MEMORANDUM FOR CLAIMANT - Murdoch University · MEMORANDUM FOR CLAIMANT ... (American Bar Association, 2009) ... Ltd and Ors v Anonymous Greek Insurance Company of General Insurances

18th Annual International Maritime Law Arbitration Moot

In the matter of an arbitration under the SCMA Arbitration Rules

UNIVERSITY OF QUEENSLAND

A U S T R A L I A

MEMORANDUM FOR

CLAIMANT

CLAIMANT

Furnace Trading Pty Ltd

2 Marina Boulevard #19-05

Singapore

v

RESPONDENT

Inferno Resources SDN BHD

2/3 SW Pasar Borong Pandan

Malaysia

TEAM 1

COUNSEL

ANTONIA BELLAS | PENELOPE BRISTOW | JANE HALL | MATTHEW PATERSON

Team 1 Memorandum for the Claimant

ii

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ............................................................................................................................ v

LIST OF AUTHORITIES ................................................................................................................................ vi

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

THE CHARTERPARTY CHAIN .................................................................................................................... 3

PRELIMINARY MATTERS ............................................................................................................................ 3

A. The laws of Singapore govern this arbitration ........................................................................................ 3

SUBMISSIONS ON AN INTERIM ORDER FOR THE SALE OF THE CARGO .................................... 4

I. THE TRIBUNAL ORDER THE INTERIM SALE OF THE CARGO ................................................. 4

A. The Tribunal has jurisdiction to order the interim sale of the Cargo ...................................................... 4

(i) The Tribunal is competent to rule on its own jurisdiction .................................................................. 4

(ii) The Tribunal has prima facie jurisdiction over the dispute ................................................................ 4

(iii) The Tribunal has the power under the IAA to make an interim order for the sale of the Cargo....... 4

B. The interim sale of the Cargo is necessary in all the circumstances ....................................................... 5

(i) Failure to sell the Cargo will cause FURNACE to suffer serious harm ................................................ 5

(ii) Such harm substantially outweighs the harm likely to be suffered by INFERNO or IDONCARE if the

Cargo is sold ............................................................................................................................................ 6

(iii) Urgent relief is required .................................................................................................................... 7

SUBMISSIONS ON THE LIEN OVER CARGO ISSUE .............................................................................. 8

II. FURNACE IS ENTITLED TO A LIEN ON THE CARGO AGAINST INFERNO ................................. 8

A. FURNACE has an effective contractual lien on the Cargo against INFERNO ............................................ 8

B. FURNACE validly exercised its lien on the Cargo against INFERNO ........................................................ 9

III. FURNACE IS ENTITLED TO EXERCISE A CONTRACTUAL LIEN ON THE CARGO

AGAINST IDONCARE .................................................................................................................................... 9


iii

A. IMLAM has a contractual right of lien on the Cargo ............................................................................... 9

(i) The BoLs evidence the terms of contract between IMLAM and IDONCARE ...................................... 10

(ii) The BoLs incorporated the terms of the VCP .................................................................................. 10

(iii) The words of incorporation in the BoLs were sufficient to incorporate the lien clause .................. 11

B. FURNACE can receive the benefit of IMLAM’s contractual right of lien against IDONCARE ................ 12

(i) IMLAM assigned its contractual right of lien to FURNACE ................................................................ 12

(ii) Alternatively, IMLAM exercised its lien right as trustee for FURNACE ............................................. 13

C. The lien was validly exercised .............................................................................................................. 14

SUBMISSIONS ON THE LIEN ON SUB-FREIGHT ISSUE ..................................................................... 15

IV. FURNACE HAS THE RIGHT TO INTERCEPT SUB-FREIGHT ..................................................... 15

A. FURNACE can revoke INFERNO’s authority to collect freight from IDONCARE .................................... 15

B. The right to intercept sub-freight is a consequence FURNACE’s right to collect freight ....................... 16

C. FURNACE must be able to collect sub-freight as a matter of commercial sense ................................... 16

D. FURNACE made a valid claim on sub-freight ........................................................................................ 16

SUBMISSIONS ON THE TERMINATION OF THE VCP ........................................................................ 17

V. FURNACE WAS ENTITLED TO TERMINATE THE VCP ................................................................. 17

A. INFERNO repudiated the VCP ............................................................................................................... 17

(i) INFERNO’s course of conduct amounted to repudiation .................................................................... 17

(ii) INFERNO failed to comply with FURNACE’s notice to perform ....................................................... 18

B. Further, INFERNO substantially breached one or more innominate terms of the VCP .......................... 19

(i) INFERNO breached the VCP by failing to pay freight ....................................................................... 20

(ii) INFERNO breached the VCP by failing to nominate a legitimate discharge port ............................. 20

SUBMISSIONS ON ENTITLEMENT TO DAMAGES .............................................................................. 22

VI. FURNACE IS ENTITLED TO DAMAGES .......................................................................................... 22


iv

A. FURNACE is entitled to damages for breach of voyage charter party .................................................... 22

(i) INFERNO failed to nominate a discharge port ................................................................................... 22

(ii) INFERNO failed to nominate a ‘safe port’......................................................................................... 22

(iii)INFERNO failed to pay freight .......................................................................................................... 23

B. FURNACE is entitled to damages for the costs and expenses of exercising its lien ............................... 23

C. FURNACE is entitled to damages for detention ...................................................................................... 23

PRAYER FOR RELIEF ................................................................................................................................. 25

ANNEXURE A: MAP OF PORTS ................................................................................................................. 26


v

LIST OF ABBREVIATIONS

ABBREVIATION TERM

BoL Bill of lading

Cargo The 84,000.052 metric tonnes of coal on board the Vessel

Expert Report Expert Report of Caleb Coalman dated 3 December 2016

FURNACE Furnace Trading Pte Ltd

IAA International Arbitration Act (Chapter 143A) 2002 rev ed

IDONCARE Idoncare Berjaya Utama Pty Ltd

INFERNO Inferno Resources Sdn Bhd

IMLAM Imlam Consignorist GmbH

Master Master of MV Tardy Tessa, Captain Tan Xiao Ming

Model Law 1985 UNCITRAL Model Law on International Commercial Arbitration (1985)

Model Law 2006 UNCITRAL Model Law on International Commercial Arbitration (rev ed

2006)

Moot Scenario International Maritime Law Arbitration Moot 2017 ‘Moot Scenario’

NYPE 2015 New York Produce Exchange Charterparty 2015

PMT Per metric tonne

SCMA Rules Singapore Chamber of Maritime Arbitration Rules (3rd edition)

SCP Sub-voyage charterparty (between INFERNO and IDONCARE)

TCP Time charterparty (between IMLAM and FURNACE)

VCP Voyage charterparty (between FURNACE and INFERNO)

Vessel MV Tardy Tessa


vi

LIST OF AUTHORITIES

A. Articles and books

Aikens et al. Bills of Lading (Informa Law from Routledge, 2nd edition, 2015)

Christopher Huntley, ‘The Scope of Article 17: Interim Measures under the UNCITRAL Model Law’

(2005) 9 Vindobona Journal of International Commercial Law and Arbitration 1

Cooke et al, Voyage Charterers (Informa Law, 4th edition, 2014)

David Caron, Matti Pellonpaa, Lee Caplan, The UNCITRAL Arbitration Rules: A Commentary

(Oxford University Press, 2006)

Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd edition, 2009)

H C Beale, Chitty on Contracts (Sweet & Maxwell, 29th edition, 2004)

Kirstin Stoll-DeBell, Nancy Dempsey, Bradford Dempsey, ‘Injunctive Relief: Temporary Restraining

Orders and Preliminary Injunctions’ (American Bar Association, 2009)

Melis Ozdel, ‘Bills of Lading Incorporating Charterparties’ (Hart Publishing, Oxford, 2015)

Mika Savola, ‘Interim measures and emergency arbitrator proceedings’ (2016) 23 Croatian

Arbitration Yearbook 73

P Jha, T Das, A Soni, ‘Effect of Weathering on Coal Quality’ (2014) 75 International Proceedings of

Economics Development and Research 155

Snell’s Equity (Sweet & Maxwell, 31st edition, 2005)

B. Cases

Aegnoussiotis Shipping Co v A/S Kristian Jebsens Rederi of Bergen (The ‘Aegnoussiotis’) [1977] 1

Lloyd’s Rep 268

Afovos Shipping Co SA v R Pagnan and Flli (The ‘Afovos’) [1982] 1 WLR 848

Afovos Shipping Co SA v R Pagnan and Flli (The ‘Afovos’) [1983] 1 WLR 195

AIG Europe (UK) Ltd and Ors v Anonymous Greek Insurance Company of General Insurances (The

‘Ethniki’) [2000] CLC 446

Albermarle Supply Co Ltd v Hind & Co [1928] 1 KB 307


vii

American Cyanamid v Ethicon Ltd [1975] AC 396

Andreas Vergottis v Robinson, David & Co Ltd (1928) 31 Lloyd’s Law Reports 23

AP Moller-Maersk A/S (trading as Maersk Sealand) & Anor v Special Entertainment Events, Inc &

Ors [2005] 1 SLR 603

Astea (UK) Ltd v Time Group Ltd [2003] EWHC 725 (TCC)

Bangladesh Chemical Industries Co v Henry Stephens Shipping Co Ltd & Anor (The ‘SLS Everest’)

[1981] 2 Lloyd’s Rep 389

Castleton Commodities Shipping Co Pte Ltd v Silver Rock Investments (The ‘Clipper Monarch’)

[2016] 1 Lloyd’s Rep 1

Cehave NV v Bremer Handelgesellschaft mbH [1974] 2 Lloyd's Rep 216

Cho Yang v Coral [1997] 2 Lloyd’s Rep 641

Chuan Hong Petrol Station Pte Ltd v Shell Singapore (Pte) Ltd [1992] 2 SLR 729

Compania Naviera General SA v Kerametal Ltd (The ‘Lorna I’) [1983] 1 Lloyd’s Rep 373

Crooks v Allan (1879) 5 QBD 38

Dalkia Utilities Services plc v Celtech International Ltd [2006] 1 Lloyd’s Rep 599

Damayanti Kantilal Doshi v Indian Bank [1998] 3 SLR(R) 851

Dawn Hill House v Samarenko [2012] EWCA (civ) 1445

Decro-Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361

Domett v Beckford (1833) 5 B & Ald 521

Dry Bulk Handy Holding Inc and Another v Fayette International Holdings Ltd and Another (The

‘Bulk Chile’) [2013] 2 Lloyd’s Rep 38

Durham Brothers v Robertson [1898] 1 QB 765

Federal Commerce and Navigation Ltd v Molena Alpha Inc (The ‘Nanfri’) [1978] 1 Lloyd’s Rep 581

Fidelitas Shipping Co Ltd v V/O Exportchleb [1963] 2 Lloyd’s Rep 113

Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SGHC 311

Freeth v Burr (1874) LR 9 CP 208


viii

Garbis Maritime Corp v Philippine National Oil Co (The ‘Garbis’) [1982] 2 Lloyd’s Rep 283

Gard Marine & Energy Ltd v China National Chartering Co Ltd (The ‘Ocean Victory’) [2015]

EWCA Civ 16

Gardner v Trechmann (1884) 15 QBD 154

Gaudet v Brown: Cargo Ex Argos (1873) LR 5 PC 134

Giebel v Smith (1872) LR 7 QB 404

Glyn Mills Currie & Co v East and West Indian Dock Co (1882) 7 App Cas 591

Golden Strait Corp. v Nippon Yusen Kaisha (The ‘Golden Victory’) [2005] 2 Lloyd’s Rep 23

Grand China Logistics Holding (Group) Co v Spar Shipping [2016] EWCA (Civ) 982

Harris and Dixon v Marcus Jacobs & Co (1885) 15 QBD 247

Homburg Houtimport BV v Agrosin Private Ltd (The ‘Starsin’) [2004] 1 AC 715

Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26

IM Skaugen SE v MAN Diesel & Turbo SE [2016] SGHCR 6

India Steamship Co v Louis Dreyfus Sugar Ltd (The ‘Indian Reliance’) [1997] 1 Lloyd's Rep 52

Inverkip SS Co Ltd v Bunge [1917] 2 KB 193

Itex Itagrani Export SA v Care Shipping Corporation and Others (The ‘Cebu’) (No 2) [1990] 2

Lloyd’s Rep 316

K/S A/S Seateam Co v Iraq National Oil Co and Ors (The ‘Sevonia Team’) [1983] 2 Lloyd’s Rep 640

K/S Penta Shipping A/S v Ethiopian Shipping lines Corp (The ‘Saga Cob’) [1992] 2 Lloyd’s Rep 545

Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The ‘Evia’) (No 2) [1983] 1 AC

736

Kuwait Rocks Co v AMN Bulkcarriers Inc (The ‘Astra’) [2013] EWHC 865 (Comm)

Leeds Shipping Co Ltd v Société Française Bunge (The ‘Eastern City’) [1958] 2 Lloyd’s Rep 127

Lyle Co v Cardiff (1899) 5 Com Cas 87

Lyle Shipping v Cardiff Corp (1899) 5 Com Cas 87

Malayawata Steel Bhd v Government of Malaysia [1975] 1 MLJ 22


ix

Malini Ventura v Knight Capital Pte Ltd & Ors [2015] SGHC 225

Manchester Trust v Furness [1895] 2 QB 539

Maritime Corporation v Holborn Oil Trading Ltd [1984] 2 Lloyd’s Rep 129

Metall Market OOO v Vitorio Shipping Co Ltd (The ‘Lehmann Timber’) [2014] QB 760

Meyerstein v Barber (1866) LR 2 CP 38

Miramar Maritime Co v Holborn Oil Trading Ltd (The ‘Miramar’) [1983] 2 Lloyd’s Rep 319

Miramar Maritime Co v Holborn Oil Trading Ltd (The ‘Miramar’) [1984] 2 Lloyd’s Rep 129

Molthes Rederi v Ellerman’s Wilson Line (1926) 26 Lloyd’s Law Reports 259

Mors-Le Blanch v Wilson (1873) LR 8 CP 227

Multi Veste 226 BV v NI Summer Row Unitholder BV [2011] EWHC 2026 (Ch)

Navigazione Alta Italia v Svenska Petroleum (The ‘Nai Matteini’) [1988] 1 Lloyd’s Rep 452

OK Petroleum AB v Vitol Energy SA [1995] 2 Lloyd’s Rep 160

Orinoco Navigation v Ecotrade (The ‘Ikariada’) [1999] 2 Lloyd’s Rep 365

Pacific Molasses v Entre Rio (The ‘San Nicholas’) [1976] 1 Lloyd’s Rep 8

Partenreederei M/S “Heidberg” & Anor v Grosvenor Grain and Feed Co Ltd & Anor (The

‘Heidberg’) [1994] 2 Lloyd’s Rep 287

Petroleo Brasiliero v ENE Kos 1 (The ‘Kos’) [2012] UKSC 17

Phelps v Spon-Smith & Co [2001] BPIR 326

Photo Production v Securior [1980] AC 827

Practitioners in Marketing Ltd [1971] 1 WLR 361

President of India v Lips Maritime Corporation (The ‘Lips’) [1988] AC 395

Rashtriya Chemicals and Fertilizers Ltd v Huddart Parker Industries Ltd (The ‘Boral Gas’) [1988] 1

Lloyd’s Rep 342

Ross T Smyth & Co Ltd v T D Bailey, Son & Co [1940] 3 All ER 60

Santiren Shipping Ltd v Unimarine SA (The ‘Chrysovalandou Dyo’) [1981] 1 Lloyd’s Rep 159

Sewell v Burdick (1884) 10 App Cas 74


x

Singapore Press Holdings Ltd v Brown Noel Trading Pte Ltd & Ors [1994] 3 SLR 151

Skips A/S Nordheim & Ors v Syrian Petroleum Co Ltd & Anor (The ‘Varenna’) [1984] QB 599

Smailes & Son v Hans Dessen & Co (1906) 12 Com Cas 117

Spar Shipping AS v Grand China Logistics Holding [2015] EWHC 718 (Comm)

Stanton v Richardson (1872) LR 7 CP 421

Steelwood Carriers Inc of Monrovia, Liberia v Evimeria Compania Naviera SA of Panama (The

‘Agios Giorgis’) [1976] 2 Lloyd’s Rep 192

Surrey County Council v Bredero Homes Ltd [1992] 3 All ER 305

Tarrabochia v Hickie (1856) 1 H&N 183

The Annefield [1971] 1 Lloyd’s Rep 1

The Ardennes [1951] 1 KB 55

The Berkshire [1974] 1 Lloyd’s Rep 185

The Eastern City [1958] 2 Lloyd’s Rep 127

The Epic [2000] SGCA 28

The Evia [1983] 1 AC 736

The Rewia [1991] 2 Lloyd’s Rep 325

The Vinson (2005) 677 LMLN 1

Thomas v National Australian Bank Ltd [2000] 2 Qd R 448

Torvald Klaveness A/S v Arni Maritime Corporation (The ‘Gregos’) [1995] 1 Lloyd’s Rep 1

Tradigrain SA and ors v King Diamond Marine Ltd (The 'Spiros C') [2000] EWCA Civ 217

Transoceanic Carriers v Cook Industries Inc (The ‘Mary Lou’) [1981] 2 Lloyd’s Rep 272

Tsu Soo Sin v Oei Tjiong Bin [2008] SGCA 46

United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904

Unitramp v Garnac Grain Co Inc (The ‘Hermine’) [1978] 2 Lloyd’s Rep 37

Universal Cargo Carriers Corp v Citati [1957] 2 QB 401


xi

W&R Fletcher (New Zealand) Ltd and Ors v Sigurd Haavik Aksjeselskap and Ors (The ‘Vikfrost’)

[1980] 1 Lloyd’s Rep 560

Wehner v Dene [1905] 2 KB 92

Welex AG v Rosa Maritime Ltd (The ‘Epsilon Rosa’) [2002] 2 Lloyd’s Rep 81

William Brandt’s Sons & Co v Dunlop Rubber Company Ltd [1905] AC 454

Xiamen Xindaan Trade Co Ltd v North China Shipping Co Ltd (The ‘Michalakis’) [2009] EWHC

588

Zim Israel Navigation Co Ltd v Tradax Export SA (The ‘Timna’) [1971] 2 Lloyd's Rep 91

C. Arbitral awards

Biwater Gauff Ltd v United Republic of Tanzania (Procedural Order No 1) (ICSID Arbitral Tribunal,

Case No. ARB/05/22, 31 March 2006)

City Oriente Ltd v Republic of Ecuador and Petroecuador (Decision on Provisional Measures)

(ICSID Arbitral Tribunal, Case No ARB/06/21, 19 November 2007)

Quiborax SA & Ors v Bolivia (Decision on Provisional Measures), (ICSID Arbitral Tribunal, Case

No ARB/06/02, 26 February 2010)

Sergei Paushok & Ors v The Government of Mongolia (Order on Interim Measures) (UNCITRAL

Arbitral Tribunal, 2 September 2008)

D. Legislation

International Arbitration Act (Chapter 143A)

Maritime Code of the People’s Republic of China 1992

UNCITRAL Model Law on International Commercial Arbitration (1985)

UNCITRAL Model Law on International Commercial Arbitration (2006, rev ed)

E. Other

Chartered Institute of Arbitrators, International Arbitration Practice Guideline: Applications for

Interim Measures (2016)


xii

Preparation of uniform provisions on interim measures of protection, UNCITRAL, 36th session, UN

Doc A/CN.9/WG.II/WP.119 (30 January 2002)


1

STATEMENT OF FACTS

1 On 15 February 2016, FURNACE (the Claimant) entered into a time charterparty (TCP) with IMLAM,

owners of the MV Tardy Tessa (Vessel). On 1 September 2016, FURNACE entered into a voyage

charterparty (VCP) with INFERNO (the Respondent). It appears that INFERNO entered into a sub-

voyage charterparty (SCP) with IDONCARE.

2 On 4 October 2016, the Vessel was loaded with 84,000.052 metric tonnes of coal (Cargo), and the

Bills of Lading (BoLs) were signed by the Master of the Vessel, and released. IDONCARE was named

as shipper, however no carrier was specified. The special instructions on the BoLs read, ‘freight

payable as per charterparty’. Clause 1 of the BoL stated ‘all terms and conditions, liberties and

exceptions of the Charter Party, dated as overleaf… are herewith incorporated’.

3 Clause 15 of the VCP entitled FURNACE to freight, in the amount of USD $771,120.48.1 This was due

to be paid on 12 October 2016, five banking days after the completion of loading, and signing and

release of the BoLs. INFERNO failed to pay freight by this date. Freight remains unpaid.

4 The Vessel arrived at Singapore on 10 October 2016. Under Cl 8 of the VCP,2 INFERNO was obliged

at this time to nominate a safe discharge port in China, out of Dalian, Jinzhou, Yingkou, Yintai,

Qingdao, Shanghai, Tianjin and Ningbo. However, INFERNO persistently failed to nominate a

legitimate discharge port, instead nominating Busan, South Korea three times. On 19 October 2016,

FURNACE issued INFERNO with a notice to perform by 20 October 2016. INFERNO failed to comply

with this notice. On 21 October 2016, INFERNO nominated Ningbo, however stated that it was unable

to pay freight, and would not make payment until the Cargo was discharged, in contravention of the

terms agreed in the VCP. On this basis, FURNACE terminated the VCP on 22 October 2016.

5 Clause 19(a) of the VCP stipulated that FURNACE ‘shall have a lien on the cargo for freight...’. On 20

October 2016, FURNACE issued INFERNO with a ‘notice of lien’, and IDONCARE with a ‘notice of lien

on sub-freight’. IMLAM expressly agreed to assist FURNACE to exercise the lien over the Cargo.

1 As specified in the Fixture Recap at point 19: Moot Scenario, p 22. 2 As specified in the Fixture Recap at point 16: Moot Scenario, p 21.


2

6 On 30 November, the Master reported that the Vessel and the Cargo were at a high risk of being

damaged or lost due to monsoon weather, and noted signs of the Cargo overheating. Further, he

reported that the crew’s heath was at risk due to lack of fresh food, fresh water, and medicine

7 FURNACE served INFERNO and IDONCARE with notices of arbitration on 25 November 2016 in

accordance with Cl 29 of the VCP. The matters were consolidated on 2 December 2016.


3

THE CHARTERPARTY CHAIN

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

submissions.

PRELIMINARY MATTERS

A. The laws of Singapore govern this arbitration

1 Pursuant to Cl 29 of the VCP,3 this arbitration is governed by the laws of Singapore and is to be

conducted under the Singapore Chamber of Maritime Arbitration Rules (3rd edition) (SCMA rules).

Therefore, the International Arbitration Act (IAA) governs this arbitration.4 Section 3(1) of the IAA

incorporates the UNCITRAL Model Law on International Commercial Arbitration (1985) (Model

Law 1985), into the law of Singapore.5

3 Moot Scenario, p 23. 4 International Arbitration Act (Chapter 143A), s 5. See also Moot Scenario, pp 70, 76, 83, 86, 89, 92, 94, 103. 5 International Arbitration Act (Chapter 143A), s 3(1).


4

SUBMISSIONS ON AN INTERIM ORDER FOR THE SALE OF THE CARGO

I. THE TRIBUNAL SHOULD ORDER THE INTERIM SALE OF THE CARGO

2 The Tribunal should order the interim sale of the Cargo because: (A) the Tribunal has jurisdiction to

order the sale; and (B) the interim sale of the Cargo is necessary in all the circumstances.

A. The Tribunal has jurisdiction to order the interim sale of the Cargo

3 The Tribunal has jurisdiction to order the interim sale of the Cargo because: (i) the Tribunal is

competent to rule on its own jurisdiction; (ii) the Tribunal has prima facie jurisdiction over the

dispute; and (iii) the Tribunal has the power under the IAA to make an interim order for the sale of

the Cargo.

(i) The Tribunal is competent to rule on its own jurisdiction

4 Section 10(2) of the IAA empowers the Tribunal to rule on its own jurisdiction.6

(ii) The Tribunal has prima facie jurisdiction over the dispute

5 FURNACE, INFERNO, and IDONCARE have each consented to SCMA arbitration,7 giving the Tribunal

the necessary prima facie jurisdiction to hear this dispute.8

(iii) The Tribunal has the power under the IAA to make an interim order for the sale of the Cargo

6 Section 12(1)(d) of the IAA gives the Tribunal power to make orders or give directions to any party

for the interim sale of any property which forms part of the subject matter of the dispute.9 The Tribunal

therefore has prima facie authority to order the interim sale of the Cargo.

7 The Tribunal is not prevented from ordering the sale of the Cargo by the fact that IMLAM, which

possess the cargo, is a third party to these proceedings. This is because the Tribunal may order parties

to the arbitration to take steps vis-à-vis third parties to accomplish specified actions.10 IMLAM is

6 See also, UNCITRAL Model Law on International Commercial Arbitration (1985), Art 16; SCMA Rules, Art 20;

Malini Ventura v Knight Capital Pte Ltd & Ors [2015] SGHC 225, [37] (Prakash J). 7 Moot Scenario, pp 72, 84, 87, respectively. 8 Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd edition, 2009) 1966. 9 International Arbitration Act (Chapter 143A), s 12(1)(d). 10 Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd edition, 2009) 1966; cf David

Caron, Matti Pellonpaa, Lee Caplan, The UNCITRAL Arbitration Rules: A Commentary (Oxford University Press,


5

contractually bound, per Cl 8(a) of the TCP,11 to follow directions given by FURNACE. Therefore, the

Tribunal can order FURNACE, which is a party to the arbitration, to direct IMLAM to discharge and sell

the Cargo.12 Further, for the reasons below, such an order would be in the interests of justice.13

B. The interim sale of the Cargo is necessary in all the circumstances

8 The Tribunal has a wide discretion to grant interim measures,14 and it may issue any interim relief it

considers ‘necessary’.15 In international commercial arbitration, three factors are considered relevant

when granting interim orders: risk of serious harm, proportionality, and urgency.16 Each of these

factors has been met in this case: (i) failure to sell the Cargo will cause FURNACE to suffer serious

harm; (ii) such harm substantially outweighs that likely to be incurred by IDONCARE or INFERNO if

the Cargo is sold; and (iii) urgent relief is required.

(i) Failure to sell the Cargo will cause FURNACE to suffer serious harm

9 There is a substantial risk of harm to the Vessel, Cargo and crew while the Vessel remains adrift. The

Master’s report of 30 November 2016 states that the Vessel and the Cargo on board are at high risk

of being damaged or lost, either due to the dangerous monsoon weather or the Cargo exploding.17

The health of the crew is also at risk because of the lack of fresh food, fresh water, and medicine.18

Without the sale of the Cargo the aforementioned conditions will continue to worsen. The necessity

2006) 540; Christopher Huntley, ‘The Scope of Article 17: Interim Measures under the UNCITRAL Model Law’ (2005)

9 Vindobona Journal of International Commercial Law and Arbitration 1, 86. 11 Moot Scenario, p 3. 12 International Arbitration Act (Chapter 143A), s 2(1). 13 Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd edition, 2009) 1966. 14 Sergei Paushok & Ors v The Government of Mongolia (Order on Interim Measures) (2 September 2008), [36]. 15 UNCITRAL Model Law on International Commercial Arbitration (1985), Art 17. 16 See, eg, Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd edition, 2009) 1981; Mika

Savola, ‘Interim measures and emergency arbitrator proceedings’ (2016) 23 Croatian Arbitration Yearbook 73, 82. See

also, UNCITRAL Model Law on International Commercial Arbitration (2006 rev ed), Art 17A; Chartered Institute of

Arbitrators, International Arbitration Practice Guideline: Applications for Interim Measures (2016), Art 2. Note that

these standards are comparable to those applied by Singaporean Courts when granting interim measures. See, eg,

Singapore Press Holdings Ltd v Brown Noel Trading Pte Ltd & Ors [1994] 3 SLR 151, 158; Chuan Hong Petrol Station

Pte Ltd v Shell Singapore (Pte) Ltd [1992] 2 SLR 729, 742-743 applying American Cyanamid v Ethicon Ltd [1975] AC

396, 407-408 (Lord Diplock). 17 Moot Scenario, p 37. See highly analogous case of Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SGHC

311, [56] (Ang Saw Ean J). 18 Moot Scenario, p 37.


6

of the order for sale is reinforced by the likely continuation of the current impasse.19 FURNACE is

unable and unwilling pay freight and there is no evidence that IDONCARE intends to demand delivery

of the Cargo. Further, if these conditions continue, FURNACE will also suffer loss of reputation and

goodwill.20

10 Until freight is paid, FURNACE has no other reasonable alternative than to retain control of the Cargo

on board the Vessel so as to preserve its lien. FURNACE had three alternative avenues of exercising its

lien, only one of which would preserve both the value of the security granted by the lien, and the lien

right itself. First, FURNACE could have discharged and warehoused the Cargo at Singapore. However,

this would have been prohibitively expensive,21 potentially rendering the security provided by

FURNACE’s lien on the Cargo commercially worthless. Second, FURNACE could have discharged and

warehoused the Cargo in China. However, under Chinese law its lien right would not have been

recognised.22 The only remaining alternative was for FURNACE to keep the Cargo on board the Vessel.

(ii) Such harm substantially outweighs the harm likely to be suffered by INFERNO or IDONCARE if

the Cargo is sold

11 The balance of convenience favours FURNACE.23 Although distress Cargo may sell for a reduced

profit, causing financial harm to IDONCARE, the interim sale of the Cargo is preferable to it remaining

at sea. While the Vessel remains at sea, IDONCARE risks the loss of the Cargo in its entirety.24

Additionally, IDONCARE risks a fall in the Cargo’s value because of further decreases in the global

coal market,25 and the coal degrading in quality while exposed to elevated temperatures.26

19 Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SGHC 311, [63] (Ang Saw Ean J). 20 Kirstin Stoll-DeBell, Nancy Dempsey, Bradford Dempsey, ‘Injunctive Relief: Temporary Restraining Orders and

Preliminary Injunctions’ (American Bar Association, 2009) 100. 21 The Port Authority of Singapore prescribes prohibitively high storage rates: see, eg, AP Moller-Maersk A/S (trading

as Maersk Sealand) & Anor v Special Entertainment Events, Inc & Ors [2005] 1 SLR 603, [15] (Chao Hick Tin JA, Lai

Kew Chai J). See, eg, Lyle Shipping v Cardiff Corp (1899) 5 Com Cas 87 (Bingham J). 22 Maritime Code of the People’s Republic of China 1992, Art 87. 23 Sergei Paushok & Ors v The Government of Mongolia (Order on Interim Measures) (2 September 2008), [79]. See,

eg, UNCITRAL Model Law on International Commercial Arbitration (2006, rev ed), Art 17A(1)(a). 24 Moot Scenario, p 37. 25 Moot Scenario, pp 99-100. 26 P Jha, T Das, A Soni, ‘Effect of Weathering on Coal Quality’ (2014) 75 International Proceedings of Economics

Development and Research 155.


7

(iii) Urgent relief is required

12 Urgent relief is required for two reasons.27 First, sale of the Cargo is necessary to protect the integrity

of the arbitration.28 FURNACE has exercised a lien over the Cargo as security for unpaid freight. The

diminishing value of the coal may eventually render the lien commercially worthless.29 The proceeds

from the sale of the Cargo can be applied to satisfy any final award. Therefore, the value of the Cargo

should be preserved by sale to ensure that any final award is enforceable.30 Second, there is an

imminent risk of serious harm to the Vessel, Cargo and crew.31

27 Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd edition, 2009) 1986-7; Christopher

Huntley, ‘The Scope of Article 17: Interim Measures under the UNCITRAL Model Law’ (2005) 9 Vindobona Journal of

International Commercial Law and Arbitration 1, 75. See, eg, Biwater Gauff Ltd v United Republic of Tanzania

(Procedural Order No 1) (ICSID, Case No. ARB/05/22, 31 March 2006), [75]-[76]; Quiborax SA & Ors v Bolivia

(Decision on Provisional Measures), (ICSID Arbitral Tribunal, Case No ARB/06/02, 26 February 2010) [150]; City

Oriente Ltd v Republic of Ecuador and Petroecuador (Decision on Provisional Measures) (ICSID Arbitral Tribunal,

Case No ARB/06/21, 19 November 2007) [67]. 28 City Oriente Ltd v Republic of Ecuador and Petroecuador (Decision on Provisional Measures) (ICSID Arbitral

Tribunal, Case No ARB/06/21, 19 November 2007) [69]. 29 Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SGHC 311, [62] (Ang Saw Ean J). 30 Preparation of uniform provisions on interim measures of protection, UNCITRAL, 36th sess, UN Doc

A/CN.9/WG.II/WP.119 (30 January 2002), [14]. 31 See, eg, Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SGHC 311, [59] (Ang Saw Ean J).


8

SUBMISSIONS ON THE LIEN OVER CARGO ISSUE

13 A lien is ‘defence available to one in possession of a [party’s] goods who is entitled at common law

or by contract to retain possession until he is paid whatever he is owed’.32 FURNACE has: (I) a

contractual lien on Cargo against INFERNO; and (II) an effective lien on Cargo against IDONCARE, the

owners of the Cargo. FURNACE can therefore continue to legally hold the Cargo until freight is paid

by INFERNO.

II. FURNACE IS ENTITLED TO A LIEN ON THE CARGO AGAINST INFERNO

14 FURNACE is entitled to a lien on the Cargo for two reasons: (A) FURNACE has an effective contractual

lien on Cargo against INFERNO, and (B) FURNACE validly exercised its lien on Cargo against INFERNO.

A. FURNACE has an effective contractual lien on the Cargo against INFERNO

15 Cl 19(a) of the VCP entitles FURNACE to a lien ‘on the cargo for freight, deadfreight, demurrage and

general average contribution’.33 Cl 19(a) of the VCP should be construed as ‘meaning what it says’,34

namely that INFERNO agreed that FURNACE would have a contractual lien on the Cargo. Insofar as the

Cargo is owned by IDONCARE, INFERNO agreed to procure the creation of a contractual lien in favour

of FURNACE. The exercise of Cl 19(a) is valid against INFERNO and any claims by INFERNO to the

contrary will fail.35

16 FURNACE’s contractual lien will be effective so long as FURNACE retains exclusive control of the

cargo.36 FURNACE has constructive possession of the Cargo by virtue of Cl 8(a) of the TCP, which

provides inter alia, that ‘The Master… shall be under the orders and directions of the Charterers [ie

FURNACE] as regards to employment’.37 Clause 8(a) of the TCP, read with Cl 19(a) of the VCP, gives

32 Santiren Shipping Ltd v Unimarine SA (The ‘Chrysovalandou Dyo’) [1981] 1 Lloyd’s Rep 159, 165 (Mocatta J). 33 Moot Scenario, p 31. 34 Aegnoussiotis Shipping Co v A/S Kristian Jebsens Rederi of Bergen (The ‘Aegnoussiotis’) [1977] 1 Lloyd’s Rep 268,

276 (Donaldson J). 35 Aegnoussiotis Shipping Co v A/S Kristian Jebsens Rederi of Bergen (The ‘Aegnoussiotis’) [1977] 1 Lloyd’s Rep 268,

276 (Donaldson J). Cf Steelwood Carriers Inc of Monrovia, Liberia v Evimeria Compania Naviera SA of Panama (The

‘Agios Giorgis’) [1976] 2 Lloyd’s Rep 192 (Mocatta J). 36 Mors-Le Blanch v Wilson (1873) LR 8 CP 227 (Willes J); Meyerstein v Barber (1866) LR 2 CP 38 (Willes J). 37 Moot Scenario, p 3.


9

FURNACE the right to direct IMLAM not to unload the Cargo until INFERNO pays freight.38 Constructive

possession has been held to ground a right practically identical to a lien.39

B. FURNACE validly exercised its lien on the Cargo against INFERNO

17 There are two basic requirements for the valid exercise of a lien: a demand for the amount in respect

of which the lien is exercised, and the retention of continuous possession of the Cargo.40 FURNACE

has satisfied both requirements. FURNACE sent a notice of lien to INFERNO on 20 October 2016

demanding ‘losses, costs, expenses, and damages’ in respect of which the lien was exercised.41

FURNACE has retained constructive possession of the Cargo.

III. FURNACE IS ENTITLED TO EXERCISE A CONTRACTUAL LIEN ON THE CARGO

AGAINST IDONCARE

18 FURNACE is unable to directly assert its contractual right of lien (provided by Cl 19(a) of the VCP)

against IDONCARE because IDONCARE is not a party to the VCP. Nonetheless: (A) IMLAM has a

contractual right of lien on the Cargo against IDONCARE through the BoLs; (B) FURNACE can receive

the benefits of IMLAM’s contractual right of lien on the Cargo; and (C) the lien was validly exercised.

A. IMLAM has a contractual right of lien on the Cargo

19 IMLAM has a contractual right of lien on the Cargo. This is because: (i) the BoLs evidence the terms

of contract between IMLAM and IDONCARE; (ii) the BoLs incorporated the terms of the VCP; and (iii)

the words of incorporation were sufficient to incorporate Cl 19(a).

38 Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SGHC 311, [32]-[33] (Ang Saw Ean J). 39 Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SGHC 311, [36] (Ang Saw Ean J); Castleton Commodities

Shipping Co Pte Ltd v Silver Rock Investments (The ‘Clipper Monarch’) [2016] 1 Lloyd’s Rep 1, [9] (Waksman J). 40 Albermarle Supply Co Ltd v Hind & Co [1928] 1 KB 307, 318 (Scrutton LJ). See, also, Cooke et al, Voyage Charters

(Informa Law, 4th Ed, 2014), [17.23]. 41 Moot Scenario, p 65.


10

(i) The BoLs evidence the terms of contract between IMLAM and IDONCARE

20 The BoLs evidence the terms of contract between the shipper (IDONCARE), and the carrier,42 but do

not expressly identify the carrier.43 Because the BoLs are signed by the Master, there is a presumption

that the BoLs take effect as a contract with the shipowner, IMLAM.44 This interpretation is supported

by the fact that IMLAM’s name appears prominently on the face of the BoLs,45 and that the Master did

not sign the BoL as agent of FURNACE.46

(ii) The BoLs incorporated the terms of the VCP

21 The BoLs contain two references to an unidentified charterparty: (1) the special instructions box reads

‘freight payable as per charter party’; and (2) item 1 of the Conditions of Carriage expressly

incorporates the terms of the ‘Charter Party, dated as overleaf’.47 The omission of the date of the

charterparty does not demonstrate an intent to negate the incorporation.48 This is because ‘unless a

charterparty [is] incorporated, all sorts of terms and arrangements would have to be implied… in

order to make the [BoL] workable’.49 Where a BoL fails to identify the relevant charterparty there is

42 Glyn Mills Currie & Co v East and West Indian Dock Co (1882) 7 App Cas 591, 596 (Earl of Selborne LC); Crooks v

Allan (1879) 5 QBD 38 (Lush J); The Ardennes [1951] 1 KB 55, 59-60 (Goddard CJ); Sewell v Burdick (1884) 10 App

Cas 74, 105 (Earl of Selborne LC); Domett v Beckford (1833) 5 B & Ald 521 (Parke J); Cho Yang v Coral [1997] 2

Lloyd’s Rep 641, 643 (Hobhouse J). 43 Moot Scenario, pp 41-46. 44 The Rewia [1991] 2 Lloyd’s Rep 325, 333 (Dillon LJ); The Berkshire [1974] 1 Lloyd’s Rep 185 (Brandon J); W&R

Fletcher (New Zealand) Ltd and Ors v Sigurd Haavik Aksjeselskap and Ors (The ‘Vikfrost’) [1980] 1 Lloyd’s Rep 560

(Browne LJ); Wehner v Dene [1905] 2 KB 92, 98 (Channell J); Homburg Houtimport BV v Agrosin Private Ltd (The

‘Starsin’) [2004] 1 AC 715, [45] (Lord Steyn), [73] (Lord Hoffman). 45 See, eg, Homburg Houtimport BV v Agrosin Private Ltd (The ‘Starsin’) [2004] 1 AC 715. 46 Cf Homburg Houtimport BV v Agrosin Private Ltd (The ‘Starsin’), [3]-[4] (Lord Bingham). See also, Manchester

Trust v Furness [1895] 2 QB 539 (Lindley LJ). 47 Moot Scenario, pp 45- 46. 48 Pacific Molasses v Entre Rio (The ‘San Nicholas’) [1976] 1 Lloyd’s Rep 8, 12 (Roskill LJ); Xiamen Xindaan Trade

Co Ltd v North China Shipping Co (The ‘Michalakis’) [2009] EWHC 588, [12], [26]-[27] (Steel J); Bangladesh

Chemical Industries Co v Henry Stephens Shipping Co Ltd & Anor (The ‘SLS Everest’) [1981] 2 Lloyd’s Rep 389, 392

(Lord Denning MR); Orinoco Navigation v Ecotrade (The ‘Ikariada’) [1999] 2 Lloyd’s Rep 365, 373 (Cresswell J);

Garbis Maritime Corp v Philippine National Oil Co (The ‘Garbis’) [1982] 2 Lloyd’s Rep 283, 287 (Goff J). See also,

Melis Ozdel, ‘Bills of Lading Incorporating Charterparties’ (Hart Publishing, Oxford, 2015) 34; Aikens LJ et al. Bills of

Lading (Informa Law from Routledge, 2nd edition, 2015) [7.112]. 49 Bangladesh Chemical Industries Co v Henry Stephens Shipping Co Ltd & Anor (The ‘SLS Everest’) [1981] 2 Lloyd’s

Rep 389, 392 (Lord Denning MR).


11

a presumption that the head charterparty was intended to be incorporated.50 This presumption is

displaced where the head charterparty is a time charterparty and a relevant voyage charterparty

exists,51 because the terms of a time charter are in many respects inapposite to the carriage of goods

on a voyage.52 Indeed, the reference to ‘freight payable as per charter party’, indicates the reference

in the BoLs is to a voyage charter, not a time charter, under which ‘hire’ would be payable.53

22 The VCP is incorporated in the BoLs,54 because FURNACE has the lawful authority of the shipowner,

per Cl 31 of the TCP,55 to direct the Master to sign and issue BoLs that are binding on the owner.56

FURNACE had a commercial incentive to do so, so it could direct IMLAM to exercise carrier’s rights,

including lien rights, under the BoLs as FURNACE’s trustee.57

(iii) The words of incorporation in the BoLs were sufficient to incorporate the lien clause

23 Clause 1 of the Conditions of Carriage in the BoLs states that ‘all terms and conditions, liberties and

exceptions of the Charterparty… are herewith incorporated’.58 These general words of incorporation

will incorporate provisions of the VCP that are ‘germane to the shipment, carriage and delivery of the

50 The Epic [2000] SGCA 28; Pacific Molasses v Entre Rio (The ‘San Nicholas’) [1976] 1 Lloyd’s Rep 8, 11 (Lord

Denning MR); Bangladesh Chemical Industries Co v Henry Stephens Shipping Co Ltd & Anor (The ‘SLS Everest’)

[1981] 2 Lloyd’s Rep 389, 391-392 (Lord Denning MR); K/S A/S Seateam Co v Iraq National Oil Co and Ors (The

‘Sevonia Team’) [1983] 2 Lloyd’s Rep 640, 644 (Lloyd J); Welex AG v Rosa Maritime Ltd (The ‘Epsilon Rosa’) [2002]

2 Lloyd’s Rep 81, [27] (Tuckey LJ); Navigazione Alta Italia v Svenska Petroleum (The ‘Nai Matteini’) [1988] 1 Lloyd’s

Rep 452, 459 (Gatehouse J). 51 Federal Commerce and Navigation Ltd v Molena Alpha Inc (The ‘Nanfri’) [1978] 1 Lloyd’s Rep 581, 591 (Kerr J);

Bangladesh Chemical Industries Co v Henry Stephens Shipping Co Ltd & Anor (The ‘SLS Everest’) [1981] 2 Lloyd’s

Rep 389, 392 (Lord Denning MR); Partenreederei M/S “Heidberg” & Anor v Grosvenor Grain and Feed Co Ltd &

Anor (The ‘Heidberg’) [1994] 2 Lloyd’s Rep 287, 309 (Diamond J); The Vinson (2005) 677 LMLN 1. See also, Melis

Ozdel, ‘Bills of Lading Incorporating Charterparties’ (Hart Publishing, Oxford, 2015) 49-50, 53-54; Aikens LJ et al.

Bills of Lading (Informa Law from Routledge, 2nd edition, 2015) [7.114]. 52 Bangladesh Chemical Industries Co v Henry Stephens Shipping Co Ltd & Anor (The ‘SLS Everest’) [1981] 2 Lloyd’s

Rep 389, 392 (Lord Denning MR). 53 Itex Itagrani Export SA v Care Shipping Corporation and Others (The ‘Cebu’) (No 2) [1990] 2 Lloyd’s Rep 316, 321

(Sheen J); Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SGHC 311, [28] (Ang Saw Ean J). 54 Cooke et al., Voyage Charterers (Informa Law, 4th edition, 2014) [18.62], approved and applied in Five Ocean

Corporation v Cingler Ship Pte Ltd [2015] SGHC 311 (Ang Saw Ean J). 55 Moot Scenario, p 12. 56 Ibid. 57 Cooke et al, Voyage Charters (Informa Law, 4th edition, 2014) [18.62]. 58 Moot Scenario, p 42.


12

cargo’.59 A lien clause, such as Cl 19(a), ‘intimately concerns the interests of the [shipper] in the

carriage and delivery of the cargo’.60 Therefore, even the most general form of incorporating words

will be sufficient to incorporate Cl 19(a).61

24 Clause 19(a) contains no express identification of the party against which the lien is to be effective.

There is no need to adjust the language to read the clause as referable to IDONCARE.62 Therefore,

IMLAM has a contractual right to exercise a lien over the Cargo through the BoLs.

B. FURNACE can receive the benefit of IMLAM’s contractual right of lien against IDONCARE

25 FURNACE can receive the benefit of IMLAM’s contractual right of lien through two alternative avenues.

Either: (i) IMLAM assigned its contractual right of lien to FURNACE; or (ii) IMLAM exercised its lien

right as trustee for FURNACE.

(i) IMLAM assigned its contractual right of lien to FURNACE

26 IMLAM validly assigned its contractual right of lien to FURNACE in equity. There are three

requirements for an effective equitable assignment: an intention to assign, a clear identification of the

chose being assigned, and some act by the assignor showing that it is passing the chose in action to

the assignee.63 Each of these requirements has been met.

27 The chose in action is the contractual right of lien, which is assignable in equity.64 The email exchange

between FURNACE and IMLAM dated 20 October 2016 sufficiently demonstrates IMLAM’s intention to

assign its contractual right of lien to FURNACE.65 There, IMLAM agreed to assist FURNACE in exercising

59 Gardner v Trechmann (1884) 15 QBD 154, 157 (Brett MR); The Annefield [1971] 1 Lloyd’s Rep 1, 16 (Lord Denning

MR); Skips A/S Nordheim and Ors v Syrian Petroleum Co Ltd and Petrofina SA (The ‘Varenna’) [1984] QB 599, 622

(Oliver LJ); OK Petroleum AB v Vitol Energy SA [1995] 2 Lloyd’s Rep 160, 165 (Coleman J); AIG Europe (UK) Ltd

and Ors v Anonymous Greek Insurance Company of General Insurances (The ‘Ethniki’) [2000] CLC 446, 452. 60 Miramar Maritime Co v Holborn Oil Trading Ltd (The ‘Miramar’) [1983] 2 Lloyd’s Rep 319, 324 (Mustill J). 61 Miramar Maritime Co v Holborn Oil Trading Ltd (The ‘Miramar’) [1983] 2 Lloyd’s Rep 319, 324 (Mustill J);

Fidelitas Shipping Co Ltd v V/O Exportchleb [1963] 2 Lloyd’s Rep 113, 125-126 (Mocatta J). See also Aikens et al.

Bills of Lading (Informa Law from Routledge, 2nd edition, 2015) [7.104]. 62 Miramar Maritime Co v Holborn Oil Trading Ltd (The ‘Miramar’) [1983] 2 Lloyd’s Rep 319, 325 (Mustill J). 63 Tsu Soo Sin v Oei Tjiong Bin [2008] SGCA 46, [16] (Rajah JA); Phelps v Spon-Smith & Co [2001] BPIR 326, [39]-

[41]; Malayawata Steel Bhd v Government of Malaysia [1975] 1 MLJ 22, 24 (Azmi J). See also John McGhee, Snell’s

Equity (Sweet & Maxwell, 31st edition, 2005) [3-13]-[3-19]. 64 See, eg, Castleton Commodities Shipping Company Pte Ltd v Silver Rock Investments (The ‘Clipper Monarch’)

[2016] 1 Lloyd’s Rep 1, [9] (Waksman J). 65 Moot Scenario, pp 35-36.


13

a lien: the only valuable assistance IMLAM could offer was an assignment of IMLAM’s contractual

right of lien. This agreement constituted an equitable assignment; an equitable assignment does not

require any particular prescribed form,66 or express words of assignment.67 IMLAM has subsequently

acted in accordance with this agreement.

28 The assignment was effective between IMLAM and FURNACE without notice to IDONCARE.68

(ii) Alternatively, IMLAM exercised its lien right as trustee for FURNACE

29 Alternatively, the exchange between FURNACE and IMLAM dated 20 October 2016 indicates that

IMLAM intended to enforce its contractual lien against IDONCARE for the benefit of FURNACE.69 The

High Court of Singapore held, in Five Oceans Corporation v Cingler Ship Pte Ltd,70 ‘a shipowner

who has been paid, may nonetheless seek and receive freight under a bill of lading for the benefit of

the charterer… where freight is sought through the exercise of a lien… the shipowner’s exercise of

the lien right is as the charterer’s trustee’.71 The same conclusion should be reached in this case. Such

a conclusion is consistent with the fact that a time charterer has the lawful power to direct the ship

owner to exercise carriers’ rights under the bill of lading, in particular a lien, as his trustee.72 Further,

a shipowner has ‘an equitable duty with regard to the cause of action for unpaid freight so that he can

be compelled by the beneficiary charterer to… exercise a lien for it’.73

66 IM Skaugen SE v MAN Diesel & Turbo SE [2016] SGHCR 6 (Wen Xiong AR); William Brandt’s Sons & Co v Dunlop

Rubber Company Ltd [1905] AC 454, 462 (Lord Macnaghten); Durham Brothers v Robertson [1898] 1 QB 765 (Chitty

LJ). 67 William Brandt’s Sons & Co v Dunlop Rubber Company Ltd [1905] AC 454, 462 (Lord Macnaghten). Note conduct

alone may be adequate: see, eg, Tsu Soo Sin v Oei Tjiong Bin [2008] SGCA 46, [18] (Rajah JA); IM Skaugen SE v

MAN Diesel & Turbo SE [2016] SGHCR 6 (Wen Xiong AR); Damayanti Kantilal Doshi v Indian Bank [1998] 3

SLR(R) 851 (Hick Tin JA, Thean JA and Pung How CJ). 68 Malayawata Steel Bhd v Government of Malaysia [1975] 1 MLJ 22, 24 (Azmi J); Thomas v National Australian Bank

Ltd [2000] 2 Qd R 448 (McMurdo P); H C Beale, Chitty on Contracts (Sweet & Maxwell, 29th edition, 2004) [19-021].

All approved in Tsu Soo Sin v Oei Tjiong Bin [2008] SGCA 46, [33]-[40] (Rajah JA). 69 Moot Scenario, pp 35-36. 70 Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SGHC 311 (Ang Saw Ean J). 71 Ibid, [36] (Ang Saw Ean J). 72 Cooke et al. Voyage Charters (Informa Law, 4th edition, 2014), [18.62]. See also, Xiamen Xindaan Trade Co Ltd v

North China Shipping Co Ltd (The ‘Michalakis’) [2009] EWHC 588, [26]-[27] (Steele J). 73 Cooke et al, Voyage Charterers (Informa Law, 4th edition, 2014) [13.40]. See also Five Ocean Corporation v Cingler

Ship Pte Ltd [2015] SGHC 311, [25] (Ang Saw Ean J); Xiamen Xindaan Trade Co Ltd v North China Shipping Co Ltd

(The ‘Michalakis’) [2009] EWHC 588, [26]-[27] (Steele J).


14

C. The lien was validly exercised

30 The lien was validly exercised for two reasons. First, it is immaterial that the lien exercised against

IDONCARE is for freight owed by INFERNO. This is because ‘no doubt has ever been raised about the

acceptability of the situation where the lien is more extensive as against the [shippers] than [its] own

direct personal liability’.74 Second, for the valid exercise of the lien, it is sufficient that a demand was

made to INFERNO on 20 October 2016, 75 and that IMLAM has retained possession of the Cargo.

74 Miramar Maritime Corporation v Holborn Oil Trading Ltd (The ‘Miramar’) [1983] 2 Lloyd’s Rep 319, 324 (Mustill

J); Miramar Maritime Corporation v Holborn Oil Trading Ltd (The ‘Miramar’) [1984] 2 Lloyd’s Rep 129, 134 (Lord

Diplock). See also Andreas Vergottis v Robinson, David & Co Ltd (1928) 31 Lloyd’s Law Reports 23, 25. 75 Santiren Shipping Ltd v Unimarine SA (The ‘Chrysovalandou Dyo’) [1981] 1 Lloyd’s Rep 159. See also, Cooke et al.

Voyage Charterers (Informa Law, 4th edition, 2014) [17.27].


15

SUBMISSIONS ON THE LIEN ON SUB-FREIGHT ISSUE

IV. FURNACE HAS THE RIGHT TO INTERCEPT SUB-FREIGHT

31 The words ‘freight payable as per charterparty’ appearing in a BoL incorporate the charter party terms

relating to the payment of freight.76 Therefore, freight is ‘due to the ship owner, as his consideration

for the agreed carriage, but the ship owner directs that it be paid in the manner set out in the sub-

charter’.77 However, a ship owner may cancel this direction at any time and direct that freight should

instead be paid to itself.78 In this way, a ship owner can intercept to claim freight directly from the

shipper under the BoL.79 FURNACE, though not the ship owner, should enjoy an analogous right to

intercept freight payable by IDONCARE to INFERNO because: (A) FURNACE can revoke INFERNO’s

authority to collect freight from IDONCARE; (B) the right to intercept sub-freight is a necessary

consequence FURNACE’s right to collect freight; (C) FURNACE must be able to collect sub-freight as a

matter of commercial sense; and (D) FURNACE made a valid claim on sub-freight.

A. FURNACE can revoke INFERNO’s authority to collect freight from IDONCARE

32 Under Cl 8 of the TCP, IMLAM delegated the collection of freight to FURNACE.80 The incorporation of

the VCP’s payment terms into the BoLs81 made freight payable to FURNACE. FURNACE further

delegated this right to collect freight to INFERNO by virtue of Cl 4 of the VCP, which allowed FURNACE

to sublet or assign the VCP.82

33 There is ‘no difficulty in the ship owner countermanding his direction to pay freight to a third party

provided... that he does so before the shipper has made the payment as initially directed.’83 The right

76 India Steamship Co v Louis Dreyfus Sugar Ltd (The ‘Indian Reliance’) [1997] 1 Lloyd's Rep 52, 57-58 (Rix LJ). 77 Tradigrain SA and ors v King Diamond Marine Ltd (The ‘Spiros C') [2000] EWCA Civ 217. 78 Molthes Rederi v Ellerman’s Wilson Line (1926) 26 Lloyd’s Law Reports 259; Wehner v Dene [1905] 2 KB 92. 79 Tradigrain SA and ors v King Diamond Marine Ltd (The 'Spiros C') [2000] EWCA Civ 217, 331 (Rix LJ). Note that

the right to intercept BoL freight must be distinguished from the contractual right of lien contained in Cl 23 of the TCP.

See, eg, Molthes Rederi v Ellerman’s Wilson Line (1926) 26 Lloyd’s Law Reports 259, 262 (Greer J). 80 Dry Bulk Handy Holding Inc and Another v Fayette International Holdings Ltd and Another (The ‘Bulk Chile’)

[2013] 2 Lloyd’s Rep 38, [28] (Tomlinson LJ). 81 See [21]-[22] above. 82 Moot Scenario, p 26. 83 Dry Bulk Handy Holding Inc and Another v Fayette International Holdings Ltd and Another (The ‘Bulk Chile’)

[2013] 2 Lloyd’s Rep 38, [28] (Tomlinson LJ).


16

to intercept sub-freight protects the interests of the party to which freight is payable in the event of a

default. FURNACE, as the party to which freight is payable under the BoL, should enjoy a similar right

to revoke INFERNO’s authority to collect sub-freight from IDONCARE and direct that it be paid to itself.

B. The right to intercept sub-freight is a consequence FURNACE’s right to collect freight

34 Under the BoLs, ‘the whole manner or mode of the collection of the freight’ is delegated by IMLAM

to FURNACE.84 FURNACE’s authority to collect freight should include the right to intercept sub-freight.

Without this right, FURNACE would lack any means of enforcing its right to payment of freight.

C. FURNACE must be able to collect sub-freight as a matter of commercial sense

35 If IMLAM, as ship owner, were to intercept the sub-freight instead of FURNACE, IMLAM would have to

account to FURNACE for any surplus it held after deducting amounts due to it under the TCP.85 As

FURNACE does not owe hire to IMLAM, IMLAM would be obligated to pass the entirety of the sub-

freight to FURNACE. It is more commercially sensible for FURNACE to intercept sub-freight in

fulfillment of its duty to collect freight. This removes any need for IMLAM to account to FURNACE.

D. FURNACE made a valid claim on sub-freight

36 In order to be able to claim sub-freight, FURNACE must show that the sub-freight has not yet been

paid, and give notice to IDONCARE requiring it to pay sub-freight to FURNACE.86 As at 15 October

2016, IDONCARE had not paid sub-freight.87 There is no evidence that sub-freight has since been paid.

Notice requiring payment was forwarded to IDONCARE on 20 October 2016.88 This notice did not need

to take any particular form, as it was sufficient that the sub-charterer was put on notice that it was

required to pay FURNACE rather than INFERNO.89

84 Tradigrain SA and ors v King Diamond Marine Ltd (The 'Spiros C') [2000] EWCA Civ 217, [39] (Rix LJ). 85 Dry Bulk Handy Holding Inc and Another v Fayette International Holdings Ltd and Another (The ‘Bulk Chile’)

[2013] 2 Lloyd’s Rep 38, [26] (Tomlinson LJ). 86 Ibid, [31] (Tomlinson LJ). 87 Moot Scenario, p 56. 88 Moot Scenario, p 66. 89 Dry Bulk Handy Holding Inc and Another v Fayette International Holdings Ltd and Another (The ‘Bulk Chile’)

[2013] 2 Lloyd’s Rep 38, [31] (Tomlinson LJ).


17

SUBMISSIONS ON THE TERMINATION OF THE VCP

V. FURNACE WAS ENTITLED TO TERMINATE THE VCP

37 FURNACE was entitled to terminate the VCP because: (A) INFERNO repudiated the VCP; and (B) in

any event, INFERNO substantially breached one or more innominate terms of the VCP.

A. INFERNO repudiated the VCP

38 INFERNO breached Cl 15 of the VCP by failing to pay freight by 12 October 2016. INFERNO breached

Cl 8 of the VCP by failing to nominate a legitimate discharge port ‘when the vessel passe[d] Singapore

for bunkering.’90 FURNACE subsequently issued INFERNO with a notice to perform these obligations.91

INFERNO failed to comply with the notice, instead stating that it was unable to make payment and

would not do so until the Cargo was discharged.92

39 INFERNO therefore repudiated the VCP by: (i) continuing with a course of conduct that evinced an

intention not to be bound by the VCP; and (ii) failing to comply with the notice to perform. FURNACE

accepted this repudiation on 22 October 2016.93

(i) INFERNO’s course of conduct amounted to repudiation

40 INFERNO’s course of conduct in persistently failing to fulfill its obligations under the VCP amounted

to repudiation.

41 Failure to make payment in accordance with the terms of the contract is repudiatory

conduct.94INFERNO persistently failed to pay freight after it fell due, and freight remains unpaid.

Further, on 21 October 2016, INFERNO informed FURNACE that it would not pay freight until after

Cargo was discharged, as it was presently unable to make payment.95 At best, INFERNO’s conduct

90 Moot Scenario, p 21. 91 Moot Scenario, p 64. 92 Moot Scenario, p 68. 93 Moot Scenario, p 68. 94 Kuwait Rocks Co v AMN Bulkcarriers Inc (The ‘Astra’) [2013] EWHC 865 (Comm); Spar Shipping AS v Grand

China Logistics Holding [2015] EWHC 718 (Comm) [208]-[214] (Popplewell J) upheld on appeal in Grand China

Logistics Holding (Group) Co v Spar Shipping [2016] EWCA (Civ) 982, [88]-[90] (Gross LJ). 95 Moot Scenario, p 68.


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evinced an intention to perform the VCP ‘substantially inconsistently’ with the terms of the VCP.96

At worst, the email amounted to an admission of an inability to perform, which is alone enough to

constitute renunciation.97

42 Further, INFERNO persistently refused to nominate a legitimate discharge port in China as listed in Cl

8 of the VCP.98 Instead, INFERNO nominated Busan, South Korea three times. INFERNO’s persistent

refusal to provide legitimate orders amounted to a repudiation of the charterparty.99

43 Despite INFERNO’s claim that it remained ‘ready and willing to perform,’100 this statement

demonstrated no more than a desire to perform,101 and INFERNO’s overall course of conduct evinced

a clear intention to no longer be bound by the VCP.102 FURNACE accepted INFERNO’s repudiation and

the VCP was terminated on 22 October 2016.103

(ii) INFERNO failed to comply with FURNACE’s notice to perform

44 INFERNO confirmed that it had renounced its obligations under the VCP by failing to comply with

FURNACE’s notice to perform. FURNACE served a notice to perform104 after the time for payment of

freight,105 and for nomination of a discharge port passed.106 FURNACE sent the notice by email on 19

October 2016 at 1320h. It stated that FURNACE expected a discharge port to be nominated, and freight

to be paid by 1200h (noon) on 20 October 2016, otherwise it reserved its right to terminate the VCP

96 Ross T Smyth & Co Ltd v T D Bailey, Son & Co [1940] 3 All ER 60; Decro-Wall International SA v Practitioners in

Marketing Ltd [1971] 1 WLR 361. 97 Universal Cargo Carriers Corp v Citati [1957] 2 QB 401, 437 (Devlin J). 98 Moot Scenario, pp 57, 58, 60. 99 Torvald Klaveness A/S v Arni Maritime Corporation (The ‘Gregos’) [1995] 1 Lloyd’s Rep 1, 9-10 (Lord Mustill). 100 Moot Scenario, p 69. 101 Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401, 437 (Devlin J) applied in Grand China Logistics

Holding (Group) Co v Spar Shipping [2016] EWCA (Civ) 982, [86] (Gross LJ). 102 Freeth v Burr (1874) LR 9 CP 208, 213 (Lord Coleridge CJ); Kuwait Rocks Co v AMN Bulkcarriers Inc (The

‘Astra’) [2013] EWHC 865 (Comm), [24]-[25] (Flaux J). 103 Moot Scenario, p 68. 104 Dalkia Utilities Services plc v Celtech International Ltd [2006] 1 Lloyd’s Rep 599, [131] (Christopher Clarke J). 105 Moot Scenario, p 21. 106 Moot Scenario, p 22.


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and claim damages.107 The notice clearly stated what INFERNO was expected to do, by what time and

what the consequences of failure would be.108

45 A notice to perform ‘changes the question from whether delay amounts to a repudiation, to the

question whether a failure to perform the obligation at all amounts to a repudiation’.109 INFERNO both

failed to pay freight due under the VCP and to nominate a discharge port before 1200h on 20 October

2016. This proves INFERNO did not intend to perform the VCP.110 INFERNO therefore repudiated the

VCP by failing to comply with the notice and consequently FURNACE had a right to terminate.

46 This position was not changed by INFERNO’s email of 21 October 2016, where INFERNO nominated

Ningbo as the discharge port.111 The notice obliged INFERNO to nominate a port and to pay freight by

20 October 2016. INFERNO only nominated Ningbo after the time specified in the notice, and in the

same email, INFERNO expressly stated, ‘as for freight, we are unable to make payment now.’112

FURNACE therefore had the right to terminate the VCP, which it exercised by way of email at 1120h

on 22 October 2016.113

B. Further, INFERNO substantially breached one or more innominate terms of the VCP

47 The breach of an innominate term will give rise to a right to terminate the contract where the breach

is ‘so serious that it goes to the root of the contract’114 and deprives the innocent party of substantially

the whole benefit that the parties intended that he should obtain from the contract.’115 A breach

107 Moot Scenario, pp 63-64. 108 Afovos Shipping Co SA v R Pagnan and Flli (The ‘Afovos’) [1982] 1 WLR 848, 854 (Lord Denning MR) affirmed on

appeal in Afovos Shipping Co SA v R Pagnan and Flli (The ‘Afovos’) [1983] 1 WLR 195. 109 Multi Veste 226 BV v NI Summer Row Unitholder BV [2011] EWHC 2026 (Ch), [201] (Lewison LJ). The

prescriptiveness of this principle was doubted in Dawn Hill House v Samarenko [2012] EWCA (civ) 1445, [42]

(Lewison LJ) but the principle remains good law. 110 United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904, 946-947 (Lord Simon of Glaisdale);

Astea (UK) Ltd v Time Group Ltd [2003] EWHC 725 (TCC), [147] (Seymour J). 111 Moot Scenario, p 67. 112 Moot Scenario, p 67. 113 Moot Scenario, p 68. 114 Cehave NV v Bremer Handelgesellschaft mbH [1974] 2 Lloyd's Rep 216. 115 Photo Production v Securior [1980] AC 827, 849 (Lord Diplock).


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causing delay will amount to a sufficiently serious breach of an intermediate term where the delay

frustrates the commercial purpose of the contract.116

48 INFERNO breached its obligations to pay freight and to nominate a legitimate discharge port in such a

manner that FURNACE was deprived of substantially the whole benefit of the VCP. Accordingly,

FURNACE was entitled to terminate the VCP.

(i) INFERNO breached the VCP by failing to pay freight

49 Freight fell due on 12 October 2016.117 Freight remains unpaid. Timely payment under a charterparty

is frequently understood to be an ‘intermediate term’ of a contract.118 The payment of freight was the

entire benefit which FURNACE stood to receive under the VCP. Freight is defined as ‘the consideration

payable for the carriage of the goods to and their delivery at the destination,’119 though actual delivery

does not need to take place where freight is earned before delivery.120 It is of fundamental importance

to a charterparty. INFERNO’s failure to pay freight deprived FURNACE of substantially the whole

benefit to which it was entitled under the VCP.121 INFERNO’s breach was therefore sufficiently serious

to give rise to a right to terminate the VCP.

(ii) INFERNO breached the VCP by failing to nominate a legitimate discharge port

50 INFERNO was obliged to nominate a legitimate discharge port by 10 October 2016.122 INFERNO did

not nominate a legitimate port until 21 October 2016.123 The fundamental, commercial purpose of the

VCP was to carry coal from Newcastle to China, so that it could be delivered to buyers. This delay

116 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, 60 (Sellers LJ), 65 (Upjohn LJ). 117 Moot Scenario, pp 22, 41. 118 Spar Shipping AS v Grand China Logistics Holding [2015] EWHC 718 (Comm), [92]-[207] (Popplewell J)

discussed in Grand China Logistics Holding (Group) Co v Spar Shipping [2016] EWCA (Civ) 982, [23]-[39] (Gross

LJ); Petroleo Brasiliero v ENE Kos 1 (The ‘Kos’) [2012] UKSC 17, [7] (Lord Sumption JSC), [52] (Lord Mance JSC);

cf Kuwait Rocks Co v AMN Bulkcarriers Inc (The ‘Astra’) [2013] EWHC 865 (Comm), [110]-[116] (Flaux J). 119 Compania Naviera General SA v Kerametal Ltd (The ‘Lorna I’) [1983] 1 Lloyd’s Rep 373, 374 (Donaldson MR). 120 Gaudet v Brown: Cargo Ex Argos (1873) LR 5 PC 134. 121 Hongkong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26, 66 (Diplock LJ). 122 Moot Scenario, p 21. 123 Moot Scenario, p 67.


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was serious enough to frustrate this commercial purpose.124 While FURNACE awaited legitimate

orders, it was prevented from using the Vessel to enter and benefit from subsequent voyage

charterparties. FURNACE has also incurred unnecessary drifting charges of USD $10,000 per day

under the TCP since 11 October due to INFERNO’s delay in nomination.125 Due to the gravity of

INFERNO’s breach, FURNACE was entitled to terminate the VCP.

124 Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401; Tarrabochia v Hickie (1856) 1 H&N 183; Stanton

v Richardson (1872) LR 7 CP 421; Inverkip SS Co Ltd v Bunge [1917] 2 KB 193, 201 (Scrutton LJ); Giebel v Smith

(1872) LR 7 QB 404. 125 Moot Scenario, p 63.


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SUBMISSIONS ON ENTITLEMENT TO DAMAGES

VI. FURNACE IS ENTITLED TO DAMAGES

51 FURNACE is entitled to be placed in the position it would have been in had INFERNO performed the

contract correctly.126 It is therefore entitled to: (A) damages for breaches of the charterparty; (B)

compensation for the costs and expenses of exercising a lien; and (C) compensation for damage

resulting from the detention of the Vessel.

A. FURNACE is entitled to damages for breach of voyage charter party

52 Any breach of contract entitles the innocent party to damages.127 FURNACE is therefore entitled to

damages for the following breaches by INFERNO: (i) failure to nominate a discharge port; (ii) failure

to nominate a ‘safe port’; and (iii) failure to pay freight.

(i) INFERNO failed to nominate a discharge port

53 Firstly, INFERNO failed to nominate a discharge port when the ‘vessel passe[d] Singapore for

bunkering’ per Cl 8 of the VCP.128 Secondly, INFERNO repeatedly nominated a port which was not an

option under Cl 8 of the VCP,129 and did not provide a legitimate nomination until 21 October 2016.130

(ii) INFERNO failed to nominate a ‘safe port’

54 INFERNO repeatedly nominated Busan, which an unsafe port by virtue of a zombie outbreak. This was

a breach of the warranty given under Cl 16 that the nominated port would be ‘safe’. A ‘safe’ port is

one that can be reached, used, and returned from, without being exposed to danger which could not

be avoided by good navigation and seamanship.131

126 Golden Strait Corp. v Nippon Yusen Kaisha (The ‘Golden Victory’) [2005] 2 Lloyd’s Rep 23. 127 Surrey County Council v Bredero Homes Ltd [1992] 3 All ER 305. 128 Moot Scenario, p 21. 129 Moot Scenario, p 21. 130 Moot Scenario, p 67. 131 Leeds Shipping Co Ltd v Société Française Bunge (The ‘Eastern City’) [1958] 2 Lloyd’s Rep 127, 131 (Sellers LJ);

Unitramp v Garnac Grain Co Inc (The ‘Hermine’) [1978] 2 Lloyd’s Rep 37, 37 (Donaldson J); Kodros Shipping Corp

of Monrovia v Empresa Cubana de Fletes (The ‘Evia’) (No 2) [1983] 1 AC 736, 749 (Lord Diplock), 756-757 (Lord

Roskill); Gard Marine & Energy Ltd v China National Chartering Co Ltd (The ‘Ocean Victory’) [2015] EWCA Civ 16,

[51] (Longmore LJ).


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55 Busan was not a safe port at the time of nomination, nor was it possible to know whether the port

would be safe at the time it was to be used.132 Further, an outbreak of zombies is not an ‘unexpected

and abnormal’ event so as to escape the ambit of the warranty.133

(iii) INFERNO failed to pay freight

56 Finally, INFERNO breached its obligation to pay freight in full to FURNACE on 4 October 2016.134

B. FURNACE is entitled to damages for the costs and expenses of exercising its lien

57 Provided the exercise of its lien is reasonable, FURNACE will be entitled to the costs and expenses of

exercising the lien.135 In determining what is ‘reasonable’, FURNACE ‘is not bound to jeopardise any

of [its] own rights in the hope of mitigating damages that may be payable by [INFERNO]’.136 It is

commercially and legally legitimate for FURNACE to safeguard its interests by maintaining its lien on

board the Vessel. As established, FURNACE’s exercise of its lien on board the Vessel was the most

commercially reasonable course of action to take.137

C. FURNACE is entitled to damages for detention

58 As established, INFERNO breached its obligation to nominate a legitimate discharge port per Cl 8 of

the VCP.138 The usual consequence of failure to nominate an appropriate safe port for discharge of

Cargo is the detention of the Vessel.139 The Vessel was detained for a period of 11 days. Where a

vessel is delayed by breach of the charterparty while not on laytime, the defaulting party will be

required to pay unliquidated damages for the detention of the vessel.140 This includes circumstances

132 Transoceanic Carriers v Cook Industries Inc (The ‘Mary Lou’) [1981] 2 Lloyd’s Rep 272, 283 (Mustill J); The

Eastern City [1958] 2 Lloyd’s Rep 127, 131 (Sellers LJ); Kodros Shipping Corp of Monrovia v Empresa Cubana de

Fletes (The ‘Evia’) (No 2) [1983] 1 AC 736, 749 (Lord Diplock), 757 (Lord Roskill); see Gard Marine & Energy Ltd v

China National Chartering Co Ltd (The ‘Ocean Victory’) [2015] EWCA Civ 16, [63] (Longmore LJ). 133 See, eg, K/S Penta Shipping A/S v Ethiopian Shipping lines Corp (The ‘Saga Cob’) [1992] 2 Lloyd’s Rep 545, 550-

551 (Parker LJ); Gard Marine & Energy Ltd v China National Chartering Co Ltd (The ‘Ocean Victory’) [2015] EWCA

Civ 16. 134 See [49] above. 135Metall Market OOO v Vitorio Shipping Co Ltd (The ‘Lehmann Timber’) [2014] QB 760, [127] (Rix LJ). 136 Smailes & Son v Hans Dessen & Co (1906) 12 Com Cas 117, 137 (Collins MR). 137 See [10] above. 138 Moot Scenario, p 21. 139 Cooke et al., Voyage Charters (Informa Law, 4th edition, 2014) [21.88]. 140 President of India v Lips Maritime Corporation (The ‘Lips’) [1988] AC 395, 422 (Lord Brandon of Oakbrook).


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in which a ship is ‘delayed by the Cargo owner's failure to arrange timely discharge’141 including by

failure to nominate a discharge port.142 FURNACE is therefore entitled to damages for the detention of

the Vessel caused by INFERNO’s failure to nominate a discharge port.

59 It is no bar to FURNACE’s claim that the delay may have been caused by the exercise of a lien. Unless

it can be shown that the lien was unreasonable, INFERNO cannot argue that the delay could have been

reduced by discharging the goods.143

60 Damages for detention have been held to be a payment ‘in the nature of demurrage’.144 This is to say

that damages for detention compensate the innocent party for the earnings that would have been made

during the relevant period were the vessel not detained. Further, ‘the agreed demurrage figure... may

be regarded as the appropriate amount to award as unliquidated damages.’145

61 Damages for delay are calculable from the time when the nomination should have been made, until

the time it was actually given.146 Therefore, FURNACE is entitled to the daily demurrage rate of USD

$140,000 per day, pro rata, for the period of 11 days during which the Vessel was detained. This

amounts to USD $1,540,000 in unliquidated damages.

141 Metall Market OOO v Vitorio Shipping Co Ltd (The ‘Lehmann Timber’) [2014] QB 760, [127] (Rix LJ). 142 Zim Israel Navigation Company Ltd v Tradax Export SA (The ‘Timna’) [1971] 2 Lloyd's Rep 91. 143 Lyle Co v Cardiff (1899) 5 Com Cas 87; Smailes & Son v Hans Dessen & Co (1906) 12 Com Cas 117. 144 Harris and Dixon v Marcus Jacobs & Co (1885) 15 QBD 247, 251 (Brett MR). 145 Rashtriya Chemicals and Fertilizers Ltd v Huddart Parker Industries Ltd (The ‘Boral Gas’) [1988] 1 Lloyd’s Rep

342, 346 (Evans J). 146 See Zim Israel Navigation Company Ltd v Tradax Export SA (The ‘Timna’) [1971] 2 Lloyd’s Rep 91, 94 (Lord

Denning MR).


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PRAYER FOR RELIEF

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

a. an order for the interim sale of the Cargo, with proceeds to be deposited into an escrow account

pending the Tribunal’s final award (I);

b. an order that INFERNO pay FURNACE freight in the amount of USD $771,120.48;

c. a declaration that FURNACE validly exercised a lien over the Cargo (II/III);

d. a declaration that FURNACE validly intercepted the sub-freight (IV);

e. an order that IDONCARE pay FURNACE the sub-freight otherwise payable to INFERNO;

f. a declaration that FURNACE validly terminated the VCP (V);

g. an award of damages for breach and termination of the VCP, costs and expenses of exercising

its lien, and detention (VI);

h. an award for interest under s 20 of the IAA; and

i. an order for costs.


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ANNEXURE A: MAP OF PORTS

Documents

MEMORANDUM FOR CLAIMANT - Murdoch University · MEMORANDUM FOR CLAIMANT ... (American Bar Association, 2009) ... Ltd and Ors v Anonymous Greek Insurance Company of General Insurances