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i
SIXTEENTH ANNUAL INTERNATIONAL MARITIME LAW
ARBITRATION MOOT COMPETITION 2015
IN THE MATTER OF ARBITRATION
___________________________________________________________________________
Claimant Respondent
Western Tankers Inc Ldt Pte
___________________________________________________________________________
MEMORANDUM FOR THE RESPONDENT
TEAM NO. 23
Karolina Aksamitowska
Dan Anghelache
Sabrina Fischer
ii
TABLE OF CONTENTS
LIST OF AUTHORITIES iv
LIST OF ABBREVIATIONS x
STATEMENT OF FACTS 1
PART ONE: JURISDICTION 3
This Tribunal has no jurisdiction to rule on the matter 3
The phrase ‘disputes arising out of this charter’ does not extend to the tort of fraud 5
PART TWO: MERITS 7
I Breach of Charterparty
A The obligation to stem sufficient bunkers at Singapore was not on the charterers 7
B Breach of a provision regarding hire 8
Frustration of the charterparty 8
Offhire event 9
Breach of orders/neglect of duty 9
Piracy 9
Loss of time 9
The distinction between a condition and an innominate term 10
C The Claimant breached the charterparty in failing to comply with the piracy clause 11
D The Claimant breached the charterparty by providing a vessel that is not fit for services as
required by the charterparty 12
The incompetence of the master and the crew rendered the vessel unseaworthy and
contributed to the breach of the charterparty 13
E The charterers are not in breach of the safe ports warranty 14
II Tort of fraud 16
iii
A ASA2 are not the agents of the charterers 16
B ASA2 did not have the actual authority to act on behalf of the Respondent 17
C ASA2 acted outside of its scope of authority
D Representations made by the charterers were true at the time they were made 17
E The Respondent honestly believed the representations to be true 18
F To the extent that the representations were true and honestly made, they were intended to be
relied upon 18
G There was no reliance on behalf of the Claimant 19
H The Claimants did not suffer damage 20
III Bailment as a recognized course of action in English law 21
A The Claimant broke the obligation to take reasonable care to deliver the goods only to the
party entitled to them 21
B Attornment can be found in the present case 22
C Alternatively, the Claimant converted in respect of the cargo on the vessel 23
D The Claimant deviated from the terms of the bailment 24
IV Prayer for relief 24
iv
LIST OF AUTHORITIES: INTERNATIONAL CONVENTIONS, RULES AND
STATUTES
Hague-Visby Rules, The Hague Rules as Amended by The Brussels Protocol 1968
Arbitration Act 1996 (UK)
LIST OF AUTHORITIES: CASES AND ARBITRAL AWARDS
A
Alfred C. Toepfer Schffahrtsgesellschaft mbH v Tossa Marine Co Ltd (The Derby) [1985] 2
Lloyd’s Rep. 325
B
Bilta (UK) Ltd (In Liquidation) v Nazir & Ors [2010] EWHC 1086 (Ch)
Bunge Corp v Tradax Export SA [1981] 1 W.L.R. 711
C
C v D [2007] EWHC 1541
Carslogie S.S. Co Ltd v Royal Norwegian Government [1952] AC 292
Cia Portorafti Commerciale SA v. Ultramar Panama Inc (The Captain Gregos) (No 2) [1990]
2 Lloyd’s Rep 395
Coopers Payen Ltd v Southampton Container Terminal Ltd [2003] EWCA Civ 1223, [2003]
1 Lloyd’s Rep 331
D
Derry v Peek (1889) 14 App. Cas. 337
Dumford Trading v OAO Atlantrybflot [2005] 1 Lloyd’s Rep 289
E
East West Corp v DKBS 1912 [2003] EWCA Civ 83, [2003] QB 1509
Edwards v. West Herts Group Management Committee [1957] 1 W.L.R. 415
ENE Kos 1 Ltd v Petroleo Brasileiro SA (No 2) [2012] UKSC 17
F
Federal Commerce & Navigation Co Ltd v Molena Alpha Inc (The Nanfri) [1979] A.C. 757
Financings Ltd v Baldock [1963] 2 Q.B. 104
Fiona Trust & Holding Corporation & Ors v Yuri Privalov & Ors [2007] UKHL 40
Fiona Trust v Privalov [2008] 1LLR 254
Frans Maas (UK) Lts v Samsung Electronics [2004] EWHC 1502, [2004] 2 Lloyd’s Rep 251
H
Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL [2010] EWHC 29 (Comm)
Hamburg Houtimport B.V. v. Agrosin Pte Ltd (The Starsin) [2000] 1 Llooyd’s Rep. 85, 101-
102
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26
v
K
Kapitoff v Wilson (1876) QBD 377
Karberg’s Case [1892] 3 Ch. 1
KH Enterprise (Owners of Cargo Lately Laden on Board The) v. Owners of The Pioneer
Container (The Pioneer Container) [1994] 2 AC 324; [1994] 1 Lloyd’s Rep 593
Kodros Shipping Corp v Empresa Cubana de Fletes (The Evia) (No. 2) [1983] 1 AC 736
Kuwait Airways Corp v. Iraqi Airways Corp (Nos 4 and 5) [2002] UKHL 19; [2002] 2 AC 88
Kuwait Rocks Co v AMN Bulkcarriers Inc [2013] EWHC 865 (Comm), [2013] 2 All E.R.
(Comm) 689 (The Astra)
L
Leeds Shipping Co ltd v Societe Francaise Bunge (The Eastern City) [1958] 2 Lloyd’s Rep
127
M
Marcq v Christie Manson & Woods Ltd (t/a Christie’s) [2003] EWCA Civ 731, [2004] QB
286
MCC Proceeds Inc v Lehman Bros International (Europe) [1998] 4 All ER 675
McFadden v Blue Star Line [1905] 1 KB 697
Mitchell v Ealing London Borough Council [1979] QB 1
Morris v CW Martin & Sons Ltd [1966] 1 QB 716, 738, CA
Motis Exports Ltd v. Dampskibsselskabet AF 1912 Aktieselskab, Aktieselskabet
Dampskibsselskabet Svenborg
Motor Oil Hellas (Corinth) Refineries S.A. v Shipping Corporation of India (The
Kanchenjunge”) [1990] 1 Lloyd’s Rep. 391
N
Naviera Amazonica Peruana SA v Cia International de Seguros del Peru [1988] 1 Lloyd's
Rep. 116
Niru Battery v. Milestone Trading Ltd. [2004] 2 Lloyd's Reports 319
Nittan (U.K.) Ltd. V Solent Steel Fabrication Ltd. Trading As Sargrove Automation And
Cornhill Insurance Co. Ltd. [1981] 1 Lloyd's Rep. 634
O
Official Assignee of Madras v. Mercantile Bank of India Ltd [1935] AC 53 (PC)
Osmium Shipping Corp v Cargill International SA [2012] EWHC 571 (Comm)
P
Pacific Basin IHX Ltd v Bulkhandling Handymax A/S (The Triton Lark) [2011] EWHC 2862
(Comm)
Papera Traders Co ltd v Hyundai Merchant Marine Co Ltd (The Eurasian Dream) [2002] 1
Lloyd’s Rep 719
Port Swettenham Authority v TW Wu & Co (M) Sdn Bhd [1979] AC 580, PC
Q
Queensland National Bank Ltd v Penisular and Oriental Steam Navigation Co [1898] 1 QB
567
vi
R
Reardon Smith Line v. Australian Wheat Board (The Houston City) (High Court of Australia)
[1954] 2 Lloyd’s Rep 148
Ruxley Electronics v. Forsyth [1996] A.C. 344 (H.L.)
S
Sandeman Coprimar SA v Transitos y Transportes Integrales SL [2003] EWCA Civ 113,
[2003] QB 1270
Smith New Court Securities Ltd. V. Scrimgeourvickers (Asset Management) Ltd. [1997] A.C.
254
Smith v Chadwick (1883-84) 9 App. Cas. 187
Spar Shipping AS v. Grand China Logistics Holding (Group) Co., Ltd [2015] EWHC 718
Sulamerica CIA Nacional de Seguros SA and others v Enesa Engenharia SA and others,
[2012] EWCA Civ 638
T
Tackey v McBain [1912] AC 186
Tenax Steamship Co v Owners of the Motor Vessel Brimnes (The Brimnes) [1973] 1 W.L.R.
386
The “Chemical Venture” [1993] 1 Lloyd’s Rep. 508
The “Eugenia” [1964] 2 QB 226
The “Puerto Buitrago” [1976] 1 Lloyds Rep 250
The Alecos M [1991] 1 Lloyd’s Rep. 120 (C.A.)
The Aliakmon [1986] AC 785; [1986] 2 Lloyd’s Rep 1
The Batis [1990] 1 Lloyd’s Rep 345
The Captain Diamantis [1977] 1 Lloyd’s Rep 362
The Captain Gregos (No 1) [1989] 2 Lloyd’s Rep 63
The Dagmar [1968] 2 Llyd’s Rep 563
The Glory Wealth [2013] 2 Lloyd’s Rep. 653
The Golden Victory [2005] 1 Lloyd’s Rep. 443 [2005] 2 Lloyd’s Rep. 747 (C.A.) and [2007] 2
Lloyd’s Rep. 164 (H.L.)
The Griparion (No. 2) [1994] 1 Lloyd’s Rep. 533
The Gudermes [1993] 1 Lloyd’s Rep 311 (CA)
The Hill Harmony [2001] 1 Lloyd’s Rep 147
The Houston City [1956] 1 Lloyd’s Rep 1
The Kanchenjunga [1987] 2 Lloyd’s Rep 509
The Maori King [1895] 2 QB 550
The Mary Lou [1981] 2 Lloyd’s Rep 272
The Mihalis Angelos [1970] 3 WLR 601
The North Sea [1999] 1 Lloyd’s Rep 21 (C.A.)
The Ocean Victory [2014] 1 Lloyd’s Rep 59
The Pamphilos [2002] 2 Lloyd’s Rep. 681
The Playa Larga [1983] 2 Lloyds Rep 171
The Polyglory [1977] 2 Lloyd’s Rep 353
The Rozel [1994] 2 Lloyd’s Rep. 161
The Starsin [2000] 1 Lloyd’s Rep 85, 101
The Stork [1954] 2 Lloyd’s Rep 397; [1955] 1 Lloyd’s Rep 349
The Teutonia (1871-73) LR 4 PC 171
Travers & Sons v Cooper [1915] 1 KB 73
vii
W
Whittam v. W. J. Daniel & Co. Ltd. [1962] 1 Q.B. 271
X
XL Insurance Ltd v Owens Corning [2001] 1 All E.R. (Comm) 530
Y
Yearworth v. North Bristol NHS Trust [2009] EWCA Civ 37; [2009] 3 WLR 118; [2010] QB
1
LIST OF AUTHORITIES: BOOKS
Bennett, The Law of Marine Insurance, 2nd
edn (Oxford, 2006)
Born, G B, International Commercial Arbitration (Kluwer Law International, 2009) vol 1
Bridge M, Personal Property Law, 3rd edn (2002)
Burrows A, English Private Law (OUP, 2013)
Coghlin T, Baker A, Kenny J, Kimball J D, Time Charters 6th
edn (Informa Law, 2008)
Coghlin T, Baker A, Kenny J, Kimball J D, Time Charters, 7th
edn (Informa Law, 2014)
Cooke J, Timothy Y, Taylor A, Voyage Charters, 3rd
edn (Informa Law, 2007)
Jones M, Professor Anthony Dugdale; Mark Simpson, QC, Clerk & Lindsell on Torts 21st edn
(Sweet & Maxwell, 2014)
McKendrick (eds), Interest in Goods, 2nd
edn (1998)
Palmer N E, Palmer on Bailment, 2nd
edn (Sweet and Maxwell, 1991)
Palmer N E, Palmer on Bailment, 3rd
edn (Sweet and Maxwell, 2009)
Todd P, Maritime Fraud and Piracy, 2nd
edn (Informa Law, 2010)
Tweeddale A, Tweeddale K, Arbitration of Commercial Disputes (OUP, reprinted 2010)
Watts P (ed.), Bowstead & Reynolds on Agency 20th
edn (Sweet & Maxwell, 2014)
Wilson J, Carriage of Goods by Sea, 6th
edn (Pearson, 2008)
viii
LIST OF AUTHORITIES: JOURNAL ARTICLES
Arzandeh A, ‘The Law Governing Arbitration Agreements in England’ (2013) LMCLQ, 31-
35
Baughen S, ‘Misdelivery and the boundaries of contract and tort’ (2010) LMCLQ 411-430
Bell A, ‘The Place of Bailment in the Modern Law of Obligations’ in N Palmer and E
Dempster H, ‘Clearing the Confusion Surrounding Bailment’ (2004) CLWR 33 295
Hill J, ‘Determining the seat of an international arbitration: party autonomy and the
interpretation of arbitration agreements’ (2014) IMCLQ, 63(3), 517-534
Kamal-Deen A, ‘The Anatomy of Gulf of Guinea Piracy’ (2015) Naval War College Review
68(1) 93
McBain G, ‘Modernising and Codifying the Law of Bailment’ (2008) JBL 1
McMeel G, ‘Bailment: fertility and the forms of actions (Yearworth v. North Bristol NHS
Trust)’ (2010) LMCLQ 22-27
McMeel G, ‘The Redundancy of Bailment’ (2003) LMCLQ 169-200
Tweeddale A, Tweeddale K, ‘Incorporation of arbitration clauses revisited Arbitration’ (2010)
76(4), 656-660
LIST OF AUTHORITIES: OTHER
Best Management Practices for Protection against Somalia Based Piracy (BMP4) Suggested
Planning and Operational Practices for Ship Operators and Masters of Ships Transiting the
High Risk Area (Witherby Publishing Goup Ltd, 2011)
BIMCO Special Circular No 1 (March 2009)
Burgess J, ‘Oil Piracy Moves to Angolan Coast with $8M Heist’
<http://oilprice.com/Energy/Energy-General/Oil-Piracy-Moves-to-Angolan-Coast-with-8M-
Heist.html> accessed 10 April 2015
ix
Johnson K, ‘Oil Pirates and the Mystery Ship’ Foreign Policy (29 January 2014)
Kashi D, ‘Nigerian Pirates Likely Hijacked Oil Tanker Off Angola's Coast, Expert Says’,
International Business Times (27 January 2014) <http://www.ibtimes.com/nigerian-pirates-
likely-hijacked-oil-tanker-angolas-coast-expert-says-1548738>
Reuters ‘UPDATE 1-Pirates hijacked tanker off Angola, stole cargo - owners’
<http://uk.reuters.com/article/2014/01/26/angola-piracy-idUKL5N0L00NM20140126>
Shelltime 4 Charter Party
United Nations Security Council, Letter Dated 18 January 2012 from the Secretary-General
addressed to the President of the Security Council S/2012/45
United Nations Security Council, Report of the United Nations Assessment Mission on Piracy
in the Gulf of Guinea, UNSC S/2012/45 (New York: 19 January 2012)
United Nations Security Council Resolution 2018, ‘Piracy and Security in Africa’ (31 October
2011)
United Nations Security Council Resolution 2039, ‘Peace Consolidation in West Africa’ (29
February 2012)
x
LIST OF ABBREVIATIONS
ASA Atlantic Services Agency
ASA2 Atlantic STS Agency Ltd (ASA Angola Ltd)
Cl. Clause
OPL Off port limit
WTI Western Tankers Inc
STS Ship to ship transfer
WD Western Dawn
1
STATEMENT OF FACTS
THE CHARTERPARTY
1 The Claimant is Western Tankers Inc, a long established company incorporated in the
British Virgin Islands. The Claimant owns, among other vessels, the Western Dawn.
The Respondent is LDT Pte, a company incorporated in Singapore.
2 On the 26 May 2014, Western Tankers Inc, the Claimant, and LDT Pte, the
Respondent, agreed on a time charter of Western Dawn (the Vessel) on an amended
Shelltime 4 charterparty. The charterparty included rider clauses and was for a period
of three months, plus or minus 30 days. The first voyage under this time charter trip
was from Singapore to OPL (Off Port Limit) Luanda, Angola, with re-delivery in the
Mediterranean area (Gibraltar-Trieste range).
THE VOYAGE
3 On 8 June 2014 the Vessel completed the loading of the cargo, bills of lading were
issued and the vessel was ordered to proceed to OPL Luanda for discharge. The ship
did not take additional bunkers at Durban contrary to the initial plan. It was agreed
that the next bunker supply would be on arrival of “STS Area 1”.
4 The charterers advised the Western Dawn to refer to their local discharge coordinator
on arrival, the Atlantic Services Agency, which never replied to any of the vessels
messages. After having received an email from the Atlantic STS Agency Ltd on 28
June 2014., in which the addresser identified himself as the Charterers local discharge
agency, the Master of the Western Dawn followed the instructions given in this
message and proceeded to an alternative discharge area, in international waters off the
Angolan Coast, close to the original discharge area. The Master informed the
charterers of this alternative discharge place at which the vessel would take new
2
bunkers via a ship to ship transfer with a vessel called The Antelope as well on 3 July
2014. The Charterers replied on the 4 July 2014 with an instruction to continue to
liaise with the vessels ship to ship coordinator. On arrival at the designated position on
4 July 2014 the Master of the vessel tendered a notice of readiness to the Charterers.
Later that day, the Western Dawn was approached by two fishing vessels which later
turned out to be pirates. The Western Dawn was hijacked. The Master was able to
regain control over the vessel only on 17 July 2014. As a result of the pirate attack,
several crewmembers were injured and the vessel was damaged. Additionally, about
28,500mt of Gasoil were stolen from the cargo and could not be recovered. Due to this
incident the Western Dawn was unable to meet the discharge target date at Luanda.
The vessel did not continue to the originally designated discharge area, but instead,
went to Cape Town to await further instructions from the charterers.
Hire
5 Furthermore the charterers failed to pay hire for July in advance. The owners sent a
notice of default of payment on 3 July 2014 to which the charterers never replied.
Instead, they sent a redelivery notice to the owners on 4 July 2014 and a few hours
later an off-hire notice. Due to no contact with the vessel, hire was not paid.
Arbitral Proceedings
6 A statement of claim was served to the defendant by the claimant on the 1 November
2014; a responding statement of defense with a counterclaim was served on 29
November 2014.
3
JURISDICITON
The Tribunal has no jurisdiction
7 International Commercial Arbitration proceedings arise out of arbitration agreements.
The tribunal has merely the authority that is transferred to it by the parties to the
agreement. Clause 46(a) of Shelltime 41 stipulates that English law is the substantial
law of the charterparty. However, the Respondent submits that London Arbitration is
not the proper seat for determining the present dispute.
8 The wording of the arbitration agreement is the decisive factor when it comes to
determining whether the tribunal has jurisdiction to hear the dispute.2 Shelltime 4
form, Clause 46 (“Law and Litigation”)3 is very clear in this regard. According to the
clause, the charter shall be construed according to English law and all disputes arising
out of this charter shall be referred to arbitration in London in accordance with the
currently effective version of the Arbitration Act 1996. According to the Arbitration
Act 1996, the tribunal has furthermore the power to rule on its own competency.4
9 Nevertheless, it is vital for the parties to decide unanimously on the seat of arbitration
in the event a dispute arises. In the present case, an agreement reached by the parties
has never been signed. The Respondent argues that the agreement is therefore invalid
and it is the correspondent between the parties which constitutes the source of
obligations.5 The correspondence between the Claimant and the Respondentrepresents
an agreement in writing according to cl. 5 (2) (b) of the Arbitration Act 1996.
10 When one analyses the communication between the Claimant and the Respondent, it
becomes clear that “an arbitration in London” according to the standard term in
1 Shelltime 4, cl.46 (a), line 775.
2 Tweeddale a, Tweeddale K Arbitration of Commercial Disputes (Oxford Univeristy Press) 165.
3 Clause 46(a) Shelltime 4.
4 Arbitration Act 1996 (UK) c 23, s 30; Gary B Born, International Commercial Arbitration
(Kluwer Law International, 2009) 856. 5 Coghlin T, A.W. Baker, J. Kenny, John D. Kimball Time Charters (6
th Edition,2008), [1.39].
4
Shelltime 4 was not the intention of the parties. In an email from 23 May 2014 the
defendant made clear that he did not agree to “an arbitration in London”.6
11 Where the parties did not expressly chose a law governing the arbitration procedures,
the identification of this procedural law must be based on an implied choice the parties
made and if an implied choice cannot be identified as well, than the law of the place
with the most real and substantial connection to the agreement should be applied,
according to the common law choice-of-law rules.7
12 Hence, the Respondent contends that this Tribunal has no jurisdiction in this matter
since the parties never agreed on London as seat of the Arbitration proceedings and
English law as proper law of the forum. Instead, the Respondent argues that it is the
Arbitration proceedings are to be held in Singapore according to Singaporean law as
evidence by the correspondence between the parties indicating a lack of agreement as
to the London Arbitration. Hence, the Respondent argues that the matter is outside the
jurisdiction of the Tribunal since London is not the proper seat of the Arbitration
proceedings and English law not the proper forum of law that was agreed upon
13 When it comes to determining the seat and the proper law of the forum, party
autonomy is the guiding principle.8 The seat is to be determined according to what the
parties agreed.9
14 The parties agreed on a Shelltime 4 charterparty with Rider clauses. The shipbroker
acted merely as “channel” for communication.10
15 Seat and procedural law of arbitration proceedings are linked closely, in general, the
choice of the law to govern the arbitration generally includes a choice of the seat.11
6 Moot Problem, 2.
7 Arzandeh A, ‘The Law Governing Arbitration Agreements in England’ (2013) LMCLQ, 31-35, 31.
8 Hill J, ‘Determining the seat of an international arbitration: party autonomy and the interpretation of arbitration
agreements’ (2014) ICLQ 63 (3), 517-534, 521. 9 Hill J, ‘Determining the seat of an international arbitration: party autonomy and the interpretation of arbitration
agreements’ (2014) ICLQ 63 (3), 517-534, 526. 10
Coghlin T, A.W. Baker, J. Kenny, John D. Kimball Time Charters (6th
Edition,2008) [2.22].
5
The Respondent equally argues that the explicit refusal of the London Arbitration
implicates the lack of agreement as to the English law being the procedural law in the
present case. The parties did not agree on a seat of arbitration nor a law governing the
Arbitration proceedings. Since there is neither express nor implied choice, the
governing law and the seat of the proceedings must be identified through determining
the law of the place with the most real and substantial connection to the matter.12
Since the respondent is a company incorporated in Singapore and the voyage that is
concerned in this matter commenced in Singapore, the Respondent submits that the
seat of Arbitration proceedings should also be in Singapore and that the proceedings
should be held according to Singaporean law. The fact that the Charterparty is
governed by English law according to Shelltime 4 cl. 46 (a) can, under the principle of
separability not influence the determination of the seat and the law of the forum.13
16 Even if the tribunal finds that it has jurisdiction over the merits of this dispute, the
Respondent argues that the phrase ‘disputes arising out of this charter’ does not extend
to the tort of fraud.
17 The Respondent submits that whilst it is accepted that Fiona Trust14
has purported to
widen the ambit of arbitration clauses, the extent to which such a phrase could extend
to tort claims is dependent on the degree to which the fraud is connected to the
contract. Adopting the words of Mustill J., the contractual and tortious disputes need
to be so closely knitted together on the facts, that the agreement to arbitrate on one can
properly be construed as covering the other.15
It is argued that the proximity
11
Hill J, ‘Determining the seat of an international arbitration: party autonomy and the interpretation of
arbitration agreements’ (2014) ICLQ 63 (3), 517-534, 524; Naviera Amazonica Peruana SA v Cia International
de Seguros del Peru [1988] 1 Lloyd's Rep 116. 12
Sulamerica CIA Nacional de Seguros SA and others v Enesa Engenharia SA and others, [2012] EWCA Civ
638. 13
XL Insurance Ltd v Owens Corning [2001] 1 All E.R. (Comm) 530; Fiona Trust v Privalov [2008] 1LLR 254;
C v D [2007] EWHC 1541. 14
Fiona Trust v Privalov [2008] 1LLR 254; C v D [2007] EWHC 1541. 15
The Playa Larga [1983] 2 Lloyds Rep 171, 183.
6
requirement is independent of the formulation of the clause in the Shelltime 4 and
cannot be ousted by its wording,16
as it is a sui generis requirement. Therefore, the
Respondent contends that the parties cannot be taken to have excluded the
requirement. In a case decided after Fiona Trust, the High Court of England decided
that because there is no sufficient connection between one of the claims and the main
contract of sale, the arbitration tribunal did not have jurisdiction to hear the claim in
question.17
Therefore, the courts have not ruled out proximity as a valid test in
deciding whether claims in tort are admissible in arbitration.
18 In the case of Playa Verde it was stated that reason why the judge found the existence
of a relevant connection was that the tort claim corresponded to the central duty of the
contract, that is, the delivery of cargo.18
Thus, the Respondent argues that it is
essential when seeking to establish sufficient connection that the tort claim is linked to
the formulation of the contractual obligations.
19 In our case, the claim relating to fraud appertains to the conduct of the parties during
the currency of the contract, rather than to the contractual obligations themselves.
Specifically, the Respondent argues that the claim relies on the existence of
representations made during the course of the contract performance.19
In the judge’s
terms, the contract is an item of past history leading up to the claim.20
Therefore, an
inextricable link between the contract and the claim relating to fraud cannot be shown
to exist.
16
Premium Nafta Products Ltd (20th Defendant) & Ors v. Fili Shipping Company Ltd & Ors [2007] UKHL 40,
[12]. 17
Bilta (UK) Ltd (In Liquidation) v Nazir & Ors [2010] EWHC 1086 (Ch), [19]. 18
The Playa Larga [1983] 2 Lloyds Rep 171, 183. 19
Moot Problem, 63. 20
The Playa Larga [1983] 2 Lloyds Rep 171, 183.
7
20 Since no relevant connection exists between the claim relating to fraud and the
charterparty, the Respondent urges the tribunal to find that the claim relating to fraud
is not admissible.
PART II MERITS
I Breach of the charterparty
A THE OBLIGATION TO STEM SUFFICIENT BUNKERS AT SINGAPORE WAS
NOT ON THE CHARTERERS
21 The fact that the ship may have less that the agreed quantity of bunkers does not imply
that the quantity of bunkers was not enough to deliver the cargo to the port of
destination. The Respondent argues that the deficiency of bunkers does not make the
vessel unfitted for the service within the meaning of Clause 1 Shelltime 4.21
Moreover,
the Respondent contends that the supply of bunkers was indeed sufficient as indicated
by the correspondence between the Master of the vessel and the charterers on 3rd
June
2014.22
The Respondent observes that the supply was sufficient to proceed to Angola
and, subsequently, even to Cape Town. On that basis, knowing that the consequence
of the quantity of the bunkers supply being “only enough to get to discharge area plus
bad weather reserve”, and that the nature of this obligation was not so grave as to
deprive the Claimant of the benefit of the contract, it could be concluded that the
bunkers obligation, if found by the tribunal, could not be a condition of the
charterparty. The Respondent argues, thus, that the Claimant could only be entitled to
damages, he has, however, no right to elect to terminate the contract for breach of an
innominate term.23
21
The North Sea [1999] 1 Lloyd’s Rep 21 (C.A.). 22
Moot Problem, 28. 23
Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26; The Mihalis Angelos [1970] 3 WLR 601.
8
22 The Respondent contends that were the tribunal to rule that there is an obligation on
the Respondent, the provision to stem sufficient bunkers does not relieve the
shipowners from the obligation of seeing that the vessel is in a seaworthy condition in
respect of the supply of fuel.24
B BREACH OF A PROVISION REGARDING HIRE
23 It is submitted that no hire is due under the Charter party since the charter party was
frustrated.
C FRUSTRATION OF THE CHARTERPARTY
24 The Respondent submits that the charter party was frustrated no later than on 4 July
2014. A pirate attack can in principle be a frustrating event. Whether a piracy attack
frustrated a contract or not depends on the length of the pirate attack.25 In this matter
the pirate attack lasted 13 days. This length of time is sufficient to frustrate the
contract, even though frustration is not lightly inferred.26 The charterers expected to be
able to use the vessel for at least three months. A pirate attack that lasted 13 days,
therefore is a supervening event as defined by Lord Simon in the case National
Carriers Ltd. v Panalpina (Northern) Ltd27
.
IF TRIBUNAL DENIES THE FRUSTRATION OF THE CONTRACT: NO HIRE
DUE, DUE TO OFF-HIRE EVENT
25 Should the Tribunal decide that the contract was not frustrated, the Respondent argues
that no hire is due, since no was hire was earned28
as a result of two off-hire events.
Under the charterparty, hire has not been earned if an off-hire event occurred and if
there was a loss of time to the charterer as a consequence of this event. In principle, an
24
The Captain Diamantis [1977] 1 Lloyd’s Rep 362, 367, per Ackner J. 25
Todd P, Maritime Fraud and Piracy [1.138]. 26
Ibid., The Petro Ranger [2001] 2 Lloyd’s Rep 348. 27
National Carriers Ltd. v Panalpina (Northern) Ltd [1981] A.C. 675). 28
Ibid.
9
off-hire event must be fortuitous and not a natural result of the charterers’ orders29
and
not a result of a breach of contract on the part of the charterers.30
D OFF-HIRE EVENT: BREACH OF ORDERS / NEGLECT OF DUTY
26 It is submitted that the vessel was off-hire for a breach of orders and/or neglect of duty
on the part of the Master from 4 July 2014 according to Shelltime 4 cl.21 (a) (ii) until
the vessel was ready to resume service of its voyage from a position not less favorable
to charterers than that at which such loss of time commenced.31
The Respondent
argues that the master neglected his duties and breached his orders.32
In addition, the
Master failed to send a daily report on 4 July 2014 at noon as stipulated by the voyage
order.
E OFF-HIRE EVENT: PIRACY
27 Alternatively, should the Tribunal decide that the Charter party was not frustrated, it is
submitted that the vessel was off-hire as of 4 July 2015.
28 The Respondent argues that the pirate attack is an off-hire event according to
Shelltime 4 cl. 21 (a) (i) as amended. The clause stipulates inter alia that on every
occasion that there is an undisputed loss of time due to accidents or damages to the
vessel or due to any other similar cause preventing the efficient working of the vessel,
the vessel is off-hire. It is submitted that a pirate attack is a similar cause in that
sense.33
The hijacking fully prevents the efficient working of the vessel and is
comparable to an accident to the vessel.
F LOSS OF TIME
29 The two off-hire events have led to an undisputed delay. According to Shelltime 4
cl.21 (a), the vessel is to be considered off-hire from the commencement of such loss
29
The “Rijn” [1981] 2 Lloyd’s Rep. 267. 30
Lensen v Anglo-Soviet (1935) 52 L.I Rep. 141. 31
Moot problem, 68. 32
Ibid. 33
Osmium Shipping Corp v Cargill International SA [2012] EWHC 571 (Comm).
10
of time until she is again ready and in an efficient state to resume her service from a
position not less favorable to charterers than that at which such loss of time
commenced. Since the vessel returned to Cape Town after the hijacking, although it
was very close to the original discharge place, the vessel has been off-hire since the
off-hire lasts until the termination of the contract.
SHOULD THE TRIBUNAL FIND THAT OBLIGATION TO PAY HIRE IS STILL
DUE AND OWED
30 Alternatively, the Respondent submits that the failure to pay hire under a time charter
party is not a breach of a condition but merely a breach of an innominate term.
DISTINCTION BETWEEN CONDITION AND INNOMINATE TERM34
31 According to the most recent decision in Spar Shipping AS v. Grand China Logistics
Holding (Group) Co., Ltd [2015] EWHC 718 the obligation to pay hire under a time
charter party is an innominate term. The Respondent contends that this ruling is
applicable to the present case.
32 Firstly, the Respondent submits the fact that the owners are entitled to withdraw a
vessel according to the anti-technicality clause in Shelltime 4 does not indicate that a
breach of the duty to pay hire is a condition of the charter party. The withdrawal
clause merely gives the owners an option to withdraw the vessel from service. A
breach of the clause does not automatically constitute a justification to terminate the
contract. The withdrawal clause itself does not transform the term into a condition.
The owners can, therefore, not claim greater damages.35
34
Tenax Steamship Co v Owners of the Motor Vessel Brimnes (The Brimnes) [1973] 1 W.L.R. 386;
Kuwait Rocks Co v AMN Bulkcarriers Inc [2013] EWHC 865 (Comm), [2013] 2 All E.R. (Comm) 689 (The
Astra). 35
Spar Shipping AS v. Grand China Logistics Holding (Group) Co., Ltd [2015] EWHC 718 ;Financings Ltd v
Baldock [1963] 2 Q.B. 104.
11
33 The Respondent argues that due to the variation in the gravity of the nature of the
breaches, an innominate term is a better and a more reasonable option.36
DAMAGES IN CASE THE TRIBUNAL FINDS THAT THE RESPONDENT IS
LIABLE
34 The Respondent contends that the Claimant cannot claim future earnings as part of the
damages should the tribunal decide that the Respondent is liable.
THE CLAIMANT BREACHED THE CHARTERPARTY IN FAILING TO COMPLY
WITH THE PIRACY CLAUSE
35 The Respondent argues that the Claimant is in breach of the Charterparty dated 26
May 201437
by failing to comply with the piracy clause sub-clause (1) contained
therein. In the area through which the vessel proceeded, i.e. the Gulf of Guinea, there
is a current real risk of piracy.38
According to the Piracy Clause sub-clause (1) the
Respondent argues that the Claimant was aware that Western Africa is a “piracy threat
area”.39
The Claimant breached the piracy clause sub-clause (1), since he failed to
adhere at all times to the latest version of BMP, which requires inter alia, deploying
36
Spar Shipping AS v. Grand China Logistics Holding (Group) Co., Ltd [2015] EWHC 718 ;Bunge Corp v
Tradax Export SA [1981] 1 W.L.R. 711; Federal Commerce & Navigation Co Ltd v Molena Alpha Inc (The
Nanfri) [1979] A.C. 757. 37
Moot Problem, 8. 38
BIMCO Special Circular, No 1, March 2009, 2; Pacific Basin IHX Ltd v Bulkhandling Handymax A/S (The
Triton Lark) [2011] EWHC 2862 (Comm); United Nations Security Council , 19 January 2012, Letter Dated 18
January 2012 from the Secretary-General addressed to the President of the Security Council S/2012/45, 3; Keith
Johnson, ‘Oil Pirates and the Mystery Ship’ Foreign Policy, January 29, 2014; James Burgess, ‘Oil Piracy
Moves to Angolan Coast with $8M Heist’
< http://oilprice.com/Energy/Energy-General/Oil-Piracy-Moves-to-Angolan-Coast-with-8M-Heist.html>
accessed 10 April 2015; Reuters ‘UPDATE 1-Pirates hijacked tanker off Angola, stole cargo - owners’
<http://uk.reuters.com/article/2014/01/26/angola-piracy-idUKL5N0L00NM20140126>; David Kashi, ‘Nigerian
Pirates Likely Hijacked Oil Tanker Off Angola's Coast, Expert Says’, International Business Times (27 January
2014) <http://www.ibtimes.com/nigerian-pirates-likely-hijacked-oil-tanker-angolas-coast-expert-says-1548738>;
Ali Kamal-Deen, ‘The Anatomy of Gulf of Guinea Piracy’ (2015) Naval War College Review 68(1) United
Nations Security Council Resolution 2018, „Piracy and Security in Africa”, 31 October 2011; Resolution 2039,
„Peace Consolidation in West Africa” 29 February 2012; United Nations Security Council Report of the United
Nations Assessment Mission on Piracy in the Gulf of Guinea, UNSC S/2012/45 (New York: 19 January 2012). 39
Moot problem, 22.
12
razor wire.40
Hence, the Respondent argues that in this way, by not employing
sufficient protective measures,41
the Claimant is in breach of Piracy Clause sub-clause
(6) as he did not effectively protect the crew and the vessel.
THE CLAIMANT BREACHED THE CHARTERPARTY BY PROVIDING A VESSEL
THAT WAS NOT FIT FOR SERVICES AS REQUIRED BY THE CHARTERPARTY
36 The Respondent argues that the Claimant is in breach of the Shelltime 4 charterparty
clause 1 which requires “at the date of the delivery of the vessel under this charter and
throughout the charter period (c) she shall be in every way fit for the service”.42
The
Respondent argues that seaworthiness is not an absolute concept. It is relative to the
nature of the ship, to the particular voyage and to the particular stage of the voyage.43
The Respondent argues that the seaworthiness requirement extends to the vessel’s
tackle or equipment,44
to numbers and competence of the crew,45
and also to their
training.46
“Seaworthiness develops over time to reflect evolving knowledge and
standards of ship construction, and it varies according to demands of the particular
adventure”.47
The Respondent contends that seaworthiness must be judged by the
standards and practices of the industry at the relevant time, at least so long as those
standards and practices are reasonable.48
37 The Respondent argues that since it was known that the voyage will include areas at
high risk of piracy, the ship was unprepared for which, and that renders the ship
40
Best Management Practices for Protection against Somalia Based Piracy (BMP4) Suggested Planning and
Operational Practices for Ship Operators and Masters of Ships Transitting the High Risk Area, Version 4
(Witherby Publishing Goup Ltd, 2011) 28. 41
Moot Problem, 9. 42
Shelltime 4 Charter Party. 43
Kapitoff v Wilson (1876) QBD 377, 380 per Field J. 44
The Maori King [1895] 2 QB 550; Queensland National Bank Ltd v Penisular and Oriental Steam Navigation
Co [1898] 1 QB 567. 45
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26; Alfred C. Toepfer
Schffahrtsgesellschaft mbH v Tossa Marine Co Ltd (The Derby) [1985] 2 Lloyd’s Rep. 325. 46
Papera Traders Co ltd v Hyundai Merchant Marine Co Ltd (The Eurasian Dream) [2002] 1 Lloyd’s Rep 719;
Paul Todd, Maritime Fraud and Piracy [1.115]. 47
Bennett, The Law of Marine Insurance, 2nd
edn (Oxford, 2006) [19.18]. 48
Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co. Ltd. and Another – The “Eurasian
Dream” [2002] 1 Lloyd’s Rep. 719.
13
unseaworthy. The Respondent contends that were the shipowners at the top of the
latest developments,49
the damage could be avoided. The Respondent, additionally,
refutes the Claimant’s contention that piracy is a peril of the sea,50
for which there
could be an exception. The Respondent is in breach of the seaworthiness obligation
due to the incompetence of the master and the crew.51
THE INCOMPETENCE OF THE MASTER AND CREW HAS RENDERED THE VESSEL
UNSEAWORTHY52
AND CONTRIBUTED TO THE BREACH OF THE CHARTERPARTY
38 Although clause 27 of the Shelltime Charter Party would normally exempt the
Claimant from liability for any loss or damage or delay or failure arising or resulting
from any act, neglect or default of the servants of the Claimant in the navigation or
management of the vessel, dangers and accidents of the sea,53
the Respondent argues
that this exception should be construed narrowly. Clause 27 provides the exception
“unless otherwise in this charter expressly provided”. Since the BIMCO Piracy Clause
is validly incorporated into this charterparty, and it expressly provides that it prevails
over other clauses in the event of conflict,54
the Respondent contends that the
Claimant is in breach of this provision, and, consequently, in breach of the
charterparty. The Respondent submits that the master failed to exercise a reasonable
judgment when it comes to the safety of the port. The master failed to observe the risk
and draw appropriate conclusions and actions, especially with regards to the two
fishing boats that were observed. No actions were taken to prevent a potential piracy
threat. Hence, the Claimant is in breach of the obligation inferred in BIMCO Piracy
49
Todd P, Maritime Fraud and Piracy [1.116]. 50
Todd P, Maritime Fraud and Piracy [1.124]; Paul Todd, Maritime Fraud and Piracy [1.119]. 51
Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co. Ltd. and Another – The “Eurasian
Dream” [2002] 1 Lloyd’s Rep. 719. 52
Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co. Ltd. and Another – The “Eurasian
Dream” [2002] 1 Lloyd’s Rep. 719. 53
Shelltime 4 Charter Party Clause 27 ‘Exceptions’. 54
Moot Problem, 12.
14
Clause for Time Charter Parties 2013 sub-clause (a).55
The Respondent contends that a
reasonably prudent owner, knowing the relevant facts and, the real risk of piracy,
would not have allowed the vessel to put to sea with this master and crew, with their
state of knowledge, training and instruction.56
The Respondent argues that the master
cannot enter ports that are obviously unsafe and then charge the charterers with
damage done.57
39 The Respondent argues that when the charterer is prepared at the time of taking the
charter to specify the place where the cargo will be available or the place at which he
desires it delivered, the shipowner must take the responsibility of ascertaining whether
he can safely berth his ship there or will take the risk of doing to. If he agrees upon the
place, his liability to have his ship there is definite.58
THE CHARTERERS ARE NOT IN BREACH OF THE SAFE PORTS WARRANTY
40 The Respondent argues that Shelltime 4 Clause 4 reduces the charterers’ safe port
obligation to one of due diligence only.59
Clause 4 of Shelltime 4 provides “Charterers
shall use due diligence to ensure that the vessel is only employed between and at safe
places… Charterers do not warrant the safety of any place to which they order the
vessel and shall be under no liability in respect thereof except for loss or damage
caused by their failure to exercise due diligence aforesaid”.60
41 Owners are not required to accept the nomination of a safe port, and charterers who
order a vessel to an unsafe port will be in breach of the charterparty. The shipowner
can refuse the nomination, and the charterers can also be liable for damages if he
55
Moot Problem, 11. 56
McFadden v Blue Star Line [1905] 1 KB 697, 706 per Channel J.; Papera Traders Co. Ltd. and Others v.
Hyundai Merchant Marine Co. Ltd. and Another – The “Eurasian Dream” [2002] 1 Lloyd’s Rep. 719. 57
Time Charters, [10.60]. 58
Reardon Smith Line v. Australian Wheat Board (The Houston City) (High Court of Australia) [1954] 2
Lloyd’s Rep 148, 153, per Dixon, C.J.; ([1956] 1 Lloyd’s Rep 1) adopted by Devlin J., in The Stork [1954] 2
Lloyd’s Rep 397, 415 per Devlin J.; [1955] 1 Lloyd’s Rep 349, 365 per Singleton LJ 365; Time Charters,
[10.80]. 59
Time Charters, [10.54]. 60
Shelltime 4 Clause 4.
15
proceeds, and loss is occasioned.61
The Respondent refutes that Claimant’s contention
that the Respondent directed the vessel to an unsafe port. The damage suffered by the
owners has been caused by or contributed to by the negligence of the master and crew
and mistakes in their judgment. The Respondent contends that the master should have
seen the danger for himself when he was approached by the fishing boats.62
The
Respondent concedes that it is the incompetence of the master or crew rather than the
charterers’ breach of the term as to safety that is the effective cause of damage.
Therefore there is no liability on the charterers. It is said that the claim of causation
from the breach by the charterers has been broken by the intervening act or default of
the master or crew.63
A safe port warranty, whereby the Charterer warrants at the time
of nominating a port that it will be safe during the vessel’s approach, call and
departure without being exposed to danger in the absence of an abnormal occurrence,
does not concern all the ports in the region of the Gulf of Guinea. Taking into account
the total large area of the Gulf of Guinea, this conclusion would be unreasonable and
thus, is inappropriate.
DAMAGES
42 The Respondent argues that the charter terminated on the same day when the ship
went missing as according to clause 20 of the Shelltime 4 Charter Party. The vessel
was unseaworthy, thus the Respondent contends that the Claimant is liable for
damages for the breach of the innominate term.64
The Respondent argues that were the
tribunal to hold the Respondent in breach, the Claimant could recover damages only
for the period up to 4 July 2014. The charterers’ repudiation had deprived the owners
of a contract that was always subject to termination upon an event, which event it had
61
Wilson J, Carriage of Goods by Sea, 6th edn (Pearson, 2008), 28-9. 62
Time Charters, [10.68]. 63
Time Charters, [10.69]; The Dagmar [1968] 2 Llyd’s Rep 563, 571 per Mocatta J.; The Polyglory [1977] 2
Lloyd’s Rep 353; The Mary Lou [1981] 2 Lloyd’s Rep 272 per Mustill J. 64
ENE Kos 1 Ltd v Petroleo Brasileiro SA (No 2). [2012] UKSC 17.
16
been proved would have occurred. In assessing damages, the courts should not ignore
facts that had become known since the breach.65
43 The Respondent argues that the cost of repair is not recoverable where the repair
would be an unreasonable expense, judged from a commercial perspective.66
The
Claimant’s acceptance of the Respondent’s nomination has been held to constitute a
waiver of a claim for damages.67
III TORT OF FRAUD
A ASA2 IS NOT AN AGENT OF THE CHARTERERS, DUE TO THE FACT THAT
IT DID NOT HAVE ACTUAL AUTHORITY: ASA HAD ACTUAL AUTHORITY TO
ACT ON BEHALF OF THE RESPONDENT
44 No misnomer has occurred, therefore ASA2 and ASA are two different parties. Rix LJ
stated that it is unlikely that a misnomer has occurred if the contract can be construed
as binding the parties that were actually named in the contract.68
As per the voyage
orders, the Owners should have received instructions from ASA, as this was the
nominated agent. Instead, they have taken voyage instructions from the wrong party,
ASA2. It is immaterial to this point whether ASA had not responded before ASA2 did,
as the Claimant was never authorised to follow the instructions of ASA2 in any case.
Thus, a construction of the contract to the effect that ASA were the Respondent’s
agents was possible. For this reason, the Respondent argues that a misnomer has not
occurred.
65
The Golden Victory [2005] 1 Lloyd’s Rep. 443, [2005] 2 Lloyd’s Rep. 747 (C.A.) and [2007] 2 Lloyd’s Rep.
164 (H.L.). 66
The Rozel [1994] 2 Lloyd’s Rep. 161, per Phillips, J.; The Puerto Buitrago; The Alecos M [1991] 1 Lloyd’s
Rep. 120 (C.A.). The Alecos M, 168 per Phillips, J.; Ruxley Electronics v. Forsyth [1996] A.C. 344 (H.L.); The
Griparion (No. 2) [1994] 1 Lloyd’s Rep. 533. 67
The “Chemical Venture” [1993] 1 Lloyd’s Rep. 508. 68
Dumford Trading v OAO Atlantrybflot [2005] 1 Lloyd’s Rep 289, [32]-[35].
17
B ALTERNATIVELY, THE RESPONDENT ARGUES THAT THE CONTRACT
MUST BE CONSTRUED IN ACCORDANCE TO WHAT IT WOULD CONVEY TO
THE REASONABLE PERSON69
45 If a reasonable person would look at the contract it would not be apparent that ASA
should is the nominated agent. The voyage orders make reference to ASA as being the
nominated discharge port agent, rather than ASA2, on two occasions.70
Therefore,
using this specific wording was not a clerical error and cannot be construed as a
misnomer.71
C EVEN IF ASA2 HAD EXPRESS OR APPARENT AUTHORITY TO ACT ON
BEHALF OF THE RESPONDENT, THE RESPONDENT IS NOT BOUND BY ASA2’S
ACTIONS DUE TO THE FACT THAT ASA2 ACTED OUTSIDE ITS SCOPE OF
AUTHORITY72
46 The Respondent contends that it should be duly noted that there is no provision in the
contract that would have allowed the Respondents to change the location of the
discharge port, so the Respondent could not have delegated this right to ASA2.73
47 The bills of lading and the voyage orders indicated that the discharge port is OPL
Luanda.74
However, ASA2 instructed the Master to change the discharge location so
that the amended STS location was now changed to a location in the Republic of
Congo, rather than in Angolan waters. Because the Respondents could not have
lawfully delegated such right to ASA2, it follows that ASA2 acted ultra vires in
changing the initial coordinates. The Respondent submits that a reasonable master
would not have followed the changed coordinates that were sent by a third party.
69
Whittam v. W. J. Daniel & Co. Ltd. [1962] 1 Q.B. 271, 277; Nittan (U.K.) Ltd. V Solent Steel Fabrication Ltd.
Trading As Sargrove Automation And Cornhill Insurance Co. Ltd. [1981] 1 Lloyd's Rep. 634. 70
Moot Problem, 14-15. 71
Nittan (U.K.) Ltd. V Solent Steel Fabrication Ltd. Trading As Sargrove Automation And Cornhill Insurance
Co. Ltd. [1981] 1 Lloyd's Rep. 634, 639. 72
Bowstead & Reynolds, [8-065]. 73
Voyage Charters, [5.15]. 74
Moot Problem, 34.
18
D REPRESENTATIONS MADE BY CHARTERERS WERE TRUE AT THE TIME
THEY WERE MADE
48 A statement is only rendered untrue if the defendant says that he expects an event to
take place when he does not.75
On a proper construction of the message dated 3 June,
the Claimant expressed that bunkers are available either at Durban or Cape Town. The
formulation suggests that if there was no supply at Durban then the Claimant could
bunker at Cape Town. The Respondent contends that the representation was not
rendered untrue just because the Claimant did not bunker at Cape Town. The
Claimants need to prove the existence of an untrue representation to a high standard of
proof.76
There is nothing to demonstrate that they were not true at the time they were
made. Therefore the burden of proof is not discharged.
E THE RESPONDENT HONESTLY BELIEVED THE REPRESENTATIONS TO BE
TRUE
49 It is trite law that without the element of dishonesty the statement is not capable of
amounting to fraud.77
In Niru Battery a bank officer who tendered a letter of credit
was not aware of the fact that no payment was due under it, despite the fact that it was
obvious to any reasonable person. However casual or naïve he might have been, it was
decided that no claim lay in deceit.78
50 The test is therefore subjective and, the Respondent argues, that the tribunal must take
into account all relevant circumstances when determining whether the Respondent was
honest. The Respondent argues that the fact that the Respondent is a newcomer in the
ship chartering market is crucial in determining whether he acted honestly because his
75
Karberg’s Case [1892] 3 Ch. 1, 11. 76
Smith New Court Securities Ltd. V. Scrimgeourvickers (Asset Management) Ltd. [1997] A.C. 254, 274. 77
Derry v Peek (1889) 14 App. Cas. 337, 376. 78
Niru Battery v. Milestone Trading Ltd. [2004] 2 Lloyd's Reports 319.
19
knowledge of the relevant bunkering process is more limited.79
For this reason, they
were not aware beforehand that the agents would be late when arriving at the STS
area, because they had not sufficiently developed business relationships in order to
assess the professionalism of ASA. The Respondents argue that this was a
manifestation of the Respondent’s naivety and thus, cannot be construed as dishonest
attitude.
F THE RESPONDENT ARGUES THAT, TO THE EXTENT THAT
REPRESENTATIONS IN QUESTION WERE TRUE AND HONESTLY MADE,
THEY WERE INTENDED TO BE RELIED UPON
51 If the tribunal finds to the contrary, the Respondents argue that their intention was for
the Claimant to bunker and discharge the cargo and not to lead the Claimant into an
area where damage would be incurred.80
The conduct of ASA2 who was either not an
agent of the Respondent or, alternatively, was acting outside authority or without any
authority whatsoever, solely bears the fault for the damage.
G THE RESPONDENT ARGUES THAT THE CLAIMANT DID NOT RELY ON THE
STATEMENT OF THE RESPONDENT, TO THE EFFECT THAT SUFFICIENT
BUNKERS ‘WILL BE AVAILABLE PASSING DURBAN OR CAPE TOWN’
52 The tort of deceit is only complete when relied upon.81
A representation is deemed to
be repeated throughout the interval provided that it still relates to an existing state of
things.82
By proceeding towards STS Area 1 any reliance that had taken place up until
that point had ended.83
Therefore, the Respondent contends that because the Claimants
could not have acted upon a representation that was not effective at the time when it
79
Moot problem, 45. 80
Tackey v McBain [1912] AC 186. 81
Michael Jones; Professor Anthony Dugdale; Mark Simpson, QC, Clerk & Lindsell on Torts (Sweet &
Maxwell 21st ed. 2014) 1321.
82 Michael Jones; Professor Anthony Dugdale; Mark Simpson, QC, Clerk & Lindsell on Torts (Sweet &
Maxwell 21st ed. 2014) 1321.
83 Moot problem, 33.
20
could have been acted upon, the representation of the Charterers is ineffective for
establishing a claim in fraud.
H THE RESPONDENT ARGUES THAT THE CLAIMANT DID NOT RELY ON THE
REPRESENTATIONS MADE BY ASA2
53 There is no reliance if the Claimant would have done the same regardless of the
agents’ representations.84
54 The Respondent submits that but for the representations of ASA2, the master would
have followed the initial coordinates that he had at his disposal, with the result that he
would have arrived at a different location.85
However, the distance between the two
coordinates is negligible and can be ascribed under the general territorial appertaining
to international waters off the Angolan coast. Therefore, both areas hold similar piracy
risks, that is, the risks appertaining to the damage alleged by the Claimant.86
To this
extent, notwithstanding the representations by ASA2, Western Dawn would have
arrived at a materially identical area.
I THE RESPONDENT ARGUES THAT THE CLAIMANT DID NOT SUFFER
DAMAGE AS A CONSEQUENCE OF RELYING ON THE REPRESENTATIONS
55 Subject to finding that such representations have taken place and that damage had
indeed been suffered, the Respondent argues that there is no link between the damage
suffered and the representations on which the Claimant allegedly relied. Although the
master’s reliance on ASA2’s instructions was a ‘but for’ factual cause of the damage
incurred during the pirate attack, the reliance was merely part of the history of events
that placed the Western Dawn in that place at that time and cannot be considered a
legal ‘cause’ of the damage allegedly incurred.87
84
Smith v Chadwick (1883-84) 9 App. Cas. 187; Clerk & Lindsell, [18-34]. 85
Moot problem, 34. 86
Ali Kamal-Deen, ‘The Anatomy of Gulf of Guinea Piracy’ (2015) 68(1) Naval War College Review 93. 87
Clerk & Lindsell [2-99]; Carslogie S.S. Co Ltd v Royal Norwegian Government [1952] AC 292.
21
III BAILMENT
56 Bailment is a legal relationship that comes into existence whenever the bailee is
voluntarily in possession of goods which belong to the bailor.88
Bailment is a
recognised course of action in common law.89
It comes into existence after the
contract has been frustrated as in the present case. When the obligations under the
contract of carriage come to an end, the duty in bailment arises. The Respondent
concedes that the Claimant is liable in bailment for two reasons. Firstly, the Claimant
broke the obligation to take reasonable care to deliver the goods only to the party
entitled to them, even in the absence of the right to possession, and secondly, the
Claimant deviated from the bailment in respect of, part of the cargo on the Vessel.
Alternatively, the Claimants converted part of the cargo on the Vessel.
A BAILMENT IS A RECOGNISED COURSE OF ACTION IN COMMON LAW
57 The Respondent argues that bailment is a valid, common and useful course of action in
maritime claims.90
Almost every claim for damages issued in the Commercial Court in
London in respect of carriage of goods by sea pleads bailment as a cause of action.91
Therefore in the event that the Tribunal rules that the contract has been frutrated, the
Respondent refutes the Claimant’s claim, that there is no common law course of action
in bailment.92
A THE CLAIMANTS BROKE THE OBLIGATION TO TAKE REASONABLE CARE
TO DELIVER THE GOODS ONLY TO THE PARTY ENTITLED TO THEM
88
The Pioneer Container [1994] 2 AC 324, PC; East West Corp v DKBS 1912 [2003] EWCA Civ 83, [2003] QB
1509, Sandeman Coprimar SA v Transitos y Transportes Integrales SL [2003] EWCA Civ 113, [2003] QB 1270;
Marcq v Christie Manson & Woods Ltd (t/a Christie’s) [2003] EWCA Civ 731, [2004] QB 286. 89
Andrew Burrows, English Private Law (OUP, 2013) 883. 90
KH Enterprise (Owners of Cargo Lately Laden on Board The) v. Owners of The Pioneer Container (The
Pioneer Container) [1994] 2 AC 324; [1994] 1 Lloyd’s Rep 593, Yearworth v. North Bristol NHS Trust [2009]
EWCA Civ 37; [2009] 3 WLR 118. 91
Palmer on Bailment, 3rd edn (2009), [20.002]. 92
Yearworth v. North Bristol NHS Trust [2009] EWCA Civ 37; [2010] QB 1; East West Corp v. DKBS AF 1912
A/S [2003] EWCA Civ 83; [2003] QB 1509, [24-32].
22
58 The Respondent argues that they did not receive or take possession of the gasoil
removed from the Vessel between 4 July
and 17 July 2014. The Respondent concedes
further that the receivers named in the Bill of Lading did not receive or take
possession of the gasoil removed from the Vessel between 4 July
and 17 July 2014 in
breach of the bailee’s duty to take reasonable care of the goods.93
The Respondent
argues that there is a general duty of care on the part of the carrier to take reasonable
steps to deliver the goods only to the party entitled to them and this duty was
breached, as the Respondent’s cargo has not been taken proper care of by the Claimant
after the contract of carriage has been terminated.
B SINCE THE ATTORNMENT CAN BE FOUND IN THE PRESENT CASE THERE
IS NO NEED TO PROVE THE RIGHT TO POSSESSION
59 The Respondent contends that the right to possession is not the sine qua non for the
bailment claim. Even if the Respondent was not in immediate possession of the goods
in the present case and, if it is proven that he was not the lawful bill of lading holder, it
does not prejudice the bailment claim. The Respondent observes that the reason why
the bailment claims failed in The Aliakmon and The Starsin was because of lack of
attornment, thus the acknowledged transfer of the right, rather than the fact that the
plaintiff had no possessory or proprietary interest in the goods at the time of the
breach.94
The Respondent argues that in the present case, the attornment took place
when the Respondent transferred the cargo to the Claimant on 8 June 2014, the title
has been transferred and, hence bailment is a legitimate course of action.
93
Morris v CW Martin & Sons Ltd [1966] 1 QB 716, 738, CA, per Salmon LJ; East West Corp v DKBS 1912
[2003] EWCA Civ 83, [2003] QB 1509. 94
Simon Baughen, ‘Bailment or conversion? Misdelivery claims against non-contractual carriers’ (2010) C 411-
430, 416.
23
C ALETERNATIVELY, THE CLAIMANT CONVERTED IN RESPECT OF THE
CARGO ON THE VESSEL
60 In the event that attornment is not found by the court in the present case, the
Respondent argues that the Claimant converted in respect of the cargo on the vessel
thus was in breach of the bailee’s duty to take reasonable care of the goods and to
abstain from converting them.95
Conversion is defined as a ‘wrongful interference
with the right to possession of a chattel’.96
The immediate right to possession is
transferable by transfer of the bill of lading without the need for attornment97
unlike
the position where the claim is for the breach of the bailment.98
Thus, in the present
case the immediate right to possession of the cargo was transferred by transfer of the
bill of lading.
61 The Respondent argues that the Claimant’s breach satisfies the three elements of the
tort of conversion defined by Lord Nicholls of Birkenhead in Kuwait Airways Corp v.
Iraqi Airways Corp (Nos 4 and 5).99
The Respondent firstly contends, that the
Claimant’s conduct was inconsistent with the rights of the owner (or other person
entitled to possession), as the owner would take proper care of the goods. Secondly,
the conduct was deliberate, not accidental. In the present case, the master acted on the
basis of his own judgment in avoiding to follow the instructions of the charterers, thus
his actions were deliberate. Thirdly, the conduct was so extensive an encroachment on
the rights of the owner as to exclude him from use and possession of the goods.100
The
Respondent argues that the delivery of the part of cargo to a party that is not entitled to
95
Morris v CW Martin & Sons Ltd [1966] 1 QB 716, 738, CA, per Salmon LJ; East West Corp v DKBS 1912
[2003] EWCA Civ 83, [2003] QB 1509. 96
MCC Proceeds Inc v Lehman Bros International (Europe) [1998] 4 All ER 675. 97
Official Assignee of Madras v. Mercantile Bank of India Ltd [1935] AC 53 (PC). 98
Simon Baughen, “Bailment or conversion? Misdelivery claims against non-contractual carriers” (2010)
Michael Jones; Professor Anthony Dugdale; Mark Simpson, QC, Clerk & Lindsell on Torts (Sweet & Maxwell
21st ed. 2014) 411-430, 414.
99 [2002] UKHL 19; [2002] 2 AC 883, [39].
100 [2002] UKHL 19; [2002] 2 AC 883, [39].
24
possession thereof, satisfies all three of these elements.101
In the present case, the
claimants deliberately appropriated the cargo, and this was a tort for which any owner
of the goods could sue.102
D THE CLAIMANT FURTHER DEVIATED FROM THE TERMS OF THE
BAILMENT
62 The Respondent argues that about 28,000mt of gasoil was discharged from the Vessel
between 4 July and 17
July 2014 contrary to the terms of the contract of carriage which
provided for delivery at Luanda and redelivery in the Mediterranean. The Claimant
deviated from the terms of the bailment and thus became the insurer of the goods.103
The Respondent argues that the fact that the goods were lost is due to the Claimant’s
fault and thus he is liable.104
IV PRAYER FOR RELIEF
For the reasons set out above, the Respondent requests the Tribunal to:
DECLARE that this Tribunal has no jurisdiction to hear the merits of the dispute, especially
in respect to the tort of fraud; and
FIND that the Respondent is not liable for the breached of the Charterparty and the tortious
duty.
101
Simon Baughen, ‘Bailment or conversion? Misdelivery claims against non-contractual carriers’ (2010)
Lloyd’s Maritime and Commercial Law Quarterly 411-430, 412. 102
Cia Portorafti Commerciale SA v. Ultramar Panama Inc (The Captain Gregos) (No 2) [1990] 2 Lloyd’s Rep
395, 406. 103
Mitchell v Ealing London Borough Council [1979] QB 1. 104
Travers & Sons v Cooper [1915] 1 KB 73; Port Swettenham Authority v TW Wu & Co (M) Sdn Bhd [1979]
AC 580, PC; Frans Maas (UK) Lts v Samsung Electronics [2004] EWHC 1502, [2004] 2 Lloyd’s Rep 251;
Coopers Payen Ltd v Southampton Container Terminal Ltd [2003] EWCA Civ 1223, [2003] 1 Lloyd’s Rep 331.