Universitas Gadjah Mada - Team 20 · 2020-01-16 · UNIVERSITAS GADJAH MADA - TEAM 20 MEMORANDUM FOR RESPONDENT Page iii TABLE OF AUTHORITHIES CASES LAW AND ARBITRAL AWARDS PAGE Aggeliki

1 7 T H I N T E R N A T I O N A L M A R I T I M E L A W A R B I T R A T I O N M O O T , 2 0 1 6

UNIVERSITAS GADJAH MADA

TEAM NO. 20

MEMORANDUM FOR RESPONDENT

ON BEHALF OF AGAINST

HESTIA INDUSTRIES ZEUS SHIPPING AND TRADING COMPANY

RESPONDENT CLAIMANT

COUNSELS

EDWIN GIOVAN SANTOSO TIURULI SITORUS GISELLA ARDEN SAMUDIONO

REYNARD KRISTIAN ANGELINA EMBUN PRASASYA SANDI HALIM

UNIVERSITAS GADJAH MADA - TEAM 20

MEMORANDUM FOR RESPONDENT Page i

TABLE OF CONTENTS

TABLE OF CONTENTS ....................................................................................................... i

LIST OF ABBREVIATIONS ............................................................................................... ii

TABLE OF AUTHORITHIES ............................................................................................ iii

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

JURISDICTION .......................................................................................................................... 3

I. THIS TRIBUNAL DOES NOT HAVE JURISDICTION OVER THE PRESENT CASE ........... 3

A. The Arbitration Clause Does Not Include The Frustration Issue to Be

Arbitrated Under Forum Resided In London ............................................................. 3

B. The Dispute Shall Be Resolved In Courts of Poseidon ..................................... 5

MERITS .................................................................................................................................... 7

II. CLAIMANT HAS FAILED TO PROVIDE A COMPETENT MASTER ............................. 7

A. The Master Was Negligent And Incompetent Due to The Absence of

Notification Obliged Under The Charterparty ........................................................... 8

B. The Master Was Negligent And Incompetent For Returning Back to Port

Of Hades ......................................................................................................................... 9

C. Claimant Shall Be Held Liable For The Master’s Negligence As The

Principal ........................................................................................................................ 10

III. RESPONDENT IS NOT LIABLE FOR DEMURRAGE CLAIM DUE TO FRUSTRATION OF

THE CHARTERPARTY ........................................................................................................ 11

A. The Reigning Regime of President Simmons Prohibited The Vessel Sailed to

Poseidon ........................................................................................................................ 12

B. The Protracted Delay Rendered The Charterparty Radically Different ..... 13

C. The Series of The Event Resulting to The Delay Was Not Foreseeable ....... 16

IV. RESPONDENT IS NOT LIABLE FOR ANY CLAIM OF DEMURRAGE DUE TO THE

OPERATION OF CLAUSES UNDER THE CHARTERPARTY ................................................. 17

A. The Event of Delay Should Be Constituted As Force Majeure ...................... 17

B. The Event of Delay Was An Arrest Which Prevented Demurrage To Accrue

18

C. The Vessel's Flag Was The Successor of The Delay ....................................... 20

COUNTERCLAIM .................................................................................................................... 20

V. RESPONDENT IS ENTITLED TO SALVAGE AWARD ....................................................... 20

A. Respondent Successfully Performed Salvage .................................................. 21

B. The Claimant Shall Be Solely Liable For The Salvage Payment .................. 23

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


MEMORANDUM FOR RESPONDENT Page ii

LIST OF ABBREVIATIONS

¶/¶¶ Paragraph/Paragraphs

Art Article

Case Files IMLAM Moot Problem 2016

Claimant Zeus Shipping and Trading Company

ETA Estimated Time Arrival

HVR The Hague-Visby Rules

i.e. That is

NOR Notice of Readiness

p./pp. Page/pages

Respondent Hestia Industries

The Cargo 260,000m3 Liquefied Natural Gas produced from Hades Shale Gas

The Charterparty The Amended Charterparty

The Coast Guard Hades Coast Guard

The Master Captain Marcus Yi

The Vessel MV Athena

This Tribunal Arbitration Tribunal seated in London

UNCLOS United Nations Convention on the Law of the Sea


MEMORANDUM FOR RESPONDENT Page iii

TABLE OF AUTHORITHIES

CASES LAW AND ARBITRAL AWARDS PAGE

Aggeliki Chairs Company Maritime SA v Pagnan SpA (The Angelic Grace)

[1995] 1 Lloyd’s Rep 87 (CA) 89 col 2

5

Baird Textiles v Marks & Spencer [2001] EWCA Civ 274 3

Bank Line v Capel [1919] A.C. 435 14

Brown v Innovators One [2012] EWHC 1321 (Comm) 3

Classic Maritime v Lion Diversified Holdings [2010] 1 Lloyd’s Rep. 59 12

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

45

7

Cricklewood Property and Investments Trust Ltd v Leighton‟s Investment

Trust Ltd [1945] A.C. 221

16

CTI Group Inc v Transclear SA [2008] EWCA Civ 856 15

Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 12

Denmark Production Ltd. v Boscobel Productions Ltd. [1969] 1 QB 699 16

Dubai Islamic Bank PJSC v Paymentech Merchant Services Inc [2001] 1

Lloyd's Rep 65

5

E. L. Oldendorff & Co. GmbH v Tradax Export S.A. (The Johanna

Oldendorff) [1973] 2 Lloyd's Rep 285, 304

9

Edwinton Commercial Corporation v Tsavliris Russ (Worldwide Salvage &

Towage) Ltd (The Sea Angel) [2007] EWCA Civ 547

14, 16, 17

Fillite (Runcorn) v Aqua-Lift (1989) 26 Const LR 66 5

Fiona Trust and Holding Corp v Privalov [2007] UKHL 40, [2007] 4 All ER

951

3

Globe Master Management Ltd v Boulus-Gad Ltd [2002] EWCA Civ 313 13

Habas Sinai ve Tibbi Gazlar Istihsal v VSC Steel Co. Ltd [2014] 1 Lloyd’s

Rep. 479

3

Hillcrest Homes Limited v Beresford and Curbishley Limited [2014] EWHC

280 (TCC)

5

Hirji Mulji v Cheong Yue Steamship Co [1926] AC 497 15


MEMORANDUM FOR RESPONDENT Page iv

Holman v FT Everard & Sons Ltd (The Jack Wharton) [1986] 2 Lloyd‘s Rep

382

10

Hongkong Fir Shipping Company Ltd v Kawasaki Kisen Kaisha Ltd (The

Hongkong Fir) [1961] 2 Lloyd's Rep. 478

8

Howell v Coupland [1876] 1 Q.B.D. p. 258 12

Ignazio Messina & Co v Polskie Linie Oceoniczne [1995] 2 Lloyd’s Rep. 566 3

Islamic Republic of Iran Shipping Lines v Steamship Mutual Underwriting

Association (Bermuda) Ltd (The Zoorik) [2011] 1 Lloyd’s Rep. 195

12

Kinoshita & Co Ltd et al. v American Oceanic Corporation, 287 F.2d 951

(U.S. Court of Appeals, 2nd Circuit 1961)

5

Kuo International Oil v Daisy Shipping Co. (The Yamatogawa) [1990] 2

Lloyd’s Rep. 39

23

Larkden Pty Limited v Lloyd Energy Systems Pty Limited [2011] NSWSC 268 7

Lathrop v Unidentified (Wrecked & Abandoned Vessel) [1993] M.D. Fla. 22

Lauritzen A.S. v Wijsmuller B.V, (The Super Servant Two) [1990] 1 Lloyd’s

Rep 1

7

London Arbitration 10/11 LMLN, 9 December 2011 19

Maxine Footwear Co. v Canadian Government Merchant Marine [1959] A.C.

589

23

McDermid v Nash Dredging & Reclamation Co Ltd [1986] 2 Lloyd‘s Rep 24 10

McDermid v Nash Dredging & Reclamation Co Ltd [1987] 2 Lloyd‘s Rep 201 10

Mediteranean Enterprises Inc v Ssangyong Corporation 708 F.2d 1458 (U.S.

Court of Appeals, 9th Circuit 1983)

5

Motor Oil (Corinth) Refineries SA v Shipping Corporation of India (The

Kanchenjunga) [1989] 1 Llyod's Law Rep 354 (CA)

9

National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 (HL) 12

Naviera Amazonica Peruana SA v Compania Internacional de Seguros del

Peru [1988] 1 Lloyd's Rep. 116

6

Onego Shipping and Chartering v JSC Arcadia Shipping (The Socol 3) [2010]

2 Lloyd’s Rep. 221

23

Overseas Union Insurance Ltd v AA Mutual International Insurance Co Ltd

[1988] 2 Lloyd's Rep 63

4


MEMORANDUM FOR RESPONDENT Page v

Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal (The Hannah

Blumenthal) [1983] 1 All ER 34

16

Peter Cassidy Seed Co. Ltd. v Osuustukkuk-Auppa Ltd. [1957] 1 WLR 273 16

Pioneer Shipping v B.T.P. Tioxide (The Nema) [1982] A.C. 724 14,15

Privy Council Appeal No. 96 (The Concadoro) [1916] 2 A.C. 199 20

Reardon Smith v Black Sea Insurance [1830] 6 Bing. 716, 725 [1939] A.C.

562

13

Royal Bank of Scotland v Hicks [2011] EWHC 287 6

RTS Flexible Systems Ltd v Molenski Alois Muller GmbH & Co. [2010] 1

W.L.R. 753.

4

Sava Star [1995] 2 Lloyd’s Rep 134 23

Scott v Davis (2000) 204 CLR 333 10

Shashoua v Sharma [2009] 2 Lloyd's Rep 376, 380, 382 5

Storer v Manchester C.C. [1974] 1 W.L.R. 1403 4

Tamplin v Anglo-Mexican Petroleum [1916] 2 A.C. 397 (HL) 14

The Adelfa [1988] 2 Lloyd’s Rep. 466 13

The Eugenia [1964] 2Q.B. 226 15, 16, 17

The Kriti Rex [1996] 2 Lloyd’s Rep. 171 23

The Penelope [1928] P. 180 15

The Playa Larga [1983] 2 Lloyd’s Rep. 171 (CA) 16

The Theodegmon [1990] 1 Lloyd’s Rep. 5 23

Tracer Research Corporation v National Environmental Services Company,

42 F.3d 1292 (U.S. Court of Appeals, 9th Circuit 1994)

5

Trade & Transport v Iino Kaiun Kaisha (The Angelia) [1972] 2 Lloyd’s Rep.

154

15

Troilus v Glenogle (The Troilus and the Glenogle) [1951] 1 Lloyd’s Rep 467 21

Tronson v Dent (1853) 8 Moo PCC 419 10

Tsakiroglou & Co v Noblee Thorl GmbH [1962] AC 93 13, 15

Union of India v N.V. Reederij Amsterdam (The Amstelslot) [1963] 2 Lloyd’s

Rep. 223

23

Walton Harvey Ltd. v Walker & Homfrays Ltd. [1931] 1 Ch 274 16

Whistler International Limited v Kawasaki Kisen Kaisha Limited [2000] 8


MEMORANDUM FOR RESPONDENT Page vi

UKHL 62

Whistler International Limited v Kawasaki Kisen Kaisha Limited [2001] 1 All

ER 403

8

Whistler International v Kawasaki Kisen Kaisha (The Hill Harmony) [2001] 1

Lloyd’s Rep. 14

13

William Sindall Plc v Cambridgeshire County Council [1994] 1 WLR 1016 13

BOOKS PAGE

Baatz, Yvonne et. al., Maritime Law (Informa Law from Routledge, 3rd ed,

2014)

8, 12

Cooke, Julian et. al., Voyage Charter (Informa Law from Routledge, 4th ed,

2014)

12, 13

Goff, Lord and Gareth Jones, The Law of Restitution (6th ed, 2002) 22

Kennedy, William Rann, Kennedy’s Law of Salvage, (British Shipping Law,

5th ed, 1985)

21

Lopez, Norman, The Master's Role In Charter Performance (MLAANZ

Journal - Part 2, 1991)

9

McKendrick, Ewan Force Majeure and Frustrarion of Contract (Informa Law

from Routledge, 2nd ed, 2013)

14, 20

Schelin, Docent J., The Charterer's Right to Order the Master (Examensarbete

i transporträtt, 20 poäng 2002)

11

JOURNALS & ARTICLES PAGE

Lennox-King, Olivia ‘Laying the Mark to Port and Starboard:Salvage Under

Duress and Economic Duress at Contract Law’ [2007] ANZMarLawJl 5

22


MEMORANDUM FOR RESPONDENT Page vii

STATUTES PAGE

Australian Admiralty Act 1988 20, 21

UNCITRAL Model Law on International Commercial Arbitration (1985) with

amendments as adopted in 2006; United Nations Commission on International

Trade Law, UNCITRAL Notes on Organizing Arbitral Proceedings, United

Nations, New York, March 2012

5

United Nations Convention on the Law of the Sea 22

MISCELLANEOUS PAGE

‘Liquified Natural Gas: Understanding the Basic Fact’ Report by the U.S.

Department of Energy (DOE) in collaboration with the National Association

of Regulatory Utility Commissioners (NARUC)

14

Pardo, Alba Trullenque ‘An Introductory View of Salvage Claims’ (2013) 21

White, Stephen F. ‘Understanding the Difference Between Towing and

Salvage’ (2000)

22


MEMORANDUM FOR RESPONDENT Page 1

STATEMENT OF FACTS

THE PARTIES

1. Zeus Shipping and Trading Company ('Claimant'), a company located in Poseidon,

owns the MV Athena ('the Vessel'). Hestia Industries ('Respondent'), the producer of

Liquefied Natural Gas ('LNG') based on Hades.

THE CHARTERPARTY

2. On 14 July 2014, Claimant provided its own voyage charter ('the Charterparty'), in

which Respondent requested an amendment of the arbitration clause, i.e. clause 30 of

the Charterparty. The agreed amendment included the change of dispute settlement

forum reference to arbitrate disputes in London, which only arise out of the provisions

of the Charterparty.

3. Both Claimant and Respondent agreed to be bound to the amended the Charterparty

for the shipping of 260,000m3 HLNG ('the Cargo') on 21 July 2014, from Port of

Hades to Port of Poseidon. The Vessel was registered in Hades and carried Hades flag

to show Claimant’s commitment to the development of the Hades Shale Gas Industry.

THE ARREST

4. On 20 September 2014, the Vessel sailed from Port of Poseidon, and arrived at Port of

Hades on 3 October 2014. A day after the arrival of the Vessel, huge protest was

arisen at the Port of Hades. However, without consultation to Respondent, Claimant

ordered the Master to proceed the Cargo.

5. The loading has completed on 6 October 2014. The Vessel started to sail from Hades

on the following day. Consequently, according to clause 9 of the Charterparty, the

time permitted to load has ended.

THE DEMURRAGE



6. The Master issued Statement of Facts that loading process has been completed at 6

October 2014. On the following day, the Vessel had left the territory of Hades. The

Master returned back to Hades port due to the interception of the Coast Guard without

any prior notification.

7. As the result of the interception, the Vessel and the Cargo were kept in Hades.

Claimant unreasonably assumed that laytime continued to run and when it exhausted,

demurrage would accrue at the sum of US$50,000/day.

8. Respondent rejected Claimant’s request on demurrage in total of US$17.9m for the

respective 358 days on the ground that the Vessel had completed the loading on 6

October 2014. Moreover, the Cargo has significant value for Respondent and should

be delivered on time.

THE SALVAGE

9. On 30 September 2015, President Simmons has tendered her resignation regarding the

accusation of bribery and corruption. It turns out that Hestia’s competitor was bribed

the Coast Guard to hold the Vessel.

10. On 6 October 2015 after the Vessel released, the propeller shafts were broken on the

voyage. Respondent provided tug service to Claimant. The assistance was succeeding

to rescue the Vessel and the Cargo.

THE ARBITRATION PROCEEDINGS

11. The Charterparty has been frustrated by 30 April 2015. The courts of Poseidon should

determine the question of frustration and demurrage in accordance to the Western

Australia law, as the appointed choice of law on the Charterparty. However, to

preserve Respondent’s position, it appointed arbitrators.



ARGUMENTS

JURISDICTION

I. THIS TRIBUNAL DOES NOT HAVE JURISDICTION OVER THE PRESENT CASE

1. Respondent submits that this Tribunal does not posses any jurisdiction to resolve the

present dispute submitted by Claimant. This Tribunal would decide that this Tribunal

is not competent to hear the disputes since clause 30 of the Charterparty does not

include the frustration issue to be arbitrated under forum resided in London [A].

Further, the present disputes shall be determined by the courts of Poseidon [B].

A. The Arbitration Clause Does Not Include The Frustration Issue to Be Arbitrated

Under Forum Resided In London

2. The arbitration clause stated: “any dispute arising under this contract shall be referred

to arbitration in London […]”. However, both parties could not bring this matter to a

forum seated in London because the parties never agreed to include frustration issue

(i). Moreover, the frustration issue is not a dispute arising under the Charterparty (ii).

i. The parties never agreed to include frustration issue to this Tribunal

3. Both parties agreed to amend the previous arbitration clause to avoid the vague

misinterpretation of the disputes that relate but do not arise out the terms of the

Charterparty.1 Since a mutual intention to contract is required, it is necessary that both

parties should intend to be contractually bound2 and it is of utmost importance.3

4. By letter dated 16 July 2014, Respondent expressed that it had negative experience in

the past regarding the dispute resolution provisions as Respondent “was not prepared

1 Case Files, p. 25, pp. 27-8. 2 Ignazio Messina & Co v Polskie Linie Oceoniczne [1995] 2 Lloyd’s Rep. 566. cf. Habas Sinai ve Tibbi;

Gazlar Istihsal v VSC Steel Co. Ltd [2014] 1 Lloyd’s Rep. 479 esp ¶ 90; There is a marked difference between

express contracts and implied contracts; the burden of proving the intention to create legal relations in the case

of implied contracts is the reverse of that in express contracts: see Brown v Innovators One [2012] EWHC

1321 (Comm), at ¶¶ 1014 et seq. and Baird Textiles v Marks & Spencer [2001] EWCA Civ 274, at ¶¶ 61 and

62. 3 (Lord Hoffman) Fiona Trust and Holding Corp v Privalov [2007] UKHL 40, [2007] 4 All ER 951 [5].



to arbitrate disputes that relate to but do not arise out of the terms of the

Charterparty”.4 Claimant expressed its consent by changing the wording in the

arbitration clause from “arising out of or in connection with” to “arising under”. This

intention is analogous to the agreement of both parties to give a narrower meaning

towards the dispute resolution.

5. Found in the outward expression,5 both parties stipulated a narrower arbitration clause

for their settlement of dispute. Therefore, the frustration issue, which is not under any

terms of the Charterparty, could not be considered in London for the virtue of

intention of the parties.

ii. The frustration issue is not a dispute arising under the Charterparty

6. An arbitration clause will confer jurisdiction on an arbitral tribunal to entertain any

form of dispute arising from the substantive or underlying contract depends on

whether the clause is broad enough. Respondent invites this Tribunal to observe the

phrase “arising under” in the arbitration clause6 only contemplates the disputes that

directly related under the Charterparty, and does not generally extend to frustration

claim, which is not governed under the Charterparty.

7. There should be a distinction between clauses relating to disputes about rights created

by the contract itself and clauses showing an intention to refer some wider class of

dispute.7 While wide clauses, i.e. “arising out of or in connection with”, applied to

non-contractual obligations in connection or implication towards the contractual

4 Case Files, p. 25. 5 Storer v Manchester C.C. [1974] 1 W.L.R. 1403, 1408; RTS Flexible Systems Ltd v Molenski Alois Muller

GmbH & Co. [2010] 1 W.L.R. 753. 6 The Charterparty, clause 30 (a). 7 Evans J in Overseas Union Insurance Ltd v AA Mutual International Insurance Co Ltd [1988] 2 Lloyd's Rep.

63, p. 67.



relationship of the parties,8 the phrase “arising under” was not wide enough to include

disputes which do not concern obligations created by or incorporated in that contract9

and only arbitrates the dispute that is directly governed under the Charterparty.10 In

present case, the claim for frustration was outside the ambit of the dispute resolution

provision under the Charterparty, as it was not arising under the contract.11 None of

the parties are entitled nor provided under the Charterparty to generate a frustration in

London tribunal.

8. Further, the effect of the phrase provides that the frustration claim will only be

admissible in this Tribunal if there is an adequate connection between the frustration

claim and the contractual claim under the Charterparty.12 In the present case, the

frustration claim lacks of the indispensable connection with the contractual claim. This

is because the frustration claim does not rely on any terms in the Charterparty.

9. Conclusively, this Tribunal shall discern that the phrase “arising under” in the

arbitration clause does not have any wide scope to cover the frustration issue, as the

phrase only covers the issue under the Charterparty. However, none of the words of

frustration can be found in the Charterparty.

B. The Dispute Shall Be Resolved In Courts of Poseidon

10. Since the parties have failed to designate an arbitral seat, this Tribunal has the power

to determine the seat with reference to all the relevant circumstances.13 The arbitration

8 Kinoshita & Co Ltd et al. v American Oceanic Corporation, 287 F.2d 951 [1961] U.S. Court of Appeals, 2nd

Circuit; Mediteranean Enterprises Inc v Ssangyong Corporation 708 F.2d 1458 [1983] U.S. Court of Appeals,

9th Circuit; Tracer Research Corporation v National Environmental Services Company, 42 F.3d 1292 [1994]

U.S. Court of Appeals, 9Th Circuit. 9 (Slade LJ) Fillite (Runcorn) v Aqua-Lift (1989) 26 Const LR 66, p. 67. 10 Hillcrest Homes Limited v Beresford and Curbishley Limited [2014] EWHC 280 (TCC) 11 Hillcrest Homes Limited v Beresford and Curbishley Limited [2014] EWHC 280 (TCC) 12 (Rix J) Aggeliki Chairs Company Maritime SA v Pagnan SpA ('The Angelic Grace') [1995] 1 Lloyd’s Rep

87 (CA) 89 col 2. 13 (Aikens J) Dubai Islamic Bank PJSC v Paymentech Merchant Services Inc [2001] 1 Lloyd's Rep 65, 74 [52];

(Cooke J) Shashoua v Sharma [2009] 2 Lloyd's Rep 376, 380 [25], 382 [34]; UNCITRAL Model Law art 20(1);



clause and an arbitral tribunal confer the jurisdiction of the arbitral tribunal.

Consequently, the London forum has no jurisdiction to entertain any matter not

referred to it by the parties.

11. Every arbitration had to have a seat, which subjected its procedural rules to the

municipal law there in force.14 To affirm courts located in Poseidon as the most proper

forum, This Tribunal shall discern the most real connections of the Charterparty with

the present case.

12. Respondent submits that the seat in London does not have any connecting factors with

the dispute arising in the Charterparty compared to the seat in Poseidon. In Royal Bank

of Scotland v. Hicks,15 the English court concluded that the claim had no real

connections with Texas therefore restrained the proceedings subject to exclusive

jurisdiction clause from continuing in Texas. In the present case, the procedural and

substantive law under the Charterparty adopts the Australian law16. Poseidon, which

also adopted the laws of Western Australia, has the most real connection to the dispute

and the Charterparty itself. Based on the Charterparty, the contract was concluded and

the voyage commenced in Poseidon.17 Moreover, the beginning of the voyage and the

discharge of the Cargo were also situated in Poseidon.18 Even, Claimant itself is a

company that is based in Poseidon.19

13. Further, some disputes are not susceptible to resolution by private arbitration because

they are in the exclusive domain of a national court or other tribunal, especially the

United Nations Commission on International Trade Law, UNCITRAL Notes on Organizing Arbitral

Proceedings, United Nations, New York, March 2012 [22]. 14 Naviera Amazonica Peruana SA v Compania Internacional de Seguros del Peru [1988] 1 Lloyd's Rep. 116. 15 [2011] EWHC 287. 16 Case Files, p. 79. 17 The Charterparty, box 1. 18 The Charterparty, box 9, 16. 19 The Charterparty, box 26.



dispute that contains the element of public interest.20 All the frustrating events were

the causation from the contractual relationship between both parties. The public has

long opposed the delivery of HLNG and consequently the coup happened and

restrained the Vessel from departing. Such public interest in a dispute shall make

private resolution outside the national court system to be inappropriate.21

14. Conclusively, the courts of Poseidon shall be the most appropriate forum to determine

the dispute arising from all the events due to the connection among the Charterparty,

the Western Australia law and the public interest.

MERITS

II. CLAIMANT HAS FAILED TO PROVIDE A COMPETENT MASTER

15. Respondent submits that the delay, which has been occasioned by the Master’s

negligence, will frustrate the Charterparty.22 Since, frustration can be determined in

regard to negligence that is directed to the performance and purpose of the contract,23

in which the delay was so disproportionate as it frustrates the commercial purpose of

the Charterparty.24

16. In order to determine one of the points of frustration in the present case, Respondent

shall demonstrate that the Master was negligent due to the absence of notification

obliged under the Charterparty [A], the Master was negligent for returning back to the

Port of Hades [B], and Claimant shall be held liable for the Master’s negligence as the

principal [C].

20 Larkden Pty Limited v Lloyd Energy Systems Pty Limited [2011] NSWSC 268, ¶ 63. 21 Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45, ¶ 98. 22 Case Files, p. 65. 23 Lauritzen A.S. v Wijsmuller B.V, ('The Super Servant Two') [1990] 1 Lloyd’s Rep 1, pp. 9-10. 24 Below [30] - [40].



A. The Master Was Negligent And Incompetent Due to The Absence of Notification

Obliged Under The Charterparty

17. It should be well accepted that Claimant, as the ship owner and the Master are obliged

to follow Respondent’s order, as the charterer, with respect to employment of the

Vessel.25 The incompetence is the failure to notify Respondent, thus Claimant has

breached clause 14 (c) of the Charterparty, which binds Claimant with obligation to

contact Respondent if there is “an appreciable change in the estimated time of

arrival”.26

18. On 15 October 2014, Claimant sent a letter to notify Respondent due to the situation

change after 8 days of the detention for the first time. The Vessel’s ETA has changed,

but neither Claimant nor the Master had notified or consulted the situation when the

Vessel been ordered to return to Port of Hades. By these reasons, Claimant’s inaction

resulted to breach of the Charterparty. This incompetent conduct of the Master or

Claimant can be held amount to the breach of seaworthiness.27

19. Thus, Respondent claims that Master was negligent and incompetent under the

Charterparty because he failed to give corresponding notice to Respondent. In any

event, Claimant violated the duty to deliver the Cargo to Poseidon. The breach was

treated at law as of such a serious character as to go to the root of the contract.28 In this

radical change, as a ship owner, Claimant should have contacted Respondent for the

misadventure happened in the middle of the voyage.

25 (Lord Hobhouse of Woodborough) Whistler International Limited v Kawasaki Kisen Kaisha Limited [2000]

UKHL 62; [2001] 1 All ER 403. 26 Case Files, p. 37. 27 Hongkong Fir Shipping Company Ltd v Kawasaki Kisen Kaisha Ltd ('The Hongkong Fir') [1961] 2 Lloyd's

Rep. 478. 28 Yvonne Baatz et al, Maritime Law (Third Edition), Informa Law from Routledge, 2014, p.137.



B. The Master Was Negligent And Incompetent For Returning Back to Port Of

Hades

20. Respondent contends that the Master’s act was unreasonable for returning back to Port

of Poseidon on 7 October 2014.29 In the middle of the voyage, the Master decided to

go back to Port of Hades after being intercepted by the Coast Guard.30 Respondent

argues that the Master has deteriorated the purpose and destination of the Vessel.

21. Usually, a charter party contains an implied obligation that there must be no

unjustified deviation from the usual and customary route for the voyage contemplated

in the charter party.31 Further emphasized in The Johanna Oldendorff, 32 the listed of

stages of the voyage charter such as, the loading or approach voyage to the agreed

loading place and the loading operation, are the obligations of the master as the agent

of ship owner. Therefore the master's role is to implement the obligations implied in

the charter party.

22. While discretion of the master was recognized in The Kanchenjunga,33 it is up to the

master to exercise that discretion reasonably. However, the Master is obliged to

carefully give the best passage for the Cargo and the Vessel, and fulfill Respondent’s

interest, as the charterer. Nonetheless, the Master’s discretion resulted the detention of

the Cargo and the Vessel, in which the Master has failed to fulfill Respondent’s

interest.

23. Claimant also admitted that the Master’s act at that time was unreasonable. As we may

observe in the correspondence with the Master, saying he was already “outside of

29 Case Files, pp. 57-9. 30 Case Files, p. 60. 31 Norman Lopez, 'The Master's Role In Charter Performance' (1991) MLAANZ Journal - Part 2, p. 12. 32 (Lord Diplock.) E. L. Oldendorff & Co. GmbH v Tradax Export S.A. ('The Johanna Oldendorff') [1973] 2

Lloyd's Rep 285, 304. 33 Motor Oil (Corinth) Refineries SA v. Shipping Corporation of India ('The Kanchenjunga') [1989] 1 Llyod's

Law Rep 354 (CA).



Hades territorial limits and under no obligation to return to port”.34 Pursuant to the

Charterparty, the Vessel had no urgency to return since the ‘Loading Process’ ended

“until the Vessel leaves the Loading Place”.35

24. Thus, the Master’s act to return back to the Port of Hades was inconsistent under the

Charterparty. Furthermore, the ‘Statement of Facts’ signed by the Master remarked

that the Vessel sailed from Hades on 7 October 2014.36 Therefore, the Vessel’s visit at

the Port of Hades already ended on that day. Claimant should have proceeded to

Poseidon, not returning back to Hades with no particular duty.

25. For the reasons above, Respondent attests that the only approved route under the

Charterparty was just from Port of Poseidon to Port of Hades then back to Port of

Poseidon. In fact, the act of return proved that Master has failed to follow the

destination and route designated and agreed by both parties on the Charterparty.

Consequently, the Master's sole negligence that resulted to the long delay of the

voyage shall not be justified.

C. Claimant Shall Be Held Liable For The Master’s Negligence As The Principal

26. A principal is liable for the wrongful acts of an agent where the agent is performing a

task, which the principal has agreed to perform, and the principal has delegated that

task to the agent.37 The Master is the agent of the ship owner38 and therefore the

Master is the agent of Claimant.

34 Case Files, p. 58. 35 The Charterparty, clause 9 (c) (i). 36 Case Files, p. 54. 37 (McHugh J) Scott v Davis [2000] 204 CLR 333, 346. 38 Tronson v Dent [1853] 8 Moo PCC 419 at 449; (Sir John Patteson, PC) Holman v FT Everard & Sons Ltd

('The Jack Wharton') [1986] 2 Lloyd‘s Rep 382; McDermid v Nash Dredging & Reclamation Co Ltd [1986] 2

Lloyd‘s Rep 24; McDermid v Nash Dredging & Reclamation Co Ltd [1987] 2 Lloyd‘s Rep 201.



27. Claimant is obliged to deliver the Cargo by the Vessel,39 which would necessarily

involve navigation of the Vessel from its origin to destination. It is reasonable in the

circumstances to infer that Claimant has delegated the task of navigating the Vessel to

the Master. Since, he has been appointed for this task, which makes the Master to be

responsible for the voyage as well.

28. Further, the Master is obliged to obey Respondent’s orders and assist him during the

charter period.40 In this present case, the delay caused by the Master has injured

Respondent's interest of the voyage. The Master has also failed to assist Respondent,

thus as the representative of Claimant on board, Claimant should hold the control for

any of the Master's action. A consequence of this is that Claimant may be held liable

for the wrongs and mistakes that the Master committed when he executed

Respondent’s orders.41

29. Therefore, Claimant is liable for the acts of the Master committed during the

delegation of this task, including the Master‘s negligence for the returning back to the

Port of Hades. And to sum up, the Charterparty shall be frustrated for abovementioned

reasons of the Master’s negligence.

III. RESPONDENT IS NOT LIABLE FOR DEMURRAGE CLAIM DUE TO FRUSTRATION OF

THE CHARTERPARTY

30. Respondent frustrated the Charterparty by sending the letter on 30 April 2015.42

Frustration takes place when there is supervening event, which significantly changes

the nature of the outstanding rights or obligations from what the parties could

39 The Charterparty, clause 1. 40 Docent J. Schelin, 'The Charterer's Right to Order the Master' (2002) Examensarbete i transportratt, 20

poang, p. 9. 41 Docent J. Schelin, 'The Charterer's Right to Order the Master' (2002) Examensarbete i transportratt, 20

poang, p. 22. 42 Case Files, p. 65.



reasonably have contemplated.43 As the consequence, demurrage, which ruled under

clause 10 of the Charterparty, did not accrue. The event took place in the Hades had

fulfilled frustration application and hindered the liability of Respondent to pay

demurrage amounted to US$17.9m. Therefore, Respondent frustrated the Charterparty

because the reigning regime of President Simmons prohibited the Vessel to continue

the voyage [A]. This condition resulted to the delay, which deprived the nature of the

Charterparty [B]. The causation of these events was unforeseeable [C].

A. The Reigning Regime of President Simmons Prohibited The Vessel Sailed to

Poseidon

31. The reigning regime of President Simmons rendered the performance of the

Charterparty radically different. When the Charterparty was concluded, nothing

indicated the ban on HLNG’s shipment from the Hades authority. However, after

President Simmons seized control of the parliament, she declared to stop the HNLG’s

export by putting the Coast Guard under the duty to detain the Vessel.44 When the

Master failed to proceed the voyage and returned back to Hades, the Charterparty

became the subject to the President Simmons’ hasty regulation.45 As a result, the

Charterparty became a different thing from what was contracted for46 and prevented

further performance of the Charterparty. The normal consequence of this situation

will be the frustration of the contract.47

43 Yvonne Baatz, Maritime Law (3rd edition, 2014) p. 141; National Carriers Ltd v Panalpina (Northern) Ltd

[1981] AC 675 (HL) p. 700; Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 729. 44 Case Files, p. 79. 45 Case Files, p. 39, clause 17 (b). 46 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 729. 47 Julian Cooke et al, Voyage Charter (4th edition, 2014) p.193; Howell v Coupland [1876] 1 Q.B.D. 258;

Islamic Republic of Iran Shipping Lines v Steamship Mutual Underwriting Association (Bermuda) Ltd ('The

Zoorik') [2011] 1 Lloyd’s Rep. 195; Classic Maritime v Lion Diversified Holdings [2010] 1 Lloyd’s Rep. 59 ¶

3.



32. In the present case, the change of the government caused the original obligation

become incapable.48 One of the original obligation of Claimant as a carrier is

proceeding to Poseidon without unnecessary deviation.49 In The Adelfa,50 discharging

was prevented by an executive ban imposed by the authorities and by the arrest of the

vessel, which were held to generate a frustration. Similar to our case, the new

regulation by the authorities prevented the Vessel leaving Hades. As a result, Claimant

could not proceed to Poseidon. Nevertheless, the Charterparty was radically different

thus frustrated.

33. In conclusion, the Vessel was prevented to continue its voyage under the Charterparty

due to Presiden Simmon’s regulation. The regulation caused the Charterparty radically

different, thus doctrine of frustration is applicable.

B. The Protracted Delay Rendered The Charterparty Radically Different

34. The delay from 7 October 2014 until 6 October 2015 had significantly altered the

whole circumstances under the Charterparty. If the ship is delayed by any extraneous

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

performance radically different from that which the contract contemplates, the

Charterparty is frustrated.51 Therefore, the uncertainty of the length of the delay led to

frustration (i), and the long delay was sufficient to frustrate the Charterparty (ii). After

all, when the Charterparty is frustrated, demurrage clause is inapplicable. Thus

Respondent is not liable to pay demurrage.

48 When the original obligations have become incapable of being performed, the performance is radically

different; (Lord Radcliffe) Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 729;

(Longmore LJ) Globe Master Management Ltd v Boulus-Gad Ltd [2002] EWCA Civ 313, [19]; (Lord Guest)

Tsakiroglou and Co v Noblee Thorl GmbH [1962] AC 93, 131-2; (Evans LJ) William Sindall Plc v

Cambridgeshire County Council [1994] 1 WLR 1016, 1039. 49 Reardon Smith v Black Sea Insurance (1830) 6 Bing. 716, 725 [1939] A.C. 562, ¶ 12.5; Whistler

International v Kawasaki Kisen Kaisha ('The Hill Harmony') [2001] 1 Lloyd’s Rep. 147. 50 [1988] 2 Lloyd’s Rep. 466. 51 Julian Cooke et al, Voyage Charter (4th edition, 2014) p. 703.



i. The length of the delay was wholly indefinite and uncertain

35. The uncertain delay led to frustration. The situation did not give any clarity on how

definite the length of the delay. The probability on the length of the deprivation and

the certainty are also important in determining frustration.52 Lord Loreburn in Tamplin

v. Anglo-Mexican Petroleum53 held that charter party was frustrated due to the

uncertainty of the length of future delay. In the present case, at the time Respondent

frustrated the Charterparty, no reasonable person could reasonably predict how long

President Simmons’ regime would endure. As long as President Simmons held the

parliament, nothing could be done to release the Vessel and resumed the voyage.

Morever, President Simmons has full dedication to prevent HLNG’s export.54 It is

apparent that the delay would be so long, indefinite and uncertain.

36. The uncertain length of delay also deprived parties’ expectation under the

Charterparty. To frustrate the contract, there must be a consideration on parties’

expectation toward the delay and involves an assessment of what the reasonably

prudent commercial man would have thought .55 In the present case, reasonable

businessman cannot wait too long because LNG has volatile prices affected by market

demand.56 Consequently, time is of the essence and uncertain delay cannot be

tolerated57 since it affects the profitability and productivity of industry. When it can be

known that in all reasonable probability, the delay will be prolonged and continued so

52 Bank Line v Capel [1919] A.C. 435, pp. 454, 60. 53 [1916] 2 A.C. 397 (H.L.); Pioneer Shipping v B.T.P. Tioxide ('The Nema') [1982] A.C. 724. 54 Case Files, p. 55. 55 Ewan McKendrick, Force Majeure and Frustrarion of Contract (Second edition, 2013); (Lord Summer)

Bank Line Case [1919] A.C. 435. 56 Liquified Natural Gas: Understanding the Basic Fact Report by the U.S. Department of Energy (DOE) in

collaboration with the National Association of Regulatory Utility Commissioners (NARUC), p. 2. 57 Pioneer Shipping Ltd v BTP Tioxide Ltd ('The Nema') [1982] AC 724 at 752; Edwinton Commercial

Corporation & Anor v Tsavliris Russ (Worldwide Salvage & Towage) Ltd ('The Sea Angel') [2007] EWCA

Civ 547, p. 90.



long as to defeat the adventure, it frustrates the contract.58 Therefore, the delay in such

manner could hold the Charterparty frustrated.

ii. The comparison between the voyage which was undertaken by parties and the

delay was sufficient to frustrate the Charterparty

37. The delay caused the Charterparty fundamentally different from which was envisaged

when the contract was made.59 The proportion of the voyages affected by the

frustrating event is substantial that the performance of what is left is something

radically different from what the parties had undertaken.60 In the case at our hand,

there was a definite time difference between the length of the voyage in the

Charterparty, which ended by 2 November 2014, and the length of the actual voyage

by 6 October 2015, which commenced after the release from the authority.61 The delay

was in excess of more than 11 times from which the parties anticipated the voyage

charter would be on foot.62 In The Angelia63 the delay which would have been to

prolong the duration of the charter 2 times, rendered the Charterparty frustrated.

Therefore, the delay which excess in more than 11 times is more sufficient to

frustrated the Charterparty.

38. Moreover, Respondent has stipulated that the Cargo is of significant value to

Respondent and Respondent will suffer significant losses should the Cargo not be

58 (Lord Sumner) Hirji Mulji v Cheong Yue Steamship Co [1926] AC 497, p. 510. 59 CTI Group Inc v Transclear SA [2008] EWCA Civ 856. 60 Pioneer Shipping v B.T.P. Tioxide ('The Nema') [1982] A.C. 724; ('The Penelope') [1928], P. 180; Trade &

Transport v Iino Kaiun Kaisha ('The Angelia') [1972] 2 Lloyd’s Rep. 154; ('The Eugenia') [1964] 2 Q.B. 226.

Tsakiroglou & Co v Noblee Thorl GmbH [1962] AC 93, HL, a cif contract in which frustration was

unsuccessfully argued on the ground that the closure of the Suez Canal and the subsequent need for rerouting

round the Cape had gone to the root of the contract. 61 NoR was issued on 3 October 2014. Loading time should at end 10 days later, which was on 13 October

2014. The Vessel was expected to arrive in Poseidon no later that 2 November 2014. 62 Case Files, p. 65. 63 Trade & Transport v Iino Kaiun Kaisha ('The Angelia') [1972] 2 Lloyd’s Rep. 154.



delivered on time.64 Because the performance of the Charterparty had been radically

different according to its intent, the Charterparty should be frustrated65.

39. Further, clause 19 (ii) of the Charterparty gave the right for parties to cancel the

Charterparty if the delivery was suspended for more than 30 days.66 In the Praya

Larga,67 such provision obviously covered a temporary difficulty possible to be

resolved within 30 days rather than a catastrophic event that immediately rendered

further performance of the contract unthinkable. In that case, the tribunal also held that

the contract frustrated because there was government intervention, which caused the

further performance of the contract unthinkable. Similar to our case, the delivery was

suspended for 358 days, which was much bigger than what could have been covered

by the Charterparty. It means that the delay was more than temporary difficulty and

rendered the performance of the Charterparty unthinkable. Therefore, the Charterparty

should be frustrated.

C. The Series of The Event Resulting to The Delay Was Not Foreseeable

40. Respondent could not have foreseen the event. Frustration of a charter party requires

the occurrence of an unforeseen event,68 in which it can be construed as an event,

which is entirely beyond what was contemplated by the parties when they entered into

the agreement.69 As held in The Sea Angel, an event could be regarded as foreseen

event if it “[…] could reasonably be thought […] as a real possibility.”70 At the time

64 Case Files, p. 61. 65 Julian Cooke et al, Voyage Charter (4th edition, 2014) p. 699. 66 Case Files, p. 16. 67 [1983] 2 Lloyd's Rep. 171 (C.A.). 68 Walton Harvey Ltd. v Walker & Homfrays Ltd. [1931] 1 Ch 274; Peter Cassidy Seed Co. Ltd. v

Osuustukkuk-Auppa Ltd. [1957] 1 WLR 273; Denmark Production Ltd. v Boscobel Productions Ltd. [1969] 1

QB 699 (Salmon LJ); Ocean Tramp Tankers Corporation v V/O Sovfracht ('The Euginia') [1964] 2 QB 226;

(Lord Brandon) Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal ('The Hannah Blumenthal')

[1983] 1 All ER 34¶ 43-44. 69 Cricklewood Property and Investments Trust Ltd v Leighton‟s Investment Trust Ltd [1945] A.C. 221 ¶ 228. 70 Edwinton Commercial Corporation and Global Tradeways Ltd v Tsavliris Russ Ltd ('The Sea Angel') [2007]

EWCH 1713 ¶ 535.



the Charterparty concluded, nobody could predict that President Simmons would seize

the parliament, prohibited the performance under the Charterparty and culminated to

the delay. Any person of ordinary intelligence would not reasonably thought that coup

and regime change as likely to occur.71 For this reason, it would be unfair to place the

burden to foresee such eventuality to Respondent. For all of the reasons, it must be

positively unjust to enforce the new obligation, which is to pay demurrage, against

Respondent.72

IV. RESPONDENT IS NOT LIABLE FOR ANY CLAIM OF DEMURRAGE DUE TO THE

OPERATION OF CLAUSES UNDER THE CHARTERPARTY

41. In the event of the Charterparty is considered as valid, demurrage according to

Claimant should be borne by Respondent. However, Respondent submits that the

event of delay should be considered as force majeure event [A]. Moreover, the event

of the delay could be considered as arrest under clause 9 (e) of the Charterparty [B].

Lastly, Respondent cannot be held responsible for any delay related to the Vessel's

flag and indeed the Vessel's flag was the cause of delay [C]. Thus, demurrage shall not

accrue and Respondent is free from any liability.

A. The Event of Delay Should Be Constituted As Force Majeure

42. In any case, Respondent shall be released from any liability based on the nature of

force majeure event. Pursuant to clause 19 of the Charterparty, "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. [...]"73

71 Edwinton Commercial Corporation & Anor v Tsavliris Russ (Worldwide Salvage & Towage) Ltd ('The Sea

Angel') [2007] EWCA Civ 547, p. 104. 72 (Lord Denning MR) ('The Eugenia') [1964] 2 QB 226, 239; (Lord Simon) National Carriers v Panalpina

[1981] AC 675, 700. 73 Case Files, p. 39; The Charterparty, clause 19.



43. Under clause 19 (c) of the Charterparty, the force majeure event was arising from the

delays in loading and shipping without the negligence of the charterer. Respondent, as

the charterer, does not create any negligence to cause the force majeure event since the

delay was the implication of the arrest of the Coast Guard.

44. In constituting the force majeure event, Respondent submits that the event was

unforeseeable and irresistible.74 Respondent even had no knowledge or contribution

for the event of return to Port of Hades. It is reasonable if Claimant borne the risk for

its own decision since the event of delay then being unforeseeable and irresistible for

Respondent.

45. Further, in The Concadoro75 where it was held that in the event of superior force

amounted to physical or legal restraint, then such circumstances must amount to force

majeure.76 Respondent contends that the delay in shipping of the Vessel caused by the

arrest commanded by legitimate government since there was a legal measure imposed

on the Vessel.

46. In conclusion, Respondent is free from any kind of liability in regards with demurrage

because under the Charterparty the arrest that led into severe delay has prevented the

laytime to count. The event of delay shall be constituted as force majeure thus

Respondent shall also not liable for the any occurrence of risk related to that event.

B. The Event of Delay Was An Arrest Which Prevented Demurrage To Accrue

47. Upon the interception of MV Athena by The Coast Guard, it was obvious that the

Vessel was subjected to an arrest by Hades' government.77 Under article 41 (2) of

74 The assertion in Schmitthoff's, Export Trade (9th Ed. 1990), p. 199, that force majeure "includes every event

which is beyond the control of the parties"; Ewan McKendrick, Force Majeure and Frustrarion of Contract

(2nd edition, 2013), p. 8. 75 Privy Council Appeal No. 96 [1916] 2 A.C. 199. 76 Privy Council Appeal No. 96 [1916] 2 A.C. 199, p. 8. 77 Case Files, p. 55.



Admiralty Act 198878, the Governor-General may make any rules in relation to arrest,

etc.79 President Simmons as the successive leader after the coup made an

announcement that allegedly amounting to Presidential Decree to arrest the Vessel.80

The release on one year afterwards reflected that the change of government influenced

the arrest of the Vessel.81

48. Respondent contends that the laytime permitted in the Charterparty was not to be

counted during the period of delay. Pursuant to clause 9 (e) of the Charterparty,82 it

provides that “[...] in the event of any delay or hindrance [...], arrests; [...] the laytime

not to count during the period of such delay or hindrance and demurrage not to

accrue [...]”. As the event of delay during the voyage was indeed a contemplation of

delay caused by arrest under clause 9 (e) of the Charterparty, Respondent attests that

demurrage then never accrued.

49. Moreover, as the wording in the abovementioned clause is clear, the event of delay

and arrest should be considered as manifested within the clause and the effect must be

given to the ordinary and natural construction of the clause.83 The wording has clearly

expressed the intention of the parties, as set out in the freely negotiated and agreed

Charterparty. Claimant then has no reason to deny the implementation of this clause.

50. In conclusion, the arrest resorted as an event of Interruption to Laytime under clause 9

(e) of the Charterparty. Laytime spent during that period then, was not exhausted but

rather, shall not be counted. Consequently, Respondent should be waived from the

US$17.9m liability since demurrage has been prevented to accrue.

78 This act applied as the Charterparty clearly appointed Western Australia law and this act is being

implemented in all states of the Commonwealth of Australia. 79 The Admiralty Act 1988, article 41. 80 Case Files, p. 74. 81 Case Files, p. 67. 82 Case Files, p. 35; The Charterparty, clause 9 (e). 83 London Arbitration 10/11, LMLN 9 December 2011.



C. The Vessel's Flag Was The Successor of The Delay

51. Respondent submits that Vessel’s flag is related to the delay. The Coast Guard

admitted that they was even not sure about the location of the Vessel but he was

convinced to order the Vessel's return because she carried Hades flag.84 As regulated

under UNCLOS article 94 (1), every state is effectively exercised its jurisdiction and

control in administrative, technical, and social matters over ships flying its flag.85 It

was then obvious that the flag played essential part about the arrest towards the Vessel

was part of jurisdiction enforcement. The arrest, by then, created a protracted delay for

the Vessel and the performance of the Charterparty.

52. Referring to clause 18 (c), “Owners agree in the event of any delay […] in connection

with the ship’s flag […] time shall not count nor demurrage accrue”.86 As elaborated

above, the Vessel’s flag has caused and directly related to the arrest.87 Consequently,

for the application of the Charterparty, the time during the event related and resulted

by Vessel's flag should not count nor demurrage accrued. At the end, Respondent is

free from any liability.

COUNTERCLAIM

V. RESPONDENT IS ENTITLED TO SALVAGE AWARD

53. Respondent’s conduct to save the Vessel was a successful salvage [A]. Consequently,

there should be a salvage reward given to the salvor. At this point, Respondent asserts

that it is Claimant who shall be solely liable for the salvage remuneration. [B]

84 Case Files, p. 55. 85 UNCLOS, article 94 (1); UNCLOS applied in this present case as it was one of the convention annexed and

functioned as complementary to Navigation Act 2012, the act appointed by the Charterparty as regulatory act. 86 The Charterparty, clause 18 (c). 87 Case Files, p. 55.



A. Respondent Successfully Performed Salvage

54. Respondent’s conduct fulfilled the cumulative elements to become a successful

salvage88 because that there was a real danger to the Vessel that Respondent

successfully saved from (i) and Respondent also rendered the performance voluntarily

(ii).

i. The Vessel indeed faced to an apparent danger

55. At the time salvage service conducted, the vessel must be in immediate danger and

distress.89 In the present case, the Vessel’s propeller shafts had been tampered with

since it was in Port of Hades.90 Later, by sailing under its own steam in the open

water,91 Respondent asserts that it indeed faced herself to real danger. As held in The

Troilus v. The Glenogle,92 vessel with broken propellers was in real danger and in need

of salvage.

56. It is reasonable that the Vessel with broken propellers was in real danger and needed

salvage since she had drifted in uncontrolled manner,93 thus would sink if no assistance

rendered right at that time.94 Fortunately, Hestug was not far away when the incident

happened and immediately rendered assistance toward the Vessel.95

57. Respondent was also successful in performing salvage because the Vessel was in

improved and safer situation after the deed than it was before.96 Without Respondent

assistance, the Vessel and the Cargo would sink and there would be many millions

88 William Rann Kennedy, Kennedy’s Law of Salvage (British Shipping Law Series, 5th edition, 1985), p. 8. 89 Alba Trullenque Pardo, 'An Introductory View of Salvage Claims' (2013), p. 24. 90 Case Files, p. 71. 91 Case Files, p. 71. 92 Troilus v Glenogle ('The Troilusand the Glenogle') [1951] 1 Lloyd’s Rep 467. 93 Case Files, p. 76. 94 Case Files, p. 71. 95 Case Files, p. 71. 96 Alba Trullenque Pardo, 'An Introductory View of Salvage Claims' (2013), p. 24.



dollar of loss.97 Since Respondent’s conduct had benefited Claimant, Respondent is

entitled to salvage remuneration as legal principle of its’ right.98

ii. Respondent also rendered the performance voluntary

58. On 5 October 2015, Claimant requested for tug service from Hestug.99 In respond,

Respondent tugged the Vessel. Respondent had concluded the tug service by succeed

tugging the Vessel until the open water and released the towlines from the Vessel after

that.100 Eventually, the tug was heading back to Port of Hades and shortly after that, it

returned only to save the Vessel from danger.101 Hence, Respondent asserts that the

salvage was carried out voluntarily.

59. Voluntariness only requires that there was no pre-existing contractual duty between

the salvor and the vessel in distress.102 Respondent contends that contractual

relationship, which is tug service, was fully concluded at the moment the towlines

were released from the Vessel.103 It further proven concluded by the Vessel had sailed

under its own steam.104

60. As it is no longer in any contractual relationship with the Vessel, Hestug’s return to

rescue the Vessel shall be deemed to be more than could be expected than someone in

their position.105 Hence, Hestug was performing salvage voluntary.

97 Case Files, p. 71. 98 Gareth Jones and Robert Goff, The Law of Restitution (Sweet and Maxwell, 6th edition, 2002) 5-12. 99 Case Files, p. 68. 100 Case Files, p. 71. 101 Case Files, p. 71. 102 Lathrop v Unidentified ('Wrecked & Abandoned Vessel') [1993] M.D. Fla. ¶ 962; White, Stephen F.

Understanding the Difference Between Towing and Salvage (ORM: Offshore Risk Management, 2000) ¶ 6; 103 Case Files, p. 71. 104 Case Files, p. 71. 105 Olivia Lennox-King 'Laying the Mark to Port and Starboard: Salvage Under Duress and Economic Duress

at Contract Law' (2007) ANZMarLawJl 5.



61. In addition, cargo owner who conducts salvage is never debarred to claim salvage

reward.106 Hence, Respondent as Cargo owner shall be rewarded for its salvage

operation on the ground of it was carried out voluntary.

B. The Claimant Shall Be Solely Liable For The Salvage Payment

62. Claimant shall be solely borne the salvage liability because it was responsible for the

salvage necessity (i). Consequently, even if the Charterparty still stand, clause 21 of

the Charterparty could not apply (ii).

i. Claimant was responsible for the salvage necessity

63. Claimant failed to comply with its obligation to provide seaworthy Vessel. Later,

Respondent submits that unseaworthiness of the Vessel had the causative effect to the

salvage necessity. Hence, Claimant shall be solely borne the salvage liability.

64. As held Maxine Footwear Co. v. Canadian Government Merchant Marine,107 the

period when the ship must be seaworthy covers the period from the beginning of the

loading until the vessel starts on her voyage. During this period, her machinery must

be properly functioning so as to comply with seaworthiness.108

65. In the present case, the Vessel was not in a seaworthy condition during at least from

Hades until the Vessel was going to start her voyage because both propeller shafts did

not operate properly since they was even at Port of Hades.109 Later, the broken

propeller shafts indeed led the Vessel to real danger and in need of salvage.110 Since

106 ('Sava Star') [1995] 2 Lloyd’s Rep 134. 107 [1959] A.C. 589. 108 ('The Kriti Rex') [1996] 2 Lloyd’s Rep. 171, ('The Theodegmon') [1990] 1 Lloyd’s Rep. 5. 109 Case Files, p. 71. 110 Above [55] - [57].



the unseaworthiness had the causative effect to the necessity of salvage, Claimant shall

be solely borne to the necessity of salvage.111

66. Claimant still has the onus to prove due diligence to provide the seaworthy ship has

been exercise. However, Respondent could not find at any time between the release of

the Vessel from Hades until the Vessel was going to sink at which Claimant has

exercised due diligence to provide seaworthy vessel.112

ii. Consequently, even if the Charterparty still stands, clause 21 could not apply

67. Pursuant to clause 21 of the Charterparty,113 it stated that: "In the event of accident,

danger, damage or disaster [...] for which […] the Carrier is not responsible [...]

Owner […] shall pay salvage [...]”. However, in the present case, the clause could not

apply since Claimant was responsible for the accident happened to the Vessel.114

Thus, Claimant is still responsible for the salvage liability.

111 Kuo International Oil v Daisy Shipping Co. ('The Yamatogawa') [1990] 2 Lloyd’s Rep. 39; Union of India v

N.V. Reederij Amsterdam ('The Amstelslot') [1963] 2 Lloyd’s Rep. 223.; Onego Shipping and Chartering v JSC

Arcadia Shipping ('The Socol 3') [2010] 2 Lloyd’s Rep. 221. 112 Case Files, pp. 68, 9. 113 Case Files, pp. 41, 2; the Charterparty, clause 21. 114 Above [55] - [57].



PRAYER FOR RELIEF

68. In light of the aforementioned submissions, Respondent respectfully requests this

Arbitral Tribunal to declare that:

a. This Tribunal does not have jurisdiction to hear the merits of this dispute;

b. The Charterparty is frustrated;

c. Claimant is not entitled for the payment of demurrage in the amount of US$17.9m;

d. Respondent is entitled for the salvage reward;

e. Claimant is liable for the payment of any cost related to these arbitration proceedings.

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