MEMORANDUM FOR C - Murdoch · PDF fileChannel Tunnel Group v. Balfour Beatty Construction Ltd. (The

1 8 T H I N T E R N A T I O N A L M A R I T I M E L A W A R B I T R A T I O N M O O T , 2 0 1 7

U N I V E R S I T A S G A D J A H M A D A

TEAM 12

MEMORANDUM FOR CLAIMANT

ON BEHALF OF AGAINST

Furnace Trading PTE LTD Inferno Resources SDN BHD

CLAIMANT/OWNERS RESPONDENT/CHARTERERS

Idoncare Berjaya Utama PTY. LTD.

RESPONDENT/SUB-CHARTERERS

COUNSEL

ALDIO PRIMADI

PRIDIERO ANUGERAH

INDIRA JAUHARA

JOHANNA DEVI

MICHELLE ALRIANI

NADYA AZKIA

TEAM 12 MEMORANDUM for CLAIMANT

i

TABLE OF CONTENTS

INDEX OF AUTHORITIES ................................................................................................................ III

LIST OF ABBREVIATIONS ............................................................................................................... IX

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

I. CLAIMANT VALIDLY TERMINATED THE VCP BASED ON RENUNCIATION AND REPUDIATORY

BREACH ....................................................................................................................................... 2

A. RESPONDENT’S BREACH AMOUNTED TO REPUDIATORY BREACH ...................................... 2

B. RESPONDENT’S CONSISTENT REFUSAL TO PERFORM ITS DUTY AMOUNTED TO

RENUNCIATION ................................................................................................................................ 4

II. CLAIMANT IS ENTITLED TO EXERCISE LIEN OVER THE CARGO ..................................... 5

A. INCORPORATION OF VCP TERMS TO THE B/L MANDATES CLAIMANT THE RIGHT TO

EXERCISE LIEN OVER THE CARGO ................................................................................................... 6

B. CLAIMANT VALIDLY EXERCISED ITS RIGHT OF LIEN OVER THE CARGO ............................ 7

III. CLAIMANT IS ENTITLED TO EXERCISE LIEN OVER THE SUB-FREIGHT ......................... 9

A. B/L VESTED CLAIMANT THE RIGHT TO INTERCEPT THE SUB-FREIGHT............................... 9

B. CLAIMANT SENT A VALID NOTICE OF LIEN ON SUB-FREIGHT .......................................... 10

IV. RESPONDENT IS LIABLE TO INDEMNIFY CLAIMANT OVER THE DAMAGES .................. 12

A. BREACH OF THE VCP ENTAILED DAMAGES FOR DETENTION AND OTHER LOSSES AND

COSTS……………………………………………………………………………………………12

B. COSTS INCURRED FROM EXERCISING LIEN IS RECOVERABLE SINCE IT SERVES AS AN ACT

OF MITIGATION .............................................................................................................................. 13

V. THE TRIBUNAL HAS THE POWER TO GRANT CLAIMANT THE LIBERTY TO SELL THE

CARGO VIA INTERIM MEASURE ............................................................................................... 14

A. IAA AND SCMA RULES EMPOWER THE TRIBUNAL TO GRANT CLAIMANT THE INTERIM

MEASURE FOR ITS LIBERTY TO SELL THE CARGO .......................................................................... 14


ii

B. THE TRIBUNAL IS THE CORRECT FORUM TO RENDER THE INTERIM MEASURE FOR

CLAIMANT’S URGENT APPLICATION INSTEAD OF THE HIGH COURT .............................................. 16

1. The Intention of the Parties Reflects that the Tribunal is the Most Appropriate Forum 16

2. The Tribunal is Effective in Granting Claimant’s Application for Interim Measure .... 17

3. The Tribunal is Capable of Securing the Relief Sought ................................................. 18

C. THE ORDER FOR SALE OF CARGO FALLS WITHIN THE TRIBUNAL’S POWER UNDER

§12(1)(D) OF IAA .......................................................................................................................... 19

VI. THE CIRCUMSTANCE OF THE CASE ARE SUCH THAT IT IS JUST AND NECESSARY FOR

THE TRIBUNAL TO ORDER THE SALE OF CARGO .................................................................... 20

A. THE CONDITION OF CARGO JUSTIFIES THE INTERIM ORDER OF THE SALE OF CARGO ....... 20

1. The Cargo is Perishable in Nature ................................................................................ 21

2. The Condition of Cargo will endanger the condition of the Vessel ............................... 22

B. THE INTERIM MEASURES OF THE SALE OF CARGO WILL MITIGATE THE LOSSES SUFFERED

BY CLAIMANT ................................................................................................................................ 22

C. THE ORDER OF SALE IS CONSISTENT WITH CLAIMANT’S RIGHTS OF LIEN ........................ 23

1. The Right of Lien over the Cargo Manifests the Right to Obtain Proceeds from the Sale

of the Cargo ........................................................................................................................... 23

2. The Absence of Contractual Rights of Sale under VCP does not Prevent the Sale of

Cargo ..................................................................................................................................... 24

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


iii

INDEX OF AUTHORITIES

Cases Referred in page:

Alan Auld Associates Ltd v. Rick Po Allard Associates [2008] EWCA Civ 655

[2008] BLR 419

2

Albemarle Supply v. Hind & Co [1928] KB 307 7

Alpha Bank S.A v. The “Sea Urchin” [2014] SGHC 24 19,21

American Steel Barge Co. v Chesapeake & Ohio Coal Agency Co., 115 F.

669 (1st Cir. 1902)

8

Bank of Scotland plc v. Owners of MV “Union Gold” [2013] EWHC 1696 17

Bank of Scotland v. The “Nel” (1997) 140 FTR 271 19, 21

Bangladesh Chemical Industries Corp v. Henry Stephens Shipping Co and

Tex-Bilan Shipping Co (The “SLS Everest”) [1981] 2 Lloyd’s Rep 389

5

Bremer Handelsgesellschaft mbH v. Vanden Avenne-izegem PVBA [1978] 2

Lloyd’s Rep `09

1

British Westinghouse Electric and Manufacturing Co Ltd v. Underground

Electric Railways Co of London Ltd [1912] AC 673, 690

12

Bunge Corporation v. Tradax Export SA [1981] 2 Lloyd’s Rep 1 1

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

[1993] SGCA 7

9

Castleton Commodities Shipping Company Pte Ltd v. Silver Rock

Investments (The “Clipper Monarch”) [2015] EWHC 2584 Comm

23

Channel Tunnel Group v. Balfour Beatty Construction Ltd. (The “Channel

Tunnel”) [1993] AC 334

17

Cetelem SA v. Roust Holdings Ltd (“Cetelem”) [2005] 1 WLR 3555 19

Cresta Shipping v. Petromar Energy Resources Pte Ltd (The “Epic”) [2000]

SGCA 28

11

Dry Bulk Handly Handling Inc & Aor v. Fayette International Holdings Ltd

& Aor (The “Bulk Chile”) [2012] EWCA 2107 (Comm),

8,10

Emilia Shipping Inc v. State Enterprise for Pulp & Paper Industries [1991] 2

MLJ 379

22


iv

Federal Commerce Ltd v. Molena Alpha Inc (The “Nanfri”) [1979] 1 Lloyd’s

Rep 201

2,9

Feoso (Singapore) Pte Ltd v. Faith Maritime Company Limited [2003] SGCA

34

4

Fidelitas v. V/O Exportchleb [1963] 2 Lloyd’s Rep. 113 (C.A) 6

Five Ocean Corporation v. Cingler Ship Pte Ltd [2015] SGHC 311 5,18,19

Force India Formula One Team Ltd v. 1 Malaysia Racing Team Sdn Bhd

[2013] EWCA Civ 780

1

Gerald Metals SA v. Timis [2016] EWHC 2327 15

Heyman v. Darwins Ltd [1942] AC 356 1

Hong Kong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd [1961] EWCA

Civ

2

India Steamship Co. v. Louis Dreyfus Sugar Ltd (The “Indian Reliance”)

[1997] 1 Lloyd’s Rep. 52

8, 10

Itex Itagrani Export SA v. Care Shipping Corporation et al (The “Cebu”

(No.2)) [1990] 2 Lloyd’s Rep 316

5

Jackson v The Union Marine Insurance Co Ltd (1874-75) LR 10 CP 125 1

Kallang Shipping Co. SA Panam v. Axa Assurances Senegal (The “Kallang”

(No.2)) [2008] EWHC 2761 (Comm)

5

K/S A/S Seateam & Co v. Iraq National Oil Co (The “Sevonia Team”) [1983]

2 Lloyd’s Rep 640

5

Larner v. Fawcett [1950] 2 All ER 727 20

London Arbitration 5/91 [1991] 299 LMLN 3(2) 7,11,12

London Arbitration 6/15 [2015] 923 LMLN 1 7

The “Makassar Caraka Jaya Niaga III-39” [2012] SGHC 175 13

Metall Market v. Vitorio Shipping Co. Ltd (The “Lehmann Timber”) [2012] 2

Lloyd’s Rep. 73

11

Metro Trading International v. Petromar Energy Resources (The “Epic”)

[2000] SGCA 28

4,5


v

Miramar Maritime Corporation v. Holborn Oil Trading Ltd (The

“Miramar”) [1983] 2 Lloyd’s Rep. 319

6

Mobil Cerro Negro Ltd v. Petroleos de Venezuela SA [2008] EWHC 532 15

Molthes Rederi Aktieselskabet v. Ellerman’s Wilson Line Limited [1927] 1

K.B 710 at 716 - 717

8, 9

National Navigation v. Endesa Generacion [2009] EWHC 196 (Comm) 5

NCC International AB v. Alliance Concrete Singapore Pte Ltd [2008] SGCA

5

15

Paragon Shipping Pte. Ltd v. Freight Connect (S) Pte. Ltd [2014] SGHC 165 11

Photo Production Ltd v. Securicor Transport Ltd [1980] 1 Lloyd's Rep 545 1

Pacific Molasses Co. and United Molasses Trading Co. Ltd v. Entre Rios

Compania Naviera S.A (The “San Nicholas”) [1976] 1 Lloyd’s Rep 8

5

Rudolf A. Oetker Kg v. The Owners and/or Demise Charterers of The Ship or

Vessel “Kingdom Container” [2006] HCAJ 150, 151, 153, 268 And 270-

272/2003

21

Ross T Smyth & Co Ltd v. T D Bailey, Son & Co [1940] 3 All ER 60 3

Santiren Shipping Ltd v. Unimarine S.A (The “Chrysovalandou-

Dyo”) [1981] 1 Lloyd`s Rep 159

4

SK Shipping PTE Ltd v. Petroexport Limited [2009] EWHC 2974 1,3

Spar Shipping AS v. Grand China Logistics Holding (Group) Co Ltd [2015]

EWHC 718

3,20

Starlight Shipping v. Tai Ping Insurance [2008] 1 Lloyd’s Rep 230 15

Targart v. Fisher [1903] 1 KB 391 9

Taxfield Shipping Ltd v. Asiana Marine Inc. And Others [HCCT15/2006] 20

Telford Homes (Creekside) Limited v. Ampurius Nu Homes Holdings Ltd

[2013] EWCA Civ 577

2

The "Dwima 1" [1996] 2 SLR 670; [1996] SGHC 83 18,20,22

The “Hansa Nord” [1975] 2 Lloyd’s Rep. 445 1

The Myrto [1977] 2 Lloyd’s Rep. 243 20

The Solhaug, 2 F. Supp. 294, 300 (S.D.N.Y. 1931) 8


vi

The “Turtle Bay” [2013] SGHC 165 18,19

Universal Cargo Carriers v. Citati [1957] 2 QB 401 3

Vitol SA v Norelf Ltd (The “Santa Clara”) [1996] 2 Lloyd's Rep 225 1

Books Referred in page:

Alan Redfern, M. Hunter, Nigel Blackaby, Law and Practice of International

Commercial Arbitration (Sweet&Maxwell, 4th ed., 2004)

13

Andrew Burrows, John Cartwright, Sir Jack Beatson, Anson’s Law of

Contract (Oxford University Press, 29th ed., 2010)

1

Hugh Beale, Chitty in Contracts, (Sweet & Maxwell Ltd, 31st ed., 2012) 3

Anthony Rogers et al., Cases and Materials on the Carriage of Goods by Sea

(Routledge, 4th Edition, 2016)

8,10

Edwin Peel, GH Treitel, The Law of Contract (Sweet and Maxwell, 12th ed.,

2007)

3

Frank-Bernd Weigand, Practitioner’s Handbook on International

Commercial Arbitration (Oxford University Press, 2nd ed., 2010)

15

Friedrich von Wieser, Social Economics (Routledge, Vol.23, 2003), 18

Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 17th ed.,

2003)

12

Jill Poole, Textbook on Contract law (Oxford University Press, 13th ed., 2016) 1,2

JP Van Niekerk, The Development of the Principles of Insurance Law in the

Netherlands from 1500 to 1800 (Juta & Co Ltd, Volume 1, 1998)

20

Julian Cooke, Tim Young, Michael Ashcroft, Andrew Taylor, John Kimball,

David Martowski, LeRoy Lambert, Michael Sturley, Voyage Charter

(Informa Law, 4th ed., 2014)

1,5,7,8,9,10,11,12

John Schofield, Layitme and Demurrage, (Informa Routledge, 6th ed., 2011) 12

Mauro Rubino-Sammartano, International Arbitration: Law and Practice

(JurisNet, 3rd ed.; 2014)

15

Michael Pryles and Michael J. Moser, Asian Leading Arbitrators’ Guide to

International Arbitration (JurisNet, 2007)

17


vii

Neil Andrews, Contract Law, (Cambridge University Press, 2nd ed., 2015) 2

Nigel Meeson, Admiralty Jurisdiction and Practice (LLP, 3rd ed.,2003) 20

Rolf A Schütze, Institutional Arbitration: A Commentary (Bloomsbury

Publishing, 2013)

14,17,18

Terrence Coghlin, et al. Time Charters (Informa Law, 7th ed., 2014) 8,9,10

Thomas Scrutton, Scrutton on Charterparties (Sweet & Maxwell, 20th ed.,

2008)

5

Journals Referred in page:

Emmanuel Gaillard, Anti-suit Injunctions in International Arbitration: IAI

Seminar (Juris Publishing and International Arbitration Institute, 2005)

15

Ronald Wong, Interim Relief in Aid of International Commercial Arbitration,

(2012) 24 Singapore Academy of Law Journal

13,16

Yulianto S Nugroho, Rudy R Rustam, Iman and Muksin Saleh, Effect of

Humidity on Self-Heating of a Sub-Bituminous Coal Under Adiabatic

Conditions (International Association for Fire Safety Science, 2008)

21

Miscellaneous Referred in page:

Charles Lockwood, Financial obligations under contract and repudiatory

breach: In What Circumstances Do Grounds for Termination Arise?

<http://www.incelaw.com/en/knowledge-bank/publications/financial-

obligations-under-contract-and-repudiatory-breach-in-what-circumstances-

do-grounds-for-termination-arise>

1

Sian Morris, Hire – Not a Condition of the contract

<https://www.steamshipmutual.com/publications/Articles/rip_the_astra1016

.htm>

2

Jeremy Andrews, Talia Taylor, Termination on Commercial Contract

<https://www.dlapiper.com/en/uk/insights/publications/2016/03/termination

-of-commercial-contracts/>

1

http://www.incelaw.com/en/knowledge-bank/publications/financial-obligations-under-contract-and-repudiatory-breach-in-what-circumstances-do-grounds-for-termination-arise



https://www.steamshipmutual.com/publications/Articles/rip_the_astra1016.htm

https://www.steamshipmutual.com/publications/Articles/rip_the_astra1016.htm

https://www.dlapiper.com/en/uk/insights/publications/2016/03/termination-of-commercial-contracts/

https://www.dlapiper.com/en/uk/insights/publications/2016/03/termination-of-commercial-contracts/


viii

John Mackle, Up A Creek Without A Boat Saying "No" to Contractual

Obligations <http://www.clarionsolicitors.com/blog/up-a-creek-without-a-

boat>

12

Morgan Lewis Stamford, An Introductory Guide to Arbitration in Singapore

<https://www.morganlewis.com/~/media/files/publication/marketing%20ma

terial/supplemental%20info/mlstamford_arbitrationsingapore_june15.ashx>

17

Propensity of Coal to Self-heat <http://www.iea-

coal.org/documents/82476/7685/Propensity-of-coal-to-self-heat-CCC/172>

21

Legal Instruments Referred in page:

Chartered Institute of Arbitrators, International Arbitration Practice

Guideline: Applications for Interim Measure

<http://www.ciarb.org/docs/default-source/ciarbdocuments/guidance-and-

ethics/practice-guidelines-protocols-and-rules/international-arbitration-

guidelines-2015/2015applicationinterimmeasures.pdf?sfvrsn=26>

16

Min Naing, SIAC Annual Report 2011 (SIAC, 2011) 17

Singapore International Arbitration Act (Chapter 143A) 14,15,17,18

Singapore Banking Law <http://www.singaporelaw.sg/sglaw/laws-of-

singapore/commercial-law/chapter-22>

23

Singapore Law of Credit and Security

<http://www.singaporelaw.sg/sglaw/laws-of-singapore/commercial-

law/chapter-11>

18

Singapore Supreme Court Of Judicature Act (Chapter 322, Section 80) Rules

Of Court

17

United Nations Commission On International Trade Law,

Settlement of Commercial Disputes – Possible uniform rules on certain issues

concerning settlement of commercial disputes: conciliation, interim measures

of protection, written form for arbitration agreement (UN Doc

A/CN.9/WG.II/WP.108)

15

https://www.morganlewis.com/~/media/files/publication/marketing%20material/supplemental%20info/mlstamford_arbitrationsingapore_june15.ashx

https://www.morganlewis.com/~/media/files/publication/marketing%20material/supplemental%20info/mlstamford_arbitrationsingapore_june15.ashx

http://www.iea-coal.org/documents/82476/7685/Propensity-of-coal-to-self-heat-CCC/172

http://www.iea-coal.org/documents/82476/7685/Propensity-of-coal-to-self-heat-CCC/172

http://www.ciarb.org/docs/default-source/ciarbdocuments/guidance-and-ethics/practice-guidelines-protocols-and-rules/international-arbitration-guidelines-2015/2015applicationinterimmeasures.pdf?sfvrsn=26



http://www.singaporelaw.sg/sglaw/laws-of-singapore/commercial-law/chapter-22





ix

LIST OF ABBREVIATIONS

¶ Paragraph

¶¶ Paragraphs

§ Symbol Section

All ER All England Law Reports

Art. Article

B/L Bill of Lading

Cargo 84,000.052 MT of Australian Anthracite Steam Coal

Case File IMLAM Moot Scenario 2017

Ch. Chapter

Charterer Inferno Resources Sdn Bhd

Claimant Furnace Trading Pte Ltd

EWHC England and Wales High Court

EWCA Civ Court of Appeal of England and Wales Decisions

(Civil Division)

i.e. Namely

IAA Singapore International Arbitration Act

(Chapter 143A)

KB Law Reports King’s Bench

Lloyd’s Rep Lloyd’s Law Reports

LMLN Lloyd’s Maritime Law Newsletter

Master Captain Tan Xiao Ming of MV TARDY TESSA

mt Metric Tonnes

O. Order


x

Owner Furnace Trading Pte Ltd

p./pp. Page/Pages

QBD Law Reports Queen’s Bench Division

r. Rule

Respondent Inferno Resources Sdn Bhd

SCMA Rules Singapore Chamber of Maritime Arbitration Rules 3rd

edition (October 2015)

SDNY United States District Court for the Southern District

of New York

SGCA Singapore Court of Appeal

SGHC Singapore High Court

Shipowner Imlam Consignorist GmbH

SIAC Singapore International Arbitration Center

SLR Singapore Law Reports

Sub-charterer Idoncare Berjaya Utama Pty. Ltd

TCP Time Charterparty

UNCITRAL Model Law UNCITRAL Model Law on International Commercial

Arbitration (1985)

USD United States Dollars

VCP Voyage Charterparty

Vessel M.V. Tardy Tessa


1

STATEMENT OF FACTS

1 The Tardy Tessa (“Vessel”) is initially time chartered by Imlam Consignorist GmbH (“CMI”) to

Furnace Trading Pte Ltd (“Claimant”) which then voyage chartered by Claimant to Inferno

Resource Sdn Bhd (“Respondent”) for the carriage of 80,000 mt Australian Steam Coal (the

“Cargo”) that belongs to Idoncare Berjaya Utama Pty. Ltd (“Sub-Charterer”).

2 Voyage Charterparty (“VCP”) requires the freight to be paid five days after the issuance of Bill of

Lading (“B/L”) and for the disport to be nominated when the Vessel passes Singapore. Despite

Claimant’s consistent reminder, those obligations were not performed by Respondent. As a result,

Claimant suffered substantial losses and the voyage were severely delayed.

3 Respondent were given opportunity to remedy its breaches when Claimant extends the deadline

for the remittance of freight and the nomination of discharging port. However, Respondent

inconsistently performed its contractual obligation by nominating discharge port that is not within

the agreed range, Busan, and requested the freight to be paid after the discharge of the Cargo.

4 To mitigate the losses that Claimant continued to incur and to urge Respondent to remit the freight

and nominate legitimate discharging port, Claimant was forced to exercise its right of lien on the

Cargo and the Sub-freight. Further, Respondent’s consistent failure to perform its obligation also

left Claimant no choice but to terminate the VCP. Subsequently, Claimant filed a declaratory relief

to enforce the validity of its exercise of lien and to hold Respondent accountable toward the

liabilities it has caused before the SCMA Arbitral Tribunal (“The Tribunal”)

5 Bearing in mind the deteriorating condition of the Cargo and the danger it poses to the Vessel,

waiting the final award of the declaratory relief is no longer a viable way. Seeing that the Tribunal

has the power to issue interim order to preserve the value of the Cargo, Claimant filed an urgent

application for the sale of the Cargo pendente lite.


2

I. CLAIMANT VALIDLY TERMINATED THE VCP BASED ON RENUNCIATION AND REPUDIATORY

BREACH

6 Respondent failed to punctually pay the freight and to nominate legitimate discharge port,

subsequently entitling Claimant to terminate the VCP.1 Upon Respondent’s repudiatory breach,2

and renunciation,3 Claimant not only accepted, 4 but also clearly and unequivocally terminated the

contract based on its rights pursuant to the VCP.5

7 Claimant’s termination of the VCP is lawful because Respondent’s conduct amounted to

repudiatory breach [A], and renunciation of its obligation under the VCP [B]. Thus, Respondent

shall be held accountable for the accrued liabilities.6

A. Respondent’s Breach Amounted to Repudiatory Breach

8 Repudiatory breach requires a breach going to the root of the contract7 that entails the frustration

of the commercial purposes of the contract.8 Determining the root of the contract can be implicitly

drawn from the nature of the contract.9

1 Case File, p. 68 2 Julian Cooke et al., Voyage Charter (Lloyd’s Shipping Law Library, 4th ed., 2014) p. 68; Jill Poole, Textbook on

Contract Law (Oxford University Press,13th ed., 2016) p. 310; Charles Lockwood, Financial Obligations under

Contract and Repudiatory Breach: In What Circumstances Do Grounds for Termination Arise?, (Ince & Co, 2014) 3 SK Shipping PTE Ltd v. Petroexport Limited [2009] EWHC 2974 (Justice Flaux); Heyman v. Darwins Ltd [1942]

AC 356 (Lord Porter); Jeremy Andrews andTalia Taylor, Termination on Commercial Contract, (DLA Piper, 2016) 4 Case File, p. 64 5 Vitol SA v. Norelf Ltd (The “Santa Clara”) [1996] 2 Lloyd's Rep 225 (Lord Steyn); Force India Formula One Team

Ltd v. 1 Malaysia Racing Team Sdn Bhd [2013] EWCA Civ 780 (Arnold J); Photo Production Ltd v. Securicor

Transport Ltd [1980] 1 Lloyd's Rep 545 (Lord Wilberforce) 6 Heyman v. Darwins Ltd [1942] AC 356, (Lord Porter); SK Shipping PTE Ltd v. Petroexport Limited [2009] EWHC

2974 (Jutsice Flaux) 7 Cehave MV v. Bremer Handelgesellschaft mbH (The “Hansa Nord”) [1975] 2 Lloyds Rep 445 (Lord Denning);

Julian Cooke et al., above n. 2, p. 48 8Jackson v. The Union Marine Insurance Co Ltd (1874-75) LR 10 CP 125 (Bramwell B) 9 Bunge Corpn v. Tradax SA [1981] 2 Lloyd’s Rep 1 (Lord Wilberforce); Charles Lockwood, Financial Obligations

under Contract and Repudiatory Breach: In What Circumstances Do Grounds for Termination Arise?


3

9 The terms of the VCP clearly evince that time is of the essence of the VCP, as it requires

performance in a timely manner in specific order.10 Respondent is under the obligation to remit

the freight 5 days after the B/L is issued,11 and it needs to nominate the discharge port on its arrival

in Singapore for bunkering.12 Further, the commercial purposes of the VCP is to ensure the safety

and timely delivery of the Cargo due to its volatile market price13 and fragile condition.14 Thus,

only a punctual payment of freight and prompt nomination of discharge port would lead to the

conformity that time is of the essence of the VCP.

10 Further, deprivation of the innocent party to its substantial benefit is regarded as repudiatory

breach. Here, Respondent’s breaches are repudiatory as it jeopardizes Claimant’s substantial

benefits.15 Claimant’s sole benefit generated from the VCP was the punctual remittance of the

freight. The fact that Claimant is under a time-charter agreement to CMI in which it is under the

obligation to pay monthly hire to CMI16 signifies the importance of punctual payment of freight

from Respondent. Delay in nominating the discharging port also substantially deprives Claimant’s

benefit as it causes daily detention charges,17 and forces Claimant to forego potential benefit that

it could have from chartering the Vessel to any future charterers. As such, Respondent’s conducts

amount to a repudiatory breach.

10 Andrew Burrows et al., Anson’s Law of Contract (Oxford University Press, 29th ed., 2010); Bremer

Handelsgesellschaft mbH v. Vanden Avenne-izegem PVBA [1978] 2 Lloyd’s Rep `09 (Lord Wilberforce) 11 Case File p. 22 12 Case File, p. 21 13 See ¶¶ 62-32 14 See ¶¶ 57-61 15 Hong Kong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ (Diplock LJ); Alan Auld

Associates Ltd v. Rick Po Allard Associates [2008] EWCA Civ 655; [2008] BLR 419s (Lord Justice Tuckey); Federal

Commerce Ltd v. Molena Alpha Inc (The “Nanfri”) [1979] 1 Lloyd’s Rep 201 (Lord Wilberforce); Jill Poole, above

n. 2, p. 310 16 Case File, p. 36 17 Case File, pp. 52-67


4

B. Respondent’s Consistent Refusal to Perform Its Duty Amounted to Renunciation

11 Renunciation requires an expression that would lead a reasonable person with the impression that

the breaching party has no intention to fulfill its contractual obligations.18 An explicit expression

though, is unnecessary.19 Failure to exhibit willingness to perform its contractual obligation,20

failure to provide prompt confirmation,21 failure to consistently perform its contractual obligation,

22 and showing willingness to perform, but in fact, unable to perform23 constitute as grounds for

renunciation.

12 Here, even though Respondent’s correspondences did not signify an express renunciation, it

evinced clear renunciation that Respondent did not intend to perform any of their obligations under

the VCP due to the following facts:

a) Respondent exhibited consistent unwillingness to pay the freight and nominate the discharge

port;24

b) Respondent stood silent when Claimant inquired confirmation on its reminder towards

outstanding freight and nomination of discharge port;25

c) Respondent attempted to perform the contract into something radically different from its

original term by nominating Busan which is not under the range of agreed discharge ports;26

18 Sian Morris, Hire – Not a Condition of the Contract, (Steamship Mutual, 2013); Neil Andrews, Contract Law,

(Cambridge University Press, 2nd ed., 2015) p. 446; Telford Homes (Creekside) Ltd v. Ampurius Nu Homes Holdings

Ltd [2013] EWCA Civ 577 (Lord Justice Longmore); Hugh Beale, Chitty on Contracts (Sweet & Maxwell, 31st ed.,

2012) 19 Edwin Peel, GH Treitel, The Law of Contract (Sweet & Maxwell, 12th ed., 2007), ¶ 12-074 20 Spar Shipping AS v. Grand China Logistics Holding (Group) Co Ltd [2015] EWHC 718 (Popplewell J) 21SK Shipping PTE Ltd v. Petroexport Limited [2009] EWHC 2974 (Justice Flaux); John Mackle, Up A Creek Without

A Boat? Saying No to Contractual Obligations, (Clarion, 2010) 22 Ross T Smyth & Co Ltd v. T D Bailey, Son & Co [1940] 3 All ER 60 at 72 (Lord Wright); Spar Shipping AS v. Grand

China Logistics Holding (Group) Co Ltd [2015] EWHC 718 (Popplewell J) 23 Universal Cargo Carriers v. Citati [1957] 2 QB 401 (Devlin J); Spar Shipping AS v. Grand China Logistics Holding

(Group) Co Ltd [2015] EWHC 718 (Popplewell J) 24 Case File, pp. 50-69 25 Ibid., pp. 50-69 26 Ibid., p. 58


5

d) Respondent failed to comply with the deadline to nominate the discharge port by 20th October

at 1200H LT27 as Respondent nominated Ningbo on 21st October at 13.22 pm;28

e) Respondent also intended to alter its obligation by blatantly requesting for the freight to be

remitted after the discharge of the Cargo when it was initially agreed for the freight to be paid

5 days after the issuance of the B/L;29

f) Respondent consistently made impression that it possesses the ability to punctually remit

freight and legitimately nominate the discharge port, but turns out unable to do so;30

The collaboration of the aforementioned facts affirm that Respondent has made expression to

Claimant in which it reasonably led Claimant to infer that Respondent possessed the absolute

inability to perform the VCP.

II. CLAIMANT IS ENTITLED TO EXERCISE LIEN OVER THE CARGO

13 Despite Claimant’s consistent reminders, 31 Respondent failed to legitimately nominate the

discharge port32 and to remit the freight.33 This left Claimant no choice but to exercise its right of

lien over the Cargo. 34 Claimant is rightful to exercise its lien upon the Cargo because the

incorporation of VCP terms to the B/L mandates Claimant the right to exercise the lien [A], and

Claimant has validly executed its right of lien upon the Cargo [B]

27 Ibid., p. 64 28 Ibid., p. 67 29 Ibid., p. 22 30 Ibid., pp. 50-54 31 Ibid., pp. 53 - 68 32 Ibid., p. 57 33 Ibid. 34 Ibid., p. 66


6

A. Incorporation of VCP Terms to the B/L Mandates Claimant the Right to Exercise Lien Over

the Cargo

14 Claimant conferred its right to exercise lien over the Cargo from the VCP Lien Clause. 35

Incorporation of lien clause to the bill of lading is required to exercise lien over cargo that belongs

to sub-charterer.36 Claimant submits that the imposition of VCP Lien Clause validly extended to

the holder of the B/L, namely the Sub-Charterer,37 because the wording of the B/L referred to the

VCP [1] and it also facilitated the incorporation of the VCP Lien Clause to the B/L [2].

1. The Terms of the B/L Provided a Reference to the VCP

15 Admittedly, the B/L does not mention any sort of serial code or date of the VCP. However, where

a bill of lading purports to incorporate a charter but fails to provide details of the charter concerned,

it can be properly identified through examination of the terms of the bill of lading.38 Here, the

terms “freight payable as per charterparty” contained in the B/L 39 shall suffice to provide

reference to the VCP.

16 This was the position in The Kallang (No.2)40 where a ship had been time chartered and then

voyage chartered. In the midst of confusion as to which charterparty its bill of lading intended to

incorporate, the court relied the on the term “freight payable as per charterparty” as referring to

35 Case File, p. 31 36 Metro Trading International v. Petromar Energy Resources (The “Epic”) [2000] SGCA 28; Santiren Shipping Ltd

v. Unimarine S.A (The “Chrysovalandou-Dyo”) [1981] 1 Lloyd`s Rep 159; Feoso (Singapore) Pte Ltd v. Faith

Maritime Company Limited [2003] SGCA 34 (Belinda Ang Saw J), ¶ 39; Julian Cooke et al., above n. 2, ¶ 17A.57;

Thomas Scrutton, Scrutton on Charterparties (Sweet & Maxwell, 20th ed., 2008), p. 76 37 Procedural Order No. 3, ¶ 2(1) 38 Metro Trading International v. Petromar Energy Resources (The “Epic”) [2000] SGCA 28; Pacific Molasses Co.

and United Molasses Trading Co. Ltd v. Entre Rios Compania Naviera S.A (The “San Nicholas”) [1976] 1 Lloyd’s

Rep 8 (Lord Denning); Bangladesh Chemical Industries Corp v. Henry Stephens Shipping Co and Tex-Bilan Shipping

Co (The SLS Everest) [1981] 2 Lloyd’s Rep 389 (Lord Denning), ¶ 392; K/S A/S Seateam & Co v. Iraq National Oil

Co (The “Sevonia Team”) [1983] 2 Lloyd’s Rep 640 (Lloyd J) 39 Case File, pp. 41, 43, 45 40 Kallang Shipping Co. SA Panam v. Axa Assurances Senegal (The “Kallang” (No.2)) [2008] EWHC 2761 (Comm)

(Hirst QC)


7

the voyage charterparty “under which freight (as opposed to hire) is payable”.41 Several courts

share the same approach,42 holding that the word ‘freight’ means a vessel employment fee earned

from voyage charterparty and thus refer to voyage charterparty. Therefore, the existence of terms

“freight payable as per charterparty” shall enable the Tribunal to find that the B/L provide a

reference to the VCP.

2. The Wording of the B/L Facilitates the Incorporation of VCP Lien Clause

17 Having submitted that the B/L refers to the VCP, Claimant further submits that the wording of the

B/L incorporate the VCP Lien Clause. General words of incorporation in a bill of lading such as

those in Congenbill Form - “all terms and conditions, liberties and exceptions of the Charter

Party” - are sufficient to incorporate lien clause. 43 Likewise, the verbatim general words of

incorporation are used in the B/L.44 Hence, the Tribunal should find that the VCP Lien Clause has

been incorporated to the B/L due to the existence of general words of incorporation.

B. Claimant Validly Exercised its Right of Lien Over the Cargo

18 Having submitted that Claimant has the right of lien over the Cargo, Claimant submits that it

lawfully executed its lien. The VCP Lien Clause provides that “Claimant shall have a lien on the

cargo for freight [and] demurrage […] due under the [Voyage] Charter Party”.45 Here, Claimant

has validly executed the VCP Lien Clause since Respondent owes freight [1] and Claimant has

sent a valid notice of lien [2].

41 Ibid. 42 Itex Itagrani Export SA v. Care Shipping Corporation et al (The “Cebu” (No.2)) [1990] 2 Lloyd’s Rep 316, ¶ 321

(Sheen J); Five Ocean Corporation v. Cingler Ship Pte Ltd [2015] SGHC 311 (Belinda Ang Saw Ean J), ¶ 28; National

Navigation v. Endesa Generacion [2009] EWHC 196 (Comm) (Gloster J), ¶ 110 43 Fidelitas v. V/O Exportchleb [1963] 2 Lloyd’s Rep. 113 (C.A) (Lord Denning MR), ¶ 125-126; Miramar Maritime

Corporation v Holborn Oil Trading Ltd (The “Miramar”) [1983] 2 Lloyd’s Rep. 319 (Mustill J), p. 324 44 Case File, pp. 41, 43, 45 45 Ibid., p. 31


8

1. Respondent Owes Freight Under the VCP

19 Respondent owes freight in the minimum of USD 771,120.48,46 which shall be paid five banking

days after the release of the B/L to Claimant. 47 This means the payment shall be due on 9th October

2016. However, even after the issuance of the invoice,48 and Claimant’s copious reminders,49

Respondent still failed to pay the freight. This failure, thus entitles Claimant to invoke its right of

lien over the Cargo.

2. Claimant Has Sent a Valid Notice of Lien

20 Claimant further perfected its execution of lien by delivering a proper notice of lien to Respondent

as follows:

a) On 18th October 2016,50 Claimant notified Respondent that should it fail to remit the freight

and if the discharge port remains un-nominated, Claimant will exercise its right of lien over

the Cargo. Claimant also reminded Respondent in respect of the amount of freight and the

daily drifting charges.

b) On 20th October 2016,51 Claimant sent a notice of lien, providing that it exercised its right of

lien over the Cargo. The lien was exercised “to mitigate the very substantial damages, losses,

cost and expenses which we have incurred and continue to incur.”52

21 Respondent cannot argue that the said notice of lien is invalid due to Claimant’s failure in inserting

a specific amount of sum. Claiming a definite amount in the notice of lien is unnecessary,53 as long

46 Case File, p. 49 47 Ibid., p. 52 48 Ibid., p. 49 49 Ibid., pp. 53 - 68 50 Ibid., p. 62 51 Ibid., p. 65 52 Ibid. 53 Julian Cooke et al., above n. 2, ¶17.24; London Arbitration 5/91 [1991] 299 LMLN 3(2); London Arbitration 6/15

[2015] 923 LMLN 1; Albemarle Supply v. Hind & Co [1928] KB 307 (Scrutton LJ), ¶ 318


9

as it provides “particulars from which [Respondent] [it]self can calculate the amount for which

[the] lien is due”.54

22 Here, Respondent is in reasonable position to determine the amount of sum that is sufficient to

discharge the lien by itself. Claimant sent the invoice for a sum of freight in minimum basis of

USD 771,120.48 to Respondent.55 Claimant has consistently reminded Respondent that Claimant

incurred USD10,000 per day due to drifting charges amounting to USD 91,666.67 per 20th October

– when Claimant finally exercised its right of lien over the Cargo.56 Hence, the Tribunal should

find that despite the absence of specific amount in the notice of lien, Claimant has exercised its

right of lien over the Cargo lawfully since Respondent can self-calculate the outstanding sum.

III. CLAIMANT IS ENTITLED TO EXERCISE LIEN OVER THE SUB-FREIGHT

23 Respondent argued that its failure to pay freight was due to Sub-Charterer’s inability to remit the

sub-freight. Subsequently, Claimant submits that it deserves the right to intercept the sub-freight

from Sub-Charterer because the B/L vested Claimant the right of interception of the sub-freight

[A]. Further, Claimant perfected its right by delivering a valid notice of lien on sub-freight [B].

A. B/L Vested Claimant the Right to Intercept the Sub-Freight

24 Absence of the specific term of ‘sub-freight’ in the charterparty does not bar Claimant in exercising

the lien on the sub-freights. Where the sub-freight is indicated under bill of lading, owners may

intercept.57

54 Albemarle Supply v. Hind & Co [1928] KB 307 (Scrutton LJ), ¶ 318 55 Case File, p. 491 56 Case File, p. 65 57 Molthes Rederi Aktieselskabet v Ellerman’s Wilson Line Limited [1927] 1 K.B 710 (Greer J), ¶ 718; Dry Bulk

Handly Handling Inc & Aor v. Fayette International Holdings Ltd & Aor (The “Bulk Chile”) [2013] EWCA Civ 184,

[2012] 2 Lloyd’s Rep 594 (Andrew Smith J), p.19; Terrence Coghlin et al., Time Charters (Informa Law, 7th Edition,

2014), p. 592;


10

25 The incorporation of freight terms under the charterparty may be inferred in cases such as the

instant case, where there exists terms acknowledging the incorporating freight.58 As laid down in

The Indian Reliance, the term “freight payable as per charterparty,” incorporates all terms and

provisions related to freight of any sub-charterer between the disponent owner and the shipper.59

The current B/L provides such terms found in the Special Condition.60

26 Furthermore, not only have the terms been incorporated, but the Master also signed the B/L.

Pursuant to Clause 26 of the VCP, the Master may sign the bill of lading on behalf of owners.61

Acting as Claimant’s agent, Master’s signatory of the B/L represents the owner’s bill where owner

acts as carrier,62 and the sub-charterer as shipper.63 Hence, in such circumstance, Sub-Charterers

shall pay the sub-freight to Claimant.64

B. Claimant Sent a Valid Notice of Lien on Sub-Freight

27 Claimant affirms the validity of the notice of lien on Sub-Freight sent on 20th October as it was

sent before the sub-freight was paid to Respondent [1], and the details within the notice of lien on

Sub-Freight suffices [2].

58 India Steamship Co. v. Louis Dreyfus Sugar Ltd (The “Indian Reliance”) [1997] 1 Lloyd’s Rep. 52 (Rix J); Julian

Cooke et al., above n. 2, ¶13.119 59 Ibid; Terrence Coghlin et al., above n. 57, p. 569-560; Anthony Rogers et al., Cases and Materials on the Carriage

of Goods by Sea (Routledge, 4th Edition, 2016 ), p.258 60 Case File, p. 41 61 Ibid., p. 22 62 Terrence Coghlin et al., above n. 57, p. 592 63 Case File, pp. 41, 48 64 Terrence Coghlin et al., above n. 57, p. 592


11

1. The Notice of Lien on Sub-Freight was Sent Before the Sub-Freight was Paid to Respondent

28 Owners can only intervene sub-freight if the shipper has not yet paid such freight prior to the

notice.65 In Cascade Shipping v. Eka Jaya,66 owners were only allowed to intercept the sub-freight

if it has not been paid to the charterer.

29 On 15th October, Claimant received correspondence from Respondent stating its inability to pay

freight as it “yet [has] to receive the same from sub-chrts”.67 Within the next five days until the top

urgent reminder,68 and notice of lien on sub-freight,69 confirmation of Sub-Charterer’s payment of

freight remained pending. Consequently, it can be deduced that without confirmation of payment,

Claimant rightfully and validly intercepted the sub-freight.

2. The Details within the Notice of Lien on Sub-Freight Suffices

30 Respondent is in no position to argue that the notice of lien sent by Claimant provides insufficient

particulars which leads to its invalidity. This is because the notice was sufficient for the following

reasons:

31 First, as laid down in The Bulk Chile, a mere notification that there is an amount due suffices to

be regarded as a valid notice of lien.70 The lack of details as to the exact amount does not affect

the validity of the notice.71 As Andrew Smith J emphasized,72 “all that is required is that in fact

some amount is due to the party giving the notice from that party’s charterer.”

65Federal Commerce Ltd v. Molena Alpha Inc (The “Nanfri”) [1979] 1 Lloyd’s Rep 201 (Lord Russell); Targart v.

Fisher [1903] 1 KB 391; Molthes Rederi Aktieselskabet v Ellerman’s Wilson Line Limited [1927] 1 K.B 710 (Greer

J), ¶ 718; Cascade Shipping Inc v. Eka Jaya Agencies (Pte) Ltd [1993] 1 SLR 980, [1993] SGCA 7; Julian Cooke et

al., above, n. 2, ¶ 17.37 66 Cascade Shipping Inc v. Eka Jaya Agencies (Pte) Ltd [1993] 1 SLR 980, [1993] SGCA 7, p.29 67 Case File, p. 56 68 Ibid., p. 64 69 Ibid., p. 66 70Dry Bulk Handly Handling Inc & Aor v. Fayette International Holdings Ltd & Aor (The “Bulk Chile”) [2013] EWCA

Civ 184, [2012] 2 Lloyd’s Rep 594 (Andrew Smith J) 71 Ibid. 72 Ibid., pp. 53, 60


12

32 Second, the notice must explicitly include the owners’ request for direct payment of the freight.73

In The Indian Reliance, Rix J was of the view that “sub-freights would become payable to the

order of the owner and not into the [previously] designated account.”74 Presently, besides having

included payment of sub-freight being made to Claimant, Claimant also provided its bank account

details within the VCP to ensure that payment be made to it rather than to Respondent.

33 Accordingly, Respondent’s sufficiency of details in its Notice of Lien on Sub-Freight renders the

validity of the lien.

IV. RESPONDENT IS LIABLE TO INDEMNIFY CLAIMANT OVER THE DAMAGES

34 In terms of liability of the damages,75 Respondent shall indemnify Claimant over the damages in

respect of delay to the vessel during the exercise of the lien, as their breach of the VCP entailed

damages for detention [A], and as the cost of mitigating the loss that Respondent would have

suffered [B].

A. Breach of the VCP entailed Damages for Detention and other Losses and Costs

35 Costs of a lien may be recoverable as damages from a breach of contract.76 Here, Respondent not

only failed to pay freight, but also failed to nominate a legitimate discharge port. Subsequently,

Claimant incurred losses and costs as follows:

73 India Steamship Co. v. Louis Dreyfus Sugar Ltd (The “Indian Reliance”) [1997] 1 Lloyd’s Rep. 52 (Rix J); Julian

Cooke et al., above, n. 2, p.317; Terrence Coghlin et al., above, n. 57, pp. 569-560; Anthony Rogers et al., above n.

59, p. 258 74India Steamship Co. v. Louis Dreyfus Sugar Ltd (The “Indian Reliance”) [1997] 1 Lloyd’s Rep. 52 (Rix J); Julian

Cooke et al., above, n. 2, p.317 75 Cresta Shipping v. Petromar Energy Resources Pte Ltd (The “Epic”) [2000] SGCA 28 (Chao Hick Tin JA, L P

Thean JA, Yong Pung How CJ); Julian Cooke et al., above, n. 2, ¶ 17.37 76 Julian Cooke et al., above, n. 2, p. 472; Metall Market v. Vitorio Shipping Co. Ltd (The “Lehmann Timber”) [2012]

2 Lloyd’s Rep. 73 (Arden, Patten LLJ, Sir Bernard Rix); London Arbitration 12/91 (1993) 304 LMLN 3 (2)


13

36 First, a shipowner is entitled to claim damages in detention where a vessel is delayed by default

of the charterer.77 Paragon Shipping Pte Ltd. v. Freight Connect affirms such as the judgment

favored the plaintiff with indemnity for “any sum that [defendant] may be liable to pay […] arising

out of defendant’s failure.”78 Additionally, failure to nominate a discharge port results to damages

for detention.79 Therefore, Claimant further claims damages in detention at the demurrage rate80

in respect of 14 days, in the sum of USD 1.96 million.

37 Second, expenses were incurred for the crew and vessel management. Similar to Makassar Caraka

Jaya Niaga III-39, the calculated expenditures and loss included: crew transport expenses, crew

medical expenses, and bunker supplies.81 Likewise, similar conditions of the crew onboard,82 and

with the additional losses of USD 771,120.48, and 10 days hire and bunker costs amounting to

USD 101,666.67, Claimant shall be indemnified from Respondent.

38 Accordingly, following Respondent’s breach, Claimant shall be indemnified for the damages,

expenses, and losses.

B. Costs Incurred from Exercising Lien is Recoverable since it Serves as an Act of Mitigation

39 Besides breach of contract, costs may also be recoverable through mitigating loss reasonably.83

Mitigation requires Claimant to take reasonable steps to reduce the loss incurred resulting from

77 Paragon Shipping Pte Ltd v. Freight Connect (S) Pte Ltd [2014] SGHC 165 (Judith Prakash J); Zim Israel

Navigation Co Ltd v. Tradax Petroleum Export SA (The “Timna”) [1971] 2 Lloyd’s Rep 91 (CA); Julian Cooke et al.,

above n. 2, p. 472 78 Paragon Shipping Pte Ltd v. Freight Connect (S) Pte Ltd [2014] SGHC 165 (Judith Prakash J) 79 John Schofield, Layitme and Demurrage (Informa Routledge, 6th ed., 2011) p. 76, ¶ 3.25; Zim Israel Navigation Co

Ltd v. Tradax Petroleum Export SA (The “Timna”) [1971] 2 Lloyd’s Rep 91 (CA) (Donaldson J) 80 John Schofield, above n. 79, p. 439, ¶ 8.1; Julian Cooke et al., above n. 2, p. 656, ¶ 21.101 81 The “Makassar Caraka Jaya Niaga III-39” [2012] SGHC 175 p.12 82 Case File, p. 37 83 London Arbitration 12/91 (1993) 304 LMLN 3 (2)


14

Respondent’s breaches.84 Failure to mitigate restricts Claimant’s right to recover such damages.

Claimant contends that it took all reasonable steps to mitigate its loss.

40 Following Respondent’s breaches, Claimant informed and continuously reminded Respondent to

alleviate their conduct, and upon Respondent’s refusal to act on its breach, Claimant eventually

exercised the lien. Had it not been for Claimant’s exercise of the lien,85 both Respondent and

Claimant would further incur “very substantial damages, losses, costs and expenses,”86 detailed

above. Thus, Claimant shall be indemnified for such costs.

V. THE TRIBUNAL HAS THE POWER TO GRANT CLAIMANT THE LIBERTY TO SELL THE CARGO VIA

INTERIM MEASURE

41 Claimant submitted the urgent application for liberty to sell the Cargo before the Tribunal seeking

for interim measure in order to preserve the value of the Cargo.87 Respondent is not in the position

to argue that the Tribunal does not have the power to grant Claimant the liberty to sell the Cargo,88

because the IAA and SCMA Rules empower the Tribunal to grant such liberty through interim

measure [A]. Although the High Court possesses such power in the case of urgency, the Tribunal

is the correct forum to render the interim measure for Claimant’s urgent application [B]. Further,

the order for sale of Cargo falls within the Tribunal’s power under §12(1)(d) of IAA [C].

A. IAA and SCMA Rules Empower the Tribunal to Grant Claimant the Interim Measure for

its Liberty to Sell the Cargo

84 The “Asia Star” [2010] 2 Lloyd’s Rep 121,127 (Rajah JA); British Westinghouse Electric and Manufacturing Co

Ltd v. Underground Electric Railways Co of London Ltd [1912] AC 673, 690 (Viscount Haldane LC); Cresta Shipping

v. Petromar Energy Resources Pte Ltd (The “Epic”) [2000] SGCA 28 (Chao Hick Tin JA); Harvey McGregor,

McGregor on Damages (Sweet & Maxwell, 17th ed, 2003) p. 217, ¶ 7-004 85 London Arbitration 12/91 (1993) 304 LMLN 3 (2); Julian Cooke et al., above, n. 2, p.618 86 Case File p. 65 87 Ibid., pp. 90-91 88 Ibid., p. 95


15

42 Consent is the cornerstone in arbitration.89 The parties’ consent to the arbitral proceedings entails

the tribunal’s power to take measures prescribed under the rule.90 Claimant and Respondent have

vested the Tribunal with the authority under SCMA Rules and IAA.91 Here, consistent with the

SCMA Rules, the IAA gives the Tribunal power to grant Claimant the interim measure for liberty

to sell Cargo.

43 Pursuant to § 12(1) of IAA, the Tribunal can make orders to any party for an “interim injunction

or any other interim measure”.92 The same section provides that an arbitral tribunal may allow any

party for “the preservation, interim custody or sale of any property which is or forms part of the

subject-matter of the dispute.”93 This shall infer that under IAA, arbitral tribunals have the power

to grant the liberty to sell property through interim measure. Such power is affirmed in a case

under SIAC in 2011.94 In that case, the tribunal - pursuant to § 12(1) of IAA - made interim order

to an Indonesian shipper to sell the cargo of coal sitting in a Chinese port pendente lite, as the

cargo was deteriorating during the long holiday period of Chinese New Year.95

44 Further, the SCMA Rules supports the Tribunal’s power to grant interim measure. Rule 33.1 of

SCMA Rules provides that the Tribunal has the power to “make such orders or give such directions

as it deems fit in so far as they are not inconsistent with the [IAA].”96 Thus, the IAA and SCMA

Rules empower the Tribunal to grant liberty to sell cargoes through issuing interim measures.

89 Alan Redfern, M. Hunter, Nigel Blackaby, Law and Practice of International Commercial Arbitration (Sweet &

Maxwell, 4th ed., 2004), ¶ 1-08 90 Ronald Wong, Interim Relief in Aid of International Commercial Arbitration, (2012) 24 Singapore Academy of Law

Journal, ¶ 10 91 Case File, p. 23 92 Singapore International Arbitration Act (Chapter 143A) (“IAA”), §12(1)(i) 93 Ibid., §12(1)(d) 94 Min Naing, SIAC Annual Report 2011 (SIAC, 2011), p. 3; Rolf A. Schütze, Institutional Arbitration: A Commentary

(Bloomsbury Publishing, 2013), ¶¶ 178-181 95 Ibid. 96 SCMA Rule, r. 33.1


16

B. The Tribunal is the Correct Forum to Render the Interim Measure for Claimant’s Urgent

Application Instead of the High Court

45 Claimant is aware of its right to submit the urgent application to the High Court pursuant to

§12A(4) of IAA.97 However, the Tribunal shall serve as the correct forum to render the interim

measure for Claimant’s urgent application. §12A(6) of IAA provides that, the High Court shall

make an order only if the arbitral tribunal “has no power or is unable for the time being to act

effectively.” 98 This is affirmed in NCC International, 99 which introduced three alternative

conditions where the court may have the power to render interim order: when arbitration was

inappropriate, ineffective, or incapable of securing the relief sought.100

46 In this case, it is not necessary to submit the urgent application to the High Court because the

Tribunal is appropriate [1], effective [2], and capable of securing the relief sought [3].

1. The Intention of the Parties Reflects that the Tribunal is the Most Appropriate Forum

47 Intention of the parties can be drawn from the arbitration agreement.101 The existence of arbitration

agreement evinces that arbitration is the most appropriate forum to settle disputes, hence the

claimant needs not to prove its appropriateness. 102 The arbitration agreement “does that for

him”.103 The existence of valid and binding Arbitration Agreement in this case shall therefore

evince the Tribunal is the most appropriate forum for Claimant to submit its application.

97 IAA, §12A(4) 98 Ibid., §12A(6) read with IAA, §15A(4) 99 NCC International AB v. Alliance Concrete Singapore Pte Ltd [2008] SGCA 5 (Andrew Phang Boon Leong JA);

Gerald Metals SA v. Timis [2016] EWHC 2327 (Leggatt J); Starlight Shipping v Tai Ping Insurance [2008] 1 Lloyd’s

Rep 230 (Cooke J), ¶¶ 22, 24, 27 100 Ibid. 101 Mauro Rubino-Sammartano, International Arbitration: Law and Practice (JurisNet, 3rd ed., 2001), p. 83; Frank-

Bernd Weigand, Practitioner’s Handbook on International Commercial Arbitration (Oxford, 2nd ed.; 2010), ¶ 1.172 102 Gaillard, Emmanuel, Anti-suit Injunctions in International Arbitration: IAI Seminar (Juris Publishing and

International Arbitration Institute, 2005), p. 351 103 Ibid.


17

48 Instead, should Respondent challenges the appropriateness of the Tribunal, it is Respondent’s

burden of proof to show the Court in question is more appropriate.104 Under Mobil Cerro Negro

v. Petroleos de Venezuela,105 the English High Court rejected the granting for interim order due to

the failure of the defendant to prove link with the English jurisdiction.

49 Respondent failed to prove that it is parties’ intention to submit the disputes to the High Court as

it failed to show how the High Court is more appropriate than the Tribunal. Hence, the power to

grant the interim measure shall remain within the Tribunal.

2. The Tribunal is Effective in Granting Claimant’s Application for Interim Measure

50 The Tribunal has been constituted,106 and is effective enough to exercise its power to grant

Claimant’s application for interim measure due to the following reasons:

51 First, the nature of ‘interim measure’ demands to be prioritized.107 The International Arbitration

Practice Guideline on Applications for Interim Measure mentions, “Arbitrators should deal with

applications for interim measures promptly and expeditiously.”108 This means the arbitrators

should “give priority to applications for interim measures” 109 and “deal with the application as

quickly as possible [...].”110

52 Second, the Tribunal is more familiar with the case. Generally, arbitral tribunals are already

familiar with the case and subject matter, hence taking shorter time to make interim order.111 On

104 NCC International AB v. Alliance Concrete Singapore Pte Ltd [2008] SGCA 5 (Andrew Phang Boon Leong JA) 105 Mobil Cerro Negro Ltd v. Petroleos de Venezuela SA [2008] EWHC 532 (Walker J); United Nations Commission

On International Trade Law, Settlement of Commercial Disputes – Possible uniform rules on certain issues concerning

settlement of commercial disputes: conciliation, interim measures of protection, written form for arbitration

agreement (UN Doc A/CN.9/WG.II/WP.108), ¶ 76 106 Case File, pp. 103-104; Procedural Order No.2; Procedural Order No.3 107 Chartered Institute of Arbitrators, International Arbitration Practice Guideline: Applications for Interim Measure,

Art.1 ¶ 1 108 Ibid. 109 Ibid., Commentary on Art.1 ¶ 1 110 Ibid. 111 Ronald Wong, above n. 89, ¶ 11; United Nations Commission On International Trade Law, Settlement of


18

the other hand, interim measure through the Court may take longer process because courts may

ask parties to present arguments due to unfamiliarity with the case, and possibility for appeal.112

Thus, Claimant contends that the Tribunal is effective in renderring the interim order.

3. The Tribunal is Capable of Securing the Relief Sought

53 The Tribunal is capable to secure the relief sought by Claimant because the interim order made by

the Tribunal is enforceable. § 12(6) of IAA stipulates, “All orders or directions made or given by

an arbitral tribunal in the course of an arbitration shall, [...] be enforceable in the same manner

as if they were orders made by a court [...].”113 It indeed infers that, same as the court, the

enforcement the order made by arbitral tribunal requires the court assistance.114

54 However, in enforcing interim order made by the tribunal, the court may not make an order that

bypasses the order made by arbitral tribunal. In Channel Tunnel, Lord Mustill stated, “The purpose

of [court ordered] interim measures of protection [...] is not to encroach the procedural powers of

the arbitrators but to reinforce them, [...].”115

55 Here, in enforcing the Tribunal-ordered interim measure, the Court shall only reinforce the order

made by the Tribunal and not bypass it. That way, such enforcement would not necessarily prolong

the proceeding, and the relief sought by Claimant remains secured. Having submitted that the

Tribunal is appropriate, effective, and capable of securing the relief sought, thus, the Tribunal,

Commercial Disputes – Possible uniform rules on certain issues concerning settlement of commercial disputes:

conciliation, interim measures of protection, written form for arbitration agreement (UN Doc A/CN.9/WG.II/WP.108),

¶ 77 112 United Nations Commission On International Trade Law, Settlement of Commercial Disputes – Possible uniform

rules on certain issues concerning settlement of commercial disputes: conciliation, interim measures of protection,

written form for arbitration agreement (UN Doc A/CN.9/WG.II/WP.108), ¶ 76 113 IAA, §12(6) 114 Ibid.; Singapore Supreme Court Of Judicature Act (Chapter 322, Section 80) Rules Of Court (“Rules of Court”),

O. 69A, r. 5; Morgan Lewis Stamford, ‘An Introductory Guide to Arbitration in Singapore’ , ¶19 115 Channel Tunnel Group v. Balfour Beatty Construction Ltd. (The “Channel Tunnel”) [1993] AC 334 (Lord Keith),

¶ 88; Michael Pryles and Michael J. Moser, Asian Leading Arbitrators’ Guide to International Arbitration (JurisNet,

2007), p. 236


19

instead of the High Court is the correct forum to render the interim measure for Claimant’s urgent

application.

C. The Order for Sale of Cargo Falls Within the Tribunal’s Power Under §12(1)(d) of IAA

56 Sale of cargo may only be granted in order to support the act of preservation.116 The IAA empowers

the Tribunal to grant order for sale in order to preserve property.117 Claimant’s request for the sale

of the Cargo is an act of preservation of its contractual right of lien under VCP and is intended to

preserve the value of the Cargo. 118 Claimant submits that the preservation of property shall

encompass preservation of a contractual right and value of cargo.

57 First, contractual right is a property. Singaporean Law of Credit and Security clearly provides that

contractual right is a type of personal property in intangible form.119 Reference to ‘property’ in

§12(1)(d) of IAA is not limited to tangible object.120 This means, arbitral tribunals are not excluded

to order preservation of intangible property.121 Thus, the Tribunal should find that preserving

Claimant’s contractual right of lien is a preservation of a property.

58 Second, the value of the Cargo shall be constituted as property because ‘value of property’ is

defined as an importance attached to the “concrete property itself”.122 In other words, a value is

inseparable from a property. Hence, the Cargo and its value are interdependent, and any action

conducted to preserve the Cargo is intended to also preserve the value and vice versa. This is

reflected in SIAC Case 2011,123 where the arbitral tribunal under §12(1)(d) of IAA granted the

116 Min Naing, SIAC Annual Report 2011 (SIAC, 2011), p.3; Rolf A. Schütze, above n. 94, ¶¶ 178-181; Bank of

Scotland plc v. Owners of MV “Union Gold” [2013] EWHC 1696 (Mr. Justice Teare); The “Turtle Bay” [2013] SGHC

165 (Belinda Ang Saw Ean J); The “Dwima 1” [1996] SGHC 83 (S Rajendran J); Five Ocean Corporation v. Cingler

Ship Pte Ltd [2015] SGHC 311 (Belinda Ang Saw Ean J) 117 IAA, §12(1)(d) 118 Case File, p. 91 119 Singapore Law of Credit and Security, §1.5 120 IAA, §12(1)(d) 121 Ibid. 122 Friedrich von Wieser, Social Economics (Routledge, Vol.23, 2003), p.145 123 Min Naing. SIAC Annual Report 2011 (SIAC, 2011), p.3, p.3; Rolf A. Schütze, above n. 94, ¶¶ 178-181


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application for sale of cargo in order to preserve the value of the cargo of Indonesian steam coal

from deterioration thus amounting as an act of preservation of property.

59 Thus, the order for sale of Cargo falls within the Tribunal’s power under §12(1)(d) of IAA because

the right of lien and the value of the Cargo that Claimant seeks to preserve are considered as

property.

VI. THE CIRCUMSTANCE OF THE CASE ARE SUCH THAT IT IS JUST AND NECESSARY FOR THE

TRIBUNAL TO ORDER THE SALE OF CARGO

60 Due to Respondent’s breaches, Claimant suffered substantial losses and expenses. This left

Claimant with no choice but to exercise the lien over the Cargo. However, Respondent showed no

indication to perform its obligation, and the condition of the Cargo keeps diminuating.

Accordingly, Claimant asserts that it is necessary to issue the order as it is justified by the condition

of the Cargo [A], and it amounts as an act of mitigation to prevent further losses of Claimant [B].

Further, such right is consistent with the right of lien lawfully exercised by Claimant [C].

A. The Condition of Cargo Justifies the Interim Order of the Sale of Cargo

61 The granting of interim measure for one of the parties to appraise and sell the cargo – instead of

resorting to normal appraisement process – requires the existence of ‘special circumstance’.124 In

situations where there is a rapid diminuation of the value of the cargo on board the vessel,125 and

where the condition of the cargo put the vessel into a risk of being endangered,126 suffice to

establish the ‘special circumstance’ justifying the sale of cargo. Here, the Tribunal should exercise

124 The “Turtle Bay” [2013] SGHC 165 (Belinda Ang Saw Ean J), ¶ 29 125 Cetelem SA v. Roust Holdings Ltd (“Cetelem”) [2005] 1 WLR 3555 (The Vice Chancellor Lord Justice Clarke and

Lord Justice Neuberger) ¶ 65; Five Ocean Corporation v. Cingler Ship Pte Ltd [2015] SGHC 311 (Belinda Ang Saw

Ean J), ¶ 48. 126 Alpha Bank S.A v. The “Sea Urchin” [2014] SGHC 24 (Belinda Ang Saw Ean J), ¶ 22; Governor and Company of

the Bank of Scotland v. Nel (The) [1999] 2 FC 578 (Prothonotary Hargrave), ¶ 10,15


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its power to grant Claimant the liberty to sell the cargo pendente lite because the coal is perishable

in nature [1] and this will endanger the safety of the Vessel [2].

1. The Cargo is Perishable in Nature

62 The power to issue interim measure depends on the nature of the disputed goods. Courts have

tendencies to grant sale of cargo pendente lite to perishable goods.127 This is because it would be

wrongful “if perishable goods perished and became of no value while the dispute between the

parties as to their ownership was being decided at law.”128

63 Diminuation of quality of the cargo is sufficient to identify ‘special circumstance’ to justify the

order of sale129 as it constitutes as a perishable condition. 130 In the case of Cetelem, Clarke LJ

granted perishable cargo to be sold pendente lite, as without the immediate sale of the cargo, its

value would cease to exist.131

64 In this case, based on joint expert report, the coal is “deemed to change from bituminous to sub-

bituminous”,132 which demonstrate extreme quality degradation from Anthracite quality.133 Signs

of overheating are also detected.134 “Strong winds and swell owing to monsoon season” further

exarcebate matters with its potential to damage the Cargo.135 The collaboration of the aforesaid

127 Nigel Meeson, Admiralty Jurisdiction and Practice (LLP, 3rd ed., 2003) pp. 157-162; The Myrto [1977] 2 Lloyd’s

Rep. 243, pp. 259-261 128 Taxfield Shipping Ltd v. Asiana Marine Inc. And Others [HCCT15/2006] (Judge L.Chan), ¶ 22; Larner v.

Fawcett [1950] 2 All ER 727 (Somervell L. J), ¶ 729 G, H 129 The "Dwima 1" [1996] 2 SLR 670; [1996] SGHC 83 (S Rajendran J), ¶ 32. 130 JP Van Niekerk, The Development of the Principles of Insurance Law in the Netherlands from 1500 to 1800 (Juta

& Co Ltd, Vol. 1, 1998), p. 291 131 Cetelem SA v Roust Holdings Ltd (“Cetelem”) [2005] 1 WLR 3555 (The Vice Chancellor Lord Justice Clarke and

Lord Justice Neuberger), ¶ 48 132 Case File, p. 98 133 Case File, p. 21 134 Ibid., p. 37 135 Ibid.


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facts affirm that it is necessary to sell the Cargo pendente lite due to the diminishing quality of the

Cargo.

2. The Condition of Cargo will endanger the condition of the Vessel

65 The presence of the Cargo in the long haul will prove harmful to the Vessel, thus justifying the

sale of the Cargo pendente lite. In The Nel, the Court held that the private sale of cargo is in order

since the constant presence of sulphur on board would cause corrosion damage to the vessel.136

66 In the case at hand, because of the volatile nature of the Cargo,137 it is extremely dangerous for the

Cargo to be kept adrift in hot and humid regions.138 The Vessel has drifted, and is currently drifting,

in OPL Singapore ever since 16th October 2016.139 The crew also indicated signs of self-ignition.140

Hence, should the Cargo remain onboard any longer, it would put the Vessel and the crew at risk.

Thus, since the Cargo is unlikely to be kept in the Vessel within secure condition, the Cargo must

be sold immediately.

B. The Interim Measures of the Sale of Cargo Will Mitigate the Losses Suffered by Claimant

67 Selling the cargo pendent lite acts as a means of mitigation for the injuries Claimant suffered from

the payable freights and other sums due from Respondent. The proceeds from the sale of the Cargo

shall be channeled to compensate any losses that the breaching party has caused.141

68 Further, by selling the Cargo pendente lite, it can preserve the value of Cargo in early sale rather

than be burdened by increasing costs of detention charges.142 Without the order of sale granted by

136 Bank of Scotland v The “Nel” (1997) 140 FTR 271 (Prothonotary Hargrave), ¶ 15 137 Herminé Nalbadian, Propensity of Coal to Self-heat, (IEA Clean Coal Centre, 2010) 138 Yulianto Nugroho et al., Effect of Humidity on Self-Heating of a Sub-Bituminous Coal Under Adiabatic Conditions

(International Association for Fire Safety Science, 2008), p.188 139 Case File, p. 35. 140 Ibid., p. 37. 141 Alpha Bank S.A. v. The “Sea Urchin” [2014] SGHC 24 (Belinda Ang Saw Ean J), ¶ 34 142 Rudolf A. Oetker Kg v. The Owners and/or Demise Charterers of The Ship or Vessel “Kingdom Container” [2006]

HCAJ 150, 151, 153, 268 And 270-272/2003 (Hon Waung J), ¶ 68


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the Tribunal, the Cargo will be stored inside the Vessel for an uncertain period of time which may

diminish the value of the Cargo due to its fluactuative market price ,143 or even brings harm to the

Vessel due to volatile condition.144

C. The Order of Sale is Consistent with Claimant’s Rights of Lien

69 Respondent is not in the position to argue that the sale of cargo will omit Claimant’s right of lien

instead of preserving it. Contrary to this, the Tribunal should grant the interim order of sale of the

Cargo because the right of the proceeds of sale may be conferred to the rights of lien [1], even with

the absence of the right to sell stated in lien clause [2].

1. The Right of Lien over the Cargo Manifests the Right to Obtain Proceeds from the Sale of the

Cargo

70 In The Dwima, Judge S Rajendran upheld that the plaintiffs are able to transfer their rights of lien

to the proceeds of sale of the perishable object,145 so long as it is the subject matter, i.e. lien, of the

plaintiff’s claim for freight.146 These steps taken were consistent with the intention to preserve the

lien instead of derogating Claimant’s right to exercise lien.147

71 Similar to the aforementioned cases, the subjct matter of Claimant’s exercise of lien upon the

unpaid freight is the deteriorating Cargo condition. This implies that it is possible and appropriate

for the Tribunal to grant liberty to sell the Cargo pendente lite.

143 Case File, pp. 99-102 144 Yulianto Nugroho, et al, above n. 137, p.188 145 The “Dwima 1” (1996) 2 SLR 670; (1996) SGHC 83 (S Rajendran J), ¶ 32-34 146 Emilia Shipping Inc v. State Enterprise for Pulp & Paper Industries [1991] 2 MLJ 379 (Chan Sek Keong J), ¶ 54 147 The “Dwima 1” (1996) 2 SLR 670; (1996) SGHC 83 (S Rajendran J), ¶ 20


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2. The Absence of Contractual Rights of Sale under VCP does not Prevent the Sale of Cargo

72 Even in the absence of a statutory or contractual power of sale, Singaporean law confers a lien

holder the right to apply for an order of sale where it is desired that the property be sold at once.148

73 In The Clipper Monarch, HHJ Waksman considered that the existence of specific provision that

allows the sale of cargo is trivial. This is because the court was convinced that claimant was also

the beneficiary by way of assignment of a true lien in favour of the carrier and as against the

shipper, pursuant to the bill of lading, and subsequently granted interim measures to sell the cargo

because the exercise of lien “can be said to have been transformed into a right to the proceeds of

sale of the cargo concerned”.149

74 The conditions in the said case are also applicable in the instant case. Claimant was not only lawful

in exercising its lien based on the VCP, but also against Sub-Charterer, pursuant to the Bill of

Lading.150 The absence of right to sell the Cargo stated in VCP will not render Claimant unable to

be granted the liberty to sell the Cargo.

148 Singapore Banking Law, §22.8.6 149 Castleton Commodities Shipping Company Pte Ltd v. Silver Rock Investments (The “Clipper Monarch”) [2015]

EWHC 2584 Comm (HHJ Waksman), ¶ 9 150 See ¶¶ 8-11


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PRAYER FOR RELIEF

75 In light of the aforementioned submission, Claimant respectfully request the Tribunal to declare

that:

a) Claimant’s termination of VCP is lawful since Respondent’s conduct amounted as a

repudiatory breach;

b) Claimant is entitled to exercise lien over the Cargo and the Sub-freight;

c) Respondent is liable for the indemnification toward the cost that Claimant incurred from

its exercise of lien;

d) The Tribunal has the power to grant Claimant the liberty to sell the Cargo pendente lite;

and

e) It is necessary and just for the Tribunal to grant Claimant the liberty to sell the Cargo

pendente lite.

RESPECTFULLY SUBMITTED ON 19 APRIL 2017,

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