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NINETEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2018 MEMORANDUM FOR CLAIMANT SYMBIOSIS LAW SCHOOL, PUNE TEAM 12 ON BEHALF OF CERULEAN BEANS AND AROMAS LTD. CLAIMANT AGAINST DYNAMIC SHIPPING LLC THE SHIP ‘MADAM DRAGONFLY’ RESPONDENTS COUNSEL Joseph Thodukayil Aravind Vishnubhotla Kenneth Martin

NINETEENTH ANNUAL INTERNATIONAL MARITIME LAW … · nineteenth annual international maritime law arbitration moot 2018 memorandum for claimant symbiosis law school, pune team 12 on

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Page 1: NINETEENTH ANNUAL INTERNATIONAL MARITIME LAW … · nineteenth annual international maritime law arbitration moot 2018 memorandum for claimant symbiosis law school, pune team 12 on

NINETEENTH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2018

MEMORANDUM FOR CLAIMANT

SYMBIOSIS LAW SCHOOL, PUNE

TEAM 12

ON BEHALF OF

CERULEAN BEANS AND AROMAS

LTD.

CLAIMANT

AGAINST

DYNAMIC SHIPPING LLC

THE SHIP ‘MADAM DRAGONFLY’

RESPONDENTS

COUNSEL

Joseph Thodukayil

Aravind Vishnubhotla

Kenneth Martin

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TEAM 12 MEMORANDUM FOR CLAIMANT

2

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ................................................................................................................ 4

LIST OF AUTHORITIE ........................................................................................................................ 5

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

ARGUMENTS ON BEHALF OF THE CLAIMANT ......................................................................... 4

I. WHETHER THIS ARBITRAL PANEL HAS THE JURISDICTION TO DETERMINE THE CLAIM FOR

DAMAGES MADE BY THE CLAIMANT .................................................................................................... 4

The claim for damages arise from matters which are not required to be determined

according to the expert determination provisions of the charter party ............................................. 4

The claim for damages must be determined by this Arbitral Panel ........................................ 4

The Respondents themselves, have admitted to this Tribunals jurisdiction ........................... 5

II. WHETHER THE RESPONDENT IS LIABLE TO PAY DAMAGES TO THE CLAIMANT?........................ 6

A. The Respondent breached obligation not to deviate ............................................................... 6

B. The Respondent breached obligation of delivering the cargo by 7:00 p.m. on 28th July

2017. 8

C. The loss to Claimant was caused by the Respondent’s breach. .............................................. 9

D. The loss to CLAIMANT was not a remote consequence of the RESPONDENT’s breach. 10

E. The Respondent is liable to pay damages arising from the water damage caused to the cargo

10

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III. WHETHER THE CLAIMANT HOLDS A MARITIME EQUITABLE LIEN OVER THE MADAM

DRAGONFLY? ...................................................................................................................................... 12

Whether a Lien is created by payment of $100,000 as security for crew’s wages? ............. 13

Whether a maritime lien is created? ..................................................................................... 13

Whether there exists an equitable lien on the ship? .............................................................. 14

Whether transfer of Maritime Lien on the Madam Dragonfly has taken place? .................. 15

Whether the Lien is Transferred Through Subrogation? .......................................................... 16

Whether Equitable subrogation arises? .................................................................................... 19

IV. WHETHER THE CLAIMANTS IS LIABLE TO PAY DAMAGES TO THE RESPONDENT? .................... 20

The Claimant is not liable to pay demurrage to the Respondent? ........................................ 20

The CLAIMANTS are not liable to pay freight to the RESPONDENT .............................. 23

The Claimant is not liable for the cost of repairs to the hull. ............................................... 24

Cost of ‘E-Access Pass’ is for the RESPONDENT’s account. ............................................ 24

The customary agency fees is payable by the RESPONDENT ............................................... 25

REQUEST FOR RELIEF .................................................................................................................... 26

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LIST OF ABBREVIATIONS

ABBREVIATION MEANING

SROAIR Statutory Right of Action in Rem

CHARTERPARTY Voyage Charterparty between Cerulean

Beans and Aromas Ltd. And Dynamic

Shipping LLC

ARBITRATION CLAUSE Clause 27 of the Charterparty

VESSEL Madam Dragonfly

CARGO 1,000 70Kg Bags of Coffee

ELR English Law Reporter

KB King’s Bench

QB Queen’s Bench

WWD Weather Working Day

USD United States Dollars

SC Supreme Court

ER England Reporter

HKLRD Hong Kong Law Reporter and Digest

LTD Limited

ED Edition

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LIST OF AUTHORITIES

A. CASES

1. Achille Lauro v. Total [1968] 2 Lloyd’s Rep. 247, 251 ................................................................ 13

2. Asfar v. Blundell [1896] 1 Q.B. 123 ............................................................................................. 31

3. Bank of Nova Scotia v. Hellenic Mutual War Risks Association (Bermuda) Ltd [1990] 1 Q.B.

818, 904. ........................................................................................................................................ 16

4. Banque Keyser Ullmann S.A. v. Skandia (UK) Insurance Co. [1990] Q.B. 665, ......................... 16

5. Barclays Bank Plc. v Estates & Commercial Ltd [1997] 1 WLR 415 (CA) ................................. 22

6. Bright Grahame Murray [1994] 1 W.L.R. 1360, ........................................................................... 16

7. British Shipowners v. Grimond (1876) 3 Rett. 968, 972 ............................................................... 19

8. Cf. Beoco v. Alfa Laval Co. [1995] Q.B. 13 ................................................................................. 16

9. Chartered Bank v. British India S.N. Co. [1909] A.C. 369, 375 ................................................... 19

10. Clark v. Bowing (1908) SC 116 .................................................................................................... 25

11. Compania Sud Americanade Vapores S.A. v. Sinochem Tianjin Import and Export Corp (The

Aconcagua) [2010] 1 Lloyd’s Rep. ............................................................................................... 17

12. Dallah Real Estate and Tourism Holding Co v The Minister of Religious Affairs, Government of

Pakistan [2010] 2 Lloyd's Rep 691, 715 [95] (Lord Collins) ........................................................ 11

13. Galoo Ltd v. Bright Grahame Murray [1994] 1 W.L.R. 1360 ...................................................... 16

14. Gatliffe v. Bourne (1838) 4 Bing. N.C. 314, (1841) 3 M. & G. 643, (1844) 7 M. & G. 850, 11 Cl.

& F. 45 ........................................................................................................................................... 18

15. Gibaud v. Great Eastern Rly [1921] 2 K.B. 426, 435. ................................................................... 16

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16. Heskell v. Continental Express (1950) 83 Ll. L. Rep. 438 ............................................................ 16

17. Hobbs, Savill & Co Ltd v The Vasilia (Owners) Albaran Bay Corporation [1972] 1 Lloyd’s Law

Rep 51 ............................................................................................................................................ 26

18. Katsivalis v. Serrano Reconveyance Co. (1970) 70 Cal.App.3d 200, 210. ................................... 27

19. Menelaou v Bank of Cyprus [2016] AC 17 ................................................................................... 22

20. Monarch SS. Co. v. Karlshamns Oljefabriker AB [1949] A.C. 196 ............................................. 16

21. Nigerian National Shipping Lines v. Mutual (The Windfall) [1998] 2 Lloyd’s Rep. 664 ............ 17

22. Novologistics SARL v. Five Ocean Corporation (The Merida) LMLN 784, 9 December 2009;

[2010] 1.......................................................................................................................................... 28

23. Orakpo v. Manson Investments, [1977] 3 W.L.R. 229, at 234...................................................... 24

24. Programmed Total Marine Services Pty Ltd v The Ship “Hako Fortress”, [2012] FCA 80 ... 22, 26

25. Re Bond Worth Ltd [1980] Ch 228 at 250-251, [1985] 3 WLR 610 at 613-614 per Nourse J ..... 21

26. Re: Economic Transport Organisation Vs. Charan Spinning Mills (P) Ltd. and Anr [2010] 4 SCC

11 ................................................................................................................................................... 23

27. Reardon Smith Line Ltd v. Ministry of Agriculture, Fisheries and Food [1963] 1 Lloyd’s Rep 12,

at p. 31 per Viscount Radcliffe. ..................................................................................................... 30

28. Reardon Smith v. Black Sea Insurance [1939] A.C. 562; ............................................................. 13

29. Shirlaw v. Taylor (1991) 102 ALR 551 at 557, Aust Fed Ct, Full Ct ........................................... 21

30. Smith v. State Savings and Loan Association (1985) 175 Cal.App.3d 1092, 1096 ...................... 27

31. Smith, Hogg & Co Ltd v Louis Bamberger & Sons [1929] 1 KB 15 ........................................... 32

32. Stag Line Ltd v. Board of Trade (1950) 84 Ll L Rep 1 (CA). ...................................................... 28

33. Stinnes v. Halcoussis (The Yanxilas) [1982] 2 Lloyd’s Rep. 445 ................................................ 17

34. Tennant Radiant Heat v. Warrington Development Corp. [1988] 1 E.G.L.R. .............................. 16

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TEAM 12 MEMORANDUM FOR CLAIMANT

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35. The Andalina, (1886) 12 P.D. 1, 6 Asp. M.L.C. 62; ..................................................................... 25

36. The Caspian Sea [1980] 1 Lloyd’s Rep. 91 ................................................................................... 31

37. The CJ Saxe 145 Fed 749 (SDNY 1906); ..................................................................................... 24

38. The King Coal, [2013] 2 HKLRD 620 .......................................................................................... 25

39. The Lyons, (1886-90) 6 Asp., M. L. C. 199, ................................................................................. 25

40. The President Arthur (1928) 25 F (2d) 99 ..................................................................................... 25

41. The William F. Safford, (1860) Lush. 69, 167 E.R. 37. ................................................................ 25

42. Vinmar International v. Theresa Navigation (The Atrice) [2001] 2 Lloyd’s Rep. 1 ..................... 17

43. West Tankers Inc v Allianz SpA [2009] AC 1138, 1150 [57] (Advocate General Kokott); ........ 11

44. William Tetley Maritime Liens and Claims (2nd Ed, BLAIS, Canada, 1998) 294; ..................... 24

B. REPORTS

1. The Berostar [1970] 2 Lloyd’s Law Rep 403; ............................................................................... 26

2. The World Star [1987] 1 Lloyd’s Law Rep 452 ............................................................................ 26

C. BOOKS

1. Cooke et al, Voyage Charters, Page 628, Informa Law, 4th ed. 2014. .................................... 16, 17

2. George Varian ‘Rank and Priority of Maritime Liens’ (1972-1973) 47 Tulane LR 751, 753 ...... 24

3. Laytime and Demurrage, Page 195, Informa Law, 6th ed. 201...................................................... 30

4. Nigel Blackaby and Constantine Partasides with Alan Redfern and Martin Hunter, Redfern and

Hunter on International Arbitration (Oxford University, 6th ed, 2015) (‘Redfern and Hunter’)

340–1 [5.105–9 .............................................................................................................................. 11

5. Simon Baughen, Shipping Law, Page 225 Routledge, 6th ed. 2015 .............................................. 28

6. Simon Baughen, Shipping Law, Page 89 Routledge, 6th ed. 2015 ................................................ 13

7. Wilson John F, Carriage of Goods by Sea, Page 115, Pearson: 2010 ........................................... 19

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D. Journals

1. William Tetley ‘Assignment and Transfer of Maritime Liens: Is There Subrogation of the

Privilege?’ (1984) 15 Journal of Maritime Law and Commerce 393, 402. ................................... 23

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TEAM 12 MEMORANDUM FOR CLAIMANT

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STATEMENT OF FACTS

A. THE PARTIES

1. The Claimant is Cerulean Beans and Aromas Ltd., a Cerulean company. The Respondent is

Dynamic Shipping LLC, a Cerulean company. The registered ship-owner of the Cerulean-flagged

vessel, the MADAM DRAGONFLY (the “Vessel”) is the Respondent. Coffees of the World Ltd.,

is a Dillamond Company, who is the client of the Claimant (the “Client”).

B. THE PAYMENT OF CREW’S WAGES

1. As on 19th July, 2017, the Respondent asked in addition to the normal terms of their charter, the

payment of the crew’s wages into a separate Bank account prior to the voyage as the crew will not

sail before this occurs.

2. To that extent, as on 22nd July, 2017, the Claimant paid $100,000 (the “Amount”) to the

Respondent, considering the urgency of the shipment. The amount was to be recovered once the

Respondent has paid the crew. These funds in other words were to be used as security by the crew.

3. The $100,000 paid by the Claimant on account of the crew’s wages was paid directly by the

company into a bank account set up by the Respondent for the sole purpose of holding wages. The

wages do not form part of the freight charges.

4. Subsequently, the crew was not paid by the Respondent after the completion of the voyage and

neither was the amount repaid to the Claimant.

5. Since the commencement of the Arbitration it has come to the Claimant’s attention that the funds

paid into the Respondent’s separate account for crew wages have been spent. The crew of the

Madam Dragonfly have foreshadowed separate legal action against the company to recover unpaid

wages for a number of voyages.

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C. THE CHARTERPARTY CHAIN

1. The Claimant chartered the vessel pursuant to a Voyage Charterparty (the “Charterparty”)

between the Claimant and Respondent dated 22nd July, 2017 for a voyage from Cerulean to

Dillamond, scheduled for the 24th of July, 2017 for a shipment of rare coffee (the “Shipment”). The

relevant clauses are set out below:

2. It was reiterated that the shipment of the said coffee was of utmost priority and that the ship must

discharge the rare coffee at the port of Dillamond by 7:00 p.m. on the 28th of July. The vessel was

required to take the most direct route to Dillamond and any change in route was to be informed

beforehand to the Claimant.

3. It was emphasized that the said coffee must be shipped in containers that are entirely waterproof, as

the rare, high quality, green coffee is highly susceptible to moisture damage. The Respondent,

considering the commercial sensitivities and importance of the voyage used a waterproof sealant

from a new supplier, which guaranteed waterproofing of containers up to 5 days.

D. THE PERFORMANCE OF THE CHARTERPARTY

1. As on 24th July, 2017, the vessel departed Cerulean and was en route to Dillamond and delivery of

the shipment was estimated to be completed by 5:00 p.m. on Friday, 28th of July. On 26th July, 2017

communications and satellite systems of the vessel came online after 17 hours, due to solar flares

which knocked out communication system.

2. On 27th July, 2017, the vessel made a deviation to Spectre due to the solar flares which knocked out

navigation systems and since the hardcopy maps of the vessel weren’t replaced since the last journey

to Spectre, the only hardcopy maps they had were that of Spectre. Neither the crew nor the

Respondent communicated the change in route to the Claimant.

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3. On 28th July, 2017, the vessel could not sail past its current location due to a sudden storm rolling

in. The crew noticed it on its radar only 30 minutes ago. Furthermore, the Claimant’s agents have

been at the port since 4:30 p.m. to take delivery of the cargo, since the shipment was due by 7 p.m.

4. On 29th July, 2017, the vessel was stuck 100 nautical miles outside the port of Dillamond since 7

a.m. as per the instructions of the port authorities, since the storm caused delays at the port and there

was no place to berth. During the storm when the crew tried to lift anchor, it got tangled on a coral

bed on which the ship inadvertently stopped on and consequently was cut off and the captain of the

ship speculated, damage to the hull may have occurred.

5. The vessel berthed around 8:42 p.m. on 29th July, 2017, and cargo was available for collection. The

crew of the vessel waited until midnight pursuant to which the shipment was offloaded at the port

of Dillamond using an electronic access pass. The claimant took delivery of 4 containers at 1:17pm

on 31st July, 2017 and the delivery was delayed as the Claimants were unable to access the cargo

left at the port of Dillamond due to congestion at the port. Furthermore, when taking delivery it was

found that one of the containers weighed in differently than the others.

6. Subsequently it was discovered that only one container was in suitable condition for delivery while

the rest were water damaged. Since the shipment was for the client of the Claimant, they had to

procure alternative inferior coffee at a cost of $9,450,000. Under the circumstances, the Claimant

demanded a total of $30,200,000/- being 15,750,000/- for damaged coffee, 9,450,000/- for the

replacement coffee and 5,000,000/- for the amount due by the Claimant to the client in damages for

failure to deliver the shipment.

7. The payment due for the voyage of the vessel on 1st August, 2017 was not made, and to that extent,

the Respondents notified the Claimants. As on 11th August, 2017 the dispute was referred to

arbitration pursuant to clause 27(a) of the Charterparty by the Claimant.

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ARGUMENTS ON BEHALF OF THE CLAIMANT

I. WHETHER THIS ARBITRAL PANEL HAS THE JURISDICTION TO DETERMINE THE CLAIM FOR

DAMAGES MADE BY THE CLAIMANT

1. The Tribunal has the power to determine its own jurisdiction under the Kompetenz-Kompetenz

doctrine.1 It is submitted that this Arbitral Panel does have the jurisdiction to determine the Claim

for damages made by the Claimant as [A.] the claim for damages arise from matters which are not

required to be determined according to the expert determination provisions of the charterparty and

[B.] the claim for damages must be determined by this Arbitral Panel. Further, [C.] the Respondents

themselves, have admitted to this Tribunals jurisdiction through their own claim for damages.

The claim for damages arise from matters which are not required to be determined according

to the expert determination provisions of the charter party

2. While Clause 27(d) provides for disputes as to technical matters to be referred to expert

determination, Clause 27(f) necessitates that any person appointed under Clause (d) must act as an

expert and not as an arbitrator. In the present matter, Clause 27(d) has already been satisfied as the

expert determination has clearly resolved the disputes arising out of technical matters,2 leaving the

final determination to be made by this Arbitral Tribunal on questions of law using the evidence

provided by the Expert, which is binding on both the parties.3

The claim for damages must be determined by this Arbitral Panel

1 UNCITRAL Model Law on International Commercial Arbitration 1985 s 2 art 16(1); Arbitration Act 1996 (UK) s 30(1);

West Tankers Inc v Allianz SpA [2009] AC 1138, 1150 [57] (Advocate General Kokott); Dallah Real Estate and Tourism

Holding Co v The Minister of Religious Affairs, Government of Pakistan [2010] 2 Lloyd's Rep 691, 715 [95] (Lord

Collins); Nigel Blackaby and Constantine Partasides with Alan Redfern and Martin Hunter, Redfern and Hunter on

International Arbitration (Oxford University, 6th ed, 2015) (‘Redfern and Hunter’) 340–1 [5.105–9] 2 Page 43, Moot Props 3 Clause 27(f)

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3. In the determination, the Expert Witness satisfies the provisions of Clause 27(d) by resolving all

questions of fact or technical matters and clearly establishing what time the cargo was damaged and

what caused such water damage. The claims for the damages that have been put before this Panel

arise out of questions of law and the determination made by the Expert Witness, which is conclusive

and binding on both parties.4 The claim for damages for breach out of the charterparty arise out of

the Respondents breach by deviating from the agreed route and failing to follow the instructions of

the Claimant, failing to deliver the cargo on the agreed time, and failing to safeguard the cargo while

it was in their duty of care. The claim for damages arising out of the respondents breach of the

charterparty is further enumerated in the IInd issue

The Respondents themselves, have admitted to this Tribunals jurisdiction

4. It is further submitted that the Respondents have themselves admitted to this courts jurisdiction as

[i.] they have submitted counter-claims for damages arising out technical matters and [ii] they have

accepted this Tribunals jurisdiction by virtue of acquiescence.

i. The claim for damages arise from matters which arise out of technical matters

5. The Respondent in its counter-claim, contend that the Claimant is liable to pay damages. It is

submitted that these claims for damages arise out of matter which would fall under the definition of

“technical matters” as per Clause 27(f). In order to determine the Respondents claim with respect

to the cost of repairs for damage to the Vessel, questions as to whether the actions of the ship which

led to the damage were justified in in good practice or what time the damage took place must be

answered by a technical expert as per Clause 27(d). Further the Respondents claim with respect to

the agency fees at the Port of Spectre can only be adjudicated upon after an expert appointed under

4 Clause 27(f), Voyage Charterparty

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Clause 27(d) has determined whether the deviation was required and whether or not such deviation

was a result of the Respondents own lack of diligence.

ii. The Respondent has accepted this Tribunals jurisdiction by virtue of acquiescence.

6. It is submitted that the respondent has admitted to this Tribunals jurisdiction by virtue of its

acquiescence in the matter. The notice of the claim for damages was received by the Respondent on

1st August 20175 and the notice of arbitration for the same not long after. 6 By appointing its

arbitrator and not raising objections to the jurisdiction of the tribunal at an earlier stage, the

respondent has assented to this Tribunals jurisdiction by virtue of acquiescence.

II. WHETHER THE RESPONDENT IS LIABLE TO PAY DAMAGES TO THE CLAIMANT?

7. It is submitted that the RESPONDENT is liable to the CLAIMANT for damages in respect of: (i)

Damaged Cargo, (ii) Cost of Replacement Coffee and (iii) Settlement Payment.

A. The Respondent breached obligation not to deviate

8. The owner of a vessel, under charter, impliedly under- takes that his vessel, while performing its

obligations under the contract of carriage, will not deviate from the contract voyage.7 When the

charter party does not provide for an agreed route, the presumption is that the usual route will be

presumed to be the direct geographical route between the ports of loading and discharge.8

9. In any case, the charter party provides that the vessel “shall proceed with all reasonable speed” to

the port of discharge and therefore it expressly incorporates a warranty on behalf of the ship-owner

not to deviate from the contract voyage. 9 Further, the RESPONDENT agrees that the parties

5 Page 29, Moot Proposition 6 Page 34, Moot Proposition 7 Simon Baughen, Shipping Law, Page 89 Routledge, 6th ed. 2015 8 Reardon Smith v. Black Sea Insurance [1939] A.C. 562; Achille Lauro v. Total [1968] 2 Lloyd’s Rep. 247, 251. 9 Ibid.

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intended the vessel to take the most “direct” route to the port of discharge.10

10. The RESPONDENT breached this obligation when Madam Dragonfly deviated to the Port of

Spectre. The CLAIMANT, further, undertakes to prove that the said deviation was not justified as

per the terms of the charterparty.

i. Deviation is Not Excused by Force Majeure.

11. In order for the RESPONDENT’s liability arising out of deviation to be excused by the force

majeure clause, the RESPONDENTS must prove that such deviation occurred as a result of “Force

Majeure Event” as enumerated from clause 17 (a) to 17 (d). It is conceded that the solar flares

contributed, in part, to Madam Dragonfly taking a deviated course. However, it is submitted that the

solar flares did not come within the definition of clause 17 and therefore was not a “Force Majeure

Event”.

12. Clause 17 (b) only contemplates those weather events, which are unforeseen, as a “Force Majeure

Event”. On 18 July 2017 The Cerulean Mail reported that NASA predicted that the solar flares

would last another two weeks and also advised anyone in the cerulean region who relies on radio or

satellite communication systems to make back-up arrangements.11 In light of such information, it

cannot be said that the RESPONDENTS could not have predicted, beforehand, the possible

occurrence of the solar flares. Therefore, the RESPONDENT is liable for damages arising out of

deviation.

ii. Clause Granting ‘liberty to deviate’ is Not Applicable

13. It is further submitted that the RESPONDENT cannot rely on the express liberty to deviate. Clause

17 provides that the vessel has liberty for the purpose of saving the life or property. According to

10 Paragraph 3, Respondents Points of Defense and Counter-Claim. 11 Cerulean Mail, Solar Flares Continue, 18th July 2017, Page no 35, Moot Proposition

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the Cerulean Times report, the solar flares only lasted for 4 hours and those satellite and navigation

systems which were in accordance with the latest compliances, connected straight away.12 In such

circumstances it cannot be said that there was any danger to life or property. In any case, this

exception is conditional on the exercise of due diligence to ensure the ship is seaworthy and properly

manned when she sails on the voyage. It has been submitted that the ship-owner failed to discharge

this obligations because of lack of updated satellite systems and hard copy maps. Thus, the ship-

owner can no longer rely on the exception clause as a result of which, the deviation is rendered

unjustified and therefore in breach of the charter party.

B. The Respondent breached obligation of delivering the cargo by 7:00 p.m. on 28th July 2017.

14. Clause 17 provides that neither party shall be liable for failure to perform or delay in performing its

obligations, where the party is being delayed, interrupted or prevented from doing so by any “Force

Majeure Event” as enumerated under 17(a) to 17(d).

15. In the present case, liability arising out of RESPONDENT’s breach cannot be excused by clause 17

because of two reasons. First, the precondition of availing the benefit of clause 17 is not satisfied

and second, exception clauses do not apply to devious voyages.

16. Clause 17 states that, the exceptions contained therein are conditional on ship-owner exercising due

diligence to ensure that the ship is sea-worthy. It has already been submitted at the outset that, in

the present case, this condition has not been fulfilled. Therefore, it is submitted that the

RESPONDENT’s liability is not excused by clause 17. It is further stated that exception clauses are

not applicable to devious voyages. Exemption clauses will normally be construed as being

inapplicable to an adventure wrongfully substituted by the defendant for the contractual adventure,

12 Cerulean Mail, Solar Flares Knock Out Global Communications, 25th July 2017, Page no 35, Moot Proposition

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it being presumed, in the absence of clear indication to the contrary, that they were intended to apply

only to the intended adventure.13

C. The loss to Claimant was caused by the Respondent’s breach.

17. Whether a particular breach has caused a claimed loss and whether there has been a break in the

chain of causation is predominantly a question of fact and common sense.14 It is enough that the

breach is an effective cause of the loss and it does not have to have been the sole cause.15

18. In order to break the chain of causation, the conduct of the claimant has to constitute an event of

such impact that it “obliterates” the wrongdoing of the defendant and makes the true cause of the

loss the conduct of the claimant rather than the breach of contract on the part of the defendant.16

19. Even if the breach of contract by the defendant and the claimant’s subsequent conduct were

concurrent causes, it is unlikely that the chain of causation would be broken. 17 In circumstances

where the defendant’s breach of contract remains an effective cause of the loss, at least ordinarily,

the chain of causation would not be broken. 18 The claimant’s state of knowledge at the time of, and

following, the defendant’s breach of contract is likely to be a factor of very great significance. The

less the claimant knows, the more likely it is that only recklessness would suffice to break the chain

of causation.19

20. In the present case, the cargo was required in order to satisfy the CLAIMANT’s contractual

obligations with a third party. As a result of the RESPONDENT’s breach, the third party and the

13 Gibaud v. Great Eastern Rly [1921] 2 K.B. 426, 435. 14 Galoo Ltd v. Bright Grahame Murray [1994] 1 W.L.R. 1360 15 Heskell v. Continental Express (1950) 83 Ll. L. Rep. 438 at p. 457 and Banque Keyser Ullmann S.A. v. Skandia (UK)

Insurance Co. [1990] Q.B. 665, 813–814; cf. Bright Grahame Murray [1994] 1 W.L.R. 1360, 16 Cooke et al, Voyage Charters, Page 635, Informa Law, 4th ed. 2014. 17 Cf. Beoco v. Alfa Laval Co. [1995] Q.B. 137 18 Tennant Radiant Heat v. Warrington Development Corp. [1988] 1 E.G.L.R. 41; Bank of Nova Scotia v. Hellenic Mutual

War Risks Association (Bermuda) Ltd [1990] 1 Q.B. 818, 904. 19 Monarch SS. Co. v. Karlshamns Oljefabriker AB [1949] A.C. 196

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CLAIMANT entered into a settlement agreement whereby the third party released the CLAIAMNT

from all liability in return for the CLAIMANT paying the amount of USD 5,000,000.

D. The loss to CLAIMANT was not a remote consequence of the RESPONDENT’s breach.

21. In contract, the test of remoteness is whether the loss in question was fairly and reasonably within

the contemplation of the parties, as at the date of the contract, as a probable result of the breach,

which has in fact occurred.20 Where the contract breaker does have special knowledge of the sort of

damage likely to be suffered, the sort of damage within his contemplation is judged in the light of

that special knowledge.21 The recovery of extra expenses of a substituted performance and also of

increased losses where the innocent party reasonably seeks to reduce his losses, but in so doing

achieves the opposite, is permissible.22 Where a breach of contract gives rise to a claim against a

contracting party by a third party and that claim is “reasonably settled”, then the amount of the

settlement is generally recoverable as damages.23

22. In the CLIAMANT’s letter to the dated 22 July 2017, it was made clear to the RESPONDENTS

that the charterparty was required for an urgent shipment of native Cerulean coffee beans and to that

end it was imperative the cargo was discharged by 7 pm on Friday 28th July 2017. Thus, the

RESPONDENTS had special knowledge to contemplate that deviation and late delivery of the cargo

was likely to result in loss to CLAIMANT by way of contractual liability to its buyer.

E. The Respondent is liable to pay damages arising from the water damage caused to the cargo

23. As per the expert determination, 75% of the cargo was damaged sometime in the 24 hours from 4:30

AM on 30th July 2017 as a result of the prolonged use of the sealant. In this regard it is submitted

20 Stinnes v. Halcoussis (The Yanxilas) [1982] 2 Lloyd’s Rep. 445 21 Cooke et al, Voyage Charters, Page 628, Informa Law, 4th ed. 2014. 22 Nigerian National Shipping Lines v. Mutual (The Windfall) [1998] 2 Lloyd’s Rep. 664; Vinmar International v. Theresa

Navigation (The Atrice) [2001] 2 Lloyd’s Rep. 1 23Compania Sud Americanade Vapores S.A. v. Sinochem Tianjin Import and Export Corp (The Aconcagua) [2010] 1

Lloyd’s Rep. 1

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that the Respondent is liable to pay damages arising from the water-damage caused to the 750 bags

of coffee as [i.] the Respondent was responsible to safeguard the cargo until delivery and [ii.] the

cargo was damaged upon delivery.

i. The Respondent was responsible to safeguard the cargo until delivery

24. It is a well-established principle that the owners have a duty to safeguard the good while the goods

are within their duty of care. The duty of care begins with the voyage and ends with delivery. In the

present case, the Respondent was liable to ensure that the containers used to store the cargo were

“entirely” water proof.

ii. The cargo was damaged upon delivery.

25. It is submitted that 75% of the cargo was water-damaged and unusable on delivery. Since delivery

is a bilateral act, involving the receipt of the goods by the consignee or his agent as well as the

relinquishing of possession by the carrier, it cannot be effected merely by discharging the goods

over the ship’s side at the port of delivery.24 What is involved in delivery is the shipowner divesting

or relinquishing the power to compel any dealing in or with the cargo which could prevent the true

consignee from obtaining possession of it and the mere issue of a delivery order and the discharge

of the cargo may not be alone sufficient to amount to delivery.25

26. In the present matter, the delivery took place while the Cargo was within the responsibility of the

Respondent as delivery did not take place until approximately 1:55PM on 31st July 2017. The

delivery time cannot be considered to be the time at which the ship was docked at port or when the

Respondent was simply ready to ‘relinquish possession’ of the cargo. Delivery can only be said to

have occured when “the goods are so completely under the control of the consignee that he may do

24 Gatliffe v. Bourne (1838) 4 Bing. N.C. 314, (1841) 3 M. & G. 643, (1844) 7 M. & G. 850, 11 Cl. & F. 45. 25 Cooke et al, Voyage Charters, Page 352, Informa Law, 4th ed. 2014.

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what he likes with them”,26 or when they are “placed under the absolute dominion and control of

the consignees”.27 The coffee or cargo cannot be considered to have been delivered until it was

within the control of the consignees, which did not take place until approximately 1:55PM on 31st

July. The effect of the requirement that delivery involves the placing of the goods under the complete

control of the consignee or his agent is that, even when the shipowner’s obligations regarding

discharge are complete, and the goods are in the hands of an independent warehouse, delivery will

not be regarded as complete so long as the shipowner is maintaining any lien or right of disposition

over the goods.28

27. Additionally, The Hague-Visby Rules do not impose a duty on the consignee to take delivery of the

goods, but in contrast it impose a duty for the carrier to “...properly and carefully load, handle, stow,

carry, keep, care, for, and discharge the goods carried.”29 The Carrier should have taken adequate

care to ensure that as the goods were delivered at 1:55PM, the responsibility vests with the Carrier

until then. Further, as the Carrier was aware of the weather conditions prevalent at the port and the

packaging being waterproof for only a period up to five days. Hence, keeping the above in mind, it

should have exercised due diligence to ensure the goods are delieved at a safe place to not cause any

damage to the cargo in question.

III. WHETHER THE CLAIMANT HOLDS A MARITIME EQUITABLE LIEN OVER THE MADAM

DRAGONFLY?

26 British Shipowners v. Grimond (1876) 3 Rett. 968, 972. 27 Chartered Bank v. British India S.N. Co. [1909] A.C. 369, 375. 28 Cooke et al, Voyage Charters, Page 218, Informa Law, 4th ed. 2014. 29 Wilson John F, Carriage of Goods by Sea, Page 115, Pearson: 2010.

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28. It is humbly contended before the Arbitral Tribunal, that the Claimants (Cerulean Beans and

Aromas) have maritime lien on the ship, Madam Dragonfly by advancing the amount of $100,000/-

to the Respondents for the purposes of security for paying the crew in the event of any default. This

shall be proved by A. Establishing the creation of a maritime lien with respect to the crew and B.

Transfer of the maritime lien by way of subrogation.

Whether a Lien is created by payment of $100,000 as security for crew’s wages?

29. A lien is a lender's claim against a collateral asset that may be legally sold should the borrower fail

to repay a loan. A lien protects lenders in the event of non-payment. When someone takes out a

sizeable loan, such as a home mortgage or an auto loan, the lender often requires an asset that can

be held as collateral against the loan. In the present case, the Respondents have borrowed a sum of

money from the Claimant to the tune of $100,000/- for the purposes of paying the crew.30

30. In the event of non-payment on the part of the borrower, the lending institution can exercise the lien

and sell the collateral asset to offset the unpaid loan. Once the loan is repaid in full, the collateral

asset is returned to the borrower and the lien dissolved. However, this sum was not repaid to the

Claimant or the crew after the voyage and therefore a lien lies on the ship of the Respondent, Madam

Dragonfly as collateral for the borrowed sum of money.31

Whether a maritime lien is created?

31. A maritime lien is a type of lien that is put on a ship or another piece of maritime property. This

type of lien is placed on the property in order to make sure that an individual is paid for services or

damages before the property can be sold. In some cases, the ship or other maritime property will be

retained by a creditor until the owner of the property pays off a debt.

30 Para 3, Page 1, Moot Scenario 31 Paragraph 12, Points of Claim on behalf of Claimant

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32. The concept and definition of maritime liens has been well elaborated in the International

Convention on Maritime Liens and Mortgages, 1993 signed at Geneva. The Convention declares

the following to be maritime liens:

1. Claims for wages and other sums due to the master, officers and other members of the vessel's

complement in respect of their employment on the vessel, including costs of repatriation and social

insurance contributions payable on their behalf;

33. The Convention goes on to say, that the maritime liens enlisted above take priority over registered

mortgages, hypotheques, charges, claims, etc. and that the claims enlisted above rank pari passu

among themselves, the exception being the claims for reward for the salvage of the vessel. In the

current scenario it is firmly established that the crew has not been paid wages for the voyage and

therefore a valid claim for wages and thus under the auspices of the Convention on Maritime Liens

a valid maritime lien on the vessel.32

Whether there exists an equitable lien on the ship?

34. An equitable lien is a specie of equitable charge arising by operation of law independent of

possession.33 Although the vendor’s and the purchaser’s equitable liens arise in circumstances

where there is a contract, a contract is not necessary for the creation of an equitable lien.34 Therefore,

the correspondence between the parties regarding payment of $100,000/- without a contract will

still hold the equitable lien as valid.35

35. It is clear that the unpaid vendor’s lien is a proprietary interest in the nature of a charge. Lord Clarke

in the Supreme Court in Menelaou had commented that the unpaid vendor was “entitled to a lien on

32 Page 36, Moot Proposition 33 Re Bond Worth Ltd [1980] Ch 228 at 250-251, [1985] 3 WLR 610 at 613-614 per Nourse J. 34 Shirlaw v. Taylor (1991) 102 ALR 551 at 557, Aust Fed Ct, Full Ct. 35 Page 1, Moot Proposition

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the property, which is in principle an equitable interest which it can enforce by sale”.36 An unpaid

vendor’s lien arises by operation of law upon the making of a binding contract – unless and to the

extent that the terms of the contract itself are inconsistent with the existence of the lien, which

constitutes the vendor’s security for the purchase price and entitles the vendor to remain in

possession of the property being sold until payment is made.37 In the present case, by virtue of

subrogation which is founded in equity, the Claimant’s are entitled to hold lien over the ship until

payment of the amount is made.38

36. The lien is discharged on completion, but only if and to the extent that the purchase price is paid by

the buyer and even if the sale completes and the property is conveyed outright to the purchaser, the

lien survives in equity for the benefit of the vendor to secure the payment of any part of the purchase

money which in fact remains unpaid.39 As humbly contended, until the repayment of $100,000/-

occurs, the lien shall continue to remain with the Claimants.40

Whether transfer of Maritime Lien on the Madam Dragonfly has taken place?

37. Furthermore, Article 10 of the Convention stipulates that such maritime liens can be transferred or

subrogated to a third party.41 The Claimant, by way of subrogation has a maritime lien which was

vested previously in the seamen.42 ‘Transferability’ can be used loosely to refer to two different

situations. The first type of transfer is a contractual agreement by a seaman to assign his wages lien

claim to a person in return for whatever contractual consideration that is stipulated. The second type

of transfer is subrogation which occurs when a third party pays off the seaman’s wages in full and

36 Menelaou v Bank of Cyprus [2016] AC 176 37 Barclays Bank Plc. v Estates & Commercial Ltd [1997] 1 WLR 415 (CA). 38 Paragraph 12 of the Points of Claim 39 Programmed Total Marine Services Pty Ltd v The Ship “Hako Fortress”, [2012] FCA 805 40 Paragraph 12 of the Points of Claim 41 Article 10 of the International Convention on Maritime Liens and Mortgages, 1993. 42 Para 2, Page 1, Moot Scenario.

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that third party purports to be the holder of the lien.43 In the current scenario, the Claimant has

deposited a sum of money to be used as security by the crew in the event of non-payment of crew’s

wages by the Respondent and this amount was kept in a separate account maintained by the

Respondent and therefore the Claimants have fulfilled their obligation of paying the crew for the

voyage undertaken.44

Whether the Lien is Transferred Through Subrogation?

38. The doctrine of subrogation is a creature of equity not founded on contract, but arising out of the

relations of the parties. In cases of insurance where a third party is liable to make good the loss, the

right of subrogation depends upon and is regulated by the broad underlying principle of securing

full indemnity to the insured, on the one hand, and on the other of holding him accountable as trustee

for any advantage he may obtain over and above the compensation for his loss.

39. In Re: Economic Transport Organisation Vs. Charan Spinning Mills (P) Ltd. and Anr,45 it was

mentioned that:

"14. Subrogation, as an equitable assignment, is inherent, incidental and

collateral to a contract of indemnity, which occurs automatically...when the

insurer settles the claim under the policy, by reimbursing the entire loss suffered

by the assured. It need not be evidenced by any writing. But where the insurer

does not settle the claim of the assured fully, by reimbursing the entire loss, there

will be no equitable assignment of the claim enabling the insurer to stand in the

shoes of the assured, but only a right to recover from the assured, any amount

43 William Tetley ‘Assignment and Transfer of Maritime Liens: Is There Subrogation of the Privilege?’ (1984) 15 Journal

of Maritime Law and Commerce 393, 402. 44 Para 2, Page 1, Moot Scenario 45 Re: Economic Transport Organisation Vs. Charan Spinning Mills (P) Ltd. and Anr [2010] 4 SCC 114

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remaining out of the compensation recovered by the assured from the

wrongdoer, after the assured fully recovers his loss....."

40. No one can convincingly say that the protection of seafarers’ wages is always more important than

encouraging safe navigation at sea, or vice versa. It is submitted that the courts should not feel

constrained by the default priority rules where there is sufficient ground to depart from the default

rules and as STEEL J. observed, priorities in admiralty are not set in stone and they should be

governed by the equity, public policy and commercial expediency of each case to arrive at a just

result.46 Considering the set of circumstances, the Claimants have provided $100,000 which is to be

used as security for the wages of the crew and since the commencement of the voyage the Claimants

have not been repaid the security amount thereby creating a subrogatory right on principles of

equity.47

41. Subrogation under the common law is essentially a remedy to ensure a transfer of rights from one

person to another, without assignment or assent of the person from whom the rights are transferred,

and which takes place by operation of law in a whole variety of widely different circumstances.48

The Respondents had asked for the amount for the purpose of paying the crew should any default

on behalf of the Respondent occur.49 Subrogation in the common law, however, as in the civil law,

is both legal and contractual.50 Subrogation of a debt also transfers the preferences with it.51 There

is perhaps a further exception to the English rule of no legal subrogation and that would be the

payment of seamen's wages by a third party at the request of the master on account of the ship.52

46 The CJ Saxe 145 Fed 749 (SDNY 1906); William Tetley Maritime Liens and Claims (2nd Ed, BLAIS, Canada, 1998)

294; George Varian ‘Rank and Priority of Maritime Liens’ (1972-1973) 47 Tulane LR 751, 753 47 Paragraph 12, Points of Claim 48 Diplock, L. J., in Orakpo v. Manson Investments, [1977] 3 W.L.R. 229, at 234. 49 Page 1, Moot Proposition 50 R. M. Goode, Commercial Law 66, (London, 1982) Waddams 51 Ibid 52 The Andalina, (1886) 12 P.D. 1, 6 Asp. M.L.C. 62; The William F. Safford, (1860) Lush. 69, 167 E.R. 37. The Lyons,

(1886-90) 6 Asp., M. L. C. 199,

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The scenario in the present case mirrors the aforesaid statute where the seamen’s wages were to be

paid by an amount which was given by the Claimant for the sole purpose of paying the crew in the

event that their payment never took place.53 Under Scottish Law54 and US Law,55 a person who pays

off the crew wages in a foreign port, is put into the shoes of the seaman whose wages he had paid.

In the recent case of The King Coal, a similar conclusion was reached albeit via different reasoning.

The arrest was set aside by reason of the wording of the SROAIR for wages under section 12A(2)(n)

of the HCO. Au J held:56

“In my view, the legislature in enacting S.12A [of the HCO] had decided to expressly

introduce these particular words: ‘Any claim by a master or member of the crew’ in

S.12A(2)(n) [of the HCO]. That is what the legislature had done by clear words. There may

or may not be good reasons for that, but it is not for this Court to speculate those reasons.

In light of the express words and the way S.12A(2)(n) [of the HCO] is drafted, the clear

words of it mean that it is only limited to a claim for wages brought by the master or a

member of the crew.”

42. The literal approach to statutory interpretation in The King Coal, however, does not rest comfortably

with an established line of English cases which provide for a special exception to the general rule

that the wages lien cannot be transferred. These English cases permit the subrogation and

assignment of the wages lien in circumstances where a party is directly ordered or permitted by the

Admiralty Court to pay the seamen.57 It should therefore in the current scenario where valid legal

subrogation is established permit transferability of the maritime lien.58

53 Para 3, Page 1, Moot Scenario. 54 Clark v. Bowing (1908) SC 1168 55 The President Arthur (1928) 25 F (2d) 999 56 The King Coal, [2013] 2 HKLRD 620. 57 The World Star [1987] 1 Lloyd’s Law Rep 452; see also The Berostar [1970] 2 Lloyd’s Law Rep 403; Hobbs, Savill &

Co Ltd v The Vasilia (Owners) Albaran Bay Corporation [1972] 1 Lloyd’s Law Rep 51. 58 Page 1, Moot Scenario

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43. In light of The King Coal, it is not certain if this special exception can stand as a matter of Hong

Kong law because it would seem that notwithstanding being ordered or permitted by the Admiralty

Court to pay the crew, a subrogated claimant/assignee cannot as a matter of language be transformed

into “a master or member of the crew” within the meaning of S.12A(2)(n) of the HCO where he was

not one to begin with. By logical extension of the reasoning in The King Coal, the SROAIR for ‘any

claim by a master, shipper, charterer or agent in respect of disbursements made on account of a ship’

under S.12A(2)(o) of the HCO is also, by its inherent nature and specific wording, non-transferable.

44. The same issue came before the Federal Court of Australia, in The Ship ‘Hako Fortress’.59 The ship

agents were authorised by the owner or demise charterer to pay and provide for the wages of the

crew of the ship, and subsequently such payment was deemed to be valid subrogation of maritime

lien to the extent of the value of wages paid by the third party.60 In the present case, the payment of

the wages by the Claimant constitutes valid subrogation and thereby the Claimants possess a valid

maritime equitable lien.

Whether Equitable subrogation arises?

45. One who advances money to pay off an encumbrance on realty at the insistence of either the owner

of the property or the holder of the encumbrance, either on the express understanding, or under

circumstances from which an understanding will be implied, that the advance made is to be secured

by a first position lien on the property, is not a mere volunteer; and in the event the new security is

for any reason not a first lien on the property, the holder of such security, if not chargeable with

culpable and inexcusable neglect, will be subrogated to the rights of the prior encumbrancer under

59 Programmed Total Marine Services Pty Ltd v The Ship “Hako Fortress”, [2012] FCA 805 60 Page 1, Moot Scenario

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the security held by him, unless the superior or equal equities of others would be prejudiced

thereby.61

46. Therefore, since the Claimants advanced money to the Respondents to the tune of $100,000/- for

the payment of crews’ wages in the event of any default, the Claimants will be put in the shoes of

the crew and therefore equitable subrogation of the maritime lien occurs, thereby vesting the

Claimants with a maritime equitable lien over the Madam Dragonfly.62

IV. WHETHER THE CLAIMANTS IS LIABLE TO PAY DAMAGES TO THE RESPONDENT?

The Claimant is not liable to pay demurrage to the Respondent?

47. According to the charter party demurrage is payable at the rate of USD 20,000 per hour over and

above the lay-days calculated. The RESPONDENT is claiming USD 100,000 as demurrage

implying that the vessel was on demurrage for a period of 5 hours. Considering that demurrage

comes to an end when the vessel leaves the port of discharge, and in the present case the

RESPONDENT vessel left the Port of Dillamond at 12:00 a.m. on 30th July 2017, it must be proved

by the claimant that first, lay-time commenced at 7:00 am on 29th July 2017 and secondly, that

demurrage bean accruing from 7:00 p.m. on 29th July 2017. The CLAIMANT on the other hand

seeks to disprove the existence of both of these conditions.

i. That lay-time does not commence until 8:42 PM, 29th July 2017

48. In order for lay-time to commence the vessel must have reached the destination specified in the

charter and must be fully fit and ready to load or discharge the cargo.63

The vessel was not an ‘arrived ship’

61 Smith v. State Savings and Loan Association (1985) 175 Cal.App.3d 1092, 1096; Katsivalis v. Serrano Reconveyance

Co. (1970) 70 Cal.App.3d 200, 210. 62 Page 1, Moot Scenario 63 Simon Baughen, Shipping Law, Page 225 Routledge, 6th ed. 2015

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49. It is thus important to determine what the parties had agreed as the destination of the voyage. In

Stag Line Ltd v Board of Trade,64 the charter provided for loading at ‘one or two safe ports East

Canada/Newfoundland, place or places as ordered by charterer. The charterer nominated Miramichi.

The vessel arrived and gave NOR. The charterer’s agents then told her to load at Millbank, one of

the four loading places in the port but no berth was available for six days. As the charterer had the

express right, on the vessel reaching the port, to load at a particular place within the port, the vessel

was held not to have ‘arrived’ until she berthed.

50. In The Merida,65 Clause 1 defined the contractual destinations in a manner which, if it stood alone,

must mean that it was a berth charterparty in that the opening term was in a form which identified

the destination as the berth and which provided expressly for charterers to nominate the berth.

Clause 2, however, referred to both safe ports and berths but did not qualify cl 1. The High Court,

reversing, arbitral tribunal from which the appeal came, held that a provision providing for loading

at “one good and safe chrts’ berth terminal 4” at Xingang was indeed a berth charter, despite the

subsequent clause providing for loading at “one good and safe port/one good and safe charterers

berth Xingang” and one excluding shifting time from the anchorage. Under clause 1, the description

of the voyage states that the vessel shall proceed to such berth or berths within the ports named in

box 9. Thus, the parties intended that the natural completion point of the carriage voyage must be at

a berth or dock within the port of Dillamond.

51. This means that until the vessel had reached a berth, it had not become an arrived ship and therefore

lay-time did not commence. It is submitted that Madam Dragonfly had docked, with the cargo

available for collection only at 8:42 PM on 29th July, thus, it was at this point that it became an

64 Stag Line Ltd v. Board of Trade (1950) 84 Ll L Rep 1 (CA). 65 Novologistics SARL v. Five Ocean Corporation (The Merida) LMLN 784, 9 December 2009; [2010] 1

Lloyd’s Reports 274.

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‘arrived’ vessel and not at 7:00 AM on 29th July 2017.66

Vessel was not within port limits

52. It is further, submitted that even if the tribunal holds that the destination specified in the charter was

the Port of Dillamond, lay-time would not commence at 7:00 AM on 29th July 2017.67 Under a Port

charter (i.e., a when the destination specified is a Port) in order for the vessel to become an ‘arrived’

vessel and lay-time to commence, it must be proved by the ship owner that the vessel had reached

within port limits and was within the immediate and effective disposition of the charterers. It is

submitted that Madam Dragonfly fulfilled neither of these conditions.

ii. That demurrage did not commence at 7:00 PM 2017

53. Without prejudice to the submission that lay-time did not commence until 8:42 PM on 29th July

2017, it is further submitted that even if lay-time did commence as claimed by the RESPONDENT,

demurrage would not accrue from 7:00 PM 29th July 2017 because of: -

a. Interruption to lay-time due to adverse weather

54. The term ‘interruptions to lay-time’’ is used to cover those periods when lay-time does not run

because they are outside the definition of lay-time as expressed in the lay-time clause. Clause 8(c)(ii)

provides that the time permitted for discharging is “0.5WWD”. A weather working day is defined

as a day on which the weather would have permitted work to be done, whether or not anyone availed

themselves of the opportunity.68 The status of a day as being a weather working day, wholly or in

part or not at all, is determined solely by its own weather, and not by extraneous factors, such as the

actions, intentions and plans of any person.69 Thus, adverse weather would be an interruption to lay-

66 Page 24, Moot Scenario 67 Page 20, Moot Scenario 68 Reardon Smith Line Ltd v. Ministry of Agriculture, Fisheries and Food [1963] 1 Lloyd’s Rep 12, at p. 31 per Viscount

Radcliffe. 69 Ibid.

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time where this was defined in terms of weather working days because these are not words of

exception but a definition of the only kind of time that may count.70 The storm that hit Dillamond

was described by the Dillamond Times, in its report dated 29th July 2017, as a “once in a lifetime”

storm which brought with it rain, hail and severe winds which “ripped out trees and upturned cars”.

The port was closed for 12 hours whilst cleaning was underway.71 It was during this period that

Madam Dragonfly along with several vessels was asked to wait for a berth around 100 nm out of

dillamond. The same was also communicated to the CLAIMANTS by the RESPODNETS via email

dated 29th July 2017, 8:58 a.m. In such conditions it is not possible to say that the weather would

have permitted the carrying out of loading and discharge operations and thus, the said period should

not count as lay-time.

a. Interruption to lay-time due to congestion.

55. Clause 8(e) provides that lay-time shall not count in the event of any delay or hindrance in

discharging as result of congestion of shipping or shore traffic consequent upon, inter alia, Acts of

God and bad weather. In the present case, the CLAIMANT could not take delivery of the cargo due

to congestion at the Port of Dillamond, which was caused as a result of the storm that hit the Port of

Dillamond. Thus, even if lay-time commenced at 7:00 a.m. on 28th July 2017, it stood interrupted

due to aforementioned reasons.

The CLAIMANTS are not liable to pay freight to the RESPONDENT

56. Where the damage is such that it destroys the commercial identity of the cargo, the cargo is regarded

as totally lost with the result that, where the earning of freight is dependent upon delivery, freight is

not earned, whether or not the shipowner is liable for the loss.72 Once it has been determined that

70 Laytime and Demurrage, Page 195, Informa Law, 6th ed. 2011 71 Page 21, Moot Scenario 72 Cooke et al, Voyage Charters, Page 328, Informa Law, 4th ed. 2014.

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the goods have lost their identity, with the result that freight is not due, it makes no difference that

the cargo owner has accepted the cargo. Such an acceptance is not an affirmation of the contract,

and involves no acknowledgement that the shipowner has performed the contract so as to be entitled

to freight.73The test is whether, as a matter of business, the nature of the thing has been altered; if

the nature of the thing is altered, and it becomes for business purposes something else, so that it is

not dealt with by business people as the thing which it originally was, the question for determination

is whether the thing insured, the original article of commerce, has become a total loss. If it is so

changed in its nature by the perils of the sea as to become an unmerchantable thing, which no buyer

would buy and no honest seller would sell, then there is a total loss.74

The Claimant is not liable for the cost of repairs to the hull.

57. Clause 19 of the charter party provides that “General Average shall be payable according to the

York/Antwerp Rules.

58. Rule A states that “There is a general average act, when, and only when, any extraordinary sacrifice

or expenditure is intentionally and reasonably made or incurred for the common safety for the

purpose of preserving from peril the property involved in a common maritime adventure.”

Cost of ‘E-Access Pass’ is for the RESPONDENT’s account.

59. In Smith, Hogg & Co Ltd v Louis Bamberger & Sons,75 the charterparty provided that:

"The cargo to be brought to and taken from alongside the steamer at the charterer’s risk

and expense as customary."

On arrival at London owners partly discharged cargo into lighters and partly on to the

quay and later claimed this expenses from endorsees of bills of lading alleging that

73 Asfar v. Blundell [1896] 1 Q.B. 123 and the comment of Donaldson J. in The Caspian Sea [1980] 1 Lloyd’s Rep. 91 74 Cooke et al, Voyage Charters, Page 328, Informa Law, 4th ed. 2014. 75 Smith, Hogg & Co Ltd v Louis Bamberger & Sons [1929] 1 KB 150

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because endorsees did not take the cargo from alongside the steamer they, owners,

had had to incur the expense of stacking on the quay and of stowage in the lighters.

It was held that by the custom of the Port of London the shipowners were under an

obligation to bear all costs of unloading and stacking on the quay and of delivery and

stowage in the lighters, and as there was no inconsistency between the custom and

the charterparty the owners’ claim failed. In the present case, there is no mention of

usage of Electronic Access Pass in the charterparty and therefore, any costs incurred

by the Shipowner for unsanctioned use of such pass will be solely attributed to the

shipowner.

The customary agency fees is payable by the RESPONDENT

60. Pursuant to clause 23 of the charter party owners shall pay any dues or charges levied on the ship

by reason of cargo being on board and all other dues and charges what

61. Clause 12 (a) provides that the ship shall be consigned to Charterers’ agents at the port or ports of

load and discharge, “paying all customary fees at each port”. Clause 2 provides that the owners shall

pay the customary agency fee(s) at the loading place. It is therefore clear that the parties intended

that the obligation to pay the customary agency fee(s) at the load and discharge ports should lie on

the owners.

62. It is further stated that the CLAIMANT is not liable for the customary agency fees at the Port of

Spectre as it was a result of the RESPONDENT’s breach. Clause 17 of the voyage charter grants

the vessel liberty to deviate for the purpose of saving life or property. The same clause also states,

“charterers shall not be held liable in any way howsoever for such deviation”. The agency fees at

the Port of Spectre was a result of REPONDENT’s deviation and therefore the charterers shall not

be held liable for the same.

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REQUEST FOR RELIEF

For reasons set out above the Claimant request that this tribunal:

1. Declare that the Respondent is liable in relation to the claims made by the Claimant

2. Declare that the Claimant holds a Maritime equitable lien over the Madam Dragonfly

3. Declare that the Claimant is not liable in relation to the claims made by the Respondent

4. Award further or other relief as the Tribunal considers fit