Team 9 Universitas Gadjah Mada Claimant · 2020. 6. 18. · 19th international maritime law arbitration moot 2018 universitas gadjah mada team 9 memorandum for claimant on behalf

1 9 T H I N T E R N AT I O N A L M A R I T I M E L AW A R B I T R AT I O N M O O T

2 0 1 8

U N I V E R S I TA S G A D J A H M A D A

TEAM 9

ME M O R A N D U M F O R C L A I M A N T

ON BEHALF OF

Cerulean Beans and Aromas Ltd

CLAIMANT/CHARTERERS

AGAINST

Dynamic Shipping LLC

RESPONDENT/SHIP OWNER

COUNSEL

HANDY WICAKSONO

RAE CHALISTA

AUDREY KURNIA BALQIS FAUZIAH AICHA REBECCA AURIZKA MARTA

TEAM 9 MEMORANDUM for CLAIMANT

i

TABLE OF CONTENTS

I. THE TRIBUNAL HAS JURISDICTION TO DETERMINE

DAMAGES ......................................................................................................... 3

A. THE CLAIMANT COMPLIED WITH CLAUSE 27(D) OF THE VCP .................................. 3 i. Technical Matters Under Clause 27(G) ................................................................ 4 ii. Technical Matters Have Been Considered by an Independent Master Mariner ... 4

B. THE EXPERT DETERMINATION SUBMITTED IS SUFFICIENT FOR ARBITRATORS TO

CONSIDER ............................................................................................................................... 5 i. A Master Mariner is Only Able to Give Considerations on Technical Matters .... 6 ii. Arbitrator’s knowledge maintains objectivity in taking account expert

determination ................................................................................................................. 6 iii. The Tribunal’s jurisdiction extends to determination of damages .................... 7

II. THE RESPONDENT HAS BREACHED THE VCP ........................... 8

A. THE RESPONDENT UNJUSTIFIABLY DEVIATED TO SPECTRE ....................................... 8 i. Deviation arises out of unseaworthiness ............................................................... 8 ii. Deviation cannot be justified ............................................................................... 10

B. RESPONDENT CANNOT RELY ON FORCE MAJEURE CLAUSE ...................................... 12 i. There was no force majeure ................................................................................. 12 ii. The delay was caused by negligence ................................................................... 13

C. THE RESPONDENT HAS BREACHED THE VCP FOR THE USE OF ACCESS BARCODE .. 15

III. THE CLAIMANT IS ENTITLED TO RECOVER DAMAGES

FROM RESPONDENT’S BREACH OF CHARTER PARTY ................... 15

A. THE RESPONDENT IS LIABLE FOR THE CLAIMANT’S DAMAGED CARGO ................. 16

B. THE RESPONDENT’S LIABILITIES EXTENDS TO CLAIMANT’S CONSEQUENTIAL

DAMAGES ............................................................................................................................. 17 i. The consequential damages are not too remote to be recovered ......................... 17


ii

ii. Further, the Claimant has mitigated his losses ................................................... 18

IV. THE CLAIMANT IS ENTITLED TO EXERCISE A MARITIME

EQUITABLE LIEN OVER THE VESSEL ................................................... 19

A. THE CLAIMANT IS ENTITLED TO EXERCISE A MARITIME EQUITABLE LIEN OVER THE

VESSEL THROUGH LEGAL SUBROGATION ........................................................................... 20 i. The crew can arrest the vessel as a result of the respondent’s failure to pay the

crew 20 ii. The right to exercise a maritime lien is subrogated to the claimant ................... 21

B. THE TRIBUNAL CAN AND SHOULD AUTHORIZE THE ARREST AND JUDICIAL SALE OF

THE VESSEL .......................................................................................................................... 23

V. THE CLAIMANT IS NOT RESPONSIBLE FOR THE

DEMURRAGE INVOICED BY RESPONDENT ........................................ 24


iii

LIST OF ABBREVIATION

Art. Article

Act UK Arbitration Act 1996

B/L Bill of Lading

Cargo 1,000 x 70 kg bags of Coffee Beans

Case File IMLAM Moot Scenario 2018

Charterer Cerulean Beans and Aromas Ltd.

Claimant Cerulean Beans and Aromas Ltd.

COGSA Carriage of Goods by Sea Act 1991

CPR 35 United Kingdom’s Civil Procedure Rules 35

EWHC English Wales High Court

EWCA Civ. Court of Appeal of England and Wales

Decisions (Civil Division)

FCA Federal Court of Australia

i.e. Namely

KB Law Reports King’s Bench

Lloyd’s Rep Lloyd’s Law Reports

LMAA London Maritime Arbitrators Association

Master Captain Edward Hillister of Madam

Dragonfly

nm Nautical Miles

NSWCA New South Wales Court of Appeal

NSWSC New South Wales Supreme Court


iv

p. Page

Para. Paragraph

Parties Cerulean Beans and Aromas Ltd. and

Dynamic Shipping LLC

Procedural Order No. 1 IMLAM 2018 Clarification for Procedural

Order No. 1

Procedural Order No. 2 IMLAM 2018 Clarification for Procedural

Order No. 2

QBD Queen’s Bench Division

Respondent Dynamic Shipping LLC

Shipowner Dynamic Shipping LLC

UKHL United Kingdom House of Lords

VCP Voyage Charterparty

Vessel Madam Dragonfly


v

LIST OF AUTHORITIES

Legal Instruments Referred in Page: Australian Navigation Act 2012 5, 10 International Convention on Standards of Training, Certification and Watch keeping for Seafarers (STCW), 1978

5

London Maritime Arbitrators Association Arbitration Terms – 2017

6

IMO Circular MSC; Circular 891 11 International Safety of Life at Sea Conventions (SOLAS) 1974

9

Senior Courts Act of 1981 – United Kingdom

20

United Kingdom Arbitration Act 1996 5, 7 United Kingdom Civil Procedural Rules 35

5

Books & Journals Referred in page: Anthony Rogers et al., Cases and Materials on the Carriage of Goods by Sea (Routledge, 4th Edition, 2016)

14

Beatson, Sir Jack, et al. Anson's Law of Contract. 29th edition, Oxford University Press, 2010.

16, 21

Clarke M ‘Good Faith and Good Seamanship’(1998, Lloyd’s Maritime and Commercial Law Quarterly)

11

Felix Sparka, Jurisdiction and Arbitration Clauses in Maritime Transport Documents: A Comparative Analysis, vol. 19 (Heidelberg: Springer, 2010)

23

John Schofield, Laytime and Demurrage, 6th Ed., (New York: Informa Law, 2011)

24, 25

Joseph Story, Commentaries on the Law of Bailments,

13

Lindsay Gordon, Maritime Arbitrations / Expert Witness (London Maritime Arbitrators Association Publication)

5

Mandaraka-Sheppard, Aleka, Modern Maritime Law (Volume 2: Managing Risks and Liabilities) Third Edition. p. 182

23

R. M. Goode, Commercial Law 66, (London, 1982) Waddams

22

Tetley, William. “Assignment and Transfer of Maritime Liens: Is There Subrogation of the Privilege?” Maritime

21, 22


vi

Law and Commerce, vol. 15, July 1984, pp. 393–417. Tetley, William. International Conflicts of Law: Common, Civil & Maritime. International Shipping Publications, 1994. p.539

21

Baatz, Yvonne, editor. Maritime Law. Third ed., Informa Law from Routledge, 2014. p. 478

24

Cases: Referred in page: Alexander v Cambridge Credit Corp (1987) 9 NSWLR 310

16

Anglo Group plc v. Winther Browne & Co. [2000] EWCH Technology 127

6

Attorney-General v Smith (1918) 34 T.L.R. 566 11 Baldwin’s Ltd. v. Halifax Corporation (1916) 85 L.J.K.B. 1769

11

Bank of China v Ship “Hai Shi” (No 3) [2013] FCA 660

10

Blackburn v Flavelle (1881) 6 App Cas 628 - 6 App Cas 628

15

Black Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1981] 2 Lloyd's Rep 446

5

Burns v MAN Automotive (Aust) (1986) 161 CLR 653

18

Cantor Fitzgerald v Tradition UK Ltd Judgment Transcript of 15 April 1999

6

Clark v Hine, (1908) 15 S.L.T. 914 22 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54

16

C V Sheepvaartonderneming Ankergracht v Stemcor (A/sia) Pty Limited [2007] FCAFC 77 160 FCR 342

9

Davis v Garrett (1830) 6 Bing 716 11 Diplock, L. J., in Orakpo v. Manson Investments, [1977] 3 W.L.R. 229

21

Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd [2008] VSCA 26

18

Cassa Nazionale della Previdenza Marinara v. Proceeds of Sale of the Italian Steamship Acrux [1965] P. 391

21

Gardiner V Agricultural & Rural Finance Pty Ltd (2007) NSWCA 235

12

Hadley v Baxendale (1854) 9 Excg 341 16


vii

Daniel Harmer v. William Errington Bell andOthers (‘The Bold Buccleugh’) [1850-1851] VII Moore, P.C. 267 13 E.R. 884

20

Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd (2006) FCA 1324; 236 ALR

14

The Great Eastern (1867) L.R. 1 A. & E. 21 Leeds Shipping Co Ltd v. Duncan Fox & Co Ltd (1932) 37 CC 213

24

Makita (Australia) Pty Ltd v Sprowles 52 NSWLR 743

4

McFadden v Blue Star Line [1905] 1 KB 697 10 Morris v. West Hartlepool Steam Navigation Co. Ltd

21

National Justice Compania Naviera SA v Prudential Assurance Company Limited 1993] 2 Lloyds Rep 68

6

Naviera Amazonica Peruana SA v. Compania Internacionale de Seguros [1988] 1 Lloyd's Rep

5

North Stafford Steel, Iron and Coal Co (Burslem) Ltd v Ward (1868) LR 3 Exch 172

15

Orakpo v. Manson Investments, [1977] 3 W.L.R. 229

21

Paul v. Speirway Ltd [1976] Ch. 220 22 Polivitte Ltd. v. Commercial Union Assurance Co. Plc., [1987] 1 Lloyd's Rep. 379

6

c. (20th defendant) & Ors v Fili Shipping Co. Ltd. (14th claimant) [2007] UKHL 40

7

Powell v Owners of the Proceeds of Sale of the Halcyon Skies (No.1) [1975 Folio No. 376

21, 24

Re Carus Wilson and Greene ( 1886) (18 QBD 7) 5 Ropner Shipping Co Ltd v Cleeves Western Valleys Anthracite Collieries Ltd (1927) 27 LL L Rep 317

25

Robinson v Harman (1848) 1 Ex 850, 855 16 R v Wallis (1949) 78 CLR 529 15 Samuel & Co v West Hartlepool Steam Navigation Co (1906 v

21

Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322

18

Siordet v Hall (1828) 4 Bing 607 13, 14 Shipping Corporation of India Ltd v Gamlen Chemical Co A/Asia Pty Ltd [1980]

14

Smith, Hogg &Co. v. Black Sea and Baltic General Insurance Co. (1940) AC 997

14

The Tagus, [1903] P. 44 23 Transco Plc v. Stockport Metropolitan Council [2003] UKHL 61

12


viii

The Alas[2014] 4 HKLRD 160 23 The British-Mexican Petroleum Company Ltd. v. Westport (Owners) [1965] 1 W.L.R 796

21

The Dictator, [1892] P. 304 23 The Leon XIII (1883) 8 P.D. 121 21 The Nina (1867-69) ) L.R. 2 A. & E. 44 21 The Rena K [1979] QB 37 24 The Ripon City (1897) P 226 20 The Tacoma City (1991) 1 Lloyds Rep. 330 20

The Tuyuti [1984] QB 838 24

The Two Ellens (1872) LR 4 PC 16 20

The “William F. Safford.” (1860) 69 167 E.R. 37 23 Union of India v N. V. Reederij Amsterdam (The Amstelslot) [1963] 2 Lloyd’s Rep. 223

9

United Africa Company v. Owners of The Tolten [1946] W.N. 7 (1945)

20

Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528

16

Werner Motoring Group Pty Ltd v NMX Pty Ltd, [2012] VSC 201

19

Wilky Property Holdings PLC V London & Surrey Investment Limited (2011) EWHC 2226

5

Yuri Privalov & 17 Ors [2007] UKHL 40 7 Miscellaneous Referred in page: Master Mariner Association Australia – Origin of the Term Master Mariner (http://www.mastermariners.org.au/stories-from-the-past/11-origin-of-the-term-master-mariner)

4

Membership of Guidelines – LMAA Membership Guidelines (http://www.lmaa.london/membership.aspx)

6


1

STATEMENT OF FACTS

A. THE PARTIES

1. The Claimant is Cerulean Beans and Aroma Ltd (“Claimant”), a coffee bean company.

The Respondent is Dynamic Shipping Ltd (“Respondent”), a shipping company.

Madam Dragonfly (“Vessel”) is flagged in Cerulean. Both Cerulean and Dillamond are

European Settlements who has adopted all United Kingdom (UK) laws.

A. THE PERFORMANCE OF THE CHARTERPARTY

2. The Claimant and Respondent entered into the Voyage Charterparty (“VCP”) dated on

22 July 2017. Under the VCP, 4 containers of coffee beans cargoes (“Cargo”) was

loaded at the loading port of Cerulean and should arrive at Dillamond by 7pm 28 July

2017.

3. On 24 July 2017, Respondent sent an email that gave notice that the Vessel departed

and is en route to Dillamond and the cargo receipt is attached to the email, with the

expectation that the delivery of the cargo is to be completed by 5pm on Friday, 28 July

2017.

4. After no contact for over 17 after the email was sent due to solar flares that knocked

out communications and satellite systems, the Respondent informed the Claimant that

the Vessel is safe and en route to Dillamond on 26 July 2017 at 2:32pm.

5. Unfortunately, due to Respondent’s failure to replace the hardcopy maps for the current

voyage, Respondent Informed Claimant that the Vessel had to deviate to the port of

Spectre approx. 1,000 NM to the West at 27 July 2017 at 7:17 am, promising that the

Vessel would leave the port of Spectre shortly and would be on her way to Dillamond.

6. Responding to such information, Claimant sent a reply to emphasize that the Cargo

needed to be delivered as soon as possible and must be completed by 7pm the following

night. Further, following Claimant’s instruction to take the most direct route to


2

Dillamond, Respondent tried to justify the deviation by explaining that they had no

systems and the only maps that they held were for Spectre.

7. On 28 July 2017, the Respondent was informed at 4:28 pm that the massive storm about

to hit Dillamond in 30 minutes through the radar, but decided to continue the voyage.

However, on 29 July 2017 at 7:04 pm, the Claimant notified them that the Claimant’s

agents were out in the pouring night waiting for the Vessel to no avail.

8. Respondent finally arrived at Dillamond on 29 July 2017 at 7:00 am. Unfortunately,

the Vessel was facing congestion at the port due to the massive storm. Due to

congestion at the port, Claimant had no choice but to take the Cargo approximately at

1:17pm on 31 July 2017. When claimant took the Cargo, claimant noticed that one of

the containers weighed differently than the others.

9. On August 1 2017 at 9:17am, the Claimant notified that they were only able to deliver

one cargo since the rest were completely water damaged due to the Respondent’s failure

to deliver them properly and promptly. The Respondent denies the allegations and

stated that the coffee was shipped in accordance with the specifications, asking if the

water did not get in after the delivery on Saturday.

10. Following the completion of the voyage, Respondent has attached an invoice, holding

the Claimant liable for freight (USD500,000), agency fee at Spectre (USD75,000), fee

for repairing the hull (USD875,000), agency fee at Dillamond (USD50,000),

demurrage (USD100,000), and the use of electronic access systems at Dillamond

(USD10,000), which the Claimant deems completely unacceptable since the costs and

the demurrage claim are entirely the result of the Respondent’s own breach of the VCP.


3

ARGUMENTS ADVANCED

I. THE TRIBUNAL HAS JURISDICTION TO DETERMINE

DAMAGES

1. The Claimant contends that the Tribunal possesses jurisdiction over the present

dispute due to the fact that Clause 27 (E) has been fulfilled. The aforementioned clause

states that

“A party may not commence legal proceedings (including Arbitral Proceedings under

this clause) in respect of dispute unless Clause (D), has been complied with first.”1

Clause (D) states that

“[…] Any dispute as to technical matters arising out of or in connection with this

contract shall be referred to expert determination by an independent Master

Mariner.”2

2. From the aforementioned Clause, the Claimant submits that [A] the Claimant has

complied with Clause 27 (D) of the VCP due to [B] the expert opinion proving to be

sufficient and [C] the Tribunal’s substantive jurisdiction extending to determination

of damages.

A. THE CLAIMANT COMPLIED WITH CLAUSE 27(D) OF THE VCP

3. Because [i] all concerns regarding technical matters under Clause 27(G) in the dispute

have been considered through [ii] expert determination by an independent Master

Mariner, the Claimant has complied with clause 27(D) in order to commence the

arbitral proceeding.

1 Clause 27 (E) of the Voyage Charter Party ( Case File P. 12) 2 Clause 27 (D) of the Voyage Charter Party ( Case File P.12)


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i. Technical Matters Under Clause 27(G)

4. Under Clause 27(D) of the VCP, both parties agree to refer any dispute to technical

matters arising out or in connection with this contract to an expert determination.3

First, under Clause 27(G), technical matters are limited to matters

"surrounding the technical aspects of the performance of the charter party, such as the vessel's route, loading and unloading of cargo, storage conditions and other matters which can reasonably be considered to be within the expert technical knowledge of a Master Mariner”4

5. Were the damages suffered by the Claimant of a dispute in relations with technical

matters, it must be regulated under the definition of Clause 27 (G) of VCP.

ii. Technical Matters Have Been Considered by an Independent Master Mariner

6. Based on the practice in Australia, a Master Mariner means “the person who has

command or charge of a Vessel”5 and having complete knowledge about the sea.6 This

implies that the Master Mariner’s expert determination within the VCP shall include

matters that require their technical expertise due to their experiences at sea.7 There is

a difference between Master Mariner and an arbitrator, based on the existence of

Clause 27 (F) of the VCP which states “any person appointed under Clause D must

act as an expert and not an arbitrator.”8

7. The role of the Master Mariner, in this case, lies solely on looking into the technical matters

regulated under the VCP9 to determine the damage. This shall mean that at the beginning of

3 Case File p. 12 4 ibid 5 Australian Navigation Act 2012 – Part 4 ( Interpretation) ( 1 – L) ; International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW), 1978 Chapter 1 General Provisions 1 (3) 6 Origin of the Term Master Mariner – Master Mariner Association Australia. http://www.mastermariners.org.au/stories-from-the-past/11-origin-of-the-term-master-mariner 7 Makita (Australia) Pty Ltd v Sprowles 52 NSWLR 743 [85] (Heydon JA); that is, the expert’s evidence must explain how the field of ‘specialised knowledge’ in which the witness is expert by reason of ‘training, study or experience’ 8 Case File p.12 9 WILKY PROPERTY HOLDINGS PLC V. LONDON & SURREY INVESTMENTS LIMITED [2011] EWHC 2226 (Ch) (Richard Snowden QC) (Para 34) ; Re Carus Wilson and Greene ( 1886) (18 QBD 7) ( Lord Esher) (page 9)


5

the contractual relations, both parties were aware of the scope of the function of a Master

Mariner.

8. The combination of the function of a Master Mariner as regulated within the

governing law of the VCP and the party’s presumed intention on the scope of their

work shall mean that the present dispute does not fall under Clause 27 (G) due to the

fact that damages are outside the scope of work of a Master Mariner, that strictly

revolves around technical matters.

B. THE EXPERT DETERMINATION SUBMITTED IS SUFFICIENT FOR

ARBITRATORS TO CONSIDER

9. As stated within the VCP, both parties have already agreed to resolve any disputes

arising out of or in connection with this contract to an arbitration proceeding in

London in accordance to the rules of the LMAA Arbitration Rules.10

10. This also gives legal effect to the Act as the lex fori11 of the proceedings and CPR 3512

as the standards on instructions on how evidence should be admitted in the UK, in

which its principles shall apply within the present forum choice.13

11. The expert determination submitted to the Tribunal is considered sufficient for the

commencement of the proceeding for [i] the Master Mariner only acts to give insight

on technical matters that [ii] the Tribunal will then have the jurisdiction to determine

damages based on their objectivity. Lastly, it is ultimately [iii] the Tribunal’s

substantive jurisdiction.

10 London Maritime Arbitrators Association Arbitration Terms 11 1. Black Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1981] 2 Lloyd's Re p 446 (J. Mustill) at p. 453 ; Naviera Amazonica Peruana SA v. Compania Internacionale de Seguros [1988] 1 Lloyd's Rep [LJ. Kerr] 116 at p119); Golden Ocean Case. 12 United Kingdom’s Civil Procedural Regulation 35 (Expert/Assessors) 13 Lindsay Gordon “ Maritime Arbitration / Expert Witness” (London Maritime Arbitrators Association Publication) – p. 1-2


6

i. A Master Mariner is Only Able to Give Considerations on Technical

Matters

12. Here, the Claimant argues that the Respondent’s claim that this dispute should be

determined by an independent Master Mariner goes against the Tribunal’s authority

to accept all procedural and evidential matters, as the Tribunal has competence.14

13. The Master Mariner’s objectivity is integral in this process. In The Ikarian Reefer, the duties

and responsibilities of an expert include never assuming the role of an advocate15 and should

usually be limited to technical matters on which they will help the court or arbitral tribunal

with their testimony or to give evidence of common professional practice regarding the issue

at hand.”16 This example shows that the role of an expert is limited to only fill the technical

gaps that an Arbitrator would not be assumed to know17 and not anything beyond that.

ii. Arbitrator’s knowledge maintains objectivity in taking account

expert determination

14. In order to maintain objectivity on considering expert determination and competence

in making judgment, the VCP requires arbitrators to possess expertise in shipping and

maritime matters.18 The current forum choice obliged their arbitrators to have

experience in the shipping industry and good knowledge of English Law related to

shipping as well as the ability to draft reasoned awards in maritime dispute subject.19

This reflects the arbitrator’s quality in determining damages that need to be

14 LMAA Arbitration Terms 14 (A) on Arbitration Procedure 15 National Justice Compania Naviera SA v Prudential Assurance Company Limited 1993] 2 Lloyds Rep 68; Polivitte Ltd. v. Commercial Union Assurance Co. Plc., [1987] 1 Lloyd's Rep. 379 at p. 386 per Mr. Justice Garland ; “An expert witness in the High Court should never assume the role of an advocate.” 16 Anglo Group plc v. Winther Browne & Co. [2000] EWCH Technology 127 (Creswell J) (P109-2) ; Cantor Fitzgerald v Tradition UK Ltd Judgment Transcript of 15 April 1999 paragraph 70; he emphasised the particular importance of experts being scrupulously independent in highly technical cases like computer cases. 17 Ibid 18 Case File – Arbitration Terms 19 Membership Guidelines – LMAA Membership Guidelines (Point IV)


7

compensated in an objective manner, where the evidence shall be conclusive and

binding for both parties.20

15. For this reason, the requirement that technical matters in Clause 27 (G) of the VCP be

considered is fulfilled when the expert determination from the Master Mariner was

given to the Tribunal, mandatory in Clause 27(D). However, this process does not

mean that the Arbitrator will rule arbitrarily, since their proposed judgment is based

on evidence that originate from expert opinion that they, as arbitrators with

background knowledge have considered and years of practice within the same

industry.

iii. The Tribunal’s jurisdiction extends to determination of damages

16. The Tribunal may adjudicate in this dispute based on Clause 30 on UK Arbitration

Act 1996, which states the Tribunal shall be entitled to determine the damages based

on Kompetenz – Kompetenz21 principle. This factor is influenced by the fact that the

law allows the Tribunal to rule on its substantive jurisdiction on “matters that has

been submitted to arbitration in accordance with the arbitration agreement.”22

17. Within the present dispute, the notion of determination of damages is excluded from

the matters that should be regulated within the Clause 27 (G) of the VCP, and this

shall lead to jurisdiction of the Tribunal to answer the questions of damages.

20 ibid – page arbitration; procedural order ( MASUKIN JOURNALS CIARB JG.) 21 Premium Nafta Products Ltd. (20th defendant) & Ors v Fili Shipping Co. Ltd. (14th claimant); Yuri Privalov & 17 Ors [2007] UKHL 40 per Lord Hoffman and Lord Hope. 22 UK Arbitration Act 1996 – Clause 30 (3) on Jurisdictions of the Tribunal.


8

II. THE RESPONDENT HAS BREACHED THE VCP

18. The Respondent’s failure in exercising due diligence has resulted in deviation of the

Vessel to the port of Spectre23. When the storm hit Dillamond, the Vessel was stuck

there and caused the Cargo to be received at 31 July 2017, three days after the agreed

date.24 Thus, the Respondent’s failure to exercise due diligence leads to delay on

arrival which violates Clause 9 of the B/L

19. Here, the Claimant submits that the Respondent failed to fulfill the contract due to [A]

the Respondent’s unjustified deviation from the original route, and [B] such deviation

caused delay that did not fall under the force majeure clause. [C] Further, upon arrival,

the Respondent’s decision to use access barcode was a breach of the VCP.

A. THE RESPONDENT UNJUSTIFIABLY DEVIATED TO SPECTRE

20. As stipulated in the VCP, the Respondent has agreed to take the most direct route to

Dillamond.25 However, during the voyage, the Respondent failed to do so by deviating

to Spectre without the Claimant’s approval, which was not justified under any clause

specified in the VCP.

21. Due to this, the Claimant submits the deviation to the port of Spectre amounted to a

breach of the VCP. This entitles the Claimant to be compensated for losses arising

from [i] unseaworthiness of the Vessel [ii] in which deviation cannot be deemed

justified.

i. Deviation arises out of unseaworthiness

23 Case File, p. 19 24 Ibid, p. 25 25 Ibid, p. 2


9

22. In the present case, the Respondent has deviated from the agreed route and failed to

follow the Claimant’s instruction to take the most direct route to Dillamond, for the

reason other than what was permitted under the VCP, which constitutes as a breach of

the VCP.

23. Clause 17 of VCP stipulates that:

“Vessel had liberty to deviate for the purpose of saving life or property…charterers will not be held liable in any way howsoever for such deviation”

However, the Claimant submits that deviation was unjustified since it arises out of

unseaworthiness of the Vessel. A Vessel is seaworthy if and only if it is in a fit state

to encounter the ordinary perils of the voyage undertaken.26 Moreover, it extends to

the smallest details on board, including the accuracy of the charts.27

24. As stipulated in the Marine Orders 27, a Vessel carrying an electronic chart display

and information system must ensure the system and the back-up arrangements,

replacements, and additions for systems and equipment,28 is an up to date printout.29

25. Further, as demonstrated in the case of The Amstelslot, in order for the carrier to be

exempted from liability, they must prove that due diligence had been exercised. The

carrier will be held responsible for the unseaworthiness of the Vessel, if such defect

were reasonably discoverable by the exercise of due diligence. 30

26. The Respondent must prove not only that the defect made the Vessel unseaworthy but

also the failure to discover the defect before the voyage was due to negligence.31 In

the case at hand, it is clear that the Respondent did not change the hardcopy maps

26 Navigation Act 2012 Art. 23 27 Navigation Act 2012 Division 5, Art. 224(1); Pretty, Nicola S – “Unseaworthiness – Turning a Blind Eye?” [2008] ANZMarLawJl 6; (2008) 22(1) Australian and New Zealand Maritime Law Journal 42 28 Marine Orders 27 Art. 20 29 Marine Orders 27 Art. 23(3)(a); SOLAS Chapter 5 Regulation 27 30 Union of India v N. V. Reederij Amsterdam (The Amstelslot) [1963] 2 Lloyd’s Rep. 223 31 CV Sheepvaartonderneming Ankergracht v Stemcor (A/sia) Pty Limited [2007] FCAFC 77; 160 FCR 342 para. 225


10

since the last journey 32 and rendered the Vessel’s unseaworthiness to cause a bigger

liability than what would be expected.33

27. Therefore, the deviation to Spectre did not fall under VCP as it was caused by the

negligence of the Respondent in not changing the hardcopy maps since the last

voyage, and not providing back-up arrangement that is required. This signifies that

the Vessel was unseaworthy to even start the voyage.

ii. Deviation cannot be justified

28. The Claimant pleads that the Respondent has deviated for the reason of failing to

exercise due diligence. As defined in The Hague Visby Rules, due diligence shall be

exercise to provide a seaworthy Vessel. 34 The test would appear to be objective in

that ‘the Vessel must have the degree of fitness which an ordinary careful and prudent

owner would require his vessel to have at the commencement of her voyage having

regard to all possible circumstances of it. 35

29. In determining whether deviation is justified in such circumstances will depend upon

a comparison between the gravity of the danger and the inconvenience of taking

avoiding action.36 Such comparison will be explained below:

a. On July 18, six days before the Vessel had sail, The Cerulean Mail has published a

news regarding solar flares that will be occurred within seven days, along with an

advised to provide back-up arrangements.37

32 Case File p. 18 33 Bank of China v Ship “Hai Shi” (No 3) [2013] FCA 660 para. 5 34 Hague Visby Rules Art. 3(1) 35 McFadden v Blue Star Line [1905] 1 KB 697 p 706 36 Wilson, John. Carriage of Goods by Sea. 7th ed., Pearson Education Limited, 2010. p. 76 37 Case File, p. 35


11

b. By the time Vessel has departed Cerulean and is en route to Dillamond, she did not

replace the hardcopy maps since the last journey,38 and not provide back-up

arrangements as she only relies on satellite-based navigation and communications.

c. Despite the Claimant’s clear instructions to take the most direct route to Dillamond,

the Vessel deviated to the port of Spectre and lost its contact for 17 hours,39 until the

effect died down on 26 July 2017.40

d. Moreover, the Cerulean National Communication Agency reported the solar flares

effect only lasted for four hours,41 and in the event where a system was being affected

for almost 20 hours, thus the delay can be attributed to old and faulty equipment.

This demonstrates the incompetence of the Master of the Vessel in ensuring all

software and hardware used for accessing electronic version42 of nautical

publications that is in compliance with IMO Circular. 43

30. Due to this, the Claimant pleads that deviation was not proportionate to the danger.

The deviation was caused by irresponsible action by the Respondent in using faulty

equipment that constitutes as a failure to exercise due diligence. Further, the deviation

cause delay on arrival and consequently enhance the risk of the Cargo to be damaged

when the Vessel was used for an extended period in the course of the voyage.44

31. Referring to the case of Davis v Garrett 45, the shipowner is liable for loss happening

after the deviation is over, in a sense that no protection is available to the carrier under

the contract of carriage since it cease to exist from the moment of deviation, and

38 ibid, p. 18 39 ibid, p. 17 40 Ibid 41 ibid, p. 35 42 Clarke, M, ‘Good Faith and Good Seamanship’ [1998] Lloyd’s Maritime and Commercial Law Quarterly 465 43 Marine Orders 23 Clause 23(5); IMO Circular MSC/Circ.801 Guidelines for the onboard use and application of computers 44 Attorney-General v Smith (1918) 34 T.L.R. 566 45 Davis v Garret (1830) 6 Bing 716


12

henceforth. Therefore, the Respondent cannot be an exemption under VCP, since the

deviation to Spectre was unjustified since it was not for the purpose of saving life and

property that is allowed under VCP.

B. RESPONDENT CANNOT RELY ON FORCE MAJEURE CLAUSE

32. As a consequence to the unjustified deviation, the Respondent was stuck 100nm out

from Dillamond after encountering a storm. Notwithstanding the Respondent’s

awareness of the urgent nature of shipment, the Respondent did not manage to deliver

the Cargo promptly to the port of Dillamond until, 31 July 2017, three days after the

expected date of arrival. Due to this, the Claimant submits that the Respondent has

failed to handle both foreseeable events, and cannot rely on force majeure because [i]

the events did not fall under force majeure clause, [ii] as they were caused by

negligence.

i. There was no force majeure

33. Clause 17(b) of VCP sets forth that Force Majeure event means unforeseen weather

events, Act of God.46 In order to argue an event constitute as an Act of God, it shall

mean the accident was due to natural causes, directly and exclusively without human

intervention.47 Referring to McKendrick, force majeure events defined as irresistible,

unforeseeable, external to the person claiming48 discharge would make performance

impossible and not merely difficult.

46 Case File p. 9 47 Transco Plc v. Stockport Metropolitan Council [2003] UKHL 61, para.59; Per Atkin J. in Baldwin’s Ltd. v. Halifax Corporation (1916) 85 L.J.K.B. 1769 at p. 1774. 48 GARDINER v AGRICULTURAL AND RURAL FINANCE PTY LTD [2007] NSWCA 235 para. 223 Kiefel J; Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd [2006] FCA 1324; 236 ALR 115 para. 61


13

34. A party must prove not only the impact of a natural phenomenon but he could also not

reasonably have anticipated or avoided its effects.49 Hence, the carrier will not be able

to rely on the defense of Act of God if the damage could have been foreseen and

reasonable steps could have been taken to prevent it.50

35. In the present case, the event was foreseeable to the Respondent because of the news

was published in Cerulean, which is where the Respondent’s base.51 The Claimant

pleads that the fault was on Respondent in his failure to make the Vessel fit to meet

and undergo the perils of sea and other incidental risks to which of necessity she must

be exposed in the course of a voyage.52

36. The event was not an Act of God if its occurrence could have been avoided by the

exercise of reasonable care.53 It would not have been excused if negligence were

involved in it.54 No wrongdoer can be allowed to justify his own wrong when the loss

actually happened whilst his wrongful act was in operation. Thus, the loss shall be

attributable to the wrongful act.55

ii. The delay was caused by negligence

37. Moreover, Clause 17(c) provides that force majeure also means:

“...hindrance in whatsoever nature in mining, processing, loading, shipping or discharging of product without the negligence of the charterer”

The Respondent may contend that the event of solar flares and storm constitute as

force majeure under Clause 17(c). However, as stated in the VCP, force majeure event

means “hindrances in loading, shipping, discharging [… ] without the negligence of

49 Ibid 50 Wilson, John. Carriage of Goods by Sea. 7th ed., Pearson Education Limited, 2010. P. 264 51 Procedural Order 2 Art. 1 52 Ibid, p. 9 53 Siordet v Hall (1828) E.R. 902 54 Abbot’s Law of Merchant Ships and Seaman, 1810, at p. 242 55 Davis v Garret (1830) 6 Bing 716; Joseph Story, Commentaries on the Law of Bailments, p. 272


14

the Charterer”. 56 A common carrier will not be able to be exempted from liabilities

if the damage could have been foreseen and reasonable steps could have been taken

to prevent it.57 The exception is not available where there is any human participation

in the occurrence, which causes the loss. 58

38. Pursuant to the case of Trade and Transport Inc v Iino Kaiun Kaisha Ltd, Kerr J stated

that the parties cannot rely on the protection of hindrance under force majeure clause,

if the relevant hindrance was a breach of contract by the contractor.59 Similarly, in the

present case, the Respondent cannot rely on the clause because the hindrance

happened after the Respondent’s breach the VCP by deviating from the contract

voyage.

39. Nevertheless, in the event where both of the breach is co-operating causes of

unseaworthiness and negligence, as if negligence facilitates the perils to inflict

damage to the cargo, the exception of perils does not affect the fundamental

obligation.60 Thus, it shall be considered that the damage arises from negligence.61

40. All of these events lead to the conclusion that the Respondent had failed to exercise

due diligence. Consequently, the Respondent shall be held liable for its failure for the

loss, which resulted in unnecessary deviation due to several chains of irresponsible

actions.

56 Case File p. 9 57 Siordet v. Hall and Others (1828) E.R. 902; Wilson, John. Carriage of Goods by Sea. 7th ed., Pearson Education Limited, 2010 p. 264 58 Ibid 59 Trade and Transport Inc v Iino Kaiun Kaisha Ltd [1972] 2 Lloyd’s Rep. 154 60 Lord Wright in Smith, Hogg &Co. v. Black Sea and Baltic General Insurance Co. (1940) AC 997, at p.1004; Anthony Rogers et al., Cases and Materials on the Carriage of Goods by Sea (Routledge, 4th Edition, 2016) p. 79 61 Shipping Corporation of India Ltd v Gamlen Chemical Co A/Asia Pty Ltd [1980] (Judge Mason and Wilson para. 5)


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C. THE RESPONDENT HAS BREACHED THE VCP FOR THE USE OF ACCESS

BARCODE

41. The Respondent’s use of access barcode shall be considered as a breach of the VCP.

Clause 12 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, for attending to matters concerning

the cargo and the vessel.”

42. The Clause above obligates the Respondent to deliver the Cargo only by consigning

them to the Claimant’s agents at the port. Where a contract expressly stipulates the

process by which an obligation is to be performed, the agreement is not to be construed

so as to allow performance by other means.62

43. Here, the Claimant never agreed to use the access barcode as a substitute of delivery

under Clause 12 of the VCP. The term delivery should therefore be construed as an

express term of discharging the cargo to the Claimant’s agents, implying the invalidity

of the use access barcode as substitute of the obligation.

44. Since it did not fall under Clause 12 of VCP, therefore, the use of access barcode did

not constitute as performance under this contract.

III. THE CLAIMANT IS ENTITLED TO RECOVER DAMAGES FROM

RESPONDENT’S BREACH OF CHARTER PARTY

45. Having submitted that the Respondent has breached the VCP, the Claimant further

contends that Claimant is entitled to recover damages in the amount of $30,200,000

caused by the breach. When it comes to recoverability of damages, Claimant can only

62 North Stafford Steel, Iron and Coal Co (Burslem) Ltd v Ward (1868) LR 3 Exch 172, 177 (Willes J); Blackburn v Flavelle (1881) 6 App Cas 628, 634–5 (Sir Barnes Peacock); R v Wallis (1949) 78 CLR 529, 550 (Dixon J).


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recover damages if the loss suffered was not too remote, which the loss arose

naturally, and reasonably foreseeable, thus the guilty party will be liable to those

unexpected damages.63

46. To the extent these conditions are satisfied, the Claimant’s loss is to be placed in the

same situation, financially, with respect to having his losses compensated as if the

contract had been performed.64 Accordingly, [A] the Respondent will be liable for

damaged Cargo. Further, [B] the Respondent’s liabilities extend to the Claimant’s

consequential damages, [C] the Claimant’s attempt to mitigate his losses.

A. THE RESPONDENT IS LIABLE FOR THE CLAIMANT’S DAMAGED

CARGO

47. The Claimant is entitled to recover the damaged Cargo in the amount of $15,750,000

because of the Respondent’s delay in delivering the Cargo and the use of access

barcode. To establish a causal connection test between a breach of contract and the

damages occurred, the innocent party needs only to show that the breach was a cause

of the loss.65

48. Here, the Respondent’s delay of delivery caused damage to the Cargo. When a

contract stipulates the time of the performance, the time becomes the essence of the

contract.66 The Respondent has been reminded multiple times in regards to the

importance of this shipment that is to be delivered on 28 July 2018.67

49. Under Clause of 12 of VCP, what is meant by delivery is that the Vessel must be

consigned to the Claimant’s agent at the discharging port for matters concerning the

63 Hadley v Baxendale (1854) 9 Excg 341, 355; Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 64 Ibid; Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54, 174 CLR 64 (Deane J) Par. 2; Robinson v Harman (1848) 1 Ex 850, 855; 154 ER 363, 365. 65 Ibid; Alexander v Cambridge Credit Corp (1987) 9 NSWLR 310, 358 66 Beatson, Sir Jack, et al. Anson's Law of Contract. 29th ed., Oxford University Press, 2010. Page 442 67 Case File p. 2, 18, 19


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Cargo.68 However, the delivery did not occur until 31 July of 2017 when Claimant

collected the Cargo at the port left by the Respondent.

50. Had the delivery been made during the agreed time, the water sealant would still have

been resilient, preventing the damage. Referring to the expert determination of Simon

Webster, the damaged occurred at 4.30am on 30 July 2017,69 around the time the

Respondent was aware the sealant would be wearing off. Here, it was the

Respondent’s failure to make proper delivery at the agreed time, specified in the VCP,

with completed delivery made in 6 days which is going beyond the duration of the

sealant’s proper use.

51. Consequently, Respondent shall be held liable for the water damaged Cargo as the

damages was caused by Respondent’s breach of VCP for delaying the delivery of the

Cargo, and the use of access barcode.

B. THE RESPONDENT’S LIABILITIES EXTENDS TO CLAIMANT’S

CONSEQUENTIAL DAMAGES

i. The consequential damages are not too remote to be recovered

52. Despite the Respondent’s knowledge of the importance of the shipment and the

existence of the Claimant’s obligation with the client,70 the Respondent disregarded

such interest as proven through failed delivery of the Cargo promptly and properly.71

53. In the present case, the Claimant did not only suffer for the damaged Cargo but also

consequential damages in the amount of US$14,450,000, consisting of alternative

coffee cargo bought in the amount of $9,450,000 and settlement payment to the client

68 Ibid, P. 7 69 Ibid, p. 43 70 Case file p. 2 & 14 71 Ibid, p. 25 & 27


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in the amount of $5,000,000.72 Consequential damage is anything beyond the normal

measure of damages, such as profits lost and expenses incurred through breach.73

54. Here, at the time the VCP was concluded between the involved parties, the

Respondent was aware that Cargo is meant to fulfill the Claimant's contractual

obligation with the client.74 In regards to causation, the Respondent knew that the

Cargo was required for an urgent shipment of native Cerulean coffee beans to Coffee

of the World Ltd, for a coffee festival in Dillamond.75 Therefore, failure in delivering

the Cargo promptly and properly would directly breach the Claimant's obligation to

the client.

55. Thus, it is reasonable for the Claimant to demand the Respondent to be liable for the

alternative coffee bought and settlement payment, which was caused directly by the

Respondent’s incompetence. These damages are not only reasonably foreseeable but

also fulfill the ‘causal connection’ test between the Claimant’s losses from the client

and the Respondent’s breach of the VCP.

ii. Further, the Claimant has mitigated his losses

56. The Claimant is also entitled to recover for any consequential damages incurred as a

result of his attempts to mitigate the losses.76 The general rule of mitigation for the

failure to deliver goods requires the Claimant to obtain a substitute, not costly or

extravagant, for the performance of his obligation.77

72 Ibid, p.27 73 Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd [2008] VSCA 26 Par. 93 74 Case file p. 2 & 14 75 Ibid. 76 Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322, 355; Burns v MAN Automotive (Aust) (1986) 161 CLR 653, 658 77 Werner Motoring Group Pty Ltd v NMX Pty Ltd, [2012] VSC 201 Par. 41


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57. While it is the Respondent’s failure to deliver the Cargo within the conditions of the

VCP, the Claimant has taken its duty to mitigate losses caused by that failure with the

settlement payment to prevent the legal action the client has threatened the Claimant

with.78

58. Secondly, the Claimant acquiring alternative coffee with a lower price to fulfill the

obligation means that Claimant has mitigated the loss of the damaged Cargo. The

Claimant was under the obligation to deliver rare, high quality, specialty grade green

coffee to third party79 but compensated with alternative coffee relatively cheaper.

Therefore, the Respondent shall be liable to compensate for the losses incurred as a

result of his own breach of contract, losses that would plausibly be relatively costly

had the Claimant not managed to successfully mitigate them.

IV. THE CLAIMANT IS ENTITLED TO EXERCISE A MARITIME

EQUITABLE LIEN OVER THE VESSEL

59. Made aware that the crew of the Vessel will not sail unless their wages are paid,80 the

Claimant made the initial transfer of $100,000 to the Respondent for crew wages on

or around 22 July 2017 to secure the urgent voyage.81 Even with the money from the

Claimant, the Respondent still has not paid the crew wages due for the voyage and

has not repaid the US$100,000 to the Claimant.82 As a result, the Claimant argues that

he can exercise a maritime equitable lien over the Vessel.

78 Case file p. 29 79 Ibid, p. 2, 29 80 Case File p.1 81 Ibid, p. 38 82 Ibid.


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60. The maritime lien would involve the Arbitral Tribunal arresting, and if the Claimant’s

demands are still not satisfied, selling the vessel, in that order.83 The proceeds of the

sale will then be distributed amongst the lien creditors,84 in this case the Claimant and

the crew in order to meet both their losses. 85

61. Due to the Claimant paying for the crew, [A] the Claimant is entitled to have the right

to a maritime lien subrogated and as a result, [B] be able to enforce the arrest and

judicial sale the Vessel authorized by the Tribunal.

A. THE CLAIMANT IS ENTITLED TO EXERCISE A MARITIME EQUITABLE

LIEN OVER THE VESSEL THROUGH LEGAL SUBROGATION

62. Usually, [i] the crew would be the one capable of arresting the Vessel in regards to

the payment of wages, [ii] but upon the Claimant’s payment of $100,000 for crew

wages, the right to arrest the Vessel shall be subrogated to the Claimant.

i. The crew can arrest the vessel as a result of the respondent’s failure

to pay the crew

63. The crew is able to exercise the maritime lien as a result of the Respondent’s failure

to provide wages for them. According to the Senior Courts Act of 1981,86 one of the

claims recognized as giving rise to maritime liens is seamen’s wages.87 The crew is

entitled to exercise a maritime lien against the Vessel88 because the Respondent

83 United Africa Company v. Owners of The Tolten [1946] W.N. 7 (1945); Daniel Harmer v. William Errington Bell andOthers (‘The Bold Buccleugh’) [1850-1851] VII Moore, P.C. 267 13 E.R. 884; The Ripon City (1897) P 226 (The President ( Sir F. H. Jeune )) 84 Tisand Pty Ltd v Owners of the Ship MV ‘Cape Moreton’ (Ex ‘Freya’) (2004) 210 ALR 601 at 607; The Tacoma City [1991] 1 Lloyd’s Rep. 330 (Lord Justice Dillon Lord Justice Ralph Gibson and Lord Justice Leggatt) 85 The Two Ellens (1872) LR 4 PC 16 (Sir Robert Phillimore); Daniel Harmer v. William Errington Bell andOthers (‘The Bold Buccleugh’) [1850-1851] VII Moore, P.C. 267 13 E.R. 884 86 Senior Courts Act of 1981 87 The Ripon City [1897] P. 226 at 242 (The President ( Sir F. H. Jeune )) 88 The "Tacoma City" (1990) 1 Lloyds Rep. 330; The Great Eastern (1865-67) L.R. 1 A. & E. 384 (Dr. Lushington); The Nina (1867-69) L.R. 2 A. & E. 44 (Sir Robert Phillimore); The Leon XIII (1883) 8 P.D. 121 (Brett , M.R. , and Bowen , L.J.); The British-Mexican Petroleum Company Ltd. v. Westport (Owners) [1965] 1 W.L.R 796 (Hewson J.); Cassa Nazionale della Previdenza Marinara v. Proceeds of Sale of the Italian Steamship Acrux [1965] P. 391 (Hewson J.)


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denying the crew their wages results in the violation of the employment terms between

the crew and the Respondent set forth in the International Transport Federation.89

64. As an employer under the VCP, the Respondent is obliged to be accountable for the

wages of seamen, as their employees.90 If wages have yet to be paid to the crew, either

in whole or partially, a maritime lien can be exercised based on the default of payment

to the crew.91

ii. The right to exercise a maritime lien is subrogated to the claimant

65. The Claimant conferred the payment of $100,000 to the separate trust account because

the Claimant was told the requested sum was for the sole purpose of holding the crew

wages.92

66. Since the Respondent has failed to fulfill their obligation as shipowner,93 and the

Claimant compensated using their own money, the right to exercise a maritime lien is

then transferred by legal subrogation to the Claimant.

67. Subrogation is the common law is 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.” 94 The subrogation of the maritime lien takes place by operation of

law is based on the principles of equity,95 not out of contract. The debt itself requires

89 Clause 16(a) VCP 90Morris v. West Hartlepool Steam Navigation Co. Ltd [1956] 1 W.L.R. 177 (Lord Morton of Henryton, Lord Porter , Lord Reid , Lord Tucker and Lord Cohen)

91Powell v Owners of the Proceeds of Sale of the Halcyon Skies (No.1) [1975 Folio No. 376] (Brandon J); Tetley, William. International Conflicts of Law: Common, Civil & Maritime. International Shipping Publications, 1994. p.539; The Ripon City, [1898] P. 78 (The President ( Sir F. H. Jeune )) 92 Procedural Order No. 2; Ripon City, The, [1898] P. 78 (1898) (The President ( Sir F. H. Jeune )) 93 Morris v. West Hartlepool Steam Navigation Co. Ltd [1956] 1 W.L.R. 177 (Lord Morton of Henryton, Lord Porter , Lord Reid , Lord Tucker and Lord Cohen) 94Tetley, William. “Assignment and Transfer of Maritime Liens: Is There Subrogation of the Privilege?” Maritime Law and Commerce, vol. 15, July 1984, pp. 393–417.; Diplock, L. J., in Orakpo v. Manson Investments, [1977] 3 W.L.R. 229, at 234 95 Ibid.


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the Respondent to repay the money because the $100,000 made the Respondent profit

for the transaction considered to be unconscionable and unjust. 96

68. Further, the operation of the right of subrogation is only when the payment is

involuntary.97 Securing the crew wages in order to commence the voyage is the reason

why the Claimant agreed in the first place, rendering their act of payment completely

dependent on the Respondent’s failure to pay the crew. It would be inequitable to deny

the Claimant such rights given the threat of not sailing caused him to make the advance

in the first place.

69. Here, subrogation is directly concerned with preventing hardship,98 depicted in the

Claimant paying for the crew as requested by the Respondent in order to avoid further

delay of the commencement of an urgent voyage. The Claimant was given no choice

but to pay unless they do not want the crew to set sail.99

70. The Claimant would have been entitled to be prioritized as highly as the crew would

have been in terms of payment. Those had advanced money to pay claims which

conferred to a maritime lien, are ranked on the proceeds of the Vessel in the priority

to which the party who received payment would have been entitled.100

71. If the Claimant had not advanced the money, the seamen would have no doubt

arrested the Vessel,101 and enforced their right to priority of payment. It is no dispute

that if the whole payment is of wages to the crew, who might have seized the ship,

96 Paul v. Speirway Ltd (1976) Ch. 220 (Lord Hoffman) 97 Tetley, William. “Assignment and Transfer of Maritime Liens: Is There Subrogation of the Privilege?” Maritime Law and Commerce, vol. 15, July 1984, pp. 393–417. 98 R. M. Goode, Commercial Law 66, (London, 1982) Waddams at 888 99 Case File p.1 100 Clark v Hine, (1908) 15 S.L.T. 914 (1908) (Lord Salvesen); The “William F. Safford” (1860) 69 167 E.R. 37 (Lushington) 101 Procedural Order no 2


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then that the doctrine that the man who has paid the privileged claims stands in the

shoes of the privileged should be applied immediately.102

B. THE TRIBUNAL CAN AND SHOULD AUTHORIZE THE ARREST AND

JUDICIAL SALE OF THE VESSEL

72. When the maritime lien is subrogated to the Claimant, the Claimant automatically has

the cause of action to enforce an in rem action, which holds the liability against the

Vessel, in order for the High Court to have jurisdiction over the arrest action against

the Vessel simply to obtain security for the referred claims.103 This means that the

claim acts against the Vessel and it is considered as the defendant and the entity at

fault.104

73. However, since the in rem action is only a procedural device to force the shipowner

to make an appearance at the proceeding, the claim will in practice be brought against

the Respondent, as the shipowner and the real defendant for the Vessel.105 This is for

the further execution of the arrest in order to secure the Vessel in its place, and if there

is no security from the Respondent to satisfy the demands of the Claimant, then the

sale of the Vessel as well.106

74. The process for the sale involves proving that the Respondent is unlikely to be able to

satisfy the award.107 In this regard, the Respondent’s financial troubles108 make the

102 The Tagus [1903] P. 44 (Phillimore J); The “William F. Safford.” (1860) 69 167 E.R. 37 (Lushington) 102 Procedural Order no 2 103 Mandaraka-Sheppard, Aleka, Modern Maritime Law (Volume 2: Managing Risks and Liabilities) Third Edition. p. 12 104 Felix Sparka, Jurisdiction and Arbitration Clauses in Maritime Transport Documents: A Comparative Analysis, vol. 19 (Heidelberg: Springer, 2010) 105The Dictator, [1892] P. 304 (Jeune J) 106 The Alas[2014] 4 HKLRD 160, at para [7] 107Baatz, Yvonne, editor. Maritime Law. Third ed., Informa Law from Routledge, 2014. p.478 ; The Rena K [1979] QB 377, at p 405 (Judge Brandon J); The Tuyuti [1984] QB 838 (Lord Justice Ackner and Lord Justice Robert Goff) 108 Case File p.36


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Respondent unlikely to satisfy the crew wages and the initial transfer of $100,000 the

Claimant lent to the Respondent.

75. If not paid for by bail or security,109 an arrested Vessel has to be sold by the Admiralty

Marshal to extinguish the maritime lien over the Vessel and repay the Claimant

through the proceeds of the sale.110

V. THE CLAIMANT IS NOT RESPONSIBLE FOR THE DEMURRAGE

INVOICED BY RESPONDENT

76. Respondent has sent an invoice to Claimant stating that Claimant is entitled for USD

$100,000 of demurrage with the rate of $20,000 per hour111. Claimant submits the

demurrage accrued for the reason of Respondent’s own breach of Charter party.

77. In determining demurrage, the fault arose where there was a causal connection

between the failure to discharge timeously and the action of the Vessel112. In the case

of Leeds Shipping v Duncan Fox, the charterer is liable to pay the agreed demurrage

unless the failure to have the ship discharge in agreed time is due to the fault of

shipowner. 113

78. Moreover, demurrage will not run whilst there is a delay caused by the fault of the

shipowner for whom he is responsible.114 When the alleged default of shipowner

caused delay at some other point in time, the charterer may be able to claim damages

for that breach of time subsequently suffered. 115

109 Powell v Owners of the Proceeds of Sale of the Halcyon Skies (No.1) [1975 Folio No. 376] (Brandon J); 110 Ibid. 111 Case File p. 32 112 John Schofield, Laytime and Demurrage, 6th Ed., (New York: Informa Law, 2011) p. 201 113 Leeds Shipping Co Ltd v. Duncan Fox & Co Ltd (1932) 37 CC 213, at p. 217 114 John Schofield, Laytime and Demurrage, 6th Ed., (New York: Informa Law, 2011) p. 198 115 Ibid


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79. Further, it is only where the charterers have been deprived of the use of the Vessel at

a time when they wanted the use of her, that time is suspended116. In the case at hand,

the Vessel was not available to the Claimant in the agreed time when it was needed

the most. Consequently, deprived the third party to received the cargo for the opening

of the festival.

PRAYER FOR RELIEF

For the aforementioned submission, the Claimant respectfully requests that this Tribunal

declare that

a) The Tribunal has jurisdiction to determine damages and that the parties can

commence arbitral proceeding

b) The Respondent has breached the VCP

c) The Claimant is entitled to consequential damages in the amount of $30,200,000 and

to exercise a maritime lien over the Vessel

d) Respondent is not entitled to claim demurrage

116 Ropner Shipping Co Ltd v Cleeves Western Valleys Anthracite Collieries Ltd (1927) 27 LL L Rep 317