19th ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION … · 19th annual international maritime law arbitration moot 2018 in the matter before london maritime arbitrators association

19th ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2018

IN THE MATTER BEFORE LONDON MARITIME ARBITRATORS ASSOCIATION

MEMORANDUM FOR APPLICANT

APPLICANT

Cerulean Beans and Aromas Ltd.

945 Moccasin Road

Cerulean 9659

V

RESPONDENT

Dynamic Shipping LLC

23 Fuchsia Crescent

Cerulean 1268

Team No. 26

COUNSEL

Aditya Andrea Sunny Vasilia

Team 26 Memorandum for the Applicant

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TABLE OF CONTENTS

ABBREVIATIONS

A. LIST OF AUTHORITIES

B. ARTICLES AND BOOKS

C. CASE LAW

D. LEGISLATION

E. OTHER

STATEMENT OF FACTS

THE CHARTERPARTY CHART

PART I: ARGUMENTS ON GOVERNING LAW

A. LAWS OF NEW SOUTH WALES, AUSTRALIA GOVERNS THE CHARTER PARTY

B. HAGUE-VISBY RULES APPLICABLE

C. LAWS OF LMAA IS THE APPLICABLE LEX ARBITRI

PART II: ARGUMENTS ON JURISDICTION

A. THE ARBITRAL TRIBUNAL HAS JURISDICTION

1. SCOPE OF REFERENCE

2. THE CLAIMS ARE NOT TECHNICAL MATTERS

3. CHOICE OF ROUTE UNDER EMPLOYMENT OF VESSEL

B. CLAIM IS NOT TIME BARRED

PART III: ARGUMENTS ON MERITS

A. DEVIATION

1. DUTY NOT TO DEVIATE

(i) DUTY NOT DEVIATE: IMPLIED TERM

(ii) DEVIATION WAS UNREASONABLE AND UNJUSTIFIED

(iii) DEVIATION NOT FALLING UNDER COMMON LAW OR CHARTER PARTY

EXCEPTIONS

(iv) DEVIATION: DOCTRINE OF FUNDAMENTAL BREACH

B. FORCE MAJEURE


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1. OCCURRENCE OF SOLAR FLARES IS NOT AN ‘UNFORESEEN’ EVENT

2. ABSENCE OF DUE DILIGENCE ON THE PART OF THE RESPONDENT

3. DELAY CAUSED BY DEVIATION AND NOT BY THE STORM

C. SEAWORTHINESS OF THE VESSEL

1. RESPONDENT HAD FAILED TO PROVIDE THE HARDCOPY OF MAP FOR THE

VOYAGE

2. RESPONDENT HAD BREACHED THE CONTRACTUAL DUTY OF

SEAWORTHINESS

3. RESPONDENT HAD BREACHED THE STATUTORY OBLIGATION OF

SEAWORTHINESS

4. FAILURE OF EQUIPMENT THAT CONSTITUTES SEAWORTHINESS

5. DAMAGE OF THE CARGO IS CAUSED DUE TO THE UNSEAWORTHINESS OF THE

VESSEL

D. MARITIME LIEN

1. FAILURE OF RETURN OF PAYMENT MADE BY THE APPLICANT

2. ASSIGNMENT AND TRANSFER OF MARITIME LIEN RIGHT FROM THE CREW TO

THE APPLICANT

E. DELIVERY

1. BARCODE PASS AND ELECTRONIC SYSTEM WAS NEVER AGREED BY THE

APPLICANT

2. BARCODE PASS DOES NOT CONSTITUTE DELIVERY

F. DEMURRAGE DID NOT ACCRUE

1. DEVIATION WAS NOT BASED ON FORCE MAJEURE

2. DELAY IS ON ACCOUNT OF RESPONDENT UNDER CLAUSE 15 (B)

G. DAMAGES

1. THE APPLICANT IS ENTITLED TO DAMAGES

(i) DAMAGES DUE TO THE BREACH OF THE CHARTER PARTY TERMS: LATE

DELIVERY AND DAMAGED CARGO


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(ii) DAMAGES FOR THIRD PARTY CLAIMS: REPLACEMENT COFFEE PAYMENT

AND SETTLEMENT PAYMENT

(iii) DAMAGES DUE TO LOSS OF PROFITS (ISSUE OF FORESEEABILITY)

(iv) LIMITATION OF LIABILITY

2. REPLY TO COUNTER CLAIM

(i) THE APPLICANT IS NOT LIABLE FOR THE DAMAGE TO THE HULL

(ii) THE APPLICANT IS NOT LIABLE FOR THE AGENCY FEES AT THE PORT OF

SPECTRE

(iii) THE APPLICANT IS NOT LIABLE FOR THE ELECTRONIC ACCESS SYSTEM

(‘THE BARCODE PASS’) AT THE DISCHARGE PORT

PART IV: PRAYERS FOR RELIEF


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LIST OF ABBREVIATIONS

Barcode Pass The barcode access document given by Respondent to Applicant as

authority pass to take delivery of goods from Discharge port

warehouse through electronic access system at Discharge Port.

CANA 2012 Commonwealth of Australia Navigation Act 2012

Cargo 70,000 kilograms (kgs) of coffee beans shipped in 4 containers.

Charterparty Voyage charterparty dated 22 July 2017 entered between the

Applicant and the Respondent for carriage of Cargo from Cerulean

to Dillamond by the agreed date.

Charterer Cerulean Beans and Aromas Ltd as Charterers who entered in the

Charterparty with the Respondent for shipping the Cargo from the

port of Cerulean to the port of Dillamond.

COGSA 1991 Carriage of Goods by Sea Act 1991, Act No. 160 of 1991 as

amended

Discharge Port Port of Dillamond under clause 1 Box 9 the Charterparty

HVR Hague Visby Rules

LMAA London Maritime Arbitrators Association

Loading Port Port of Cerulean under clause 1 Box 5 of the Charterparty

NSWA New South Wales, Australia

Parties Applicant and Respondent collectively referred as Parties.

Respondent Dynamic Shipping LCC as the Shipowner who carried the Cargo

from Discharge Port to Loading Port.

SOLAS The International Convention for the Safety of Life at Sea

Tribunal Arbitral Tribunal constituted under clause 27 of the Charterparty.

Voyage Journey of the vessel from Cerulean to Dillamond

Vessel The Madam Dragonfly

YAR 2004 The York-Antwerp Rules 2004


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LIST OF AUTHORITIES

A. Case Law

Alfred C. Toepfer Schiffahrtsgesellschaft G.M.B.H. V. Tossa Marine Co. Ltd. (The Derby) [1985] 2

Lloyd’s Rep. 325.

Danciger v. Cooley, 248 U.S. 319, 327 (1919)

DivFiona Trust & Holding Corporation & ors v. Yuri Privalov & ors., [2007] EWCA

Encyclopaedia Britannica v Hong Kong Producer [1969] 2 Lloyd’s Rep. 536

Foscolo, Mango v Stag Line (1932) 41 LILR 165

Glencore International AG v MSC Mediterranean Shipping Co SA [2017] EWCA Civ 365

Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd [2012] EWCA Civ 265

Hain Steamship Company Ltd v Tate & Lyle Ltd [1936] 2 All ER 597.

Hillcrest Homes Ltd v Beresford & Curbishley Ltd, [2014] EWHC 280

Jones v Flying Clipper (1954) 116 Fed. Supp 386

Kopitoff v Wilson (1876) 1 Q.B.D. 377

Kyokuyo Co Ltd v AP Moller-Maersk A/S (t/a Maersk Line) [2017] EWHC 654 (Comm)

Papera Traders Co. Limited & Others v Hyundai Merchant Marine Co. Limited, The Keihin Co.

Limited [2002] 1 Lloyd’s Rep. 719.

Procter & Gamble Co. v Svenska Cellulosa Aktiebolaget SCA, [2012] EWCA Civ 1413

Rainy Sky SA v Kookmin Bank [2011] UKSC 50

Reardon Smith Line Ltd. v Black Sea and Baltic General Insurance Co Ltd. [1939] AC 562 at p.584

Reardon Smith Line v Black Sea and Baltic General Insurance, [1939] AC 562.

Sadler v Dixon (1841) 151 E.R.1303


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Scaramanga v. Stamp (1880) 5 C.P.D. 295,

Stanton v Richardson (1874) L.R. 9 C.P 390; (1875) 45 L.J.Q.B. 78 HL.

Suisse Atlantique Societe d'Armement SA v NV Rotterdamsche Kolen Centrale [1967] 1 A.C. 361

The Marine Star [1996] C.L.C. 1510

The Petone [1917] P 198

Whistler International Limited v Kawasaki Kisen Kaisha Limited, [2001] 1 Lloyd's Rep. 147

Whistler International Ltd V Kawasaki Kisen Kaisha Ltd Lloyd's Law Reports [2001] 1 Lloyd's Rep.

147

Wood v Capita Insurance Services Ltd [2017] UKSC 24

B. Legislation

AAA International Rules (American Arbitration Association 1997)

Arbitration Act 1996

Carriage of Goods by Sea Act 1992

Commonwealth of Australia Navigation Act 2012

Hague-Visby Rules

ICSID Convention (The International Center for Settlement of Investment Disputes 1965)

LCIA Rules (London Court of International Arbitration 1998)

The ICC Rules of Arbitration (International Chamber of Commerce 1998)

The International Convention for the Safety of Life at Sea

The York-Antwerp Rules 2004

UNCITRAL Rules (United Nations Commission on International Trade Law 1976)


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C. Other

LMAA (London Maritime Arbitrators Association)

D. Articles and Books

Anchorages- Jurisdictional responsibility for anchorages in Queensland, Department of Transport and

Main Road

Dicey and Morris, Conflict of Laws, 11th edition, p.1163

J. F. Wilson, Carriage of Goods by Sea, 7th Ed. p. 16. English courts have restricted the concept of

deviation to geographic deviation.

Scrutton on Charterparties and Bills of Lading, 22nd Edition

Yvonne Baatz’s Maritime law, 2nd Edition, Sweet & Maxwell, 2011


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STATEMENT OF FACTS

1. On 22 July 2017, the Cerulean Beans and Aromas Ltd (“The Applicant”) entered into a voyage

charterparty with Dynamic Shipping LLC (“The Respondent”) for the carriage of 70.000 kilograms

(kgs) of coffee beans (“The Cargo”), packed in 4 containers (each containing 250 bags), from Cerulean

to Dillamond (the Charterparty). As per the Charterparty, the Madam Dragonfly (The Vessel) was to

sail from Cerulean on 24 July 2017 and to deliver the Cargo at Dillamond on 28 July 2017, no later

than 19:00.1

2. The freight rate was agreed at USD 500,0002 and the demurrage rate was agreed at USD 20,000 per

hour.3 Prior to the voyage, an additional payment of USD 100,000 was made by the Applicant as a

security for the crew’s wages. Having considered the nature of the Cargo, the Respondent was

informed of the risk of moisture damage to the Cargo and the Respondent was requested to take extra

care in packaging and shipping of the Cargo.4

3. On 24 July 2017, The Vessel left the Cerulean port with 4 containers of coffee beans worth USD

21,000,000 ($300/kg x 70,000kgs).5 Although the Respondent was requested to take the most direct

route to Dillamond and to contact the Applicant before any deviation, they failed to do so and deviated

to Spectre, which is not the direct route to the agreed destination.6

4. On 25 July 2017, around 21:00, the communication systems of The Vessel were knocked out due to

solar flares. There was no communication between the Respondent and The Vessel for a period of 17

hours.7

5. On 26 July 2017, the communication systems of the vessel were re-established around 14:00.8

6. On 27 July 2017, Respondent informed the Charterer that The Vessel had to deviate to Spectre because

The Vessel did not have a hardcopy of the voyage from Cerulean to Dillamond (“The Voyage”) and

instead had maps from its previous voyage, which was from Dillamond to Spectre.9

1 Charterparty dated 22 July 2017, p. 3 of Moot scenario and email dated 22 July 2017 from Applicant to Respondent, p. 2

of Moot scenario 2 Clause 22, box 11, The Charterparty, p.3 of Moot scenario 3 Clause 9, box 24, The Charterparty, p.3 of Moot scenario 4 Letter dated 22 July 2017 from Applicant to Respondent, p. 14 of Moot scenario, 5 Ibid, Clause 1, box 4, The Charterparty, p.3 of Moot scenario 6 The map of route from Port of Cerulean (Loading Port) to Port of Dillamond (Discharge Port), p.39 of Moot scenario 7 The email from Respondent to Applicant dated 26 July 2017 at 2:32pm, p. 17 of Moot scenario, 8 Ibid., 9 The email from Respondent to Applicant dated 27 July 2017 at 7:17am, p. 18 of Moot scenario,


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7. On 28 July 2017, the Charterer’s staff was waiting to take delivery of the Cargo at the Dillamond port

since 16:30 however, the Cargo did not arrive, and the staff kept waiting whole night.10

8. On 29 July 2017, the Respondent informed the Applicant that the Vessel was stuck approximately

100nm out from Discharge Port since 7:00 after a massive storm had hit the Dillamond area near and

around the Discharge Port during the night of 28 July 2017. Furthermore, the crew of the Vessel

dropped the anchor but it got tangled with a coral bed and damaged the hull of the ship.11 Respondent

emailed the Applicant on 29 July 2017 at 20:42 that The Vessel had docked and Cargo was discharged

and was available for collection.12

9. On 30 July 2017 at 12.02, barcode access to the Cargo was granted to the Applicant.13

10. On 31 July 2017, around 13:17, the Cargo was delivered to the Charterer but the weight of one of the

containers differed from the other three.14 Three out of four containers were water damaged and the

Applicant could only deliver one container to the buyer, the Coffees of the World LTD (“The Third

Party”).15

11. Due to the loss of three containers, which was 75% of the Cargo, the Applicant had to arrange for the

replacements of inferior quality coffee beans than the one agreed through an alternative source, which

had cost him USD 9,450,000 (“Replacement Coffee Payment”). The Applicant also paid damages of

USD 5,000,000 as a Settlement Payment to the Third Party, for the breach of contract as a result of

the failure to deliver the Cargo by 19:00 on 28 July 2017. The amount of damaged Cargo was USD

15,750,000

12. On 1 August 2017 the Applicants served notice of breach of the Charterparty to the Respondent and

pressed for the payment of USD 30,200,000 from the Respondent by 7 August 2017 for the damages.16

The Respondent denied all liabilities via email dated 2 August 2017 sent at 7:01 from Mr. Marc

Simpson of Respondent to Mr. Jay Mizzone of Applicant. In reply to this email the Applicant sent

email dated 2 August 2017 at 10:59 to Mr. Marc Simpson of the Respondent.17

10 The email from Applicant to Respondent dated 28 July 2017 at 11:45pm, p. 19 of Moot scenario, 11 The email from Respondent to Applicant dated 29 July 2017 at 8:58am, p. 20 of Moot scenario, 12The email from Respondent to Applicant dated 29 July 2017 at 8:42pm, p. 24 of Moot scenario, 13 Access authority pass, p. 23 of Moot scenario, 14 The email from Applicant to Respondent dated 31 July 2017 at 4:21pm, p. 24 of Moot scenario, 15 The email from Applicant to Respondent dated 1 August 2017 at 9:17am, p. 25 of Moot scenario, 16 Notice of breach of Charterparty (Demand Notice), p. 27 of the Moot scenario

17 The email from Applicant to Respondent dated 2 August 2017 at 10:59am, p. 30 of Moot scenario


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13. Accordingly, on 7 September 2017, the Arbitration Tribunal’s formation was determined as per clause

27 of the Charterparty.18

PART I: ARGUMENTS ON APPLICABLE GOVERNING LAW

A. Laws of New South Wales, Australia governs the Charterparty

14. Pursuant to Clause 28 of the Charterparty19, the governing substantive law20 is stated to be that of New

South Wales, Australia (NSWA).

B. Hague Visby Rules Applicable

15. Clause 28 of the Charterparty also contains a ‘Clause paramount’ which states “Respondents to have

benefit of Article 4(5).” Clause paramount is the clause incorporating the cargo liability regime such

as Hague Visby Rules (HVR). Further, it must be noted that the Carriage of Goods by Sea Act, 199121

(COGSA 1991) under Part 2 seeks application of the amended Hague Rules. Under section 8, COGSA

1991 the amended Hague Rules as amended by the Brussels Protocol 1968 and notably known as

HVR are to have the force of law in Australia subject to section 10 of COGSA 1991. COGSA 1991

has also attached the HVR as schedule 1 of the Act. Therefore, in view of the paramount clause under

clause 28 of the Charterparty22 and applicable schedule 1 of the COGSA 1991 HVR is applicable on

carriage of goods under this Charterparty.

C. Laws of LMAA is the applicable lex arbitri

16. The Applicant and the Respondent (Parties) agreed under clause 27 of the Charterparty23 that the

Arbitration Rules of the London Maritime Arbitrators Association (LMAA) should apply to this

Charterparty. Accordingly, the lex arbitri will be that of the LMAA Arbitration Rules and Arbitration

Act 1996.

PART II: ARGUMENTS ON JURISDICTION

A. The Arbitral Tribunal has Jurisdiction

18 Procedural order no. 2, para. 23 19 Clause 28, Charterparty, p.12 of Moot scenario 20 Dicey and Morris, Conflict of Laws, 11th edition, p.1163 21 Including amendments up to: Act No. 126, 2015 22 Clause 28, Charterparty, p.12 of Moot scenario 23 Clause 27, Charterparty, p.12 of Moot scenario


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17. The Arbitral Tribunal has been validly formed as per the terms of the Charterparty.24 It is within the

scope of arbitral tribunals’ jurisdiction to rule on their own jurisdiction. In the present case, the Parties

have adopted the LMAA’s Terms and hence according to the terms, the tribunal can rule on its own

substantive jurisdiction under Sections 30 and 3125 either by issuing an interim award or by addressing

jurisdiction in the final award26

1. Scope of Reference

18. The Tribunal has a wide scope of reference. The issues of current claims as provided under various

contentions below and in the Prayer for Reliefs sought under the Statement of Claim27 (the Claims)

fall under the scope of reference as provided below. The Claims brought under the Charterparty in the

present case cannot be considered “technical matters” as Clause 27 of the Charterparty provides a vast

scope of reference to refer the dispute between the Parties to the Tribunal. Clause 27 (a) states that

any dispute arising out of or in connection with this contract, shall be referred to arbitration.28

19. It is therefore clear from the wording of the clause 27 (a) that the Claims falls within the scope of

reference29 and hence referable to the Tribunal.

2. The Claims are not “Technical Matters”

20. The jurisdictional objection raised in the “Points of Defence and Counterclaim”30 of Respondent

which argues that the claim for damages arises from matters which are to be determined according to

the expert determination provisions of the Charterparty is denied by the Applicant.

21. Clause 27 (d) of the Charterparty provides that any dispute as to technical matters shall be referred to

expert determination by an independent master mariner.31 Clause 27 (g) defines the term “Technical

matter” as matters surrounding the technical aspects of the performance of the Charterparty, such as

24 Procedural order no. 2, para. 23 and supplementary information, point 2, Moot Scenario, p. 45 25 Arbitration Act 1996 26 Clause 27 (a), The Charterparty, p.12 of Moot scenario 27 Points of Claim delivered on behalf of the Applicant, p. 37 of Moot scenario

28 Clause 27(a), The Charterparty, p.12 of Moot scenario 29 Hillcrest Homes Ltd v Beresford & Curbishley Ltd, [2014] EWHC 280 (TCC), wherein the Queen’s Bench Division,

(Technology & Construction Court) ruled that the phrase ‘arising out of” is much wider than term “under the contract” as

the term “arising out of” would mean claims arising out of statute applicable to contract although not directly under contract.

Although in Fiona Trust & Holding Corporation & ors v. Yuri Privalov & ors., [2007] EWCA CIV 20, which is commercial

case, the judge ruled that “various phrases meant the same thing”. 30 section 4(b), Points of Defence and Counterclaim delivered on behalf of the Respondent, p. 40 of Moot scenario,p. 31 Clause 27 (d), The Charterparty, p.12 of Moot scenario


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the vessel's route, etc. which can reasonably be considered to be within the expert technical knowledge

of a Master Mariner. 32

22. The objection33 is made by Respondent based on Clause 27(d) and (g) of vessel’s route being under

expert determination. The dispute does involve issue of the vessel’s route, but the matter in dispute

cannot reasonably be considered within the expert technical knowledge of a master mariner. Such

objection is not plausible as the term “technical” is to be understood in general parlance meaning

“relating to a particular subject, art, or craft, or its techniques” or “requiring special knowledge to be

understood”34. Clause 27 of the Charterparty must be read as a whole.

23. What does “reasonably be considered to be within the expert technical knowledge of a Master

Mariner” mean?35 The Charterparty is based on the commercial understanding of the Parties as the

Applicant is not a technical shipping person but a commercial man as evidenced by the fact that he is

not into chartering business but merely a coffee trader who chartered the Vessel only for shipment of

this particular product for a festival and hence this was a ‘charter without demise’. Accordingly, the

terms must be interpreted in general commercial sense as stated in the case of Proctor & Gamble Co.,

which held that “The court should prefer that [meaning] which better accords with the overall objective

of the contract or with good commercial sense”36. This view is also supported by the Supreme Court

decision of Wood v Capita Insurance Services Ltd37 by giving weight to business common sense in

the Rainy Sky.38 The case referred to The Antaios39 also provided that “If detailed and syntactical

analysis of words in a commercial contract is going to lead to a conclusion that flouts business

common sense it must yield to business common sense.”40

24. The Claims that have arisen between the Parties do not fall within the aspects which can reasonably

be considered within the “technical” knowledge of a master mariner, but they are issues that are clearly

understandable by commercial men involved in international trade. In the present case, the Claims are

based upon delay of delivery and damage to Cargo. The deviation has been one of the basis for the

32 Clause 27 (g), The Charterparty, p.12 of Moot scenario 33 Ibid., 34 Oxford Dictionary, accessible on https://en.oxforddictionaries.com/definition/technical 35 Clause 27(g), The Charterparty, p.12 of Moot scenario 36 Procter & Gamble Co. v Svenska Cellulosa Aktiebolaget SCA, [2012] EWCA Civ 1413 at [22], per Moore-Bick L.J. 37 Wood v Capita Insurance Services Ltd [2017] UKSC 24, para 11. 38 Rainy Sky SA v Kookmin Bank [2011] UKSC 50, para. 21 39 [1984] AC 191 40 Ibid, p. 201

https://en.oxforddictionaries.com/definition/technical


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Claims and “the Vessel’s route” cannot be considered a technical aspect provided it was due to

unforeseeable weather conditions.

25. In the present case, deviation is not due to weather conditions but due to faulty equipment and non-

availability of physical maps on board of the Vessel . This is clearly stated in the email dated 28 July

2017 that the Vessel had to deviate because they had no systems and the only maps they held were for

Spectre.41 Such deviation is not subject to a technical aspect in regard to the vessel’s route which can

reasonably be considered to be within the expert technical knowledge of a Master Mariner. In the

current case, the Vessel’s route was agreed to be the most direct route to Dillamond (as shown in

map)42 and the deviation due to the non-availability of a map for a direct route to Dillamond was not

a technical decision. The option of choosing the alternative route in case of any apprehension to the

safety of the Vessel or the Cargo or the Crews’ lives would have required expert technical knowledge.

Therefore, current case clearly does not falls under technical aspect subject to the determination by a

master mariner.

3. Choice of route under Employment of Vessel

26. The issue of choosing the route is that of utmost dispatch and employment of a vessel involving the

economic aspect of its operation. This is supported by the House of Lords in Whistler International

Limited43 wherein choice of route is considered a matter of employment of the vessel and not of its

navigation. If the route is contractually agreed, then the shipowner (in that case the Respondent) must

follow the contractually agreed route44 and if the route is not contractually agreed the Respondent

must take the most direct geographical route.45 Under Clause 17, The Vessel had liberty to deviate for

the purpose of saving life or property (including the Vessel). Thus, the current deviation is a breach

of contract as discussed in detail under paragraph [17] of this Memorandum.

27. The employment of the vessel was arranged specifically for completing the voyage within the

specified time of discharge by 19:00 on 28 July 2017 under the Charterparty Clause 1 box 9.46 This

was also clear in the letter dated 22 July from Mr. Jay Mizzone on behalf of the Applicant to Mr. Marc

41 The email from Respondent to Applicant dated 28 July 2017 at 4:58pm, p. 19 of Moot scenario, 42 Points of Claim, Points of Claim delivered on behalf of the Applicant, p. 37 of Moot scenario, 43 Whistler International Limited v Kawasaki Kisen Kaisha Limited, [2001] 1 Lloyd's Rep. 147 44 Ibid referred in Yvonne Baatz’s Maritime law, 2nd Edition, Sweet & Maxwell, 2011, p. 149 45 Reardon Smith Line Ltd. v Black Sea and Baltic General Insurance Co Ltd. [1939] AC 562 at p.584 46 Clause 1 box 9, The Charterparty, p.3 of Moot scenario


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Simpson of the Respondent Company.47 Thus, the issue of the choice of route is that of the

employment of the vessel and not of the navigation or a technical aspect. By the meaning of the words

“technical aspects” and “vessel’s route”, it must be understood that only if there was a navigational

decision to save life, the Vessel or the Cargo, it would have been covered under Clause 27 (d) and

been subject to expert determination by an independent master mariner.48

28. In view of the above, the Applicant submits that the term “vessel’s route” must be interpreted in a

general commercial sense and should not be construed as “technical aspects” requiring expert

determination. It was indeed a matter of the “employment of vessel” and not of its “navigation” and

so subject to the jurisdiction of Tribunal without having any application of Clauses 27(d), (e) and (g).

B. Claim is not Time Barred

29. The Claim is brought within the time bar of one calendar year from the date of the delay and the

damage to the Cargo as per the Charterparty dated 22 July 2017. The Demand Notice for the damaged

Cargo was sent to Respondent on 1 August 201749 and the Tribunal was formed on 7 September

2017.50 Accordingly, the Applicant states that the claim is not time barred.

PART III: ARGUMENTS ON MERITS

A. DEVIATION

30. The Respondent is obliged to proceed on the Voyage without deviation. If there is a contractually

agreed route the Vessel (the Respondent) must follow that route unless exception applies. In case of a

non-contractually agreed route, it is presumed that the most direct geographical route is the contractual

route unless the Respondent can prove that a customary route exists.51 In the current case, duty not to

deviate has been breached by the Respondent by going to port of Spectre and not following the most

direct route52 to the Discharge Port.

1. Duty not to deviate

47 Clause 22, The Charterparty, p. 11 of Moot scenario 48 Letter dated 22 July 2017 from Applicant to Respondent, p. 14 of Moot scenario, 49 Notice of breach of Charterparty (Demand Notice), p. 27 of the Moot scenario, 50 Procedural order No. 2, para 23 51 Reardon Smith Line v Black Sea and Baltic General Insurance, [1939] AC 562. 52The map of route from Port of Cerulean (Loading Port) to Port of Dillamond (Discharge Port), p. 39 of Moot scenario


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31. Deviation has been defined as the “intentional and unreasonable change in the geographical route of

the voyage as contracted”.53 There are two elements which together constitute deviation which are (a)

intentional and (b) unreasonable change in the geographical route.

(i) Duty not to deviate is an Implied Term

32. Duty not to deviate needs not to be expressly stated in the Charterparty, it is an implied term in

accordance with the common law. A duty for taking the most direct route is defined by Lord Porter in

Reardon Smith case54; by stating that it is the duty of a ship, to take the usual route. If no evidence be

given, that route is presumed to be the direct geographical route.55

33. In the current case, the Respondent had been informed via e-mail of its duty to take the most direct

route to Dillamond and accordingly a duty not to deviate.56 As these conditions set out by the

Applicant regarding the most direct route and accepted by the Respondent duty not to deviate had

become a term of the Charterparty.

34. In addition; in commercial contracts, it is common practice to agree to terms early on by an exchange

of e-mails and so such terms are not to be repeated later on. The reason behind this is that

communication by e-mail, let the Parties know their exact undertakings and terms agreed upon.57

Therefore, even though there is no express term within the Charterparty with regards to deviation, the

Applicant made sure that the Respondent is aware about its duty not to deviate vide communication

of a letter58 prior to entering into the Charterparty. Thus, the Applicant states that Respondent was

aware about the implied term of taking the most direct route and thereby not to deviate. Hence, the

Respondent by deviating, it had breached the terms of the Charterparty.

35. In the letter dated 22 July 2017 from the Applicantto the Respondent59, the Applicant had expressly

stated that as promised to its client (“the Third Party”) the Applicant will stay in full control of the

Voyage and of carriage of the Cargo. The Applicant furtherly stated that in an event where the Vessel

has to deviate and not take the most direct route to the Discharge Port, the Applicantmust be contacted

by the Respondent prior to the changing of the route.

53 J. F. Wilson, Carriage of Goods by Sea, 7th Ed. p. 16. English courts have restricted the concept of deviation to geographic

deviation. 54 Reardon Smith Line v Black Sea and Baltic General Insurance [1939] AC 562. 55 Ibid, 56 Letter dated 22 July 2017 from Applicant to Respondent, p. 2 of Moot scenario 57 Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd [2012] EWCA Civ 265 58 The email from Respondent to Applicant dated 28 July 2017 at 4:58pm, p. 19 of Moot scenario, 59 The Cerulean Mail, article dated 18 July 2017, p. 35 of Moot scenario,


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(ii) Deviation was unreasonable and unjustified

36. In order for a deviation to be reasonable there has to be an exception deriving from the HVR or the

Common Law. At Common Law; a departure from the direct route is permissible in the following

circumstances namely; (a) to save human life or to communicate with a vessel in distress in case lives

may be in danger; (b) to avoid danger to the ship or cargo; (c) where deviation is made necessary by

some default on the part of the Charterer.60

37. The Respondent deviated from the direct route as it failed to carry a hardcopy of the map for the

Voyage as agreed by Respondent itself under an email dated 27 July 2017.61 Accordingly, the

Respondent had confirmed to the Applicant vide email dated 28 July 2017 that the Vessel had to

deviate because of the absence of a map vital for the Voyage. The only map that was available on

board it was that of at the port of Spectre which was the Vessel’s previous voyage.62 Since the failure

to carry the designated map for the contractually agreed Voyage constitutes the Respondent’s omission

against its obligations to make the Vessel seaworthy63. It is also understood that such act is intentional.

38. In view of the above facts, it is clear that the Respondent is liable for breach of it’s duty not to deviate

by his own failure of due diligence to make the Vessel seaworthy as provided under Article III.(1).64

(iii) Deviation not falling under Common Law or Charterparty exceptions

39. The deviation is permitted under exceptional circumstances such as (a) to save life (b) to communicate

with ship in distress where there is risk of loss of life but not for sole purpose of saving property.65

Furthermore, Under the HVR, article IV (4) deviation to save or attempting to save life or property is

not deemed infringement. The HVR allow deviation as long as it is reasonable. The Charterparty

provided a “liberty to deviate” Clause as stated under force majeure Clause 17 in line with above HVR

article IV (4).66

40. Based on the facts stated above, there is no evidence indicating that the Vessel had deviated because

there was any real or possible danger to human life or to the Vessel or to the Cargo on board at the

time of deviation. The Vessel had deviated due to the lack of maps that were required to be on board

60 John F Wilson, Carriage of Goods by Sea, p. 17-19. 61 The email from Respondent to Applicant dated 27 July 2017 at 7:17am, p. 18 of Moot scenario, 62 The email from Respondent to Applicant dated 28 July 2017 at 4:58pm, p. 19 of Moot scenario, 63 Art. III, Rule 1 of the Hague-Visby Rules 64Ibid 65 Scaramanga v. Stamp (1880) 5 C.P.D. 295, per Cockburn C.J. at p. 309 66 Clause 17, The Charterparty, p. 9 of Moot scenario


18

and not because of any apprehension of or actual danger. Therefore, the Respondent is liable for

unjustified deviation.

41. The courts tend to interpret “any reasonable deviation” as “deviation, which no reasonably minded

cargo-owner would raise any objection to”67. Thus, it is a question of fact which should be decided in

accordance with the circumstances of each case. In the present case, the test for a reasonably minded

cargo-owner (the Applicant) has failed. Since it is clear that the omission of the Respondent to have

the relevant map for the Voyage on board, the Applicantas as innocent party denies to accept that there

is any reasonable deviation. Further, the deviation occured without seeking any consent or informing

the Applicantas it is required under an implied term.68 Additionally, it is relevant to note that UK

courts have given an extremely restricted interpretation of reasonable deviation.69

(iv) Respondent is in Fundamental Breach of the Charterparty.

42. Unjustified deviation is a fundamental breach of the contract (Charterparty) which gives the charterer

(the Charterer) the right to elect to terminate or to affirm the contract (Charterparty).70 In the Suisse

Atlantique71 case it has been held that no term can be regarded as fundamental, unless it is a condition

agreed upon by both parties. Since the parties had agreed on the most direct route in their

correspondence and it had been repeatedly underlined that it is fundamental for the Applicant to be in

charge of the Voyage at all times, it is obvious that the Respondent has committed a fundamental

breach of the Charterparty. Even though, the importance of the Voyage with regards to deviation and

control of the Voyage had been repeatedly expressed by the Applicant, the Respondent had not

complied with its obligations.

43. As mentioned above, the Hain Steamship Co Ltd case introduced a modified concept of repudiatory

breach where the innocent party could either elect to treat the contract at end and sue for damages or

keep it alive by affirming it. By reference to this case, it is legitimate to state that the Applicant is

entitled to all the damages caused by the Respondent arising from the breach of the contract. Even

though, the Charterparty has not been terminated by the Applicant, it is still entitled to all damages

relying upon the Clause 35 of the Charterparty. Clause 35 is the “NON WAIVER CLAUSE” which

67 Stag Line v Foscolo, Mango & Co [1932] AC 328. 68 See, Section i of this Statement of Claim, .Duty not to deviate is Implied Term, 69 F. Wilson, Carriage of Goods by Sea, 7th Ed p.19. 70 Hain Steamship Company Ltd v Tate & Lyle Ltd [1936] 2 All ER 597. 71 Suisse Atlantique Societe d'Armement SA v NV Rotterdamsche Kolen Centrale [1967] 1 A.C. 361


19

entitles the innocent party to all damages even if the Applicant has failed to invoke remedies at the

time of the breach; i.e. the deviation. 72

44. Additionally, it is imperative to note that the Applicant by giving orders to the Respondent to take the

most direct route is a matter of employment. As decided in the Hill Harmony 73 route instructions or

orders in a general sense, are orders as to the employment of the Vessel and the Master is bound to

follow them. This issue is already addressed in the argument for jurisdiction.74

45. In light of the above facts, the Respondent is in breach of the fundamental duty of Charterparty not to

deviate. As deviation occurred unjustifiably and unreasonably, it does not fall under any exception.

Hence, the Applicant states that the Respondent is liable for all Claims arising from deviation.

46. In addition, doctrine of fundamental breach is closely related to Respondent’s limitation of liability.

This issue will be dealt with under Limitation of Liability topic (Topic G).

B. FORCE MAJEURE

1. Occurrence of Solar Flares is not an ‘unforeseen’ event

47. The Respondent has mentioned under Section 4(b) of the Points of Defence and Counterclaims75 that

the delay was caused by two events of force majeure, namely (a) the solar flares and (b) the storm

which hit Dillamond and surrounding areas on Friday night, i.e. 28 July 2017. In reply to such claim

made by Respondent, the Applicant states that solar flares were not an “unforeseen” event as proved

by submissions stated below.

48. The Charterparty contains terms of force majeure under Clause 17. The relevant sub clause is Clause

17(b) of the Charterparty which states that the term ‘Force Majeure Event’ includes “unforeseen

weather events, Act of God, accidents, fire, explosions, flood, landslips, ice, frost or snow”.76 Since,

NASA had already issued warnings regarding the solar flares and advised to make back-up

arrangements for the satellite communication system, the emission of solar flares was already expected

and hence it cannot be said to be ‘unforeseen’.77

49. The “Act of God” includes any incident, which is caused by “natural causes, directly, and exclusively,

without human intervention, and that it could not have been prevented by any amount of foresight,

72 Clause 35, The Charterparty, p.13 of Moot scenario 73 Whistler International Ltd V Kawasaki Kisen Kaisha Ltd Lloyd's Law Reports [2001] 1 Lloyd's Rep. 147 74 See, para. 13. 75 Section 4(b), Points of Defence and Counterclaim delivered on behalf of the Respondent, p. 40 of Moot scenario, 76 Clause 17 (b), The Charterparty, p. 9 of Moot scenario 77 The Cerulean Mail, article dated 18 July 2017, p. 35 of Moot scenario,


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pains and care, reasonably to be expected from the Shipowner.”78 Although the solar flares can be

considered an “Act of God”, it was not unforeseen as required under Clause 17(b) of the

Charterparty.79 In construing a force majeure clause in a contract, the proper approach is to look at the

words the parties have used, rather than to consider the parties' general intentions.80 Accordingly, the

Applicant submits that the event of solar flares is not unforeseen but expected and hence the

Respondent is liable for delays caused due to deviation.

2. Absence of due diligence on the part of the Respondent

50. Pursuant to Clause 17, “force majeure exceptions are conditional on the exercise of due diligence to

ensure the ship is seaworthy and properly manned when she sails on the voyage”.81 In order to invoke

application of the force majeure clause prevention from liability damages, the Respondent has to proof

that he took reasonable care and there was no negligence on the part of the Master of the ship.82

However, the communication systems of The Vessel were knocked out for seventeen (17) consecutive

hours while official reports suggests that the communication systems were down only for four (4)

hours.83 The Cerulean National Agency said that the unreasonable delay in proper working of the

communication system can be attributed to the old and/or faulty equipment.

51. Therefore, the Applicant submits that the Vessel was not seaworthy due to her faulty equipment and

if the Respondent would have conducted due diligence, it would have been easily discovered that there

is no map available on board for the agreed Voyage and the faulty equipment and consequently the

delay could not have occurred.84 Therefore, the Respondent cannot rely on the protection under the

force majeure clause.

3. Delay caused by deviation and not by the Storm

52. The second alleged force majeure event under the ‘Act of God’, is the Storm which hit Dillamond and

surrounding areas on Friday evening on 28 July 2018. This is clearly stated in the article dated 29 July

2017 in The Dillamond Times.85

78 Scrutton on Charterparties and Bills of Lading, 22nd Edition 79 Clause 17 (b), The Charterparty, p. 9 of Moot scenario 80 The Marine Star [1996] C.L.C. 1510 81 Clause 17, The Charterparty, p.9 of Moot scenario 82 Scrutton on Charterparties and Bills of Lading, 22nd Edition, p.234 83 The Cerulean Mail, article dated 25 July 2017, p. 35 of Moot scenario, 84 The Cerulean Mail, article dated 25 July 2017, p. 35 of Moot scenario, 85 The Dillamond Times, article dated 29 July 2017, p. 21 of Moot scenario,


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53. The Applicant submits that if the Respondent would not have deviated from the agreed direct route

and followed the agreed timeline then The Vessel would have reached the Discharge port by 19:00 on

28 July 2017, hours before the storm hit the Discharge port86 on Friday evening. Assuming that the

storm is alleged to be the force majeure event according to the Respondent in the Points of Defence

and Counterclaim87, the delay is attributable to deviation, which was a non-notified decision as

mentioned above.88

C. SEAWORTHINESS OF THE VESSEL

1. Respondent had failed to provide the hardcopy of map for the Voyage

53. In present case, the Respondent had failed to ensure the map’s hardcopy was on board needed for the

Voyage, something very crucial to assist the seafarer in securing the Voyage safely.89 Without the

hardcopy, The Vessel should be rendered as unseaworthy. It is the Respondent’s duty to keep the

necessary equipment for the Voyage on board and it is very negligent and reckless behavior on part

of the Respondent to commence a Voyage without a hardcopy of map considering the fact that solar

flares were anticipated to affect navigational equipment such as radio or satellite communication

systems.90 It must be noted that the prediction for the solar flares was six (6) days prior to the departure

date; i.e. 24 July 2017, and accordingly the Respondent should have been prepared and proactively

solve the situation before the commencement of the Voyage.

2. Respondent had breached the contractual duty of seaworthiness

54. The Respondent had a contractual duty to provide a seaworthy vessel pursuant to Clause 1 of the

Charterparty by stating that The Vessel must be “warranted tight, staunch and strong and in every

way fitted for the Voyage”. The case of Stanton v Richardson 91 adjudicates that this is another way

of saying that the shipowner (Respondent) must provide the ship in a seaworthy state. In addition, in

the case of The Derby92, the Court of Appeal widened the meaning of the words “in every way fitted

for the service” not limited to the physical state of the vessel, but also to carry documents relating to

her “seaworthiness or fitness to perform the service for which the charter provides.

86 The Dillamond Times, 29 July 2017, 87 Section 4(b), Points of Defence and Counterclaim delivered on behalf of the Respondent, p. 40 of Moot scenario, 88 See, Para.21 89 The email from Respondent to Applicant dated 27 July 2017 at 7:17am, p. 18 of Moot scenario, 90 The Cerulean Mail, article dated 18 July 2017, p. 35 of Moot scenario, 91 Stanton v Richardson (1874) L.R. 9 C.P 390; affirmed (1875) 45 L.J.Q.B. 78 HL. 92 Alfred C. Toepfer Schiffahrtsgesellschaft G.M.B.H. V. Tossa Marine Co. Ltd. Tossa Marine Co. Ltd. V. Alfred C. Toepfer

Schiffahrtsgesellschaft G.m.b.H. (The Derby) [1985] 2 Lloyd’s Rep. 325.


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55. Furthermore, since the term of seaworthiness is a relative one, its meaning is dependent upon the

vessel involved and the service in which it is employed, Eurasian Dream93 has defined the concept of

seaworthiness by stating that the vessel must be in a suitable condition and suitably manned and

equipped to meet the ordinary perils likely to be encountered while performing the services required

of it including documentation. Thus, the seaworthiness threshold covers not only the physical

condition of the vessel such as stability and construction, and its equipment, competence of the crew

and adequacy of her stores and fuel, but also extends to having the adequate documents required for

the vessel to be able to complete the voyage.

3. Respondent had breached the statutory obligation of seaworthiness

56. The HVR provides under Article III (1)(a) that the carrier must exercise due diligence to: (a) Make

the ship seaworthy; (b) Properly man, equip and supply the ship”

57. The International Convention for the Safety of life at Sea (SOLAS), sets minimum safety standard in

the operation of merchant ships and prescribes that all vessels irrespective of size shall have nautical

charts and nautical publication to plan and display the vessel’s route for the intended voyage and to

plot and monitor positions throughout the voyage in pursuant to the Regulation 19.2.1.1.94 Therefore,

it is evident that the nautical map is a compulsory document to be equipped with when the vessel

navigates to the sea. This contention of the Applicant is supported by The Derby when the Judge stated

that: “To discharge their obligation under this charter-party the Respondents were bound to provide

a vessel…. with all appropriate navigational aids, such for example as charts”95.

58. Further, Article 224 of the Commonwealth of Australia Navigation Act 2012 (CANA) stipulates that

“the Respondent of a regulated Australian vessel or a foreign vessel must not take the vessel to the

sea if the vessel is not supplied with nautical charts….on the particular voyage”.

59. Therefore, the Applicant submits that the Respondent failed to exercise due diligence in making the

ship seaworthy and accordingly, the Respondent had breached the terms of the Charterparty.

4. Failure of Equipment that constitutes seaworthiness

93 Papera Traders Co. Limited & Others v Hyundai Merchant Marine Co. Limited, The Keihin Co. Limited [2002] 1 Lloyd’s

Rep. 719. 94 The International Convention for the Safety of life at Sea 95 Alfred C. Toepfer Schiffahrtsgesellschaft G.M.B.H. V. Tossa Marine Co. Ltd. Tossa Marine Co. Ltd. V. Alfred C. Toepfer

Schiffahrtsgesellschaft G.m.b.H. (The Derby) [1985] 2 Lloyd’s Rep. 325.


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60. A seaworthy vessel is defined in Sadler v. Dixon96 as one which is in a ‘fit state as to repairs,

equipment, crew and in all other respects, to encounter the ordinary perils of the sea’. As per Eurasian

Dream97 the concept of seaworthiness includes the physical condition of the vessel such as its stability

and construction, and its equipment in order for the Vessel to be able to complete the Voyage.

Accordingly, the maintenance of the equipment to overcome the peril of the sea is regarded as the

relevant materiality of the doctrine of seaworthiness. Furthermore, in Kopitoff v. Wilson98 the Court

supported a wider definition: “The shipowner…held to warrant that the ship is…. fit to meet and

undergo the perils of the sea and other incidental risks which of necessity she must exposed in the

course of voyage” Regulation 19.4 of SOLAS also stipulates that “The navigation equipment and

system … shall be so installed, tested and maintained as to minimise malfunction.”

61. Consequently, the Respondent must have maintained the equipment of the Vessel in a good state by

complying with the current regulations. The Respondent’s systems were knocked out for seventeen

(17) hours99 as stated in the above contention on force majeure instead of four (4) hours for the vessel

with well-maintained equipments as confirmed by the Cerulean National Communication.100

5. Damage of the Cargo is caused due to the unseaworthiness of The Vessel

62. The Vessel’s unseaworthiness was the effective cause of the damage to the Cargo owned by the

Applicant. Had the Respondent made the hardcopy of the map available on The Vessel for the Voyage,

the Vessel would not have deviated101 which led to an undue delay of the Voyage. To add, if the

Respondent had updated the communications equipment in line with the regulations, the Vessel would

have got in touch with the Respondent within four (4) hours instead of seventeen (17) hours. The

Cargo was water damaged because of rainfall and prolong use of sealants as stating in the Statement

of expert opinion of Simon Webster102. However, the unseaworthiness of The Vessel due to faulty

equipment and non availability of a hardcopy map remains the most proximate cause for the damage

to the Cargo, as the Cargo would have reached the Discharge port by 28 July 2017 had The Vessel not

deviated, faced the storm an consequently been delayed.

96 Sadler v Dixon (1841) 151 E.R.1303 97 Papera Traders Co. Limited & Others v Hyundai Merchant Marine Co. Limited, The Keihin Co. Limited [2002] 1 Lloyd’s

Rep. 719 98 Kopitoff v Wilson (1876) 1 Q.B.D. 377 99 The email from Respondent to Applicant dated 26 July 2017 at 2:32pm, p. 17 of Moot scenario, 100 The Cerulean Mail, article dated 25 July 2017, p. 35 of Moot scenario, 101 The email from Respondent to Applicant dated 27 July 2017 at 7:17am, p. 18 of Moot scenario, 102 The Statement of Expert Opinion of Simon Webster, p.43 of Moot scenario,


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D. MARITIME LIEN

63. The Applicant is entitled to a lien on the Vessel for three reasons: (a) Failure of payment by the

Respondent; (b) Misrepresentation of the Respondent, and (c) Assignment and Transfer of maritime

lien right from the crew to the Applicant.

1. Failure of return of payment made by the Applicant

64. The Applicant was asked to pay the crew’s wages into a separate Bank account prior to the Voyage

as the Applicant was informed that the crew will not sail before the payment is made as security.103

An internal memo was sent by Mr. Jay Mizzone to Mr. Will Gardner of the Applicant on 19 July

2017.104 The Respondent failed to return the amount paid by the Applicant and hence failed to comply

with its promise to repay the amount after the completion of Voyage.

2. Assignment and Transfer of maritime lien right from the crew to the Applicant

65. A transfer of a maritime lien occurs by legal assignment of the rights of the creditor (by Force of Law)

to the third party when the third party pays off the debt.105 The Applicant has paid off the debt i.e. the

crew wages, at the request of the Respondent.106 The Applicant is therefore, legally assigned by the

crew of The Vessel to hold the maritime lien transferred to Applicant as the creditor. The transfer of

maritime lien rights to a third party has been recognized by the English case law.107 The Applicant

should be reimbursed for their advances out of the proceeds of sale of The Vessel .

E. DELIVERY

1. Barcode Access Code and Electronic system was never agreed by the Applicant

66. It is evidenced from the facts, that there was no agreement between the Applicant and the Respondent

for the use of a Barcode Pass108. To add, it is expressly stated by the Applicant that it did not agree to

any access barcodes. In accordance with the Charterparty the Respondent had undertaken to deliver

the cargo at port Dillamond to Applicant or its agents.109 Not only Respondent failed to deliver the

Cargo to Applicant as they have agreed but also, used Barcode Pass in order to circumvent its liability

103 This internal memo dated 19 July 2017, p. 1 of Moot scenario, 104 The internal memo dated 19 July 2017, p. 1 of Moot scenario

105 The Petone [1917] P 198 106 This internal memo dated 19 July 2017, p. 1 of Moot scenario, 107 The Petone [1917] P 198 108 Access authority pass, p. 23 of Moot scenario, 109 Clause 12, The Charterparty, p.7 of Moot scenario.


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to ensure delivery. As Barcode Pass had never been agreed to by the Applicant, it is obvious that

merely sending Barcode Pass does not constitute delivery110.

2. Barcode Pass does not constitute Delivery

67. The Respondent sent the Barcode Pass to the Applicant on 29 July 2017111, however due to a

congestion at the Discharge Port, the Applicant received the shipment of coffee beans on 31 July 2017

at 13:17 as informed by the Applicant to the Respondent vide email dated 31 July 2017 sent at

16:21.112 Although the agreed day for delivery at per Charterparty was on 28 July 2017 as stated on

the letter dated 22 July 2017113, emails and Clause 1 box 9.114 Only by looking at the facts it is clear

that the Respondent had breached the contractual obligation to deliver the Coffee Beans on the agreed

date115.

68. Without prejudice to the previous submission, if the Applicant had agreed to the use of Barcode Pass,

this agreement does not indicate that the Respondent’s liability for the Cargo has ceased at the time

when the Barcode Pass was sent.

69. For the Barcode Pass to be considered valid, it entails both parties to consent to it.116 Based on these

facts, the Respondent is liable for damage to the Cargo even if the Cargo was in the warehouse since

the discharge does not constitute delivery117.

70. It is commonly known that carrier’s (Respondent’s) liability ends when delivery of the cargo has been

completed. When it is the carrier’s duty to unload the cargo, dropping the cargo in the consignee’s

premises does not constitute delivery.118 However, if the consignee (the Respondent) is to unload the

Cargo, the issue then involves whether there was an agreement that delivery was to be accomplished

without obtaining a signed delivery receipt. This is usual commercial practice when deliveries are to

be made after normal business hours when no employee of the consignee is on duty. Transportation is

not completed until a shipment has both arrived at its destination and has been delivered119. Barcode

Pass is not valid. On 30 July 2017 at 24:02 the Respondent had sent the Barcode Pass and sent it via

110 Glencore International AG v MSC Mediterranean Shipping Co SA [2017] EWCA Civ 365 para.27. 111 Access authority pass, p. 23 of Moot scenario, 112 The email from Applicant to Respondent dated 31 July 2017 at 4:21pm, p. 24 of Moot scenario, 113 Letter dated 22 July 2017 from Applicant to Respondent, p. 14 of Moot scenario, 114 The Charterparty, p.3 of Moot scenario 115 The email from Applicant to Respondent dated 28 July 2017 at 11:45pm, p. 19 of Moot scenario 116 Glencore International AG v MSC Mediterranean Shipping Co SA [2017] EWCA Civ 365 para.51 117 Ibid, para.51 118 Clause 8.1 ‘Transit Clause’, ICC 2009 119 Danciger v. Cooley, 248 U.S. 319, 327 (1919)


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email to the Applicant in order to be scanned at access gate 1B for the release of the Cargo. The

Applicant submits that the Barcode Pass cannot be accepted as a valid document for delivery of the

Cargo. In accordance with the Glencore case120, it is established that for a Barcode Pass to constitute

delivery it has to identify the Cargo and specify to whom the cargo is to be delivered.

71. The barcode which was sent to the Applicant by email121 was not valid because it did not identify the

Cargo. It was simply stating the word “cargo” which is an unambiguous term and thus it is evidenced

that the Barcode Pass did not meet the requirements set by the Court of Appeal in the Glencore case.122

In addition, there was no indication of the Applicant’s title in the barcode document whatsoever. If

the document carrying the barcode is examined closely it is obvious that there was no clarification as

to who the recipient of the Cargo was. No reasonable person looking at this document can infer the

identification of either the Cargo or the person of whom is supposed to collect the Cargo123.

72. In addition, based on the Glencore case, the Court of Appeal rejected the argument of the ship-

Respondent (Respondent) claiming that the provisions of the pin codes constituted a delivery order. It

was held that in order to be a valid delivery order, the parties must be taken to have been referring to

a ship’s delivery order as defined in Section 1(4) of the COGSA 1992124. This Section provides that a

ship’s delivery order contains an ‘undertaking’ which is either given under or for the purposes of a

contract for the carriage by sea of the goods to which the document relates, or of goods which include

those goods and is an undertaking by the carrier to a person identified in the document to deliver the

goods to which the document relates to that person. By reference to COGSA the Court of Appeal in

the aforementioned case125 it was held that the essential feature of a delivery order must contain an

‘undertaking’ given by the carrier. As it can be understood, clearly the barcode did not contain any

‘undertaking’ given by the Respondent. The Barcode Pass simply stated that delivery of this access

authority pass constitutes delivery of the Cargo.

F. DEMURRAGE DID NOT ACCRUE

1. Deviation was not based on Force Majeure

120 Glencore International AG v MSC Mediterranean Shipping Co SA [2017] EWCA Civ 365 121 Access authority pass, p. 23 of Moot scenario, 122 [2017] EWCA Civ 365 para 60. 123 Access authority pass, p. 23 of Moot scenario, 124 S.1(4) Carriage of Goods by Sea Act 1992 125 [2017] EWCA Civ 365 para


27

73. As stated above, deviation126 was not a force majeure event but was result of unseaworthiness127 of

The Vessel and failure of its equipments during solar flares for more than four hours due to the

Respondent’s faulty equipments. The unseaworthiness due to the unavailability of maps and failure

of equipments during solar flares beyond four hours caused deviation. The cause of damage starts

from deviation and hence there is a casual link between the unseaworthiness and the deviation. The

deviation directly affected the arrival time at the Discharge Port which was agreed on 28 July 2017 at

19:00. If the Vessel would not have deviated, it would not have faced the storm and consequently

would not have waited 100 nautical miles outside the Discharge Port until 16:58 on 29 July.128

2. Delay is on account of Respondent under Clause 15 (b)

74. The Vessel had deviated unjustifiably from the direct route129 for the agreed Voyage. The deviation is

at first place wrongful and based on the unseaworthiness of The Vessel since the Respondent had not

abide with its legal obligations under article III, Rule 1 (a)130 to exercise due diligence to make the

vessel seaworthy. The news article in “The Cerulean Mail” stated in its publication dated 25 July 2017

citing official reports that systems were only down for four hours and only faulty equipments were

down for almost 20 hours.131

75. Under Clause 15 (a) of the Charterparty132, the Respondent must comply with the applicable

requirements of the Commonwealth of Australia Navigation Act 2012 (CANA 2012) and the

Regulations thereunder. Section 223 of CANA, 2012 provides for regulatory requirement of supplying

navigation charts of particular voyage. Failure to do so entails fault-based offence and civil penalty.

Fault based offence entails penalty in form of 12 months imprisonment along with 60 penalty units

while civil penalty entails 600 penalty units.

76. Thus the Respondent has breached Section 223 of the CANA 2012 as well as Article III, Rule 1 (a) of

the Hague Visby Rules by not doing due diligence and not ensuring that the navigational maps of the

Voyage is available before departing from the Loading Port.

126 Section I, this Statement of Claim, 127 Section III, this Statement of Claim, 128 Based on email sent by Owner to Claimant dated 29 July 2017 at 4:28 stating that Madam Dragonfly will berth in 30

mins. 129 Section I, this Statement of Claim, 130 Hague Visby Rules 131 The Cerulean Mail, article dated 25 July 2017, p. 35 of Moot scenario, 132 The Charterparty, p.8 of Moot scenario


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77. In view of the above, Clause 15(b) of the Charterparty133 will be applicable which provides the Vessel

is to comply with all the requirements and regulations for all ports and countries of call under this

Charterparty and delays will be on account of Respondent for failure to comply with regulations.134

78. As stated in Clause 15(b), time shall not count, and demurrage will not accrue during such period of

delay caused due to the Respondent’s violation of laws. Therefore, the Applicant will not be liable for

any demurrage accrued due to delays caused owing to Respondent’s breach of the Hague Visby Rules

and CANA 2012 and any cost incurred during the period of delays must be on Respondent’s account.

G. DAMAGES

1. The Applicant is entitled to Damages

79. The Applicant is entitled to actual damages arising from (A) breach of the terms of the Charterparty

(B) on account of the damaged Cargo (C) amount for the Replacement Coffee Payment.

(i) Damages due to the breach of the Charter Party terms: Late Delivery and

Damaged Cargo

80. Pursuant to the Charterparty, the Respondent was to depart the Port of Cerulean to the Port of

Dillamond via the most direct route. The Respondent has deviated making a stop at the Port of Spectre,

breaching the agreement not to deviate.135

81. The Applicant is entitled to USD15,750,000 on account of the damaged cargo. 75% of the Cargo was

delivered water-damaged and therefore could not be used or sold to any subsequent buyer.136

(ii) Damages for third party claims: Replacement coffee payment and settlement

payment

82. The damaged Cargo was deemed unusable for any subsequent buyer and more specifically, the Cargo

would be by no means accepted by the Third Party. In order for the Applicant to satisfy his obligations

with the Third party he required to source alternative less quality coffee at cost of USD8,450,000

(Replacement Coffee Payment).137

133 The Charterparty, p.8 of Moot scenario, 134 Ibid., 135 See, para 19 136 Points of Defence and Counterclaim delivered on behalf of the Respondent, p. 40 of Moot scenario, 137 Ibid.


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83. The Applicant is entitled to liquidated damages because the Respondent has prevented the Applicant

from performing his obligations under the third party contract. Had it not been for the breach of the

Respondent, the Applicant would not have made the Settlement Payment at the cost of USD5,000,000.

84. Based on the email on 19 July 2017138, the third party had threatened legal action should the Cargo

not arrive by the time agreed. Subsequently, a legal action arising from a breach of the Charterparty

for any delay was foreseeable.

(iii) The Applicant is entitled to Loss Profits

85. The Applicant is entitled to the anticipated return on profits on account of the Replacement Coffee.

The Applicant had to source alternative coffee of lower quality than the supplied Cargo. In

consequence, the Applicant is entitled to expenses for the alternative coffee at a cost of

USD9,450,000.139

(iv) Limitation of Liability

86. In current case, the Respondent shall be deprived of the limitation because of the fundamental breach

which it caused by unreasonable and unjustified deviation. This issue had been dealt with Hain

Steamship case140; if the deviation is unjustified, the Respondent is not entitled to limit its liability.

Therefore, because of Respondent’s fundamental breach of the Charterparty, any limitation of liability

should be denied.

87. As provided by HVR article IV(5)(a), unless the nature and value of such goods have been declared

by the shipper (Applicant) before shipment and inserted in the bill of lading, neither the carrier

(Respondent) nor the ship (Madam Dragonfly) shall in any event be or become liable for any loss or

damage to or in connection with the goods in an amount exceeding the equivalent of 666.67 units of

account per package or unit or units of account per kilo of gross weight of the goods lost or damaged,

whichever is the higher. Even though HVR clearly states “declaration of value inserted in bill of

lading” it is clear that the Parties had decided tacitly not to issue a bill of lading. It is obvious that in

the current case parties intention was not to issue a bill of lading.

138 This internal memo dated 19 July 2017, p. 1 of Moot scenario, 139 The invoice dated 31 July 2017 sent by Moonbucks Ltd., p.28 of Moot scenario

140 Hain Steamship Company Ltd v Tate & Lyle Ltd [1936] 2 All ER 597; Jones v Flying Clipper (1954) 116 Fed. Supp

386; Encyclopaedia Britannica v Hong Kong Producer [1969] 2 Lloyd’s Rep. 536; Foscolo, Mango v Stag Line (1932) 41

LILR 165.


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88. In addition; Even though HVR, requires a ‘bill of lading’ to be issued, yet in Pyrene and Scindia Court

held that it is irrelevant whether a ‘bill of lading’ was issued or not as to the declaration of value.

Therefore, in this particular case it should be decided that declaration of value is indeed valid and the

Respondent should be held liable to the full extent of the damages.

89. Without prejudice to the arguments above, Box 4 of Charterparty141 the Cargo is stated as 1000 bags

of 70 kilograms (kgs). Because it is stated expressly as “bags” each of 1000 bags should be considered

as a separate package142 thus, limitation of liability should be calculated in terms of package, which

set out in HVR as being the higher limitation of 666.67 SDR per package.

90. Consequently, the Respondent’s claims regarding limitation of liability should be rejected if not;

limitation of liability should be considered in accordance with package limitation.

2. REPLY TO COUNTER CLAIM

(i) The Applicant is not liable for their Own Damages for the Hull

91. The Respondent’s crew lifted the anchor but it got tangled on a coral bed which then led to damages

to the hull.143 Such damages which might be caused either negligence of Respondent’s employee or

the unfitness of The Vessel itself is not relevant to the Applicant. It is very common that State agency

is the most appropriate authority to determine and regulate designated anchorages144 and the anchorage

locations are often designated by authority. The Master had anchored at the time where they have been

instructed by the Port Authorities to wait for berthing, yet it is debatable whether the anchorage

location of the Vessel was the designated one. The Master should have anchored where the competent

authority said the Master could anchor. Additionally, before anchoring, the Master must take into

account external factors such as weather, the capacity of the Vessel, the depth of water, and the nature

of seabed. Therefore, in this case, the Master just anchored the Vessel to avoid the storm but without

considering these information.145

92. The Respondent was stuck hundred (100) nautical miles outside the port on the instructions of port

authorities of Discharge Port. The Discharge Port authority advised the Applicant to stay there because

141 The Charterparty, p.3 of Moot scenario 142 Kyokuyo Co Ltd v AP Moller-Maersk A/S (t/a Maersk Line) [2017] EWHC 654 (Comm) 143 The email from Respondent to Applicant dated 29 July 2017 at 8:58am, p. 20 of Moot scenario, 144 Anchorages- Jurisdictional responsibility for anchorages in Queensland, Department of Transport and Main Road, p.1. 145 ‘International Association of Classification Societies on requirements concerning mooring, anchoring, and towing,’ See,<

https://www.myseatime.com/blog/detail/the-ultimate-actionable-guide-of-anchoring-a-ship>

https://www.myseatime.com/blog/detail/the-ultimate-actionable-guide-of-anchoring-a-ship


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of the congestion146 caused as a result of the storm. As mention in preceding paragraph, the

Respondent’s employee namely the Master and its crew dropped the anchor at its discretion without

taking into account the suitability of location, and did not make sure that the place which the Port

authorities instructed the ship to stay was a designated anchorage area. The Respondent’s employee

failed to give proper judgement about location as well as he neglected in lifting the anchor. The anchor

got tangled on a coral bed and led to damages on the hull. Therefore, such loss to the hull is wholly

caused from the fault of Respondent’s employee, not relevant to the Applicant.

93. Article III (3) of HVR stipulates that “the shipper shall not be responsible for loss or damage sustained

by the carrier or the ship arising or resulting from any cause without the act, fault or neglect of the

shipper, his agents or his servant”. Such damage to the hull is not caused by the Charterer, or its agent

or its servant therefore, the Applicant is not responsible for such damage.

94. In addition, damage to the hull is not considered to be a damage arising in General Average since

according to Rule A of The York-Antwerp Rules 2004 (YAR 2004), “there is general average act

when and only when any extraordinary sacrifice or expenditure is intentionally and reasonably made

or incurred for the common safety for the purpose of preserving from the peril the property involved

in a common maritime”. The Rule means that if the loss falls within the definition of General Average,

the Respondent will have the right of contribution from the Applicant. However, in present case, the

damage to The Vessel’s hull is caused by the negligence in carrying out the their duty, not caused by

action to save the property or Cargo of the Claimant. Therefore, the Applicant is under no obligation

to pay for any general average contribution to the Respondent.

(ii) The Applicant is not Liable for the Agency Fees at the Port of Spectre

95. According to the email on 28 July 2017147, the Respondent admitted that the reason for deviation to

Spectre was the non-availability of map for Voyage. The Vessel only had a map of the previous voyage

on board; at the port of Spectre. As stated in the above submissions, deviation is not due to a force

majeure event and therefore deviation of the Vessel is not reasonable or justified.

96. Since the deviation itself is a breach of law and a contractual breach under the Charterparty, the

Agency fees entailed at Spectre cannot be made payable since such fees have arisen due to a breach

while the Applicant is the innocent party. Clause 12 of the Charterparty mentions only the agents at

146 The email from Respondent to Applicant dated 29 July 2017 at 8:58am, p. 20 of Moot scenario, 147 The email from Respondent to Applicant dated 27 July 2017 at 7:17am, p. 18 of Moot scenario,


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port of discharge and port of loading. It makes no reference to agents at any intermediate port,

therefore any fee relating to agent at intermediate port is disregarded because it is not within the

contract and accordingly the Applicant does not have to pay for it. The only situation the Respondent

could employ the agent other than one at discharge and loading port is the case the ship in distress.

Accordingly, if the ship calls at any port or ports on passage in distress, the Master is to advise the

Applicant in Cerulean, who will advise the name of Claimant’s Agent at such port. In this case,

Respondent’s Vessel called at Spectre port not because of distress, but lack of map, therefore the

Applicant is not liable for such unexpected fee, even if the Vessel had deviated because of distress,

the Applicant is still not liable for paying the Agency fees due to the fact that the agent at Spectre is

not one appointed by the Charterer.

(iii) The Applicant is not Liable for the Fees of using the Electronic Access System at

Discharge Port

97. In the present case, there is no agreement in relation to the Electronic system for delivery under the

Charterparty, in fact the Applicant was unaware that such system would have being used by the

Respondent. The Respondent unilaterally used the electronic system without seeking confirmation

from the Applicant. Also, the electronic system generating the Barcode Pass does not guarantee the

security of the cargo, because anyone who happens to get access to the Barcode can gain possession

of the entire Cargo. The Charterer submits that the use of such electronic system might make the Cargo

prone to a theft incident.

98. As ruled in Glencore148, if the electronic system release has taken place, the contracting parties must

agree in using it. That means if the carrier (the Respondent) would like to use it for delivery, it needs

the unequivocal consent of the Cargo Respondent (the Charterer). If the Applicant is not aware about

the existence of electronic system, that entails that the Respondent could not have fulfilled its

obligations to deliver the Cargo.

99. Therefore, the Applicant is not liable for the use of electronic access systems at the Discharge Port.

148 Glencore International AG v MSC Mediterranean Shipping Co SA [2017] EWCA Civ 365 para.51.


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PART IV: PRAYERS FOR RELIEF

In light of the above submissions of facts and law, the Charterer humbly submits for grant of following

reliefs:

a. Declaration that Respondent has breached the terms of Charterparty;

b. An award for damages in the amount of USD30,200,000 comprising:

i. USD 15,750,000 on account of the damaged Cargo;

ii. USD 9,450,000 for the Replacement Coffee Payment;

iii. USD 5,000,000 on account of the Settlement Payment; and

b. The Applicant holds a maritime equitable lien over the The Vessel ;

c. Declaration that the limitation of liability does not apply;

d. Declaration that Applicant is not liable for demurrage;

e. An order for costs

Further, the Respondent also prays for any equitable remedy that the Tribunal deems fit.

Documents

19th ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION … · 19th annual international maritime law arbitration moot 2018 in the matter before london maritime arbitrators association