memorandum for respondent (3) - Murdoch University · AIG Europe SA v. QBE International Insurance Ltd. [2001] 2 Lloyd’s Rep 268 Arnold Karberg & Co v Blythe ... (Private) Ltd [1985]

RESPONDENT – TEAM 10 INTERNATIONAL MARTIME LAW ARBITRATION MOOT 2013

FOURTEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013

TRISAKTI UNIVERSITY

INDONESIA

In the Matter of an Arbitration held at London

MEMORANDUM FOR RESPONDENT

ON BEHALF OF: AGAINST: Aardvark, Ltd. Twilight Carrier, Inc. THE CLAIMANT THE RESPONDENT

TEAM NO. 10

FITRI RAMADANTI NUGROHO NURUL RAHMAYANTI


I

TABLE OF CONTENTS TABLE OF CONTENTS ........................................................................................ I

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

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

SUMMARY OF FACTS .......................................................................................... 1

SUMMARY OF PLEADINGS ............................................................................... 3

1. THE TRIBUNAL HAS NO JURISDICTION TO EXERCISE THE

MERITS ARISING FROM THE PARTIES ....................................................

4

1.1 The arbitration clause, on which is said to be incorporated unto the Bs/L,

was not effectively incorporated ....................................................................

5

1.1.1 The incorporation of an unfamiliar agreement between the parties

is without express references ..............................................................

5

1.1.2 The failure to express the right terms unto the Bs/L amounts to

commercial uncertainty ......................................................................

1.2 The dispute should be litigated in Rotterdam ....................................................

1.2.1 A concurrent court is currently underway in the Dutch Court

located in Rotterdam, the Netherlands ...................................................

1.2.2 The vessel is currently in arrest in Rotterdam ......................................

1.3 In conclusion, the Tribunal does not have jurisdiction to entertain the

merits from the parties ..........................................................................................

5

6 6

6

7

2. THE EVENT OF HIJACKING DURING THE VOYAGE HAVE LIFTED

THE LIABILITY OF THE RESPONDENT TOWARDS THE

DETERIORATION OF THE CARGOES

7

2.1 The events within the Gulf of Aden establishes piracy ....................................

2.1.1 Piracy falls under act of public enemies .............................................

2.1.2 The servants of the carrier did not contribute to the loss and

damage towards the cargo during the period of hijacking ...............

2.1.3 Furthermore, piracy can also be considered as an act of riot ...........

2.2 Piracy also constitutes as a peril at sea which lifts the liability of the

carrier under article III r. 2 of the Hague-Visby Rule ....................................

8

8

9

9

10


II

2.2.1 The shipmaster and agent on board the vessel acted on the basis

of necessity .............................................................................................

10

3. THE DEVIATION TO ROTTERDAM BY THE RESPONDENT IS

AMOUNTED TO A REASONABLE DEVIATION AND DOES NOT

BREACH THE CONTRACT OF CARRIAGE BETWEEN THE

PARTIES .............................................................................................................

11

3.1 The deviation to Rotterdam is consistent with the Hague-Visby Rule .......... 11

3.1.1 The deviation to Rotterdam is amounted to a reasonable deviation

to save life or property in which both the Claimant and the

Charterer agreed upon ........................................................................

11

3.1.2 Furthermore, the master of the vessel has extraordinary rights

towards the vessel and cargo ..............................................................

12

3.1.3 In any event the deviation to Rotterdam should be considered as a

change of voyage ...............................................................................

12

3.2 Pursuant to article 29 of the Charterparty, permits the Respondent to

change route from Liverpool to Rotterdam ...................................................

13

3.2.1 The Charterer still retains the right to redirect the vessel to

Rotterdam instead of Liverpool ..........................................................

13

3.2.2 Bith the Claimant and the Charterer agreed on the Change of

Voyage ...............................................................................................

13

3.3 The deviation is mutually beneficial for all parties ....................................... 13

4. THE RESPONDENT DID NOT BREACH THE CONTRACT OF

CARRIAGE AS THE CLAIMANT HAVE ABANDONED THEIR

RIGHTS OVER THE CARGOES ....................................................................

14

4.1 The termination of the sales contract and thus the contract of carriage by

the Claimant have resulted in the abandonment of the cargoes .....................

14

4.1.1 Consequently, the Bs/L also cease to apply ....................................... 14

4.2 The Respondent has no primary knowledge about the correspondence

between the Charterer and the Claimant ........................................................

16

4.2.1 The Bs/L is in the form of an order bill and therefore the delivery

and the entitlement of the cargoes is made to order ...........................

16


III

4.2.2 The Dutch Court has determined the current legal holder of the

cargo is the Charterer .........................................................................

17

4.3 The cargoes were discharged by a valid LOI ................................................. 17

4.3.1 The shipmaster has the right to make an on scene decision .............. 18

4.3.2 The shipmaster has the power to act upon damaged goods on

behalf of the lawful holder .................................................................

18

5. THE RESPONDENT IS LIABLE FOR ITS CONDUCTS IN INDUCING

THE LOSSES AND DAMAGES SUFFERED BY CLAIMANT ...................

19

5.1 The Respondent is not liable for the contamination, the delay, and the

discharge of the cargoes to the Charterer .......................................................

19

5.1.1 The delay and the contamination of the cargoes were not caused by

the negligence of the crew .................................................................

19

5.1.2 The Respondent is under the obligation to the consent to the

deviation under the liberty clause .......................................................

20

5.1.3 The Respondent discharged the cargoes in accordance with

maritime law .......................................................................................

5.2 Were the Panel found the Respondent to be at fault, the limitation of

liability enshrines the Respondent’s conducts ...................................................

5.2.1 Piracy is appertain to expectation under the Hague-Visby ................

5.2.2 The deviation is reasonable and justifiable to mitigate cost and save

property ......................................................................................................

5.3 The Respondent is not liable for any loss and damages incurred to the

Claimant as there is no fault or liabilities are limited and therefore the

Respondent is not liable for the damages and cost ........................................

5.4 Were the Tribunal decide that the Respondent is liable, the Claim should

be limited to the Respondent’s calculations .......................................................

5.4.1 The Claimant has already received part of the indemnity ..................

5.4.2 Were the court decide that the Claimant has not been indemnified,

part of the sales of the cargoes is sufficient ..........................................

20

20

20

21

21

21

21

22

PRAYER FOR RELIEF .......................................................................................... 23


IV

LIST OF ABBREVIATIONS

The Claimant : Aardvark Ltd

The Respondent : Twilight Carriers Inc

The Charterer : Beatles Oils & Fats Ltd

PFAD : Palm Fatty Acid Distillate

Bs/L : Bills of Lading

Charterparty : Voyage charterparty between Twilight Carriers Inc and

Beatles Oils & Fats Ltd, dated 12 September 2008

Vessel : Twilight Trader

Hague-Visby Rule : International Convention for the Unification of Certain

Rules relating to Bills of Lading, signed at Brussels on 25

August 1924, as amended by the Protocol signed at Brussels

on 23 February 1968.

COGSA : England, Carriage of Goods by Sea Act 1992


V

INDEX OF AUTHORITIES

JUDICIAL DECISIONS

[1989] 1 Lloyd’s Rep. 103 (C.A).

7E Communications Ltd v. Vertex Antennentechnik GmbH [2007] 1 WLR 2175

Acatos v. Burns (1878) 3 Ex. D. 282.

Africa Express Line; AIG Europe (UK) Ltd v. The Ethniki [2000] 2 All ER 566

Africa Exprs Line Ltd v. Socofi S.A High Court [2009] EWHC 3223 (Comm) (“Africa Express Line”)

AIG Europe SA v. QBE International Insurance Ltd. [2001] 2 Lloyd’s Rep 268

Arnold Karberg & Co v Blythe

Anderson, Anderson & Co v Owners of the San Roman [1873] 5 LRPC 301

Athens Maritime v Hellenic Mutual War Risks (The Andreas Lemos) [1983] QB 647, 654

Atlantic Insurance Co v. Huth (1880) 16 ChD 474.

Australasian SN Co v. Morse (1872) LR 4 PC 222

Bank Line v. Capel [1919] A.C. 435.

Board The Merak v. The Merak (Owners)[1965] 2 WLR 250.

Bowes v Shand (1877) 2 App. Cas. 455 (HL)

Bristol and West of England Bank v Midland Railway Co (1891) 2 QB 653

Bryant v.Commonwealth Ins. Co, 13 Pick. 543.)

Bua International Ltd v Hai Hing Shipping Co Ltd (The Hai Hing) [2000] 1 Lloyd’s Rep. 300

Butler v. Murray, 30 NY 88, 98-99 (1864)

Cf. Guaranty Trust of New York v Van den Berghs (1925) 22 Lloyd’s Rep. 447 at 455.

Cho Yang Shipping v. Coral (UK) Ltd. [1997] 2 Lloyd’s Rep. 641.

E. L. Oldendorff & Co. G.M.B.H. Appellants v. Tradax Export S.A. Respondents , [1974] AC 479

Elder Dempster Lines v. Zaki Ishag (1981)1 LLR,92,(1983) 2 LLR,.548


VI

Federal Bulk Carriers Inc v C. Itoh & Co. Ltd. And Others (The Federal Bulker) [1989] 1 Lloyd’s Rep. 103

Gatoil International Inc v Tradax Petroleum Ltd;

Girvin S, Carriage of Goods by Sea (Oxford University Press, 2nd ed, 2011) 403.

Glyn, Mills & Co. v East and West India Dock Co. (1882) 7 App. Cas. 591

Glynn and Others v. Margetson & Co and Others [1893] AC 351

Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (The Bunga Seroja) [1999] 1 Lloyd’s Rep 512,

Green Jourdain & Co (1915) 2 K.B. 379

Industrie Chimiche Italia Centrale v Alexander G Tsavliris & Sons Maritime Co (The Choko Star) (No 2) [1990] 1 Lloyd’s Rep 516

Industrie Chimiche Italia Centralev. Alexandre G. Tsavlinis & Sons Mar. Co (The Choko Star) (1990), 1 Lloyd’s Rep 516 CA (Civ Div)

JAG Investments Pty Ltd v Strati (1973) NSWLR 450 at 456-6; Grange v Sullivan (1966) 116 CLR 418

Lady Gwendolen (1965) 1 Lloyd's Rep. 335

Lickbarrow v. Mason (1794) 683.

MB Pyramid Sound NV v Briese Schiffahrts GmbH and Latvian Shipping Association Ltd (1995) 2 Lloyd’s Rep. 144

Meadows Indemnity Co. Ltd v. Insurance Corporation [1989] 1 Lloyd’s Rep.

Mitchell v. Ede (1840) 11 Ad. & El. 888 at 903

Nobel v. Jenkins [1896] 2 QB 326

Petrotrade v Stinnes Handel (1995) 1 Lloyd’s Rep. 142

Prifiti v. Musini [2004] Lloyd’s (Ins & Reins) Rep 518

Rio Tinto v Seed Shipping (1926)

Ross T Smyth & Co Ltd v TD Bailey Son & Co (1940) 3 All ER 60

Salotti v. RUWA Polstereimaschinen GmbH [1976] ECR 1831

Sinason-Teicher v. Oilcakes [1954] 1 W.L.R. 935; Bunge Corp. v. Vegetable Vitamin Foods (Private) Ltd [1985] 1 Lloyd’s Rep. 613.

Skips A/S Nordheim v. Syrian Petroleum Co. Ltd (The Varenna) [1983] 2 Lloyd’s Rep 592;


VII

Stag Line v Foscolo Mango & Co Ltd [1932] AC 328.

Steel v. State Line Steamship Co (1877-78) LR 3 App Cas 72

Suttor v Gundowda pty Ltd (1950) 81 CLR 418

Tate & Lyle, Ltd v Hain Steamship Co Ltd [1936] 55 Lloyd’s Rep 159

The Annefield [1971] 1 Lloyd’s Rep 1

The Ardennes(1950) 84 Lloyd’s Rep 340 (K.B.).

The Delos [2001] 1 Lloyd’s Rep. 703 (Q.B. Com. Ct.).

The Freccia Del Nord [1989] 1 Lloyd’s Rep. 388.

The Merak [1964] 2 Lloyd’s Rep. 527 (C.A.)

The Nordglimt [1987] 2 Lloyd’s Rep. 470

The Rena K, [1978] 1 Lloyd’s Rep. 545

The Teutonia (1872) 3 LR, A. & E., 394.

The Tuyuti [1984] 2 Lloyd’s Rep. 51.

Total Transport Corp v Arcadia Petroleum Ltd (The Eurus) [1996] 2 Lloyd‘s Rep 408.

TW Thomas & Co. v. Portsea Co Ltd. [1912] AC 1

W Thomas & Co Ltd v Portsea Steamship Co [1912] AC 1

BOOKS, ARTICLES & JOURNALS

Andrew Tweeddale and Keren Tweeddale, Incorporation of Arbitration Clauses Revisited

Bennett, The Law of Marine Insurance, 2nd edn, Oxford (2006)

Gary R. List et al, Storage, Handling, and Transport of Oils and Fats, John Wiley & Sons,

Inc, Iowa 2005

Hopkins, business & law for the shipmaster 159 (1989).

K.X. Li & Jim Mi Ng, International Maritime Conventions: Seafarers’ Safety and Human

Rights, j. mar. l. & com.381 (2002).


VIII

M. Bundock, Oil Spillages at sea, Solicitors Journal, 1993, 97 at p 98; Goldman v. Thai

Airways (1983) 3 All E.R. 693

Paul Todd, Incorporation of Arbitration Clauses into Bills of Lading, JOURNAL OF

BUSINESS LAW 331, 333 (1997).

Simon Baughen, Shipping Law , Cavendish Publishing Limited, 2nd ed, 2001

Rubin, The Law of Piracy, 2nd edn, Transnational Publishers (New York, 1998)

Piracy and Armed Robbery Against Ships, Annual Report, International Chamber of, Commerce, International Maritime Bureau, Jan 1-Dec 31, 2003

Eugene Kontorovich, The “Define and Punish” Clause and the Limits of Universal Jurisdiction, 103 Northwestern University Law Review (2009)

INTERNATIONAL TREATIES AND MUNICIPAL LEGISLATIONS

International Convention for the Unification of Certain Rules relating to Bills of Lading, signed at Brussels on 25 August 1924, as amended by the Protocol signed at Brussels on 23 February 1968.

United Kingdom, London Arbitration Act (1996).

United Kingdom, Carriage of Good by Sea Act (1992)

United Kingdom, Marine Insurance Act 1906,

United Kingdom, The Public Order Act 1986


1

SUMMARY OF FACTS

1. In May 23rd 2008 the Claimant contracted with the Charterer concerning 4000mt of

PFAD with the agreed price 747.50 USD. The Respondent operates the business of

shipping cargo and owns the Vessel. The cargoes are to be shipped by October 2008

2. In September 12th 2008, the Charterer entered into a Charterparty with the

Respondent to ship the PFAD from Pasir Gudang to Merseyside under 4 separate B/Ls.

Between November 15th 2008 and February 13th 2009 Somali pirates held the vessel en

route to Liverpool, consequently the cargo is now contaminated. The Claimant terminated

the contract on the ground of a repudiatory breach of the sale contract in failing to insure

the cargoes under the agreed terms.

3. On March 2009 the Charterer informed the Claimant that the cargoes are no longer

transported to Liverpool and will deviate to Rotterdam to mitigate cost. The Charterer

requested the B/L from the Claimant, in which the Claimant agreed for the return of the

purchase price. The Respondent however has no knowledge of the correspondence between

the Charterer and the Claimant. The Respondent discharged the cargoes on or about 20-22

March 2009 to the Charterer against a LOI.

4. On March 23rd 2009 the Charterer arrested the cargo as security for their claims

against the Claimant. A dispute arose between the Claimant and the Charterer bringing the

proceedings to the Dutch Court. The Claimant tried to lift the arrest of the Cargo in court, but

failed, thus the Charterer obtained permission from the Dutch Court for the cargoes to be sold.


2

5. On the same day the Claimant arrested the Vessel in Rotterdam as security for their

claims against the Respondent for damages as the Dutch Court rejected the Claimant’s

appeal. The Charterer once again aided the Respondent by releasing the Vessel on behalf of

the Respondent. The Claimant however received a bank guarantee for the sum of 1,400,000

Euros in return for the release of the Vessel. For the reasons above the Claimant has

brought the claims to arbitration in England although the Respondent’s actions are

justifiable


3

SUMMARY OF PLEADINGS

The Tribunal does not entitled to exercise its jurisdiction over the merits since the

arbitration clause was not effectively incorporated onto the Bs/L. Respondent claims that

Rotterdam should be the place to litigate the merits.

The delay of the Cargoes caused by the event namely Piracy. Under the Hague

Visby rules, it lifted the Respondent from its liability to cover the loss and damage suffered

by Claimant.

Additionally, mitigate cost should be deemed as reasonable necessity to deviate.

According to previous cases, The Respondent has a right to the limitation of liability by

proven that the deviation did by The Respondent in purpose to mitigate cost is reasonable.

Respondent’s conduct in discharge the cargoes without Bs/L is not breach the

contract of carriage since it did in regard with the letter of Indemnity. Therefore,

Respondent should not be liable to cover all losses and damage. Alternatively, Respondent

entitled to the limitation of liability stipulated on Hgue Visby rules.


4

PLEADINGS

1. THE COURT HAS NO JURISDICTION TO EXERCISE THE MERITS ARISING

FROM THE PARTIES

The Arbitral Tribunal does not have jurisdiction to hear this matter since the arbitration

clause has not been validly incorporated, either directly or by reference, into the Bs/L dated

12 September 2008, consequently, there is no agreement to arbitrate between the parties.

1.1 The arbitration clause, on which is said to be incorporated unto the Bs/L, was

not effectively incorporated into the relevant Bs/L

Once a bill of lading is endorsed to and is in the hands of a receiver the only evidence of

the terms of a contract of carriage is to be found in the bill of lading itself.1 The Claimant

endorsed the Bs/L, a new contract is said to arise between the Respondent, and also the

Charterer.2 The description of the Charterparty should be interpreted clearly, in this present

case there is no physical evidence in which Charterparty is incorporated containing all the

terms which bind the parties.3 In the Rena K Case, the tribunal held that the incorporation of

the arbitration clause should be clear and descriptive not just mere “to be used with

Charterparty” or the words will serve no purpose.4 The Respondent had no actual contents

on of the clauses, without which they could not be incorporated into the contract of carriage.

Thus, the arbitration clause within the Charterparty is not in effect. Therefore, the buyer is

only bound by the terms explicitly mentioned in or expressly referenced to, in the B/L.5 The

intention of the original contracting parties is wholly irrelevant.6

1 Bua International Ltd v Hai Hing Shipping Co Ltd (The Hai Hing) [2000] 1 Lloyd’s Rep. 300, 306 per Rix 2 Tate & Lyle, Ltd v Hain Steamship Co Ltd [1936] 55 Lloyd’s Rep 159, 174 per Atkin J. 3 The Ardennes[1950] 84 Lloyd’s Rep 340 (K.B.). 4 The Rena K, [1978] 1 Lloyd’s Rep. 545 5 Paul Todd, “Incorporation of Arbitration Clauses into Bills of Lading”, JOURNAL OF BUSINESS LAW

331, 333 (1997). 6 Paul Todd, Ibid., at 339; Owners of Cargo on Board The Merak v. The Merak (Owners)[1965] 2 WLR 250.


5

1.1.1 The incorporation of an unfamiliar agreement between the parties is

without an express reference

An arbitration clause is said to have been validly incorporated into an agreement, if the

effect of the incorporation is to make the arbitration clause a part of the agreement.7 The

standard of incorporation required in cases where party A, in an agreement with party B,

incorporates terms from its previous contracts with other parties is higher than the standard

required when A incorporates the terms from past contracts with B itself.8 The former case

mandates an express reference to the arbitration clause.9 In this present case, the Claimant is

not a party to the Charterparty and thus an express reference is mandatory. For instance, a

reference to general terms found on the reverse of the agreement or to standard terms, a copy

of which should be given to the other party, and which should include an arbitration clause, is

considered sufficient.10 The Claimant is nevertheless unfamiliar to the Charterparty thus, an

express reference is mandatory.

1.1.2 The failure to express the right terms unto the Bs/L amounts to commercial

uncertainty

In The Federal Bulker,11 the Court of Appeal emphasised the importance of commercial

certainty with respect to Bs/L,12 by upholding the well-established principal that arbitration

clauses are not incorporated by general reference to another document.13 The incorporation of

7 Section 6(2), The English Arbitration Act 1996 8 TW Thomas & Co. v. Portsea Co Ltd. [1912] AC 1; Africa Exprs Line Ltd v. Socofi S.A High Court

[2009] EWHC 3223 (Comm) (“Africa Express Line”); The Annefield [1971] 1 Lloyd’s Rep 1; Skips A/S Nordheim v. Syrian Petroleum Co. Ltd (The Varenna) [1983] 2 Lloyd’s Rep 592; Andrew Tweeddale and Keren Tweeddale, “Incorporation of Arbitration Clauses Revisited”, 76(4) ARBITRATION 656 (2010); Habas Sinai.

9 Africa Express Line; AIG Europe (UK) Ltd v. The Ethniki [2000] 2 All ER 566; AIG Europe SA v. QBE International Insurance Ltd. [2001] 2 Lloyd’s Rep 268; Prifiti v. Musini [2004] Lloyd’s (Ins & Reins) Rep 518;

10 Salotti v. RUWA Polstereimaschinen GmbH [1976] ECR 1831 cited with approval in 7E Communications Ltd v. Vertex Antennentechnik GmbH [2007] 1 WLR 2175

11 [1989] 1 Lloyd’s Rep. 103 (C.A). 12 Ibid 105, 109, 111. 13 See for example, Federal Bulk Carriers Inc v C. Itoh & Co. Ltd. And Others (The Federal Bulker)

[1989] 1 Lloyd’s Rep. 103 (C.A.), 108; TW Thomas & Co Ltd v Portsea Steamship Co [1912] AC 1; The


6

the arbitration clause unto the Bs/L is expected into included in broader terms. Any attempt

without express reference to its nature and content would be inconsistent with the well-

entrenched position of the law.14 The circumstances of the present case are even further

removed from those referred to in The Federal Bulker as here is no reference to an external

document, such as a charterparty or standard form.

1.2 The dispute should be litigated in Rotterdam

The agreement to arbitrate between the parties is not present and therefore there is no

express choice of law to govern the merits of the dispute.

1.2.1 A concurrent court is currently underway in the Dutch Court located in

Rotterdam, The Netherlands

The issues as to forum conveniens are identical where there are proceedings in a

foreign court by the defendant in the English proceedings and where there are

no proceedings, but the foreign court is said to be more appropriate.15 The existence of

the proceedings may be a relevant factor, depending for its weight on the stages reached. It

does not, however, shift the burden of proof to the claimant in the English proceedings.16 The

Claimant and the Charterer is still awaiting decision of the Dutch Court. The current

proceedings have not yet been affirmed. Thus, the arbitration is unable to proceed as a

concurrent court is currently underway.

1.2.2 The vessel is currently in arrest in Rotterdam

Merak [1964] 2 Lloyd’s Rep. 527 (C.A.); The Annefield, [1971] 1 Lloyd’s Rep. 1 (Adm.); The Delos [2001] 1 Lloyd’s Rep. 703 (Q.B. Com. Ct.), 706.

14 1 See for example, Federal Bulk Carriers Inc v C. Itoh & Co. Ltd. And Others (The Federal Bulker) [1989] 1 Lloyd’s Rep. 103; TW Thomas & Co Ltd v Portsea Steamship Co [1912] AC 1; The Merak [1964] 2 Lloyd’s Rep. 527 (C.A.); The Annefield, [1971] 1 Lloyd’s Rep. 1 (Adm.); The Delos [2001] 1 Lloyd’s Rep. 703 (Q.B. Com. Ct.).

15 The Varna (No. 2) [1994] 2 Lloyd’s Rep. 41 (applying The Spiliada). For cases prior to The Spiliada see De Dampierre v. De Dampierre [1988] A.C. 92 and (in the context of shipping) The Abidin Daver [1984] A.C. 398.

16 Meadows Indemnity Co. Ltd v. Insurance Corporation [1989] 1 Lloyd’s Rep.


7

In an action in rem the court may be seized on arrest of a ship where that act was the

foundation of jurisdiction on the merits.17 Where the arrest was a provisional measure only

(as where the merits action is elsewhere) the court would arguably not be “seized” of

the merits.18 In particular, the connection between arrest and writ in rem illustrated a policy

of the inappropriateness of arrest as a security for arbitration proceedings. The Rena K and

this is underlined by the CPR provision that the arrest remains unless ordered otherwise, there

would be no need for such an indirect approach if either the power to arrest was seen in its

realistic light—a provisional remedy not linked exclusively to a judicial hearing on

the merits—or specific statutory provisions made for arrest in support of arbitration.19 The

vessel of the Respondent is currently lifted but the vessel in question is currently still within

the Dutch Court proceedings.

1.3 In conclusion, the Tribunal does not have jurisdiction to entertain the merits

from the parties

Given the Tribunal is not the appropriate body for determination of this matter, to avoid

multiplicity of proceedings and the related risk of inconsistent concurrent findings, the parties

should not be compelled to submit to arbitration.

2. THE EVENT OF HIJACKING DURING THE VOYAGE HAVE LIFTED THE

LIABILITY OF THE RESPONDENT TOWARDS THE DETERIORATION OF

THE CARGOES

The Carriage of Goods by Sea Act 1992 implements the Hague-Visby Rules compulsorily

into English law, also pursuant to the Grand Paramount Clause inscribed in the Bs/L, the

Hague-Visby Rules applies as a part of statutory law for the parties. The Respondent has not

17 The Freccia Del Nord [1989] 1 Lloyd’s Rep. 388. 18 The Nordglimt [1987] 2 Lloyd’s Rep. 470 19 The Rena K [1978] 1 Lloyd’s Rep. 545. Cf. The Tuyuti [1984] 2 Lloyd’s Rep. 51.


8

breached the Hague-Visby rule in failing to perform the proper provisions under article III r.

2 during the period of hijacking by Somali pirates within the Gulf of Aden.

2.1 The events within the Gulf of Aden establishes piracy

The central idea behind piracy, for any definition, is robbery at sea, and piracy has

always involved the forcible seizure of property.20 The International Maritime Bereau have

established a definition of piracy as an act of boarding or attempting to board any ship with

the apparent intent to commit theft or any other crime and with the apparent intent or

capability to use force in the furtherance of that act.21 In this present case, the perpetrator

boarded the ship without permission and seized the crew and cargoes within the vessel.

Thus, the act within the Gulf of Aden falls within piracy as it has fulfilled the necessary

elements.

2.1.1 Piracy falls under act of public enemies

Pirates have long been considered hostis humanis generis, an enemy of mankind, so that

in international law every state may seize a pirate ship, or a ship taken by piracy and under

the control of pirates.22 Piracy is the original crime of universal jurisdiction, in which all

nations were endowed with authority to assert jurisdiction over pirates since the crime is so

heinous and ships of all nations are at risk.23 In the case of, E. L. Oldendorff & Co.

G.M.B.H. Appellants v. Tradax Export S.A. Respondents (The Johanna Oldendorf), states

in the case of maritime carriage this rule was subject to the exception that performance was

excused if it were prevented by Act of God or of the King’s enemies or by inherent vice in

the goods carried. It is clear under English Law that piracy is considered to be a public

20 Rubin, The Law of Piracy, 2nd edn, Transnational Publishers (New York, 1998), ch. 1. 21 Piracy and Armed Robbery Against Ships, Annual Report, International Chamber of Commerce,

International Maritime Bureau, Jan 1-Dec 31, 2003, at 3. 22 Athens Maritime v Hellenic Mutual War Risks (The Andreas Lemos) [1983] QB 647, 654 23 Eugene Kontorovich, The “Define and Punish” Clause and the Limits of Universal Jurisdiction, 103

Northwestern University Law Review 149, 151 (2009), Athens Maritime v Hellenic Mutual War Risks (The Andreas Lemos) [1983] QB 647, 654,


9

enemy and therefore the events that occur should not hold the Respondent liable towards

the deterioration of the cargo.

2.1.2 The servants of the carrier did not contribute to the loss and damages

towards the cargo during the period of hijacking

In the events of the hijacking within the Gulf of Aden, the crew of the vessel did not

contribute to the loss and damage of the cargoes. “Capture” would seem properly to include

every act of seizing or taking by an enemy or belligerent.24 The ship is delayed by any

extraneous event outside the control of the owner, and the delay is sufficiently long to

render performance radically different from that which the contract contemplates, the

charter is frustrated.25 The equivalent exception under The Hague and the Hague-Visby

Rules is “Strikes or lockouts or stoppage or restraint of labor from whatever cause, whether

partial or general”.26 The master and crew on board were restrained from doing their duties

on board the vessel as the pirates on board kept the crew confined to the bridge. Thus, the

deterioration of the cargo was not the fault of the crew on board the vessel as the pirates

took control of the vessel and enabled the crew.

2.1.3 Furthermore, piracy can also be considered as an act of riot

The carrier is, in principle, not liable for any consequences that arise as piracy also

fulfills the element of an act of riot and civil commotion.27 A hijacking is also likely to

constitute a riot, if there are 12 or more hijackers, in which case it falls within the war and

strikes, or strikes exclusion, depending on whether it is a hull or cargo cover.28 During the

period of hijacking in Somalia it has been surveyed that 30 pirates were on board the vessel

24 John Cory & Sons v Burr (1883) 8 App Cas 393, 405. See also Johnston v Hogg (1883) 10 QBD 432,

433-434. 25 Bank Line v. Capel [1919] A.C. 435. 26 Hague-Visby Rule Art. IV r. 2(j). 27 Bennett, The Law of Marine Insurance, 2nd edn, Oxford (2006), at paras. 14.15 - 14.17. “Commotion

connotes turbulence or tumult and, I think, violence or intention to commit violence”: London & Manchester Plate Glass Co Ltd v Heath [1913] 3 KB 411 at 417

28 United Kingdom, the Public Order Act 1986


10

during the period of time. Affirmatively, the conditions of hijacking are also constituted as

an act of riot as the number of pirates on board the vessel exceeds the number required.

2.2 Piracy also constitutes as a peril at sea which lifts the liability of the carrier

under article III r. 2 of the Hague-Visby Rules

Article III(2) the Hague or Hague-Visby Rules exempts liability for loss or damage

arising from perils, dangers and accidents of the sea, and piracy falls into the exemption of

peril at sea.29 The term ‘perils of the seas’ refers only to fortuitous accidents or casualties of

the seas. It does not include the ordinary action of the winds and waves.30 Some points

clarified in case law are: the peril, danger or accident must be one of the sea, that is of a

maritime nature and arguably one that occurs after the vessel has left the port.31

2.2.2 The shipmaster and the crew on board the vessel acted based on necessity

during the period of hijacking

The shipmaster and the crew on board acted on the basis of necessity. While the bill of lading

generally limits the scope of the master’s authority with respect to the ship’s cargo, his

authority over cargo may expand beyond his enumerated authorities in the rare circumstances

where he has the powers to become an agent of necessity.32 First, there must be an emergency

such that the property interests of the cargo owners are in jeopardy.33 Second, there must be

an inability to obtain instructions from the owner of the property.34 Further, if acting as an

agent of necessity of more than one party, then he must act in bona fide for the interests of

all, and in any case, much deference is given to the master’s discretion because of his unique

position as the “man on the spot.”35 In this present case, first, the situation as piracy is

29 Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (The

Bunga Seroja) [1999] 1 Lloyd’s Rep 512, [81] 30 United Kingdom, Marine Insurance Act 1906, Sched 1, para. 7 31 Steel v. State Line Steamship Co (1877-78) LR 3 App Cas 72, at 78. 32 Hopkins, business & law for the shipmaster 159 (1989). 33 Nobel v. Jenkins [1896] 2 QB 326; Industrie Chimiche Italia Centralev. Alexandre G. Tsavlinis & Sons

Mar. Co (The Choko Star) (1990), 1 Lloyd’s Rep 516 CA (Civ Div) 34 Supra 35 Supra


11

amounted to an emergency situation, second the pirates enabled the crew on board to vessel

to tend to the cargoes, and further, the Charterer acted as a mediator interest of all of the

party. The master was enabled to attend to his crew and the cargoes during the period of

hijacking. Thus, the master acted on the basis of necessity.

3. THE DEVIATION TO ROTTERDAM BY THE RESPONDENT IS AMOUNTED

TO RESONABLE DEVIATION AND DOES NOT BREACH THE CONTRACT OF

CARRIAGE BETWEEN THE PARTIES

The Respondent submits the Charterparty was not rescinded at the time of deviation.

Whilst the right to rescind may have arisen, there was no intention to rescind and the

Claimant waived any breach by the Respondent.

3.1 The deviation to Rotterdam is consistent with the Hague-Visby Rule

Under the Hague-Visby Rules regime, pursuant to article IV r. 4, deviation is also allowed

in order to save or attempt to save property or when the deviation is reasonable.36 A

shipowner is generally obliged and entitled to do what is necessary for the proper prosecution

of the adventure.37

3.1.1 The deviation to Rotterdam is amounted to a reasonable deviation to save

life or property in which both the Claimant and the Charterer agreed upon

The deviation to Rotterdam is amounted to a reasonable deviation at it is to save life

and/or property. The Respondent is entitled to deviate for the purpose of saving life or

property, and will not be liable for such deviation.38 The Vessel was at liberty to deviate in

order to ensure the safety of the vessel and its cargo. At the time of the deviation the

36 The Hague-Visby Rule Art. IV r. 4. 37 Industrie Chimiche Italia Centrale v Alexander G Tsavliris & Sons Maritime Co (The Choko Star) (No

2) [1990] 1 Lloyd’s Rep 516; reversed by the Merchant Shipping Act 1995, s.224, Sched.11, Part 1, Art.6. 38 Anderson, Anderson & Co v Owners of the San Roman [1873] 5 LRPC 301; Girvin S, Carriage of

Goods by Sea (Oxford University Press, 2nd ed, 2011) 403.


12

Charterer and the Claimant were corresponding the fact that the PFAD have been

contaminated during the period of piracy. The Charterer insisted the cargoes to be delivered

to Rotterdam to mitigate cost. Thus, the respondent did not breach the contract of carriage, as

the deviation was reasonable to relinquish the PFAD.

3.1.2 Furthermore, the master of the vessel has extraordinary rights towards the

vessel and cargo

The master’s sale of cargo in an intermediate port is justified only when the nature or

condition of the property necessitates the sale, the master is unable to successfully complete

the voyage or procure another, the master acts in good faith, and consultation with the cargo

owner is impracticable.39 To satisfy the good faith requirement, the master should reasonably

believe that an immediate sale is in the best interest of the cargo owner, and he must act in

bona fide in the best interests of all parties involved.40 In this present case, the Charterer and

the Claimant came to an agreement to mitigate cost the cargoes must be delivered to

Rotterdam instead of Liverpool.

3.1.3 In any event, the deviation to Rotterdam should be considered as a change

of voyage

The expression “change of voyage” is conventionally used to refer to the situation where

the insured voyage is begun but the destination is voluntarily changed.41 The shipmaster,

usually called the master in maritime law, is the appointed and retained commander of a

vessel in commercial service and is the person who is responsible for a vessel in navigation

and licensed by competent national authority. If the master properly exercises his agent of

39 Butler v. Murray, 30 NY 88, 98-99 (1864). (Abbott on Shipping, 447 and notes; The NewEng. Ins.

Co v. Brig Sarah, 13 Peters, 387; Bryant v.Commonwealth Ins. Co, 13 Pick. 543.) 40 Facts p. (Charterparty) 41 MIA 1906, s.45(1) provides, “Where, after the commencement of the risk, the destination of the ship

is voluntarily changed from the destination contemplated by the policy, there is said to be a change of voyage”. Section 45(1) states a practice rather than a rule of law but makes it clear that the expression is used in a particular sense.


13

necessity authority to delay or deviate, the shipowner is entitled to full payment of the freight

even if the charterers obtain the goods short of the port of destination.42

3.2 Pursuant to article 29 of the Charterparty, permits the Respondent to change

route from Liverpool to Rotterdam

Liberty clauses in the contract of carriage will still be interpreted contra

proferentem according to the ordinary rules of construction,43 which is stipulated in the

Charterparty, gives permission to the Respondent to deviate or has another port to discharge

the cargoes under the order or consent of the Shipper or, if the rights have been transferred,

from the lawful holder of the Bs/L.

3.2.1 The Charterer still retains the right to redirect the vessel to Rotterdam

instead of Liverpool

It is generally known in the maritime law that the Charterer has the right to redirect the

vessel or instruct the Shipowner to deliver the goods to another consignee and in a port other

than as expressed in the Charterparty.44 However, such right which derives from the

Charterparty may be lost45 if the cargoes or the Bs/L is already delivered to another party46 or

the Charterer’s right under the contract has been transferred to the consignee even if the

goods or the Bs/L has not been delivered.47 Although the Bs/L has been transferred to the

Claimant as the consignee by completion of PFAD sale transaction,48 the Claimant have

suggested Rotterdam to the Charterer and have agreed for the Bs/L to be sent to the Charterer

for the agreed purchase price. However, the Respondent have no knowledge of the

correspondence prior to the tribunal. The Respondent’s knowledge is that both parties have

42 The Teutonia (1872) 3 LR, A. & E., 394. 43 Glynn and Others v. Margetson & Co and Others [1893] AC 351; see also Notes to Art. 11. 44 Elder Dempster Lines v Zaki Ishag (The Lycaon) (1983) 2 Lloyd’s Rep. 548, 550, 555. 45 Carriage of Goods by Sea Act, s.2(5) 46 Mitchell v. Ede (1840) 11 Ad. & El. 888 at 903 47 Cf. Guaranty Trust of New York v Van den Berghs (1925) 22 Lloyd’s Rep. 447 at 455. 48 Facts, p. 25.


14

once mutually agreed, thus the Charterer does not retain the rights to redirect the vessel to

Rotterdam.

3.2.2 Both the Claimant and the Charterer agreed on the change of voyage

The expression “change of voyage” is conventionally used to refer to the situation where

the insured voyage is begun but the destination is voluntarily changed.49 The shipmaster,

usually called the master in maritime law, is the appointed and retained commander of a

vessel in commercial service and is the person who is responsible for a vessel in navigation

and licensed by competent national authority. If the master properly exercises his agent of

necessity authority to delay or deviate, the shipowner is entitled to full payment of the freight

even if the charterers obtain the goods short of the port of destination.50 In this present case,

both the Claimant and the Charterer agreed. Thus, the deviation should be considered a

change of voyage from Liverpool to Rotterdam.

3.3 The Respondent have complied to the terms under the Charterparty and the Bs/L

A Charterparty is, by nature, entered into for a specified destination51 and the shipowner

has an obligation to comply with the agreed destination in the Charterparty as the lawful

destination or as instructed by the lawful holder of the Bs/L.52 Although the Charterparty

have stipulated Merseyside, Liverpool, both the Claimant and the Charterer have agreed on

the deviation. Therefore, the Respondent have fulfilled its obligation to deliver the cargoes to

Rotterdam.

3.4 The deviation is mutually beneficial for all of the parties

49 MIA 1906, s.45(1) provides, “Where, after the commencement of the risk, the destination of the ship

is voluntarily changed from the destination contemplated by the policy, there is said to be a change of voyage”. Section 45(1) states a practice rather than a rule of law but makes it clear that the expression is used in a particular sense.

50 The Teutonia (1872) 3 LR, A. & E., 394. 51 Simon Baughen, Shipping Law (Cavendish Publishing Limited, 2nd ed, 2001) 9. 52 Total Transport Corp v Arcadia Petroleum Ltd (The Eurus) [1996] 2 Lloyd‘s Rep 408.


15

Deviation may be regarded as reasonable if it is mutually beneficial for the parties

involved.53 The deviation to Rotterdam have mitigated cost as the Claimant have affirmed the

PFAD in Liverpool would be belowe the marketed price. It has been established supra both

the Claimant and the Charterer have agreed that Rotterdam will be the best place to sell the

PFAD. Thus, deviation has been well established to be in consistent with the Charterparty

and the Bs/L.

4. THE RESPONDENT DID NOT BREACH THE CONTRACT OF CARRIAGE AS

THE CLAIMANT HAVE ABANDONED THEIR RIGHTS OVER THE CARGOES

4.1 The termination of the sales contract and thus the contract of carriage by the

Claimant have resulted in the abandonment of the cargoes

The Respondent submits the Claimant have terminated the sales contract and the contract

of carriage with the reason of repudiatory breach of contract. The breach of contract however

in this present case, amounts to a waiver of performance by the Respondent as piracy is a

condition that is not normal to precede performance.54 The disagreement by the parties brings

the contract to an end.55 In this present case, the Claimant claimed a repudiatory breach of

contract because of the claimed delay from piracy and therefore the Claimant have brought

the contract to an end. Accordingly, the termination of the contract has resulted in the

abandonment of the cargoes by the Claiamant.

4.1.1 Consequently, the Bs/L also cease to apply

As a result of the termination of contract, the Bs/L cease to apply. In the lycaon case, the

carrier has a right to choose whether discharge or not discharge with or without the Bs/L until

53 Stag Line v Foscolo Mango & Co Ltd [1932] AC 328. 54 Sinason-Teicher v. Oilcakes [1954] 1 W.L.R. 935; Bunge Corp. v. Vegetable Vitamin Foods (Private)

Ltd [1985] 1 Lloyd’s Rep. 613. 55 Suttor v Gundowda pty Ltd (1950) 81 CLR 418 at 440-2; JAG Investments Pty Ltd v Strati (1973)

NSWLR 450 at 456-6; Grange v Sullivan (1966) 116 CLR 418 at 429;


16

the court determines who is entitled to the cargoes.56 The obligation to deliver the cargoes to

the port has ceased to exist as the Charterparty, the Bs/L, and any documents relating to sales

have come to an end.57 On March 6th 2009, an agent of behalf of the Claimant, Paul Taylor

has affirmed the termination of contract by the Respondent and even has agreed for the

cargoes to be delivered to Rotterdam for the Charterer to mitigate cost. Therefore, the

contract of carriage between the parties cease to exist.

4.2 The Respondent has no primary knowledge about the correspondence between

the Charterer and the Claimant

The Respondent has no primary knowledge about the correspondence between the Charter

and the Claimant and has no knowledge about the contractual agreements set by the Claimant

and the Charterer.

4.2.1 The Bs/L is in the form of an order bill therefore the delivery and

entitlement of the cargoes is made to order

An “order” bill of lading is one under which the goods are to be delivered to a named

person “… or to his order or assigns …” or simply “to order”. Such a bill is, by the custom of

merchants, a document of title to the goods.58 Where the consignee of Bs/L is ‘to order’;

presentation of the Bs/L before discharging the cargoes is compulsory as prima facie

evidences.59 In practices, delivering and discharging the cargoes without Bs/L are constituted

as violation of maritime law.60 The Respondent does not have primary knowledge that the

Claimant is the legal holder of the Bs/L as the consignee within the Bs/L does not state the

56 Elder Dempster Lines v. Zaki Ishag (1981)1 LLR,92,(1983) 2 LLR,.54 57 Arnold Karberg & Co v Blythe, Green Jourdain & Co (1915) 2 K.B. 379 at 388; Ross T Smyth & Co

Ltd v TD Bailey Son & Co (1940) 3 All ER 60; Petrotrade v Stinnes Handel (1995) 1 Lloyd’s Rep. 142; Bowes v Shand (1877) 2 App. Cas. 455 (HL)

58 Lickbarrow v. Mason (1794) 5 Term 683. 59 MB Pyramid Sound NV v Briese Schiffahrts GmbH and Latvian Shipping Association Ltd (1995) 2

Lloyd’s Rep. 144; Gatoil International Inc v Tradax Petroleum Ltd; Same v Panatlantic Carriers Corporation (1985) 1 Lloyd’s Rep. 350 ; Elder Dempster Lines v. Zaki Ishag, 2 Lloyd’s Rep. 548; Glyn, Mills & Co. v East and West India Dock Co. (1882) 7 App. Cas. 591

60 Sze Hai Tong Bank v Rambler Cycle Co [1959] MLJ 200 at 201; (1959) AC 576 at 586; Chabbra Corpn Pte Ltd v Jag Shakti (1986) AC 337; Bristol and West of England Bank v Midland Railway Co (1891) 2 QB 653


17

name of the legal holder. Thus, the entitlement of the cargoes belongs to the possessor of the

Bs/L in which the Claimant is not because of the termination of the contract.

4.2.2 The Dutch Court has determined the current legal holder of the cargo is the

Charterer

The Charterer is the current legal holder of the cargoes as the Dutch Court appointed the

Charterer the lawful holder of the cargoes. The court have power to determine who is the

legal holder of the cargoes. In the case of Cho Yang Shipping v. Coral (UK) Ltd. the Court

determine who the parties to the contract and who is the legal possessor of the cargoes.61 This

shows the court has the power in identifying the cargo interest who is party to the bill of

lading contract have arisen in determining whether the contractual rights and liabilities have

been transferred to a new holder under the legislation providing for such a transfer or

otherwise. The Dutch Court held the cargoes is to be sold by the Charterer. Therefore, the

lawful holder of the cargoes belongs to the Charterer and the Claimant has loss its right

towards the cargo.

4.3 The cargoes were discharged by a valid LOI

Carriers commonly deliver without production, taking an indemnity from the consignee or

the charterers (who in the case of an oil cargo, for example, might be expected to know the

identity of the ultimate receiver of the cargo). 62 In the case of Motis Export

Ltd. v. Dampskibsselkabet AF 1912 Aktiesekkab, an indemnity can be deemed lawful if a

court does not object its legality. In practice, a suitable indemnity will be likely to satisfy the

shipowner.63 All the more, the goods owner has a reasonable explanation for the absence of

the bills of lading.64 The Dutch Court have stated that the lawful holder of the cargoes is the

61 Cho Yang Shipping v. Coral (UK) Ltd. [1997] 2 Lloyd’s Rep. 641. 62 A/S Hansen-Tangens Rederi III v.Total Transport Corp. (The Sagona) [1984] 1 Lloyd’s Rep. 194. 63 [1999] 1 Lloyd's Rep. 837, upheld by the Court of Appeal [2000] 1 Lloyd's Rep. 211 (where this point

was not considered). 64 Supra


18

Charterer. Thus, the Respondent discharging against a letter of indemnity does not constitute

as a breach of contract as the Dutch Court is letting the Charterer sell the cargoes.

4.3.1 The shipmaster has the right to make an on scene decision making

The shipmaster is able to make decisions on scene and is protected by appropriate

provisions, including the right of appeal, contained in, inter alia, national legislation,

collective agreements or contracts of employment, from unjustifiable dismissal or other

unjustifiable action by ship-owners, charterers or any other person as a consequence of the

proper exercise of his professional judgment.65 The master has the overriding authority and

responsibility to make decisions, and the discretion to take whatever action he considers to be

in the best interests of the passengers, crew, ship and marine environment all together.66 In

this present case, there are no further objections from the agents of the Respondent and

therefore this includes the decision of the master for the interest of the whole parties.

4.3.2 The shipmaster has the power to act upon damaged goods on behalf of the

lawful holder

The master’s sale of cargo in an intermediate port is justified only when the nature or

condition of the property necessitates the sale, the master is unable to successfully complete

the voyage or procure another, the master acts in good faith, and consultation with the cargo

owner is impracticable.67 To satisfy the good faith requirement, the master should reasonably

believe that an immediate sale is in the best interest of the cargo owner, and he must act in

bona fide in the best interests of all parties involved.68 Further, the master possesses the

authority sell damaged or perishable goods only when it is absolutely necessary, such as the

65 IMO Resolution A.443(XI); see also K.X. Li & Jim Mi Ng, International Maritime Conventions: Seafarers’ Safety and Human Rights, 33 j. mar. l. & com.381 (2002).

66 SM Code para. 5(2). Even prior to the ISM Code, IMO resolution A.443(XI) had invited governments to ensure that the master was “not constrained by the shipowner, charterer or any other persons” from taking any decision in respect of maritime safety and the protection of the marine environment “which in the professional judgment of the shipmaster, is necessary”. See also K.X. Li & Jim Mi Ng, International Maritime Conventions: Seafarers’ Safety and Human Rights, 33 j. mar. l. & com. 381 (2002).

67 Butler v. Murray, 30 NY 88, 98-99 (1864). (Abbott on Shipping, 447 and notes; The NewEng. Ins. Co v. Brig Sarah, 13 Peters, 387; Bryant v.Commonwealth Ins. Co, 13 Pick. 543.)

68 Australasian SN Co v. Morse (1872) LR 4 PC 222; Acatos v. Burns (1878) 3 Ex. D. 282.


19

case in cargos which rapidly perish, thus the master may not effect such a sale when other,

possibly less prudent, courses of action are available.69 The shipmaster who discharged the

cargo against the Bs/L acted in good faith as the Claimant have abandoned the cargo

according to the correspondence. The Dutch Court then held the Charterer liable for the

cargoes. Thus, the Respondent did not breach contract of carriage as the shipmaster acted in

good faith.

5. THE RESPONDENT IS NOT LIABLE FOR THE LOSS AND DAMAGE

SUFFERED BY THE CLAIMANT

5.1 The Respondent is not liable for the contamination, the delay, and the discharge

of the cargoes to the Charterer

The Respondent enlightens several facts: (i) the delay of the Cargoes and the

contamination is not the result of Respondent’s fault; (ii) the deviation was to comply with

the Respondent’s obligation to the Charterer in accordance with the liberty clause in the

Charterparty; (iii) the discharged of the Cargoes to the Charterer was in line with the

maritime law.

5.1.1 The delay and the contamination of the cargoes were not caused by the

negligence of the crew

The contamination is caused by the nature of The Cargoes namely oxidation which

occurred when The Cargoes were on the container longer than it used to.70 Furthermore,

there is no evidence that The Cargoes were opened or if it opened, it probably did by 30

pirates.71 Thus, the delay and contamination were not the fault of the crews, and no one of

the crew should be liable for the contamination.

69 Atlantic Insurance Co v. Huth (1880) 16 ChD 474. 70 Gary R. List et al, Storage, Handling, and Transport of Oils and Fats, John Wiley & Sons, Inc, Iowa

2005, pp. 208-212 71 Facts, p. 43


20

5.1.2 The Respondent is under the obligation to consent to the deviation under

the liberty clause

As enlighten in Submission 3, The Respondent deviated according to its consent under

the liberty clause. Furthermore, The claimant considered to find another buyer in

Rotterdam72 which the Charterer requested the same by issued the letter of indemnity.73

However, the deviation under the liberty clause is justifiable since both The Claimant and

The Charterer were aspire the Respondent to navigate to Rotterdam.

5.1.3 The Respondent discharged the Cargoes in accordance with maritime law

According to the letter of indemnity issued by The Charterer, The Respondent discharge

the Cargoes which allowed by Maritime law as enlightened further in submission 4.2.3.

accordingly, the discharge is not breach the contract of carriage and maritime law either.

5.2 Were the Panel found the Respondent to be at fault, the limitation of liability

enshrines the Respondent’s conducts

In the event arbiter found the loss and damages of the cargoes caused by the breach of

contract of carriage or in tort, limitation of liability provided and shall be applied in any

action against the Respondent in respect of loss or damage to goods covered by a contract

of carriage whether the action be founded in contract or in tort.74

5.4.3 Piracy is appertain to exception under the Hague-Visby

Respondent shall not be responsible for loss or damage arising or resulting from perils.75

Affirmed in submission 2.2, Piracy can be justified as peril. Furthermore, in The Johanna

Oldendorf, the Carrier’s liability should be limited by the exception, including peril.76

72 Facts, p. 67 73 Facts, p. 68 74 Art IV bis (1) of Hague Visby rules 75 The Hague-Visby Rule Art IV (2)(c) 76 E. L. Oldendorff & Co. G.M.B.H. Appellants v. Tradax Export S.A. Respondents , [1974] AC 479 per

Lord Diplock at p.556-557


21

5.2.2 The deviation is reasonable and justifiable (to mitigate cost and save

property)

The reasonable deviation shall not be deemed to be an infringement or breach of these

Rules or of the contract of carriage, and the Respondent shall not be liable for any loss or

damage resulting therefrom.77 Respondent changes the route in necessity and reasonably,

thus The Respondent should not be liable for its conduct deviating to Rotterdam.78

5.3 The Respondent is not liable for any loss and damages incurred to the Claimant

as there is no fault or the liabilities are limited therefore the respondent is not

liable for the damages and cost

The delay of the Cargoes and the contamination is result of the peril on the sea namely

piracy. The reasonable deviation and discharging the cargoes with letter of indemnity is not

breach any contract of carriage. Since there is no fault committed by The Respondent, The

Respondent should not be liable to cover all loss and damages under the principle and the

Limitation of liability must be provided against The Respondent.79

5.4 Were the Tribunal decide that the Respondent is liable, the Claim should be

limited to the Respondent’s calculation

5.4.1 The Claimant has already received part of the indemnity

The value of liability that requested by The Claimant is not justifiable.80 The Claimant

has receives the indemnity On 3 April 2009 from issued by the Bank of Tokyo-Mitsubishi

UFJ in the sum of USD 1.4 million.81 Thus, the the sum of liability must be diminished in

the amount of the indemnity.

77 Art IV (4) of Hague Visby rules 78 Rio Tinto v Seed Shipping (1926) 24 LIL Rep 316 Per Roche J 79 M. Bundock, Oil Spillages at sea, Solicitors Journal, 1993, 97 at p 98; Goldman v. Thai Airways

(1983) 3 All E.R. 693; The Lady Gwendolen (1965) 1 Lloyd's Rep. 335 80 Facts, p. 70 81 Facts, p. 54


22

5.4.2 Were the court decide that the Claimant has not been indemnify, part of

the sale of the cargoes is sufficient.

In the premises any claim is limited to USD 1.4 Million pursuant to market value of the

Cargoes in Rotterdam is USD 350 pmt. or alternatively USD 1.52 Million pursuant to the

market value in Liverpool around 20-30 March is the price paid in Rotterdam plus freight

cost.


23

PRAYER FOR RELIEF

For all the reasons submitted above, the Respondent respectfully request the arbitral panel to:

DECLARE that this arbitral panel does not have jurisdiction to hear these proceedings; and

further

ADJUDGE that the Respondent is not liable to the Claimant for the following amounts

claimed:

a) USD 522.50 per mt x 4,000 of PFAD= USD$ 2,090,000

b) Court fees of USD 138,843.14; and

c) Legal fees in respect of the Court proceedings of USD 107,913.12.

further

DECLARE that any liability of the Respondent is limited to USD$ 1,520,000

alternatively

ADJUDGE that the Respondent is not liable to the Claimant for the following amounts

claimed:

a) USD 3,236,756.26, alternatively USD 2,329,912.26, alternatively damages; and

b) Interest on a compound basis pursuant to s. 49 of the Arbitration Act 1996; and

c) Costs with compound interest on costs.

Documents

memorandum for respondent (3) - Murdoch University · AIG Europe SA v. QBE International Insurance Ltd. [2001] 2 Lloyd’s Rep 268 Arnold Karberg & Co v Blythe ... (Private) Ltd [1985]