INTERNATIONAL MARITIME LAW ARBITRATION MOOT … · INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6 VII Howard Marine and Dredging Co. Ltd v. A. Ogden & Sons (Excavations)

INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6

I

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

EDITION 2015

MURDOCH UNIVERSITY

MELBOURNE

In the matter of an arbitration

BETWEEN

WESTERN TANKERS INC

Claimant

-and-

LDT PTE

Respondent

MEMORANDUM FOR THE CLAIMANT

Counsel for the Claimant:

University of Versailles, France

Team No. 6

Pierre CAPELLE

Pierre-Baptiste CHIPAULT

Arthur DAIN

Carole POMES-BORDEDEBAT

Rodolphe RUFFIE

Myriam SNOUSSI


II

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ...................................................................................................... IV

INDEX OF AUTHORITIES .......................................................................................................... V

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

PART I – JURISDICTION .............................................................................................................. 2

I. The Tribunal has the power to rule on its own jurisdiction ................................................... 2

II. The Parties expressly agreed to submit the Dispute to arbitration ....................................... 2

III. The “Law and Litigation” Clause specifies London as the proper seat of arbitration

IV. All the claims brought in the present case are arbitrable .................................................... 4

V. All the claims brought in the present case fall within the scope of the arbitration Clause .. 4

PART II – MERITS ......................................................................................................................... 5

I. Preliminary issue: laws of England govern the Contract ...................................................... 5

II. Breach of the Contract .......................................................................................................... 5

A. The Respondent’s failure to pay hire for the second period ............................................. 6

1. The Respondent failed to pay hire for the second period .............................................. 6

2. The Respondent's obligation to payment is not challenged by unexpected occurences .

...................................................................................................................................... 7

B. The Respondent’s failure to perform other obligations .................................................. 11

1. The Respondent breached Clause 4. (c) of the pro-forma Shelltime 4 ....................... 11

2. The Respondent directed the Vessel to proceed to an alternative discharge place

without the required authorisation of the Claimant ........................................................... 12

3. The Respondent is liable for the discharge of the Cargo without the authorisation of

the Claimant ......................................................................................................................... 1

4. The Respondent breached the BIMCO STS Clause of the Contract ............................ 1

5. The Respondent cannot rely on the BIMCO Piracy Clause to exclude its liability .... 14

6. The Respondent breached the Contract by failing to give the Vessel voyage orders . 14

7. The Respondent’s breaches of the contract caused the Claimant’s loss ..................... 15

III. The Respondent committed maritime fraud ..................................................................... 15

A. ASA2 acts in the name of and for the account of the Respondent ................................. 15

B. The Respondent is civilly liable for the tort of deceit .................................................... 17

IV. The Respondent and ASA2 acting on its behalf are liable for negligent misrepresentation .

...................................................................................................................................................... 22


III

PART III – PRAYER FOR RELIEF ............................................................................................. 25


IV

LIST OF ABBREVIATIONS

§

Arbitration Act 1996

Co.

Corp.

Ct.

Ct. App.

Ed.

Etc.

ICC

Ibid.

Id.

Ltd

op. cit.

p.

pp.

v.

Paragraph

Arbitration Act 1996 (UK) c 23

Company

Corporation

Court

Court of Appeal

Edition

Et cætera

International Chamber of Commerce, Paris

Ibidem

Idem

Limited Company

Opus citandum

Page

Page to page

Versus


V

INDEX OF AUTHORITIES

(in alphabetical order)

Type of

document

Document title Page

number

Domestic

cases

AES Ust-Kamenogorsk Hydropower Plant LLP v. Ust-Kamenogorsk Hydropower Plant JSC [2011] EWCA Civ 647, §78-83 (English Ct. App.)

2

Amoco Overseas Co. v. ST Averger [1975] AMC 782, 789 (SD NY, 1975) 12

Anglo Northern v. Jones [1917] 2 KB 78 8

Armitage v. Nurse [1998] Ch 241, 250 19

Bank Line v. Capel 1918 [1919] AC 435 8

Bilta (UK) Ltd v. Muhammad Nazir [2010] All ER (D) 146 (May) 4

Bradford Third Benefit BS v. Borders [1941] 2 All ER 205 19

Clef Aquitaine SARL v. Laporte Materials (Barrow) Ltd [2000] 2 All ER 493 22

Christopher Brown Ltd v. Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte GmbH [1954] 1 QB 8, 12-3

2

Dallah Real Estate v. Government of Pakistan [2010] UKSC 46, (U.K. S.Ct.) 2


VI

Davis Contractors Limited v. Fareham UDC [1956] AC 696 7

Derry v. Peek [1889] 14 App Cas 337 17

Discount Records Ltd v. Barclays Bank Ltd [1975] 1 WLR 315 18

Doyle v. Olby (Ironmongers) Ltd [1969] EWCA Civ 2 at p. 167, 2 QB 158 22

Eco 3 Capital Ltd and others v. Ludsin Overseas Ltd [2013] EWCA Civ 413 18

Edgington v. Fitzmaurice [1884] 29 Ch D 459, 481 21

Fiona Trust v. Privalov [2007] All ER (D) 233 4

Freeman v. Reed [1863] 4 B. & S. 174, 184 17

Fulham Football Club Ltd v. Richards [2011] EWCA Civ 855 4

Harbour Assurance Co. (UK) Ltd v. Kansa General International Insurance Co. Ltd [1993] Lloyd’s Rep 455 2


VII

Howard Marine and Dredging Co. Ltd v. A. Ogden & Sons (Excavations) Ltd [1977] EWCA Civ 3 23

Huyton SA v. Peter Cremer GmbH & Co. [1999] 1 Lloyd’s Rep 620, 624 13

Homburg Houltimport BV and others v. Agrosin Private Ltd and others (The Starsin) [2003] 1 Lloyd’s Rep 571, 577-8

12

J. Lauritzen AS v Wijmuller B.V. (The Super Servant Two) [1990] 1 Lloyd’s Rep. 1 9

Joseph Constantine S.S. Line Ltd v. Imperial Smelting Corp. Ltd [1942] A.C 154, 163 8

Larkden Pty Limited v. Lloyd Energy Systems Pty Limited [2011] NSWSC 268 4

L’Estrange v. F Graucob Ltd [1934] 2 KB 394, 403 12

Lloyd v. Grace Smith & Co. [1912] AC 716 16

Lonrho Ltd v. Shell Petroleum Co. Ltd [1978] IV Y.B. Comm. Arbitrage. 320-22 (High Ct.) 5

Ludsin Overseas Ltd v. Eco3 Capital Ltd [2012] EWHC (Ch) 18


VIII

Mareva Navigation Co. v. Canaria Armadora SA (The “Mareva A.S.”) [1977] 1 Lloyd’s Rep 368 11

Mead v. Bebington [2007] EWCA Civ 518 21

Metall Market OOO v. Vitorio Shipping Co. Ltd (The Lehmann Timber) [2012] 2 Lloyd’s Rep 73

13

Mediterranean Shipping Company SA v. Trafigura Beheer BV (The MSC Amsterdam) [2007] 2 Lloyd’s Rep 622

13

National Carriers Ltd v. Panalpina (Northern) Ltd [1981] AC 675 8

Nomihold Sec. Inc. v. Mobile Telesys. Fin. SA [2012] EWHC 130, §59 (Comm) (English High Ct.) 2

Peekay Intermark Ltd v. Australia & New Zealand Banking Group Ltd [2006] 2 Lloyd’s Rep 511, 520

12

Per Lord Wright in A/S Tankerexpress v. Compagnie Financière Belge des Pétroles SA (Petrofina) [1948] 2 All ER 939, p. 946

7

Polhill v. Walter [1832] 3 B&Ad 114 19

Premium Nafta Products Ltd v. Fili Shipping Compagny Ltd [2007] UKLH40 4

Royscot Trust v. Rogerson [1991] 2 QB 297 22


IX

Smith New Court Securities Ltd v. Scrimgeour Vickers (Asset Management) Ltd [1996] UKHL 3 [1997] AC 254 (21 November 1996)

22

Spice Girls Ltd v. Aprilia World Service Bv [2002] EWCA Civ 15 23

Standard Chartered Bank v. Pakistan National Shipping Corp. (No. 2) [2003] 1 AC 959 Court of Appeal

18

The Sea Angel 2007 Edwinton Commercial Corporation & Anor v Tsavliris Russ Ltd [2007] EWHC Civ 547

8

Awards Engineering Company v. Engineering Company, Producer [1994] Final Award, ICC Case Nos. 6515 and 6516 2

Books G. Berlingieri, Time Charter, 7th Ed. 2014 2

H. Beale, Chitty on Contracts, 31st Ed., Sweet & Maxwell, 2014 Chitty on Contracts, 30th Ed., Sweet & Maxwell, 2008 9

Ph. Fouchard, E. Gaillard, B. Goldman, International Commercial Arbitration, Litec, 1996 2

B. A. Garner, Black’s Law Dictionary, 5th Ed., West Publishing Company, 1979 17

P. Todd, Chapter 2 – Introduction to Maritime Fraud: Issues Particular to Maritime Fraud”, Marine Fraud & Piracy, 2nd Ed., 2010

16

Articles R. Fentem & L. Walker, “Civil fraud – Back to basics”, Guildhall Chambers, November 2012 21


X

E. Wong, “Procedural issues resulting from a fraud claim in international commercial arbitration: an English law perspective”, Kluwer Law Arbitration, January 2014

4

Statutes Arbitration Act 1996 (UK) c 23 2

Law Reform (Frustrated Contract) Act 1943 9

Other International Commerce Chamber International Maritime Bureau, Piracy annual report

13

Guide to Prevention of Maritime Fraud, ICC Publication No. 370 (1980)

17

Practice note, Fraudulent misrepresentation, Practical Law Dispute Resolution

17

The Draft Hague Principles on Choice of Law in International Commercial Contracts

5


1

STATEMENT OF FACTS

1. On 26 May 2014, an amended Shelltime 4 charterparty with rider clauses (hereinafter the

“Contract”) was entered into between the ship-owner Western Tankers Inc., a company

incorporated in the British Virgin Islands (hereinafter the “Claimant”), and the charterer

LTD Pte, a company incorporated in Singapore (hereinafter the “Respondent”). The

Claimant and the Respondent are hereinafter referred to collectively as the “Parties” and

individually as the “Party.” The purpose of the Contract was to provide the Respondent

with a vessel (hereinafter the “Vessel”) for the carriage of petroleum products (hereinafter

the “Cargo”) from Singapore to Luanda, Angola, for a period of three months. In

particular, the Contract required the Respondent to supply the Claimant with sufficient

bunkers and to pay a monthly rent in advance. Furthermore, the Contract included an

arbitration Clause.

2. On 27 May 2014, the Master of the Vessel (hereinafter the “Master”) recommended filling

the tank with 1,500 metric tons of IFO in order to accomplish the prospected voyage.

3. On 30 May 2014, the Respondent required a credit line of 950 metric tons of IFO to fill the

fuel tank of the Vessel. On 3 June 2014, the Respondent asserted to the Master that there

would be a sufficient fuel supply off Durban or off Cape Town.

4. By 8 June 2014, the Respondent had entered into a sales contract with the company Angola

Energy Imports relating to the Cargo.

5. On 8 June 2014, two bills of lading were issued upon the loading of the Cargo (hereinafter

the “Bills of Lading”). The Vessel was ordered to proceed towards the city of Luanda.

6. On 25 June 2014, the Master had to slow down the speed of the Vessel from 13 knots to 12

knots in order to save fuel. The Respondent had not supplied the Vessel with fuel as stated.

7. On 28 June 2014, the Respondent and the Atlantic Services Agency Ltd (hereinafter

“ASA2”) both instructed the Vessel to proceed towards an alternative discharge place in

international waters off the Angolan coast. ASA2 was presented as the ship-to-ship

coordinator and was to assist the Vessel in discharging the Cargo and providing fuel

supply.

8. Between 4 and 17 July, a group of pirates hijacked the Vessel. During this period, a

quantity of the Cargo was discharged and the Vessel suffered material damage.


2

PART I – JURISDICTION

9. The Claimant argues that this arbitral Tribunal (hereinafter the “Tribunal”) has jurisdiction

over the merits of this dispute (hereinafter the “Dispute”) because: (I) the Tribunal has the

power to rule on its own jurisdiction; (II) the Parties expressly agreed to submit the

Dispute to arbitration; (III) the arbitration Clause specifies London as the proper seat of

arbitration; (IV) all the claims brought in the case at hand are arbitrable; (V) all the claims

brought in the case fall within the scope of the arbitration Clause.

I. The Tribunal has the power to rule on its own jurisdiction

10. The Claimant contends that the Tribunal has jurisdiction over its own jurisdiction.

The competence-competence1 principle is the cornerstone of international arbitration,

according to which an arbitral tribunal has power to rule on its own jurisdiction.2 This

international standard3 of arbitration includes questions as the validity of the arbitration

clause.4

Therefore, this Tribunal has the power to rule on its own jurisdiction.

II. The Parties expressly agreed to submit the Dispute to arbitration

11. The Claimant argues that the Parties agreed to submit the Dispute to arbitration.

The present Contract is valid. A charterparty does not need to meet a particular form

requirement to be valid. In practice, it is common for parties to conclude a contract, a

“fixture,” by an exchange of correspondence.5 The general rule is that parties are bound to

an agreement when they have agreed all the terms6 and therefore intend to make a binding

contract.

1 Arbitration Act 1996. Section 30. See Fouchard, E. Gaillard, Goldman on International Commercial Arbitration, Kluwer Law International, 1999, pp. 381–416. 2 Dallah Real Estate v. Government of Pakistan [2010] UKSC 46, §§96, 103, 104 (U.K. S.Ct.); AES Ust-Kamenogorsk Hydropower Plant LLP v. Ust-Kamenogorsk Hydropower Plant JSC [2011] EWCA Civ 647, §§78-83 (English Ct. App.); Nomihold Sec. Inc. v. Mobile Telesys. Fin. SA [2012] EWHC 130, §59 (Comm.) (English High Ct.). 3 Harbour Assurance Co. (UK) Ltd v. Kansa General International Insurance Co. Ltd [1993] Lloyd’s Rep 455. See, e.g. Engineering Company v. Engineering Company, Producer, Final Award, ICC Case Nos. 6515 and 6516, 1994. 4 Christopher Brown Ltd v. Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte GmbH [1954] 1 QB 8, 12-3. 5 Francesco Berlingieri, Time Charters, Lloyd’s Shipping Law Library, 2008, 6th edition. See e.g. Welex A.G v. Rosa Maritime [2002] 2 Lloyd’s Rep. 509 (CA): “the recap is often referred to as ‘the Charterparty’.” 6 Rossiter v. Miller [1878] 3 App. Cas 1124, said, at p. 1151: “If some particulars essential to the agreement still remain to be settled afterwards, there is no contract.”


3

The Contract contains a valid arbitration agreement. Indeed, a “Law and Litigation” Clause

is specifically included at Clause 46. (b) and provides that:

“(b) All disputes arising out of this charter shall be referred to Arbitration in

London in accordance with the Arbitration Act 1996 (…).”

The shipbroker sent a “fully fixed recap” of the Contract negotiations. 7 The recap

mentioned “Law and Litigation:” which was deliberately left blank by the shipbroker8 in

order to respect the intention of the Parties to apply the original draft of Clause 46. (a).

Therefore, this Tribunal should acknowledge that the Parties are bound by the “Law and

Litigation” Clause contained in the valid Contract and by its terms therein.

III. The “Law and Litigation” Clause specifies London as the proper seat of

arbitration

12. The Claimant contends that the seat of arbitration is London.

The seat of arbitration is London in accordance with the Arbitration Act 1996. Clause 46.

(b) of the Contract provides that the seat of arbitration shall be London in accordance with

the abovementioned Arbitration Act. The Respondent wrongly alleges within its statement

of defence that the appropriate seat of arbitration is Singapore.

During the negotiations, the Respondent stated it was “not keen on London arbitration.”9

However, such statement cannot have any influence on the location of the seat of

arbitration. Firstly, stating “not keen” does not exclude London as the seat of arbitration.

At most, it only shows an opinion from the Respondent. Secondly, no alternative seat of

arbitration was ever suggested by the Respondent during the negotiations of the Contract.

Lastly, the Respondent made a number of amendments to the Contract. Thus, the

Respondent had the opportunity to change the location of the seat of arbitration. Yet, The

Respondent did not and seemed careless to know whether the seat of arbitration would be

London or any other city. Any representation to the contrary would show a disruptive will

to slow down the procedure and a proof of dishonesty.

Therefore, the seat of arbitration can only be London.

7 Moot problem: email sent on the 26 May 2014 at 17:09 (UTC+1) from Bill at IMWB to Charles at LDTP and to Oliver at WTI, p.5. 8 Id. 9 Moot problem: message sent on the 23 May 2014 at 12:30 (UTC+8) from Charles at LDTP and Bill at IMWMB, p. 2.


4

IV. All the claims brought in the present case are arbitrable

13. The Claimant contends that all claims brought in the present case are arbitrable.

Under English law, there is no legal certainty regarding arbitrability.10 However, all

matters falling within the principle of party autonomy shall be arbitrable.11 The general

rule is that any matter, which may be the subject of an enforcement award, may be settled

by arbitration. 12 Nevertheless, if some disputes relating to public interest are not

susceptible to be settled by arbitration, fraud is not a public interest matter. There is no

public policy requiring issues of fraud to be decided by the courts. Hence, accusations of

fraud are capable of falling within the scope of an arbitration clause.13 English law position

is now clear: arbitrators can deal with fraud allegations.14

Therefore, all claims regarding breach of contract and tort of fraud can be settled by

arbitration.

V. All the claims brought in the present case fall within the scope of the arbitration

Clause

14. The Claimant contends that all the claims brought in the present Dispute fall within

the scope of the arbitration Clause. As per the terms of the arbitration Clause, “all

disputes arising out of this charter shall be referred to Arbitration.”

Under English law, there is no longer15 a difference between the terms “arising out” and

“arising under” as set out in the arbitration clause.16 The Tribunal has jurisdiction to rule

on any dispute arising from the contract.

On the one hand, the Claimant alleges that any breach of contract falls within the scope of

the arbitration Clause. In Lonrho v. Shell Petroleum Co. Ltd, 17 English courts implied that

“an arbitration clause is no doubt designed primarily to cover claims for breach of

10 Fulham Football Club Ltd v. Richards [2011] EWCA Civ 855, ‘[T]he limitation which the contractual basis of arbitration necessarily imposes on the power of the arbitrator to make orders affecting non-parties is not necessarily determinative of whether the subject matter of the dispute is itself arbitrable.’ See also Mustill & Boyd, 149 – 150. 11 Julian D. M. Lew and Oliver Marsden, Chapter 19: Arbitrability in Julian D. M. Lew, Harris Bor, et al. (eds), Arbitration in England, with chapters on Scotland and Ireland, (Kluwer Law International 2013) pp. 399-412, §19.01. 12 Larkden Pty Limited v. Lloyd Energy Systems Pty Limited [2011] NSWSC 268. 13 E. Wong, “Procedural issues resulting from a fraud claim in international commercial arbitration: an English law perspective”, Kluwer Law Arbitration, January 2014. 14 Fiona Trust v. Privalov [2007] All ER (D) 233 (Oct), and Bilta (UK) Ltd v. Muhammad Nazir [2010] All ER (D) 146 (May). 15 Premium Nafta Products Ltd v. Fili Shipping Compagny Ltd, [2007] UKLH40. 16 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 46. (b). 17 IV Y.B. Comm. Arb. 320, 321-22 [1978] (English High Ct. (Ch)) (1979).


5

contracts.” Therefore, breach of the Contract claims fall undoubtedly within the scope of

the “Law and Litigation” Clause. On the other hand, as the Claimant understands from the

Respondent’s statement of defence, the Respondent alleges that the “Law and Litigation”

Clause does not extend to the tort of fraud. Then, the Tribunal shall widely interpret the

scope of the arbitration Clause and consider that all disputes arising from the Contract,

including non-contractual claims, shall be settled by arbitration.

Therefore, this Tribunal has jurisdiction over all merits of the present Dispute.

PART II – MERITS

15. Firstly, the Claimant contends that (I) laws of England are applicable to the merits of the

Dispute. Secondly, the Claimant argues that: (II) the Respondent breached the Contract;

(II) the Respondent is liable to pay damages to the Claimant for the tort of fraud; (III) the

Respondent is liable to pay damages to the Claimant for the tort of negligent

misrepresentation.

I. Preliminary issue: laws of England govern the Contract

16. The choice-of-law Clause contained in the Contract provides that:

“This charter shall be construed and the relations between the parties

determined in accordance with the laws of England.”18

As the Claimant understands from the Respondent’s statement of defence, the Respondent

alleges that Singaporean law governs the Contract. The law chosen by the Parties governs

their contract.19 Choice-of-law clauses are standard features in international contracts.

In this case, the Contract designates laws of England as applicable, and therefore are the

governing law, if any dispute was to occur. As mentioned above, no amendment to the pro-

forma Shelltime 4 was made regarding the governing law. No intention to change Clause

46. (a) of the Contract in favour of laws of Singapore was ever initiated.

Therefore, only laws of England are applicable to the Dispute

II. Breach of Contract

17. The Claimant argues that the Respondent breached the Contract because (A) the

Respondent failed to pay the hire of the Vessel and (B) failed to perform several other

18 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 46. (a). 19 See e.g. The Draft Hague Principles on Choice of Law in International Commercial Contracts.


6

obligations. Therefore, (C) the Claimant suffered losses for which (D) it is rightly entitled

to claim damages.

A. The Respondent failed to pay hire

18. The Claimant argues that the Respondent breached its obligation to pay hire under the

terms of the Contract. (1) The Respondent failed to pay the second-period hire; (2) the

Respondent is not discharged of its obligation to pay hire in the absence of an off-hire or

frustrating event.

1. The Respondent failed to pay hire for the second period

19. The Claimant argues that the Respondent failed to pay the second-period hire which

payment was owed and due on 3 July 2014.

Clause 8. of the Contract states that the Respondent “shall pay for the use and hire of the

vessel (…), from the time and the date of her delivery (local time) to Charterers.”20 Clause

9. of the Contract provides that: “(…) payment of hire shall be made (…) per calendar

month in advance.”21The Claimant acknowledged that the Vessel was delivered to the

Respondent on 4 June 2014.22

Clause 8. of the Contract provides for the computation of hire, and Clause 9. provides for

the mechanics of payment.23 In Kawasaki v. Batham Steamship, it was held that the

obligation to pay hire in advance probably applies on the first instalment of hire just as it

applies on the other instalment.24 Accordingly, “month in advance” must be construed as

payment for each and every month in advance. Therefore, each monthly instalment is to be

paid before midnight on the day before each period begins.25

20. Furthermore, the Contract expressly refers to “per calendar” month. The Parties intended

to refer to the “corresponding day” rule evidenced by Cockburn, C.J, in Freeman v. Reed.26

Consequently, the first instalment of hire was due and owed to the Respondent on 3 June

2014, and in application of the “corresponding day” rule the second period of hire was due

20 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 8. 21 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 9. 22 Moot problem: email sent on 4 June 2014 at 00:01 (UTC+8) from the Master to Chris at LDTP, p. 28. 23 Francesco Berlingieri, Time Charter, Chapter 16, 7th Ed. 2014, 16.1, the above development is based on Clause 5 of the New York Produce form. 24 Kawasaki v. Bantham Steamship [1938] 60 Ll.L.Rep. 70 25 Francesco Berlingieri, Time Charter, 7th, op. cit., 16.5. 26 Freeman v. Reed [1863] 4 B. & S. 174, 184.


7

to the Respondent on 3 July 2014, as notified by the Claimant to the Respondent.27

Payment of hire is a primary, absolute obligation of the Respondent under the terms of the

Contract and may not be excused by any accident or inadvertence.28

The Claimant argues that it is entitled to claim for interests pursuant to Clause 9. (a)

of the Contract, which reads as follows:

“Interest on any amount due but not paid on the due date shall accrue from that

day up to and including the day when the payment is made (…).”

Accordingly, interest shall apply to the payment of the second period of hire due as of 3

July 2014.

21. Alternatively, if the Tribunal considers that such payment is due and owed on a

subsequent date, it will ascertain that no payment for the second-period hire was

made by the Respondent. Such a failure constitutes a breach of the Contract

22. The Tribunal will order the Respondent to pay for hire and interests on the amount due. In

the alternative, the Tribunal will award damages to the Claimant on the ground of a breach

of Contract by the Respondent.

2. The Respondent’s obligation to payment is not challenged by unexpected

occurrences

23. The Claimant argues that the Respondent is not entitled to rely on any frustration of

the Contract in order to be discharged of its obligation to pay hire.

Firstly, the Claimant argues that there was no frustration of the Contract on 4 July or on

any other subsequent date.

In Davis Contractors Limited v. Fareham,29 the House of Lords established that the test for

frustration was whether or not the circumstances in which an obligation is to be performed

have rendered such obligation radically different from that which was undertaken in the

contract. Lord Reid considered that the key question was whether or not the scope of the

contract was wide enough to cover its application under the new circumstances. The House

of Lords further confirmed this test in National Carriers Ltd v. Panalpina (Northern) Ltd,30

and held that frustration required a frustrating event occurring in the absence of default by

27 Moot problem: email sent on 3 July 2014 at 18:01 (UTC+1) from Oliver at WTI to Chris at LTDP, p. 39. 28 Per Lord Wright in A/S Tankerexpress v. Compagnie Financière Belge des Pétroles SA (Petrofina) [1948] 2 All ER 939, p. 946. 29 Davis Contractors Limited v. Fareham, UDC [1956] AC 696. 30 National Carriers Ltd v. Panalpina (Northern) Ltd [1981] AC 675.


8

any of the parties. Hence there shall be frustration only where a supervening event, an

external event or extraneous change of situation, radically changed a party’s obligations.

In the present case, the Claimant contends that there is no frustration resulting from delays

induced by the pirates’ attack of the Vessel.

24. The Anglo Northern-Jones 31 case evidenced the proportionality test. This authority

suggested that the main consideration lied in the total length of deprivation of use of the

vessel as compared with the unexpired portion of the contract. In Bank Line v. Capel, 32

Lord Summer added that: “(…), though it may not be the main and certainly is not the only

matter to be considered.” The relevant condition that must be taken into account is that the

alleged frustrating event should be both supervening and unforeseen at the time when the

parties entered into the contract. Accordingly, if an express provision in the contract

“intended to deal with the event which has occurred,” it “will normally preclude the

application of the doctrine of frustration.”33 In The Sea Angel,34 the court applied a multi-

factorial approach to determine whether a pro-forma Shelltime 4 charterparty concluded

for a twenty-day period and for the employment of a vessel for salvage operations was to

be found frustrated by the occurrence of a three-month delay. Such delay was caused by

the detention of the vessel by the Karachi Port Authority. The court held that the

contractual risk of delay lay on the charterer, and that the general risk of delay was

foreseeable by the salvage industry, as provided in the additional Clauses of the contract.

25. In circumstances comparable to the abovementioned case, the seizure of the Vessel by

pirates during thirteen days constituted a foreseeable risk for the Parties involved in the

maritime industry, under a three-month period charter concluded for a voyage to Western-

Africa. The Parties, by including additional piracy Clauses in the Contract, which

expressly provide that in such event, the Vessel shall remain on hire,35 had foreseen the

possibility of such attack. Furthermore, according to IMB Piracy Reporting Centre, Angola

and Congo are piracy zones well known of maritime industry operators.

Therefore, the Tribunal will find that the Contract was not frustrated as from 4 July 2014,

as piracy events may not be qualified as unforeseen events under the Contract.

26. Alternatively, the Claimant argues that the alleged frustration is a consequence of the

Respondent’s default and, accordingly, a self-induced frustration.

31 Anglo Northern-Jones 1917 2 K.B. 78, Bailhache, J., p. 84. 32 Bank Line v. Capel 1918 [1919] AC 435. 33 Joseph Constantine S.S. Line Ltd v. Imperial Smelting Corp. Ltd [1942] A.C 154, 163. 34 Edwinton Commercial Corporation & Anor v. Tsavliris Russ Ltd, [2007] EWHC Civ 547. 35 Moot problem: Contract, ST4 and BIMCO Piracy Clauses, pp. 8-11.


9

In Super Servant Two,36 the court held that frustration must take place without the fault or

blame of either party, and frustration of a venture may not result from any act or election of

the party seeking to rely on it.

As further developed below, the piracy attack on the Vessel shall be regarded as resulting

from several breaches on the part of the Respondent, including but not limited to: the

failure to bunker the Vessel as required by the Contract; or the failure to obtain the

Claimant’s consent when instructing the Vessel to proceed to an alternative discharge

place.

Consequently, the Tribunal will find that the Contract was not frustrated on 4 July 2014 or

any other subsequent date. Alternatively, the Tribunal will decide the frustration as self-

induced by the Respondent.

27. The Claimant contends that hire is recoverable by the Claimant under the Law

Reform (Frustrated Contracts) Act 1943 (the “Act”).

The Act, which applies to time charters (Section 2 (5), a)) governed by English Law

(Section 1 (1)), provides in its Section 1 (2) that:

“All sums paid or payable to any party in pursuance of the contract before the

time when the parties were so discharged shall, in the case of sums so paid, be

recoverable from him as money received by him for the use of the party by whom

the sums were paid, and, in the case of sums so payable, cease to be so

payable.”

This provision is to be construed as allowing the payee to recover sums due by the payer

before the time of discharge by the frustrating event.37 The Claimant has previously

demonstrated that hire was due and owed on 3 July 2014, while the Respondent alleged

frustration of the Contract by no later than 4 July 2014.

Therefore, the Tribunal will find that the Contract was not frustrated, and accordingly

order the Respondent to pay the second period of hire.

Alternatively, if the Tribunal decides that the Contract was frustrated on 4 July 2014, the

Tribunal will order the Respondent to pay the second-period hire, in application of the Act

which requires the payment of hire due before frustration of the Contract.

28. The Claimant argues that the Respondent is not entitled to rely on the Clause 21. (a)

of the Contract in order to preclude its obligation to pay hire.

36 J. Lauritzen AS v. Wijmuller B.V. (The Super Servant Two) [1990] 1 Lloyd’s Rep. 1. 37 H. Beale, The Chitty on Contract, Sweet & Maxwell, 31st Ed., 23-078.


10

Firstly, the Claimant contends that Clause 21. (a) of the Contract is not applicable in the

present case. The application of such Clause is precluded by application of the BIMCO

Piracy Clause for time charterparty,38 which was inserted in the Contract and clearly

stipulates that in the occurrence of pirates attack “any time lost shall be for the account of

the Charterers and the Vessel shall remain on hire.” Such Clause further adds at point (g)

that “in the event of a conflict between the provisions of this and any implied or express

provision of the Charterparty, this Clause shall prevail.”

Besides, a supplementary provision specific to piracy was added to pro-forma Shelltime 4

(hereinafter the “ST4 Piracy Clause”), which provides for captured of the Vessel by

pirates. Such Clause provides that:

“If the vessel is captured by pirates, hire shall be payable at 100% of the hire

rate for the duration of any such capture.”39

29. The Claimant contends that the application of the BIMCO Piracy Clause is in conflict with

Clause 21. (a) of the Contract. In this case and according to point g) of the BIMCO Piracy

Clause, such Clause shall apply and prevail over any other provision. The BIMCO Piracy

Clause and the ST4 Piracy Clause providing for the same events are not in conflict. As

such, the ST4 Piracy Clause clearly stipulates that the hire remains payable at 100% of the

hire rate during the capture by pirates.

The Vessel remained on hire during the period of seizure ranging from 4 July, on which

the Claimant received an off-hire notification,40 to 17 July 2014, when an incident report

was communicated to the Parties. 41 Consequently, the Tribunal will find that the

abovementioned Piracy Clauses here apply and prevail over Clause 21. (a). And

accordingly, the Tribunal will conclude that the hire was payable during the hijack, at

100% of the hire rate during this period.

30. The Respondent, who may contend that the Vessel was off-hire under Clause 21. (a)

of the Contract on 4 July 2014, has to properly prove that the alleged fact falls within

the scope of the off-hire provisions.

38 Moot problem: Contract, BIMCO Piracy Clause, p 11. 39 Moot problem: Contract, ST4 Piracy Clause, p. 8. 40 Moot problem: email sent on 4 July 2014 at 11:24 (UTC+8) from Chris at LDTP to Oliver at WTI, p. 41. 41 Moot problem: email sent on 17 July 2014 at 23:25 (UTC+1) from the Master to Chris at LDTP, p. 42.


11

Kerr, J., in the Mareveva A.S.42 comments on the New York Produce Exchange form: “(…)

that it is for the charterers to bring themselves clearly within an off-hire clause if they

contend that hire ceases.”43

The Claimant denies any neglect of duty or breach of orders on the part of the Master, and

the Respondent is to bring clear evidence of its allegations.

Therefore, the arbitral Tribunal will find that payment of hire was due and owed on 3 July

2014, and accordingly order the Respondent to pay the second period of hire, as the

Contract was never frustrated and the off-hire provision is not applicable.

B. The Respondent failed to perform other obligations

31. The Claimant contends that the Respondent breached many other obligations of the

Contract because: (1) the Respondent breached the Clause 4 (c) of the pro-forma Shelltime

4; (2) the Respondent directed the Vessel to proceed to an alternative discharge place

without the authorisation of the Claimant as required; (3) the Respondent is liable for the

discharge of the Cargo without the authorisation of the Claimant; and (4) further, the

Respondent breached the BIMCO STS Clause of the Contract. The Respondent is liable to

pay damages to the Claimant for the above breaches of the Contract because: (5) the

Respondent cannot rely on the BIMCO Piracy Clause to exclude its liability; (6) the

Respondent breached the pro-forma Shelltime 4 by failing to give Voyage orders to the

Vessel; and (7) the Respondent’s breaches of the Contract caused the Claimant’s loss.

1. The Respondent breached Clause 4. (c) of the pro-forma Shelltime 4

32. The Respondent breached its obligation of due diligence under the Contract by

disregarding the Master’s recommendations. It did not perform the Contract with due

diligence pursuant to the Contract.44 Indeed, the Respondent did not listen to the Master’s

recommendations. The Master sent multiple emails explaining to the Respondent the need

to bunker the Vessel sufficiently.

Thus, the Master sent on 27 May 2014 an email stating the bunkers required. It gave an

amount of “about 1,500 metric tons.” The Respondent only provided 950 metric tons of

fuel. The Master reacted immediately by stating in an email that it was “disappointed to

42 Mareva Navigation Co. v. Canaria Armadora SA (The Mareva AS) [1977] 1 Lloyd’s Rep. 368 per Kerr J. at pp. 381-382. 43 Id. 44 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 4. (c).


12

see the stem [was] not for the full quantity [the Claimant] requested.” The Master also

asked the Respondent “to advise [their] intentions for supplying [the Claimant] with

proper bunker stem / supply to meet the required itinerary.” Furthermore, filling the tank

with 950 metric tons of fuel was “only enough to get the Vessel to discharge area plus the

bad weather reserve.”45 The Master repeatedly advised the Respondent that the Vessel

could not meet the required itinerary without a new bunker supply.46 As such, the

Respondent did not re-bunker the Vessel off Durban despite the Master’s

recommendations to do so.47

Consequently, the Tribunal will find that the Respondent breached its obligation of due

diligence despite the Master’s recommendations.

2. The Respondent directed the Vessel to proceed to an alternative

discharge place without the required authorisation of the Claimant

33. The Claimant contends that the Respondent directed the Vessel to proceed to an

alternative discharge place without the required authorisation. Luanda was the

contracted port of discharge, as evidenced in the Bills of Lading.

A bill of lading is interpreted by using ordinary methods of contractual interpretation.48

The party that signs a written contract is bound by its terms.49 In the present case, the Bills

of Lading clearly provide that the agreed port of discharge was Luanda.50 This express

designation of the port of discharge is conclusive evidence that the Claimant and the

Respondent agreed to discharge the Cargo at Luanda. The Claimant therefore argues that

Luanda was the agreed port of discharge.

The Respondent indicated through its disport agent51 an alternative discharge place in

international waters off the Angolan coast.52 Thus, the Respondent breached the Contract.

Therefore, the Claimant argues that the Respondent breached the Contract by directing the

Vessel to proceed to a port other than the agreed port of discharge

45 Moot problem: email sent on the 3 June 2014 at 12:27 (UTC+8) from the Master to Chris at LDTP, p. 25. 46 Id. 47 Moot problem: email sent on the 20 June 2014 at 11:02 (UTC+4) from the Master to Chris at LDTP, p. 31. 48 Homburg Houltimport BV and others v. Agrosin Private Ltd and others (The Starsin) [2003] 1 Lloyd’s Rep 571, 577-8; Amoco Overseas Co. v. ST Averger, 1975 AMC 782, 789 (SD NY, 1975). 49 Peekay Intermark Ltd v. Australia & New Zealand Banking Group Ltd [2006] 2 Lloyd’s Rep 511, 520; L’Estrange v. F Graucob Ltd [1934] 2 KB 394, 403; A. G. Guest, ‘Exemption Clauses’ in H. G. Beale et al (eds), Chitty on Contracts (Sweet & Maxwell, 30th ed, 2008) vol 1, 909, 978. 50 Moot problem: Bill of Lading, pp. 43-44. 51 See infra. ASA2 acts in the name and for the account of the Respondent. 52 Moot problem: email sent on 28 June 2014 at 18:43 (UTC+8) from Chris at LDTP to the Master, p. 34.


13

3. The Respondent is liable for the discharge of the Cargo without the

authorisation of the Claimant

34. While the Vessel was at the alternative discharge place, a quantity of the Cargo was

discharged, in breach of the Contract, without the authorisation of the Claimant. As

mentioned above, the agreed port of discharge was Luanda.53 Though, the Respondent

indicated another port.54 Further, goods are discharged when they are offloaded into

warehousing or storage.55 The Claimant and the Respondent agreed that the discharge

occurred when the Cargo was offloaded during a ship-to-ship transfer.56

Therefore, the Claimant argues that the Respondent discharged the Cargo at a port other

than the agreed port of discharge.

4. The Respondent breached the BIMCO STS Clause of the Contract

35. The Respondent’s failure led to a piracy attack as it brought the Vessel into an unsafe

zone. The Contract provides that if the Claimant agrees to let the Vessel go through

excluded areas, “[the Respondent] shall use due diligence to ensure that the Vessel in only

employed between and at safe places [as well as for] ship-to-ship transfer.”57 In addition,

the Contract also provides, according to the rider Clause, a right to conduct ship-to-ship

cargo operations in safe areas only.58

Though, the Master had to slow the Vessel’s speed down in order to continue the itinerary

as planned.59 As this slowdown was not sufficient, the Vessel had to stop in an alternative

discharge place.60 The maritime coordinates given by the Respondent directed the Vessel

to an alternative discharge place off the Congolese coast. The Respondent could not

reasonably ignore that ICC International Bureau registered the Congolese coast as an

unsafe zone.61

53 See supra, The Respondent directed the Vessel to proceed to an alternative discharge place without the Claimant’s authorisation as required in the Charterparty. 54 Moot problem: email sent on 28 June 2014 at 18:43 (UTC+8) from Chris at LDTP to the Master, p. 34. 55 See generally Mediterranean Shipping Company SA v. Trafigura Beheer BV (The MSC Amsterdam) [2007] 2 Lloyd’s Rep 622; Huyton SA v. Peter Cremer GmbH & Co. [1999] 1 Lloyd's Rep 620, 624; The Metall Market OOO v. Vitorio Shipping Co. Ltd (The Lehmann Timber) [2012] 2 Lloyd’s Rep 73. 56 Moot problem: email sent on 28 June 2014 at 18:43 (UTC+8) from Chris at LDTP to the Master, p. 34 57 Moot problem: Contract, amended pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 4. (a) and (c). 58 Moot problem: Contract, BIMCO STS Clause (a) and (b), p. 10. 59 Moot problem: email sent on the 25 June 2014 at 11:02 (UTC+3) from the Master to Chris at LDTP, p. 32. 60 Moot problem: email sent on the 28 June 2014 at 18:43 (UTC+8) from Chris at LDTP to the Master, p. 34. 61 ICC International Maritime Bureau, Piracy annual report, 2014.


14

The Master did not approve to stop at an alternative discharge place but had no choice to

lay-up as the Vessel was running out of fuel. In this regard, the possibility to laying-up has

been deleted from the pro-forma Shelltime 4. It was then not possible to ask for laying-up.

Therefore, the Claimant argues that the Respondent breached the Contract by leading the

Vessel to an unsafe zone.

5. The Respondent cannot rely on the BIMCO Piracy Clause to exclude its

liability

36. The Claimant provided a ship in conformity with the Contract. Therefore, the

Respondent cannot argue on the BIMCO Piracy Clause to exclude its liability. There

is a rider Clause providing as follows: “the owner shall have the liberty” to take preventive

measures.62 As such, it was not mandatory for the Claimant to take preventive measures.

The Claimant provided a ship fit for service according to the Questionnaire 88.63

The Claimant contends that it exercised the requisite degree of due diligence to make the

Vessel seaworthy, properly manned and equipped. As such, the Claimant argues that it did

not breach the Contract.

Therefore, the Claimant argues that the Vessel was fit for service. The Respondent cannot

rely on the non-mandatory the BIMCO Piracy Clause to exclude its liability.

6. The Respondent breached the Contract by failing to give the Vessel

voyage orders

37. The Respondent breached the Contract by failing to give the Vessel voyage orders

after the attack. After the attack, the Vessel returned to Cape Town for assistance and

further orders. Though, the Respondent failed to give the Vessel voyage orders after the

attack despite its obligation to do so pursuant to the Contract.64 The Contract provides that:

“[The Respondent] shall from time to time give the master all requisite

instructions and sailing directions.”

It also provides that:

“The master shall be under the orders and direction of [the Respondent] as

regards employment of the vessel (…).”

62 Moot problem: Contract, BIMCO Piracy Clause (c), p. 11. 63 Moot problem: Intertanko's standard tanker chartering questionnaire 88, pp. 49-59. 64 Moot problem: Contract, amended pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 12. and 13. (a).


15

The Respondent did not give voyage orders at any point following the Cargo transfer at the

alternative discharge place. The Master stated that “due to no instruction from [the

Respondent]” the Vessel proceeded in direction of Cape Town for assistance.65 The

Respondent should have given orders to the Master in order to give it the right instructions

for assistance.

Therefore, the Claimant claims that the Respondent breached its obligation to give the

Vessel voyage orders after the Cargo transfer at the alternative discharge place.

7. The Respondent’s breaches of the Contract caused the Claimant’s loss

38. The Respondent is liable for the damages caused to the Vessel during the attack. The

Vessel was damaged after the attack according to the last email sent by the Master, in

which the latter stated that: “Vessel damage includes navigating and radio equipment in

wheelhouse, main deck hose crane unserviceable, starboard-side accommodation ladder

buckled.”66

The Respondent’s failures have belated the Vessel and modified the itinerary of the latter.67

The Respondent breaches led to a piracy attack, which caused multiple damages to the

Vessel. The Respondent is directly liable for the Claimant’s loss.

The Claimant therefore argues that the Respondent’s behaviour abovementioned led to the

damages observed by the Master after the attack

III. The Respondent committed maritime fraud

39. (B) The Tribunal will find the Respondent civilly liable for the tort of deceit. In such case,

the Claimant is rightly entitled to claim for damages. (A) By way of preliminary comment,

the Tribunal must acknowledge the existence of an agency relationship between the

Respondent and the Atlantic STS Agency Ltd an agency relationship which makes the

principal liable for the torts committed by its agent.

A. ASA2 acts in the name of and for the account of the Respondent

40. The Claimant argues that ASA2 acted, and still acts, as the agent of the Respondent

and that the latter is liable for the torts committed by the former. Maritime fraud can

65 Moot problem: email sent on 17 July 2014 at 23:20 (UTC+1) from the Master to Chris at LDTP, p. 41. 66 Moot problem: email sent on 17 July 2014 at 23:20 (UTC+1) from the Master to Oliver at WTI, p. 42. 67 See supra, The Respondent breached the BIMCO STS Clause of the contract.


16

be made by a contracting party as well as by the agent of any of them.68 In maritime fraud,

the offending statements are not always made directly by the co-contracting party.69 The

employer can be liable for the torts committed by its agent in the course of their agency.70

Therefore, the principal may be liable for the fraudulent misrepresentation committed by

any of its agents.

ASA2 made representations in the name and for the account of the Respondent. In the

voyage order document, the disport agent designated is “Atlantic Services Agency”

(hereinafter “ASA1”). In practice, the true disport agent is nevertheless ASA2. Two types

of proofs can be advanced in establishing this.

41. Firstly, some proofs are inherent to the agent’s behaviour. ASA2 introduced itself as an

agent in its email of the 28th of June 2014 addressed to the Master.71 Indeed, ASA2

presented itself as an “agency” who has been given the “control” of the Vessel and as the

“vessel coordinator.” Also, information that the latter had are illustrative. ASA2 was thus

aware that the Parties entered a time charterparty, that the Vessel proceeded towards the

city of Luanda, that it had 72,000 metric tons of gasoil on board and that it needed to be

refuelled. In other words, ASA2 had knowledge of facts that a third party could never

have. Lastly, ASA2 is the only one who contacted the Master concerning the ship-to-ship

operation. ASA1 never did so thus far.

42. Secondly, some proofs are inherent to the Respondent’s behaviour. Firstly, the affiliate of

LDTP “Traders Inc. BVI” was included in copy of the email sent on 30 June 2014 by the

Master to ASA2.72 The Respondent was therefore quickly aware of the contact established

between the Master and ASA2 and did not challenge it.

Then, the Respondent requested from the Master to “keep” liaising with its ship-to-ship

coordinator in an e-mail sent on 4 July 2014.73 This statement is unequivocal. It clearly

confirms that the Respondent was aware of the contact established between the Master and

ASA2. Lastly, the Respondent declared in its e-mail of 4 July 2014 addressed to the

Claimant that it considered the Vessel as off-hire due to “no contact with receiver.” This

constitutes the last evidence that the Respondent had contact with ASA2, its agent.

68 See. infra, The Respondent and its agent committed maritime fraud. 69 Paul Todd, “Chapter 2 Introduction to Maritime Fraud: Issues Particular to Maritime Fraud”, Marine Fraud & Piracy, 2nd Edition 2010, §2.138. 70 Lloyd v. Grace Smith & Co. [1912] AC 716. Paul Todd, “Chapter 2 Introduction to Maritime Fraud: Issues Particular to Maritime Fraud”, op. cit., §2.143. 71 Moot problem: email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35. 72 Moot problem: email sent on 30 June 2014 at 12:29 (UTC+1) from the Master to ASA2, p. 37. 73 Moot problem: email sent on 4 July 2014 at 09:52 (UTC+8) from Chris at LDTP to the Master, p. 40.


17

Indeed, the Respondent affirmed that the Vessel had “no contact” with the receiver. Yet,

the Master only stated that the ship-to-ship vessel did not arrive. The Respondent could not

possibly know that the Master had no contact with the ship-to-ship operator when it had

only been told that this operator had not arrived.

There was a clear communication of information and a trade link between the Respondent

and ASA2. The agency relationship between them may not be challenged.

Therefore, the Tribunal will ascertain the Respondent is vicariously liable for the false

representations made by its agent.

B. The Respondent is civilly liable for the tort of deceit

43. The Claimant argues that both the Respondent and ASA2 acting on its behalf

committed maritime fraud. Hence, the Tribunal is requested to award damages to the

Claimant for the loss suffered due to the maritime fraud. The International Maritime

Bureau has defined maritime fraud as follows:

“An international trade transaction involves several parties – buyer, seller, ship-

owner, charterer, ship’s master or crew, insurer, banker, broker or agent.

Maritime fraud occurs when one of these parties succeeds, unjustly or illegally,

in obtaining money or goods from another party to whom, on the face of it, he

has undertaken specific trade, transport and financial obligations.”74

The fraudulent misrepresentation is one variation of maritime fraud. The action for

fraudulent misrepresentation is based on the tort of deceit,75 which can be defined as:

“A fraudulent and deceptive misrepresentation, artifice, or device, used by one

or more persons to deceive and trick another, who is ignorant of the true facts,

to the prejudice and damage of the party imposed upon.”76

To bring the claim in the tort of deceit, five conditions must be met. As seen in the Derry v.

Peek case in which the House of Lords defined the tort of deceit:77

- the Respondent must have made a false statement of fact;

- the Respondent must have known that the representation is false or must have been

reckless as to whether it is true or false;

- the Respondent must have intended the Claimant to rely upon the statement;

- the Claimant must have in fact relied upon the statement; and 74 ICC Publication No. 370, Guide to Prevention of Maritime Fraud, 1980. 75 PLC Practice note, “Misrepresentation”, Practical Law Dispute Resolution Fraudulent misrepresentation. 76 Black’s Law Dictionary, Fifth Edition, West Publishing Company, 1979. 77 Derry v. Peek [1889] 14 App. Cas 337.


18

- the Claimant must thereby have suffered financial loss.78

44. Both the Respondent and ASA2 acting on its behalf have made false representations.

By way of preliminary comment, it must be noted that the Master warned the Respondent

that the fuel supply ordered at the loading port was not sufficient to go beyond the

discharge area.79 The Respondent made both explicit and implied false statements.

The Respondent made explicit false statements on two occasions.

! The Respondent asserted in its e-mail sent to the Master on 3 June 2014 that it will

“revert” later on to the bunker supply in Durban or Cape Town issue. The

Respondent did not do so and had no intention to. Yet, the Master asked the

Respondent twice to do so.80 Hence, the Vessel could not refuel and had to slow

down its speed in order to save fuel.

! The Respondent stated in its e-mail sent to the Master on 28 June 2014 that bunkers

would be available “on arrival STS Area 1.”81 However, there was no bunker supply

present at the place indicated by the ship-to-ship coordinator when the Vessel

arrived.82 Yet the Vessel arrived both at the agreed place and at the estimated time of

arrival, as communicated to the ship-to-ship coordinator already five days before.83

Furthermore, an express statement may imply a representation.84 The Respondent made

implied false statements on two occasions.

! The Respondent asserted in its e-mail sent to the Master on 3 June 2014 that they

“have alternative bunker supply available passing Durban or Cape Town.”85 In the

context of the conversation established between the Respondent and the Master, it

means an intention to supply the Vessel with fuel off Durban or off Cape Town. The

abovementioned e-mail is in fact a response to the e-mail sent before by the Master

to the Respondent in which the first one asked the second to specify its “intentions”

to supply the Vessel with fuel. However, the Respondent did not provide any fuel

supply off Durban or off Cape Town.86

78 Standard Chartered Bank v. Pakistan National Shipping Corp. (No. 2), [2003] 1 AC 959; Court of Appeal, Eco 3 Capital Ltd and others v. Ludsin Overseas Ltd [2013] EWCA Civ 413. 79 Moot problem: email sent on 3 June 2014 at 12:17 (UTC+8) from the Master to Chris at LDTP, p. 25. 80 Moot problem: email sent on 8 June 2014 at 11:02 (UTC+8) from the Master to Chris at LDTP, p. 29; email sent on 20 June 2014 at 11:02 (UTC+4) from the Master to Chris at LDTP, p. 31. 81 Moot problem: email sent on 28 June 2014 at 16:27 (UTC+8) from Chris at LDTP to the Master, p. 33. 82 Moot problem: email sent on 4 July at 05:22 (UTC+1) from the Master to Chris at LDTP, p. 40. 83 Moot problem: email sent on 28 June 2014 at 19:50 (UTC+2) from the Master to ASA2, p. 35. 84 Discount Records Ltd v. Barclays Bank Ltd [1975] 1 WLR 315. 85 Moot problem: email sent on 3 June 2014 at 17:21 (UTC+8) from Chris at LDTP to the Master, p. 26. 86 Moot problem: email sent on 25 June 2014 at 11:02 (UTC+3) from the Master to Chris at LDTP, p. 32 and following.


19

! Concerning the fuel supply, the Respondent affirmed to the Master that “everything

is under control”87 and to the Claimant that “all is going well.”88 In other words, the

Respondent had hinted that the Vessel was proceeding normally without any fuel

supply difficulty, which is inaccurate.

45. ASA2 acting on behalf of the Respondent made false representations. In its e-mail sent to

the Master on 28 June 2014 at 18:02 (UTC+1), the agent stated that its own vessel was in

charge of unloading the Vessel and supplying it with fuel at the coordinates 06°00’00’’S –

08°10’00’’E. Nevertheless, there was no bunker supply present at the designated place as

discussed above.89 This statement was incorrect.

Therefore, the Tribunal will ascertain that the statements made by the Respondent as well

as by ASA2 on its behalf were substantially false.

46. The states of mind of both the Respondent and ASA2 acting on its behalf were

dishonest. Dishonesty implies that a false representation is made knowingly or

recklessly.90 Indeed, Lord Herschell stated in the Derry v. Peek case that:

“(…) Fraud is proved when it is shown that a false representation has been

made (i) knowingly, (ii) without belief in its truth, or (iii) recklessly, careless

whether it be true or false.”91

Also, the motive of the fraudster in making the representation is irrelevant.92

47. The state of mind of the Respondent was dishonest. Firstly, the Respondent disregarded the

Master’s advice to fill the Vessel with 1500 metric tons of fuel,93 and chose to fill the tank

with only 950 metric tons of fuel instead.94 Then, the Respondent disregarded the protest

from the Master to fill the Vessel with more fuel; and asked the Master to “protest for any

short supply.”95 The latter did so96 but the former chose to ignore it and stated that there

was an “alternative bunker supply” off Durban or off Cape Town.97 Furthermore, the

Respondent disregarded the requests from the Master, as it did not respond to any message 87 Moot problem: email sent on 3 June 2014 at 20:15 (UTC+8) from Chris at LDTP to the Master, p. 28. 88 Moot problem: email sent on 4 July 2014 at 09:37 (UTC+8) from Chris at LDTP to Oliver at WTI, p. 39. 89 See supra, False representation. 90 Paul Todd, “Chapter 2 Introduction to Maritime Fraud: Issues Particular to Maritime Fraud”, op. cit., §2.122. 91 Derry v. Peek, op., cit. 92 Bradford Third Benefit BS v. Borders (1941) 2 All ER 205, followed in Ludsin Overseas Ltd v. Eco3 Capital Ltd [2012] EWHC 1980 (Ch); Armitage v. Nurse [1998] Ch 241, 250; In Polhill v. Walter [1832] 3 B&Ad 114, “a laudable motive is no defence if the constituent mental element is proved: the Defendant endorsed a bill of exchange in an attempt to be helpful; held: that was no defence.” 93 Moot problem: email sent on 27 May 2014 at 12:27 (UTC+8) from the Master to Chris at LDTP, p.20. 94 Moot problem: email sent on 30 May 2014 at 15:27 (UTC+8) from Chris at LDTP to David Ng at Equator Bunkers, p.24. 95 Moot problem: email sent on 3 June 2014 at 09:27 (UTC+8) from Chris at LDTP to the Master, p.25. 96 Moot problem: email sent on 3 June 2014 at 12:17 (UTC+8) from the Master to Chris at LDTP, p.25. 97 Moot problem: email sent on 3 June 2014 at 17:21 (UTC+8) from Chris at LDTP to the Master, p.26.


20

coming from the Master from 3 June to 28 June 2014. Yet the latter wrote to the

Respondent three times: the first time to confirm the ship-to-ship operation coordinates,98

the second time to ask the Respondent to “urgently” advise its intention to fill the Vessel

off Durban99 and the third time to say that it “must” have bunker supply.100

48. In contrast, the Respondent did not fail to write to the Claimant, in the meantime, to

surprisingly tell it that all was going on well.101 The Respondent did read its e-mails and

deliberately ignored the Master’s solicitations. Lastly, the Respondent did nothing that

might suggest it had the intention to provide a fuel supply. For instance, the Respondent

never even asked the Master to report its estimated time of arrival off Durban in order to

anticipate any ship-to-ship operation.

The Master vainly warned the Respondent many times. Hence, the false statement that

there was an alternative bunker supply off Durban or off Cape Town could only be made in

full knowledge of facts.

Therefore, the Tribunal will ascertain that the Respondent made a false representation

knowingly.

49. The state of mind of ASA2 acting on behalf of the Respondent was dishonest. In its single

e-mail addressed to the Master sent on 28 June 2014, ASA2 stated that the hired Vessel

could discharge and benefit from a fuel supply in connection with a ship-to-ship operation

at the coordinates 06°00’00’’S – 08°10’00’’E.102 The agent of the Respondent then leaved

unanswered five e-mails sent by the Master.103 Yet the latter each time asked ASA2 to

confirm that it had those connections and fender supply for the ship-to-ship operation. The

Vessel arrived to the located place in accordance with the estimated time of arrival and

with the abovementioned coordinates. However, there was “no bunker supply” there, as the

Master affirms in its e-mail sent on 17 July 2014 to the Respondent and to the Claimant.104

The ship-to-ship coordinator had no intention to provide fuel supply or to discharge the

Vessel. If it did so, it would have come to the agreed place and would obviously have

98 Moot problem: email sent on 8 June 2014 at 11:02 (UTC+8) from the Master to Chris at LDTP, p.29. 99 Moot problem: email sent on 20 June 2014 at 11:02 (UTC+4) from the Master to Chris at LDTP, p. 31. 100 Moot problem: email sent on 25 June 2014 at 11:02 (UTC+3) from the Master to Chris at LDTP, p. 32. 101 Moot problem: email sent on 20 June 2014 at 11:52 (UTC+8) from Chris at LDTP to Oliver at WTI, p. 31. 102 Moot problem: email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35. 103 Moot problem: email sent on 28 June 2014 at 19:50 (UTC+2) from the Master to ASA2, p. 35; email sent on 29 June 2014 at 12:29 (UTC+1) from the Master to ASA2, p. 36; email sent on 1 July 2014 at 12:29 (UTC+1) from the Master to ASA2, p. 37; email sent on 2 July 2014 at 12:27 (UTC+1) from the Master to ASA2, p. 37; email sent on 3 July 2014 at 12:30 (UTC+1) from the Master to ASA2, p. 38. 104 Moot problem: email sent on 17 July 2014 at 23:20 (UTC+1) from the Master to Chris at LDTP and Oliver at WTI, p. 41.


21

answered to the Master’s requests, which is no less than what could reasonably be

expected from a worthy ship-to-ship coordinator.

Therefore, the Tribunal will ascertain that ASA2 acting on behalf of the Respondent

knowingly made a false representation.

50. The Respondent and its agent obviously intended the Claimant to rely upon the

abovementioned statement. To bring a claim in the tort of deceit, there must indeed exist

an intention that the victim of fraud should rely on the false representation.105

In the case at hand, such intent does exist. Firstly, both the Respondent and its agent

instructed the Vessel to proceed towards off Luanda.106 Secondly, the Respondent asserted

that a supply of bunkers would be available off Durban or off Cape Town107 and the agent

asserted that a supply of bunkers would be available at the ship-to-ship area one.108 By

doing so, they both wanted to ensure that the Master would adhere to the given directions.

Therefore, the Tribunal will ascertain that the Respondent and ASA2 acting on its behalf

intended the Claimant to rely upon the statement.

51. The Claimant did in fact rely upon the Respondent’s statement. The claim relating to

the tort of deceit must establish that the Claimant knew the statement and was influenced

to act by it.109 Moreover, the Edgington v. Fitzmaurice case provides that “[i]t is not

necessary to show that the (deceitful) misstatement was the sole cause of acting as [the

plaintiff] did.”110

The Master did in fact rely upon two false statements.

! The Master relied on the false statement made by the Respondent that there is an

alternative bunker supply off Durban or off Cape Town. Indeed, the Master

spontaneously sent to the Respondent on 25 June its estimated time of arrival off

Durban.111

! The Master relied on the false statement made by the Respondent and its agent that

there is a bunker supply at the ship-to-ship area one.112 In each of the e-mails sent to

105 Mead v. Bebington [2007] EWCA Civ 518. 106 Moot problem: voyage order attached to the email sent on 27 May 2014 at 09:27 from Chris at LDTP to the Master, p. 20; email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35. 107 Moot problem: email sent on 3 June 2014 at 17:21 (UTC+8) from Chris at LDTP to the Master, p. 26. 108 Moot problem: email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35. 109 Ross Fentem & Lucy Walker, “Civil fraud – Back to basics”, Guildhall Chambers, November 2012. 110 Edgington v. Fitzmaurice [1884] 29 Ch D 459, 481. The effect of this rule was that the plaintiff could recover the whole of his loss, even though he was himself partly responsible for it. 111 Moot problem: email sent on 25 June 2014 at 11 :02 (UTC+3) from the Master to Chris at LDTP, p. 32. 112 Moot problem: email sent on 28 June 2014 at 18:43 (UTC+8) from Chris at LDTP to the Master, p. 34; email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35.


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ASA2, the Master stated that it would be “taking bunkers on arrival” and requested

the receiver to confirm it has “hose connections and fender supply.”

Therefore, the Tribunal will ascertain that the Claimant did in fact rely upon the false

statements made by the Respondent and persons acting on its behalf.

52. The Claimant was thereby caused financial loss. Due to the false representations made

by the Respondent and ASA2 acting on its behalf outlined above, the Vessel arrived at a

location where pirates attacked it. This hijack caused the Vessel serious damages that

require repairs and prevent any further hire for a certain period of time. Thus, it is

undisputable that the Claimant suffered financial loss.

Therefore, the Tribunal will ascertain that the Claimant has suffered a financial loss due to

the false representations made by the Respondent and its agent.

53. The Claimant is rightly entitled to claim damages for the tort of deceit. In principle,

the Respondent is liable for all losses flowing from the tort.113 The Claimant, victim of the

fraud, must therefore be put in the position it would have been if the false representations

had not been made.114

Therefore, the Tribunal will award damages for all losses suffered by the Claimant due to

the maritime fraud committed by the Respondent.

IV. The Respondent and ASA2 acting on its behalf are liable for negligent

misrepresentation

54. If not made with fraudulent intent, the aforementioned false statements otherwise

demonstrate the Respondent’s negligence in representing that it would provide a

sufficient supply of bunkers to the Claimant. Under the Misrepresentation Act 1967, the

Claimant is entitled to claim damages for the Respondent’s negligent misrepresentation, as

if the misrepresentation were made fraudulently.115 Section 2 (1) of the Act provides that:

“Where a person has entered into a contract after a misrepresentation has been

made to him by another party thereto and as a result thereof he has suffered

loss, then, if the person making the misrepresentation would be liable to

damages in respect thereof had the misrepresentation been made fraudulently,

that person shall be so liable notwithstanding that the misrepresentation was not

made fraudulently, unless he proves that he had reasonable ground to believe 113 Smith New Court Securities Ltd v. Scrimgeour Vickers (Asset Management) Ltd [1996] UKHL 3, [1997] AC 254 (21 November 1996); Clef Aquitaine SARL v. Laporte Materials (Barrow) Ltd [2000] 2 All ER 493. 114 Doyle v. Olby (Ironmongers) Ltd [1969] EWCA Civ 2 at p. 167, [1969] 2 QB 158 (31 January 1969). 115 Royscot Trust v. Rogerson [1991] 2 QB 297.


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and did believe up to the time the contract was made the facts represented were

true.”

55. The Claimant and the Respondent based the Contract on a standard pro-forma Shelltime 4,

which was amended by the terms negotiated between the Parties. As reflected in the

recap,116 the Respondent requested several amendments to be made to the pro-forma

Shelltime 4, but did not request Clause 7. (a) of the Contract to be amended. In Spice Girls

Ltd,117 the Court of Appeal found the claimants liable under the Misrepresentation Act for

an implied misrepresentation they made by conduct to the Respondent. By not expressing

any intention to amend Clause 7. (a) of the Contract, which provides that “Charterer shall

provide and pay for all fuel,” the Respondent made by the implied representation that it

was commercially capable of supplying, and would therefore supply, all necessary bunkers

to the Claimant. Contrary to what the Respondent contends,118 the Respondent’s failure to

provide a sufficient supply of bunker to the Vessel in Singapore prior to its departure and

the subsequent false statements repeatedly made by the Respondent regarding bunkering at

various stages of the voyage prove that the Respondent’s implied representation was

untrue. The Claimant refers this Tribunal to paragraphs above119 and contends that such

misrepresentation, if fraudulent, would entitle the Claimant to damages.

56. If the representee proves a misrepresentation under the Act, which, if fraudulent, would

have sounded in damages, the onus passes immediately to the representor to prove that it

had reasonable ground to believe the facts represented.120 While the Respondent contends

that all representations made by it were honest and all beliefs in aid of such representations

were honest beliefs,121 the Respondent had no reasonable ground to believe and did not

believe that it would be able to provide and pay for all bunkers. The Respondent’s

correspondence with Singapore bunker suppliers Equator Bunkers demonstrates that the

Respondent knew it never had any means to provide a sufficient supply of bunkers to the

Vessel as soon as the day after the commencement date of the Contract. In the e-mail sent

to Equator Bunkers on 27 may 2014,122 the Respondent states that it is “developing a new

trade from the Singapore / Malaysia area to Atlantic area” and therefore requires “a 30

116 Moot problem: email sent on 26 May 2014 at 17:09 (UTC+1) from Bill to Charles at LDTP and Oliver at WTI, p. 5. 117 Spice Girls Ltd v. Aprilia World Service Bv [2002] EWCA Civ 15. 118 Moot problem: Statement of defence, §15, a, p. 68. 119 See supra, The tort of deceit. 120 Howard Marine and Dredging Co. Ltd v. A. Ogden & Sons (Excavations) Ltd. [1977] EWCA Civ 3. 121 Moot problem: Statement of defence, §15, b, p. 68. 122 Moot problem: email sent on 27 may 2014 at 12:00 (UTC+ 8) from Chris at LDTP to David at Equator Bunkers, p. 20.


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day credit line to the order of US$750,000 to US$1million for the purchase of residual

fuel.” Further e-mail sent by the Respondent to David Ng at Equator Bunkers on 28 May

2014 shows that the Respondent accepted a $650,000 credit line and only intended to

purchase 990metric tons of fuel,123 when the Master already informed the Respondent that

1500 metric tons of fuel were required for the whole voyage.124 The quote given by

Equator Bunkers regarding the cost of fuel in its e-mail to the Respondent on 28 May 2014

proves that the credit line initially required and eventually accepted by the Respondent was

insufficient to purchase the full quantity of fuel necessary for the whole voyage.125

57. This Tribunal will therefore find that the Respondent had no reasonable ground to believe

and did not believe the implied representation it made regarding its ability to provide and

pay for a sufficient supply of bunkers to the Claimant.

Therefore, the Claimant is rightly entitled to claim damages for negligent

misrepresentation under section 2 (1) of the Misrepresentation Act 1967 and the

Respondent is liable to same damages as if it made such representation fraudulently.

123 Moot problem: email sent on 28 May 2014 at 09:17 (UTC +8) by Chris at LDTP to David at Equator Bunkers, p. 22. 124 Moot problem: email sent on 27 May 2014 at 12:27 (UTC+8) from the Master to Chris at LDTP, p. 21. 125 Moot problem: email sent on 28 May 2014 at 10:10 (UTC +8) from David at Equator Bunkers to Chris at LDTP, p. 23.


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PART III – PRAYER FOR RELIEF

In light of the foregoing submissions, the Claimant respectfully requests this Tribunal to:

DECLARE that it has jurisdiction over the merits of the present claims; and

FIND that the Respondent is liable for the breaches of the Contract, the tort of fraud and the

negligent misrepresentation; and

AWARD to the Claimant damages and interest on the amounts claimed; and

ORDER the Respondent to pay all legal and other costs that may incur arising out of or in

relation to the present arbitration.

Documents

INTERNATIONAL MARITIME LAW ARBITRATION MOOT … · INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6 VII Howard Marine and Dredging Co. Ltd v. A. Ogden & Sons (Excavations)