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16th ANNUAL INTERNATIONAL MARITIME RBITRATION MOOT COMPETITION
2015
SRI LANKA LAW COLLEGE TEAM NO. 18
IN THE MATTER OF AN ARBITRATION HELD AT LONDON
CLAIMANT DEFENDANT
WESTERN TANKERS INC LDT PTE
MEMORANDUM FOR THE DEFENDANT
TEAM MEMBERS
DAMINDA WIJAYARATNE
HIMANTHA WICKREMARATNE
NAVEEN MAHA ARACHCHIGE
PRASHAN GUNARATNA
i
Table of Contents
INDEX OF AUTHORITIES............................................................................................................... iii
STATEMENT OF FACTS .................................................................................................................. 1
QUESTIONS PRESENTED ................................................................................................................ 2
ARGUMENTS ADVANCED ............................................................................................................. 3
A. THE TRIBUNAL HAS NO JURISDICTION TO DETERMINE THE MATTER ..................... 3
A.1 Disagreeing to Arbitration in London at the Negotiations Stage .......................................... 3
A.2 Law and Litigation Left Blank on the Fully Fixed Recap..................................................... 4
A.3 The Proper Arbitration Tribunal should be Singapore and Singapore Arbitration ............... 4
A.4 The Proper Seat of Arbitration is Singapore Based on the Doctrine of “Forum Non
Conveniens” ..................................................................................................................................... 5
B. THE CHARTERPARTY MAKES NO PROVISION TO STEM BUNKERS FOR THE FULL
VOYAGE ............................................................................................................................................. 6
C. THE MASTER ACTED UNDER VOYAGE RELATED INSTRUCTIONS FROM A THIRD
PARTY ................................................................................................................................................ 7
C.1 The Vessel Proceeded to an Alternative Discharge Location ............................................... 8
D. THE INABILITY OF THE VESSEL TO MEET HER DISCHARGE TARGET DATE WAS
DUE TO FAULT OF THE OWNERS ................................................................................................ 9
E. THE OWNERS ARE LIABLE FOR THE LOSS AND DAMAGES CAUSED BY THE
PIRATE ATTACK .............................................................................................................................. 9
E.1 Concealment of the Pirate Attack.......................................................................................... 9
E.2 Liability for Acts of Piracy.................................................................................................. 10
F. NO HIRE IS DUE AND OWED TO THE OWNERS ............................................................... 11
ii
F.1 No Hire was Due and Owed on 3rd
July 2014 ..................................................................... 12
F.2 Frustration of the Charterparty ............................................................................................ 12
F.3 The Vessel was Off Hire ..................................................................................................... 13
G. THE CHARTERERS ARE NOT LIABLE IN THE TORT OF FRAUD .................................. 14
G.1 The Claim Relating to the Tort of Fraud is not Admissible ................................................ 14
G.2 Even if Admissible, Fraud is not Proved............................................................................. 15
G.3 Even if the Tribunal Holds in favour of the Owners, the Loss and Damages Do Not Arise
from Fraud ...................................................................................................................................... 17
H. THE OWNERS BREACHED THE CHARTERPARTY BY PROVIDING A SHIP WHICH
WAS NOT FIT FOR SERVICE ........................................................................................................ 18
H.1 The Master's Incompetence to follow the Instructions Given to Him Attributes to the
Ship’s Unseaworthiness ................................................................................................................. 19
H.2 The Ship was Unseaworthy from the Beginning Due to the Failure to Follow Anti-Piracy
Precautions ..................................................................................................................................... 20
I. THE OWNERS ARE LIABLE FOR THE LOSS OF PART OF THE CARGO ....................... 22
I.1 The Owners are Liable Under the Tort of Conversion ........................................................ 23
I.2 The Owners Breached Their Duty as Bailee ....................................................................... 24
PRAYER ............................................................................................................................................ 25
iii
INDEX OF AUTHORITIES
CASES
Actis Co v Sanko Steamship Co (The Aquacharm) [1982] 1 Lloyd's Rep 7 (CA)………………… 21
Adler v Dickson [1955] 1 Q. B. 158……………………………………………………………….. 25
Amchem [1993] 1 S.C.R…………………………………………………………………………… 05
Bilta (UK) Ltd (in liquidation) v Nazir and others [2010] EWHC 1086 (Ch)…………………….. 16
Burges v Wickham (1863) 3 B & S 669……………………………………………………………. 20
Cohn v Davidson (1876-77) LR 2 QBD 455 (QB)………………………………………………… 20
Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696………………………. 13
Dempster & Co. and Others v Zochonis & Co [1924] A.C. 522…………………………………. 24
Derry v Peek (1889) UKHL 1 [1889] LR 14 App Cas 337……………………………………….. 16
Dodds v Walker [1980] 1 W.L.R. 1061……………………………………………………………. 12
Eco 3 Capital Ltd & Ors v Ludsin Overseas Ltd [2013] EWCA Civ 413……………………….. 17
EEOC v. Waffle House, INC. (2002) 534 U.S. 279, 122 S. CT. 754……………………………… 03
Elder, Dempster & Co Ltd v. Paterson, Zochonis & Co Ltd [1924] A.C. 522....……………….... 24
First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938…………………………………… 03
Freeman v. Reed (1863) 4 B.& S. 174…………………………………………………………...... 12
Gibson v Small (1853) 4 HL Cas 353……………………………………………………………... 20
Grant v Norway (1851) 10 C.B. 665; 138 E.R. 263…………………………………………...……22
Hispanica de Petroleos S. A. v Vencedora Oceanica Navegacion S. A. (The Kapetan Markos NL)
(No. 2) [1987] 2 Lloyd’s Rep. 321…………………………………………………………………. 24
Kopitoff v Wilson (1876) 1 QBD 602……………………………………………………………… 18
Lyon v Mells (1804) 5 East 428 (KB)……………………………………………………………… 20
McFadden v Blue Star Line (1905) 1 KB 697……………………………………………………... 19
iv
National Carriers v Panalpina Ltd [1981] AC 675……………………………………………….. 13
Papera Traders Co Ltd and Others v Hyundai Merchant Marine Co. Ltd. and Another (The
Eurasian Dream) [2002] 1 Lloyd's Rep 719……………………………………………………… 20
Port Swettenham Authority v. T. W. Wu & Co (M) Sdn Bhd [1978] 3 All ER 337……………….. 25
Premium Nafta Products Limited and others v. Fili Shipping Company Limited and others (UKHL
2007)……………………………………………………………………………………………….. 16
ProForce Recruit Ltd v. Rugby Group Ltd [2006] EWCA Civ 69………...……………………… 04
Pyrene Co. Ltd.v. Scindia Navigation Co. Ltd. [1954] 2 Q. B. 402……………………………... 25
Samuel v West Hartlepool Steam Navigation (1906) 11 Com. Cas. 115………………………….. 22
Sandemann v Scurr (1866) L.R. 2 QB.86………………………………………………………….. 22
Schuster v McKeller (1857) 7 E. & B. 704………………………………………………………… 22
Scruttons Ltd. v. Midland Silicones Ltd. [1962] A. C. 446……………………………………..… 24
Smith Hogg v. Black Sea (1940) AC 99………………………………………………………….... 19
Spiliada Maritime Corporation v. Cansulex Ltd (1987) AC 460………………………………… 05
Stanton v Richardson (1873-74) LR 9 CP 390 (Court of Exchequer)……………………………... 20
Steamship Calcutta Co. Ltd. v Andrew Weir and Co. (1925) 31 Com. Cas. 111………………….. 22
Steel v State Line Steamship Co. (1877-78) LR 3 App Cas 72 (H L)……………………………... 20
Stumore v Green (1868) L.R. 2 QB.86…………………………………………………………….. 22
The Fjord Wind [1999] 1 Lloyd's Rep. 307………………………………………………………... 19
The Makedonia [1962] 1 Lloyd’s Rep 316………………………………………………………… 19
The Marathon (1879) 40 LT 163…………………………………………………………………... 20
The St. Cloud (1863) B. & L. 4…………………………………………………………………...... 22
The Star Sea [1997] 1 Lloyd's Rep. 360…………………………………………………………… 20
v
Tradax Export SA v Dorada Compania Naviera SA of Panama (The Lutetian) [1982] 2 Lloyd’s
Rep. 140……………………………………………………………………………………………. 15
Wilson v Darling Island Stevedoring Ligterage Co. [1956] 1 Lloyd’s Rep. 364………………….. 24
STATUTES
Arbitration Act of 1996, UK ………………………………………………………………………. 04
Torts (Interference with Goods) Act 1977, UK……………………………………………………. 23
BOOKS
A.M. Jones and M.A. Dugdale, Clerk & Lindsell on Torts, 17th Ed. (London: Sweet and Maxwell,
1995)……………………………………………………………………………………………… 23
Black’s Law Dictionary 655, 6th Ed. (1990) .……………………………………………………. 05
Capt. Florencio J. T. Ventosa, Knowledge Re- Ship Business for Maritime Schools (1994), Rex
Printing……………………………………………………………………………………………... 13
G. H. Treitel, F. M. B. Reynolds, T. G. Carver, Carver on Bills of Lading, 3rd
Ed (London: Sweet &
Maxwell, 2011)...................................................................................................................... ...........24
P. Todd, Maritime Fraud and Piracy (2010)……………………………………………………….. 21
ONLINE MATERIAL
"Baltime 1939'' uniform time charter online:
www.uio.no/studier/emner/jus/jus/JUS5401/h11/.../baltime1939.pdf.............................................. 18
BBC Chartering, Chartering Terms, online: https://www.bbc
chartering.com/fileadmin/user_upload/Downloads/BBC_Chartering_Terms.pdf………………… 12
Best Management Practices for Protection against Somalia Based Piracy, (Scotland: Witherby
Publishing Group Ltd, 2011), online: http://www.mschoa.org/docs/public-documents/bmp4-low-
res_sept_5_2011.pdf?sfvrsn=0......................................................................................................... 11
ICC IMB Piracy and Armed Robbery Against Ships – 2014 Annual Report,Online:<
http://www.hellenicshippingnews.com/wp-content/uploads/2014/10/2014-Q3-IMB-Piracy-Report-
ABRDGED.pdf>.................................................................................................................... ….10, 22
White & Case (2010) International Arbitration Survey: Choices in International
Arbitration,Online:http://www.whitecase.com/files/upload/fileRepository/2010-International-
Arbitration-Survey-Choices-International-Arbitration.PDF……………………………………….. 06
1
STATEMENT OF FACTS
The Charterparty
A time Charterparty was entered into between the Claimants/Owners, Western Tankers Inc and the
Defendants/Charterers, LDT Pte. for a period of three months plus or minus 30 days commencing
4th
June 2014. The Vessel was chartered on an amended Shelltime 4 Charterparty with rider clauses.
It included a voyage from Singapore PB to OPL Luanda, Angola, West Africa with re-delivery in
the Mediterranean area.
Performance of the Charterparty
The vessel proceeded under the instructions of the Charterers until a certain point in time on 28th
June 2014. Thereafter, the Master of the Vessel was contacted by a third party, namely, ASA2.
ASA2 provided the Master with a discharge place different to the discharge place provided to the
Master by the Charterers. Consequently, the Vessel never reached and was never present at the
discharge place as instructed by the Charterers. There were no communications from the Vessel
received by either the Charterers or the Owners from 4th
July 2014 until 17th
July 2014.
Vessel is Off Hire
The vessel was placed off hire from the 4th
of July 2014 due to the Master breaching the voyage
instructions given by the Charterers.
The Pirate Attack
It later transpired that when the Vessel was in the location instructed by ASA2, it was attacked by
pirates. According to the Master, the piracy operation resulted in the theft of cargo of about
28,500mt of gasoil in up to five STS transfers.
2
QUESTIONS PRESENTED
A. Does the tribunal have jurisdiction to determine this matter?
B. Does the Charterparty make provision to stem bunkers for the full voyage?
C. Has the Master acted under voyage related instructions from a third party?
D. Was the Vessel unable to meet her discharge target date?
E. Are the Owners liable for the damages caused by the pirate attack?
F. Was hire due and owed to the Owners?
G. Are the Charterers liable in the tort of fraud?
H. Have the Owners breached the Charterparty by providing a ship which was not fit for
service?
I. Are the Owners liable for the loss of part of the cargo?
3
ARGUMENTS ADVANCED
A. THE TRIBUNAL HAS NO JURISDICTION TO DETERMINE THE MATTER
1. In order for an agreement for arbitration to take effect, both parties must consent to such
agreement. It has been observed that “courts should not assume that the parties have agreed to
arbitrate unless there is clear and unmistakable evidence that they did so.”1 If it appears that
consent has not been given by either party to arbitrate, a tribunal may not proceed to arbitrate
and any arbitration clause purported to be enforced, can be challenged for lack of jurisdiction.
This view has been affirmed in the First Options case2.
2. It is submitted that the Charterers never consented to arbitration in London. Hence, the
arbitration tribunal does not have jurisdiction to determine the matter. The Charterers further
submit that the proper seat and forum of arbitration should be Singapore and Singapore
Arbitration due to the reasons given below.
A.1 Disagreeing to Arbitration in London at the Negotiations Stage
3. In the course of negotiation of terms of agreement between the parties which were coordinated
by Bill (the Broker), the Charterers refused to have the seat of arbitration as London. An email
sent to him3 read; “Really not keen on London arbitration as we have had a bit of a negative
experience on this recently.”
1EEOC v. Waffle House, INC. 534 U.S. 279, 122 S. CT. 754 (2002).
2First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995):
“…before ‘arbitrators’ could purport to take jurisdiction over Kaplan personally it is necessary to show that Kaplan had
consented to their exercise of authority… [that] Kaplan had maintained consistently that he had never personally
consented to arbitration- and therefore, he had not 'waived' or 'surrendered' that defense.” Furthermore it affirmed that
lack of consent will challenge the jurisdiction; “'Kaplan's jurisdictional defense was in fact well-founded. Specifically,
he had never consented, in his individual capacity, to allow the arbitrators to determine the merits of the dispute.” 3Facts, p.2, Charles at LDTP/23
rd/1230 (UTC+8)/Bill at IMWMB.
4
4. The Charterers entrusted Bill (the Broker) to carry on the negotiations diligently and were under
no obligation to contact the Owners directly. The Charterers reasonably expected him to convey
their disagreement to the owners. Any failure to do the same on the part of the Broker does not
make the Charterers liable in any manner whatsoever.
5. According to the law of contract “use of materials in pre-contractual negotiations are allowed in
the construction of the contractual terms.”4 Thus the Charterers submit that the emails
negotiating the terms must be considered in the construction of the terms of the Charterparty.
Thus, no consent was given as to arbitration in London.
A.2 Law and Litigation Left Blank on the Fully Fixed Recap
6. The Shelltime 4 Charter-party was open for amendment. Anything which was to be amended
and agreed upon should have been mentioned in the fully fixed recap5 sent to both parties by the
Broker. By including a section for ‘Law and Litigation’ in the Recap, the Charterers were placed
under the impression that this too would be subject to amendment as had been agreed
previously.
7. However, the section headed; ‘Law and Litigation’ on the fully fixed recap6 being left blank is
evidence that no agreement was arrived at by the parties to arbitrate in London.
A.3 The Proper Arbitration Tribunal should be Singapore and Singapore Arbitration
8. The Charterers contend that according to the Arbitration Act 19967, the right to object to the
substantive jurisdiction of the tribunal is with the Charterers and accordingly, “an objection that
the arbitral tribunal lacks substantive jurisdiction at the outset of the proceedings must be raised
by a party not later than the time he takes the first step in the proceedings to contest the merits
4ProForce Recruit Ltd v. Rugby Group Ltd [2006] EWCA Civ 69.
5 Facts, p. 5, Subject: WESTERN DAWN / FULLY FIXED RECAP / CP DATED 26 MAY 2014.
6 Fully Fixed Recap, p. 6.
7 Arbitration Act of 1996, UK (hereinafter ‘the 1996 Act’).
5
of any matter in relation to which he challenges the tribunal’s jurisdiction.”8 When such an
objection is made, the tribunal has the power to rule on its own jurisdiction.”9
A.4 The Proper Seat of Arbitration is Singapore Based on the Doctrine of “Forum Non
Conveniens”
9. The 1996 Act provides that “the object of arbitration is to obtain the fair resolution of disputes
by an impartial tribunal without unnecessary delay or expense.”10
The doctrine of forum non
conveniens refers to the discretionary power exercised by courts in the common law world to
decline jurisdiction over a matter, despite having jurisdiction simpliciter, where the court is of
the opinion that the matter may be more appropriately tried elsewhere.11
This definition and the
phrase “without unnecessary delay or expense” is well supplemented by the Supreme Court of
Canada in Amchem12
when it held that the test for granting a stay based on forum non
conveniens is whether the defendant has clearly established that there is another forum that is
more convenient and appropriate for the pursuit of the action and securing the ends of justice
than the forum selected by the plaintiff.
10. The concept of the doctrine of forum non conveniens was explained by Lord Goff in the English
case Spiliada13
which held that “...a national court may decline to exercise jurisdiction on the
ground that a court in another State, which also has jurisdiction, would objectively be a more
appropriate forum for the trial of the action, that is to say, a forum in which the case may be
tried more suitably for the interest of all the parties and the ends of justice.”
8Ibid at Section 31(1).
9Ibid at Section 31(4)(a).
10Ibid at Section (1)(a).
11 Black’s Law Dictionary 655 (6th ed. 1990).
12Amchem, [1993] 1 S.C.R. at 38, 58.
13Spiliada Maritime Corporation v. Cansulex Ltd (1987) AC 460 at page 476.
6
11. In order to rely on the doctrine of forum non conveniens there is a list of non-exhaustive
conditions which needs to be present14
. In light of these conditions, the Charterers submit that
due to (1) the jurisdiction in which the factual matters giving rise to the dispute arose (e.g.
owner's allegation of not bunkering the ship at Singapore and not paying the second off hire, the
Charterer's claim of not equipping the ship to face piracy at Singapore); (2) the jurisdiction in
which a corporate party is incorporated (e.g. LDT PTE); (3) the relative convenience or
inconvenience to potential witnesses (e.g. Load port agents, Equator Bunkers), the proper seat of
arbitration should be Singapore. In addition to this, the Charterers further submit that although
London is a well-recognized international arbitration centre, Singapore has better jurisdiction
due to forum non conveniens. Singapore should be the seat of arbitration because it is also a well
recognised world arbitration centre.15
Due to these reasons, it is submitted that the tribunal has
no jurisdiction and the proper tribunal should be Singapore.
B. THE CHARTERPARTY MAKES NO PROVISION TO STEM BUNKERS FOR THE
FULL VOYAGE
12. The Charterparty required only that the vessel be bunkered by the Charterers at Singapore16
. The
Charterparty did not impose an obligation on the Charterers to stem ‘sufficient’ bunkers from
Singapore to OPL Luanda or any other point.
13. It is the Voyage Orders that states that the vessel must arrive at the loadport fully bunkered to
perform voyage17
. The voyage as per the Voyage Orders is from Singapore PB to OPL
14
Includes (1) the jurisdiction in which the factual matters giving rise to the dispute arose; (2) the location of each of the
parties; (3) where the majority of the parties are located; (4) the location of key evidence and witnesses (5) the location
from which the bulk of the evidence is expected to come; (6) the jurisdiction in which a corporate party is incorporated;
(7) the location of a corporate party’s records where the plaintiff seeks an accounting of the same; (8) where the cause
of action arose; (9) the relative convenience or inconvenience to potential witnesses. 15
White & Case (2010) International Arbitration Survey: Choices in International Arbitration. 16
Facts, p. 5, Fully Fixed Recap. 17
Facts, p. 14, Voyage Orders.
7
Luanda18
. The Charterers submit that they had bunkered sufficiently for the voyage from
Singapore to OPL Luanda. At the loadport, the vessel had 490MT ROB and a further
948.150MT19
bunkers were provided at Singapore. The Master made representations that the
said 950MT (approximated) of bunkers itself were sufficient to go to the discharge point20
.
However, the vessel at Singapore had on board bunkers of 1440MT (490MT + 950MT) which
was more than adequate to perform the voyage as per Voyage Orders.
14. The Charterers were obligated to accept and pay for all bunkers on board at the time of delivery
and therefore the ROB of 490MT were accepted by the Charterers21
as part of their bunkers.
15. According to the representations made by the Master, the consumption of 950MT from
Singapore PB to OPL Luanda will have left the vessel with 490MT remaining at Luanda.
However, the Master thereafter expected that at OPL Luanda there would be 350MT bunkers
remaining22
.
C. THE MASTER ACTED UNDER VOYAGE RELATED INSTRUCTIONS FROM A
THIRD PARTY
16. The Voyage Orders specified that the Master shall disregard any voyage related instructions
received from third parties and immediately refer such instructions to charterer for handling23
.
17. On 28th
June 2014, the Master received instructions from Atlantic STS Agency Ltd (ASA2)
which Agency had purported that the Charterers had passed control to it24
. ASA2 is not and has
never been the agent of the Charterers. From that point onwards, the Master followed and acted
18
Facts, p. 13, Voyage Orders. 19
Facts, p. 29, Email from Master of WESTERN DAWN to Chris at LDTP. 20
Facts, pp. 25 and 28, Emails from Master of WESTERN DAWN to Chris at LDTP. 21
Shelltime 4 Charterparty, Clause15, Lines 287-8. 22
Facts, p. 32, Email from Master of WESTERN DAWN to Chris at LDTP. 23
Voyage Orders, p. 13. 24
Facts, p. 35, Email from Atlantic STS Agency Ltd to Master of Western Dawn.
8
under instructions received from the said ASA2. The Voyage Orders stipulated that the Disport
Agents of the Charterer’s is Atlantic Services Agency and specified the email correspondence
address as [email protected]
. Despite such specifications, the Master had acted under
instructions received from a third party using a different email address, namely,
[email protected]. It is further submitted that the Master was well
aware of the proper email address as prior to the communication from ASA2, the Master had
sent several emails to Chris at LDTP which were also copied to Atlantic Services Agency
.
18. Further, the Voyage Orders required all routine operations communications to be sent to
Charterers27
. The Master is in breach of this provision as he did not copy/forward the emails he
sent to ASA2 to the Charterers.
19. An alleged ‘alternative discharge place in international waters off the Angolan coast’ was also
provided by the said ASA2 and the Charterers assume no responsibility for the vessel
proceeding to the said alternative discharge place. The Charterers submit that therefore, a
question of authorisation of the owners, is irrelevant.
20. The above is a breach of the Voyage Orders and thus any losses and damages resulting from
undertaking such third party instructions is the liability of the Master and vicariously, the
Owners.
C.1 The Vessel Proceeded to an Alternative Discharge Location
21. The Master was provided a discharge location by the Charterers known as STS Area 1 twice on
28th
June 201428
. The said location was recognised by the Master as 9deg 00’ South: 011 deg30’
25
Facts, pp. 14 and 15. 26
Facts, pp. 30, 31, 32, 33, 34, Emails from Master of WESTERN DAWN to Chris at LDTP Cc: Atlantic Services
Agency. 27
Facts, p.15, Communications General.
9
East29
. However, the Vessel proceeded to a different location, 6deg 00’ South: 8deg 10’ East30
in violation of the instructions given by the Charterers. As stated earlier, by not disregarding
voyage related instructions from third parties the Master has breached the Voyage Orders.
D. THE INABILITY OF THE VESSEL TO MEET HER DISCHARGE TARGET DATE
WAS DUE TO FAULT OF THE OWNERS
22. Due to the Master proceeding to a location different from the instructed discharge location, the
Vessel was unable to meet her discharge target date at the instructed OPL Luanda discharge
location (STS Area 1).
23. In any event, the Master made numerous representations that the Vessel will arrive at OPL
Luanda at least by 3rd
July 2014 even if it commenced the voyage and proceeded at 12 knots or
if the speed is reduced to 12 knots after the commencement of the voyage31
. It is submitted that
the cause of the Vessel being unable to arrive at the discharge location at least by 3rd
July 2014
is due to the Master proceeding to a different location.
24. As a result, the Vessel was unable to discharge the full cargo to Angola Energy Imports in
accordance with the voyage instructions and Bills of Lading.
E. THE OWNERS ARE LIABLE FOR THE LOSS AND DAMAGES CAUSED BY THE
PIRATE ATTACK
E.1 Concealment of the Pirate Attack
25. The Charterers submit that the Owners have willfully suppressed and/or concealed the fact that
an act of piracy took place at the said alternative discharge place. In the Statement of Claim, the
Owners allege that the loss of cargo was the result of an unauthorised discharge of cargo. The
28
Facts, pp. 33 and 34, Emails from Chris at LDTP to Master of WESTERN DAWN. 29
Facts, p. 34, Email from Master of WESTERN DAWN to Chris at LDTP. 30
Facts, p. 41, Email from Master of WESTERN DAWN to Chris at LDTP. 31
Facts, pp. 30, 32, 33, 34, Emails from Master of WESTERN DAWN to Chris at LDTP.
10
Master however, in his correspondence to both the Owners and the Charterers has stated that the
cargo lost was “stolen by pirates in multiple STS operations”32
and reiterates that fact in the
Incident Report wherein he states that the Vessel underwent a “CARGO THEFT IN UP TO 5
STS EVENTS UNDER PIRATES CONTROL”33
.
26. It is submitted that the Owners have concealed this fact as the pirate attack took place in a
location where the Master took the Vessel to, following the instructions of a third party, in
breach of the voyage instructions.
E.2 Liability for Acts of Piracy
27. Liability for acts of piracy lay directly with the Owners under the Charterparty.
28. Under the ‘Piracy Clause’ in the Special Provisions to ST4, the owners are required to adhere at
all times to the latest version of BMP, i.e. BMP 4, if the vessel proceeds to or through an area in
which there is a current risk of piracy. The vessel was chartered to proceed through a known
area of a risk of piracy, West Africa34
.
29. The Master has failed to adhere to the BMP 4 practices. The Vessel proceeded through or in
very close proximity to the High Risk Area as defined in BMP 4 (Annexure 1). Attacks have
taken place at most extremities of the High Risk Area35
. There is no indication that the latest
advice/updates were obtained from MSCHOA, NATO Shipping Centre and the UKMTO on the
extent and latest locations of pirate activity as recommended36
. No evidence has been adduced
that the Master carried out a thorough Risk Assessment as required by Section 3. According to
Section 4, typical pirate attacks commence with two small high speed open boats approaching
32
Facts, p.42, Email from Master of WESTERN DAWN to Oliver at WTI. 33
Facts, p. 42, Email from Master of WESTERN DAWN to Chris at LDTP. 34
ICC IMB Piracy and Armed Robbery Against Ships – 2014 Annual Report. 35
BMP 4, 2.4. 36
BMP 4, 2.5.
11
the vessel37
. The Master having observed two small boats on the radar38
does not act as required
by BMP 4. BMP Reporting Procedures under Section 5 are not followed by the Master. There is
no record of the Owners having registered the Vessel’s movement prior to entering the High
Risk Area with the MSCHOA. No Ship Protection Measures have been taken as recommended
by Section 8. Although it appears from the internal correspondence at WTI that it intended to
equip the Vessel with such protection measures39
, it failed to do so at Singapore or elsewhere.
The Master ought to have recognised that the two boats were pirate boats and followed the
procedure in Section 9 which includes informing UKMTO. The Master has failed to perform
such tasks.
30. Hire is payable under Sub-Clause (4) of the ‘Piracy Clause’ for the duration of a capture of the
Vessel only if two conditions are satisfied, namely; (1) the capture was not caused by a lack of
due diligence on Owners’ part; and (2) the Charterers have not exercised the option to require
Owners to purchase off-hire insurance
31. It is submitted that the first condition is not satisfied due to a combination of factors including
the Master proceeding to a wrong discharge location and the reasons enumerated in 28.1 above.
As such, hire is not payable for the duration of the pirate capture. In any case, the Vessel was off
hire prior to such capture as submitted in F.3 below.
F. NO HIRE IS DUE AND OWED TO THE OWNERS
32. No hire is due and owed to the Owners as per the Charterparty on 3rd
of July 2014 and the
Charterparty was frustrated by no later than 4th
July 2014 or in the alternative, the Vessel was
off hire from the same date.
37
BMP 4, 4.1. 38
Facts, p. 40, Email from Master of WESTERN DAWN to Oliver at WTI. 39
Facts, p. 22, Email from Oliver at WTI to Master of Western Dawn.
12
F.1 No Hire was Due and Owed on 3rd
July 2014
33. The Charterparty provides that hire is to be paid per calendar month in advance40
. According to
Cockburn C.J., in Freeman v. Reed41
“the calendar month… is complete when, starting from the
given day in the first month, you come to the corresponding day in the succeeding month
whatever be the length of either”42
. Therefore, if at all hire is due and owed, it is on 4th
July
2014 and not on 3rd
July 2014.
F.2 Frustration of the Charterparty
34. In order for a Charterparty to be frustrated, certain conditions must be met43
:
34.1. it must not be either party's fault
34.2. the contract should not make any provision for it
34.3. it must result in a change of circumstances so radical that the nature of the contract
fundamentally alters
34.4. performance involves a radical change from the obligation originally undertaken
35. The Charterparty does not contemplate a situation in which the Master of the Vessel follows
instructions from a party other than the Charterer. Further, the Vessel makes no contact with the
Charterers and the Owners for four and three consecutive days respectively. Such a situation is
beyond the control of both the Charterers and the Owners who are thus not at fault. This resulted
in the Vessel proceeding to an alternative discharge location and therefore the nature of the
40
Shelltime 4 Charterparty, Clause 9. 41
(1863) 4 B.& S. 174. 42
Similar commentary in Dodds v Walker [1980] 1 W.L.R. 1061 affirmed by the House of Lords, 1 W.L.R. 1027 and
BBC Chartering, Chartering Terms, https://www.bbc-
chartering.com/fileadmin/user_upload/Downloads/BBC_Chartering_Terms.pdf (“A “month” in a time charter usually
means a calendar month, which extends from the given day of the month to the day of corresponding number in next
month.”) and Capt. Florencio J. T. Ventosa, Knowledge Re- Ship Business for Maritime Schools (1994), Rex Printing
Co. 43
Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, National Carriers v Panalpina Ltd [1981]
AC 675.
13
contract between the parties changed. Due to the pirate attack that took place at the said
alternative location, it became impossible to perform the contract as part of the cargo was lost in
the attack.
36. It is further observed that the Master’s behaviour, which included not contacting either the
Charterer or the Owners for several days, leads to a reasonable suspicion of his involvement in
the pirate attack. The submission that the Master may have been acting in cahoots with the
pirates and siphoned cargo from the vessel is based inter alia on the following facts:
36.1. Communicating with and following instructions from, a third party, Atlantic STS
Agency Ltd, when in fact the details of the Charterer’s discharge port agent had been
provided in the Charterparty;
36.2. Not communicating with the Charterers from 29th
June 2014 to 2nd
July 2014;
36.3. Not communicating with the Charterer’s discharge port agent, Atlantic Services
Agency;
36.4. Proceeding to a discharge place other than the place provided by the Charterers;
36.5. Not taking any measures when the two small boats were shown on the radar;
F.3 The Vessel was Off Hire
37. The off hire clause in clause 21 of the Charterparty stipulates the following:
“On each and every occasion that there is an undisputed loss of time (whether by way of
interruption in the vessel’s service or, from reduction in the vessel’s performance, or in any
other manner) due to industrial action, refusal to sail, breach of orders or neglect of duty on
the part of the master, officers or crew, then without prejudice to Charterer’s rights under
Clause 3 or to any other rights of Charterers hereunder, or otherwise, the vessel shall be off-
hire from the commencement of such loss of time until she is again ready and in an efficient
14
state to resume her service from a position not less favourable to Charterers than that at which
such loss of time commenced…44
” (Emphasis added).
38. The foregoing allows the Charterers to place the vessel off hire if the Master breaches orders or
neglects his duties. Thus, when the Master neglected his duty to follow and/or breached the
order to proceed to the given discharge place, there arose a loss of time as a consequence, that is
from 4th
July to 17th
July. Thereby the vessel, under the terms of the Charterparty, was correctly
placed off hire from the commencement of such loss of time, 4th
July 2014 until she was again
ready and in an efficient state to resume her service from a position not less favourable to
Charterers than that at which such loss of time commenced.
39. The Charterers submit that the loss of time has not been disputed by the Owners. The reason for
not disputing such loss of time is due to the Master stating in two correspondences that the
Vessel was under pirate control during such period45
, which fact has been concealed in the
Statement of Claim of the Owners.
40. If the Vessel is off hire on the due date, there arises a suspension of the obligation to pay hire in
advance46
. The Charterer’s obligation to make payment of the next monthly instalment of hire in
advance is suspended until immediately before the ship was again at the service of the
Charterers47
.
G. THE CHARTERERS ARE NOT LIABLE IN THE TORT OF FRAUD
G.1 The Claim Relating to the Tort of Fraud is not Admissible
41. Clause 46 (b) of the Charterparty specifies the following:
44
Shelltime 4 Charterparty, Clause 21 (a) (ii). 45
Facts, pp. 41 and 42: Emails from Master of Western Dawn to Oliver at WTI and Chris at LDTP. 46
Tradax Export SA v Dorada Compania Naviera SA of Panama (The Lutetian) [1982] 2 Lloyd’s Rep. 140. 47
Ibid.
15
“All disputes arising out of this charter shall be referred to Arbitration in London in accordance
with the laws of England…”
42. In the recent Fiona Trust48
decision, the House of Lords held in favour of a wide interpretation
of arbitration clauses, which would necessarily include “disputes arising out of” agreements, if
English law applies and London is the seat of arbitration.
43. However, this decision must be applied in light of its considered application in Bilta (UK) Ltd
(in liquidation) v Nazir and others49
. While following Fiona Trust, the Chancery Court held that
a part of the dispute, the non-Jetvia sale, is not a “dispute arising … under, out of or in
connection with” any such transaction.
44. The dispute in the instant arbitration is in respect of whether the Charterer’s made fraudulent
representations with regard to the supply of bunkers at the discharge location. This question is
taken out of the scope of the Charterparty as the vessel proceeded to a different location at
which location it was attacked by pirates. Thus the allegations of the tort of fraud made by the
Owners are not disputes arising out of the charter.
G.2 Even if Admissible, Fraud is not Proved
45. Derry v Peek50
set out the requirements for the tort of fraud to be complete. The two elements of
the tort were determined to be as follows:
Firstly, there must be proof of fraud. Secondly, it must be shown that a false representation has
been made (1) knowingly; or (2) without belief in its truth; or (3) recklessly, carelessly whether
it be true or false.
48
Premium Nafta Products Limited and others v. Fili Shipping Company Limited and others (UKHL 2007). 49
[2010] EWHC 1086 (Ch), [2010] Bus. L.R. 1634. 50
(1889) UKHL 1, [1889] LR 14 App Cas 337.
16
46. It is submitted that neither element is satisfied. As per Lord Herschell, the first is a strict
requirement51
. The Owners have no proof of fraud as all representations made by the Charterers
were true at the time they were made and in order to succeed the Owners must prove that the
state of mind of the Charterers was to dishonestly perpetrate fraud on the Owners52
, which is a
heavy burden. Mere allegations of dishonesty53
would not suffice.
47. The second requirement is not satisfied as all representations were made with belief in its truth.
The representation made by the Charterers on 3rd
June 2014, that alternative bunker supply will
be available passing Durban or Cape Town was a true and honest belief at the time it was made.
However, the Charterers were unable to bunker at the said places and it is submitted that the
Charterers did not envision any serious detrimental consequences from such non-supply because
the Master had made representations that the bunker supply was sufficient to reach the discharge
location as submitted in para 13.
48. Further, the above was not a breach of the Charterparty as it is not within the ambit of the same.
49. On 28th
June 2014 the Charterers informed the Master that bunkers would be supplied at the
discharge location (STS Area 1). The Charterers submit that they had made proper arrangements
for the provision of bunkers at the said STS Area 1. However, owing to the neglect of duty
and/or breach of orders by the Master as submitted in para 37, the Vessel never reached STS
Area 1.
50. In any event, the Charterers are not responsible for any consequences that resulted from
following instructions received from the third party, ASA2. The Owners have made mere
inferences that ASA2 made representations on behalf of the Charterers based on the fact that the
51
Ibid. As per Lord Herschell, “First in order to sustain an action of deceit, there must be proof of fraud, and nothing
short of that will suffice.” 52
Eco 3 Capital Ltd & Ors v Ludsin Overseas Ltd [2013] EWCA Civ 413. 53
Para 18 of Statement of Claim.
17
correspondences from ASA2 made references the outstanding issues pertaining to the Vessel’s
intended supply of bunkers. The Charterers do not wish to delve into discussing numerous
possibilities of how ASA2 might have been aware of such issues, which possibilities include,
but are not limited to, ASA2 intercepting messages from and between the Charterers and the
Vessel as part of a piracy operation.
G.3 Even if the Tribunal Holds in favour of the Owners, the Loss and Damages Do Not Arise
from Fraud
51. Even if the tribunal finds that the Charterers have committed fraud by making false
representations, the loss and damages as claimed by the Owners do not arise from such fraud.
The Charterers submit that the Owners have convoluted facts in their Statement of Claim54
. The
fact that the Charterers made representations that alternative bunker supply will be available
passing Durban or Cape Town and that they did not do so has no relevance to the claim of fraud.
52. The Charterers submit that they made two representations that bunkers would be supplied at
STS Area 1. Without prejudice to the contention that the representation that bunker supply
would be available at STS Area 1 was true and honest, even if such representation was false, the
Vessel proceeded to a different location and not the given STS Area 1. The vessel was not and
never was present at the said STS Area 1 in order to fall victim to such fraud. Therefore, the
particular loss and damages do not arise from such false representation, if any. The Charterers
are not responsible for the loss and damages that resulted from the Master following orders of a
third party.
54
Para 17 (a), (b) and (c) of Statement of Claim.
18
H. THE OWNERS BREACHED THE CHARTERPARTY BY PROVIDING A SHIP
WHICH WAS NOT FIT FOR SERVICE
53. The Charterparty requires the Owners to provide a ship which is “'in every way fit for service”55
at the beginning of delivery of the vessel and throughout the charter period. According to the
Charterparty, the ship owner is under an obligation to provide a ship which is seaworthy at the
commencement of the voyage. In McFadden v Blue Star Line56
it was observed that “a vessel
must have that degree of fitness which an ordinary, careful and prudent owner would require his
vessel to have, having regard to all the probable circumstances of the voyage”57
.
54. Most contracts of carriage particularly Charterparties58
provide expressly that the ship should be
seaworthy. For instance, clause 1 of ASBATANKVOY provides “…being seaworthy and
having all pipes, pumps and heater coils in good working order, and being in every respect fitted
for the voyage…” Even if there is no express seaworthiness clause, the duty to provide a
seaworthy ship is, nevertheless, implied at law. It was held in Kopitoff v. Wilson59
that “the ship
owner is, by nature of the contract, impliedly and necessarily held to warrant that the ship is
good, and is in a condition to perform the voyage then about to be undertaken, or, in ordinary
language, is seaworthy, that is, fit to meet and undergo the perils of the sea and other incidental
risks to which she must necessarily be exposed in the course of the voyage.” Thus, it is clear
that it is the Owners’ responsibility to make the ship seaworthy and it is a broad term which has
comprehensive applicability.
55
Shelltime 4 Charterparty, Clause 1 (c). 56
(1905) 1 KB 697. 57
Ibid as per Channell J. 58
Clause 1 of Baltime Form (1939). 59
(1876) 1 QBD 602.
19
H.1 The Master's Incompetence to follow the Instructions Given to Him Attributes to the
Ship’s Unseaworthiness
55. The Master, by following the instructions given by ASA2 who have never been the Charterer’s
agents as stated in para 17 rendered himself incompetent thus making the ship unseaworthy. The
Charterparty requires the ship to have an efficient master60
. The terms efficiency and
incompetence have been interpreted to bear the same meaning61
. Seaworthiness is not an
absolute concept and it is relative to the nature of the ship, to the particular voyage and even to
the particular stage of the voyage on which the ship is engaged62
. The Charterers contend that
even if the Master relies on a defence as to the loss or damage which occurred, it has been
observed that “if loss or damage has been caused partly by unseaworthiness and partly by some
other factors for which the carrier has a defence under the contract of carriage, or the applicable
regime, then the carrier is not entitled to rely on that defence unless he can prove precisely the
extent of the damage/loss has been caused solely by the exempted event.63
” In the instant case,
the Owners cannot rely on any defence because the loss and damage occurred purely due to the
incompetence of the Master by not following proper instructions and other reasons mentioned
herein.
56. Incompetence or inefficiency is a question of fact. Each case needs to be examined on its own
merits and at times it is difficult to distinguish between crew negligence and incompetence.
Incompetence may be proved from one incident and need not be demonstrated by reference to a
series of acts64
. In The Eurasian Dream,65
Creswell J provided guidance as to what may
constitute incompetence66
. Incompetence can be characterized as follows:
60
Shelltime 4 Charterparty, Clause 2 (a) (i). 61
The Makedonia [1962] 1 Lloyd’s Rep 316. 62
Per Justice Moore-Bick in The Fjord Wind [1999] 1 Lloyd's Rep. 307 at 315 (approved by Lord Justice Clarke [2000]
2 Lloyd's Rep. 191 at 197). 63
Smith Hogg v Black Sea (1940) AC 99. 64
Per Lord Justice Leggattin in The Star Sea [1997] 1 Lloyd's Rep. 360 at 373-374.
20
“…has the propensity to casualness, lack of effort and failure to use ability even though
theoretically capable of performing the job properly (i.e. a disinclination to perform the job
properly) that, again, renders him unfit or unsuitable (i.e. incompetent) for the assigned task,
duty or role on board the vessel”67
.
57. The Charterparty specifically provided the manner in which the Master is to perform his duties68
and when the Master neglected such provisions and followed the instructions given by ASA2,
he thus became incompetent, resulting in a breach of the Charterparty69
. This also makes the
ship unseaworthy because although theoretically he was capable of performing the job properly,
his lack of effort to carefully handle the communications and his inability to ascertain who the
real agent was, is a case of incompetency.
H.2 The Ship was Unseaworthy from the Beginning Due to the Failure to Follow Anti-Piracy
Precautions
58. The common law provides that whether expressed or implied, the ship owner has an absolute
duty to provide a seaworthy vessel70
when contracting to carry goods. Therefore, the duty on the
ship owner to provide for a seaworthy vessel is an absolute duty. Not only is there an obligation
on the fitness of the ship but also that she is able to withstand those ordinary perils of the sea71
.
59. It has been further observed that the notion of seaworthiness has long been recognized by law as
a concept which allows variables to be taken to consideration as was made clear in Burges v
Wickham72
by Cockburn J. when he commented that “... the term seaworthiness is a relative and
65
Papera Traders Co Ltd and Others v Hyundai Merchant Marine Co. Ltd. and Another (The Eurasian Dream) [2002]
1 Lloyd's Rep 719. 66
Ibid at 736. 67
Supra note 61 and Supra note 65. 68
Shelltime 4 Charterparty, Clause 13(a). 69
Shelltime 4 Charterparty, Clauses 1(c) and 2(a) (i). 70
Steel v State Line Steamship Co. (1877-78) LR 3 App Cas 72 (H L), The Marathon (1879) 40 LT 163, Cohn v
Davidson (1876-77) LR 2 QBD 455 (QB), Lyon v Mells (1804 ])5 East 428 (KB). 71
Steel v State Line Steamship Co. (1877-78) LR 3 App Cas 72 (HL). 72
(1863) 3 B & S 669, Hodges.
21
flexible term, the degree of seaworthiness depending on the position in which the vessel may be
placed, or on the nature of the navigation or adventure on which it is about to embark.” Adding
to the above view, it has been stated that the ship owner has a “bounden legal duty towards the
mariners for the safety of their lives, and towards the merchants who load their goods, that the
ship should be tight, staunch, and strong, and in every way fitted for the voyage, or, in other
words, seaworthy”73
. The ship owner has the absolute duty to provide a vessel that “…must be
fit in design, structure, condition, and equipment to encounter whatever perils of the sea a ship
of that kind, and laden in that way, may be fairly expected to encounter74
”.
60. Accordingly, when a certain risk is foreseeable in a voyage of such nature and it can be fairly
expected that a certain risk may encountered during the voyage, the ship owner has the
obligation to properly equip the ship to face such an expected risk. If it is known that the voyage
will include areas of a high risk of piracy, a ship that is not properly prepared may well not be
seaworthy75
.
61. The above gives rise to two different types of seaworthiness obligations. The first, that the
vessel, the crew and equipment will be able to withstand the ordinary ‘perils of the sea’
envisioned during the voyage, and the second, that the vessel must be suitable to transport the
cargo76
. It is submitted that none of these obligations have been adhered to by the Owners.
According to the IMB Piracy Report 2014 there were risks of pirate attacks both around
Malacca Strait, around Angola as well as Nigeria77
. It is also evident from the report that oil
73
Gibson v Small, (1853) 4 HL Cas 353 at 370. 74
Stanton v Richardson (1873-74) LR 9 CP 390 (Court of Exchequer). 75
Maritime Fraud and Piracy (2010) by Paul Todd. 76
Actis Co v Sanko Steamship Co (The Aquacharm) [1982] 1 Lloyd's Rep 7 (CA). 77
ICC IMB Piracy and Armed Robbery Against Ships – 2014 Annual Report.
22
tankers were frequent targets. Because of this apparent risk, the Master was under an obligation
to take anti-piracy precautions specified in the Charterparty under the special provisions78
.
62. Further obligations are enumerated in BMP4 as discussed in para 28.1. It is evident that the
Owners had the intention of complying with such obligations79
. However, their failure to do so
at Singapore made the ship unfit for service and unseaworthy because there was an apparent risk
at Malacca Straits and the ship did not have such equipment passing Malacca Straits80
and
neither was it properly equipped when it entered West Africa.
63. In view of the above, it is contended that the loss of cargo and damage to the vessel occurred
solely due to an incompetent master and an unseaworthy ship which does not make the
Charterers liable.
I. THE OWNERS ARE LIABLE FOR THE LOSS OF PART OF THE CARGO
64. The Master of a vessel acts as Agent for the Owners81
. This constitutes prima facie evidence that
the master signed the bill of lading on behalf of his principal, the Owners, and therefore the
contract of carriage of goods by sea was made with the Owners of the ship82
. Thus, the Owners
have the responsibility for goods on board the ship83
.
78
Special provisions to ST4 Proforma, Piracy Clause, Sub Clause (1) and Sub Clause (6) (D). 79
Facts, p.27, Email from Rich Evasion to Lucius at Purchasing and Cc: Master of WESTERN DAWN, Operations and
Safety Dept and Oliver at WTI. 80
Facts, p. 27, Email from Lucius at Purchasing to Master of WESTERN DAWN. 81
Samuel v West Hartlepool Steam Navigation (1906) 11 Com. Cas. 115 at 125, Steamship Calcutta Co. Ltd. v Andrew
Weir and Co. (1925) 31 Com. Cas. 111 at 111-112, Grant v Norway (1851) 10 C.B. 665; 138 E.R. 263, Stumore v
Green (1868) L.R. 2 QB.86 at 98. 82
Schuster v McKeller (1857) 7 E. & B. 704 at 723 and Sandemann v Scurr (1866) L.R. 2 QB.86 at 98. 83
The St. Cloud (1863) B. & L. 4 at p 15.
23
I.1 The Owners are Liable Under the Tort of Conversion
65. Conversion is defined as 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 it84
. Under UK law,
conversion is governed by the Torts (Interference with Goods) Act 197785
. The basic elements
of the tort of conversion of goods are (1) the defendant's conduct was inconsistent with the
rights of the owner or other person entitled to possession of goods; (2) the conduct was
deliberate rather than accidental; and (3) the conduct excludes the owner from use and
possession of the goods86
.
66. If the tribunal finds that the Master’s conduct suggests that he was involved in the pirate attack
as submitted in para 35, the Owners are liable in conversion as the Master is the employee or
agent of the Owners. The first element is satisfied as the conduct of the Master deprived the true
owners of the cargo, Angola Energy Imports87
of about 28,500mt of gasoil88
. The conduct of the
Master as far as his involvement is concerned was deliberate and such conduct has resulted in
Angola Energy Imports being excluded from the use and possession of the said gasoil.
67. The Owners have breached s. 2 of the 1977 Act which states that “[A]n action lies in conversion
for loss or destruction of goods which a bailee has allowed to happen in breach of his duty to his
bailor.” The contention that a bailor-bailee relationship existed is submitted in 8.2 below.
68. Relief that may be granted under the 1977 Act are (a) an order for delivery of the goods, and for
payment of any consequential damages, or (b) an order for delivery of the goods, but giving the
84
A.M. Jones and M.A. Dugdale, Clerk & Lindsell on Torts, 17th Edn (London: Sweet and Maxwell, 1995), p. 636, para
13-12. 85
Hereinafter the 1977 Act. 86
Ibid. 87
As per Bill of Lading, p. 44. 88
Facts, p. 42, Emails from Master of WESTERN DAWN to Oliver at WTI and Chris at LDTP but the precise amount
has not been determined by independent cargo inspectors.
24
defendant the alternative of paying damages by reference to the value of the goods, together in
either alternative with payment of any consequential damages, or (c) damages89
.
I.2 The Owners Breached Their Duty as Bailee
69. The Owners breached their duty as bailee in respect of part of the cargo. The law of bailment
has its origins in the case of Elder, Dempster & Co. and Others v Zochonis & Co90
. In Elder
Dempster, Lord Sumner states91
that “[I]t may be that… the obligations to be inferred from the
reception of cargo… amount to a bailment…”92
Even if the Master signs the Bill of Lading as
agent of the Charterer, he remains for the purpose of the carriage operation, which includes
taking possession of the cargo, the employee of the ship owner93
.
70. The Bill of Lading states that the Charterers are both the Shipper/Consignor and the Carrier. It
may be argued by the Owners therefore that the Owners are not party to the contract. However,
such a contention would not affect bailment due to several reasons. The Bill of Lading was
signed on behalf of the Master, who, in taking possession of the goods acted as the employee of
the Owners and thus his knowledge on the terms of the Bill could be imputed to the Owners94
.
More specifically, there is a contractual bailment between the Owners and the Charterers. When
the cargo of gasoil was delivered by the Charterers and received by the Master, an implied
contract between them arose95
.
89
Supra note 86 at s. 3 (2). 90
[1924] A.C. 522. 91
Lords Dunedin and Carson agreeing. 92
This is Lord Sumner’s preferred view. His Lordship also provides a possible alternate view that the Master may take
possession of the goods as agent of the Charterer but this possibility cannot be reconciled with the view that a time
charter is a contract for services and that the captain and crew remain the employees of the ship owner. 93
G. H. Treitel, F. M. B. Reynolds, T. G. Carver, Carver on Bills of Lading, 3rd
Ed (London: Sweet & Maxwell, 2011)
at page 430. 94
Wilson v Darling Island Stevedoring Ligterage Co. [1956] 1 Lloyd’s Rep. 364 at 364, Scruttons Ltd. v. Midland
Silicones Ltd. [1962] A. C. 446 at 455 and Hispanica de Petroleos S. A. v Vencedora Oceanica Navegacion S. A. (The
Kapetan Markos NL) (No. 2) [1987] 2 Lloyd’s Rep. 321 at 331. 95
Adler v Dickson [1955] 1 Q. B. 158 at 199 and Pyrene Co. Ltd.v. Scindia Navigation Co. Ltd. [1954] 2 Q. B. 402 at
426.
25
71. The above establishes that the Owners were in fact bailees of the cargo onboard the vessel. The
bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence
would, under similar circumstances, take of his own goods of the same bulk, quality, and value
as the goods bailed96
. The Owners have breached this standard by not taking piracy risk
precautions as was submitted in G.2.
PRAYER
In light of the above submissions, the Owners request the tribunal to declare:
A. The tribunal has no jurisdiction to determine this matter.
B. The Charterparty makes no provision to stem bunkers for the full voyage.
C. The Master has acted under voyage related instructions from a third party.
D. The Vessel was unable to meet her discharge target date due to the fault of the Owners.
E. The Owners are liable for the loss and damages caused by the pirate attack.
F. The hire was not due and owed to the Owners.
G. The Charterers are not liable in the tort of fraud.
H. The Owners have breached the Charterparty by providing a ship which was not fit for
service.
I. The Owners are liable for the loss of part of the cargo.
And therefore the following reliefs are prayed for:
(a) Declaration of no liability.
(b) Damages as particularized in the phase relating to quantification of damages.
(c) Interest.
(d) Costs.
(e) Further or other relief as the Tribunal considers fit.
96
Port Swettenham Authority v. T. W. Wu & Co (M) Sdn Bhd [1978] 3 All ER 337 at 339.
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