19th ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION …€¦ · Team 26 Memorandum for the Respondent 1 19th ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2018 IN THE MATTER BEFORE

Team 26 Memorandum for the Respondent

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19th ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2018

IN THE MATTER BEFORE LONDON MARITIME ARBITRATORS ASSOCIATION

MEMORANDUM FOR RESPONDENT

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


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TABLE OF CONTENTS

ABBREVIATIONS

A. LIST OF AUTHORITIES AND REFERENCES

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. LAWS OF LMAA IS THE APPLICABLE LEX ARBITRI

PART II: ARGUMENTS ON JURISDICTION

A. THE ARBITRAL TRIBUNAL DOES NOT HAVE JURISDICTION

1. SCOPE OF REFERENCE- PRE-CONDITION OF EXPERT DETERMINATION IS NOT

FULFILLED

2. THE CLAIMS FALL UNDER THE CONTRACTUAL DEFINITION OF ‘TECHNICAL

MATTERS’

3. CHOICE OF ROUTE FALLS UNDER DEFINITION OF TECHNICAL MATTERS

B. TIME LIMITATION

PART III: ARGUMENTS ON MERITS

A. DEVIATION

1. NO BREACH OF THE DUTY NOT TO DEVIATE

(i) DEVIATION WAS REASONABLE AND JUSTIFIED: LIBERTY CLAUSE


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(ii) DEVIATION UNDER HAGUE VISBY RULES

(iii) DEVIATION UNDER COMMON LAW

2. CAUSATION

3. DEVIATION IS WAIVED

B. FORCE MAJEURE

1. OCCURRENCE OF SOLAR FLARES AND THE STORM ARE ‘UNFORESEEN’

EVENTS

2. DUE DILIGENCE EXERCISED BY THE RESPONDENT

C. SEAWORTHINESS OF THE VESSEL: RESPONDENT DID NOT BREACH THE

CONTRACTUAL DUTY OF SEAWORTHINESS

1. RESPONDENT DID NOT BREACH THE CONTRACTUAL DUTY OF

SEAWORTHINESS

D. CARGO ON BOARD THE VESSEL: DAMAGE OF THE CARGO NOT CAUSED BY

“UNSEAWORTHINESS”

1. DAMAGE TO THE CARGO WAS NOT CAUSED BY ‘UNSEAWORTHINESS’

E. MARITIME LIEN

1. THE APPLICANT IS NOT ENTITLED TO A LIEN OVER THE VESSEL

2. THE APPLICANT CANNOT RECEIVE THE BENEFIT OF A MARITIME LIEN OVER

THE VESSEL EXERCISED BY THE CREW

3. THE APPLICANT DID NOT VALIDLY EXERCISE A MARITIME LIEN OVER THE

VESSEL

F. DELIVERY

1. BARCODE PASS CONSTITUTES DELIVERY

G. DEMURRAGE IS ACCRUED

1. DEVIATION AND DELAY WERE AS A RESULT OF FORCE MAJEURE

2. CALCULATION OF LAYTIME


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(i) LAYTIME STARTS WHEN VESSEL ARRIVES AT PORT - CLAUSE 8(C)(II)

(ii) LAYTIME ENDS AFTER 0.5 WWD

3. DEMURRAGE IS CHARGED AS PER CHARTERPARTY

H. DAMAGES

1. THE APPLICANT IS NOT ENTITLED TO DAMAGES

2. THE RESPONDENT IS ENTITLED TO DAMAGES

(i) DAMAGE TO THE HULL: GENERAL AVERAGE INCIDENT

(ii) AGENCY FEES AT THE PORT OF SPECTRE

(iii) ELECTRONIC RELEASE SYSTEM (‘THE BARCODE PASS’) AT THE

DISCHARGE PORT

I. LIMITATION OF LIABILITY

1. UNDER THE HAGUE VISBY RULES

2. INVALID DECLARATION OF VALUE

PART IV: PRAYERS FOR RELIEF


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LIST OF ABBREVIATIONS

Applicant 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.

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

authority pass to take delivery of goods from Discharge port through

electronic access system at Discharge Port.

CANA 2012 Commonwealth of Australia Navigation Act 2012

Cargo The carriage of 70000 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.

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

amended

Crew Crew members of the Madam Dragonfly vessel.

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.


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Respondent Dynamic Shipping LCC as the Shipowners 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 chartered under the Charterparty

YAR 2004 The York-Antwerp Rules 2004


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LIST OF AUTHORITIES AND REFERENCES

A. Articles and books

Cooke et al Voyage Charterers (Informa Law, 4th edition, 2014) [17.25].

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

J. F. Wilson, Carriage of Goods by Sea, 7th edt., p.16.

M. Tsimplis, ‘Maritime Law’ Textbook 4th Edition p.514

Scrutton on Charterparties and Bill of lading, Sweet & Maxwell

Y. Baatz, Maritime Law, 4th edt., p. 144

B. Case Law

Albemarle Supply Co Ltd v Hind & Co [1928] 1 KB 307, 318 (Scrutton LJ)

Alfred C Toepfer Schiffahrtsgesellschaft GmbH v Tossa Marine Co Ltd (The Derby) [1985] 2

Lloyd’s Rep 325

Arnold v Britton & Others [2015] UKSC 36

Atlantic Paper Stock Ltd. v. St. Anne-Nackawic Pulp and Paper Company Limited, [1976] 1 S.C.R.

580

Caspian Basin Specialised Emergency Salvage Administration v Bouygues [1977] 2 Lloyd’s Rep.

507

Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, para 14

E. L. Oldendorff & Co. G.M.B.H. v. Tradax Export S.A. (The Johanna Oldendorff), [1974] A.C.

479 ; [1973] 2 Lloyd's Rep. 285

Glencore International AG v MSC Mediterranean Shipping Co SA [2017] EWCA Civ 365 para.57

Hain SS Co v Tate & Lyle [1936] 2 All ER 597


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

Matsoukis v Priestman & Co. [1915] 1 K.B. 681

Maxine Footwear Co. v Canadian Government Merchant Marine [1959] A.C. 589

Navalmar UK Ltd v Kale Maden Hammaddeler Sanayi Ve Ticart As (The Arundel Castle) [2017]

EWHC 116 (Comm)

Photo Production v Securicor Transport [1980] AC 827

Rio Tinto v Seed Shipping (1926) 24 Lloyd's Rep 316

Robertson v French (1803) 4 East 135

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

Shore v. Wilson (1842) 9 Cl. & F. 355, 555; Smith v. Doe (1821) 3 B. & B. 473, 550, 602

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

The Arundel Castle, Supra note…

The Happy Ranger [2002] 2 Lloyd’s Rep 364

The Kapitan Petko Voivoda [2003] 2 Lloyd’s Rep.

The Petone [1917] P 198; The Leoborg (No 2) (fn 112)

The Teutonia (1872) LR 4 PC 171

C. Legislation

1976 Convention on Limitation of Liability for Maritime Claims (LLMC)

Carriage of Goods by Sea Act, 1991

Hague Visby Rules

York Antwerp Rules 2004


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D. Other

Arbitration Rules of the London Maritime Arbitrators Association (LMAA)


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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 1,000 70

kilograms (kgs) bags of coffee beans (the ‘Cargo’), packed in four containers (each containing 250

bags), from Cerulean to Dillamond (“the Charterparty”).1

2. The containers which the Cargo was transported were water proofed as instructed by the Applicant.

The Respondent guaranteed that the waterproofing of the containers was suitable for short voyages

up to five days.2

3. On 24 July 2017, the Vessel departed from the port of Cerulean (“the Loading Port”) towards the

port of Dillamond (“the Discharge Port”). The delivery of The Cargo was agreed to be completed

by 19:00 on 28 July 2017.3

4. The Respondent received the dock receipt of the Cargo, including the number of ‘4 containers’ and

specifying the state of the Cargo: ‘No damage observed on receipt’.4

5. On 26 July 2017, contact was re-established after the absence of any communication between

Respondent and the Vessel and Applicant for 17 hours. Accordingly, the Respondent informed the

Applicant via email about the non-communication with the Vessel.5

6. During the knock down of the navigational communication systems due to solar flares, the Vessel

had deviated to the port of Spectre because the crew had noted that The Vessel had passed the port

of Spectre approximately 1,000 nautical miles to the West. The Respondent reported the deviation

to Spectre via sending an email to the Applicant dated on 27 July 2017 at 7:17.6

7. On 27 July 2017, the Vessel had departed from Spectre towards the Discharge Port.7

1 Box 4, The Charterparty, p. 3 of the Moot Scenario.

2 Letter dated 22 July 2017 from the respondent to the Applicant, p.14 of the moot scenario.

3 Box 9, The Charterparty dated 22 July 2017, p. 3 of the Moot Scenario 4 The Dock receipt, p.16 of the Moot scenario. 5 Email from the Respondent to the Applicant dated 26 July 2017 at 2:32pm, p.17 of the moot scenario. 6 Email from the Respondent to the Applicant dated 27 July 2017 at 7:17am, p.18 of the moot scenario. 7 Ibid.,


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8. In the evening of the 28 July 2017, a massive storm hit the Dillamond area where the Discharge

Port is located, consequently rendering the vessel unable to proceed past its location. The storm was

sudden and was not picked up on radars until approximately 45 minutes before it hit Dillamond with

rain, hail and severe winds which ripped out trees and upturned cars.

9. During the storm, the Vessel’s anchor was dropped to avoid the storm but when an attempt was

made to lift it, it tangled on a coral bed and there was a damage to the hull.8

10. On 29 July 2017, since 7:00, the Vessel was located -100 nautical miles out from Dillamond after

being instructed by the Discharge Port to wait for berthing due to port delays after the storm. The

Applicant was informed about the unavailability of berth at the Discharge Port.9

11. On 29 July 2017, the Vessel berthed at 17:00 as communicated to the the Applicant via email at

16:28. In this email, the Applicant was also informed that the expected delivery of the cargo would

take place approximately two hours after berthing.10

12. On 29 July 2017 at 20:42, the Cargo was delivered to the Applicant. Since the Applicant was not

available to collect delivery of the Cargo at the time of discharge at the Discharge Port, the

Respondent made use of electronic access systems and sent a non-negotiable document with the

barcode access (“The Barcode Pass”).11

13. The Respondent contends in the Points of Defence that it should not held liable for any delay of the

cargo supply as the delay was caused due to two events of force majeure namely solar flares and

storm.12

14. The Respondent states that there was no water damage at the time of the delivery at the Discharge

Port and any damage claimed would have occurred after delivery.13

8 Email from the Respondent to the Applicant dated 29 July 2017 at 8:58am, p.20 of the Moot scenario. 9 Ibid.

10 Email from the Respondent to the Applicant dated 29 July 2017 at 4:28pm, p.22 of the Moot scenario. 11 Authority access pass, p. 23 of the Moot scenario.

12 Point of Defence and counterclaim, p. 40 of the moot scenario

13 The points of Defence and Counterclaim on behalf of the Respondent, p. 41 of the Moot scenario.


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15. On 1 August 2017 the Applicant served notice of breach of the Charterparty agreement and pressed

for the payment of USD30,200,000 from the Respondent by 7 August 2017 for the damage allegedly

caused during the Voyage from the Loading Port to the Discharge Port. 14

16. The Respondent denies all liability in relation to the delays and damages caused to the Applicant as

stated in the Statement of Claim.15

17. The Applicant is in breach of its obligations under the Charterparty as it had failed to pay the

following amounts due, based on the invoice sent by the Respondent to the Applicant through email

dated on 7 August 2017 at 3:40pm 16:

• Freight (USD125,000/container): (USD 500,000)

• Agency fee at Port of Spectre: (USD75,000)

• Agency fee at Discharge Port: (USD50,000)

• The cost of repairs to damage caused to the vessel due to adverse weather conditions:

(USD875,000)

• Demurrage: (at the rate of USD20,000/hour- Total: USD100,000) and

• The Use of electronic access system at the Discharge Port: (USD10,000).

THE CHARTERPARTY CHART

This diagram depicts the contractual relationships between the parties for the purpose of the following

submissions.

14 The demand Notice dated 1 August 2017, p. 27 of the Moot scenario

15 The points of Defence and Counterclaim on behalf of the Respondent, p. 41 of the Moot scenario

16 Email from the Respondent to the Applicant dated 7 August 2017 at 3:40pm, p.32 of the Moot scenario


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PART I: ARGUMENTS ON APPLICABLE GOVERNING LAW

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

a) Pursuant to Clause 28 of the Charterparty, the governing substantive law is stated to be that of New

South Wales, Australia (NSWA). Clause 28 of the Charterparty also contains a clause paramount

which states: “Owners to have benefit of Article 4(5).”17

b) It must be noted that the Carriage of Goods by Sea Act, 1991 (GOGSA 1991) under Part 2 seeks

the application of the amended Hague Rules. Under Section 8, GOGSA 1991 the amended Hague

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

(HVR) are to have the force of law in Australia subject to Section 10 of GOGSA 1991. 18

18. Applicable lex arbitri

The Parties agreed under Clause 27 of the Charterparty to apply the Arbitration Rules of the London

Maritime Arbitrators Association (LMAA). Accordingly, the lex arbitri will be that of the LMAA

Terms 2017 which is English law.

17 HVR, Art. IV (5)

18 Section 10, COGSA 1991, Including amendments up to: Act No. 126, 2015


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PART II: ARGUMENTS ON JURISDICTION

19. The Arbitral Tribunal does not have Jurisdiction to hear the claims based on “Technical Matters”

for the reasons stated below. Further, as stated above the lex arbitri applicable is that of LMAA

Arbitration Rules and in view of the same procedural law of England and Wales namely the

Arbitration Act 1996 will apply. The ruling of the Tribunal on its jurisdiction is not binding on any

subsequent review of its determination by the court under Sections 32, 67 or 72 of the Arbitration

Act 1996.

A. Ousting clause is illegal

20. The Australian modified Hague Visby rules definition of “Sea carriage document” under article

1(1)(g)(iv) includes “a non-negotiable document (including a consignment note and a document of

the kind known as a sea waybill or the kind known as a ship's delivery order) that either contains or

evidences a contract of carriage of goods by sea.” The literal definition includes charterparties as

“sea carriage documents”; charterparties are not negotiable and certainly contain a carriage by sea

contract. This candid view appealed to court in The Blooming Orchard Case.

21. Pursuant to clause 11(2), any agreement which ousts or tries to preclude or limit the jurisdiction of

the Commonwealth court or of a State or Territory in respect of a bill of lading (or similar document)

relating to carriage of goods according to the Australian law is illegal. Although section 11(3)

provides exception to agreement clauses which precludes or limit court jurisdiction, it is conditional

upon arbitration being conducted in Australia. Thus clause 27(e) which restricts parties from

commencing legal proceedings is illegal and inoperative as per section 11(2) and 11(3) of the

GOGSA 1991. Therefore, Respondent humbly submits that accordingly, this Tribunal does not have

jurisdiction in respect of cargo claims made by Applicants.

B. Scope of Reference – The pre-condition of expert determination is not fulfilled


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22. Assuming, the above contention is not recognized, and Tribunal still adjudicate in favor of

jurisdiction on above ground, the Respondent submits that Tribunal has limited scope as the

“technical matter” was agreed to be determined by expert determination before applying for

arbitration. The scope of reference stated in clause 27 (a)19 is to be read with an exception provided

under clause 27 (d)20 Further, clause 27 (e)21 provides for complying with clause 27(d) before going

to Tribunal.

23. Clause 27 (g)22 defines the term “Technical matter” as “matters surrounding the technical aspects

of the performance of the charterparty, such as the vessel’s route, …. which can reasonably be

considered to be within the expert technical knowledge of a Master Mariner.” Pursuant to above sub

clauses, it is comprehensible on plain reading that “technical matters” which is defined in clause

27(g) is not arbitrable23 or not subject to court’s jurisdiction24 without first referring dispute for

expert determination. Therefore, “technical matters” were outside the reference of an arbitral

tribunal until the condition precedent was complied with. The condition precedent under clause 27

(e) must therefore be fulfilled before approaching the Tribunal i.e. the expert determination must be

obtained in technical matters.

C. The Claim falls under the contractual definition of “Technical Matters”

24. In the present case, the term ‘technical’ does not only mean “Technical” in general parlance as the

meaning of the term “technical matters” is already defined under the Charterparty. When the term

has been defined in the contract the meaning is to be considered in reference to the meaning defined

in the contract25 and must take precedence over general ordinary meaning and must be to be

understood in their plain, ordinary and popular sense.26

19 Clause 27 (a), The Charterparty, p.12 of Moot scenario

20 Clause 27 (d) Ibid,

21 Clause 27 (e), Ibid,

22 Clause 27 (g), Ibid,

23 Clause 27(g), Ibid,

24 Clause 27 (e), Ibid,

25 Shore v. Wilson (1842) 9 Cl. & F. 355, 555; Smith v. Doe (1821) 3 B. & B. 473, 550, 602

26 Robertson v French (1803) 4 East 135


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25. Therefore, it is submitted by the Respondents that the intention of the Parties must be inferred from

the contractual provisions which clearly define “technical matters”. Further, since the meaning

includes “vessel’s route” it must be interpreted in the light of its natural and ordinary meaning and

not in a commercial parlance as the “employment of vessel”. Therefore, the claims are held to fall

under “technical matters”.

D. Choice of route falls under definition of ‘Technical matters’

26. Pursuant to above submissions, the Respondent submits that the Vessel’s route and any disputes

arising from the deviation and later circumstances must be construed as a technical matter under

clause 27 (g) and be subject to expert determination. Accordingly, the formation of the Tribunal was

premature and without fulfillment of pre-conditions required to be performed before approaching

arbitration. Thus, the Tribunal does not have jurisdiction to adjudicate on the Claims falling under

Clauses 27 (d) and (e)27.

E. Time Limitation

27. The Counterclaim of the Respondent is brought within the time bar of 6 months under clause 22 of

the Charterparty28 for freight claims as the notice was sent on 1 August 201729 and hence not time

barred. The Tribunal was constituted on 7 September 201730.

PART III: ARGUMENTS ON MERITS

A. DEVIATION

1. No breach of Duty not to deviate

28. The Applicant’s arguments regarding breach of duty not to deviate must be dismissed. Deviation

has been identified as an ‘intentional and unreasonable change in the geographic route of the

voyage’.31 In accordance with this definition, deviation must both be intentional and unreasonable.

27 Clause 27 (d) and (e), The Charterparty, p.12 of Moot scenario

28 Clause 22, The Charterparty, p.11 of Moot scenario

29 The demand Notice dated 1 August 2017, p. 27 of the moot scenario.

30 Procedural order No. 2, para 23,

31 Tetley p. 1812.


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However, in this case it is apparent that the duty not to deviate has not been breached by the

Respondent for a number of reasons:

(i) Deviation was reasonable and justified: Liberty Clause

29. Under the current circumstances The Vessel lost connection due to solar flares which knocked out

the communication and satellite systems for 17 hours.32 It is completely illogical for the Applicant

to argue that there was no danger to the Vessel or to the Cargo. The lack of communication and

satellite systems caused the Vessel to lose all contact. In order to prevent any damage to the Cargo

and The Vessel, the Respondent had to change its route from The Discharge port to the port of

Spectre. This decision taken by the Respondent is justified by the Charterparty itself as it contains

a Liberty Clause [Clause 17].

30. In reference to Clause 17 of the Charterparty, as agreed between the Applicant and the Respondent

on 22 July 2017, the Respondent had liberty to deviate for the purpose of saving life or property,

including The Vessel itself. Clearly, this decision to make a stop at Spectre in order to secure the

Cargo and The Vessel has been taken in the interest of the Applicant in accordance with the Liberty

Clause. Thus, it is obvious that no unreasonable deviation has taken place.

31. By adding a liberty clause into the Charterparty, the Parties’ intention was to give the Respondent

room to make decisions in case of arising dangers.

(ii) Deviation under The Hague-Visby Rules

32. Article IV, Rule 4, of The Hague-Visby Rules (“HVR”) states that “Any deviation in saving or

attempting to save life or property at sea or any reasonable deviation shall not be deemed to be an

infringement or breach of these Rules or of the contract of carriage, and the carrier shall not be liable

for any loss or damage resulting therefrom.”

33. In accordance with the HVR, which are incorporated into the Charterparty by the Clause Paramount

under Clause 28, as long as deviation is reasonable, it shall not be deemed to be a breach of the

contract. As mentioned in detail above, the change of route was the only choice the Respondent had

32 Email from the Respondent to the Applicant dated 27 July 2017 at 7:17am, p.18 of the moot scenario ,


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for the purposes of protecting the Cargo and the Vessel. Because the Respondent had no knowledge

when solar flares would stop and systems come back on. As to knowledge of the Respondent,

systems would be gone for days even weeks.

(iii) Deviation under Common Law

34. Even in situations where the HVR were not applicable, the Respondent could have relied on the

justification for deviation at common law namely that deviation was made in order to avoid danger

to the ship or to her cargo.

35. Further, the Respondent argues that the deviation is justified although the risk to be avoided affects

only the ship and not the cargo.33 However, the Respondent, by changing the route aimed to keep

both the Vessel and Cargo safe.

36. There will be no breach of contract when the ship strays off track due to other intervening factors

such as a storm. 34 Therefore, even if the Charterparty had not expressly stated the liberty clause,

this precedent would have still been sufficient to advocate that the Respondent was not in breach of

the Charterparty.

2. Causation

37. Without prejudice to the above argument of deviation; in spite of the Applicant’s arguments

regarding the damages for the breach of the Charterparty, causing them a USD 5,000,000

claim(“Settlement Payment”) in respect of the Applicant’s liability to Coffees of the World Ltd

(“The Third Party”) and the USD 9,450,000 (“Replacement Coffee Payment”) claim in respect of

the replacement coffee, there is no link of causation evidenced by the Applicant that the deviation

caused them the said damage. All of the damage was caused by events which cannot be attributable

to the Respondent.

3. Deviation is waived

33 The Teutonia (1872) LR 4 PC 171.

34 Rio Tinto v Seed Shipping (1926) 24 Lloyd's Rep 316.


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38. Without prejudice to the above arguments, even if the deviation was not justified, the Applicant had

ignored the deviation and treated the Charterparty as still subsisting. Instead of terminating the

Charterparty, the Applicant chose to keep it alive. Therefore, the Charterer is deemed to have waived

its rights and remedies and is restricted to a remedy of damages for any loss attributable to the

deviation.35

B. FORCE MAJEURE

1. Occurrence of Solar Flares and the Storm are ‘Unforeseen Events’

39. According to Clause 17 of the Charterparty Parties are exempted for any Force Majeure Event.

40. Further, Clause 17 (b) includes this events ‘unforeseen weather events, acts of God, accidents, fire,

explosions, flood, landslips, ice, frost or snow’ as Force Majeure. Therefore, the Respondent is not

responsible for the loss caused to the Applicant because the delay was caused due to the occurrence

of two (2) unforeseen events, which were beyond the control of the Respondent and thus fall under

the ‘force majeure clause’.

41. The first event of force majeure was the emission of solar flares by the sun, which knocked out the

communication systems of the the Vessel for 17 hours.36 It would be rational to say that the solar

flares were an unforeseen event and beyond the control of the Respondent.

42. In addition, the Respondent took all reasonable steps to overcome the situation and in order to do

so the Respondent deviated to Spectre because the Vessel only had a hard copy of the maps to

Spectre on board.37

43. The Vessel was stuck hundred (100) nautical miles out of the Discharge Port since 7:00 on 29 July

2017 but due to the storm the discharge port was closed for around twelve(12) hours and there was

nowhere for the Vessel to berth.38 The storm was described as “once in a lifetime” at the Dillamond

35 Suisse Atlantique Societe d'Armement SA v NV Rotterdamsche Kolen Centrale [1967] 1 A.C. 361; Hain SS Co v Tate &

Lyle [1936] 2 All ER 597.

36 Email from the Respondent to the Applicant dated 27 July 2017 at 7:17am, p.18 of the Moot scenario ,

37 Ibid.,

38 Email from the Respondent to the Applicant dated 29 July 2017 at 8:58am, p.20 of the Moot scenario.


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Times which had caused a complete shut down for the airports for three (3) hours and ports for

around twelve (12) hours, and thus it cannot be described as a foreseen event.39

44. In order to attract the force majeure Clause40 the event must clearly be beyond the control of the

contracting parties (here the event was unforeseeable and thus beyond the control of the Respondent)

and the event must render performance of the contractual obligations impossible.41 The occurrence

of solar flares and the storm made the performance of the contractual obligation to take the most

direct route to the Discharge Port42 impossible and it was only after the discontinuance of these

events that the contractual obligation could have been performed in the best possible way. As soon

as the flares effect disappeared, the Vessel was en route to the Discharge Port.43

2. Due diligence exercised by the Respondent as required by Clause 17

45. The Vessel was properly manned and maintained and the Respondent was diligent on his part. The

Vessel had to deviate due to the failure of the communication systems, which was damaged by the

solar flares. This failure is only attributable to the occurrence of an unforeseen event since the Vessel

left the Loading Port in a perfectly seaworthy state and if there had not been any intervention of the

solar flares the communication system would not have failed. Where the Respondent is diligent on

his part in maintaining the vessel, the breakdown of a machinery is deemed to come within the force

majeure clause.44

46. The solar flares emitted by the sun did not only adversely affect the communication system of The

Vessel, but they also knocked out the global communication system and that was completely

unforeseen.45 The seaworthiness of the Vessel and the effect of the solar flares can be supported by

the fact that the Vessel’s communication system did not require any repair and came back online

when the effect of the solar flares died down.46

39 The Dillamond Times dated 29 July 2017, p.21 of the Moot scenario.

40 Clause 17, The Charterparty,

41 Atlantic Paper Stock Ltd. v. St. Anne-Nackawic Pulp and Paper Company Limited, [1976] 1 S.C.R. 580

42 Email from the Respondent to the Applicant dated 27 July 2017 at 7:17am, p.18 of the moot scenario ,

43 Email from the Respondent to the Applicant dated 28 July 2017 at 4:58pm , p. 19 of the moot scenario,

44 Matsoukis v Priestman & Co. [1915] 1 K.B. 681

45 The Cerulean Mail dated 25 July 2017, p.35 of the moot scenario,

46 Email from the Respondent to the Applicant dated 28 July 2017 at 4:58pm , p. 19 of the moot scenario


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C. SEAWORTHINESS OF THE VESSEL

1. Respondent did not breach the contractual duty of Seaworthiness

47. The Respondent obliged to provide the ship “warranted tight, staunch and strong and in every way

fitted for the Voyage”47. This Clause actually express the term of seaworthiness, in which the

Respondent has a duty to provide the ship in a seaworthy state. The wording also emphasizes that

the Vessel must be in every way fitted for the service and this was elaborated The Derby by stating

that the owners were bound to provide a vessel which was physically fit to encounter all such perils

as would be reasonably foreseeable. 48

48. Furthermore, a seaworthy vessel is defined in Sadler v. Dixon49 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’. Under

article III (1) of HRV also places the obligation of seaworthiness on the Respondent “(a) make the

ship seaworthy…fit and safe for their reception, carriage and preservation”. In this case, the

Respondent exercised due diligence to make the ship seaworthy. It could be seen from looking the

fact of the case, solar flares could be considered as force majeure because the emission of the solar

flares were unforeseen and beyond the control of the parties. In the Newspaper of the Cerulean Mail

on 25th of July 2017, it is said that the solar flares is regarded unprecedented international

emergency and thereby it may be said this event is not considered as ordinary peril of the sea

anymore.

49. As per Sadler v. Dixon, the Respondent has contractual duty to make the Vessel seaworthy by

making it able to encounter merely ordinary peril of the sea, not the events which are considered as

unordinary perils of the sea. The Respondent does not have duty to make the Vessel confront with

everything that happens at sea, especially something unexpected and unforeseeable therefore the

communication system of the Vessel is knocked out by solar flares which does not render the Vessel

unseaworthiness.


48 Alfred C Toepfer Schiffahrtsgesellschaft GmbH v Tossa Marine Co Ltd (The Derby) [1985] 2 Lloyd’s Rep 325 49 Sadler v Dixon (1841) 151 E.R.1303


22

50. Regarding equipment of the Vessel, it could be said that the Respondent also exercised due diligence

to make the equipment properly because after being knocking out by the solar flares, the Vessel still

did not require any repair and still be fit to continue the Voyage as confirmed in the email on 28th

of July 2017 at 4:58pm. As could be seen that the Vessel is still considered seaworthiness state and

do not affect the Voyage. Also, the Respondent exercised due diligence to keep and care properly

the Cargo by waterproofing the container up to five (5) days in order that the Cargo could be in a

good condition and order during the transit and could not be affected by ordinary danger of the sea.50

D. CARGO ON BOARD THE VESSEL: DAMAGE OF THE CARGO NOT CAUSED BY

“UNSEAWORTHINESS”

1. Damage to the Cargo was not caused by ‘Unseaworthiness’

51. Although the Respondent notified the Applicant of the estimated time of arrival of the Vessel and

the Cargo was available for collection on 29 of July 2017 at 20:42, however at this time but the

Applicant’s agent still not show up to collect the Cargo.51

52. Article 1.(e) of the HVR also requires that “the carriage of Cargo covers the period from the time

when the Cargo is loaded onto the Vessel until the time it is discharged from the Vessel”. It means

the obligation of the carrier’s is finished after the Respondent discharges the Cargo. As a result, the

Respondent unloaded the Cargo and fulfilled his contractual delivery obligation under the

Charterparty when discharging the Cargo at the Discharge Port and then passing the Barcode Pass

(“BAC”) to the Applicant on 30 of July 2017 at 24:02.

53. In addition, pursuant to the statement of expert opinion of Simon Webster stated the cargo was

damaged sometime in the 24 hours from 4:30 am on 30 July 2017. The Cargo was damaged because

the sealant used to seal the containers whilst exceptionally strong, is designed for short-term (up to

5 days) use only.52

50 Letter dated 22 July 2017 from the Applicant to the Respondent , p. 2 of the Moot scenario. 51 Email from the Respondent to the Applicant dated 29 July 2017 at 4:28pm , p. 22 of the Moot scenario. 52 Statement of expert opinion of Simon Webster, p.43 of the moot scenario.


23

54. As can be seen from the statement of expert opinion of Simon Webster, ingress of water to the Cargo

happened after the Respondent discharged the Cargo.53 At the time of arrival of the Vessel at

Discharge Port, no water could have possibly get into the Cargo. Hence, if the Cargo was damaged

after the Respondent delivers the goods, the Respondent would not be held liable for such damages.

Because the Respondent has no any duties in respect of the Cargo after discharging according to

Article 1(e) of HRV.

55. Also, regarding the cause of loss, the Cargo was lost due to prolonged use of the sealant and also

unprecedented rainfall, and not caused by the lack of seaworthiness of the Vessel. If the Applicant

had taken delivery of the Cargo on the date the Cargo was discharged and available for collection,

the damage would not have occurred.

56. In any event, if the Respondent’s vessel is unseaworthy, the Respondent is only liable for such loss

if there is a want of due diligence to make Vessel seaworthy and its consequences as per HVR article

IV(1).

57. In conclusion, where there is no causal link between the loss and the Respondent’s obligation under

the contract of carriage and HVR obligation of want of due diligence, the Respondent is not liable.

E. MARITIME LIEN

58. The Applicant is not entitled to a maritime lien and specifically: (A) The Applicant is not entitled

to a lien over the Vessel for the crew’s wages; and (B) the Applicant cannot receive the benefit of a

maritime lien over the Vessel on behalf of the crew; and (C) in any event the Applicant did not

validly exercise a maritime lien over the Vessel.

1. The Applicant is not entitled to a lien over the Vessel for the crew’s wages.

59. The Applicant is not entitled to maritime lien over the Vessel because: (a) the Applicant cannot

hold a maritime lien over the Vessel in the first place; (b) the Applicant is not entitled to a common

law or statutory lien; (c) the Applicant is not entitled to any form of contractual lien on the vessel

for the wages of the crew.

53 Statement of expert opinion of Simon Webster, p.43 of the moot scenario.


24

60. A maritime lien can come to existence for unpaid crew wages.54 The Applicant cannot claim a

maritime lien for matters that involve third parties, i.e. the crew.

61. According to common law, maritime liens are not transferrable rights.55 Where an agent pays off

outstanding crew wages which arose before the arrest, he does not then become entitled to the

maritime lien which the crew wages normally attract.56 To add, in The Ships Hako Fortress57,

confirms that maritime liens are a personal right, not transferable nor able to be revived after they

are extinguished.

2. The Applicant did not receive the benefit of a maritime lien over the Vessel exercised by

the crew

62. The Applicant cannot receive the benefit of a maritime lien over the Vessel exercised by the crew,

as (a) the crew did not assign a contractual right of lien to the Applicant; (b) the crew did not exercise

a right of lien as a trustee for the Applicant; (c) in any event, the Charterparty does not include a

clause of a maritime lien over the Vessel for purposes of crew wages.

63. The Applicant cannot exercise any contractual right of lien purported to be held by the crew unless

the crew assigned this right to the Applicant by an express provision.

64. Any purported assignment was not valid at law. Section 8(3) of Supreme Court Act 1981, section

21(6) requires any assignment to be by way of express notice in writing to the Respondents. No

such notice was given to the Respondents.

65. On 19 July 2017, a memo internal was sent to the Applicant by Will Gardner (General Counsel)

asking for a payment to be made of the amount of USD 100,000 into a separate bank account for

the crews’ wages. This email did not evince any intention to assign the Crew’s contractual right of

lien to the Applicant.58

66. Furthermore, the Crew did not exercise a right of lien as a trustee for the Applicant since an intention

54 Section 20(2)(o), Supreme Curt Act 1981

55 The Petone [1917] P 198; The Leoborg (No 2) (fn 112)

56 M. Tsimplis, ‘Maritime Law’ Textbook 4th Edition p.514

57 Programmed Total Marine Services Pty Ltd v The Ships Hako Fortress (2013) FCAFC 21

58 Memo Internal, p.1 of the Moot Scenario,


25

for the creation of a trust is absent, therefore an express trust in favour of the Applicant cannot be

inferred.

3. The Applicant did not validly exercise a lien over the Vessel as no notice was given to the

Respondents and the crew.

67. In order for a lien to be validly exercised, ‘a person claiming a lien must either claim it for a definite

amount or give the owner [of the Vessel] particulars from which he himself can calculate the amount

for which the lien is due’.59 The Applicant failed to give such notice to the Respondents and

consequently the Applicant cannot validly exercise the lien over the Vessel.

68. Further, a failure to make any demand at all invalidates the exercise of the lien.60

F. DELIVERY

1. Barcode Pass constitutes delivery

69. E-mails sent from Respondent to Applicant states that in case Applicant fails to take accept delivery

in the usual manner, the Cargo will be collected by using the Barcode Pass.61 When the Applicant

informed62 that Madam Dragonfly was due to berth and the Cargo should be collected, the Applicant

had shown no protest. In spite of Respondent’s efforts to ensure the Cargo is delivered in the usual

manner, the Applicant had failed to be delivered in person. Therefore, the Respondent had to provide

access by the Barcode Pass in order to keep the Cargo safe and sound.

70. The Barcode Pass amounts to the delivery of goods. This can be understood merely by reading the

document63 sent to the Applicant. Apart from the e-mail correspondence stated above, the Barcode

Pass clearly states that because the Applicant failed to take delivery of the Cargo, in spite of the fact

that the Respondent had waited at the discharge port, delivery of the Barcode Pass constitutes

delivery of the Cargo. Not only the Applicant raised any queries about the Barcode Pass, it also used

59 Albemarle Supply Co Ltd v Hind & Co [1928] 1 KB 307, 318 (Scrutton LJ).

60 Cooke et al Voyage Charterers (Informa Law, 4th edition, 2014) [17.25]. 61 Access authority pass, p. 23 of the Moot scenario, 62 Email from the Respondent to the Applicant dated 29 July 2017 at 4:28pm , p. 22 of the Moot scenario,

63 Access authority pass, p. 23 of the moot scenario,


26

it to access the Cargo with no other questions. Therefore, it is clear that delivery of the Cargo was

valid and Applicant was bound by the Barcode Pass and its terms.

71. At last, by reference to Glenore case on the judge’s findings, the Applicant was unaware that any

electronic release system was in use. In present case, it distinguishes Glencore from its facts due to

that the Respondent sent an email on 29 of July 2017 informing the Applicant about the use of BAC.

Therefore, the Applicant was aware that in case of the Applicant failing to collect the Cargo at the

time of discharge then the Cargo was to be placed at the Discharge Port and would be accessed the

gate using the barcode given64. Also, when the Barcode Pass was granted to Applicant through email

on 29 of July 201, Applicant did not deny accepting such delivery and accepted document without

raising any issue on such system.

G. DEMURRAGE IS ACCRUED

1. Deviation and Delay are because of force majeure

72. In reply to Applicants submissions under clause 15(b) of the Charterparty65, as stated above, in

deviation66 and force majeure67 contentions, the deviation and delays were due to force majeure

events and hence Respondent cannot be made accountable for such delays. Therefore, the

Respondent is not liable for any breach of law namely, CANA, 2012 and the HVR.

2. Calculation of laytime

(i) Laytime starts when vessel arrives at Port - Clause 8(c)(ii)

73. The Clause 8(c)(ii)68 provides for time counting for laytime for Discharge is “(calculated form when

vessel arrives at the discharge port until all cargo has been discharged) is .5 WWD”. So, as per

clause 8(c)(ii), the time would start when the Vessel arrives at the Discharge Port.

74. The Respondent states that the Vessel entered the Discharge Port at 7:00. This is evidenced by the

fact that Vessel was made to wait 100 nautical miles away from the Discharge Port. The storm

64 Ibid para.59

65 Clause 15(b), The Charterparty, p.8 of Moot scenario

66 See para. 18

67 See para. 32

68 Clause 8(c) (ii), The Charterparty, p.6 of Moot scenario


27

caused delays and there was nowhere to berth. The Discharge Port instructed the Vessel to wait at

that location since 7:00.69

75. The 100 nautical miles outside the Discharge Port is in essence considered to be within the port

limits. The test to determine when a vessel has arrived under a Charterparty was addressed in the

Johanna Olderndorff70. Although, it is worth mentioning that the Johanna case is distinguished

from this case, it is still relevant to discuss that the area where the port authority exercise its powers

to regulate the movement and conduct of the ships would indicate the limits of the port where no

particular law determines them.71

76. In the present case, it is evident that there was no express reference to the Charterparty as to the

nature of an arrived ship nor it was specified that the Vessel need to be within port limits to constitute

her arrival.

77. In the Arundel Castle72, the meaning of the ‘port’ in laytime definitions intend to reflect the wider

concept of the port area explained in the Johanna with reference now outside ‘the legal, fiscal or

administrative area’ of the port. Although, it was held that for a valid notice of readiness the vessel

needs to be within the legal limits of the port, given the factual matrix of the case, Knowles J may

have reached a different conclusion if the material had not been limited to an Admiralty chart.

78. In the present case, there is no reference to a geographical map of the Discharge port and

accordingly, laytime must start counting when the Vessel arrived at location where it was ordered

to wait from 7:00. This is well supported by a reference to the Laytime Definitions under

Charterparties 2013 where it states that ‘port limits’ include “any area within which vessels are

customarily asked to wait by the port authorities and over which the port authorities exercise

authority or control over the movement of shipping”73

(ii) Laytime ends after 0.5 WWD

69 Email from the Respondent to the Applicant dated 29 July 2017 at 8:58, p. 20 of the moot scenario.

70 Oldendorff (EL) & Co GmbH v Tradax Export S.A. [1973] 2 Lloyd's Rep 285

71 Ibid

72 Navalmar UK Ltd v Kalemaden Hammeddeler Sanayi ve Ticaret As [2017] EWHC 116 (Comm)

73 BIMCO’s Laytime Definitions for Charterparties 2013.


28

79. Pursuant to Clause 8(c)(ii), laytime was permitted 0.5 WWD for discharging. WWD is defined by

lord Goddard as a working day is a length of time which, according to the port custom are usually

worked at the port and the presence of the word “weather” seems to qualify it so that from the

number of hours which would be the ordinary hours of the port to be deducted the length of time

during which the weather interferes with the work.74

80. The Respondent waited at the Discharge Port for the Applicant’s agents to come and collect the

Cargo. The Respondents informed the Applicant clearly by email dated 29 July 2017 at 16:28 that

Respondent will wait till 24:00 for delivery of cargo, if collection is not done then the attached BAC

will allow them access to gate where the goods were placed. Further, it was informed that demurrage

will accrue from the time of arrival.75 Accordingly, laytime started counting at 7:00 in the morning

and continued until 24:00 i.e. 12pm in midnight until which The Vessel waited at Discharge Port.

3. Demurrage is charged as per Charterparty

81. Pursuant to Clause 9 and box 24, demurrage was agreed to be charged at rate of USD 20,000/hour.

In view of above facts, Respondent provides the following timeline for claiming demurrage:

Date Day Time Remark

29/7/17 Saturday 7:00 The Vessel was ordered to wait 100 nm outside port –

laytime starts

29/7/17 Saturday 19:00 Laytime expires

29/7/17 Saturday 19:00 to

24:00

Vessel waited until midnight at Discharge Port.

Time Lost 5 hours USD 20,000/hour x 5 = USD 100,000

82. The Respondent states that, Applicant was informed about The Vessel being stuck 100 nautical

miles outside port vide email dated 29 July 2017 at 8:58. Respondent again emailed Applicant on

74 Clause 9, Box 24, The Charterparty, p.3 of Moot scenario

75 Email from the Respondent to the Applicant dated 29 July 2017 at 4:28pm, p.22 of the Moot scenario


29

29 July 2017 at 16:28 stating that vessel will berth in thirty (30) minutes i.e. by 16:58 and can deliver

cargo in approximately two (2) hours i.e. by 7:58. In same email Respondent informed that they will

wait until 24:00 for the Applicant to come and collect the Cargo failing which the Applicant can

access goods through provided barcode access at Discharge Port. Finally, the Applicant did not

receive the goods until 24:00. Accordingly, the Respondent has appropriately charged five (5) hours

of demurrage at rate of USD 20,000/hour pursuant to Clause 9 and Box 24 for time starting from

19:00 until midnight i.e. 24:00.

H. DAMAGES

1. The Applicant is not entitled to Damages

83. The Applicant is (i) not entitled to damages for the damaged Cargo: (ii) costs and expenses for the

Replacement Coffee; and (iii) expenses on account of the Settlement Payment.

(i) The Applicant is not entitled to damages for the damaged Cargo

84. The Respondent denies the allegation in paragraph 6 of the Points of Claim. Further on, there was

no water damage to the Cargo at the time of its delivery pleaded in paragraph 43.

(ii) The Applicant is not entitled to damages for costs and expenses for the Replacement

Coffee

85. The Respondent admits that the Applicant has made the Replacement Coffee Payment but otherwise

does not admit paragraph 8 of the Points of Claim.

(iii) The Applicant is not entitled to expenses on account of the Settlement Payment

86. The Respondent admits that the Applicant has made the Settlement Payment but does not admit the

allegations in paragraphs 9 and 10 of the Points of Claim.

2. The Respondent is entitled to Damages

(i) Damage to the hull:


30

87. The vessel was hit by the storm on 29 July 2017. In order to avoid the storm, the Crew had to drop

the anchor but when the crew tried to lift the anchor, it tangled on a coral bed and caused damage

to the hull.76

88. The damage was caused due to the occurrence of the storm, which is a force majeure event and was

beyond control of the owner. The crew had taken reasonable steps to minimize the damage by

cutting the anchor but tangled anchor had already caused substantial damage to the hull.77

89. Under Clause 19, the Applicant must contribute towards damages as General Average caused due

to unforeseen events or events not in control of Respondent. 78 Where temporary repairs are affected

to a ship at a Port of Loading, call or refuge, for the common safety, or of damage caused by general

average sacrifice, the cost of such repairs shall be allowed as general average.79

90. The amount to be allowed as general average for damage or loss to the ship, her machinery and/or

gear caused by a general average act shall be the actual reasonable cost of repairing or replacing

such damage or loss, subject to deductions in accordance with Rule XIII.80

91. Without prejudice to the above statements, the Applicant had breached the safe port warranty. The

Discharge Port was considered to be unsafe due to the occurrence of the storm and notwithstanding

the effort of the Crew to minimise the damage, the severe nature of the weather condition at the

Discharge caused the damage to the hull. Therefore, the Respondent states that the weather condition

at the port was a ‘characteristic of the port’ as discussed in The Ocean Victory81 and hence the

Applicant is in breach of the safe port undertaking.

(ii) Agency fees paid at the port of Spectre

76 Email from the Respondent to the Applicant dated 29 July 2017 at 8:58am, p. 20 of the Moot scenario.,

77 Ibid


79 York Antwerp Rules 2004 RULE XIV (a)

80 York Antwerp Rules 2004 RULE XVIII

81 Gard Marine and Energy Limited v China National Chartering Company Limited and another (2017)


31

92. The agency fees paid at the Spectre were due to the deviation and the deviation had taken place

because of the occurrence of the solar flares, which knocked out the communication system of the

vessel, and eventually the Vessel had to deviate to Spectre. 82

93. Since the agency fees at Spectre incurred additional expenses and were beyond control of the

Respondent, such expense is incurred an allowable general average. 83 Therefore, is allowable as

General Average under Rule F of YAR 2004.

(iii) Electronic release system (The Barcode Pass) at the Discharge Port

94. The Respondent informed the Applicant regarding the attached barcode required for collection of

the cargo. As the Applicant did not protested in this regard and collected the Cargo, therefore they

had consented to the electronic release of the Cargo.84

95. Since there were no agents of the Applicant to collect the Cargo the Respondent had to deliver it at

the Discharge Port and authority access authority pass was issued for collection of the cargo.85 Had

there been any agents of the charterer to collect the cargo the electronic release would not be

required, no expenses for the same could have incurred, and thus this expense shall be borne by the

Applicant.

I. LIMITATION OF LIABILITY

1. Under the Hague-Visby Rules

96. Without prejudice to defences and counter-claims submitted; in accordance with HVR Art. 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 2 units of account per kilogram of gross weight of the goods lost

82 Email from the Respondent to the Applicant dated 26 July 2017 at 2:32 pm, p.17 of the Moot scenario.

83 York Antwerp Rules 2004 RULE F

84 Email from the Respondent to the Applicant dated 29 July 2017 at 8:58am, p. 20 of the moot scenario.

85 Email from the Respondent to the Applicant dated 29 July 2017 at 4:28pm, p. 22 of the moot scenario.


32

or damaged. In accordance with the current case, there can be no argument regarding valid

declaration of the goods (the Cargo).

97. First of all, it is important to underline that by invoking limitation, the Respondent is not deemed to

have admitted liability in respect of claims brought against it.86 In the present case, it is clear that

the parties (the Applicant and the Respondent) intended not to issue a bill of lading. In spite of the

fact that HVR Art. IV (5)(a) expressly stated that declaration of value must be under a bill of lading,

all arguments regarding valid declaration of value should be rejected due to absence of the bill of

lading.

98. Notwithstanding the defences and counter claims, Art. IV (5)(c) of HVR states that only where the

number of goods packed within the container are not enumerated would the container be capable of

constituting the package. The weight of the Cargo is 70,000 kilograms (kgs) of coffee beans87. This

is to be calculated from 2 units of account(SDR) per kg. Thus, in regards to HVR conclusion for

limitation of liability is $202,720 and claims exceeding this amount should be rejected.

99. In accordance with HVR in order to lose the right to limit liability is that the loss must have resulted

from personal act or omission of the party liable, and it must also be established that he (Respondent)

either intended such loss or was reckless as to the consequences of his act or omission in the sense

that he realized that such a loss would probably result. Unless these three conditions are fulfilled

there is no logical argument regarding the limitation. Because the Applicant could not evidence

there was an act or omission of the Respondent that was intended to cause such loss or reckless

behavior done by realizing such a loss would probably result. Therefore, lack of concrete evidence,

all claims regarding the Respondent not being able to minimize risks and limit liability, should be

rejected.

100. In addition to the package limitation given by HVR in relation to Cargo claims, the Respondent is

entitled to rely also on a global limitation figure based on the Vessel’s tonnage which in this case is

86 Caspian Basin Specialised Emergency Salvage Administration v Bouygues [1977] 2 Lloyd’s Rep. 507.

87 Box 4, The Charterparty, p.3 of Moot scenario


33

2,000 GRT. 1976 Convention on Limitation of Liability88 for Maritime Claims (LLMC) Art. 4

provides that; “… a person liable shall not be entitled to limit his liability if it is proved that the loss

resulted from his personal act of omission, committed with the intent to cause such loss, or recklessly

and with knowledge that such loss would probably result.” Again in 1976 LLMC the limitation is a

right given to the ship-owner (Respondent) and cannot be overridden unless such conditions are

satisfied which, as explained above, have not been satisfied.

101. LLMC provides that the limitation figures under 1996 Protocol, which Australia is a contracting

state is that; for vessels not exceeding 2,000 GRT it is 1.510.000 SDRs which can be roughly

calculated as USD 2,115.00089. Since, the above limitation is legally applicable to Respondent, the

same must be maximum liability of Respondent if at all held liable, as adjudicated by Tribunal.

Therefore, Tribunal must reject Applicant’s package-based calculations.

102. The burden of proof lies with the Applicant 90. However, the Applicant has not presented any

evidence in order to override limitation of liability. Because there is no solid evidence of the

Respondent acting in a way that his liability cannot be limited, it should be decided that limitation

of liability should be applicable.

103. As explained previously, the Respondent is not in fundamental breach of the Charterparty. Even if

it were, limitation of liability would still be valid as it was held The Kapitan Petko Voivoda91,

seriousness of breach would no longer be considered as sole criteria for determining whether

limitation of liability would apply. Also, “in any event” means that limitation of liability would be

applicable to a breach irrespective of the seriousness of its nature92.

104. Consequently, all claims set out by the Applicant should be denied and if decided otherwise

limitation of liability should be applied to all claims.

88 1976 Convention on Limitation of Liability for Maritime Claims (LLMC).

89 See https://www.imf.org/external/np/fin/data/rms_sdrv.aspx, entered on 8 April 2018.

90 HVR, Art. IV (5) (a)

91 [2003] 2 Lloyd’s Rep. 1.

92 Photo Production v Securicor Transport [1980] AC 827, The Happy Ranger [2002] 2 Lloyd’s Rep 364.

https://www.imf.org/external/np/fin/data/rms_sdrv.aspx


34

PART IV: PRAYER FOR RELIEF:

For the reasons set out above the Respondent request the tribunal to declare that:

1. The deviation and delay is caused due to the force majeure events.

2. The Applicant has waived the alleged breach of the Charterparty.

3. The Applicant is not entitled to maritime lien.

4. Respondent is not liable for any damages claimed for the damaged Cargo.

5. The Respondent is not liable to the Applicant for alleged damages in the amount of

USD30,200,000 comprising:

(a) USD15,750,000 on account of the damaged Cargo;

(b) USD9,450,000 for the Replacement Coffee Payment;

(c) USD5,000,000 on account of the Settlement Payment;

6. In addition, the Respondent requests the tribunal to allow the following counterclaim in favor of

Respondent:

(a) freight;

(b) agency fees at the Port of Spectre, to which the Vessel was required to deviate during the

voyage;

(c) the cost of repairs to damage caused to the Vessel when avoiding dangerous weather

conditions;

(d) agency fees at the Discharge Port;

(e) demurrage; and

(f) Use of electronic access systems at the Discharge Port.

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

Documents

19th ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION …€¦ · Team 26 Memorandum for the Respondent 1 19th ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2018 IN THE MATTER BEFORE