UNIVERSITAS PADJADJARAN INDONESIA – TEAM 11 · PDF fileUNIVERSITAS PADJADJARAN INDONESIA – TEAM 11 ... Bowater v. Rowley Regis Corp. [1944] KB 476 (CA ... Kuwait Airways Corp v

14TH INTERNATIONAL MARITIME LAW ARBITRATION

MOOT COMPETITION

2013

UNIVERSITAS PADJADJARAN

INDONESIA – TEAM 11

IN THE MATTER OF AN ARBITRATION HELD IN LONDON

MEMORANDUM FOR THE CLAIMANT

On Behalf Of:

Against:

Aardvark Limited Twilight Carriers Inc.

Claimant Respondent

TEAM ANNISA DAMAYANTI • FAWZAN IRCHAMSYAH

GALURA WIRAYUDANTO • MAHESA WONG ANABRANG NIDYA KARINA HARLIANI • SINATRYA S. PRIMANDHANA

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 ii

TABLE OF CONTENTS

TABLE OF CONTENTS ....................................................................................................... ii

LIST OF ABREVIATIONS ................................................................................................... iv

INDEX OF AUTHORITIES ................................................................................................... v

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

1. THE ARBITRAL TRIBUNAL HAS THE JURISDICTION TO HEAR THIS

MATTER .................................................................................................................................. 3

1.1. The Claimant As The Lawful Holder of The B/L Is Bound to Its Provisions .................. 3

1.1.1. The Claimant Has Fulfilled The Requirement to Become The Lawful Holder of The

B/L…….. ......................................................................................................................................... 4

1.1.2. The Claimant Has Exercised Good Faith In Acquiring The Possession of The B/L ......... 5

1.1.3. The Claimant Remains As The Lawful Holder of The B/L on The Grounds That The

Transfer of Rights Was Rescinded .................................................................................................. 5

1.2. The Arbitration Agreement In The Fixture Re-Cap Has Been Validly Incorporated to

The B/L Which Constitutes As A Valid Arbitration Agreement ................................................. 7

2. THE RESPONDENT HAS BREACHED ITS CONTRACT OF CARRIAGE

TOWARDS THE CLAIMANT .............................................................................................. 8

2.1. The Respondent Has Breached The Hague-Visby Rules Incorporated Within The

Provisions In The Contract of Carriage ......................................................................................... 8

2.1.1. The Hijacking Is Foreseeable ............................................................................................ 8

2.1.2. The Respondent Has Failed to Exercise Due Diligence to Provide A Seaworthy Vessel . 9

2.1.3. The Respondent Has Breached Its Obligation to Exercise Duty of Care ........................ 11

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 iii

2.1.4. The Respondent Cannot Rely on The Exceptions In The Hague-Visby Rules Nor In The

Charter Party ................................................................................................................................ 12

2.2. The Respondent Has Failed to Deliver The Cargo to The Contractual Port ................. 12

2.2.1. The Respondent Has Committed An Unreasonable Deviation ........................................ 13

2.3. The Respondent Has Committed A Misdelivery Without The Presentation of The

B/L….. .............................................................................................................................................. 15

2.3.1. Respondent Is Not Justified to Deliver The Cargo Without Presentation of The B/L ..... 15

3. THE RESPONDENT IS LIABLE UNDER THE TORT OF CONVERSION FOR

NOT DELIVERING THE CARGO TO THE CLAIMANT ............................................. 18

3.1. The Arbitral Tribunal Has The Competence to Hear The Dispute Regarding Tort…. 18

3.2. The Claimant As The Lawful Holder Has The Entitlement to Sue In Conversion ....... 19

3.3. The Respondent Has Committed Tort of Conversion ...................................................... 19

3.3.1. The Respondent’s Action Is Inconsistent With The Rights of The Claimant ................... 20

3.3.2. The Respondent Deliberately Committed The Act of Conversion ................................... 20

3.4. The Claimant Did Not Consent to The Act of The Respondent Which Resulted In

Conversion ....................................................................................................................................... 21

4. THE RESPONDENT IS LIABLE FOR ALL LOSSES SUFFERED BY THE

CLAIMANT….. ..................................................................................................................... 22

4.1. The Claimant Is Entitled For The Initial Value of The Cargo ........................................ 22

4.2. Alternatively, The Respondent Is Liable to Compensate The Claimant For The

Repurchase of The Cargo ............................................................................................................... 23

4.3. The Respondent Is Liable For The Court Fees From Penalty In Dutch Court ............. 24

PRAYER ................................................................................................................................. 25

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 iv

LIST OF ABREVIATIONS

Claimant Aardvark Limited

Respondent Twilight Carriers Inc.

Beatles Beatles Oils & Fats Limited

Vessel Twilight Trader

PFAD Palm Fatty Acid Distillate

Cargo 4,000 mt (±10%) of Palm Fatty Acid Distillate

B/L

LOI

Problem

Charter Party

FOSFA 81

The 25th October 2008 Bill of Lading

Letter of Indemnity

IMLAM Moot Problem, 2013

VEGOIL VOY Charter Party

The Federation of Oils, Seeds and Fats

Associations 81

Fixture Re-cap

Bill

The 12th September 2008 Fixture Re-Cap of The

Charter Party

Bill of Lading

The Hague-Visby Rules International Convention for The Unification of

Certain Rules of Law Relating to Bills of

Lading

UK Arbitration Act United Kingdom Arbitration Act 1996

COGSA United Kingdom Carriage of Goods by Sea Act

GoA

BMP2

Gulf of Aden

The Best Management Practices Version 2,

MSC.1/Circ.1334

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 v

INDEX OF AUTHORITIES

A. CASE LAW

COMMONWEALTH STATES

1. Ahmad v. Mitsui OSK Lines Ltd [2005] FCA 731………………………………………..5

2. BNP Paribas v. Bandung Shipping [2003] 3 SLR 611; [2003] SGHC 111………….....16

3. Carrington Slipways Pty Ltd. v. Petrick Operation Pty Ltd. [1991] 24 NSWLR 745…..19

4. Comalco Aluminium Ltd. v. Mogal Freight Services Pty Ltd. [1993] 113 ALR 677…...19

5. Furness v. Adrium Indutries Pty Ltd. [1966] 1 VR 668…………………………………23

6. Glencore International AG v. Owners of The Cherry (The Cherry) [2003] 1 SLR 471;

[2002] SGCA 49……………………………………………………………………...3, 16

7. Keppel Tatlee Bank Ltd v. Bandung Shipping Private Ltd [2003] 1 Lloyd’s Rep. 619….4

8. UCO Bank v. Golden Shore Transportation Pte Ltd [2006] 1 SLR 1; [2005] SGCA 42..3

UNITED KINGDOM

1. Actis Co. Ltd. v. The Sanko Steamship Co. Ltd (The Aquacharm) [1982] 1 Lloyd's Rep.

7…………………………………………………………………………………………...9

2. Aegean Sea Traders Corporation v. Repsol Petroleo S.A. and Another (The Aegean Sea)

[1998] 2 Lloyd's Rep. 39………………………………………...…………………..3, 4, 5

3. Astro Vencedor v. Mabanaft [1971] 2 All ER 1301…………………………………….19

4. Ashmore & Son v. C. S. Cox & Co. [1899] 1 QB 436……………………………………6

5. Ashington Piggeries v Hill [1972] AC 441…………………………………………….....6

6. Barclays Bank Ltd. v. Commissioners of Customs and Excise [1963] 1 Lloyd’s Rep.

81………………………………………………………………………………………...15

7. Bowater v. Rowley Regis Corp. [1944] KB 476 (CA)…………………………………..21

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 vi

8. Brandeis v. Goldschmidt & Co. v. Western Transport Ltd. [1981] QB 864……………23

9. British Sugar PLC v. NEI Power Projects Ltd. [1997] 87 BLR 42……………………..24

10. Carlberg v. Wemyss [1915] SC 616…………………………………………………18, 20

11. Caxton Publishing v. Sutherland Publishing [1938] 4 A11 ER 389……………………20

12. Cf Monarch v. Karlshamss [1949] AC 196……………………………………………..12

13. Cia Portorafti Commerciale SA v. Ultramar Panama Inc. (The Captain Gregos) (No. 2)

[1990] 2 Lloyd’s Rep. 395…………………………………………………………..19, 20

14. Clothing Management v. Beazley Solutions [2012] EWHC 727 QB……………………..6

15. Compania Sud American Vapores v. Ms ER Hamburg, Schiffahrtsgesellschaft MBH &

Co., KG [2006] EWHC 483 (Comm)…………………………………………………......8

16. Comptoir d’Achat et de Vente du Boerenbond Belge S.A. v. Luis de Ridder Limitada

(The Julia) [1949] AC 293………………………………………………………………..6

17. Cubazukar v. IANSA (The Playa Larga) [1983] 2 Lloyd’s Rep. 171 (CA)…….……….21

18. East West Corporation v. DKBS [2003] 1 Lloyd's Rep. 239…………...…….………3, 19

19. Enichem Anic SpA v. Ampelos Shipping Co Ltd (The Delfini) [1990] 1 Lloyd’s Rep.

252………………………………………………………………………………………...4

20. FC Bradley & Sons v. Federal Steam Navigation Co. [1926] 24 Lloyd’s Rep. 446……..9

21. Gatoil International Inc v. Tradax Petroleum Ltd v. Panatlantic Carriers Corporation

(The Rio Sun) [1985] 1 Lloyd's Rep. 350………………………………………….……11

22. Gill v. M.S. & L.R. [1873] Lloyd’s Rep. 8 QB 186……………………………………12

23. Glynn v. Margeston [1893] AC 351 [1907] 1 KB 660………………………………….14

24. Habas Sinai Ve Tibbi Gazlar Isthisal Endustri A.S. v. Sometal S.A.L (The Habas Sinai)

[2010] EWHC 29 (Comm)………………………………………………………………..7

25. Hadley v. Baxendale [1854] 9 Ex. 341……………………………………………...23, 24

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 vii

26. Hansen-Tangens Rederei III v. Team Transport Corporation (The Sagona) [1984] 1

Lloyd’s Rep. 194………………………………………………………………………...16

27. Hickox v. Adams [1876] 34 LT 404…...………………………………………………….6

28. Hobbs Padgett & Co (Reinsurance) Limited v. JC Kirkland Ltd [1969] Lloyd’s Rep.

547………………………………………………………………………………………...7

29. Homburg Houtimport B.V. v. Agrosin Private Ltd. and Others (The Starsin) [2003]

UKHL 12; [2003] 1 Lloyd’s Rep. 571………………………………………………...….4

30. Hong Kong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 QB 26……..9

31. Hotel Service Ltd. v. Hilton International Hotels (UK) Ltd. [2000] 1 All ER (Comm)

750……………………………………………………………………………………….24

32. Howard v. Pickford Tool Co [1951] 1 KB 417…………………………………………..6

33. IBL Ltd. v. Coussens [1991] 2 All ER 133……………………………………………...23

34. International Packers London Ltd. v. Ocean Steam Ship Co. Ltd. [1955] 2 Lloyd's Rep.

218……………………………………………………………………………………….11

35. James Morrison & Co. Ltd v. Shaw, Savill and Albion Co. Ltd. [1916] 2 KB 783…..…13

36. Johnson v. Taylor Bros [1920] AC 144………………………………………………….6

37. Kopitoff v. Wilson [1876] 1 QBD 377……………………………………………………9

38. Kum v. Wah Tat Bank Ltd. [1971] 1 Lloyd’s Rep. 439…………………………………..4

39. Kuwait Airways Corp v. Iraqi Airways Corp [2002] UKHL 19…………………….20, 23

40. Kuwait Petroleum Corp. v. I&D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Law

Rep. 541....……………………………………………………………4, 15, 16, 17, 18, 20

41. Kwei Tek Chao and Others v. British Traders and Shippers Ltd. N.V.

Handelsmaatschappij J. Smits Import-Export [1954] 2 QB 459; [1954] 1 Lloyd’s Rep.

16…………………………………………………………………………………………6

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 viii

42. La Fontana Novela v. E.G. Cornelius & Co. Ltd. (The Peace Venture) [1996] 2 Lloyd's

Rep. 66……………………………………………………………………………………9

43. Lecky & Co Ltd v. Oglivy, Gillanders & Co. [1897] 3. Com. Cas. 29……………….....12

44. Leduc v. Ward [1888] 20 QBD 475…………………………………………………14, 15

45. Leesh River Tea Co. v. British Indian Steam Navigation Co. [1966] 1 Lloyd's Rep.

450……………………………………………………………………………………….11

46. Letang v. Ottawa Electric Railway Company [1926] AC 725…..……………………...21

47. Lickbarrow v. Mason [1794] 5 Term Rep. 683…………………………………………..4

48. Manifest Shipping & Co. Ltd. v. Uni-Polaris Insurance Co. Ltd. and la Réunion

Europeene (The Star Sea) [1997] 1 Lloyd's Rep. 360…………………………………..10

49. Margetson v. Glynn [1892] 1 QB 337…………………………………………………..14

50. Marquis of Bute v. Barclays Bank [1955] 1 QB 202………………………………..19, 20

51. Maxine Footwear Co. Ltd. and Another v. Canadian Government Merchant Marine Ltd

[1959] AC 589………………………………………………………………………...9, 12

52. MB Pyramid Sound NV v. Briese Schiffahrts GmbH and Co. KG MS Sina and Latvian

Shipping Association Ltd (The Ines) [1995] 2 Lloyd’s Rep. 144…………………...14, 19

53. McFadden v. Blue Star Line [1905] 1 KB 697…………………………………………...8

54. Mediterranean Freight Services Ltd. v. BP Oil International Ltd. (The Fiona) [1994] 2

Lloyd's Rep. 506………………………………………………………………………...12

55. Michael v. Hart & Co. [1902] 1 KB 482…………………………………………………6

56. Minister of Food v. Reardon Line [1951] 2 Lloyd’s Rep. 265………………………….12

57. Mobile Shipping Co. v. Shell Eastern Petroleum Ltd (The Mobile Courage) [1987]

Lloyd’s Rep. 655…………………………………………………………………...……15

58. Moschi v. Lep Air Services Ltd [1972] 2 All ER 393………..…………………………..6

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 ix

59. Motis Exports v. Dampskibsellskabet AF 1912 (The Motis Case) [2000] 1 Lloyd’s Rep.

121………………………………………………………………………………...…16, 17

60. Nettleship v. Weston [1971] 2 QB 691 (CA)…………………………………………....21

61. Northern Shipping Co. v. Deutsche Seereederei GMBH and Others (The Kapitan

Sakharov) [2000] 2 Lloyd's Rep. 255………………………………………………...…12

62. Nugent v. Smith [1876] 1 CPD 423……………………………………………………...12

63. Osborne v. The London and North Western Railway Company [1926] A.C.

725……………………………………………………………………………………….21

64. Overseas Tankship (UK) Ltd. v. Morts Dock & Engineering (The Wagon Mound, No. 1)

[1961] AC 388…...…………………………………………………………………....8, 11

65. Pace Shipping Co Ltd v. Churchgate Nigeria Ltd (The Pace) [2009] EWHC 1975

(Comm); [2010] 1 Lloyd’s Rep. 183…………………...…………...…………………….3

66. Panchaud Freres SA v. Ets. General Grain Co [1970] 1 Lloyd's Rep. 53…………...…..6

67. Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co. Ltd. and Another

(The Eurasian Dream) [2002] 1 Lloyd’s Rep. 719……………………...………..9, 10, 12

68. Parsons Corporation and Others v. C.V. Scheepvaartonderneming Happy Ranger and

Others (The Happy Ranger) [2002] 2 Lloyd's Rep. 357………………………………...12

69. Pasific Basin IHX Ltd. v. Bulkhandling Handymax A.S. [2012] 1 Lloyd’s Rep. 457…….8

70. Pyrene Co. v. Scindia Steam Navigation [1954] 1 Lloyd’s Rep. 321…………….……..11

71. Re Hohenzollern Aktien & City of London CC [1886] 54 LT 596……………...………19

72. Rio Tinto Co v. Seed Shipping Co. [1926] 24 LILR 316……………………………..9, 13

73. Robin Hood Flour Mills, Ltd. v. N. M. Paterson & Sons, Ltd. (The Farrandoc) [1967] 1

Lloyd's Rep. 232………………………………………………………...…………..10, 12

74. Robinson v. Harman [1848] 1 Ex. 850………………………………………………….23

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 x

75. SA Sucre Export v. Northern Shipping Ltd (The Sormovsky 3068) [1994] 2 Lloyd's Rep.

266...…………………………………………………………………………………..4, 18

76. Sanders Bros v. Maclean and Co. [1883] 11 QBD 327………………………………....19

77. Senate Electrical Wholesalers Ltd. v. Alcatel Submarine Networks [1999] 2 Lloyd’s Rep.

423……………………………………………………………………………………….23

78. SIAT di del Ferro v. Tradax Overseas SA [1980] 1 Lloyd’s Rep. 53…………...………12

79. Singh v. Ali [1960] AC 167…………………………………………………………...…19

80. Siordet v. Hall [1828] 4 Bing 607……………………………………………………….12

81. Smith v. Charle Baker & Sons [1891] AC 325 (IHL)…………………………………...21

82. Stag Line v. Foscolo Mango & Co. Ltd. [1931] 41 Lloyd’s Rep. 165 [1932] AC

328…………………………………………………………………………………...13, 15

83. Steel Co Limited and Others v. Islamic Solidarity Shipping Company Jordan Inc. [2004]

UKHL 49………………………………………………………………………………….8

84. Sze Hai Tong Bank Ltd. v. Rambler Cycle Co. Ltd. [1959] 2 Lloyd’s Rep. 114..15, 18, 20

85. Tate & Lyle Ltd v. Hain Steamship Company Ltd [1936] 2 All ER 597 Lloyd’s Rep.

159……………………………………………………………………………………….16

86. The Aliakmon [1986] AC 785; [1986] 2 Lloyd’s Rep. 1………………………………...19

87. The Antwerpen [1994] 1 Lloyd’s Rep. 213……………………………………………...14

88. The Berge Sisar [2001] UKHL 17; 2 WLR 1118; [2001] 1 Lloyd’s Rep. 663…………..4

89. The Darrah [1977] AC 159……………………………………………………………...15

90. The Europa [1908] P. 84…………………………………………………………………9

91. The Future Express [1993] 2 Lloyd’s Rep. 542…………………………………………19

92. The Glenfruin [1885] QBD 103………………………………………………………9, 12

93. The Jag Shakti [1986] AC 337…………………………………………………………..15

94. The Paola D’Alesio [1994] 2 Lloyd’s Rep. 366……………………………………...…18

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 xi

95. The Schwan [1908] P. 356………………………………………………………..……..10

96. The Stettin [1889] 14 PD 142……………………………………………………………15

97. Thomas v. Quartermaine [1887] 18 QBD 685………………………………………….21

98. Trasimex Holding S.A. v. Addax B.V. (The Red Sea) [1999] 1 Lloyd’s Rep. 28 (CA)….6

99. Tritonia Shipping Inc v. South Nelson Forest Products Corporation [1966] Lloyd’s Rep.

114………………………………………………………………………………………...7

100. TTMI Sarl v. Statoil ASA (The Sibohelle) [2011] EWHC 1150 (Comm)………...…...7

101. Welex A.G. v. Rosa Maritime Ltd (The Epsilon Rosa) [2002] EWHC 762 (Comm);

[2003] EWCA Civ 938……………………………………………………………………7

102. White v. Blackmore [1972] 3 WLR 296…………………………………………...…21

103. Woolf v. Collis [1948] 1 KB 11……………………………………………………...19

104. Vencendor v. Mabanaft [1971] Lloyd's Rep. 502…………………………...……….19

105. Victoria Laundry v. Newman Industries Ltd. [1949] 2 KB 528……………………...23

UNITED STATES

1. Allied Chemical International Corp. v. Comphania de Navegacao Lloyd Brasiliero

[1986] AMC 826 (2d. Cir. 1985)………………………………………………………..16

B. STATUTES

1. International Convention for the Unification of Certain Rules relating to Bills of Lading,

1924 (Hague Rules) as amended by the Visby Protocol, 1968 (The Hague-Visby Rules).

2. The Rome II Regulation 2009.

3. UNCITRAL Model Law on International Commercial Arbitration, 1985.

4. United Kingdom, Arbitration Act 1996.

5. United Kingdom, Bills of Exchange Act 1882.

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 xii

6. United Kingdom, Carriage of Goods Sea Act 1992.

7. United Kingdom, Sale of Goods Act 1979.

8. United Kingdom, Torts (Interference With Goods) Act 1977.

C. TREATISES & DIGESTS

1. Chorley and Giles, Shipping Law (5th edition) (London: Sir Isaac Pitman & Sons Ltd,

1963).

2. Filipo Lorenzon, C.I.F and F.O.B Contracts (London: Sweet and Maxell Publishing,

2012).

3. G. H. Treitel, Carver on Bills of Lading (London: Sweet & Maxwell , 2012) .

4. G. H. Treitel, The Law of Contract (11th edition) (London: Sweet & Maxwell, 2003).

5. Grant Gilmore and Charles L. Black, The Law of Admiralty (2nd edition) (London: The

Foundation Press. Inc, 1975).

6. International Maritime Organization, The Best Management Practices to Deter Piracy in

the Gulf of Aden and off the Coast of Somalia Version 2 (BMP2) dated August 09

MSC.1/Circ.1334.

7. John F. Wilson, Carriage of Goods by Sea (4th edition) (London: Longman, 2001).

8. John Murphy & Christian Witting, Street on Torts (13th edition) (United Kingdom:

Oxford University Press, 2012).

9. M. L. Hendrikse, N. H. Margetson, Aspects of Maritime Law: Claims Under Bills of

Lading (London: Kluwer Law International, 2008).

10. Martin Dockray, Cases & Materials on The Carriage of Goods by Sea (London:

Cavendish Publishing Limited, 2004).

11. McGregor H., McGregor on Damages (17th edition) (London: Sweet & Maxwell, 2003).

12. Nicholas Gaskell, Bills of Lading: Law of Contract (London: LLP, 2000).

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 xiii

13. P. W. D. Redmond, General Principles of English Law (4th edition) (London: Choucer

Press Ltd, 1974).

14. Paul Bugden, Goods in Transit and Freight Forwarding (2nd edition) (London: Sweet &

Maxwell, 2010).

15. Robert Force, Admiralty and Maritime Law (Washington D. C: Federal Judicial Center,

2004).

16. Security Council Resolution. Adopted by the Security Council at its 6019th meeting (20

November 2008) S/RES/1844.

17. Simon Baughen, Shipping Law (4th edition) (United Kingdom: T&F Books, 2009).

18. Stewart C. Boyd, Scrutton on Charterparties and Bill of Lading (Scrutton) (20th edition)

(London: Sweet & Maxwell, 1996).

19. United Nations Security Council, Report of the Secretary General Pursuant to Security

Council Resolution 1897 [2009] S/2010/556, 27 October 2010.

20. Yang, Liang-yi, Bills of Lading and other Shipping Documents (1st edition) (China:

Chinese University of Politics and Laws Press, 2001).

21. William Tetley, Marine Cargo Claims (3rd edition) (Montreal: International Shipping

Publication, 1988).

D. ARTICLES

1. Caslav Pejovic, Legal Issues Arising From delivery of goods without a Bill of lading

(2006).

2. C.H. Spurin, Substantive and Procedural Law: Arbitration Agreement (2008).

3. Conversion, Tort, and Restitution in Palmer and McKendrick (eds), Interests in Goods

(1998).

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 xiv

4. International Chamber Of Commerce, International Maritime Bureau, Annual Report:

Piracy And Armed Robbery Against Ships. 1 Jan–31 Dec. 2006 (2007).

5. International Chamber of Commerce, The Piracy & Armed Robbery Prone Areas and

Warnings, adopted on 2 December 2009 at the 26th Assembly Session of the

International Maritime Organization (IMO).

6. International Maritime Organization, Annex 2, Reports On Acts Of Piracy And Armed

Robbery Against Ships – Issued monthly – Acts reported during November 2009,

reported by Member States or International Organizations In Consultative Status

MSC.4/Circ.146 (14 December 2009).

7. Masood Ahmed, Arbitration Clauses: Fairness, Justice and Commercial Certainty in

William W. Park (ed.), ARBITRATION INTERNATIONAL 415 (2010).

8. Ocean Cargo Glossary - PMM Dept. - Version 3: February 2004.

9. Tettenborn, Damages in Conversion: The Exception or the Anomaly? [1993] CLJ 128.

10. UK P&I Club Circular 4/01: Bills of Lading – Delivery of Cargo: Std Form of Bill of

Lading; International Transport Intermediaries Club: Ten Golden Rules For Delivery of

Cargo.

E. OTHERS

1. Trevor Elliston, Bills of lading and Club Cover, can be accessed at

www.ukpandi.com/knowledge/article/bills-of-lading-and-club-cover-1158 (last accessed

on 20 April 2013)

14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 1

STATEMENT OF FACTS

1. Aardvark Limited (the Claimant) is a company located in the High Street Bootle,

Merseyside, United Kingdom carrying a business of an oil trader and the buyer of the

4,000 mt of Palm Fatty Acid Distillate (the Cargo) from Beatles Oils & Fats (Beatles)

under the CIF contract of sale terms governed by FOSFA 81 to resell the Cargo.

2. Beatles chartered the Twilight Trader (the Vessel), a vessel owned by a company

carrying on a business of a ship owner, Twilight Carrier (the Respondent), under the

Voyage Charter Party dated 12 September 2009 (the Charter Party) with the standard

form of VEGOIL VOY Charter Party for delivering the Cargo to the Port of

Merseyside, United Kingdom under the amendment of the 23 September 2008 contract

of sale and the 25 October 2008 Bill of Lading signed by the agent of the master.

3. On 15 November 2008, Somali pirates hijacked the Vessel in the Gulf of Aden (GoA).

The Vessel was seized for three months until 13 February 2009. The quality of Cargo

on board the Vessel deteriorated from being a GMQ (Good Merchantable Quality) to a

non-GMQ cargo during the course of the hijack. Later it was discovered that there was

no heating applied to the Cargo from the hijacking until the delivery.

4. Between the periods of February until March there was a dispute between the Claimant

and Beatles regarding the entitlement to the Cargo and the termination of the contract

of sales. However, under the period of the dispute, the Claimant retains the possession

of the Bill of Lading at all times.

5. On 19 March 2009, Beatles issued a letter of indemnity to the Respondent ordering

them to deliver the Cargo to the port of Rotterdam without the presentation of the Bill

of Lading.


6. On 20 March 2009, the Claimant wrote to the Respondent declaring themselves as the

lawful holder of the Bill of Lading and requested that the discharge of the Cargo should

be in compliance with the contract of carriage which is in Liverpool.

7. On 20 until 22 March 2009, notwithstanding the notification by the Claimant, the

Vessel was discharged at the Port of Rotterdam.

8. Later, the Cargo was arrested by Dutch Court as requested by Beatles on 23rd of March

2009. The Claimant is the defendant on these proceedings. Following the arrest of the

Cargo, the Claimant made an application to arrest the Vessel.

9. On 27 March 2009, the court ordered for the Respondent to provide USD 1.4 million to

lift the arrest, which was indemnified by Beatles on behalf of the Respondent on April

3rd, 2009.

10. On 23 May 2009, Beatles issued an application for an order for sale. Later on 24 July

2009, the court of Rotterdam upheld the arrest and granted an order for sale. In this

hearing, the Claimant made an appeal on 21 August 2009 to suspend the sale of the

Cargo which failed.

11. On 25 August 2009 Beatles sold the Cargo to AB Buyer based on the order for sale that

was granted by the court.

12. On 6 April 2010, the Claimant commences arbitral proceeding in accordance with the

Fixture Recap of the Charter Party against the Respondent claiming damages due to the

Respondent’s failure to deliver the Cargo to the contractual port and to the rightful

owner as well for the deterioration of the Cargo.


1. THE ARBITRAL TRIBUNAL HAS THE JURISDICTION TO HEAR THIS

MATTER

This arbitral tribunal has the jurisdiction to hear this matter as first, the Claimant as the lawful

holder of the 25th October 2008 Bill of Lading (“B/L”) is bound to the provisions which are

incorporated with the B/L and secondly, the arbitration agreement in the Fixture Re-cap of

the Charter Party (“Fixture Re-cap”) has been validly incorporated by reference into the B/L

which constitutes as a valid arbitration agreement.

1.1. The Claimant As The Lawful Holder of The B/L Is Bound to Its Provisions

English law recognizes the doctrine of privity of a contract, which implies that a contract is a

private relationship between the parties involved, and no other person can acquire rights or

incur liabilities under it.1 However, by virtue of section 2(1) of the Carriage of Goods by Sea

Act 1992 (“COGSA”),2 despite having no contractual link between the claimant and the

carrier, the claimant can still proceed against the carrier based on the contract by showing that

the claimant is the lawful holder of bill3 and has thereby acquired statutory right of action

against the carrier ‘as if’ they had been the parties to that contract under the terms of the bill.

Thus, being the lawful holder of the bill overcomes the problem of privity.4

1 P. W. D. Redmond, General Principles of English Law (4th edition) (London: Choucer Press Ltd. 1974) p. 144. 2 COGSA, section 2 (1); Simon Baughen (Baughen), Shipping Law (4th edition) (United Kingdom: T&F Books,

2009), p. 19. 3 United Kingdom, Carriage of Goods Sea Act 1992 (COGSA), section 2 (1) (a); Martin Dockray (Martin

Dockray), Cases & Materials on The Carriage of Goods by Sea (London: Cavendish Publishing Limited, 2004), p. 116.

4 East West v. DKBS [2003] 1 Lloyd's Rep. 239; Pace Shipping Co Ltd v. Churchgate Nigeria Ltd (The Pace) [2009] EWHC 1975 (Comm); [2010] 1 Lloyd’s Rep. 183; Aegean Sea Traders Corporation v. Repsol Petroleo S.A. and Another (The Aegean Sea) [1998] 2 Lloyd's Rep. 39; Lickbarrow v. Mason [1794] 5 Term Rep. 683; UCO Bank v. Golden Shore Transportation Pte Ltd [2006] 1 SLR 1; [2005] SGCA 42; Glencore International AG v. Owners of The Cherry (The Cherry) [2003] 1 SLR 471; [2002] SGCA 49; Martin Dockray, p. 41; Nicholas Gaskel (Gaskel), Bills of Lading: Law of Contract (London: LLP, 2000) section 4.36, p. 131.


1.1.1. The Claimant Has Fulfilled The Requirement to Become The Lawful Holder of The

B/L

The lawful holder is the person with possession of the order bill which has been endorsed and

delivered by the seller against payment of the price as a result of completion and transaction

between the parties,5 and as a consequence, the constructive possession of the cargo passes

from the sellers to him.6 Regarding the endorsement, in Lickbarrow v. Mason,7 where the

shipper writes his name on the back of an order bill, the order bill has been endorsed in

blank8 since endorsement of the bill in blank by the shipper may be filled up by the person to

whom they are so delivered or transmitted as aforesaid.9 Towards this matter, on mid-January

2009, the B/L was delivered to the Claimant as a result of transaction agreed by the Claimant

and Beatles.10 In an exchange of the possession of the B/L, the Claimant has made an

immediate payment with 99% Cash Against Document terms on 26 January 2009. 11

Furthermore, seeing that the shipper’s signature was found on the back of the order B/L,12 the

B/L has been endorsed to the Claimant in blank. Therefore, as the holder of the endorsed

5 COGSA, section 5 (2). 6 Kuwait Petroleum Corp. v. I&D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Law Rep. 541 [per Neil C. J.];

SA Sucre Export v. Northern Shipping Ltd (The Sormovsky 3068) [1994] 2 Lloyd's Rep. 266; Enichem Anic SpA v. Ampelos Shipping Co Ltd (The Delfini) [1990] 1 Lloyd’s Rep. 252, p. 268; The Berge Sisar [2001] UKHL 17, p. 18; 2 WLR 1118; [2001] 1 Lloyd’s Rep. 663; Homburg Houtimport B.V. v. Agrosin Private Ltd. and Others (The Starsin) [2003] UKHL 12; [2003] 1 Lloyd’s Rep. 571.

7 Lickbarrow v. Mason [1794] 5 Term Rep. 683. 8 Ibid; Kum v. Wah Tat Bank Ltd. [1971] 1 Lloyd’s Rep. 439, p. 446-449 [per Lord Devlin]; Baughen, p. 6;

Chorley and Giles, Shipping Law, (5th edition) (London: Sir Isaac Pitman & Sons Ltd. 1963) p. 157; M. L. Hendrikse, N. H. Margetson, Aspects of Maritime Law: Claims Under Bills of Lading (London: Kluwer Law International, 2008) p. 206; Martin Dockray, p. 112.

9 Lickbarrow v. Mason [1794] 5 Term Rep. 683, p. 685; Keppel Tatlee Bank Ltd v. Bandung Shipping Private Ltd [2003] 1 Lloyd’s Rep. 619, p. 622; The Aegean Sea [1998] 2 Lloyd's Rep. 39, p. 59–60; Stewart C. Boyd, Scrutton on Charterparties and Bill of Lading (Scrutton) (20th edition) (London: Sweet & Maxwell, 1996), p. 184.

10 Problem, p. 1-2. 11 Problem, p. 25. 12 Problem, p. 14-21.


order B/L since mid-January 200913 and was in possession of the purchased B/L at all

times,14 the Claimant is the lawful holder of the B/L.

1.1.2. The Claimant Has Exercised Good Faith In Acquiring The Possession of The B/L

Possession of the bill in good faith gives the certainty that the person who holds the bill

acquires possession of the bill in “honest conduct”15 rather than possesion of the bill through

fraud or theft.16 In Ahmad v. Mitsui OSK Lines Ltd,17 the court held that the possession of the

bill in good faith was adversed since the holder has acquired possession of the bill from the

seller without complying with the conditions, typically as to payment that is required to be

performed under the contract of sales.18 Reffering to this present case, the good faith has been

shown by the fact that both Beatles as the seller and the Claimant as the buyer has

acknowledged and agreed to the transaction, seeing that the Claimant is the confirmed buyer

of the Cargo under the Broker confirmation letter.19 Furthermore, the Claimant has satisfied

the complying condition under the contract of sales through payment.20 For these reasons, the

Claimant acquires the B/L with honest conduct rather than through fraud or theft. Thus, the

Claimant as the lawful holder of the B/L has exercised good faith in acquiring the possession

of the B/L.

1.1.3. The Claimant Remains As The Lawful Holder of The B/L on The Grounds That

The Transfer of Rights Was Rescinded

The Respondent alleged that the Claimant is no longer the lawful holder of the B/L,21

nevertheless the Claimant submits otherwise. According to the CIF contract, the cargo

13 Problem, Claims Submission, p. 67, pp. 11. 14 Clarification, pp. 6. 15 The Aegean Sea [1998] 2 Lloyd's Rep. 39, p. 60; United Kingdom, Bills of Exchange Act 1882, section 90;

United Kingdom, Sale of Goods Act 1979 (SOGA), section 61 (3). 16 G. H. Treitel, Carver on Bills of Lading (London: Sweet & Maxwell , 2012) p. 231, pp. 5-025. 17 Ahmad v. Mitsui OSK Lines Ltd [2005] FCA 731. 18 Ibid, p. 68- 69; SOGA, section 28. 19 Problem, p. 1-2. 20 Claimant Memorandum, section 1.1.2. 21 Problem, Defence Submission, p. 73, pp. 10.


shipped must conform to their description in the contract of sales otherwise the buyer may

reject them or, alternatively, claim for the repayment of the purchase price.22 In any event that

the cargo might be damaged, the seller has a duty to insure the cargo by providing the valued

insurance policy agreed under the contract of sales that shall protect the buyer, or the seller

would be in repudiatory breach.23 In Howard v. Pickford Tool Co.,24 an acceptance of the

breach can transfer the rights of the cargo. Consequently, all the obligations in the contract

come to an end and are replaced by operation of law by an obligation to pay money

damages.25 However, when the party refuses to accept the breach, the transfer of rights was

rescinded.26 In this present case, following the deterioration of the Cargo, Beatles was in

repudiatory breach by providing unvalued policy limited to its market value on departure27

when it should have been the valued policy agreed under the contract of sales incorporated

with FOSFA 8128 with no less than 5% of the invoice value.29 In order to conclude the

breach, the Claimant inquired Beatles for the repayment of the purchase price together with

interest, which Beatles refused to comply, thus there was no acceptance of the breach

concluded. Therefore, the transfer of rights was rescinded and the Claimant remains as the

lawful holder of the B/L.

22 SOGA, section 15; Panchaud Freres SA v. Ets. General Grain Co [1970] 1 Lloyd's Rep. 53; Kwei Tek Chao

and Others v. British Traders and Shippers Ltd. N.V. Handelsmaatschappij J. Smits Import-Export [1954] 2 QB 459; [1954] 1 Lloyd’s Rep. 16; Trasimex Holding S.A. v. Addax B.V. (The Red Sea) [1999] 1 Lloyd’s Rep. 28, p. 33 (C.A.); Ashmore & Son v. C. S. Cox & Co. [1899] 1 QB 436; Ashington Piggeries v. Hill [1972] AC 441.

23 Comptoir d’Achat et de Vente du Boerenbond Belge S.A. v. Luis de Ridder Limitada (The Julia) [1949] AC 293; Clothing Management v. Beazley Solutions [2012] EWHC 727 QB, p. 587, pp. 73; Johnson v. Taylor Bros [1920] AC 144, p. 145 [per Lord Atkinson]; Hickox v. Adams [1876] 34 LT 404.

24 Howard v. Pickford Tool Co [1951] 1 KB 417. 25 Moschi v. Lep Air Services Ltd [1972] 2 All ER 393, pp. 398-399 [per Lord Reid]. 26 Howard v. Pickford Tool Co [1951] 1 KB 417, p. 420; Michael v. Hart & Co [1902] 1 KB 482; Ocean Cargo

Glossary - PMM Dept. - Version 3: February 2004, p. 4. 27 Problem, p. 25. 28 Problem, p. 1-2. 29 FOSFA 81, cl. 6.


1.2. The Arbitration Agreement In The Fixture Re-Cap Has Been Validly

Incorporated to The B/L Which Constitutes As A Valid Arbitration Agreement

An arbitration clause can be incorporated into a contract by reference to another contract such

as the incorporation of an arbitration clause into the bill, by referring to the charter party

agreement or to another document containing the relevant terms.30 A reference to a document

containing an arbitration clause constitutes a valid arbitration agreement if the clause is made

a part of the contract.31

The Claimant as the lawful holder based their claims on the B/L, accordingly bound to the

Charter Party since the B/L is incorporated to the Charter Party.32 A Charter Party agreement

can be evidenced by the existence of the Fixture Re-cap.33 Therefore, the Fixture Re-cap is an

integral and inseparable part from the Charter Party. Consequently, the provisions of the

Fixture Re-cap are therefore undoubtedly binding to the Claimant and the Respondent.

In Welex AG v. Rosa Maritime Ltd,34 seeing that the claimant was aware and had received the

fixture re-cap as the evidence of the charter party, the arbitration agreement in the fixture re-

cap incorporated into the bill is the valid arbitration agreement between the claimant and the

carrier.35 Further, the phrase ’settled by arbitration in London’ was enough to constitute a

valid arbitration agreement.36 Toward this matter, the Fixture Re-cap as an evidenced of the

Charter Party that was delivered to the Claimant states “LAW AND JURISDICTION:

ENGLISH LAW TO APPLY. LONDON ARBITRATION.” as the arbitration agreement.37 Since

the Fixture Re-Cap forms an integral and inseparable part with the Charter Party, the 30 Masood Ahmed, Arbitration Clauses: Fairness, Justice and Commercial Certainty in William W. Park (ed.),

ARBITRATION INTERNATIONAL 415 (2010), p. 413. 31 UK Arbitration Act 1996, section 6 (2); UNCITRAL Model Law 1985, art. 7 (6); Habas Sinai Ve Tibbi

Gazlar Isthisal Endustri A.S. v. Sometal S.A.L (The Habas Sinai) [2010] EWHC 29 (Comm). 32 Problem, p. 15. 33 TTMI Sarl v. Statoil ASA (The Sibohelle) [2011] EWHC 1150 (Comm) [Beatson, J] pp. 27. 34 Welex A.G. v. Rosa Maritime Ltd (The Epsilon Rosa) [2002] EWHC 762 (Comm); [2003] EWCA Civ 938. 35 Ibid, [per David Steel, J] p. 82. 36 Ibid; Tritonia Shipping Inc v. South Nelson Forest Products Corporation [1966] Lloyd’s Rep. 114; Hobbs

Padgett & Co (Reinsurance) Limited v. JC Kirkland Ltd [1969] Lloyd’s Rep. 547, p. 549. 37 Problem, p. 4.


arbitration agreement found within is enough to constitute as a valid arbitration agreement,

thus, English law and London arbitration is the proper system of law and seat for this dispute.

2. THE RESPONDENT HAS BREACHED ITS CONTRACT OF CARRIAGE

TOWARDS THE CLAIMANT

2.1. The Respondent Has Breached The Hague-Visby Rules Incorporated Within The

Provisions In The Contract of Carriage

Article III of the Hague-Visby Rules, incorporated within the B/L and the Charter Party,

imposes a duty on the carrier to make the vessel seaworthy38 and to take proper and careful

care of the cargo.39 Such duty can be enforced only if there is a contractual term to that

effect.40 In this present case, such duties were stipulated in the contract of carriage,41 hence,

the Respondent has a duty to make the Vessel seaworthy and to take care the Cargo.

2.1.1. The Hijacking Is Foreseeable

In the case of The Wagon Mound No. 1,42 the respondent’s scope of liability extends to all

losses that arise from foreseeable events. If there is a substantial chance or risk of a particular

event happening, then the respondent must take all necessary steps to eliminate such risk.43

Towards this matter, the risk of an attack within the GoA, particularly from Somali pirates, is

well known44 through numerous highly publicized pirate attacks against a wide variety of

cargo ships.45 Accordingly, the Respondent has acknowledged that under the contract of

38 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (The Hague-

Visby Rules) and Protocol of Signature, signed in Brussels on 25 August 1924 (entry into force on 2 June 1931), art. III, r. 1.

39 The Hague-Visby Rules, art. III, r. 2. 40 Steel Co Limited and Others v. Islamic Solidarity Shipping Company Jordan Inc. [2004] UKHL 49;

Compania Sud American Vapores v. Ms ER Hamburg, Schiffahrtsgesellschaft MBH & Co., KG [2006] EWHC 483 (Comm).

41 Problem, Charter Party, Part II, Cl. 1 & Cl. 16. 42 Overseas Tankship (UK) Ltd. v. Morts Dock & Engineering (The Wagon Mound, No. 1) [1961] AC 388. 43 Ibid, p. 391. 44 Pasific Basin IHX Ltd. v. Bulkhandling Handymax A.S. [2012] 1 Lloyd’s Rep. 457; Security Council

Resolution. Adopted by the Security Council at its 6019th meeting (20 November 2008) S/RES/1844. 45 International Chamber Of Commerce, International Maritime Bureau, Annual Report: Piracy And Armed

Robbery Against Ships. 1 Jan–31 Dec. 2006 (2007) p. 5.


carriage, the Vessel was en route via GoA,46 hence the hijacking was foreseeable since there

is a substantial chance or risk of a hijack by passing the GoA.

2.1.2. The Respondent Has Failed to Exercise Due Diligence to Provide A Seaworthy

Vessel

Under the Hague-Visby Rules, the carrier should provide seaworthiness of the vessel,47 which

indicates that the vessel is fit to meet and undergo the perils of the sea and other incidental

risks that by necessity she might be exposed to in the course of the voyage.48 On the

condition that the loss and damages were caused by unseaworthiness, the carrier would be

held liable.49

The standards of seaworthiness are relative to the nature of the ship, to the particular voyage

and even to the particular stage of the voyage,50 such as the vessel’s route.51 Presently, the

standard of the seaworthiness required is increased when the course of voyage was en route

through the high-risk area of piracy in the GoA.

Furthermore, seaworthiness extends to include the competence of the crew.52 Due diligence

and negligence of the carrier is shown through the degree of training and informedness of the

46 Problem, p. 41. 47 The Hague-Visby Rules, art. III r. 1; Grant Gilmore and Charles L. Black, The Law of Admiralty (2nd edition)

(London: The Foundation Press. Inc, 1975) p. 143. 48 Kopitoff v. Wilson [1876] 1 QBD 377, p. 380; Actis Co. Ltd. v. The Sanko Steamship Co. Ltd (The

Aquacharm) [1982] 1 Lloyd's Rep. 7, p. 9. 49 The Europa [1908] P. 84, p. 97-98; Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co.

Ltd. and Another (The Eurasian Dream) [2002] 1 Lloyd’s Rep. 719, p. 735 [per Cresswell, J]; The Glenfruin [1885] QBD 103, p. 103; Maxine Footwear Co. Ltd. and Another v. Canadian Government Merchant Marine Ltd [1959] AC 589.

50 FC Bradley & Sons v. Federal Steam Navigation Co. [1926] 24 Lloyd’s Rep. 446 [per Scrutton LJ]. 51 McFadden v. Blue Star Line [1905] 1 KB 697, p. 706. 52 Hong Kong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 QB 26; The Eurasian Dream

[2002] 1 Lloyd’s Rep. 719; Rio Tinto Co v. Seed Shipping Co. [1926] 24 LILR 316; La Fontana Novela v. E.G. Cornelius & Co. Ltd. (The Peace Venture) [1996] 2 Lloyd's Rep. 66; Paul Bugden, Goods in Transit and Freight Forwarding (2nd edition) (London: Sweet & Maxwell, 2010), p. 297.


crew. Even if the crew had an extensive experience, their lack of specific training and

information could mean that they are incompetent to navigate the Vessel.53

It has been proven that by implementing the Best Management Practices (BMP2), many cases

of hijacking attempts in the GoA have been succesfully evaded due to evasive maneuvers and

effective anti piracy measures taken by the crew.54 In the event of an attempted hijacking of

“BBC THAMES” General Cargo ship in the GoA, the hijack was evaded due to the Master’s

action in raising the alarm, increasing the vessel speed, taking evasive maneuvers, and

informing warships for assistance, as well as sending an SSAS alert to ICC-IMB Piracy

reporting center.55 Facts have shown that increased vigilance and preparedness of crews

along with high profile measures taken in advance continues to be an effective deterrent

against hijacking. Towards this matter, according to the BMP2, the carrier should make every

effort to plan transit periods through the highest risk areas of the GoA for night passage since

there are very few successful attacks that have occurred at night.56 Contrary to the BMP2, the

Respondent entered the GoA at 0745 hours and the hijack occurred on 1250 hours at

daylight,57 which proves the incompetence of the crew through their lack of training and

informedness. Therefore, the Claimant submits that the Respondent has breached article III

Rule 1 of the Hague-Visby Rules by failing to provide a seaworthy Vessel through the

53 The Schwan [1908] P. 356; Manifest Shipping & Co. Ltd. v. Uni-Polaris Insurance Co. Ltd. and la Réunion

Europeene (The Star Sea) [1997] 1 Lloyd's Rep. 360; Robin Hood Flour Mills, Ltd. v. N. M. Paterson & Sons, Ltd. (The Farrandoc) [1967] 1 Lloyd's Rep. 232; The Eurasian Dream [2002] 1 Lloyd's Rep. 719.

54 IMO, Annex 2, Reports On Acts Of Piracy And Armed Robbery Against Ships – Issued monthly – Acts reported during November 2009 (Reports On Acts Of Piracy And Armed Robbery Against Ships November 2009) reported by Member States or International Organizations In Consultative Status, p. 1, MSC.4/Circ.146 (14 December 2009); ICC-IMB Piracy and Armed Robbery Against Ship Report – First Quarter 2011, p. 54; International Maritime Organization, The Best Management Practices to Deter Piracy in the Gulf of Aden and off the Coast of Somalia Version 2 (BMP2) dated August 09 MSC.1/Circ.1334 (BMP2); United Nations Security Council, Report of the Secretary General Pursuant to Security Council Resolution 1897 [2009] S/2010/556, 27 October 2010.

55 Ibid, Reports On Acts Of Piracy And Armed Robbery Against Ships November 2009, Annex 2; International Chamber of Commerce, The Piracy & Armed Robbery Prone Areas and Warnings adopted on 2 December 2009 at the 26th Assembly Session of the International Maritime Organization (IMO).

56 BMP2, pp. 3 (C)(V). 57 Problem, p. 41.


incompetence of the crew to take all necessary steps to evade the hijacking before entering

the high-risk area.

2.1.3. The Respondent Has Breached Its Obligation to Exercise Duty of Care

Carrier has the obligation to care for the cargo according to article III Rule 2 of the Hague-

Visby Rules.58 A violation of the Hague-Visby Rules exists where carrier has failed to take

care of the cargo through the act of omission and accordingly the carrier is held liable for the

loss and damages.59 In The Rio Sun,60 the court stated that since there were no heating

instructions for the petroleum cargo ordered by the charterer, the failure of the carrier to

provide heating towards the cargo did not constitute as a breach.61 On the contrary, in this

present case, since the crew had received carrying instructions for heating of the Cargo

during the voyage,62 they have the obligation to properly and carefully care for the Cargo by

heating it during the voyage from Somali Coast to Fujairah, seeing that the Somali Pirates

have left the Vessel.63 Thus, the obligation of heating the Cargo to reduce the risk of

deterioration is still maintained since the crew was no longer exposed to danger.

Based on said facts, heating to the required temperature will affect the quality of the PFAD.64

Since there was no heating applied to the Cargo during the subsequent voyage to Fujairah, 65

the Respondent is responsible for the deterioration of the quality of the Cargo from GMQ to

non-GMQ, which can never be returned to its former condition.66 Therefore, by failing to

58 The Wagon Mound, No. 1 [1961] 2 WLR 126, p. 391; Pyrene Co. v. Scindia Steam Navigation [1954] 1

Lloyd’s Rep. 321; The Hague-Visby Rules, art. III, r. 2. 59 International Packers London Ltd. v. Ocean Steam Ship Co. Ltd. [1955] 2 Lloyd's Rep. 218, p. 236 [per

McNair J.]; Leesh River Tea Co. v. British Indian Steam Navigation Co. [1966] 1 Lloyd's Rep. 450, p. 457; Scrutton, p. 431.

60 Gatoil International Inc v. Tradax Petroleum Ltd v. Panatlantic Carriers Corporation (The Rio Sun) [1985] 1 Lloyd's Rep. 350

61 Ibid, p. 351. 62 Problem, p. 41. 63 Ibid. 64 Problem, p. 51. 65 Problem, p. 41. 66 Problem, p. 27.


heat the Cargo, the Respondent has breached its obligation to care for the Cargo under article

III Rule 2 of the Hague-Visby Rules.

2.1.4. The Respondent Cannot Rely on The Exceptions In The Hague-Visby Rules Nor In

The Charter Party

The Claimant submits that all the exceptions provided for the benefits of a carrier are

precluded in this case as risk of the peril could have been avoided by the exercise of due

diligence and reasonable care on the part of the Respondent.67 As established in Siordet v.

Hall case, “no peril is ‘danger of the sea’ if its occurrence can be avoided by the exercise of

reasonable skill, diligence and care”.68 In this present dispute, the Respondent has failed to

exercise reasonable skill, diligence and care to avoid the hijack and deterioration of the

Cargo,69 as a consequence, the Respondent cannot rely on any of the exceptions contained in

the Hague-Visby Rules nor in the Charter Party and shall be held liable for loss and damages.

2.2. The Respondent Has Failed to Deliver The Cargo to The Contractual Port

Under Common law, contractual port of delivery is defined as the stated port under the

contract of sale70 or the bill,71 and the carrier will be in breach of contract by failing to deliver

to the contractual port of delivery.72 There are several exceptions to the aforesaid rules,

including the liberty and deviation clause that has been raised by the Respondent under their

67 The Eurasian Dream [2002] 1 Lloyd’s Rep. 719, p. 735 [per Cresswell, J]; The Glenfruin [1885] QBD 103, p.

103; Maxine Footwear Co. Ltd. and Another v. Canadian Government Merchant Marine Ltd; [1959] AC 589; The Farrandoc [1967] 2 Lloyd's Rep. 276; Mediterranean Freight Services Ltd. v. BP Oil International Ltd., (The Fiona), [1994] 2 Lloyd's Rep. 506; Northern Shipping Co. v. Deutsche Seereederei GMBH and Others (The Kapitan Sakharov) [2000] 2 Lloyd's Rep. 255; Parsons Corporation and Others v. C.V. Scheepvaartonderneming "Happy Ranger" and Others (The Happy Ranger) [2002] 2 Lloyd's Rep. 357; Minister of Food v. Reardon Line [1951] 2 Lloyd’s Rep. 265; Nugent v. Smith [1876] 1 CPD 423 [Per Cockburn, C. J.]; Gill v. M.S. & L.R. [1873] Lloyd’s Rep. 8 Q.B. 186 [per Lush, J.]; The Hague-Visby Rules, art. III, r. 8.

68 Siordet v. Hall [1828] 4 Bing 607. 69 Claimant Memorandum, section 2.1.2. and 2.1.3. 70 Lecky & Co Ltd v. Oglivy, Gillanders & Co [1897] 3. Com. Cas. 29. 71 SIAT di del Ferro v. Tradax Overseas SA [1980] 1 Lloyd’s Rep. 53; Filipo Lorenzon, C.I.F and F.O.B

Contracts (London: Sweet and Maxell Publishing, 2012) p. 144. 72 Gaskel, p. 169; Cf Monarch v. Karlshamss [1949] AC 196.


defense submission.73 Nonetheless, the Claimant contends that the Respondent has failed to

deliver the Cargo to the contractual port of delivery based on following reasons.

2.2.1. The Respondent Has Committed An Unreasonable Deviation

When a carrier commits an act that is inconsistent with the agreed route of shipments under

the contract, it could be constructed as an act of deviation.74 Thus, by committing an act of

deviation, the carrier is liable for all losses and damages received by the cargo.75

Under the Hague-Visby Rules, article IV Rule 4, deviation could only be justified if made in

reason of saving life or property and any reasonable deviation.76 Further supported by Lord

Buckmaster’s judgment under the case of Stag Line v. Foscolo Mango,77 that “reasonable”

deviation in saving life and property must be strictly interpreted. Furthermore, in the case of

Rio Tinto Co v. Seed Shipping Co,78 the court held that a deviation needs to be committed

intentionally by the carrier in order to be constructed as an act of deviation, where a mere

accidental deviation will result in the exemption of carrier’s fault.

Relating to this case, after the Vessel was captured by Somali pirates, the Respondent has

comitted a deviation by directing the Vessel to Rotterdam,79 contrary to the fact that since

there are no addendum regarding the contractual port of delivery in the B/L80 and contract of

sale81 then it should have been delivered to Merseyside, Liverpool. Further, the Respondent

deliberately committed a deviation, not merely accidental, when he chose to deviate to

Rotterdam without any reasonable causes of deviation by either saving life or property,

seeing that there are no life threatening conditions or dangers to the Cargo that exists in the

73 Problem, p. 73. Respondent’s Defense Submission. 74 Gaskel, p. 179; Martin Dockray, p. 63. 75 James Morrison & Co. Ltd v. Shaw, Savill and Albion Co Ltd [1916] 2 KB 783; Robert Force, Admiralty and

Maritime Law (Washington D. C: Federal Judicial Center, 2004) p. 304. 76 The Hague Visby Rules, art. IV r. 4. 77 Stag Line v. Foscolo Mango & Co. Ltd. [1931] 41 Lloyd’s Rep. 165 [1932] AC 328. 78 Rio Tinto Co v. Seed Shipping Co. [1926] 24 LILR 316. 79 Problem, p. 48. 80 Problem, p. 14. 81 Problem, p. 13.


time of deviation. Despite their actions, the Respondent had submitted that they are justified

to deviate under the liberty clause of the Charter Party. However, the Claimant takes a

different stance and submits that the Respondent is liable for the unreasonable deviation

regardless of the liberty clause and the Respondent cannot rely on the exception under the

Hague-Visby rules to justify the deviation.

a) The Liberty Clause Cannot Justify Unreasonable Deviation

Normally, Liberty clause is drafted in favor of the carrier and courts interpret them

restrictively82 and occasionally nullify the clause.83 Moreover, the majority of courts have

held that liberty clauses do not authorize the carrier to engage in conduct that would

otherwise be considered as an unreasonable deviation.84 The above practices has been

ascertained respectively under the case of Leduc v. Ward85 and Glynn v. Margeston & Co.86

In the judgment of Leduc v. Ward, the court ruled that deviation and liberty clause was too

wide as it had the same effect as if it was drafted ‘any port in the world’. Such construction

was held to be too wide and inconsistent with the mercantile object of the contract and held

that the liberty clause cannot exempt the carrier for the loss and damages occurred.87 While in

the judgment of Glynn v. Margeston & Co, the House of Lords held that liberty to deviate

must not be constructed so as to defeat the main object of the charter party, which was to

transport the cargo to the nominated port of discharge.88

82John F. Wilson, Carriage of Goods by Sea (4th edition) (London: Longman, 2001) p. 21. 83 Trevor, Elliston, Bills of lading and Club Cover, can be accessed at

www.ukpandi.com/knowledge/article/bills-of-lading-and-club-cover-1158 (last accessed on 20 April 2013) 84 MB Pyramid Sound NV v. Briese Schiffahrts GmbH and Co. KG MS Sina and Latvian Shipping Association

Ltd (The Ines) [1995] 2 Lloyd’s Rep. 144; The Antwerpen [1994] 1 Lloyd’s Rep. 213; Gaskel, section 14.27, p. 421-422; Yang, Liang-yi, Bills of Lading and other Shipping Documents (1st edition) (China: Chinese University of Politics and Laws Press, 2001) p. 139-141; William Tetley, Marine Cargo Claims (3rd edition) (Montreal: International Shipping Publication, 1988) p. 752-54.

85 Leduc v. Ward [1888] 20 QBD 475, p. 220. 86 Glynn v. Margeston [1893] AC 351 [1907] 1 KB 660. 87 Leduc v. Ward [1888] 20 QBD 475, p. 482; Margetson v. Glynn [1892] 1 QB 337, p. 340. 88 [1893] AC 351 [1907] 1 KB 660.


Relating to this present case, the Respondent relies on the liberty clause of the Charter Party89

which particularly states “the vessel may proceed ... at any such port or place whatsoever as

the master or the owner may consider safe or advisable… or discharge the cargo at any such

port” the construction of this clause is too wide of an interpretation since it could give the

carrier rights to discharge at any port. Hereby, the Claimant submits that the construction of

the liberty clause cannot protect the Respondent from any liabilities arising from loss and

damages of the Cargo.

As explained above, the Respondent has failed to deliver the Cargo to the port of Liverpool,

instead, they unreasonably deviated to the port of Rotterdam without any intentions of saving

neither life nor property,90 also noting that the Respondent’s conduct did not benefit the

Claimant in any way.91 Therefore, the Claimant submits that the Respondent cannot rely on

the liberty clause to justify the deviation and should indemnify the Claimant for all the loss

and damages suffered.

2.3. The Respondent Has Committed A Misdelivery Without The Presentation of The

B/L

2.3.1. Respondent Is Not Justified to Deliver The Cargo Without Presentation of The B/L

Upon the delivery, the carrier is obliged to surrender the cargo to a party who presents the

bill.92 Failure to do so will expose the carrier to the risk of being sued in breach of contract,93

even if the cargo was delivered to the party entitled to receive them.94 In this present case, the

Claimant submits that the Respondent has breached the contract of carriage since the LOI

89 Problem, p. 11. 90 Claimant Memorandum, section 3.1. 91 Leduc v. Ward [1888] 20 QBD 475, p. 482, pp. 294; Stag Line v. Foscolo Mango & Co. Ltd. [1931] 41

Lloyd’s Rep. 165 [1932] AC 328; The Darrah [1977] AC 159, p. 157–165 [per Lord Diplock]. 92 Gaskel, p. 417; The Stettin [1889] 14 PD 142; The Jag Shakti [1986] AC 337. 93 Barclays Bank Ltd. v. Commissioners of Customs and Excise [1963] 1 Lloyd’s Rep. 81; Sze Hai Tong Bank

Ltd. v. Rambler Cycle Co. Ltd. [1959] 2 Lloyd’s Rep. 114; Mobile Shipping Co. v. Shell Eastern Petroleum Ltd (The Mobile Courage) [1987] Lloyd’s Rep. 655.

94 The Houda [1994] 2 Lloyd’s Law Rep. 541, p. 550-552, 556.


cannot relieve the Respondent from liabilities. Additionally, there are no exceptions

whatsoever to justify Respondent’s action.

a) The letter of indemnity cannot relieve the Respondent from any liabilities

In the event of delivery without presentation of the bill, the requestor usually issues an LOI

for a guarantee to indemnify the carrier from any loss resulting from the delivery.95 However,

accepting an LOI will risk the carrier for breaching the contract of carriage,96 as LOI does not

relieve the carrier from the liability to the person who is entitled to the cargo.97 Accordingly,

if the person who is entitled to the cargo did not consent to the delivery against an LOI, the

carrier would be in breach of contract with them.98 In the case of Tate & Lyle Ltd v. Hain

Steamship Company Ltd. The court also ruled that charterer’s order to waive carrier liabilities

under the charter party is not binding to the holder of the bill.99

When a charterer requests the carrier to deliver the cargo without the presentation of bill, the

carrier has no obligation to comply with the order.100 On the contrary, the carrier has the right

to refuse the order if the charterer is not able to present the bill.101 In The Houda,102 the court

of appeal held that the charterer couldn’t insist the carrier to deliver the cargo without the

presentation of the bill.103 The carrier may in that event decline to deliver except to the holder

of the bill.104

95Gaskel, p. 425; Caslav Pejovic (Pejovic), Legal Issues Arising From delivery of goods without a Bill of lading,

p. 18. 96 Ibid, Pejovic. 97 UK P&I Club Circular 4/01: Bills of Lading – Delivery of Cargo: Std Form of Bill of Lading; International

Transport Intermediaries Club: Ten Golden Rules For Delivery of Cargo. 98 BNP Paribas v. Bandung Shipping [2003] 3 SLR 611; [2003] SGHC 111. 99 [1936] 2 All ER 597 Lloyd’s Rep. 159. 100 Hansen-Tangens Rederei III v. Team Transport Corporation (The Sagona) [1984] 1 Lloyd’s Rep. 194; Allied

Chemical International Corp. v. Comphania de Navegacao Lloyd Brasiliero [1986] AMC 826 (2d. Cir. 1985); The Cherry [2003] 1 SLR 471; [2002] SGCA 49; Motis Exports v. Dampskibsellskabet AF 1912 (The Motis Case) [2000] 1 Lloyd’s Rep. 121; Gaskel, p. 423.

101 Pejovic, p. 12. 102 The Houda [1994] 2 Lloyd’s Law Rep. 541. 103 The Houda, reversing Phillips J [1993] 1 Lloyd’s Rep. 333. 104 The Houda [1994] 2 Lloyd’s Law Rep. 541, p. 556; Gaskel, p. 425


In this present case, Beatles as the charterer issued an LOI ordering the Respondent to deliver

the Cargo to Rotterdam without the presentation of the B/L.105 On the following day, the

Claimant sent a letter of 20 March 2009 informing the Respondent that the Claimant as the

lawful holder of B/L did not authorize Beatles’s order.106 However, the Respondent insisted

to discharge the Cargo to the port of Rotterdam107 and ignored the letter of 20 March 2009

despite the fact that it was opened immediately after being received.108 This action by the

Respondent results in breach of contract and Claimant’s loss of the Cargo. Therefore, the

Respondent should indemnify any loss suffered by Claimant as the lawful holder of the B/L,

which is entitled to the Cargo.

b) Additionally, there are no justifications that the Respondent can rely upon

A carrier has an obligation to deliver the cargo to the holder of a properly endorsed bill109 and

is not obliged to deliver the cargo without the presentation of the bill.110 Should they fail,

there are slight defense in which the carrier can rely on to justify their action. The decision

under The Houda111 held that a missing bill would not amount as a defense for a conduct of

delivery without presentation of the bill.112 This judgment was emphasized per Lord Rix J

under The Motis Case. 113 Further, the court held that carrier could not rely on their

contractual protection under the express clause in the bill to justify their actions.114 That

being said, it is clear that the rules relating to delivery without presentation of bill is a strict

one and courts tend to ignore any defense raised by the carrier if they deliver the cargo

105 Problem, p. 53. 106 Problem, p. 36. 107 Problem, p. 53. 108 Clarification, pp. 7. 109 Pejovic, p. 5. 110 The Motis Case [2000] 1 Lloyd’s Rep. 121; Gaskel, p. 423. 111 The Houda [1994] 2 Lloyd’s Law Rep. 541. 112 Ibid, p. 553. 113 The Motis Case [2000] 1 Lloyd’s Rep. 211, p. 841. 114 Ibid, p. 841.


without presentation of the bill and to a party who is not entitled to delivery.115 Furthermore,

the carrier cannot be justified by submitting that they are not aware in regards to the

endorsement of the bill. Pursuant to The Sormovskiy 3068,116 the fact that the bill was issued

“to order” meant that they could be endorsed in favor of third parties and the carrier could not

claim that they did not know that the bill was endorsed.117

In the case at hand, the Respondent has delivered the Cargo without presentation of the B/L

to the port of Rotterdam118 and does so, without the authorization of the Claimant,119 who is

entitled to the Cargo.120 Therefore, the action of the Respondent cannot be justified by any

reason whatsoever, since it eliminates any justification to deliver the Cargo without

presentation of the B/L. Thus, the Respondent should be held liable for their actions and shall

be held fully responsible for any loss suffered by the Claimant resulting from their breach of

contact.

3. THE RESPONDENT IS LIABLE UNDER THE TORT OF CONVERSION FOR

NOT DELIVERING THE CARGO TO THE CLAIMANT

3.1. The Arbitral Tribunal Has The Competence to Hear The Dispute Regarding Tort

Tortious claims are regulated under the Torts (Interference of Goods) Act 1977, which

provides that the law applicable to a non-contractual obligation arising out of a tort shall be

the law of the country.121 These provisions clearly cover tortious claims as well as contract

claims.122 Moreover, as explained in Arbitration Act 1996,123 tortious claims are included in

115 Sze Hai Tong Bank Ltd. v. Rambler Cycle Co. Ltd., [1959] 2 Lloyd’s Rep. 114; [1959] AC 576, p. 120, col.

1, p. 586; The Houda [1994] 2 Lloyd’s Law Rep. 541, p. 556; The Sormovskiy 3068 [1994] 2 Lloyd's Rep. 266, p. 206; Carlberg v. Wemyss, [1915] SC 616, p. 624.

116 The Sormovskiy 3068 [1994] 2 Lloyd's Rep. 266. 117 Ibid, p. 206. 118 Problem, p. 53. 119 Problem, p. 36. 120 Claimant Memorandum, section 1.1.1. 121 United Kingdom, Torts (Interference with Goods) Act 1977, section 1; The Rome II Regulation, art. 4 (1). 122 UK Abitration Act 1996, section 6 (1); C.H. Spurin, Substantive and Procedural Law: Arbitration Agreement

(2008) p. 13. 123 The Paola D’Alesio [1994] 2 Lloyd’s Rep. 366; UK Arbitration Act 1996, art. 6 (1).


the scope of the arbitration clause. It could be widely interpreted from particular phrases such

as, “any claim”, “any dispute”, “arising out of or/and in connection”.124 The case of Woolf v.

Collis established that a clause covering “all claims” or other similar phrases includes tort

claims.125 In this present case, seeing that the arbitration agreement under the Charter Party

uses the phrase “any dispute arising from”,126 thus the arbitration clause is widely interpreted

and covers tort claims. For the reasons submitted above, the arbitral tribunal has the

competence to hear any dispute regarding tort.

3.2. The Claimant As The Lawful Holder Has The Entitlement to Sue In Conversion

To be able to sue for conversion, a party has to qualify the immediate right to possession at

the time127 by being the lawful holder of the bill.128 Hence, the bill should be regarded as the

document of title that gives the holder immediate rights to possession.129 As established under

the case of East West v. DKBS, the bill gave the possessory title to the holder.130 Therefore,

as a lawful holder of the B/L,131 the Claimant has the possessory title to the Cargo and gives

the rights to sue in conversion.

3.3. The Respondent Has Committed Tort of Conversion

Conversion occurs when the carrier fails to deliver the cargo to the person entitled to the

possession of the cargo. 132 Elements of conversion as defined per Lord Nicholls of

124 Re Hohenzollern Aktien & City of London CC [1886] 54 LT 596; Vencendor v. Mabanaft [1971] Lloyd's

Rep. 502; Astro Vencedor v. Mabanaft [1971] 2 All ER 1301. 125 Woolf v. Collis [1948] 1 KB 11. 126 Problem, p. 11. 127 Marquis of Bute v. Barclays Bank [1955] 1 QB 202; Singh v. Ali [1960] AC 167; Cia Portorafti

Commerciale SA v. Ultramar Panama Inc. (The Captain Gregos) (No. 2) [1990] 2 Lloyd’s Rep. 395. 128 The Aliakmon [1986] AC 785; [1986] 2 Lloyd’s Rep. 1; The Future Express [1993] 2 Lloyd’s Rep. 542;

Sanders Bros v. Maclean and Co. [1883] 11 QBD 327 p. 341; Carrington Slipways Pty Ltd. v. Petrick Operation Pty Ltd. [1991] 24 NSWLR 745; Comalco Aluminium Ltd. v. Mogal Freight Services Pty Ltd. [1993] 113 ALR 677.

129 Sanders Bros v. Maclean and Co. [1883] 11 QBD 327, p. 341; Carrington Slipways Pty Ltd. v. Petrick Operation Pty Ltd. [1991] 24 NSWLR 745; Comalco Aluminium Ltd. v. Mogal Freight Services Pty Ltd. [1993] 113 ALR 677.

130 East West Corporation v. DKBS [2003] 1 Lloyd's Rep. 239. 131 Claimant Memorandum, section 1.1. 132 The Ines [1995] 2 Lloyd’s Rep. 144; Baughen, p. 63.


Birkenhead, states that first, the Respondent’s conduct was inconsistent with the rights of the

owner or person entitled to possession and secondly, the conduct was deliberate, not

accidental.133

3.3.1. The Respondent’s Action Is Inconsistent With The Rights of The Claimant

Any claims regarding the matter of conversion will be asserted to the person who is entitled

in possession of the cargo134 through the possession of the bill at that time.135 Further, the

carrier has a duty to deliver the cargo to the possessor of the bill136 and therefore the carrier

shall decline any delivery other than to the lawful holder of the bill as established in the case

of Carlberg v. Wemyss.137

In the case at hand, the Claimant has the entitlement to the possession of the Cargo by being

the lawful holder of the B/L.138 Thus, the Respondent’s action by failing to deliver the Cargo

to the Claimant has satisfied the element of the tort of conversion.

3.3.2. The Respondent Deliberately Committed The Act of Conversion

Under section 2 (2) of the Torts (Interference With Goods) act 1997, conversion only occurs

if there is an intentional conduct resulting in an interference with the cargo of the claimant.139

According to the Caxton Publishing v. Sutherland Publishing case, Lord Porter stated that,

“If the respondent intends that dealing with the cargo which, in fact, interferes with the

control of the claimant, that act will be conversion”.140 Pursuant to the letter of 20 March

2009, the Claimant warned the Respondent not to comply with Beatles’ order to discharge the

133 Kuwait Airways Corp v. Iraqi Airways Corp [2002] UKHL 19. 134 Cia Portorafti Commerciale SA v. Ultramar Panama Inc. (The Captain Gregos) (No 2) [1990] 2 Lloyd’s

Rep. 395. 135 Marquis of Bute v. Barclays Bank [1955] 1 QB 202; Baughen, p. 63. 136 Sze Hai Tong Bank Ltd v. Rambler Cycle Co. Ltd [1959] 2 Lloyd’s Rep. 114. 137 Carlberg v. Wemyss [1915] SC 616, p. 624; The Houda [1994] 2 Lloyd’s Law Rep. 541, p. 556. 138 Claimant Memorandum, section 1.1. 139 Torts (Interference with Goods) Act, section 2 (2). 140 Caxton Publishing v. Sutherland Publishing [1938] 4 A11 ER 389, p. 404 [per Lord Porter].


Cargo in Rotterdam, if not the Respondent will be in breach of contract.141 Notwithstanding

the Claimant’s letter, between 20 and 22 March 2009, the Respondent discharged the Cargo

in Rotterdam against the LOI provided by Beatles.142 It can be seen that the Respondent has

clearly conducted an intentional interference with the Cargo of the Claimant resulting in

conversion, and therefore the Respondent deliberately commits the act of conversion.

3.4. The Claimant Did Not Consent to The Act of The Respondent Which Resulted In

Conversion

Under English law, there would be no tort if the injured party voluntarily consents and agrees

to all risk and action towards them.143 However, mere knowledge of risk is not consent;144 the

claimant must have full knowledge of the circumstances145 and agrees to bear the risk.146

Moreover, as explained by Scott LJ, in the case of Bowater v. Rowley Regis Corp., “....a man

cannot be said to be trully ‘willing’ unless he is in a position to choose freely, and freedom of

choice predicates, not only full knowledge of the circumstances.”147 Moreover, Mustill J in

the case of Cubazukar v. IANSA analyzed that a conversion is a single wrongful act and the

cause of action accruing in the date of conversion.148 Thus, the consent of conversion must be

given at the time of conversion occurs. In this present case, the letter of 18 March 2009

indicates an acceptance by the Claimant to comply with Beatles’ intention to dispose the

Cargo in Rotterdam,149 however, it was only if Beatles has provided a repayment of the

141 Problem, p. 36. 142 Problem, p. 53. 143 White v. Blackmore [1972] 3 WLR 296; Smith v. Charle Baker & Sons [1891] AC 325 (IHL). 144 Ibid. 145 Thomas v. Quartermaine [1887] 18 QBD 685, p. 696; Letang v. Ottawa Electric Railway Company [1926]

AC 725, p. 731; Osborne v. The London and North Western Railway Company [1926] A.C. 725 [per Wills J.]; Redmond, p. 179; John Murphy & Christian Witting, Street on Torts (13th edition) (United Kingdom: Oxford University Press, 2012) p. 201;

146 Nettleship v. Weston [1971] 2 QB 691 (CA), p. 701. 147 Bowater v. Rowley Regis Corp. [1944] KB 476 (CA), p. 479. 148 Cubazukar v. IANSA (The Playa Larga) [1983] 2 Lloyd’s Rep. 171. (CA). 149 Problem, p. 31.


purchase price to the Claimant.150 Since there was no repayment, the Claimant was not ready

to give the B/L and asserts the Respondent to deliver the Cargo to Liverpool to the Claimant

as the lawful holder of the B/L.151 Yet, the Respondent proceeded to discharge the Cargo to

Beatles, instead of the Claimant.152

Moreover, the LOI issued by Beatles containing an order to alter the course to Rotterdam was

beyond the Claimant’s assumption of the risk on the present circumstances. Hence, there was

no consent established by the Claimant regarding the act of the Respondent, which resulted in

conversion.

4. THE RESPONDENT IS LIABLE FOR ALL LOSSES SUFFERED BY THE

CLAIMANT

The Claimant has suffered both actual and consequential losses in relation to the

Respondent’s conduct.153 There is a clear causal link since these losses have arisen as a result

of a failure to properly care for and deliver the Cargo committed by the Respondent.

Applying the first limb of Hadley v. Baxendale154 the loss is clearly foreseeable from the

carrier’s perspective. Therefore, the Claimant submits that first, the Claimant is entitled for

the initial value of the Cargo, secondly, the Respondent is liable to compensate the Claimant

for the repurchase of the Cargo, and thirdly, the Respondent is liable for the court fees from

penalty in Dutch Court.

4.1. The Claimant Is Entitled For The Initial Value of The Cargo

There is a rule in common law regarding remedy to compensate the injured party of a breach

of contract, in which the conditions must be returned to as if the contract had been performed,

150 Problem, p. 33. 151 Problem, p. 36. 152 Problem, p. 53. 153 Problem, p. 70. 154 [1854] 9 Ex. 341.


with respect to the damages,155 provided it is not to remote.156 As applied in the Ines case,157

the judgment placed the injured party to the position in which it would have been if there had

been no breach. In this present case, the Claimant suffered loss from the deterioration of the

Cargo quality by reason of the Respondent’s failure.158 This loss could not have been

mitigated except through the Respondent providing an equal value of the Cargo. Therefore,

the Claimant is entitled for the initial value of the Cargo in the amount of USD 747.50 per mt.

4.2. Alternatively, The Respondent Is Liable to Compensate The Claimant For The

Repurchase of The Cargo

As a replacement for the Cargo that has been converted by the Respondent, the Claimant

repurchased the Cargo and thus suffered economic loss in the amount of USD 552.50 per mt

to sell to their sub-buyers.159 Under the tort of conversion, the loss arising from this present

case is contributed by the Respondent through an act of conversion of the Cargo, which was

entitled to the Claimant.160 There is no specific standard on the damage assessment of

conversion, yet the principle of restitutio in integrum prevails in conversion cases. As

stipulated in the case of Kuwait Airways Corp v. Iraqi Airways Co, the main purpose of

assessing damage in conversion is to compensate any loss sustained by the injured party, as

long as the loss was due to the defaulter’s conduct.161 Relating to this present case, the loss

155 Robinson v. Harman [1848] 1 Ex. 850, p. 855; Senate Electrical Wholesalers Ltd. v. Alcatel Submarine

Networks [1999] 2 Lloyd’s Rep. 423, at 430; Victoria Laundry v. Newman Industries Ltd. [1949] 2 KB 528; G. H Treitel, The Law of Contract (11th edition) (London: Sweet & Maxwell, 2003) p. 944.

156 Hadley v. Baxendale [1854] 9 Ex. 341. 157 [1995] 2 Lloyd’s Rep. 144. 158 Problem, p. 69. 159 Problem, p. 46. 160Torts (Interference with Goods) Act, section 3(2) (c). The courts may also make an order for delivery up of

the chattel, section. 3 (2) (a); Tettenborn, Damages in Conversion: The Exception or the Anomaly? [1993] CLJ 128; Conversion, Tort, and Restitution in Palmer and McKendrick (eds), Interests in Goods (1998).

161 Kuwait Airways Corp. v. Iraqi Airways Co. (No. 4 and 5) [2002] UKHL 19; Furness v. Adrium Indutries Pty Ltd. [1966] 1 VR 668; Brandeis v. Goldschmidt & Co. v. Western Transport Ltd. [1981] QB 864; IBL Ltd. v. Coussens [1991] 2 All ER 133; McGregor H., McGregor on Damages (17th edition) (London: Sweet & Maxwell, 2003), p. 12.


suffered by the Claimant is a direct result of the Respondent’s action. Therefore, the

Respondent is liable to compensate the Claimant amounting to USD 522.50 per mt.

4.3. The Respondent Is Liable For The Court Fees From Penalty In Dutch Court

The consequential loss falls when a party who breaches a contract is generally liable to the

innocent party for the further harm from the extent of the respondent’s action as long as there

was no arbitration clause that limits the liability. 162 In Hotel Services Ltd v. Hilton

International Hotels (UK) Ltd,163 the consequential damages is limited by the clause within

the contract of carriage, as follows, “The Company will not in any circumstances be liable for

any consequential loss, damages or liability….”

Contrary to the case above, there is no clause that limits the consequential loss in the contract

of carriage.164 Thus, the Respondent shall reimburse any loss resulting from the extent of

their actions. In this present case, from the extent of the misdelivery conducted by the

Respondent, the Claimant has suffered an additional loss of USD 138,843.14 in court fees

coupled with USD 107,913.12 in legal fees in respect of the Court proceedings.165 Hence, the

Respondent is liable for the Claimant’s loss resulting of court fees.

162 The second limb of Hadley v Baxendale [1854] 9 Exch. 341; Hotel Service Ltd. v. Hilton International

Hotels (UK) Ltd. [2000] 1 All ER (Comm) 750; British Sugar PLC v NEI Power Projects Ltd. [1997] 87 BLR 42.

163 [2000] 1 All ER (Comm) 750. 164 Problem, p. 9; Problem, p. 17. 165 Problem, p. 55.


PRAYER

In light of the above submission the Claimant requests this arbitral tribunal to:

DECLARE that this Tribunal has jurisdiction to hear the dispute.

ADJUDGE that the Respondent is liable

a) To the Claimant for breach of contract and/or tort;

b) To the Claimant for liabilities incurred due to the Respondent’s breach of contract

and/or tort; and

c) To compensate the Claimant in full for USD 3,236,756.26.

And the Respondent’s counter claim is not maintainable.

And therefore AWARD the Claimant

a) Damages of the initial value of the good amounting to USD 2,990,000

b) Alternatively, damages of the Claimant to repurchase the cargo amounting to

2,090,000

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

d) Compound interest pursuant to Arbitration Act 1996 (UK Arbitration Act 1996)

e) Costs