THE NINETEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT

Memorandum for the Respondent

On Behalf of:

Dynamic Shipping LLC

(RESPONDENT)

Against:

Cerulean Beans and Aromas Ltd

(CLAIMANT)

A. NAMIRA IMANI – CINDY RAHMADAVITA – JEVON HOLLY – RAISYA MAJORY – VINKA DAMIANDRA

TEAM NO. 17

MEMORANDUM FOR THE RESPONDENT

TEAM NO. 17

i

TABLE OF CONTENTS

TABLE OF CONTENTS ..................................................................................................................... i

LIST OF AUTHORITIES ................................................................................................................. iii

LIST OF ABBREVIATIONS ............................................................................................................ vi

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

ARGUMENTS PRESENTED............................................................................................................. 2

I. THE CLAIMANT IS NOT ENTITLED TO SUBMIT ITS CLAIMS TO THIS

TRIBUNAL BEFORE THE EXPERT DETERMINATION PROVISIONS HAVE BEEN

FULFILLED ................................................................................................................................ 2

II. THE RESPONDENT IS NOT LIABLE FOR THE DAMAGES RESULTING FROM

THE DELAY IN DELIVERING THE CARGO ..................................................................... 3

A. The Delay Was Caused by The Storm as A Force Majeure Event ...................................... 3

i. The Storm qualifies as a Force Majeure Event ................................................................... 4

ii. The Storm is the effective cause of the delay ....................................................................... 4

iii. The Respondent is not precluded to rely on exemptions under Clause 17 of the

Charterparty ........................................................................................................................ 5

B. In Any Event, The Deviation is Justified ............................................................................. 6

i. The deviation was caused by solar flares as a Force Majeure Event under Clause 17 of

the Charterparty................................................................................................................... 6

ii. The deviation was done to save lives and property at sea ................................................... 7

C. In Any Event, The Loss Caused by The Delay is Too Remote ........................................... 8

III. THE RESPONDENT IS NOT LIABLE FOR THE DAMAGE TO THE CARGO ............. 9

A. The Damage to The Cargo Occurred After The Cargo Had Been Delivered ...................... 9

i. Delivery occurred at 00:02 AM when the electronic access came into operation. ........... 10

ii. Alternatively, the Cargo was under the absolute dominion and control of the Claimant by

the time the Vessel has docked or at the latest, when the Cargo was offloaded. ............... 11

B. Alternatively, the Respondent did not breach its duty to take care of the Cargo .............. 12

C. In the event that the Respondent is liable, its liability for the damaged cargo is limited .. 13

i. The Respondent is entitled to limit its liability................................................................... 13

ii. The Respondent is only liable for 105.000 units of account. ............................................. 14

IV. THE CLAIMANT IS NOT ENTITLED TO ANY MARITIME LIEN OVER THE

VESSEL ..................................................................................................................................... 16

A. The Claimant Is Not Entitled To The Maritime Lien Over The Vessel For The

Outstanding USD 100,000 ................................................................................................. 16

B. The Claimant Is Not Entitled To The Maritime Equitable Lien Over The Vessel By Way

Of Equitable Subrogation To The Crew’s Maritime Lien ................................................. 16

ii

V. THE CLAIMANT IS LIABLE FOR THE SUMS DUE TO THE RESPONDENT UNDER

THE CHARTERPARTY ......................................................................................................... 18

A. The Claimant Is Liable for The Outstanding Freight Under The Charterparty ................. 19

B. The Claimant Is Liable For The Agency Fee At Dillamond ............................................. 19

C. The Claimant Is Liable for Demurrage .............................................................................. 20

D. The Claimant Is Liable for The Use Of Electronic Access System At The Port Of

Dillamond .......................................................................................................................... 21

E. The Claimant Is Liable For The Agency Fees at The Port Of Spectre and The Cost Of

Repairs to The Vessel’s Hull ............................................................................................. 22

F. The Respondent Is Not Precluded to Receive Damages by Virtue Of Clause 15 (B) Of

The Charterparty ................................................................................................................ 23

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

iii

LIST OF AUTHORITIES

CASES

Adamastos Shipping Co Ltd v Anglo Saxon Petroleum Co Ltd, [1959] A.C. 133

AGL Sales (Qld) Pty Ltd v Dawson Sales Pty Ltd [2009] QCA 262

Australasian United Steam Navigation Co Ltd v Hiskens (1914) 18 CLR 646

Automatic Tube Co and Email Ltd v Adelaide Steamship Co (The Beltana), The "Beltana" [1966]

WAR 103

B.P. Refinery (Westernport) Pty. Ltd v Hastings Shire Council (1977) 52 A.L.J.R. 20

Baldwin’s Ltd v Halifax Corporation (1916) 85 LJ KB

Bankers Trust International v Todd Shipyards Corp (The halcyon Isle) [1981] A.C. 221 (1980)

Banque Financiere de la Cite SA v Parc (Battersea) Ltd [1999] 1 A.C. 226

The Bold Buccleugh (1851) 7 Moo. P.C. 267

Boodle Hatfield & Co v British Film Ltd, (1986) 2 B.C.C. 99221 (1985)

Brazzill v Willoughby [2009] EWHC 1633 (Ch)

Butler v Rice [1910] 2 Ch. 277

Cazalet v. Morris [1916] Sc 952

Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd (1993) AC 334

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

China Pacific SA v Food Corpn of India (The Winson) [1982] AC 939

Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337

The Commonwealth of Australia v Amann Aviation Pty. Limited [1991] HCA 54

Davis v Garret [1830] 6 Birmingham 716

Duncan v Koster (The Teutonia) (1872) LR 4 PC 171

E.L. Oldendorff & Co. v. Tradax Export The “Johanna Oldendorff” [1974] A.C. 479 (H.L.).

El Greco (Aust) Pty Ltd v Mediterranean Shipping Co SA 140 FCR 296 (2004)

Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA7

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

Felthouse v Bindley (1862) 11 CB (NS)

Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235

Gaudet v Brown (1873) LR 5 PC 134

Ghana Commercial Bank Appellants v D. T. Chandiram and Another Respondents [1960] 3

W.L.R. 328

Gilchrist Watt & Sanderson Pty Ltd v York Products Pty Ltd [1970] 1 WLR 1262

Glencore International AG v. MSC Mediterranean Shipping Co SA & Anor. [2015] EWHC 1989

(Comm)

Global Dress Company Ltd. v. Boase & Co. Ltd. [1966] 2 Ll.L.R. 72

Goldman v Thai Airways International Ltd [1983] 1 WLR 1186, 1194

Great Eastern Shipping Co Ltd v Far East Chartering Ltd 2012 WL 608696 (2012)

Great Northern Railway Co v Swaffield (1874) LR 9 Ex 132

Hadley v. Baxendale (1854) 9 Exch. 341

Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220

Horabin v British Overseas Airway Corp [1952] 2 Lloyd’s Rep 450

Houghland v. R. R. Low (Luxury Coaches) Ltd. [1962] 1 QB 694

Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd [2006] FCA 1324

J. & E. Kish v. Charles Taylor, Sons & Co [1912] A.C. 604

iv

Keane v Australian Steamships Pty Ltd. [1929] HCA 5

Koufos v C Czarnikow Ltd (The Heron II), [1969] 1 A.C. 350 (1967)

Kyokuyo Co Ltd v. AP Moller-Maersk A/A (t/a Maersk Line [2017] EWHC 654 (Comm)

Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] A.C. 350

Mediterranean Shipping Co SA v Delumar BVBA (The “MSC Rosa M”) [2000] 2 Lloyd’s Rep 399,

401

Menelaou v Bank of Cyprus Plc [2016] A.C. 188

Metall Market OOO v. Vitorio Shipping Co Ltd [2014] Q.B. 760

Morris v C W Martin & Sons Ltd [1966] 1 QB 716

Nea Agrex SA v Baltic Shipping Co Ltd (The Agios Lazarus), [1976] Q.B. 933

Nugent v Smith, (1876) 1 CPD 423

Ontario Bus Industries Inc v Federal Calumet (TD) [1991] FCJ 535

Orakpo v Manson Investments Ltd. [1978] AC 95

Paterson Steamships, Ltd v Canadian Co-Operative Wheat Producers [1934] A.C. 538

Paul v. Speirway Ltd. [1976] Ch. 220; [1960] A.C. 732

Phelps, James & Co v Hill [1891] 1 QB 605, CA

The Pioneer Container, [1994] C.L.C. 332

River Gurara (Owners of Cargo Lately Laden on Board) v Nigerian National Shipping Line Ltd

[1998] Q.B. 610

Rolls Royce plc v Heavylift-Volga Dnepr Ltd [2000] 1 Lloyd’s Rep 653

Rust v Abbey Life Assurance Co Ltd [1979] 2 Lloyd's Rep 334

Sailing Ship Garston Co v. Hickie (1885) 15 QBD 580

Sang Stone Hamoon Jonoub Co Ltd v Baoyue Shipping Co Ltd [2015] EWHC 2288 (Comm)

Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 C.L.R. 169

Scaramanga & Co v Stamp (1880) 5 CPD 295 (CA)

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51

Sheehan v Lloyds Names Muncih Re Syndicate Ltd [2017] FCA 1340

Smith Hogg & Co Ltd v Black Sea and Baltic General Insurance Co Ltd [1940] 3 All ER 405

Société Telus Communications v Peracomo Inc [2011] FC 494, 521

SS Pharmaceutical Co Ltd v Qantas Airways Ltd (1988) 92 FLR 231

Straits Exploration (Australia) Pty Ltd v Murchison United NL [2005] WASCA 241

Transfield Shipping Inc v. Mercator Shipping Inc 2008 WL 2596066

Universal Music Australia Pty Limited v Pavlovic [2015] NSWSC 791

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

Volcafe Ltd v Compania Sud Americana de Vapores SA [2016] 2 C.L.C. 762

Westrac Equipment Pty Ltd v Owners of Ship “Assets Venture” [2002] FCA 440 (2002)

Wylie v. Carlyon [1922] 1 Ch. 51

Yara Nipro Pty Ltd v Interfert Australia Pty Ltd [2009] QSC 314

Yara Nipro Pty Ltd v Interfert Australia Pty Ltd [2010] QCA 128

Yemgas FZCO v Superior Pescadores SA Panama, [2016] EWCA Civ 101

STATUTES AND REGULATIONS

International Conventions on Safe Training, Certification, and Watchkeeping for Seafarers 1978

CONVENTIONS

International Convention for the Unification of Certain Rules of Law relating to Bills of

Lading 1968

v

BOOKS

Ewan McKendrick, Force Majeure and Frustration of Contract (2nd edn, LLP, London, 1995).

Gary B Born, International Commercial Arbitration (Kluwer Law International 2009) vol 1, 853.

Julian Cooke et al, Voyage Charters (Informa, 4th ed, 2014)

Nigel Blackaby et al, Redfern and Hunter on International Arbitration (Oxford University) Press,

5th ed, 2009).

Nigel Meeson, Admiralty Jurisdiciton and Practice (Third Edition, Lloyd’s Shipping Law Library,

2003).

JOURNAL & OTHERS

Australian Maritime Safety Authority. “Navigation System.” AMSA.

https://www.amsa.gov.au/safety-navigation/navigation-systems (accessed on 15 April 2018).

vi

LIST OF ABBREVIATIONS

A.C.

AATA

All ER

ALJR

ALMD

Bing.

Cargo

C.P.D.

Claimant

C.L.C.

Charterparty

FCA

HCA

K.B.

Lloyd’s Rep

L.R.

Moo. P.C.

NSWLR

p.

¶

UK Law Reports, Appeal Cases

Administrative Appeals Tribunal

All England Law Reports (United Kingdom)

Australian Law Journal Reports

Australian Legal Monthly Digest

Bingham's Common Pleas Reports (England)

1,000 bags of 70,000 kilograms of high-grade coffee

beans contained inside four containers, carried by the

Vessel

Common Pleas Division - Law Reports

Cerulean Beans and Aromas Ltd

Commercial Law Cases

Voyage charterparty between the Parties

Federal Court of Australia

High Court of Australia

King’s Bench

Lloyd’s Law Report

Law Reports (England)

Moore's Privy Council Cases

New South Wales Law Reports

page

paragraph

vii

Parties

Respondent

QBD

Delivery Deadline

Vessel

Voyage

Storm

Vessel

UKSC

WAR

WLR

the Claimant and the Respondent

Dynamic Shipping LLC

Queen’s Bench Division

7:00 PM 28 July 2017

Madam Dragonfly

The voyage concerning the carriage of the Cargo from

Cerulean to Dillamond on 24 July 2017

The storm occurring at 5:13 PM on 28 July 2017.

Madam Dragonfly

United Kingdom Supreme Court

Western Australia Reports

Weekly Law Reports

1

SUMMARY OF FACTS

1. Cerulean Beans and Aromas (the "Claimant"), entered into a voyage charterparty (the "Char-

terparty") with Dynamic Shipping (the "Respondent"). The Madam Dragonfly (the "Vessel") was

chartered to ship four containers of coffee beans (the "Cargo") from the Port of Cerulean to the

Port of Dillamond.

2. On 24 July 2017, shortly after the Vessel departed the Port of Cerulean, solar flares of an unprece-

dented scale occurred, shutting down international radio and satellite communication systems. The

Vessel deviated to Port of Spectre until its systems could recover from the solar flares.

3. On 28 July 2017, during its journey to Dillamond, at around 5:13 PM, a massive Storm which was

described as a "once in a lifetime" event hit Dillamond ("Storm"), preventing the Vessel to proceed

to Port of Dillamond, causing it to fail to deliver the Cargo by 7:00 PM on 28 July 2017 ("Delivery

Deadline"). At 7:00 AM on 29 July 2017 at, the Vessel was stuck at 100 nm out of Dillamond and

had nowhere to berth due to congestion caused by the Storm. The Port of Dillamond was closed for

12 hours for clean-up efforts.

4. Approximately 13 hours later, the Respondent notified the Claimant that the Cargo was available

for collection. The Respondent waited until midnight for the Claimant to physically collect the

Cargo and furnished the Claimant with electronic access to collect the Cargo if it could only come

after midnight. The Claimant collected the Cargo at 1:17 PM on 31 July 2017. According to an

expert opinion, the Cargo was damaged within 24 hours after 4:30 AM on 30 July 2017.

5. In its letter dated 2 August 2017, the Claimant sought USD 30.200.000 in damages from the Re-

spondent for the delay and damage to the Cargo. The Respondent denied liability for such damages.

The Claimant then initiated arbitral proceedings against the Respondent on 11 August 2017.

2

ARGUMENTS PRESENTED

I. THE CLAIMANT IS NOT ENTITLED TO SUBMIT ITS CLAIMS TO THIS TRIBUNAL

BEFORE THE EXPERT DETERMINATION PROVISIONS HAVE BEEN FULFILLED

1. When a contract refers the dispute to an expert determination, the parties should enforce it unless

good reasons are shown for departing from it.1 In the present case, the Parties have agreed that any

dispute as to technical matters arising out of or in connection with the Charterparty shall be referred

to an expert determination by an independent Master Mariner. This agreement is contained in

Clause 27 (d) to (g) of the Charterparty (“Expert Determination Provisions”).2

2. Clause 27 (d) calls for disputes as to an technical matters arising out of or in connection with the

Charterparty to be referred to an expert determination by an independent Master Mariner.3 Clause

27 (g) defines technical matters as “...matters surrounding the technical aspects of the performance

of the charterparty, such as the vessel's route, loading and unloading of cargo, storage conditions

and other matters which can reasonably be considered to be within the expert technical knowledge

of a Master Mariner.4” Further, Clause 27 (e) stipulates that, “A party may not commence legal

proceedings in respect of dispute unless clause (d) has been complied with first.”5 If disputes re-

lating to the performance of the Charterparty contain factual questions within the expert technical

knowledge of a Master Mariner, any legal proceedings cannot be brought upon it before the dispute

is referred to an independent Master Mariner.

3. In the present case, the Claimant’s claims for damages consist of issues which are a mixture of

questions of law, and questions of fact, whereby the opinion of a Master Mariner is required. For

1 Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd (1993) AC 334. 2 Moot Scenario, p. 12. 3 Ibid, p. 12. 4 Ibid, p. 2. 5 Ibid, p. 12.

3

example, a question of fact is whether the Respondent had exercised due diligence to ensure the

Vessel is seaworthy. In Paterson Steamships, Ltd v Canadian Co-Operative Wheat Producers,6 it

was held that measuring a shipowner's due diligence to make his vessel seaworthy is a question of

fact which "did not depend on any legal regulation".7 Another case relates to the sufficiency of

protection provided by the waterproof sealants, where an expert determination is needed to deter-

mine whether the sealants provided by the Respondent conformed with the standard of duty of

care. A certified Master Mariner is capable to determine whether the equipment and map are ap-

propriate to the safe conduct of the Voyage, 8 procedure for safe-handling, stowage, and securing

of cargo and stores, and precautions to observe with types of cargo,9 all of which are required in

order to determine the Vessel's conformity with the law.

4. In the case at hand, there is no evidence that the Parties have resorted to the Expert Determination

Provisions. As such, the Claimant’s decision to commence arbitral proceedings should be deemed

as premature,10 and should not be accepted by this Tribunal.

II. THE RESPONDENT IS NOT LIABLE FOR THE DAMAGES RESULTING FROM THE

DELAY IN DELIVERING THE CARGO

5. Although the Respondent did not discharge the Cargo by the Delivery Deadline as required under

the Charterparty, the Respondent is not liable for the damages resulted by the delay because: (A)

the delay was caused by the Storm as a Force Majeure Event. (B) In any event, the deviation is

justified. Further, (C) the loss claimed by the Claimant is too remote.

A. The Delay Was Caused by The Storm as A Force Majeure Event

6. Under Clause 17 of the Charterparty, the Respondent is exempted from liability for any failure to

perform its obligation by reason of any Force Majeure Event.11 Here, (i) the Storm qualifies as a

6 [1934] A.C. 538. 7 Paterson Steamships, Ltd v Canadian Co-Operative Wheat Producers [1934] A.C. 538. 8 IMO, International Conventions on Safe Training, Certification, and Watchkeeping for Seafarers, Table A-II/2, column

4. 9 Ibid, Table A-II/5, column 2. 10 Straits Exploration (Australia) Pty Ltd v Murchison United NL [2005] WASCA 241. 11 Moot Scenario, p. 9

4

Force Majeure Event, and (ii) the Storm is the efficient cause of the delay. Further, (iii) the Re-

spondent is not precluded to rely on exemptions under Clause 17.

i. The Storm qualifies as a Force Majeure Event

7. The Respondent was prevented from delivering the Cargo on time due to the Storm, which qualifies

as a Force Majeure Event. Under Clause 17, Force Majeure Event is defined as, among others,

“unforeseen weather events, acts of God, accidents, fire, explosions, flood, landslips, ice, frost or

snow.”12 The Storm qualifies as an unforeseen weather event. The test of foreseeability is deter-

mined by whether the event must have been unforeseeable by a reasonable person at the time of

the contract and in the circumstances in which it was made.13 Alternatively, the Storm qualifies as

an act of God. An act of God is an accident caused by nature without any human intervention that

could not have been prevented by any amount of foresight, pains, and care reasonably to be ex-

pected.14

8. Here, the Storm’s intensity, and severity was described as "once in a lifetime" and was not picked

up on radars until approximately 45 minutes before it hit Dillamond. It caused the power lines to

be knocked down, cars were upturned and the port was closed.15 Thus, it was unforeseeable and

could not have been prevented by any reasonable person, qualifying it as a Force Majeure Event.

ii. The Storm is the effective cause of the delay

9. Under Clause 17 of the Charterparty, a party is not liable when its obligation is “delayed, inter-

rupted, or prevented” to be performed by reason of the relevant Force Majeure Event. Such con-

struction of the clause indicates that to take the clause into effect, there must be a causation between

the Force Majeure Event and a party's inability to perform.16

12 Ibid. 13 Ewan McKendrick, Force Majeure and Frustration of Contract, 2nd edn, LLP, London, 1995 at pp 24-25; Hyundai

Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd [2006] FCA 1324. 14 Nugent v Smith, (1876) 1 CPD 423; Baldwin’s Ltd v Halifax Corporation (1916) 85 LJ KB. 15 Moot Scenario, p. 21, 36. 16 Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd (2006) 236 ALR 115; Yara Nipro Pty Ltd v Interfert

Australia Pty Ltd [2009] QSC 314 ; Yara Nipro Pty Ltd v Interfert Australia Pty Ltd [2010] QCA 128; Gardiner v Agri-

cultural and Rural Finance Pty Ltd [2007] NSWCA 235.

5

10. The Claimant might argue that the effective cause of the delay was the Respondent’s deviation to

the Port of Spectre or the alleged unseaworthiness. However, the Storm is the effective cause of

the delay. In determining so, it is important to answer if the delay would still happen had there

been no deviation or the alleged unseaworthiness.17 In the present case, even without deviation or

the alleged unseaworthiness, the discharge of the Cargo would not have been possible to be done

before the Delivery Deadline. As the Voyage was originally estimated to take 4 days and 8 hours,

the Vessel was estimated to arrive at 5:00 PM on 28 July 2017.18 Meanwhile, the Storm happened

at 5:13 PM on 28 July 2017.19 Thus, even if the Respondent proceeded the Voyage as planned, it

would have been impossible to discharge the Cargo before the Delivery Deadline.

iii. The Respondent is not precluded to rely on exemptions under Clause 17 of the Char-

terparty

11. The Claimant might argue that the Respondent cannot be exempted under Clause 17 of the Char-

terparty due to its failure to exercise due diligence. It is acknowledged that Clause 17 provides that

all the exceptions contain therein are conditional upon the exercise of due diligence to ensure the

ship is seaworthy.20 However, any failure to meet the condition to rely on an exemption clause

under a charterparty does not preclude a party to rely on the exemption, unless the failure is the

cause of the loss.21 As explained earlier,22 the delay was caused by the Storm, and the Respondent’s

failure to bring the correct hardcopy map has nothing to do with the delay, as it would have hap-

pened anyway even if the Respondent had proceeded under normal circumstances.

12. Further, the Respondent has provided a prompt written notice of the Storm to Claimant and taken

reasonable steps to minimise any delay. As required by Clause 17, in the event of a Force Majeure

17 Smith Hogg & Co Ltd v Black Sea and Baltic General Insurance Co Ltd [1940] 3 All ER 405; Sheehan v Lloyds Names

Muncih Re Syndicate Ltd [2017] FCA 1340; Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918]

A.C. 350. 18 Procedural Order No.2, ¶7. 19 Moot Scenario, p. 21, 19. 20 Moot Scenario, p. 9. 21 Paterson Steamships, Limited Appellants; v. Canadian Co-Operative Wheat Producers, Limited Respondents [1934]

A.C. 53; J. & E. Kish v. Charles Taylor, Sons & Co [1912] A.C. 604. 22 Team 17 Memorandum for Respondent ¶¶14-15.

6

Event arising, “the affected party shall give the other party prompt written notice on such cause or

causes and shall take all reasonable steps to minimise any delay so caused.”23 A written notice

can be considered as 'prompt' if it is sent “as soon as it becomes obvious that the Force Majeure

Event has prevented, or will prevent, performance.”24 In the present case, the Respondent had

promptly notified the Claimant of the occurrence of the Storm, as a notice was made available to

the Claimant before the Storm hit, stating the cause of the Force Majeure as required.25 Further,

the Respondent had taken reasonable steps to minimise any delay that might arise from the occur-

rence of the Storm, by dropping the anchor to avoid the Storm.26 Consequently, the Respondent is

entitled to rely on the exemption under Clause 17 of the Chapterparty.

B. In Any Event, The Deviation is Justified

13. The Respondent acknowledges that under the Charterparty it has the obligation to carry the Cargo

from Cerulean to Dillamond without deviation, unless for cause justifying such deviation.27 If the

deviation is not justifiable, then the Respondent is liable for the loss.28 Here, the Respondent devi-

ation to the Port of Spectre is justifiable because (i) the deviation was caused by solar flares as a

Force Majeure Event under Clause 17 of the Charterparty; (ii) alternatively, the deviation was done

to save lives and property.

i. The deviation was caused by solar flares as a Force Majeure Event under Clause 17 of the

Charterparty

14. The deviation was done after the Vessel's communication systems went down due to the solar

flare.29 An Act of God is an accident caused by nature without any human intervention.30 In the

present case, the solar flare was unprecedented, knocking out international radio and satellite

23 Moot Scenario, p. 9. 24 AGL Sales (Qld) Pty Ltd v Dawson Sales Pty Ltd [2009] QCA 262. 25 Moot Scenario, p. 9 26 Ibid, p. 20. 27 Scaramanga & Co v Stamp (1880) 5 CPD 295 (CA). 28 Davis v Garret [1830] 6 Birmingham 716. 29 Procedural Order 2, ¶10. 30 Team 17 Memorandum for Respondent ¶12.

7

communication systems and subsequently disabling the Vessel navigation and communication.31

Thus, it qualifies as an act of God under Clause 17 of the Charterparty.

15. To qualify as unforeseeable, the event must have been unforeseeable by a reasonable person at the

time of the contract and in the circumstances in which it was made.32 In the present case, at the

conclusion of the Charterparty, although the occurrence of solar flares was foreseeable, its severity

was not. The series of solar flares was described as an unprecedented international emergency, one

of which knocked out radio and satellite communication systems around the world. Consequently,

ships were left with no navigation or communication systems up to 20 hours.33 Thus, the solar flare

which knocked out global radio and satellite communication systems qualify as an unforeseeable

weather event and constitute a Force Majeure Event.

ii. The deviation was done to save lives and property at sea

16. Clause 17 of the Charterparty entitles the Vessel to deviate to save lives and property at sea. In

addition, under common law, a vessel is entitled to deviate for the sole purpose of saving life. The

Respondent contends that the Vessel’s deviation is justified under both grounds.

17. The deviation to Port of Spectre was justified because it was done to avoid perils resulting from

dangers of navigation. It was established in The Teutonia,34 if a master knows the risk that if he

continues in the direct course of his voyage, his ship will be exposed to some imminent peril or

other dangers of navigation, he is justified in deviating from his current course.35 In Phelps, James

& Co v Hill,36 it is also established that where the circumstances necessitate the Master to deviate,

31 Moot Scenario, p. 35. 32 Ewan McKendrick, Force Majeure and Frustration of Contract, 2nd edn, LLP, London, 1995 at pp 24-25; Hyundai

Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd [2006] FCA 1324. 33 Moot Scenario, p. 35 34 (1872) LR 4 PC 171; Phelps, James & Co v Hill [1891] 1 QB 605, CA. 35 The Teutonia (1872) LR 4 PC 171. 36 [1891] 1 QB 605, CA.

8

he is not only justified, but it is his duty to do so in order to avoid dangers and mitigating conse-

quences which may have happened.37

18. In the present case, communications and satellite systems were knocked out by solar flares.38 Given

the direness of the situation, it was necessary for the Vessel to go to the nearest port to ascertain

whether its navigation and communication systems needed necessary repair, to ascertain whether

the Vessel's system would be able to recover from the solar flares. The only back-up navigation

system available at that time was the hardcopy map to the Port of Spectre. 39 Proceeding without

navigation systems would expose the Vessel to a risk of collisions with other vessels in the area, 40

harming the crew of the vessel and property on board. As a result, it was necessary for the Vessel

to deviate from its initial route and proceed to the Port of Spectre to protect the lives and property

on board.

C. In Any Event, The Loss Caused by The Delay is Too Remote

19. The Claimant may only recover from a loss that is not only within the reasonable contemplation

of the Respondent, and if the Respondent has assumed responsibility for the loss.41 In the present

case, the Respondent was only aware that the Cargo was meant for an immediate sale to a third

party.42 The Respondent admits that as a result of a damaged Cargo, it is foreseeable that the Claim-

ant might incur losses. However, the Respondent was not aware of the specific details of the rela-

tionship between the Claimant and its client, including the threat of the legal action given by its

client in the event of the Claimant's delay.43 Therefore, the Respondent never assumed that it will

be liable for loss in a form of a settlement payment.

37 Phelps, James & Co v Hill [1891] 1 QB 605, CA. 38 Moot Scenario, p. 17. 39 Ibid, p. 19. 40Australian Maritime Safety Authority. “Navigation System.” AMSA. https://www.amsa.gov.au/safety-navigation/navi-

gation-systems (accessed on 15 April 2018). 41 Transfield Shipping Inc v. Mercator Shipping Inc 2008 WL 2596066; Hadley v. Baxendale (1854) 9 Exch. 341; Victoria

Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB; Koufos v C Czarnikow Ltd (The Heron II), [1969] 1 A.C.

350 (1967); The Commonwealth of Australia v Amann Aviation Pty. Limited [1991] HCA 54. 42 Moot Scenario, p. 2, 16. 43 Ibid.

9

III. THE RESPONDENT IS NOT LIABLE FOR THE DAMAGE TO THE CARGO

20. Despite the fact the relationship between the Claimant and the Respondent amounts to a bailment,

the Respondent denies any liability for the damages to the Cargo.

21. As established in Hobbs v Petersham Transport Co Pty Ltd,44 "the obligation of a carrier as bailee

is to exercise due care, skill and diligence for the safety of chattels entrusted to him."45 Such duty

ceases when delivery occurred.46 Consequently, he is not liable for the damages occurred after the

delivery.47 Further, even if the goods were damaged within his duty, he is not liable for loss or

damage without any default on his part. 48

22. In the present case, the Respondent submits that (A) the damages to the Cargo occurred after the

Cargo had been delivered on 29 July 2017; (B) alternatively, the Respondent did not breach its

duty to take care of the Cargo; (C) in the event that the Respondent is liable, its liability for the

damaged Cargo is limited; and (D) the Claimant is not entitled to recover for the replacement cargo.

A. The Damage to The Cargo Occurred After The Cargo Had Been Delivered

23. The damages to the Cargo occurred sometime between 4:30 AM on 30 July 2017 and 4:30 AM on

31 July 2017.49 The Claimant argued that the delivery only occurred at 1:17 PM on 31 July 2017

when it took the Cargo.50 The Respondent contends that: (i) delivery occurred at 00:02 AM when

the electronic access came into operation; (ii) alternatively, the Cargo was under the absolute do-

minion and control of the Claimant by the time the Vessel has docked or at the latest, when the

Cargo was offloaded. As such, damage to the Cargo occurred after the Cargo had been delivered.

44 Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220; Westrac Equipment Pty Ltd v Owners of Ship “Assets

Venture” [2002] FCA 440 (2002). 45 Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220; Gilchrist Watt & Sanderson Pty Ltd v York Products

Pty Ltd [1970] 1 WLR 1262; Morris v C W Martin & Sons Ltd [1966] 1 QB 716; The Pioneer Container, [1994] C.L.C.

332. 46 Gilchrist Watt & Sanderson Pty Ltd v York Products Pty Ltd [1970] 2 NSWR 156; Hobbs v Petersham Transport Co

Pty Ltd (1971) 124 CLR 220. 47 Morris v C W Martin & Sons Ltd [1966] 1 QB 716. 48 Ibid. 49 Moot Scenario, p. 43. 50 Ibid, p. 24.

10

i. Delivery occurred at 00:02 AM when the electronic access came into operation.

24. The mode of delivery is subject to parties’ agreement.51 Thus, when the carrier has acted in the

agreed mode of transfer, delivery has been performed. 52 The Charterparty does not provide any

agreement on the mode of the delivery. However, the Parties have later agreed to use the electronic

access system as the mode of delivery.

25. An agreement is concluded when an offer is followed by an acceptance.53 In the email dated 29

July 2017 at 4:28 PM, the Respondent delivered the electronic access as an attachment which ex-

pressly states that “delivery of this access authority pass constitutes delivery of your cargo.”54 This

constitutes an offer by the Respondent to make delivery of the Cargo by the delivery of the elec-

tronic access, as it clearly shows the Respondent's intention to be bound.55 This e-mail was fol-

lowed by the Claimant's silence until it collected the Cargo.

26. Common law avails the avenue to consider implied acceptance.56 The test of whether there exists

an implied acceptance is to ask whether an objective third party seeing all the relevant facts and

circumstances, conclude that there had been an acceptance. One circumstance where the general

rule can be varied is when parties have previously treated silence as an acceptance.57

27. It has been previously acknowledged by the Parties that silence is an acceptance. On 22 July 2017,

the Respondent notified the Claimant that it amended the Charterparty. The Claimant silently

agreed to the amendment by agreeing to proceed with the Voyage, evidenced by the Dock Receipt

which shows that the Claimant had delivered its Cargo to the Respondent.58

51 Australasian United Steam Navigation Co Ltd v Hiskens (1914) 18 CLR 646. 52 Ibid. 53 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523; Felthouse v Bindley (1862) 11

CB (NS). 54 Moot Scenario, p. 23. 55 Universal Music Australia Pty Limited v Pavlovic [2015] NSWSC 791; Electricity Generation Corporation t/as Verve

Energy v Woodside Energy Ltd [2014] HCA7. 56 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523. 57 Ibid. 58 Moot Scenario, p. 16.

11

28. In the present case, where the Respondent amended the agreement as to the mode of the delivery,

the Claimant's silence should be deemed as an acceptance. The Respondent sent the email at 4:28

PM stating that its crew will wait until midnight. Considering that immediate delivery was essen-

tial, it is commercially reasonable that communications between the Parties should not prolong the

delivery. The Claimant should have replied if it intended to object to the mode of delivery.

29. The Respondent's acceptance was further affirmed by its conduct. Silence may also amount an

assent where the offeree had been given a reasonable opportunity to reject, but fails and instead

takes benefit of the offer.59 Despite being given a reasonable opportunity to turn down the offer

until 00:02 AM on 30 July when electronic came into effect, the Claimant did not reject the offer.60

Instead, two days after receiving the electronic access, the Claimant took benefit of the offer and

took the Cargo using such access.61

30. In its entirety, an objective bystander would have concluded that the Respondent had accepted to

use the electronic access as the mode of delivery, when it failed to reject it before the electronic

access came into operation. Consequently, delivery occurred at 00:02 AM on 30 July 2017, before

the Cargo was damaged.

ii. Alternatively, the Cargo was under the absolute dominion and control of the Claimant by

the time the Vessel has docked or at the latest, when the Cargo was offloaded.

31. In the absence of any agreement as to the method of delivery, delivery occurs when the goods are

“placed under the absolute dominion and control of the consignees.”62 This rule does not necessi-

tate physical delivery.63 Delivery is no more than a transfer of possession of the goods.64 It does

59 Rust v Abbey Life Assurance Co Ltd [1979] 2 Lloyd's Rep 334 at 340; Chitty on Contracts, 25th ed, (1983) (pars 79ff at

48) and D W Greig and J L R Davis; The Law of Contract (1987) at 303f. 60 Moot Scenario, p. 24. 61 Ibid. 62 Australasian United Steam Navigation Co Ltd v Hiskens (1914) 18 CLR 646; Chartered Bank v. British India S.N. Co.

[1909] A.C. 369, 375. 63 Keane v Australian Steamships Pty Ltd. [1929] HCA 5. 64 Australasian United Steam Navigation Co. Ltd. v. Hiskens (1914) 18 CLR 646.; Automatic Tube Co and Email Ltd v

Adelaide Steamship Co (The Beltana), The "Beltana" [1966] WAR 103.

12

not require the carrier themselves to physically hand over the cargo to the receivers.65 The carrier

is only required to divest or relinquish the power to compel any dealing in or with the cargo which

can prevent the consignee from obtaining possession.66

32. When the Vessel docked, the Respondent notified the Claimant that the Cargo was available for

collection.67 Further, when the Cargo was offloaded, the Respondent’s crew had left, hence the

Respondent had divested all its power as to the physical dealing of the Cargo.68 The Cargo was

stored in the electronic facilities maintained by the Port Authority, which can be accessed anytime

by the Claimant using the barcode sent by the Respondent. Thereby, the Cargo had been put under

the dominion and control of the Claimant and the Claimant could have collected the Cargo at any

time as they desire. The Respondent no longer had the power to control the Cargo.

33. As such, when the electronic system started operating, the Respondent had forfeited the physical

dealing, and the Claimant had the Cargo under his dominion or control. Thus, the delivery occurred

on 30 July 2017 00:02 AM.

B. Alternatively, the Respondent did not breach its duty to take care of the Cargo

34. It is established that bailee is exempted from liability arising from the damages to the cargo if he

can prove that the loss or damage was not the result of any default on his part.69 In the present case,

the Respondent submits that it did not breach its duty to take care of the Cargo, hence the damage

was not the result of any default on the Respondent.

35. In Volcafe Ltd v Compania Sud Americana de Vapores SA,70 it was held that a carrier of coffee

bean was not obliged to provide more layers of kraft paper than required under the general industry

65 Great Eastern Shipping Co Ltd v Far East Chartering Ltd 2012 WL 608696 (2012); Australasian United Steam Navi-

gation Co. Ltd. v. Hiskens (1914) 18 CLR 646. 66 Glencore International AG v. MSC Mediterranean Shipping Co SA & Anor. [2015] EWHC 1989 (Comm); Cooke on

Voyage Charters (4th Edn, 2014) at para 10.4 67 Moot Scenario, p. 24. 68 Ibid, p. 22. 69 Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220; Westrac Equipment Pty Ltd v Owners of Ship “Assets

Venture” [2002] FCA 440 (2002); Houghland v. R. R. Low (Luxury Coaches) Ltd. [1962] 1 QB 694.; Global Dress Com-

pany Ltd. v. Boase & Co. Ltd. [1966] 2 Ll.L.R. 72. 70 [2016] 2 C.L.C. 762.

13

practice unless specifically requested by the charterer, even though it would have prevented the

cargo from being damaged.71

36. Similarly in the present case, under the general industry practice, coffee is ordinarily shipped in

waterproof containers.72 There is no general industry practice as to the longevity required for wa-

terproof sealants. The Respondent had provided an exceptionally strong waterproof sealants that

last for more than the estimated time needed for the voyage.73 The Claimant did not specifically

request for the sealant to last longer and decided to proceed with the voyage knowing that the

sealant will only last for five days.74 Thus, the Respondent has conducted its duty to take care of

the Cargo by carrying the coffee beans in accordance with the general industry practice.

C. In the event that the Respondent is liable, its liability for the damaged cargo is limited

37. When a charterparty incorporates Clause Paramount, parties have intended to incorporate HVR.75

Parties may only agree to incorporate part of the rules.76 In the present case, the Parties have in-

corporated Article IV rule 5 of HVR, hence in the event that the Respondent is liable for the dam-

aged Cargo, the Respondent may limit its liability under Article IV rule 5 of HVR.

i. The Respondent is entitled to limit its liability.

38. To rely on Article 4 rule 5 of HVR, the Respondent has to prove that the damage to Cargo did not

result from its own personal act, which was committed "with the intent to cause damage, or reck-

lessly and with the knowledge that the loss would probably result."77 In the event that this Tribunal

deems that the Respondent's act amounts to a breach of the duty of care, the Respondent did not

71 Volcafe Ltd v Compania Sud Americana de Vapores SA [2016] 2 C.L.C. 762. 72 Procedural Order No. 2, ¶12. 73 Moot Scenario, p. 43; Procedural Order No. 2, ¶7. 74 Moot Scenario, p. 14. 75 Yemgas FZCO v Superior Pescadores SA Panama, [2016] EWCA Civ 101; Kyokuyo Co Ltd v. AP Moller-Maersk A/A

(t/a Maersk Line [2017] EWHC 654 (Comm); Nea Agrex SA v Baltic Shipping Co Ltd (The Agios Lazarus) [1976] Q.B.

933; Adamastos Shipping Co Ltd v Anglo Saxon Petroleum Co Ltd, [1959] A.C. 133. 76 Nea Agrex SA v Baltic Shipping Co Ltd (The Agios Lazarus), [1976] Q.B. 933. 77 Article IV rule 5 (e)Hague-Visby Rules.

14

act "with the intent to cause damage, or recklessly and with the knowledge that the loss would

probably result."

39. To be considered as having an intention willful misconduct, the Claimant has to prove that the

Respondent "not only that he knowingly (and in that sense willfully) did the wrongful act, but also

that, when he did it, he was aware that he was committing misconduct."78 Further, a party is deemed

to have acted “recklessly with knowledge that damage would probably result” when a conduct is

done with decision to run the risk or with a mental attitude of omitting the knowledge that damage

would probably result 79

40. Here, the Claimant might argue that the Respondent provided waterproof sealants are not durable

enough for the Voyage to protect the Cargo. However, it does not follow that the Respondent

willfully and indifferently to the existence of risk provided sealants that are weak enough so that

the Cargo would be damaged. The Respondent was not aware that it was committing a misconduct,

nor was it aware that damage would probably result out of using an exceptionally strong sealant,

especially when such conduct was informed to the Claimant prior to the Voyage. 80

ii. The Respondent is only liable for 105.000 units of account.

41. The Respondent is entitled to limit its liability Under Article IV rule 5 (a) of HVR to “666.67 units

of account per package or unit or 2 units of account per kilo of gross weight of the goods damaged,

whichever is the higher.”81 The Respondent submits that the container is the packages, hence the

limitation is higher when it is count based on the gross weight of the damaged goods.

78 Horabin v British Overseas Airway Corp [1952] 2 Lloyd’s Rep 450; Rolls Royce plc v Heavylift-Volga Dnepr Ltd [2000]

1 Lloyd’s Rep 653. 79Goldman v Thai Airways International Ltd [1983] 1 WLR 1186, 1194.; Ontario Bus Industries Inc v Federal Calumet

(TD) [1991] FCJ 535; Mediterranean Shipping Co SA v Delumar BVBA (The “MSC Rosa M”) [2000] 2 Lloyd’s Rep 399,

401; Société Telus Communications v Peracomo Inc [2011] FC 494, 521; SS Pharmaceutical Co Ltd v Qantas Airways Ltd

(1988) 92 FLR 231. 80 Moot Scenario, p. 43, 14. 81 Article IV Rule 5 (a) Hague-Visby Rules.

15

42. According to Article IV rule 5 (c) HVR, parties are free to agree to enumerate the number “pack-

ages or units as packed” in the container.82 If parties fail to do so, the container shall be considered

the package.83 In the present case, the Respondent has amended the Charterparty to only enumer-

ates 4 containers of coffee beans.84 The Claimant agreed by continuing to proceed with the Voyage.

The amendment is further affirmed by the number of packages written on the Dock Receipt.85 If

the limitation is counted based on the number of packages, the Respondent will only be liable for

2,000.01 units of account. Since the limitation based on the gross weight of the damaged cargo

will be higher, the Respondent is liable for 2 units of account per kilo of the gross weight, i.e.

105,000 units of account.

D. The Claimant is not entitled to recover for the replacement cargo

43. The Claimant may only recover from a loss that is not only within the reasonable contemplation

of the Respondent, and if the Respondent has assumed responsibility for the loss.86 In the present

case, the Respondent was only aware that the Cargo was meant for an immediate sale to a third

party.87 The Respondent admits that as a result of a damaged Cargo, it is foreseeable that the Claim-

ant might incur losses. However, the Respondent was not aware of the specific details of the rela-

tionship between the Claimant and its client, including its promise to provide a replacement cargo

in the event the Cargo was damaged.88. The Respondent never assumed that it will be liable for

loss in a form of a replacement cargo.

82 El Greco (Aust) Pty Ltd v Mediterranean Shipping Co SA 140 FCR 296 (2004). 83 Article IV Rule 5 (c) of Hague Visby Rules; El Greco (Aust) Pty Ltd v Mediterranean Shipping Co SA 140 FCR 296

(2004); Kyokuyo Co Ltd v AP Moller-Maersk A/S (t/a Maersk Line) 2017 WL 01084504 (2017); River Gurara (Owners of

Cargo Lately Laden on Board) v Nigerian National Shipping Line Ltd [1998] Q.B. 610. 84 Moot Scenario, p. 14. 85 Ibid, p. 16. 86 Transfield Shipping Inc v. Mercator Shipping Inc 2008 WL 2596066; Hadley v. Baxendale (1854) 9 Exch. 341; Victoria

Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB; Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 A.C.

350 (1967); The Commonwealth of Australia v Amann Aviation Pty. Limited [1991] HCA 54. 87 Moot Scenario, p. 2, 16. 88 Ibid.

16

IV. THE CLAIMANT IS NOT ENTITLED TO ANY MARITIME LIEN OVER THE VESSEL

44. The Respondent denies that the Claimant’s entitlement to any maritime lien. Under the present

circumstances, (A) the Claimant is not entitled to the maritime lien over the Vessel under the com-

mon law for the outstanding USD 100,000 on account of the crew’s wages and (B) the Claimant

is not entitled to the maritime equitable lien over the Vessel by way of equitable subrogation of the

crew’s maritime lien.

A. The Claimant Is Not Entitled To The Maritime Lien Over The Vessel For The Outstand-

ing USD 100,000

45. Under the common law only recognise six claims which give rise to a maritime lien, i.e. damage

caused by a ship, salvage, bottomry, seamen’s wages, and master’s wages and disbursements.89 In

this present case, the Claimant has claimed a maritime lien to be exercised over the loan it has

provided to the Respondent on account crew wages. However, this should be distinguished with

a claim for unpaid wages crew wages brought by the crew of a vessel. Because the loan provided

by the Claimant falls outside the above list, no maritime lien arises under the common law. There-

fore, the Claimant is not entitled to a maritime lien over the Vessel.

B. The Claimant Is Not Entitled To The Maritime Equitable Lien Over The Vessel By

Way Of Equitable Subrogation To The Crew’s Maritime Lien

46. The Claimant argued that it is entitled to the maritime equitable lien by way of equitable subroga-

tion of the crew’s maritime lien. Principally, a loan arrangement which provides that a loan by a

lender to a borrower is made to repay another third-party secured loan, the lender is entitled to a

subrogation of such third-party security.90 Such lender is entitled in equity to be subrogated to the

89 Bankers Trust International v Todd Shipyards Corp (The halcyon Isle) [1981] A.C. 221 (1980); The Bold Buccleugh

(1851) 7 Moo. P.C. 267; Nigel Meeson, Admiralty Jurisdiction and Practice (Third Edition, Lloyd’s Shipping Law Library,

2003), p. 62. 90 Orakpo v Manson Investments Ltd. [1978] AC 95; Boodle Hatfield & Co v British Film Ltd, (1986) 2 B.C.C. 99221

(1985); Brazzill v Willoughby [2009] EWHC 1633 (Ch); Ghana Commercial Bank Appellants v D. T. Chandiram and

Another Respondents [1960] 3 W.L.R. 328; Wylie v. Carlyon [1922] 1 Ch. 51; Paul v. Speirway Ltd. [1976] Ch. 220;.

17

Creditor security.91 However, the law on equitable subrogation does not apply if it would produce

an unjust result.92 Accordingly, a subrogation, if any, is displaced in the present case because the

subrogation to the crew’s maritime lien will give rise to an unjust result.

47. One circumstance that gives rise to an unjust result is when without implication of subrogation the

party had already got what they bargained for.93 Thus if the parties have to settle on an unsecured

loan, there will be no subrogation to any security. 94 This derived from an important principle that

a plaintiff cannot be subrogated to a better right than what it had bargained for.95

48. In this present case, the loan furnished by the Claimant is an unsecured loan, hence, it will be unjust

if subrogation is granted. The provision of the loan by the Claimant was not conditional upon any

security being provided by the Respondent, 96 as no agreement nor discussion regarding security

took place. In Paul v Speirway, 97 an intention of a lender to have security without any actual steps

to have security leads to the conclusion lender has forfeited their right to the security, so the true

nature of the transaction is an unsecured one.98

49. In the present case, the Claimant it was aware of the financial difficulties incurred by the Respond-

ent and the risks borne by it upon furnishing the loan.99 Both Parties did not discuss, let alone agree,

any security to guarantee the provision of the Claimant's loan. Being aware of these circumstances,

the Claimant proceeded with the disbursing the loan amount to the Respondent prior to the

91 Orakpo v Manson Investments Ltd. [1978] AC 95; Boodle Hatfield & Co v British Film Ltd, (1986) 2 B.C.C. 99221

(1985);Wylie v. Carlyon [1922] 1 Ch. 51; Paul v. Speirway Ltd. [1976] Ch. 220. 92 Boodle Hatfield & Co v British Film Ltd (1986) 2 B.C.C. 99221 (1985); Paul v Speirway (In Liquidation) (1976) 31 P.

& C.R. 353 (1976). 93 Paul v Speirway (In Liquidation) (1976) 31 P. & C.R. 353 (1976). 94 Paul v Speirway (In Liquidation) (1976) 31 P. & C.R. 353 (1976); Orakpo v Manson Investments Ltd. [1978] AC 95;

Boodle Hatfield & Co. v. British Films Ltd. [1986] P.C.C. 176; Menelaou v Bank of Cyprus Plc [2016] A.C. 188; Banque

Financiere de la Cite SA v Parc (Battersea) Ltd [1999] 1 A.C. 226. 95 Banque Financiere de la Cite SA v Parc (Battersea) Ltd [1999] 1 A.C. 226; Menelaou v Bank of Cyprus Plc [2016]

A.C.176. 96 Moot Scenario, p. 38, 41. 97 31 P. & C.R. 353 (1976). 98 Paul v Speirway (In Liquidation) (1976) 31 P. & C.R. 353 (1976); Orakpo v Manson Investments Ltd. [1978] AC 95;

Boodle Hatfield & Co. v. British Films Ltd. [1986] P.C.C. 176; Menelaou v Bank of Cyprus Plc [2016] A.C. 188; Banque

Financiere de la Cite SA v Parc (Battersea) Ltd [1999] 1 A.C. 99 Moot Scenario, p. 1.

18

commencement of the Voyage.100 Although the Claimant might argue that it intended to take steps

to ensure its interest are adequately protected the Claimant did not take any steps or even com-

municate with the Respondent to receive security. 101 Therefore, in absence on any agreement or

discussion on security the Claimant's loan shall be deemed to be an unsecured loan. Thus, the

Claimant cannot claim an equitable subrogation of maritime lien on account of the Claimant's loan

50. As there was no security bargained for the Claimant, and the subrogation of the crew’s maritime

lien will only give rise to better bargain which the Claimant never entitles for. Consequently, the

Claimant is not entitled to be subrogated to the crew’s maritime lien.

V. THE CLAIMANT IS LIABLE FOR THE SUMS DUE TO THE RESPONDENT UNDER

THE CHARTERPARTY

51. On 7 August 2017, the Respondent re-notified the Claimant to pay the outstanding amount under

the invoice issued, comprising of: freight; agency fee at the Port of Spectre; repairs to the Vessel’s

hull; agency fee and the use of electronic access systems at the Port of Dillamond; and demur-

rage.102

52. In this vein, the Respondent submits that (A) the Claimant is liable for the outstanding freight under

the Charterparty in full, and (B) the agency fees at the Port of Dillamond. Further, (C) the Claimant

is liable for the demurrage, (D) the use of electronic access system at the Port of Dillamond, and

(E) the agency fees at the Port of Spectre and the cost of repairs to the Vessel’s hull. Also, (F) the

Respondent is not precluded to receive payment of demurrage, the use of electronic access system

at the Port of Dillamond, agency fees at the Port of Spectre, and the cost of repairs to the Vessel’s

hull under Clause 15 (b) of the Charterparty.

100 Ibid, p. 38, p. 41. 101 Ibid, p. 1. 102 Ibid, p. 32.

19

A. The Claimant Is Liable for The Outstanding Freight Under The Charterparty

53. Clause 22 of the Charterparty provides that, “[f]reight to be paid by telegraphic in United States

Dollars to Owner's account 90%, less full commissions, within two banking days of delivery of the

cargo. The Owners will issue an invoice immediately upon delivery of the cargo.” The Cargo was

delivered to Claimant on Sunday, 30 July 2017 at 00:02 AM.103 As the freight is to be paid within

two banking days of delivery of the cargo, it is due on Tuesday, 1 August 2017 in the amount of

USD 500,000. As such, the Claimant is liable for freight.

B. The Claimant Is Liable For The Agency Fee At Dillamond

54. When there is a deficiency in the express term of an agreement, a court is open to imply a term to

foster business efficacy.104 Pursuant to B.P. Refinery (Westernport) Pty. Ltd v Hastings Shire Coun-

cil,105 the term can be implied if it is: “(1) reasonable and equitable; (2) necessary to give business

efficacy to the contract; (3) so obvious that ‘it goes without saying’; (4) capable of clear expres-

sion; (5) not contrary with any express term of the contract.”106 In assessing such condition, this

Tribunal shall objectively ascertain and reinforce the presumed intention of the Parties by seeing

the factual matrices.107

55. In the present case, the Parties have agreed under Clause 12 of the Charterparty that customary

fees at discharge port shall be borne by the Vessel.108 Further, Clause 22 provides that freight is

calculated on Bill of Lading weight on completion of loading, in full of port charges due to the

Vessel.109 Reading the two clauses together, it is concluded that the Parties have intended for the

103 Team 17 Memorandum for Respondent, ¶¶25-34. 104 Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; Secured Income Real Estate (Aus-

tralia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51. 105 (1977) 52 A.L.J.R. 20. 106 B.P. Refinery (Westernport) Pty. Ltd v Hastings Shire Council (1977) 52 A.L.J.R. 20. 107B.P. Refinery (Westernport) Pty. Ltd v Hastings Shire Council (1977) 52 A.L.J.R. 20; Scanlan's New Neon Ltd v Tooheys

Ltd (1943) 67 C.L.R. 169. 108 Moot Scenario, p. 7 109 Ibid, p. 11.

20

fees charged at the discharge port, which is borne by the Vessel, to be on Claimant’s account as

part of freight due to the Claimant.

56. However, under the present circumstances, the conditions to trigger the freight calculation method

stipulated in Clause 22 was not met. As opposed to be calculated on the Bill of Lading weight on

completion of loading, the current freight was calculated solely based on the numbers of containers

loaded,110 far before loading had even been conducted.111 This left a lacuna on who should be borne

the port charges paid by the Vessel at the Port of Dillamond, as it was not calculated as part of the

current freight.

57. To give business efficacy to the Charterparty, it is necessary for this Tribunal to imply that if the

freight calculation was not based on the method stipulated in Clause 22, then the fees charged at

the Port of Dillamond remains on the Claimant’s account. In the absence of any contradictory

express terms under the Charterparty, it is reasonable and it ‘goes without saying’ for this Tribunal

to imply that it is the Parties’ intention under Clause 22 to have the fees charged at the port to be

on the Claimant’s account. Therefore, as it could be implied that the fees charged at the discharge

port shall be borne by the Claimant, the Respondent is entitled to recover fees charged at the Port

of Dillamond.

C. The Claimant Is Liable for Demurrage

58. Under Clause 9 of the Charterparty, demurrage accrues when the discharge exceeds the laytime.112

Clause 8 (c) (ii) of the Charterparty provides that the laytime is 0.5 Weather Working Days

(“WWD”).113 The clause further provides that laytime starts upon the Vessel’s arrival at the dis-

charge port.114 If the charterparty provides that laytime starts upon the vessel’s arrival at the dis-

charge port, then the usual waiting place where a port can have its authority is to be accepted as

110 Ibid, p. 32. 111 Ibid, p. 3. 112 Ibid, p.7. 113 Ibid, p. 7. 114 Ibid, p. 6.

21

the area of the port.115 As held in Sailing-ship “Garston” Co. v Hickie & Co.116, geographical

location is not detrimental on determining what constitute a “port”, as certain space of water is to

be accepted as the “port” as long as port authorities can exercise its authority over ships within

such area.117

59. In the present case, the Vessel had arrived at the waiting place instructed by the port authority in

Dillamond on 29 July 2017 at 7:00 AM.118 Accordingly, at that time the Vessel should be deemed

to have arrived at the discharge port. Thereby, laytime started to count, and ended 0.5 WWD later,

on 29 July 2017 at 7:00 PM. As the Cargo had only been discharged on 30 July 2017 at 00:02

AM,119 demurrage accrued for 5 hours at the rate of USD 20,000 per hour,120 and the Claimant is

liable for the demurrage in the amount of USD 100,000.

D. The Claimant Is Liable for The Use Of Electronic Access System At The Port Of Dilla-

mond

60. It has been established that if a charterer fails to fulfill its duty to take delivery of the cargo within

the agreed laytime, a shipowner is entitled to do what is reasonable in the circumstances to mini-

mise the delay.121 If such action materially reduces the period of demurrage which might have been

accrued, the shipowner is entitled to recover its expenses from the charterer to the extent of the

amount of demurrage thereby saved.122

61. In the present case, laytime had started from 29 July 2017 at 07:00 AM and ended on the same day

at 07:00 PM.123 As there was no response from the Claimant as to its whereabouts, the

115 E.L. Oldendorff & Co. v. Tradax Export The “Johanna Oldendorff” [1974] A.C. 479 (H.L.); Sailing Ship Garston

Co v. Hickie (1885) 15 QBD 580. 116 (1885) 15 QBD 580. 117 Sailing Ship Garston Co v. Hickie (1885) 15 QBD 580. 118 Moot Scenario, p. 20. 119 Ibid, p. 23. 120 Ibid, p. 3. 121 Cazalet v. Morris [1916] Sc 952; Sang Stone Hamoon Jonoub Co Ltd v Baoyue Shipping Co Ltd [2015] EWHC 2288

(Comm); Metall Market OOO v. Vitorio Shipping Co Ltd [2014] Q.B. 760; Gaudet v Brown (1873) LR 5 PC 134; Great

Northern Railway Co v Swaffield (1874) LR 9 Ex 132; J. Cooke, Voyage Charter, p. 222, s.10.19. 122 Cazalet v. Morris [1916] Sc 952. 123 Team 17 Memorandum for Claimant, ¶61.

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Respondent’s crew decided to wait until midnight to allow the Claimant to physically take the

Cargo.124 After such waiting time given by the Respondent, the Claimant did not take the Cargo.

To prevent further delay to the Vessel, the Respondent discharged the Cargo by virtue of the elec-

tronic access facility at the Port of Dillamond on 30 July 2017 at 00:02 AM,125 with demurrage

accrued for 5 hours in the amount of USD 100,000.

62. Accordingly, the Claimant only took the Cargo from the electronic access facility at the Port of

Dillamond on 31 July 2017 at 1:17 PM,126 37 hours after the Respondent discharged the Cargo to

the electronic access facility at the port. Had the Respondent waited until then, the Claimant would

be liable for an additional demurrage for 37 hours in the amount of USD 740,000.

63. As such, the use of electronic system at the Port of Dillamond saved Claimant from paying demur-

rage in the amount of USD 740,000, and the Respondent is entitled to recover the expenses incurred

for such arrangement in the amount of USD 10,000.

E. The Claimant Is Liable For The Agency Fees at The Port Of Spectre and The Cost Of

Repairs to The Vessel’s Hull

64. The Respondent argues that the Claimant is liable for the agency fees at the Port of Spectre and the

cost of repairs to the Vessel’s hull, as these costs were incurred by the Respondent in exercising

its duty to act for the safety of the cargo in the case of emergency.

65. Under the law of bailment, a shipowner who has fulfilled its duty of care to the cargo is entitled

to charge cargo owner with the expenses reasonably incurred in doing so.127 As held in Gaudet v

Brown128 “...not merely is a power given, but a duty is cast on the master in many cases of accident

and emergency to act for the safety of the cargo … and that, as a correlative right, he is entitled to

charge its owner with the expenses properly incurred in so doing.”

124 Moot Scenario, p. 22. 125 Ibid, p. 23. 126 Ibid, p. 24. 127 China Pacific SA v Food Corpn of India (The Winson) [1982] AC 939. 128 Gaudet v Brown (1873) LR 5 PC 134.

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66. On 25 July 2017, the Vessel lost its communication systems for 17 hours due to the solar flares.129

As a consequence of such attack, the Vessel had to deviate to the Port of Spectre to save lives and

property at the sea, including the Cargo.130 As such, the unplanned agency fee at the Port of Spectre

that was incurred by the Respondent in exercising its duty of care to the Cargo shall be recovered

by the Claimant.

67. Further, the damage to the Vessel’s hull also occurred as a consequence of the Respondent’s effort

to protect the Cargo when the massive Storm was about to hit Dillamond. On 28 July 2017, the

Vessel’s crew dropped the anchor at the sea to avoid the massive Storm.131 When the crew tried to

lift the anchor, it got tangled on a coral bed on which the ship inadvertently stopped on, and the

hull was damaged when the anchor was cut.132 As the cost of repairs to the Vessel’s hull was

incurred as a result of the Respondent’s effort to avoid dangerous weather condition in protecting

the Cargo, the Respondent is entitled to be reimbursed for such cost.

F. The Respondent Is Not Precluded to Receive Damages by Virtue Of Clause 15 (B) Of

The Charterparty

68. Clause 15 (b) of the Charterparty provides that if there exists a delay ‘as a consequence’ of the

Vessel fails to comply with the applicable statutes or regulations under the Charterparty, time shall

not count nor demurrage accrue during the period of such delay and any extra expenses incurred,

shall be at the expense of the Respondent. The Claimant may argue that by failing to bring the

correct hardcopy map to Dillamond, the Respondent is not entitled to damages under item (C) to

(E) since there existed a delay as a consequence of the Vessel’s failure to comply with the Com-

monwealth of Australia Navigation Act 2012 and the Regulations thereunder.

69. However, the Respondent’s failure to bring the correct hardcopy map was not the cause of the

delay. As argued in paragraph 10-11, the Respondent’s failure to bring the correct hardcopy map

129 Moot Scenario, p. 17. 130 Team 17 Memorandum for Respondent, ¶¶17-19. 131 Moot Scenario, p. 20. 132 Ibid, p. 20.

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to Dillamond does not negate the fact that the massive Storm happened in Dillamond on 28 July

2017 was the effective cause of the delay. Had the Respondent brought the correct map and pro-

ceeded to Port of Dillamond when the solar flares occurred, the delay would still have happened

due to the Storm.

70. The Cargo must be discharged by 28 July 2017 at 07:00 PM.133 On 24 July 2017 at 9:00 AM, the

Vessel departed Cerulean.134 As the voyage was originally estimated to take 4 days and 8 hours,135

the Vessel was originally estimated to arrive at the Port of Dillamond on 28 July 2017 at 5:00 PM.

The Respondent would have 2 hours to discharge the Cargo. However, on 28 July 2017 at 4:28

PM, the Storm was picked up on radars,136 hitting Dillamond 45 minutes later.137 The Storm caused

severe rain, hail and winds which ripped out trees and upturned cars.138 Had the Vessel proceeded

the voyage as planned, the delay in the discharge would still have happened, as there is no way to

discharge the Cargo during such dangerous weather condition.

71. Therefore, the Vessel’s failure to comply with the applicable regulations, if any, was not the cause

of the delay, and the Respondent is not precluded to receive damages under item (C) to (E) under

Clause 15 (b) of the Charterparty.

133 Moot Scenario, p. 3. 134 Procedural Order No. 2, ¶8. 135 Ibid, ¶7. 136 Moot Scenario, p. 19. 137 Ibid, p. 21. 138 Ibid, p. 21.

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PRAYER FOR RELIEF

DECLARE that this the Claimant is not entitled to submit claims to this Tribunal and matters to be

resolved by an Expert Determination;

Further,

ADJUDGE that the Respondent is not liable for :

1. USD15,750,000 on account of the damaged Cargo;

2. USD9,450,000 for the replacement cargo;

3. USD5,000,000 on account of settlement payment;

Further,

ADJUDGE that in the event the Respondent is liable for the damages to the Cargo, the Respondent is

entitled to limit its liability pursuant to Hague-Visby Rules;

Further,

ADJUDGE that the Claimant is not entitled to any maritime lien over the Vessel; and

FIND that the Respondent is entitled to the damages sought under the counter claim.