THE ELEVENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION ... · PDF fileTHE ELEVENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION . ... valid variation of the Charter

THE ELEVENTH ANNUAL INTERNATIONAL MARITIME

LAW ARBITRATION MOOT COMPETITION

2010

The University of Notre Dame

Australia - Team 6

IN THE MATTER OF AN ARBITRATION HELD IN SYDNEY

MEMORANDUM FOR THE CLAIMANT

On Behalf Of: Against: New England Chartering and Trading Company LLC SSP Pty Ltd Level 36, 1 Sho Street Level 17, 10 Crow Street Gamma, Upsilon Gamma, Upsilon CLAIMANT RESPONDENT

Team

Patrick Edward Corrigan Jonathan Llewelyn Heath

Ruth Mary Loveranes James William Parkinson

Sally Louise Millar

University of Notre Dame Memorandum for Claimant

II

TABLE OF CONTENTS .......................................................................................................II

LIST OF ABBREVIATIONS ..............................................................................................IV

TABLE OF AUTHORITIES .................................................................................................V

SUMMARY OF FACTS .........................................................................................................1

1. THE ARBITRAL TRIBUNAL HAS JURISDICTION TO CONSIDER THE

DISPUTE...................................................................................................................................3

1.1 The tribunal has the capacity to decide its own competence to hear the dispute.................3

1.2 There is a valid arbitration agreement between the Claimant and Respondent...................3

1.3 The Claimant has not waived its right to arbitration............................................................4

1.4 The arbitral panel has jurisdiction to hear disputes arising from the Warranty regardless of

whether it is a part of the Charterparty.......................................................................................6

1.5 The arbitral panel has jurisdiction to hear disputes arising from the Addendum to the

Charterparty................................................................................................................................7

2. THE LAW OF GAMMA, UPSILON GOVERNS THE CHARTERPARTY................8

2.1 There has been no express choice of law applicable to the Charterparty.............................8

2.2 There has been no implied choice of law applicable to the Charterparty............................8

2.3The objective choice of law is the law of Gamma, Upsilon..................................................9

3. THE CLAIMANT IS ENTITLED TO REIMBURSEMENT FOR ITS PAYMENT

TO THETA.............................................................................................................................11

3.1 The Warranty sent from the Respondent to the Claimant on 6 October 2008 amounts to a

valid variation of the Charter party..........................................................................................11

3.2 The Warranty dated 6 October is enforceable....................................................................13

3.3 The Respondent has assumed the risk of cargo contamination..........................................15

3.4 The Claimant’s payment to Theta was reasonable.............................................................16


III

4. THE CLAIMANT IS ENTITLED TO BE INDEMNIFIED FOR LIABILITY TO

BETA BETA ..........................................................................................................................17

4.1 The warranty extends to the fragments of bitumen present in the Cargo...........................17

4.2 It is for the Respondent to substantiate its claim that the Claimant is responsible for the

presence of bitumen in the Cargo.............................................................................................17

5. THE CLAIMANT IS ENTITLED TO THE COST OF FREIGHT FROM GAMMA,

UPSILON TO ZETA, QOPPA.............................................................................................18

5.1 The inclusion of the words ‘without prejudice’ does not affect the Respondent’s

obligation to pay the Claimant freight under the Addendum………………………………...18

6. THE CLAIMANT IS ENTITLED TO DAMAGES FOR DETENTION.....................20

6.1 The embargo has not frustrated the Charter party..............................................................20

6.2 The delay caused by the embargo is within SSP’s sphere of responsibility under the

Addendum................................................................................................................................21

6.3 The demurrage clause only regulates breaches of the laytime provisions.........................22

6.4 There are no liquidated damages agreed as between the parties for the delay caused by the

embargo therefore damages at large are appropriate................................................................23

PRAYER FOR RELIEF .......................................................................................................25


IV

LIST OF ABBREVIATIONS:

MLAANZ RULES: Maritime Law Association of Australia and New Zealand Rules

CLAIMANT: New England Chartering and Trading Company LLC

RESPONDENT: SSP Pty Ltd

CHARTERPARTY: The charterparty dated 19 July 2008 between the Claimant and

Respondent

WARRANTY: The warranty provided by the Respondent to the Claimant in the letter dated

6 October 2008

ADDENDUM: Addendum No.1 to the Charter party

FHEX EIU: Fridays and holidays excluded even if used

VESSEL: MV Super P

NOR: Notice of readiness

UQIS: Upsilon Quarantine and Inspection Service

CARGO: 25,103.6250mt of Single Superphosphate


V

TABLE OF AUTHORITIES:

ARTICLES/BOOKS/REPORTS:

Seddon, N C and Ellinghaus M P, Cheshire and Fifoot’s Law of Contract (9th ed, 2008).

Redfern, A, et al, Law and Practice of International Commercial Arbitration (4th ed, 2004).

CASE LAW:

ACD Tridon v Tridon Australia Pty Ltd [2002] NSWSC 896...................................................4

Akai v People’s Insurance (1996) 188 CLR 418……………………………………………...8

Aktieselskabet Reidar v Arcos Ltd (1926) 25 Ll L Rep 513.....................................................24

Amin Rasheed Shipping Co v Kuwait Insurance Co [1984] AC 50...........................................8

AT&T Technologies Inc v Communications Workers of America, 475 US 643 (1986).............7

Axa Re v Global Ace Markets Ltd [2006] EWHC 216 (Unreported, Gloster J, 20 January 2006)...........................................................................................................................................5

Bakri Navigation Co Ltd v Glorious Shipping SA (1991) 217 ALR 152...................................4

Bonython v Commonwealth [1951] AC 201..............................................................................9

Brogden v Metropolitan Railway Co (1877) 2 App Cas 666...................................................12

Canadian Transport Co Ltd v Court Line Ltd [1940] AC 934................................................18

Cinnamon European Structured Credit Master Fund v Banco Commercial Portugues SA [2009] EWHC 3381 (Unreported, Blackburne J, 18 December 2009)......................................6

Coast Lines Ltd v Hudig and Veder Chartering NC [1972] 2 QB 34………………………..11

Codelfa Construction Pty Ltd v State Rail Authority (NSW) 149 CLR 337.............................20

Commercial Portugues SA [2009] EWHC 3381 (Unreported, Blackburne J, 18 December 2009)...........................................................................................................................................6

Compagnie Tunisienne de Navigation SA v Compagnie d’Armement Maritime SA [1971] AC 572…………………………………………………………………………………………..…9

Cross v Kirkby (Unreported, Court of Appeal (Civil Division), Beldam, Otton and Judge LJJ, 18 February 2000)....................................................................................................................15


VI

Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696............................20

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523........12

ERG Raffinerie Mediterranee SpA v Chevron USA Inc (The Luxmar) [2006] 2 Lloyd’s Rep 543............................................................................................................................................24

Fiona Trust & Holding Corp v Privalov [2008] 1 Lloyd’s Rep 254.........................................7

Gray v Thames Trains Ltd [2009] 1 AC 1339.........................................................................13

Hadley v Clarke (1799) 101 ER 1377......................................................................................21

Hi-Fert Pty Ltd v Kiukiang Maritime Carrier Inc (No 5) (1998) 90 FCR 1..............................7

Holman v Johnson (1775) 1 Cowp 341....................................................................................13

Inverkip Steamship Co Ltd v Bunge & Co [1917] 2 KB 193...................................................22

John Kaldor Fabricmaker Pty Ltd v Mitchell Cotts Freight (Aust) Pty Ltd (1989) 18 NSWLR 172..............................................................................................................................................8

L Brown & Sons v Crosby Homes (NorthWest) Ltd [2005] EWHC 3503 (Unreported, Ramsey J, 5 December 2005)...................................................................................................................6

Limerick v Coker (1916) 33 TLR 103......................................................................................16

Mendelsohn-Zeller Co Inc v T&C Providores Pty Ltd [1981] 1 NSWLR 366........................10

Navigation Co Ltd v Glorious Shipping SA (1991) 217 ALR 152.............................................4

Naviera Mogor SA v Societe Metallurgique de Normandie (The Nogar Marin) [1988] 1 Lloyd’s Rep 412.......................................................................................................................12

Nelson v Nelson (1995) 184 CLR 538.....................................................................................15

Nepean Hwy Pty Ltd v Leigh Mardon Australasia Pty Ltd [2009] VSC 226 (Unreported, Davies J, 11 June 2009)..............................................................................................................7

Ocean Tramp Tankers Corp v V/O Sovfracht (The Eugenia) [1964] 2 WLR 114...................20

Owners of Cargo Lately Laden on Board the Rewia v Caribbean Liners (Caribtainer) Ltd (The Rewia) [1991] 2 Lloyd’s Rep 325....................................................................................16

Palmco Shipping Inc v Continental Ore Corp (The Captain George K) [1970] 2 Lloyd's Rep 21..............................................................................................................................................20

Paul Smith Ltd v H&S International Holding Inc [1991] 2 Lloyd’s Rep 127...........................5

President of India v Jebsens (UK) Ltd (The General Capinpin, The Proteus, The Free Wave and The Dinera) [1991] 1 Lloyd's Rep 1.................................................................................22

http://au.westlaw.com/Find/Default.wl?rs=WLAU1.0&vr=2.0&FindType=Y�

http://legalonline.thomson.com.au/do/resultDetailed.jsp?limit=20&reverse=true&freeText=Empirnall%20Holdings%20Pty%20Ltd%20v%20Machon%20Paull%20Partners%20Pty%20Ltd%20&sortBy=date_sort&hitlist=%2Fdo%2FresultSummary.jsp&start=1&id=5038662�


VII

Re United Railways of the Havana and Regla Warehouses Ltd [1960] Ch 52........................10

Safeway Stores Limited v Twigger [2010] EWHC 11 (Comm) (Unreported, Flaux J, 15 January 2010)...........................................................................................................................14

Stone & Rolls Ltd (in liquidation) v Moore Stephens (a firm) [2009] 1 AC 1391...................14

Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd (1957) 98 CLR 93...............19

The Assunzione (No 1) [1954] 1 All ER 278............................................................................10

Tritonia Shipping Inc v South Nelson Forest Products Corporation [1966] 1 Lloyd’s Rep 114..............................................................................................................................................3

Turnbull, Scott & Co v Cruickshank Co (1904) (Court Of Sessions, Inner House, Second Division) 7 Fraser 265..............................................................................................................22

Turner v Azam [1904] AC 826.................................................................................................16

Wehner v Dene Steam Shipping Co [1905] 2 KB 92...............................................................16

Wick v Atlantic Marine Inc 605 F 2d 166 (5th Cir 1979)............................................................7

LEGISLATION:

Arbitration Act 1996 (UK).

Carriage of Goods by Sea Act 1991 (Cth).

Florida International Arbitration Act, FLA STAT (2009).

International Arbitration Act 1974 (Cth).


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SUMMARY OF FACTS:

1. New England Chartering and Trading Company LLC (‘the Claimant’) is the owner of the

ship MV Super P (‘The Vessel’). Under a Charterparty dated 19 July 2008 The Claimant

chartered The Vessel to SSP Pty Limited (‘the Respondent’) for a voyage from the Port of

Alpha, Rholand to the Port of Gamma, Upsilon. The Respondent manufactured and sold

25, 103.6250 m/t of Single Super Phosphate (‘the Cargo’) to Theta Pty Ltd. The

Charterparty was for the delivery of the Cargo.

2. On 29 September 2008 the Cargo was loaded. At some stage after loading and prior to 6

October 2008, the Claimants surveyor’s inspected the hold on behalf of the Respondent.

The inspection found some fragments of bitumen and one piece of timber on the surface

of the Cargo. On 6 October 2008 the Respondent warranted that the Cargo met the

product specifications in relation to moisture and absence of foreign objects. At a later,

unknown date, because of the Warranty provided, the Master issued a clean Bill of

Lading.

3. The Vessel arrived in the Port of Gamma, Upsilon on 16 October 2008. Upon arrival the

Chief Quarantine Officer of the Upsilon Quarantine and Inspection Service and his team

inspected the vessel. A piece of dunnage was found during inspection, which was

contaminated with the previous cargo, Omicron Barley. This is a prohibited import and

breached Upsilon’s quarantine policy. As the extent of the contamination could not be

established the vessel was ordered into quarantine on 19 October 2008. As a result the

Cargo was unable to be discharged.

4. On the same day the Claimant informed the Respondent that the Warranty signed 6

October 2009 would be relied upon to indemnify the Claimant in respect for any claims

against them.


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5. Theta Pty Ltd was ordered by customs to re-export. They on sold to Beta-Beta Pty Ltd,

who are based in Zeta, Qoppa. They did so at a loss of U$ 4,999,899, invoiced on 20

October 2008. To accommodate this change The Claimant created an Addendum to the

original Charterparty on the 21 October 2008 agreeing that the Vessel will proceed from

Gamma, Upsilon to Zeta, Qoppa and deliver the Cargo. On 22 October 2008 The

Respondent signed on a ‘without prejudice’ basis.

6. On 5 November 2008, the Vessel arrived in the port of Zeta, Qoppa. On 6 November

2008 the Vessel was granted customs clearance. On 8 November, prior to any discharge

occurring, the Vessel was placed under a government embargo on cargo discharge. On 29

October 2009 the government embargo was lifted. Discharge commenced on 30 October

2009 and finished at 0900 on 5 November 2009.

7. On 30 November 2009 the Claimant commenced arbitral proceedings in accordance with

clause 19(d) of the original Charterparty. This was due to the Respondent’s failure to

make agreed payments for Theta’s claim, freight unpaid and damages for detention.

Another claim has been made due to the bitumen in the cargo damaging the production

system of Beta-Beta.


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1. THE ARBITRAL TRIBUNAL HAS JURISDICTION TO CONSIDER THE

DISPUTE

1.1 The tribunal has the capacity to decide its own competence to hear the dispute.

1. Under clause 19(d) of the Charterparty, the arbitral tribunal must apply the MLAANZ

rules to arbitrate this dispute. Rule 15 of the MLAANZ rules provides that the tribunal

‘shall exercise the jurisdiction and have all of the powers set out in the relevant legislation

governing the Arbitration’. According to legislation in the three legal systems relevant to

this dispute—Upsilon,1 Omicron,2 and Rholand3

1.2 There is a valid arbitration agreement between the Claimant and Respondent.

—the arbitral tribunal has the power to

decide on its own jurisdiction.

2. The arbitral tribunal has jurisdiction to hear disputes that fall within the scope of a valid

arbitration agreement made between the disputing parties.4

(d) Any dispute arising out of or in connection with this contract, including any question

regarding it existence, validity, or termination, shall be referred to arbitration in Gamma by a

sole arbitrator/a tribun of 3 arbitrators (strike out whichever is inapplicable) in accordance

with the Arbitration Rules of th Maritime Law Association of Australia and New Zealand.

Clause 19(d) of the

Charterparty provides:

3. In Tritonia Shipping Inc v South Nelson Forest Products Corporation,5

1 Article 16(1), UNCITRAL Model Law on International Commercial Arbitration (as adopted by the UN Commission on International Trade Law on 21 June 1985) given force in Australian law in the International Arbitration Act 1974 (Cth) s 16.

it was held that a

written agreement requiring that ‘any dispute arising from this charter-party shall be

settled by arbitration in London’ constituted a valid arbitration agreement. The written

2 Arbitration Act 1996 (UK) s 30. 3 Florida International Arbitration Act, FLA STAT ch 684.06(2) (2009). 4 Redfern, A, et al, Law and Practice of International Commercial Arbitration (4th ed, 2004) 157. 5 [1966] 1 Lloyd’s Rep 114.


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agreement contained in clause 19(d) of the Charterparty states a similar intention to

arbitrate and goes further in providing the forum and rules of arbitration. Clause 19(d) is,

therefore, a valid arbitration agreement.

1.3 The Claimant has not waived its right to arbitration.

4. The Claimant admits that it has agreed to the terms of the Respondent’s Warranty which

provides that each party ‘irrevocably and unconditionally submits to the exclusive

jurisdiction of the courts of Omicron’. However, the Claimant asserts that it has not

waived its right to arbitration.

5. It is the Claimant’s position that the Warranty is incorporated as a part of the Charterparty

and effectively varies its terms. The Charterparty requires disputes to be referred to

arbitration but the Warranty, as an amendment to that Charterparty, requires the courts of

Omicron to have exclusive jurisdiction.

6. Parties may waive their right to arbitration by express amendment to their contract.6 The

parties must show a clear intention to render the arbitration agreement void.7 In Bakri

Navigation Co Ltd v Glorious Shipping SA,8

6 Bakri Navigation Co Ltd v Glorious Shipping SA (1991) 217 ALR 152.

the disputing parties waived their right to

arbitration by novation of their contract. The parties altered their contractual agreement

through a ‘Deed of Undertaking’ which bound the parties to set a trial date and comply

with court proceedings and orders regarding the dispute. In this case, the parties showed a

clear intention to deal with the arbitrable disputes between them not by arbitration but by

litigation instead.

7 ACD Tridon v Tridon Australia Pty Ltd [2002] NSWSC 896. 8 (1991) 217 ALR 152.


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7. This differs from the case between the Claimant and Respondent who have, by

amendment to their contract, selected a court to have exclusive jurisdiction, but have not

expressed an intention for litigation to replace arbitration as the chosen avenue for dispute

resolution. The warranty makes no clear statement to render the arbitration clause void

and inoperative. The parties could have easily inserted a statement to that effect but they

did not. Therefore, by agreeing to the terms of the Warranty, the Claimant has not waived

its right to arbitration.

8. The arbitration clause and the choice of court contained in the Charterparty can co-exist

without conflict. In Paul Smith Ltd v H&S International Holding Inc,9 a licensing

agreement contained a clause providing for arbitration and a clause electing the exclusive

jurisdiction of the English courts. Steyn J held that the ‘simple and straightforward’

solution to solve such an apparent inconsistency is to treat the choice of court as the

choice of lex arbitri (the law governing the arbitration) so that the arbitration agreement

can have full effect.10

9. Accordingly, under clause 19(d) of the Charterparty, the Claimant and Respondent must

deal with disputes by arbitration, however, where the arbitration requires the support of a

court (for example, to replace an arbitrator or to enforce an award), the courts of Omicron

have exclusive jurisdiction.

9 [1991] 2 Lloyd’s Rep 127. 10 Paul Smith Ltd v H&S International Holding Inc [1991] 2 Lloyd’s Rep 127, 129, 130; followed in Axa Re v Global Ace Markets Ltd [2006] EWHC 216 (Unreported, Gloster J, 20 January 2006).


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1.4. The arbitral panel has jurisdiction to hear disputes arising from the Warranty

regardless of whether it is part of the Charterparty.

10. The Claimant asserts that the Warranty is part of the Charterparty. Disputes arising out of

the Warranty amount to disputes ‘arising out of or in connection with the Charterparty’.

They fall within the scope of the arbitration agreement and, therefore, the jurisdiction of

the arbitral panel.

11. Furthermore, if the Warranty is found to give rise to a contract separate to the

Charterparty, then the Warranty will still fall within the jurisdiction of the arbitral panel.

12. The arbitration agreement, contained in clause 19(d) of the Charterparty, requires that

‘Any dispute arising out of or in connection with’ the Charterparty shall be referred to the

arbitral panel. In Cinnamon European Structured Credit Master Fund v Banco

Commercial Portugues SA,11

13. The Warranty, if treated as giving rise to a separate contract, stands in close connection

with the Charterparty. But for the Charterparty’s existence, the Warranty would not have

been issued. The issues arising from the Warranty are inextricably linked to the

Charterparty and are therefore, subject to arbitration.

a dispute resolution clause that applied to ‘any dispute

arising out of or in connection with’ a purchase agreement was held to extend to issues

arising from a separate, but connected contract made between the parties.

14. The separate contract arising from the Warranty is subject to the arbitration agreement

notwithstanding the Warranty’s express statement that the courts of Omicron have

exclusive jurisdiction. A party intending to escape the wide scope of a dispute resolution 11 [2009] EWHC 3381 (Unreported, Blackburne J, 18 December 2009); L Brown & Sons v Crosby Homes (NorthWest) Ltd [2005] EWHC 3503 (Unreported, Ramsey J, 5 December 2005).


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clause must explicitly state their intention to have certain disputes dealt with by a

different tribunal.12 Furthermore, ‘only the most forceful evidence’ of an intention to

exclude a claim from arbitration will undermine the full effect of a widely drawn

arbitration agreement.13

15. As a contract separate but connected to the Charterparty, the Warranty falls within the

wide scope of the arbitration agreement contained in clause 19(d) of the Charterparty. The

Warranty’s express submission to the courts of Omicron does not explicitly render the

arbitration agreement void. The submission to the courts of Omicron is, at the most, the

election of the lex arbitri. Even if the Warranty gives rise to a separate contract, it is

subject to the arbitration agreement and the jurisdiction of the arbitral tribunal.

1.5. The arbitral panel has jurisdiction to hear disputes arising from the Addendum to

the Charterparty.

16. In Hi-Fert Pty Ltd v Kiukiang Maritime Carrier Inc (No 5),14 the Australian Federal

Court found that an arbitration clause applying to disputes arising from a charterparty also

applied to disputes arising from an addendum to the charterparty.15

17. All disputes between the Claimant and Respondent to be raised in arbitration fall within

the scope of the arbitration agreement and the arbitral panel’s jurisdiction.

The Addendum dated

21 October 2008 is expressed to be the first addendum to the Charterparty. As such, it is

subject to the arbitration clause contained in the Charterparty.

12 Fiona Trust & Holding Corp v Privalov [2008] 1 Lloyd’s Rep 254, 257; Wick v Atlantic Marine Inc 605 F 2d 166, 168 (5th Cir 1979); 1144 Nepean Hwy Pty Ltd v Leigh Mardon Australasia Pty Ltd [2009] VSC 226 (Unreported, Davies J, 11 June 2009) [15]. 13 Fiona Trust & Holding Corp v Privalov above n 12, 260; AT&T Technologies Inc v Communications Workers of America, 475 US 643, 650 (1986). 14 (1998) 90 FCR 1. 15 Hi-Fert Pty Ltd v Kiukiang Maritime Carrier Inc (No 5) (1998) 90 FCR 1, 15.


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2. THE LAW OF GAMMA, UPSILON GOVERNS THE CHARTERPARTY.

2.1 There has been no express choice of law applicable to the Charterparty.

18. There has been no express choice of law with the exception of the choice of Omicron law

to govern the Warranty. It will be argued that the choice of law for the Warranty does not

determine the choice of law for the rest of the contractual obligations contained in the

Charterparty.

2.2 There has been no implied choice of law applicable to the Charterparty.

19. Where there is no express intention to be governed by the law of a certain jurisdiction,

courts will enforce the parties’ inferred or implied intention.16 The intention of the

parties’ may be inferred from the terms and nature of the contract and from the general

circumstances of the case.17 The parties’ mutual intention in selecting the governing law

is to be inferred by necessary implication.18

20. The terms of the Charterparty and the documents exchanged between the parties do not

indicate an intention to be governed by the laws of one jurisdiction. The Warranty is

expressly governed by the law of Omicron. Under clause 10 of the Charterparty, the bills

of lading issued are governed by the Australian Carriage of Goods by Sea Act.

19

21. Under clause 19(d) of the Charterparty, the Claimant and Respondent have agreed that

arbitration will be held in Gamma, Upsilon. This is a strong indication that the parties

It cannot

be inferred that the parties intended the laws of one particular place to govern their

contractual obligations.

16 Akai v People’s Insurance (1996) 188 CLR 418; and John Kaldor Fabricmaker Pty Ltd v Mitchell Cotts Freight (Aust) Pty Ltd (1989) 18 NSWLR 172. 17 Ibid. 18 Amin Rasheed Shipping Co v Kuwait Insurance Co [1984] AC 50. 19 Carriage of Goods by Sea Act.1991 (Cth).


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intended the laws of Gamma, Upsilon to govern the Charterparty.20 An arbitration clause,

however, is merely one of the factors to be taken into account. 21 It is a weighty factor but

it is not conclusive.22

22. The Claimant and Respondent have used the standard GENCON 1994 form as their

Charterparty. The parties’ use of a standard form of contract originating from a particular

place may indicate that they have impliedly selected the law of that place to govern the

contract.

23

23. The factors indicating an implied choice of law are inconclusive. In the absence of an

express or implied choice of law, the arbitration panel must determine the proper law on

an objective basis.

The GENCON form used by the parties, however, was produced by BIMCO,

an independent international shipping association, and does not associate itself with a

particular country.

24

2.3 The objective choice of law is the law of Gamma, Upsilon.

24. The UNCITRAL Model Law on International Commercial Arbitration 1985 (‘the Model

Law) is given the force of law in Australia by s 16 International Arbitration Act 1974

(Cth). Article 28(2) of the Model Law provides that ‘failing any designation by the

parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules

which it considers applicable’.

25. In Bonython v Commonwealth, 25

20 John Kaldor Fabricmaker Pty Ltd v Mitchell Cotts Freight (Aust) Pty Ltd, above n 16.

the Privy Council, affirming a decision of the

Australian High Court, held that where there is no express or implied choice of law, a

21 Compagnie Tunisienne de Navigation SA v Compagnie d’Armement Maritime SA [1971] AC 572. 22 Ibid, 600. 23 Amin Rasheed Shipping Co v Kuwait Insurance Co [1984] AC 50, 64-7. 24 John Kaldor Fabricmaker Pty Ltd v Mitchell Cotts Freight (Aust) Pty Ltd, above n 16. 25 [1951] AC 201.


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contract is governed by the system of law with which it has the closest and most real

connection.26 The arbitral tribunal must determine the place where the elements of the

contract are ‘most densely grouped’—the place with the most connecting factors to the

contract.27

26. The principal factors to be taken into account include ‘the place of contracting, the place

of performance, the places of residence or business of the parties respectively, and the

nature of the subject matter of the contract’.

28

27. The place of contracting was Gamma, Upsilon, according to Box 2 of the Charterparty.

The superphosphate was to be discharged at Gamma, Upsilon according to Box 11 of the

Charterparty. The Respondent’s place of business is in Gamma, Upsilon and, according to

the letter containing the Warranty, the Vessel’s P&I club has a correspondent based in

Gamma, Upsilon.

28. The forum of the arbitration is in Gamma, Upsilon and bills of lading issued under the

Charterparty are governed by the Australian Carriage of Goods by Sea Act 1991(Cth)

which is identical to the Act in Upsilon.

29. Payment of freight and demurrage as stated in the Charterparty is to be in Upsilon dollars.

This choice of currency is a significant indicator that Gamma, Upsilon has the closest

most real connection to Charterparty.29

30. There are also factors connecting the contract to Alpha, Rholand. The Vessel flies the flag

of Rholand. However, the law of the flag only applies when all the factors of the contract

26 Ibid. 27Ibid. 28 Re United Railways of the Havana and Regla Warehouses Ltd [1960] Ch 52,91. 29 The Assunzione (No 1) [1954] 1 All ER 278, 282 and Mendelsohn-Zeller Co Inc v T&C Providores Pty Ltd [1981] 1 NSWLR 366.


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are in balance30

31. Two factors connect the Charterparty to Omicron. Firstly, according to Box 3 of the

Charterparty, the Claimant’s principal place of business is Omicron and, secondly, the

Warranty is governed by the law of Omicron. These two factors, however, do not

outweigh those connecting the Charterparty to Gamma, Upsilon. Furthermore, neither the

Claimant nor the Respondent benefits by claiming that the laws of Omicron rather than

Gamma, Upsilon govern the whole Charterparty. It is the Claimant’s position that the

laws of Omicron and Gamma, Upsilon are not substantially different for the purposes of

resolving the disputes regarding the Charterparty.

and in this case the factors clearly favour Gamma, Upsilon. Though the

cargo was loaded in Alpha, Rholand and, according to Box 22 of the Charterparty, the

general average was to be adjusted there, Gamma, Upsilon has a stronger connection to

the Charterparty.

32. The Charterparty has its closest and most real connection to Gamma, Upsilon and is

therefore governed by the law of Gamma, Upsilon and is subject to the law of Omicron

only in relation to the Warranty.

3. THE CLAIMANT IS ENTITLED TO REIMBURSEMENT FOR ITS PAYMENT

TO THETA.

3.1 The Warranty sent from the Respondent to the Claimant on the 6 October 2008

amounts to a valid variation of the Charterparty.

33. On 6 October 2008, the Respondent sent a letter to the Claimant warranting that the

fragments of bitumen and one piece of timber found in hold 1 of the Vessel would not

‘affect the handling, storage or use of the Cargo’. This is effectively an offer for

30 Coast Lines Ltd v Hudig and Veder Chartering NC [1972] 2 QB 34, 44.


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reimbursement in the event that the Claimant suffers loss because of the bitumen and the

piece of timber.

34. The Claimant accepted the Respondent’s Warranty by virtue of its conduct.31 In

circumstances where cargo is not in apparent good condition the Master must ‘clause’ the

bill of lading.32

35. Under clause 20 of the Charterparty, the Claimant must ensure that the Vessel is free of

previous cargo residues and complies with UQIS’ zero tolerance policy for foreign

organic matter. However, the Warranty has the operative effect of shifting some of the

Claimant’s liability for hold cleanliness to the Respondent. Under the Warranty, the

Respondent is responsible for the presence of the fragments of bitumen and the piece of

timber in the Cargo. This shifting of liability amounts to a variation of the Charterparty.

However, in reliance on the Warranty issued by the Respondent, the

Master did not record the presence of bitumen and a piece of timber on the Bill of Lading.

By the Master’s signature of a clean Bill of Lading, the Claimant accepted the

Respondent’s Warranty. The Warranty, expressed to be governed by Omicron law, is

contractually binding.

36. Clause 20 states that hold cleanliness is the Claimant’s responsibility regardless of the

Respondent’s approval or rejection of the holds after inspection. The Respondent’s letter

dated 6 October 2008, however, is not merely an approval of hold cleanliness. It is a

warranty offering protection to the Claimant in the event that the Cargo does not meet

‘product specifications’ because of the bitumen and timber. The parties clearly intended

to vary the Claimant’s liability under clause 20 of the Charterparty so that the Respondent

is responsible for the presence of bitumen and the piece of timber in the Cargo. 31 Brogden v Metropolitan Railway Co (1877) 2 App Cas 666; Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523. 32 Naviera Mogor SA v Societe Metallurgique de Normandie (The Nogar Marin) [1988] 1 Lloyd’s Rep 412.




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3.2 The Warranty is enforceable.

37. The Warranty given by the Respondent to the Claimant is not in violation of any statute

nor is it void as against public policy. The Master of the Vessel, as the Claimant’s agent,

issued the clean Bill of Lading as requested by the Respondent, which reflected the

condition of the Cargo as the Respondent saw it.33

38. In the alternative, if the Warranty is illegal it is still enforceable. By holding the Warranty

to be unenforceable, the arbitral panel would be allowing the Respondent to profit from

its illegal activity. Originally no court would lend its aid to someone who founded their

cause of action upon an immoral or an illegal act.

The Master’s only involvement in this

transaction was the signing of the Bill of Lading. There is no evidence the master had any

knowledge of the Respondents intention to inform Theta of the Warranty included in

relation to the goods or whether they intended it to only be privy between the Respondent

and the Claimant. As such the Warranty itself is not tainted by illegality and the

Respondent is liable for any accusations of fraud that may arise in relation to the issuing

of the Warranty. The Master only issued the clean Bill of Lading to the Respondent. After

this point any fraud that arose out of it was due to the Respondent’s decision not to

inform Theta of the Warranty in relation to the goods.

34 This maxim of ex turpi causa has

evolved so that it now expresses not so much a principle as a policy which is based on a

group of reasons, which vary in different situations.35

33 The Respondent’s letter dated 6 October 2008, page 11 of facts.

The exceptions to this rule which

apply here are the issues in relation to vicarious liability and the involvement of two

parties to the fraud. It is for these reasons that the Warranty should be enforced against

the Respondent.

34 Holman v Johnson (1775) 1 Cowp 341, 343 (Lord Mansfield). 35 Gray v Thames Trains Ltd [2009] 1 AC 1339, 1370 (Lord Hoffman).


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39. The Master of the Vessel issued a clean Bill of Lading as a direct result of the Warranty

issued by the Respondent to the Claimant in its letter dated 6 October 2008. Therefore the

Claimant is only vicariously liable for the acts of the Master issuing a clean Bill of Lading

and any illegality that it is tainted with.

40. Ex turpi causa will not apply where a company is vicariously liable for the act of its

employees.36 Lord Phillips of Worth Matravers in Stone & Rolls v Moore Stephens37

41. Therefore in order for the illegality defence to succeed, the Claimant would need to be

personally at fault rather than vicariously. The Master of the Vessel, as the Claimant’s

agent, signed the clean Bill of Lading, it was not a document that the Claimant personally

signed. Any illegality that may have arisen out of the actions of the Master is not as a

result of any personal action on the part of the Claimant. The Claimant is only liable for

the acts of the Master by virtue of the doctrine of vicarious liability or the general

principles of the law of agency and this of itself is not enough to give rise to the defence

of illegality.

accepted that ‘in the context of a claim for compensation for the adverse consequences of

wrong-doing, ex turpi causa applies where the wrongdoing is personal, but not where it is

vicarious’.

38

42. The arbitral panel must be very cautious in ruling that the Warranty is unenforceable.

Where the court is concerned with the application of the ex turpi maxim to contractual

rights between two people who were both parties to an unlawful transaction, it faces the

dilemma that by denying relief on the ground of illegality to one party, it appears to

36 Safeway Stores Limited v Twigger [2010] EWHC 11 (Comm) (Unreported, Flaux J, 15 January 2010) [51]. 37 Stone & Rolls Ltd (in liquidation) v Moore Stephens (a firm) [2009] 1 AC 1391, 1455, 1466. 38 Safeway Stores Limited v Twigger, above n 36,[54].


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confer an unjustified benefit illegally obtained on the other.39 This theme is also seen in

other jurisdictions. The Australian High Court has cautioned that to withhold relief

because of an illegal transaction would in practice be imposing a sanction on one party to

that transaction while effectively benefitting another person who is a willing participant in

the illegality.40

43. If the arbitral panel were to rule that the Warranty was unenforceable, it would be

rewarding the Respondent for its illegal activity. The principle of ex terpi causa in this

case would have to take into account that where a party to an illegal transaction seeks to

benefit from their illegal activity at the expense of the other party, the transaction that

may be tainted with illegality should be upheld. On this basis the Respondent should be

held to the Warranty it gave to the Claimant.

3.3 The Respondent has assumed the risk of cargo contamination.

44. Under clause 20 of the Charterparty the Respondent acknowledged Upsilon’s ‘zero

tolerance’ policy for any foreign organic matter. The Respondent issued a Warranty to

allow the Cargo to be shipped with a piece of timber, which is a foreign organic object.

By doing so the Respondent assumed the risk that the Cargo would be rejected in Upsilon

on the basis of the presence of a foreign organic matter. This risk has eventuated and the

Respondent is liable for the consequent loss suffered by the Claimant who has settled

Theta’s cargo claim.

39 Cross v Kirkby (Unreported, Court of Appeal (Civil Division), Beldam, Otton and Judge LJJ, 18 February 2000) [74] (Beldam LJ). 40 Nelson v Nelson (1995) 184 CLR 538, 612 (McHugh J).


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3.4 The Claimant’s payment to Theta was reasonable.

45. The Respondent cannot deny the Claimant’s right to reimbursement under the Warranty

on the grounds that the Claimant’s payment to Theta was unreasonable. The Claimant

recognises its contractual relationship with Theta. It was not unreasonable for the

Claimant to reimburse Theta for its apparent failure to meet their obligations in that

relationship. The Bill of Lading issued on 29 September 2008 was signed by the Master

of the Vessel. It is therefore presumed that the Bill of Lading takes effect as a contract

with the Claimant who is the Master’s employer.41

46. Upon the Master’s signature of the Bill of Lading, the Claimant was charged with

contractual responsibilities to Theta who was the holder of the negotiable Bill of Lading.

Pursuant to clause 10, the ‘Bills of Lading’ clause of the Charterparty. The Claimant’s

obligations to Theta are subject to the terms of the Charterparty, the Carriage of Goods by

Sea Act 1991 (Cth), and the incorporated amended version of the Hague-Visby rules.

47. Under the amended Hague-Visby rules, the clean Bill of Lading is evidence that the

Cargo was in apparent good condition before the voyage began. 42 The Claimant is

estopped from claiming that contamination did not occur during the voyage.43 It was not

unreasonable for the Claimant to take responsibility for its apparent failure to fulfil its

obligation to ‘properly and carefully...handle, stow, carry, keep [and] care for’44

48. Furthermore, it was not unreasonable for the Claimant to pay the amount of damages

calculated by Theta. Theta’s loss flowed directly from the contamination of the Cargo.

the

Cargo during the voyage.

41 Turner v Azam [1904] AC 826; Wehner v Dene Steam Shipping Co [1905] 2 KB 92; Limerick v Coker (1916) 33 TLR 103, Owners of Cargo Lately Laden on Board the Rewia v Caribbean Liners (Caribtainer) Ltd (The Rewia) [1991] 2 Lloyd’s Rep 325. 42Carriage of Goods by Sea Act 1991 (Cth) sch 1A, art 3.4. 43 Ibid. 44 Carriage of Goods by Sea Act, above n 42 sch 1A, art 3.2.


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Theta’s loss is evidenced by invoices from the sale and resale of the Cargo. There is

nothing to say that the amount of Theta’s loss could have been reduced.

4. THE CLAIMANT IS ENTITLED TO BE INDEMNIFIED FOR LIABILITY TO

BETA BETA.

4.1 The Warranty extends to the fragments of bitumen present in the Cargo.

49. The Respondent’s letter dated 6 October 2008 clearly warrants that the ‘fragments of

bitumen’ in the Cargo will not ‘affect the handling, storage or use of the Cargo’. The

Warranty is valid and effective.45

4.2 It is for the Respondent to substantiate its claim that the Claimant is responsible for

the presence of bitumen in the Cargo.

The Respondent must indemnify the Claimant for

damage caused by the bitumen.

50. The Respondent claims that the fragments of bitumen entered the cargo hold because of a

fault in the ship’s gear and, as such, the Claimant has breached its obligation under clause

5(b) of the Charterparty to provide equipment in ‘good working order’. The Respondent

relies on expert opinion which suggests that the most likely reason for the bitumen

entering the Cargo was the ‘poor adjustment of the ship’s cranes such that they were

over-extending their reach and “grabbing” at the dock’.46

51. The facts asserted by the Respondent are inconclusive. The over-extending of the cranes

may have been due to some fault by the cranemen for which the Respondent is

responsible under section 5(b) of the Charterparty. It may also have been due to some

45 See paragraphs 33-43 of Claimant’s Memorandum. 46 The Respondent’s letter dated 4 December 2008, page 35 of facts.


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irregularity in the port’s structure. As such it is the Respondent’s responsibility to prove

their claim from the facts.

52. Furthermore, clause 5(a) states that the Cargo shall be loaded by the Respondent ‘free of

any risk, liability and expense whatsoever’ to the Claimant. In Canadian Transport Co

Ltd v Court Line Ltd,47

5. THE CLAIMANT IS ENTITLED TO THE COST OF FREIGHT FROM GAMMA,

UPSILON TO ZETA, QOPPA.

a charterparty provided that the charterers were to load the cargo

at their expense. The court held that damage due to improper loading was for the

charterer’s account in the absence of any evidence that the Master incurred liability by

interfering with the loading process. On the facts at hand, there is no evidence that the

Master took any role in the improper loading of the Cargo. Damage caused by the

improper loading of the Cargo is the Respondent’s responsibility.

5.1 The inclusion of the words ‘without prejudice’ does not affect the Respondent’s

obligation to pay the Claimant freight under the Addendum.

53. In point 7(a) of the Respondent’s Points of Claim, the Respondent admits entering into an

Addendum to the Charterparty for the voyage of the Vessel from Gamma to Zeta.

However in point 7(b) they state they did so ‘without prejudice’ to their rights under the

Charterparty. The Claimant will submit that in signing, and therefore accepting, the

Addendum the Respondent is bound by its terms, which includes the paying of freight for

the voyage. The inclusion of the words ‘without prejudice’ has no effect on its

responsibility to pay the freight to the Claimant.

47 [1940] AC 934, 937, 938, 944.


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54. In the case of Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd,48

55. In obiter, Williams J states that in regard to acceptance ‘without prejudice’, these words

can have no meaning because ‘when an offer is accepted the contract is complete and the

acceptance of the offer could not be made without prejudice to its legal effect’.

a party

accepted an offer in a letter headed ‘Without Prejudice’. While ultimately the majority

decided the case for different reasons, they were of the mind that this contractual

acceptance on a without prejudice basis still gave rise to rights and responsibilities

between the parties.

49 This is

the view submitted as the preferable view in Cheshire and Fifoot’s Law of Contract as the

authors state that a person cannot both accept an offer of settlement and purport to reserve

his or her position.50

56. It is submitted that this is the correct reading of an acceptance of a contract on a ‘without

prejudice’ basis. The practical implications of any other interpretation would undermine

the very essence of the law of contract. The Respondent cannot accept contractual

obligations under the Addendum and then claim that, due to its acceptance on a ‘without

prejudice basis’, it is not wholly bound by its terms. The Respondent is contractually

bound to pay freight to the Claimant.

48 (1957) 98 CLR 93. 49 Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd (1957) 98 CLR 93, 118. 50 Seddon, N C and Ellinghaus M P, Cheshire and Fifoot’s Law of Contract (9th ed, 2008) 239.


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6. THE CLAIMANT IS ENTITLED TO DAMAGES FOR DETENTION

6.1 The embargo has not frustrated the Charterparty.

57. From 8 November 2008 to 29 October 2009, the Vessel was detained at the port of Zeta,

Qoppa under a government embargo. It is the Claimant’s position that the embargo did

not frustrate the Charterparty.

58. A contract is frustrated when an event not contemplated by the parties renders the

performance of contractual obligations radically different from that which was undertaken

at the time of contracting.51

59. The ‘Exceptions to Laytime’ clause in the Addendum provides that time lost due to

‘restraints of established authorities’ shall not count as used laytime or time on

demurrage. The parties have clearly contemplated the possibility that government

restrictions such as an embargo could detain the Vessel. The embargo is therefore not a

frustrating event.

60. In the case of The Captain George K52 the closure of the Suez Canal almost doubled the

total distance of the voyage originally planned. Mocatta J held that such a delay resulted

in increased cost and time taken to perform the contractual obligations but did not

constitute a frustrating event.53

61. Furthermore, the period of delay caused by the government embargo can be considered as

On the facts at hand, the performance of the Charterparty

has not become radically different, merely more onerous and less profitable for the parties

and that alone is not reason enough to render the Charterparty frustrated.

51 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696; Codelfa Construction Pty Ltd v State Rail Authority (NSW) 149 CLR 337. 52 Palmco Shipping Inc v Continental Ore Corp (The Captain George K) [1970] 2 Lloyd's Rep 21. 53 Ibid at 32; also see Ocean Tramp Tankers Corp v V/O Sovfracht (The Eugenia) [1964] 2 WLR 114.

http://au.westlaw.com/Find/Default.wl?rs=WLAU1.0&vr=2.0&FindType=Y�


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a period of temporary illegality.54 In Hadley v Clarke55 a ship was detained under an

embargo for two years. The Court of King’s Bench held that the embargo did not dissolve

the contract but only suspended its performance until the embargo was lifted.56

6.2 The delay caused by the embargo is within the Respondent’s sphere of responsibility

under the Addendum.

The

embargo imposed by the Qoppa Government does not frustrate the contract but simply

suspends its performance. It is the Claimant’s position that, because the Charterparty is

not frustrated, loss should not lie where it falls.

62. The Addendum provides that, “[should] the vessel [be] delayed at the discharging port

longer than laytime allowed then Charterers shall pay demurrage at the rate specified in

the governing Charterparty per day for every running day so detained and proportionately

for any part of the day.”57 The laytime allowed for the discharge operation is to be

ascertained via reference to the metric ton Bill of Lading weight.58 The gross tonnage of

the Cargo as per the Bill of Lading numbered BL000002 is 25,103.625mt.59 This is to be

discharged at a rate of 10,250mt per working weather day of 24 consecutive hours FHEX

EIU, provided the vessel can discharge at this rate.60

54 Hadley v Clarke (1799) 101 ER 1377.

The inclusion of the phrase ‘24

consecutive hours’ establishes a discharging period that spans a day in the ordinary sense,

so that every hour counts from the time NOR is tendered up until the discharge operation

55 (1799) 101 ER 1377. 56 Ibid, 1382. 57 Demurrage/Despatch clause, page 22 of facts. 58 Ibid. 59 Bill of Lading No. BL000002, page 29 of facts. 60 Discharge Rate clause, page 21 of facts.


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is completed.61

63. Therefore, a Cargo which is 25,103.625mt to be discharged at rate of 10,250mt for 24

consecutive hours provides a laytime period of two days, ten hours and forty seven

minutes.

Further, there are no facts that develop an impediment from the vessels’

perspective that would inhibit discharging at such a rate.

62 It cannot be in dispute that the detention of the Super P at the port of Zeta for

over a year exceeds the laytime provided for the discharge operation. It is the Claimant’s

position that the Respondent, in signing the Addendum and being bound to its terms,63

has assumed the risk of such delay and has thus brought it within its sphere of

responsibility under the Addendum. Such a conclusion is supported with reference to the

head charter’s costs/risk provisions which establish that discharging of the Cargo shall be

performed by the charterers without any risk, liability or expense to owner.64

6.3 The demurrage clause only regulates breaches of the laytime provisions.

Though the

clause outlined above governs the payment of demurrage for any delay, it is the

Claimant’s position that demurrage is incapable of adequately providing a remedy for the

losses suffered at the port of Zeta and, as such, damages for detention are appropriate.

64. The demurrage clause in the governing charter only becomes operative should the

charterer breach their obligation to discharge the Cargo within the agreed laydays.65

61 Turnbull, Scott & Co v Cruickshank Co (1904) (Court Of Sessions, Inner House, Second Division) 7 Fraser 265, 273.

It is

the Claimant’s position that compensation is due not because of default by the charterer in

the context of laytime, but rather due to the assumption of risk by the Respondent that

payment will fall due should the vessel be delayed at the port of discharge for any reason

62 Such a calculation of laytime supported by the obiter of Lord Templeman in President of India v Jebsens (UK) Ltd (The General Capinpin, The Proteus, The Free Wave and The Dinera) [1991] 1 Lloyd's Rep 1, 4. 63 See submission 4 of Claimants Memorandum. 64Clause 5 of Governing Charter, page 3 of facts. 65 Inverkip Steamship Co Ltd v Bunge & Co [1917] 2 KB 193, 200 and 201 (Scrutton LJ).


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beyond the laytime provisions. This distinction is important as on the facts at hand the

discharge operation does not cross the laytime/demurrage threshold.

65. This is so as the vessel arrives at Zeta on 5/11/2008 at 1500hrs.66 Assuming NOR is

tendered at this time, laytime would not commence until 1500hrs on the 6/11/2008.67

However the 6/11/2008 is a Thursday and the Addendum supplies that, ‘time from

1200hrs Thursday...until 0800hrs Saturday is not to count as used laytime.’68 Therefore,

laytime does not begin to start counting until 0800 Saturday which is the 8/11/2008,

which is the day of the embargo.69

66. Therefore, the total laytime which has been consumed, taking into account the above

discussion, is seven hours, thereby ruling the possibility of breach by the Respondent in

the context of laytime provisions, leaving the assumption of risk by the Respondent as the

principal point to which the Claimant submits payment is due for the delay caused by the

embargo.

The embargo can be classified as a ‘restraint of

established authorities’ under the Addendum and as such time from 1500hrs on 8/11/2008

until the date at which it is lifted on 29/11/2009 is an exception to laytime.

6.4 There are no liquidated damages agreed as between the parties for the delay caused

by the embargo therefore damages at large are appropriate.

67. The leading authorities on the recovery of general damages for excesses of laytime

provide that recovery is dependent upon a breach of the laytime provisions, giving rise to

66 Super P at Zeta – Statement of Facts, page 26 of facts. 67Commencement of Laytime clause states that laytime shall not commence until 24hours after NOR is tendered within office hours. Office hours are deemed to be 0900 to 1700hrs Saturday to Thursday. As the day of arrival is Wednesday at 1500hrs (i.e. 5/11/2008), the tendering of the NOR upon arrival would be within ‘office hours’ at the port of Zeta. Page 22 of facts 68 Discharging Rate clause, page 21 of facts. 69 Super P at Zeta – Statement of Facts, page 26 of facts.


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demurrage payments only, as agreed in the Charterparty.70 Alternatively, they establish

that if there is a breach in addition to, but separate from, the breach of laytime provisions

which result in prolonged detention of the vessel then damages for said detention in

addition to demurrage shall be payable.71

68. As noted, the authorities govern the position when there is either a single or multiple

breaches giving rise to detention of the vessel. They do not canvass issues which arise

where one party has assumed the risk of detention at the behest of port authorities and as

such they cannot be relied upon to govern the circumstances of this case.

It is the Claimant’s position that these authorities

cannot govern the situation that has arisen between the parties.

69. Further, the Addendum and the governing Charterparty do not provide a liquidated rate

of damages for such delays and in the absence of a pre-agreed amount, damages for

detention (i.e. general damages) are the only available form of compensation that can be

awarded. The Claimant has calculated that the award of damages should be to the sum of

U$11,622,500 and we able to assume on the facts that proper calculations for such

damages have been produced and the Claimant asks the tribunal to award this sum due to

assumption of risk of detention that the Respondent has undertaken under the Addendum.

70 First established in Inverkip Steamship Co Ltd v Bunge & Co [1917] 2 KB 193 (CA), affirmed by Langley J in ERG Raffinerie Mediterranee SpA v Chevron USA Inc (The Luxmar) [2007] 2 Lloyd’s Rep 542 (CA (Civ Div)), on appeal from ERG Raffinerie Mediterranee SpA v Chevron USA Inc (The Luxmar) [2006] 2 Lloyd’s Rep 543 (QBD (Comm)). 71 Aktieselskabet Reidar v Arcos Ltd (1926) 25 Ll L Rep 513 (CA).


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PRAYER FOR RELIEF

For the reasons submitted above, the Claimant requests this Arbitral Tribunal to:

DECLARE that it has jurisdiction to hear this dispute; and

ADJUDGE that the Respondent is to indemnify the Claimant for liability to -

a) Theta to the amount of U$4,999,889.00; and b) Beta Beta for an amount to be settled at a later date;

and further

ADJUDGE that the Respondent is liable to the Claimant for -

c) freight costs of U$635,874.69; d) damages for detention to the amount of U$11,622,500.00; e) Interests; and f) Costs.

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THE ELEVENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION ... · PDF fileTHE ELEVENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION . ... valid variation of the Charter