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20th ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT

In the matter of an arbitration under the Arbitration Act 1996

Between

PANTHER SHIPPING INC

CLAIMANT / Owners

- and -

OMEGA CHARTERING LIMITED

RESPONDENT / Charterers

MEMORANDUM FOR CLAIMANT

Counsel for CLAIMANT

TEAM 02

UNIVERSITY OF VERSAILLES · PARIS SACLAY

Houda NAJI · Nicoleta IFTODI · Eyram APETOGBOR · Leonte READ


II

TABLE OF CONTENT

INDEX OF ABBREVIATIONS ........................................................................................................................ IV

INDEX OF AUTHORITIES ............................................................................................................................... V

STATEMENT OF FACTS .................................................................................................................................. 1

I. THE ARBITRAL TRIBUNAL HAS JURISDICTION TO RULE OVER THE CLAIMS ................... 3

A. The applicable law to the arbitral proceedings ...................................................................................... 3

1. English law applies to the Charterparty................................................................................................ 3

2. The Arbitration Act 1996 and the London Maritime Arbitration Association Terms 2017 govern

the arbitral proceedings according to the Charterparty ............................................................................... 4

B. The Arbitral Tribunal is competent pursuant to Clause 80 of the Charterparty ............................... 5

1. The Arbitral Tribunal is competent over the claims ............................................................................. 5

2. The Arbitral Tribunal is regularly constituted ..................................................................................... 5

C. The Arbitral Tribunal does not have jurisdiction to hear the Cargo Claim under the Bill of Lading

6

D. Cargo Claim is time-barred ..................................................................................................................... 6

1. Inter-Club NYPE Agreement 1996 governs the Cargo Claim between the Parties ............................ 6

2. Cargo damage allegation is time-barred pursuant to the ICA ............................................................. 7

II. ALTERNATIVELY, RESPONDENT IS NOT LIABLE FOR THE DAMAGE CAUSED TO THE

CARGO ................................................................................................................................................................. 8

A. Cargo Claim does not arise out of unseaworthiness and/or error or fault in navigation or

management of the vessel ................................................................................................................................. 8

1. The vessel was seaworthy ...................................................................................................................... 9

2. Cargo damage was not caused by error or fault in the navigation or management of the Vessel ... 10

B. Cargo damage would fall under Clause 8(b) of the ICA ................................................................. 11


III

III. RESPONDENT FAILED TO PERFORM HULL CLEANING PRIOR TO RE-DELIVERY ....... 12

A. The right to attempt a lump sum offer is granted upon RESPONDENT being prevented to carry

Hull Cleaning .................................................................................................................................................. 12

B. The quotation of North Titan does not relieve RESPONDENT from its obligation to perform Hull

Cleaning ........................................................................................................................................................... 13

1. CLAIMANT did not reject RESPONDENT’s offer to have the Vessel’s hull cleaned at North Titan

14

2. The quotation of North Titan is not accurate ..................................................................................... 15

C. RESPONDENT is liable for all direct and indirect costs as a result of the Vessel’s defouling after

late re-delivery ................................................................................................................................................ 16

1. RESPONDENT was aware of the consequences of re-delivering the Vessel dirty ........................... 16

2. RESPONDENT cannot limit their liability for the cleaning cost to USD33,000 .............................. 17

D. RESPONDENT was never relieved from its obligation to perform Hull Cleaning .......................... 18

1. Evidence of the Parties’ intention or willingness to make a new binding contract upon Hull

Cleaning ....................................................................................................................................................... 18

2. CLAIMANT withdrew their acceptance upon new agreement as respondent did not arrange

inspection ..................................................................................................................................................... 19

IV. CLAIMANT IS ENTITLED TO CLAIM DAMAGES FOR LATE RE-DELIVERY AND LOSS

OF HIRE ............................................................................................................................................................. 19

A. RESPONDENT failed to comply with its obligation of re-delivery under the Charterparty .......... 20

1. RESPONDENT failed to re-deliver the Vessel prior to the expiry of the maximum period of the

Charterparty ................................................................................................................................................. 20

2. Alternatively, RESPONDENT cannot trigger the off-hire clause ..................................................... 22

B. CLAIMANT is entitled to claim loss of hire ........................................................................................ 24

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


IV

INDEX OF ABBREVIATIONS

BIMCO Baltic and International Maritime Council

Cargo A cargo of 1720 x 5mt of English breakfast tea in bags on board of

the Vessel

Charterparty The time Charterparty between CLAIMANT and RESPONDENT

CLAIMANT Panther Shipping Inc

Comm Commercial Court

EWHC England and Wales High Court (or, High Court of Justice in

England)

FHS Final Hire Settlement

Ibid. Ibidem

ICA Inter-Club NYPE Agreement (1996)

LMAA Terms London Maritime Arbitration Association Terms (2017)

Next Fixture Charterparty between Panther Shipping Inc and Champion

Chartering Corp

NYPE 2015 New York Produce Exchange (2015)

Parties CLAIMANT and RESPONDENT

p. / pp. Page / pages

RESPONDENT Omega Chartering Limited

Vessel M/V Thanos Quest


V

INDEX OF AUTHORITIES

CASE LAW

Case Law Quoted on page:

A.

Adamastos Shipping v Anglo Saxon Petroleum, [1959] A.C. 133 13

Africa Express Line Ltd v Socofi S.A., [2009] EWHC 3223 (Comm) 6

Arnold v Britton, [2015] UKSC 36 23

Astra Trust Ltd v Adams and Williams, [1969] 1 Lloyd’s Rep. 81 19

Asty Maritime Co Ltd and Panagiotis Stravelakis v Rocco Giuseppe & Figli,

S.N.C. And Others (the “Astyanax”), [1985] 2 Lloyd’s Rep. 109

19

B.

Bank Line Ltd v Arthur Capel and Co, [1919] A.C. 435 23

C.

Cable & Wireless plc v IBM United Kingdom Ltd, [2002] EWHC 2059 14

Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, 1 A.C. 1101 23

Comptoir Commercial Anversois v Power Son and Co, [1920] 1 K.B. 868 13

D.

Davis Contractors Ltd v Fareham Urban District Council, [1956] UKHL 3 23

Delaware North Marine Experience Pty Ltd v The ship “eye-spy”, [2017]

FCA 708

21

G.

Golden Ocean v Salgaocar Mining, [2012] 1 Lloyd’s Rep. (C.A.) 542 16

Golden Strait Corp v Nippon Yusen Kaisha (the “Golden Victory”), [2005] 2

Lloyd’s Rep. 23

17


VI

H.

Habton Farms v Nimmo, [2004] QB 1 19

Hackney Borough Council v Dore, [1922] 1 K.B. 431 22

Hussey v Horne-Payne HL, [1879] 4 App Cas 311 19

Hyundai Merchant Marine Co Ltd v Karander Maritime Inc (the “Niizuru”),

[1996] 2 Lloyd’s Rep. 66

21

Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd, [2006] 236

ALR 115

8

I.

IMT Shipping and Chartering GmbH v Changsung Shipping Company Limited

(the “Zenovia”), [2009] EWHC 739 (Comm)

21, 25

Ipsos SA v Dentsu Aegis Network Ltd (formerly Aegis Group Plc), [2015]

EWHC 1726 (Comm)

7

Italian State Railways v Mavrogordatos, [1919] 2 K.B. 305 21

J.

J. Lauritzen A.S. v Wijsmuller B.V. (the “Super Servant Two”), [1990] 1 Lloyd’s

Rep. 1

24

K.

Koufos v C. Czarnikow Ltd (the “Heron II”), [1969] 1 A.C. 350 16

L.

Laminates Acquisitions v BTR Australia Limited, [2004] 1 All ER (Comm) 7

Lidgett v Williams, [1845] 14 L.J. Ch. 459 18

M.


VII

Maestro Bulk Ltd v Cosco Bulk Carrier Ltd (the “Great Creation”), [2014]

EWHC 3978 (Comm)

21

Martrade Shipping & Transport GmbH v United Entreprises Corporation (the

“Wisdom C”), [2014] EWHC 1884 (Comm)

20

Matsoukis v Priestman & Co, [1915] 1 K.B. 681 22

McFadden v Blue Star Line, [1905] 1 K.B. 697 10

Mercantile and General Reinsurance Co plc v London Assurance, 3 November

1989, unreported

6

Miramar Maritime Corp v Holborn Oil, [1984] A.C. 676 13

Morrison Steamship Co Ltd v Greystoke Castle, [1947] A.C. 265 24

N.

National Carriers Ltd v Panalpina (Northern) Ltd, [1981] A.C. 675 23

O.

Ocean Tramp Tankers Corporation v V/O Sovfracht (the “Eugenia”), [1964] 2

QB 226

20

P.

Pagnan SpA v Feed Products, [1987] 2 Lloyd’s Rep. 601 19

Petromec Inc Petro-Deep Societa Armamento Navi Appoggio Spa v Petroleo

Brasileiro SA, [2006] 1 Lloyd’s Rep. 121

14

R.

Reardon Smith Line Ltd v Yngvar Hansen-Tangen and Sanko SS & Co Ltd (the

“Diana Prosperity”), [1976] 1 WLR 989

23

Rodocanachi v Milburn, [1886] 17 QBD 316 6


VIII

Rossiter v Miller, [1873] 3 App Cas 1124 19

Royal Greek Government v Minister of Transport (the “Ilissos”), [1948] 82

Lloyd’s Rep. 196

22

S.

SBT Star Bulk & Tankers (Germany) GmbH & Co KG v Cosmotrade SA (the

“Wehr Trave”), [2016] EWHC 583 (Comm)

20

Silver Dry Bulk Co Ltd v Homer Hulbert Maritime Co Ltd, [2017] EWHC 44

(Comm)

5

Sim Chay Koon v NTUC Income Insurance Cooperative Ltd, [2016] 2 SLR 5

Shagang South-Asia (Hong Kong) Trading Co Ltd v Daewoo Logistics (the

“Shagang”) [2015] EWHC 194 (Comm)

3

SHV Gas Supply & Trading SAS v Naftomar Shipping & Trading Co Ltd Inc

(the “Azur Gaz”), [2006] 1 Lloyd’s Rep. 163

8

Stewart v Van Ommeren, [1918] 2 K.B. 560 21

Storer v Manchester City Council, [1974] 1 W.L.R. 18

Sulamerica CIA Nacional de Seguros SA and others v Enesa Engenharia SA and

others [2012] EWCA Civ 638

4

T.

The Clarence, [1850] 3 W Rob 283 24

The Concadoro, [1916] 2 A.C. 199 13

The Lady Gwendolen, [1965] 1 Lloyd’s Rep. 335 11

W.

Walford v Miles, [1992] 2 A.C. 128 14


IX

LEGISLATION

Legal Sources Full citation Quoted on page:

Arbitration Act 1996 Arbitration Act 1996 (of England), CHAPTER 23

[17th June 1996]

2, 3, 4, 5

Hague-Visby Rules The Hague Rules as Amended by the Brussels

Protocol 1968

9

ICA Inter-Club Agreement (as amended 1 September

2011) - UK P&I

2, 3, 4, 6, 7, 8, 9,

10, 11, 12

LMAA Terms London Maritime Arbitration Association Terms

2017

4, 5

NYPE 2015 Form New York Produce Exchange Form

Time Charter

6th November 1913

Amended 20th October 1921; 6th August 1931; 3rd

October 1946;

Revised 12th June 1981; 14th September 1993; 3rd

June 2015

3, 4, 16, 21, 22


X

DOCTRINE

Doctrine Cited as: Quoted on page:

ANWARI, NABIL

Seaworthiness in the context of the ISPS

Code and the relevant amendments to

SOLAS Convention 1974

World Maritime University, 2005

N. Anwari, Seaworthiness in the

context of the ISPS Code and the

relevant amendments to SOLAS

Convention 1974

9

BAUGHEN, SIMON

Shipping Law

6th Edition

Routledge, 2015

S. Baughen, Shipping Law 21

BLACKABY, NIGEL

PARTASIDES, CONSTANTINE

REDFERN, ALAN

HUNTER, MARTIN

Redfern and Hunter on International

Arbitration

6th Edition

Oxford University Press, 2015

N. Blackaby, C. Partasides, A.

Redfern, M. Hunter, Redfern and

Hunter on International Arbitration

3

BORN, GARY

International Arbitration: Law and

Practice

2nd Edition

Kluwer Law International, 2015

G. Born, International Arbitration 3

CHORLEY, ROBERT S

ET AL

Chorley & Giles’ Shipping Law

8th Edition

London: Financial Times/Pitman

Publishing, 1987

R. S. Chorley, Chorley & Giles’

Shipping Law

9


XI

COGHLIN, TERENCE

BAKER, ANDREW

KENNY, JULIAN

KIMBALL, JOHN

Time Charters

6th Edition

Informa Law from Routledge, 2008

T. Coghlin, A. Baker, J. Kenny, J.

Kimball, Time Charters

21

KENDALL-MARSDEN, SAM

GREEN, JAMIE

A review of off-hire clauses. Part one:

the NYPE form

Standard Club Review, June 2018

S. Kendall-Marsden, J. Green,

A review of off-hire clauses

21, 22

MACNEIL, IAIN

Uncertainty in commercial law

Edinburgh Law Review, 13 (1), 2009

I. MacNeil, Uncertainty in

commercial law

16

MANDARAKA-SHEPPARD,

ALEKA

Modern Maritime Law, Volume 2:

Managing Risks and Liabilities

3rd Edition


A. Mandaraka-Sheppard, Modern

Maritime Law

23

MCKENDRICK, EWAN

Force Majeure and frustration of

contract

2th Edition


E. McKendrick, Force Majeure and

frustration of contract

22


XII

SCHMITTHOFF, CLIVE M.

ADAM, JOHN

Schmitthoff’s Export Trade: The Law

and Practice of International Trade

9th Edition

London Steven & Sons, 1990

C. M. Schmitthoff, J. Adam, The Law

and Practice of International Trade

23

SCRUTTON, THOMAS EDWARD

MOCATTA, ALAN ABRAHAM

MUSTILL, MICHAEL J

BOYD, STEWART C

Scrutton on charterparties and bills of

lading

18th Edition

London: Sweet & Maxwell, 1978

T. E. Scrutton, Scrutton on

charterparties and bills of lading

9

VAN DEN BERG, ALBERT JAN

Yearbook Commercial Arbitration

Volume XXI

Kluwer, 1996

A.J. Van Den Berg, Yearbook

Commercial Arbitration

6


1

STATEMENT OF FACTS

A. The Parties and the Charterparty

1. Panther Shipping Inc (“CLAIMANT”), a Liberian company, is the owner of the M/V “THANOS

QUEST” (“Vessel”). The Vessel is registered under Antigua and Barbuda Flag. Omega Chartering

Limited (“RESPONDENT”) is a company based in Liechtenstein.

2. On 18 March 2016, CLAIMANT entered into a time charter trip (“Charterparty”) with

RESPONDENT, for a period of 50-55 days. Accordingly, RESPONDENT had to carry out a cargo of

1720 x 5mt of English breakfast tea bags (“Cargo”). On 29 March 2016, the Vessel was delivered

to RESPONDENT. On 20 April 2016, the Vessel departed West Coast and arrived at Wahanda

on 7 May 2016.

B. The Hull Cleaning

3. Under the Charterparty, RESPONDENT had a duty to arrange the Hull Cleaning of the Vessel prior

re-delivery. On 8 June 2016, RESPONDENT informed CLAIMANT that cleaning was not allowed by

Wahanda government, despite confirmation from Wahanda Port Services that several companies had

previously done Hull Cleaning.

4. After several emails, on 9 June 2016, the Parties agreed, contrary to the Charterparty, that CLAIMANT

will organize Vessel’s bottom cleaning. In return, RESPONDENT agreed to arrange inspection prior

to re-delivery and to take in charge the costs arising from such cleaning, against an original invoice.

5. On 18 June 2016, RESPONDENT announced that the Vessel would be re-delivered dirty and instead

offered to pay a lump sum as full and final settlement for Hull Cleaning. However, since there had

been no inspection, CLAIMANT rejected the amount offered and reminded RESPONDENT that Hull

Cleaning shall always be carried out prior to re-delivery, in respect of Clause 83(d). After that,

RESPONDENT maintained that it had no obligation to arrange neither inspection nor bottom cleaning

prior to re-delivery.


2

6. Finally, the Vessel’s hull was inspected and cleaned at South Island between 1st July 2016 and 3rd

July 2016, at a total cost of USD96,567.42. On 1st August 2016, CLAIMANT presented its Final Hire

Statement (“FHS”) to RESPONDENT who paid all amounts under the FHS, except the costs of

cleaning.

C. The late re-delivery and the loss of hire

7. Simultaneously, on 15 June 2016, CLAIMANT concluded an agreement with another charterer,

Champion Chartering Corp (“Champion”), for a duration of 4 years (“Next Fixture”), with a laycan

of 22-28 June 2016. The daily rate of hire was USD10,500. Due to the late re-delivery, the Vessel

missed the laycan and Champion cancelled the Next Fixture. Thus, CLAIMANT suffered damages for

loss of hire on an amount of USD15,330,000.00.

8. On 30 June 2016, the Vessel was re-delivered to CLAIMANT, namely 39 days exceeding the duration

of the Charterparty. Without any evidence, RESPONDENT claims that Wahanda Port Authority would

have quarantined the Vessel for at least 28 days, due to an alleged case of Ebola at the edge of the

Vessel. Contrary to what RESPONDENT contends, the Vessel was on-hire until the effective date

of re-delivery.

D. The Cargo Claim

9. On 27 June 2016, upon discharge of the Cargo at Wahanda, RESPONDENT alleged that part of the

Cargo was damaged. Nonetheless, Cargo Claim is time-barred as RESPONDENT failed to give written

notification of the Claim in accordance with clause 6 of the ICA. Alternatively, CLAIMANT denies

the application of clause 8(a) of the ICA, since the damage was not caused by unseaworthiness.

E. The arbitral proceedings

10. All these events left CLAIMANT with no choice but to file a Request for Arbitration, on 16 October

2018, in accordance with clause 80 of the Charterparty. On 30 October 2018, the Tribunal was

constituted pursuant to Arbitration Act 1996. The Parties have never objected the regularity of the

constitution of the Tribunal.


3

I. THE ARBITRAL TRIBUNAL HAS JURISDICTION TO RULE OVER THE CLAIMS

11. In accordance with the principle competence-competence, the Tribunal has power to determine its

own jurisdiction1 by construing the arbitration agreement according to its governing law2. Pursuant

to the laws governing the arbitral proceedings (A.), the claim raised by the CLAIMANT falls within

the scope of the Arbitral Tribunal’s jurisdiction (B.). However, the Tribunal does not have jurisdiction

to rule over the Cargo Claim (C.). In any case, this counterclaim is time-barred (D.).

A. The applicable law to the arbitral proceedings

1. English law applies to the Charterparty

12. In order to determine the applicable law to the arbitral procedure, parties may specify in their

agreement the seat of arbitration. Indeed, in the Shagang3 case, a presumption in favour of the

geographical location being the “seat” of arbitration was confirmed by the Court. In its decision, the

Court outlined: “the words ‘arbitration to be held in Hong Kong’ carried with it an implied choice of

Hong Kong as the seat of arbitration and, therefore, the curial law, given the close link which exists

between the place of arbitration and the procedure governing it”4. The designation of the seat of

arbitration is an implicit reference to the laws of that venue that will apply to the proceedings.

13. Moreover, the same criterion is retained by the NYPE 2015 Form5. Clause 54 designates the

applicable law to the proceedings according to the seat of arbitration chosen by the parties.

14. In the case at hand, the NYPE 2015 Form applies to the Charterparty6. Clause 80 of this Charterparty

provides: “Should any dispute arise between Owners and Charterers, the matter in dispute shall be

referred to three persons at London (…) English law to apply (…) The Contact (sic) to be construed

in accordance with English Law. Arbitration to be in London” 7. Thus, Parties have expressly chosen

1 Silver Dry Bulk Co Ltd v Homer Hulbert Maritime Co Ltd, [2017] EWHC 44 (Comm); N. Blackaby, C. Partasides, A.

Redfern, M. Hunter, Redfern and Hunter on International Arbitration, pp. 322, 345; Arbitration Act 1996, Section 30. 2 G. Born, International Arbitration, p.48. 3 Shagang South-Asia (Hong Kong) Trading Co Ltd v Daewoo Logistics (the “Shagang”), [2015] EWHC 194 (Comm). 4 Ibid.

5 NYPE 2015 Form, Clause 54. 6 IMLAM Problem Scenario V2, Charterparty, p.5.

7 IMLAM Problem Scenario V2, Charterparty, Article 80, p.15.


4

English law to apply to their agreement and specified London as the seat of arbitration. Therefore,

both arbitral procedure and the merits of the dispute are governed by English law.

2. The Arbitration Act 1996 and the London Maritime Arbitration Association

Terms 2017 govern the arbitral proceedings according to the Charterparty

15. The applicable law to an arbitration agreement may be determined by express reference within the

arbitration agreement itself8. In their Charterparty, Parties refer to the NYPE 2015 Form9. This Form

determines the applicable law to the arbitral proceedings regarding the seat of arbitration. Clause 54

provides: “(…) any dispute arising out of or in connection with this Charterparty shall be referred to

arbitration in London in accordance with the Arbitration act (…)”10.

16. In addition, this clause provides arbitration shall be conducted in accordance with the London

Maritime Arbitration Association Terms (“LMAA Terms”) current at the time when the arbitration

proceedings are commenced. Thus, generally, the Arbitration Act 1996 is the applicable law of the

arbitration in England, however the LMAA Terms are suitable to maritime disputes.

17. Indeed, according to LMAA Terms: “the arbitral proceedings and the rights and obligations of the

parties in connection therewith shall be in all respects governed by the [1996] Act save to the extent

that the provisions of the Act are varied, modified or supplemented by these Terms”11. The LMAA

Terms are whereof designed to apply in conjunction with the English Arbitration Act 1996.

18. In the present case, the seat of arbitration is in London and the lex arbitri is English law12. According

to clause 54 of NYPE 2015 Form, two regulations are applicable to the arbitral proceedings between

Parties: the Arbitration Act 1996 and the LMAA Terms. Moreover, the Parties’ choice of the

settlement procedure for small disputes according to the LMAA Terms proves that the both acts apply

in a complementary way13.

8 Sulamerica Cia Nacional De Seguros S.A. & Ors v Enesa Engenharia SA & Ors, [2012] EWCA Civ 638. 9 IMLAM Problem Scenario V2, Recap Fixture, p.5.

10 NYPE 2015 Form, Clause 54(b).

11 LMAA Terms, Paragraph 7(a). 12 IMLAM Problem Scenario V2, Charterparty, Article 80, p.15. 13 IMLAM Problem Scenario V2, Charterparty, Clause 102, p.18.


5

B. The Arbitral Tribunal is competent pursuant to Clause 80 of the Charterparty

1. The Arbitral Tribunal is competent over the claims

19. The general principle of competence-competence found that an arbitral tribunal has jurisdiction to

rule on its own jurisdiction, including any objections with respect to the existence or validity of the

arbitration agreement14.

20. In the case, Parties had already agreed to entrust any future dispute before an arbitral tribunal

according to Clause 80 of the Charterparty. Hence, the arbitration agreement gives prima facie

jurisdiction to the Arbitral Tribunal. In case of doubts or disputes, the Tribunal remains competent

to assess its own jurisdiction.

2. The Arbitral Tribunal is regularly constituted

21. According to LMAA Terms, a tribunal includes a sole arbitrator, a tribunal of two or more arbitrators,

and an umpire15. Section 15 of Arbitration Act 1996 provides that “unless otherwise agreed by the

parties, an agreement that the number of arbitrators shall be two or any other even number shall be

understood as requiring the appointment of an additional arbitrator as chairman of the tribunal”16.

Indeed, it is possible to compose an arbitral tribunal with only two arbitrators under the joint scheme

of the two regulations. It is also expected that the choice of a third arbitrator may be deferred in time.

22. In the case, under the terms of the Arbitration Clause 80, the dispute shall be referred to three persons

at London. CLAIMANT appointed Madam Mary Walker from Armada Street Arbitration Chambers17.

RESPONDENT appointed Captain Eric Masterson18. Therefore, on 30 October 2018, the Tribunal was

constituted by two arbitrators19. Though, the Arbitral Tribunal was constituted only by two arbitrators,

it does not impede the validity of its constitution. On 8 March 2019, the Tribunal indicated in its

Directions Order that: “before the hearing the Tribunal shall appoint a third arbitrator who shall be

14 Silver Dry Bulk Co Ltd v Homer Hulbert Maritime Co Ltd, [2017] EWHC 44 (Comm); Sim Chay Koon v NTUC Income

Insurance Cooperative Ltd, [2016] 2 SLR. 15 LMAA Terms, Paragraph 2(c). 16 Arbitration Act 1996, Section 15. 17 IMLAM Problem Scenario V2, p.59-60. 18 Ibid., p.62. 19 Ibid., p.63.


6

the chairman unless the parties shall agree otherwise”20. The Tribunal is therefore regularly

constituted, and the two arbitrators shall choose the third arbitrator during the pleadings.

C. The Arbitral Tribunal does not have jurisdiction to hear the Cargo Claim under the Bill

of Lading

23. The carrying of the goods in the case is governed by the Bill of Lading21. This act also regulates the

settlement of disputes between their parties. According to clause 3 of Bill of Lading “any dispute

arising under this Bill of Lading shall be decided in the country where the carrier has his principal

place of business, and the law of such country shall apply (…)”22.

24. The Charterparty and the Bill of Lading are two distinct documents which bind different parties:

owners (CLAIMANT) and Charterers (RESPONDENT) on the one hand, and Carrier (RESPONDENT)

and Merchant (Hawkeye Import & Export Pty) on the other hand. These contracts have a different

legal nature23. Unless the Bill of Lading refers to the arbitration clause, disputes arising from the

application of the Bill of Lading cannot be settled by a clause in the Charterparty24. Generally, an

arbitrator has no jurisdiction over a dispute between one or both of the parties and a third party25.

25. In the case at hand, the designated carrier on the Bill of Lading is RESPONDENT, which had the

commercial management of the vessel. There is no reference to the Charterparty in the Bill of Lading.

Therefore, the Arbitral Tribunal does not have jurisdiction to rule over Cargo Claim.

D. Cargo Claim is time-barred

1. Inter-Club NYPE Agreement 1996 governs the Cargo Claim between the Parties

26. The relationship between CLAIMANT and RESPONDENT is governed by the terms of the

Charterparty26. Under Clause 27 of the Charterparty and the Rider Clause 53, the Cargo Claim shall

be settled in accordance with the Inter-Club NYPE Agreement 1996 (“ICA”), as amended

20 IMLAM Problem Scenario V2, Directions Order from 8 March 2019, §6, p.2. 21 IMLAM Problem Scenario V2, Bill of Lading, p.47-49. 22 Ibid., Clause 3, p.48. 23 A.J. Van Den Berg, Yearbook Commercial Arbitration. 24 Africa Express Line Ltd v Socofi S.A., [2009] EWHC 3223 (Comm). 25 Mercantile and General Reinsurance Co plc v London Assurance, 3 November 1989, unreported. 26 Rodocanachi v Milburn, [1886] 17 QBD 316.


7

on 1st September 201127. The applicability of the ICA was also confirmed by the RESPONDENT in

its counterclaim submission28. Consequently, the Cargo damage allegations shall be settled in

accordance with the ICA.

2. Cargo damage allegation is time-barred pursuant to the ICA

27. Article 6 of the ICA provides that: “Recovery…by an owner or charterer shall be deemed to be waived

and absolutely bar red 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 (…) or the date the cargo should have

been delivered (…)”.

28. As stated above, written notification must be given to CLAIMANT as a condition precedent to the

admissibility of the Cargo Claim. The information about the Cargo damages delivered in several

emails (first one received on 27 June 2016)29, do by no means constitute the “written notification”

required by Clause 6 of the ICA. In the first emails CLAIMANT stated that the cargo was apparently

damaged and that a survey was scheduled. In the following emails, CLAIMANT even asked for several

extensions in order to formally notify the Cargo Claim30.

29. There is a clear difference between a simple notice (as the one emailed by the CLAIMANT) which

establishes damages and states the possibility of a claim being made, and a claim notice which

specifies the claim that is actually being made. The later document calls for an indication of the

underlying facts, events, circumstances, nature of the claim and amount claimed, as confirmed in the

Laminates Acquisitions31 case. English Court determined that purchaser had failed to give adequate

notice of claim.

30. Furthermore, in the Ipsos v. Aegis32 case, the claimant had 6 months to notify its claim to the other

party. Even though two “notification” letters were sent the Court held that they did not constitute a

claim notice since they lacked relevant information related to the claim being initiated. This case is a

27 IMLAM Problem Scenario V2, Charterparty, Clause 53, p.10. 28 Ibid., Defence and counterclaim submissions, p.71. 29 Ibid., p.38. 30 Ibid., p.57-58. 31 Laminates Acquisitions v BTR Australia Limited, [2004] 1 All ER (Comm). 32 Ipsos SA v Dentsu Aegis Network Ltd (formerly Aegis Group Plc), [2015] EWHC 1726 (Comm).


8

reminder of the importance of ensuring that notices, such as those under the ICA, are given in writing,

and are clear and unambiguous as a matter of best practice.

31. The provision of written notice is an essential condition precedent to the Cargo Claim submission and

must be demonstrated33.

32. In this case, two extensions were granted, however CLAIMANT failed to deliver a notification of

Cargo Claim. The mere fact that CLAIMANT asked for these extensions in order to notify the Cargo

Claim and that it did not undertake actions should be sufficient to prove it waived its right to claim

for Cargo damages. As a result, the Cargo allegations shall be deemed to be waived and absolutely

barred in accordance with article 6 of the ICA.

33. For Cargo Claim to prosper, CLAIMANT needs to prove its a loss, the basic reason for the claim, and

the essence of the request needs to be proven. If the CLAIMANT is saying that this party is responsible

for the Cargo damage, this damage must be correctly determined. The evidential force of a

notification of the cargo claim is consequently of great significance, the effect that article 6 of ICA

wants to give is precisely that of a descriptive notification of the Claim, not of the possibility of

initiating a Cargo Claim.

II. ALTERNATIVELY, RESPONDENT IS NOT LIABLE FOR THE DAMAGE CAUSED

TO THE CARGO

34. Alternatively, shall the Tribunal consider the Claim admissible, CLAIMANT failed to establish either

unseaworthiness or error under article 8(a) of the ICA (A.). Additionally, the alleged damage was not

correctly determined, CLAIMANT is responsible for Cargo damage (B.).

A. Cargo Claim does not arise out of unseaworthiness and/or error or fault in navigation

or management of the vessel

33 Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd, [2006] 236 ALR 115; SHV Gas Supply & Trading

SAS v Naftomar Shipping & Trading Co Ltd Inc (the “Azur Gaz”), [2006] 1 Lloyd’s Rep 163.


9

35. Article 8(a) of the ICA indicates that Cargo Claim “(…) shall be apportioned as follows: (a) Claims

in fact arising out of unseaworthiness and/or error or fault in navigation or management of the vessel:

100% Owners (…)”.

36. Neither unseaworthiness, error nor fault in navigation were configured nor proved by the

CLAIMANT, moreover there is not enough evidence and documentation to determine the amount of

the cargo that was damaged and the amount claimed by the receiver of the cargo.

1. The vessel was seaworthy

37. In the present case, the vessel was hired for a time charter trip to Bao Kingdom. Consequently, the

Hague-Visby Rules (“HVR”), as amended by the Brussels Protocol 1968, are applicable thus Bao

Kingdom closely resemble the laws of the Hong Kong34, which incorporated them.

38. Additionally, the Bill of Lading issued by the RESPONDENT incorporates the HVR by reference35.

Moreover, ICA indicates in its article 10 that the governing law is the English law. In this context,

HVR are also applicable.

39. In article 4 of the HVR is indicated that “neither the carrier nor the ship shall be liable for loss or

damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part

of the carrier to make the ship seaworthy”.

40. The seaworthiness is a standard to which the condition of a ship has to be measured, particularly,

before the beginning of a voyage36. English law defines seaworthiness regarding its fitness to

encounter the perils of the intended voyage and its ability to receive the type of cargo provided by the

charterers37. Under these circumstances, unseaworthiness cannot be configured. Thus, the due

diligence, a constitutive part of seaworthiness, was assured by the RESPONDENT38, as the alleged

incident occurred at the end of the voyage.

34 IMLAM Problem Scenario V2, Procedural Order No. 2, p.2. 35 Ibid., Bill of Lading, Clause 2, p.48. 36 Hague-Visby Rules, Article 3. 37 N. Anwari, Seaworthiness in the context of the ISPS Code and the relevant amendments to SOLAS Convention 1974, p.7;

R. S. Chorley, Chorley & Giles’ Shipping Law, pp.187-188. 38 See, T. E. Scrutton, Scrutton on charterparties and bills of lading.


10

41. This can be illustrated by McFadden v Blue Star Line39 case where the Tribunal established that “a

vessel must have that degree of fitness which an ordinary careful and prudent owner would require

his vessel to have at the commencement of her voyage having regard to all the probable circumstances

of it… If he would, the ship was not seaworthy…”.

42. The damage or the event which rendered the Vessel unseaworthy must have occurred during or before

the commencement of the voyage to be considered as that the unseaworthiness of the Vessel is a cause

of the damages to the cargo. Otherwise, it might not compromise the RESPONDENT’s liability.

43. This was confirmed as well in the McFadden v Blue Star Line40 case, in which the vessel’s ballast

tank was being filled with seawater and the crew attempted to close the seacock, but did not do so

effectively, the cargo was thus damaged. The damages took place after the goods were on board, so

they fell in the interval between the loading and sailing stages and did not therefore constitute a breach

of the warranty of seaworthiness.

44. As previously stated in the counterclaim submissions, the allegation is that the cargo was damaged

“(...) prior to leaving the berth at West Coast”41. Therefore, similar to what happened in McFadden

v. Blue Star Line, under these circumstances the Cargo damage cannot constitute a breach of the

warranty of seaworthiness.

2. Cargo damage was not caused by error or fault in the navigation or management

of the Vessel

45. HVR provides in its article 4 that “neither the carrier nor the ship shall be responsible for loss or

damage arising or resulting from: (a) Act, neglect, or default of the master, mariner, pilot, or the

servants of the carrier in the navigation or in the management of the ship”.

46. Additionally, there is no solid proof that Cargo damage was caused by error or fault in the navigation

or management of the Vessel, as stated under article 8(a) of the ICA. The only documentation

provided was a preliminary survey report that should be considered as inconclusive and unprecise.

39 McFadden v Blue Star Line, [1905] 1 KB 697. 40 McFadden v Blue Star Line, [1905] 1 KB 697. 41 IMLAM Problem Scenario V2, Defence and counterclaim submissions, p.72.


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RESPONDENT failed to present the full documentation in support for its allegations and the

Preliminary Survey submitted to this Tribunal is irregular.

47. On 30 June 2016, a Preliminary Survey was performed. However, the surveyor stated that it was

“only a preliminary report” and that it was “too early to say the likely quantum of the damage”42. The

Bill of Lading was not even provided to the surveyor, so it was not possible for the surveyor to know

the particularities of the Cargo43.

48. Alternatively, the acts of a master or its crew do not constitute a personal act of an shipowner, this

can be confirmed with The Lady Gwendolen44 case, where the master’s dangerous command of the

ship was insufficient to constitute a personal act of the shipowner. There is no evidence that either

the RESPONDENT, nor the master had knowledge of the supposed actions of the crew member in

regards to the opening of the valve.

49. Therefore, according to article 4 of the HVR this party may limit its liability. In case the Arbitral

Tribunal will consider otherwise, there is not enough evidence to proof that CLAIMANT acted out of

neglect, error or fault in the management of the Vessel.

B. Cargo damage would fall under Clause 8(b) of the ICA

50. As indicated by the CLAIMANT in its Counterclaim Submissions, Clause 8(b) of the ICA could be

applicable, this Clause provides that: “Claims arising out of the loading, stowage, lashing, discharge,

storage or other handling of cargo: 100% Charterers”.

51. In a London Arbitration45 case where the charter was on a NYPE form for a time charter trip and

clause 8 of NYPE was amended and read inter alia: “Charter are to load, stow and discharge the

cargo at their risk and expense but always understood these operations remain under the supervision

and direction and responsibility of the Captain.” The Tribunal considered that the reference to “risk”

in clause 8 meant that liability for loss or damage arising out of cargo operations would rest with the

42 IMLAM Problem Scenario V2, Preliminary Survey report, p.46. 43 Ibid., Procedural Order No.2, Point 9, p.2. 44 The Lady Gwendolen, [1965] 1 Lloyd’s Rep. 335. 45 London Arbitration 17/84 (LMLN 128).


12

charterers, and the reference to the supervision, direction and responsibility of the master was simply

to confirm the master’s right to supervise, direct and be responsible for cargo operations. Indeed, the

words “risk” and “responsibility” cancelled each other out and therefore the charterer was

responsible.

52. If the alleged damages occurred prior leaving the berth at West Coast, it means that it was during the

discharging stage. In such case, clause 8(b) of the ICA allocates 100% of the responsibility on

CLAIMANT. Even if we can find the word “responsibility” added to clause 8, there is a contradiction

though the word “risk” wasn’t amended and is used in the same sentence; consequently, CLAIMANT

is responsible for the Cargo damages.

III. RESPONDENT FAILED TO PERFORM HULL CLEANING PRIOR TO RE-

DELIVERY

53. Pursuant to Clause 83(d) of the Charterparty, Hull Cleaning shall always be carried out prior to

re-delivery by RESPONDENT46. Further, the Charterparty indicates that if RESPONDENT is

prevented, CLAIMANT and RESPONDENT shall agree on a lump sum prior to, but latest on re-

delivery. In this case, RESPONDENT failed to perform Hull Cleaning without being prevented from

it and offered to make a lump sum payment47(A.). Simultaneously, CLAIMANT did not reject the

quotation of North Titan, but only considered the lump sum amount not generous (B.). Consequently,

RESPONDENT is liable for all costs resulting from defouling after re-delivery (C.).

A. The right to attempt a lump sum offer is granted upon RESPONDENT being prevented

to carry Hull Cleaning

54. Clause 83(d) of the Charterparty indicates that cleaning should be carried out prior to re-delivery and

“if nevertheless, Charterers are prevented”, parties shall agree on a lump sum payment48.

46 IMLAM Problem Scenario V2, Charterparty, Clause 83 (c), p.16. 47 Ibid., Email 9 June 2016, p.28. 48 Ibid., BIMCO Clause 83(d), p.16.


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55. As a matter of fact, when the parties incorporate standard clauses into their charter, it is presumed

that they intend these standard terms to receive the same interpretation as in any other case and with

accordance with business common sense49.

56. In Comptoir Commercial Anversois50 case, the Court of Appeal held that “prevention” meant either

physical or legal event preventing obligation performance. This principle was framed restrictively in

The Concadoro51 case. In that matter, the Court of Appeal held that a ship’s Master was not restrained

by circumstances, when he was unable to leave port because he had not been provided with sufficient

funds to do so.

57. In this case, RESPONDENT claims it was prevented from arranging Hull Cleaning because the

government of Wahanda did not allow underwater cleaning jobs due to the dirty water52. Whereas

valid information from Wahanda port services confirm that “companies did this work before”53.

RESPONDENT did not try to reach out to all the companies who performed Hull Cleaning at

Wahanda54. In addition, RESPONDENT was aware that cleaning arrangements prior to re-delivery

was possible at North Titan, but chose to re-deliver the Vessel dirty55.

58. No other indications of any interposing obstacles that would make arranging Hull Cleaning difficult

to overcome prior to re-delivery are present in this case. In fact, RESPONDENT barely tried to arrange

Hull Cleaning prior to re-delivery. Therefore, it shall not be considered as prevented from arranging

Hull Cleaning at Wahanda. Consequently, RESPONDENT was not eligible to the option of offering a

lump sum payment in full and final settlement, according to Clause 83 (d).

B. The quotation of North Titan does not relieve RESPONDENT from its obligation to

perform Hull Cleaning

49 Miramar Maritime Corp v Holborn Oil, [1984] A.C. 676; Adamastos Shipping v Anglo Saxon Petroleum, [1959] AC

133. 50 Comptoir Commercial Anversois v Power Son and Co, [1920] 1 K.B. 868. 51 The Concadoro, [1916] 2 A.C. 199. 52 IMLAM Problem Scenario V2, Email 8 June 2016, from Brokers to Managers, p.29. 53 Ibid., First email 25 May 2016, from Wahanda Port Services to Omega Chartering, p.26. 54 Ibid., Second email 25 May 2016, from Wahanda Port Services to Omega Chartering, p.26. 55 Ibid., Email 30 June 2016, from Brokers to RESPONDENT, p.42.


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1. CLAIMANT did not reject RESPONDENT’s offer to have the Vessel’s hull cleaned

at North Titan

59. Clause 83 of the Charterparty indicates that cleaning should take place on RESPONDENT expenses

prior to re-delivery56.

60. In the Walford v Miles57 case, the House of Lords held that an agreement to negotiate in good faith

was not generally enforceable under English law. Recently this approach was softened by the Court

of Appeal in the Petromec v Petroleo58 judgement. The tribunal would have been inclined to find the

obligation enforceable, if the three objections usually raised about enforceability were found to be

true: (i) the possibility to establish clearly what the additional costs would be; (ii) the Tribunal should

examine if the withdraw from negotiations was due to bad faith, based on the fact, (iii) the possibility

to establish what loss would have been. The same inclination is reflected in the Cable & Wireless59

case. In fact, a party would be in breach of its obligation only if it refused to participate in the

prescribed procedure.

61. In this case, RESPONDENT offered a lump sum for the Hull Cleaning in full and final settlement.

However, the amount of lump sum was based on a quotation from Titan Shipbuilder60. RESPONDENT

refused to arrange inspection after CLAIMANT’s several requests even that “from evidence available

as to the extent of fouling both above and below water line”61. CLAIMANT also rejected the lump

sum amount because the cost of cleaning varies according to the extent of fouling62. In the absence

of an inspection the cost would be predictable.

62. By an email dated 26 June 2016, CLAIMANT notified to RESPONDENT the Vessel’s next voyage “to

load East Coast range” 63. One day later, RESPONDENT informed CLAIMANT that Hull Cleaning

56 Ibid., Charterparty, Clause 83(d), p.16. 57 Walford v Miles, [1992] 2 A.C. 128. 58 Petromec Inc Petro-Deep Societa Armamento Navi Appoggio Spa v Petroleo Brasileiro SA, [2006] 1 Lloyd’s Rep. 121. 59 Cable & Wireless plc v IBM United Kingdom Ltd, [2002] EWHC 2059. 60 IMLAM Problem Scenario V2, Email 22 June 2016, from RESPONDENT to Titan Shipbuilders, p.36; Email 27 June

2016, from Brokers to Brokers, p.39; In addition, Quotation from Titan Shipbuilders, p.37. 61 Ibid., Email 29 June 2016, from Brokers to RESPONDENT, p.43. 62 Ibid., Email 9 June 2016, from Brokers to Brokers, p.28. 63 Ibid., Email 27 June 2016, from Brokers to RESPONDENT, p.39.


15

was possible at North Titan and CLAIMANT should arrange it there. Then, RESPONDENT offered a

lump sum for the Hull Cleaning in full and final settlement based on a quotation from Titan

Shipbuilders64. It is noteworthy that the quotation is based only on the Vessel’s description and does

not take in consideration the extent of the fouling65.

63. For that very reason, RESPONDENT cannot order CLAIMANT to perform Hull Cleaning at North

Titan while the Vessel is still under RESPONDENT’s hire. RESPONDENT promised “if Owners are

sailing north we can arrange cleaning at North Titan port”66. Therefore, it cannot create any new

obligations on CLAIMANT under the existent Charterparty.

64. In conclusion CLAIMANT did not reject the suggestion of cleaning the Vessel at North Titan but only

rejected the lump sum amount offer “Chtrs offer is not generous”67. In overall, CLAIMANT was not

entitled to the RESPONDENT offer to have the Vessel’s hull cleaned at North Titan port.

2. The quotation of North Titan is not accurate

65. The two quotations, from South Island Port Agency and Titan Shipbuilders, concern Vessel bottom

cleaning and the polishing of the propellers. The estimate quotation by Titan Shipbuilders at North

Titan port indicates the cost of USD25,000.00 for the realization of the work quoted above but only

in working days. Other fees are added for pilotage, tuggage and agency fees, all at the cost of

USD8,000.00.

66. Considering the Master’s note about the Vessel being heavily fouled, Titan Shipbuilders should have

been invited to clarify the job related to cleaning of bootoping above water level 4m68. It should be

noted that the Vessel’s fouling condition was severally aggravated as time passed by69.

67. The quotation delivered from South Island port Agency, indicates the cost of USD41,000.00. This

amount was meant to cover the realization of a similar work as Titan Shipbuilders would provide,

64 Ibid., Email 27 June 2016, from Brokers to Brokers, p.39. 65 Ibid., Email 22 June 2016, from RESPONDENT to Titan Shipbuilders, p.36. 66 Ibid., Email 26 June 2016, from Brokers to RESPONDENT, p.34; Email 23 June 2016, from Titan Shipbuilders to

RESPONDENT, p.35. 67 Ibid. 68 IMLAM Problem Scenario V2, Titan Shipbuilders Quotation, p.37. 69 Ibid., Email 26 June 2016, from Brokers to RESPONDENT, p.34.


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together with the cleaning of the raised portion of the hull which is 4 meters above the water level of

the line of fouling along the entire length of the ship on both sides. In addition, the South Island port

Agency will carry the work during the weekend too70.

68. In fact, the invoice provided by South Island port estimated USD30,000.00 as the cost of defouling

the Vessel at first. But later, it was joined by a statement of the Vessel disbursement adding

USD11,000.00 to the original cost for all the extrawork the defouling required. The Titan Shipbuilders

based their quotation on abstract descriptions of the Vessel’s ignoring the situation of the Vessel and

how bad the fouling was. The estimation of the work required for defouling is not accurate71.

C. RESPONDENT is liable for all direct and indirect costs as a result of the Vessel’s

defouling after late re-delivery

69. Clause 1(d), paragraph 2, of the NYPE 2015 form, indicates that Charterers shall indemnify the

Owners “for any loss, damage, costs, expenses or loss of time, including any underwater inspection

required by class, caused as a consequence of the Vessel lying aground at the Charterers’ request”.

In addition, clause 4(a) of the same text states that “the vessel shall be re-delivered to the Owners in

like good orders and condition ...”.

1. RESPONDENT was aware of the consequences of re-delivering the Vessel dirty

70. In the Heron II72 case, it was set that under a charterparty the parties have the opportunity to anticipate

certain breaches and can estimate in advance the damage that they will cause. However, this advance

planning is not possible under some circumstances such as negligence.

71. The importance of certainty and predictability in commercial transactions is without any doubt

crucial73. Lord Bingham set, in the Golden Victory74 case, that if the party breaching the contract was

aware of the consequences, she would have promptly honoured her obligation to pay damages.

70 Ibid., Invoice by South Island Port Agency, p.50; See also, Statement of Vessel Disbursemen, p.51. 71 Ibid., Invoice by South Island Port Agency, p.50. 72 Koufos v C. Czarnikow, Ltd (the “Heron II”), [1969] 1 AC 350. 73 I. MacNeil, Uncertainty in commercial law, pp. 68-99. 74 Golden Strait Corp v Nippon Yusen Kaisha (the “Golden Victory”), [2005] 2 Lloyd’s Rep. 23.


17

72. Hull fouling is a well-known problem affecting vessels trading. The build-up of fouling on hulls

induced much larger propulsion costs as a result of the loss of speed and the increase of consumption

in fuel. In this case, at the time the charter was concluded, CLAIMANT and RESPONDENT set their

minds to solve this issue if it may happen in the future by Clause 83 of Charterparty.

73. In an email dated 8 June 2016, RESPONDENT sent pictures to CLAIMANT expressing the aggravated

state of the fouling75. In addition, on 26 June 2016, Master reported that the Vessel had been heavily

fouled after her prolonged stay at Wahanda and attached pictures to show the aggravated extent of

the fouling76. Based on those various exchanges, it is safe to say RESPONDENT was aware that

prolonged stay at Wahanda not only caused the fouling but also made it worse as time passed by.

74. CLAIMANT was aware, under the Charterparty, of the importance of certainty and predictability in

commercial transactions. Hence, it reminded RESPONDENT that arranging inspections was crucial

since the cost of cleaning may vary depending on the place and the extent of the fouling77. In fact, the

breach of the delivery obligation on time contributed to the aggravation of the fouling affecting the

ship’s performance during the voyage to South Island.

2. RESPONDENT cannot limit their liability for the cleaning cost to USD33,000

75. The purpose of allocating damages for a breach of contract is to place the innocent party in position

it would have been in had the contract been performed with respect to damages78. I don’t think that

your title is correct. The limitation of liability and full compensation for the damage suffered due to

the non-performance of the contract are two different things.

76. On 1st March 2016, CLAIMANT took delivery of the Vessel which was then delivered new to

RESPONDENT79. On 18 June 2016, CLAIMANT was informed about RESPONDENT intention to re-

deliver the Vessel dirty80.

75 IMLAM Problem Scenario V2, Email 8 June 2016, p.29. 76 IMLAM Problem Scenario V2, Email 26 June 2016, p.34. 77 IMLAM Problem Scenario V2, Email 9 June 2016, p.28. 78 Golden Strait Corp v Nippon Yusen Kaisha (the “Golden Victory”), [2005] 2 Lloyd’s Rep. 23. 79 IMLAM Problem Scenario V2, p.1. 80 Ibid., Email 18 June 2016, p.34.


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77. If RESPONDENT had arranged cleaning prior to re-delivery, CLAIMANT would not have had to incur

the direct (USD41,000.00 for cleaning at South Island) and indirect costs (USD55,567.42 for voyage

to South Island) of the defouling. CLAIMANT is entitled to all damages as a result of RESPONDENT

re-delivering the Vessel’s dirty.

D. RESPONDENT was never relieved from its obligation to perform Hull Cleaning

78. It may appear from the Parties exchanges that a new agreement concerning Hull Cleaning issue was

being negotiated, however it relied on an inspection obligation.

1. Evidence of the Parties’ intention or willingness to make a new binding contract

upon Hull Cleaning

79. In Lidgett v Williams81 case was stated a charter does not have to be made on a formal basis. It can

be made through exchanges between the Parties. If proven, it is considered to binding. In fact, in

practice, it is common for parties to conclude a fixture, by an exchange of emails, as confirmed by

the Golden Ocean v Salgaocar Mining82 case.

80. In this case, as highlighted by the email dated 9 June 2016, RESPONDENT implied a new arrangement

“as per Owners should arrange underwater cleaning, Charterers will pay the cost against original

invoice” 83.

81. By an email dated the same day, CLAIMANT accepted the RESPONDENT’s new arrangement under

the condition of RESPONDENT arranging an inspection: “Owners will arrange vessel’s bottom

cleaning at convenient port…. however there has been no inspection in order to find the extent of the

fouling”84. Further, on 18 July 2016, CLAIMANT received the notice: “...Chrtrs will re-deliver the

vessel dirty” 85.

82. Upon the consideration of an objective appraisal of the words communicated between RESPONDENT

and CLAIMANT, it shall be noted that they intended to introduce an additional requirement that

81 Lidgett v Williams, [1845] 14 L.J. Ch. 459; Storer v Manchester City Council, [1974] 1 W.L.R. 82 Golden Ocean v Salgaocar Mining, [2012] 1 Lloyd’s Rep. (C.A.) 542. 83 IMLAM Problem Scenario V2, Email 9 June 2016, p.28. 84 Ibid., Email 9 June 2016, p.28. 85 Ibid., Email 18 July 2016, p.34.


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should be born by RESPONDENT to hold an inspection of the fouling of the Vessel before the

Charterparty expires.

2. CLAIMANT withdrew their acceptance upon new agreement as respondent did not

arrange inspection

83. As stated in Pagnan v. Feed Products86case, in order to conclude that a contract has been made

“… the Court must consider all exchanges in context and not seize upon one episode”. The general

rule is that parties are not bound by an agreement until they have agreed all the terms that they regard

as essential to the contract. As Lord Blackburn confirms, in Rossiter v Miller87 case: “If some

particulars essential to the agreement still remain to be settled afterwards, there is no contract”.

Furthermore, Megaw J. held that an agreement to purchase a yacht “subject to a satisfactory survey”

was not intended to be legally binding, since those words indicated that the purchaser was not

prepared to commit himself to a deal until he had seen a survey report88.

84. Consequently, CLAIMANT withdrew its acceptance to the new arrangement concerning Hull

Cleaning because RESPONDENT did not arrange inspection prior to re-delivery.

IV. CLAIMANT IS ENTITLED TO CLAIM DAMAGES FOR LATE RE-DELIVERY AND

LOSS OF HIRE

85. The Vessel was delivered into the time Charterparty on 29 March 2016, for a period of about 50-55

days. That being so, the deadline for the re-delivery has started to flow from that day. RESPONDENT

had to re-deliver the Vessel prior to the expiry of the maximum period of the Charterparty, otherwise

before 22 May 2016. However, the Vessel was re-delivered on 30 June 2016, namely 39 days later.

Because of that, CLAIMANT lost its Next Fixture.

86 Pagnan SpA v Feed Products, [1987] 2 Lloyd’s Rep. 601; See also, Asty Maritime Co Ltd and Panagiotis Stravelakis v

Rocco Giuseppe & Figli, S.N.C. And Others (the “Astyanax”), [1985] 2 Lloyd’s Rep. 109; Hussey v Horne-Payne HL,

[1879] 4 App Cas 311. 87 Rossiter v Miller, [1873] 3 App Cas 1124. 88 Astra Trust Ltd v Adams and Williams, [1969] 1 Lloyd’s Rep. 81; See also, Habton Farms v Nimmo, [2004] QB 1.


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86. Since RESPONDENT breached the Charterparty (A.), CLAIMANT is entitled to claim loss of hire

because of the late re-delivery (B.).

A. RESPONDENT failed to comply with its obligation of re-delivery under the Charterparty

1. RESPONDENT failed to re-deliver the Vessel prior to the expiry of the maximum

period of the Charterparty

87. A time charter trip, where the charter period is defined by a trip within a geographical range, is

qualified as a time charterparty. On this wise, in the Wehr Trave89 case, the Commercial Court

considered the meaning of a time charter trip90 and concluded: “time charters could be divided into

term time charters (where the charter period was agreed in advance) and trip time charters (where the

charter period was defined by a trip within a geographical range). In both cases, the defining

characteristic of the charter was that the vessel was under the directions and orders of the charterer as

regards her employment for the charter period”. The specific terms agreed upon by the parties shall

be taken into consideration as a reference to apply such qualification91.

88. In the case at hand, the Charterparty concluded by the Parties meets all the conditions in order to be

qualified as a time charterparty. This agreement was a common hybrid, with attributes of both time

and voyage charters: (i) Parties entered into a “time charter trip” 92, (ii) the contract was for a duration

of 50-55 days, (iii) the daily rate of hire was USD750093, (iv) the charter period was defined by a trip

within a geographical range94.

89. As Parties were bound by a time Charterparty, starting 29 March 2016 the Vessel was under the

directions and orders of the RESPONDENT as regards her employment for the charter period. Hire

had to be paid starting from the same day. Thus, CLAIMANT had no liability for its Vessel for the

whole duration of the Charterparty.

89 SBT Star Bulk & Tankers (Germany) GmbH & Co KG v Cosmotrade SA (the “Wehr Trave”), [2016] EWHC 583 (Comm). 90 See also, Martrade Shipping & Transport GmbH v United Entreprises Corporation (the “Wisdom C”), [2014] EWHC

1884 (Comm); Ocean Tramp Tankers Corporation v V/O Sovfracht (the “Eugenia”), [1964] 2 QB 226. 91 Martrade Shipping & Transport GmbH v United Entreprises Corporation (the “Wisdom C”), [2014] EWHC 1884

(Comm). 92 IMLAM Problem Scenario V2, Charterparty, p.3. 93 Id., p.4. 94 Id., p.3-4.


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90. Further, the ship shall be re-delivered at the end of the charter and shall be put on the disposal of the

owners95. In accordance with the NYPE 2015 Form, the charterers have three duties in relation to the

re-delivery: (i) the ship shall be re-delivered at the place stipulated in the charter, (ii) charterers must

serve notice of the expected time and port of re-delivery, (iii) they must procure that the ship is re-

delivered in the same good order and condition as she was in at delivery96.

91. As regards the third duty, under Lines 56 and 57 of the NYPE 2015 Form and Clause 31 of the

Charterparty, RESPONDENT had to send a re-delivery notice to CLAIMANT, in a reasonable time.

The purpose of a notice of re-delivery is to enable the owner to have enough time to fix the ship for

her next employment97. It is considered that failure to comply with this obligation constitutes a breach

of charter on the date that the ship is re-delivered98. Any re-delivery within a shorter time frame than

the defined period will give rise to damages to owners99. The damages shall be measured by putting

owners in the position in which they would have been in, if notice had been properly tendered100.

92. The time charterer agrees to pay hire for every minute that the ship is at the charterer’s disposal from

her delivery until re-delivery. The hire is usually stipulated at a daily rate and payable in advance101.

It is of great importance to the owner in financing the operation of its ship to receive the hire on time

and for the right amount. The charterer is obliged to pay hire continuously unless it can show that the

wording of the off-hire clause applies to the event which has occurred102.

93. In the present case, RESPONDENT failed to comply with all its obligations in relation to the re-

delivery. Even if the Vessel was re-delivered to the discharge port provided by the Charterparty

(Wahanda) and apparently in the same conditions as she was in at delivery, RESPONDENT re-

delivered it on 28 June 2018103, that is to say 39 days later than the final deadline. On top of that,

95 Italian State Railways v Mavrogordatos, [1919] 2 K.B. 305. 96 NYPE 2015 Form, Clause 2, Lines 56-57. 97 Delaware North Marine experience pty ltd v The ship “eye-spy”, [2017] FCA 708. 98 T. Coghlin, A. Baker, J. Kenny, J. Kimball, Time Charters, p.269-270. 99 Hyundai Merchant Marine Co Ltd v Karander Maritime Inc (the “Niizuru”), [1996] 2 Lloyd’s Rep. 66; IMT Shipping

and Chartering GmbH v Changsung Shipping Company Limited (the “Zenovia”), [2009] EWHC 739 (Comm). 100 Maestro Bulk Ltd v Cosco Bulk Carrier Ltd (the “Great Creation”), [2014] EWHC 3978 (Comm). 101 S. Baughen, Shipping Law, p.189. 102 S. Kendall-Marsden, J. Green, A review of off-hire clauses, p.1; Stewart v Van Ommeren, [1918] 2 K.B. 560. 103 IMLAM Problem Scenario V2, p.44.


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RESPONDENT failed to send a re-delivery notice to CLAIMANT, in a reasonable time. He sent a re-

delivery notice on 29 June 2016, one day before the effective date of re-delivery. Or, this is not a

reasonable and good enough period for CLAIMANT to fix the Vessel for her next employment.

94. Furthermore, even in case of late re-delivery, the hire is due for the whole period of the trip, USD7500

daily inclot. This means that RESPONDENT was also required to pay hire between 7 May and 30

June, the actual date of re-delivery. That’s the equivalent of USD412,500. Since RESPONDENT has

already paid this amount, the Arbitral Tribunal must reject his claim for restitution of that sum.

2. Alternatively, RESPONDENT cannot trigger the off-hire clause

95. The right to put a ship off-hire is strictly contractual. The onus is on the charterer to bring itself within

the off-hire clause in order to make a legitimate deduction from hire104. In order to trigger the NYPE

2015 Form off-hire clause105, three necessary conditions must first be met: (i) the full working of the

ship has been prevented, (ii) caused by an off-hire event, (iii) which led to a loss of time.

96. It was submitted that crew members were carrying the Ebola virus and because of that the Vessel was

quarantined and the full working of the ship has been prevented. The first question to be answered is

whether Ebola constitutes an off-hire event. The Courts have narrowly interpreted the meaning of the

phrase “deficiency of men”106.

97. Even if RESPONDENT raised the assumption of a force majeure event, under English law, such

event “…constitutes a legal or physical restraint on the performance of the contract (whether or not

occurring through human intervention, although it must not be caused by the act, negligence, omission

or default of the contracting party) which is both unforeseen and irresistible”107. Thereby, force

majeure clauses provide for cancellation of the contract in the event that performance is prevented by

circumstances comprehended within the term force majeure108. They can contain a list of excusing

104 S. Kendall-Marsden, J. Green, A review of off-hire clauses, p.1. 105 NYPE 2015 Form, Clause 17. 106 NYPE 2015 Form, Clause 17; See also, Royal Greek Government v Minister of Transport (the “Ilissos”), [1948] 82

Lloyd’s Rep. 196. 107 E. McKendrick, Force Majeure and frustration of contract, p.8. 108 Hackney Borough Council v Doré, [1922] 1 K.B. 431; Matsoukis v Priestman & Co, [1915] 1 K.B. 681.


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events, provisions for notices to be issued to the promise and detailing the consequences of the force

majeure event109.

98. If the relevant event, preventing the performance of the contract, does not fall within the scope of the

force majeure clause, it will constitute a breach of contract110. The burden of proof is upon the

charterers to show that such an event occurred and that it falls within the clause.

99. In the case, RESPONDENT argues that few crew members were carrying the Ebola Virus and

consequently the Port Authority did not allow Vessel to berth. Nevertheless, the Parties only provided

in their Charterparty a Zika Virus Protection Clause111. They never conceded that Clause 112 could

be extended to Ebola cases or to other possible diseases112. In addition, RESPONDENT failed to

provide any certificate from Port Authority that could confirm reasonable Ebola suspicions. Thus, in

the absence of a force majeure clause providing for Ebola, RESPONDENT is prevented from relying

on this argument.

100. In any case, Ebola appeared because of the RESPONDENT’s negligence to diligently check his crew.

This event which was triggered by RESPONDENT’s intervention cannot be constitutive of a force

majeure event. Hence, the force majeure exception cannot prevent RESPONDENT from any liability

regarding the late re-delivery and must therefore be rejected.

101. As for the hypothesis of a possible frustration event, in the Davis Contractors113 case, lord Radcliffe

concurred with the result that: “… frustration occurs whenever the law recognises that, without the

default of either party, a contractual obligation has become incapable of being performed because the

circumstance in which performance is called for would render it a thing radically different from that

which was undertaken by the contract”. Whether the delay is sufficient to frustrate the contract

depends on the time when the event that gave rise to the delay occurred114.

109 C. M. Schmitthoff, J. Adam, The Law and Practice of International Trade, p.199. 110 A. Mandaraka-Sheppard, Modern Maritime Law, p.261. 111 IMLAM Problem Scenario V2, Charterparty, Clause 112, p.20. 112 Chartbrook Ltd v Persimmon Homes Ltd, [2009] UKHL 38, 1 AC 1101; Arnold v Britton, [2015] UKSC 36; Reardon

Smith Line Ltd v Yngvar Hansen-Tangen and Sanko SS & Co Ltd (the “Diana Prosperity”), [1976] 1 WLR 989. 113 Davis Contractors Ltd v Fareham Urban District Council, [1956] UKHL 3; See also, National Carriers Ltd v Panalpina

(Northern) Ltd, [1981] A.C. 675. 114 Bank Line Ltd v Arthur Capel and Co, [1919] AC 435.


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102. To retain the argument based on frustration, several conditions have been listed in The Super Servant

Two115case: (i) a significant change in circumstances, (ii) very narrow limits and ought not to be

extended, (iii) frustration should not be due to the act or election of the party seeking to rely on it.

103. In this case, the delay of the re-delivery was due to RESPONDENT’s fault. Though the newspaper

West Coast Daily Echo published two articles on 18 and on 21 April 2016 regarding the outbreak of

Ebola virus in the City of West Coast, RESPONDENT has never raised any claims on health of the

crew members. Anyhow, the Vessel was delivered to RESPONDENT on March 29, before the

outbreak of Ebola. It decided itself to carry out the loading in almost a month and to depart to

Wahanda on 20 April 2016. Thus, the late re-delivery is due to the RESPONDENT’s acts. In addition,

the delay of 39 days would not be considered as a significant change in circumstances. Therefore,

frustration cannot be accepted in this case.

104. Alternatively, even if the Tribunal would accept the qualification of frustration, maritime practice

shall be taken into consideration. There is a risk that a vessel could be placed off-hire if it is

quarantined prior to being allowed entry to a port. In this case, the Vessel was quarantined after the

entry to the discharge port. Therefore, she could not be placed off-hire.

B. CLAIMANT is entitled to claim loss of hire

105. The party who has sustained a damage is entitled to be put, as far as practicable, in the same condition

it would have been in had the injury not been suffered116. Hence, the suffering party is entitled to be

placed in the expected position the correct performance of the contract would lead to117. English case

law specified that for the purposes of damage evaluation the loss taken into consideration shall be the

one a reasonable man would anticipate as a result of a wrongful act118.

106. A time charterer will only be able to fix firm employment for a vessel once acknowledging when the

vessel will be at his disposal. Similarly, the owner of a Vessel will only be able to fix a follow-on

115 J. Lauritzen A.S. v Wijsmuller B.V. (the “Super Servant Two”), [1990] 1 Lloyd’s Rep. 1. 116 The Clarence, [1850] 3 W Rob 283. 117 Golden Strait Corp v Nippon Yusen Kaisha (the “Golden Victory”), [2005] 2 Lloyd’s Rep 23. 118 Morrison Steamship Co Ltd v Greystoke Castle, [1947] AC 265.


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charter with a minimum of downtime between fixtures once acknowledging when his ship will be

returned119.

107. In the case at hand, CLAIMANT chartered the Vessel, for 4 years, to Champion Chartering Corp with

a laycan of 22-28 June 2016. The daily rate of hire was USD10,500. CLAIMANT lost the Next fixture

because of the late re-delivery of the Vessel, on 30 June 2016. Therefore, RESPONDENT must repair

the damage and CLAIMANT is entitled to claim loss of hire. The value of the damage for loss of hire

is estimated at USD15,330,000.00 (calculated as 4 years at USD10,500 per day).

PRAYER FOR RELIEF

For the reasons set out above, the CLAIMANT requests the Tribunal to:

(I) DECLARE that the Tribunal does not have jurisdiction to hear counterclaims under the Bill

of Lading;

(II) DECLARE that RESPONDENT is not liable for cargo damages;

(III) AWARD CLAIMANT damages for Hull Cleaning in the amount of USD96,567.42;

(IV) AWARD CLAIMANT damages for late re-delivery in the amount of USD15,330,000.00 (loss

of hire under the Next Fixture);

(V) AWARD CLAIMANT interests as particularised above;

(VI) ORDER RESPONDENT to pay arbitration costs and other expenses incurred due to these

arbitration proceedings.

Dated this 29th day of April 2019

Counsel for CLAIMANT

PANTHER SHIPPING INC

119 IMT Shipping and Chartering GmbH v Changsung Shipping Company Limited (the “Zenovia”), [2009] EWHC 739

(Comm).