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THE EIGHTEENTH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

NATIONAL UNIVERSITY OF SINGAPORE, SINGAPORE

IN A MATTER OF AN ARBITRATION

MEMORANDUM FOR THE RESPONDENT

ON BEHALF OF

INFERNO RESOURCES SDN BHD

(RESPONDENT)

IDONCARE BERJAYA UTAMA PTY.

LTD

(RESPONDENT)

AGAINST

FURNACE TRADING PTE LTD

(CLAIMANT)

TEAM NO. 21

ALBERTUS SUKARDI – JEVON HOLLY

TRYSA ARIFIN – URSULLA PANGARIBUAN

TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT

i

MEMORANDUM FOR

THE RESPONDENT

TEAM NO. 21


ii

TABLE OF CONTENTS

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

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

LIST OF AUTHORITIES .................................................................................................... VI

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

ARGUMENTS PRESENTED................................................................................................. 3

I. THE TRIBUNAL MAY ORDER THE ARBITRATION PROCEEDINGS

TO BE CONSOLIDATED .................................................................................... 3

II. THE TRIBUNAL SHALL NOT ORDER LIBERTY TO SELL AND

APPRAISE THE CARGO PENDENTE LITE PURSUANT TO S. 12.1.D OF

THE IAA ................................................................................................................. 3

A. Granting the Order to Sell and Appraise the Cargo Pendente Lite Exceeds

the Tribunal’s Authority under S.12.1.d of the IAA .................................... 3

B. It Is Not Necessary to Sell the Cargo Pendente Lite ...................................... 5

i. The Claimant failed to meet the requisite test of serious question to be

tried .............................................................................................................5

ii. In any event, the balance of convenience lies in favour of not granting

the order of sale and appraisal ...................................................................5

a. Sale is not the only option available to preserve the Cargo .................. 6

b. The Claimant failed to prove that the Cargo value is deteriorating...... 7

c. The value of the Cargo will remain adequate as a security for the

outstanding Freight ...................................................................................... 7

III. THE CLAIMANT IS NOT ENTITLED TO DIRECT IMLAM TO

EXERCISE LIEN OVER THE CARGO ............................................................ 8

A. The Unconventional Method in Exercising Lien Proposed by the

Claimant is Not an Established Rule .............................................................. 9

B. Alternatively, the B/L Does Not Incorporate the OREVOY C/P .............. 10

i. The Presumption to incorporate the head voyage charterparty is not

absolute and shall not apply in this case ....................................................10

ii. The voyage charterparty between INFERNO and IDC Is More Apposite

to the B/L than the OREVOY C/P ...............................................................12

IV. THE CLAIMANT COULD NOT DIRECT IMLAM TO RECOVER B/L

FREIGHT FROM IDC FOR THE CLAIMANT’S BENEFIT ....................... 13

A. IMLAM’s Right to Make a Direct Claim for the B/L Freight is Not

Triggered as There is No Default in the Hire Payment under the Time

C/P ................................................................................................................... 14


iii

B. The Concept of Equitable Duty Between a Head Owner and a Time

Charterer in Respect of The Cause of Action for the Unpaid Freight is

Not an Established Rule ................................................................................ 15

V. THE CLAIMANT’S TERMINATION OF THE OREVOY C/P IS

WRONGFUL........................................................................................................ 16

VI. THE CLAIMANT IS NOT ENTITLED TO DAMAGES FOR DETENTION

IN THE FULL AMOUNT FOR ITS FAILURE TO ACT REASONABLY

UPON INFERNO’S BREACH ........................................................................... 18

A. The Claimant Is Not Entitled to Damages for Detention from 11 October

until 17 October 2016 Due to Its Failure to Mitigate the Loss by Staying

Idle in Singapore OPL ................................................................................... 19

B. In any Event, the Claimant Is Not Entitled to Damages for Detention after

16 October 2016 Due to Its Failure to Mitigate by Refusing the

Amendment for the Discharge Port ............................................................. 21

PRAYER FOR RELIEF........................................................................................................ 24


iv

LIST OF ABBREVIATIONS

AC UK Law Reports, Appeal Cases

Amendment INFERNO’s offer for Tardy Tessa to Discharge at Busan

Port on an Open Book Basis

Art

S.

Article

Section

B/L Bills of Lading between IMLAM and IDC dated 4 October

2016

Cargo 84,000.052 MT Australian Steam Coal

CLC Commercial Law Cases

EWHC (Comm) English and Wales High Court (Commercial Division)

Freight Clause Clause 19 of the Fixture Recap

IAA International Arbitration Act (CAP 143A, REV ED 2002)

IDC

INFERNO

Idoncare Berjaya Utama Pty Ltd

Inferno Resources Sdn Bhd

IMLAM Imlam Consignorist GmbH

KB King’s Bench

Lloyd’s Rep Lloyd’s Law Reports

Model Law UNCITRAL Model Law 1985 enacted in the International

Arbitration Act (CAP 143A, REV ED 2002)

Moot Scenario International Maritime Law Arbitration Moot 2017 Problem

OREVOY C/P Voyage Charterparty between Claimant and INFERNO

dated 1 September 2016

Parties Claimant and INFERNO

Pendente Lite Pending the Final Award

QB Queen’s Bench

S. Section

SCMA Rules Singapore Chamber of Maritime Arbitration Rules


v

LIST OF ABBREVIATIONS

SG LT Singapore Local Time

SG OPL Singapore Outter Port Limit

SGCA Singapore Court of Appeal

SGHC Singapore High Court

SLR Singapore Law Reports

SLR(R) Singapore Law Report (Reissue)

STL Scots Law Times

Sub-Voyage C/P Unidentified Charterparty between INFERNO and IDC

Tardy Tessa MV Tardy Tessa

The Claimant Furnace Trading Pte Ltd

The Master

Time C/P

Tan Xiao Ming, Master of MV Tardy Tessa

Time Charterparty concluded between IMLAM and the

Claimant dated 15 February 2016

Three Pre-Conditions Completion of Loading; Signing/Releasing B/L; Receipt of

Owners’ Freight Invoice

UKHL United Kingdom House of Lords

UNCITRAL United Nations Commission on International Trade Law

WLR The Weekly Law Reports


vi

LIST OF AUTHORITIES

Cases Aktieselskabet Ocean v B Harding & Sons Ltd [1928] 2 KB 371 (1928)................................ 10

Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R) 602 ... 14,

15, 16

Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R) 602. ... 14

American Cyanamid v Ethicon [1975] 2 WLR 316 ................................................................... 3

Antariksa Logistics Pte Ltd and Others v McTrans Cargo (S) Pte Ltd [2012] SGHC 154 ....... 7

Antariksa Logistics Pte Ltd and Others v McTrans Cargo (S) Pte Ltd [2012] SGHC 154. ...... 7

Banco de Portugal v Waterlow and Sons, Limited (Banco de Portugal) [1932] AC 452. ...... 17

Bangladesh Chemical Industries Corporation v Henry Stephens Shipping Company

LimitedTex-Dilan Shipping Company Limited (The SLS Everest) [1981] WL 187858....... 10

BNP Paribas v Bandung Shipping Pte Ltd. [2003] SGHC 111. ................................................ 9

Bowmaker Ltd v Wycombe Motors Ltd [1946] KB 505. ............................................................ 7

Brani Readymixed Pte Ltd v Yee Hong Pte Ltd [1994] 3 SLR(R) 1004 .................................. 14

Camellia Tanker SA v International Transport Workers [1976] I.C.R. 274 (1976). ................. 4

Care Shipping Corporation v. Latin American Shipping Corporation (The Cebu (No 1)) [1983] 2 WLR 829 ............................................................................................................... 11

Cascade Shipping Inc, v. Eka Jaya Agencies (Pte.) Ltd. [1993] 1 SLR 980 ..................... 12, 13

Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334. ...................... 2

Cho Yang Shipping Co Ltd v. Coral (UK) Ltd. [1997] CLC 1100. ......................................... 10

Chua Tian Chu and another v Chin Bay Ching and another [2011] SGHC 126. ................... 14

Chuan Hong Petrol Station Pte Ltd v Shell Singapore (Pte) Ltd [1992] 2 SLR 729 ................ 4

Cosemar SA v Marimarna Shipping Co Ltd (The Matthew) [1990] 2 Ll Rep 323. ................... 8

Dry Bulk Handy Holding Inc. v. Fayette International Holdings Ltd (The Bulk Chile) [2013]

2 Lloyd’s Rep. 47. .......................................................................................................... 13, 14

Dry Bulk Handy Holding Inc. v. Fayette International Holdings Ltd (The Bulk Chile) [2013]

2 Lloyd’s Rep.47. ................................................................................................................. 12

Dunkirk Colliery Company v Lever (1878) 9 Ch D 20. ..................................................... 17, 19

Empresa Cubana de Fletes v Lagonisti Shipping Co Ltd (The Georgios C) [1971] 1 QB 488

.............................................................................................................................................. 14

Federal Bulk Carriers Inc v C. Itoh & Co. Ltd [1989] 1 Lloyd’s Rep 103 ............................... 9

Fellowes v Fisher [1975] 3 WLR 184 ....................................................................................... 3

Feoso (Singapore) Pte Ltd v Faith Maritime Co Ltd [2003] SGCA 34 .................................... 6

Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources,

intervener) [2015] SGHC 311. .......................................................................................... 2, 4

Freeman v Taylor [1831] 8 Bing 124 ...................................................................................... 15

Gardner & Sons v. Trechmann [1884] 15 QBD 154 ........................................................... 8, 10

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

(Comm) .................................................................................................................................. 9

Hansen v Harrold Brothers [1894] 1 QB 612 (1894)................................................................ 8

Hirtenstein V Hill Dickinson LLP [2014] EWHC 2711 ............................................................ 5

Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715 ..................... 9

Hong Kong Vegetable Oil Co Ltd v Wicker and Other (1977-1978) SLR(R) 65. ..................... 3

Hongkong Fir Shipping v. Kawasaki Kisen Kaisha [1962] 2 Q.B. 26, 60, 65 ........................ 15

India Steamship Co v. Louis Dreyfus Sugar Ltd (The Indian Reliance) [1997] 1 Lloyd's Rep

52............................................................................................................................................ 9


vii

International Bulk Carriers (Beirut) S.A.R.L. v. Evlogia Shipping Co. S.A., And Marathon

Shipping Co. Ltd. (The Mihalios Xilas) [1978] 2 Lloyd's Rep. 186 ...................................... 6

Jia Min Building Construction Pte Ltd v Ann Lee Pte Ltd (Jia Min Building Construction)

[2004] 3 SLR(R) 288 ........................................................................................................... 17

Lansing Linde Ltd v Kerr [1991] 1 WLR 251 ........................................................................... 4

Limited v Underground Electric Railways Company of London, Limited (British

Westinghouse Electric) [1912] AC 673 ............................................................................... 17

MacAndrew v Chapple [1865] 18 CB (NS) 759 ...................................................................... 15

Maldives Airports Co Ltd v GMR Male International Airport (2013) SGCA 16 ...................... 4

Mansel Oil Ltd & Anor v Troon Storage Tankers SA [2008] EWHC 1269 (Comm). ............. 17

Maredelanto Compania Naviera S.A. v. Bergbau-Handel G.M.B.H. (The Mihalis Angelos)

[1970] 3 WLR 601. .............................................................................................................. 16

Maythorn v Palmer [1864] 11 LT 261. ...................................................................................... 3

Miramar Maritime Corp v Holborn Oil Trading (The Miramar) [1984] 3 WLR 1. ................. 9

Molthes Rederi AB v Ellermans Wilson Line Ltd [1927] 1 KB 710 (1926). ........................... 12

MP-Bilt Pte Ltd v Oey Widarto [1999] 1 SLR(R) 908 ............................................................ 17

National Jaya (Pte) Ltd v Hong Tat Marine Shipping Pte Ltd [1978–1979] SLR 416 ............. 9

Navigazione Alta Italia SpA v Svenska Petroleum AB (The Nai Matteini) [1988] 1 Lloyd’s

Rep 452 .................................................................................................................................. 9

NCC International AB v Alliance Concrete Singapore (2008) SGCA 5 ................................... 2

Norwest Holdingste Ltd (in liquidation) v Newport Mining Ltd [2010] SGHC 144. ................ 5

OCBC Securities Pte Ltd v Phang Yul Cher Yeow [1997] 3 SLR(R). ..................................... 19

Ogle v Comboyuro Investments Pty Ltd [1976] HCA 21. ................................................. 15, 16

Partenreederei M/S Heidberg v Grosvenor Grain and Feed Co Ltd (The Heidberg) [1994] 2

Lloyd’s Rep. 287 .................................................................................................................... 9

Payzu, Limited v Saunders [1919] 2 KB 581; OCBC Securities Pte Ltd v Phang Yul Cher

Yeow [1997] 3 SLR(R)......................................................................................................... 19

Photo Production v. Securicor [1980] A.C. 827, 849 ............................................................. 15

Potters-Ballotini v Weston-Baker, [1977] RPC 202 (1976) ...................................................... 4

Regina v Secretary of State for Transport, Ex parte Factortame Ltd and Others (No 2) [1991]

1 AC 603 ................................................................................................................................ 4

Rice v Great Yarmouth BC [2003] T.C.L.R 1.......................................................................... 15

Samsun Logix Corporation v. Oceantrade Corporation [2007] EWHC 2372 (Comm). .......... 6

Santiren Shipping Ltd v. Unimarine S.A. (The Chrysovalandou Dyo) [1981] 1 Lloyd’s Rep.

159.......................................................................................................................................... 6

Singapore Press Holdings Ltd v Brown Noel Trading Pte Ltd [1994] 3 SLR 151 .................... 4

Smailes and Son v Hans Dessen and Co (1906) 94 LT 492 at 493. ........................................ 19

South Oxfordshire D v SITA UK Ltd [2006] EWHC 2459 (Comm)........................................ 15

Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 All ER 883 ........................................ 17

The Asia Star [2010] SGCA 12 ................................................................................... 17, 19, 21

The Atticka Hope [1988] 1 Lloyd's Rep. 439 ........................................................................... 11

The Dolphina [2011] SGHC 273 ............................................................................................... 9

The Epic [2000] 3 SLR 735 ......................................................................................... 6, 7, 8, 10

The Hansa Nord [1975] 2 Lloyd’s Rep. 445 ........................................................................... 15

The London Explorer [1971] 1 Lloyd’s Rep., p. 526................................................................. 6

The Madeleine [1967] 2 Lloyd’s Rep., p. 238. .......................................................................... 6

The Star Quest [2016] 3 SGHC 100 .......................................................................................... 9

The Trade Resolve [1999] 4 SLR 424, [1999] SGHC 109 ........................................................ 6

The Ugland Trailer [1985] 2 Lloyd's Rep. 372 ....................................................................... 11

Tradigrain SA v King Diamond Marine Ltd (The Spiros C) [2000] WL 77762 (2000) .......... 12


viii

Turner and Another v. Haji Goolam Mahomed Azam [1904] AC 826. ............................... 7, 10

Welex AG v Rosa Maritime Ltd (The Epsilon Rosa) (No.2) [2003] 2 CLC 207 (2003) ............ 9

Western Bulk Shipowning III A/S v Carbofer Maritime Trading ApS & Ors., (The Western

Moscow) [2012] EWHC 1224 (Comm) ............................................................................... 11

White and Carter (Councils) Ltd v McGregor [1962] AC 413, HL at 445 ............................. 17

Other Authorities Analytical Commentary on draft text of a model law on international commercial arbitration:

Report of the Secretary-General” UNCITRAL, 18thSess, UNDocA/CN.9/264 (1985),

reprinted in [1985] 16YB UNCITRAL 104 (“the Model Law Commentary”) ..................... 2

Fifth Working Group Report, A/CN.9/246 ................................................................................ 2

First Working Group Report, A/CN.9/216 ................................................................................ 2

Fourth Working Group Report, A/CN.9/245 ............................................................................. 2

http://ports.com/sea-route/ adjust port variable from Singapore to: Ningbo; Yantai; Tianjin;

Dalian; Jinzhou; Qingdao; Yingkou. ; GPS Coordinates Of Hangzhou Bay (“Hangzhou

Bay Coordinate”), China 30°17'6.72" N 120°55'26.40" E. ................................................. 21

https://www.marinetraffic.com/en/voyage-planner, adjust destination variable from Singapore

to Hangzhou Bay Coordinates. ............................................................................................ 21

Man Diesel & Turbo, Propulsion Trends in Bulk Carriers: Two-stroke Engines, p. 14, Fig. 9:

Average design ship speed of bulk carriers. ........................................................................ 21

Seventh Secretariat Note, A/CN.9/264, Art. 18, para. 3, p. 543. ............................................... 2

Books Andrew Burrows, Remedies for Torts and Breach of Contract, 3

rd Ed., (Oxford: University

Press, 2004) .......................................................................................................................... 22

Guenter Treitel and Francis Reynolds, Carver on Bills of Lading, 3rd

Ed., (Sweet & Maxwell,

2011) .................................................................................................................................... 11

John F. Wilson, Carriage of Goods by Sea, 7th

Ed, (Harlow: Pearson, 2010). ....................... 17

S.C. Boyd, A. Burrows, and D. Foxton, Scrutton on Charterparties, 20th

Ed., (London: Sweet

& Maxwell) .......................................................................................................................... 10

Sir Bernard Eder, et al, Scrutton on Charterparties and Bills of Lading, 23rd

Ed., (London:

Sweet & Maxwell, 2015) ..................................................................................................... 11

Regulations International Arbitration Act (CAP 143A.) ........................................................................... 3, 5

Singapore Chamber of Maritima Arbitration Rules .................................................................. 3


1

STATEMENT OF FACTS

I. CHAIN OF CHARTERPARTIES

1. On 15 February 2016, IMLAM Consignorist GmbH (“IMLAM”), the owner of the MV

TARDY TESSA (“Tardy Tessa”) and Furnace Trading Pte Ltd (the “Claimant”) entered

into a time charterparty for a period of 2 years. The Claimant voyage-chartered the Tardy

Tessa to Inferno Resources Sdn Bhd (“INFERNO”) to ship 84,000.052 MT of Australian

Coal (the “Cargo”) from Newcastle, Australia to one of the eight discharge ports in

China. This voyage charterparty was concluded on a clean Fixture Recap based on the

COAL-OREVOY Standard Form charterparty (the “OREVOY C/P”). INFERNO later

sub-voyage chartered the Vessel to Idoncare Berjaya Utama Pty Ltd (“IDC”), the shipper

of the Cargo1 and the holder of the B/L.

2

II. THE PERFORMANCE OF THE VOYAGE

2. Under the Freight Clause of the OREVOY C/P, INFERNO is obliged to pay the freight to

the Claimant within five banking days after loading being completed, the B/L has been

signed, and receipt of the freight invoice. Further, INFERNO is obliged to nominate a

discharge port when the Tardy Tessa passes Singapore for bunkering.

3. On 15 October 2016 INFERNO informed the Claimant that it was unable to nominate the

discharge port and make payment of freight as INFERNO was yet to receive the same

from its sub-charterer. Subsequently, on 16 October 2016, INFERNO requested the

Claimant to divert to Busan port, South Korea instead because of the congestion at

Chinese ports and that INFERNO is prepared to amend the freight rate on open book

basis. (the “Amendment of the Discharge Port”). The Claimant rejected the

Amendment of the Discharge Port on the ground that Busan was unsafe at that time due

1 Moot Scenario, p. 41,43,45.

2 Procedural Order No. 3, para. 2(2).


2

to the rumor of zombies outbreak. Neither parties has any information and/or details

regarding the zombies outbreak.

4. On its email dated 19 October 2016, the Claimant sent notice to INFERNO, stating that if

INFERNO does not nominate a discharge port and pay freight by 12.00 SG LT on 20

October 2016, the Claimant will treat such conduct as repudiatory breach of the C/P and

serve its right to terminate the C/P. On 21 October 2016 that INFERNO finally nominated

Port of Ningbo and promised the Claimant that the payment of Freight will be made after

the cargo discharge as his sub-charterer has not paid the freight to him.

5. On 22 October 2016, the Claimant terminated the OREVOY C/P on the basis of

renunciation and repudiatory breach of the OREVOY C/P.

III. The Arbitration

6. On 25 November 2016, the Claimant sent notices of arbitration to both INFERNO and

IDC. Both INFERNO and IDC have no objection to the jurisdiction of the Tribunal.


3

ARGUMENTS PRESENTED

I. THE TRIBUNAL MAY ORDER THE ARBITRATION PROCEEDINGS TO

BE CONSOLIDATED

1. On 1 December 2016, the Claimant applied for the consolidation of the two arbitration

proceedings between the Claimant and INFERNO and between the Claimant and IDC.3

INFERNO acknowledges that Rule 33.3 of the SCMA Rules provides that the Tribunal

has the power to direct two or more arbitration proceedings that concern common issues

of fact or law to be consolidated.4 Neither IDC nor INFERNO contest such power

5 and

leave it to the Tribunal to decide in the oral hearing.

II. THE TRIBUNAL SHALL NOT ORDER LIBERTY TO SELL AND APPRAISE

THE CARGO PENDENTE LITE PURSUANT TO S. 12.1.D OF THE IAA

2. INFERNO requests the Tribunal not to order the sale and appraisal of the Cargo pendente

lite, because granting an order to sell and appraise the Cargo pendente lite (A) exceeds the

Tribunal’s authority under S.12.1.d of the IAA, and (B) it is not necessary.

A. Granting the Order to Sell and Appraise the Cargo Pendente Lite Exceeds the

Tribunal’s Authority under S.12.1.d of the IAA

3. S. 12.1.d of the IAA and Art. 17 of the Model Law give the Tribunal the power to order

or direct, if necessary, any party to sell any property that is or forms part of the subject-

matter of a dispute, as an interim measure.6 Under S. 2 of the IAA, the term “party” is

defined as a party to the arbitration agreement, or party to the arbitration.7

4. Working Group Report, a binding source in interpreting the Model Law,8 states that Art.

17 of the Model Law explicitly limits a tribunal’s authority to give orders only to parties

3 Moot Scenario, p. 90.

4 SCMA Rules, Rule 33.3.

5 Moot Scenario, p.95.

6 IAA, S.12.1.d; Art. 17 of the Model Law.

7 IAA, S. 2.

8 IAA, S. 4.


4

within the arbitration proceedings, and does not confer the tribunal the authority to make

an order which is directed at or impacts third parties.9

This restriction is recognized under

Singapore law,10

hence the additional procedures required for the court’s assistance in aid

of arbitration.

5. In this case, the Tribunal can only grant an interim measure for the sale and appraisal of

the Cargo to the Claimant, which is a party to this arbitration proceeding. However, the

possession of the Cargo lies in IMLAM. The Tribunal would thus exceed its conferred

authority by giving an order to sell and appraise the Cargo, because such order would

impact IMLAM, which is not a party to this arbitration proceeding. Moreover, such an

order may not be effective as IMLAM is not a party to this proceeding and is in no way

obliged to comply with the Tribunal’s order.

6. INFERNO acknowledges that in the case Five Ocean Corporation v Cingler Ship Pte

Ltd,11

the judge allowed a sales application by a party that did not possess the cargo.

However, it must be noted that such case was decided in court, which by its nature has a

different authority than that of an arbitration tribunal. Further, in that case the judge

considered the fact that the head owner, as the party holding possession of the cargo, had

already consented to support and be bound by the order of sale of the court by submitting

an affidavit. In contrast, in the present case, IMLAM is not present in the current

proceeding, and has never consented to be bound by an order of sale.12

9 First Working Group Report, A/CN.9/216, para. 66, p. 534; Fourth Working Group Report, A/CN.9/245, para.

71, p. 539.; Fifth Working Group Report, A/CN.9/246.; Seventh Secretariat Note, A/CN.9/264, Art. 18, para. 3,

p. 543. 10

NCC International AB v Alliance Concrete Singapore (2008) SGCA 5, at [1],[46],[53]; Analytical

Commentary on draft text of a model law on international commercial arbitration: Report of the Secretary-

General” UNCITRAL, 18thSess, UNDocA/CN.9/264 (1985), reprinted in [1985] 16YB UNCITRAL 104 (“the

Model Law Commentary”); Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334. 11

Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources, intervener) [2015]

SGHC 311. 12

Moot Scenario, p. 36.


5

7. Given the reasons above, the Tribunal should not grant the order to sell and appraise the

Cargo pendente lite as doing so exceeds the Tribunal’s authority under S.12.1.d of the

IAA.

B. It Is Not Necessary to Sell the Cargo Pendente Lite

8. INFERNO submits that it is not necessary for the Tribunal to sell the Cargo pendente lite,

on two grounds: (i) the Claimant failed to meet the requisite test of serious question to be

tried; and (ii) the balance of convenience lies in favour of not granting the order of sale

and appraisal.

i. The Claimant failed to meet the requisite test of serious question to be tried

9. A P Rajah J, in Hong Kong Vegetable Oil Co Ltd v Wicker and others13

, expounded that

it must first be decided whether there is in fact and in law a serious question to be tried.

Failing this test will render the motion dismissed.14

The question to be answered is

whether the action is properly conceived and whether all the proper, necessary and/or

interested parties are before the trial so that any order by the tribunal can be properly and

effectively implemented.15

IMLAM is an interested party because the assessment affects

its obligation under the B/L to deliver the Cargo. INFERNO submits that the test of

serious question to be tried is not met as IMLAM is not present in this arbitration

proceeding. Therefore, as this element is not fulfilled by the Claimant, the motion shall be

dismissed and the Tribunal shall not order such interim measure.

ii. In any event, the balance of convenience lies in favour of not granting the

order of sale and appraisal

10. In assessing the balance of convenience test, the Tribunal shall determine which course

appears to do less harm: (a) granting an injunction that subsequently turns out to be

13

Hong Kong Vegetable Oil Co Ltd v Wicker and Other (1977-1978) SLR(R) 65. 14

Hong Kong Vegetable Oil Co Ltd v Wicker and Other (1977-1978) SLR(R) 65. 15

Hong Kong Vegetable Oil Co Ltd v Wicker and Other (1977-1978) SLR(R) 65, at [15]; Fellowes v Fisher

[1975] 3 WLR 184; American Cyanamid v Ethicon [1975] 2 WLR 316; Maythorn v Palmer [1864] 11 LT 261.


6

unjustified, or (b) refusing one if it subsequently turns out that an injunction should have

been granted.16

In the case at hand, the balance of convenience lies in favour of not

granting the order of sale and appraisal as (a) sale is not the only option available to

preserve the Cargo; (b) the Claimant failed to prove that the value of the Cargo is

deteriorating; and (c) the value of the Cargo will remain adequate to act as a security for

the outstanding Freight.

a. Sale is not the only option available to preserve the Cargo

11. The Claimant argued that the sale of Cargo, as an interim measure, is necessary to

preserve the value of the security for the claim.17

As established in Maldives Airports Co

Ltd v GMR Male International Airport Pte Ltd,18

what constitutes “necessary” in ordering

an interim measure is when there are no other reasonable available alternatives in

preserving the concerned property.

12. In the present case, the sale of the Cargo pendente lite is not the only alternative to

preserve the Cargo. One reasonable available alternative is to store the Cargo in a

warehouse at the nearest available port. Storing the Cargo in a warehouse would preserve

its value and would also increase the possibility of obtaining a better price and better

terms for the Cargo, compared to selling the Cargo pendente lite. This is because selling

the Cargo pendente lite would subject the Cargo to “as is where is” basis which is a state

when an object being purchased is deemed to have been purchased in its existing

16

Chuan Hong Petrol Station Pte Ltd v Shell Singapore (Pte) Ltd [1992] 2 SLR 729; Singapore Press Holdings

Ltd v Brown Noel Trading Pte Ltd [1994] 3 SLR 151; Lansing Linde Ltd v Kerr [1991] 1 WLR 251; Regina v

Secretary of State for Transport, Ex parte Factortame Ltd and Others (No 2) [1991] 1 AC 603; Potters-Ballotini

v Weston-Baker, [1977] RPC 202 (1976); Camellia Tanker SA v International Transport Workers [1976] I.C.R.

274 (1976). 17

Memorandum of the Claimant, para. 18. 18

Maldives Airports Co Ltd v GMR Male International Airport (2013) SGCA 16 ; Five Ocean Corporation v

Cingler Ship Pte Ltd (PT Commodities & Energy Resources, intervener) [2015] SGHC 311.


7

condition, be that good or bad,19

whereas storing the Cargo in a warehouse would allow

for sufficient time to negotiate a better price and better terms for the Cargo.

b. The Claimant failed to prove that the Cargo value is deteriorating

13. The Claimant argued that the sale of the Cargo pendente lite is for the benefit of both

parties because the Cargo’s value is deteriorating and thus must be locked in at the

current value.20

14. INFERNO contends that there is no factual proof that the value of the Cargo is

deteriorating. The factual basis relied on by the Claimant as to the condition of the Cargo

is the Joint Experts’ Report,21

which was based solely on the Cargo’s condition during

loading. The Claimant failed to provide any evidence as to the current condition of the

Cargo. In the absence of such evidence, one cannot assume that the value of the Cargo is

deteriorating.

c. The value of the Cargo will remain adequate as a security for the

outstanding Freight

15. The Claimant contends that selling the Cargo pendente lite will preserve the value of the

Cargo so it will be sufficient as security for the Freight. The Claimant’s reasoning is that

selling the Cargo at a later point in time will result in a decrease in its value due to the

distressed nature of the Cargo. However, this argument should be rejected because, even

in the worst-case scenario, the value of the Cargo will not be diminished to the extent that

it will not be sufficient to cover the Freight due to the Claimant.22

16. In conclusion, the balance of convenience lies in not granting the interim measure of sale

of the Cargo pendente lite, as granting such interim measure based on less-than

substantiated grounds will pose greater harm. Refusing such interim measure does not

19

Moot Scenario, p. 90.; Hirtenstein V Hill Dickinson LLP [2014] EWHC 2711; Norwest Holdingste Ltd (in

liquidation) v Newport Mining Ltd [2010] SGHC 144. 20


Moot Scenario, Joint Parties’ Expert Report, p. 97. 22

Moot Scenario, p. 49, p. 101-102.


8

prejudice the Claimant’s interests and the exercise other alternative options can still

address the Claimant’s concerns regarding the value of the security for the Freight. On the

other hand, granting such interim measures, which if subsequently turned out to be

unjustified, would be prejudicial to the interests of INFERNO and IDC.

III. THE CLAIMANT IS NOT ENTITLED TO DIRECT IMLAM TO EXERCISE

LIEN OVER THE CARGO

17. By the notice sent to INFERNO on 20 October 2016,23

the Claimant purported to exercise

lien over the Cargo for the alleged Freight due under the OREVOY C/P. It is INFERNO’s

position that the Claimant is not entitled to exercise lien over the Cargo.

18. A lien over cargo is contractual and dependent on the continued possession of the cargo.24

Once a shipowner loses possession of the cargo, the shipowner loses contractual lien for

good.25

In the present case, the Claimant is merely a time-charterer under non-demise

Time C/P26

and has no control or possession over the vessel or the Cargo.27

Furthermore,

the Claimant does not have a contractual relationship with IDC, the current B/L holder28

and the shipper of the Cargo,29

because the Claimant is not a party to the B/L.

19. Despite its incapacity, the Claimant purported that it can exercise lien over the Cargo in

an unconventional manner, by asking IMLAM to exercise lien over IDC’s Cargo under

the B/L contract for the Claimant’s interest.30

However, INFERNO submits otherwise.

(A) The unconventional method to exercise Lien proposed by the Claimant is not an

23

Moot Scenario, p. 65. 24

Feoso (Singapore) Pte Ltd v Faith Maritime Co Ltd [2003] SGCA 34; Santiren Shipping Ltd v. Unimarine

S.A. (The Chrysovalandou Dyo) [1981] 1 Lloyd’s Rep. 159, at p. 165; The Trade Resolve [1999] 4 SLR 424,

[1999] SGHC 109; The Epic [2000] 3 SLR 735; Samsun Logix Corporation v. Oceantrade Corporation [2007]

EWHC 2372 (Comm). 25

International Bulk Carriers (Beirut) S.A.R.L. v. Evlogia Shipping Co. S.A., And Marathon Shipping Co. Ltd. (The Mihalios Xilas) [1978] 2 Lloyd's Rep. 186; Feoso (Singapore) Pte Ltd v Faith Maritime Co Ltd [2003]

SGCA 34. 26


The Madeleine [1967] 2 Lloyd’s Rep., p. 238.; The London Explorer [1971] 1 Lloyd’s Rep., p. 526. 28

Procedural Order No. 3, para. 2(1). 29

Moot Scenario, p. 41,43,45. 30

Memorandum of the Claimant, para. 28.


9

established rule, and (B) alternatively, IMLAM is not entitled to exercise lien over the

Cargo because the B/L does not incorporate the OREVOY C/P.

A. The Unconventional Method in Exercising Lien Proposed by the Claimant is Not

an Established Rule

20. The Claimant relies on Five Ocean Corporation v. Cingler Ship Pte Ltd. (“Five Ocean”),

a case assessing the rule on the exercise of lien over the cargo under English law, in an

attempt to establish that a time-charterer with no contractual lien and physical possession

of cargo can exercise lien over the cargo in an unconventional manner. It argues that it

can order/direct IMLAM to exercise lien over the Cargo and the Claimant shall have an

equitable right derived from IMLAM’s exercise of its Lien.

21. Without clear grounds for the right to lien, an exercise of lien may amount to a wrongful

detention, which may render the party exercising the lien liable.31

In order to grant the

Claimant’s lien assertion, this Tribunal must be satisfied that the invoked grounds for lien

are clearly and distinctly established; otherwise the retention of the cargo would be a

wrongful detention.32

It must be borne in mind that a right to seize one party’s goods for

another party’s debt must be clearly and distinctly conferred before a court or a tribunal

can be expected to recognize it.33

22. The Respondent contends that the unconventional method set forth in the Five Ocean case

is not an established one and is not applicable to our present case, which is governed by

Singaporean law. The judge in Five Ocean acknowledged such proposition as a fact

regarding the position under the English law, but it is not established that it is a matter of

law in Singapore. Further, the Tribunal should note that in coming to her conclusion, the

31

The Epic [2000] 3 SLR 735; Antariksa Logistics Pte Ltd and Others v McTrans Cargo (S) Pte Ltd [2012]

SGHC 154. 32

Antariksa Logistics Pte Ltd and Others v McTrans Cargo (S) Pte Ltd [2012] SGHC 154; Bowmaker Ltd v

Wycombe Motors Ltd [1946] KB 505. 33

Turner and Another v. Haji Goolam Mahomed Azam [1904] AC 826.


10

academic opinions are heavily relied. Therefore, the Respondent submits that the Tribunal

shall not grant the Claimant’s request that the exercise of lien be declared lawful.

B. Alternatively, the B/L Does Not Incorporate the OREVOY C/P

23. A shipowner’s right of lien on the cargo as provided in a charterparty can only be

enforced against the holder of a bill of lading, if the relevant lien provision has been

incorporated into the bill of lading.34

The Claimant contends that the OREVOY C/P is

incorporated into the B/L, rendering the lien enforceable against the Cargo, which is

owned by IDC, as the holder of the bill of lading. The Respondent submits that the Cargo

cannot be subjected to the lien as the B/L does not incorporate the OREVOY C/P.

24. INFERNO submits that the B/L does not incorporate the terms of the OREVOY C/P;

instead, they incorporate the voyage C/P between INFERNO and IDC. This is because (i)

the presumption to incorporate the head voyage charterparty is not absolute and shall not

apply here, as IDC would want to incorporate terms of carriage that it negotiated and had

knowledge of. Additionally, (ii) the voyage charterparty between INFERNO and IDC is

more apposite to the B/L than the OREVOY C/P.

i. The Presumption to incorporate the head voyage charterparty is not

absolute and shall not apply in this case

25. The Claimant argued that the OREVOY C/P is the charterparty incorporated into the B/L

by virtue of the presumption to incorporate the head voyage charterparty.35

However,

such presumption is not applicable in the present case. This presumption is not applicable

if, based on the examination of facts,36

a charterparty other than the head voyage charter

34

The Epic [2000] 3 SLR 735; Turner and Another v. Haji Goolam Mahomed Azam [1904] AC 826; Hansen v

Harrold Brothers [1894] 1 QB 612 (1894); Gardner & Sons v. Trechmann [1884] 15 QBD 154; Cosemar SA v

Marimarna Shipping Co Ltd (The Matthew) [1990] 2 Ll Rep 323. 35

Memorandum of the Claimant, paras. 36-38 36

The Epic [2000] 3 SLR 735; S.C. Boyd, A. Burrows, and D. Foxton, Scrutton on Charterparties, 20th

Ed.,

(London: Sweet & Maxwell), Art. 38, at p. 76.


11

is the one intended by parties to be incorporated into the bill of lading.37

In determining

which C/P is to be incorporated, each case should be determined on a case-per-case

basis.38

26. A bill of lading is a contract between a shipper and a shipowner.39

In the construction of

the bill of lading and which charterparty incorporated, the court has to construe the

parties’ intentions objectively, taking into account the full commercial background in

which the contract was made,40

including the intention of the parties to such B/L.41

Weight should be given to the presumed intention of the master who signed and issued

the bill of lading, equal weight must be given to the intention of the shipper who normally

draws up the bill lading and presents it to the master for signature.42

27. Here, IDC, as the shipper, would have intended for the voyage charterparty between

INFERNO and IDC to be the one incorporated into the B/L. IDC would not have intended

for the B/L to incorporate the OREVOY C/P, to which it is not a party. Further, the

phrase “freight payable as per charterparty” in the bill of lading means that the mode of

payment, amount and the recipient of the freight payable by the shipper is as per the

charterparty.43

In the absence of some other considerations, a shipper is liable for the

37

Partenreederei M/S Heidberg v Grosvenor Grain and Feed Co Ltd (The Heidberg) [1994] 2 Lloyd’s Rep.

287. 38

Federal Bulk Carriers Inc v C. Itoh & Co. Ltd [1989] 1 Lloyd’s Rep 103; Navigazione Alta Italia SpA v

Svenska Petroleum AB (The Nai Matteini) [1988] 1 Lloyd’s Rep 452; Partenreederei M/S Heidberg v

Grosvenor Grain and Feed Co Ltd (The Heidberg) [1994] 2 Lloyd’s Rep. 287; Welex AG v Rosa Maritime Ltd

(The Epsilon Rosa) (No.2) [2003] 2 CLC 207 (2003); The Dolphina [2011] SGHC 273; Miramar Maritime

Corp v Holborn Oil Trading (The Miramar) [1984] 3 WLR 1. 39

National Jaya (Pte) Ltd v Hong Tat Marine Shipping Pte Ltd [1978–1979] SLR 416 at 419; BNP Paribas v

Bandung Shipping Pte Ltd. [2003] SGHC 111. 40

Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715 ; Glencore International AG v

MSC Mediterranean Shipping Co SA [2015] EWHC 1989 (Comm) at [22]; The Star Quest [2016] 3 SGHC 100;

Sir Bernard Eder, et al, Scrutton on Charterparties and Bills of Lading, 23rd

Ed., (London: Sweet & Maxwell,

2015), para 2-047; Guenter Treitel and Francis Reynolds, Carver on Bills of Lading, 3rd

Ed., (Sweet & Maxwell,

3rd Ed., 2011), para 3-012. 41


287. 42


287. 43

India Steamship Co v. Louis Dreyfus Sugar Ltd (The Indian Reliance) [1997] 1 Lloyd's Rep 52.


12

payment of freight under the bill of lading;44

hence, it would want to know which

charterparty he is bound to. IDC would have intended to incorporate the charterparty

between INFERNO and it would be familiar with the terms and such terms have been

negotiated by it.

28. One of the implications of incorporation of a charterparty into a bill of lading is that the

cargo under the bill of lading is subjected to lien under that charterparty.45

Surely, as a

cargo owner, the shipper would not want to be subjected to a lien provision that he was

not even aware of. At the case at bar, the Cargo, which belongs to IDC, is allegedly

subjected to a lien under the OREVOY C/P, to which IDC is not even aware of.

ii. The voyage charterparty between INFERNO and IDC Is More Apposite to

the B/L than the OREVOY C/P

29. The appositeness is assessed from whether or not the terms of the charterparty will be

congruent in the context of a carriage under the bill of lading.46

The Claimant relied on

the case of The SLS Everest to argue that since the term used in the B/L is “freight,”

therefore a voyage charterparty, specifically the OREVOY C/P, is incorporated.

30. INFERNO submits that the Claimant failed to note the distinguishing fact between The

SLS Everest and our present case. The SLS Everest deals only with a question of which of

two charterparties is incorporated into the bill of lading: a time charterparty or a voyage

charterparty. The bill of lading in The SLS Everets used the term “freight” and the court

held that the voyage charterparty was incorporated for reasons of appositeness.

31. In the present case, the B/L uses the term “freight,” therefore, applying The SLS Everest,

a voyage charterparty is to be incorporated into the B/L. However, there are two voyage

44

Cho Yang Shipping Co Ltd v. Coral (UK) Ltd. [1997] CLC 1100. 45

The Epic [2000] 3 SLR 735; Aktieselskabet Ocean v B Harding & Sons Ltd [1928] 2 KB 371 (1928); Turner

and Another v. Haji Goolam Mahomed Azam [1904] AC 826; Gardner & Sons v. Trechmann [1884] 15 QBD

154. 46

Bangladesh Chemical Industries Corporation v Henry Stephens Shipping Company LimitedTex-Dilan

Shipping Company Limited (The SLS Everest) [1981] WL 187858.


13

charterparties in the present case, i.e. the OREVOY C/P and the voyage charterparty

between INFERNO and IDC. Thus, the crux of the issue is which voyage charterparty is

to be incorporated. The SLS Everest fails to provide any meaningful bearing for this such

issue, therefore it is not applicable to the case at hand.

32. Moreover, Clause 25 of the OREVOY C/P Part II stipulates that the bills of lading issued

shall be as per the “COAL-OREVOYBILL” bill of lading form.47

Therefore, bills of

lading incorporating the OREVOY C/P would certainly be in the “COAL-

OREVOYBILL” bill of lading form. In the present case, the B/L issued was in the form

of IMLAM-Consignorists letterhead, without any indication or any printed letters on

COAL-OREVOY. Therefore, the B/L is not congruent to the OREVOY C/P terms. In

conclusion, for the abovementioned reasons, the OREVOY C/P is not incorporated into

the B/L.

IV. THE CLAIMANT COULD NOT DIRECT IMLAM TO RECOVER B/L

FREIGHT FROM IDC FOR THE CLAIMANT’S BENEFIT

33. It is an established rule that lien over sub-freight is only available under express

contractual term. In the absence of such clause, such as in this case, there is no right on

the part of the shipowner to exercise lien over sub-freight.48

The Claimant argued that it

can direct IMLAM, as a carrier under the B/L, to recover B/L Freight from IDC, as the

shipper, for the Claimant’s benefit under equitable duty.49

Such contention by the

Claimant should be rejected because (A) IMLAM’s right to make a direct claim for the

B/L Freight is not triggered as there is no default in the hire payment under the Time C/P.

47

Moot Scenario, OREVOY C/P, Cl. 25, p. 32. 48

Western Bulk Shipowning III A/S v Carbofer Maritime Trading ApS & Ors., (The Western Moscow) [2012]

EWHC 1224 (Comm); The Atticka Hope [1988] 1 Lloyd's Rep. 439; The Ugland Trailer [1985] 2 Lloyd's Rep.

372, at p.374; Care Shipping Corporation v. Latin American Shipping Corporation (The Cebu (No 1)) [1983] 2

WLR 829. 49

Memorandum of the Claimant, paras. 44-46.


14

Moreover, (B) the concept of equitable duty between a head owner and a time charterer in

respect of the cause of action for the unpaid freight is not an established rule.

A. IMLAM’s Right to Make a Direct Claim for the B/L Freight is Not Triggered as

There is No Default in the Hire Payment under the Time C/P

34. The provision of “freight payable as per charterparty” under a bill of lading expresses

that a shipowner has delegated authority to the time charterer to collect freight in a

manner agreeable to the time charterer and sub-charterer.50

Although the freight is the

shipowner’s right, it is directed to be paid to a nominated recipient or third party.51

Courts, both in English and Singaporean jurisdictions, acknowledge that there is an

implicit understanding that a head shipowner will not exercise its legal right under the bill

of lading until and unless the time-charterer is in default of his obligation to pay the

charter hire under the time charterparty.52

Put differently, the head shipowner’s right to

make a direct claim under the bill of lading is only triggered when there is a default in

hire payment by a time-charterer.

35. Here, pursuant to the “freight payable as per charter party” terms under the B/L, IMLAM

had delegated to the Claimant the authority to collect the freight in a manner agreeable to

the Claimant and its sub-charterers. Although the B/L Freight is IMLAM’s right, it is

directed to be paid to a nominated recipient under the applicable charterparty. There is an

implicit understanding that IMLAM will not exercise its legal right under the B/L until

and unless the Claimant is in default of its obligation to pay the charter hire under the

Time C/P. IMLAM’s right to make a direct claim under the B/L is only triggered when

there is a default in the charter hire by the Claimant, which is not the case here.

50

Tradigrain SA v King Diamond Marine Ltd (The Spiros C) [2000] WL 877762 (2000); Dry Bulk Handy

Holding Inc. v. Fayette International Holdings Ltd (The Bulk Chile) [2013] 2 Lloyd’s Rep.47. 51

Dry Bulk Handy Holding Inc. v. Fayette International Holdings Ltd (The Bulk Chile) [2013] 2 Lloyd’s

Rep.47. 52

Cascade Shipping Inc, v. Eka Jaya Agencies (Pte.) Ltd. [1993] 1 SLR 980, para. 37; Molthes Rederi AB v

Ellermans Wilson Line Ltd [1927] 1 KB 710 (1926).


15

Therefore, IMLAM’s right to make a direct claim for the B/L Freight is not triggered in

the present case. Accordingly, IMLAM cannot make a direct claim for the B/L Freight on

IDC.

B. The Concept of Equitable Duty Between a Head Owner and a Time Charterer in

Respect of The Cause of Action for the Unpaid Freight is Not an Established

Rule

36. The Claimant argues that, on the basis of equitable duty between a head owner and a time

charterer, IMLAM may make a direct claim for the B/L Freight.53

However, such

equitable duty is not an established rule; therefore it cannot be invoked in the present

case.

37. The Claimant relied solely on limited academic opinions in an attempt to establish an

equitable duty between the Claimant and IMLAM as a basis for the cause of action for

IMLAM claims of B/L Freight.54

Such equitable duty has never been applied in any case

law. This absence is understandable as there are various business reasons, acknowledged

by English and Singaporean judges, which do not support this concept.

38. Firstly, a head shipowner would not be expected to act in any manner which would

damage its commercial reputation.55

There is no reason for a head shipowner to be

concerned with the freights to be collected under the B/L as it is only entitled to hire

charges as provided in its time C/P.56

The head shipowner executes the carriage of cargo

in exchange of the hire paid by the time charterer and not because of the bill of lading

freight paid by the shipper.57

53



Dry Bulk Handy Holding Inc. v. Fayette International Holdings Ltd (The Bulk Chile) [2013] 2 Lloyd’s Rep.

47. 56

Cascade Shipping Inc, v. Eka Jaya Agencies (Pte.) Ltd. [1993] 1 SLR 980. 57

Cascade Shipping Inc, v. Eka Jaya Agencies (Pte.) Ltd. [1993] 1 SLR 980.


16

39. Secondly, such a direct claim could be seen as an interference with the authority that has

been delegated by the head shipowner to the time charterer. Such interference may be

regarded as repudiatory in regard to the time charterparty.58

40. As a conclusion, IMLAM’s right to make a direct claim for the B/L Freight is not

triggered by and the Claimant cannot rely on the concept of equitable duty; therefore the

Claimant cannot direct IMLAM to recover the B/L Freight from IDC for the Claimant’s

benefit.

V. THE CLAIMANT’S TERMINATION OF THE OREVOY C/P IS WRONGFUL

41. The Claimant argued that INFERNO committed a breach of the Freight Clause and such

action constitutes a repudiatory breach entitling the Claimant to terminate the OREVOY

C/P.59

However, this Tribunal must reject this contention because the alleged breach is

not a repudiatory breach; hence, the Claimant’s termination is unlawful.

42. Although a freight clause may provide a time stipulation, the effect of such stipulation

always depends on the true construction of the contract.60

A default in payment obligation

per se does not automatically give the innocent party a right to terminate the contract.61

It

only does so if there is an express provision giving the right to do so or if the non-

payment is such as to amount to a repudiation of the contract.62

58

Dry Bulk Handy Holding Inc. v. Fayette International Holdings Ltd (The Bulk Chile) [2013] 2 Lloyd’s Rep.

47. 59

Memorandum of the Claimant, para. 47, Moot Scenario, p. 68. 60

Chua Tian Chu and another v Chin Bay Ching and another [2011] SGHC 126.; Empresa Cubana de Fletes v

Lagonisti Shipping Co Ltd (The Georgios C) [1971] 1 QB 488; Brani Readymixed Pte Ltd v Yee Hong Pte Ltd

[1994] 3 SLR(R) 1004; Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R)

602. 61


Lagonisti Shipping Co Ltd (“The Georgios C”) [1971] 1 QB 488; Brani Readymixed Pte Ltd v Yee Hong Pte

Ltd [1994] 3 SLR(R) 1004; Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R)

602. 62


Lagonisti Shipping Co Ltd (“The Georgios C”) [1971] 1 QB 488; Brani Readymixed Pte Ltd v Yee Hong Pte

Ltd [1994] 3 SLR(R) 1004; Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R)

602.


17

43. In the present case there is no express provision in the OREVOY C/P that entitles the

Claimant to terminate the contract once the freight payment was not received within five

banking days after the three pre-conditions as mentioned in the Freight Clause:

completion of loading; signing/releasing B/L; receipt of owners’ freight invoice.63

44. Further, the late payment does not amount to a repudiatory breach. In order to constitute a

repudiation, the breach must be such as to deprive the innocent party of the substantially

whole benefit of the contract to which it is entitled under the contract.64

Thus, the

important question is whether the alleged breach concerns a provision that constitutes

substantially the whole benefit of the contract.

45. To assess whether the timing obligation of the Freight Clause constitutes the substantially

whole benefit, we must consider the parties’ intention objectively ascertained. This can be

done through assessing the formulation of the Freight Clause and also the circumstances

of the voyage. During the conclusion of the OREVOY C/P, the Parties already knew that

the payment should have been made prior to the discharge. By taking into account that the

Parties did not incorporate a provision in the OREVOY C/P entitling termination in case

of non-payment of Freight before the discharge, it can be inferred that the timing

obligation does not constitute the substantially whole benefit of the contract. Therefore,

INFERNO’s breach of the timing obligation in the Freight Clause is not a repudiatory

breach and the Claimant is not entitled to terminate the OREVOY C/P on that basis.

46. When a party terminates a contract without any legal justification or valid ground, such

termination is wrongful.65

In such case, the terminating party is in repudiatory breach

63


Hongkong Fir Shipping v. Kawasaki Kisen Kaisha [1962] 2 Q.B. 26, 60, 65; Rice v Great Yarmouth BC

[2003] T.C.L.R 1; South Oxfordshire D v SITA UK Ltd [2006] EWHC 2459 (Comm); Photo Production v.

Securicor [1980] A.C. 827, 849; The Hansa Nord [1975] 2 Lloyd’s Rep. 445; Freeman v Taylor [1831] 8 Bing

124; MacAndrew v Chapple [1865] 18 CB (NS) 759; John F. Wilson, Carriage of Goods by Sea, 7th

Ed,

(Harlow: Pearson, 2010). 65

Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R) 602; Ogle v Comboyuro

Investments Pty Ltd [1976] HCA 21.


18

itself and the other party would be entitled to the damages thereof.66

In this case, the

Claimant, lacking any legal ground, wrongfully terminated the OREVOY C/P, as

explained above.67

Thus, the Claimant is in repudiatory breach itself and INFERNO is

entitled to seek damages thereof.

VI. THE CLAIMANT IS NOT ENTITLED TO DAMAGES FOR DETENTION IN

THE FULL AMOUNT FOR ITS FAILURE TO ACT REASONABLY UPON

INFERNO’S BREACH

47. The Claimant argued that INFERNO breached its obligation to nominate a discharge port

on time as per the Discharge Port Clause, i.e. before 11 October 2016 at 08.00 Singapore

Local Time (“SGLT”). Subsequently, the Claimant seeks damages for detention for the

alleged loss due to the delay caused by the breach.68

The innocent party is entitled to

recover by way of damages the true value of the contractual rights that he has thereby

lost, subject to his duty to mitigate.69

INFERNO admits its failure to nominate a discharge

port on time as per Discharge Port Clause.70

However, INFERNO submits that (A) the

Claimant is not entitled to damages for detention from 11 October until 17 October 2016

due to its failure to mitigate the loss by staying idle in SG OPL; alternatively, (B) the

Claimant is not entitled to damages for detention after 16 October 2016 due to its failure

to mitigate by refusing INFERNO’s offer for the Amendment of the Discharge Port to be

Busan port.

66

Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R) 602; Ogle v Comboyuro

Investments Pty Ltd [1976] HCA 21. 67

Moot Scenario p. 68. 68


Maredelanto Compania Naviera S.A. v. Bergbau-Handel G.M.B.H. (The Mihalis Angelos) [1970] 3 WLR

601. 70

Moot Scenario, p. 21.


19

A. The Claimant Is Not Entitled to Damages for Detention from 11 October until 17

October 2016 Due to Its Failure to Mitigate the Loss by Staying Idle in Singapore

OPL

48. Under principles of mitigation, an innocent party is required to take all reasonable steps to

mitigate the loss caused by a defaulting party’s breach.71

Such principle boils down to a

central question of whether the innocent party had acted reasonably to mitigate the loss.72

Failure to act reasonably to mitigate the loss disentitles the innocent party to recover

damages for the avoidable loss.73

49. In this present case, the Claimant argues that it could not proceed from Singapore because

INFERNO had not nominated the discharge port, rendering the Tardy Tessa to stay idle at

the Singapore OPL.74

However, INFERNO submits that the Claimant’s inaction by

staying idle in Singapore OPL was unreasonable, and thus disentitles the Claimant for the

damages of detention that it could have avoided.

50. In assessing whether the Claimant’s conduct was reasonable, the standard of

reasonableness is what a prudent and reasonable shipowner, in the same position as the

Claimant, would have done.75

In Mansel Oil Ltd & Anor v Troon Storage Tankers SA76

it

was acknowledged that in the absence of port nomination, it is usual for a shipowner to

co-operate with its charterer to minimize delay by proceeding to a deviation point and

demanding the nomination on the way. A deviation point is an intersection in a course of

voyage at which a vessel must choose which route it should take in order to arrive at one

71

The Asia Star [2010] SGCA 12; MP-Bilt Pte Ltd v Oey Widarto [1999] 1 SLR(R) 908; [1999] SGHC 70;

White and Carter (Councils) Ltd v McGregor [1962] AC 413, HL at 445; Stocznia Gdanska SA v Latvian

Shipping Co [1998] 1 All ER 883; Jia Min Building Construction Pte Ltd v Ann Lee Pte Ltd (Jia Min Building

Construction) [2004] 3 SLR(R) 288; Banco de Portugal v Waterlow and Sons, Limited (Banco de Portugal)

[1932] AC 452. 72

The Asia Star [2010] SGCA 12. 73

The Asia Star [2010] SGCA 12; Jia Min Building Construction Pte Ltd v Ann Lee Pte Ltd (Jia Min Building

Construction) [2004] 3 SLR(R) 288; Limited v Underground Electric Railways Company of London, Limited

(British Westinghouse Electric) [1912] AC 673. 74

Moot Scenario, p. 52-67. 75

The Asia Star [2010] SGCA 12; Dunkirk Colliery Company v Lever (1878) 9 Ch D 20. 76

Mansel Oil Ltd & Anor v Troon Storage Tankers SA [2008] EWHC 1269 (Comm).


20

of a stipulated range of ports. Before the vessel reaches the deviation point the owners

can, without a nomination, do all that they need to in complying with the charterparty,

and without loss to themselves.77

51. The port options prescribed in the OREVOY C/P are eight ports in China. To proceed to

any of those ports from Singapore, the Tardy Tessa had only one option, which was to

sail via South China Sea, and subsequently meet the deviation point on Hangzhou Bay.78

Hangzhou Bay is the intersection of every route to the stipulated ports under the

OREVOY C/P. Therefore, given the absence of port nomination at that time, the Claimant

should have cooperated with INFERNO to minimize delay by proceeding to Hangzhou

Bay, as the deviation point in this voyage. The Claimant could have reached the deviation

point without loss to itself, rather than waiting in Singapore OPL.

52. Further, had the Claimant proceeded to Hangzhou Bay, as the deviation point, the

Claimant would have been able to avoid six days lost in waiting for the nomination. The

Tardy Tessa is a bulk carrier with a deadweight of 76,822.00 metric tonnes,79

categorized

as a panamax bulk-carrier, with an average speed of 14.5 knots.80

The distance from

Singapore to Hangzhou Bay is approximately 2,172 nautical miles.81

Proceeding to

Hangzhou Bay at the average speed of the Tardy Tessa would have taken approximately

six days, and the Tardy Tessa would have arrived at Hangzhou Bay on 17 October 2016.

Therefore, the time period where the Tardy Tessa would have been waiting idle could

have been reduced by six days, i.e., from 11 October 2016 to 17 October 2016.

77

Mansel Oil Ltd & Anor v Troon Storage Tankers SA [2008] EWHC 1269 (Comm). 78

http://ports.com/sea-route/ adjust port variable from Singapore to: Ningbo; Yantai; Tianjin; Dalian; Jinzhou;

Qingdao; Yingkou. ; GPS Coordinates Of Hangzhou Bay (“Hangzhou Bay Coordinate”), China 30°17'6.72" N

120°55'26.40" E. 79


Man Diesel & Turbo, Propulsion Trends in Bulk Carriers: Two-stroke Engines, p. 14, Fig. 9: Average design

ship speed of bulk carriers. 81

https://www.marinetraffic.com/en/voyage-planner, adjust destination variable from Singapore to Hangzhou

Bay Coordinates.

http://ports.com/sea-route/

https://www.marinetraffic.com/en/voyage-planner


21

B. In any Event, the Claimant Is Not Entitled to Damages for Detention after 16

October 2016 Due to Its Failure to Mitigate by Refusing the Amendment for the

Discharge Port

53. It is established that in the commercial context, the test of reasonableness in principles of

mitigation is a question of fact; it must reflect commercial and fact-sensitive fairness

having regard to all circumstances existing.82

The test of reasonableness is what a

reasonable and prudent businessman would have done in the ordinary course of his

business had he been in the aggrieved party’s shoes.83

54. The innocent party should be encouraged to be self-reliant or proactive in attempting to

reduce its loss by taking reasonable steps, instead of pinning all its loss on the defaulting

party.84

In the realm of commercial contract, it is reasonable for a prudent and reasonable

businessman, as an aggrieved party, to engage alternative performance to mitigate the loss

resulting from the breach.85

Failure to engage with the reasonable alternative performance

is deemed as unreasonable inaction.86

55. In acting reasonably, the innocent party must act with both its own interests and the

interests of the defaulting party.87

In the case of The Asia Star, a charterer ordered a

vessel from a shipowner to be delivered to the nominated loading port for a carriage of

palm oil. However, the shipowner failed to deliver the vessel at the designated time.

When the vessel eventually arrived, it turned out that loading was impossible as the vessel

was not fit to load all the palm oil. Consequently, the charterer incurred loss from the

accrual of warehouse costs and third- party claims caused by the inability to load. At that

82

The Asia Star [2010] SGCA 12. 83

The Asia Star [2010] SGCA 12; Dunkirk Colliery Company v Lever (1878) 9 Ch D 20. 84

The Asia Star [2010] SGCA 12; Andrew Burrows, Remedies for Torts and Breach of Contract, 3rd

Ed,

(Oxford: University Press, 2004), p. 122. 85

The Asia Star [2010] SGCA 12; Payzu, Limited v Saunders [1919] 2 KB 581; OCBC Securities Pte Ltd v

Phang Yul Cher Yeow [1997] 3 SLR(R). 86

The Asia Star [2010] SGCA 12; OCBC Securities Pte Ltd v Phang Yul Cher Yeow [1997] 3 SLR(R). 87

Smailes and Son v Hans Dessen and Co (1906) 94 LT 492 at 493.


22

time, the charterer had an option to engage an alternative vessel at a slightly higher rate,

but chose not to do so. In that case it was held that if a substitute vessel was available on

reasonable terms, the charterer ought to have mitigated its loss by engaging that vessel. If

a charterer cannot get the same vessel of the same size as it originally chartered, it should

take the next best reasonable option that is available, which may include chartering a

larger vessel, if a failure to do so will cause greater loss to the defaulting party. The judge

held that the charterer’s refusal to engage the alternative vessel was unreasonable, and

therefore the charterer failed to mitigate its losses, and was thus not entitled to the

corresponding loss he could have avoided by taking the alternative engagement.

56. Here, given the circumstances of port congestions in the prescribed Chinese ports on 16

October 2016,88

INFERNO nominated Busan as the alternative discharge port, along with

an offer to amend the freight on an open-book basis.89

However, the Claimant

unreasonably rejected such amendment with the sole reason of a rumor of a zombie

outbreak, the validity of which information is questionable.90

57. Applying the same rationale applied in The Asia Star as explained in paragraph 55, Busan

was available as a substitute arrangement and it was offered on reasonable terms of

freight; therefore, the Claimant ought to have mitigated its loss by accepting such

amendment. Given the circumstances at that time, the Chinese ports were not available,

therefore the Claimant ought to have taken the next best reasonable option, which was

Busan. The Claimant should have been proactive in attempting to reduce its loss, which

could have been done by accepting the alternative arrangement, instead of pinning all its

loss on INFERNO. The Claimant’s refusal to accept the alternative arrangement was

unreasonable inaction; and therefore the Claimant had failed to mitigate and is not

88



Procedural Order No. 3, para. 6.


23

entitled to damages for detention it could have avoided, i.e. the damages for detention

accruing from the date such offer was made on 16 October 2016.

58. Further, as a matter of reasonableness, the judge in The Asia Star held that the aggrieved

party must encourage communication with the defaulting party concerning possible

mitigation steps.91

However, the Claimant does not show any cooperation to resolve the

unfortunate circumstances. Not only did the Claimant reject INFERNO’s proposal of an

alternative discharge port, based on unfounded rumors, it failed to suggest any suitable

alternative arrangements, for example, negotiating hire rates or requesting a guarantee.

59. In conclusion, the Claimant failed to act reasonably to mitigate the loss incurred due to

INFERNO’s breach. Therefore, the loss, if any, shall not be assessed in full but only upon

the unavoidable period. Had the Claimant proceeded to Hangzhou Bay, any loss incurred

from 11 October 2016 to 17 of October 2016 could have been avoided. Therefore, the

loss shall only be assessed for four days, i.e. 17 October 2016 until 21 October 2016. In

any event, had the Claimant accepted the amendment to Busan, there would have been no

loss incurred after 16 October 2016, and therefore, the assessment shall be limited to 11

until 16 October 2016 only.

91

The Asia Star [2010] SGCA 12.


24

PRAYER FOR RELIEF

For the reasons set out above, INFERNO AND IDC request the Tribunal to:

(a) ORDER for the two arbitration proceedings to be consolidated;

and further to:

(b) FIND that the Tribunal shall not order a liberty to sell and appraise the Cargo pendente

lite;

and further to:

(c) DECLARE that the Claimant’s exercise of lien over the Cargo is unlawful;

(d) DECLARE that the Claimant could not direct IMLAM to recover the B/L Freight from

IDC for the Claimant’s benefit;

(e) DECLARE that the Claimant’s termination of the OREVOY C/P is wrongful;

(f) FIND that the Claimant is not entitled for the full amount of damages for detention; and

(g) AWARD other reliefs as the Tribunal deems fit.