EAM 18 - Murdoch University · twentieth annual international maritime law arbitration moot 2019 universitas diponegoro team 18 memorandum for claimant’s in the matter of the arbitration

TWENTIETH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2019

UNIVERSITAS DIPONEGORO

TEAM 18

MEMORANDUM FOR CLAIMANT’S

IN THE MATTER OF THE ARBITRATION HELD IN ROTTERDAM

ON BEHALF OF AGAINST

PHANTER SHIPPING INC OMEGA CHARTERING LTD

CLAIMANT / OWNERS RESPONDENT / CHARTERERS

COUNSEL

NATANAEL DAUD VENDRA WAHID RAKA PERMANA

RESTY SUTRAINY RUTH ARTHASYA DANIEL KANDOU

Team 18 Memorandum For Claimant

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TABLE OF CONTENTS

LIST OF ABBREVIATION ..................................................................................................... iv

STATEMENT OF FACTS ........................................................................................................ 1

TIMELINE OF KEY EVENTS ................................................................................................. 4

SUBMISSIONS ON THE TRIBUNAL’S JURISDICTION ..................................................... 4

I. THE CHARTERPARTY ............................................................................................. 4

A. The Fixture Recap Dated 18 March 2016 And The Rider Clause Are

Charterparty ..................................................................................................................... 4

B. NYPE 2015 Standard Form complemented The Charterparty ............................ 5

II. THE TRIBUNAL HAS JURISDICTION TO DETERMINE THE CLAIM OF

DAMAGES ........................................................................................................................... 5

A. The Tribunal has power to rule on its own jurisdiction ........................................ 5

B. The Small Claim Procedure Does Not apply in the Present Dispute ................... 6

SUBMISSIONS ON HULL CLEANING AND EXPENSES ............................................... 7

I. THE FINAL HIRE SETTLEMENT PRESENTED BY OWNER WAS FINAL

AND FULL SETTLEMENT ............................................................................................... 7

II. CHARTERER SHALL PAY OWNER FOR THE COSTS AND EXPENSES IN

CONNECTION WITH HULL CLEANING, INCLUDING THE VOYAGE. ............... 8

SUBMISSIONS ON LATE REDELIVERY .......................................................................... 9


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I. CHARTERER SHALL INDEMNIFY OWNER LOSS FROM THE NEXT

FIXTURE ............................................................................................................................ 10

II. THE RESPONDENT SHALL INDEMNIFY THE CLAIMANT DAMAGES

FOR THE LOSS OF POSSIBLE FIXTURE ................................................................... 12

ARGUMENTS ON THE MERITS OF THE COUNTER CLAIM ......................................... 14

SUBMISSION ON THE OVERPAID HIRE .......................................................................... 14

I. The Vessel was not off-hire from period of 07.05.2016 until 26.06.2016 ............... 15

II. The Vessel Is Not Off Hire From The Prevention Of Full Working Of The

Vessel Causes Under Clause 17 of the Charterparty ...................................................... 15

SUBMISSIONS ON CARGO CLAIM ................................................................................... 17

I. The Respondent failed to give proper details of the written notification of the

Cargo Claim to the Claimant required by clause 6 of the ICA...................................... 18

II. Cargo Claim shall not fall to be apportioned under clause 8(a) of the ICA. ..... 20

PRAYER FOR RELIEF .......................................................................................................... 22


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LIST OF ABBREVIATION

Abbreviation Term

Charterparty The Time Charterparty

Claimant / Owners Panther Shipping Inc.

ICA Inter-Club Agreement

NYPE New York Produce Exhange Form 2015

Respondent / Charterers Omega Chartering Limited

Vessel M/V “THANOS QUEST”

Wahanda The port of Wahanda

South Island The port of South Island

North Titan The port of North Titan

Receivers Hawkeye Import & Export Pty

LMAA London Maritime Arbitrators Association

Procedural Order No. 2

IMLAM 2019 Clarification for Procedural

Order No. 2

UKHL United Kingdom House of Lords

P. Page

Arbitration Act United Kingdom Arbitration Act 1996 c 23

Cargo 8,600 mt of loose leaf English Breakfast Tea

KB Law Reports King’s Bench

Lloyd’s Rep Lloyd’s Law Reports

REDEL Re-delivery

CHOPT Charterers Option

YR Years


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Master Captain Rogers of M/V “THANOS QUEST”

Champion Champion Chartering Corp

Next Fixture The first two years of Champion Fixture

Possible Fixture

Additional two years extension of Champion

Fixture in Champion option

i.e. Namely

EWCA Civ

Court of Appeal of England and Wales

Decisions (Civil Division)

para. Paragraph

Laycan Lay days/cancelling

FHS Final Hire Settlement

LIST OF AUTHORITIES

ARTICLES / BOOKS

Clare Amberose et al, London Maritime Arbitration (Informa Law, 4th ed, 2017)

Dicey, Morris and Collins on The Conflict of Laws (15th ed., 2012)

Gary B Born, International Commercial Arbitration (Kluwer Law International, 2009)

Rhidian Thomas, Legal Issues Relating to Time Charterparties (Informa Law, 1st ed, 2008)

Terence Coghlin et al, Time Charters (Informa Law, 7th ed, 2014)

CASES

Actis Co. Ltd. v. The Sanko Steamship Co. Ltd. (The "Aquacharm") [1980] 2 Lloyd's Rep.

237


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Andre & Cie S.A. v. Orient Shipping (Rotterdam) B.V. (The “Laconian Confidence”) [1997]

1 Lloyd's Rep. 139

Bernuth Lines Limited v. High Seas Shipping Limited, [2005] EWHC 3020 (Comm) Case No:

2005 FOLIO 684

C Czarnikow Ltd v Koufos (The Heron II) [1967] UKHL 4 (17 October 1967)

Ca Venezolana De Navegacion v. Bank Line (The "Roachbank") [1987] 2 Lloyd's Rep 498,

United Kingdom: High Court (England and Wales), 27 July 1987

F.C. Bradley & Sons v. Federal Steam Navigation (1926) 24 Ll.L.Rep. 446

Golden Ocean v. Salgaocar Mining [2012] 1 Lloyd’s Rep. (C.A.) 542

Hadley & Anor v Baxendale & Ors [1854] EWHC Exch J70 (23 February 1854)

H Parsons (Livestock) Ltd v Uttley Ingham & Company Ltd [1977] EWCA Civ 13 (18 May

1977)

IPSOS SA v Dentsu Aegis Network Ltd [2015] EWHC 1171 (Comm) (29 April 2015)

Jackson & Anor v. Royal Bank of Scotland [2005] UKHL 3 (27 January 2005)

John Grimes Partnership Ltd v Gubbins [2013] EWCA Civ 37 (05 February 2013)

Laminates Acquisitions v. BTR Australia Limited [2004] 1 All ER (Comm) 737

Monarch Steamship v Karlshamns Oljefabricker [1948] UKHL 1 (09 December 1948)

M. (L.) v. Devally [1997] IEHC 50; [1997] 2 ILRM 369 (13th March, 1997)

Papera Traders Co. Ltd. & Ors v Hyundai Merchant Marine Co. Ltd. [2002] EWHC

118 (Commercial) (7th February, 2002)

Rok plc v S Harrison Group Ltd [2011] EWHC 270 (Comm)

RWE Nukem Ltd v AEA Technology Plc [2005] EWHC 78 (Comm) (28 January 2005)

Satef-Huttenes Albertus SpA v Paloma Tercera Shipping Co SA (The Pegase) [1981] Lloyd's

Rep 175, 183


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Senate Electrical Wholesalers Ltd. v Alcatel Submarine Networks Ltd [1998] EWCA Civ

3534 (22 June 1998)

Shagang South -Asia (Hong Kong) Trading Co Ltd v Daewoo Logistics [2015] EWHC 194

(Comm)

The Star Sea [1997] 1 Lloyd’s Rep. 360 P. 373-374 (per Leggatt LJ)

Torvald Klaveness A/S v. Arni Maritime Corporation (The “Gregos”) [1993]

Transfield Shipping Inc v Mercator Shipping Inc [2008] UKHL 48 (9 July 2008)

Transfield Shipping Inc of Panama v Mercator Shipping Inc of Monrovia [2006] EWHC

3030 (Comm) (01 December 2006)

Triad Shipping Co v Stellar Chartering and Brokerage Inc (The “Island Archon”) [1994] 2

Lloyd’s Rep 227

TTMI Sarl v. Statoil ASA, Queen’s Bench Division (Commercial Court): Beatson J: [2011]

EWHC 1150 (Comm): 9 May 2011

Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528

Welex A.G. v. Rosa Maritime [2002] 2 Lloyd’s Rep. 81, [2003] 2 Lloyd’s Rep. 509 (C.A.)

LEGISLATIONS

Arbitration Act 1996 (UK)

Inter-Club New York Produce Exchange Agreement 1996 (As Amended September 2011)


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STATEMENT OF FACTS

1. On 18 March 2016, Panther Shipping Inc (Claimant) chartered the M/V “THANOS

QUEST” (Vessel) to Omega Chartering Limited (Respondent) by a time charterparty

(Charterparty) for a trip of about 50-55 days from West Coast to Wahanda carrying a

cargo of harmless bulk products. On 29 March 2016, the Vessel was delivered into the

Charterparty. Loading of the cargo was completed and the vessel sailed for Wahanda on

20 April.

2. On 7 May, the Vessel arrived at the discharge port of Wahanda. The Vessel was unable

to proceed to berth and instead waited at the anchorage.1

3. On 8 June, the Claimant sent an e-mail to Respondent (via the Vessel’s managers and

brokers, respectively Hulk Hulls (Managers) and Clark Kent & Sons (Brokers)) noting

that the Vessel was expected to spend more than thirty days at the port of Wahanda.

Claimant requested that Respondent confirm arrangements for hull cleaning of the

Vessel in accordance with clause 83 of the Charterparty.2 Respondent replied stating that

hull cleaning could not be performed at Wahanda, and offered to pay Claimant USD

15,000 in lieu of cleaning.3

4. The Claimant could not agree a lump sum for cleaning since there had been no

inspection and it was not possible to know the extent of fouling. The Claimant stated

they would arrange an inspection and cleaning at the next convenient port.4 The

Respondent responded that they would pay the cost of underwater cleaning against an

original invoice.5

1 Moot Scenario, Email date 7 May 2016, P.25 2 Moot Scenario, First Email of 8 June 2016, P.29 3 Moot Scenario, Second Email of 8 June 2016, P.29 4 Moot Scenario, First Email of 9 June 2016, P.29 5 Moot Scenario, Second Email of 9 June 2016, P.28


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5. On 15 June, the Claimant chartered the Vessel to Champion Chartering Corp

(Champion) for a period of two years, plus a further two years in charterers’ option

(Next Fixture).6

6. On 18 June, the Claimant sent an email reserving their right to claim against Respondent

for the losses incurred resulting from the Vessel being delivered without hull cleaning

having been performed.7

7. The Claimant further stated that the Vessel had been fouled during the extended stay in

Wahanda and that cleaning could not take place in East Coast ports, questioning

Respondent’s intention regarding hull cleaning in accordance with clause 83 of the

Charterparty.8

8. On 27 June, the Respondent replied stating that they could arrange cleaning at North

Titan port if Owners were sailing north. Alternatively, a lump sum payment of USD

20,000 was offered in lieu of cleaning.9

9. On 28 June, Champion cancelled the Next Fixture, since the Vessel had missed the

laycan.10

10. On 29 June, The Claimant called the Respondent to arrange for the Vessel’s hull

cleaning at South Island following the discharge at Wahanda.11 The Respondent stated

that voyage to South Island would be non-contractual and cleaning could not be

performed at Wahanda, offering USD 30,000 in lieu of cleaning.12

11. The Claimant gave Respondent a final opportunity to comply with their contractual

obligations under clause 83 of the charterparty by arranging for underwater cleaning

prior to re-delivery.

6 Moot Scenario, Email date 15 June 2016, P.30 7 Moot Scenario, Email date 18 June 2016. P.34 8 Moot Scenario, Email date 25 June 2016, P.34 9 Moot Scenario, Email date 27 June 2016. P.38 10 Moot Scenario, Email date 28 June 2016, P.40 11 Moot Scenario, Email date 29 June 2016, P.43 12 Moot Scenario, Email date 30 June 2016, P.42


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12. In completion of discharge of the cargo, the Vessel was re-delivered on 30 June.13 Hull

cleaning was performed at South Island between 1 July and 3 July at a total cost of USD

41,000.

13. On 4 July, Claimant chartered the Vessel to Fairwind International for a time charter trip

of about 50-55 days (Replacement Fixture).14

14. On 1 August, the Claimant presented the Final Hire Statement (FHS) to the

Respondent.15 It includes costs of USD 97,766.64 in relation to the Vessel’s hull cleaning

at South Island after re-delivery of the Vessel.

15. The Respondent have paid sums under the FHS, but have failed to pay the amount of

USD 96,567.42 for hull cleaning and voyage in South Island.

16. The Claimant seeks to recover loss and damage:

1) USD 41,000.00 for hull cleaning costs

2) USD 55,567.42 for voyage to South Island to perform hull cleaning

3) USD 15,330,000.00 for late re-delivery (loss of hire under the Net Fixture,

calculated as 4 years at USD 10,500 per day).

On 16 October 2018, the Claimant referred the dispute to arbitration.16

13 Moot Scenario, Email date 29 June 2016, P.44. 14 Moot Scenario, Email date 4 July 2016, P.53. 15 Moot Scenario, Final Hire Statement dated 1 August 2016, P.52. 16 Moot Scenario, Notice of Arbitration dated 16 October 2018, P.61.


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TIMELINE OF KEY EVENTS

17. The following diagram depicts the key events for the purposes of the following

submissions.

SUBMISSIONS ON THE TRIBUNAL’S JURISDICTION

I. THE CHARTERPARTY

A. The Fixture Recap Dated 18 March 2016 And The Rider Clause Are Charterparty

18. The Charterparty for the Vessel referred to in the Fixture Recap dated 18 March 2016,

along with the Rider Clause. A charterparty is a written charter agreement which

includes any means by which an agreement may be recorded.17 Such a wide definition

would seem to include all forms of electronic transmission and communication18 with the

17 TTMI Sarl v. Statoil ASA, Queen’s Bench Division (Commercial Court): Beatson J: [2011] EWHC 1150

(Comm): 9 May 2011 18 Golden Ocean v. Salgaocar Mining [2012] 1 Lloyd’s Rep. (C.A.) 542 at [22]


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terms being recapitulated in a fixture recap.19 In the present case, parties have agreed the

Fixture Recap and the Rider Clause assimilate as the Charterparty.

B. NYPE 2015 Standard Form complemented The Charterparty

19. NYPE Form 2015 remains the most important standard form for dry cargo charters.20 In

common, the standard form wording is often supplemented and it may be specially

provided.21 Rather than ignoring the Charterparty, The Tribunal should interpret the

standard form as complementing the lack of the Charterparty.

II. THE TRIBUNAL HAS JURISDICTION TO DETERMINE THE CLAIM OF

DAMAGES

A. The Tribunal has power to rule on its own jurisdiction

20. Under clause 80 of the Charterparty, any dispute that arises shall be construed in

accordance with the English law and the seat of Arbitration chosen in London.22 English

law recognize the Lex Arbitri in establishing of tribunal substantive jurisdiction. As there

is no “agreement to the contrary”, appoint to rule 6 of the LMAA terms, the rule applied

to determine the power of tribunal to rule on its own jurisdiction.

21. Lex Arbitri is expressed in the choice of a seat for arbitration. This "seat" is in most cases

sufficiently indicated by the country chosen as the place of the arbitration23 and the law

governing the contact.24 The lex arbitri governs the procedure of an arbitration and

amongst other things, sets out the parties’ rights with respect to setting aside an arbitral

award.25 In this case, the Lex Arbitri is English Law.

19 Welex A.G. v. Rosa Maritime [2002] 2 Lloyd’s Rep. 81, [2003] 2 Lloyd’s Rep. 509 (C.A.). 20 Terence Coghlin et al, Time Charters (Informa Law, 7th ed, 2014), P.1 21 Ibid, P.11 22 Moot Scenario, Rider Clause, Clause 80 23 Shagang South -Asia (Hong Kong) Trading Co Ltd v Daewoo Logistics [2015] EWHC 194 (Comm) cl. 30 24 Lord Collins of Mapesbury, Adrian Briggs, Andrew Dickson, Jonathan Harris, et al, Dicey, Morris and

Collins on The Conflict of Laws (Sweet & Maxwell Ltd, 15th ed. 2015) para. 16 25 Gary B Born, International Commercial Arbitration (Kluwer Law International, 2009) vol 1, P. 1004


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22. Dispute arising in the matter of a time charter under this form is in accordance with

clause 54 of NYPE Form 2015. The LMAA Tribunal should be chosen as the forum of

dispute settlement. Furthermore, The Tribunal may rule on its own substantive

jurisdiction on the principle of ”Competence - Competence” as to the matter that has

been submitted to arbitration. In the present case, both parties refer to Charterparty

arbitration clause supplemented with NYPE form 2015, this tribunal prima facie fit and

have jurisdiction to this case.

B. The Small Claim Procedure does Not apply in the present dispute

23. Under clause 102 of the Charterparty, if claims or counterclaims of the dispute does not

exceed the sum of USD 100,000, the dispute shall be resolved in accordance with The

Small Claim Procedure of the LMAA.26 The Small Claim Procedure was intended as an

expeditious, low cost, usually documentary procedure, with a single arbitrator, no

discovery and reduced formality.27 This procedure would not fit with the claim and

interest in this proceeding.

24. A properly constituted tribunal was the heart on arbitration proceeding. Under small

claim procedure, parties shall appoint the sole arbitrator for the proceeding. On rule 2(b)

LMAA SCP, if the parties do not appoint a sole arbitrator in 14 days, either party may

apply in writing to the Honorary Secretary LMAA for the appointment of a sole

arbitrator by the President. In the present case, both parties have not appointed the sole

arbitrator.

26 Clare Ambrose, Karen Maxwell, Michael Collett, London Maritime Arbitration, (Informa Law, 4th ed, 2017)

para. 1.25 27 Bernuth Lines Limited v. High Seas Shipping Limited, [2005] EWHC 3020 (Comm) Case No: 2005 FOLIO

684, para. 46


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ARGUMENTS ON THE MERITS OF THE CLAIM

SUBMISSIONS ON HULL CLEANING AND EXPENSES

25. The Respondent is liable to pay Claimant the amount of USD95,567.42 in damages for

the loss caused by Respondent’s failure to perform hull cleaning prior re-delivery.

Pursuant to the clause 83 of Charterparty, Respondent has obligation to “clean any of

vessel underwater parts, including but not limited to, the hull, sea chests, rudder and

propeller” prior redelivery.

26. The Respondent redelivered the vessel without conduct inspection or cleaning the vessel.

Otherwise, the charterer offer to pay sum to suite their convenience. Due to the

Respondent failed to perform hull cleaning before re-delivery. The Claimant was loss

and beared the costs of the voyage to South Island (USD55,567.42) in order to perform

hull cleaning (USD41,000.00).28

27. Charterer is liable for Owner loss and damages cause by: (I) The Final Hire Statement

Presented by Owner was Final and Full Settlement (II) Charterer shall pay Owner for the

cost and expenses in connection with Hull Cleaning.

I. THE FINAL HIRE SETTLEMENT PRESENTED BY OWNER WAS FINAL AND

FULL SETTLEMENT

28. Under clause 83 (d) Charterparty, if Charterer failed perform cleaning prior redelivery,

parties shall agree a lump sum payment in full and final settlement of Owner cost and

expenses arising as a result of or in connection with the need for cleaning.29 The full and

final settlement arose as a result of the performance of the cleaning undertaken by the

Owner's account.

28 Moot Scenario, Claimant Claim Submissions, P.69 29 Moot Scenario, Rider Clause, Clause 83, P.16


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29. Owner consider the risk of the vessel suffering hull fouling by being inactive at a muddy

water for more than 30 days as a result of detention by port authority. The risk that the

vessel's performance would suffer as a result of hull fouling means that the Owners

would have to clean her hull as soon as they could.30 This type of risk was one that was

foreseeable and foreseen by both parties.31 When the charterparty concluded, this risk

flowing to the Owner from the order as to the employment of the vessel was

unforeseen.32 Then that will be a potent factor in deciding that the loss or expense will

fall within the scope of the implied indemnity.

30. The lump sum payment is a factor to be taken into account when the Tribunal considers

the merits.33 The Tribunal must consider that the Charterer had breached their contractual

obligation to perform inspection and hull cleaning before vessel redelivery, which

resulted in the cleaning of the vessel undertaken by Owner’s account.

31. The full and final settlement shall express the Owner's full satisfaction for loss and

damages. In the present case, the Final Hire Statement were the result of Owner's

performance in hull cleaning, including all the expenses in connection with hull cleaning.

Rather than a sum presented by Charterers, the sum cannot fulfil the Owner's

satisfaction. Therefore, in vein with clause 83 (d), the Final Hire Statement was the lump

sum that should be agreed to by both parties.

II. CHARTERER SHALL PAY OWNER FOR THE COSTS AND EXPENSES IN

CONNECTION WITH HULL CLEANING, INCLUDING THE VOYAGE.

32. Under Clause 83 (d), Charterer must consider Owner cost and expenses “in connection

with the need for cleaning” if Charterer fails to perform cleaning before redelivery. In the

30 Triad Shipping Co v Stellar Chartering and Brokerage Inc (The “Island Archon”) [1994] 2 Lloyd’s Rep 227 31 Moot Scenario, Rider Clause, Clause 83, P.16. 32 Triad Shipping Co v Stellar Chartering and Brokerage Inc (The “Island Archon”) [1994] 2 Lloyd’s Rep 227 33 M. (L.) v. Devally [1997] IEHC 50; [1997] 2 ILRM 369 (13th March, 1997), para 27


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present case, the cost of the voyage to cleaning port in South Island must be considered.

Charterer had known this type of risk when Wahanda Port Services notified the parties

that the port condition is not suitable for hull cleaning.

33. Charterer intended to redeliver the vessel prematurely to avoid the operation cost and

expenses for cleaning in South Island Port. The operation cost comprises of the bunker,

hire, and other expenses related to the daily operation of the vessel. A vessel needs a

master, officer and crew to be operated. For the purpose of cleaning, Owner suffered a

loss by reason of premature redelivery for the cost of hire and bunker.

34. Charterers denied liability for any costs other than the lump sum they offered.34 A lump

sum offered by Charterer does not include the bunker and the operational cost. It is not

generous, while the owner suffers from hull fouling due to charterer’s fault. Under clause

83 (d), “in connection” shall be interpreted not limited to hull cleaning process, but

includes bunker, hire and operational cost suffered by Owner.

35. The Tribunal must consider the voyage cost to South Island as Charterer’s liability.

Under FHS, Charterer liable to indemnify the Owner in full and final. Owner has the

right to enjoy full satisfaction for its loss and damages.

SUBMISSIONS ON LATE REDELIVERY

36. Charterer is liable to pay USD15,330,000.00 in damages arising from the late redelivery.

Charterer are under a duty to redeliver the ship at the end of the charter period, where

that obligation has as its corollary that the Charterer must not redeliver the ship any

earlier than the end of the charter period, nor any later.35

34 Moot Scenario, Email date 30 June 2016, P.43. 35 Terence Coghlin et al, Time Charters (Informa Law, 7th ed, 2014) P.91


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37. The vessel was chartered to the Charterers in 29.03.2016, for a period provided in the

fixture recap for about 50 – 55 days.36 This has the effect that the period stated is to be

construed as an approximate period only, as the word “about” imports a reasonable

margin either side of the agreed period.37 The vessel is redelivered at 30.06.2016, far

beyond the expire date of supposed redelivery date based on the charterparty.38 Charterer

breaches of the charterparty by failure to redeliver the Vessel prior to the expiry of the

maximum period of the Charterparty which is already admitted by the Charterer.39

38. Due to this late redelivery, the Next Fixture are cancelled since the Vessel had missed the

laycan where the Vessel at the time still in the Charterer hand,40 and thereby unable to

gain the hire from the Next Fixture and the Possible Fixture calculated as 4 years at

USD10,500 per day for a total of USD15,330,000.00.41

39. Charterer are liable for damages by such late redelivery, as such the Charterer shall : (I)

Indemnify the Claimant damages from the loss of the next fixture, and (II) Indemnify the

Owner’s the damages from the loss of possible fixture.

I. CHARTERER SHALL INDEMNIFY OWNER LOSS FROM THE NEXT

FIXTURE

40. The Charterer argued the Owners would only be entitled to damages calculated as the

difference between the Charterparty rate of hire and the market rate of hire for the period

of overrun.42 The normal measure for the damages of late redelivery is the difference

between what the Owners earned in hire under the charter during the period of the

overrun and what the market would have paid for the use of the ship during the same

36 Moot Scenario, Fixture Recap, P.4 37Terence Coghlin et al, Time Charters (Informa Law, 7th ed, 2014) P.94 38 Moot Scenario, Claimant Claim’s Submission, para 17, P.68 39 Moot Scenario, Respondent Defence and Counter Claim Submission, para. 10, P.72 40 Moot Scenario, Email date 28.06.2016, P.40 41 Moot Scenario, Claimant Claim’s Submission , para. 22, P.69 42 Moot Scenario, Respondent Defence and Counter Claim Submission, para. 11, P.73


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period.43 Normal measure does not apply in this case of losses arising from cancellation

of Next Fixture, as the Owners has Next Fixture terminated because of late re-delivery.44

In certain circumstances, the Owners may also be entitled to recover in respect of

additional losses.

41. In addition to losing the opportunity to take advantage of an increased rate of hire, the

Owners is suffering other losses from the result of late redelivery. Such losses may arise

either during the period of the overrun or after it. One additional loss that the Owners

may suffer is the loss of the next charter which the ship was due to perform.45

42. Where two parties have made a contract which one of them has broken, the damages

which the other party ought to receive in respect of such breach of contract should be

such as may fairly and reasonably be considered either arising naturally, i.e., from such

breach of contract itself.46 The damages recoverable for breach of contract are such as

flow naturally in most cases from the breach, whether under ordinary circumstances or

from special circumstances due to the knowledge either in the possession of or

communicated to the Charterer.47

43. English law distinct the types of damages between general and special damages; the

latter are such that, if they are not communicated, it would not be fair or reasonable to

hold the Charterer responsible for losses which he could not be taken to contemplate as

likely to result from his breach of Charterparty.48 If it is already communicated, then the

Charterer can be responsible for any losses arising from the breach of Charterparty.

43 Terence Coghlin et al, Time Charters (Informa Law, 7th ed, 2014) P.102 44 Moot Scenario, Email date 28.06.2016, P.40 45 Terence Coghlin et al, Time Charters (Informa Law, 7th ed, 2014) , P.103 46 Transfield Shipping Inc v Mercator Shipping Inc [2008] UKHL 48 (9 July 2008) 47 C Czarnikow Ltd v Koufos (The Heron II) [1967] UKHL 4 (17 October 1967), para 18 48 Monarch Steamship v Karlshamns Oljefabricker [1948] UKHL 1 (09 December 1948)


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44. In this case, the Owners already communicate and informed the Charterer about the

existence of the next fixture,49 which makes the Charterer already had knowledge about

such Next Fixture.50 Therefore, the Charterer is liable and shall indemnify the Owners

damages from the loss of next fixture as could reasonably have been foreseen at the time

of the breaching the Charterparty with late redelivery for the cancellation of the Next

Fixture as it’s possible consequences.51

II. THE CHARTERER SHALL INDEMNIFY THE OWNERS’ DAMAGES FOR

THE LOSS OF POSSIBLE FIXTURE

45. Next Fixture charterparty provides “FOR 2 YR CHARTER WITH 2 YR EXTENSION IN

CHOPT”, where there is an extension option for 2 years further (Possible Fixture).52 For

the loss of the possible fixture suffered by the Owners to be indemnified by the the

Charterer, there must be a causal connection between a party’s loss and the breach by the

other party before the tribunal will award damages, and the damage suffered by those

party must not be too “remote” from the breach of contract.

46. Thus, if the type or kind of loss was, at the time of contract, reasonably foreseeable by

the Charterer as a result from his breach (had he contemplated a breach), then such a type

or kind of loss is not too remote, where what was known to the Charterer at the time of

contract will clearly be relevant to what was reasonably foreseeable.53

47. The facts in question come to the Charterer knowledge in such circumstances that a

reasonable person in the shoes of the Charterer would have contemplated that, in the

49 Moot Scenario, Email date 26.06.2016, P.34 50 Moot Scenario, Claimant Claim’s Submission, para. 6, P.77 51 H Parsons (Livestock) Ltd v Uttley Ingham & Company Ltd [1977] EWCA Civ 13 (18 May 1977) 52 Moot Scenario, Champion Fixture Recap, P.32 53 John Grimes Partnership Ltd v Gubbins [2013] EWCA Civ 37 (05 February 2013), para. 17


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event of a breach by him, such facts were to be taken into account when considering his

responsibility for losses suffered by the the Owners as a result of such breach.54

48. Furthermore, the damages should be fairly and reasonably be considered arising

naturally, where the damages by a breach is caused from a delay in delivering is seen as

natural consequences.55 When it comes to recoverability of damages, the Owners can

recover such damages if the losses suffered was not too remote, which such loss arose

naturally, and reasonably foreseeable, thus the guilty party will be liable for those

unexpected damages.56

49. Even if the losses suffered do not arise naturally and thus are not reasonably foreseeable

which make it an extraordinary losses, a party will be liable for such extraordinary losses

if it had particular or specific knowledge that such losses are likely to occur in the case of

a breach.57 Thus, such losses are based on the actual knowledge of the party who did the

breach.

50. In this case, there is a causal connection between the possible fixture and next fixture

where the Charterer already have knowledge about the existence of those next fixture.58

The loss from possible fixture is directly connected with the next fixture as it is a natural

consequences from the cancellation of the next fixture caused by breach with late

redelivery by the Charterer. Where these damages suffered are not too remote, further

damages that are suffered can be claimed by the Owners.59

54 Satef-Huttenes Albertus SpA v Paloma Tercera Shipping Co SA (The Pegase) [1981] Lloyd's Rep 175, 183 55 Jackson & Anor v. Royal Bank of Scotland [2005] UKHL 3 (27 January 2005), para. 46. 56 Hadley & Anor v Baxendale & Ors [1854] EWHC Exch J70 (23 February 1854) 528 57 Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 58 Moot Scenatio, Email date 26.06.2016, P.34 59 Torvald Klaveness A/S v. Arni Maritime Corporation (The “Gregos”) [1993] 2 Lloyd's Rep. 335 ; Transfield

Shipping Inc of Panama v Mercator Shipping Inc of Monrovia [2006] EWHC 3030 (Comm) (01 December

2006, para. 36


14

51. In other words, there shall be no option for possible fixture to available if the next fixture

itself is not exist in the first place. Therefore, the Charterer shall indemnify the Owners

for damages from the loss of possible fixture.

ARGUMENTS ON THE MERITS OF THE COUNTER CLAIM

SUBMISSION ON THE OVERPAID HIRE

52. The Charterer are not entitled for the restitution or damages from overpaid hire as the

Vessel is not off-hire from 07.05.2016 until 26.06.2016, as this would not amount to an

off-hire event under clause 17 of the NYPE form and hire therefore shall continued to

accrue.60

53. It was the case in The London Explorer [1972] where the The Vessel was chartered on

terms that hire was to continue until the hour of the day of her redelivery.61 The

Charterers’ most basic obligation under a time charter is to make full and punctual

payment of hire. At any time, and for any period between delivery and redelivery, the

ship is ‘on hire’.62 The Charterers remain liable for hire until the ship is redelivered,

even in cases where the ship is redelivered after the end of the agreed charter period, the

Charterers remain liable for hire until redelivery takes place.63

54. The Charterer are not entitled for the restitution for the overpaid hire, because (I) the

Vessel was not off-hire from period of 07.05.2016 until 26.06.2016, and (II) The Vessel

Is Not Prevented From Full Working Pursuant To Clause 17 of the Charterparty.

60 Moot Scenario, Claimant Reply and Defence to Counter Claim Submission, para. 8, P.77 61 Transfield Shipping Inc of Panama v Mercator Shipping Inc of Monrovia [2006] EWHC 3030 (Comm) (01

December 2006), para. 21. 62 Terence Coghlin et al, Time Charters (Informa Law, 7th ed, 2014), P.10 63 Ibid, P.267


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I. THE VESSEL WAS NOT OFF-HIRE FROM PERIOD OF 07.05.2016 UNTIL

26.06.2016

55. The Charterer argued that quarantine in Wahanda would amount the off-hire event under

provision of Clause 17 of the NYPE form. Such quarantine in Wahanda shall not

deducted as off-hire under the provision of Clause 44 of the Charterparty. Clauses 44 of

tlhe Charterparty provides the Owners shall be liable for any delay in quarantine arising

from the Master, Officers, or crew having communication with the shore or any infected

area without the written consent of Charterers or their Agents and Any time lost by such

causes may be deducted as off-hire.64

56. Under this clause, if Charterers or their Agents acknowledge such quarantine from the

Master, Officers, or crew of the Vessel then the quarantine shall not be deducted as off-

hire.

57. In this case, the Master, Officers, or crew are having communication with Wahanda port

with the consent of the Charterer or their Agents, as the Owners are notified by the

Charterer Agent via email about the detainment of the Vessel by Wahanda port

authorities since the Vessel arrival in Wahanda without the objection of such

communication is made without their consent.65 Therefore, The Owners shall not be

liable and any time lost by such causes shall not deducted as off-hire based from

provision of Clauses 44.

II. THE VESSEL IS NOT OFF HIRE FROM THE PREVENTION OF FULL

WORKING OF THE VESSEL CAUSES UNDER CLAUSE 17 OF THE

CHARTERPARTY

64 Moot Scenario, Rider Clauses, Clause 44, P.9 65 Moot Scenario, Email date 07.05.2016, P.25


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58. Clause 17 of the Charterparty, where it is construed from clause 17 of NYPE form,

provides referring in relevant part, “in the event of loss of time from deficiency and/or

default and/or strike of officers or ratings… or detention by Port State control or other

competent authority for Vessel deficiencies… or by any similar cause preventing the full

working of the Vessel, the payment of hire and overtime, if any, shall cease for the time

thereby lost”.66

59. The off- hire clause of the NYPE form makes clear that only ejusdem generis causes are

to be effective, by adding the word “similar” before the word “cause” in the clause.67

Ejusdem generis rule is a rule of construction to the effect that a sweep up provision at

the end of a list must be taken to refer to the same kind of things as those previously

specifically mentioned.68

60. In such case, it is narrowed down from general to specific from the wording of the clause

and the court does not have to construe the clause constrictively.69 Here, the use of the

word, “similar” makes it abundantly clear whatever the “other cause” is, it has to be

similar to the causes specifically listed in the off-hire clause.

61. Where the off-hire clause is unamended and does not contain the word 'whatsoever', then

the ejusdem generis rule shall aplly.70 It is well established that the words ‘any other

cause’, in the absence of ‘whatsoever’, should be construed either ejusdem generis or at

any rate in some limited way reflecting the general context of the charter and clause.71 In

the application of the ejusdem generis rule, identification of the general type of cause of

the named causes is crucial.

66 New York Produce Exchange Form 2015 Clause 17 67 Terence Coghlin et al, Time Charters (Informa Law, 7th ed, 2014), P.451 68 Ibid, P.450 69 Rhidian Thomas, Legal Issues Relating to Time Charterparties (Informa Law, 1st ed, 2008), P.142-143 70 Ca Venezolana De Navegacion v. Bank Line (The "Roachbank") [1987] 2 Lloyd's Rep 498, United Kingdom:

High Court (England and Wales), 27 July 1987 71 Andre & Cie S.A. v. Orient Shipping (Rotterdam) B.V. (The “Laconian Confidence”) [1997] 1 Lloyd's Rep.

139


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62. Therefore, in the terms of the off-hire causes provided in the clauses 17 of the NYPE

form must be limited only within the causes already mentioned in such clauses, namely

detention by port state control or other competent authority for Vessel deficiencies and

not to be construed for every other causes outside what already mentioned in those

clauses that prevented the full working of the Vessel.

63. As the Charterparty already excepted the off-hire causes of detention by port state

control with Clause 44 of the Charterparty regarding quarantine, where in this case such

detention is caused by the quarantine of the Vessel, therefore the Vessel shall not be off-

hire from such causes and the Charterer is not entitled for any restitution or damages

from overpaid hire as the Vessel is at all times in the period of the Charterparty shall

remain on hire.

SUBMISSIONS ON CARGO CLAIM

64. The Owners is not liable for any cargo claim that are claimed by the Charterer from the

Receivers of the damaged cargo pursuant to clause 6 of the Inter-Club Agreement (ICA).

Clause 6 of the ICA provides “recovery under this Agreement by an Owners or

Charterers shall be deemed to be waived and absolutely barred unless written notification

of the Cargo Claim has been given to the other party to the charterparty within 24 months

of the date of delivery of the cargo or the date the cargo should have been delivered ...

such notification shall if possible include details of the contract of carriage, the nature of

the claim and the amount claimed”.72

65. Clause 53 of the Charterparty provides the Owners agree that liability for cargo claims,

as between Owners and Charterers, shall be apportioned as specified by the Inter-Club

72 Inter-Club Agreement Clause 6


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Agreement (ICA).73 Furthermore, clause 2 of the ICA provides the terms of ICA shall

apply notwithstanding anything to the contrary in any other provision of the charterparty;

in particular the provisions of clause (6) (time bar) shall apply notwithstanding any

provision of the charterparty or rule of law to the contrary.74

66. The Charterer argued in their counter claim where the cargo was found to be severely

wet damaged upon discharge of the Cargo at Wahanda caused by the negligence on the

part of the crew, where the crew negligently pumped water into the cargo hold while

ballasting prior to leaving the berth at West Coast.75 Details of the written notification of

those cargo claim provided by the Charterer only include nature of the cargo claim and

the contract of carriage that provided to the Owners, lacking the details of amount

claimed, which already confirmed by the Charterer during the course of this reference.76

67. The Owners is not liable for the cargo claim that are claimed by the Charterer from the

Receivers of the damaged cargo, because: (I) The Charterer failed to give proper details

of the written notification of the Cargo Claim to the Owners required by clause 6 of the

ICA; or alternatively, (II) Cargo Claim would not fall to be apportioned under clause

8(a) of the ICA.

I. THE CHARTERER FAILED TO GIVE PROPER DETAILS OF THE WRITTEN

NOTIFICATION OF THE CARGO CLAIM TO THE CLAIMANT REQUIRED

BY CLAUSE 6 OF THE ICA

68. The commercial purpose of a claims notification clause include ensuring the defendant

knows in sufficiently formal terms that a claim for breach is to be made so that financial

provision can be made for it. Such a purpose is not served if the notice is uninformative

73 Moot Scenario, Rider Clauses, Clause 53, P.10 74 Inter-Club Agreement Clause 2 75 Moot Scenario, Respondent Counter Claim Submission, para. 9, P.72 76 Procedural Order No. 2, para. 15


19

or unclear.77 The clause contemplates that the notice will be couched in terms which are

sufficiently clear and unambiguous as to leave no such doubt and to leave no room for

argument about the particulars of the complaint.78

69. There is a need to specify the matter which gives rise to the claim, the nature of the claim

and the amount claimed.79 The notice must specify the matter which gives rise to the

claim. This must mean the underlying facts, events and circumstances, which constitute

the factual basis on which the claim is posited, where one of things need to be specified

is that the notice must set out the 'amount claimed', specifically requires a calculation on

the part of of the loss which is allegedly suffered.80

70. There is an obligation in the Claim Notice to include a requirement of reasonable detail,

where the meaning is intended to add something to a requirement to specify, such as the

amount claimed, for what constitutes reasonable detail will depend the details to be

provided should be as extensive as those that would be required.81 When it is realistic to

put any monetary quantification on the amount claimed, then it is what has to be included

in the notification in relation to any particular claim.82

71. Clause 6 of the ICA provides that such notification shall if possible include details of the

contract of carriage, the nature of the claim and the amount claimed.83 Every notification

clause turns on its own individual wording, in particular due regard must be had to the

fact that where such notification clauses operate as a condition precedent to liability for

the party bringing a claim to demonstrate that it has complied with the notification

77 IPSOS SA v Dentsu Aegis Network Ltd [2015] EWHC 1171 (Comm) (29 April 2015), para. 19 78 Senate Electrical Wholesalers Ltd. v Alcatel Submarine Networks Ltd [1998] EWCA Civ 3534 (22 June

1998) 79 IPSOS SA v Dentsu Aegis Network Ltd [2015] EWHC 1171 (Comm) (29 April 2015) para. 24 80 Laminates Acquisitions v. BTR Australia Limited [2004] 1 All ER (Comm) 737 ; IPSOS SA v Dentsu Aegis

Network Ltd [2015] EWHC 1171 (Comm) (29 April 2015) 81 Rok plc v S Harrison Group Ltd [2011] EWHC 270 (Comm) 82 RWE Nukem Ltd v AEA Technology Plc [2005] EWHC 78 (Comm) (28 January 2005), para. 11 83 Inter-Club Agreement Clause 6


20

requirement where it gave proper particulars of its claims and did give those specific

details as were available to it.84

72. It is established for there is no claim notification in respect of the present claim was

given when there is a lack of details that need to be specified in such notification.85 In

this case, the Charterer only given the details for nature of the claim and contract of

carriage to the Owners without the amount of the claim provided.86 The Charterer have

failed to give the proper written notification of the Cargo Claim required by clause 6 of

the ICA, as the nature and effect of the information given by the Charterer regarding

cargo claim is not sufficient enough for the purposes of those clause, even when it is

applicable in this case to provide such information to the Owners where the amount is

already agreed between Receivers and the Charterer.87 As there is no cargo claim

notification given to the Owners by the Charterer within the time limit provided by

clause 6 of the ICA due to the lack of details, the written notification of the cargo claim

is time-barred under clause 6 of the ICA.

II. CARGO CLAIM SHALL NOT FALL TO BE APPORTIONED UNDER CLAUSE

8(a) OF THE ICA

73. Alternatively, if the tribunal wish to asserts there is a written notification of this cargo

claim, the Owners denied that the Cargo Claim would fall to be apportioned under clause

8(a) of the Inter-Club Agreement (ICA), since the claim was not arising from

unseaworthiness and/or error or fault in the navigation or management of the vessel since

the cargo claim is caused by the negligence of the crew.

84 RWE Nukem Ltd v AEA Technology Plc [2005] EWHC 78 (Comm) (28 January 2005), para. 2 85 IPSOS SA v Dentsu Aegis Network Ltd [2015] EWHC 1171 (Comm) (29 April 2015), para. 11 86 Procedural Order No. 2, para. 15 87 Procedural Order No.2, para. 11


21

74. The definition of seaworthiness is that the ship must have that degree of fitness which an

ordinary careful Owners would require his vessel to have at the commencement of her

voyage having regard to all the probable circumstances of it.88 There are two aspects of

seaworthiness, the first requires that the ship, her crew and her equipment shall be in all

respects sound and able to encounter and withstand the ordinary perils of the sea during

the contemplated voyage, and the second requires that the ship shall be suitable to carry

the contract cargo.89 This aspect of the duty relates to the physical condition of the vessel

and its equipment, the competence or efficiency of the Master and crew, and the

adequacy of stores and documentation.90 The Vessel at all times fulfilled the first and

second requirements of seaworthiness.

75. There is a distinction between negligence and incompetence of the crew, where only the

latter shall make the Vessel unseaworthy. Negligence is the omission to do something

which a reasonable man, guided upon those considerations which ordinarily regulate the

conduct of human affairs, would do, or doing something which a prudent and reasonable

man would not do,91 and incompetence may consist of a disabling want of skill or a

disabling want of knowledge.92

76. It is recognized that one mistake or even more than one mistake does not necessarily

render a crew member incompetent, as anyone can make a mistake without the

conclusion being drawn that he has either a disabling want of skill or a disabling lack of

knowledge.93

88 F.C. Bradley & Sons v. Federal Steam Navigation (1926) 24 Ll.L.Rep. 446 89 Actis Co. Ltd. v. The Sanko Steamship Co. Ltd. (The "Aquacharm") [1980] 2 Lloyd's Rep. 237 90 Papera Traders Co. Ltd. & Ors v Hyundai Merchant Marine Co. Ltd. [2002] EWHC 118 (Commercial)

(7th February, 2002) 91 Blyth v Birmingham Waterworks (1856) 11 Ex Ch 781 92 Papera Traders Co. Ltd. Ors v Hyundai Merchant Marine Co. Ltd. [2002] EWHC 118 (Commercial) (7th

February, 2002) 93 The Star Sea [1997] 1 Lloyd’s Rep. 360 P. 373-374 (per Leggatt LJ)


22

77. In this case, the Charterer already acknowledge that error in ballasting management is

caused by negligence of the crew.94 The Owners also undertook its own investigations

into the incident and confirm the findings of the Charterer Preliminary Survey Report for

the cause of the damage suffered to the cargo.95 As negligence of the crew is not the

cause for the vessel to be unseaworthy, therefore the Cargo Claim shall not fall to be

apportioned under clause 8(a) of the ICA.

PRAYER FOR RELIEF

For the reasons set out above, the Owners seeks the following orders and declarations:

A. A declaration for this Tribunal has jurisdiction to hear the merits of the Owners’

claims;

B. An order that the Charterer pay the Owners damages in the amount of

USD15,426,567.42, comprising:

i. USD 41,000.00 for hull cleaning costs

ii. USD 55,567.42 for voyage to South Island to perform hull cleaning

iii. USD 15,330,000.00 for late re-delivery (loss of hire under the Net Fixture,

calculated as 4 years at USD 10,500 per day).

C. An award for interest under s 49 of the Arbitration Act 1996 (UK); and

D. An order for costs.

94 Moot Scenario, First Email of 27.06.2016, P.38 95 Procedural Order No. 2, para. 9

Documents

EAM 18 - Murdoch University · twentieth annual international maritime law arbitration moot 2019 universitas diponegoro team 18 memorandum for claimant’s in the matter of the arbitration