TWENTIETH ANNUAL INT 2019 M MORANDUM FOR CLAIMANT€¦ · twentieth annual international maritime law arbitration moot 2019 memorandum for claimant the university of sydney team 22

TWENTIETH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2019

MEMORANDUM FOR CLAIMANT

THE UNIVERSITY OF SYDNEY

TEAM 22

ON BEHALF OF:

PANTHER SHIPPING INC

CLAIMANT

AGAINST:

OMEGA CHARTERING LIMITED

RESPONDENT

COUNSEL

Joy Chen Kaitlyn Crowe Alex Kiefer Georgia Reid May Yang

TEAM 22 MEMORANDUM FOR CLAIMANT

I

TABLE OF CONTENTS

TABLE OF CONTENTS I

ABBREVIATIONS IV

LIST OF AUTHORITIES VI

STATEMENT OF FACTS 1

ARGUMENTS ON THE MERITS OF THE CLAIM

2

I. CLAIMANT IS ENTITLED TO DAMAGES FOR RESPONDENT’S FAILURE TO PERFORM HULL CLEANING PRIOR TO RE-DELIVERY OF THE VESSEL

2

A. RESPONDENT BREACHED CLAUSE 83 OF THE OMEGA RIDER CLAUSES 2

(i) The Vessel remained in Wahanda in accordance with RESPONDENT’s orders 2

(ii) RESPONDENT remained under an obligation to undertake hull cleaning notwithstanding that no joint inspection took place

3

(iii) RESPONDENT was not prevented from performing hull cleaning and therefore accrued no right under the Charterparty to offer a lump sum payment to CLAIMANT

4

(iv) In the alternative, CLAIMANT’s rejection of RESPONDENT’s offers to make a lump sum payment was reasonable

5

B. CLAIMANT IS ENTITLED TO RECOVER THE HULL CLEANING COSTS INCURRED AT SOUTH ISLAND

6

(i) RESPONDENT’s breach of Clause 83 caused CLAIMANT to incur the hull cleaning costs

6

(ii) The hull cleaning costs incurred by CLAIMANT were not too remote 7

(iii) CLAIMANT did not fail to mitigate the hull cleaning costs 7

C. CLAIMANT IS ENTITLED TO RECOVER THE COSTS OF THE VOYAGE TO SOUTH ISLAND

9

(i) RESPONDENT’s breach caused CLAIMANT to incur the costs of the voyage to South Island

9

(ii) The costs of the voyage to South Island incurred by CLAIMANT were not too remote

9


II

(iii) CLAIMANT did not fail to mitigate the costs of the voyage to South Island 9

II. CLAIMANT IS ENTITLED TO DAMAGES FOR RESPONDENT’S LATE RE-DELIVERY OF THE VESSEL

10

A. RESPONDENT BREACHED ITS OBLIGATION TO RE-DELIVER THE VESSEL PRIOR TO THE EXPIRY OF THE MAXIMUM PERIOD OF THE CHARTERPARTY

10

(i) ‘About’ does not extend the charter’s maximum period until 30 June 2016 10

(ii) ‘Without guarantee’ does not extend the charter’s period duration until 30 June 2016

11

(iii) In any event, RESPONDENT has admitted its breach of the re-delivery obligation 11

B. CLAIMANT IS ENTITLED TO DAMAGES FOR BREACH OF THE CHARTERPARTY 12

(i) RESPONDENT’s breach caused the loss of hire under the Next Fixture 12

(ii) The loss of the Next Fixture was not too remote 13

a. Loss of hire under the Next Fixture naturally arises from late re-delivery of a vessel

13

b. RESPONDENT had actual knowledge of special circumstances 13

c. RESPONDENT assumed responsibility for loss of hire under the Next Fixture 14

(iii) CLAIMANT did not fail to mitigate the loss of hire under the Next Fixture 15

ARGUMENTS ON THE MERITS OF THE COUNTERCLAIM

15

III. CLAIMANT IS NOT LIABLE TO INDEMNIFY RESPONDENT FOR THE CARGO CLAIM 15

A. THE ICA DOES NOT APPLY TO APPORTION LIABILITY OF THE CARGO CLAIM 15

(i) The precondition under sub-Clause 4(c) of the ICA has not been met 16

(ii) Recovery is time barred by Clause 6 of the ICA 16

B. EVEN IF THE ICA APPLIES, CLAIMANT IS ONLY LIABLE FOR 50% OF THE CARGO CLAIM

17

(i) The Cargo Claim should be apportioned under sub-Clause 8(b) 18

(ii) In the alternative, the Cargo Claim should be apportioned under sub-Clause 8(d)

18

C. THE HAGUE RULES DO NOT APPLY TO DETERMINE CLAIMANT’S LIABILITY 18


III

(i) The Hague Rules were not incorporated to the Charterparty 19

(ii) Further, CLAIMANT is not a party to the Bill of Lading 19

D. EVEN IF THE HAGUE RULES APPLY, CLAIMANT IS NOT LIABLE TO ACCOUNT FOR THE CARGO CLAIM

20

(i) CLAIMANT can rely on the exception in Article 4(2)(a) 20

(ii) CLAIMANT can rely on the exception in Article 4(2)(n) 20

E. RESPONDENT CANNOT SET OFF ANY AMOUNT IT IS ENTITLED TO WITH RESPECT TO THE CARGO CLAIM AGAINST ANY DAMAGES AWARDED TO CLAIMANT UNDER THE CLAIM

21

IV. CLAIMANT IS NOT LIABLE TO ACCOUNT FOR OVERPAID HIRE 21

A. CLAIMANT IS NOT LIABLE TO ACCOUNT FOR OVERPAID HIRE PURSUANT TO

CLAUSE 17 OF THE NYPE 2015 21

(i) RESPONDENT cannot establish that the full working of the Vessel was prevented

22

(ii) In the alternative, RESPONDENT cannot establish that the full working of the Vessel was prevented by a cause or event within the scope of Clause 17

22

a. The full working of the Vessel was not prevented by ‘a deficiency of officers’

22

b. The full working of the Vessel was not prevented by ‘detention of the vessel by Port State control […] for Vessel deficiencies’

23

c. The detention of the Vessel by Port State Control did not constitute ‘any other similar cause preventing the full working of the Vessel’

23

B. CLAIMANT IS NOT LIABLE TO ACCOUNT FOR OVERPAID HIRE PURSUANT TO

CLAUSE 44 OF THE OMEGA RIDER CLAUSES 24

C. RESPONDENT CANNOT SET OFF ANY AMOUNT IT IS ENTITLED TO WITH RESPECT TO THE OVERPAID HIRE AGAINST ANY DAMAGES AWARDED TO CLAIMANT UNDER THE CLAIM

25

REQUEST FOR RELIEF 25


IV

ABBREVIATIONS

Cargo Claim Claim for damage to the cargo of tea brought by the Receivers against RESPONDENT

Charterparty The time charter between CLAIMANT and RESPONDENT, including the Omega Recap, the Omega Rider and NYPE 2015

Champion Champion Chartering Corp

Champion Recap Pages 30–33 of the Record

CHOPT Charterers’ option

Claim Submissions Pages 65–69 of the Record

CLAIMANT Panther Shipping Inc

Defence Submissions Defence and Counterclaim Submissions at pages 70–74 of the Record

Ebola The Ebola virus disease

Fairwind Fairwind International

Fairwind Recap Pages 53–56 of the Record

Hague Rules International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, opened for signature on 25 August 1924

ICA The Inter-Club New York Produce Exchange Agreement (as amended 1 September 2011)

Laycan Laydays cancelling

Next Fixture The time charter between CLAIMANT and Champion

NYPE 2015 New York Produce Exchange Form (as amended 3 June 2015)

Omega Recap Pages 2–6 of the Record

Omega Rider Clauses Pages 7–20 of the Record

Parties CLAIMANT and RESPONDENT

Receivers Hawkeye Import & Export Pty

Record 2019 International Maritime Law Arbitration Moot Scenario

Replacement Fixture The time charter between CLAIMANT and Fairwind


V

Reply Submissions Reply and Defence to Counterclaim Submissions at pages 75–77 of the Record

RESPONDENT Omega Chartering Limited

Vessel M/V Thanos Quest

WOG Without guarantee


VI

LIST OF AUTHORITIES CASES AND ARBITRAL AWARDS REFERRED TO AT:

A v B [2019] 1 Lloyd's Rep 385 12 [37]

A/S Iverans Rederei v Seeschiffahrtsgesellschaft [1992] 2 Lloyd’s Rep 378 (‘The Holstencruiser’)

16 [49]

Actis Co Ltd v The Sanko Steamship Co Ltd [1982] 1 Lloyd’s Rep 7 (‘The Aquacharm’)

22 [70], 23 [76]

Admiralty Comrs v SS Valeria [1922] 2 AC 242 7 [20]

AerCap Partners 1 Ltd v Avia Asset Management AB [2011] Bus LR D85 12 [37]

Ali v Petroleum Company of Trinidad and Tobago [2017] ICR 531 4 [13]

Allied Maples Group v Simmons & Simmons [1995] 1 WLR 1602 12 [37]

Alma Shipping Corp of Monrovia v Mantovani [1975] 1 Lloyd’s Rep 115 (‘The Dione’)

11 [32]

Andre & Cie SA v Orient Shipping (Rotterdam) BV [1997] 1 Lloyd’s Rep 139 (‘The Laconian Confidence’)

22 [70], 23 [76]

Andrew Wood v Sureterm Direct Ltd [2014] EWHR 3240 (Comm) 4 [12]

Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 4 [12]

Aries Tanker Co v Total Transport Ltd [1977] 1 Lloyd’s Rep 334 (‘The Aries’)

17 [54], 21 [66]

ASM Shipping Ltd of India v TTMI Ltd of England [2009] 1 Lloyd’s Rep 293 (‘The Amer Energy’)

14 [42]

Att-Gen Belize v Belize Telecom Ltd [2009] 1 WLR 1988 4 [12]

Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452 8 [24], 9 [24], 10 [29]

Barbudev v Eurocom Cable Management Bulgaria EOOD [2012] 2 All ER (Comm) 963

5 [16]

Bibby Factors Northwest Ltd v HFD Ltd [2016] 1 Lloyd’s Rep 517 21 [66]

Borealis AB v Geogas Trading SA [2011] 1 Lloyd’s Rep 482 8 [24], 9 [24], 10 [29]

Bosma v Larsen [1966] 1 Lloyd’s Rep 22 16 [49]


VII

BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266

4 [13]

British Transport Commission v Gourley [1956] AC 185 7 [20]

British Westinghouse Electric and Manufacturing Company Limited v Underground Electric Railways Company of London Limited [1912] AC 673

8 [23], 9 [29], 10 [29]

Britvic Soft Drinks Ltd v Messer UK Ltd [2002] 1 Lloyd’s Rep 20 8 [24]

Brown v KMR Services Ltd [1995] 2 Lloyd’s Rep 513 7 [22]

CA Venezolana De Navegacion v Bank Line [1987] 2 Lloyd’s Rep 498 (‘The Roachbank’)

23 [76]

Chaplin v Hicks [1911] 2 KB 786 12 [37]

Chimbusco Pan Nation Petro-Chemical Co Ltd v Owners and/or demise charterers of the vessel or ship The Decurion (No 2) [2013] 5 HKC 125 (‘The Decurion’)

Chubu Asahi Cotton Spinning Co Ltd v The Ship Tenos (1968) 12 FLR 291 20 [64]

Classic Maritime Inc v Lion Diversified Holdings Berhad [2010] 1 Lloyd’s Rep 59

13 [39], 14 [42]

Compania Portorafti Commerciale SA v Ultramar Panama Inc [1990] 1 Lloyd’s Rep 210 (‘The Captain Gregos’)

17 [54]

Continental Pacific Shipping Ltd v Deemand Shipping Co Ltd [1997] Lloyd’s Rep 404 (‘The Lendoudis Evangelos II’)

11 [33]

Cosco Bulk Carrier Co Ltd v Team-Up Owning Co Ltd [2011] 1 Lloyd’s Rep 187 (‘The Saldanha’)

23 [76]

Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Corporation [1978] 1 Lloyd’s Rep 53 (‘The Apollonius’)

6 [17]

CSSA Chartering and Shipping Services Sa v Mitsui Osk Lines Ltd [2018] 1 Lloyd’s Rep 57 (‘The Pacific Voyager’)

12 [36]

CV Sheepvaartonderneming Ankergracht v Stemcor (Australasia) Pty Ltd [2007] FCAFC 77, [2007] 1 Lloyd’s Rep Plus 68

20 [65]

Czarnikow Ltd v Koufos [1969] 1 AC 350 (‘The Heron II’) 7 [20], 7 [22], 13 [39], 14 [41], 14 [42]

Dany Lions Ltd v Bristol Cars Ltd [2014] 2 All ER (Comm) 403 5 [16]


VIII

Darbishire v Warran [1963] 2 Lloyd’s Rep 187 6 [19], 9 [25]

Davies v Taylor [1974] AC 207 12 [37]

Deutsche Bank AG v Total Global Steel Ltd [2012] EWHC 1201 (Comm) 8 [23]

Dodd Properties (Kent) Ltd v Canterbury City Council [1980] 1 All ER 928

7 [20]

Dunkirk Colliery Co v Lever (1878) 9 Ch D 20 8 [23], 10 [29]

Edwards v Society of Graphical and Allied Trades [1971] Ch 354 8 [23]

Federal Commerce and Navigation Co Ltd v Molena Alpha Inc [1978] 2 Lloyd’s Rep 132 (‘The Nanfi’)

21 [66]

Fenwick v Schmalz (1868) LR 3 CP 313 6 [17]

Fetim BV v Oceanspeed Shipping Ltd [1999] 1 Lloyd’s Rep 612 (‘The Flecha’)

19 [62]

Fisher v Bell [1961] 1 QB 394 3 [10]

Fyffes Group Ltd v Reefer Express Lines Pty Ltd and Reefkrit Shipping Inc [1996] 2 Lloyd’s Rep 171 (‘The Kriti Rex’)

8 [23], 12 [37], 13 [39]

Galoo v Bright Grahame Murray [1993] 1 WLR 1360 7 [20]

Geldof Metaalconstructie NV v Simon Carves Ltd [2011] 1 Lloyd’s Rep 517

21 [66]

GKN Centrax Gears Ltd v Matbro Ltd [1976] 2 Lloyd’s Rep 555 14 [42]

Glencore Grain Ltd v Goldbeam Shipping Inc [2002] 2 Lloyd’s Rep 244 (‘The Mass Glory’)

14 [41]

Glory Wealth Shipping Pte Ltd v Korea Line Corp [2011] 2 Lloyd’s Rep 370 (‘The Wren’)

8 [23]

Golden Strait Corp v Nippon Yusen Kubishika Kaisha [2007] 2 AC 353 (‘The Golden Victory’)

6 [19], 9 [25]

Gosse Millard v Canadian Government Merchant Marine Ltd [1928] 1 KB 717

18 [56], 20 [64]

Gosse Millerd v Canadian Government Merchant Marine Ltd [1929] AC 223

18 [56], 20 [64]

Gulf Shipping Lines Ltd v Cia Naviera Alanje SA [1976] 2 Lloyd’s Rep 643 (‘The Aspa Maria’)

11 [32], 12 [35]


IX

Guthell v Ballarat Trustees, Executors & Agency Co Ltd (1922) 30 CLR 293

3 [10]

H Parsons (Livestock) Ltd v Uttley, Ingham & Co Ltd [1978] QB 791 7 [22], 13 [39]

Hadley v Baxendale (1854) 9 Ex 341 7 [21], 9 [27], 13 [40], 14 [41]

Hallman Holding Ltd v Webster [2016] UKPC 3 4 [13]

Hector Steamship Co v V O Sovfracht, Moscow [1945] KB 343 10 [31], 11 [32]

Homburg Houtimport BV v Agrosin Private Ltd [2000] 1 Lloyd’s Rep 85 20 [62]

Homburg Houtimport BV v Agrosin Private Ltd [2001] 1 Lloyd’s Rep 437 20 [62]

Homburg Houtimport BV v Agrosin Private Ltd [2004] 1 AC 714 (‘The Starsin’)

19 [61], 20 [62]

Hughes v Lord Advocate [1963] AC 837 13 [39]

Hyundai Merchant Maritime Co Ltd v Geruri Chartering Co Ltd [1991] 1 Lloyd’s Rep 100 (‘The Peonia’)

10 [31] , 11 [32], 11 [33]

Hyundai Merchant Marine Co Ltd v Furness Withy (Australia) Pty [2006] 2 Lloyd’s Rep 175 (‘The Doric Pride’)

21 [67], 24 [78]

Idaho v Peninsula and Oriental Steam Navigation Co [1983] 1 Lloyd’s Rep 219 (‘The Strathnewton’)

16 [49], 19 [60]

Imperator I Maritime Co v Bunge SA [2016] 2 Lloyd’s Rep 293 (‘The Coral Seas’)

13 [40]

IMT Shipping and Chartering GMBH v Chansung Shipping Co Ltd [2009] 2 Lloyd’s Rep 139 (‘The Zenovia’)

10 [31], 11 [33]

International Minerals & Chemical Co v Karl O Helm AG [1986] 1 Lloyd’s Rep 81

14 [41]

Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896

4 [12]

Jack L Israel Ltd v Ocean Dynamic Lines SA [1982] 2 Lloyd’s Rep 88 (‘The Ocean Dynamic’)

13 [39]

John Grimes v Gubbins [2013] 2 EGLR 31 14 [42]

Kaleej International Pty Ltd v Gulf Shipping Lines (1986) 6 NSWLR 569 (‘The Sun Diamond’)

19 [62]


X

Koch Marine Inc v D’amica Societa Di Navigazione ARL [1980] 1 Lloyd’s Rep 75 (‘The Elena D’amico’)

8 [23]

Larrinaga Steamship Co Ltd v The King [1945] AC 246 3 [10], 3[11]

Leon Corporation v Atlantic Lines & Navigation Co Inc [1985] 2 Lloyd’s Rep 470 (‘The Leon’)

21 [66]

Liesbosch Dredger v SS Edison [1933] AC 449 7 [20]

Linea Naviera Paramaconi SA v Abnormal Load Engineering Ltd [2001] 1 Lloyd’s Rep 763

17 [54]

Liverpool City Council v Irwin [1976] 2 WLR 562 4 [13]

Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 6 [19], 9 [25]

Lloyds and Scottish Finance Ltd v Modern Cars and Caravans (Kingston) Ltd [1966] 1 QB 764

8 [24]

London & Overseas Freighters Ltd v Timber Shipping Co SA [1972] AC 1 (‘The London Explorer’)

11 [32]

London Arbitration 16/02 (2002) 600 Lloyd’s Maritime Law Newsletter 2 17 [51]



Losinjska Plovidba Brodarstovo 68 v Valfracht Maritime Co Ltd [2001] 2 Lloyd’s Rep 17 (‘The Lipa’)

11 [33]

Marbienes Compania Naviera SA v Ferrostaal AG [1976] 2 Lloyd’s Rep 149 (‘The Democritos’)

11 [32], 12 [36]

Mareva Navigation Co Ltd v Canaria Armadora SA [1977] 1 Lloyd’s Rep 368 (‘The Mareva AS’)

21 [67], 22 [70]

Marks and Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742

4 [13]

MB Pyramid Sound MV v Briese Schiffahrts GmbH [1995] 2 Lloyd’s Rep 144 (‘The Innes’)

19 [62]

Meyer v Sanderson [1913] 108 LT 428 11 [32]

Miller v Borner [1900] 1 QB 691 4 [12], 5 [15]

Minnesota Mining & Manufacturing (Australia) Pty Ltd v The Ship ‘Novoaltaisk’ [1972] 2 NSWLR 476

18 [56], 20 [64]


XI

Mitsui OSK Lines Ltd v Garnac Grain Co Inc [1984] 2 Lloyd’s Rep 449 (‘The Myrtos’)

12 [36]

Moore v DER Ltd [1971] 2 Lloyd’s Rep 359 8 [24], 10 [29]

Multiplex Constructions UK Ltd v Cleveland Bridge UK Ltd [2006] EWHC 1341 (TCC)

5 [16]

Navigas International Ltd v Trans-Offshore Inc [1985] 2 Lloyd’s Rep 62 (‘The Bridgestone Maru’)

21 [67]

New A Line v Erechthion Shipping Co. S.A. [1987] 2 Lloyd’s Rep 180 (‘The Erechthion’)

3 [10], 3[11]

North Sea Energy Holdings NV v Petroleum Authority of Thailand [1999] 1 Lloyd’s Rep 483

12 [37]

Omak Maritime Ltd v Mamola Challenger Shipping Co [2011] 1 Lloyd’s Rep 47 (‘The Mamola Challenger’)

8 [23]

Pacific Interlink Sdn BHD v Owner of the Asia Star [2009] 2 Lloyd’s Rep 387 (‘The Asia Star’)

8 [23], 10 [29]

Payzu Ltd v Saunders [1919] 2 KB 581 6 [19], 9 [25]

Petroleo Brasiliero SA v Kriti Akti Shipping Co SA [1996] 2 Lloyd’s Rep 171

10 [31]

Petroleum Shipping Ltd v Vatis [1997] 2 Lloyd’s Rep 314 (‘The Riza and the Sun’)

15 [45]

Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472

4 [13]

Pilkington v Wood [1953] Ch 770 8 [23]

Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724 (‘The Nema’) 13 [40]

PM Law Ltd v Motorplus Ltd [2017] AC 1173 4 [12], 5 [15]

President of India v Lips Maritime Corp [1988] AC 395 (‘The Lips’) 14 [41]

Primagates Maritime Co Ltd v The Bunkers On Board the Cargo Explorer (unreported, 15 March 1995, High Court of South Africa, Durban and Coast Local Division) (‘The Cargo Explorer’)

16 [49]

Rainy Sky SA v Kookmin Bank [2012] 1 Lloyd’s Rep 34 4 [12]

Ravennavi SpA v New Century Shipbuilding Ltd [2007] 2 Lloyd’s Rep 24 5 [15]


XII

Reardon Smith Lane Ltd v Yngyar Hansen-Tangen and Sanko Steamship Co [1976] 2 Lloyd’s Rep 621

3 [10]

Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592 4 [13]

Robinson v Harman (1848) 1 Ex 850 6 [19], 9 [25]

Roper v Johnson (1873) LR 8 CP 167 8 [23]

Royal Greek Government v Minister of Transport (1948) 82 Ll L Rep l96 (‘The Illisos’)

21 [67], 22 [73], 24 [78]

Santa Martha Baay Scheepvaart and Handelsmaatschappij NV v Scanbulk A/S [1981] 2 Lloyd’s Rep 267 (‘The Rijn’)

6 [17]

Satef-Huttenes Albertus SPA v Paloma Tercera Shipping Co SA [1981] 1 Lloyd’s Rep 175 (‘The Pegase’)

14 [42]

SBT Star Bulk & Tankers (Germany) GmbH & Co KG v Cosmotrade SA [2016] 2 Lloyd’s Rep 170 (‘The Wehr Trave’)

10 [31]

Shaker v Vistajet Group Holdings SA [2012] 2 Lloyd’s Rep 93 5 [16]

Shell UK Ltd v Lostock Garage Ltd [1976] 1 WLR 1187 4 [13]

Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 4 [13]

Sidermar SpA v Apollo Corporation [1978] 1 Lloyd’s Rep 200 (‘The Apollo’)

24 [77]

Sig Bergesen DY & Co v Mobil Shipping and Transportation Co [1993] 2 Lloyd’s Rep 453 (‘The Berge Sund’)

22 [70], 22 [73]

Silver v Ocean Steam Ship Co [1931] 1 KB 416 20 [65]

Skibsaktieselskapet Snefonn, Skibsaksjeselskapet Bergehus and Sig Bergesen DY & Co v Kawasaki Kisen Kaisha Ltd [1975] 1 Lloyd’s Rep 422 (‘The Berge Tasta’)

11 [32]

Society of Lloyd’s v Robinson [1999] 1 WLR 756 4 [12]

Sotiros Shipping Inc v Samiet Solholt [1983] 1 Lloyd’s Rep 605 (‘The Solholt’)

6 [19], 8 [23], 9 [25]

Standard Chartered Bank v Pakistan National Shipping Corp [1999] 1 Lloyd’s Rep 747

8 [23]

Standard Chartered Bank v Pakistan National Shipping Corp [2001] 1 All ER (Comm) 822

8 [23]


XIII

Staniforth v Lyall (1830) 131 ER 65 15 [45]

Strutt v Whitnell [1975] 1 WLR 870 8 [23]

Suisse Atlantique Société d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1967] 1 AC 361 (‘The Silvretta’)

13 [40]

Sunrise Maritime Inc v Uvisco Ltd [1988] 2 Lloyd’s Rep 287 (‘The Hector’) 20 [62]

Supershield Ltd v Siemens Building Technologies [2010] I Lloyd’s Rep 349 14 [42]

Sylvia Shipping Co Ltd v Progress Bulk Carriers Ltd [2010] 2 Lloyd’s Rep 81 (‘The Sylvia’)

14 [42]

Thai Airways International plc v KI Holdings Co Ltd [2016] 1 All ER (Comm) 675

6 [17], 8 [24]

The Argonaftis [1989] 2 Lloyd’s Rep 487 7 [20]

The Berkshire [1974] 1 Lloyd’s Rep 185 20 [62]

The Front Ace v Owners of The Vicky 1 [2008] 2 Lloyd’s Rep 45 (‘The Vicky 1’)

12 [37]

The Glenochil [1896] P 10 18 [56], 20 [64]

The Moorcock (1889) 14 PD 64 4 [13]

The Rewia [1991] 2 Lloyd’s Rep 325 19 [62]

The Venuzuela [1980] 1 Lloyd’s Rep 393 20 [62]

Transfield Shipping Inc v Mercator Shipping Inc [2009] 1 AC 61 (‘The Achilleas’)

7 [22], 13 [39], 13 [40], 14 [41], 14 [42], 15 [44]

Transpetrol Maritime Service v SJB (Marine Energy) BV [2012] 1 Lloyd’s Rep 564 (‘The Rowan’)

11 [33]

Transworld Oil Ltd v North Bay Shipping Corp [1987] Lloyd’s Rep 173 (‘The Rio Claro’)

13 [39]

Triad Shipping Co v Stellar Chartering and Brokerage Inc [1993] 2 Lloyd’s Rep 338 (‘The Island Archon No 1’)

3 [10]

Triad Shipping Co v Stellar Chartering and Brokerage Inc [1994] 2 Lloyd’s Rep 227 (‘The Island Archon No 2’)

3 [10]

TS Lines Ltd v Delphis NV [2009] 2 Lloyd’s Rep 54 (‘The TS Singapore’) 22 [70], 22 [73]


XIV

UBC Chartering Ltd v Liepaya Shipping Co Ltd [1999] 2 Lloyd’s Rep 649 (‘The Liepaya’)

8 [23]

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

6 [19], 7 [22], 9 [25], 14 [41]

Walford v Miles [1992] 2 AC 128 5 [16]

Watson Steamship v Merryweather (1913) 18 Com Cas 294 10 [31]

Watts, Watts & Co Ltd v Mitsui & Co Ltd [1917] AC 227 6 [19], 9 [25]

Wellesley Partners LLP v Withers LLP [2016] Ch 529 7 [22], 13 [39]

Whistler International Ltd v Kawasaki Kisen Kaisha Ltd [1998] 2 Lloyd’s 367 (‘The Hill Harmony’)

3 [10], 3[11]

Wickman Machine Tool Sales Ltd v Schuler AG [1974] AC 235 4 [12]

Wilson v United Counties Bank [1920] AC 102 8 [24]

Wood v Capita Insurance Services Ltd [2017] AC 1173 4 [12], 5 [15]

Yngvar Hansen-Tangen (trading as rH E Hansen-Tangen) v Sanko Steamship Co [1976] 2 Lloyd’s Rep 621 (‘The Diana Prosperity’)

3 [10]

Zodiac Maritime Agencies Ltd v Fortescue Metals Group Ltd [2011] 2 Lloyd’s Rep 360 (‘The Kildare’)

8 [23]

BOOKS REFERRED TO AT:

Beale, H G, A S Burrows, Mindy Chen-Wishart, M R Freeland, A G Guest, R J A Hooley, Eva Lomnicka, David McClean, Peter MacDonald Eggers and E G McKendrick (eds), Chitty on Contracts: Volume 1 (Sweet & Maxwell, 32nd ed, 2015)

4 [13], 7 [20], 8 [23], 9 [24], 10 [29]

• Bennett, Howard, Peter MacDonald Eggers, Siobán Healy, Stephen Girvin, Stephen Hofmeyr, Julia Dias, Robert Bright, Alexander MacDonald, Richard Sarll and Simon Kerr (eds), Carver on Charterparties (Sweet & Maxwell, 2017)

• •

3 [10], 8 [23], 10 [31], 11 [32], 11[33], 12 [35],

12 [37], 13 [39], 14 [41], 14[42],

15 [45], 16 [49], 17 [51], 18 [56], 21 [65], 24 [76]

Coghlin, Terence, Andrew Baker, Julian Kenny, John Kimball and Thomas Belknap, Time Charters (Taylor & Francis, 7th ed, 2014)

3 [11], 10 [31], 11 [32], 11 [33],


XV

12 [36], 25 [79]

Eder, Bernard, David Foxton, Andrew Burrows, Steven Berry and Stewart Boyd, Scrutton on Charterparties and Bills of Ladings (Sweet & Maxwell, 23rd ed, 2017)

4 [12]

Harris, Jack W, Maritime Law: Issues, Challenges and Implications (Nova Science, 2009)

18 [56]

Hazelwood, Stephen J, and David Senmark, P&I Clubs Law and Practice (Informa Law, 4th ed, 2010)

16 [49], 17 [51]

Lopez, Norman, Bes’ Chartering and Shipping Terms (Barker & Howard, 11th ed, 1992)

10 [31], 12 [35]

Matej, David, and Stephan Gollasch (eds), Global Maritime Transport and Ballast Water Management: Issues and Solutions (Springer, 2014)

18 [56], 20 [64]

Pearce, Dennis C, and Robert S Geddes, Statutory Interpretation in Australia (LexisNexis Butterworths, 8th ed, 2014)

16 [49]

Tetley, William, Marine Cargo Claims (Thomas Carswell, 4th ed, 2008) 19 [61], 20 [62]

Thomas, Rhidian D, Legal Issues Relating to Time Charterparties (Informa London, 2008)

4 [12], 16 [49], 19 [60]

Treitel, Guenter, and Francis Reynolds, Carver on Bills of Lading (Sweet & Maxwell, 3rd ed, 2011)

18 [56], 20 [62]

JOURNAL ARTICLES REFERRED TO AT:

Demirel, Yigit Kemal, Dogancan Uzun, Yansheng Zhang, Ho-Chun Fang, Alexander Day and Osman Turan, ‘Effect of Barnacle Fouling on Ship Resistance and Powering’ (2017) 33(10) The Journal of Bioadhesion and Biofilm Research 819

10 [28]

Kovanen, Lauri, ‘Study of Hull Fouling On Cruise Vessels Across Various Seas’ (Research Paper, Eniram Studies, October 2012) 7

6 [17], 10 [28]

Sonak, Sangeeta, Asha Giriyan and Prajwala Pangam, ‘A Method for Analysis of Costs and Benefits of Antifouling Systems Applied on Ship Hull’ (2010) 6(1) Journal of Ship Technology 73

6 [17]


XVI

OTHER REFERRED TO AT:

BIMCO, Singapore Maritime Foundation (SMF) and Association of Shipbrokers and Agents (ASBA), ‘NYPE 2016 Explanatory Note’ (2018) <https://www.smf.com.sg/wp-content/uploads/2018/11/22-document-nype-2015-explanatory-notes.pdf>

23 [74]

Fraende, Mette Kronholm, ‘BIMCO and Industry Partners to Launch Hull Underwater Cleaning Standard’, BIMCO (Web page, 8 October 2018) < https://www.bimco.org/news/priority-news/20181008---hull-cleaning-standard>

9 [27]

German Insurance Association, ‘Cargo Information for Tea’ (2019) <http://www.tis-gdv.de/tis_e/ware/genuss/tee/tee.htm>

21 [65]


1

STATEMENT OF FACTS

1. On 18 March 2016, Panther Shipping Inc (CLAIMANT) and Omega Chartering Limited

(RESPONDENT) entered into a time charter (Charterparty), pursuant to which the M/V Thanos Quest

(Vessel) carried a cargo of English Breakfast Tea (Cargo) from West Coast, Challaland to Wahanda,

Bao Kingdom. The duration of the Charterparty was expressed to be ‘ABT 50-55 DAYS WOG’.

RESPONDENT took delivery of the Vessel on 29 March 2016.

2. While the Charterparty was still on foot, CLAIMANT concluded a subsequent time charter (Next

Fixture) with Champion Chartering Corp (Champion) for a duration of two years, with an option to

extend for another two years. The laycan for the Next Fixture was 22–28 June 2016.

3. Upon arriving in Wahanda on 7 May 2016, the Vessel was prevented from berthing by Port State

Control, on the apparent suspicion that members of her crew were carrying Ebola. The Vessel was

held at anchorage until 26 June 2016, during which time her hull was ‘thoroughly fouled’. On 9 June

2016 CLAIMANT was informed via its broker that underwater cleaning could not take place at

Wahanda and that RESPONDENT would pay the cost of such cleaning against an original invoice.

4. RESPONDENT re-delivered the Vessel, without hull cleaning having been performed, to CLAIMANT on

30 June 2016, 93 days after she was delivered into the Charterparty and after the expiry of the laycan

for the Next Fixture. CLAIMANT had previously sought an extension of the cancelling date for the

Next Fixture. Champion declined and released the Vessel on 28 June 2016. CLAIMANT then arranged

for the Vessel’s hull to be cleaned at South Island. Upon discharge, the Cargo was found to have

sustained water damage, as a result of which the receivers of the Cargo, Hawkeye Import & Export

Pty (Receivers), brought a claim against RESPONDENT (Cargo Claim).

5. CLAIMANT commenced proceedings on 9 November 2018, claiming damages for the costs of hull

cleaning, the voyage to South Island and for the late re-delivery of the Vessel. RESPONDENT

counterclaimed for an indemnity with respect to the Cargo Claim and restitution, or damages, for

overpaid hire. The seat of the arbitration is London. The Charterparty is governed by English law.


2

ARGUMENTS ON THE MERITS OF THE CLAIM

I. CLAIMANT IS ENTITLED TO DAMAGES FOR RESPONDENT’S FAILURE TO PERFORM HULL CLEANING

PRIOR TO RE-DELIVERY OF THE VESSEL

6. Clause 83 of the Omega Rider Clauses, which governs the commercial agreement between the Parties

with respect to hull fouling, is structured as follows: sub-Clause 83(a) sets out the circumstances in

which either party may call for a joint inspection under sub-Clause 83(b); if hull cleaning is called

for following such an inspection, sub-Clause 83(c) provides that the charterers are to bear the risk,

cost, expense and time of performing such cleaning; sub-Clause 83(d) additionally provides that

cleaning must be carried out prior to re-delivery, but contemplates the agreement of a lump sum

payment prior to, or on, re-delivery in the event that the charterers are prevented from doing so.

7. RESPONDENT’s failure to perform hull cleaning prior to re-delivery amounted to a breach of Clause

83 (A). Consequently, CLAIMANT is entitled to recover both the costs of hull cleaning incurred at

South Island (B) and the costs of the voyage to South Island for the purpose of such cleaning (C).

A. RESPONDENT BREACHED CLAUSE 83 OF THE OMEGA RIDER CLAUSES

8. The Vessel remained in Wahanda for over 30 days in accordance with RESPONDENT’s orders,

satisfying sub-Clause 83(a) (i). The lack of a joint inspection, as contemplated by sub-Clause 83(b),

does not relieve RESPONDENT of its obligation to arrange hull cleaning pursuant to sub-Clause 83(c)

(ii). Therefore, the Tribunal should determine that RESPONDENT’s failure to perform hull cleaning

prior to re-delivery of the Vessel breached sub-Clauses 83(c) and 83(d) because RESPONDENT was

not prevented from carrying out cleaning and therefore accrued no right under the Charterparty to

offer a lump sum payment to CLAIMANT (iii). In the alternative, even if such a right did accrue,

CLAIMANT acted reasonably in rejecting RESPONDENT’s lump sum offers (iv).

(i) The Vessel remained in Wahanda in accordance with RESPONDENT’s orders

9. For an inspection of a vessel idling outside a tropical zone to have been called for in accordance with

sub-Clause 83(a), she must have remained within that place for a period exceeding 30 days ‘in


3

accordance with Charterers’ orders’.1 Here, the Vessel remained in Wahanda, which is not in a

tropical zone,2 for over 30 days. The critical issue is whether the Vessel remained in Wahanda in

accordance with RESPONDENT’s orders, notwithstanding her detention by Port State Control.

10. Courts have construed ‘in accordance with’ to mean ‘as a consequence of’,3 which is the legal and

commercial meaning of the phrase.4 Further, courts have drawn a distinction between orders

concerning the employment of a vessel,5 classified as charterers’ orders, and orders concerning the

navigation of a vessel,6 classified as Master’s orders that are attributable to the vessel’s owners.7 The

Parties should be presumed to have intended that both terms carry their established legal meaning.8

11. Here, RESPONDENT made the initial order that the Vessel berth at Wahanda, which constitutes an

order as to employment.9 The Vessel was then detained at the port of Wahanda due to the suspected

outbreak of Ebola amongst the crew.10 This order was not one as to navigation,11 and did not break

the chain of causation between RESPONDENT’s initial order and the Vessel remaining in Wahanda.

The Vessel therefore remained idle in accordance with RESPONDENT’s orders.

(ii) RESPONDENT remained under an obligation to undertake hull cleaning notwithstanding

that no joint inspection took place

12. Sub-Clause 83(c) provides that if, as a result of an inspection conducted pursuant to sub-Clause 83(b),

either party calls for underwater cleaning, that cleaning shall be undertaken by the charterers.

1 Record 16. 2 Record 81, Procedural Order No. 2 [2]. 3 Triad Shipping Co v Stellar Chartering and Brokerage Inc [1993] 2 Lloyd’s Rep 338, 407 (Cresswell J) (‘The Island Archon No 1’). 4 Reardon Smith Line Ltd v Yngvar Hansen-Tangen and Sanko Steamship Co [1976] 2 Lloyd’s Rep 621, 625–6 (Lord Wilberforce, Lords Simon and Kilbrandon agreeing) (‘The Diana Prosperity’). 5 Whistler International Ltd v Kawasaki Kisen Kaisha Ltd [1998] 2 Lloyd’s 367, 372 (Clarke J) (‘The Hill Harmony’); see also, Larrinaga Steamship Co Ltd v The King [1945] AC 246, 255 (Lord Wright), 261 (Lord Parker) (‘Larrinaga’). 6 Larrinaga, 255 (Lord Wright), 261 (Lord Parker); New A Line v Erechthion Shipping Co SA [1987] 2 Lloyd's Rep 180, 185 (Staughton J) (‘The Erechthion’); The Hill Harmony, 372 (Clarke J). 7 Triad Shipping Co v Stellar Chartering and Brokerage Inc [1994] 2 Lloyd’s Rep 227, 230–1 (Evans LJ) (‘The Island Archon No 2’); The Hill Harmony, 82 (Clarke J). 8 Howard Bennett et al, Carver on Charterparties (Sweet & Maxwell, 2017) [12-089] (‘Carver’); Guthell v Ballarat Trustees, Executors & Agency Co Ltd (1922) 30 CLR 293, 299 (Knox CJ); Fisher v Bell [1961] 1 QB 394, 400 (Lord Parker CJ), 401 (Ashworth J), 401 (Ewles J). 9 Record 4; see also, Terence Coghlin et al, Time Charters (Routledge, 7th ed, 2014) 335–7 [19.1]–[19.9] (‘Coghlin’); Larrinaga, 255 (Lord Wright), 261 (Lord Parker); The Hill Harmony, 82 (Clarke J). 10 Record 24–5. 11 The Erechthion, 184 (Staughton J).


4

According to sub-Clause 83(c)(ii), where, as here, inspection or cleaning is not permitted or possible,

speed and consumption warranties remain suspended until the completion of cleaning. Reading these

sub-Clauses together,12 it would be commercially absurd if RESPONDENT specifically, and commercial

parties generally, could avoid hull cleaning obligations simply by refusing to arrange a joint

inspection when speed and consumption warranties would remain suspended.13 The Parties cannot

have intended such an unreasonable result, which must yield to business common sense.14 The

purpose of an inspection performed pursuant to sub-Clause 83(b) is to determine whether cleaning is

necessary.15 Here, the Parties did not dispute that the Vessel’s hull needed to be cleaned.16

13. In order to avoid this commercial absurdity, and give business efficacy17 to Clause 83, an officious

bystander18 would imply in fact19 into sub-Clause 83(b) the following term, or words to that effect:20

where the extent of fouling, or the need for cleaning, is not disputed, the charterers remain obliged to

arrange hull cleaning under sub-Clause 83(c), notwithstanding the lack of a joint inspection.

(iii) RESPONDENT was not prevented from performing hull cleaning and therefore accrued no

right under the Charterparty to offer a lump sum payment to CLAIMANT

14. RESPONDENT was not prevented from performing its obligation to clean the Vessel’s hull. Although

12 Bernard Eder et al, Scrutton on Charterparties and Bills of Lading (Thomson Reuters, 23rd ed, 2017) 30–5 [2-047]–[2-065] (‘Scrutton’); Rhidian Thomas, Legal Issues Relating to Time Charterparties (Informa, 2008) 25 (‘Thomas’); Miller v Borner [1900] 1 QB 691, 693 (Channell J) (‘Borner’); Att-Gen Belize v Belize Telecom Ltd [2009] 1 WLR 1988, 1994 [21] (Lord Hoffman); Wood v Capita Insurance Services Ltd [2017] AC 1173, 1179 [10] (Lord Hodge, Lords Neuberger, Mance, Christopher Clarke and Sumption agreeing) (‘Capita’); PM Law Ltd v Motorplus Ltd [2018] EWCA Civ 1730 [12] (Lady Asplin) (‘Motorplus’). 13 Wickman Machine Tool Sales Ltd v Schuler AG [1974] AC 235, 251 (Lord Reid) (Wickman Machine); Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 898 (Lord Goff), 905 (Lord Lloyd), 912–3 (Lord Hoffmann), 918 (Lord Hope), 918 (Lord Clyde) (‘ICS’); Society of Lloyd’s v Robinson [1999] 1 WLR 756, 763 (Lord Steyn); Andrew Wood v Sureterm Direct Ltd [2014] EWHR 3240 (Comm) [28] (Clarke LJ). 14 Wickman Machine, 251 (Lord Reid); Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191, 201 (Lord Diplock) (‘The Antaios’); Rainy Sky SA v Kookmin Bank [2012] 1 Lloyd's Rep 34, 39 (Lord Clarke). 15 Record 16, Omega Rider Clauses. 16 Record 81, Procedural Order No. 2 [5]. 17 The Moorcock (1889) 14 PD 64, 68 (Bowen LJ); Marks and Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742, 753 [17] (Lord Neuberger); Ali v Petroleum Company of Trinidad and Tobago [2017] ICR 531, 535 [7] (Lord Hughes). 18 Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206, 227 (Mackinnon LJ); Liverpool City Council v Irwin [1976] 2 WLR 562, 571 (Lord Cross) (‘Liverpool’). 19 Hallman Holding Ltd v Webster [2016] UKPC 3 [14] (Lord Hodge); see also, The Moorcock, 68 (Bowen LJ); Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592, 605 (Scrutton LJ); BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 282–3 (Lord Simon); Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472, 481 (Sir Bingham MR). 20 H G Beale, Chitty on Contracts: Volume I (Sweet & Maxwell, 32nd ed, 2015) 1098 [14-006] (‘Chitty’); Shell UK Ltd v Lostock Garage Ltd [1976] 1 WLR 1187, 1196–7 (Lord Denning); Liverpool, 579 (Lord Edmund-Davies).


5

hull cleaning was not possible at Wahanda, the Vessel’s hull could be, and in fact was, cleaned

elsewhere.21 Sub-Clause 83(c)(ii) makes clear that, where cleaning is neither permitted nor possible

at the port or place of inspection, speed and consumption warranties remain suspended, during which

suspension the obligation to perform cleaning remains.22

15. By contrast, sub-Clause 83(d) contemplates that, where Charterers are prevented from carrying out

cleaning, a lump sum payment may be arranged. Importantly, sub-Clause 83(d) contains no restriction

that the Charterers be prevented at ‘the port or place of inspection’. The absence of those words from

sub-Clause 83(d) highlights that these provisions establish two discrete thresholds of prevention.23

RESPONDENT remained liable to arrange for the Vessel’s hull to be cleaned at another suitable port,

notwithstanding its inability to perform hull cleaning at the place of inspection due to poor visibility.24

RESPONDENT was therefore not relieved of its obligations under sub-Clause 83(c) and no right to

negotiate a lump sum payment pursuant to sub-Clause 83(d) accrued.

16. In any event, the reference in sub-Clause 83(d) that ‘the parties shall, prior to but latest on redelivery,

agree a lump sum payment’ constitutes an agreement to agree.25 Such agreements have been held to

have no contractual force on the basis of uncertainty, irrespective of the parties’ actual intentions.26

(iv) In the alternative, CLAIMANT’s rejection of RESPONDENT’s offers to make a lump sum

payment was reasonable

17. Even if, contra [14]–[16], RESPONDENT had a right to negotiate a lump sum payment, it was

reasonable for CLAIMANT to reject each of the offers made by RESPONDENT,27 for two reasons. First,

the rejection of any lump sum offer was reasonable as there was no way of quantifying the potential

21 Record 26; Record 81, Procedural Order No. 2 [6]. 22 London Arbitration 16/17 (2017) 978 Lloyd’s Maritime Law Newsletter 2. 23 Borner, 693 (Channell J); Capita, 1179 [10] (Lord Hodge, Lords Neuberger, Mance, Christopher Clarke and Sumption agreeing); Motorplus, [12] (Lady Asplin); see also, Ravennavi SpA v New Century Shipbuilding Ltd [2007] 2 Lloyd’s Rep 24, 27 [12] (Moore-Bick LJ) (‘Ravennavi’). 24 See eg London Arbitration 18/14 (2014) 910 Lloyd’s Maritime Law Newsletter 1. 25 Walford v Miles [1992] 2 AC 128, 138 (Lord Ackner) (‘Walford’); Shaker v Vistajet Group Holdings SA [2012] 2 Lloyd’s Rep 93, 96 [17] (Teare J). 26 Dany Lions Ltd v Bristol Cars Ltd [2014] 2 All ER (Comm) 403, 417 [46]–[47] (Andrews J); see also, Walford, 138 (Lord Ackner); Multiplex Constructions UK Ltd v Cleveland Bridge UK Ltd [2006] EWHC 1341 (TCC), [635] (Jackson J); Barbudev v Eurocom Cable Management Bulgaria EOOD [2012] 2 All ER (Comm) 963, 969 [22]–[24], 974 [44]–[46], 975 [52] (Aickens LJ). 27 Record 29, 39, 43.


6

costs of cleaning absent an inspection. Poor visibility at Wahanda rendered impossible any

inspection,28 which meant that CLAIMANT was unable to determine the extent of the fouling, which

can vary significantly,29 and the likely quantum of cleaning costs thereby arising.30 Further, there is

no linear correlation between the period of time a vessel remains idle and the amount of hull fouling

that may occur, making any estimation of the extent of fouling unreliable.31 It was therefore

reasonable32 for CLAIMANT to reject RESPONDENT’s offers33 that were made in full and final

settlement of its costs.

18. Second, to the extent that the quote for hull cleaning provided by Titan Shipbuilders constitutes a

benchmark for what may have amounted to a reasonable offer in the circumstances,34 each of

RESPONDENT’s increasing offers fell short of that amount.35

B. CLAIMANT IS ENTITLED TO RECOVER THE HULL CLEANING COSTS INCURRED AT SOUTH ISLAND

19. CLAIMANT is entitled to recover the USD41,000 expended on hull cleaning at South Island,36 as

damages in order to be placed in the position in which it would have been if the Charterparty had

been performed,37 because RESPONDENT’s breach caused CLAIMANT to incur the hull cleaning costs

(i), those costs were not too remote (ii), and CLAIMANT did not fail to mitigate those costs (iii).38

28 Record 26. 29 Lauri Kovanen, ‘Study of Hull Fouling On Cruise Vessels Across Various Seas’ (Research Paper, Eniram Studies, October 2012) 7 (‘Kovanen’). 30 Sangeeta Sonak et al, ‘A Method for Analysis of Costs and Benefits of Antifouling Systems Applied on Ship Hull’ (2010) 6(1) Journal of Ship Technology 73, 73–83; Global Maritime Energy Efficiency Partnerships, International Maritime Organisation, ‘Hull Coating’ (Web page), <https://glomeep.imo.org/technology/hull-coating/>. 31 Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Corporation [1978] 1 Lloyd’s Rep 53, 66 (Mocatta J) (‘The Apollonius’); see also, Fenwick v Schmalz (1868) LR 3 CP 313, 316 (Willes J); Santa Martha Baay Scheepvaart and Handelsmaatschappij NV v Scanbulk A/S [1981] 2 Lloyd’s Rep 267, 272 (Mustill J) (‘The Rijn’). 32 Thai Airways International plc v KI Holdings Co Ltd [2016] 1 All ER (Comm) 675, 686–7 [38], 694 [62] (Leggatt J) (‘Thai Airways’). 33 Record 29, 39, 43. 34 Record 35, 37. 35 Record 29, 39, 43. 36 Record 50–1; Record 68, Claim Submissions [18]. 37 Robinson v Harman (1848) 1 Ex 850, 855 (Parke B); Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, 39 (Lord Blackburn) (‘Livingstone’); Watts, Watts & Co Ltd v Mitsui & Co Ltd [1917] AC 227, 241 (Lord Dunedin) (‘Watts’); Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528, 539 (Asquith LJ) (‘Victoria Laundry’). 38 Payzu Ltd v Saunders [1919] 2 KB 581, 589 (Scrutton LJ); Darbishire v Warran [1963] 2 Lloyd’s Rep 187, 193 (Pearson LJ); Sotiros Shipping Inc v Samiet Solholt [1983] 1 Lloyd's Rep 605, 608 (Sir Donaldson MR) (‘The Solholt’); Golden Strait Corp v Nippon Yusen Kubishika Kaisha [2007] 2 AC 353, 370 (Lord Bingham) (‘The Golden Victory’).


7

(i) RESPONDENT’s breach of Clause 83 caused CLAIMANT to incur the hull cleaning costs

20. RESPONDENT’s failure to arrange cleaning prior to re-delivery was the effective cause39 of CLAIMANT

incurring hull cleaning costs because CLAIMANT would not have incurred USD41,000 in costs by

cleaning a hull that RESPONDENT had already arranged to be cleaned.

(ii) The hull cleaning costs incurred by CLAIMANT were not too remote

21. The seminal test for remoteness in Hadley v Baxendale40 contains two limbs: where one party

breaches a contract, the damages that party is liable to pay should be fairly and reasonably considered

to be either that which arises naturally, or according to the usual course of things, from the breach

(the first limb), or that which may reasonably be supposed to have been in the contemplation of both

parties at the time they made the contract as the probable result of breach (the second limb).41

22. The hull cleaning costs incurred at South Island fall within the first limb, because they arose naturally

from RESPONDENT’s failure to clean the Vessel’s hull prior to re-delivery.42 It was natural that

CLAIMANT would take subsequent steps to arrange hull cleaning. Moreover, it was a ‘serious

possibility’43 that the costs of cleaning, and services ancillary to cleaning, would vary between ports,

and at different times. However, the precise fluctuation in price need not have been foreseen by

RESPONDENT.44 Further, the Charterparty made express provision for hull cleaning,45 through which

responsibility for hull cleaning costs was allocated to, and assumed by, RESPONDENT.46

(iii) CLAIMANT did not fail to mitigate the hull cleaning costs

23. CLAIMANT’s entitlement to the USD41,000 should not be reduced on account of a failure to mitigate.

39 Chitty, 1838 [26-058]; Admiralty Comrs v SS Valeria [1922] 2 AC 242, 248 (Lord Dunedin); Liesbosch Dredger v SS Edison [1933] AC 449, 463 (Lord Wright); British Transport Commission v Gourley [1956] AC 185, 197 (Earl Jowitt); Czarnikow Ltd v Koufos [1969] 1 AC 350, 414 (Lord Pearce), 420 (Lord Upjohn) (‘The Heron II’); Dodd Properties (Kent) Ltd v Canterbury City Council [1980] 1 All ER 928, 934 (Megaw LJ); The Argonaftis [1989] 2 Lloyd’s Rep 487, 491–2 (Sheen J); Galoo v Bright Grahame Murray [1993] 1 WLR 1360, 1374–5 (Lord Glidewell) (‘Galoo’). 40 (1854) 9 Ex 341 (‘Hadley v Baxendale’). 41 Hadley v Baxendale, 354–5 (Alderson B). 42 The Heron II, 383 (Lord Reid), 406 (Lord Morris); Victoria Laundry, 540 (Asquith LJ); H Parsons (Livestock) Ltd v Uttley, Ingham & Co Ltd [1978] QB 791, 802 (Lord Denning), 805 (Lord Orr), 807 (Lord Scarman) (‘H Parsons’). 43 The Heron II, 406 (Lord Morris). 44 Brown v KMR Services Ltd [1995] 2 Lloyd’s Rep 513, 521 (Gatehouse J); Transfield Shipping Inc v Mercator Shipping Inc [2009] 1 AC 61, 70 [21] (Lord Hoffman) (‘The Achilleas’); Wellesley Partners LLP v Withers LLP [2016] Ch 529, 553 [76] (Floyd LJ) (‘Wellesley’). 45 Record 16. 46 The Achilleas, 70 [21] (Lord Hoffman), 73 [32], 74 [34] (Lord Hope).


8

As CLAIMANT was not under a positive duty to mitigate,47 it was not obliged to do anything which

was not objectively reasonable48 or in the ordinary course of business.49 Moreover, RESPONDENT

bears the onus of proving that a reasonable course of action was available to CLAIMANT, which would

have mitigated part of the loss incurred.50 RESPONDENT failed to discharge that onus because it has

not established that it was neither objectively reasonable nor in the ordinary course of business for

CLAIMANT to decline RESPONDENT’s offer to arrange cleaning at North Titan, for two reasons.

24. First, RESPONDENT’s offers were made in ‘full and final settlement’ of CLAIMANT’s costs.51

RESPONDENT cannot establish that it would have been reasonable for CLAIMANT to accept a sub-

standard offer and forfeit its right to make any further claim for damages. Second, it was reasonable

for CLAIMANT to refuse cleaning at North Titan. In assessing whether reasonable steps were taken,

the Tribunal should recognise that CLAIMANT was only required to arrange hull cleaning because of

RESPONDENT’s breach.52 As the Vessel could not be cleaned at any East Coast ports, there were

limited hull cleaning options available to CLAIMANT.53 The higher cost of cleaning at South Island,

as compared with the cost at North Titan, is immaterial54 because the mere existence of a cheaper

47 Carver, 1054 [11-117]; The Solholt, 608 (Sir Donaldson MR); Koch Marine Inc v D'Amica Societa di Navigazione ARL [1980] 1 Lloyd’s Rep 75, 81 [26] (Goff J) (‘The Elena D'Amico’); Zodiac Maritime Agencies Ltd v Fortescue Metals Group Ltd [2011] 2 Lloyd’s Rep 360, 368 [65] (Steel J) (‘The Kildare’); Glory Wealth Shipping Pte Ltd v Korea Line Corp [2011] 2 Lloyd’s Rep 370, 377 [31] (Blair J) (‘The Wren’). 48 Chitty, 1850–1 [26-082]; The Solholt, 608 (Sir Donaldson MR); British Westinghouse Electric and Manufacturing Company Limited v Underground Electric Railways Company of London Limited [1912] AC 673, 689 (Viscount Haldane LC) (‘British Westinghouse’); Standard Chartered Bank v Pakistan National Shipping Corp [1999] 1 Lloyd’s Rep 747, 756, 759 (Toulson J) affirmed in [2001] 1 All ER (Comm) 822, 836 [38] (Potter J) (‘Standard Chartered Bank’); Deutsche Bank AG v Total Global Steel Ltd [2012] EWHC 1201 (Comm) [159] (Smith J). 49 Chitty, 1851 [26-082]; Dunkirk Colliery Co v Lever (1878) 9 Ch D 20, 25 (James LJ) (‘Dunkirk Colliery’); British Westinghouse, 689 (Viscount Haldane LC); Pacific Interlink Sdn BHD v Owner of the Asia Star [2009] 2 Lloyd’s Rep 387, 392, 398–9, 403 (Prakash J) (‘The Asia Star’). 50 Carver, 1057 [11-125], 1089 [11-194]; Chitty, 1850 [26-081]; Roper v Johnson (1873) LR 8 CP 167, 178–9 (Keating J), 183–4 (Grove J); British Westinghouse, 689 (Viscount Haldane LC); Pilkington v Wood [1953] Ch 770, 775–6 (Harman J); Edwards v Society of Graphical and Allied Trades [1971] Ch 354, 380 (Sachs LJ); Strutt v Whitnell [1975] 1 WLR 870, 872 (Cairns LJ); Fyffes Group Ltd v Reefer Express Lines Pty Ltd and Reefkrit Shipping Inc [1996] 2 Lloyd’s Rep 171, 198–9 (Moore-Bick J) (‘The Kriti Rex’); UBC Chartering Ltd v Liepaya Shipping Co Ltd [1999] 2 Lloyd’s Rep 649, 671 (Rix J) (‘The Liepaya’); Omak Maritime Ltd v Mamola Challenger Shipping Co [2011] 1 Lloyd's Rep 47, 50 [17]–[18] (Teare J) (‘The Mamola Challenger’). 51 Record 29, 39, 43. 52 Thai Airways, 686–7 [38] (Leggatt J); Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452, 506 (Lord Russell) (‘Banco de Portugal’); Moore v DER Ltd [1971] 2 Lloyd’s Rep 359, 361 (Davies LJ) (‘Moore’); Britvic Soft Drinks Ltd v Messer UK Ltd [2002] 1 Lloyd’s Rep 20, 46 [114] (Tomlinson J); Borealis AB v Geogas Trading SA [2011] 1 Lloyd’s Rep 482, 491 [50], 506 [137] (Gross LJ) (‘Borealis’). 53 Record 34. 54 Wilson v United Counties Bank [1920] AC 102, 125 (Lord Atkinson); Lloyds and Scottish Finance Ltd v Modern Cars and Caravans (Kingston) Ltd [1966] 1 QB 764, 782–3 (Davies J).


9

alternative does not, by itself, suffice to establish a failure to mitigate.55

C. CLAIMANT IS ENTITLED TO RECOVER THE COSTS OF THE VOYAGE TO SOUTH ISLAND

25. CLAIMANT is entitled to recover as damages56 the USD55,567.42 incurred by way of the voyage to

South Island to perform hull cleaning because RESPONDENT’s breach of Clause 83 caused CLAIMANT

to incur the costs of the South Island voyage (i), those costs were not too remote (ii), and CLAIMANT

did not fail to mitigate its loss (iii).57

(i) RESPONDENT’s breach caused CLAIMANT to incur the costs of the voyage to South Island

26. RESPONDENT’s breach of Clause 83 was the effective cause58 of CLAIMANT expending USD55,567.42

in the course of the voyage to South Island because CLAIMANT would not have incurred such costs

travelling to clean a hull that RESPONDENT had already arranged to be cleaned.

(ii) The costs of the voyage to South Island incurred by CLAIMANT were not too remote

27. The costs of the voyage to South Island fall within the first limb of Hadley v Baxendale. The costs

were a natural consequence of RESPONDENT’s breach of Clause 83, it being common knowledge

among commercial shipping parties that hull cleaning cannot occur at all ports.59 RESPONDENT

assumed responsibility for the costs of a voyage to a suitable port on the same basis as submitted

above at [22].

(iii) CLAIMANT did not fail to mitigate the costs of the voyage to South Island

28. RESPONDENT cannot establish that CLAIMANT failed to mitigate the costs of the voyage to South Island

by refusing RESPONDENT’s offer to arrange cleaning at North Titan.60 As the two locations were of a

similar distance from Wahanda,61 CLAIMANT was unlikely to have mitigated those costs by travelling

to North Titan. Further, to the extent that the fouled hull increased the duration and costs of the voyage

55 Chitty, 1851 [26-082]; Banco de Portugal, 506 (Lord Russell); Moore, 361 (Davies LJ); Borealis, 491 [50] (Gross LJ). 56 Robinson v Harman (1848) 1 Ex 850, 855 (Parke B); Watts, 241 (Lord Dunedin); Livingstone, 39 (Lord Blackburn); Victoria Laundry, 539 (Asquith LJ). 57 Payzu, 589 (Scrutton LJ); Darbishire v Warran [1963] 2 Lloyd’s Rep 187, 193 (Pearson LJ); The Solholt, 608 (Sir Donaldson MR); The Golden Victory, 370 (Lord Bingham). 58 See above CLAIMANT Memorandum [20]. 59 See Mette Kronholm Fraende, ‘BIMCO and Industry Partners to Launch Hull Underwater Cleaning Standard’, BIMCO (Web page, 8 October 2018) < https://www.bimco.org/news/priority-news/20181008---hull-cleaning-standard>. 60 British Westinghouse, 689 (Viscount Haldane LC); see above CLAIMANT Memorandum [23]. 61 Record 39, 52, 83.


10

to South Island, any voyage to North Titan a week prior would have been similarly affected.62

29. Even if the voyage to North Titan would have been cheaper than travelling to South Island,

RESPONDENT cannot establish that it was not objectively reasonable or in the ordinary course of

business for CLAIMANT to arrange cleaning at South Island.63 As submitted above at [23], the

availability of a less expensive option does not, by itself, establish a failure to mitigate.64

II. CLAIMANT IS ENTITLED TO DAMAGES FOR RESPONDENT’S LATE RE-DELIVERY OF THE VESSEL

30. RESPONDENT breached its obligation to re-deliver the Vessel prior to the expiry of the maximum

period of the Charterparty (A). Therefore, RESPONDENT is liable for the loss of hire under the Next

Fixture (B).

A. RESPONDENT BREACHED ITS OBLIGATION TO RE-DELIVER THE VESSEL PRIOR TO THE EXPIRY OF

THE MAXIMUM PERIOD OF THE CHARTERPARTY

31. RESPONDENT was obliged to re-deliver the Vessel, at the latest, by the end of the charter period.65 The

Omega Recap relevantly provides: ‘DURATION ABT 50-55 DAYS WOG’.66 Here, the Vessel was

delivered to RESPONDENT on 29 March 2016,67 and RESPONDENT re-delivered the Vessel on 30 June

2016, 93 days later.68 Therefore, RESPONDENT has breached its re-delivery obligation even if the

maximum period of the Charterparty had been extended beyond 50–55 days by the terms ‘about’ (i)

and ‘without guarantee’ (ii). In any event, RESPONDENT has admitted its breach (iii).

62 Kovanen, 7; Yigit Kemal Demirel et al, ‘Effect of Barnacle Fouling on Ship Resistance and Powering’ (2017) 33(10) The Journal of Bioadhesion and Biofilm Research 819, 830, 831–2. 63 Chitty, 1851 [26-082]; Dunkirk Colliery, 25 (James LJ); British Westinghouse, 689 (Viscount Haldane LC); The Asia Star, 392, 398–9, 403 (Prakash J). 64 Chitty, 1851 [26-082]; Banco de Portugal, 506 (Lord Russell); Moore, 361 (Davies LJ); Borealis, 491 [50] (Gross LJ). 65 Carver, 648 [7-342]; Coghlin, 92 [4.3]–[4.4], 94 [4.11]; Watson Steamship v Merryweather (1913) 18 Com Cas 294, 299 (Atkin J); Hector Steamship Co v V O Sovfracht, Moscow [1945] KB 343, 347 (Atkinson J) (‘Hector Steamship’); Hyundai Merchant Maritime Co Ltd v Geruri Chartering Co Ltd [1991] 1 Lloyd’s Rep 100, 107 (Bingham LJ), 118 (Slade LJ) (‘The Peonia’); Petroleo Brasiliero SA v Kriti Akti Shipping Co SA [2004] 1 Lloyd’s Rep 712, 717 [19] (Mance LJ) (‘The Kriti Akti’); SBT Star Bulk & Tankers (Germany) GmbH & Co KG v Cosmotrade SA (‘The Wehr Trave’) [2016] 2 Lloyd's Rep 170, 174 [13] (Sir Elder). 66 Record 4, Omega Recap; Norman Lopez, Bes’ Chartering and Shipping Terms (Barker & Howard, 11th ed, 1992) 162 (‘Lopez’); IMT Shipping and Chartering GMBH v Chansung Shipping Co [2009] 2 Lloyd’s Rep 139, 144 [14] (Tomlinson J) Ltd (‘The Zenovia’). 67 Record 66, Claim Submissions [3]. 68 Record 68, Claim Submissions [17]; Record 66, Claim Submissions [3].


11

(i) ‘About’ does not extend the charter’s maximum period until 30 June 2016

32. The 50–55 day period is qualified by ‘about’, which implies a ‘reasonable margin’ such that the date

for re-delivery may exceed that which has been otherwise stipulated.69 A ‘reasonable margin’ is to be

determined by reference to what is reasonable in context, viewing the relevant charterparty as a whole,

and including its terms and overall length.70 RESPONDENT’s re-delivery of the Vessel 38 days after

the conclusion of the 50–55 day charter period exceeds any such reasonable margin.71

(ii) ‘Without guarantee’ does not extend the charter’s maximum period until 30 June 2016

33. Although the 50–55 day duration is also qualified by ‘without guarantee’, the maximum period of the

Charterparty was not extended until 30 June 2016. It has been held that ‘without guarantee’ only

requires a charterer to act in good faith when estimating the duration of a charterparty.72 However,

even if the Tribunal is satisfied that RESPONDENT acted in good faith, the ‘without guarantee’ qualifier

cannot mean that the maximum period of the Charterparty can never be exceeded because every time

charter must have a termination date.73 The alternative would render meaningless the re-delivery

obligation and be incompatible with the fundamental nature of commercial contracts.74 As such, the

qualifier should be construed only to import a further margin of tolerance.75

(iii) In any event, RESPONDENT has admitted its breach of the re-delivery obligation

34. In any event, RESPONDENT has admitted that it breached its obligation to re-deliver the Vessel on

time. Paragraph 10(2) states, under the heading ‘Charterers’ Breaches of the Charterparty’, that

69 Carver, 650 [7-350]; Hector Steamship, 346 (Atkinson J); London & Overseas Freighters Ltd v Timber Shipping Co SA [1972] AC 1, 14 (Lord Reid) (‘The London Explorer’); Alma Shipping Corp of Monrovia v Mantovani [1975] 1 Lloyd’s Rep 115, 117 (Lord Denning MR) (‘The Dione’); Gulf Shipping Lines Ltd v Cia Naviera Alanje [1976] 2 Lloyd’s Rep 643, 645 (Waller J) SA (‘The Aspa Maria’); The Peonia, 107 (Bingham LJ). 70 Carver, 650–1 [7-351]; Coghlin, 94 [4.20]; Marbienes Compania Naviera SA v Ferrostaal AG [1976] 2 Lloyd's Rep 149, 153 (Lord Denning MR) (‘The Democritos’). 71 Record 66, Claim Submissions [3]; Record 68, Claim Submissions [17]; Meyer v Sanderson [1913] 108 LT 428, 429 (Atkin J); The London Explorer [1972] AC 1, 20 (Lord Morris). See also, the facts of Skibsaktieselskapet Snefonn, Skibsaksjeselskapet Bergehus and Sig Bergesen DY & Co v Kawasaki Kisen Kaisha Ltd [1975] 1 Lloyd’s Rep 422 (‘The Berge Tasta’); The Dione; The Democritos. 72 Coghlin, 96 [4.28]; Continental Pacific Shipping Ltd v Deemand Shipping Co Ltd [1997] Lloyds Rep 404, 406 (Longmore J) (‘The Lendoudis Evangelos II’); Losinjska Plovidba Brodarstovo 68 v Valfracht Maritime Co Ltd [2001] 2 Lloyd’s Rep 17, 19 [11] (Smith J) (‘The Lipa’); The Zenovia, 151 [48] (Tomlinson J); Transpetrol Maritime Services v SJB (Marine Energy) BV [2012] 1 Lloyd’s Rep 564, 568 [16] (Longmore LJ) (‘The Rowan’). 73 The Peonia, 103, 107 (Bingham LJ). 74 Carver, 669 [7-403]. 75 Ibid.


12

‘Paragraph 21(2) [of the Claim Submissions] is admitted’.76 Paragraph 21(2) of the Claim

Submissions relevantly provides: ‘[i]n the premises, Charterers acted in breach of the Charterparty in

that they […] failed to re-deliver the Vessel prior to the expiry of the maximum period’.77

B. CLAIMANT IS ENTITLED TO DAMAGES FOR BREACH OF THE CHARTERPARTY

35. The duration of the Next Fixture was 2 years plus a 2-year option,78 at a daily rate of USD10,500.79

CLAIMANT is entitled to recover the loss of hire under the Next Fixture, valued at USD15,330,000,80

because RESPONDENT’s breach of its re-delivery obligation caused the loss of hire under the Next

Fixture (i), the loss was not too remote (ii) and CLAIMANT did not fail to mitigate its loss (iii).

(i) RESPONDENT’s breach caused the loss of hire under the Next Fixture

36. RESPONDENT’s breach of the re-delivery obligation was the effective cause of CLAIMANT’s loss of

hire under the Next Fixture,81 because the substantial delay in re-delivery directly resulted in the

Vessel missing the laycan for the Next Fixture,82 thus entitling Champion to cancel the Next Fixture.83

37. CLAIMANT’s loss under the Next Fixture extends to the daily rate of hire of USD10,500 over 4 years.

If it is established that there was a ‘real’ or ‘substantial’ chance that Champion would have exercised

the option and that RESPONDENT’s breach would have caused the loss of hire under the 2-year

option,84 it follows that the cancellation of the Next Fixture was also the effective cause of the loss

of the option. Here, this chance was real or substantial for four reasons.

38. First, the exercise of the option provides commercial certainty to Champion because the terms of the

76 Record 72, Defence Submissions [10]. 77 Record 68, Claim Submissions [21(2)]. 78 Record 30–3, Champion Recap; Lopez, 38. 79 Record 32; see also, Carver, 656 [7-367]; The Aspa Maria, 644 (Lord Denning MR). 80 Record 69, Claim Submissions [22(3)]. 81 Above n 39. 82 Record 40; Record 67, Claim Submissions [13]. 83 Coghlin, 146 [7.5]; The Democritos, 152 (Lord Denning MR); Mitsui OSK Lines Ltd v Garnac Grain Co Inc [1984] 2 Lloyd's Rep 449, 454 (Leggatt J) (‘The Myrtos’); CSSA Chartering and Shipping Services Sa v Mitsui Osk Lines Ltd [2018] 1 Lloyd’s Rep 57, 64 [26] (Popplewell J) (‘The Pacific Voyager’). 84 Carver, 1110–11 [11-250]–[11-251]; Chaplin v Hicks [1911] 2 KB 786, 795 (Moulton LJ), 800 (Farell LJ); Davies v Taylor [1974] AC 207, 212 (Lord Reid), 220 (Lord Simon), 223 (Lord Cross); Allied Maples Group v Simmons & Simmons [1995] 1 WLR 1602, 1611–14 (Stuart-Smith LJ); North Sea Energy Holdings NV v Petroleum Authority of Thailand [1999] 1 Lloyd’s Rep 483, 493–4 (Waller LJ); The Kriti Rex, 667–8 (Toulson J); The Front Ace v Owners of The Vicky 1 [2008] 2 Lloyd’s Rep 45, 56–7 [68]–[73] (Sir Clarke MR) (‘The Vicky 1’); A v B [2019] 1 Lloyd's Rep 385, 398 [96]–[100] (Sir Cranston); AerCap Partners 1 Ltd v Avia Asset Management AB [2011] Bus LR D85, D87–8 [76] (Gross LJ).


13

Next Fixture are known, and Champion would be familiar with the Vessel and her crew. Second, the

exercise of the option secures a daily rate of hire for a further 2-year period that is certain and

protected from market fluctuations. Third, if Champion exercises the option, it can avoid complex,

risky, and time-consuming renegotiations with another shipowner, with whom Champion would

likely have had no established commercial relationship. Fourth, the extended charter period would

allow Champion to negotiate and fix voyages toward the end of the initial 2-year period with greater

certainty as to its bargaining position.

(ii) The loss of the Next Fixture was not too remote

39. As a matter of principle, remoteness determines whether the contract-breaker should be liable for the

type of loss that occurred and it is irrelevant to this assessment if the extent of the type of loss was

unforeseeably large.85 Here, the loss of hire under the Next Fixture was not too remote because the

cancellation of a subsequent fixture amounts to loss that naturally arises from the late re-delivery of

a vessel (a). In the alternative, the loss of 4 years’ worth of hire under the Next Fixture fell within the

special circumstances of which RESPONDENT had actual knowledge (b). In any event, RESPONDENT

has assumed responsibility for this type of loss (c).

a. Loss of hire under the Next Fixture naturally arises from the late re-delivery of a vessel

40. It is standard commercial practice that a vessel would have consecutive fixtures to maximise profit

and shipowners often secure subsequent fixtures during a current fixture.86 As such, the result that

late re-delivery for a current fixture would jeopardise a subsequent fixture is the type of loss that

naturally arises from commercial charterparties.87 Therefore, the loss of hire under the Next Fixture

falls within the first limb of Hadley v Baxendale.

85 Carver, 1135 [11-301]; Hughes v Lord Advocate [1963] AC 837, 845 (Lord Reid); The Heron II, 388 (Lord Reid), 404 (Lord Morris); H Parsons, 804 (Lord Denning MR), 813 (Scarman LJ); Jack L Israel Ltd v Ocean Dynamic Lines SA [1982] 2 Lloyd’s Rep 88, 93–4 (Goff J) (‘The Ocean Dynamic’); Transworld Oil Ltd v North Bay Shipping Corp [1987] Lloyd’s Rep 173, 175 (Staughton J) (‘The Rio Claro’); The Kriti Rex, 203 (Moore-Bick J); The Achilleas, 70 [21] (Lord Hoffmann); Classic Maritime Inc v Lion Diversified Holdings Berhad [2010] 1 Lloyd’s Rep 59, 71–2 [72]–[77] (Cooke J) (‘Classic Maritime Inc’); Wellesley, 555 [86] (Floyd LJ). 86 Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724, 725 (Lord Roskill) (‘The Nema’); Suisse Atlantique Société d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1967] 1 AC 361, 396 (Lord Reid) (‘The Silvretta’); The Achilleas, 75 [36] (Lord Hope); Imperator I Maritime Co v Bunge SA [2016] 2 Lloyd's Rep 293, 294 [1] (Phillips J) (‘The Coral Seas’). 87 The Achilleas, 70 [23] (Lord Hoffmann), 74–5 [36] (Lord Hope).


14

b. RESPONDENT had actual knowledge of special circumstances

41. In the alternative, the loss of 4 years’ worth of hire falls within the second limb88 of Hadley v

Baxendale because RESPONDENT had actual knowledge that a 3–5 year fixture would follow the

Charterparty, which would inevitably be jeopardised by late re-delivery.89 On 1 March 2016,

CLAIMANT published a message on its Chatter account stating that it was ‘[l]ooking to fix [the Vessel]

for 3-5 years’.90 It can be inferred that RESPONDENT was aware of this ‘widely read’ message,91

particularly as a commercially prudent party could be expected to have undertaken due diligence

concerning a new potential business partner.

c. RESPONDENT assumed responsibility for the loss of hire under the Next Fixture

42. The majority of the House of Lords in The Achilleas held that, in exceptional cases, it is insufficient

that the type of loss arose naturally or was reasonably contemplated, and it must be shown that the

contract-breaker also assumed responsibility for that type of loss occurring.92 This rule was not strictly

supported by later authorities.93 However, if the Tribunal determines that the present proceedings

constitute an exceptional case, the loss of hire under the Next Fixture is nevertheless not too remote

because RESPONDENT assumed responsibility for that type of loss, for four reasons.

43. First, CLAIMANT’s 1 March 2016 Chatter post was made during or before the Charterparty

negotiations, which were finalised on 18 March 2016.94 Second, this post represented CLAIMANT’s

commercial position at the time of negotiations and it is reasonable to infer CLAIMANT maintained

88 Carver, 1121 [11-275], 1127 [11-285], 1129 [11-287]; Hadley v Baxendale, 354–5 (Alderson B); Victoria Laundry, 542 (Asquith LJ); The Heron II, 395 (Lord Morris), 411 (Lord Hodson); Glencore Grain Ltd v Goldbeam Shipping Inc [2002] 2 Lloyd’s Rep 244, 258–260 [61]–[69] (Moore-Bick J) (‘The Mass Glory’). 89 Record 1; Carver, 1131 [11-292]; Hadley v Baxendale, 355 (Alderson B); The Achilleas, 70 [21] (Lord Hoffmann), 73 [31] (Lord Hope), 83 [68] (Lord Walker). 90 Record 1. 91 Record 81, Procedural Order No. 2 [3]; President of India v Lips Maritime Corp [1988] AC 395, 412 (Lord Neill) (‘The Lips’); International Minerals & Chemical Co v Karl O Helm AG [1986] 1 Lloyd's Rep 81, 104 (Hobhouse J). 92 The Achilleas, 68 [15], 70 [21] (Lord Hoffmann), 73 [31] (Lord Hope), 83 [69] (Lord Walker); applied in ASM Shipping Ltd of India v TTMI Ltd of England [2009] 1 Lloyd’s Rep 293, 295 [19] (Flaux J) (‘The Amer Energy’); Classic Maritime Inc, 72 [77] (Cooke J); Supershield Ltd v Siemens Building Technologies [2010] I Lloyd’s Rep 349, 354 [37] (Toulson LJ); Sylvia Shipping Co Ltd v Progress Bulk Carriers Ltd [2010] 2 Lloyd’s Rep 81, 85 [39] (Hamblen J) (‘The Sylvia’); John Grimes v Gubbins [2013] 2 EGLR 31 [17] (Sir Keene). 93 Carver, 1130 [11-290]; The Heron II, 421–2 (Lord Upjohn); GKN Centrax Gears Ltd v Matbro Ltd [1976] 2 Lloyd’s Rep 555, 574 (Lord Denning MR), 577 (Stephenson LJ), 580 (Bridge LJ); Satef-Huttenes Albertus SPA v Paloma Tercera Shipping Co SA [1981] 1 Lloyd’s Rep 175, 182 (Goff J) (‘The Pegase’). 94 Record 1; Record 2, Omega Recap.


15

this position throughout its negotiations with RESPONDENT. Third, as submitted above at [41],

RESPONDENT was likely aware of the post.95 Fourth, the Charterparty concluded with RESPONDENT

does not undermine CLAIMANT’s expressed intention for a 3–5 year fixture; rather, it can be inferred

that the charter with RESPONDENT was an interim fixture that allowed CLAIMANT to maintain an

income stream and secure a 3–5 year fixture, as in fact occurred with the Next Fixture.

44. Therefore, RESPONDENT assumed responsibility for the consequence that its late re-delivery would

jeopardise 4 years’ hire under the Next Fixture, a type of loss that was foreseeable and quantifiable.96

(iii) CLAIMANT did not fail to mitigate the loss of hire under the Next Fixture

45. RESPONDENT bears the onus to satisfy the Tribunal that CLAIMANT has failed its duty to mitigate.97

As submitted above at [23], there was no positive duty to mitigate.98 Therefore, CLAIMANT was only

required to take reasonable commercial steps to mitigate the loss of hire under the Next Fixture, and

it did so by securing the Replacement Fixture.99 Further, by reaching out to Champion to seek an

extension of the laycan, CLAIMANT took sufficient steps to attempt to prevent the loss of the Next

Fixture itself.100 However, CLAIMANT acknowledges that the hire received under the Replacement

Fixture should be deducted from the damages to which it is entitled.101

ARGUMENTS ON THE MERITS OF THE COUNTERCLAIM

III. CLAIMANT IS NOT LIABLE TO INDEMNIFY RESPONDENT FOR THE CARGO CLAIM

46. The ICA does not apply to apportion liability for the Cargo Claim (A). In the alternative, even if the

ICA does apply, CLAIMANT is only liable for 50% of the Cargo Claim (B). Further, the Hague Rules

do not apply to determine CLAIMANT’s liability (C). In the alternative, even if the Hague Rules do

apply, CLAIMANT is nevertheless not liable to account for the Cargo Claim (D). Finally, to the extent

95 Record 81, Procedural Order No. 2 [3]. 96 The Achilleas, 280 [23] (Lord Hoffmann), 282–3 [36] (Lord Hope), 287 [62], 291–2 [86] (Lord Walker). 97 Above n 50. 98 Above n 47. 99 Record 53; above n 48. 100 Record 40. 101 Carver, 1089 [11-194]; Staniforth v Lyall (1830) 131 ER 65, 68 (Tindal CJ) 68–9 (Gaselee, Bosanquet and Alderson JJ agreeing); Petroleum Shipping Ltd v Vatis [1997] 2 Lloyd’s Rep 314, 321–3 (Walker J) (‘The Riza and the Sun’).


16

that CLAIMANT is found liable to account for the Cargo Claim, RESPONDENT is not entitled to set off

that amount against sums for which RESPONDENT is found liable to CLAIMANT (E).

A. THE ICA DOES NOT APPLY TO APPORTION LIABILITY FOR THE CARGO CLAIM

47. Clause 53 of the Omega Rider Clauses provides that liability for cargo claims, as between CLAIMANT

as owner and RESPONDENT as charterer, ‘shall be apportioned as specified by the [ICA]’.102 However,

the ICA does not apply in this case because the precondition in sub-Clause 4(c) of the ICA has not

been met (i). Further, recovery is time-barred pursuant to Clause 6 of the ICA (ii).

(i) The precondition under sub-Clause 4(c) of the ICA has not been met

48. Pursuant to sub-Clause 4(c), the ICA cannot apply to apportion liability for the Cargo Claim because

the Cargo Claim has not been ‘properly settled or compromised and paid’,103 for two reasons.

49. First, ‘and’ is used conjunctively, while ‘or’ is used disjunctively.104 Therefore, while a cargo claim

may be either ‘settled’ or ‘compromised’, such that there exists a legal liability to pay, the requirement

that a cargo claim be ‘paid’ is a strict precondition that cannot be substituted.105 Second, the ICA does

not facilitate indemnification against the incurring of future liability because no apportionment can

occur until the underlying claim for damages has been met.106 As at 17 December 2018, the Receivers

had merely commenced a claim against RESPONDENT.107 Therefore, apportionment under Clause 8 of

the ICA cannot occur because the Cargo Claim has not yet been paid.

(ii) Recovery is time-barred by Clause 6 of the ICA

50. Clause 6 of the ICA provides ‘[r]ecovery under this Agreement […] shall be deemed to be waived

and absolutely barred unless written notification of the Cargo Claim has been given to the other party

to the charterparty within 24 months of the date of delivery of the cargo […]. Such notification shall

102 Record 10. 103 Emphasis added. 104 D Pearce and R Geddes, Statutory Interpretation in Australia (LexisNexis Butterworths, 8th ed, 2014), 65–6 [2.29]. 105 Thomas, 239 [13.59]; Steven Hazelwood et al, P&I Clubs Law and Practice (Informa, 4th ed, 2010) (‘Hazelwood’) 279 [15.62]; Idaho v Peninsula & Oriental Steam Navigation Co [1983] 1 Lloyd’s Rep 219, 227 (Sir Donaldson MR) (‘The Strathnewton’); see also, A/S Iverans Rederei v Seeschiffahrtsgesellschaft [1992] 2 Lloyd’s Rep 378, 384–5 (Lord Hobhouse) (‘The Holstencruiser’); Primagates Maritime Co Ltd v The Bunkers Onboard the Cargo Explorer (unreported, 15 March 1995, High Court of South Africa, Durban and Coast Local Division) (‘The Cargo Explorer’). 106 Carver, 490 [5-257]; Thomas, 237 [13.40]; Bosma v Larsen [1966] 1 Lloyd’s Rep 22, 27–9 (McNair J). 107 Record 72, Defence Submissions [9].


17

if possible include details of the contract of carriage, the nature of the claim and the amount claimed.’

51. Although CLAIMANT accepts that RESPONDENT provided information as to the Cargo Claim’s

existence on 7 July 2016,108 that communication did not constitute sufficient notice for the purposes

of Clause 6. While RESPONDENT was not required to provide details of all three matters specified in

Clause 6, the failure to include the details for any of them rendered its notification insufficient as

CLAIMANT could not know the case it had to meet, contrary to the purpose of the ICA’s notice

requirement,109 for three reasons.

52. First, RESPONDENT has accepted that it did not provide the contract of carriage to CLAIMANT on 7

July 2016. Indeed, it was only provided to CLAIMANT ‘during the course of this reference’,110 being

these proceedings before the Tribunal. Further, as it can be inferred that RESPONDENT had in its

possession the contract of carriage at the time of the notification, it was ‘possible’ for RESPONDENT

to provide CLAIMANT with the contract of carriage on 7 July 2016. RESPONDENT failed to do so.

53. Second, the nature of the claim was not satisfactorily given because the details of the Cargo Claim

were contained in a surveyor’s report that was caveated as ‘preliminary’.111 As a subsequent report

was forthcoming, the Preliminary Survey Report recognised the tentative nature of its own findings.

Further, although the Report stated that the Receivers ‘would be making a claim against Charterers

under the Contract of Carriage’, it also stated ‘the Receivers will need to assess their options’ before

commencing any action. A reference to the possibility of bringing a claim is of itself insufficient.

54. Third, the quantum of the Cargo Claim was not provided to CLAIMANT on 7 July 2016. Here, details

of the precise quantum sought were commercially important because they would have allowed

CLAIMANT to assess whether to defend the apportionment claim or clear its books and settle with

RESPONDENT, consistently with the rationale of the ICA time bar.112 While the quantum of the Cargo

108 Record 45; Record 82, Procedural Order No. 2 [15]. 109 Carver, 491 [5-259]; Hazelwood, 280 [15.66]; London Arbitration 16/02 (2002) 600 Lloyd’s Maritime Law Newsletter 2. 110 Record 82, Procedural Order No. 2 [15]. 111 Record 46. 112 Aries Tanker Co v Total Transport Ltd [1977] 1 Lloyd’s Rep 334, 336 (Lord Wilberforce) (‘The Aries’); Compania Portorafti Commerciale SA v Ultramar Panama Inc [1990] 1 Lloyd’s Rep 310, 315 (Bingham LJ) (‘The Captain Gregos’); Linea Naviera Paramaconi SA v Abnormal Load Engineering Ltd [2001] 1 Lloyd’s Rep 763, 769 [19] (Tomlinson J).


18

Claim was subsequently agreed as between the Receivers and RESPONDENT,113 that does not constitute

notification of the quantum as at 7 July 2016.

B. EVEN IF THE ICA APPLIES, CLAIMANT IS ONLY LIABLE FOR 50% OF THE CARGO CLAIM

55. Sub-Clause 8(a) of the ICA does not apply to apportion the Cargo Claim because it arises ‘out of

loading, stowage, lashing, storage or other handling of the cargo’. Therefore, at most, CLAIMANT is

liable for only 50% of the Cargo Claim because it should be apportioned under either sub-Clause 8(b)

(i), or, alternatively, pursuant to sub-Clause 8(d) (ii).

(i) The Cargo Claim should be apportioned under sub-Clause 8(b)

56. The relevant act giving rise to the Cargo Claim is the crew pumping ballast water into the hold in

which the Cargo was stowed.114 The act of ballasting is inherently linked to the amount of cargo. If a

vessel is not loaded to capacity, then it must carry additional ballast so that the vessel is properly

submerged. Further, the act from which the Cargo Claim arose affected the cargo alone.115 It had no

consequence on the safe travelling of the Vessel because ballast can perform its function irrespective

of its exact placement within a vessel.116

57. Therefore, the Cargo Claim arose ‘out of loading, stowage, lashing, storage or other handling of the

cargo’. It follows that liability should be apportioned under sub-Clause 8(b) of the ICA. Since the

words ‘and responsibility’ were added into Clause 8 of the standard NYPE 2015 form by the Omega

Recap,117 CLAIMANT is therefore only liable for 50% of the Cargo Claim.

(ii) In the alternative, the Cargo Claim should be apportioned under sub-Clause 8(d)

58. If the Cargo Claim does not fall to be apportioned under either sub-Clause 8(a) or sub-Clause 8(b),

113 Record 82, Procedural Order No. 2 [11]. 114 Record 46; Record 81, Procedural Order No. 2 [9]. 115 Sir Guenter Treitel and Francis Reynolds, Carver on Bills of Lading (Sweet & Maxwell, 3rd ed, 2011) 706 [9-212] (‘Carver on Bills of Lading’); Gosse Millard v Canadian Government Merchant Marine Ltd [1928] 1 KB 717, 749 (Greer LJ, dissenting) upheld on appeal by the House of Lords in [1929] AC 223. 116 Carver, 424 [5-093]; The Glenochil [1896] P 10, 16 (Sir Francis Jeune); Gosse Millerd v Canadian Government Merchant Marine Ltd [1929] AC 223, 232 (Lord Hailsham LC) (‘Gosse Millerd’); Minnesota Mining & Manufacturing (Australia) Pty Ltd v The Ship ‘Novoaltaisk’ [1972] 2 NSWLR 476, 480 (Macfarlan J) (‘Minnesota’); J W Harris, Maritime Law: Issues, Challenges and Implications (Nova Science, 2009) 161; David Matej, ‘Vessels and Ballast Water’ in M David and S Gollasch (ed), Global Maritime Transport and Ballast Water Management: Issues and Solutions (Springer, 2014) 14–5 (‘Matej’). 117 Record 5.


19

sub-Clause 8(d), which concerns ‘all other cargo claims whatsoever’, will apply. Apportioned under

sub-Clause 8(d), CLAIMANT is nevertheless liable for, at most, 50% of the Cargo Claim.

C. THE HAGUE RULES DO NOT APPLY TO DETERMINE CLAIMANT’S LIABILITY

59. CLAIMANT’s liability for the Cargo Claim may not be determined under the Hague Rules because the

Hague Rules were not incorporated into the Charterparty (i). Further, even if the Bill of Lading was

governed by the Hague Rules, CLAIMANT is not a party to that contract of carriage (ii).

(i) The Hague Rules were not incorporated into the Charterparty

60. The Parties’ adoption of Clause 53 of the Charterparty,118 which identifies the ICA as the scheme for

determining liability, expresses their common intention to exclude the application of other

inconsistent schemes.119 The Hague Rules, which provides for the allocation of actual cargo

responsibility, is inconsistent with the ICA, which is a mechanical apportionment scheme intended

to avoid the costly litigation that would otherwise result from contesting Parties’ actual culpability.120

(ii) Further, CLAIMANT is not a party to the Bill of Lading

61. Box 3 on the front of the Bill of Lading121 clearly identifies RESPONDENT as the ‘Carrier’ under the

contract of carriage with the Receivers. This designation is not undermined by Clause 17 of the Bill

of Lading, an identity of carrier clause, for two reasons. First, the Tribunal should find that Clause

17, as an identity of carrier clause, is invalid. To conclude otherwise, and find that this identity of

carrier clause is valid, would allow RESPONDENT to lessen or avoid its liability in a manner

inconsistent with both Article 3(8) of the Hague Rules,122 and the fact that the Receivers have

commenced a valid claim against RESPONDENT under that contract of carriage.123

62. Second, previous decisions which suggested that an identity of carrier clause may override an express

118 Record 10. 119 ICA cl 5. 120 Thomas [13.61]; The Strathnewton, 223, 225–6 (Kerr LJ). 121 Record 47–9. 122 William Tetley, Marine Cargo Claims: Volume 1 (Thomson Carswell, 4th ed, 2008) 602 (‘Tetley’); Homburg Houtimport BV v Agrosin Private Ltd [2004] 1 AC 715, 744 [34] (Lord Bingham), 763 [113]–[114] (Lord Hoffmann), 787–8 [157]–[158] (Lord Hobhouse), 801 [212] (Lord Millett) (‘The Starsin’). 123 Record 46, 82, Procedural Order No. 2 [10].


20

identification of the carrier on the face of a bill of lading124 were not followed in The Starsin. In that

case, the House of Lords instead held that a reasonable commercial party, versed in the shipping

trade, would not prefer a clause at the back of a bill of lading, commonly printed in small and barely

legible font, in favour of a clear identification of the carrier in the signature box on the face of the bill

of lading.125 The Tribunal should adopt the same approach here.

D. EVEN IF THE HAGUE RULES APPLY, CLAIMANT IS NOT LIABLE TO ACCOUNT FOR THE CARGO CLAIM

63. Even if the Hague Rules do apply to determine liability for the Cargo Claim, CLAIMANT is not liable

because the obligation to care for cargo in Article 3(2) is expressly subject to the exceptions to liability

provided for in Article 4(2). Even if the Tribunal accepts that CLAIMANT seemingly has breached this

obligation, CLAIMANT can rely on the exceptions in Article 4(2)(a) (i) and Article 4(2)(n) (ii).

(i) CLAIMANT can rely on the exception in Article 4(2)(a)

64. The Cargo Claim arises from the crew’s act of ballasting, which is an ‘act, neglect or default […] in

the management of the ship’ as required by Article 4(2)(a). Handling of the Vessel’s ballasting is

undertaken ‘in the management of the ship’ because it directly affects her essential functions of

structural stability, trim and safe navigation.126 While the amount of cargo affects the extent of

ballasting required, the act of ballasting cannot be said to affect the care of the cargo alone.127

(ii) CLAIMANT can rely on the exception in Article 4(2)(n)

65. CLAIMANT can rely on Article 4(2)(n), which provides an exception to liability based on

124 Fetim BV v Oceanspeed Shipping Ltd [1999] 1 Lloyd’s Rep 612, 618 (Moore-Bick J) (‘The Flecha’); see also, The Berkshire [1974] 1 Lloyd’s Rep 185, 188 (Brandon J); Kaleej International Pty Ltd v Gulf Shipping Lines (1986) 6 NSWLR 569, 574 (Samuels JA) (‘The Sun Diamond’); The Rewia [1991] 2 Lloyd’s Rep 325, 333 (Leggatt LJ), 336 (Dillon LJ); MB Pyramid Sound MV v Briese Schiffahrts GmbH [1995] 2 Lloyd’s Rep 144, 150 (Clarke J) (‘The Innes’). 125 Carver on Bills of Lading, 182–3 [4-036], 191–3 [4-045]; Tetley, 609–10; Homburg Houtimport BV v Agrosin Private Ltd [2000] 1 Lloyd’s Rep 85, 93 (Colman J) upheld on appeal by House of Lords in The Starsin, 738 [15] (Lord Bingham), 747 [45]–[46] (Lord Steyn), 754–5 [74]–[77] (Lord Hoffman), 769 [128] (Lord Hobhouse), 796 [188] (Lord Millett); see also, The Venuzuela [1980] 1 Lloyd’s Rep 393, 396–7 (Sheen J); Sunrise Maritime Inc v Uvisco Ltd [1998] 2 Lloyd’s Rep 287, 293–6 (Rix LJ) (‘The Hector’); Homburg Houtimport BV v Agrosin Private Ltd [2001] 1 Lloyd’s Rep 437, 451 (Rix LJ, dissenting, upholding Colman J). 126 The Glenochil [1896] P 10, 16 (Sir Francis Jeune); Gosse Millerd, 232 (Lord Hailsham LC); Minnesota, 480–1 (Macfarlan J); Chubu Asahi Cotton Spinning Co Ltd v The Ship Tenos (1968) 12 FLR 291, 299–300 (Macfarlan J); Matej, 14–5. 127 Gosse Millard v Canadian Government Merchant Marine Ltd [1928] 1 KB 717, 749 (Greer LJ, dissenting) upheld in by the House of Lords in Gosse Millerd.


21

‘insufficiency of packing’. Contrary to normal practice,128 the cargo was not packaged to withstand

the ordinary hazards which are likely to be encountered during transit.129 Where that cargo is tea

being transported by container shipping, the ordinary hazards are odour and moisture.130 Here, the tea

was merely packaged in ‘jute bags’,131 made of natural fibres, easily permeable by air and moisture.

E. RESPONDENT CANNOT SET OFF ANY AMOUNT IT IS ENTITLED TO WITH RESPECT TO THE CARGO

CLAIM AGAINST ANY DAMAGES AWARDED TO CLAIMANT UNDER THE CLAIM

66. Any entitlement established under the Cargo Claim cannot be set off against CLAIMANT’s entitlement

to damages under the Claim. This is because RESPONDENT’s entitlement arising from cargo damage

has no connection to, and does not directly impeach, either the claim for damages arising from the

hull fouling or the late re-delivery of the Vessel.132 As such, it is not manifestly unjust to require

separate satisfaction of any entitlements made out under the Claim and Counterclaim.

IV. CLAIMANT IS NOT LIABLE TO ACCOUNT FOR OVERPAID HIRE

67. CLAIMANT, as the owner of the Vessel, has a prima facie right to be paid hire.133 As an off-hire clause

provides for derogation from this right, RESPONDENT has the burden of establishing its entitlement to

any hire paid.134 Accordingly, any ambiguity must be resolved in favour of CLAIMANT.135

68. RESPONDENT cannot rely on Clause 17 to seek restitution of overpaid hire, or alternatively damages,

because the Vessel was never off-hire pursuant to Clause 17 (A). Additionally, CLAIMANT is not liable

to account for overpaid hire pursuant to Clause 44 of the Omega Rider Clauses (B). Finally, to the

128 Carver, 416 [5-078]; Silver v Ocean Steam Ship Co [1931] 1 KB 416, 52 (Scrutton LJ); CV Sheepvaartonderneming Ankergracht v Stemcor (Australasia) Pty Ltd [2007] FCAFC 77, [2007] 1 Lloyd’s Rep Plus 68 (Full Court of the Federal Court of Australia) [117] (Ryan and Dowsett JJ), [281]–[283] (Rares J). 129 Carver, 416 [5-078]. 130 German Insurance Association, ‘Cargo Information for Tea’ (Web page, 2019) <http://www.tisgdv.de/tis_e/ware/gen uss/tee/tee.htm>. 131 Record 46–7. 132 Federal Commerce and Navigation Co Ltd v Molena Alpha Inc [1978] 2 Lloyd’s Rep 132, 140–1 (Lord Denning MR) (‘The Nanfri’); see also, The Aries, 337 (Lord Wilberforce); Geldof Metaalconstructie NV v Simon Carves Ltd [2011] 1 Lloyd’s Rep 517, 527–8 [43] (Rix LJ); Bibby Factors Northwest Ltd v HFD Ltd [2016] 1 Lloyd’s Rep 517, 522–3 [34]–[37] (Clarke LJ), 526 [61] (Kitchin LJ), 526 [62] (Laws LJ); Leon Corporation v Atlantic Lines & Navigation Co Inc [1985] 2 Lloyd’s Rep 470, 474 (Hobhouse J) (‘The Leon’). 133 Royal Greek Government v Minister of Transport [1948] 82 Lloyds Rep 196, 199 (Bucknill LJ) (‘The Illisos’); Mareva Navigation Co Ltd v Canaria Armadora SA [1977] 1 Lloyd’s Rep 368, 381 (Kerr J) (‘The Mareva AS’); Navigas International Ltd v Trans-Offshore Inc [1985] 2 Lloyd’s Rep 62, 81 (Hirst J) (‘The Bridgestone Maru’). 134 The Illisos, 199 (Bucknill LJ); The Mareva AS, 381 (Kerr J); The Bridgestone Maru, 81 (Hirst J). 135 The Illisos, 199 (Bucknill LJ); Hyundai Merchant Marine Co Ltd v Furness Withy (Australia) Pty [2006] 2 Lloyd’s Rep 175 (Rix LJ) (‘The Doric Pride’).


22

extent that CLAIMANT is found liable to account for overpaid hire, RESPONDENT is not entitled to set

off that amount against any sums for which RESPONDENT is found to be liable to CLAIMANT (C).

A. CLAIMANT is not liable to account for overpaid hire pursuant to Clause 17 of the NYPE 2015

69. CLAIMANT is not liable to account for overpaid hire pursuant to Clause 17 of the NYPE 2015 because

RESPONDENT cannot establish that the full working of the Vessel was prevented (i). In the alternative,

RESPONDENT cannot establish that the full working of the Vessel was prevented by a cause or event

within the scope of Clause 17 (ii).

(i) RESPONDENT cannot establish that the full working of the Vessel was prevented

70. In order to demonstrate that a vessel is off-hire, a charterer must first establish that the full working

of the vessel was prevented.136 Specifically, RESPONDENT must establish that the Vessel was

prevented from performing the next operation that the charter service required of her.137

71. Here, in view of the conflicting accounts as to the condition of the crew, RESPONDENT has failed to

establish that the Vessel was unable to perform her next operation, namely proceeding to berth.138 At

the time of inspection, only a few crew members had a minor cold.139 Even if Port State Control had

found a number of crew members with a high fever,140 the Vessel still remained capable of berthing.

(ii) In the alternative, RESPONDENT cannot establish that the full working of the Vessel was

prevented by a cause or event within the scope of Clause 17

72. Even if RESPONDENT can establish that the full working of the Vessel was prevented, it cannot

establish that the full working of the Vessel was prevented by ‘a deficiency of officers’ (a), ‘detention

by Port State control […] for Vessel deficiencies’ (b), or by ‘any other similar cause’ (c).

a. The full working of the Vessel was not prevented by ‘a deficiency of officers’

73. To rely on this off-hire event, RESPONDENT must show that there was a ‘numerical insufficiency’ of

136 The Mareva AS, 382 (Kerr J); Actis Co Ltd v The Sanko Steamship Co Ltd [1982] 1 Lloyd’s Rep 7, 9 (Lord Denning MR) (‘The Aquacharm’); Andre & Cie SA v Orient Shipping (Rotterdam) BV [1997] 1 Lloyd’s Rep 139, 141 (Rix J) (‘The Laconian Confidence’). 137 Sig Bergesen DY & Co v Mobil Shipping and Transportation Co [1993] 2 Lloyd's Rep 453, 459 (Staughton LJ) (‘The Berge Sund’); TS Lines Ltd v Delphis NV [2009] 2 Lloyd’s Rep 54, 57 (Burton J) (‘The TS Singapore’). 138 Record 24. 139 Ibid. 140 Ibid.


23

officers such that the full working of the Vessel was prevented.141 Here, this standard is not met

irrespective of whether the extent of illness upon inspection was two crew members with a minor

cold,142 as was the case, or a number of crew members with a high fever, as RESPONDENT alleges.143

b. The full working of the Vessel was not prevented by ‘detention of the vessel by Port State

control […] for Vessel deficiencies’

74. Clause 17 of the NYPE 2015 refers to ‘detention of a vessel by Port State control […] for Vessel

deficiencies’. This off-hire event did not appear in prior versions of the NYPE, and accordingly there

is limited guidance as to its construction. However, the NYPE 2015 Explanatory Notes state that the

event now expressly covers ‘Vessel deficiencies discovered as a result of the ship being inspected by

Port State control that lead to the ship being detained’.144 This suggests the amendment covers

detention pursuant to established Vessel deficiencies, as opposed to preventative quarantine measures

aimed at restricting the spread of potential disease, whether or not its presence has been confirmed.

75. Here, it was not established that the Vessel was deficient at any time while detained. Port State

Control initially detained her for inspection, motivated by the ‘fear [that] crew members may be

carrying [Ebola]’,145 and not because of any known deficiency. Further, no evidence has been

adduced that any of the crew were later found with Ebola. Rather, it appears the quarantine was a

preventative measure, a view supported by the Vessel later gaining free pratique without any issues.146

c. The detention of the Vessel by Port State Control did not constitute ‘any other similar

cause preventing the full working of the Vessel’

76. Prior cases considering whether the conduct of authorities amounted to an off-hire event required a

determination of whether that conduct amounted to ‘any other cause preventing the full working of

the Vessel’.147 This phrase, which was included in versions of the NYPE prior to the NYPE 2015,

141 The Ilissos, 199–200 (Bucknill LJ). 142 Record 24. 143 Ibid. 144 BIMCO, Singapore Maritime Foundation (SMF) and Association of Shipbrokers and Agents (ASBA), ‘NYPE 2015 Explanatory Note’ (2018) 16. 145 Record 25. 146 Record 81, Procedural Order No. 2 [7]. 147 The Aquacharm, 10 (Griffiths LJ); The Laconian Confidence, 150–1 (Rix J).


24

was construed eiusdem generis; that is, its scope was limited to causes similar in nature to those

expressly listed.148 The NYPE 2015 includes an amended version of this phrase, specifically, ‘by a

similar cause preventing the full working of the Vessel’. The amendment amounts to an express

adoption of the eiusdem generis construction employed when interpreting ‘any other cause’.149

77. It is not clear from cases dealing with prior versions of the NYPE off-hire clause that detention based

on suspected crew illness falls within the scope of ‘any other cause’, when construed eiusdem generis.

By extension, it is not clear that such illness falls within the scope of ‘any other similar cause’. In The

Apollo,150 a vessel was found to have been off-hire while detained for inspection. However, ‘any other

cause’ was not construed eiusdem generis, due to the inclusion of ‘whatsoever’ after ‘any other

cause’.151 In any event, The Apollo can be distinguished because the crew members in that case were

diagnosed with typhus at an earlier port and the remaining crew members were exposed to the disease.

B. CLAIMANT IS NOT LIABLE TO ACCOUNT FOR OVERPAID HIRE PURSUANT TO CLAUSE 44 OF THE

OMEGA RIDER CLAUSES

78. Clause 44 of the Omega Rider Clauses provides that, in the event that the Vessel is quarantined

following unauthorised contact with an infected area by her Master, Officers, or crew, any time lost

as a result may be deducted as off-hire.152 The operation of Clause 44 is contingent on RESPONDENT

establishing three elements: first, there must be an ‘infected area’; second, the Master, Officers or

crew of the Vessel must have had communication with the infected area, or its shore; and third, the

contact with the infected area must have occurred without the written consent of the charterers. There

are ambiguities concerning each element, and these must be resolved in favour of CLAIMANT.153

79. First, it is unclear from reports noting only ‘several’ cases of Ebola, that West Coast was ‘an infected

148 CA Venezolana De Navegacion v Bank Line [1987] 2 Lloyd’s Rep 498, 507 (Webster J) (‘The Roachbank’); The Laconian Confidence, 150–1 (Rix J); Cosco Bulk Carrier Co Ltd v Team-Up Owning Co Ltd [2011] 1 Lloyd’s Rep 187, 192–4 (Gross J) (‘The Saldanha’). 149 Carver, 768-9 [7-706]. 150 Sidermar SpA v Apollo Corporation [1978] 1 Lloyd’s Rep 200, 205 (Mocatta J) (‘The Apollo’). 151 Ibid. 152 Record 9. 153 The Illisos, 199 (Bucknill LJ); The Doric Pride, 179 (Rix LJ).


25

area’ prior to the Vessel’s departure.154 Second, since loading is traditionally carried out by

stevedores, the crew may have had no communication with the infected area or shore.155 Third, any

contact with West Coast would likely have occurred in the course of loading cargo for the voyage to

Wahanda and, accordingly, with RESPONDENT’s written consent.156

C. RESPONDENT CANNOT SET OFF ANY AMOUNT IT IS ENTITLED TO WITH RESPECT TO THE OVERPAID

HIRE AGAINST ANY DAMAGES AWARDED TO CLAIMANT UNDER THE CLAIM

80. Any entitlement established to overpaid hire cannot be set off against CLAIMANT’s entitlement to

damages under the Claim. Pursuant to the principles outlined above at [66], RESPONDENT’s

entitlements here would not impeach CLAIMANT’s entitlement to damages arising from hull fouling

or late re-delivery.157 As such, it is not manifestly unjust to require separate satisfaction of any

entitlements under the Claim and Counterclaim.

REQUEST FOR RELIEF

81. For the reasons set out above, CLAIMANT requests that the Tribunal:

(a) award CLAIMANT damages in the amount of USD15,426,567.42 comprising:

i. USD41,000 for hull cleaning costs;

ii. USD55,567.42 for the costs of the voyage to South Island to perform hull cleaning;

iii. USD15,330,000 for the loss of hire under the Next Fixture due to late re-delivery;

(b) award CLAIMANT interest on all sums found to be due pursuant to section 49 of the Arbitration

Act 1996 (UK);

(c) declare that RESPONDENT is not entitled to any indemnity with respect to the Cargo Claim, or the

USD375,000 it seeks in relation to the overpaid hire; and

(d) declare that RESPONDENT is not entitled to set off any entitlement under the Counterclaim against

CLAIMANT’s entitlement under the Claim.

154 Record 22. 155 Coghlin, 353 [20.2]. 156 Record 3–4. 157 Above n 132.

Documents

TWENTIETH ANNUAL INT 2019 M MORANDUM FOR CLAIMANT€¦ · twentieth annual international maritime law arbitration moot 2019 memorandum for claimant the university of sydney team 22