TEAM NUMBER: 7

1

IN THE MATTER OF AN ARBITRATION

THE 16TH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2015

WESTERN TANKERS INC

CLAIMANT

V

LESS DEPENDABLE TRADERS PTE

RESPONDENT

MEMORANDUM FOR THE CLAIMANT

Jessica Duncan | Zackary George | Leo Rees-Murphy | Georgia Williams

TEAM NUMBER: 7

2

TABLE OF CONTENTS

REFERENCE LIST 3

SUMMARY OF FACTS 7

SUMMARY OF ARGUMENT 8

SUBMISSIONS 9

(1) THE ARBITRAL TRIBUNAL HAS JURISDICTION TO HEAR THIS MATTER

(A) The parties have provided for England and English law to be the seat and forum of

the arbitration

(B) This construction is not altered by anything in the recapitulation or previous

correspondence

(2) THE RESPONDENT IS LIABLE TO PAY HIRE WHICH WAS DUE AND PAYABLE

UNDER THE CHARTERPARTY 10

(A) Hire was due and payable under the Charterparty on 3 July 2014

(B) The Charterparty was not frustrated

(C) The Vessel was not off-hire

(3) THE RESPONDENT AND/OR PERSONS ACTING AS ITS AGENTS COMMITTED

THE TORT OF FRAUD 15

(A) The fraud claim is admissible in this arbitration

(B) Representations were made by ASA2 as agent of the Respondent

(C) The elements of the tort of fraud are satisfied

(4) THE VESSEL WAS FIT FOR SERVICE 21

(A) Claims in respect of the loss of cargo

(B) Non-cargo claims for the loss of fixture

(5) THE CLAIMANT DID NOT CONVERT OR BREACH THEIR DUTY AS BAILEE IN

RESPECT OF PART OF THE CARGO ON BOARD 26

(A) The Claimant has not breached its duties as a bailee

(B) The Claimant did not convert part of the cargo

(6) THE CLAIMANT SHOULD BE AWARDED COMPOUND INTEREST 29

RELIEF SOUGHT 30

TEAM NUMBER: 7

3

REFERENCE LIST

CASES

A & J Inglis v John Buttery & Co (1877) 5 R 58

Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd (“The Saxon Star”) [1959] AC

133

Andrews v Mockford [1896] 1 QB 372

The Antigoni [1991] 1 Lloyd’s Rep. 209

The Atlantic Glory (1969) AMC 2318

Armagas Ltd v Mumdogas SA (The Ocean Frost) [1986] AC 717

Bank Line Limited v Arthur Capel & Co [1919] AC 435

Blackfriars Lighterage & Cartage Co Ltd v R L Hobbs (“The Landeer”) [1955] 2 Lloyd’s

Rep 554

Borgship Tankers Inc v Product Transport Corporation Ltd (“The Casco”) [2005] EWHC

273

Briess v Woolley [1954] AC 333

Caltex Oil (Aust) Pty Ltd v Alderton [1964–65] NSWR 456

Cargill International S.A. v Cpn Tankers (Bermuda) Ltd (The "Ot Sonja") [1993] 2 Lloyd’s

Rep. 435

Capital Trust Investment Ltd v Radio Design AB [2002] EWCA Civ 135

Chartbrook Homes Ltd v Perismmon Homes Ltd [2009] 1 AC 1101

Christopher Brown v Genossenschaft Osterreichlischer Waldbesitzer GmbH [1954] 1 QB 8

Colonial Bank v Cady and Williams (1890) 15 App Cas 267

Copping v ANZ McCaughan Ltd (1997) SASR 525

Countess of Warwick Steamship Company v Le Nickel Societe Anonyme; Anglo-Northern

Trading Company Ltd v Emlyn Jones & Williams [1918] 1 KB 372

Davis Contractors Ltd v Fareham Urban DC [1956] AC 696

Derry v Peek (1889) 14 App Cas 337

East West Corporation v DKBS 1912 & Ors [2003] QB 1509

Edgington v Fitzmaurice (1885) 29 Ch D 459

The Europa [1908] P. 84

Eridania SpA v Rudolf A Oetker (“The Fjord Wind”) [1999] 1 Lloyd’s Rep. 307

Eridania SpA v Rudolf A Oetker (“The Fjord Wind”) [2000] 2 Lloyd’s Rep. 191

Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32

TEAM NUMBER: 7

4

Fiona Trust & Holding Corp v Privalov [2008] 1 Lloyd’s Rep. 254

Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480

Glynn v Margetson [1893] AC 351

Gosse Millerd v. Canadian Government Merchant Marine [1929] AC 223

Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation

Berhad (The Bunga Seroja) (1998) 196 CLR 161

Henderson v Merrett Syndicates Ltd [1995] 2 AC 145

Homburg Houtimport BV v Egrosin Private Ltd (“The Starsin”) [2004] 1 AC 715

Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (“The Hongkong Fir”) [1961] 2

Lloyd’s Rep. 478

International Fina Services AG v Katrina Shipping Ltd (“The Fina Samco”) [1994] 1 Lloyd’s

Rep 153

Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896

Kemp v Tolland [1956] 2 Lloyd’s Rep. 681

Kuwait Airways Corporation v Iraqi Airways Company and Others [2002] 2 AC 883

Liberty Shipping LIM. Procs 1973 AMC 2241

Lesotho Highlands Development Authority v Impregilo Spa [2006] 1 AC 221

Liverpool City Council v Walton Group Plc [2002] 1 EGLR 149

Mair v Rio Grande Rubber Estates Ltd [1913] AC 853

Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd (“The Star Sea”) [1997] 1 Lloyd’s

Rep. 360

Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (“The Mihalis Angelos”)

[1971] 1 QB 164

Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959] AC 589

Minister of Food v Reardon Smith Line [1951] 2 Lloyd’s Rep. 265

Midland Bank Trust Co limited v Hett, Stubs & Kemp [1979] Ch 384

Midland Silicones v Scruttons [1962] AC 446

National Bank of Greece SA v Pinios Shipping Co (no. 1) and George Dionysios Tsitsilianis

(The “Maria”) (No.3) [1990] 1 Lloyd’s Rep. 225

National Carriers v Panalpina (Northern) Ltd [1981] AC 675

Navigazione Alta Italia S.P.A. v Concordia Maritime Chartering A.B. (The “Stena Pacifica”)

[1990] 2 Lloyd’s Rep 234

The North Hills, 1973 AMC 2318 (Arb. at N.Y. 1972).

Ocean Tramp Tankers Corp v V/O Sovfracht (“The Eugenia”) [1964] 2 QB 226

Ove Skou v Rudolf A Oetker (“The Arctic Skou”) [1985] 2 Lloyd’s Rep 478

TEAM NUMBER: 7

5

The Pacglory, SMA 2737 (Arb. at N.Y. 1990)

Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501

Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd (“The Eurasian Dream”) [2002]

1 Lloyd’s Rep. 719

Peek v Gurney (1873) LR 6 HR 377

Pickering v Barkley (1648) 82 ER 587

“The Pioneer Container” [1994] 2 AC 324

Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) (No.2) [1982] AC 724

Prenn v Simmonds [1971] 1 WLR 1381

Re London and provincial electric lighting and power generating Co Ltd (1886) 55 LT 670

Republic of Bolivia v Indemnity Mutual Marine Insurance [1909] 1 KB 785

The Roberta (Indemnity) (1938) 60 Lloyd’s Rep. 84

Russell v Niemann [1864] 144 ER 66

Smith New Court Securities Ltd v Citibank NA [1997] AC 254

Sonatrach Petroleum Corp. (BVI) v Ferrell Int’l Ltd [2002] 1 All ER (Comm) 627

Standard Oil Co of New York v Clan Line Steamers Ltd [1924] AC 100

Stargas S.P.A v Petredec Ltd (The "Sargasso") [1994] Lloyd's Rep 412

The Stena Pacifica [1990] 2 Lloyd’s Rep 234

Sulamérica Cia Nacional de Seguros SA v Ensa Engenharia SA [2012] 1 Lloyd's Rep. 671

Svenska Petroleum Exploration AB v Government of the Republic of Lithuania [2006] 1

Lloyd's Rep. 181

Taylor v Caldwell (1863) 122 ER 309

Trafigura Beheer BV v Navigazione Montanari Spa (The "Valle Di Cordoba") [2015] 1

Lloyd’s Rep. Plus 26

Ulysses Compania Naviera S.A. v Huntingdon Petroleum Services Ltd and Others (“The

Ermoupolis") [1990] 1 Lloyd’s Rep 160

W. J. Tatem, Limited v Gamboa [1939] 1 KB 132

Westvilla Properties Limited v Dow Properties Limited [2010] EWHC 30 (Ch)

Whistler International v. Kawasaki Kisen Kaisha (The Hill Harmony) [2001] 1 AC 638

XL Insurance Ltd v Owens Corning [2000] 2 Lloyd’s Rep. 500

Yarm Road Ltd v Hewden Tower Cranes Ltd (2003) 90 Con LR 1

TEAM NUMBER: 7

6

BOOKS

Ambrose, Clare, and Karen Maxwell, London Maritime Arbitration (Informa, 3rd ed, 2009)

Born, G, International Commercial Arbitration (Kluwer, 2nd Ed, 2014)

Cartwright, John, Misrepresentation, Mistake and Non Disclosure, (Sweet & Maxwell, 3rd ed,

2012

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

Davies, Martin, and Anothony Dickey, Shipping Law (Lawbook Co, 3rd ed, 2004)

Gorton, Lars, Shipbroking and Chartering Practice (Business of Shipping Series, 7th ed,

2009)

Handley, KR, Spencer Bower & Handley Actionable Misrepresentation (2014, 5th Ed,

LexisNexis)

Jones, Michael (ed), Clerk & Lindsell on Torts (2010, 20th ed, Sweet & Maxwell)

Karan, Hakan, The Carrier’s Liability under International Maritime Conventions the Hague,

Hague-Visby, and Hamburg Rules (The Edwin Mellen Press, 2004)

Richardson, John, A Guide to the Hague and Hague-Visby Rules (Lloyd’s of London Press

Ltd, 3rd ed, 1994)

Tweeddale, A, and K Tweeddale, Arbitration of Commercial Disputes: International English

Law and Practice (2005, Oxford University Press)

Todd, Paul, Maritime Fraud and Piracy (Lloyd’s List, 2nd ed, 2010)

Watts, Peter, and F.M.B. Reynolds, Bowstead & Reynolds on Agency (2010, 19th Ed, Sweet &

Maxwell) 372

LEGISLATION

Arbitration Act 1996 (UK)

Journal Articles

Hunter, Grant, ‘Revised Piracy Clauses’ (Special Circular No 7, BIMCO, 19 July 2013) 2

White, Roger, ‘Human Unseaworthniess’ [1995] 1 Lloyd’s Maritime and Commercial Law

Quarterly 221

OTHER

The travaux préparatoires of the International Convention for the Unification of Certain

Rules of Law relating to bills of lading of 25 August 1924, The Hague Rules and of the

protocols of 23 February 1968 and 21 December 1979, The Hague-Visby Rules, 408

UK P&I Club, “Piracy: A Change of Tactics - West Africa” (Bulletin 763 - 05/11, UK P&I

Club, 13 May 2011)

TEAM NUMBER: 7

7

STATEMENT OF FACTS

THE PARTIES AND THE CHARTER AGREEMENT

Western Tankers Inc (“the Claimant”) are the owners of the Western Dawn (“the Vessel”)

which was chartered to Less Dependable Traders Pte (“the Respondent”) on an amended

Shelltime 4 pro-forma with rider clauses (“the Charterparty”). Subjects were lifted on 26

May 2014. The Vessel was ordered by the Charterers to undertake a voyage from Singapore

to OPL Luanda, where oil cargo would be discharged at a Ship to Ship transfer (“STS”)

location. As a result of the events outlined, the Claimant seeks an award for the payment of

hire under the Charterparty and damages in respect of the material damage to the Vessel

during a piracy attack.

THE EVENTS THROUGHOUT THE VOYAGE

Under the Charterparty the Respondent was to provide and pay for all fuel. In response to

repeated concerns raised by the Master about the supply of bunkers, the Respondent and

ASA2 (an entity that the Claimant submits acted as the Respondent’s agent) gave multiple

assurances representing that bunkers would be available at later locations throughout the

voyage. Bunkers were not provided.

While approaching OPL Luanda, the Master was directed by ASA2 to a revised STS location

for the provision of bunkers and discharge of cargo. On 4 July 2014, while awaiting ASA2’s

instruction at the given coordinates, the Vessel was seized by pirates. Later that day, the

Respondent refused to pay the second instalment of hire. The Vessel was detained for 13 days

until the Master made contact with the Claimant and the Respondent on 17 July 2014. The

Master reported that between 4 and 17 July 2014 an unknown quantity of the cargo on board

was discharged, crew members were injured and the Vessel was materially damaged.

TEAM NUMBER: 7

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SUMMARY OF ARGUMENT

DETERMINATION OF THESE MATTERS BY THE TRIBUNAL

The Claimant submits to the jurisdiction of this Tribunal to determine the disputes outlined, as

conferred by the Charterparty.

THE CLAIMANT’S CONTENTIONS

The Claimant is owed unpaid hire, which became payable under the Charterparty on 3 July

2014. Moreover the Vessel was not off-hire and nor was the Charterparty frustrated at this

time, meaning the obligation to pay hire remained on foot. The Claimant also seeks damages

for the physical damage inflicted on the Vessel during the piracy attack, on the basis that it

was caused by fraud perpetrated by the Respondent and its agents.

RESPONSE TO THE COUNTERCLAIM

Further, on the true construction of the Charterparty, the Claimant did not breach its

obligations as to the Vessel’s fitness or its duties under the express piracy clauses, so cannot

be responsible for the piracy attack. The Claimant also did not breach its duties as a bailee or

convert the cargo.

TEAM NUMBER: 7

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SUBMISSIONS

(1) THE ARBITRAL TRIBUNAL HAS JURISDICTION TO HEAR THIS MATTER

(A) The parties have provided for England and English law to be the seat and forum of

the arbitration

1. Clause 46(b) of the Shelltime 4 form (“the Arbitration Clause”) provides that “all

disputes arising out of this charter shall be referred to Arbitration in London in

accordance with the Arbitration Act 1996”.

2. It is a recognised principle of intentional commercial arbitration that an arbitral tribunal

has the power to rule on its own jurisdiction.1

3. An arbitration agreement is considered separable and independent from the main

contract,2 and is governed by the “proper” law of that agreement.3 Here the proper law

of the arbitration agreement is English law.4

4. The Arbitration Clause should be given the meaning that it would convey “to a

reasonable person having all the background knowledge which would reasonably have

been available to the parties in the situation in which they were at the time of the

contract”.5 The Arbitration Clause clearly and unambiguously states that “disputes shall

be referred to Arbitration in London” and the Tribunal should give effect to this

intention.

1 Christopher Brown v Genossenschaft Osterreichlischer Waldbesitzer GmbH [1954] 1 QB 8, 12-13; see also

Arbitration Act 1996 (UK) c 23, s 30. 2 Fiona Trust & Holding Corp v Privalov [2008] 1 Lloyd’s Rep. 254; Lesotho Highlands Development Authority

v Impregilo Spa [2006] 1 AC 221, 232; Arbitration Act 1996 (UK) c 24, s 7. 3 Clare Ambrose and Karen Maxwell, London Maritime Arbitration (Informa, 3rd ed, 2009) 68. 4 On establishing the proper law of the arbitration agreement, see for example: Sulamérica Cia Nacional de

Seguros SA v Ensa Engenharia SA [2012] 1 Lloyd's Rep. 671, 679; XL Insurance Ltd v Owens Corning [2000] 2

Lloyd’s Rep. 500, 508; Svenska Petroleum Exploration AB v Government of the Republic of Lithuania [2006] 1

Lloyd's Rep. 181, 204; G Born, International Commercial Arbitration (Kluwer, 2nd ed, 2014) 580-835, 589-94. 5 Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896, 912.

TEAM NUMBER: 7

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(B) This construction is not altered by anything in the recapitulation or previous

correspondence

5. Although the recap email dated 26 May 2014 (“the Recap”) includes the words “LAW

AND LITIGATION:”, the blank space following these words indicates that the parties

did not stipulate an amendment to the Arbitration Clause in the Shelltime 4 form and

therefore intended that clause to apply.6 On the objective approach to contractual

interpretation,7 the blank space following “LAW AND LITIGATION:” should be read

in conjunction with the Shelltime 4 form as referring to “England and London

Arbitration”.

6. Alternatively, “LAW AND LITIGATION:” should be considered meaningless as one

cannot with ‘reasonable certainty’8 fill the blank space with any other law or forum of

dispute resolution. Nothing on the facts supports the Respondent’s contention that

“Singapore and Singapore Arbitration” should be inferred.

7. In previous correspondence dated 23 May 2014, the Respondent asserted that it was not

“keen on London Arbitration”.9 The Claimant submits that evidence of prior

negotiations and declarations of subjective intention prior to the contract are neither

relevant nor admissible.10 This statement therefore cannot be used to interpret the rest of

the arbitration agreement.

6 Facts, p 6. 7 Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896, 913. 8 Liverpool City Council v Walton Group Plc [2002] 1 EGLR 149 [46], cited with approval in form Westvilla

Properties Limited v Dow Properties Limited [2010] EWHC 30 (Ch) [40] citing A & J Inglis v John Buttery &

Co (1877) 5 R 58, 69-70. 9 Facts, p 2. 10 Prenn v Simmonds [1971] 1 WLR 1381, 1384; Chartbrook Homes Ltd v Persimmon Homes Ltd [2009] 1 AC

1101.

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(2) THE RESPONDENT IS LIABLE TO PAY HIRE WHICH WAS DUE AND

PAYABLE UNDER THE CHARTERPARTY

(A) Hire was due and payable under the Charterparty on 3 July 2014

8. Clause 8 of the Charterparty provides that hire is to be paid “from the time and date of

[the Vessel’s] delivery (local time)”,11 and under clause 9 is payable “per calendar

month in advance”.12 The Respondent failed to pay for the second hire period13 which

the Claimant submits on two alternative grounds was payable on 3 July 2014.

9. First, the words “local time” in clause 8 should be interpreted as meaning the time

“local” to the transaction as a whole. References to “local time” are ambiguous, as it is

unclear whether the words refer to the time “local” at the Vessel’s location, to the

transaction as a whole or even particular events occurring in performance. Where

alternative constructions are available, the construction adopted should give effect to the

sensible commercial approach to calculating hire which would be objectively intended

by the parties.14

10. The parties likely intended that “local time” refer to one consistent time zone such that

hire is paid for the total elapsed period, otherwise the computation of hire depends on

the direction of travel.15 Additionally, “calendar month” is an expression of lapsed time

and therefore supports a construction that hire should be calculated on the basis of

elapsed time.16 Therefore, “local time” should be read as referring to the “local time” of

the transaction as a whole. This is English time, having regard to the location of the

bank,17 the seat of the Arbitration and choice of law under the Charterparty.18 Delivery

11 Shelltime 4, cl 8. 12 Shelltime 4, cl 9. 13 Facts, pp 39, 41. 14 Ove Skou v Rudolf A Oetker (“The Arctic Skou”) [1985] 2 Lloyd’s Rep. 478, 480. 15 The North Hills, 1973 AMC 2318 (Arb. at N.Y. 1972). 16 The Pacglory, SMA 2737 (Arb. at N.Y. 1990) citing The Atlantic Glory, SMA 76 (Arb. at N.Y. 1962). 17 Facts, p 5. 18 Shelltime 4, cl 46(b).

TEAM NUMBER: 7

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occurred at 00:01 (UTC+8) on 4 June 2014,19 so the obligation to pay hire arose in the

first instance at 16:01 (GMT) on 3 June 2014. From this point hire was therefore

payable one calendar month later on the third day of July.

11. Alternatively, the Claimant submits that the preferable construction of the words “per

calendar month in advance” is that payment is to be made prior to each calendar month

commencing.20 As the Vessel was delivered on 4 June 2014, the next “calendar month”

would begin on 4 July 2014. Accordingly, payment was due “in advance” of that period,

meaning the date payable was 3 July 2014.

(B) The Charterparty was not frustrated

12. The Respondent bears the onus of showing that “without default of either party, a

contractual obligation has become incapable of being performed because the

circumstances in which performance is called for would render it a thing radically

different from that which was undertaken by the contract”.21

13. The Claimant submits that the Charterparty is not frustrated on the basis of either

impossibility of performance, or the delay occasioned by the piracy attack and the

consequent damage to the Vessel.

(i) The allegedly frustrating event is contemplated by express provision in the contract

14. The doctrine of frustration cannot be invoked where the express terms of the contract

make complete provision for the situation that has arisen.22 The parties have allocated

risks in respect of piracy by including in Recap the BIMCO Piracy clause for Time

19 Facts, p 28. 20 In support for this construction see the discussion of a similar clause in the NYPE 93 form: Coghlin et al, Time

Charters (Informa, 7th ed, 2014) [16.5]. 21 National Carriers v Panalpina (Northern) Ltd [1981] AC 675, 700 restating the test in Davis Contractors Ltd

v Fareham Urban DC [1956] AC 696. 22 Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32, 40; Bank Line v Capel [1919]

AC 435, 441-443.

TEAM NUMBER: 7

13

Charter Parties 2013 (“the BIMCO Piracy Clause”)23 and the Special Provision Piracy

Clause24 to be riders to their agreement.

15. The facts fall within the ambit of these piracy clauses. The meaning of the word

“piracy” in a document used “by business men for business purposes… [is] the meaning

that would be given to it by ordinary persons.”25 On an ordinary meaning a piracy attack

involves a violent theft or seizure of a vessel for ransom for private, rather than public,

purposes.26 which applies on the facts.27

16. The BIMCO Piracy Clause states that if the Vessel is attacked by pirates the time lost

shall “be for the account of the Charterers and the Vessel shall remain on hire.”28 The

clause also holds the charterers liable for hire both during a seizure by pirates and for

any time lost in making good any damage and deterioration resulting from the seizure.29

This clause both contemplates and provides for the seizure itself and the consequent

damage to the main deck hose and systems.30

(ii) Nothing on the facts amounts to a “frustrating event”

Impossibility

17. Despite the damage to the Vessel the contract may still be performed. Discharge of only

part of the cargo does not amount to total destruction of the subject matter of the

Charterparty which might otherwise suffice to frustrate that agreement.31

23 Facts, p 11. 24 Facts, p 8. 25 Republic of Bolivia v Indemnity Mutual Marine Insurance [1909] 1 KB 785, 790; note “piracy” is undefined in

the Charterparty. 26 Paul Todd, Maritime Fraud and Piracy (Lloyd’s List, 2nd ed, 2010) 11-13. 27 Facts, p 42 see also p 46. 28 Facts, p 12 sub-clause (e). 29 Facts, p 12 subclause (f); note that the 2009 BIMCO Piracy Clause was specifically amended to achieve this

outcome: Grant Hunter, ‘Revised Piracy Clauses’ (Special Circular No 7, BIMCO, 19 July 2013) 2. 30 Facts p 42. 31 Taylor v Caldwell (1863) 122 ER 309; W. J. Tatem, Limited v Gamboa [1939] 1 KB 132, 138.

TEAM NUMBER: 7

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18. A mere increase in onerousness or expense in performing the contract is insufficient to

bring about a frustrating event.32 Once the Vessel is repaired at Cape Town, the contract

may still be partially performed.

Delay

19. In a time charterparty, a critical factor in assessing whether the delay is likely to be so

inordinate as to frustrate the contract is to compare the probable length of the delay with

the total period of the charterparty.33 The probable length of the interruption must be

reasonably assessed at the time the event occurs.34

20. The Claimant submits that at the time the Vessel was seized by pirates, it was unlikely

that the service would be interrupted for a particularly substantial period given the

practice of pirates operating in the area, which may involve capture for only a number

of days.35 The charter period was to run for a period of two months as the Respondent

had already chosen to exercise its option to redeliver early.36 In the context of a two

month charter period, the relatively insubstantial probable delay does not amount to a

frustrating event.

(C) The Vessel was not off-hire

(i) The Vessel remained on-hire under the BIMCO Piracy Clause

21. The Charterparty explicitly provides that the Vessel is to remain on hire in the event of

a piracy attack. The BIMCO Piracy Clause states that “if the Vessel is attacked by

pirates any time lost shall be for the account of the Charterers and the Vessel shall

remain on hire.”37 Under sub-clause (f) the Vessel “shall remain on hire throughout the

seizure and the Charterers’ obligations shall remain unaffected, except that hire

32 Ocean Tramp Tankers Corp v V/O Sovfracht (“The Eugenia”) [1964] 2 QB 226, 239. 33 Ibid. 34 Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) (No.2) [1982] AC 724; Anglo-Northern v Jones [1917] 2

KB 78, 85. 35 UK P&I Club, “Piracy: A Change of Tactics - West Africa” (Bulletin 763 - 05/11, UK P&I Club, 13 May

2011) 1. 36 Facts, pp 39-40. 37 Facts, p 12 sub-clause (e).

TEAM NUMBER: 7

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payments shall cease as of the ninety-first (91st) day after the seizure until release”.38

The “piracy attack” reported by the Master on 17 July 2014 falls within the ambit of this

clause,39 so the clear, unambiguous words expressly provide that the Vessel remained

on hire throughout this period.

(ii) The BIMCO Piracy Clause prevails over all other “off-hire” provisions in the Charterparty

22. In accordance with the rule of construction that specific clauses prevail over general

clauses in contracts,40 the specific BIMCO Piracy Clause prevails over the standard off-

hire provision, clause 21 in the Shelltime 4 form. As a special rider, under general

principles of construction the BIMCO Piracy Clause takes priority over a clause in the

standard form.41

23. Further, to the extent that there is any conflict between the BIMCO Piracy Clause and

the Special Piracy Clause, the former should prevail in accordance with sub-clause (g)

which states: “[i]n the event of a conflict between the provisions of this Clause and any

implied or express provision of the Charterparty, this Clause shall prevail.”42

(iii) Alternatively, if the BIMCO Piracy Clause does not prevail, the Vessel was not off-hire

for breach of orders or neglect of duty

24. The Respondent cannot rely on the Master following the orders of ASA2 as a breach of

orders or neglect of duty because the instructions by ASA2 were issued on the

Respondent’s behalf. This is discussed below at [28] – [35].

25. The Respondent cannot invoke clause 21(a)(ii) of the Shelltime 4 form. The words “due

to” in clause 21(a)(ii) require a causal link between the breach of order or neglect of

38 Facts, p 12. 39 For the reasons stated at [15] above; Facts pp 41-42. 40 Glynn v Margetson [1893] AC 351, 355. 41 Homburg Houtimport BV v Egrosin Private Ltd (“The Starsin”) [2004] 1 AC 715, 737; Lars Gorton,

Shipbroking and Chartering Practice (Business of Shipping Series, 7th ed, 2009) 192. 42 Facts, p 11.

TEAM NUMBER: 7

16

duty, and the loss of time.43 In the circumstances there is no causal link between any

alleged breach of orders or neglect of duty by the Master and a loss of time as required

under that clause.

(3) THE RESPONDENT AND/OR PERSONS ACTING AS ITS AGENTS

COMMITTED THE TORT OF FRAUD

(A) The fraud claim is admissible in this arbitration

26. Since The Fiona Trust44 Arbitration agreements are construed in accordance with the

presumption that the parties intended that any dispute arising out of their contractual

relationship is to be decided by the same tribunal, unless the language makes clear that

certain questions were intended to be excluded from the tribunal’s jurisdiction.45 There

is no language in the Arbitration Clause to exclude tort claims that arise in the course of

performing the Charterparty. Therefore, as a matter of construction, the clause is apt to

cover the fraud dispute. It would defeat the commercial purpose of an arbitration clause

to attribute an intention to the parties that there be two sets of proceedings in different

jurisdictions arising out of the same facts.46

27. The Claimant further submits that the same result would be reached even if the Fiona

Trust is not followed and the earlier, now abandoned,47 approach of English Courts is

adopted. The words “arising out of” are sufficiently broad to cover the fraud allegation.48

The contractual and tortious disputes are so closely knitted together on the facts, as the

43 International Fina Services AG v Katrina Shipping Ltd (“The Fina Samco”) [1994] 1 Lloyd’s Rep. 153, 161;

Stargas S.p.A v Petredec Ltd (“The Sargasso") [1994] 1 Lloyd's Rep. 412, 427. 44 Fiona Trust & Holding Corp v Privalov [2008] 1 Lloyd’s Rep. 254. 45 Ibid, 257. 46 Ibid, 256; Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488, 517. 47 Clare Ambrose and Karen Maxwell, London Maritime Arbitration (Informa, 3rd ed, 2009) 56. 48 Capital Trust Investment Ltd v Radio Design AB [2002] EWCA Civ 135; see generally A Tweeddale and K

Tweeddale, Arbitration of Commercial Disputes: International English Law and Practice (Oxford University

Press, 2005).

TEAM NUMBER: 7

17

fraud was perpetrated in the course of performing the Charterparty, therefore “an

agreement to arbitrate on one can properly be construed as covering the other”.49

(B) Representations were made by ASA2 as agent of the Respondent

28. ASA2 is considered to have acted on behalf of the Respondent on the basis of apparent

authority.50

29. A principal is estopped from denying a legal relationship of apparent authority where

there has been a manifestation made by the principal, through words or conduct, that the

agent had authority to act, and the manifestation was relied upon by a third party in

circumstances where it was reasonable to do so.51

(i) The Respondent manifested that ASA2 had authority to act as their agent

30. On 4 July 2015 the Respondent made a statement that the Master should “continue to

liaise with [his] STS coordinator” (emphasis added).52

31. This statement was made in the following context:

a. The Respondent failed to ensure its discharge port agent coordinated the STS transfer

as the Vessel approached the STS location;53

b. On 28 June 2014, ASA2 contacted the Master purporting to be the STS coordinator,

stating an STS transfer would be performed with the “Antelope”;54

c. On 30 June 2014 the Respondent was copied in on an email from the Master to

Captain Anya from ASA2;55 and

49 Ulysses Compania Naviera S.A. v Huntingdon Petroleum Services Ltd and Others (“The Ermoupolis") [1990]

1 Lloyd’s Rep. 160, 164. 50 Peter Watts and F.M.B. Reynolds, Bowstead & Reynolds on Agency (Sweet & Maxwell, 19th ed, 2010) 364-

73; see also 65-99 on principles of ‘ratification’ which would lead to a similar result on the facts. 51 Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, 498. 52 Facts, p 40. 53 Facts, p 14; see also on creating the circumstances in which a person may appear authorised: Colonial Bank v

Cady and Williams (1890) 15 App Cas 267, 273; Armagas Ltd v Mumdogas SA (“The Ocean Frost”) [1986] AC

717, 777. 54 Facts, p 35. 55 Facts, p 41.

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18

d. On 3 July 2014 the Master informed the Respondent that the Vessel was to undertake

an STS transfer and receive bunkers from the “Antelope”.56

32. The Claimant submits that this statement on 4 July, in the context of the Respondent’s

knowledge, was a manifestation as to ASA2’s authority.

(ii) The manifestation was reasonably relied upon by the Claimant

33. The Master relied on the agency of ASA2 by proceeding to the coordinates stated in the

correspondence from ASA2.57

34. This reliance was reasonable given the appropriate timing of ASA2’s contact, the lack

of contact from any other coordinator and instruction by the Respondent to continue

liaising with this coordinator. No evidence suggests that the Master actually lacked

belief in the authority of ASA2 and he was not on notice as to ASA2’s actual lack of

authority.

(C) The elements of the tort of fraud are satisfied

35. The tort of fraud requires the following elements listed at (i)-(v) below.58 Whilst the

difficulty of sustaining an allegation of fraud is acknowledged, the Tribunal is invited to

conclude that the elements are satisfied for the reasons below.

(i) A false representation

36. The Respondent made three false representations:

a. On 3 June 2014, the Charterers represented that a sufficient supply of bunkers would

be “available passing Durban or Cape Town”59 (“the First Statement”);

b. Twice on 28 June 2014, the Charterers represented that a sufficient supply of bunkers

would be available “on arrival STS Area 1”60 (“the Second Statement”); and

56 Facts, p 38. 57 Facts, p 35. 58 Michael Jones (ed), Clerk & Lindsell on Torts (Sweet & Maxwell, 20th ed, 2010) 1191-1222. 59 Facts, p 26. 60 Facts, pp 33-34.

TEAM NUMBER: 7

19

c. On 28 June 2014, ASA2, on behalf of Charterers, instructed the Vessel that she was

under the “control” of ASA2 as the Charterers’ “agency” and “local instruction”, that

she would “discharge 72,000mts gasoil / balance of cargo TBN” at a nominated STS

location, and that she would receive “300MT IFO bunkers”61 (“the Third

Statement”);

d. Taken together (“the Statements”).

37. These connected Statements must be considered as a whole and read together as a series

of representations.62 Together they are a “continuous fraud” that the Respondent would

in future provide bunkers to the Claimant.63

38. The Respondent lacked reasonable grounds for making the Statements, which renders

the Statements false.64 In respect of the First Statement, the Respondent had an

insufficient credit line to provide sufficient bunkers for the itinerary required under the

Charterparty,65 which the Master stated was 1500MT.66 On 27 May 2014 the

Respondent requested a “credit line to the order of US$750,000 to US$1 million”67 but

Equator Bunkers only approved a line of US$650,000.68 On the purchase option

selected69 the full 1500MT required would have cost US$945,375, exceeding the

Respondent’s approved credit line.

39. There is no correspondence to show the Respondent requested an extension to the credit

line or tried to obtain bunkers at all.

(ii) The representations were made fraudulently

61 Facts, p 35. 62 Mair v Rio Grande Rubber Estates Ltd [1913] AC 853, 863. 63 See for example Andrews v Mockford [1896] 1 QB 372; Briess v Woolley [1954] AC 333, 349; on statements

of intention see Edgington v Fitzmaurice (1885) 29 Ch D 459. 64 John Cartwright, Misrepresentation, Mistake and Non Disclosure, (Sweet & Maxwell, 3rd ed, 2012) 85 citing

Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (“The Mihalis Angelos”) [1971] 1 QB 164. 65 Shelltime 4, cl 7(a). 66 Facts, p 20. 67 Facts, p 20. 68 Facts, p 21. 69 Facts, pp 21-23.

TEAM NUMBER: 7

20

40. The Claimant submits that the Statements were made fraudulently as the Respondent

lacked honest belief in their truth.70 The Claimant accepts that the evidence is not strong

on this issue. However the Tribunal is invited to infer that the Respondent could not

have believed it could fulfil its promise of providing bunkers given the insufficient

credit line explained above and inaction in extending it.71 Therefore the Respondent

made the continuous representation without belief in its truth or recklessly, careless as

to whether it be true or false.

(iii) The representations were made with the intention that they be acted upon

41. The Respondent made the Statements with the intention that they be relied and acted

upon by the Claimant.72

(iv) The representations induced the Claimant to act

42. Whether the Claimant was induced by the Statements is a question of fact.73 In the case

of a complex representation, the representee need not rely on every representation

specifically, only on the effect of the representations as a whole; if he has been

influenced by each a defence to one would be no answer to the others.74

43. The correspondence discloses a series of concerns raised by the Master about the supply

of bunkers75 that were allayed by the Statements, such that the Master continued the

Voyage despite his concerns and protest. Particularly in reliance on the Third Statement,

the Master confirmed receipt of the advice and directed the ship to the new STS location

on the promise that there would be bunkers available on arrival. From 29 June 2014 to

70 Derry v Peek (1889) 14 App Cas 337, 374. 71 Edgington v Fitzmaurice (1885) 29 Ch D 459. 72 Peek v Gurney (1873) LR 6 HR 377, 411-412; Facts, p 68. 73 Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501, 540-542. 74 KR Handley, Spencer Bower & Handley Actionable Misrepresentation (LexisNexis, 5th ed, 2014) 80. 75 Facts, pp 25-34.

TEAM NUMBER: 7

21

the 03 July 2014 the Master repeatedly confirmed the Vessel would be “taking bunkers

on arrival”.76

44. The Tribunal should therefore find that the Master relied upon the Statements.

(v) Reliance on the representations resulted in loss to the Claimant

45. While waiting at the STS coordinates provided by ASA2, the Vessel was attacked by

pirates and as a result sustained material damage, including to navigational and radio

equipment and the main deck hose crane which was rendered unserviceable.77

46. The starting point for the measure of damages for fraud is that the loss need not have

been foreseeable.78 The test for causation has been articulated as follows: “[it is]

orthodox and settled rule that the plaintiff is entitled to all losses directly flowing from

the transaction caused by the deceit”.79

47. Applying this broad approach, the piracy attack occurred while the Vessel was waiting

at the STS coordinates provided by ASA2, to which the Master had been induced to go

by the promise of bunkers.

(4) THE VESSEL WAS FIT FOR SERVICE

48. There are two allegations concerning the fitness of the Vessel: the alleged incompetence

of the Master and the alleged failure to take piracy precautions.

49. In respect of these breaches, the Respondent seeks to recover (A) The loss of the follow

on fixture from Bonny to Augusta as a consequence of the Vessel’s detention by pirates

and (B) the loss of cargo that was discharged by pirates. Different provisions under the

Charterparty are enlivened for these two types of losses, so each loss is addressed

separately below.

76 Facts, pp 36-38. 77 Facts, p 42. 78 Smith New Court Securities v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254, 266-267. 79 Ibid, 283.

TEAM NUMBER: 7

22

(A) Claims in respect of the loss of cargo

(i) The cargo claims are subject to the HV Rules

50. Clause 27(c)(ii) of the Shelltime 4 form stipulates that the Hague-Visby Rules (“the HV

Rules”) apply to any claims “arising out of any loss of or damage to or in connection

with cargo”. The effect of this provision is to incorporate the HV Rules into the

Charterparty. The HV Rules apply to cargo claims to the extent that the obligations

under the Charterparty are co-extensive with the obligations under the HV Rules.80 The

Claimant submits that all cargo claims are subject to the HV Rules under the

Charterparty, and the HV Rules prevail over any inconsistent special piracy provision.

51. The effect of incorporating the HV Rules is to replace the absolute obligations to

properly man the ship,81 and ensure that the vessel is ‘fitted for the service’,82 with an

obligation to exercise due diligence to make the ship seaworthy at the beginning of the

voyage within the meaning of Art III r 1.83

52. The onus of proving unseaworthiness under the HV Rules lies on the party alleging it.84

The Master was not incompetent

53. The Claimant was required to exercise due diligence at the beginning of the voyage to

ensure that the Master was competent.

54. The test for the seaworthiness of the Master and crew85 is whether “a reasonably prudent

owner, knowing the relevant facts, [would] have allowed this vessel to be put to sea

with this Master and crew, with their state of knowledge, training and instruction”.86

80 Navigazione Alta Italia S.P.A. v Concordia Maritime Chartering A.B. (“The Stena Pacifica”) [1990] 2

Lloyd’s Rep. 234, 237. 81 Shelltime 4, cl 2(a). 82 Shelltime 4, cl 1(c). 83 HV Rules Art III r 1(a); HV Rules Art III r 1(b) has been held to import the common law standard of

seaworthiness, and apply it throughout the charter period: Navigazione Alta Italia S.P.A. v Concordia Maritime

Chartering A.B. (“The Stena Pacifica”) [1990] 2 Lloyd’s Rep. 234. 84 HV Rules Art IV r 1; Hong Kong Fir Shipping v Kawasaki [1962] 2 QB 26. 85 Hong Kong Fir Shipping v Kawasaki [1962] 2 QB 26; The Roberta (1938) 60 Ll.L.Rep 84. 86 Ibid, 34.

TEAM NUMBER: 7

23

55. The threshold for incompetence on the part of the Master is "a disabling want of skill"

or a "disabling lack of knowledge".87 The Respondent cannot discharge the onus of

meeting this threshold on the facts.

56. A crew member is competent if they have the requisite training to perform the job with

the skill to be reasonably expected of an ordinary seaman of that individual’s rank.88

There is no evidence, including in the Q88,89 that the Master lacked any relevant

training or professional qualifications. It would be an unreasonably high burden to

require an owner to employ a master who has not only the expected qualifications, but

has also been specifically trained to anticipate, detect and investigate potentially

deceptive or fraudulent orders.

57. Further, the Claimant submits that there is no evidence on the facts for the tribunal to

draw an inference that the Master was incompetent.

58. When following orders from ASA2, it was reasonable for the Master to believe ASA2

was acting for the Respondent given that ASA2 had a similar name to the Respondent’s

genuine agents, ASA,90 and he had received no other direction from an STS coordinator

as the Vessel approached the STS location.91

59. Even if the Tribunal considers that the Master was negligent, one occasion of

negligence does not necessarily support an inference that the Master was incompetent.92

87 Papera Traders Co Ltd and Others v Hyundai Merchant Marine Co Ltd and Another (“The Eurasian

Dream”) [2002] 1 Lloyd’s Rep 719, 736; Standard Oil Co of New York v Clan Line Steamers Ltd [1924] AC

100, 121.

Roger White, ‘Human Unseaworthniess’ [1995] 1 Lloyd’s Maritime and Commerical Law Quarterly 221, 226;

Liberty Shipping LIM. Procs 1973 AMC 2241. 89 Facts, p 47. 90 Facts, p 35. 91 Facts, p 33-41. 92 Roger White, ‘Human Unseaworthniess’ [1995] 1 Lloyd’s Maritime and Commerical Law Quarterly 221, 224;

Blackfriars Lighterage & Cartage Co Ltd v R L Hobbs (“The Landeer”) [1955] 2 Lloyd’s Rep. 554, 561;

Manifest Shipping & Co Ltd v Uni-Polaris Insurance Co Ltd and La Réunion Européene (“The Star Sea”)

[1997] 1 Lloyd’s Rep. 360, 374.

TEAM NUMBER: 7

24

The Claimant is excepted from liability for an act of negligence by the Master in the

navigation or management of the ship.93

60. Further, the Claimant submits that whichever aspect of incompetence is alleged, it did

not cause the loss.

The Vessel was not unseaworthy for failing to take piracy precautions

61. The Claimant was required to exercise due diligence at the beginning of the voyage to

ensure that the Vessel was seaworthy.

62. The ship must have that degree of fitness which an ordinary careful owner would

require his or her Vessel to have at the commencement of her voyage having regard to

all the probable circumstances of it.94 Seaworthiness is not an absolute concept but it is

relative to the nature of the ship, the particular voyage and the particular stage of the

voyage.95

63. The Claimant was aware that the fixture included West Africa, a known piracy area, so

exercised due diligence in engaging Captain Evasion from the Safety and Security

Department to undertake an assessment of the Vessel.96 Importantly, the Claimant

submits that at the beginning of the voyage, it was anticipated that the Vessel was to call

at Durban for bunkers. Therefore the “probable circumstances” at the outset of the

“particular voyage” contemplated did not involve piracy as the Vessel was only to travel

to Durban before entering a risk area.

64. Captain Evasion recommended a number of safety items, including razor wire, but

noted late delivery might be rescheduled for Durban.97

93 HV Rules, Art IV r 2(a). 94 Eridania S.P.A. and Others v Rudolf A. Oetker and Others (“The Fjord Wind") [1999] 1 Lloyd’s Rep. 307,

315; approved on appeal by Lord Justice Clarke at [2000] 2 Lloyd’s Rep. 191, 197. 95 Ibid. 96 Facts, p 22. 97 Facts p 27.

TEAM NUMBER: 7

25

65. Therefore, undertaking this assessment and arranging for equipment to be provided at

Durban, where the Claimant contemplated the Vessel would next call at port, satisfies

due diligence was exercised at the beginning of the voyage.

66. Further, even if the Vessel was unseaworthy the onus is on the Respondent to prove that

the lack of the razor wire caused the loss.98

(B) Non-cargo claims for the loss of fixture

67. The Claimant accepts the difficulty of applying the HV Rules to this loss of fixture

claim given the authorities of The Casco99 and The Stena Pacifica.100 Therefore the

Claimant proceeds on the basis that the HV Rules do not apply to this type of loss and

therefore other terms in the Shelltime apply to impose the standard of seaworthiness.

(i) The Master was not incompetent

68. Clause 2(a)(i) imposes an absolute obligation regarding the Master’s competence both

at the date of delivery and throughout the voyage. For the reasons stated above at [53] to

[60], the Master was not incompetent at any time.

(ii) The Claimant is not liable for any breach of the express piracy provisions

69. The Charterparty contains express piracy provisions relating to piracy, being the Special

Piracy Provision101 and the BIMCO Piracy Clause.102 The Claimant submits that the

general obligation for the Vessel to be “fit for the service” under clause 1(c) has been

modified by these clauses. As the obligation of seaworthiness is relative to particular

voyage and the dangers likely to be encountered, the Claimant submits that the piracy

clause was intended to create independent obligations dealing with this particular risk

that effectively provide the standard of seaworthiness.

98 Minister of Food v Reardon Smith Line [1951] 2 Lloyd’s Rep. 265, 270. 99 Borgship Tankers Inc v Product Transport Corp Ltd (“The Casco”) [2005] 1 Lloyd's Rep. 565 100 Navigazione Alta Italia S.p.A. v Concordia Maritime Chartering A.B. (“The Stena Pacifica”) [1990] 2

Lloyd’s Rep. 234. 101 Facts, p 8. 102 Facts, p 11.

TEAM NUMBER: 7

26

70. On its true construction, adherence to the Special Piracy Clause was not required at

every moment throughout the voyage. The preferable construction of sub-clause 1 is the

construction that gives effect to the objective intentions of the parties and commercial

sensibility.103 This construction is that adherence to the BMP4 is only needed if the

vessel was at risk of a piracy attack. The clause should be construed as follows:

Proceeding “to” meaning ‘about to enter’, or;

proceeding “through” meaning ‘having entered’,

an area at risk of piracy.

71. This construction should be preferred over one that requires absolute compliance which

demands that even a vessel traveling through a safe zone with no risk of piracy must

carry all necessary equipment if they intend on entering a risk area much later in the

voyage.

72. When the Vessel left Singapore for what the Master reasonably anticipated would be its

next call at Durban, the Vessel was not proceeding “to” or “through” an area at risk of

piracy within the true meaning of the clause stated above. Therefore, there was no

breach of the clause in not having the razor wire on board at this particular time as the

clause did not apply.

73. It was only when the Vessel approached the West Africa region that it could be

considered as proceeding “to” an area at risk of piracy. However, the Claimant should

not be liable for this breach. The Claimant had arranged to freight the equipment

required under the BMP4 to Durban after the Respondent had indicated that bunkers

would be provided at that port.104 It was therefore the Respondent’s failure to allow the

Vessel to stop at that location which rendered the Master unable to comply with the

BMP4. Therefore the Claimant should not be held liable for any breach.

103 Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896. 104 Facts, p 36.

TEAM NUMBER: 7

27

(5) THE CLAIMANT DID NOT CONVERT OR BREACH THEIR DUTY AS BAILEE

IN RESPECT OF PART OF THE CARGO ON BOARD

(A) The Claimant has not breached its duties as a bailee

74. The obligations under a bailment of goods are modified by the contract of carriage

between shipowner and charterer.105 Those contractual terms take precedence over any

common law duty or obligation.106

75. Under the Charterparty, any claim that is “arising out of any loss of or damage to or in

connection with cargo” is subject to the HV Rules.107

76. While it is conceded that the partial discharge of the cargo is in breach of the Claimant’s

obligation under the HV Rules,108 the Claimant relies on the defences in Art IV r 2109 so

bears the onus of proof in establishing one of these defences.110

77. The English Court of Appeal recently considered that piracy falls into one of the Art IV

r 2 exceptions of the HV Rules,111 and the Claimant submits it so falls into sub-rules (c)

“perils of the sea, dangers and accidents of the sea”, (f) “acts of public enemies”, or (q)

which is known as “the last resort of the rogue”.

78. Piracy has been held to be a “peril of the sea”112 and the Claimant therefore relies on r

2(c) to exclude its liability. Whether the peril can be foreseen or guarded against for the

105 East West Corporation v DKBS 1912 & Ors [2003] QB 1509, 1519; Midland Silicones v Scruttons [1962] AC

446, 487; Norman Palmer, Palmer on Bailment (Sweet and Maxwell, 3rd ed, 2009) 1107 [20-016]. 106 “The Pioneer Container” [1994] 2 AC 324. 107 Shelltime 4, cl 27(c)(ii); on the incorporation of the HV Rules into charterparties see Adamastos Shipping Co

Ltd v Anglo-Saxon Petroleum Co Ltd (“The Saxon Star”) [1959] AC 133, 154. 108 HV Rules Art III r 2 109 The Antigoni [1991] 1 Lloyd’s Rep. 209, 212; these defences are available because, as discussed above, the

Vessel was seaworthy: see e.g. Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959]

AC 589, 602-3. 110 Whistler International v Kawasaki Kisen Kaisha (“The Hill Harmony”) [2001] 1 AC 638, 658; Gosse Millerd

v Canadian Government Merchant Marine [1929] AC 223, 234. 111 Trafigura Beheer BV v Navigazione Montanari Spa (“The Valle Di Cordoba") [2015] 1 Lloyd’s Rep. Plus 26

[24], [33], [37]. 112 Pickering v Barkley (1648) 82 ER 587 cited in Russell v Niemann [1864] 144 ER 66, 70-72 and Great China

Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (“The Bunga Seroja”) (1998)

196 CLR 161.

TEAM NUMBER: 7

28

purposes of the HV Rules is not the critical question, provided it does not occur with the

actual fault or privity of the carrier.113

79. Alternatively, while the precise scope of “public enemies” in r 2(f) is uncertain it is

generally assumed to cover piracy.114 This view is justifiable in light of the facts that

pirates are enemies of the human race.115 The Claimant submits that the defence under r

2(f) can be raised.116

80. Alternatively, the events fall within r 2(q) which relieves liability for “any other cause

arising without the actual fault or privity of the carrier”.

(B) The Claimant did not convert part of the cargo

81. The Claimant accepts that the Respondent has title to bring an action in the tort of

conversion.117

82. However, a claim in conversion must fail as the conduct was accidental, and not

deliberate.118 The discharge of the cargo to pirates was not a deliberate action given that

the seizure by external agents was beyond the Claimant’s control.

83. Alternatively, a claim in conversion fails because the same exclusions of liability

explained above119 also apply to this claim. The HV Rules state that the “defences and

limits of liability provided… shall apply in any action against the carrier in respect of

loss or damage to goods covered by a contract of carriage whether the action be founded

in contract or in tort”. Though plaintiffs may bring the most advantageous action

113 Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (“The Bunga

Seroja”) (1998) 196 CLR 161, 181 198-204, 218. 114 John Richardson, A Guide to the Hague and Hague-Visby Rules (Lloyd’s of London Press Ltd, 3rd ed, 1994)

50; this view accords with the that expressed by the framers of the HV Rules, who agreed that an act of public

enemies may mean pirates: The travaux préparatoires of the International Convention for the Unification of

Certain Rules of Law relating to bills of lading of 25 August 1924, The Hague Rules and of the protocols of 23

February 1968 and 21 December 1979, The Hague-Visby Rules, 408. 115 Trafigura Beheer BV v Navigazione Montanari Spa (The "Valle Di Cordoba") [2015] 1 Lloyd’s Rep. Plus 26,

[2]. 116 See also Hakan Karan, The Carrier’s Liability under International Maritime Conventions: the Hague, Hague-

Visby, and Hamburg Rules (The Edwin Mellen Press, 2004) 304. 117 Procedural Order no. 2 [22]. 118 Kuwait Airways Corporation v Iraqi Airways Company and Others [2002] 2 AC 883 [38]. 119 See above [75]-[80].

TEAM NUMBER: 7

29

available in tort or contract, “concurrent or alternative liability will not be admitted if its

effect would be to permit the plaintiff to circumvent or escape a contractual exclusion or

limitation of liability for the act or omission that would constitute the tort.”120

(6) THE CLAIMANT SHOULD BE AWARDED COMPOUND INTEREST

84. Procedural Order no 1 suggests the quantification of damages will be particularised in a

later phase of the arbitration. The Claimant advances a preliminary submission that

interest should be awarded on whatever sum is particularised on that date.

85. The interest rate on unpaid hire is dictated by clause 9(b) of the Shelltime 4 form,121

under which interest on any amount due, but not paid, shall accrue at a compounding

rate. This Tribunal should give effect to this clause.122

86. Compound interest should, in the interests of justice, also be awarded on any damages

for the fraud claim in accordance with the Arbitration Act 1996 (UK) s 49. This power

should be exercised to compensate the Claimant for being kept out of its money123 by

the Respondent’s fraud.

120 Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, 191 citing with approval Midland Bank Trust Co

limited v Hett, Stubs & Kemp [1979] Ch 384, 522. 121 See also Arbitration Act 1996 (UK) s 49(1). 122 Arbitration Act 1996 (UK) s 49(6); LCIA Arbitration Rules October 2014, Article 26.4; National Bank of

Greece SA v Pinios Shipping Co (no. 1) and George Dionysios Tsitsilianis (“The Maria”) (No.3) [1990] 1

Lloyd’s Rep. 225. 123 Kemp v Tolland [1956] 2 Lloyd’s Rep. 681, 691; Clare Ambrose and Karen Maxwell, London Maritime

Arbitration (Informa, 3rd ed, 2009) 296-297.

TEAM NUMBER: 7

30

RELIEF SOUGHT

For the reasons submitted above, the Claimant respectfully requests the Tribunal to:

DECLARE that the Tribunal has jurisdiction to hear this dispute; and

DECLARE that, although Procedural Order 1 suggests the quantification of damages will be

particularised a later date in the arbitration, the Claimant is entitled to the following:

a) Hire due and owing under the Charterparty or damages in the same amount;

b) Damages for the material damage to the vessel; and

c) An award of compound interest of any sum found owing, in accordance with section

49 of the Arbitration Act 1996 (UK).