View
2
Download
0
Category
Preview:
Citation preview
MEMORANDUM ON BEHALF OF THE RESPONDENT
COUNSELS
Sanya Kapoor
Riya Gupta
Arushi Sethi
Rupal Gupta
NINETEENTH ANNUAL INTERNATIONAL MARITIME
LAW ARBITRATION MOOT
2018
Guru Gobind Singh Indraprastha University, New Delhi, India
IN THE MATTER OF:
CERULEAN BEANS AND AROMAS LTD. … CLAIMANT
v.
DYNAMIC SHIPPING LLC. … RESPONDENT
TEAM 4
TEAM 4 MEMORANDUM FOR RESPONDENT
II
TABLE OF CONTENTS
ABBREVIATIONS IV
LIST OF AUTHORITIES V
STATEMENT OF FACTS 1
ARGUMENTS ON JURISDICTION 2
1. THAT THE TRIBUNAL DOES NOT HAVE JURISDICTION TO DETERMINE
THE CLAIM FOR DAMAGES MADE BY THE CLAIMANT. 2
A. The English law governs the arbitration agreement 2
(i) The English law has the closest and most real connection to the arbitration
agreement. 2
(ii) The choice of London as the arbitral seat is testimony to this conclusion 3
B. That the claimant has superseded Clause 27 leading to pre-mature arbitration 3
(i) Pursuant to Clause 27(d) of the Record, referring the matter to
the jurisdiction of a Master Mariner for expert determination was a
pre-arbitral step. 3
(ii)The Claimant is liable for the repercussions of invoking a pre-mature
arbitration. 4
C. The Master Mariner has the expertise to analyse technical matters 5
ARGUMENTS ON THE MERITS OF THE CLAIM 6
2. THAT THE RESPONDENTS ARE NOT LIABLE FOR THE BREACH OFTHE
CHARTERPARTY 6
A. That the deviation of madam dragonfly was effected by instances of force majeure 6
B. That the Respondents had exhibited reasonable and prudent behaviour 8
C. That Respondents cannot be made liable for reasonable deviation 9
D. That the commercial object of the contract has not been frustrated 11
TEAM 4 MEMORANDUM FOR RESPONDENT
III
E. That the Charterer’s breached their liability of nominating a safe port of delivery 11
3. THAT THE CLAIMANT DOES NOT HOLD MARITIME EQUITABLE LIEN
ON THE VESSEL 12
A.Claimant is not entitled to hold maritime lien 12
B. Claimant is not entitled to hold equitable lien 12
4. THAT THE CLAIMANT IS LIABLE TO PAY THE DAMAGES CLAIMED 14
A.That the delivery took place on 29th July, 2017. 14
B. That the Claimant is liable to pay the freight. 15
C.That the Claimant is liable to pay for repairs to hull. 16
D.That the Claimant is liable to pay demurrage. 17
E.That the Claimant is liable to pay for use of electronic access systems. 19
F.That the Claimant is liable to pay the agency fee. 21
ARGUMENTS ON THE MERITS OF THE COUNTER CLAIM 22
5.THAT RESPONDENTS ARE NOT LIABLE TO PAY DAMAGES CLAIMED
BY THE CLAIMANT. 22
A.That the Respondent is not liable to pay the damages for the damages goods and
replacement cargo 22
B.That the Respondent is not liable to pay the settlement payment 24
REQUEST FOR RELIEF 25
TEAM 4 MEMORANDUM FOR RESPONDENT
IV
ABBREVIATIONS
Claimant Cerulean Beans and Aromas Ltd.
Cl. Clause
Respondents Dynamic Shipping LLC
WWD Weather Working Days
S. Section
p. Page
Para. Paragraph
LMAA London Maritime Arbitration Association
USD US Dollars
NSW New South Wales
HVR Hague Visby Rules by Brussels Protocol, 1968
UNCTAD United Nations Conference on Trade and
Development
ICC International Chamber of Commerce
Charterparty The Voyage Charterparty between Claimant and
Respondent.
Hon’ble Honourable
TEAM 4 MEMORANDUM FOR RESPONDENT
V
LIST OF AUTHORITIES
CASES AND ARBITRAL AWARDS
AktieselskabetReidar v Arcos Ltd [1927] 1 KB 352.
Aldebaran Compania Maritime SA Vs Aussenhandel AG (The Darrah), [1977] AC 157.
Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50, 61
Anderson, & Co v The Owners of San Roman(1873-74) L.R 5P C 301.
Aries Tanker Corp v Total Transport [1977] 1 Lloyd’s Rep 334 at p 337
Attorney General of the Republic of Ghana v Texaco Overseas Tankships Ltd – “Texaco Melbourne”
(1993) 1 Lloyd’s Rep 471 (CA).
Automatic Tube Company et al., v. Adelaide Steamship (Operations) Ltd. et al. [1967] 1 Lloyd's List
L.R.
Badgin Nominees Pty. Ltd. v Oneida Ltd. Anr [1998] VSC 188.
Banco de Portugal v Waterlow [1932] AC 452
Barnes v Alexander 232 US 117, 121.
Beechwood Birmingham v. Hoyer Group UK [2011] Q.B. 357
Beier Howlett Pc v. Police & Fire Retirement Systems 858 N.W.2d 432 (2015).
Black Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg [1981] 2 Lloyd’s Rep 446.
Bonython v Commonwealth (1950) 81 CLR 486, 498
Bourne v Gatliffe (1841) 133 ER 1298
Brecknock,etc., Nay. Co. v. Pritchard, 6 T. R. 750
Bridge (1989) 105 LQR 398; The Oregon, 55 F. 666, 673 (6th Cir. 1893)
British Movietonews Ltd v London and District Cinemas Ltd [1952] AC 166, 185
British Westinghouse Electric Co Ltd v. Underground Electric Rys Co of London Ltd, [1912] AC 673,
689
Brown v. Nitrate Producers S.S. Co. (1937) 58 LI.L.R.188
Buntin v. Fletchas, 257 F.2d 512, 514 (5th Cir. 1958)
Calcot, Ltd. v. Isbrandtsen Company, 318 F.2d 669 (1st Cir. 1963)
TEAM 4 MEMORANDUM FOR RESPONDENT
VI
Cf. AIC Ltd v. Marine Pilot (The Archimidis) [2008] 1 Lloyd’s Rep. 597.
cf. Empresa Cubana Importada de Alimentos v. Iasmos Shipping Co. S.A. (The Good Friend) [1984] 2
Lloyd’s Rep. 586
Chanler v. Wayfarer Marine Corp., 302 F. Supp. 282, 286 (S.D. Me. 1969)
Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd. (HL) [1993] 1 Lloyd’s Rep 291
Circle Finance Company vs. Jessie L. Peacock and Sara A. Peacock 399 So. 2d 81 (1981).
Coast Lines Ltd v Hudig &Veder Chartering NV [1972] 2 WLR 280 (‘Coast Lines’)
Compania De Vapore sInsco, S.A. v. Missouri Pacific R. Co., 232 F.2d 657 (5th Cir. 1956).
Compania Naviera Aeolus SA v Union of India (The Spalmatori) [1964] AC 868, 879 (Lord Reid)
Compania Naviera Aeolus SA v Union of India [1964] AC 868 at 899 (Lord Guest)
Comyn Ching v. Oriental Tube [1979] B.L.R. 56, esp. pp. 80
Contine xInc v SS Flying Independent [1952] AMC 1499 at p 1503
Cransfield Bros. v. Tatem S.N.Co. (1939) 64 LI.L.R. 264, 275
Dakin v Oxley (1864) 143 ER 938
Dallah Real Estate and Tourism Co v Ministry of Religious Affairs of the Government of Pakistan
[2011] 1 AC 763, 830
Dammers & Van der Heide Shipping & Trading, Inc. v. S.S. Joseph Lykes 300 F. Supp. 358 (E.D. La.
1969).
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500
Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696
Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 729
Derby Resources A.G. v. Blue Corinth Marine Co. (The Athenian Harmony)[1998] 2 Lloyd’s Rep. 410
Dias Compania Naviera SA v Louis Dreyfus Corporation [1978] 1 WLR 261 at 263
Easter City, [1958] 2 Lloyd’s Rep. 127.
Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm)
Exmar BV v. National Iranian Tanker Co. (The Trade Fortitude) [1992] 1 Lloyd’s Rep. 169, 177
FC Bradley & Sons Ltd v Federal Steam Navigation Co Ltd (1926) 24 Ll LR 446, 455
Federal Insurance Co. v. Sabine Towing & Transp. Co.783 F.2d 347
TEAM 4 MEMORANDUM FOR RESPONDENT
VII
Fisher v. Val de Travers Asphalte (1876) 45 L.J.C.P. 479
Fitzgerald v. Lona (Owners) (1932) 44 Ll. L. Rep. 212
Freedom Maritime Corp. v. International Bulk Carriers (The Khian Captain (No. 2)) [1986] 1 Lloyd’s
Rep. 429.
Fulton Shipping Inc of Panama v Globalia Business Travel S.A.U. [2015] EWCA Civ 1299.
G.W. Grace & Co Ltd v General Steam Navigation Co Ltd (The Sussex Oak) [1950] 2 KB 383
Gatliffev Bourne (1838) 4 Bing. N.C. 314, (1841) 3 M. & G. 643.
Gebruder Metelmann GmbH & Co KG v NBR (London) Ltd [1984] 1 Lloyd’s Rep 614 at 633
Gelb v. Minneford Yacht Yard, Inc., 108 F. Supp. 211 (S.D.N.Y. 1952)
General Feeds Inc. v. Slobodna Plovidba, [1999] 1 Lloyd’s Rep. 688.
Gilroy, Sons & Co v W R Price & Co [1893] AC 56, 64
Glyn Mills v East and West India Dock Co (1882) 7 App Cas 591
Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] 2 A.C. 353
Grad Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2013] EWH C
2199 (Comm) 2013 WL 3878761.
Guan Bee v. Palembang Shipping Co. [1969] 1 May L.J.
Hadley v. Clarke, 8 T. R. 259.
Harlow & Jones, Ltd v Panex (International), Ltd [1967] 2 Lloyd’s Rep 509
Harris v Jacobs (1885) 15 QBD 247, 251 (Brett MR)
Hedley v Pinkney & Sons Steamship Co [1894] AC 222
Hellenic Dolphin [1978] 2 Lloyd’s Rep. 336.
Hellenic Lines, Ltd. v. Embassy of Pakistan 467 F.2d 1150, 1154 (2d Cir. 1972)
Him Portland, Llc v. Devito Builders, Inc. 211 F. Supp. 2d 230 (D. Me. 2002)
Hooper Bailie Associated Ltd. v. Natcon Group Pty Ltd., (1992) 28 N.S.W.L.R. 194
Huddart Parker Ltd v Cotter (1942) 66 CLR 624
In re Arbitration between Nereus Shipping, S.A. and Island Creek Coal Sales Co., SMA 1763 (1982)
International Packers London Ltd v Ocean Steamship Co Ltd [1955] 2 Lloyd’s Rep 218
J. Gerber & Co. v. S.S. Sabine Howaldt, 437 F.2d 580, 588, 1971 AMC 539 (2d Cir. 1971).
TEAM 4 MEMORANDUM FOR RESPONDENT
VIII
John F. Hunt Demolition v. Asma Engineering Ltd [2008] 1 All E.R. 180, [2007] EWHC 1507 (TCC).
Johnston Bros v Saxon Queen SS Co (1913) 108 LT 564.
Kiddle v. Lovett (1885) 16 Q. B. D. 605.
Kish (JE) v Charles Taylor & Sons [1912] AC 604, 616
Kish v Taylor [19121 A.C. 604
Kodros Shipping Corp. v. Empresa Cubana de Fletes [1981] 2 Lloyd’s Rep. 613
Koufos v C Czarnikow Ltd[1967] UKHL 4
Lebeaupin v Richard Crispin & Co (1920) 2 KB 714.
Leeds Shipping Co. Ltd. v. Société Française Bunge [1958] 2 Lloyd’s Rep. 127
Leeds SS. Co. v. Duncan Fox (1932) 37 Com. Cas. 213
Leigh And Sillavan Ltd V Aliakmon Shipping Co Ltd (The Aliakmon), [1985] UKHL 10.
Leonard v Leyland & Co (1902) 28 TLR 727
Lim Kim Som v Sheriffa Taibahbte Abdul Rahman [1994] 1 SLR(R) 233, 246 [28].
Lockhart v Falk (1875) LR 10 Ex 132, 135 (Cleasby B)
London Arbitration 2/2005, (2005) 659 LMLN 1.
Lord Mansfield in Forward v. Pittard (1785) 1 T.R. 2.
Lord Mansfield in Proprietors, v.Wood, 3 Esp. 127; Forward v. Pittard, IT. R. 27; 2 Greenl. Ev. (14 th
ed.), p. 209.
M.D.C. v. N.V.Z.M. Beursstraat[1962] 1 Lloyd’s Rep. 180
Macrae v. H.G. Swindells, [1954] 1 W.L.R. 597
MDC Ltd. v. NV Zeevaart Maatschapij Beursstraat [1962] 1 Lloyd’s Rep. 180, 186.
Mediolanum Shipping Co v Japan Lines Ltd (The Mediolanum) [1984] 1 Lloyd’s Rep 136 (CA)
Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366, 369
Metropolitan Tunnel and Public Works Ltd v. London ElectricRailway Co [1926] 1 Ch 371 at 390.
Montedison S.P.A. v. Icroma S.p.A. (The Caspian Sea) [1980] 1 Lloyd’s Rep. 91.
National Packaging Corp. v. N.Y.K. Line [1973] 1 Lloyd’s Rep. 46
Newcastle Protection and Indemnity Association v. Assuranceforeningen Gard [1998] 2 Lloyd’s Rep.
387 at p. 407
TEAM 4 MEMORANDUM FOR RESPONDENT
IX
Nissho Iwai Australia Ltd v Malaysian International Shipping Corporation (1989) 167 CLR 219
North American Smelting Co. v. Moller S.S. Co., 204 F.2d 384 (3rd Cir. 1953)
Notura v Henderson[1870] L.R 5 Q.B 354.
Nugent v Smith 4 (1876) 1 CPD 423 at p 444.
Nuzzo v. Rederi, 304 F.2d 506, 510 (2nd Cir. 1962).
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197, 217
P. Dougherty Co. v. 2,471 Tons of Coal, 278 F. 799, 803 (D. Mass. 1922)
Palace Shipping Co v Gans SS Line [1916] 1 KB 138
Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd &Ors (1993) 43 FCR 439, 444.
Potomac Poultry Food Co., Inc. v. M/V Anna Maersk, 1934 AMC 166, 172 (D. Md. 1934).
President of India v West Coast Steamship Co (The Portland Trader) [1963] 2 Lloyd’s Rep 278,
280‐281 (Dist Ct, Oregon).
QH Tours Ltd v Ship Design and Management (Aust) Pty Ltd (1991) 105 ALR 371, 384
R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 500, 529
R&W Paul Ltd v National Steamship Co Ltd (1937) 59 Ll L Rep 28
R.R .CO. vs Reeves 77 U.S. 10 Wall. 176 176 (1869).
Re United Railways of Havana and Regla Warehouses Ltd [1961] AC 1007, 1021
Reardon Smith Line V Australian Wheat Board [1956] 1 Lloyd's Rep. 1.
Red. “Macedonia” v. Slaughter (1935) 40 Com. Cas. 227
RiverWear Comrs. v. Adamson, iQ. B. Div.548
Rothwells Ltd (in liq) v Connell (1993) 27 ATR 137, 143
Ruxley Electronics and Construction Ltd v. Forsyth [1996] A.C. 344
Shell International Petroleum Co. v. Seabridge Shipping (The Metula) [1977] 2 Lloyd’s Rep. 436,
[1978] 2 Lloyd’s Rep. 5
Shubrickv. Salmond, 3 Burr. 1637
Skandia Ins. Co. v. Star Shipping 173 F. Supp. 2d 1228, 2001 AMC 1527
Slater v. Hoyle & Smith [1920] 2 K.B. 11
Smailes and Son v Hans Dessen and Co (1906) 94 LT 492
TEAM 4 MEMORANDUM FOR RESPONDENT
X
Southampton Container Terminals v. Hansa Sch. (The Maersk Colombo) [1999] 2 Lloyd’s Rep. 491.
Stag Line Ltd v Foscolo Mango [1932] AC 328 at p 343-4.
Steel v State Line Steamship Co (1877) 3 App Cas 72
Steel v State Line Steamship Co (1877) 3 App Cas 72
Stegemann v. Miami Beach Boatslips, Inc., 213 F.2d 561, 1954 AMC 1372 (5th Cir. 1954)
Straits Exploration (Australia) Pty Ltd v Murchison United NL [2005] WASCA 241.
Sul America Cia Nacional De Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638.
Supershield v. Siemens Building Technologies [2010] 1 Lloyd’s Rep. 349.
Swedish contractor v The Secretary of the People's Committee for a municipality of an Arab State ICC
Case Nos. 6276 and 6277, 1990
Taylor v. Caldwell, [1863] EWHC QB J1.
The “Sivand” [1998] 2 Lloyd’s Rep 97
The Amstelslot [1962] 2 Lloyd’s Rep. 336.
The Asia Star [2010] 2 Lloyd’s Rep. 121
The Assunzione [1954] 2 WLR 234 (‘Assunzione’), 261
The Brede [1973] 2 Lloyd’s Rep 333
The Dagmar [1968] 2 Lloyd’s Rep 563
The Eastern City, [1958] 2 Lloyd’s Rep 127.
The Elena D’Amico [1980] 1 Lloyd’s Rep 75 at p 89.
The Fjord [1999] 1 Lloyd´s Rep. 307.
The Forum Craftsman (Islamic Republic of Iran Shipping Lines v. Ierax Shipping Co. [1991] 1
Lloyd’s Rep. 81
The Greta Holme [1897] A.C. 596
The Iron Gippsland [1994] 1 Lloyd's Rep. 335
The Metagama, (1928) 29 LIL Rep 253 (HL); Le Blanche v. L.N.W Ry, (1876) 1 C.P.D. 286
The Oceano , 148 F. 131, 133 (S.D.N.Y. 1906).
The Pentland (1897) 13 TLR 430
The Polyglory [1977] 2 Lloyd's Rep. 353
TEAM 4 MEMORANDUM FOR RESPONDENT
XI
The President Monroe [1972] 1 Lloyd’s Rep. 385, 386 (U.S. District Ct).
The Rona 5 Aspinal M.C 259.
The Sanix Ace [1987] 1 Lloyd’s Rep 465
The Schwan [1909] AC 450, 464.
The Solholt [1983] 1 Lloyd’s Rep 605 at p 608
The Solomon, SMA 3106 (1994).
The Stena Conquest, SMA 4075 (2010)
The Stolt Avance, SMA 3010 (1993)
The Stranna [1938] P 69; The Diamond [1906] P 282
TheTbilisi, SMA 3935 (2006)
The Torepo [2002] EWHC 1481 (Admlty).
The Varing [1931]
Transco Plc v Stockport Metropolitan Council, [2003] UKHL 61
Transamerican Steamship Corporation v Tradax Export S.A. (The Oriental Envoy) [1982] 2 Lloyd’s
Rep 266, 271 (Parker J)
Tucker v. Linger, (1882) 21 Ch D 18
Universal Cargo Carriers Corp v Citati [1957] 2 QB 401.
Vinmar International v. Theresa Navigation (The Atrice) [2001] 2 Lloyd’s Rep. 1
Virginia Carolina Chemical Co v Norfolk & North American Steam Shipping Co Ltd (1912) 17 Com
Cas 277
Wilson v Lancs &Yorks Ry (1861) 9 CBNS 632
XL Insurance Ltd v Owens Corning [2000] 2 Lloyd’s Rep 500.
Zeke Services Pty Ltd v Traffic Technologies Limited [2005] QSC 135.
BOOKS AND JOURNALS REFERRED
Alexander Jollies, Consequences of Multi-Tier Arbitration Clauses: Issues of Enforcement (Reprinted
from (2006) 72 Arbitration)
Allyson Matvey, Incidental Damages Vs Consequential Damages: A Distinction of Consequence,
(2017)
TEAM 4 MEMORANDUM FOR RESPONDENT
XII
Álvaro López De Argumedo Piñeiro with Miguel Ángel Fernández-Ballesteros and David Arias (eds):
Multi-Step Dispute Resolution Clauses (2010)
Anderson, 234.
Baizeau, Domitille; Anne-Marie Loong with Manuel Arroyo (ed): Chapter 13, Part X: Multi-tiered
and Hybrid Arbitration Clauses
Benjamin’s Sale of Goods, 9th ed (2014)
C.J.S. Act of God (1985)
David J.A. Cairns, Advocacy and the Functions of Lawyers in International Arbitration.
Didem Kayali, Enforceability of Multi-Tiered Dispute Resolution Clauses, Journal of International
Arbitration, (Kluwer Law International 2010, Volume 27 Issue 6).
Domitille Baizeau and Anne-Marie Loong, Chapter 13, Part X: Multi-tiered and Hybrid Arbitration
Clauses
Dyala Jimenez-Figueres, Multi-Tiered Dispute Resolution Clauses in ICC Arbitration, 14 ICC Bull. 71
(No. 1, 2003)
Fouchard, Gaillard, Goldman: On International Commercial Arbitration (Kluwer Law International,
1999)
Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd ed., 2014).
Gilmore & Black, The Law of Admiralty (1957).
International Journal of Arab Arbitration, (International Journal of Arab Arbitration 2009, Volume 1
Issue 4)
J. Beatson et al., Anson’s Law of Contract (29th Edition, 2010)
John Schofield, Laytime and demurrage, Lloyd Shipping Law Library
Julian Cooke et al., Voyage Charters (4th edn, 2014)
Kayali, Didem: Enforceability of Multi-Tiered Dispute Resolution Clauses (Kluwer Law International
2010, Volume 27 Issue 6)
Kerry Powell, What Is Force Majeure? (Heavy Construction News 110 (June 2001)).
Laytime Definitions for Charterparties 2013
TEAM 4 MEMORANDUM FOR RESPONDENT
XIII
Manuel Arroyo (ed) Arbitration in Switzerland: The Practitioner's Guide, (Kluwer Law International
2013)
Marko Mećar, Enforceability Of Multi-Tiered Clauses Leading To Arbitration
McGregor on Damages (19th ed. 2014)
Petition of United States, 300 F. Supp. 358, 366 and n. 2 (E.D. La. 1969) (Hurricane Betsy)
Pryles, Michael: Multi-Tiered Dispute Resolution Clauses, Volume 18, no. 2 (2001), Journal of
International Arbitration
Redfern and Hunter, International Arbitration (Oxford University Press, 6th ed. 2015)
Schoenbaum. Vol. 2
Scrutton on Charterparties, 23nd ed.
Simon Baughen, Shipping Law, (4th edition, 2009)
Tariq Alawneh, A Critical Analysis of The Implied Obligation Against Unjustified Deviation: Is the
Rule Still Relevant to The Modern Law on Carriage of Goods by Sea? (April 2015)
Tetley, Marine Cargo Claims, Vol. 1
Treitel on the Law of Contract (Sweet & Maxwell)
Varady, Tibor, et. al International Commercial Arbitration, a Transnational Perspective, Fifth Edition,
2012, American Casebooks.
STATUTES AND CONVENTIONS
Arbitration Act 1996 (UK).
Carriage of Goods by Sea Act 1992
Hague Visby Rules, 1968.
Ports and Maritime Administration Act 1995 (NSW)
UNCITRAL Model Law on International Commercial Arbitration.
SUMMARY OF THE FACTS
I. AGREEMENT BETWEEN PARTIES
Cerulean Beans, serving as the Charterers and Dynamic Shipping, owner of the vessel named Madam
Dragonfly had entered into a voyagecharterparty, dated 22 July, 2017 for the shipment of cargo entailing
high quality coffee beans. The shipment had to be delivered by 7 pm on 28 July, 2017 at Port Dillamond
by the most direct route, as there was a parallel contract running between the Charterer and a third party,
Coffees of the World.
II. PERFORMANCE OF THE CONTRACT
Madam Dragonfly deviated to Port Spectre during the voyage due to the hampering of the communication
and navigational systems for a period of 17 hours owing to the solar flares which the vessel was struck
with. Once the communication system was restored, the vessel started the journey towards Dillamond,
however a storm rolled in which led to the closure of the Ports for 12 hours.Before the arrival of the vessel
at the port, the Owners had mandated that they would deliver the goods via a barcode access if the
Charterer is unable to collect the same. After the arrival of the ship at the port on 29 July, the goods were
ready for delivery by 8:42 pm the same day. Due to congestion on the port, agents of the Charterers were
unable to collect the goods until 31 July, 2017, 3/4th of which were found to be damaged.
III. MARITIME EQUITABLE LIEN ON THE VESSEL
On 22 July 2017, the Charterer paid the amount of USD100,000 on account of wages which would
become payable to the crew of the Madam Dragonfly following the voyage into a special Bank account of
the Respondent established for that purpose. The Respondent did not pay the crew of the Madam
Dragonfly wages due for the voyage and has not repaid the US$100,000 to the Charterer, pursuant to
which the Charterer kept a maritime equitable lien on the vessel.
IV. DAMAGES CLAIMED BY BOTH THE PARTIES
Owing to such circumstances the Charterers referred the case to arbitration and both sides submit their
points of claim. The Charterer claims damages in the amount of USD30,200,000 while owner claims
damages in amount of USD 1,160,000.
TEAM 4 MEMORANDUM FOR RESPONDENT
2
ARGUMENTS ON JURISDICTION
I. THAT THE TRIBUNAL DOES NOT HAVE JURISDICTION TO DETERMINE THE CLAIM
FOR DAMAGES MADE BY THE CLAIMANT
1. It is submitted that under the doctrine of competence-competence,1 the Tribunal has power to determine its
own jurisdiction2 by construing the arbitration agreement according to its governing law.3 The
Respondents object to the jurisdiction of the Hon’ble Tribunal, in alternative, the English law governs the
arbitration agreement (A). That the claimant has superseded Clause 27 leading to pre-mature arbitration.
(B). The Master Mariner has the expertise to analyse technical matters, subject to the provisions of the
charterparty (C).
A. The English law governs the arbitration agreement.
2. The Parties have not expressly chosen a governing law for the arbitration agreement. In the absence of
such a choice, the system of law with the “closest and most real connection” to the arbitration agreement
governs that agreement.4
(i) The English law has the closest and most real connection to the arbitration agreement.
3. Itis also advanced that both the claimant and the respondent are based in Cerulean5 which has adopted the
laws of the United Kingdom.6 Therefore, four additional factors indicate that the English law has the
closest and most real connection to the arbitration agreement. First, both Parties are located in states that
apply the English law.7 Second, both Parties executed their counterparts of the Charterparty in states that
apply English law.8 Third, the subject matter9 of the arbitration agreement is “disputes arising under the
Charterparty”, which is an agreement for the voyage of a ship bound by English law. Fourth, the arbitration
1Fouchard, Gaillard, Goldman: On International Commercial Arbitration (Kluwer Law International, 1999) p. 213. 2Redfern and Hunter, International Arbitration (Oxford University Press, 6th ed., 2015), 322, 345; QH Tours Ltd v Ship Design and
Management (Aust) Pty Ltd (1991) 105 ALR 371, 384; Dallah Real Estate and Tourism Co v Ministry of Religious Affairs of the
Government of Pakistan [2011] 1 AC 763, 830; UNCITRAL Model Law on International Commercial Arbitration, Article 16(1). 3Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd ed., 2014), 1405-6; Paper Products Pty Limited v
Tomlinsons (Rochdale) Ltd &Ors (1993) 43 FCR 439, 444. 4Bonython v Commonwealth (1950) 81 CLR 486, 498; Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50, 61;
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197, 217. 5Procedural Order No. 2, Clause 1. 6Moot Scenario, 45. 7Rothwells Ltd (in liq) v Connell (1993) 27 ATR 137, 143. 8R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 500, 529; Re United Railways of Havana
and Regla Warehouses Ltd [1961] AC 1007, 1021; Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366, 369. 9R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 500, 529; The Assunzione [1954] 2 WLR
234 (‘Assunzione’), 261; Coast Lines Ltd v Hudig&Veder Chartering NV [1972] 2 WLR 280 (‘Coast Lines’), 286 ,289..
TEAM 4 MEMORANDUM FOR RESPONDENT
3
is regulated by LMAA, which is an English set of institutional rules10 and involved preliminary activities
such as appointing arbitrators and exchanging points of claim, which took place in states that apply English
law.
(ii) The choice of London as the arbitral seat is testimony to this conclusion
4. Following the doctrine of separability established under S.7 of the Arbitration Act11, it does not necessarily
follow that the law governing the main Charterparty should also govern the arbitration clause. In Sul
America v Enesa Engenharia12 that “in principle the proper law of an arbitration agreement which itself
formed part of a substantive contract13 might differ from that of the contract as a whole”.14Indeed, the
Court of Appeal held that the place chosen for the arbitration proceedings, and the consequential lex
arbitri, was an “important factor” which (where London was the ‘seat’) “tended to suggest that the parties
intended English law15 to govern all aspects of the arbitration agreement.”
5. That it would be rare for the law of the arbitration agreement to be different from the law of the seat of the
arbitration.16 The reason is that an agreement to arbitrate will normally have a more real connection with
the place where the parties have chosen to arbitrate17 than with the place of the law of the underlying
contract in cases where the parties have deliberately chosen to arbitrate in one place disputes which have
arisen under a contract governed by the law of another place.18 Thus it is submitted that the arbitration
agreement is to be governed by the English law.
6. Notwithstanding, the Respondents object to the jurisdiction of the Hon’ble Tribunal and mandate that the
matter should be referred to the jurisdiction of the Master Mariner.
B. That the claimant has superseded Clause 27 leading to pre-mature arbitration.
7. That the claimant in approaching this Tribunal has superseded the arbitration agreement and thus it has led
to pre-mature arbitration, which in turn hampers the rights of the Respondents.
10Moot Scenario, 12. 11Arbitration Act 1996 (UK). 12Sul America Cia Nacional De Seguros SA v EnesaEngenharia SA [2012] EWCA Civ 638. 13Ibid, p. 679. 14Ibid, p. 672. 15XL Insurance Ltd v Owens Corning [2000] 2 Lloyd’s Rep 500. 16Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd. (HL) [1993] 1 Lloyd’s Rep 291. 17Black Clawson International Ltd v PapierwerkeWaldhof-Aschaffenburg [1981] 2 Lloyd’s Rep 446. 18Ibid.
TEAM 4 MEMORANDUM FOR RESPONDENT
4
(i) Pursuant to Clause 27(d) of the Record, referring the matter to the jurisdiction of a Master
Mariner for expert determination was a pre-arbitral step.
8. It is mandated that pursuant to Clause 27(d) of the Record, the dispute, involving a ‘technical matter’ had
to be referred to a Master Mariner for expert determination and thereafter to the Tribunal. In the instant
case, the dispute does involve the vessels route and unloading of cargo, making the matter a technical one
as per Clause 27(g) of the Charterparty.19 Thus, this makes it incumbent upon the Tribunal to refer the
matter to the Master for expert determination.
9. It is further mandated that by expressly stipulating that arbitration may not start before the mandatory pre-
arbitration mechanism is employed,20 or by simply contracting that dispute “shall” be submitted to such
pre-arbitration mechanism,21 makes it mandatory for the matter to be referred to the pre-arbitral
mechanism.22 The use of the word “shall” clearly means that the pre-arbitration mechanism are contracted
as “a prior mandatory process of communication between the parties in conflict”.23 That pursuant to the
Clause 27(d) of the Record, the word ‘shall’ makes it incumbent upon the Claimant to refer the dispute,
involving a technical matter to a Master Mariner and thereafter, the matter ‘may’24be referred for
arbitration.
10.It is submitted that the appointment of Simon Webster, maritime engineer by profession, by the arbitral
tribunal cannot be considered as the Master Mariner as it does not equate to the fulfilment of Clause 27(d)
of the Record and the Claimant has evidently evaded the procedural requirement of the arbitration
agreement.
11.That the purpose of referring the matter to the jurisdiction of the Master for expert determination25 was
aimed at reaching an amicable solution between the parties26 and to provide a “filtering effect”27. That,
19Moot Scenario, 12. 20Swedish contractor v The Secretary of the People's Committee for a municipality of an Arab State ICC Case Nos. 6276 and 6277,
1990, International Journal of Arab Arbitration 2009, Volume 1 Issue 4) pp. 363 – 367. 21Varady, Tibor, et. al International Commercial Arbitration, a Transnational Perspective, Fifth Edition, 2012, American Casebooks p.
14 22Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm). 23Dyala Jimenez-Figueres, Multi-Tiered Dispute Resolution Clauses in ICC Arbitration, 14 ICC Bull. 71 (No. 1, 2003) pp. 84 – 85. 24Moot Scenario, 12. 25Pryles, Michael: Multi-Tiered Dispute Resolution Clauses, Volume 18, no. 2 (2001), Journal of International Arbitration, p. 159. 26Baizeau, Domitille; Anne-Marie Loong with Manuel Arroyo (ed): Chapter 13, Part X: Multi-tiered and Hybrid Arbitration Clauses,
Manuel Arroyo (ed) Arbitration in Switzerland: The Practitioner's Guide, (Kluwer Law International 2013) p. 1453. 27Álvaro López De ArgumedoPiñeiro with Miguel Ángel Fernández-Ballesteros and David Arias (eds): Multi-Step Dispute Resolution
Clauses (2010) p. 733
TEAM 4 MEMORANDUM FOR RESPONDENT
5
only after the failure of the same;28 the matter could have been referred for arbitration29 otherwise it may
lead to a pre-mature arbitration.30 That thus, the Claimant is liable for superseding Clause 27 of the Record
leading to pre-mature arbitration.
(ii) The Claimant is liable for the repercussions of invoking a pre-mature arbitration.
12.It is mandated that arbitral tribunals have adopted two main procedural approaches31 in handling situations
where the Claimant has submitted the claim to tribunal before complying to the stipulated multi-tiered
clause.32
13.According to the procedural approach, the multi-tiered clause leading to arbitration is of procedural nature
and the whole pre-arbitration procedure should be exhausted before the arbitration proceedings may start
or continue.33 When the Claimant submits the dispute to arbitral tribunal by skipping the contracted pre-
arbitration mechanisms, the arbitral tribunal may either dismiss the claim34 or may order stay of the
arbitration proceedings35 until the contracted procedure has been complied with36 by the Claimant.37It has
further been held that the court clearly has a jurisdiction to stay a court proceeding38 on the simple basis
that "a contract is a contract" and the parties should abide by it. 39
14.That as per the facts and circumstances of the instant case, it is prayed by the Respondents that the arbitral
tribunal grants a stay on the arbitral proceedings and refers the matter to a Master Mariner first for expert
determination. That this will prevent violation of the arbitration agreement and will not act as a prejudice
against the Respondents’ right.
C. The Master Mariner has the expertise to analyse technical matters
28DidemKayali, Enforceability of Multi-Tiered Dispute Resolution Clauses, Journal of International Arbitration, (Kluwer Law
International 2010, Volume 27 Issue 6) p. 552. 29Jollies, Alexander: Consequences of Multi-tier Arbitration Clauses: Issues of Enforcement (Reprinted from (2006) 72 Arbitration 4
(Sweet and Maxwell, London)) p. 329. 30Supra 19. 31Marko Mećar , Enforceability Of Multi-Tiered Clauses Leading To Arbitration. 32Ibid. 33Jollies, Alexander: Consequences of Multi-tier Arbitration Clauses: Issues of Enforcement (Reprinted from (2006) 72 Arbitration 4
(Sweet and Maxwell, London)) p. 329. 34Álvaro López De ArgumedoPiñeiro with Miguel Ángel Fernández-Ballesteros and David Arias (eds): Multi-Step Dispute Resolution
Clauses (2010); David J.A. Cairns, Advocacy and the Functions of Lawyers in International Arbitration.; Alexander Jollies,
Consequences of Multi-tier Arbitration Clauses: Issues of Enforcement, Reprinted from (2006) 72 Arbitration, pp. 336 - 337. 35Hooper Bailie Associated Ltd. v. Natcon Group Pty Ltd., (1992) 28 N.S.W.L.R. 194; Him Portland, Llcv..Devito Builders, Inc. 211 F.
Supp. 2d 230 (D. Me. 2002); DidemKayali, “Enforceability of Multi-Tiered Dispute Resolution Clauses”, Journal of International
Arbitration, (Kluwer Law International 2010, Volume 27 Issue 6) p. 562. 36Metropolitan Tunnel and Public Works Ltd v. London ElectricRailwayCo[1926] 1 Ch 371 at 390. 37Alexander Jollies, Consequences of Multi-Tier Arbitration Clauses: Issues of Enforcement (Reprinted from (2006) 72 Arbitration) p.
331. 38Straits Exploration (Australia) Pty Ltd v Murchison United NL(2005) 31 WAR 187; [2005] WASCA 241. 39Badgin Nominees Pty. Ltd. v Oneida Ltd. Anr [1998] VSC 188.
TEAM 4 MEMORANDUM FOR RESPONDENT
6
15.It is mandated that the evident advantage of an expert determination of a contractual dispute is that it is
expeditious because they are informal and because the expert applies his own store of knowledge, his
expertise, his skill of a valuer, to his observations of facts, which are of a kind with which he is familiar.40It
is submitted that the level of expertise, qualification and experience of a Master Mariner is aptly wide in
ambit and it is only the Master Mariner who has the capability of understanding and analysing a technical
matter owing to a charterparty.
16.It is humbly prayed before the tribunal, that pursuant to the above-mentioned contentions, the Tribunal
refers the matter to the Master Mariner for expert determination, thereby abiding by the procedural
requirement of the arbitration agreement.
ARGUMENTS ON THE MERITS OF THE CLAIM
II.THAT THE RESPONDENTS ARE NOT LIABLE FOR THE BREACH OF THE
CHARTERPARTY
16. The Respondent’s humbly submit that, owing to the facts and circumstances of the said case read with
the following contentions, it is evident that the Respondent’s cannot be made liable for the breach of the
charterparty as the deviation of Madam Dragonfly was effected by instances of force majeure (A).The
Respondents had exhibited reasonable and prudent behaviour (B). There was reasonable and justified
deviation (C). The commercial object of the contract has not been frustrated (D).The Charterer’s breached
their liability of nominating a safe port of delivery (E).
(A) That the deviation of Madam Dragonfly was effected by instances of force majeure
17. The Respondents are covered under the Exception Clause 17(b) of the Charterparty41 which specifies that
neither party shall be liable for any failure to perform this Contract, where the party prevented from doing
so by reasons of any Force Majeure Event.It is submitted that the term force majeure is prevention of a
party's performance that is caused by circumstances and events which are recognized as being above and
beyond the control of contracting parties and which could not reasonably have been foreseenor avoided42
by the due care of either of the parties.
40Zeke Services Pty Ltd v Traffic Technologies Limited [2005] QSC 135. 41Cl 17 (b), Voyage Charterparty. 42Petition of United States, 300 F. Supp. 358, 366 and n. 2 (E.D. La. 1969)(Hurricane Betsy); Gilmore & Black, The Law of Admiralty
(1957) Ch. VII p. 396.
TEAM 4 MEMORANDUM FOR RESPONDENT
7
17. That Act of God means any accident, due directly and exclusively to natural causes without human
intervention, which by no amount of foresight, pains, or care, reasonably to have been expected could have
been prevented.43That the phrase "peril of the sea," is said to occur when conditions "are of an
extraordinary nature or arise from irresistible force or overwhelming power, and which cannot be guarded
against by the ordinary exertions of human skill and prudence.' 44 Considering these definitions it is
apparent on the face of record that instances of heavy storm in the high seas, as faced by the Respondents
in the instant case, forms a part of perils of the sea which could not have been guarded against.
17. It is submitted that a force majeure clause generally requires four elements for an event to qualify as a
force majeure: (1)the event must be external; (2) it must render the performance radically different from
that originally contemplated;45(3) it must have been unforeseeable (objective standard) or at least
unforeseen (subjective standard);46 and (4) its occurrence must be beyond the control of the party
concerned. 47
18. It is submitted that owing to the above-mentioned contentions, it is evident that the solar flares which
occurred between 25th July, 2017- 26th July, 2017 and the adjoining storm which followed were major
instances of Force Majeure as all four elements requisite for an event to qualify as a force majeure event
are fulfilled and acted upon.
19. That as per Article IV(2)(c) and (d) of the Hague Visby Rules48, neither the shipper nor the carrier will be
responsible in any event of perils, dangers and accidents of the sea or other navigable waters and Act of
God.
20. That when the damage is shown to have resulted from the immediate act of God, such as a sudden and
extraordinary flood49, the carrier would be exempt from liability, unless the plaintiff shall prove that the
defendant was guilty of some negligence50 in not providing for the safety of the goods.51 That there are
43C.J.S. Act of God, at 757 (1985);Compania de Vapores INSCO S.A. v. Missouri Pac. R.R., 232 F.2d 657, 660, 1956
AMC 764, (5th Cir. 1956); Proprietors, v.Wood, 3 Esp. 127; Forward v. Pittard, IT. R. 27; 2 Greenl. Ev. (14 th ed.), p. 209. 44J. Gerber & Co. v. S.S. Sabine Howaldt, 437 F.2d 580, 588, 1971 AMC 539 (2d Cir. 1971). 45Taylor v. Caldwell, [1863] EWHC QB J1. 46Skandia Ins. Co. v. Star Shipping 173 F. Supp. 2d 1228, 2001 AMC 1527; Compania De VaporesInsco, S.A. v. Missouri Pacific R.
Co., 232 F.2d 657 (5th Cir. 1956). 47Transco Plc v Stockport Metropolitan Council, [2003] UKHL 61; Lebeaupin v Richard Crispin & Co (1920) 2 KB 714. 48Article IV(2)(c) of Hague Visby Rules, 1968. 49Treitel on the Law of Contract (Sweet & Maxwell), p. 415 50Dammers& Van der Heide Shipping & Trading, Inc. v. S.S. Joseph Lykes 300 F. Supp. 358 (E.D. La. 1969). 51R.R .CO. vs Reeves77 U.S. 10 Wall. 176 176 (1869).
TEAM 4 MEMORANDUM FOR RESPONDENT
8
numerous other cases in which courts have exonerated defendants because the claimed damage was caused
by a storm that was found to be an act of God.52 Further, solar flares can temporarily alter the upper
atmosphere creating disruptions with signal transmission.53 The harmful solar radiation disturbs the
atmosphere in the layer where GPS and communications signals travel.54
21. In the instant case, the Respondents had to face both severe and harmful solar flares, which resulted in
deviation of Madam Dragonfly due to the hampering of the communication and navigational systems,
followed by a fierce storm which was considered to be “Once in a Lifetime storm” which brought with it
rain, hail and severe winds.55 It is evident that both these events qualify to be Force Majeure events. That
thus the Respondents cannot be made liable for the breach of the charterparty.
(B) That the Respondents had exhibited reasonable and prudent behaviour
22. It is mandated that a common carrier is not liable for any accident as to which he can show that it is due to
natural causes, directly and exclusively without human intervention56, and that it could not have been
prevented by any amount of foresight and care reasonably to be expected from him.57 Where the law
creates a duty or charge, and the party is disabled by an act of God, without any fault, from performing it,
and has no remedy over, then the law will excuse him.58
23. In the instant case, the Respondents had taken all adequate and reasonable measures as the Respondents
had made sure that the ship conforms to the standards prescribed by the relevant law and adequate and
reasonable technological systems were adopted. Further, all technological systems cannot be advocated
and only reasonable technical aspects are required to be included in the vessel59, as is in the instant case.
24. It is further mandated that the Shippers are to make inspections of the vessel before the commencement of
the voyage within the parameter of reasonableness60 and keeping in mind what a prudent man would
52Chanler v. Wayfarer Marine Corp., 302 F. Supp. 282, 286 (S.D. Me. 1969); Buntin v. Fletchas, 257 F.2d 512, 514 (5th Cir. 1958);
Stegemann v. Miami Beach Boatslips, Inc., 213 F.2d 561, 1954 AMC 1372 (5th Cir. 1954); Gelb v. Minneford Yacht Yard, Inc., 108 F.
Supp. 211 (S.D.N.Y. 1952); Potomac Poultry Food Co., Inc. v. M/V Anna Maersk, 1934 AMC 166, 172 (D. Md. 1934). 53https://www.nasa.gov/mission_pages/sunearth/news/flare-impacts.html 54NASA on Sept. 10, 2017. (https://www.nasa.gov/feature/goddard/2017/active-region-on-sun-continues-to-emit-solar-flares ). 55Moot Scenario, 21. 56Lord Mansfield in Forward v. Pittard (1785) 1 T.R. 2. 57Nugent v Smith 4 (1876) 1 CPD 423 at p 444. 58Paradinev. Jane, Alleyn27; River Wear Comrs. v. Adamson, iQ. B. Div.548; Shubrickv. Salmond, 3 Burr. 1637; Brecknock,etc., Nay.
Co. v. Pritchard, 6 T. R. 750; Hadley v. Clarke, 8 T. R. 259. 59Nuzzo v. Rederi, 304 F.2d 506, 510 (2nd Cir. 1962). 60Brown v. Nitrate Producers S.S. Co. (1937) 58 LI.L.R.188; Cransfield Bros. v. TatemS.N.Co. (1939) 64 LI.L.R. 264, 275; Guan Bee
v. Palembang Shipping Co. [1969] 1 May L.J. 90, 91; M.D.C. v. N.V.Z.M. Beursstraat[1962] 1 Lloyd’s Rep. 180; The President
Monroe [1972] 1 Lloyd’s Rep. 385, 386 (U.S. District Ct).
TEAM 4 MEMORANDUM FOR RESPONDENT
9
inspect.61 In the instant case the shippers and the agents of the Charterers themselves had inspected the
vessel before the accrual of the voyage.62 This corresponds to the fact that the vessel was in perfect shape
and every technological system was adequately and robustly fit in.
25. That the standard required is not an accident‐free ship,63 nor an obligation to provide a ship which might
withstand all conceivable hazards64 and fulfils a demand for perfection.65 A temporary defect or one which
is trivial and can be remedied will not be enough to render the vessel unseaworthy to encounter the perils
of the voyage. 66 Further, the test to determine whether the shipper is liable for the eventual
unseaworthiness of the vessel depends not on absolute perfection but on commercial reality.67 Thus, in the
instant case, the Respondents cannot be made liable under any circumstance as they are devoid of the
obligation of providing an accident free ship able to withstand all hazards at the high seas.
26. In Torepo68 the vessel was accused of being unseaworthy for not being equipped with adequate charts. The
court did not hold the vessel liable as the seaworthiness standard is not one of perfection and nor the ISM
demands perfection.69Thus it is submitted that in the instant case the vessel was reasonably seaworthy and
the failure of the navigational and communication systems for some hours was due to the occurrence of
harmful solar flares, which was a defect which could not be foreseen or avoided.
27. It is further advanced that if a seaworthiness defect arises while the vessel is at sea, the shipowner will not
be liable for damages caused by such a defect to the cargo previously loaded.70 In the instant case, the
communication systems were knocked down only after the ship was on its voyage, attributable to the solar
flares. Thus the Respondents cannot be held liable under any circumstances, for the breach of the
charterparty.
61The Amstelslot [1962] 2 Lloyd’s Rep. 336. 62Moot Scenario, 5. 63Hellenic Dolphin [1978] 2 Lloyd’s Rep. 336. 64President of India v West Coast Steamship Co (The Portland Trader) [1963] 2 Lloyd’s Rep 278, 280‐281 (Dist Ct, Oregon). 65Tetley, Marine Cargo Claims, Vol. 1, 929. 66Steel v State Line Steamship Co (1877) 3 App Cas 72; Hedley v Pinkney & Sons Steamship Co [1894] AC 222, 228; ThePentland
(1897) 13 TLR 430; The Stranna [1938] P 69; The Diamond [1906] P 282; Virginia Carolina Chemical Co v Norfolk & North
American Steam Shipping Co Ltd (1912) 17 Com Cas 277, 278; FC Bradley & Sons Ltd v Federal Steam Navigation Co Ltd (1926) 24
Ll LR 446, 455; Huddart Parker Ltd v Cotter (1942) 66 CLR 624, 663‐4; International Packers London Ltd v Ocean Steamship Co Ltd
[1955] 2 Lloyd’s Rep 218; London Arbitration 2/2005, (2005) 659 LMLN 1; Steel v State Line Steamship Co (1877) 3 App Cas 72,
90‐91; Leonard v Leyland & Co (1902) 28 TLR 727; Gilroy, Sons & Co v W R Price & Co [1893] AC 56, 64; The Schwan [1909] AC
450, 464. 67Schoenbaum. Vol. 2, 32.; MDC Ltd. v. NV ZeevaartMaatschapijBeursstraat [1962] 1 Lloyd’s Rep. 180, 186. 68The Torepo [2002] EWHC 1481 (Admlty). 69Anderson, 234. 70Tetley, Marine Cargo Claims, Vol. 1, 896; The Fjord [1999] 1 Lloyd´s Rep. 307.
TEAM 4 MEMORANDUM FOR RESPONDENT
10
(C) That Respondents cannot be made liable for reasonable deviation
28. It is submitted that as per Article IV (4) of the Hague-Visby Rules71 to save or attempting to save
property72 at sea; and any reasonable deviation73 of the vessel is considered to be justifiable and should not
to be considered a breach of the contract of carriage. It is further submitted that according to Clause 17 of
the Charterparty,74 the Respondents were allowed to deviate for the purpose of saving life and property
(including the vessel). It is further submitted that a contract of affreightment is not put to an end either by a
breach of the warranty of seaworthiness or by a deviation which is in fact necessary for the safety of the
ship and crew.75
29. That in the instant case the Respondents were obligated to deviate to Port Spectre from the most direct
route to Port Dillamond due to the failure of the communication and navigational satellites which was
affected by the unforeseeable solar flares and radiations. It is stated that it is often difficult in practice to
separate the crew (human life) from the ship and its cargo. It will be quite often the case that the intention
of the master in deviating under such circumstances is to offer protection not just to the crew, but also to
the ship and its cargo.76 Given that the three elements are often inseparable it is submitted by the
Respondents that saving of human life of the crew onboard and the cargo was an obligation of the
shipmaster77 and acting in furtherance of this obligation the Respondent deviated from the prescribed route.
30. It is further put forward that the master is not only allowed to deviate in order to save cargo on board, but it
would have amounted to recklessness78 and negligence on the master79 to continue on the voyage without
attempting to save the cargo80 It is thus advanced that in such situations the carrier’s obligation relating to
care and preservation of the cargo would seem to take precedence over the implied obligation not to
deviate.
31. That the Respondents reasonably deviated to the Port of Spectre owing to the shipper’s obligation towards
the safety of cargo and human life on board. That thus the Respondents cannot, under any circumstances be
71Article IV (4) of the Hague-Visby Rules. 72Stag Line Ltd v Foscolo Mango [1932] AC 328 at p 343-4. 73Article IV of Carriage of Goods by Sea Act 1971. 74Moot Scenario, 9. 75Kish v Taylor [19121 A.C. 604 (The Europa). 76Julian Cooke et al., Voyage Charters (4th edn, 2014) 77Kish v Taylor [19121 A.C. 604. 78Anderson, & Co v The Owners of San Roman,(1873-74) L.R 5P C 301. 79Notura v Henderson[1870] L.R 5 Q.B 354. 80The Rona 5 Aspinal M.C 259.
TEAM 4 MEMORANDUM FOR RESPONDENT
11
made liable from deviating and thus breaching the charterparty as owing to the above contentions it is
evident that the deviation of Madam Dragonfly was a reasonable and unavoidable one.
32. Arguendo if the deviation of the vessel of the shipper was unjustified, as alleged by the Charterer’s, they
had been informed about the same via mail dated 26th July, 2017 at 2:32pm. That it is an established fact in
shipping law that where the cargo owner elects to affirm the contract, it is said that he “waives the
deviation”, leaving intact his other rights and remedies arising out of the deviation. It is further accepted
that since unjustified deviation is itself a breach, the carrier remains liable in damages for the loss resulting
from the deviation, unless liability for this loss is itself covered by an exceptions clause.81
33. That however it has to be kept in mind that in the instant case the deviation was caused due to the solar
flares and the storms which have already been established as major force majeure events. That thus the
Respondents are covered and cannot be made liable under the Exception Clause 17(b) of the Charterparty.
(D) That the commercial object of the contract has not been frustrated
34. A contract is only frustrated if there has been such a change as to render an obligation ‘radically different’
to what the contract contemplated.82
35. The commercial object of the voyage – the delivery of the cargo – would not have been defeated, but
simply delayed. Absent any evidence that this delay was inordinate, and because the contract already
contemplated delay in its laytime and demurrage clauses, it cannot be said that performance became ‘a
different thing from that contracted for.83Thus it can be very well concluded that the commercial purpose
of the contract has not been frustrated by the Respondents and they cannot be made liable for the same.
(E) That the Charterer’s breached their liability of nominating a safe port of delivery
36. It is submitted that it is a well known fact that a safe port means that the loading and destination ports are
adequate in the relevant period of time, the particular ship can reach it, use it and return from it without, in
the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good
81Julian Cooke et al., Voyage Charters (4th edn, 2014) 82Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 728–9; Lim Kim Som v SheriffaTaibahbte Abdul Rahman
[1994] 1 SLR(R) 233, 245–6 [27]–[29]. 83British Movietonews Ltd v London and District Cinemas Ltd [1952] AC 166, 185; Davis Contractors Ltd v Fareham Urban District
Council [1956] AC 696, 729; Lim Kim Som v SheriffaTaibahbte Abdul Rahman [1994] 1 SLR(R) 233, 246 [28].
TEAM 4 MEMORANDUM FOR RESPONDENT
12
navigation84 and seamanship. 85 That the relevant period of time means the entire period from the moment
of the vessel’s arrival till the time of her departure.86
37. That in the instant case the Respondents had to deliver the goods to Port Dillamond nominated by the
Charterer’s. That owing to the facts of the case, Port Dillamond is deemed to be an unsafe port as even
after using good navigation techniques, the danger, the vessel and the crew was exposed to was
insurmountable.
38. In the case of Reardon Smith Line v Australian Wheat Board87, a clause in a charterparty provided that the
ship was to load "at such safe dock, pier, wharves, and/or anchorage as ordered." It was held, the words of
the charterparty were an undertaking by the charterers to nominate a safe port and a safe dock within the
port. Ergo, the Claimant is in breach of clause 11 of the charterparty88 which is similar in its wording.
39. Thus it is finally advanced, owing to the facts and circumstances and the contentions made in the present
case, the Respondents cannot be held liable for the breach of the charterparty.
III. THAT THE CLAIMANT DOES NOT HOLD MARITIME EQUITABLE LIEN ON THE
VESSEL
40. It is submitted that the Claimant is neither entitled to hold maritime lien (A) nor is entitled to hold
equitable lien (B).
(A) Claimant is not entitled to hold maritime lien
41. The Hon’ble Court in the case The Oceano89, stated that: “As soon as the performance of a charter party is
commenced a lien exists on the vessel in favor of the shipper or charterer, and a suit in rem may be
maintained for any liability of the master or owner arising therefore…Damages sustained by a charterer
through breach of a charter contract constitute a lien on the vessel.”
42. A lien on the vessel arises in the charterer’s favour for virtually any breach of charter committed by an
owner.90Therefore, the above authorities cited establish that only in the event of breach of charter party,
84Grad Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2013] EWH C 2199 (Comm) 2013 WL
3878761. 85Eastern City, [1958] 2 Lloyd’s Rep. 127. 86Ibid. 87Reardon Smith Line v Australian Wheat Board[1956] 1 Lloyd's Rep. 1 88Cl 11, Voyage Charterparty. 89The Oceano , 148 F. 131, 133 (S.D.N.Y. 1906). 90Julian Cooke et al., Voyage Charters (4th edn, 2014)
TEAM 4 MEMORANDUM FOR RESPONDENT
13
right of maritime lien comes into existence. However, the Respondent is covered by the defence of force
majeure as proved earlier in para. 19and hence, has not committed a breach of charter party. In view of the
same, the Claimant does not hold a right to hold maritime lien over Madam Dragonfly.
(B) Claimant is not entitled to hold equitable lien
43. It is humbly submitted that the Claimant does not hold equitable lien over Madam Dragonfly. The Court, in
the case Beier Howlett Pc v. Police & Fire Retirement Systems91stated that “An equitable lien arises from
an agreement that both identifies property and evidences an intention that such property serve as security
for an obligation” This means that to give rise to an equitable lien, there must be an agreement identifying
that property, in this case the vessel, as a security for an obligation. However, in the instant case, there was
no such prior agreement as to identification of Madam Dragonflyas a security.
44. Similarly, in the case of Barnes v Alexander92, the Court while discussing equitable lien stated that “The
form or particular nature of the agreement which shall create a lien is not very material, for equity looks at
the final intent and purpose rather than at the form; and if intent appear to give, or to charge, or to pledge
property, real or personal, as a security for an obligation, and the property is so described that the principal
things intended to be given or charged can be sufficiently identified, the lien follows.”
45. This leads to the fact that there must be an intention and purpose to hold a particular thing, which in this
case is the vessel, as security for securing an unpaid obligation. Since, there is an apparent lack of any such
agreement or even expression or implication of intention to hold Madam Dragonfly as security, there arises
no question of existence of equitable lien.
46. It is further submitted that there was no unjust enrichment upon the Respondent by the Claimants which
constitutes an equitable lien. The fund created for the payment of wages was not an enrichment for the
Respondent nor was it a benefit for the Respondents. It was merely for the payment of wages to the crew
which will be done in the due course of time. The Claimant was aware of the fact that the Respondent was
facing certain financial distress93 and hence, the money was merely temporarily put to such use so that the
Respondent company would not have to let go off a large number of its crew, which would leave them
91Beier Howlett Pc v. Police & Fire Retirement Systems 858 N.W.2d 432 (2015) 92Barnes v Alexander, 232 US 117, 121 93Moot scenario, page 1
TEAM 4 MEMORANDUM FOR RESPONDENT
14
unemployed. So, the Respondent had the goodwill of the crew in mind while stalling the payment of
wages.
47. It is submitted that as earlier mentioned in the charter party, to the best of the Respondent’s knowledge the
vessel has never been involved in any action or dispute or been blacked by any maritime or transport
organisation in or in connection with crew wages or conditions94. In continuance of the same, the
Respondent shall pay the crew wages and return the money to the Claimant.
IV. THAT THE CLAIMANT IS LIABLE TO PAY THE DAMAGES CLAIMED
48. It is submitted that the Claimant is liable to pay the requisite damages to the amount of USD 1,610,000 as
the delivery took place on 29th July, 2017 (A) for the amount of Freight (B), Repairs to Hull (C),
Demurrage (D), Usage of Electronic Facilities at port (E) and Agency fee for the Port of Spectre and
Dillamond (F).
(A) That the delivery took place on 29th July, 2017
49. It is submitted that the Cargo was delivered to the Claimant at 8:42pm on 29 July 2017.It is mandated that
delivery need not consist only of a physical transfer of the property. There can be a symbolic or
constructive delivery of which the classic instance is the delivery of a key to the warehouse where goods
are stored.95
50. Further, shipowner is required to allow the consignee a reasonable time in which to collect the cargo, after
which he may land and warehouse it at the consignee’s expense96 as after the expiry of a reasonable time,
the shipowner is entitled to do what is reasonable in the circumstances to prevent delay to his ship. In the
present case, sufficient time was given to the Claimant to take delivery of the goods, yet they procured the
goods only after 41 hours (time difference between the delivery times claimed by both the parties) from the
port. Further, on 29th July at 8:58 am, the Claimant was made aware that the ship is on her way to the port.
On the same day at 4:28 pm, the claimant was again reminded that the ship is about to birth in another 30
minutes. After receiving no reply from the Claimant, they were again informed at 8:42 pm that their goods
94Moot scenario, page 8. 95Benjamin’s Sale of Goods, 9th ed (2014) 96National Packaging Corp. v. N.Y.K. Line [1973] 1 Lloyd’s Rep. 46; Bourne v Gatliffe(1841) 133 ER 1298; North American Smelting
Co. v. Moller S.S. Co., 204 F.2d 384 (3rd Cir. 1953); Calcot, Ltd. v. Isbrandtsen Company, 318 F.2d 669 (1st Cir. 1963)
TEAM 4 MEMORANDUM FOR RESPONDENT
15
are available for collection. Ergo, only after giving reasonable time for taking the delivery, goods were
discharged at the port and delivery constituted.
51. In the case of The "Beltana" 97 The Australian court rejected the actual physical transfer definition and held
that "in this case delivery of the goods was made either when the goods were landed on the wharf and freed
from the ship's tackles . . . or at the very latest at the time they were placed [at the consignee's disposal]".
In the instant case, by discharging the goods at the port, they were placed at the Claimant’s disposal.
52. In furtherance of this, the mail containing the barcode access was itself a “delivery order” for the
purposes of section 1(4) of the Carriage of Goods by Sea Act 199298; and the claimant is estopped from
contending that delivery of the cargo upon presentation of a pin code was a breach of contract and/or duty
on the part of the carrier.
53. Reliance is placed on the classic case of Glyn Mills v East and West India Dock Co99. That case established
that there was a duty on the part of the carrier to deliver goods to the presenter of a genuine original bill of
lading. Similarly, in the present case there should be no difficulty in regarding the delivery of a pin code as
the relevant symbolic act and the possession of the pin code as that which entitles the possessor to delivery
of the goods, the obligation of the carrier being to deliver to the person who first enters the pin code into
the machine. Therefore, only after giving the means of access to the port as well as reasonable time,
delivery was constituted at 8:42pm on 29 July 2017.
(B)That the Claimant is liable to pay the freight
54. Freight is the remuneration payable for the carriage of the cargo.100 The primary payment obligation under
a voyage charter is freight.101 Freight is a fixed price for a particular voyage carrying a particular cargo or
cargoes.102 Under a voyage charter, the shipowner is entitled to freight which will cover costs, including
fuel and crew as well as profit.103
97Automatic Tube Company et al., v. Adelaide Steamship (Operations) Ltd. et al. [1967] 1 Lloyd's List L.R. at 540 98Section 1(4) of the Carriage of Goods by Sea Act 1992. 99Glyn Mills v East and West India Dock Co (1882) 7 App Cas 591. 100Julian Cooke et al., Voyage Charters (4th ed., 2014) 101Simon Baughen, Shipping Law, P. 225 (4th ed., 2009). 102Ibid. 103Id. at P. 220.
TEAM 4 MEMORANDUM FOR RESPONDENT
16
55. As a rule, freight is earned by the carriage and arrival of the goods ready to be delivered to the merchant,
though they may be in a damaged state when they arrive.104
56. It is submitted that freight is payable on the entire quantity loaded as the provisions of the charter indicate
that the amount of cargo on which freight was payable should be ascertained on loading and there were no
provisions for remeasurement or adjustment at the port of discharge.105 The amount of freight was
therefore fixed on loading, although it was not payable until delivery.106Therefore, freight is required to be
paid for all 1000 bags of coffee loaded on 24th July 2017.
57. It is argued that since the cargo retained the form and substance of coffeebeans, and had not entirely lost
commercial value, freight was payable. The mere fact of damage or contamination was irrelevant. The
question is whether an honest merchant would be forced to qualify the description applicable to the goods
on shipment to such an extent as to destroy it. If the qualification destroys the description, no freight has
been earned because ‘the cargo’ has not been delivered. If the description is merely qualified, ‘the cargo’
has been delivered, albeit damaged or as the case may be contaminated.107 Thus, since the cargo could
properly be described as “coffee beans”, albeit “damaged coffee beans”, the freight is payable.
58. Furthermore, a claim in respect of cargo cannot be asserted by way of deduction from freight is a long
established rule in English law.108 The rule against deduction from freight extended beyond claims for
damages and was to the effect that a claim for freight was “sacrosanct” and therefore unaffected by any
cross-claim of the charterer.109Therefore, where the contract contains an arbitration clause, the owner may
obtain an immediately enforceable interim award for freight before the tribunal adjudicates upon the
charterer’s cross-claims.110
(C) That the Claimant is liable to pay for repairs to hull.
59. During the course of the voyage, the hull was damaged111 and the Respondents are entitled to claim for its
repairs from the Claimant.
104Dakin v Oxley (1864) 143 ER 938; Kish (JE) v Charles Taylor & Sons [1912] AC 604, 616. 105Moot scenario, 11, cl 22. 106Shell International Petroleum Co. v. Seabridge Shipping (The Metula) [1977] 2 Lloyd’s Rep. 436, [1978] 2 Lloyd’s Rep. 5. 107Montedison S.P.A. v. Icroma S.p.A. (The Caspian Sea) [1980] 1 Lloyd’s Rep. 91. 108Aries Tanker Corp v Total Transport [1977] 1 Lloyd’s Rep 334 at p 337; The Brede [1973] 2 Lloyd’s Rep 333. 109Freedom Maritime Corp. v. International Bulk Carriers (The Khian Captain (No. 2)) [1986] 1 Lloyd’s Rep. 429. 110Exmar BV v. National Iranian Tanker Co. (The Trade Fortitude) [1992] 1 Lloyd’s Rep. 169, 177. 111Moot scenario, 20.
TEAM 4 MEMORANDUM FOR RESPONDENT
17
60. The loss incurred by the owners as a result of physical damage to the ship consists normally of the cost of
the repairs themselves, as long at least as they are reasonable112 and of loss of income113 resulting from
detention through repairs.
61. A port will not be safe unless, in the relevant period of time, the particular ship can reach it, use it and
return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot
be avoided by good navigation and seamanship.114 Since a port is not safe if the ship is exposed to a danger
even while approaching it, in the present case, the ship was damaged whilst approaching the port. Ergo, the
charterers will be liable for any damage caused to the ship whilst approaching the port as happened in this
case.
62. The charterer does not guarantee that the most direct route or any particular route to the port is safe, but the
voyage he orders must be one which an ordinarily prudent and skilful master can find a way of making in
safely.115 This entails prevention of vessel from risks such as exceptional risks at the open sea.116
63. Where charterers nominate an unsafe port or berth, the normal117 consequences where the order is obeyed
are physical damage to the ship. Even negligent navigation following the charterer's order to proceed to
an unsafe port will not necessarily break the chain of causation.118A grounding caused by the charterer’s
nomination of an unsafe port may result in hull damage for which charterer is liable.119
64. Furthermore, where by the terms of a charterparty the charterer gives an undertaking to nominate a safe
port and he breaks that undertaking and nominates an unsafe port and the ship is damaged through going
there, he will be liable for the damage.120It is immaterial in point of law where the danger is located. 121
65. A port may be unsafe because of uncharted reef122 deficient anchorages,123 wind conditions124 and other
kinds of adverse weather125 In the case at hand, the port is rendered unsafe as the object on which the
anchor got tangled was an uncharted coral reef due to which the hull was damaged and costs accrued.126
112Ruxley Electronics and Construction Ltd v. Forsyth [1996] A.C. 344 113The Greta Holme [1897] A.C. 596 and Beechwood Birmingham v. Hoyer Group UK [2011] Q.B. 357, at paras 33–47. 114Leeds Shipping Co. Ltd. v. SociétéFrançaise Bunge [1958] 2 Lloyd’s Rep. 127, at p. 131; Kodros Shipping Corp. v. Empresa
Cubana de Fletes [1981] 2 Lloyd’s Rep. 613. 115Ibid. 116Palace Shipping Co v Gans SS Line [1916] 1 KB 138. 117Cf. AIC Ltd v. Marine Pilot (The Archimidis) [2008] 1 Lloyd’s Rep. 597. 118The Polyglory [1977] 2 Lloyd's Rep. 353, p.366. 119The Solomon, SMA 3106 (1994) (Engelbrecht, Leon, Arnold). 120Reardon Smith Line V Australian Wheat Board[1956] 1 Lloyd's Rep. 1. 121G.W. Grace & Co Ltd v General Steam Navigation Co Ltd (The Sussex Oak) [1950] 2 KB 383. 122Mediolanum Shipping Co v Japan Lines Ltd (The Mediolanum) [1984] 1 Lloyd’s Rep 136 (CA)
TEAM 4 MEMORANDUM FOR RESPONDENT
18
(D) That the Claimant is liable to pay demurrage
66. Demurrage is the agreed damages to be paid for delay if the ship is delayed in loading or discharging
beyond the agreed period”. 127 If the laytime is exceeded, the charterers are in breach of an innominate
term of the contract.128 Thus they are liable for damages for breach, but in reality, these are always fixed as
demurrage. Demurrage is therefore liquidated damages for exceeding the laytime.129
67. Where the laytime allowed is measured in weather working days then during the period the vessel is
waiting for a berth (whether the delay is due to weather or congestion) time will count except for any
periods during which loading or discharging wouldn’t have been possible due to weather, had the
particular vessel been in berth. 130 Since in the present case, laytime allowed was 0.5 WWD131, laytime
began to run at 7 AM on 29th July 2017 when the port instructed the ship to wait outside the port of
Dillamond due to unavailability of berths. 132 Had a berth been available, she would have docked earlier
and discharged the cargo.
68. It is submitted that in port charters, laytime commences when the vessel arrives at the port, and the
charterer takes the risk of delays due to congestion.133 Charterer’s position and plea of ignorance of the
prevailing port conditions lacks any commercial reality.134 Since there was a port charter in the present
case, charterer is liable for demurrage as a result of delays due to congestion.
69. Laytime Definitions for Charterparties 2013135, defines the word “port” as follows. “PORT shall mean any
area where vessels load or discharge cargo and shall include, but not be limited to, berths, wharves,
anchorages, buoys and offshore facilities as well as places outside the legal, fiscal or administrative area
where vessels are ordered to wait for their turn no matter the distance from that area.” Therefore, in the
123The Eastern City, [1958] 2 Lloyd’s Rep 127. 124Johnston Bros v Saxon Queen SS Co (1913) 108 LT 564. 125The Dagmar [1968] 2 Lloyd’s Rep 563. 126Moot scenario, 20. 127AktieselskabetReidar v Arcos Ltd [1927] 1 KB 352. 128Universal Cargo Carriers Corp v Citati[1957] 2 QB 401. 129CompaniaNaviera Aeolus SA v Union of India [1964] AC 868 at 899 (Lord Guest); Dias CompaniaNaviera SA v Louis Dreyfus
Corporation [1978] 1 WLR 261 at 263; The Forum Craftsman (Islamic Republic of Iran Shipping Lines v. Ierax Shipping Co. [1991] 1
Lloyd’s Rep. 81, at p. 87.) 130Aldebaran Compania Maritime SA Vs Aussenhandel AG (The Darrah) [1977] AC 157. 131Cl 8 (c) of Voyage Charterparty. 132Moot scenario, 20. 133P. Dougherty Co. v. 2,471 Tons of Coal, 278 F. 799, 803 (D. Mass. 1922); In re Arbitration between Nereus Shipping, S.A. and
Island Creek Coal Sales Co., SMA 1763 (1982); Hellenic Lines, Ltd. v. Embassy of Pakistan 467 F.2d 1150, 1154 (2d Cir. 1972) 134The StoltAvance SMA 3010 (1993). 135Laytime Definitions for Charterparties 2013.
TEAM 4 MEMORANDUM FOR RESPONDENT
19
instant case, at 7 AM on 29th July 2017, when the vessel was ordered to wait at a place 100 nm out from
Dillamond136, it was within the port limits, hence the laytime commenced.
70. The vessel arrived at Port of Dillamond at approximately 4 pm on 29th July 2017. Notice of readiness was
then given. The laytime allowed for discharging expired on arrival as it was communicated to the
Claimant that demurrage shall accrue from arrival, which was acquiesced by the Claimant.137 Thus
demurrage accrued from 4 pm till the discharge of cargo at 9 pm. Hence, the Claimant owes demurrage
charges to the Respondent to the amount of USD 100,000 at the rate of USD 20,000/hour.
71. In alternative, even if the discharge by the Claimant was delayed due to congestion, it is stated that if the
selected method of discharge is hindered or prevented by an excepted peril the charterer must change to
another available method, failing which he risks incurring demurrage.138
72. It is submitted that the Claimant cannot rely on Clause 8(e)139 to excuse its failure to pay demurrage since
laytime continued to run, demurrage accrued for each subsequent hour of delay after it expired.140The onus
is on charterer to demonstrate that it can benefit from either of these exemptions, which as exclusion
clauses should be construed narrowly and against the party that seeks to rely on them.141 Adopting this
approach, the Tribunal should find neither exclusionary factor applies.
(E) That the Claimant is liable to pay for use of electronic access systems.
73. It is submitted that the Claimant is liable to pay USD 10,000 for use of electronic access systems at port of
Dillamond on the basis that such facility was used only for the benefit of the Claimant due to advantages
such as improved speed, reduced expense and paperwork. The Respondent was aware about the urgency of
delivery, hence opted to use such facility to mitigate the losses that claimant might incur due to the delay.
The Claimant can recover for loss incurred in reasonable attempts to avoid loss.142
136Moot scenario, 20. 137Moot scenario, 22. 138The Varing [1931] P. 79; Fitzgerald v. Lona (Owners) (1932) 44 Ll. L. Rep. 212; Red. “Macedonia” v. Slaughter (1935) 40 Com.
Cas. 227. 139Cl 8 (e) of Voyage Charterparty. 140John Schofield, Laytime and demurrage, Lloyd Shipping Law Library 357 [6.2], [6.7]; Lockhart v Falk (1875) LR 10 Ex 132, 135
(Cleasby B); Harris v Jacobs (1885) 15 QBD 247, 251 (Brett MR); Transamerican Steamship Corporation v Tradax Export S.A. (The
Oriental Envoy) [1982] 2 Lloyd’s Rep 266, 271 (Parker J) 141CompaniaNaviera Aeolus SA v Union of India (The Spalmatori) [1964] AC 868, 879 (Lord Reid); Darlington Futures Ltd v Delco
Australia Pty Ltd (1986) 161 CLR 500, 510; Nissho Iwai Australia Ltd v Malaysian International Shipping Corporation (1989) 167
CLR 219, 227. 142McGregor on Damages (19th (2014) edition); Fulton Shipping Inc of Panama v Globalia Business Travel S.A.U. [2015] EWCA Civ
1299.
TEAM 4 MEMORANDUM FOR RESPONDENT
20
74. Where the owner does take steps, going beyond his legal obligations, to speed up the loading or
discharging process and thus diminish the time his vessel spends on demurrage he is entitled to recover any
costs reasonably incurred in so doing.143 It is submitted that the Respondent used the electronic facility
only to speed up the discharging process due to urgent nature of the delivery, hence the claimant shall be
liable to pay for costs incurred.
75. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him
has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover
the cost of such measures merely because the party in breach can suggest that other measures less
burdensome to him might have been taken.144 Since the charterers breached their duty to nominate a safe
port, owners acted reasonably by adopting alternate and quicker method of delivery of cargo by using the
electronic access system, hence the charterers will be liable to pay such costs incurred by owners in
adopting such remedial measure.
76. As has been upheld in the case of The Asia Star145, the claimant can recover expenses reasonably incurred
in the course of taking mitigation measures. Therefore, subject to the reasonableness of the actions of the
aggrieved party and the foreseeability of its additional loss in mitigation, recovery of such additional loss is
allowed146
77. While the principle of mitigation does not require an aggrieved party to nurse the defaulting party’s
interests at the expense of its own interests147, it has also long been said that the aggrieved party must act
with both the defaulting party’s interests as well as its own interests in mind148.
78. Considering that quick delivery of cargo was in the interest of both the parties, using electronic access
systems at port of Dillamond was reasonable and the charterers will be liable for the costs incurred for the
same.
143Leeds SS. Co. v. Duncan Fox (1932) 37 Com. Cas. 213 144Banco de Portugal v Waterlow [1932] AC 452 145The Asia Star [2010] 2 Lloyd’s Rep. 121 146Browne-Wilkinson LJ in GebruderMetelmann GmbH & Co KG v NBR (London) Ltd [1984] 1 Lloyd’s Rep 614 at 633;The
“Sivand” [1998] 2 Lloyd’s Rep 97 147Harlow & Jones, Ltd v Panex (International), Ltd [1967] 2 Lloyd’s Rep 509 at 530 per Roskill J. 148Smailes and Son v Hans Dessen and Co (1906) 94 LT 492 at 493 per Channell J.
TEAM 4 MEMORANDUM FOR RESPONDENT
21
79. Claimants are also liable to pay for use of electronic access systems in accordance with Section 56 of Ports
and Maritime Administration Act 1995 (NSW)149as the electronic facility was used to access the port
cargo.
(F) That the Claimant is liable to pay the agency fee
80. That the Claimants are liable for the payment of agency fee at the Port of Spectre and the Port of Dilamond
to the Respondents. Agency fee at the Port of Spectre (A). Agency fee at the Port of Dilamond (B).
(i) Agency fee at the Port of Spectre
81. It is mandated that pursuant to the charterparty, the unforeseeable and inevitable weather conditions and
hampering of communication systems owing to the solar flares,150 made it incumbent upon the
Respondents to deviate to the Post of Spectre due to the obligation on the Respondents regarding safety of
cargo, human life and property.151
82. It is stated before the Tribunal that the agency fee claimed by the Respondents is part of an incidental
expense, while carrying out the execution of the contract. It is settled that incidental damages are incidental
expenses such as commercially reasonable charges in stopping delivery, in transportation, care and custody
of goods, incurred by the non-breaching party in order to avoid other direct and consequential losses of
breach.152 Furthermore, owing to the above contentions it is evident that the Charterer’s have breached
Clause 11 of the charterparty153 by nominating an unsafe port of delivery.
83. That thus the Respondents have rightfully claimed the agency fees incurred at the Port of Spectre, as that
expense was unavoidable and incidental to the execution of the contract, which has to be mandatorily
recovered by the Charterer’s. Hence the claim.
(ii) Agency fee at the Port of Dilamond
84. It is submitted that according to the Part 5 of Ports and Maritime Administration Act, 1995,154 the site
occupation and the wharfage charges have to be paid to the port by the person utilizing such site and agents
for the purpose of loading and unloading of cargo. That this makes it an evident fact, that the expenses
149Ports and Maritime Administration Act 1995 (NSW), Section 56. 150Moot Scenario, 17,19. 151Notura v Henderson[1870] L.R 5 Q.B 354. 152Allyson Matvey, Incidental Damages Vs Consequential Damages: A Distinction of Consequence, (2017) 153Clause 11, Voyage Charterparty. 154Part 5 of Ports and Maritime Administration Act, 1995 of No.13.
TEAM 4 MEMORANDUM FOR RESPONDENT
22
incurred by the Respondents in paying the agency fees to the port authority, due to the unavailability of the
Claimant’s agents, the Claimant is liable to reimburse the requisite agency fees to the Respondents.
85. It is thus submitted that the Respondents have claimed the agency fees at both the ports rightly and the
Claimant is liable for it.
ARGUMENTS ON THE MERITS OF THE COUNTER CLAIM
V. THAT RESPONDENTS ARE NOT LIABLE TO PAY DAMAGES CLAIMED BY THE
CLAIMANT.
(A) That the Respondents are not liable to pay the damages for the damaged goods and replacement
cargo
86. It is submitted that pursuant to the above mentioned contentions, the Respondents had delivered the cargo
at 8:42 pm on 29th July, 2017. Further, on consideration of the reports submitted by the Tribunal appointed
expert, it is apparent that the cargo was damaged on 30th July, 2017155 after the delivery was affected. It is
stated that in order to claim from a person for loss caused by him by reason of loss of or damage to
property, he must have had either the legal ownership of or a possessory title156 to the property concerned
at the time when the loss or damage occurred157. Thus, under any circumstance, the Respondents cannot be
made liable for the damaged cargo therefore, payment of the replacement cargo is out of question.
87. The innocent party cannot claim to be compensated by the party in default for loss which is really due not
to the breach but to its own failure to behave reasonably after the breach.158A defendant is only liable for
such part of the claimant’s loss as is properly to be regarded as caused by the defendant’s breach of
duty.’159 By failing to take available steps to mitigate, the claimant may run the risk of the court holding
that the resultant loss is not attributable to the original breach.160
155Moot scenario, 43. 156Gatliffev. Bourne (1838) 4 Bing. N.C. 314, (1841) 3 M. & G. 643 157Leigh and Sillavan Ltd V Aliakmon Shipping Co Ltd (The Aliakmon), [1985] UKHL 10. 158British Westinghouse Electric Co Ltd v. Underground Electric Rys Co of London Ltd, [1912] AC 673, 689; The Metagama, (1928)
29 LIL Rep 253 (HL); Le Blanche v. L.N.W Ry, (1876) 1 C.P.D. 286; Tucker v. Linger, (1882) 21 Ch D 18; Macrae v. H.G. Swindells,
[1954] 1 W.L.R. 597; The Stena Conquest, SMA 4075 (2010); Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden
Victory) [2007] 2 A.C. 353; Attorney General of the Republic of Ghana v Texaco Overseas Tankships Ltd – “Texaco Melbourne”
(1993) 1 Lloyd‟s Rep 471 (CA). 159The Solholt [1983] 1 Lloyd’s Rep 605 at p 608; Robert Goff J in The Elena D’Amico [1980] 1 Lloyd’s Rep 75 at p 89. 160Bridge (1989) 105 LQR 398; The Oregon, 55 F. 666, 673 (6th Cir. 1893); The Tbilisi, SMA 3935 (2006) (Jarashow, Berg,
Martowski); Federal Insurance Co. v. Sabine Towing & Transp. Co.783 F.2d 347; J. Beatson et al., Anson’s Law of Contract (29th
Edition, 2010) at p.555.
TEAM 4 MEMORANDUM FOR RESPONDENT
23
88. In the present case, since the cargo was damaged on 30 July 2017161 i.e. after the delivery by the
Respondent, it is evident that the damage was not caused due to their late delivery but due to delay by
Claimants in collecting the cargo from the port. Furthermore, claimants didn’t take any steps to mitigate
their losses by using appropriate methods to dry the coffee and selling it nor did they exercise reasonable
care by reaching the port at time to collect the delivered cargo. Ergo, Respondents are not liable to pay for
damaged cargo.
89. In alternative, it is submitted that the use of packaging which is normal or customary in the trade will
generally exonerate the shipper even though it cannot guarantee protection against every possible form of
damage.162Coffee is ordinarily shipped in fibre bags placed into well sealed/waterproof shipping
containers163 as happened in the instant case, therefore, the Respondent cannot be held liable to pay for the
resultant damage to cargo.
90. In The Iron Gippsland164, it was stated that it was reasonable for the plaintiff to reprocess a contaminated
cargo of oil and therefore the cost of cure was held to be the appropriate measure of damages. Similarly in
the present case coffee beans could have been dried up by subjecting them to appropriate methods and used
to sell again. Hence, the Respondents are not liable to pay any damages for the replaced coffee.
91. Even if damages are payable, in the absence of special facts or terms, the normal measure of damages
when cargo is delivered damaged is the sound value at the destination, less the damaged value and the
costs of carriage (if not already paid),165 a measure which may, in an appropriate case, be reflected by the
repair or reconditioning costs. Thus in the present case, if cost of the damaged cargo has to be claimed, it
can not be claimed for the sound value of coffee.
92. It is also apparent on the face of record that the damages for replacement cargo (USD 9,450,000) claimed
by the Claimant are unreasonable and not in proportion. That it is a well settled law that providing extra
financial benefit166 to the aggrieved party would lead to their unjust enrichment167, leading to miscarriage
161Moot scenario, 43. 162ContinexInc v SS Flying Independent [1952] AMC 1499 at p 1503. 163Procedural Order 2, cl 12. 164The Iron Gippsland [1994] 1 Lloyd's Rep. 335. 165Vinmar International v. Theresa Navigation (The Atrice) [2001] 2 Lloyd’s Rep. 1, para. 56; Slater v. Hoyle & Smith [1920] 2 K.B.
11; Derby Resources A.G. v. Blue Corinth Marine Co. (The Athenian Harmony)[1998] 2 Lloyd’s Rep. 410; cf. Empresa
CubanaImportada de Alimentos v. Iasmos Shipping Co. S.A. (The Good Friend) [1984] 2 Lloyd’s Rep. 586; Wilson v Lancs&Yorks Ry
(1861) 9 CBNS 632; Koufos v C Czarnikow Ltd, (The Heron II), [1969] 1 A.C. 350. 166Southampton Container Terminals v. Hansa Sch. (The Maersk Colombo) [1999] 2 Lloyd’s Rep. 491.
TEAM 4 MEMORANDUM FOR RESPONDENT
24
of justice for the Respondents. Thus, it is submitted that the Respondents cannot be made liable to pay such
an amount for replacement cargo.
93. Arguendo, liability of respondent is limited.It is mandated that in furtherance of the Clause Paramount168,
Article 4(5) (a) and (e) of Hague Visby Rules, limits the liability of the Respondent to 666.67 SDR per
package or unit or 2 SDR per kilogram of gross weight of the goods lost or damaged, whichever is
higher.169 That the Claimant has claimed USD 1, 57, 50,000 (52,500 kg x $300) for the damaged cargo,
however pursuant to the limitation of liability on the Respondents, they are liable to pay approximately
USD 7, 26, 392.72 (666.67 SDR x 750) or USD 1, 52, 7751 (2 SDR x 52,500 kg), whichever is higher.
Thus the Respondents can be made liable only to the extent of USD 7, 26, 392.72, if adjudged liable.
(B)That the Respondents are not liable to pay the settlement payment
94. The provisions of contracts of sale and purchase to which the goods owner is a party are, in the absence of
special circumstances, res inter aliosacta which are not to be taken into account in assessing the damages to
be paid to the goods owner. 170The carriers of goods are not concerned, in the absence of special
circumstances, with rights of indemnity or rights to recover or recoup the price, or rights to damages as
between goods owners and mercantile parties with whom they may be in contractual relations. Such
considerations are too remote.171
95. In order to show that the settlement was reasonable the claimant must prove that the sum paid is at least as
big as their liability to the Coffees of the World. In order to do that they must establish their case by
evidence and figures.172If the settlement is not thus “reasonable”, it is then irrelevant in law.173 This issue
involves determining, first whether it was reasonable to settle the claim at all, and second whether the level
of settlement was within a reasonable range174
167Circle Finance Company vs. Jessie L. Peacock and Sara A. Peacock 399 So. 2d 81 (1981) 168Cl 28 of Voyage charterparty. 169Article 4(5) (a) of HVR. 170 R&W Paul Ltd v National Steamship Co Ltd (1937) 59 Ll L Rep 28; Scrutton on Charterparties, 23nd edn, Art. 212. 171The Sanix Ace [1987] 1 Lloyd’s Rep 465 172Kiddle v. Lovett (1885) 16 Q. B. D. 605. 173John F.Hunt Demolition v. Asma Engineering Ltd [2008] 1 All E.R. 180, [2007] EWHC 1507 (TCC). 174Fisher v. Val de Travers Asphalte (1876) 45 L.J.C.P. 479; Comyn Ching v. Oriental Tube [1979] B.L.R. 56, esp. pp. 80, 83 and 92,
and Supershield v. Siemens Building Technologies [2010] 1 Lloyd’s Rep. 349.
TEAM 4 MEMORANDUM FOR RESPONDENT
25
96. Unless the claim is of sufficient strength reasonably to justify a settlement and the amount paid in
settlement is reasonable having regard to the strength of the claim, it cannot be shown that the loss has
been caused by the relevant eventuality or breach of contract175
It is submitted that it was not reasonable to settle the claim as Coffees of the World accepts that the breach
was beyond the control of the claimant and had already made sufficient efforts to minimise the loss by
securing replacement coffee. 176The festival for which the coffee was required was also successful in the
end177, showing that a loss to the amount of $5,000,000 claimed as settlement payment was not reasonable.
Therefore, it is submitted thatthe Respondents are not liable to pay the settlement payment.
REQUEST FOR RELIEF
For the reasons set out above, the Respondent requests that the Tribunal:
1. Refer the matter to the jurisdiction of a Master Mariner, pursuant to the Charterparty.
2. Uphold that there has been no breach of the charterparty by the Respondents.
3. Adjudge that the Claimant does not hold a maritime equitable lien on the vessel.
4. Declare that the Respondent is entitled for the damages amounting to USD 1,610,000 and that they are
not liable for the payment of the claimed damages by the Claimant.
Dated this 18th day of April, 2018.
Agents for the Respondents
Dynamic Shipping LLC.
175Newcastle Protection and Indemnity Association v. Assuranceforeningen Gard [1998] 2 Lloyd’s Rep. 387 at p. 407; General Feeds
Inc. v. SlobodnaPlovidba (The Krapan J.) [1999] 1 Lloyd’s Rep. 688. 176Moot scenario, 29. 177Ibid.
Recommended