17th INTERNATIONAL MARITIME LAW ARBITRATION MOOT

JULY 2016

IN THE MATTER OF AN ARBITRATION HELD IN EXETER

CLAIMANT ZEUS SHIPPING AND

TRADING COMPANY

RESPONDENT HESTIA

INDUSTRIES

_______________________________________________________

MEMORANDUM FOR THE RESPONDENT TEAM NO. 18

Bernard Chiew Chia Shern

Kavita Gopalan

Marco Isidor Tan Kee Keat

Tan Tong Hwa

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TABLE OF CONTENTS

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

A. The Parties ............................................................................................................ 1

B. The Charterparty .................................................................................................. 1C. Critical Facts to the Dispute ................................................................................. 2

II. SUMMARY OF THE ISSUES ................................................................................... 3

III. PRELIMINARY ISSUES OF JURISDICTION ...................................................... 4

A. This Tribunal Has No Jurisdiction to Hear the Claims ........................................ 4

i. This tribunal does not have jurisdiction to determine the issue of frustration. .... 4

IV. SUBSTANTIVE ISSUES ........................................................................................ 7

A. The Charterparty Has Been Frustrated ................................................................. 7

i. The Charterparty was frustrated by reason of delay. ........................................... 7ii. The force majeure clause cannot prevent frustration. ...................................... 8

B. RESPONDENT IS NOT LIABLE FOR DEMURRAGE .................................... 9

i. Demurrage only accrues when the time permitted (laytime) expired. ................. 9

ii. The Vessel left the Loading Place before the laytime expired. ...................... 10

iii. Delay was caused due to the fault of the Claimant. ........................................ 12

C. The Respondent is entitled to a salvage reward. ................................................ 13

i. The salvage services were voluntarily provided. ............................................... 13

ii. The vessel Athena was in danger. ................................................................... 15iii. The services were in the nature of salvage. .................................................... 17

iv. The Respondent was successful and conferred a benefit to the Claimant ...... 18

V. PRAYER FOR RELIEF ........................................................................................... 20

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TABLE OF AUTHORITIES

Treaties

Charter Parties, Report by the Secretariat of UNCTAD, 1974, New York: UN ................ 9

International Convention on Salvage, 1989 ................................................................ 13, 18

United Nations Convention on the Law of the Sea ........................................................... 12

Cases

Andreas Sobonis ET AL. v National Transport Corporation ET AL. and Graneksport

Preduzece ZA Izvoz I Uvoz Zitarica (The "National Defender") [1970] 1 Lloyd's Rep.

40................................................................................................................................... 16

Ashville Investments Ltd v Elmer Contractors Ltd [1987] CA 577 ................................... 4

Cape Flattery Ltd v. Titan Maritime LLC (U.S. Court of Appeals, 9th Circuit 2011) ....... 5

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

E.L. Oldendorff & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1973] 2

Lloyd's Rep. 280 ........................................................................................................... 10

Empresa Exportadora De Azucar v Industria Azucarera Nacional SA [1983] 2 Lloyd's Rep.

171................................................................................................................................... 9

Ethiopian Oilseeds Pulses Export Corp v Rio Del Mar Foods [1990] 1 Q.B. 86 ............... 5

Fibrosa Spolka Akcyjna v Fairbrairn, Lawson, Combe Barbour Ltd [1943] AC 32 .......... 9

Fiona Trust & Holding Corp v Yuri Privalov [2007] EWCA Civ 20 ................................. 5

Fisher and Others v The "The Oceanic Grandeur" Roberts and Others (The "Oceanic

Grandeur") [1972] 2 Lloyd's Rep. 396 ......................................................................... 17

Gem Shipping v Babanaft (The Fontevivo) [1975] 1 Lloyd’s Rep. 339 .......................... 12

Hirji Mulji v Cheong Yue Steamship Co [1926] AC 497 .................................................. 5

Jackson v Union Maritime Insurance Co Ltd (1874) L.R. 10 C.P. 125 .............................. 8

Pioneer Shipping Ltd v B.T.P. Tioxide Ltd (The Nema) [1982] AC 724 .......................... 7

Pringle v Mollett (1840) 6 M. & W. 80 ............................................................................ 12

S.S. Melanie v Owners of the S.S. San Onofre [1925] A.C. 246 ............................... 18, 19

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Sociedad Financiera de Bienes Raices SA v Agrimpex Hungarian Trading Co (The Aello)

1961 AC 135 ................................................................................................................. 10

The Charlotte (1848) 3 Wm Rob 68 ........................................................................... 15, 16

The Delian Spirit Shipping Developments Corporation v V/O Sojuzneftexport (The Delian

Spirit) [1971] 1 Lloyd's Rep. 506 ................................................................................. 10

The Glaucus (1948) 81 Lloyd’s Rep. 262 ......................................................................... 14

The Jubilee (1879) 4 Asp. 275 .......................................................................................... 14

The Lepanto [1892] P. 122 ............................................................................................... 18

The Mount Cynthos (1937) 58 Lloyd's Rep. 18 ............................................................... 16

The Neptune (1824) 1 Hagg 227 ...................................................................................... 13

The Pa Mar [1999] 1 Lloyd's Rep. 338 ............................................................................. 17

The Phantom (1866) LR 1 A&E 58 .................................................................................. 17

The Princess Alice (1843) 3 W. Rob. 138 ........................................................................ 14

The Renpor (1883) 8 P.D. 115 .......................................................................................... 18

The Sava Star [1995] 2 Lloyd's Law Reports 134 ............................................................ 14

The Troilus [1951] 2 All ER 40 ........................................................................................ 16

The Waterloo (1820) 2 Dods. 433 .................................................................................... 14

Turnbull v Owners of the Strathnaver (The Strathnaver) (1875) 1 App. Cas. 58 ............. 14

Statutes

Australian Navigation Act 1912 ....................................................................................... 13

BooksandJournals

Boyd.S, Burros.A, Foxton.D. (2012). Scrutton on Charterparties and Bills of Lading. 20th

Edition. London: Sweet and Maxwell. ........................................................................... 8

Brice, G. (1999). Maritime Law of Salvage. 3rd Edi. London: Sweet and Maxwell ....... 13

Julian C. (2001). Voyage Charters, 2nd Edi. Lloyd’s Shipping Law Library .................... 7

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LIST OF ABBREVIATIONS

s. Section

¶ Paragraph

Art Article

B/L Bill of Lading

CIF Cost, Insurance and Freight

Claimant Zeus Shipping and Trading Company

HLNG LNG produced from Hades Shale Gas

HVR/Rules Protocol to Amend the International Convention for the Unification

of Certain Rules of Law Relating to Bills of Lading (Hague-Visby

Rules)(Brussels 1968)

Lloyd’s Rep. Lloyd’s Law Reports.

LNG Liquefied Natural Gas

Moot Scenario IMLAM Moot Scenario, 2016

Respondent Hestia Industries

SHINC Sunday / Holidays Included

USD United States Dollars

WWD Weather Working Day

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RESPONDENT’S CASE

I. STATEMENT OF FACTS

A. The Parties

The Claimant is Zeus Shipping and Trading Company based in Poseidon.

The Claimant is the owner of Athena (the “Vessel”), a modern bulk tanker, capable of

transporting Liquefied Natural Gas (“LNG”) and the specialized form of LNG

produced from Hades Shale Gas, known as HLNG.

The Respondent is Hestia Industries, a new producer of HLNG based in Hades.

B. The Charterparty

On 21 July 2014, the Claimant as “Owners” and the Respondent as “Charterers”

entered into a voyage charterparty for the hire of the Vessel to transport 260,000m³ of

LNG produced by the Respondent (the “Cargo”) from the Port of Hades (the “Loading

Place”) to a safe berth in Poseidon.

On 16 July 2014, the Respondent accepted the Charterparty proposed by the Claimants

but with reservation to the arbitration clause (“Arbitration Clause”). The Respondent

was only prepared to arbitrate provisions of the Charterparty that relate to but do not

arise out of the terms of the Charterparty. The basis of this exception is that the

Respondent had a bad experience in the past and that the arbitration clause reflects the

Respondent’s company policy regarding dispute resolution provisions. Both parties

agreed to refer to arbitration in London in accordance with the Arbitration Rules of the

Maritime Law Association of Australia and New Zealand.

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C. Critical Facts to the Dispute

Upon arrival at the Port of Hades, the Master of the Vessel tendered a Notice of

Readiness (“NOR”) on 3 October 2014. The Vessel commenced loading on the same

day the NOR was tendered but was delayed due to protests at the port. Loading

commenced soon after where the Vessel weighing approximately 260,000m³ of HLNG

was loaded pursuant to the Charterparty.

Pursuant to Clause 9 and Box 5 of the Charterparty, time permitted for loading is 10

WWD SHINC, which runs from the time when NOR is tendered until the Vessel leaves

the Loading Place.

On 7 October 2014, the opposition leader of Hades, Jacqueline Simmons, seized control

of parliament being instigated by the protest and public opposition to the export of

HLNG by Hestia Industries. Meanwhile, the Vessel upon completion of loading of the

Cargo had sailed from the Loading Place.

However, the Vessel was intercepted by the Coast Guard and the Master was directed

to return to the Port of Hades immediately. At the time the Vessel was intercepted by

the Hades Coast Guard, and the Master of the Vessel had compiled with the Hades

Coast Guard even though it was not sufficiently certain if the Vessel was within the

territorial waters of Hades to resist the Coast Guard’s directions to return to berth.

Thereafter, the Vessel was detained by the Hades Coast Guard until 7 October 2015.

On 7 October 2015, while leaving the Port of Hades, it was discovered that the

propellers of the Vessel had been tampered with and both propeller shafts broke shortly

after setting sail under its own steam.

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II. SUMMARY OF THE ISSUES

The issues to be determined by this Tribunal are:

a. Whether this tribunal has jurisdiction to determine the issue of frustration, given

that the Charterparty contains an express arbitration clause providing only for

disputes ‘arising under’ the Charterparty.

b. Whether the Charterparty has been frustrated by reason of delay which occurred

in delivery of the Cargo.

c. Whether the Claimant is entitled to a claim of demurrage totaling US$17.9m.

d. Whether the Respondent is entitled to a salvage reward by undertaking a

salvage operation.

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III. PRELIMINARY ISSUES OF JURISDICTION

A. This Tribunal Has No Jurisdiction to Hear the Claims

At the outset, the Respondent appears conditionally before this Arbitral Tribunal

("Tribunal”) as it disputes the Tribunal’s jurisdiction to hear the issue of frustration.

i. This tribunal does not have jurisdiction to determine the issue of

frustration.

The Arbitration Clause does not cover disputes arising out of the Charterparty such as

frustration. Therefore, this Arbitral Tribunal does not have jurisdiction to determine the

issue of frustration.

a. The phrase “arising under” should be interpreted narrowly based on the

construction of the arbitration clause.

The Respondent submits that the amendment to the Arbitration Clause from “arising

out of” to “arising under” is of utmost importance as it was done with the intention to

exclude disputes which relate to but do not arise out of the terms of the Charterparty.

In Ashville Investments1, the Court of Appeal held that in construing a clause, the court

will consider what is the underlying purpose and intention of the contract. The court

will have regard to the true intention of the parties and the correct meaning of the words

used.2

In the current situation, both parties have consented to the amendment to restrict the

scope of disputes of the Arbitration Clause where the arbitral tribunal has limited

1 [1987] CA 577. 2 Ibid at page 75.

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jurisdiction where disputes that relate to but do not arise out of the Charterparty would

be excluded from being heard in the arbitration.3

The phrase “arising out of” has a wider meaning than “arising under”4 where the words

“arising under” are confined to disputes relating to the interpretation and performance

of the contract itself based on the clauses of the contract.5

On whether the words “arising under” should be interpreted in a liberal approach, the

case of Fiona Trust & Holding Corp v Yuri Privalov6 should be distinguished from the

current situation as there was no clear intention by the parties to limit the scope of the

arbitration agreement, unlike the present case. The House of Lords in Fiona Trust7

stated that one would need to find very clear language before determining intention.

In Hirji Mulji v Cheong Yue Steamship Co,8 it was held that the question whether a

contract had been frustrated was not a dispute “under the contract”.

Similarly, the case of Ethiopian Oilseeds & Pulses Export Corporation v Rio Del Mar

Foods Inc9 held that the words “arising out of” has a wide meaning to cover every

dispute including the issue of frustration except a dispute to whether there was ever a

contract at all.

3 Moot scenario at page 25. 4 Ethiopian Oilseeds Pulses Export Corp v Rio Del Mar Foods [1990] 1 Q.B. 86. 5 Cape Flattery Ltd v. Titan Maritime LLC (U.S. Court of Appeals, 9th Circuit 2011). 6 [2007] EWCA Civ 20. 7 Supra, note 6, at page 256. 8 [1926] AC 497. 9 [1990] 1 Lloyd’s Rep 86.

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In the present case, the Arbitration Clause does not provide jurisdiction to this arbitral

tribunal to arbitrate the dispute of frustration due to the scope of words “arising under”.

Therefore, the Respondent will object to arbitral tribunal’s jurisdiction to hear the issue

of frustration.

Since the arbitral tribunal has no jurisdiction to hear the dispute on frustration, it

follows that the award of demurrage can only be given when the claimant can show

that there is no proof of frustration.

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IV. SUBSTANTIVE ISSUES

A. The Charterparty Has Been Frustrated

i. The Charterparty was frustrated by reason of delay.

A Charterparty is frustrated when, as a result of an extraneous event outside the control

of either party, the commercial purpose of the contract becomes impossible to attain10.

The delay of 358 days in delivering the cargo caused the Charterparty to be frustrated

because:

a. the delay has caused the contractual obligations to be radically different; and

b. the delay is sufficiently grave to frustrate the contract.

a. The delay has caused the contractual obligations to be radically different.

According to Lord Radcliffe in the case of Davis Contractors Ltd v Fareham UDC11,

frustration occurs whenever, without default of either party, performance on the

contract has been radically changed.

According to the House of Lords in Pioneer Shipping Ltd v B.T.P. Tioxide Ltd (The

Nema)12 , the general yardstick in determining whether frustration has occurred is

whether the delay already suffered and the prospects of further delay from that cause

will make any ultimate performance of the relevant contractual obligations ‘radically

different’. There must be long, unreasonable delay to amount to such a situation.

10 Julian C. (2001). Voyage Charters, 2nd Edi. Lloyd’s Shipping Law Library at page 612. 11 [1956] AC 696 at page 729. 12 [1982] AC 724 at page 726.

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According to the Court in Jackson v Union Maritime Insurance Co Ltd13, the delay of

six months was held to be so long that it caused the voyage undertaken thereafter to be

a completely different voyage and that the delay brought the contract in a commercial

sense to an end.

In the present scenario, the length of delay is more than two times the delay in Jackson

v Union. As such, the delay was disproportionate to the length of time contemplated

and certainly brings an end to the commercial sense of the Charter.

b. The delay is sufficiently grave.

Furthermore, in assessing whether the event was sufficiently grave, the commercial

purpose of both parties and the benefits that they expected to obtain from the charter

must be considered as well14.

In the present case, the commercial purpose of the charter was to ship the cargo by the

stipulated time. As such, the contract was frustrated. As can be observed in the

correspondence dated 22nd November 2015, the Respondent made clear the high value

of the cargo and the damages that the Respondent might have to bear if the cargo did

not arrive at Poseidon by the agreed date. The urgency of the delivery is very clear in

that correspondence.

ii. The force majeure clause cannot prevent frustration.

In this case, the Respondent contends that the force majeure clause would not prevent

the Respondent from raising and relying on the issue of frustration of the Charterparty.

13 (1874) L.R. 10 C.P. 125. 14 Boyd.S, Burros.A, Foxton.D. (2012). Scrutton on Charterparties and Bills of Lading. 20th Edition. London: Sweet and Maxwell.

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In Clause 19(c) of the Charterparty, it states that the shipper and/or charterer shall not

be liable for delay in delivery for loading or in discharging if the delay is caused by the

stoppages or hindrances of whatsoever nature occurring without the negligence of the

Charterer.

According to Fibrosa Spolka Akcyjna v Fairbrairn, Lawson, Combe Barbour Ltd15, a

force majeure clause cannot be relied upon if the delay is one that is beyond “minor”.

In the case at hand, the duration is one that certainly does not fall within the meaning

of “minor” and as such, the force majeure clause contract cannot be relied upon.

Also, in the case of Empresa Exportadora De Azucar v Industria Azucarera Nacional

SA16, the Court held that force majeure clauses are not intended to deal with events

which strike “at the contract as a whole and make further performance of it unthinkable.”

The event in question in the case at hand strikes at the heart of the charterparty and thus

force majeure cannot be raised to avoid a claim of frustration.

B. RESPONDENT IS NOT LIABLE FOR DEMURRAGE

i. Demurrage only accrues when the time permitted (laytime) expired.

Demurrage is the compensation to the shipowner for the use of the additional time in

detaining the vessel beyond the agreed time, or laytime.17 Demurrage is also referred

to as an agreed amount payable to the owner in respect of delay to the vessel beyond

the laytime, for which the owner is not responsible.18

15 [1943]AC 32 at page 39. 16 [1983] 2 Lloyd’s Rep 171 at page 174. 17 Charter Parties, Report by the Secretariat of UNCTAD, 1974, New York: UN. 18 Voyage Charterparty Laytime Interpretation Rules 1993, Rule 24.

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Pursuant to Clause 10 of the Charterparty, demurrage with the rate of US$50,000/day

as specified in Box 24 is payable upon the expiry of the lay-days allowed.

ii. The Vessel left the Loading Place before the laytime expired.

Pursuant to Clause 9(c) of the Charterparty, time permitted for loading is 10 WWD

SHINC which is calculated as soon as NOR is tendered until the Vessel leaves the

Loading Place. According to Box 5, the loading place is the Port of Hades. Construing

Clause 9(c) and Box 5 as a whole, laytime will begin to run when NOR is tendered and

stop when the Vessel leaves the Port of Hades (the “Loading Place”).

Based on the facts, NOR was issued by Captain Marcus Yi on 3 October 2014, and

laytime would begin to run until 12 October 2014. Thereafter, demurrage would accrue

from 13 October 2014 onwards had the Vessel not left the Loading Place.

a. The Vessel had left the Loading Place.

In The Johanna Oldendorff, Lord Reid held that, in the absence of a defined

geographical space, “port” is referred as the commercial area of a port in which the

master can immediately and effectively place his ship at the disposal of the charterer

for the purpose of calculation of laytime. Disagreeing with the application of The Aello

test in The Delian Spirit19, Lord Reid further held that the definition of “commercial

area” can only be applied in areas within the breakwater but cannot be extended to the

open sea outside (known as Reid’s test).20 The risk of delay shifts from the charterers

to the shipowners if the vessel has left the “port” as defined in the Reid’s test.21

19 [1971] 1 Lloyd’s Rep. 506. 20 [1973] 2 Lloyd’s Rep. 280 at 290-291. 21 Summerskill, M.B. (1989). Laytime. 4th Edi. London: Stevens & Sons Limited, at p. 73.

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In the present scenario, the Vessel was no longer at the immediate and effective

disposal of the charterer after the Vessel left the berth upon completion of loading. Had

the Vessel still been under immediate and effective disposal of the Respondent, the

Master would have consulted the Respondent when the Coast Guard intercepted it.

There is no evidence suggesting such consultation.

Furthermore, the Claimant had conceded that the vessel was in fact outside Hades

territorial limits when it was intercepted by the Coast Guard.22 It was also reported by

The Hades Advocate on 25 October 2014 that the Vessel was intercepted just outside

the port limits of Hades,23 suggesting that the vessel had left the area outside the

breakwater rendering it no longer under the immediate and effective disposal of the

Respondent. In other words, before the interception and detention, the Vessel had left

the Loading Place, which at that point of time, the laytime ceased to run.

b. Issuance of Statement of Facts signified the end of the Vessel’s visit.

According to the Statement of Facts signed by the Master of the Vessel, loading of the

cargo was completed on 6 October 2014 and the Vessel had sailed from Hades on

7 October 2014. The issuance of the Statement of Facts signifies the end of the Vessel’s

visit to the Port of Hades.

The fact that the Coast Guard of Hades was able to instruct the Vessel to return does

not mean that the Vessel had not left the Port of Hades, or it was still within the territory

of Hades. The compliance of the Master with the instruction of Coast Guard was simply

because the Vessel was carrying the Hades flag, which bound the Vessel to follow the

22 Moot Scenario at page 58: email from Zeus to the Master of the Vessel. 23 Moot Scenario at page 62: Inside a coast guard operation. The Hades Advocate.

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law of Hades even though the Vessel is in the High Seas,24 including the Presidential

Decree.

Further, there is no conclusive evidence to show that the Vessel did not leave the

Loading Place.

Pursuant to Clause 9(c) of the Charterparty, laytime ceased when the Vessel left the

Loading Place.

On the present facts, since the loading has been completed and the Vessel had left the

Loading Place, the Respondent should not liable for the any delay which occurs without

any fault of his part. 25 Instead, the risk of delay shifted from the Respondent to the

Claimant after the Respondent left the Loading Place.26

In the premises, the Respondent is not liable for the demurrage claim.

iii. Delay was caused due to the fault of the Claimant.

It is further submitted that the Claimant is not entitled to demurrage as the delay was

attributable to the fault of the Claimant.27

In the present case, the Master of the Vessel made the decision to comply with the order

to return to berth.28

24 United Nations Convention on the Law of the Sea, Article 92: Status of ships. 25 Pringle v Mollett (1840) 6 M. & W. 80: the charterer is not liable for a detention which occurs without any fault of his part after the loading has been completed. 26 Supra. Note 22. 27 Gem Shipping v Babanaft (The Fontevivo) [1975] 1 Lloyd’s Rep. 339. 28 Moot Scenario at page 65.

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In the premises, the delay was caused by the Claimant’s fault and therefore, the

Respondent is not liable to the Claimant for demurrage.

C. The Respondent is entitled to a salvage reward.

The Respondent’s tugs had undertook a salvage operation in respect of the Athena, and

successfully preserve the value of the Vessel and cargo.

According to Article 12(1) of the International Convention on Salvage, 1989

(hereinafter referred as “the Salvage Convention”),29 which has been incorporated in

Australian law by virtue of the Navigation Act 1912,30 every salvage operation with a

useful result gives the salvors a right to reward.

According to Article 1(a) of the same convention, “salvage operation” means any act

done to assist a vessel in danger in navigable waters or any other waters. The

Respondent is entitled to a salvage award because the following required elements exist:

a. Voluntariness;

b. Danger (or peril), real or apprehended;

c. Salvage services;

d. Success and benefit.31

i. The salvage services were voluntarily provided.

The definition of “salvor” has been best expressed by Lord Stowell in The Neptune as:

29 Incorporated in Part A, Schedule 9, Australian Navigation Act 1912. 30 Australian Navigation Act 1912, Volume 2, Schedule 1. 31 Brice, G. (1999). Maritime Law of Salvage. 3rd Edi. London: Sweet and Maxwell, at page 2.

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‘A person who, without any particular relation to a ship in distress, proffers useful

service, and gives it a volunteer adventurer, without any pre-existing covenant that

connected him with the duty of employing himself for the preservation of that

ship.’32

In the premises, the services must be voluntarily provided, but not for any pre-existing

contractual duty or public duty, for the Respondent to be regarded as a ‘salvor’. It is

the Respondent’s contention that the Respondent was a volunteer in providing the

salvage service.

a. There was no pre-existing contractual obligation for the salvage.

Notwithstanding that the tug service33 was provided by the Respondent, there was no

salvage contract between the Claimant and the Respondent.

In the absence of a pre-existing contractual obligation of salvage, the Respondent

rendered assistance to the Vessel voluntarily, and thus the Claimant’s liability to pay

for the salvage rewards is still effective.34

b. Being the cargo-owner does not negate eligibility of the Respondent to be a

volunteer.

According to The Sava Star, the cargo-owner may not be automatically barred from

being a volunteer to render assistance to the salvage operation. Salvage service

rendered by the cargo-owner is not necessarily an act of self-preservation that negates

32 (1824) 1 Hagg. 227 at 236. 33 The Princess Alice (1843) 3 W. Rob. 138 at 139-140 per Dr Lushingotn; approved in The Strathnaver (1875) 1 App. Cas. 58 at 63; The Jubilee (1879) 4 Asp. 275 at 276; The Glaucus (1948) 81 Lloyd’s Rep. 262 at 266. Towage service has been described as the employment of one vessel to expedite the voyage of another when nothing more is required than the accelerating of her progress. 34 The Waterloo (1820) 2 Dods. 433 at 437.

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the voluntariness of the cargo-owner in a salvage operation.35 Clarke J. in that case

went further and held that motive of the salvage is irrelevant.

So long as the services are in the nature of salvage services and voluntary in the sense

that they were not rendered pursuant to a duty owed to the shipowners and not part of

what might ordinarily be expected of a cargo-owner such as providing advice about the

characteristics of the cargo, the cargo-owner is eligible to claim a salvage reward.36

In the premises, notwithstanding that the Respondent is the cargo-owner of the HLNG

carried by the vessel, the Respondent had undertaken the salvage service out of his own

volition. Thus, the Respondent is not precluded from claiming a salvage reward.

ii. The vessel Athena was in danger.

According to The Charlotte, in determining whether the vessel is in danger, it will be

sufficient if, at the time at which assistance is rendered, the vessel has encountered any

damage or misfortune which might possibly expose it to loss or damage if the services

were not rendered.37

In our present facts, the Vessel’s propeller shafts were broken which might possibly

expose it to loss or damage due to immobility in the open waters if the services by the

Respondent were not rendered.

35 [1995] 2 Lloyd’s Law Reports 134. 36 Ibid at page 144. 37 (1848) 3 Wm Rob 68, 71.

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In The Charlotte, it was further held that it is sufficient to show that there was a state

of difficulty and a reasonable apprehension of danger under an objective test. The

opinion of those on board is not decisive.

Applying the objective test, the Court in The Mount Cynthos held that the reasonable

apprehension of danger must be such that no reasonably prudent and skillful person in

charge of the venture would refuse a salvor’s help if it were offered to him upon the

condition of his paying a salvage reward.38

According to The National Defender, a stranded vessel with no reasonable expectation

of being able to get off with ease very soon is in a position of danger for salvage

purposes because she cannot pursue her intended voyage or deal effectively with any

emergency which may arise.39

In The Troilus, a steamship which was tugged to Aden due to the loss of her propeller

in Indian Ocean was tugged to United Kingdom for repairs as there was no facility for

the repair and storage for her cargo. Lord Porter held that the salvage award could be

claimed because the damaged vessel with no means of egress must lie deteriorating and

the cargo on board would ultimately perish unless some form of salvage assistance is

rendered. The Court went on to warn that the possibility of expense and the effect of

delay both upon the ship and cargo must be borne in mind.40

38 (1937) 58 Lloyd’s Rep. 18, 25. 39 [1970] 1 Lloyd’s Rep. 40. 40 [1951] 2 All ER 40.

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In our present facts, the propeller shafts of the vessel were broken in the open waters

which made it unable to move with ease to pursue her voyage or deal effectively with

any emergency that may arise without the assistance rendered by the Respondent.

In the premises, any reasonably prudent and skillful person in charge of the venture

would not refuse the salvor’s help even if it was done on the condition of salvage reward.

For this reason, applying the objective test, the Vessel was in apprehended danger.

iii. The services were in the nature of salvage.

In The Oceanic Grandeur, Stephen J of the High Court of Australia held that the

physical character of the particular services is not important but rather the

circumstances in which they were being carried out. If those circumstances involve the

necessary elements of salvage, they will be salvage services whether or not they take

the form of lightening, towing or any other maritime operation.41

In The Phantom, Justice Dr Lushington held that it is not necessary to show absolute

danger in order to constitute a salvage service. It is sufficient if there is a state of

difficulty, and reasonable apprehension.42 Having considered the judgment in The

Phantom, the Admiralty Court in The Pa Mar held that the towage of a vessel whose

generator broke down causing a complete failure of power amounted to a salvage

service.43

41 [1972] 2 Lloyd’s Rep. 396, 406. 42 (1866) LR 1 A & E 58, 60. 43 [1999] 1 Lloyd’s Rep. 338.

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In the premises, having fulfilled all other necessary elements of salvage, the assistance

rendered to the Vessel whose propeller shafts were broken amounts to services in the

nature of salvage.

iv. The Respondent was successful and conferred a benefit to the Claimant44

According to Article 12 of the Salvage Convention, a salvage operation which has

which has a useful result give right to a reward.45

According to The Lepanto, the requirements to establish a successful claim for a

salvage reward are:

a. Property in the ship or cargo, or some part of it, must ultimately be preserved;

and

b. The claimant of the salvage reward must have provided a useful and effective

service to that end (meritorious contributions to success).46

a. Millions of dollars’ worth of cargo and vessel were saved.

In The Renpor, the Court of Appeal held that in a claim for salvage reward, the property

imperiled must has been preserved from the danger to which it was subject.47

44 Owners of the S.S. Melanie v Owners of the S.S. San Onofre [1925] A.C. 246, 262: “Success is necessary for a salvage award in the proper sense of the term. Contributions to that success, or as it is sometimes expressed meritorious contributions to that success, give a title to salvage reward. Services, however meritorious, which do not contribute to the ultimate success, do not give a title to salvage reward. Services which rescue a vessel from one danger but end by leaving her in a position of as great or nearly as great danger though of another kind, are held not to contribute to the ultimate success and do not entitle to salvage reward.” 45 International Convention on Salvage, 1989. 46 [1892] P. 122, 128-129. 47 (1883) 8 P.D. 115, 117.

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In the current case, the Cargo and the Vessel which were worth millions of dollars were

preserved by the salvage operation.48

b. The Respondent provided the meritorious contributions leading to the success.

According to Owners of the S.S. Melanie v Owners of the S.S. San Onofre, when

salvage is finally effected, those who have meritoriously contributed to that result are

entitled to a share in the salvage reward.49

The Respondent, as the tug owner and salvor, had rendered assistance which led to the

successful preservation of the Cargo and the Vessel.50

Having established all the elements of salvage, it is submitted that the Respondent is

entitled to a salvage reward.

48 Moot Scenario at page 71: The Hades Advocate, paragraph 3. 49 [1952] A.C. 246, 262-263. 50 Supra. Note 26.

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V. PRAYER FOR RELIEF In light of the above submissions, the Respondent requests the Tribunal to:

i. DECLINE jurisdiction in respect of the issue of frustration and therefore,

demurrage.

ii. DECLARE that the Charterparty has been frustrated by reason of delay which

occurred in delivery of the cargo.

iii. DECLARE that the Respondent has no liability to the Claimant for the

demurrage claim.

iv. FIND that the Respondent is entitled to the claim of the salvage reward for

undertaking salvage operations to rescue the Vessel.

v. AWARD interests & costs in favour of the Respondent.