SIXTEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION

MOOT COMPETITION 2015

IN THE MATTER OF AN ARBITRATION

BETWEEN:

WESTERN TANKERS INC. CLAIMANT/Owners

– and –

LDT PTE. RESPONDENT/Charterers

MEMORANDUM FOR THE CLAIMANT

Team No. 11

Phoebe HO Tsz Lok Honour Henry HSU

Mark LAW Hiu Fung Edmund Christopher LO

Katrina SIU Hiu Lui Bridget YIM Choi Wai

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Team 11 Claimant’s Memorandum

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Table of Contents

TABLE OF AUTHORITIES ............................................................................................................... 5

SUMMARY OF FACTS ....................................................................................................................... 8

PART ONE: JURISDICTION ............................................................................................................ 9 (A) THIS TRIBUNAL HAS POWER TO RULE ON ITS OWN JURISDICTION ............................................ 9 (B) THIS TRIBUNAL IS AUTHORISED BY THE PARTIES’ AGREEMENT TO HEAR THE PRESENT

DISPUTES ............................................................................................................................................. 9 (C) THE TRIBUNAL HAS JURISDICTION TO DECIDE THE PARTICULAR MATTER OF FRAUD ............ 10

PART TWO: MERITS ....................................................................................................................... 10

I THE RESPONDENT IS LIABLE FOR THE TORT OF FRAUD ............................................. 10 (A) THE RESPONDENT COMMITTED THE TORT OF FRAUD ............................................................. 11

a) The representations were false ............................................................................................. 11 b) The representations were made knowing to be false ............................................................ 12 c) The representations were intended to be relied upon by the Claimant ................................ 13 d) The representations were relied upon by the Claimant who suffered loss as a result ......... 13

(B) THE RESPONDENT IS ALSO VICARIOUSLY LIABLE FOR THE TORT OF FRAUD COMMITTED BY

ASA2 ................................................................................................................................................ 14 a) ASA2 committed the tort of fraud ......................................................................................... 14 b) The Respondent ratified the principal-agent relationship with ASA2 .................................. 14

II THE RESPONDENT BREACHED THE CHARTERPARTY. ................................................. 16 (A) THE RESPONDENT IS LIABLE FOR DAMAGES ARISING OUT OF THE PIRATE ATTACK .............. 16

a) The Master reasonably fulfilled its contractual obligations in complying with the Respondent’s instructions ............................................................................................................ 16 b) The Respondent is liable for damages arising from material damage to the Vessel owing to the unauthorised discharge .......................................................................................................... 17 c) The consignee's claim should be levied against the Respondent, who orchestrated the unauthorised discharge and unduly exposed the ship to risks of piracy ...................................... 18

(B) THE RESPONDENT, IN PROVIDING THE VOYAGE ORDERS, BREACHED ITS OBLIGATION TO

NOMINATE A SAFE PORT AND IS LIABLE FOR UNAUTHORIZED DISCHARGE ...................................... 18 a) The Respondent was obliged to nominate a safe port, including safe passage to and from the port ......................................................................................................................................... 19 b) Alternatively, the Respondent was obliged to nominate the safe port, which requires the port itself to be free of risks .......................................................................................................... 19 c) The Respondent knew or ought to have known of the real risk of piracy ............................. 20 d) Hence, the taking hostage of the Vessel by pirates was attributable to the Respondent’s breach of its safe port undertaking. ............................................................................................. 21 e) As the nomination of Luanda port is already improper, any subsequent orders given by the Respondent is without Claimant’s authorization ......................................................................... 22 f) The due diligence clause will not absolve the Respondent from its liabilities since the Respondent fell far below the standard of due diligence ............................................................. 22 g) Alternatively, even if the piracy attack was unexpected and abnormal, the Respondent still breached its secondary obligation to issue fresh instructions ..................................................... 23

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III THE RESPONDENT IS LIABLE TO THE SECOND PAYMENT OF HIRE ...................... 24 (A) HIRE WAS DUE AND OWING UNDER THE CHARTERPARTY MONTHLY AND THE RESPONDENT DID NOT PAY HIRE ON 3RD JULY ......................................................................................................... 24 (B) THERE WAS NO FRUSTRATION OF THE CHARTERPARTY ......................................................... 24

a) There was no third party intervention on 28th June ............................................................. 24 b) The amount of remaining Cargo is more than negligible .................................................... 25 c) The Respondent claims frustration merely for the sake of excusing a bad bargain ............. 25

(C) FURTHER, OR ALTERNATIVELY, THE VESSEL WAS NOT OFF-HIRE UNTIL IT RESUMES SERVICE

25

IV THE CLAIMANT IS NOT LIABLE FOR UNSEAWORTHINESS ....................................... 26 (A) THE MASTER WAS NOT INCOMPETENT BY FOLLOWING THE RESPONDENT’S INSTRUCTIONS 26

a) The Master merely followed the instructions of ASA2 ......................................................... 26 b) Alternatively, the Master, though possibly negligent, was not incompetent ........................ 26 c) The Claimant is not liable for such negligence under Clause 27 of ST4 ............................. 27

(B) THE MASTER COMPLIED WITH ANTI-PIRACY PRECAUTIONS REQUIRED BY THE CHARTERPARTY AND/OR INDUSTRY PRACTICE RELATING TO WEST AFRICA. ................................. 28

a) The BMP4 is only advisory in nature, hence even if the Master did not fully implement its requirement, this does not render the Vessel unseaworthy .......................................................... 28 b) The safety standards required by ISPS and ISM Codes were complied with ...................... 29

V THE CLAIMANT IS NOT LIABLE FOR CONVERSION/BAILMENT ................................ 29 (A) THERE WAS NO CONVERSION UNDER COMMON LAW ............................................................. 30

a) The Claimant is the improper respondent ............................................................................ 30 b) There was no intention to convert the Lost Cargo ............................................................... 30

(B) THERE WAS NO BREACH OF BAILMENT ................................................................................... 30 a) The Claimant did not breach its duty as bailee .................................................................... 30 b) There was no breach of bailment as insurer ........................................................................ 31

(C) THERE WAS NO CONVERSION UNDER STATUTE ...................................................................... 31

VI. PRAYER FOR RELIEF .............................................................................................................. 31

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TABLE OF AUTHORITIES

STATUTES

Torts (Interference with Goods) Act 1977 ............................................................................................ 31

Arbitration Act 1996 .......................................................................................................................... 9-10

UK CASES

Angelic Grace, The. See Aggeliki Charis Compania Maritima SA v Pagnan SpA [1995] 1 Lloyd's Rep

87 (CA) --------------------------------------------------------------------------------------------------------- 10

Angus v Clifford [1891] 2 Ch 449 (CA) ----------------------------------------------------------------------- 12

Athena, The. See Sea Trade Maritime Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd

[2006] EWHC 578 (Comm) ----------------------------------------------------------------------------------- 9

Berge Sund, The. See Sig Begesen DY & Co v Mobil Shipping & Transportation Co [1993] 2 Lloyd’s

Rep 452 (CA) -------------------------------------------------------------------------------------------------- 17

Briess v Wooley [1954] AC 333 (HL) ------------------------------------------------------------------------- 14

Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 (HL) ------------------------ 25

Derry v Peek (1889) 14 App Cas 337 (HL) ------------------------------------------------------------------- 10

E B Aaby’s Rederi A/S v LEP Transport Ltd [1948] 81 Ll L Rep 465 (KB) ---------------------------- 25

Eurasian Dream, The. See Papera Traders Co Ltd & Others v Hyundai Merchant Marine Co Ltd, The

Keihin Co Ltd (No. 2) [2002] EWHC 2130 (Comm) ---------------------------------------------------- 27

Evia (No. 2), The. See Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes [1983] AC 736 (HL)

--------------------------------------------------------------------------------------------------------------- 19, 23

Fiona Trust & Holding Corp v Privalov [2007] UKHL 40 ------------------------------------------------- 10

Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL [2010] EWHC 29 (Comm) -------- 9

Houda, The. See Kuwait Petroleum Corp v I & D Oil Carriers Ltd [1994] 2 Lloyd’s

Rep 541 (CA) ------------------------------------------------------------------------------------------------ 16-7

Island Archon, The. See Triad Shipping Co v Stellar Chartering and Brokerage Inc [1994] 2 Lloyd’s

Rep2 27 (CA) -------------------------------------------------------------------------------------------------- 18

Joseph Travers & Sons Ltd v Cooper [1915] 1 KB 73 (CA) ----------------------------------------------- 31

Keighley Maxsted & Co v Durant [1901] AC 240 (HL) ---------------------------------------------------- 14

Koenigsblatt v Sweet [1923] 2 Ch 314 (CA) 325 ------------------------------------------------------------ 14

Kuwait Airways Corp v Iraqi Airways Co [2002] UKHL 19 ----------------------------------------------- 31

Lensen Shipping Ltd v Anglo-Soviet Shipping Co Ltd (1935) 52 L1 L R 141 (CA) ------------------- 20

Lilley v Doubleday (1881) 7 QBD 510 (QB) ----------------------------------------------------------------- 31

Lucille, The. See Uni-Ocean Lines Pte Ltd v C-Trade SA [1983] 1 Lloyd’s Rep 387 ------------------ 21

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Ludson Overseas Ltd v Eco3 Capital Ltd [2013] EWCA Civ 413 ----------------------------------------- 10

Mary Lou, The. See Transoceanic Petroleum Carriers v Cook Industries Inc [1981] 2 Lloyd’s Rep 272

(QB) ------------------------------------------------------------------------------------------------------------- 23

Monde Petroleum SA v Westernzagros Limited [2015] EWHC 67 (Comm) ---------------------------- 10

National Oilwell (UK) Ltd v Davy Offshore Ltd [1993] 2 Lloyd's Rep 582 (QB) ---------------------- 15

Norga Marin, The. See Naviera Magor SA v Societe Metallurgique de Normandie [1988] 1 Lloyd’s

Rep 412 (CA) ------------------------------------------------------------------------------------------------- 18

Pacific Champ, The. See Hyundai Merchant Marine Company Limited v Americas Bulk Transport

Limited [2013] EWHC 470 (Comm) ------------------------------------------------------------------------- 9

Playa Larga, The. See Empresa Exportadora de Azucar v Industria Azucarera Nacional SA [1983] 2

Lloyd's Rep 171 (CA) ----------------------------------------------------------------------------------------- 10

Ryanair Ltd v Esso Italiana Srl [2013] EWCA Civ 1450 --------------------------------------------------- 10

Saga Cob, The. See K/S Penta Shipping AS v Ethiopian Shipping Lines Corp [1992] 2 Lloyd’s Rep

398 (QB) ------------------------------------------------------------------------------------------------------- 23

Saga Cob, The. See K/S Penta Shipping AS v Ethiopian Shipping Lines Corp [1992] 2 Lloyd’s Rep

(CA) 545 -------------------------------------------------------------------------------------------------------- 23

St Raphael, The. See Excomm Ltd v Ahmed Abdul-Qawi Bamaodah [1985] 1 Lloyd’s Rep 403 (CA)9

Star Sea, The. See Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd and La Réunion

Européene [1997] 1 Lloyd’s Rep 360 (CA) ---------------------------------------------------------------- 27

Tracomin SA v Sudan Oil Seed Co [1983] 1 Lloyd’s Rep 560 (QB) --------------------------------------- 9

Watson v Swann (1862) 11 CB 756 ---------------------------------------------------------------------------- 15

Wilson v Tumman (1843) 6 M & G 236 ---------------------------------------------------------------------- 14

With v O’Flanagan [1936] Ch 575 (CA) ---------------------------------------------------------------------- 12

AUSTRALIAN CASES

Cowper and Cowper v JG Godner Pty Ltd (1986) 40 SASR 457 ........................................................ 31

Frankhauser v Mark Dykes Pty Ltd [1960] VR 376 ............................................................................. 31

INDUSTRIAL GUIDELINES

Best Management Practices for Protection against Somalia-based Piracy .................................. 21, 28-9

Guidelines for Owners, Operators and Masters for Protection against Piracy in the Gulf of Guinea

Region 2014 ...................................................................................................................................... 21

International Code for the Security of Ships and of Port Facilities ...................................................... 28

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International Safety Management Code ................................................................................................ 28

BOOKS / CHAPTER IN BOOKS

Bennett H, ‘Safe port Clauses’ in Thomas D R (ed), Legal Issues Relating to Time Charterparties

(Informa 2008) .................................................................................................................................. 20

Blackaby N and others, Redfern & Hunter on International Arbitration (5th edn, Oxford University

Press 2009) ......................................................................................................................................... 9

Coghlin T and others, Time Charter (7th edn, Ina 2014) ....................................................................... 25

Eggers P M, Deceit The Lie of the Law (Informa 2009) ....................................................................... 13

Foxton D, ‘Indemnities in Time Charters’ in Thomas D R (ed), Legal Issues Relating to Time

Charterparties (Informa 2008) ......................................................................................................... 18

Jones M A and the others (eds), Clerk and Lindsell on Torts (20th edn, Sweet & Maxwell 2010) ..... 12

Schofield J, Laytime and Demurrage (6th edn, lnforma 2011) ........................................................... 26

ARTICLES

Johnson K, ‘Oil Pirates and the Mystery Ship’ Foreign Policy (Washington, 29 January 2014)

<http://foreignpolicy.com/2014/01/29/oil-pirates-and-the-mystery-ship> accessed 20 March 2015

.......................................................................................................................................................... 21

Thomas D R, ‘The Safe Port Promise of Charterers From the Perspective of the English Common

Law’ (2006) Singapore Academy of Law Journal 597, 603 ............................................................ 23

White R, ‘The Human Factor in Unseaworthiness Claims’ [1995] LMCLQ 221 ................................ 27

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SUMMARY OF FACTS

1.   Between 21st May and 22nd May 2014, the ship owners, Western Tankers Inc. (“Claimant”),

and the charterers, Less Dependable Traders Pte (“Respondent”), negotiated on a Time

Charter Trip via the shipbroker IMWMB.

2.   On 23rd May 2014, the Claimant agreed for its vessel the M/T Western Dawn (“Vessel”) to be

hired by the Respondent for the carriage of jet fuel and gasoil (“Cargo”) from the Port of

Singapore to the Off-Port-Limits at the Port of Luanda.

3.   On 26th May 2014, IMWMB sent the recap of an agreed Time Charter Party

(“Charterparty”) to the Claimant. It included an amended version of the pro-forma

Shelltime 4 Time Charter Party (“ST4”) and additional clauses.

4.   On 3rd June 2014, the Respondent provided insufficient bunker stem to the Vessel at the Port

of Singapore; and promised to provide additional bunkers during the voyage.

5.   On 8th June 2014, the Vessel departed from Singapore and began its voyage to Luanda.

6.   On 28th June 2014, the Master of the Vessel employed by the Claimant (“Master”) received

instructions from the Respondent’s agent, Atlantic STS Agency (“ASA2”), on behalf of the

Respondent to direct the Vessel to an alternative location for the discharge of the Cargo and

for bunkering.

7.   On 4th July 2014, the Claimant received the Respondent’s notice declaring the Vessel to be

‘off-hire’ due to a loss of contact upon the Vessel’s arrival at the alternative location. The

second payment of hire remained outstanding.

8.   On 17th July 2014, the Claimant was notified that the Vessel had been under attack by pirates

at the alternative location. The Respondent never provided any additional bunkers to the

Vessel.

9.   As a result, damage was done to the Vessel; and casualties had been inflicted upon the

crewmen on board. The Vessel then proceeded to Cape Town for assistance.

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PART ONE: JURISDICTION

10.   The Claimant contends that: (A) This tribunal has power to rule on its own jurisdiction; (B)

This tribunal is authorised by the parties agreement to hear the present disputes; and (C) The

tribunal has jurisdiction to decide the particular matter of fraud.

(A)  This tribunal has power to rule on its own jurisdiction

11.   Under the Kompetenz-Kompetentz principle, an arbitral tribunal can determine its own

jurisdiction.1 This doctrine was incorporated into the Arbitration Act 1996. Section 30 of the

Act empowers an arbitral tribunal to rule on, inter alia, whether there is a valid arbitration

agreement and what matters are to be submitted.

(B)  This tribunal is authorised by the parties’ agreement to hear the present disputes

12.   Section 5 of the Arbitration Act 1996 provides that a valid arbitration agreement must be in

writing, while section 6(2) provides that reference in an agreement to a document containing

an arbitration clause constitutes an arbitration agreement.

13.   It is argued that the arbitration agreement between the parties was incorporated by reference

to the ST4, 2 which consisted an arbitration clause (Clause 46(b)). This satisfies the

requirement under section 5 of the Act.

14.   Applying section 6(2), validity of an arbitration clause is not independent of the existence of

the charter unless contrary intentions expressed. 3 General words of incorporation are

sufficient to incorporate the entire standard contract which includes the arbitration clause.4

1 Nigel Blackaby and others, Redfern & Hunter on International Arbitration (5th edn, Oxford University Press 2009) para 5.99. 2 Moot Scenario p.5. 3 Hyundai Merchant Marine Company Limited v Americas Bulk Transport Limited (The Pacific Champ) [2013] EWHC 470 (Comm) [35]. 4 Tracomin SA v Sudan Oil Seed Co [1983] 1 Lloyd’s Rep 560 (QB); Excomm Ltd v Ahmed Abdul-Qawi Bamaodah (The St Raphael) [1985] 1 Lloyd’s Rep 403 (CA); Sea Trade Maritime Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Athena) [2006] EWHC 2530 (Comm) [65], [90]; Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL [2010] EWHC 29 (Comm) [36], [52].Habas Sinai (n 4) [52]; The Athena (n 4).

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15.   In light of the email dated 23rd May at 0625 (UTC+1),5 the Respondent suggested the use of

the ST4 as the basis of the later incorporated Charterparty.6 There was no such intention that

the arbitration clause was to be separated from the Charterparty. Hence, the fixture recap is

inclusive of all clauses contained in the ST4 which was not amended. Section 6(2) was

satisfied and the arbitration clause was duly incorporated.

(C)  The tribunal has jurisdiction to decide the particular matter of fraud

16.   Under the notion of one stop arbitration, when rational commercial parties enter into an

arbitration agreement, unless contrary intention is expressed, all issues arising out of their

relationship are presumed to be dealt with once and for all by the same court or tribunal.7

17.   The phase ‘arising out of’ encompasses tortious disputes that are so closely knitted with the

contractual disputes such that an agreement to arbitrate covers both matters.8

18.   Here, the cause of action in fraud is heavily intertwined with the claim in contract for

Respondent’s failure to supply sufficient bunkers and thus was arising out of the contractual

relationship between the parties. Since no reservation was made by either party on the matter

of tort of fraud, the one-stop arbitration presumption is applicable. The tort of fraud claim

therefore falls within the ambit of this tribunal’s jurisdiction.

PART TWO: MERITS

I THE RESPONDENT IS LIABLE FOR THE TORT OF FRAUD

19.   It is argued that: (A) The Respondent committed the tort of fraud; or (B) Alternatively the

Respondent is vicariously liable for the tort of fraud committed by its agent ASA2.

20.   The leading authority is Derry v Peek,9 the legal elements of which are well summarized in

Ludson Overseas Ltd v Eco3 Capital Ltd, 10 in that i) the defendant makes a false

5 Moot Scenario p.3. 6 Moot Scenario p.5. 7 Fiona Trust & Holding Corp v Privalov [2007] UKHL 40 [13]; Ryanair Ltd v Esso Italiana Srl [2013] EWCA Civ 1450; Monde Petroleum SA v Westernzagros Limited [2015] EWHC 67 (Comm). 8 Empresa Exportadora de Azucar v Industria Azucarera Nacional SA [1983] 2 Lloyd's Rep 171 (CA) [89]; Aggeliki Charis Compania Maritima SA v Pagnan SpA [1995] 1 Lloyd's Rep 87 (CA); Fiona Trust (n 7).

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representation to the plaintiff; ii) knowing it to be false, or being reckless as to its truth; iii)

intends the plaintiff to act in reliance on it; and iv) the plaintiff does act in reliance on the

representation and in consequence suffers loss. Upon establishment of all these elements, as

the Claimant would proceed below, the Respondent must be liable for tort of fraud.

(A)  The Respondent committed the tort of fraud

21.   The Respondent committed the tort of fraud through continuing representations to the Master

regarding the supply of bunkers due to insufficiency from the beginning of the voyage. The

first representation was made on 3rd June, which stated that bunkers would be “available

passing Durban or Cape Town”.11 The second and third representations were made on 28th

June, which stated that bunkers would be available “on arrival STS Area 1”.12 The last

representation of the same nature was subsequently made on 4th July that “next supply after

STS all under control/reverting”.13

22.   It is argued that these representations made by the Respondent; a) were false; b) were made

knowing to be false; c) were intended to be relied upon by the Claimant; and d) were relied

upon by the Claimant who suffered loss as a result.

a)   The representations were false

23.   These representations all relate to the same issue, namely the supply of bunkers

notwithstanding the time lapse between the making of the representations and subsequent

reliance by the Claimant that resulted in losses suffered. Therefore, these representations are

deemed continuing in nature and they altogether constitute a single action in tort.14

24.   These representations were false from the outset because there was no actual supply of any

bunkers throughout the entire voyage.

9 (1889) 14 App Cas 337 (HL). 10 [2013] EWCA Civ 413. 11 Moot Scenario p.26. 12 Moot Scenario pp.33-35. 13 Moot Scenario p.40. 14 Michael A. Jones and others (eds), Clerk and Lindsell on Torts (20th edn, Sweet & Maxwell 2010) para 18-18.

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b)   The representations were made knowing to be false

25.   It is argued that the Respondent made these representations dishonestly, which can be readily

inferred from the multiple dishonest representations.

26.   Although a broken promise does not amount to a false representation,15 an “inference of fact

that the state of his mind was to his own knowledge not that which he describes it as being”

suffices.16

27.   The Respondent represented that a supply would be available at Durban or Cape Town.17

This representation was made contrary to his knowledge of the true state of affairs. When the

Master subsequently inquired about the bunker supply,18 the Respondent replied that it “will

revert re next bunker supply”19 but never did so. Thus the Respondent never intended to

provide any bunkers at Durban or Cape Town; otherwise, it would not have needed to “revert”

to the Master later. The hidden intention was to postpone bunker supply for an indefinite time.

28.   The Master protested against the non-supply of bunkers passing Durban and Cape Town and

requested for bunkers again.20 The Respondent, in appeasing the Master, casually nominated

STS Area 1 for a bunker supply.21 This representation was in truth dishonest because the

Respondent never informed the Master of the location of STS Area 1.

29.   Accordingly, the representations were mere lies. The Respondent cannot contend that its

representations were true at the time they were made and were therefore honestly held.

Instead, the Respondent, as the representor was under a duty to make good the previous

untrue representation upon being aware of its untruthfulness.22 However, the Respondent

15 ibid. 16 Angus v Clifford [1891] 2 Ch 449 (CA), 470-471. 17 Moot Scenario p.26. 18 Moot Scenario p.28. 19 ibid. 20 Moot Scenario p.32. 21 Moot Scenario p.33. 22 With v O’Flanagan [1936] Ch 575 (CA) 583-585 (Lord Wright).

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failed to correct any of its representations even when it realised that there would be no actual

supply of bunkers at the promised locations.

30.   Therefore, the representations individually and collectively illustrate that the Respondent

never truly intended to supply bunkers.

c)   The representations were intended to be relied upon by the Claimant

31.   The Respondent intended the representations to be relied upon by the Master. As the

Respondent was the only legitimate party to instruct the Master, its representations and

instructions were intended to be relied upon.

32.   Furthermore, since the Respondent was obliged to ensure the sufficiency of bunker

provision,23 the Master had to obey and rely upon any representations regarding bunker

supply.

33.   However ‘silly’ the Master’s reliance may seem because of the representations’ uncertain

nature, this cannot relieve the Respondent's liabilities for being the representor.24

d)   The representations were relied upon by the Claimant who suffered loss as a result

34.   All the representations were relied on by the Master, who was employed by the Claimant to

be in charge of the voyage and the whole Vessel.

35.   Moreover, the last representation made by the Respondent on 4th July stated “next bunker

supply after STS at Bonny all under control/ reverting”25; in attempt to induce the Vessel into

continuing its voyage on insufficient bunker fuel. But for these representations, the Vessel

would not have suffered any damage.

36.   These continuing representations led the Vessel into a High Risk Area where it was exposed

to security risks, where it was attacked by pirates. The Claimant suffered losses therefrom. In

short, it was a fraudulent scheme - the Respondent all along had been using the promise of

23 Line 160, Clause 7(a) of the ST4; Moot Scenario, p.5. 24 Peter M. Eggers, Deceit the Lie of the Law (Informa 2009) para 7.42. 25 Moot Scenario p.40.

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bunker supplies to trap the Master into completing the voyage without sufficient bunker fuel.

Accordingly, the Respondent is liable for damages under tort of fraud.

(B)  The Respondent is also vicariously liable for the tort of fraud committed by ASA2

37.   It is submitted that: a) ASA2 committed the tort of fraud; and b) the Respondent ratified the

principal-agent relationship with ASA2.

a)   ASA2 committed the tort of fraud

38.   The Master followed the false representation made by ASA2 on 28th June, where the latter

held itself out as the Respondent’s agent and that the “ANTELOPE was instructed to supply

with 300MT IFO bunkers” upon Cargo transfer at the nominated STS coordinates.26 However

the ANTELOPE never arrived and the Vessel suffered losses from the pirate attack.27.

b)   The Respondent ratified the principal-agent relationship with ASA2

39.   Despite the lack of actual and/or implied authority, a principal-agent relationship can be

ratified subsequently such that a party could be said to have been ‘acting in capacity of an

agent’ on behalf of the principal prior to the ratification.28 The requirements for establishing

such ratification can be summarized,29 as i) the identity of the principal must be disclosed by

the agent; ii) the principal must have knowledge of all the material circumstances of the act at

the time of ratification; and iii) there is a positive act or an omission committed by the

principal which amounts to ratification.

40.   An example of ratification for an agent’s misrepresentation under the tort of deceit in support

of such is Briess v Woolley,30 where the shareholders were held vicariously liable for the

fraudulent misrepresentations made by the managing director at the time when he was not

actually authorized but subsequently authorized by ratification at a general meeting.

26 Moot Scenario p.35. 27 Moot Scenario p.41,42. 28 Briess v Woolley [1954] AC 333 (HL). 29 Keighley Maxsted & Co v Durant [1901] AC 240 (HL) 246; Wilson v Tumman (1843) 6 MG 236, 242; Koenigsblatt v Sweet [1923] 2 Ch 314 (CA) 325. 30 Briess (n 28).

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41.   Here, the Respondent was disclosed by the ASA2 as its principal in its email to the Master on

28th June.31 It is not necessary for the principal to be named as long as its identity is known or

ascertainable to the relevant parties.32 Even though the Respondent was not named in the

email, its identity is ascertainable in the context of the communication.

42.   Moreover, the Respondent had full knowledge of the whole circumstances all along. This is

evident by its reply email to the Master on 4th July which said “please continue to liaise with

your STS coordinator”33 and “next bunker supply after STS”. These messages correspond

exactly with the ASA2’s email on 28th June which said “we are your STS coordinator”34. The

Master’s emails on 3rd July that “we arrive at the new OPL discharge R/V tomorrow at 0530”

and “you have advised bunkers on arrival supply from STS v/l ANTELOPE” were also

conveyed to the Respondent. 35 Undeniably, the Respondent was fully aware of the

circumstances of instructions given by ASA2 for the discharge of Cargo and the supply of

bunkers at the alternative discharge location.

43.   Additionally, the ratification was made by the Respondent by its positive act in its message to

the Master on 4th July by asking the Master to “continue to liaise with the STS coordinator”,

which was ASA2.36Alternatively, the ratification was made by the Respondent’s omission to

raise inquiries as to the amended OPL discharge coordinates and the identity of ANTELOPE.

44.   Therefore, ASA2 was ratified by the Respondent as its agent on 4th July and that accordingly,

the Respondent is vicariously liable for any of its acts and representations, including that of

fraud and all related damages arising therefrom.

31 Moot Scenario p35. 32 Watson v Swann (1862) 11 CB 756, 771; National Oilwell (UK) Ltd v Davy Offshore Ltd [1993] 2 Lloyd's Rep. 582 (QB) 592-597. 33 Moot Scenario p.40. 34 Moot Scenario p.35. 35 Moot Scenario p.38. 36 Moot Scenario p.40.

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II THE RESPONDENT BREACHED THE CHARTERPARTY.

45.   The Claimant is entitled to damages arising from Respondent’s breaches of the Charterparty

because: (A) The Respondent is liable for damages arising out of the pirate attack; (B) The

Respondent, in providing the Voyage Orders, breached its obligation to nominate a safe port

and is liable for unauthorized discharge.

(A)  The Respondent is liable for damages arising out of the pirate attack

46.   The Claimant submits that: a) the Master reasonably fulfilled its contractual obligations in

complying with the Respondent’s instructions; b) the Respondent is held liable for damages

arising from material damage to the Vessel owing to the unauthorised discharge; and c) any

claims the consignee has are should be levied against the Respondent, who orchestrated the

unauthorised discharge and unduly exposed the ship to risks of piracy.

a)   The Master reasonably fulfilled its contractual obligations in complying with the

Respondent’s instructions

47.   Despite the Respondent’s breach, the Master acted reasonably in compliance with his

contractual obligation to obey the Respondent’s instructions and thus is not to be blamed.37

48.   The leading authority on point is The Houda,38 where a vessel was time chartered on an

amended ST4. The owners delayed compliance with the orders when its lawfulness was in

doubt and refused to comply with the charterer’s further orders to discharge the cargo without

production of the bills of lading.39

49.   The Court of Appeal held that the refusal to comply with the charterers’ orders were

justified. 40 The test is how a person of reasonable prudence would have acted in the

circumstances and whether these circumstances are reasonable grounds for some delay in

37 Lines 225-226, Clause 13(a) of the ST4 provides that the Master has an obligation to comply with “the orders and direction of Charterers as regards employment of the vessel, agency and other arrangements......”. 38 Kuwait Petroleum Corp v I&D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541 (CA). 39 ibid 555. 40 ibid.

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compliance. However, since the amended ST4 made no such provision to entitle the

charterers to require the owners or the Master to discharge cargo without the production of

the bills of lading, the court held that the owners’ delay in compliance was justified.41

50.   However, unlike The Houda, here it was reasonable for the Master to comply with the

Respondent’s instructions, as the amended Clause 13(b) of the ST4 expressly provided for

permissible circumstances upon Respondent’s request by communication in writing to

discharge any quantity of cargo sans bill of lading.42 Such contractual and employment

obligation to discharge did not necessitate any delay of compliance of orders.

51.   Therefore, in acting pursuant to Respondent’s advice by written correspondence to discharge

at the STS position,43 the Master was at all times reasonable in carrying out Respondent’s

instructions and fulfilling its employment obligations.

b)   The Respondent is liable for damages arising from material damage to the Vessel

owing to the unauthorised discharge

52.   In The Berge Sund, 44 Staughton LJ held that “[A] time charter contains an implied

undertaking by the charterers to indemnify the owners against the consequences of

complying with their order[s].”45 The obligation is usually implied if it is not express.46

53.   As a consequence of the Master complying with the Respondent’s instruction to head to the

STS position, the Vessel was attacked and was subjected to a series of unauthorised

discharges up to 5 STS operations under pirates’ control. Thus, the Respondent is liable.

41 The Houda (n 38). 42 Lines 235-279, Clause 13(b) states, “If Charterers......specifically refers to this Clause request Owners to discharge a quantity of cargo either without Bills of Lading and/or at a discharge place other than that named in a Bill of Lading and/or that is different from the Bill of Lading quantity, then owners shall discharge such cargo......”; Moot Scenario, p. 6. 43 Moot Scenario p.38, 40. 44 Sig Begesen DY & Co v Mobil Shipping & Transportation Co (The Berge Sund) [1993] 2 Lloyd’s Rep 452 (CA). 45 ibid 462; David Foxton, ‘Indemnities in Time Charters’ in D. Rhidian Thomas (ed), Legal Issues Relating to Time Charterparties (Informa 2008). 46 Naviera Magor SA v Societe Metallurgique de Normandie (The Nogar Marin) [1988] 1 Lloyd’s Rep 412 (CA).

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54.   The Claimant, therefore is entitled to seek damages against the Respondent over all the

material damage done by the Vessel, including, inter alia, its navigation equipment, the

main-deck hose crane, the starboard-side accommodation ladder and the bridge equipment

(including electronic navigation systems, radar and ECDIS). 47

c)   The consignee's claim should be levied against the Respondent, who orchestrated the

unauthorised discharge and unduly exposed the ship to risks of piracy

55.   The failure to discharge the Cargo to Angola Energy Imports (“the Consignee”) in

accordance with the Bills of Lading is a further consequence of the Respondent’s instruction

to proceed to the STS position.

56.   Charterers are obliged to indemnify the ship owners for any claims that the consignee may

have against the latter in respect of cargo claims for failure to deliver.48

57.   Although the consignee has not yet presented a claim for the failure to deliver the cargo,49

and has discretion as whether to sue to the Claimant or Respondent in respect of the failure to

deliver the Cargo; the Claimant submits that any claim should be levied against the

Respondent because liability can be traced back to the Respondent.

(B)  The Respondent, in providing the Voyage Orders, breached its obligation to nominate a

safe port and is liable for unauthorized discharge

58.   The Respondent, by ignoring its contractual duty of ‘due diligence’ to employ the Vessel

‘between and at safe places’, including ports, was in breach of clause 4(c) of the ST4 and the

subsequent discharge was without the Claimant’ authorisation.50

59.   The Respondent’s breach of its obligation to nominate a safe port is two-fold. The

Respondent breached the obligation to nominate a) a port with safe passage to and fro;

47 Moot Scenario pp.42, 62. 48 Triad Shipping Co v Stellar Chartering and Brokerage Inc (The Island Archon) [1994] 2 Lloyd’s Rep 227 (CA). 49 Procedural Order No. 2, pt.16. 50 Lines 125-131, Clause 4 (c) of the ST4.

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alternatively, b) a port itself which is free of risks; thus c) in this regard knew or ought to

have known of the risk of piracy; (d) Hence, the taking hostage of the Vessel by pirates was

attributable to the Respondent’s breach of its safe port undertaking (e) as the nomination of

Luanda port is already improper, any subsequent orders given by the Respondent is without

Claimant’s authorization; (f) the due diligence clause will not absolve the Respondent from

its liabilities since the Respondent fell far below the standard of due diligence; (g)

alternatively, even if the piracy attack was unexpected and abnormal, the Respondent still

breached its secondary obligation to issue fresh instructions.

a)   The Respondent was obliged to nominate a safe port, including safe passage to and

from the port

60.   The Claimant maintains that the scope of the word ‘between’ safe ports extends the safe port

undertaking by the Respondent to encompassing ‘any passage to and from the port’.51 Lord

Roskill in The Evia (No. 2) propounded that “a port will not be safe unless, in the relevant

period of time, [a] particular ship can reach it, use it and return from it without, in the absence

of some abnormal occurrence, being exposed to danger which cannot be avoided by good

navigation and seamanship.”52

61.   As compliance with the Voyage Orders entails the passage of the Angolan coast in order to

reach the discharge port of Luanda, the Respondent was obliged to pay due attention to the

safety of the charter to and fro between the load port of Singapore and the discharge port of

Luanda.53

b)   Alternatively, the Respondent was obliged to nominate the safe port, which requires

the port itself to be free of risks

51, Howard Bennett, ‘Safe port Clauses’ in D. Rhidian Thomas (eds), Legal Issues Relating to Time Charterparties (Ina (London) 2008), para 4.18. 52 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] AC 736 (HL) 757 (Lord Roskill). 53 Moot Scenario p.13.

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62.   In the alternative, even if a stricter approach is adopted by this tribunal, the Respondent still

owed its safe port undertaking to the Claimant by ensuring safety of the actual ‘port’ itself.

According to Lensen Shipping Ltd v Anglo-Soviet Shipping Co Ltd,54 when the promise is

made with regard to a “port” alone, it will be construed as alluding both to the port and to the

loading and unloading places within the port used by the chartered ship.

63.   The Claimant maintains that as the discharge port of Luanda lies within the geographical

province of Angola, Angola is the port area where the unloading would take place.

c)   The Respondent knew or ought to have known of the real risk of piracy

64.   The Respondent knew or ought to have known of the prevailing risk posed by Angola, as

indicated by the incorporation of the ST4 and the piracy clause into the Charterparty.

65.   Construing Clause 4(a) of the ST4 with the amended recap, the Vessel may be employed for

the purpose of carrying all lawful merchandise in any part of the world, but ‘always to

exclude’ Angola.55

66.   Further, the piracy clause provides that both parties shall adhere to the latest version of Best

Management Practices For Protection Against Somalia Based Piracy (“BMP4”) should the

vessel proceed to or through an area in which there is a current risk of piracy verified by a

competent international authority. Pursuant to the Guidelines for Owners, Operators and

Masters for Protection against Piracy in the Gulf of Guinea Region published by the

International Maritime Organization (the “Guidelines”), which is to be read in conjunction

with the BMP4, several areas had been shortlisted to be piracy-prone. The Guidelines

specifically note that “attacks and armed robbery have occurred from as far south as Angola

and north as Sierra Leone.”56

54 Lensen Shipping Ltd v Anglo-Soviet Shipping Co Ltd (1935) 52 L1 L R 141 (CA). 55 Lines 110-117, Clause 4(a) of the ST4; Moot Scenario p.6. 56 Guidelines for Owners, Operators and Masters for Protection against Piracy in the Gulf of Guinea Region 2014, para 2.

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67.   In The Lucille, 57 it was held that the time charterers were in breach of their safe port

undertaking by employing the Lucille to proceed to Basrah. Bingham J (as he was then) held

that Basrah was unsafe by reason of the heightened military activity between the Iraqi and

Iranian forces. This was well-predicted as on the facts, considering the relevant date, military

activity and the means of ingress and egress thereto had become a ‘prevailing characteristics’

of Basrah.58

68.   By analogy, as the Angolan coast is known to the international community as being plagued

by piracy; attacks and armed robberies are frequently reported.59 Thus piracy is a prevailing

characteristic of Luanda, which is indistinguishable from the Angolan coast. The port is

thereby, prospectively unsafe.

d)   Hence, the taking hostage of the Vessel by pirates was attributable to the

Respondent’s breach of its safe port undertaking.

69.   According to the correspondence dated 17th July from the Master, which was to the common

knowledge of both parties, the Vessel was held up by pirates from 4 July to 17 July around

the international waters of Angolan coast while it was on its way towards the designated

discharge port of Luanda.60

70.   But for the appointment of Luanda as the discharge port, it would not have been inevitable

for the Vessel to travel across Angolan coast and seized by pirates. Hence, by this nomination,

the Respondent exposed the Vessel the undue risks of piracy.

71.   Given that the port of Luanda is prospectively unsafe and that piracy is a prevailing

characteristic of the port, the damage done to the Vessel was attributable to the Respondent’s

57 Uni-Ocean Lines Pte Ltd v C-Trade SA (The Lucille) [1983] 1 Lloyd’s Rep. 387 (QB) 393 (Bingham J). 58 ibid. 59 Keith Johnson, ‘Oil Pirates and the Mystery Ship’ Foreign Policy (Washington, 29 January 2014) <http://foreignpolicy.com/2014/01/29/oil-pirates-and-the-mystery-ship> accessed 20 March 2015. 60 Moot Scenario p.42.

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breach of its safe port undertaking under Clause 4(c) of the ST4 and its breach of its

contractual obligation to always exclude Angola under Clause 4(a) of the ST4.

e)   As the nomination of Luanda port is already improper, any subsequent orders given

by the Respondent is without Claimant’s authorization

72.   Further, since the Respondent had failed to nominate a safe port from the start, any

subsequent order by the Respondent to discharge at the STS position61 was bound to be

unauthorized and the Respondent was liable for damages. In The Gregos,62 Lord Mustill held

that “the persistence of the charterers in an illegitimate order was a conduct ‘evincing an

intention no longer to be bound’ by the contract, and hence a repudiation of it.”63

f)   The due diligence clause will not absolve the Respondent from its liabilities since the

Respondent fell far below the standard of due diligence

73.   The requirement of due diligence can be equated with the exercise of reasonable care.64 In

The Saga Cob,65 Parker LJ held that it would be satisfied “if a reasonably careful charterer

would on the facts known have concluded that the port was prospectively safe”.66

74.   Nonetheless, Diamond J propounded that once the port was known to the charterer to be

unsafe, it is beyond the charterer’s right to re-evaluate the degree of risk and to decide

whether trading at that port represents a reasonable commercial risk for the shipowner.67

75.   Insisting on sending the vessel to a port in circumstances when the charterer either knows or

ought to have known of the relevant unsafety constitutes a complete lack of due diligence.68

Therefore, in ignoring the risks of piracy and the contractual prohibition and insisting on

61 Moot Scenario pp.38, 40 62 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1 (HL). 63 ibid [8]. 64 D Rhidian Thomas, ‘The Safe Port Promise of Charterers From the Perspective of the English Common Law’ (2006) Singapore Academy of Law Journal 597, 603; K/S Penta Shipping AS v Ethiopian Shipping Lines Corp (The Saga Cob) [1991] 2 Lloyd’s Rep 398 (QB) 408. 65 K/S Penta Shipping AS v Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545 (CA). 66 ibid 551 (Parker LJ); Howard Bennett, ‘Safe port Clauses’ in D. Rhidian Thomas (ed), Legal Issues Relating to Time Charterparties (Informa 2008) para 4.44. 67 The Saga Cob (n 65) 398,408. 68 ibid.

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travelling through the Angolan coast, the Respondent was in breach of its safe port

undertaking and duty to act as per Claimant’s authorisation.

g)   Alternatively, even if the piracy attack was unexpected and abnormal, the

Respondent still breached its secondary obligation to issue fresh instructions

76.   Alternatively, even if the port was prospectively safe and the pirate attack was merely an

abnormal occurrence, the Respondent still breached its secondary obligation to issue fresh

instructions. According to Mustill J in The Mary Lou, an event is abnormal if it is not a

‘characteristic’ of the nominated port.69

77.   This tribunal should exercise great caution before ruling the pirate attack as an abnormal

occurrence. As Bingham J (as he was then) observed in The Evia (No.2), the scope of

abnormal occurrence is narrow; delays, damage or destruction of the chartered ship caused by

a characteristic of the prospectively unsafe port are not abnormal occurrences.

78.   However, even if the pirate attack was an abnormal occurrence, the secondary obligation

which arises “should be construed as requiring a time charterer to do all that he can

effectively do to protect the ship from the new danger.”70 Lord Roskill in The Evia (No. 2)

held that the charterer would come under a ‘secondary obligation’ to cancel his original order

and nominate another port which is prospectively safe.71

79.   The Respondent breached its secondary obligation to effectively protect the Vessel from the

new danger by turning a blind eye to the piracy attack. After the pirate attack, Captain Smith,

had attempted it to the Respondent by the correspondence dated 17th July.72 Lamentably, with

all the futile attempts by Captain Stelios to seek assistance from the Respondent, he sensibly

exercised his discretion to proceed to Cape Town for assistance.

69 Transoceanic Petroleum Carriers v Cook Industries Inc (The Mary Lou) [1981] 2 Lloyd’s Rep 272 (QB) 278; The Evia (No 2) [1982] Lloyd’s Rep 307 (HL) 310. 70 The Evia (No 2) [1983] 1 AC 736 (HL) 765. 71 The Evia (No 2) (n 70), 319 . 72 Moot Scenario p.42.

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III THE RESPONDENT IS LIABLE TO THE SECOND PAYMENT OF HIRE

80.   The Claimant is entitled to hire because: (A) Hire was due and owing under the Charterparty

monthly in advance and Respondent did not pay hire on 3rd July (close of business, GMT), as

required by the Charterparty; (B) There was no frustration of the Charterparty; and (C) The

Vessel was not off-hire during the pirate seizure.

(A)  Hire was due and owing under the Charterparty monthly and the Respondent did not

pay hire on 3rd July

81.   According to clause 9 of ST4, hire is due per calendar in advance. ‘In advance’ means hire is

to be paid no later than midnight on the day before a period begins.73 The Vessel entered

service on 4th June,74 so a new period begins on the 4th of each calendar month. Payment has

to be made prior to the start of a period. Hence, it has to be made no later than 3rd July

midnight. The Respondent failed to pay hire on 3rd July.

(B)  There was no frustration of the Charterparty

82.   The Claimant argues that the Charterparty was not frustrated because (a) there was no third

party intervention on 28th June; (b) the amount of remaining Cargo is more than negligible;

and (c) the Respondent is merely trying to excuse a bad bargain.

a)   There was no third party intervention on 28th June

83.   Frustration can only occur when there is no fault on either party.75 It is not open to the

Respondent to contend that frustration occurred as a result of ASA2’s intervention. As argued

above in paragraphs 39-46, ASA2 was the agent of the Respondent. As such, ASA2’s acts

equate the Respondent’s acts, which negate the operation of frustration.

73 Terence Coghlin and others, Time Charter (7th edn, lLP 2014) para 16.6. 74 Moot Scenario pp.28, 29. 75 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 (HL) 729.

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b)   The amount of remaining Cargo is more than negligible

84.   Partial destruction or loss of Cargo cannot trigger frustration unless the remaining Cargo is de

minimis.76 During pirate seizure, only 28190mt out of 72190mt of Gasoil was robbed and

more than 60% of the cargo remains on board. Therefore, there is no frustration.

c)   The Respondent claims frustration merely for the sake of excusing a bad bargain

85.   The Respondent claims frustration merely for the sake of excusing a bad bargain. 77

According to an article ‘New Kid en the Bloc’, the Vessel was hired at a peak price.78

Therefore, it is reasonable to believe that the Respondent did not have a genuine claim in

frustration. Instead, they are relying on this doctrine to relieve themselves of an imprudent

bargain, which is not a valid ground for frustration.79

(C)  Further, or alternatively, the Vessel was not off-hire until it resumes service

86.   Further, or alternatively, the Claimant maintained that the Vessel has never been off-hire.

Sub-clause (4) of the piracy clause attached under the special provisions80 and clause (g) of

the BIMCO Piracy Clause for Time Charters 2013,81 both state that in the event of pirate

capture or seizure, the Vessel should remain on hire, clause (g) of the BIMCO Piracy Clause

further provides that hire is payable for any time loss in making good the Vessel. The former

provides no such cap of 90 days on the payment of hire, whilst the latter provides that

payment of hire shall be suspended on the 91st day of pirate seizure. Such difference is

immaterial since the actual pirate seizure only took place for 13 days.

87.   The BIMCO Piracy Clause for Time Charters 2013 provides that in the event of conflicts, the

BIMCO clause prevails. Thus, the BIMCO Piracy Clause prevails over the off-hire clause in

76 E B Aaby’s Rederi A/S v LEP Transport Ltd [1948] 81 Ll L Rep 465 (KB). 77 Moot Scenario p.45. 78 Ibid. 79 John Schofield, Laytime and Demurrage (6th edn, lLP 2011) para 9.14. 80 Moot Scenario p.8. 81 Moot Scenario p.12.

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ST4. The Vessel was captured by pirates on 4th July and suffered substantial damage.82

Pursuant to clause (g) of the BIMCO Piracy Clause, the Respondent cannot rely on the off-

hire clause to avoid payment during the pirate seizure and repair of the Vessel.

IV THE CLAIMANT IS NOT LIABLE FOR UNSEAWORTHINESS

88.   The Claimant submits that the Vessel was not unseaworthy because: (A) The Master was not

incompetent by following the Respondent’s instructions; and (B) The Master complied with

anti-piracy precautions required by the Charterparty and/or industry practice relating to West

Africa.

(A)  The Master was not incompetent by following the Respondent’s instructions

89.   The Claimant maintains it employs the competent Master because a) the Master merely

followed the instructions of ASA2; or b) alternatively, the Master, though possibly negligent,

was not incompetent; and c) the Claimant is not liable for any such negligence under Clause

27 of ST4.

a)   The Master merely followed the instructions of ASA2

90.   As argued hereinbefore, ASA2 was the agent of the Respondent, hence the Master was

competent at all relevant times to have followed the instructions given by ASA2.83

b)   Alternatively, the Master, though possibly negligent, was not incompetent

91.   The Master was competent because he diligently followed all obligations required of him.

Slight mistakes can at most constitute negligence. 84

92.   A crewmember’s negligence differs from incompetence. The main distinction lies between

general capability and incapability.85 A crewmember is incompetent if he is incapable of

possessing the necessary skills reasonably expected of an ordinary seaman of his rank to

82 Moot Scenario p.42. 83 Paras 37-44. 84 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd and La Réunion Européene (The Star Sea) [1997] 1 Lloyd’s Rep 360 (CA) 373-4 (Leggatt LJ), affd [2001] 1 Lloyd’s Rep 389 (HL). 85 Roger White, ‘The Human Factor in Unseaworthiness Claims’ [1995] LMCLQ 221, 225.

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carry out particular tasks or duties.86 In essence, it is the “disabling want of certain skill and

knowledge” that renders a crewmember incompetent, unfit and unqualified to command.87

Hence, a negligent crewmember could possess the required skills but fall below the standard

of a reasonable crewmen exercising those skills.

93.   The Master is competent because he diligently performed all obligations required of him:

including, inter alia, the checking of the bunker supply and hardware of the Vessel, the

provision of incident and daily reports as well as detailed planning and thorough supervision

of the voyage. The Master also reported all conditions on board and suspicious activities at

sea to the Respondent and sought assistance swiftly after pirate attack. Above all, the Safety

Management Certificate is conclusive evidence, which implies that the Master is well-trained

with the necessary skills to carry out sailing tasks.88

94.   It is not open for the Respondent to allege that the Master was incompetent by simply

following instructions given by ASA2. Even if ASA2 was found not to be the Respondent’s

agent, the compliance with ASA2’s instructions was a human mistake committed by the

Master. The making of such mistake is irrespective of the level of training or skills acquired

by the Master.

c)   The Claimant is not liable for such negligence under Clause 27 of ST4

95.   Clause 27 of ST4 provides that the Claimant shall not be liable for any loss or damage arising

from any neglect of the Master, subject to any express provisions, provided that Clauses 1, 2,

3 and 24 are duly complied with.89 Clauses 1, 2, 3 and 24 were all duly complied with,

including the necessary possession of all certificates, provision of competent crewmembers,

86 ibid 224. 87 Papera Traders Co Ltd & Others v Hyundai Merchant Marine Co Ltd, The Keihin Co Ltd (No. 2) (The Eurasian Dream) [2002] EWHC 2130 (Comm). 88 Moot Scenario 49. 89 Lines 526-537, ST4 Clause 27(a).

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and the exercise of due diligence to maintain the vessel in light of the agreed and industrial

standards. Thus, the Claimant is not liable for the master’s negligence.

(B)  The Master complied with anti-piracy precautions required by the Charterparty and/or

industry practice relating to West Africa.

96.   The Vessel was seaworthy because: a) the BMP4 is only advisory in nature, hence even if the

Master did not fully implement its requirement, this does not render the Vessel unseaworthy;

and b) the safety standards required by ISPS90 and ISM Codes91 were complied with.

a)   The BMP4 is only advisory in nature, hence even if the Master did not fully

implement its requirement, this does not render the Vessel unseaworthy

97.   Although BMP4 is an industrial practice that is to be followed by all Masters and ship-

owners, it is only of advisory nature and imposes no mandatory obligations on the Master and

the Claimant. This is evidenced by the proof on the wordings used on BMP4 that “the advice

and ination given is intended purely as guidance”,92 and that in particular under Section 8 for

ship protection measures to be taken in High Risk Area that “Owners may wish to consider

making further alterations beyond the scope of the guidance”93

98.   Thus the Claimant’s was at liberty to equip the Vessel as it pleased. Failing to comply with

the requirements under BMP4 do not render the vessel unseaworthy because there were no

compulsory obligations to comply with BMP4.

99.   Further, the Claimant did its best to adhere to the BMP4 to adopt preventive measures. This

strong initiative is evidenced by the fact that the Claimant was aware of the known

security/piracy threat area that the Vessel might pass through and contacted the Master at first

90 International Maritime Organization, 'International Code for the Security of Ships and of Port Facilities' <https://www.maritimenz.govt.nz/Publications-and-forms/Commercial-operations/Shipping-safety/Maritime-security/ISPS-code.pdf> accessed 10 March 2015. 91 International Maritime Organization, 'International Safety Management Code' < http://www.imo.org/OurWork/HumanElement/SafetyManagement/Pages/ISMCode.aspx> accessed 10 March 2015. 92 Terms of Use of BMP4. 93 Section 8 of BMP4

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to arrange for equipment inspection and preparation before letting the Vessel leave

Singapore.94 Therefore, the Claimant intended to provide a seaworthy ship.

b)   The safety standards required by ISPS and ISM Codes were complied with

100.  The ISPS and the ISM are international standards for the maritime security measures

assessment and safe management and operation of ships. Under such, owners of ships and

any other organisation or person who has assumed the responsibility for the operation of the

ship from the shipowners, would have agreed to take over all duties and responsibility

imposed by the Codes.

101.  The Claimant complied with the duties and responsibilities under ISPS and ISM Codes by

adopting reasonable preventive measures and having acquired all the necessary certificates

that were well verified.95 Since Singapore is a Member State of the ISPS and ISM Codes, had

the Claimant failed to comply with the Codes, the Vessel would not have been allowed to

leave from Singapore at all. As such, the successful departure of the Vessel from Singapore is

conclusive evidence that the Vessel was seaworthy and safe.

102.  Therefore, the Claimant submits that there is no right of repudiation of the charterparty or

damages arising thereof from the alleged contractual breach.

V THE CLAIMANT IS NOT LIABLE FOR CONVERSION/BAILMENT

103.  The Claimant is not liable for the loss of about 28,000mt of gasoil (“the Lost Cargo”) out of

the 72,190mt of gasoil (“the Cargo”) on board the Vessel between 4th-17th July.

104.  The Claimant submits that: A) There was no conversion under common law; B) There was no

breach of bailment, and a fortiori, C) There was no conversion under statute.

94 Moot Scenario p.22. 95 Moot Scenario p.49.

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(A)  There was no conversion under common law

105.  It is argued that: a) the Claimant is the improper Respondent; and b) there was no intention to

deprive the Respondent or the Consignee in the Bill of Lading of the Lost Cargo.

a)   The Claimant is the improper respondent

106.  As such, the most directly liable character for conversion are the pirates, given that they stole

the Lost Cargo whilst the Claimant was powerless to resist it. Notwithstanding the practical

impossibility of suing the pirates, this is not a ground for suing the Claimant for a tort that

can only be committed by a positive act.

b)   There was no intention to convert the Lost Cargo

107.  Conversion is an “act of deliberate dealing with a chattel in a manner inconsistent with

another’s right whereby that other is deprived of the use and possession of it”.96 Intention to

convert must be present. The burden of proof to establish such intention is on the Respondent

who alleges conversion. However, in any event, firstly, there was no intention and secondly,

there is no evidence capable of discharging the Respondent’s burden of proof.

(B)  There was no breach of bailment

108.  The Respondent has alleged breach of bailment resulting in the theft of the Lost Cargo.97

However the Claimant submits that: a) there was no breach of duty as bailee and b) there was

no breach of bailment as insurer.

a)   The Claimant did not breach its duty as bailee

109.  Where bailed goods are lost or damaged, the burden of disproving breach of duty lies on the

bailee.98 Nonetheless it is submitted that even if there was a duty owed by the Claimant to the

Respondent under the bailment on terms or common law, such a duty was never breached

96 Kuwait Airways Corp v Iraqi Airways Co [2002] UKHL 19 [38] (Lord Nicholls). 97 Moot Scenario, Statement of Defence, pp.69-70. 98 Joseph Travers & Sons Ltd v Cooper [1915] 1 KB 73 (CA); Fankhauser v Mark Dykes Pty Ltd [1960] VR 376, Cowper and Cowper v JG Godner Pty Ltd (1986) 40 SASR 457, 471 – Bollen J appeared to regard the bailee’s burden of negativing causation as one of the implied terms of the agreement whereunder he accepts possession of the goods

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because the Claimant provided the Respondent with a seaworthy ship capable of discharging

that duty. Therefore there was no breach of duty as bailee notwithstanding that the Lost

Cargo was stolen since the Vessel was seaworthy.

b)   There was no breach of bailment as insurer

110.  A bailee becomes an insurer of the goods entrusted to it should it deviate from the terms of

the bailment.99 An insurer of the goods is strictly liable for all damages occurring to the goods

entrusted to it regardless of want of reasonable care.100

111.  The Claimant submits that it did not deviate from the terms of the bailment because it obeyed

with all the instructions and voyage orders of the Respondent under the Charterparty,

including representations by its agent, ASA2.

(C)  There was no conversion under statute

112.  Section 2(2) of the Torts (Interference with Goods) Act 1977 provides that “[a]n action lies in

conversion for loss… of goods which a bailee has allowed to happen in breach of his duty to

his bailor”.

113.  The Claimants submits that there is no conversion because there was no breach of duty as

bailee as argued. As there was no breach of duty as bailee, a fortiori there was no conversion

under statute.

VI. PRAYER FOR RELIEF

114.  For the reasons given above, the Claimant claims the following: a) Damages as particularised

in the phase of this arbitration relating to quantification of damages; b) Interest; c) Costs; and

d) Further or other relief as the Tribunal considers fit.

99 Lilley v Doubleday (1881) 7 QBD 510 (QB). 100 ibid.