MEMORANDUM FOR RESPONDENT - Murdoch University · Memorandum for Respondent ii ... Claimant Zeus Shipping and Trading Company ... MLAANZ Maritime Law Association of Australia and

17th Annual International Maritime Law Arbitration Moot

In the matter of arbitration under the MLAANZ Arbitration Rules

UNIVERSITY OF QUEENSLAND

MEMORANDUM FOR

RESPONDENT

CLAIMANT

Zeus Shipping and Trading Co

Level 4, 200 Beta Street

Poseidon

v

RESPONDENT

Hestia Industries

Level 1, 100 Alpha Street

Hades

COUNSEL

KEILIN ANDERSON | DOMINIC FAWCETT | JAAMAE HAFEEZ-BAIG | AMINA KARCIC

University of Queensland

Memorandum for Respondent

ii

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ........................................................................................................ iii

LIST OF AUTHORITIES ............................................................................................................... v

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

QUESTIONS PRESENTED ............................................................................................................ 4

SUBMISSIONS ................................................................................................................................. 5

I THE TRIBUNAL DOES NOT HAVE JURISDICTION TO HEAR THE

FRUSTRATION ISSUE .............................................................................................................. 5

A The Tribunal has the power to rule on its own jurisdiction ................................................. 5

B The Proper Law of the Arbitration Agreement is Western Australian Law ........................ 6

C Under Western Australian principles of contractual interpretation, a dispute about

frustration is not a ‘dispute arising under this contract’ ............................................................. 7

II THE RESPONDENT IS NOT LIABLE TO PAY DEMURRAGE .................................. 8

A Laytime ended when the Vessel commenced sailing .......................................................... 9

B Alternatively, laytime ended when the Vessel crossed the port limits .............................. 10

C Alternatively, laytime was interrupted ............................................................................... 11

D Alternatively, any delay was caused by fault of the Claimant ........................................... 12

III ALTERNATIVELY, THE RESPONDENT IS NOT LIABLE TO PAY DEMURRAGE

BECAUSE THE CHARTERPARTY WAS FRUSTRATED ................................................. 14

A As at 7 October 2014 the probable delay to the Vessel was so inordinate as to frustrate the

commercial purpose of the Charterparty .................................................................................. 15

B Alternatively, the Charterparty was frustrated on a later date ........................................... 17

C The interception, return and detention of the Vessel gave rise to supervening impossibility

of performance .......................................................................................................................... 17

D The supervening event was not provided for by the parties .............................................. 18

E Frustration was not self-induced ........................................................................................ 19

IV THE RESPONDENT IS ENTITLED TO A SALVAGE REWARD .............................. 20

A The Respondent and Hestug are the same legal entity ...................................................... 21

B The Vessel was salvable property in danger at sea ............................................................ 21

C The Respondent’s services were successful in rescuing the Vessel .................................. 22

D The Respondent’s services exceeded due performance of the contract ............................. 22

E The Respondent is nonetheless a volunteer under the general law of salvage .................. 23

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



iii

LIST OF ABBREVIATIONS

Act Arbitration Act 1996 (UK)

Arbitration Agreement Clause 30 of the Charterparty

Art. / Arts. Article/Articles

Bundle Bundle of Documents relevant to Arbitration

Cargo The cargo of HLNG aboard the Vessel

Charterparty The contract concluded between the Claimant and

Respondent on or about 22 July 2014

Claimant Zeus Shipping and Trading Company

Demurrage Clause Clause 10 of the Charterparty

Draft Arbitration

Agreement

Clause 30 of the Draft Charterparty

Draft Charterparty The contract enclosed in the Claimant’s email dated 14 July

2014

Force Majeure Clause Clause 19 of the Charterparty

HLNG Liquefied Natural Gas produced from Hades Shale Gas

Interruptions Clause Clause 9(e) of the Charterparty

Master Captain Marcus Yi



iv

MLAANZ Maritime Law Association of Australia and New Zealand

NOR Notice of Readiness

Respondent Hestia Industries

Salvage Convention International Convention on Salvage 1989

Statement of Facts The Statement of Facts in respect of MV Athena at Hades,

signed by Captain Marcus Yi on 7 October 2014

Tribunal The Arbitral Panel

Vessel MV Athena



v

LIST OF AUTHORITIES

Books

Cooke, Julian et al, Voyage Charters (Informa, 4th ed, 2014)

Beale, Hugh, Chitty on Contracts: General Principles (Sweet & Maxwell, 30th ed, 2008)

Reeder, John (ed), Brice on Maritime Law of Salvage (Sweet & Maxwell, 4th ed, 2003)

Rose, Francis, Steel, Sir David and Shaw, Richard (eds), Kennedy & Rose: Law of Salvage (Sweet

& Maxwell, 8th, 2008)

Stannard, John, Delay in the Performance of Contractual Obligations (Oxford University Press,

2007)

Treitel, Sir Guenter, Frustration and Force Majeure (Sweet & Maxwell, 3rd ed, 2014)

Articles

Davies, Martin, ‘What happened to the Salvage Convention 1989?’ (2008) 39(4) Journal of

Maritime Law & Commerce 463

Gaskell, Nicholas, ‘The 1989 Salvage Convention and the Lloyd’s Open Form (LOF) Salvage

Agreement 1990’ (1991) 16 Tulane Maritime Law Journal 1

Cases

Adelfamar SA v Silos Mangimi Martini SPA (The Adelfa) [1988] 2 Lloyd’s Rep 466

Admiral Shipping Co v Weidner Hopkins & Co [1916] 1 KB 429

Amin Rasheed v Kuwait Insurance Corp [1984] AC 50

Andreas Sobonis v The National Defender, National Transport Corporation [1970] 1 Lloyd’s Rep

40

Anglo Northern Trading v Emlyn Jones & Williams [1918] 1 KB 372

Arsonovia Ltd and Ors v Cruz City 1 Mauritius Holdings [2013] 1 Lloyd’s Rep 235

Bank Line Ltd v Arthur Capel & Co [1918] AC 435

Black-Clawson International Ltd v Papierwerke Waldoff-Aschaffenburg AG [1981] 2 Lloyd's Rep

446

Blane Steamships v Minister of Transport [1951] 2 KB 965

Blue Anchor Line v Alfred C Toepfer (The Union Amsterdam) [1982] 2 Lloyd’s Rep 432

Brisbane City Council v Group Projects Pty Ltd (1979) 145 CLR 143



vi

British Foreign Marine Insurance Company v Samuel Sanday & Co [1916] 1 AC 650

Budgett v Binnington [1891] 1 QB 35

Bunge SA v ADM Do Brasil LTDA [2009] 2 Lloyd’s Rep 175

C v D [2008] Bus LR 843

Chimimport v D’Alesio [1994] 1 Lloyd’s Rep 366;

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337

Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45

Corporate Systems Publishing Pty Ltd v Lingard (No 4) [2008] WASC 21 (27 February 2008)

Countess of Warwick Steamship Company v Le Nickel Societe Anonyme and Anglo-Northern

Trading Company Ltd v Emlyn Jones & Williams [1918] 1 KB 372

Davis Contractors Ltd v Fareham UDC [1956] AC 696

Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The Sea Angel)

[2007] 2 Lloyd’s Rep 517

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640

Ellis Shipping Corporation v Voest Alpine Intertrading (The Lefthero) [1992] 2 Lloyd’s Rep 109

Embiricos v Sydney Reid & Co [1914] 3 KB 45

Fairbridge v Pace (1844) 1 Carr & K 317

Fibrosa v Fairbairn [1943] AC 32

Fillite (Runcorn) Ltd v Aqua-Lift (1981) 26 Con LR 66

Fiona Trust & Holding Corporation v Privalov [2007] Bus LR 1719

Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160

Freedom Maritime Corporation v International Bulk Carriers SA and another (The Khian

Captain) [1985] 2 Lloyd’s Rep 212

Gem Shipping Co of Monrovia v Babanaft (Lebanon) SARL (The Fontevivo) [1975] 1 Lloyd’s Rep

339

Government of Gibraltar v Kenney [1956] 2 QB 410

Grupo Torras SA v Sheikh Fahad Mohammed al Sabah [1995] 1 Lloyd’s Rep 374

Heimann v Commonwealth of Australia (1938) 38 SR (NSW) 691

Heyman v Darwins Ltd [1942] AC 356



vii

High Seas Venture Ltd Partnership v Sinom (Hong Kong) Ltd (The New Forest) [2008] 1 Lloyd’s

Rep 504

Hillcrown Pty Ltd v O’Brien [2011] QCA 129 (19 April 2011)

Hirji Mulji v Cheong Yue Steamship Co Ltd (1926) AC 497

Hirsch v The Zinc Corp Ltd (1917) 24 CLR 34

Houlder v Weir (1905) 10 CC 228

Hudson v Bilton (1856) 119 ER 975

IBM Australia Pty Ltd v State of Queensland [2015] QSC 342 (7 December 2015)

Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896

J Lauritzen AS v Wijsmuller BV (The “Super Servant Two”) [1990] Lloyd’s Rep 1

Jackson v Union Marine Insurance Co Ltd (1874) LR 10 CP 125

Joseph Constantine Steamship Line Ltd v Imperial Smelting Corp Ltd [1942] AC 154

Kuwait Petroleum Corporation v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541

Leeds Shipping Co Ltd v Duncan Fox & Co Ltd (1932) 37 CC 213

Lodge Partners Pty Ltd v Pegum [2009] FCA 519 (20 May 2009)

Midwest Shipping v Henry [1971] 1 Lloyd’s Rep 375

Miller v. Law Accident Insurance Company [1903] 1 KB 712

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd; Wright Prospecting Pty Ltd v Mount

Bruce Mining Pty Ltd (2015) 89 ALJR 990

National Carriers v Panalpina (Northern) Ltd [1981] AC 675

Nova (Jersey) Knit Ltd v Kammgarn Spinnerei [1977] 1 WLR 713

oOH! Media Roadside Pty Ltd v Diamond Wheels Pty Ltd (2011) 32 VR 255

Overseas Union Insurance Ltd v AA Mutual International Insurance Co Ltd [1988] 2 Lloyd’s Rep

62

Paal Wilson and Co A/S v Partenreederei Hannah Blumenthal (The Hannah Blumenthal) [1983] 1

AC 854

Pacific Carriers v BNP Paribas (2004) 218 CLR 451

Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (1993) 43 FCR 439

Peterson Farms Inc v C&M Farming Ltd [2004] 1 Lloyd’s Rep 60



viii

Pioneer Shipping v BTP Tioxide (The Nema) [1982] AC 724

Price v Livingstone (1882) 9 QBD 679

Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989

Rinehart v Welker [2012] NSWCA 95 (20 April 2012)

Rodoconachi v Elliot (1874) LR 9 CP 518

Sailing Ship “Garston” Co. v. Hickie & Co (1885) 15 QBD 580

Sametiet M/T Johs Stove v Istanbul Petrol Rafinerisi A/S (The Johs Stove) [1984] 1 Lloyd’s Rep 38

Scanlan’s New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169

Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596

Stanton v Austin (1872) LR 7 CP 651

Sulamerica SA v Enesa Engelharia SA [2013] 1 WLR 102

Tamplin Steamship Co v Anglo-Mexican Petroleum Products Co [1916] 2 AC 397

Tatem v Gamboa [1939] 1 KB 132

The Bamburi [1982] 1 Lloyd’s Rep 312

The City of Subiaco v Local Government Advisory Board [2011] WASC 322 (18 November 2011)

The Penelope [1928] P 180

The Queen Elizabeth (1949) 82 Lloyd’s Law Rep 803

The Sava Star [1995] 2 Lloyd’s Rep 134

The Vrede (1861) Lush 322

Thompson v Gillespy (1885) 119 ER 459

Transnet v The MV Cleopatra Dream (The Cleopatra Dream) [2011] ZASCA 12 (11 March 2011)

Transworld Oil Ltd v North Bay Shipping Corporation (The Rio Claro) [1987] 2 Lloyd’s Rep 173

Union of India v EB Aabay’s Rederi A/S (The “Evje”) [1975] AC 797

Conventions

International Convention on Arrest of Vessels 1999, opened for signature 12 March 1999, 1110

UNTS 318 (entered into force 14 September 2011)

Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on

the law applicable to contractual obligations [2008] OJ L 177/6



ix

The International Convention on Salvage 1989, opened for signature 28 April 1989, 1953 UNTS

165 (entered into force 14 July 1996)

United Nations Convention on the Law of the Sea, opened for signature 10 December 1982, 1833

UNTS 3 (entered into force 16 November 1994)

Vienna Convention on the Law of Treaties 1969, opened for signature 23 May 1969, 1155 UNTS

331 (entered into force 27 January 1980)

Legislation

Contracts (Applicable Law) Act 1990 (UK)

Merchant Shipping Act 1995 (UK)

Arbitration Act 1996 (UK)

Other

London Arbitration 11/91 LMLN 304 (29 June 1991)

London Arbitration 20/10 LMN 807 (29 October 2010)

The Travaux Preparatoires of The International Convention on Salvage 1989, opened for signature

28 April 1989, 1953 UNTS 165 (entered into force 14 July 1996)



1

STATEMENT OF FACTS

1. The Respondent is a producer of HLNG in Hades.1 The Claimant is the owner of a Hades-flagged

‘H Max LNG Carrier’, designed specifically to transport this product.2 On 1 July 2014 the parties

entered into negotiations for the Claimant to promptly transport the Respondent’s HLNG from

Hades to Poseidon, as part of the commissioning of the Respondent’s HLNG plant, which was to

commence on 15 September 2014.3

2. On 14 July 2014 the Claimant sent the Respondent its standard form voyage charterparty.4 On 16

July 2014 the Respondent informed the Claimant that it would not agree to the Claimant’s terms

unless the arbitration clause was amended. On 22 July 2014, the Respondent signed the

Charterparty, which contained an amended arbitration clause.

3. On 3 October 2014, the Vessel arrived at the Port of Hades and the Master tendered the NOR.

The permitted time for loading was 10 WWD SHINC, calculated from when the NOR was

tendered until the Vessel ‘[left] the Loading Place’.5 The Cargo was successfully loaded and on 7

October 2014 at 0900 hours the Vessel commenced sailing.6 The Vessel left the Loading Place.

4. On the same day, the Opposition Leader of Hades Jacqueline Simmons seized control of Hades

Parliament.7 President Simmons ordered the under-resourced Coast Guard to intercept the Vessel

1 Bundle, p 2.

2 Ibid p 3.

3 Ibid p 2.

4 Ibid p 3.

5 Ibid p 34.

6 Ibid p 54.

7 Ibid p 55.



2

and return it to the Port of Hades.8 Late on 7 October 2014, the Coast Guard intercepted the

Vessel and ordered the Master to return to berth.

5. Initially the Master refused to do so on the basis that the Vessel was outside of territorial waters

However, he subsequently succumbed once reminded that the Vessel was Hades-flagged and was

therefore subject to Hades law.9 The Claimant subsequently stood the Master down in respect of

his negligence.10

6. The Vessel spent the following 364 days detained at the Port of Hades.11 On 30 September 2015,

President Simmons resigned due to allegations of misconduct within her Government.12 The

Vessel was released by the Coast Guard on 5 October 2015, well after commissioning of the

Respondent’s HLNG plant was to take place.13 The Claimant claimed USD $17,900,000 in

demurrage.14 The Respondent denied liability on the basis that the Vessel left the Loading Place,

and alternatively, that the Charterparty was frustrated.15

7. After being towed to open waters by tugs owned by the Respondent’s business Hestug, the

Vessel’s propeller shafts snapped.16 This was the result of tampering while at the Port of Hades.17

The tugs voluntarily rendered assistance, successfully saving the Vessel.18

8 Ibid.

9 Ibid pp 57, 62.

10 Ibid p 58.

11 Ibid p 70.

12 Ibid p 53

13 Ibid p 68.

14 Ibid pp 69-70.

15 Ibid p 73.

16 Ibid p 71.

17 Ibid.

18 Ibid.



3

8. The Claimant referred the dispute to arbitration on 16 November 2015.19 The Respondent:

a. denied that the Tribunal had jurisdiction to hear the dispute;

b. without prejudice to its primary position, denied all liability; and

c. claimed a salvage award.20

19

Ibid p 72. 20

Ibid p 73.



4

QUESTIONS PRESENTED

1. What is the governing law of the Arbitration Agreement?

2. Does the Tribunal have jurisdiction to hear the dispute over whether the Charterparty is

frustrated?

3. Did laytime end on 7 October 2014?

4. Did the events of 7 October 2014 constitute an interruption to laytime under the

Interruptions Clause?

5. Was the delay the Claimant’s fault?

6. Was the Charterparty frustrated on 7 October 2014?

7. Was the Charterparty frustrated at a later date?

8. Are Hestug and the Respondent the same legal entity?

9. If so, is the Respondent entitled to a salvage award?

10. If required at law, were the Respondent’s services voluntary?



5

SUBMISSIONS

I THE TRIBUNAL DOES NOT HAVE JURISDICTION TO HEAR THE

FRUSTRATION ISSUE

1. The Tribunal does not have jurisdiction to hear the dispute regarding the frustration of the

Charterparty because: (A) the Tribunal has the power to rule on its jurisdiction; (B) the proper

law of the Arbitration Agreement is Western Australian law; and (C) under Western Australian

principles of contractual interpretation, a dispute regarding frustration is not a ‘dispute arising

under’ the Charterparty.

A The Tribunal has the power to rule on its own jurisdiction

2. The seat of the arbitration is London and therefore Part 1 of the Act applies. Section 30 of the Act

states that ‘the arbitral tribunal may rule on its own substantive jurisdiction, that is, as to… what

matters have been submitted to arbitration in accordance with the arbitration agreement.’ Further,

under section 7 of the Act, the Arbitration Agreement is treated as separable from the

Charterparty and is not rendered ineffective in the event that the Charterparty is indeed frustrated.

It follows that the Respondent’s claim that the Charterparty is frustrated21 does not affect the

Tribunal’s competence to determine its own jurisdiction.

3. The Arbitration Agreement confers upon the Tribunal jurisdiction over ‘any dispute arising under

this contract’. The Tribunal must determine whether, on a true construction, the dispute about

whether the Charterparty is frustrated is a ‘dispute arising under this contract’. The construction

21

See Submission III.



6

of the Arbitration Agreement is governed by its proper law, which may differ from the proper law

of the Charterparty.22

B The Proper Law of the Arbitration Agreement is Western Australian Law

4. Pursuant to common law conflict of law rules,23 the proper law of the Arbitration Agreement is

the system of laws that the parties expressly or impliedly chose, or, if no such choice is

ascertainable, the system of laws with which it has the closest and most real connection.24

5. In the absence of an express choice, the parties impliedly chose Western Australian law to govern

the Arbitration Agreement. This is because they expressly chose that law for the Charterparty.

Where there is an express choice of law in the underlying contract yet no such express choice in

the agreement to arbitrate, ‘the natural inference is that … [the parties] intended the proper law

chosen to govern the substantive contract also to govern the agreement to arbitrate’.25 In the

absence of any indication to the contrary, the parties are taken to have intended that the whole of

their relationship be governed by the same system of law.26 Without anything more, the mere

choice of London as the seat of arbitration does not displace this presumption.27 It follows that

Western Australian contractual interpretation principles must be used in construing the

Arbitration Agreement.

22

Black-Clawson International Ltd v Papierwerke Waldoff-Aschaffenburg AG [1981] 2 Lloyd's Rep 446. See also

Arbitration Act 1996 (UK) s 7. 23

The Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law

applicable to contractual obligations [2008] OJ L 177/6 (‘Rome I Regulation’) does not apply to agreements to

arbitrate. See Contracts (Applicable Law) Act 1990 (UK) sch 1. 24

Amin Rasheed v Kuwait Insurance Corp [1984] AC 50; Sulamerica SA v Enesa Engelharia SA [2013] 1 WLR 102,

114 (Moore-Bick LJ, Hallett LJ and Lord Neuberger agreeing). 25

Sulamerica SA v Enesa Engelharia SA [2013] 1 WLR 102, 109 (Moore-Bick LJ, Hallett LJ and Lord Neuberger MR

agreeing); followed in Arsonovia Ltd and Ors v Cruz City 1 Mauritius Holdings [2013] 1 Lloyd’s Rep 235. 26

Sulamerica SA v Enesa Engelharia SA [2013] 1 WLR 102, 109 (Moore-Bick LJ, Hallett LJ and Lord Neuberger MR

agreeing). 27

Arsonovia Ltd v Cruz City 1 Mauritius Holdings [2013] 1 Lloyd’s Rep 235, 243 [19].



7

C Under Western Australian principles of contractual interpretation, a dispute

about frustration is not a ‘dispute arising under this contract’

6. The principles of contractual interpretation under Western Australian Law are well-settled.28

While pre-contractual negotiations are normally inadmissible,29 there is an exception where such

evidence, if it amounts to concurrence, is to be used to ‘negative an inference sought to be drawn

from surrounding circumstances’.30 As large business entities that agreed to refer disputes to

arbitration, it is presumed that they intended that the same tribunal would hear all of their

disputes.31

7. The exchange of letters between 14 and 21 July 2014 negates this presumption. The Draft

Arbitration Agreement referred to arbitration ‘any dispute arising out of or in connection with this

contract, including any question regarding its existence, validity, or termination’.32 At the request

of the Respondent, the Claimant amended the Draft Arbitration Agreement such that ‘any dispute

arising under this contract’ would be referred to arbitration, a phrase that is significantly

narrower.33 The Respondent’s request for such an amendment, and the Claimant’s accession to it,

demonstrates a mutual intention that some disputes would not be heard by the Tribunal.34

8. In light of this admissible extrinsic evidence ‘any dispute arising under this contract’ only refers

to disputes that concern the parties’ rights and liabilities under the Charterparty. The words

28

See, eg, Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; Mount Bruce Mining Pty

Ltd v Wright Prospecting Pty Ltd; Wright Prospecting Pty Ltd v Mount Bruce Mining Pty Ltd (2015) 89 ALJR 990,

1006 [108] (Kiefel and Keane JJ); Pacific Carriers v BNP Paribas (2004) 218 CLR 451, 461-2 [22]; The City of

Subiaco v Local Government Advisory Board [2011] WASC 322 (18 November 2011) [85]; Corporate Systems

Publishing Pty Ltd v Lingard (No 4) [2008] WASC 21 (27 February 2008) [257]. 29

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 352 (Mason J). 30

Ibid 353 (Mason J) citing Heimann v Commonwealth of Australia (1938) 38 SR (NSW) 691, 695; IBM Australia

Pty Ltd v State of Queensland [2015] QSC 342 (7 December 2015) [105]. 31

Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160, 165 (Gleeson CJ);

Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45, 87 [165] (Allsop J). 32

Bundle, p 20. 33

Overseas Union Insurance Ltd v AA Mutual International Insurance Co Ltd [1988] 2 Lloyd’s Rep 62, 67. 34

Lodge Partners Pty Ltd v Pegum [2009] FCA 519 (20 May 2009) [31]-[32].



8

‘arising under’ have been construed narrowly,35 and presuppose that a contract exists.36 The

parties’ dispute over whether the Charterparty is frustrated does not concern rights and liabilities.

Rather, it concerns whether the supervening event discharged the Charterparty.

9. Alternatively, if the parties’ pre-contractual negotiations are inadmissible, the present dispute is

nevertheless outside the scope of the Arbitration Agreement. Unlike the English approach, the

presumption cannot override the plain and ordinary meaning of the words.37 Due to the

limitations on the phrase ‘arising under this contract’ mentioned above, the words of the

Arbitration Agreement cannot be construed in accordance with the presumption.38

10. For the reasons above, the Tribunal does not have jurisdiction to determine whether the

Charterparty is frustrated.

II THE RESPONDENT IS NOT LIABLE TO PAY DEMURRAGE

11. The Respondent is not liable to pay demurrage to the Claimant because: (A) laytime ended when

the Vessel commenced sailing from the Port of Hades on 7 October 2014; (B) alternatively,

laytime ended when the Vessel crossed the limits of the Port of Hades on 7 October 2014; (C)

laytime was interrupted because the delay was due to a cause excepted under the Interruptions

Clause; (D) alternatively, the Claimant cannot claim demurrage because any delay was due to

fault of the Claimant.

35

See, eg, Codelfa v NSW Rail Authority (1982) 149 CLR 337, 366; Heyman v Darwins Ltd [1942] AC 356, 385

(Lord Wright), 399 (Lord Porter); Government of Gibraltar v Kenney [1956] 2 QB 410, 421; Chimimport v D’Alesio

[1994] 1 Lloyd’s Rep 366; cf Union of India v EB Aabay’s Rederi A/S (The “Evje”) [1975] AC 797, 814, 817. 36

Fillite (Runcorn) Ltd v Aqua-Lift (1981) 26 Con LR 66, 76-7 (Slade LJ), 79 (Nourse LJ). 37

Rinehart v Welker [2012] NSWCA 95 (20 April 2012) [120]-[122] (Bathurst CJ), [204] (McColl JA), [219] (Young

JA); cf Fiona Trust Holdings v Privalov [2007] Bus LR 1719, 1725 [13] (Lord Hoffmann). 38

Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45, 87 [165] (Allsop J); Paper Products

Pty Ltd v Tomlinsons (Rochdale) Ltd (1993) 43 FCR 439, 448 (French J).



9

A Laytime ended when the Vessel commenced sailing

12. Pursuant to clause 9(c)(i), laytime ends when ‘the vessel leaves the Loading Place.’ The Loading

Place is defined in box 5 as ‘1 safe port, Hades’, which is understood to mean the Port of Hades.

Laytime ended on 7 October 2014 when the Vessel commenced sailing from the Port of Hades,

six days before it would have otherwise expired (10 WWD SHINC starting on 3 October 2014).

13. The word ‘leaves’ should be construed such that laytime ended once the Vessel commenced

sailing from the Port of Hades. Terms of commercial contracts are to be given a businesslike

interpretation in accordance with the assumption that the parties intended to produce a

commercial result.39 It makes commercial sense for the Respondent’s assumption of risk to be

limited to the extent of its obligation to load. Giving clause 9(c)(i) the alternative construction

that laytime ended once the Vessel crossed the port limits would produce an uncommercial result.

The Respondent would assume all risk during the time it took for the Vessel to reach the port

limits, during which the Vessel would be under the control of the Claimant.

14. As outlined in the Claimant’s Statement of Facts,40 loading was completed on 6 October 2014 and

the voyage commenced on 7 October 2014. The Statement of Facts, issued as part of maritime

custom, holds a strong evidential value of its contents even in the absence of mutuality or

signature.41 The Tribunal should ‘lean towards seeing finality’ in the Statement of Facts and

require ‘convincing live evidence’ to dispute its accuracy.42

39

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, 656 [35] (French CJ, Hayne,

Crennan and Kiefel JJ). 40

Bundle, p 54. 41

High Seas Venture Ltd Partnership v Sinom (Hong Kong) Ltd (The New Forest) [2008] 1 Lloyd’s Rep 504, 507

[13]. 42

Ibid.



10

B Alternatively, laytime ended when the Vessel crossed the port limits

15. If clause 9(c)(i) is given the alternative interpretation, laytime nevertheless ended on 7 October

2014 when the Vessel crossed the commercial limits of the Port of Hades before being

intercepted by the Coast Guard.

16. The majority of the evidence before the Tribunal demonstrates that the Vessel, at the time of

interception, was outside of the territorial limits of Hades. At the point of interception, the Master

was of this opinion,43 and he was in the best position to most accurately determine the location of

the Vessel. The email from the Claimant to the Master dismissing him also notes that the Vessel

was ‘outside of Hades territorial limits.’44 The Coast Guard did not have access to navigational

equipment,45 and the letter from the Claimant to the Respondent of 15 October 2014 which

maintained that ‘the vessel had not left the Port of Hades’46 is liable to be inherently self-

interested.

17. The port is to be defined by its commercial limits, rather than its legal, fiscal or administrative

limits.47 As it was outside the territorial limits of Hades, the Vessel was at least 12 nautical miles

from Hades.48 The natural inference to be drawn is that the Vessel was therefore also past the

commercial limits of the Port of Hades.

43

Bundle, pp 57, 62. 44

Ibid p 58. 45

Ibid p 62. 46

Ibid p 60. 47

Price v Livingstone (1882) 9 QBD 679, 681 (Sir George Jessel MR). 48

United Nations Convention on the Law of the Sea, opened for signature 10 December 1982, 1833 UNTS 3 (entered

into force 16 November 1994) art 3.



11

C Alternatively, laytime was interrupted

18. If the Vessel never left the Port of Hades and laytime continued to run, the detention at the hands

of the Coast Guard constituted an ‘arrest’ under the Interruptions Clause and was therefore an

interruption to laytime.

19. By construing the Charterparty as a whole, it is reasonable to infer that the parties intended for the

word ‘arrests’ to have a broad meaning. The Force Majeure Clause provides for ‘force majeure

events’, and specifically refers to ‘Court issued arrest proceedings.’ Without express language to

the contrary, force majeure clauses do not apply to events giving rise to delays during the loading

stage as there is a specific clause dealing with interruptions to laytime.49 In this context, had the

parties intended that ‘arrests’ in the Interruptions Clause bear the same narrow meaning as it does

in the Force Majeure Clause, they could have used similar qualifying words.

20. The word ‘arrests’ in the Interruptions Clause was intended to be broader in meaning. That is, it is

not restricted to arrests that are a provisional remedy to secure a maritime claim. Further, the

Force Majeure Clause only applies to events outside the control of the parties to the Charterparty.

The Interruptions Clause is wider, as it covers events which are within the fault of the shipowner.

Accordingly, the word ‘arrests’ in the Interruptions Clause should be interpreted more broadly.

21. In the maritime industry it is common practice to include exceptions for arrest, detention and

restraint of princes. In the absence of specific exceptions for restraint of princes and detention, a

commercial and business-like interpretation of ‘arrests’ would extend to that category of events.

The Interruptions Clause can therefore include situations of restraint of princes.

49

Transworld Oil Ltd v North Bay Shipping Corporation (The Rio Claro) [1987] 2 Lloyd’s Rep 173; Sametiet M/T

Johs Stove v Istanbul Petrol Rafinerisi A/S (The Johs Stove) [1984] 1 Lloyd’s Rep 38, 41. See also Freedom Maritime

Corporation v International Bulk Carriers SA and another (The Khian Captain) [1985] 2 Lloyd’s Rep 212.



12

22. The Coast Guard’s direction in accordance with President Simmons’ orders, and subsequent

detention of the Vessel constitutes an arrest under the Interruptions Clause even in the absence of

physical restraint. An arrest by a government is ordinarily a restraint of princes. It is ‘not

necessary that force should be employed, or even that force should be immediately available for

employment’.50 This enlivens an interruption to laytime under the Interruptions Clause meaning

that ‘laytime [is] not to count during the period of such delay or hindrance and demurrage not to

accrue.’

D Alternatively, any delay was caused by fault of the Claimant

23. It is well established that laytime or time on demurrage thereafter will not run whilst there is

delay caused by the fault of the shipowner or those for whom he is responsible.51 The Claimant

cannot benefit from their own fault via a claim for demurrage. The Master’s immediate

compliance with the Coast Guard’s orders was the cause of the interception and detention of the

Vessel from 7 October 2014. It is trite law that the shipowner is responsible for the actions of the

Master of the Vessel.

24. The delay must be caused by an act of the shipowners which amounts to a breach of obligation on

their part.52 That is, the shipowner ‘has not done his part in regard to something which it was

within his power to do.’53 There will be no fault where there has been no such breach of

50

British Foreign Marine Insurance Company v Samuel Sanday & Co [1916] 1 AC 650, 672 (Lord Wrenbury); see

also 669-70 (Lord Parmoor), 665 (Lord Atkinson), 659 (Earl Loreburn); Rodoconachi v Elliot (1874) LR 9 CP 518;

Miller v Law Accident Insurance Company [1903] 1 KB 712; The Bamburi [1982] 1 Lloyd’s Rep 312. 51

Budgett v Binnington [1891] 1 QB 35. In Blue Anchor Line v Alfred C Toepfer (The Union Amsterdam) [1982] 2

Lloyd’s Rep 432 the Queen’s Bench held that a person is not entitled to take advantage of their own wrong. 52

Houlder v Weir (1905) 10 CC 228, 236 (Channell J); Gem Shipping Co of Monrovia v Babanaft (Lebanon) SARL

(The Fontevivo) [1975] 1 Lloyd’s Rep 339, 342 (Donaldson J). 53

Leeds Shipping Co Ltd v Duncan Fox & Co Ltd (1932) 37 CC 213, 217 (Mackinnon J).



13

obligation, but merely the performance of a necessary operation.54 The Master was in breach of

obligation by failing to act reasonably upon receipt of the direction of the Coast Guard.

25. In the context of ‘agency and employment’ clauses, the Master is obliged to follow the orders of

the charterers. However, he is not always obliged to obey the orders immediately. The Master is

under a duty to act reasonably, and the circumstances in which an order is received, or the nature

of it, may make it unreasonable for the Master to comply without further consideration or

enquiry.55

26. It has been said that ‘[s]ome orders are of their nature such that they would, if the master were to

act reasonably, require immediate compliance. Others would require a great deal of thought and

consideration before a reasonable master would comply with them’.56

27. The Master was under an analogous duty to act reasonably when issued with the direction to

return to berth from the Coast Guard. The following circumstances of which the Master was

aware made it unreasonable for him to immediately follow the direction without first seeking

instructions from the Claimant:

a. the unrest at the Port of Hades;57

b. the recent presidential coup;58

c. the fact that the Coast Guard amounted to ‘two men with a rubber dinghy’59 and a

work experience student;60

54

Houlder v Weir (1905) 10 CC 228, 236 (Channell J). 55

Midwest Shipping v Henry [1971] 1 Lloyd’s Rep 375, 379 (Donaldson J); followed in Kuwait Petroleum

Corporation v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541. 56

Midwest Shipping v Henry [1971] 1 Lloyd’s Rep 375, 379 (Donaldson J). 57

Bundle, pp 52, 53. 58

Ibid p 55. 59

Ibid.



14

d. the uncertainty as to the location of the Vessel and whether the Master was legally

required to comply; and

e. the absence of any circumstances which might suggest that the Vessel would

lawfully have to return to the Port of Hades.

28. If the Master had contacted the Claimant, he would have been advised to continue sailing, being

under no obligation to follow the direction of the Hades Coast Guard.61 The regular email contact

between the Master and the Claimant suggests that such correspondence would not have taken an

unreasonable amount of time. In the premises, the Master’s negligence caused the detention of the

Vessel, and thereby constitutes fault which precludes the Claimant from claiming demurrage.

III ALTERNATIVELY, THE RESPONDENT IS NOT LIABLE TO PAY

DEMURRAGE BECAUSE THE CHARTERPARTY WAS FRUSTRATED

29. The Charterparty was frustrated by the interception, return and detention of the Vessel because:

(A) as at 7 October 2014, the probable delay to the Vessel was so inordinate as to frustrate the

commercial purpose of the Charterparty; (B) alternatively, the Charterparty was frustrated by

delay on a later date; (C) alternatively, the interception, return and detention of the Vessel gave

rise to supervening impossibility of performance; (D) the supervening event was not provided for

by the parties; and (E) frustration was not self-induced.

30. When frustrated, a contract is automatically, and without election of either party, brought to an

end.62 Future obligations and rights of each party not already accrued are discharged.63 If the

Charterparty was frustrated on 7 October 2014, time on demurrage was yet to accrue, and the

60

Ibid p 62. 61

Ibid p 58. 62

Scanlan’s New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169, 203 (McTiernan J); J Lauritzen AS v Wijsmuller BV

(The “Super Servant Two”) [1990] Lloyd’s Rep 1, 8 (Bingham LJ). 63

Hirsch v The Zinc Corp Ltd (1917) 24 CLR 34, 64; Fibrosa v Fairbairn [1943] AC 32.



15

Respondent is not liable to pay any sum by way of demurrage. Alternatively, if the Charterparty

was frustrated on 15 October 2014 or 22 October 2014, only two days’ demurrage or nine days’

demurrage respectively are payable.

A As at 7 October 2014 the probable delay to the Vessel was so inordinate as to

frustrate the commercial purpose of the Charterparty

31. Delay will frustrate a contract when it becomes clear to an informed observer that it will be of

such a length as to defeat the common object underlying the contract.64 The common object of the

Charterparty was to transport the Cargo from Hades to Poseidon within a reasonable time,

gleaned from the genesis of the transaction, the context and the market in which the parties were

operating.65

32. An estimate of one month was given for the voyage,66 which supports the common object of

dispatching the Cargo promptly. This is so the Respondent could improve its standing on the

stock exchange67 and the Claimant could have use of its Vessel for subsequent voyages.

Furthermore, the Respondent’s object was within the contemplation of both parties, as the

Respondent informed the Claimant the Vessel was required to facilitate commissioning of the

LNG plant commencing on 15 September 2014.68

33. Considering this common object, an informed observer on 7 October 2014 would have concluded

that the likely delay would be of a frustrating character. The probable length of the delay

64

Scanlan’s New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169, 223 (Williams J) citing Hirji Mulji v Cheong Yue

Steamship Co Ltd [1926] AC 497, 507 (Lord Sumner). 65

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, 657 [35] (French CJ, Hayne,

Crennan, Kiefel JJ) citing Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR

337, 350 (Mason J). 66

Bundle, p 2. 67

Ibid p 26. 68

Ibid p 2. See Admiral Shipping Co v Weidner Hopkins & Co [1916] 1 KB 429, 437.



16

compared to the anticipated period of the Charterparty was inordinate as at that date.69 Unlike

delays caused by strikes which are inherently speculative,70 this delay was caused by a

government. This raises a general presumption it was likely to continue for a significant period.71

This is strengthened by the facts that the government’s primary agenda was to stop the export of

the Respondent’s product72 and that the subsequent detention continued until 5 October 2015.73

34. In any event, anticipated length is not the sole focus of the assessment. It is significant that the

delay was ‘wholly indefinite and probably long’74 and completely dependent on the actions of

third parties. This was the case in Bank Line Ltd v Arthur Capel & Co,75 where the delay was

only four months in duration.76

35. Accordingly, an informed observer would not need to ‘wait and see’ before assessing whether the

delay was of a frustrating character.77 There was no indication at 7 October 2014 that the Vessel

would be able to leave the Port of Hades in the immediate future. Given the political hostility

toward the Cargo and the illegitimacy of the government, it would have appeared unlikely that the

detention could be resolved through formal negotiations or official channels.78 In these

circumstances, it would be uncommercial for the fate of the parties’ rights and liabilities to hang

in suspense.79

69

Countess of Warwick Steamship Company v Le Nickel Societe Anonyme; Anglo-Northern Trading Co Ltd v Emlyn

Jones & Williams [1917] 2 KB 372, 378 affirming Tamplin Steamship Co v Anglo-Mexican Petroleum Products Co

[1916] 2 AC 397. 70

See, eg, Pioneer Shipping v BTP Tioxide (The Nema) [1982] AC 724. 71

Julian Cooke et al., Voyage Charters (Informa, 4th ed, 2014), 701-2 [22.13]. 72

Bundle, pp 52, 55. 73

Which assists in showing that the probability of prolonged detention was reasonably forecasted: Bank Line Ltd v

Arthur Capel & Co [1918] AC 435, 454, 460 (Lord Sumner). 74

Bank Line Ltd v Arthur Capel & Co [1918] AC 435, 460 (Lord Sumner). 75

[1918] AC 435. 76

Ibid. 77

Pioneer Shipping v BTP Tioxide (The Nema) [1982] AC 724, 752 (Lord Roskill). 78

Cf Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The Sea Angel) [2007] 2

Lloyd’s Rep 510, 538 [117] (Rix LJ). 79

Embiricos v Sydney Reid & Co [1914] 3 KB 45, 59 (Scrutton J).



17

B Alternatively, the Charterparty was frustrated on a later date

36. Subsequent evidence which came to light strengthened the presumption that the delay was

frustrating in nature. On 15 October 2014, correspondence indicates that the Claimant anticipated

‘a long delay’ and was concerned that the Cargo would be drawn upon over time to be used in

emerging Hades energy sectors.80 On 22 October 2014, the Respondent made the Claimant aware

it would suffer ‘significant losses’ if the Cargo were not delivered on time.81

37. Within this time, the Vessel continued to remain within the control of the Hades Government

with no prospects of imminent release. The parties’ changed expectations and probable forecasts

heightened the probability of inordinate delay, and an informed observer would consider it to be

of a frustrating character. In this event, a negligible sum in demurrage would be payable to the

Claimant.

C The interception, return and detention of the Vessel gave rise to supervening

impossibility of performance

38. An agreement is frustrated where the parties enter into it on a common assumption about a future

fact that proves to be mistaken.82 The parties entered into the Charterparty on the common

assumption that the Vessel would not be subject to interception at the Port of Hades. This

assumption was central to performance83 of the Charterparty, as the agreement was to transport

Cargo from Hades to Poseidon rendering it necessary to be able to leave Hades with the Cargo.

80

Bundle, p 60. 81

Ibid p 61. 82

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 358 (Mason J); Tamplin

Steamship Co v Anglo-Mexican Petroleum Products Co [1916] 2 AC 397, 406; oOH! Media Roadside Pty Ltd

(formerly Power Panels Pty Ltd) v Diamond Wheels Pty Ltd (2011) 32 VR 255, 272 [68] (Nettle JA); Hillcrown Pty

Ltd v O’Brien [2011] QCA 129 (19 April 2011) [27] (Chesterman JA). 83

The common assumption must be about a future fact which is essential to performance: Codelfa Construction Pty

Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 357 (Mason J) citing with approval Davis Contractors Ltd v

Fareham UDC [1956] AC 696 (Lords Reid and Radcliffe).



18

39. This assumption is found in the terms of the Charterparty and by recourse to surrounding

circumstances,84 such as correspondence between the parties.85 Mutually known facts86

demonstrate there was no indication the Vessel would be able to leave Hades,87 and the parties

also contemplated significant delay was likely.88 The common assumption as to the Vessel’s

ability to leave Hades was a mistake as to a future fact, and therefore performance is rendered

‘radically different from that which was undertaken by the contract’.89

D The supervening event was not provided for by the parties

40. A contract will not be frustrated where the parties have expressly provided in their contract for

the consequences of the particular event that has occurred.90 Nevertheless, frustration may still

occur where the provisions of the contract do not in terms apply to the situation which has arisen,

or the degree or disruption which has occurred is greater than that which the clause

contemplates.91

41. The Demurrage Clause, Interruptions Clause or Force Majeure Clause do not provide for the

delay resulting from the interception, return and detention of the Vessel.

84

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 358 (Mason J); Mount Bruce

Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 89 ALJR 990, 998 [49]-[50] (French CJ, Nettle and Gordon JJ). 85

Bundle, p 2. 86

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 351-352 (Mason J); Mount Bruce

Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 89 ALJR 990, 1006 [108] (Kiefel and Keane JJ). 87

Bundle, p 52. The President’s reported intentions were of permanently stopping the export of HLNG from Hades. 88

Ibid p 60. Forecasted expectations are relevant for the Tribunal’s assessment as to whether frustration occurred:

Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The Sea Angel) [2007] 2 Lloyd’s

Rep 517, 536-7 [111] (Rix LJ). 89

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 357 (Mason J). 90

Joseph Constantine Steamship Line Ltd v Imperial Smelting Corp Ltd [1942] AC 154, 163. 91

Bank Line Ltd v Arthur Capel & Co [1918] AC 435; Fibrosa v Fairbairn [1943] AC 32, 40 (Viscount Simon); The

Penelope [1928] P 180; Anglo Northern Trading v Emlyn Jones & Williams [1918] 1 KB 372; Tatem v Gamboa

[1939] 1 KB 132.



19

a. The existence of the Demurrage Clause does not preclude the Charterparty being

frustrated due to delay resulting from a supervening event during the loading

stage.92

b. In Submission II, the Respondent states that the relevant events on 7 October 2014

fell within the Interruptions Clause and thus afforded an exception to laytime. If that

submission is not accepted, the presence of the Interruptions Clause cannot be relied

upon to suggest that the Charterparty provides for the supervening event.

c. The Force Majeure Clause does not provide for the supervening event because it

lacks the necessary specificity and precision to apply to delays during the loading

stage.93

E Frustration was not self-induced

42. The frustrating event must arise without blame or fault by the party seeking to rely on the contract

being frustrated.94 The Respondent was not at ‘fault’ in providing cargo under the Charterparty

which was the subject of political upheaval as well as the motivating reason behind President

Simmons’ order to the Coast Guard to detain the vessel. Provided that the carriage of its cargo

does not violate a ‘municipal law’, a charterer is not under a duty to warn a shipowner that their

cargo is liable to cause delay.95

92

Adelfamar S.A. v Silos Mangimi Martini SPA, (The Adelfa) [1988] 2 Lloyd’s Rep 466, 471. 93

Ellis Shipping Corporation v Voest Alpine Intertrading (The Lefthero) [1992] 2 Lloyd’s Rep 109, 112 (Lloyd LJ);

Transworld Oil Ltd v North Bay Shipping Corporation (The Rio Claro) [1987] 2 Lloyd’s Rep 173; Sametiet M/T Johs

Stove v Istanbul Petrol Rafinerisi A/S (The Johs Stove) [1984] 1 Lloyd’s Rep 38, 41. 94

Bank Line Ltd v Arthur Capel & Co [1918] AC 435, 452; Paal Wilson and Co A/S v Partenreederei Hannah

Blumenthal (The Hannah Blumenthal) [1983] 1 AC 854, 909; J Lauritzen AS v Wijsmuller BV (The “Super Servant

Two”) [1990] 1 Lloyd’s Rep 1, 8 (Bingham LJ). 95

Bunge SA v ADM Do Brasil LTDA [2009] 2 Lloyd’s Rep 175, 187 [36].



20

43. There is no evidence to suggest that it was unlawful to transport HLNG. Even if it is assumed that

President Simmons’ order to the Coast Guard to return the Vessel to berth was lawful,96 the order

did not directly prohibit the carriage of HLNG. In any event, the Claimant knew that the Cargo

was politically dangerous.97 The Vessel was specifically designed to transport HLNG.98 The

Claimant assumed any risk relating to the Cargo.

IV THE RESPONDENT IS ENTITLED TO A SALVAGE REWARD

44. The Respondent is entitled to a salvage reward because: (A) the Respondent and Hestug are the

same legal entity; (B) the Vessel was salvable property in danger at sea; (C) the Respondent’s

services were successful in rescuing the Vessel; (D) the Respondent’s services exceeded due

performance of the contract; and (E) the Respondent is nonetheless a volunteer under the general

law of salvage.

45. The Respondent towed the Claimant’s Vessel to safety when its propeller shafts broke, ‘likely

saving many millions of dollars’ worth of cargo and vessel’.99 Under the Salvage Convention,100

an award is contingent on the following criteria:101

a. the salvor undertakes ‘any act or activity... to assist a vessel or any other property in

danger in navigable waters or in any other waters whatsoever’;

b. the services render a ‘useful result’; and

96

Bundle, p 74. 97

Ibid p 20. 98

Ibid p 3. 99

Ibid pp 71, 73. 100

The International Convention on Salvage 1989, opened for signature 28 April 1989, 1953 UNTS 165 (entered into

force 14 July 1996) (‘Salvage Convention’). It applies whenever proceedings are brought in England: Merchant

Shipping Act 1995 (UK) s 224. 101

Respectively, Salvage Convention arts 1(a), 12(1) and 17.



21

c. the services rendered ‘exceed what can be reasonably considered as due

performance of a contract entered into before the danger arose.’

A The Respondent and Hestug are the same legal entity

46. Hestug is a business of the Respondent rather than its subsidiary. The Respondent’s letter of 23

November 2015 informed the Claimant that its own tugs undertook the salvage efforts102 and this

is confirmed in the Respondent’s counterclaim.103 The Hades Advocate also stated that the

Respondent has traditionally ‘been in the business of port management and tug services at

Hades’.104

47. From this evidence, it is reasonable to infer that the Respondent owns the tugs, and it operates a

towing business under the name ‘Hestug’.

B The Vessel was salvable property in danger at sea

48. A ship falls under the Salvage Convention’s definition of ‘property’.105 Further, the Vessel was in

danger at the time of being salved due to its propeller shafts snapping. The Vessel was unable to

continue her voyage and was unable to effectively address any emergencies that may have

arisen.106

102

Bundle, p 73. 103

Ibid pp 76-7. 104

Ibid p 26. 105

Salvage Convention art 1(c). 106

Andreas Sobonis v The National Defender, National Transport Corporation [1970] 1 Lloyd’s Rep 40.



22

C The Respondent’s services were successful in rescuing the Vessel

49. The Respondent’s tugs rendered assistance to the Vessel, ‘likely saving many millions of dollars’

worth of cargo and vessel’.107 The Respondent’s salvage operation therefore had a ‘useful

result.’108

D The Respondent’s services exceeded due performance of the contract

50. The Respondent’s services exceeded due performance under both the Charterparty and the

towage contract. According to article 17 of the Salvage Convention, a person is a ‘salvor’ if ‘the

services they have rendered exceed what can be reasonably considered as due performance of a

contract entered into before the danger arose.’ Article 17 is the only restriction109 on who is

entitled to an award for salvage and takes precedence110 over any pre-existing case law to the

contrary.

51. The Respondent’s towage contract concluded upon the towline being released. Given that the

towage contract was discharged by performance, the subsequent assistance provided by the

Respondent’s tugs necessarily exceeded due performance of that contract. Further, when the

propeller shafts broke, the Vessel had just embarked on its voyage stage, when nothing was

required of the Respondent under the Charterparty.

107

Ibid pp 71, 73. 108

Salvage Convention art 12(1). 109

Martin Davies, ‘What happened to the Salvage Convention 1989?’ (2008) 39(4) Journal of Maritime Law &

Commerce 463, 486; Nicholas Gaskell, ‘The 1989 Salvage Convention and the Lloyd’s Open Form (LOF) Salvage

Agreement 1990’ (1991) 16 Tulane Maritime Law Journal 1, 25. 110

Specifically where there is a conflict: Transnet v The MV Cleopatra Dream (The Cleopatra Dream) [2011]

ZASCA 12 (11 March 2011) [25].



23

E The Respondent is nonetheless a volunteer under the general law of salvage

52. Even if article 17 is not exhaustive, and there is a further requirement that the services are

‘voluntary’, the Respondent is nevertheless entitled to an award. In The Sava Star111 it was held

that a cargo-owner is entitled to a salvage award in respect of meritorious services rendered to a

ship carrying its cargo provided that the services go beyond what was ordinarily expected.

53. Justice Clarke gave the example of a cargo-owner providing a tug as something that was

extraordinary in nature.112 His Honour went on to state that:

cargo owners may now be able to render valuable salvage services in circumstances. For example, a large oil

company might own tugs or tankers. I can see no reason why salvage services rendered by such tugs or

tankers should not attract a salvage award from the owner of the salved ship.113

54. The Respondent’s services fall squarely within the category of salvors able to claim payment

under the common law. Conversely, if the Respondents had merely provided information about

the characteristics of the Cargo, this would not entitle the Respondent to claim salvage.114

Moreover, unlike passengers,115 cargo owners are not ‘bound up in the maritime adventure’.116

The Respondent’s tugs were a safe distance away, with no contractual duty to render assistance to

the Vessel.

111

[1995] 2 Lloyd’s Rep 134, 143. 112

Ibid. 113

Ibid, 144. 114

Ibid, 143. 115

The Vrede (1861) Lush 322, 324-5. 116

The Sava Star [1995] 2 Lloyd’s Rep 134, 141.



24

55. Finally, the principle of encouraging salvage operations which underscores the Salvage

Convention117 and the common law supports an award in these circumstances. The purpose of

salvage awards is to encourage the voluntary rescuing of maritime property.118

117

See, eg, the preamble to the Salvage Convention: ‘CONVINCED of the need to ensure that adequate incentives are

available to persons who undertake salvage operations in respect of vessels and other property in danger’. 118

The Queen Elizabeth (1949) 82 Lloyd’s Law Rep 803.



25

PRAYER FOR RELIEF

For the reasons submitted above, the Respondent respectfully requests the Tribunal to:

1. DECLARE that the Tribunal has no jurisdiction to determine whether the Charterparty is

frustrated (and also the dispute over whether demurrage is owing);

Further,

2. DECLARE that:

a. the Respondent is not liable to pay demurrage to the Claimant; or

b. the Charterparty is frustrated; and

Further,

3. DECLARE that the Respondent is entitled to a salvage reward, the value of which is to be

assessed at a later date.