MEMORANDUM FOR THE RESPONDENT - Murdoch … · MEMORANDUM FOR THE RESPONDENT ... (Hugo), The law of demurrage, 3rd ed., ... Dampskibsselskabet Norden A/S v Gladstone Civil Pty Ltd,

17TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2016

MEMORANDUM FOR THE RESPONDENT

In the Matter of arbitration under the MLAA Rules

TEAM 25 – CENTRE DROIT MARITIME ET DES TRANSPORTS (FRANCE)

Camille AUBERT Natalia GAUCHER Benoit GUILLOU

Rosaline JACQUET Fanny LECADRE

Evangeline MARCHAIS


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ON BEHALF OF

HESTIA INDUSTRIES

The Respondent

AGAINST

ZEUS SHIPPING AND TRADING COMPANY

The Claimant


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TABLE OF CONTENTS

TABLEOFCONTENTS.....................................................................................................................3

TABLEOFABBREVIATIONS..........................................................................................................4INDEXOFAUTHORITIES................................................................................................................5I. BOOKSREFERREDTO.......................................................................................................................5II. CASESREFERREDTO.......................................................................................................................6III. LEGISLATIONSANDRULESREFERREDTO.............................................................................7

STATEMENTOFFACTS...................................................................................................................8

MERITS.............................................................................................................................................11I. THETRIBUNALHASNOJURISDICTIONTOHEARTHECLAIM...........................................11A. TheArbitrationClauseandLawofArbitration...............................................................................111. TheArbitrationClause............................................................................................................................................112. TheLawofArbitration............................................................................................................................................11

B. ThisTribunalhasnojurisdictiontohearthecase.........................................................................121. TheArbitrationagreementisnotvalid............................................................................................................122. TheRespondentdeniesthescopeoftheArbitrationClause..................................................................133. Conclusion:thearbitrationclausehasnoeffect..........................................................................................14

II. PERFORMANCEOFTHECONTRACT.........................................................................................14A. NodemurrageisduebytheRespondentundertheContract..................................................141. Thelaytimewasnotexceeded.............................................................................................................................142. TheVesselhadleftthePortofLoading............................................................................................................163. Alternatively,thelaytimehadbeeninterrupted..........................................................................................164. Conclusion.....................................................................................................................................................................17

B. TheClaimantisliabletotheRespondent..........................................................................................171. Introduction.................................................................................................................................................................172. TheClaimantliabilityundertheContract.......................................................................................................18a. UnjustifiedlackofnoticebytheClaimant.................................................................................................19b. TheClaimant’snegligence................................................................................................................................20c. FailureoftheobligationoftransportbytheClaimant.........................................................................20

3. TheClaimantextra-contractualliability..........................................................................................................21a. TheMastercommittedafault.........................................................................................................................21b. ThevicariousliabilityoftheClaimant........................................................................................................22

III. alternatively,Therespondentisdischargedbyforcemajeure....................................23A. ForceMajeure................................................................................................................................................23B. AwrongfularrestoftheshipasForceMajeureevent.................................................................241. AVesselmaybearrestedonlybyalegitimateGovernment...................................................................242. TheinterceptionoftheVesselwasillegal.......................................................................................................25

C. Conclusion.......................................................................................................................................................26IV. ALTERNATIVELY,THERESPONDENTISDISCHARGEDBYFRUSTRATION.................27A. Theconditionsofapplicationofthefrustrationdoctrine..........................................................27B. TheFrustrationoftheContractdischargestheRespondentofitscontractualobligations................................................................................................................................................................28

V. RESPONDENT’SCOUNTERCLAIM:SALVAGEREWARDS.....................................................28A. THENECESSARYAPPLICATIONOFTHE1989SALVAGECONVENTION............................29B. THEASSISTANCEOFTHEVESSELISASALVAGEOPERATION..............................................291. ThequalificationoftheoperationaccordingtotheSalvageConvention1989..............................292. Theportassistancetowingcontractwasfulfilled.......................................................................................293. TheRespondentisentitledtosalvagerewards............................................................................................304. Alternatively,theoperationmustbeconsideredasanexceptionaltowing....................................30


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REQUESTFORRELIEF..................................................................................................................31

TABLE OF ABBREVIATIONS

COGSA Carriage of Goods by Sea Act, 1991 (Australia)

ETA Estimated Time of Arrival

ETD Estimated Time od Departure

HLNG Hades Liquefied Natural Gas

LNG Liquefied Natural Gas

MLAA Maritime Law Association of Australia & New Zealand Arbitration Rules, 2007

NOR Notice Of Readiness

WWD SHINC Weather Working Days, Sundays and Holidays Included


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INDEX OF AUTHORITIES

I. BOOKS REFERRED TO

AMBROSE (Clare) – MAXWELL (Karen) – PARRY (Angharad), London Maritime Arbitration,

3rd ed., London, Informa, 2009, XLIX-611 p.

BONASSIES (Pierre) – SCAPEL (Christian), Droit maritime, 2nd ed, Paris, LGDJ-Lextenso,

2010, X-946 p.

CHITTY (Joseph) – BALE (H. G.), Chitty on Contracts, 28th ed., 2 vol., London, Sweet &

Maxwell, 1999, CCCXXVI-1659 p.

GADBIN-GEORGE (Géraldine) et al., Glossaire de droit anglais, méthode, traduction et

approche comparative, 2014, Paris, Dalloz, XVI-455 p.

MCKENDRICK (Ewan), Contract Law, 8th ed., London, Palgrave-Basingstoke, 2009, XL-

278 p.

SCHOFIELD (John), Laytime and demurrage, 3rd ed., London – New York, LLP (Lloyd’s

Shipping law Library), 1996, XXXIII-414 p.

TIBERG (Hugo), The law of demurrage, 3rd ed., London, Stevens & Sons Ltd, 1979, XI-652 p.

TETLEY (William), Marine Cargo Claims, 3rd ed., London, Blais, 1988. CXL-1305 p. Laytime Definitions for Charter Parties, BIMCO.


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II. CASES REFERRED TO

C.

Christopher Brown Ltd. V. Genossenschaft Oesterreichischer Waldbesitzer

Holzwirtschaftsbetriebe Registrierte GmbH [1954] 1 QB 8.

D.

Dampskibsselskabet Norden A/S v Gladstone Civil Pty Ltd, Federal Court of Australia,

[2012] FCA 696.

H.

Horne Coupar v. Velletta & Company, Supreme Court of British Columbia, 21 April 2010,

[2010] BCSC 483.

L.

London Arbitration 4/92, LMLN 349, 20 March 1993.

T.

Tamplin SS Co Ltd v Anglo-Mexican Petroleum Products Co Ltd [1916] 2 AC 397.

W.

Walton Harvey Ltd v Walker & Homfrays Ltd [1931] 1 Ch 274 (CA)


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III. LEGISLATIONS AND RULES REFERRED TO

International Conventions International Convention on Salvage, London, 28 April 1989.

International Convention on the High Seas, Geneva, 29 April 1958.

International Convention on the Law of the Sea, Montego Bay, 10

December 1982.

Hague-Visby Rules (The Hague Rules as Amended by the Brussels

Protocol 1968).

Australia Carriage of Goods by Sea Act, 1991.

Maritime Law Association of Australia & New Zealand Arbitration

Rules, 2007.

Western Australia Port Authorities Act, 1999.

United Kingdom Arbitration Act, 1996.

BIMCO Special Circular No. 8 of 10 September 2013: Laytime Definitions for

Charter Parties.


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STATEMENT OF FACTS

1. On Tuesday, 1st July 2014, HESTIA INDUSTRIES (hereafter “the Respondent”), a producer

of Liquefied Natural Gas (LNG) based in Hades, required the ship-owner ZEUS SHIPPING

AND TRADING COMPANY (hereafter “the Claimant”) to submit the terms of a Voyage

Charter Party to hire a Vessel suitable for the transport of 260,000 m3 of LNG produced from

Hades Shale Gas (hereafter HLNG) from Hades to Poseidon with an approximate loading

date set for Wednesday 1st October 2014 and approximate discharge date on Thursday 30th

October 2014.

2. On Monday 14th July, the Claimant informed the Respondent of its recent purchase of the MV

Athena, a vessel suitable for the proposed transport and informed the Respondent that the

Vessel had been flagged with the Hades flag. The Claimant submitted a Charter Party for the

proposed voyage to the Respondent.

3. By way of an email dated Wednesday 16th July 2014, the Respondent accepted the main

commercial terms proposed by the Claimant in the Charter Party. The Respondent merely

requested that the ARBITRATION clause (clause 30) be amended to exclude disputes, “that

relate to but do not arise out the terms of the charterparty”, from the scope of arbitration.

4. On Tuesday 22nd July 2014, the Respondent addressed an executed version of the proposed

Voyage Charter Party to the Captain of the MV Athena.

5. On Saturday 20th September 2014, the Claimant informed the respondent that the MV

Athena’s excepted time of arrival (ETA) in Hades was set for 9:00 on Friday 3rd October

2014.


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6. On Friday 3rd October 2014, a notice of readiness (NOR) was tendered at 09:15.

7. The loading operations of HLNG commenced on Friday 3rd October at 14:30 and were

completed on Monday 6th October at 23:50. It is necessary to mention that the Port of Hades

was closed during two hours as a result of significant protests against HLNG export from

Hades. In spite of these important protests, the Claimant ordered the MV Athena’s Master to

proceed with loading the cargo.

8. During the night of 6/7th October 2014, against all expectations, the leader of the Opposition

Party in Hades took control of the Parliament.

9. On 7th October 2014, the new President publically affirmed her intention to instruct the Hades

Coast Guard to intercept the MV Athena and to have it return to port.

10. On Tuesday 7th October 2014, The MV Athena left Hades at 09:00 following customs

clearance and port clearance.

11. On Wednesday 8th October 2014, the Hades Coast Guard intercepted the MV Athena while it

was sailing towards Poseidon. The Hades Coast Guards requested the Master of the Vessel to

return to the Port of Hades, arguing that the Vessel was within the inner limits of Hade’s

territorial waters and the Hades Flag. The Vessel’s Master followed the Coast Guard’s

instructions.

12. On Friday 10th October 2014, the Claimant informed the Respondent that because the delay

was caused by the nature of the cargo and as the Coast Guard considers the vessel had not left

the port of Hades, demurrage will accrue at the sum of USD 50,000/day, in accordance with

Charter Party. Subsequently, the Claimant criticised the Master’s behaviour and asserted that

the Vessel was outside the Hades territorial limits. However, the Respondent had not been

informed of the situation.


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13. On Tuesday 22th October 2014, the Respondent informed the Claimant that its company

would suffer “significant losses” as a result of the failure to deliver the cargo in Poseidon.

14. On Wednesday 15th April 20015 (after 6 months), the Claimant addressed an invoice to the

Respondent for the payment of 184 days of demurrage at the rate 50,0000 USD / day which

amounts to the sum of USD 9.2 million.

15. On Monday, 5th October 2015, following the President’s resignation, the Coast Guards

released the MV Athena.

16. Towing operation began under the control of HESTUG services. Shortly after the end of the

towing operation, it had become clear that, while at the Port of Hades, the propellers of the

Vessel had been tampered with. As a result, the propeller shafts broke. The Vessel needed

assistance was successfully rescued by HESTUG

17. On Tuesday 6th October 2015, the Claimant addressed an invoice to the Respondent for the

payment of 358 days of demurrage, amounting to the sum of USD 17.9 million.

18. On Monday, 16th November, the Claimant informed the Respondent of its intention to refer

the dispute to arbitration. The Respondent made clear that it does not recognise its liability for

the alleged demurrage and denied the jurisdiction of the arbitral tribunal.


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MERITS

I. THE TRIBUNAL HAS NO JURISDICTION TO HEAR THE

CLAIM

A. THE ARBITRATION CLAUSE AND LAW OF ARBITRATION

1. The Arbitration Clause

19. Clause 30 of the Charter Party provides:

30. ARBITRATION

(a) Any dispute arising under this contract shall be referred to arbitration in London by a sole arbitrator/a tribunal of 3 arbitrators (strike out whichever is inapplicable) in accordance with the Arbitration Rules of the Maritime Law Association of Australia and New Zealand. […] (d) The parties hereby agree that:-

(i) the Arbitrators may determine any questions by reference to consideration of general justice and fairness; (ii) a party may be represented by duly qualified legal practitioners or other representative; (iii) the Arbitrators shall include in the arbitration award their findings on the material questions of law and fact, including references to the matters.

2. The Law of Arbitration

20. The Clause does not define a legislation governing the Arbitration. The MLAA Rules

provide:

2. In these Rules, unless the contrary intention appears: “Arbitration” means an arbitration conducted a) in Australia which concerns a dispute to which: […] ii) the International Arbitration Act 1974 (Cth) applies”.

21. The Arbitration Clause shall be construed under the Law of the Seat, that is to say under the

United Kingdom Arbitration Act, 1996.


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22. Alternatively, Australian International Arbitration Act, 1974 may also apply.

B. THIS TRIBUNAL HAS NO JURISDICTION TO HEAR THE CASE

23. Under the principle of Kompetenz-Kompetenz, this Tribunal is entitled to rule on its own

jurisdiction1. Arbitrators’ jurisdiction is the power conferred on them by the Parties to

determine the dispute and make a final decision, which is binding on the Parties2.

24. Under Clause 30(1) of the Arbitration Act, 1996, the principle is appreciated as follows:

(1) Unless otherwise agreed by the parties, the arbitral tribunal may rule on its own substantive jurisdiction, that is, as to—

(a) whether there is a valid arbitration agreement, (b) whether the tribunal is properly constituted, and (c) what matters have been submitted to arbitration in accordance with the arbitration agreement.

1. The Arbitration agreement is not valid

25. ARBITRATION Clause (Clause 30) provides: “a) Any dispute arising under this contract

shall be referred to arbitration in London”.

26. This provision is void, as it purports to preclude or limit the jurisdiction of Australian Courts.

Or pursuant to Sect. 11 of Australian COGSA, 1991, such a foreign arbitration clause in

Charter Party has no effect:

(1) All parties to: (a) a sea carriage document relating to the carriage of goods from any place in Australia to any place outside Australia; or (b) a non‑negotiable document of a kind mentioned in subparagraph 10(1)(b)(iii), relating to such a carriage of goods; are taken to have intended to contract according to the laws in force at the place of shipment. (2) An agreement (whether made in Australia or elsewhere) has no effect so far as it purports to:

1 Christopher Brown Ltd. V. Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte GmbH [1954] 2 C. AMBROSE – K. MAXWELL – A. PARRY, London Maritime Arbitration, 3rd ed., London, 2009, p. 73.


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[…] (c) preclude or limit the jurisdiction of a court of the Commonwealth or of a State or Territory in respect of: (i) a sea carriage document relating to the carriage of goods from any place outside Australia to any place in Australia; or (ii) a non‑negotiable document of a kind mentioned in subparagraph 10(1)(b)(iii) relating to such a carriage of goods.

27. Pursuant to s 7 and s 9 of COGSA 1991, “sea carriage document” is defined by reference to

the Hague Rules as

A non-negotiable document (including a consignment note and a document of the kind known as a sea waybill or the kind known as a ship’s delivery order) that either contains or evidences a contract of carriage of goods by sea.

28. A voyage charter party is such a sea carriage document. This point still raises tensions

amongst Australian jurisdictions, as there has no longer been a Supreme Court decision to

settle this question. In Dampskibsselskabet Norden A/S v Gladstone Civil Pty Ltd3, a Federal

Court considered voyage charter parties as sea carriage documents under Sect. 11 of the

COGSA.

29. As there is no consensus, this interpretation according to which a foreign arbitration clause in

a charter party is void, must be followed by this Tribunal, otherwise its award may not be

not be enforced in Australia.

2. The Respondent denies the scope of the Arbitration Clause

30. The Respondent intended ab initio to limit the arbitrable matter: “There is one amendment

(…). We are not prepared to arbitrate disputes that relate to but do not arise out of the terms

of the charterparty” (Letter to Zeus dated 16 July 20144).

3 Dampskibsselskabet Norden A/S v Gladstone Civil Pty Ltd, Federal Court of Australia, [2012] FCA 696. 4 Moot scenario, p. 25.


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31. A new clause was written by the Claimant. Parties now disagree on the scope of this clause,

which stands ambiguous. The Tribunal shall therefore construe this clause contra proferetem:

10. Contra proferentem is a rule of contractual interpretation which provides that an ambiguous term will be construed against the party responsible for its inclusion in the contract. This interpretation will therefore favour the party who did not draft the term presumably because that party is not responsible for the ambiguity therein and should not be made to suffer for it. […], once ambiguity is established, the rule is fairly straightforward in application5.

32. Therefore, the Respondent’s interpretation that restrain the scope of the Arbitration clause

shall be followed by this Tribunal. In particular, the frustration issue does not appear as a

dispute arising under the Contract. Contra proferentem interpretation automatically requires

to reject this question from the jurisdiction of this Tribunal.

3. Conclusion: the arbitration clause has no effect

33. As a result of the matters stated hereinabove, the ARBITRATION Clause has no effect, and

this Arbitral Tribunal shall deny its jurisdiction.

II. PERFORMANCE OF THE CONTRACT

A. NO DEMURRAGE IS DUE BY THE RESPONDENT UNDER THE

CONTRACT

1. The laytime was not exceeded

34. Laytime is a period allowed by the shipowner to the charterer to proceed with the loading and

the discharging of the cargo, carried by sea onboard a vessel. Where the allowed laytime is

5 Horne Coupar v. Velletta & Company, Supreme Court of British Columbia, 21 April 2010, [2010] BCSC 483.


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exceeded, the charterer is liable to pay demurrage to the shipowner6. According to the

DEMURRAGE AND DISPATCH MONEY Clause7, demurrage is a rate per day.

35. The laytime in principle begins to run when the Master of the Vessel gives the Notice of

Readiness (NOR)8, for advising the charterer the vessel has arrived at the port and is ready to

load (or discharge). NOR is a prerequisite to the commencement of laytime at common law.

In this case, the NOR was emitted by the Master on 3rd October 2014 at 09:15. 9 And the

laytime stops to run when the Vessel leaves the loading Place. In this case, the Statement of

facts established by the Master mentions that the MV ATHENA sailed from Hades on 7th

October 2014 at 09:00.

36. The Vessel was loaded in accordance with the Charter Party, on 3rd October 2014 at 14:30.

The loading was completed on 6th October. The MV ATHENA left the port of Hades for

Poseidon on 7th October at 9:00. According to the LOADING AND DISCHARGING Clause

of the Charter Party10, “time permitted for loading is 10 WWD SHINC”. Loading operations

took place during three and a half days. The ten days of laytime allowed as per Clause 9 of the

Charter Party were not exceeded.

37. Hence, demurrage has not accrued.

6 BIMCO, Laytime Definitions for Charter Parties, 2013. 7 Clause 10 of the Charter Party. 8 P. BONASSIES – C. SCAPEL, Droit maritime, 2nd ed., Paris, 2010. 9 NOR page 51 of the Moot Scenario. 10 Clause 9 c i of the Charter Party.


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2. The Vessel had left the Port of Loading

38. In order to assert that the laytime continued to run after the loading operations had ended, and

that the Respondent is liable for demurrage, the Claimant argues that the Vessel did not leave

the Port of Hades.11 This argument cannot retain the attention of this Tribunal.

39. Undoubtedly, the Vessel had left the Port of Loading.

40. If there is no delay for the load of the cargo and if the vessel has left the harbour waters, the

laytime stops running. As evoked previously, there was no delay in the loading of HLNG.

41. The Claimant sent an email to the Master of the Vessel in order to assert the Vessel was

outside the territorial waters of Hades to justify there was no obligation to return to port and

to ask his resignation.12

42. The Claimant’s bad faith is evident when asserting that the Vessel had never left the Port of

Hades. MV ATHENA did in fact leave the Port of Loading.

3. Alternatively, the laytime had been interrupted

43. The LOADING AND DISCHARGING Clause of the Charter party 13 settles laytime

interruption causes.

44. If the tribunal does not find the Vessel had left the Port of Loading, it would consider there

was a cause of interruption of the laytime.

45. In particular, Clause 9 refers to “arrests”. The Master had been required by a Coast Guard to

return to port and compelled to stay docked. This requisition will be considered as an “arrest”

under Clause 9. Therefore, it represents a cause of interruption of the laytime. 11 Email from The Claimant to the Respondent, page 63 of the Moot Scenario. 12 Page 58 of the Moot Scenario. 13 Clause 9 (e) of the Charter Party.


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46. An additional element supports the hereinabove plea: if there is a fixed laytime in a charter

party, the interruptions and exceptions will normally be in favour of the charter according

to the contra proferentem rule14. Hence, it is clear that the clause inserted in the Charter

Party rules in favour of the Respondent.

4. Conclusion

47. The Claimant is not grounded to ask the Respondent for demurrage.

B. THE CLAIMANT IS LIABLE TO THE RESPONDENT

1. Introduction

48. The Master of the MV Athena had reported to the Claimant the unsafe situation at the Port of

Hades on account of huge protest against the HLNG export from Hades. He wanted to know

wether or not he had to proceed to the loading notwithstanding the conjecture. The Claimant

commanded to him to proceed to the loading of the cargo.15

49. However, the Claimant had to secure the release of the Vessel from Hades. Hence, the

Claimant would have waived the operation regarding the troubles at the Port. It clearly

appears that the Claimant would have challenged the transport, or at least postponed it for the

security of the Vessel and its cargo.

50. There were significant protests at the Port of Hades when the Vessel arrived. As a result, the

Port had to close during two hours.

51. The Claimant could have prevented the loading by referring a state of Force Majeure as

provided by the FORCE MAJEURE clause 16 of the Charter Party such as stoppage,

14 J. SCHOFIELD, Laytime and demurrage, 3rd ed., London – New York, 1996, p. 162 15 In an email from Zeus to the MV Athena dated 4th October 2014, page 53 of the Moot Scenario. 16 Clause 19 of the Charter Party.


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mobilisation, hostilities or riots. In addition, the Claimant had the possibility to minimize the

risk. However, it decided to proceed to the loading of the cargo, arbitrarily and without

notifying or consulting the Respondent.

52. The Claimant clearly committed a fault by ordering the loading of the cargo on board, without

consulting the Respondent, in spite of the exceptional circumstances.

53. Also, the Claimant did not act in good faith. When the Claimant issued the Charter Party, they

took the risk to export HLNG knowing that if the vessel could not leave the port of Hades due

to protests, the delivery of the cargo would be delayed. The Claimant can be aware that this

incident could give rise to important demurrage requested to the Respondent.

54. Moreover, the Claimant registered the MV Athena in Hades from its own initiative when the

Respondent requested to it for the transport of HLNG from Hades to Poseidon. It is potential

that the Claimant foresaw the protests against the export of HLNG. Hence, the power of

Hades authorities would have been stronger regarding the flag of the MV Athena rather a

foreign flag. It is clear that the Claimant facilitated the interception of the Vessel.

2. The Claimant liability under the Contract

55. According to the Charter Party, “the Claimant must take all steps necessary to secure the

release of the Athena from the port of Hades and sail to Poseidon with all due despatch”.17

(our emphasis)

56. The Claimant failed to perform its contractual obligations.

17 Page 61 of the Moot Scenario and INTRODUCTION of the Charter Party and implicitly in all different clauses.


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57. Under common law, the duty of a carrier refers to that of a “common carrier”. A carrier has to

perform a contract in a reasonable way. In this case, it appears that the Claimant did not take

all reasonable steps to fulfill the Charter Party.

a. Unjustified lack of notice by the Claimant

58. The Claimant failed to notify the interception of the MV Athena and its return to Port. The

Claimant did not send any email in order to inform the Respondent. The Respondent

discovered the arrest by checking the Vessel tracking.

59. However, the Claimant had to inform the Respondent about the progress of loading, transport

and unloading of the cargo. This obligation had to be maintained during all the execution of

the contract.

60. This obligation can be deduced especially in view of some clauses in the Charter Party:

- The LOADING PORT NOTICE Clause18 states that: “If the vessel is already at the

port of loading discharging cargo or for other reason, the Master or Owners shall

give corresponding notice when the vessel is excepted to load under this charter

party”

- The DISCHARGING PORT NOTICE clause19 states that: “ on completion of loading,

the Master or Owners shall notify Charterers in Poseidon stating the date and time of

departure from the loading place (…), the excepted time of arrival”.

61. These clauses on the Charter Party must be interpreted as an obligation for the shipowner to

notice the Charterer of many events, of the well process of the transport.

18 Clause 3 iv of the Charter Party. 19 Clause 14 a of the Charter Party


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62. Such important incident has to be notified to the charterer. It was essential for the Respondent

to know the unexceeded situation.

b. The Claimant’s negligence

63. The Claimant has a duty of care pursuant to the Charter Party. The Claimant is a professional.

The Claimant had a duty to give advice to its clients. As a leader in the maritime transport and

a professional shipper, the Claimant must advice the Respondent as the risk creating by such

transport. Surely, The Respondent is a professional however it had not the same profession.

The Respondent is in HLNG business (liquefaction and export). It had no expertise in

shipping.

64. The Claimant should have alerted the Respondent of the risk in order to export HLNG from

Hades, not necessary in the Charter Party but at least in an email. They exchanged many

emails. Hence, the Claimant should have informed the Respondent of the risks generated by

the transport of HLNG.

c. Failure of the obligation of transport by the Claimant

65. The Voyage Charter Party represents the contract signed the shipowner – the Claimant – and

the charterer – the Respondent. In this kind of Charter Party, the owner keeps the nautical and

commercial management. Indeed, the owner has a fundamental contractual obligation:

transport a determined cargo from one port to another. In case of failure, this obligation is not

fulfilled and the responsible owner can be found liable. Hence, the Claimant had to transport

HNLG with the MV Athena, from Hades to Poseidon pursuant to the Charter Party.

Nevertheless, the Master of the vessel returned to the port of loading and as a result the

transport had not been made until Poseidon. The fact that the transport had not be completed

correctly due to a wrong option made by the Master is imputable to the Claimant. The


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Claimant has failed to fulfil its central obligation of transport. It is the reason of the delay.

Therefore, the Respondent cannot be found liable for it.

66. On a second hand, Shipowner has to provide a Vessel in good condition, so called in

seaworthiness condition, able to receive the cargo, preserve it and able to transport it between

a place to another. After the release of the MV Athena, it was clear that the vessel was not

seaworthy. The ship owner failed in providing a vessel able to carry out the sea passage.

3. The Claimant extra-contractual liability

a. The Master committed a fault

67. The Master on a voyage takes on significant obligations: as agent of the shipowner, he has the

duty of taking all necessary steps to carry out the contract and of taking reasonable care of the

goods entrusted to him20.

68. The Claimant himself asserted the Master should not return to Port because the Vessel was

outside the Hades territorial waters via an email21. The Coast Guards did not have jurisdiction

to give such orders. The Claimant reproached to the Master his conduct and asked for his

resignation because he committed a fault submitting to the Coast Guard orders.

69. The Master should have continued the transport, despite the direction of the Coast Guard. The

fact the Vessel returned to Port is the cause of the delay. If the Vessel would not has returned

to Port, it is possible to think that transport would have been correctly realized, without delay.

So no demurrage would have been existed.

20 J. COOKE – T. YOUNG – A. TAYLOR et al., Voyage Charters, London - New York - Hambourg - Hong Kong, LLP, 1993 (Lloyd's Shipping Law Library), p.261. 21 Email from the Respondent to the Master of the Vessel, page 58 of the Moot Scenario.


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70. Pursuant the different breaches of the Contract by the Claimant, and resulting that the

Respondent had suffer losses (economic and reputation injuries), the Respondent is entitled to

damages.

b. The vicarious liability of the Claimant

71. The Respondent is able to invoke the vicarious liability.

72. The vicarious liability makes the Respondent liable for the torts committed by another

individual. It is the case in an employer-employee relationship. For the employer to be held

vicariously liable, the worker must be an employee who has committed a tort in the course of

his/her employment.

73. In this case, the Claimant – the shipowner – and the Respondent – the charterer – entered into

a Voyage Charter Party.

74. In law, under a Voyage Charter Party, the shipowner retains the nautical and the commercial

management of the vessel. Consequently the shipowner – the Claimant – is responsible for

employing the crew – included the Master and for accomplishing the necessary maintenance

and repairs of the vessel.

75. The Claimant employed the shipmaster – there was a subordinate relationship between the

Claimant and the Master of the Vessel. The litigious act (the interception of the Vessel) has

occurred in the course of this employment. The Master was on board to conduct the vessel

until Poseidon, the determined port of discharge.

76. Whilst a charterer’s obligation to complete loading or discharge within the prescribed lay

days is unconditional, nevertheless laytime will not run whilst there is a delay caused by the


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fault of the shipowner or those from whom they are responsible22. The defence is an example

of the more general principle that a plaintiff cannot claim damages if the claim is based on his

own fault or default.

77. The vicarious liability of the Claimant has to be challenged. The delay is due to the Master

who is under the control of the shipowner, the Claimant. As a result, the Claimant is not

entitled to request the payment of demurrage because the Respondent is not liable for the

delay.

III. ALTERNATIVELY, THE RESPONDENT IS DISCHARGED BY

FORCE MAJEURE

A. FORCE MAJEURE

78. FORCE MAJEURE Clause of the Charter Party provides23:

Neither party shall be liable for any failure to perform or delay in performing its obligations under this Contract, where the party is being delayed, interrupted or prevented from doing so by reasons of any Force Majeure Event. For the purposes of this Contract, “Force Majeure Event” means: […] (d) mobilization, war (declared or undeclared), hostilities [...], riots […], Court issued arrest proceedings, act of the Queen’s enemies, […], enemies […] or other similar cause.

79. An in concreto interpretation of the facts, as it was engaged in Cobelfret (UK) Limited v

Austen and Butta (Sales) PTY Limited, 198824, requires the discharge of obligations under the

FORCE MAEURE Clause. In this case, the chartered Vessel could not discharge its cargo

properly, due to sudden quota restrictions in the designated Port of Discharge. The judge

22 J. SCHOFIELD, Laytime and demurrage, op. cit., p. 164; London Arbitration 4/92 LMLN 349 20 March 1993. 23 Clause 19 of the Charter Party. 24 Cobelfret (UK) Limited v Austen and Butta (Sales) PTY Limited, New South Wales Supreme Court, 24 February 1988 (unreported - jurisdata BC8802189).


24

stated after an in concreto analysis (relationship between the parties, legal and economical

contexts…) that this situation belonged to the FORCE MAJEURE clause.

80. In the case submitted to this Arbitral Tribunal, Parties shall be considered as having

contemplated Jacqueline Simmons’ coup d’État and its consequences This action was

supported by Hades armed forces (The Hades Advocate, 7 October 201425) and is a

mobilisation or hostilities or other similar cause according to the FORCE MAJEURE Clause.

B. A WRONGFUL ARREST OF THE SHIP AS FORCE MAJEURE EVENT

81. The Vessel was under the Hades flag.

82. The nationality of a vessel is very important in maritime law notably because it determines

the powers of the flag State, and the rights of the Vessel.

1. A Vessel may be arrested only by a legitimate Government

83. Firstly, in the High Seas. – Two conventions are applicable. Article one of Geneva

Convention of 29th April 1958 states that: “the term high seas means all parts of the sea that

are not included in the territorial sea or in the internal waters of a State”

84. Article 87 of the United Nations Convention on the Law of the Seas (signed at Montego Bay

Convention on 10th December 1982) recognizes “freedom of the high sea”. Article 92 states

that the vessel flying a flag shall be subject to its exclusive jurisdiction, on the high seas. And

Article 94 compels that the State shall effectively exercise its jurisdiction over ships flying its

flag and its Master, officers and crew.

85. According to the aforesaid articles, the state of Hades had jurisdiction over the MV Athena.

25 Moot scenario, p. 55.


25

86. Secondly, in Hades Territorial Waters. – Article 3 of the United Nations Convention on the

Law of Seas defines the territorial waters as follows: « Every State has the right to establish

the breadth of its territorial sea up to a limit not exceeding 12 nautical miles, measured from

baselines determined in accordance with this Convention »

87. Article 2 of the same convention provides the sovereignty of the coastal State in its territorial

waters.

88. Although the position of the MV Athena during the interception cannot be well determined,

as the Vessel was under the Hades Flag, the State of Hades had exclusive jurisdiction over it.

Only the State of Hades had jurisdiction over the Vessel. The fact that the Vessel was in

territorial waters or in the high seas is irrelevant.

89. Hence, it is impossible to deny the power of the Hades State over the MV Athena in order to

enforce it the national and international law.

2. The interception of the Vessel was illegal

90. Regarding the Port Authorities Act, 1999, The new President should have taken a special

decision respecting the legal system in order to render the Act legal and enforceable.

91. She asked to Coast Guard of Hades to intercept the Vessel and order to it to return to the port

arbitrarily, without any Act and with the Hades military aids.

92. It is indisputable that the flag State has an important power over vessels flying its flags but

this power is not, however, unlimited. The law has to be respected. The legal system even if

an urgent case has to be followed.

93. The President of Hades, ordering to the Coast Guard to compel the Master of the vessel to

return to the Port of Hades, committed a fault. There was no legal and justified act.


26

94. If there had been a Presidential Decree, the order given to the Vessel and its Master to return

to the Port of Hades would be enforceable by an officer of the Hades government, even on

board of the MV Athena due to its flag. In the absence of a Presidential Decree, there was a

lack of legal basis in spite of the Hades flag of the MV Athena.

95. Furthermore, reading from The Hades Advocate26 issued on 25th October 2014, it is clear that

the Coast Guard Commander, who intercepted the MV Athena, was absolutely not sure that

he had the power to do so. The article shows that the Commander found an argument in order

to try to convince the Master to return to port but without real legal basis. The Hades flag

ground seams to be hazardous perceiving the shipmaster was hesitant to submit to its

authority.

96. In addition to this, it must be that the President Simmons does not embody a democratic

policy, regarding the coup d’état with the military assistance on one hand and the alleged

corruption on the other. Such arbitrary decision based on illegal behaviour is inacceptable.

97. The Respondent was not able to overthrow this decision. Only the Master of the Vessel could

resist the decision and refuse to return to Port. The Master had to ensure the vessel navigation;

he was only responsible of it. A shipmaster has to choose the appropriate seaway.

C. CONCLUSION

98. Therefore, performance of the Contract was no longer required, and the Claimant is

discharged of its obligations from 7 October 2014, that is to say from the moment the Coast

Guard required the Master.

26 Article of the Hades Advocate dated on 25 October 2014, page 62 of the Moot scenario


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IV. ALTERNATIVELY, THE RESPONDENT IS DISCHARGED BY

FRUSTRATION

A. THE CONDITIONS OF APPLICATION OF THE FRUSTRATION

DOCTRINE

99. There is no applicable piece of legislation, which excludes Voyage Charter Parties from the

scope of the doctrine of frustration. The doctrine of frustration is therefore applicable to the

Voyage Charter Party.

100. The doctrine of frustration operates where, “after the contract was concluded, events

occur which make performance of the contract impossible, illegal or something radically

different from that which was in the contemplation of the parties at the time they entered into

the contract”27.

101. The event has to be unforeseen or unforeseeable in order to invoke the frustration

doctrine. 28

102. The Respondent will demonstrate that unforeseeable events have rendered the

performance of the Charter Party impossible. Even if the parties were aware that

environmental opponents, were against the export of HLNG from Hades, the decision to

prohibit the export of HLNG and to arrest the MV Athena were absolutely not foreseen or

foreseeable at the time the Charter Party was executed.

103. The arrest of the MV Athena and the prohibition of HLNG export occurred in a

context of political instability, following a coup d’Etat, backed by military forces. As a result

of an order emanating from the newly appointed President, the MV Athena was requested to

return to port and was ordered not to leave Hades. The transport of HLNG from Hades to 27 MCKENDRICK, Contract Law, 8th ed 2009, at [14.8]. 28 Walton Harvey Ltd v Walker & Homfrays Ltd [1931] 1 Ch 274 (CA)


28

Poseidon on board the MV Athena could not be completed. Hence, the performance of the

Charter Party had become impossible.

104. Therefore, the contract should be deemed frustrated.

B. THE FRUSTRATION OF THE CONTRACT DISCHARGES THE

RESPONDENT OF ITS CONTRACTUAL OBLIGATIONS

105. At common law, where frustration is established the contract is terminated

automatically for the future. 29 As a result of termination of contract, both parties are

discharged from future performance.

106. The charter party does not provide any guidance in case of termination. In addition,

the DEMURAGE AND DIPATCH MONEY clause 30is not intended to survive to termination

of the contract.

107. Hence, the Respondent is released from the contractual obligation to return the vessel

at the expected time according to the charter party.

108. In conclusion, no demurrage is due by the Respondent.

V. RESPONDENT’S COUNTERCLAIM: SALVAGE REWARDS

109. The Respondent’s counterclaim concerns the assistance of the MV Athena by

HESTUG. The aim of the Respondent’s counterclaim is to secure a reward on the following

basis:

a. The Salvage Convention, 1989 applies for the operation

29 Tamplin SS Co Ltd v Anglo-Mexican Petroleum Products Co Ltd [1916] 2 AC 397 30 Clause 10 of the Charter Party


29

b. The operation must be considered as salvage

In a later section we will describe how the Respondent is entitled to a salvage reward.

A. THE NECESSARY APPLICATION OF THE 1989 SALVAGE CONVENTION

110. The Convention entered into force in Australian law on 8th January 1998. According to

article 6, the Convention applies to any salvage operation except if the parties decide

differently in the contract.

111. The parties did not exclude the application of the Convention in the Contract and they

did not provide a contract to govern the operation. Thus, the Salvage convention of 1989 has

to be applied.

B. THE ASSISTANCE OF THE VESSEL IS A SALVAGE OPERATION

112. The operation must be considered as a salvage operation or alternatively as an

exceptional towing operation

1. The qualification of the operation according to the Salvage Convention

1989

113. Article 1 identifies a salvage operation as « any act or activity undertaken to assist a

vessel or any other property in danger in navigable waters or in any other waters whatsoever

». In this particular case, the MV Athena was removed while it was still in the open waters.

Moreover, the Vessel was deprived of its capacity to manoeuvre. Thus, we can consider that,

according to the 1989 Convention, the Vessel assistance is a salvage operation.

2. The port assistance towing contract was fulfilled


30

114. The port assistance towing contract was ended when the event occurred, Athena was

sailing in open waters. Pursuant to article 17 of the Convention « no payment is due {...}

unless the services rendered exceed what can be reasonably considered as due performance

of a contract entered into before the danger arose ». Indeed, in the case all towing lines were

released, the tug boats were making their way to their berth, the tug boats were no more under

Athena effects, i.e. free of their movements and not preventing the MV Athena from sailing.

Port towing contract was clearly ended.

3. The Respondent is entitled to salvage rewards

115. The Respondent is claiming a salvage reward because of the intervention of Hestug

(which is owing by him). The assistance had allowed the save of the Athena, its crew, its

bunkers and the cargo. In addition, it avoided, for the port, a huge ecological disaster due to

the nature of the cargo. In order to evaluate the reward, several elements have to be

considered. At first the Athena is a recent vessel, equipped with the latest technology. Then

the Hestug boats were able to assist the Athena with reduced delay. Because of the success of

the operation, the Athena has been sailed back to a safe berth without making any damage. At

least, 260 000 m3 of LNG were loaded on board of the Athena.

4. Alternatively, the operation must be considered as an exceptional towing

116. Even if the Claimant does not accept the qualification of salvage of the operation, the

action of the Hestug is still considered as an exceptional towing. The operation is in any case

out of the towing contract and for this reason the Respondent deserved a compensation.


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REQUEST FOR RELIEF

For the reasons set out above, the Owners request this Tribunal to:

(I) DECLARE that this Tribunal has no jurisdiction to settle the case;

(II) FIND that the Claimant is liable for the breach of the Contract;

(III) FIND that the Claimant is responsible for the delay;

(IV) Alternatively, FIND that the Respondent is not liable due to a Force Majeure;

(V) Alternatively, FIND that the Respondent is discharged by frustration;

(VI) AWARD salvage rewards to the Respondent.

Documents

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