INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2015

THE UNIVERSITY OF HONG KONG

TEAM 1

MEMORANDUM FOR THE CHARTERERS

CECILIA WING YU CHOI

JOYCE HO YAN LEUNG

PAK HEI LI

TIFFANY TSZ SHAN TAM

 

TABLE OF CONTENT

LIST OF ABBREVIATIONS i

LIST OF AUTHORITIES iii

I. SUMMARY OF ARGUMENT 1

II. SUMMARY OF FACTS 1

III. THIS TRIBUNAL HAS NO JURISDICTION TO CONSIDER THE CLAIMS 3

A. This Tribunal Is Competent to Rule on Its Own Jurisdiction

B. The Arbitration Agreement Should Be Rectified

C. The Arbitration Clause Does Not Cover Tortious Claims

3

3

5

IV. ASA2 WAS NOT THE CHARTERERS’ AGENT 7

A. Captain Anya Did Not Have Actual/ Apparent Authority in Giving

Instructions for the Vessel to Proceed to an Alternative Discharge

Location (‘Discharge Instructions’)

7

V. INSTRUCTIONS FOR THE VESSEL TO DISCHARGE CARGOES AT AN ALTERNATIVE

DISCHARGE LOCATION WERE NOT GIVEN BY THE CHARTERERS IN BREACH OF THE

CHARTERPARTY

9

A. The Discharge Instructions were Not Given by the Charterers and/ or

Their Agent

B. Further or Alternatively, the Charterers Were Entitled to Give the

Discharge Instructions without Prior Approval of the Owners

9

11

VI. THE CHARTERERS WERE NOT IN BREACH OF THE CHARTERPARTY WITH

REGARD TO HIRE

13

A. The Charterparty Was Frustrated by 4 July 2014 by the Pirate Attack

i. The doctrine of frustration applies

ii The Pirate Attack constituted a frustrating event

B. As a Result of the Frustrating Event, the Charterers Are Not Obliged to

Pay Hire for the Second Hire Period

C. The Vessel Was Off-Hire from 4 July 2014 by Reason of the Pirate

Attack

D. Further or Alternatively, the Vessel Was Off-Hire from 4 July 2014 by

Reason of Breach of Orders and/or Neglect of Duty on the Part of the

Master

13

13

14

14

15

16

VII. THE CHARTERERS DID NOT COMMIT THE TORT OF DECEIT 16

A. The Charterers Hold the Owners to Strict Proof of the Three Distinct

Allegations of Fraudulent Misrepresentations

16

 

   

B. The First Representation Was Not a Fraudulent Misrepresentation

i. The First Representation was mere promise of future conduct

ii. The First Representation was true at the time it was made and

was made with the Charterers’ honest belief

iii. The First Representation was not intended to be acted on by the

Owners

iv. The Owners had not been influenced by the First Representation

C. The Second Representation Was Not a Fraudulent Misrepresentation

i. The Second Representation was true at the time it was made and

was made with the Charterers’ honest belief

ii. The Owners had not been influenced by the Second

Representation

D. The Third Representation Was Not a Fraudulent Misrepresentation

i. ASA2 was not acting as an agent of the Charterers in making the

Third Representation

ii. The Charterers are not primarily liable for the deceit committed

by ASA2

iii. The Charterers are not vicariously liable for the deceit committed

by ASA2

iv. Alternatively, no causation existed between the First and Second

Representations and the damage claimed by the Owners

17

17

18

18

18

19

19

20

20

20

20

21

21

VIII. THE CHARTERERS’ COUNTERCLAIMS 21

A. The Vessel Was Not Fit for Service

i. The Owners failed to follow anti-piracy precautions

ii. The Master was incompetent

B. The Owners Are Liable for Loss of Cargo

21

22

23

24

IX. CONCLUSION 25

  i

LIST OF ABBREVIATIONS

Act The Law Reform (Frustrated Contracts) Act 1943

Antelope The vessel nominated by ASA2 to perform STS Transfer

Alternative Discharge Location The coordinates given by ASA2 for STS Transfer

Arbitration Clause Clause 46(b) of Shelltime 4

ASA2 ASA (Angola) Ltd; Atlantic STS Agency Ltd

BIMCO Baltic and International Maritime Council

BIMCO Piracy Clause BIMCO Piracy Clause for Time Charter Parties 2013

BMP4 Best Management Practices for Protection against Somalia Based Piracy (Version 4)

Captain Anya Captain William Edward Anya, General Manager of ASA2

Charterers Less Dependable Traders PTE (LDT PTE)

Charterparty The voyage charterparty between Western Tankers Inc. and LDT PTE regarding the vessel ‘The Western Dawn’

Choice of Law Clause Clause 46(a) of Shelltime 4

Discharge Instructions Instructions given to the Vessel in proceeding to the Alternative Discharge Location

ETA Estimated time of arrival

IMWMB Broker between the Charterers and the Owners

Master Captain Stelio Smith, Master of The Western Dawn

Noon Report A daily report sent by the Master to update the Charterers and agents

Owners Western Tankers Inc.

OPL Off-port Limits

Pirate Attack Seizure of the Vessel by pirates from 4-17 July 2014

Recap Shelltime 4 with amendments and additional rider clauses, dated 26 May 2014

Second Hire Period Second month of the hire period: 4 July 2014 – 3 August 2014

STS Transfer Ship-to-ship transfer with the Antelope as instructed by ASA2

Trading Limits Stipulated in Clause 4(a) of Shelltime 4 subject to Recap

  ii

The First Representation Representation given by the Charterers on 3 June 2014

The Second Representation Representation given by the Charterers on 28 June 2014

The Third Representation Representation given by ASA2 on 28 June 2014

The Gulf of Guinea Region Guidelines

Guidelines for Owners, Operators and Masters for Protection against Piracy in the Gulf of Guinea Region

William William of Atlantic Services Agency

Vessel The Western Dawn, the vessel under the Charterparty

Voyage Order Voyage order (LDTP/WD01): Moot Problem p 13

     

  iii

LIST OF AUTHORITIES Statutes Law Reform (Frustrated Contracts) Act 1943 Cases Aggeliki Chairs Company Maritime SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep 87 (CA) Alfred C Toepfer Schiffahrtsgesellschaft GMBH v Tossa Marine Co Ltd (The Derby) [1985] 2 Lloyd’s Rep 325 Armagas Ltd v Mundogas SA [1986] AC 717 Bank Line Ltd v Arthur Capel & Co [1919] AC 435 Bisset v Wilkinson [1927] AC 177 Bulk Shipping A.G. v Ipco Trading S.A. (The Jasmine B) [1992] 1 Lloyd’s Rep 39 QBD (Comm) Derry v Peek (1889) 14 App Cas 337 Edgington v Fitzmaurice (1885) 29 Ch D 459 Egyptian International Foreign Trade Co v Soplex Wholesale Supplies Ltd (The Raffaella) [1985] 2 Lloyd’s Rep 36 Fibrosa v Fairbairn [1943] AC 32 Fiona Trust and Holding Corp v Privalov [2007] UKHL 40, [2007] 4 All ER 951 Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] QB 480 Ghanem Al-Thani Holdings WLL v Jaguar Cars Exports Ltd [2012] EWHC 856 (Comm) Gosse Millerd v Canadian Government Merchant Marine Ltd [1927] 2 KB 432 Haringey LBC v Hines [2010] EWCA Civ 1111, [2011] HLR 6 Hongkong Fir Shipping Company Ltd v Kawasaki Kisen Kaisha Ltd (The Hongkong Fir) [1961] 2 Lloyd’s Rep 478 Hornal v Neuberger Products Ltd [1957] 1 QB 247 Ispat Industries Ltd v Western Bulk Pte. Ltd [2011 ] EWHC 93 (Comm), 2011 WL 291665 Jordan v Money (1854) 5 HLC 185 Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541 Mediolanum Shipping Co v Japan Lines Ltd (The Mediolanum) [1984] 1 Lloyd’s Rep 136

  iv

Montpellier Estates Ltd v Leeds City Council [2013] EWHC 166 (QB) Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 (HL) National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 Osmium Shipping Corporation v Cargill International SA (The Captain Stefanos) [2012] EWHC 571 (Comm) Papera Traders Co Ltd v Hyundai merchant Marine Co Ltd (The Eurasian Dream) [2002] EWHC 118 (Comm), [2002] 1 Lloyd’s Rep 719 Petroships Pte Ltd v Petec Trading and Investment Corp (The Petro Ranger) [2001] 2 Lloyd’s Rep 348 Pourzand v Telstra Corp Ltd [2014] WASCA 14 Segovia Compania Naviera SA of Panama v R Pagnan & FLLI of Padova (The Aragon) [1975] 1 Lloyd’s Rep 628 Select Commodities Ltd v Valdo SA (The Florida) [2006] EWHC 1137 (Comm), [2007] 1 Lloyd’s Rep 1 Shinhan Bank Ltd v Sea Containers Ltd [2000] 2 Lloyd’s Rep 406 Smith New Court Securities Ltd v Citibank NA [1997] AC 254 Other authorities BIMCO and others, BIMCO Guidelines for Owners, Operators and Masters for Protection against Piracy in the Gulf of Guinea Region (2014) <  http://www.imo.org/OurWork/Security/WestAfrica/Documents/Guidelines_for_protection_against_Piracy_in_the_Gulf_of_Guinea_Region.pdf> accessed 20 April 2015 Coghlin T, Baker A, Kenny J, Kimball J, Belknap T, Time Charters. (7th edn, Routledge 2014) Beale H (ed), Chitty on Contract (31st edn, Sweet & Maxwell 2014) Watts P (ed), Bowstead & Reynolds on Agency (20th edn, Sweet & Maxwell 2014) Merkin R, Arbitration Law (1st edn, Informa Law Library 2014) UK Maritime Trade Operations (UKMTO) Office and others, Best Management Practices for Protection against Somalia Based Piracy (Version 4 – August 2011) (Witherby Publishing Group 2011) <http://www.mschoa.org/docs/public-documents/bmp4-low-res_sept_5_2011.pdf?sfvrsn=0> accessed 20 April 2015

  1

I. SUMMARY OF ARGUMENT

It is the Charterers’ case that: (1) This Tribunal has no jurisdiction to consider the claims. (2) 1.

Even if this Tribunal has jurisdiction, the Charterers are not liable for breach of the

Charterparty and deceit. (3) ASA (Angola) Ltd (‘ASA2’) was not the Charterers’ agent and

the Charterers are not liable for loss resulting from the shipmaster’s compliance with voyage

instructions given by Captain Anya. (4) The Charterers are not in breach of the Charterparty

for failure to pay hire. (5) The Owners are liable for the Charterers’ counterclaims.

II. SUMMARY OF FACTS

By a charterparty entered into between Western Tankers Inc. (‘Owners’) and LDT PTE 2.

(‘Charterers’) on 26 May 2014, the Owners agreed to let and the Charterers agreed to hire the

‘Western Dawn’ (‘Vessel’) for a period of three months, plus or minus 30 days

(‘Charterparty’). The Charterparty was in the form of Shelltime 4 with amendments and

additional rider clauses found in the Recap dated 26 May 2014 (‘Recap’).

The Charterparty was for a time charter trip, which included a voyage from Singapore to OPL 3.

Luanda, West Africa, via the Cape of Good Hope with re-delivery of the Vessel in the

Mediterranean area.

On 27 May 2014, the Charterers sent a voyage order (‘Voyage Order’) to Captain Stelios 4.

Smith, master of the Vessel (‘Master’). The Master acknowledged receipt of the Voyage

Order on the same day and requested for 1,500 mt bunkers. The Owners acknowledged that

the fixture ‘will include WAF area [which] is a known security/ piracy threat area’ and

arranged for its Ops and Safety Department to attend the Vessel ‘at Singapore to assist in the

plan and upgrade of systems and equipment’.

The Charterers confirmed supply of 950 mt of bunkers on 30 May 2014 and further suggested 5.

that alternative bunker supply may be made available at Durban or Cape Town on 3 June 2014.

  2

The Charterers and Master exchanged email correspondence on the same day regarding the

provision of bunker.

On the same day, the Owners informed the Master that there were problems delivering the 6.

anti-piracy equipment to Singapore in time for the voyage and suggested sending them to

Durban instead. The Vessel never received the safety equipment the Owners undertook to

arrange.

The Master issued a Notice of Readiness upon the Vessel’s arrival in Singapore on 4 June 7.

2014. The Vessel was then loaded with 30,000.559 mt of Jet A1 aviation fuel and 72,199.127

mt of gasoil. Upon completion of loading on 8 June 2014 and issuance of Bills of Lading, the

Vessel left Singapore on the same day for OPL Luanda.

The Charterers issued a 45 day redelivery notice on 20 June 2014, stipulating redelivery of the 8.

Vessel on or about 4 August 2014 about Gibraltar.

By an email dated 25 June 2014, the Master protested against the Charterers’ advice not to 9.

supply fuel at Durban and reduced the speed of the Vessel to 12 knots. The Charterers

responded on 28 June 2014, stipulating that ‘Next bunker supply now on arrival STS Area 1’

and further designating the Bonny Offshore Terminal as the next load port and the

Mediterranean Sea, not East of but including Greece, as the destination.

By an email dated 28 June 2014, Captain William Edward Anya (‘Captain Anya’), General 10.

Manager of ASA (Angola) Ltd (‘ASA2’), informed the Master that ASA2 would act as the

agent for the Charterers and gave detailed instructions regarding a ship-to-ship transfer (‘STS

Transfer’) with the Antelope (‘Antelope’) at an alternative discharge place in international

waters off the Angolan Coast (‘Alternative Discharge Location’).

On 3 July 2014, the Owners advised the Charterers by email that payment for the second hire 11.

period (‘Second Hire Period’) had fallen due. In a separate email from the Master to the

  3

Charterers on the same day, the Master stated that the Vessel would arrive at ‘the new OPL

discharge R/V tomorrow at 0530. You have advised AGW 3 day discharge to 2 STS, with

bunkers on arrival supply from STS v/l ANTELOPE before cargo transfer’.

The Charterers issued a 30 day redelivery notice on 4 July 2014, and further asked the Master 12.

to ‘continue to liaise with your STS coordinator’. Bonny was confirmed as the next bunker

supply location.

Upon the Vessel’s arrival at the Alternative Discharge Location specified by Captain Anya on 13.

4 July 2014, the Master issued a Notice of Readiness to the Charterers. The Vessel was later

arrested. The Charterers informed the Owners by email on the same day that they considered

‘Vessel as offhire due no contact with receiver/ chrtr [and] payment for second hire period not

due until vessel back on-hire’.

By an email dated 17 July 2014, the Master gave notice to the Charterers and the Owners that 14.

the Vessel was back under his command after a pirate attack and cargo diversion (‘Pirate

Attack’). The Charterers and the Owners were informed of loss of cargo, specifically the loss

of 28,190 mt of gasoil, in multiple ship-to-ship transfer operations and damage to the Vessel.

The Vessel proceeded to Cape Town for assistance.

III. THIS TRIBUNAL HAS NO JURISDICTION TO CONSIDER THE CLAIMS

A. This Tribunal Is Competent to Rule on Its Own Jurisdiction

  The Charterer accepts that this Tribunal is competent to rule on its own jurisdiction by virtue 15.

of the Kompetenz-Kompetenz principle.

B. The Arbitration Agreement Should Be Rectified

  Shelltime 4 is used as the basis of the Charterparty.1 Clause 46(a) (‘Choice of Law Clause’) 16.

and Clause 46(b) (‘Arbitration Clause’) provide, respectively, that English law is the

                                                                                                               1 Moot Problem p 5.

  4

governing law and that ‘All disputes arising out of this charter shall be referred to Arbitration

in London accordance with the Arbitration Act 1996’.

Since arbitration is consensual in nature, the intention of the parties is of utmost importance.2 17.

It is submitted that the Arbitration Clause does not reflect the intention of both parties. When

the Charterers were negotiating with broker IMWMB (‘IMWMB’), the Charterers manifested

their intention that London arbitration was not preferred on 23 May.3 Such manifestation was

made alongside the request to change the delivery date, which was subsequently acceded to by

IMWMB on the same day.4 As IMWMB only stated the main terms of the Charterparty in the

reply,5 the Charterers reasonably assumed that the London arbitration clause will be either

deleted or amended in the Recap.

IMWMB is the broker between the Charterers and the Owners.6 Therefore, IMWMB acted as 18.

the agent for both parties in relation to the negotiation of the Charterparty. Irrespective of

whether the notice was subsequently transmitted to the Owners, the Charterers’ notice that

London arbitration was not preferred is effective because IMWMB received such notice within

the scope of its actual authority.7 Therefore, it is submitted that this Tribunal should impute to

the Owners knowledge that the Charterers did not accede to London arbitration.8

To reflect the parties’ true intention, it is submitted that the Arbitration Clause should be 19.

rectified such that the phrase ‘in London in accordance with the Arbitration Act 1996 (or any

re-enactment or modification thereof for the time being in force)’ be deleted.

The four prerequisite conditions are satisfied.9 First, although the Charterers agreed that 20.

arbitration is the preferred mode of dispute resolution, the Charterers erroneously believed that

                                                                                                               2 Fiona Trust and Holding Corp v Privalov [2007] UKHL 40, [2007] 4 All ER 951 [5] (Lord Hoffmann). 3 Moot Problem p 2. 4 ibid. 5 ibid. 6 Procedural Order no 2, Dramatis Personae. 7 Peter G Watts (ed), Bowstead & Reynolds on Agency (20th edn, Sweet & Maxwell 2014) para 8-204. 8 ibid para 8-207. 9 Hugh Beale (ed), Chitty on Contract (31st edn, Sweet & Maxwell 2014) vol 1 para 5-122.

  5

IMWMB or the Owners would amend the Charterparty such that the arbitration would not be

held in London pursuant to the Arbitration Act 1996. Secondly, the Owners knew of the

Charterers’ intention. Thirdly, the Owners failed to draw the mistake to the notice of the

Charterers. Fourthly, the inclusion of London arbitration clause benefits the Owners.

As the rectified Arbitration Clause is silent as to the seat of the Arbitration, ‘all the relevant 21.

circumstances’ must be considered to determine the seat. 10 The notion of ‘relevant

circumstances’ include:

‘Any connections with one or more particular countries that can be identified in

relation to (i) the parties; (ii) the dispute which will be the subject of the arbitration;

(iii) the proposed procedures in the arbitration, including (if known) the place of

interlocutory and final hearings; (iv) the issue of the Award or Awards.’11

In this case, only the connections concerning the parties and the subject matter of the 22.

arbitration are relevant. Regarding the parties, neither the Owners nor the Charterers were

incorporated in the UK. The Charterers were a company incorporated in Singapore.

Regarding the dispute, the voyage in question does not concern the UK. Rather, the load port

was in Singapore. Therefore, it is submitted that this Tribunal should hold Singapore as the

seat of the arbitration.

C. The Arbitration Clause Does Not Cover Tortious Claims

In the event that English law applies and London is the seat of the arbitration, it is submitted 23.

that the tortious claim does not fall within the ambit of the Arbitration Clause.

For a tortious claim to fall within an arbitration clause which covers ‘[a]ll disputes arising out 24.

of this charter’, there must be a sufficiently close connection between the tortious claim and a

                                                                                                               10 Robert Merkin, Arbitration Law (1st edn, Informa Law Library 2014) para 1.31.1. 11 ibid para 1.30.1.

  6

claim under the contract. 12 To establish such a connection, the Owners must show that either

the resolution of the contractual issue is necessary for a decision on the tortious claim, or that

the contractual and tortious disputes are so closely knitted together on the facts that an

arbitration agreement can be properly construed as covering the tortious claim.13

In The Angelic Grace, the Court of Appeal affirmed the first instance decision that the tortious 25.

claim concerning a collision fell within the arbitration clause. However, it is submitted that

the current case can be distinguished from The Angelic Grace on two grounds.

First, the Owners’ claims in contract and in tort are not alternatives. As opposed to The 26.

Angelic Grace, where the claims for breach of the warranty of safety and the claims for fault in

collision were held to be closely overlapped,14 the Owners’ claim based on tort of fraud is

independent from its contractual claim regarding hire.

Secondly, the Owners’ claim in tort can be adjudicated without considering the Charterparty. 27.

The nature of a claim based on tort of deceit is different from that of a negligence claim. For

the adjudication of the latter, contractual terms relating to lighterage, collision and exclusion of

liability were relevant.15 In contrast, the current tortious claim depends on three issues

regarding the truth of the representations, the intention and honesty of the representor and the

Owner’s reliance and the resolution of these issues do not turn on any contractual provisions.

Two alleged instances of fraudulent representations were in fact made by ASA2, which is not a

party to the Charterparty.16

Therefore, the resolution of the contractual claim regarding hire is unnecessary for a decision 28.

on the tortious claim. The material facts of these issues are not so closely knitted together with

the contractual claim that the Arbitration Agreement can be properly construed as covering the

                                                                                                               12 Aggeliki Chairs Company Maritime SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep 87 (CA) 89 col 2 (Rix J). 13 ibid. 14 ibid 90 col 1 (Rix J). 15 ibid. 16 Moot Problem p 63.

  7

tortious claim. It is thus submitted that there is not a sufficiently close connection between the

tortious claim and the contractual claim.

As a result, the presumption of ‘one-stop adjudication’ should be displaced. The parties 29.

simply did not contemplate that ‘all disputes arising out of this charter’ covered a claim found

on tort of deceit.17 Since the tortious claim can be segregated from the contractual claim, there

is no basis to infer that the parties intended to refer the tortious claim to arbitration.

IV. ASA2 WAS NOT THE CHARTERERS’ AGENT

A. Captain Anya Did Not Have Actual/ Apparent Authority in Giving Instructions for the Vessel to Proceed to an Alternative Discharge Location (‘Discharge Instructions’)

It is the Charterers’ primary submission that ASA2 did not have actual authority in giving 30.

voyage instructions on behalf of the Charterers. Under the Voyage Order, the Charterers

expressly appointed Atlantic Services Agency as the disport agent,18 the email address of

which is different from that of ASA2.19

The issue is whether ASA2 nonetheless had apparent authority to act on behalf of the 31.

Charterers. The test is whether (i) the principal made a representation that another person had

authority to act on his behalf, and (ii) the third party reasonably relied on such representation.20

The Charterers submit that (i) the only representation on ASA2’s authority was made by ASA2

itself, which would not suffice for a finding of apparent authority,21 and (ii) the Owners were

or should have been aware of the lack of actual authority on the part of ASA2 in giving the

Discharge Instructions.

                                                                                                               17 Cf In The Angelic Grace, the contractual terms suggested that the parties contemplated disputes could arise with regards to collisions or other accident of navigation: The Angelic Grace (n12) 90 col 1 (Rix J). 18 Attachment to email dated 27 May 2014 09:27 (UTC+8) from Chris at LDTP: Moot Problem pp 14-15. 19 Email dated 28 June 2014 18:02 (UTC+1): ibid p 35. 20 Egyptian International Foreign Trade Co v Soplex Wholesale Supplies Ltd (The Raffaella) [1985] 2 Lloyd’s Rep 36, 41; Pourzand v Telstra Corp Ltd [2014] WASCA 14 [83]. 21 Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] QB 480, 505.

  8

The Charterers’ appointment of Atlantic Services Agency as the disport agent was clearly 32.

within the knowledge of the Master, whose correspondence to the Charterers from 8 June 2014

to 28 June 2014 was copied or additionally sent to Atlantic Services Agency.22

In addition, the Voyage Order specifically required the Master to disregard any voyage-related 33.

instructions received from third parties and immediately refer such instructions to the

Charterers for handling.23 The Master however failed to comply with such requirement, even

though the coordinates given by ASA2 for the STS Transfer were different from the

information the Master had originally obtained.24

Moreover, the Voyage Order required the Master to copy all the email correspondence in 34.

relation to estimated time of arrival (‘ETA’) discharge port to both the Charterers and Atlantic

Services Agency with the email address william@asa.com.an.25 However, from 28 June 2014

when ASA2 first made contact with the Master onwards, the Master failed to include either the

Charterers or Atlantic Services Agency in his ETA messages. Instead, those emails were only

addressed to ASA2 with the email address captain_anya_GM@asa2.com.an,26 which was

neither the email address provided by the Charterers in the Voyage Orders nor the email

address of ASA2 in its correspondence dated 28 June 2014.27 It is unknown to the Charterers

as to how the Master ascertained the alternative email address of ASA2.

The Charterers were only informed briefly by the Master of the direction given to the Master 35.

by ASA2 in a separate email dated 3 July 2014.28 Furthermore, it was only after the Charterers’

request dated 4 July 2014 asking to be included in the email correspondence,29 that the Master

subsequently included the Charterers in the correspondence dated the same day.30 The

                                                                                                               22 Moot Problem pp 29- 34. 23 Attachment to email dated 27 May 2014 09:27 (UTC+8) from Chris at LDTP: ibid p 13. 24 ibid pp 33-35. 25 Attachment to email dated 27 May 2014 09:27 (UTC+8) from Chris at LDTP: ibid p 14. 26 ibid pp 35-38. 27 Email dated 28 June 2014 18:02 (UTC+1): ibid p 35. 28 Email dated 03 July 2014 16:28 (UTC+1): ibid p 38. 29 Email dated 04 July 2014 09:52 (UTC+8): ibid p 40. 30 Email dated 04 July 2014 05:22 (UTC+1): ibid p 41.

  9

Charterers were neither aware of ASA2 purportedly acting on behalf of the Charterers nor the

fact that the Vessel was directed to proceed to the Alternative Discharge Location until such

was communicated in the said message dated 4 July 2014.31 Upon receiving such notification,

the Charterers duly gave notice that they considered the Vessel off-hire.32

Therefore, the Owners knew or should have known that ASA2 was not the Charterers’ agent. 36.

As such, neither the principle of apparent authority nor the wider doctrine of estoppel would

apply in giving rise to an agency relationship between the Charterers and ASA2.

V. INSTRUCTIONS FOR THE VESSEL TO DISCHARGE CARGOES AT THE

ALTERNATIVE DISCHARGE LOCATION WERE NOT GIVEN BY THE

CHARTERERS IN BREACH OF THE CHARTERPARTY

A. The Discharge Instructions Were Not Given by the Charterers and/or Their Agent

  Following from submissions made in paragraphs 30 to 36 above, the Charterers submit that 37.

Captain Anya did not give the Discharge Instructions as the Charterers’ agent. Further, the

Discharge Instructions should not be attributed to the Charterers because the Master should not

have complied with them.

Clause 13(a) of Shelltime 4 provides that ‘the master shall be under the orders and directions 38.

of [c]harterers as regards employment of the vessel, agency and other arrangements’.

In contravention of the Charterers’ directions to ‘disregard any voyage-related instructions 39.

received from third parties’, 33 the Master complied with the Discharge Instructions

notwithstanding the circumstances identified in paragraphs 30 and 33 above without first

referring the matter to the Charterers.34

                                                                                                               31 ibid. 32 Email dated 04 July 2014 12:24 (UTC+8): ibid p 41. 33 Attachment to email dated 27 May 2014 09:27 (UTC+8): Moot Problem p 13. 34 T Coghlin and others, Time Charters (7th edn, Routledge 2014) para 19.1.

  10

Further, the Master failed to inquire into the validity of the Discharge Instructions. In 40.

determining whether the shipmaster should have complied immediately with the voyage

instructions he receives, the test is ‘[h]ow would a man of reasonable prudence have acted in

the circumstances?’35

The English Court of Appeal considered the shipmaster’s obligation in this regard in The 41.

Houda, where the master was instructed by the charterers that ‘[a]ll instructions relating to the

voyages of your vessel will be issued by Kuwait Petroleum Corp. in Kuwait’. An issue arose

as to whether the master was entitled to question the lawfulness of voyage instructions he

received from London following Iraq’s invasion of Kuwait.36

Neill LJ held that ‘[i]n a war situation there may well be circumstances where the [master’s] 42.

right, and indeed the duty, to pause in order to seek further information about the source of

and the validity of any orders which may be received is capable of arising even if there may be

no immediate physical threat to the cargo or the ship’.37

In light of the circumstances identified in paragraphs 30 and 33 above, and the fact that 43.

Captain Anya directed the Vessel to proceed to the Alternative Discharge Location, close to

recognized piracy prone areas in West Africa, it is submitted that (i) the duty to confirm the

validity of voyage instructions arose in the circumstances, and (ii) the Master was in breach of

such obligation by failing to first refer the Discharge Instructions to the Charterers.

The Charterers further submit that the manner in which the Master dealt with Captain Anya 44.

was in contravention of the BIMCO Guidelines for Owners, Operators and Masters for

Protection against Piracy in the Gulf of Guinea Region (‘Gulf of Guinea Region Guidelines’),

which recommend shipmasters to, inter alia, keep minimal communications with external

                                                                                                               35 Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541, 549 col 1. 36 ibid. 37 ibid 549 col 2.

  11

parties, have the email address lists controlled when communicating with agents, and advise

rendezvous points only at the last minute.38

The Charterers further rely on The Mediolanum to dispute their responsibility for the 45.

Discharge Instructions, where the vessel was instructed to proceed to an alternative bunkering

place by the refinery because the original berth was congested. The vessel took ground and

the issue was whether the instructions given by the refinery could be attributed to the

charterers. The court considered, without deciding, that the instructions should not be treated

as those of the charterers because (i) the refinery was the charterers’ agent in providing fuel

but not in selecting the bunkering location, and (ii) the vessel was originally instructed by the

charterers’ agents to proceed to a different and safe place for bunkering.39 Since the Master

did receive different instructions for the STS Transfer previously, the Charterers submit that

the Discharge Instructions should not be attributed to them.

B. Further or Alternatively, the Charterers Were Entitled to Give the Discharge Instructions without Prior Approval of the Owners

  Even if the Discharge Instructions were given by the Charterers, it is submitted that the 46.

Charterers were entitled to give them without first obtaining approval from the Owners.

The general principle that ‘the charterer has neither the right nor the obligation to change’ his 47.

nomination of a discharging port in the absence of an express provision,40 is confined in the

context of time charters under which the charterer is entitled to direct the vessel to any port

within the specified trading limits.41 Clause 4(c) of Shelltime 4 further provides that ‘the

vessel shall be … discharged at any places as the Charterers may direct’.

                                                                                                               38 BIMCO and others, BIMCO Guidelines for Owners, Operators and Masters for Protection against Piracy in the Gulf of Guinea Region (2014) <http://www.imo.org/OurWork/Security/WestAfrica/Documents/Guidelines_for_protection_against_Piracy_in_the_Gulf_of_Guinea_Region.pdf> accessed 20 April 2015, p 7. 39 Mediolanum Shipping Co v Japan Lines Ltd (The Mediolanum) [1984] 1 Lloyd’s Rep 136, 140 col 2. 40 Bulk Shipping AG v Ipco Trading SA (The Jasmine B) [1992] 1 Lloyd’s Rep 39, 42 col 1. 41 Segovia Compania Naviera SA of Panama v R Pagnan & F LLI of Padova (The Aragon) [1975] 1 Lloyd’s Rep 628, 633 col 1; Ispat Industries Ltd v Western Bulk Pte. Ltd [2011] EWHC 93 (Comm) [35].

  12

The Charterers submit that the Discharge Instructions were not in breach of the Charterparty as 48.

they were within the trading limits thereunder (‘Trading Limits’). The Vessel was directed

by ASA2 to proceed to international waters, which are plainly within the Trading Limits.

Even if the express exclusion of Angola covers international waters off the Angolan coast, the 49.

issue is whether the Trading Limits had been amended to remove such restriction. The issue

turns on whether ‘the parties’ correspondence and conduct … [are such that] the only

conclusion any reasonable person in the parties’ position could come to must be that the

contract was being amended’.42 ‘OPL Luanda’ was named as the disport under the Voyage

Order,43 which the Master accepted by email on 27 May 2014.44 The email was copied to the

Owners,45 who further received emails from the Master indicating that the Vessel was heading

towards Luanda on 8 June 2014,46 and 20 June 2014.47 The fact that the Charterparty included

a voyage from Singapore to Luanda is not disputed in the Owners’ Statement of Claim.48 It is

therefore submitted that the Charterparty was amended to allow a voyage to Angola, and by

necessary implication, international waters off its coast.

Alternatively, even if the Charterparty was not varied, it is submitted that (i) the Owners were 50.

aware that the Vessel was directed to Angola in deviation from the Trading Limits as set out in

paragraph 49, and (ii) their failure to object to such instructions amounted to an election to

accept the departure. As such, the Owners have waived their right to refuse compliance with

the Discharge Instructions on the grounds that the destination was in Angola and hence not

within the Trading Limits.49

                                                                                                               42 T Coghlin (n 34) paras 5.8-5.10. 43 Attachment to email dated 27 May 2014 09:27 (UTC+8): Moot Problem p 13. 44 Email dated 27 May 2014 12:27 (UTC+8): Moot Problem pp 20-21. 45 ibid. 46 Email dated 8 June 2014 11:02 (UTC+8): Moot Problem p 29. 47 Email dated 20 June 2014 11:02 (UTC+4): Moot Problem p 31. 48 Moot Problem p 60. 49 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 (HL) 397-398.

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VI. THE CHARTERERS WERE NOT IN BREACH OF THE CHARTERPARTY WITH

REGARD TO HIRE Clause 9 of Shelltime 4 provides that payment of hire is due ‘per calendar month in advance’. 51.

The issue is whether the Charterers were in breach of the Charterparty for failing to pay hire

for the second month of the hire period, i.e. the period between 4 July 2014 and 3 August 2014.

The Charterers argue that they were relieved from the obligation to pay hire on the grounds 52.

that (i) the Charterparty was frustrated by the Pirate Attack, and further or alternatively, (ii) the

Vessel was off-hire from 4 July 2014.

A. The Charterparty Was Frustrated by 4 July 2014 by the Pirate Attack

The doctrine of frustration applies i. Although a contract would normally not be frustrated if there is an express provision dealing 53.

with the alleged frustrating event, such provision should be construed narrowly.50 The issue is

whether the Pirate Attack can frustrate the Charterparty notwithstanding the incorporation of

the Piracy Clause,51 and the BIMCO Piracy Clause for Time Charter Parties 2013 (‘BIMCO

Piracy Clause’).52

In Fibrosa v Fairbairn,53 the court was concerned with whether a charterparty was frustrated 54.

by the Second World War notwithstanding a war clause therein. Rowlatt J considered it

necessary not only to consider whether the parties did contemplate a war, but also whether

they contemplated the war ‘as actually happened or its consequences’.54 The Charterers

submit that the parties only contemplated a temporary interruption of the Charterparty by

reason of piracy, given that neither of the clauses addresses the situation where the Vessel is so

damaged as a result of pirate attacks that it would no longer be able to perform the

Charterparty. The clauses therefore do not cover the Pirate Attack, which caused material

                                                                                                               50 Bank Line Ltd v Arthur Capel & Co [1919] AC 435, 455; Select Commodities Ltd v Valdo SA (The Florida) [2006] EWHC 1137 (Comm), [2007] 1 Lloyd’s Rep 1. 51 Moot Problem pp 8-9. 52 Moot Problem pp 11-12. 53 [1943] AC 32. 54 T Coghlin (n 34) para 26.36.

  14

damage to the Vessel’s navigation and communication equipment and as a result of which the

Vessel had to proceed to Cape Town for assistance.55

The Pirate Attack constituted a frustrating event ii. A contract would be frustrated by reason of an event which ‘so significantly changes the 55.

nature (not merely the expense or onerousness) of the out-standing contractual rights and/or

obligations from what the parties could reasonably have contemplated at the time of its

execution that it would be unjust to hold them to the literal sense of its stipulations in the new

circumstances’.56

A ‘critical factor’ is the likely duration of the interruption relative to the remaining balance of 56.

the hire period.57 This is to be assessed without the benefit of hindsight under the test of ‘what

estimate would a reasonable man of business take of the probable length of the withdrawal of

the vessel from service’.58 In the circumstances, the Vessel lost contact with both the

Charterers and the Owners from 4 July 2014 to 17 July 2014. Further, the cause of the

Vessel’s disappearance was not ascertained at anytime before 7 July 2014.59 The Charterers

submit that the Pirate Attack appeared indefinite at the time it took place, thereby frustrating

the Charterparty.

B. As a Result of the Frustrating Event, the Charterers Are Not Obliged to Pay Hire for the Second Hire Period

The issue then turns on whether the Charterers are nonetheless obliged to pay hire for the 57.

Second Hire Period, which fell due before the Pirate Attack.

Under the Law Reform (Frustrated Contracts) Act 1943 (‘Act’), sums payable under a contract 58.

before its frustration would cease to be so payable after occurrence of the frustrating event.60

                                                                                                               55 Email dated 17 July 2014 23:20 (UTC+1): Moot Problem pp 41-42. 56 National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675, 700; Petroships Pte Ltd v Petec Trading and Investment Corp (The Petro Ranger) [2001] 2 Lloyd’s Rep 348. 57 T Coghlin (n 34) para 26.43. 58 T Coghlin (n 34) para 26.47. 59 Newspaper article dated 7 July 2014 entitled ‘Tanker Gone Missing’: Moot Problem p 46. 60 Section 1(2) of the Law Reform (Frustrated Contracts) Act 1943.

  15

The Act is applicable to the Charterparty given that (i) it is a time charter,61 (ii) that is

governed by English law.62 The Charterers therefore submit that they are relieved from the

payment of hire for the Second Hire Period by reason of the Pirate Attack.

C. The Vessel Was Off-hire from 4 July 2014 by Reason of the Pirate Attack

Further or alternatively, the Charterparty was off-hire by reason of the Pirate Attack. 59.

It is provided under Sub-clause (4) of the Piracy Clause that hire would remain ‘payable at 100% 60.

for duration of hire’ where the capture of the vessel by pirates is ‘not caused by a lack of due

diligence on the part of the Owners’ and where the Charterers have requested the Owners to

purchase off-hire insurance.63 The BIMCO Piracy Clause provides that (i) the Vessel shall

remain on hire if it is attacked by pirates,64 or seized by pirates,65 and (ii) hire shall remain

payable until the ninety-first day after seizure of the Vessel until its release.66

It was held by the English court that ‘where there are one or more clauses which deal with off-61.

hire events they must clearly be looked at together and reconciled’.67 The Charterers submit

that the BIMCO Piracy Clause, which is drafted in wider terms, is subject to the Piracy Clause

such that the Vessel may still become off-hire if the event of piracy is caused by a lack of due

diligence on the part of the Owners, as in the present case which is discussed in paragraphs 86

to 96 below. It is further submitted that the Pirate Attack would not have taken place if (i) the

Owners adopted anti-piracy precautionary measures as recommended in Best Management

Practices for Protection against Somalia Based Piracy Version 4 (‘BMP4’)68 and the Gulf of

Guinea Guidelines; and (ii) the Master did not comply with the Discharge Instructions

                                                                                                               61 Section 2(5) of the Law Reform (Frustrated Contracts) Act 1943. 62 Section 1(1) of the Law Reform (Frustrated Contracts) Act 1943; Clause 46(a) of Shelltime 4. 63 Moot Problem pp 8-9. 64 Clause (e) of the BIMCO Piracy Clause: Moot Problem p 12. 65 Clause (f) of the BIMCO Piracy Clause: Moot Problem p 12. 66 ibid. 67 Osmium Shipping Corporation v Cargill International SA (The ‘Captain Stefanos’) [2012] EWHC 571 (Comm) [11]. 68 UK Maritime Trade Operations (UKMTO) Office et al, Best Management Practices for Protection against Somalia Based Piracy (Version 4 – August 2011) (Witherby Publishing Group 2011) <http://www.mschoa.org/docs/public-documents/bmp4-low-res_sept_5_2011.pdf?sfvrsn=0> accessed 20 April 2015.

  16

received from ASA2, which were of questionable legitimacy. The Vessel was therefore off-

hire by reason of the Pirate Attack from 4 July 2014.

D. Further or Alternatively, the Vessel Was Off-hire from 4 July 2014 by Reason of Breach of Orders and/or Neglect of Duty on the Part of the Master

  It is further submitted that the Charterparty was off-hire for time lost due to ‘breach of orders 62.

or neglect of duty on the part of the master, officers or crew’ pursuant to Clause 21(a)(ii) of

Shelltime 4, by reason of the matters submitted in paragraphs 38 to 44, and 86 to 96.

VII. THE CHARTERERS DID NOT COMMIT THE TORT OF DECEIT

A. The Charterers Hold the Owners to Strict Proof of the Three Distinct Allegations of Fraudulent Misrepresentations

The three allegations of fraudulent misrepresentation against the Charterers as brought by the 63.

Owners must be distinctly alleged and proved by the Owners.69

Although allegations of fraud need only be proved to the civil standard of preponderance of 64.

probability and no more,70 in practice stronger evidence would be required to establish fraud

than other types of allegations.71

The Charterers put forward the following four submissions in respect of each alleged 65.

representation to show that the Owners have failed to satisfy the burden of proof in

establishing the tort of deceit:

a) The representations were mere promises of future conduct but not statement of

present intention;

b) The representations were true at the time they were made and were made with the

Charterers’ honest beliefs;

                                                                                                               69 Haringey LBC v Hines [2010] EWCA Civ 1111, [2011] HLR 6 [39]. 70 Hornal v Neuberger Products Ltd [1957] 1 QB 247. 71 Smith New Court Securities Ltd v Citibank NA [1997] AC 254, 274 (Lord Steyn).

  17

c) The representations were not intended to be acted on by the Owners;

d) The Owners had not been influenced by the representations.

The alleged misrepresentations are as follows: 66.

a) The Charterers represented on 3 June 2014 that a sufficient supply of bunkers would

be ‘available passing Durban or Cape Town’72 (‘First Representation’);

b) The Charterers represented twice on 28 June 2014 that a sufficient supply of

bunkers would be available ‘on arrival STS Area 1’ 73 (‘Second Representation’);

c) ASA2, purportedly on behalf of the Charterers, instructed the Vessel on 28 June

2014 that she was under the ‘control’ of ASA2 as the Charterers’ ‘agen[t]’ and

‘local instruction’ and that she would ‘discharge 72,000 mts gasoil/ balance of

cargo TBN’ at the Alternative Discharge Location for STS Transfer while receiving

‘300 mt IFO bunkers’74 with Antelope (‘Third Representation’).

B. The First Representation Was Not a Fraudulent Misrepresentation

The First Representation was mere promise of future conduct i. The First Representation regarding possible bunkers was merely promise honestly held by the 67.

Charterers expressing their intention to provide alternative bunker supply passing Durban or

Cape Town in the coming future.

The intention, albeit honestly held, did not amount to statement of present intention and 68.

therefore would not amount to a sufficient representation of an existing fact to form the

foundation of the action for deceit.75 This is evidenced by the Charterers’ use of the word

‘reverting’ 76 when providing information regarding alternative bunkers as well as their

                                                                                                               72 Email dated 3 June 2014 17:21 (UTC+8): Moot Problem p 26. 73 Email dated 28 June 2014 16:27 (UTC+8): ibid p 33; Email dated 28 June 2014 18:43 (UTC+8): ibid p 34. 74 Email dated 28 June 2014 18:02 (UTC+1): ibid p 35. 75 Edgington v Fitzmaurice (1885) 29 Ch D 459. 76 Email dated 3 June 2014 17:21 (UTC+8): Moot Problem p 26.

  18

subsequent correspondence to the Master on 3 June 2014 stating that they would revert

regarding next bunker supply.77 The representation was only intended as a promise of future

conduct.78

The First Representation was true at the time it was made and was made ii.with the Charterers’ honest belief

Although no bunkers were supplied at Durban or Cape Town, the First Representation, in the 69.

form of a promise, when expressed in good faith would not constitute a misrepresentation79

merely because the Charterers subsequently changed their minds.80

Furthermore, the burden of proof lies with the Owners to establish that no honest intention to 70.

bunker passing Durban or Cape Town existed in the Charterers’ mind at that moment when the

First Representation was made.

The First Representation was not intended to be acted on by the Owners iii. As submitted in paragraph 68, the Charterers used the word ‘reverting’ when giving the First 71.

Representation and stated that they would revert regarding the next bunker supply. It is

therefore reasonable to construe that the Charterers would not expect the Owners to act on the

promise until they had reverted back to the Master for the provision of bunker supplies.81

The Owners had not been influenced by the First Representation iv. The Charterers submit that the Owners had not acted in reliance on the Charterers’ 72.

misrepresentation.

The Master did not sail to Durban despite the representation of the Charterers that bunkers 73.

would be available at Durban. The Master provided an alternative ETA OPL Luanda in the

                                                                                                               77 Email dated 3 June 2014 20:15 (UTC+8): ibid p 28. 78 Ghanem Al-Thani Holdings WLL v Jaguar Cars Exports Ltd [2012] EWHC 856 (Comm) [56]. 79 Montpellier Estates Ltd v Leeds City Council [2013] EWHC 166 (QB); Bisset v Wilkinson [1927] AC 177. 80 Jordan v Money (1854) 5 HLC 185. 81 Shinhan Bank Ltd v Sea Containers Ltd [2000] 2 Lloyd’s Rep 406.

  19

correspondence dated 20 June 2014,82 which suggests that the Master had not been influenced

by the First Representation.

Clause 24(a) of the Shelltime 4 provided that in the absence of the Charterers’ orders to the 74.

contrary the Vessel shall proceed at the service speed, which was stipulated to be within speed

ranges 13-14 knots laden.83 With reserve for bad weather, the bunkers on board were

sufficient for the Vessel to arrive at the discharge port.84 Nevertheless, the Master reduced the

speed of the Vessel to 12 knots on 25 June 2014 without the prior authorisation of the

Charterers.85

Had the Master relied on the representations of the Charterers, the Vessel would have proceed 75.

to Durban directly for bunkers instead of reducing speed without authorisation in order to

conserve fuel.

The speed reduction was indicative of the fact that the Owners and/ or Master did not rely on 76.

the representation of the Charterers and had exercised their own judgment with regard to

bunkers consumption.

C. The Second Representation Was Not a Fraudulent Misrepresentation

The Charterers further submit that the Second Representation was not a fraudulent 77.

misrepresentation.

The Second Representation was true at the time it was made and was i.made with the Charterers’ honest belief

The Second Representation was an honest representation given by the Charterers which 78.

remained true.86 The Owners produced no evidence to support their allegation that no bunker

would have been supplied on arrival at STS Area 1.

                                                                                                               82 Email dated 20 June 2014 11:02 (UTC+4): Moot Problem p 31. 83 ibid p 6. 84 Email dated 3 June 2014 20:02 (UTC+8): ibid p 28. 85 Email dated 25 June 2014 11:02 (UTC+3): ibid p 32. 86 Derry v Peek (1889) 14 App Cas 337 at 376.

  20

In fact, the Owners never found out for themselves if bunkers had been supplied at STS Area 1 79.

as the Vessel never proceeded to STS Area 1 as instructed by the Charterers.

Bearing in mind that the burden is on the Owners to establish that the Second Representation 80.

was in fact untrue, the Second Representation was not untrue and was made with the

Charterers’ honest belief.

The Owners had not been influenced by the Second Representation ii. Despite the Charterers’ representation that the next bunker supply would be available on 81.

arrival at STS Area 1, the Master did not proceed to the said location. Instead, the Master was

influenced by ASA2, a third party unrelated to the Charterers, to divert the Vessel to an

Alternative Discharge Location and to indicate his intention to take bunkers there.87

D. The Third Representation Was Not a Fraudulent Misrepresentation

ASA2 was not acting as an agent of the Charterers in making the Third i.Representation

The Charterers do not dispute that the Third Representation made by ASA2 was a false 82.

representation and that the Owners had been influenced by such misrepresentation. However,

ASA2 was never the Charterers’ agent given the submissions set out in paragraphs 30 to 36

above.

The Charterers are not primarily liable for the deceit committed by ASA2 ii. The Charterers were not aware of the Third Representation made by ASA2. It is therefore 83.

submitted that the Charterers are not liable as a primary tortfeasor in deceit as they did not

personally have the necessary fraudulent state of mind.

                                                                                                               87 Email dated 28 June 2014 19:50 (UTC+2): Moot Problem p 35.

  21

The Charterers are not vicariously liable for the deceit committed by iii.ASA2

In any event, ASA2 had no actual or ostensible authority to make the Third Representation and 84.

hence, there could be no vicarious liability in tort for the Charterers for the unauthorized

statements.88

Alternatively, no causation existed between the First and Second iv.Representations and the damage claimed by the Owners

Even if this Tribunal finds that the First and Second Representations amount to fraudulent 85.

misrepresentations, the Charterers submit that there is no causation between the First and

Second Representations as made by the Charterers and the damage suffered by the Owners.

No actual losses resulted from the first two representations. The loss suffered by the Owners,

i.e. damage to the Vessel as a result of the Pirate Attack, resulted from ASA2’s Third

Representation but not the First and Second Representations. As such, the Charterers should

not be held liable for the damage suffered by the Owners.

VIII. THE CHARTERERS’ COUNTERCLAIMS

A. The Vessel Was Not Fit for Service

It is submitted that the Vessel was not fit for service. Clauses 1(c) and 2(a)(i) of Shelltime 4 86.

were breached.

It is submitted that ‘in every way fit for the service’ under Clause 1(c) goes beyond 87.

seaworthiness. In The Derby,89 Sir Dens Buckley expressed the view that ‘“the service”

referred … is that service which the owners became bound under the charterparty to render to

the charterers’.90 This was interpreted by Time Charters to mean that ‘the ship must also be

suitable for the particular service which the ship is to perform’.91

                                                                                                               88 Armagas Ltd v Mundogas SA [1986] AC 717. 89 Alfred C Toepfer Schiffahrtsgesellschaft GMBH v Tossa Marine Co Ltd (The Derby) [1985] 2 Lloyd’s Rep 325. 90 ibid 333 col 2. The Charterparty used in The Derby was the New York Produce Exchange form (‘NYPE form’). For

the avoidance of doubt, it is submitted that ‘in every way fit for the service’ under Shelltime 4 and ‘in every way fitted for the service’ under NYPE form are treated synonymously.

91 T Coghlin (n 34) para 8.12.

  22

It is submitted that the Owners breached Clause 1(c) and/or Clause 2(a)(i) because (i) the 88.

Master failed to follow anti-piracy precautions which were demanded by the particular voyage

service undertaken by the Owners and (ii) the Master was incompetent.

The Owners failed to follow anti-piracy precautions i. In The Derby, the test applied was whether the vessel is ‘physically fit to encounter all such 89.

perils as would be reasonably foreseeable on any voyage the charterers could legitimately

require the ship to make’, which includes, inter alia, whether ‘the ship was furnished with all

such …equipment as might be reasonably necessary for those purposes’.92

The Charterparty and various industry practices give clear guidance as to what measures are to 90.

be taken when a vessel sails through high-risk areas. The designated discharge port, Luanda,

is physically proximate to a high risk area, namely, the Gulf of Guinea, as verified by

BIMCO93 and various bodies in The Gulf of Guinea Region Guidelines. Such guidelines are to

be read together with BMP4.94

Under the Piracy Clause Sub-clause (1), it is stated that where the Vessel ‘proceeds to or 91.

through an area in which there is a current risk of piracy, verified by a competent

international authority’, the Owners should take ‘reasonable preventative measures’ and

adhere to BMP4 at all times.95

Four BMP4 recommendations are relevant to the present case: (i) deploying concertina razor 92.

wires;96 (ii) blocking or lifting external ladders on the accommodation block;97 restricting

                                                                                                               92 The Derby (n 89) [333]. 93 BIMCO and others (n 38). 94 UK Maritime Trade Operations (UKMTO) Office and others (n 68). 95 Moot Problem p 8. 96 UK Maritime Trade Operations (UKMTO) Office and others (n 68) p 29. 97 ibid p 27.

  23

external access to the bridge;98 and (iv) ‘[proceeding] at full sea speed, or at least 18 knots

where they are capable of greater speed’ when sailing through high risk area.99

None of the aforementioned measures were adopted by the Vessel.100 It is submitted that there 93.

was no excuse in deferring the supply of razor wire to Durban. The Owners had no authority

to decide to load supplies in Durban when the Charterers had not yet confirmed the next

bunkering location.101 It should be noted that the actual bunkering location was not at Durban

or Cape Town, but in Luanda.

The Master was incompetent ii. In The Hongkong Fir,102 incompetence of crew members (along with insufficiency in number) 94.

was held to amount to breach of seaworthiness. Moreover, Clause (2)(a)(i) of Shelltime 4

requires the Vessel to have ‘a full and efficient complement of master, officers and crew…’ at

the date of vessel delivery and throughout the charter period.

It is submitted that the Master was incompetent because (i) he failed to refer the Discharge 95.

Instructions to the Charterers in breach of the Voyage Order, as discussed in paragraph 33; (ii)

he failed to copy the Charterers in Noon Reports sent on 29 June and 30 June 2014, as

discussed in paragraph 34; (iii) he failed to comply with the Gulf of Guinea Region Guidelines,

as discussed in paragraph 44. In particular, he revealed the ETA six days prior to arriving at

the discharge location103 and failed to keep a controlled addressee list.

For the foregoing reasons, it is submitted that the Vessel was not fit for service, thereby 96.

breaching Clauses 1(a) and 2(a)(i) of Shelltime 4, and that such breaches cannot be exempted

by virtue of Clause 27(a).

                                                                                                               98 ibid. 99 ibid p 7. 100 Recommendation (i): razor wires were neither supplied in Singapore nor in Durban. Recommendation (ii) and (iii):

Moot Problem p 42. Recommendation (iv): Master reduced speed to 12 knots since 25 June 2014, Moot Problem p 32.

101 Email dated 03 June 2014 12:01 (UTC+1): Moot Problem p 27. 102 Hongkong Fir Shipping Company Ltd v Kawasaki Kisen Kaisha Ltd (The Hongkong Fir) [1961] 2 Lloyd's Rep.478. 103 Email dated 28 June 2014 19:50 (UTC+2): Moot Problem p 35.

  24

B. The Owners Are Liable for Loss of Cargo

Clause 27(c)(ii) of Shelltime 4 provides that ‘any claim arising out of any loss of or damage to 97.

or in connection with cargo … shall be subject to the Hague-Visby Rules’. It is submitted that

the Owners breached their duty as bailee and are liable for loss arising from loss of cargo. In

particular, the Owners submit that article III, rules 1 and 2 of the Hague-Visby Rules were

breached.

According to Gosse Millerd v Canadian Government Merchant Marine Ltd,104 Wright J at first 98.

instance held that article III and its exemptions under article IV should be applied in the

following order: first, it is for the cargo owners (i.e. the Charterers) to prove a prima facie

breach on the part of the Owners’ in failing to deliver the cargo, which can be satisfied by

proving goods have not been delivered.105 It is then for the Owners to claim the benefit of the

exemptions under article IV, which is to show that they have ‘taken reasonable care of the

goods while they have been in [their] custody’ as bailee.106

Although the precise amount of loss has not been ascertained by independent cargo inspectors, 99.

it is common ground that approximately 28,190 mt of gasoil was stolen.107 The Charterers

have therefore discharged the burden of proof. The burden now shifts to the Owners to negate

fault.

Alternatively, in the event that this Tribunal rules that the Charterers bear a more onerous 100.

burden of proof, the Charterers shall make the following submissions:

a) With regard to breach of article III, rule 1, it is submitted that the Vessel was unseaworthy,

for the reasons discussed in paragraphs 87 to 96. In particular, the Master was ignorant as

                                                                                                               104 [1927] 2 KB 432. 105 ibid 434. 106 ibid 435-436. 107 Email dated 17 July 2014 23:25 (UTC +1): Moot Problem p 42.

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to the peculiar piracy hazards of the voyage, even though he was well informed of the

situation by virtue of the email correspondence.108

b) In The Eurasian Dream,109 the master and crew failed to properly and timeously extinguish

a fire, which eventually destroyed the cargo. Cresswell J applied the but-for test in ruling

that cargo damage was attributable to unseaworthiness. It is noteworthy that the court

considered all causes as ‘one cumulative set of deficiencies’.110

c) Here, in considering all causes mentioned in paragraphs 88 to 96 as ‘one cumulative set of

deficiencies’, it is submitted that but for the Owners’ failure to follow anti-piracy

precautions and the Master’s incompetence, the cargo would not have been stolen.

d) With regard to article III, rule 2, it is submitted that breach was self-evident by virtue of

the language in the provision. The Owners have not ‘properly and carefully … keep, care

for, and discharge the goods carried’.

For the foregoing reasons, it is submitted that the Owners breached their duty as bailee. 101.

IX. CONCLUSION

It is submitted that the Owners’ claims should be dismissed and that the Owners are liable for 102.

loss arising from loss of cargo.

                                                                                                               108 Email dated 27 May 2014 16:59 (UTC +1): Moot Problem pp 21-22. 109 Papera Traders Co Ltd v Hyundai merchant Marine Co Ltd (The Eurasian Dream) [2002] EWHC 118 (Comm), [2002] 1 Lloyd’s Rep 719. 110 ibid 742 col 1.