MURDOCH UNIVERSITY / UNIVERSITY OF SOUTHAMPTON SCHOOL OF LAW

14TH INTERNATIONAL MARITIME MOOT 2013

MEMORANDUM FOR CLAIMANT

On Behalf of: Against:

Aardvark Ltd Twilight Carriers Ltd

Aardvark House

The High Street, Bootle, Merseyside.

GERARD EVERETT / TONY MCWILLIAMS

TEAM 2

VICTORIA UNIVERSITY COLLEGE OF LAW AND JUSTICE

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TABLE OF CONTENTS

TABLE OF CONTENTS ............................................................................................................ i  List of Abbreviations ................................................................................................................. ii  Index of Authorities ................................................................................................................. iii  Statement of Facts ...................................................................................................................... 2  Summary of Argument .............................................................................................................. 5  1   The tribunal is validly constituted, has jurisdiction over the matters before it and should be conducted under the rules of the Arbitration Act (1996) Chapter 23. .................................. 6  

1.1   London is the correct seat for the arbitration ................................................................ 6  1.2   The arbitration panel is properly constructed and governed ......................................... 6  

2   The Buyer/Claimant has right of suit against the Respondent/Owner? ............................... 7  2.1   Legislative rights attached to holders of a bill of lading ............................................... 7  2.2   Further or in the alternative, the claimant has rights under bailment ............................ 8  2.3   Conclusion ..................................................................................................................... 9  

3   The Respondent/Owner did not provide a ship that was “seaworthy” in accordance with Article III, Rule 1(a) of the H(V). .............................................................................................. 9  

3.1   The definition of “seaworthy”. ...................................................................................... 9  3.2   3.2 Somali Piracy an ‘incidental risk’ and ‘probable circumstance’ of the chosen route 10  3.3   A failure to protect against Somali Piracy left the vessel unseaworthy. ..................... 10  3.4   The Respondent failed their overriding obligation to ‘properly and carefully … care for .. the goods carried’ in accordance with Article 111, Rule 2 of the H(V)R. .................. 11  3.5   Conclusion ................................................................................................................... 13  

4   The cargo was delivered to Rotterdam rather than Liverpool ........................................... 13  4.1   Liverpool is clearly identified as port of discharge ..................................................... 13  4.2   Clause 29 of the charterparty does not apply .............................................................. 13  4.3   The respondent cannot rely on Article IV r 4 of H(V)R. ............................................ 14  

5   The respondents delivered the cargo without presenting the bills of lading. ..................... 14  5.1   The claimant had not abandoned the cargo ................................................................. 14  5.2   As the cargo was not abandoned the respondent was obliged to deliver the cargo to the claimant. ......................................................................................................................... 15  5.3   The respondent has committed the tort of conversion. ............................................... 16  

6   Request for relief ................................................................................................................ 17  6.1   The claimant respectfully requests that the tribunal find: ........................................... 17  

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List of Abbreviations

Claimant Aardvark Ltd Respondent Twilight Carriers Charter Beatles Oils & Fats Ltd Vessel Twilight Trader Cargo Palm Fatty Acid Distilate H(V)R Hague Visby Rules FOSFA Federation of Oils, Seeds

and Fats Association Ltd BMP4 Best Management

Practices for Protection against Somalia Based Piracy – version 4

PCASP Privately Contracted Armed Security Personal

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Index of Authorities

Legislation  

Arbitration Act 1996 .................................................................................................................. 6 Carriage of Goods by Sea Act 1992 (UK) ......................................................................... 7, 8, 9

Conventions  

The Hague-Visby Rules .............................................................................................................. 8 UNICATRAL Model Law on International Arbitration (1985) ................................................ 6

Cases  

Albacora v Westcott & Laurance Line Ltd [1966] 2 Lloyds Rep 53 (HL) .............................. 11 Bacleys Bank Ltd v Commissioners of Customs and Excise [1963] 1 Lloyds Rep 81 (CA) ..... 8 Carewins Development (China) Ltd v Bright Fortune Shipping Ltd [2009] 3 HKLRD 409 .. 16 Duncan v Koster (The Teutonia) (1872) LR 4 PC 171 ............................................................ 14 East West Corp v DKBS 1912 & AKTS Svendborg [2003] QB 1509 .................................... 7, 9 FC Bradley & Sons v Federal Steam Navigation Co (1926) 24 LI. Rep 446 .......................... 10 Frenkel v MacAndrews & Co Ltd [1929] AC 545 ................................................................... 14 Glyn Mills Currie & Co v The East & West India Dock Co. (1892) 7 App Cas 591 .............. 16 Gordon v Harper (1796) 7 Term Rep 9 ................................................................................... 17 Keene v Carter (1994) 12 WAR 20 ......................................................................................... 16 Kuwait Airways Corporation v Iraqi Airways Company (no. 4 and 5)[2002] 2 AC 833 ........ 17 Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyds Rep 117 ....................... 15 Milan Nigria Ltd V Angeliki B Maritime Co [2011] EWHC 892 (Comm) ............................. 13 Mitisui & Co Ltd v Novorossiysk Shipping Co (The Gudermes) [1993] 1 Lloyds Rep 311

(CA) ....................................................................................................................................... 9 Morris v CW Martin & Sons Ltd [1966] 1 QB 716 ................................................................... 9 Oakley v Lyster [1931] 1 KB 148 ............................................................................................ 18 Pace Shipping Co. Ltd. v Churchgate Nigeria Ltd (The “Pace) No 2, [2010] EWHC 2828 .... 7 Re Jigrose Pty Ltd [1994] 1 Qd R 382 ..................................................................................... 16 Simpson v Gowers (1981) 121 DLR (3d) 709 ......................................................................... 16 Stag Line v Foscolo, Mango & Co Ltd [1932] AC 328 ........................................................... 15 The Cherry [2002] 1 SLR(R) 643 .............................................................................................. 7 The Glendarroch [1894] P 226 (CA) ....................................................................................... 13 Transpacific Eternity SA v Kanematsu Corp (The Antares III) [2002] 1 Lloyd’s Rep 233. ... 17 UCO Bank v Golden Shore Transportation Pte Ltd [2006] 1 SLR(R) 1 ................................... 8

Other  Authorities  

Margetson N J, Dissertation:The system of liability of articles 111 and 1V of the Hague (Visby) Rules, (Faculty of Law, University of Amsterdam, 2008) ...................................... 11

Maritime Security Centre – Horn of Africa & NATO Shipping Centre, Best Management Practices for Protection against Somalia Based Pircacy, (Version 4 – August 2011.) ...... 10

Mendelson D, The new law of torts, (Oxford University Press, 2nd ed., 2010) ....................... 12 Piracy off the Somali Coast Workshop commissioned by the Special Representative of the

Secretary General of the UN to Somalia Ambassador Ahmedou Ould‐Abdallah, Nairobi 10‐21 November 2008, Final report Assessment and recommendations .......................... 10

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United Nations Commission on International Trade Law (UNICTRAL), Working Group 111, 12th Session, Draft Convention on contracts for the carriage of goods wholly or partly by sea (revised), Document A/CN.9/544 .................................................................................. 11

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QUESTIONS PRESENTED

1. Whether the arbitration should be conducted under the rules of the Arbitration Act (1996)

Chapter 23?

2. Whether the Buyer/Claimant has right of suit against the Respondent/Owner?

3. Whether the Respondent/Owner provided a ship that was “seaworthy” in accordance with

Article III, Rules 1(a) of the H(V)R and/or “properly manned , equipped and supplied” in

accordance with Article III, Rule 1(b)?

4. Whether the Respondent/Owner failed to properly and/or carefully load, handle, stow,

carry, keep, care for and discharge the goods carried in breach of Article 111, r.2 of the

H(V)R?

5. Whether the Respondent is entitled to limit liability to USD 1.4 million under Article IV

5(b) of the H(V)R for the loss suffered by the Claimant as a result of the sale of the goods at

Rotterdam contrary to the Claimant’s instructions as the legal holder of the bills of lading?

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Statement of Facts

1. The dispute arises from a contract dated 23rd May, 2008, for the purchase a total of 4000

metric tonnes of Palm Fatty Acid Distillate (The Cargo) by the Claimant, Aardvark Ltd

(The Buyer/Claimant) from Beatles Oils and Fats (The Charterer) for delivery to CIF

Merseyside in accordance with Incoterms 2000; and the associated charterparty contract

between the Charterer and Twilight Carriers Inc. (The Owner/Respondent) on September

12th, 2008, for the use of the “Twilight Trader” (The Vessel) to ship the cargo, comingled,

from various Malaysian ports to Mersey, United Kingdom (Mersey) per a standard Vegoil

Voy Form “Vegoilvoy 1/27/50”.

2. Bills of Lading (BOL) were created denoting Vegetable Oils SDN BHD (Shipper), of

Pasir Gudang, Malaysia as Shipper, signed “To Order” and nominating MT “Twilight

Trader” as the vessel.

3. A route via the Suez Canal was chosen and as a result, the vessel was exposed to the risk

of piracy off the Somali Coast. On 15th November, 2008 the Vessel was held by Somali

pirates and remained so until 13th February, 2009.

4. The Buyer paid to the Charterer USD 2,986,671.38 on 26th January, 2009, during the

period of detention by the Somali pirates. As a result, the Charterer signed the Bills of

Lading over to the Buyer/Claimant.

5. During the period of detention by Somali pirates, the Master and crew of the vessel were

confined to quarters and failed to manage the cargo, including fulfilling their obligation to

maintain the security of the cargo from both tampering and heating the cargo at agreed

time intervals. As a result, upon release, the Buyer/Claimant was unable to guarantee the

condition of the cargo as being of Good Manufacturing Quality (GMQ), and sought in an

email of 25th February, 2009, from their solicitors to the Charterer’s solicitors, to find

alternate buyers for the cargo as a non GMQ product, fit only for use as burning oil and at

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a considerable cost reduction.

6. The Buyer/Claimant received a copy of the cargo insurance policy on 6th March, 2009,

and immediately notified the Charterer that said policy was not in accordance with the

terms of the contract between the Buyer/Claimant and the Charterer in that it insured the

cargo for market value on departure, plus freight and insurance subject to German law,

and not for agreed value for 105% of invoice value subject to English law.

7. The Buyer/Claimant accepted these failures to comply with the terms of the FOSFA 81

contract as repudiatory breaches of contract and sought refund of their payment, noting

that the Product Authentication Inspectorate had confirmed that the cargo could not be

used as non-food/feed due to the risk of by-products entering the food/feed chain. A

counter claim that the Buyer/Claimant had committed an anticipatory breach by

requesting a refund of the payment for the cargo was denied.

8. The Buyer/Claimant reiterated a desire for the cargo to be shipped to alternate European

ports which may offer a price which would result in a higher value being achieved for the

sale of the cargo but conceded that, as the Charterer owned the cargo, it was the

Charterer’s decision to make. In response, the Charterer claimed anticipatory repudiatory

breach by the Buyer/Claimant and advised a redirection of the cargo to Rotterdam.

9. Upon payment, the Bills of Lading were transferred to the Buyer/Claimant and receipt of

these was acknowledged on 17th March, 2009 with a further request for instructions from

the Charterer as to the disposal of the cargo on the basis of ownership, the

Buyer/Claimant having paid in full for the cargo.

10. The Buyer/Claimant couriered the Bills of Lading to their Rotterdam agent when the

refund of their purchases monies was not forthcoming and the Charterer counter claimed

that the Buyer/Claimant had abandoned the cargo by virtue of their request for a refund,

or default, disclaiming the Buyer/Claimant’s rights to instruct the Owner regarding

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delivery of the cargo and advising the goods would be discharged into storage until

resolution of the issues between the parties.

11. The Buyer/Claimant rejected this proposal and notified the Owner/Respondent that, as

lawful holders of the Bills of Lading, they had not authorised discharge at Rotterdam and

that the Owner would be in breach of the contract of carriage if they proceeded to do so.

The Buyer/Claimant notified the Owner/Respondent of their liability for all loss or

damage sustained by the Buyer/Claimant as a result.

12. The Owner/Respondent discharged the cargo to the Charterer against a letter of indemnity

between 20th and 22nd March, 2009, acknowledging such discharge would be made

without production of the original bills of lading. The Charterer sought to garnish

property before judgment as well as to attach movable goods in a proceeding which the

Buyer/Claimant was a defendant.

13. The Buyer/Claimant made an application to the Dutch Court to arrest the vessel on 23rd

March, 2009, and the vessel was arrested. The arrest was lifted on 27th March, 2009,

upon provision of security of USD1.4 million, subsequently issued by the Bank of Tokyo-

Mitsubishi UFJ (Holland) NV on 3rd April, 2009.

14. The Charterer sought an order to sale on 23rd May, 2009, which was granted on 24th July,

2009 and unsuccessfully appealed by the Buyer/Claimant on 21st August, 2009. The

cargo was sold for USD 1,695,752.38, the proceeds of which are currently held by the

Dutch Court.

15. Subsequent advice from the on purchasers of the cargo from the Buyer/Claimant

confirmed the goods would not have entered the food chain and that the inability to

guarantee that the goods were of GMQ would not have impacted the price they were

prepared to pay for the goods accordingly.

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Summary of Argument

1. A contract of carriage exists between Aardvark and Twilight Carriers

2. The respondent is in breach of Article III rule 2 of the Hague Visby Rules in that the

goods were not properly cared for during an act of piracy

3. The respondent, contrary to the Bills of Lading delivered the cargo to Rotterdam

rather than Liverpool

4. The respondent delivered the cargo without presenting the Bills of Lading

5. The respondent delivered the cargo to the wrong party despite the claimants being the

lawful holders of the Bills of Lading

6. In the alternative, the respondents have committed the tort of conversion being they

incorrectly disposed of the cargo

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1 The tribunal is validly constituted, has jurisdiction over the matters before it

and should be conducted under the rules of the Arbitration Act (1996)

Chapter 23.

1.1 London is the correct seat for the arbitration

1. Article 20 of the UNCITRAL Model Law on International Commercial Arbitration1

determines that parties to arbitration are free to agree on the place of said arbitration.

2. This understanding has been adopted by Part III s 99 of the United Kingdom Arbitration

Act2.

3. The cover to the charterparty states English law applies and the seat of arbitration is

London.

4. This cover forms part of the charterparty and has the effect of varying cl. 31 thereby

confirming that London rather than New York is the seat of arbitration.

1.2 The arbitration panel is properly constructed and governed

5. All panel members have been properly appointed3 and the number of arbitrators is

consistent with the legislation4.

6. The arbitration will be conducted in accordance with the Arbitration Act 1996 (UK). This

is in keeping with the seat and law of the arbitration as set out in the cover to the

charterparty.

7. The requirements of FOSFA have been adequately covered as cl 32 of FOSFA 81

provides that disputes can be referred to London for resolution.

8. Panel members have been appointed in accordance with the FOSFA rules of arbitration.

1 UNICATRAL Model Law on International Arbitration (1985). 2 Arbitration Act 1996 (UK). 3 Ibid s 16. 4 Ibid s 15,

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2 The Buyer/Claimant has right of suit against the Respondent/Owner?

2.1 Legislative rights attached to holders of a bill of lading

9. The basis of the contract is derived from Carriage of Goods by Sea Act 1992 (UK), of

which s 2(1) applies.

10. The claimant was the lawful holder of a bill of lading and as such has transferred to or

vested in them, all rights of suit under the contract of carriage as if they had been a party

to that contract.

11. The holder of a bill is defined in s 5(2)5 as a person who has possession of the bill by

virtue of being identified on the bill as the consignee of the goods,6 or, a person with

possession of the bill as a result of any endorsement of the bill.7

12. A person is the holder of the bill of lading if they have possession of the bill.8 However,

the courts have also explained that possession is not limited to actual physical

possession.9 Burton J in The Pace10 has further confirmed this proposition.

13. On the facts, the bills of lading are made to order, and were duly transferred to the

claimant. Further the claimant or their agents have physical possession of the bills.

14. As the lawful holder of the bills of lading the claimant has the rights of suit under the

contract of carriage.

15. Contract of carriage is defined in relation to a bill of lading, as the contract contained in

or evidenced by that bill.11

16. The bills of lading are of a Congenbill 2007 nature and contain an inclusion clause

referencing the charterparty. The bills also in cl 2, the General Paramount clause, include

the Hague-Visby Rules12.

5 Carriage of Goods by Sea Act 1992 (UK). 6 Ibid s 5(2)(a). 7 Ibid s 5(2)(b). 8 East West Corp v DKBS 1912 & AKTS Svendborg [2003] QB 1509, 44. 9 The Cherry [2002] 1 SLR(R) 643, 21. 10 Pace Shipping Co. Ltd. v Churchgate Nigeria Ltd (The “Pace) No 2, [2010] EWHC 2828 (Comm). 11 Ibid s 5(1).

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17. As Chao Hack Tin JA stated, the objective behind s 2(1) of the Act13 is amongst other

things, to facilitate the enforcement of rights by third parties against the carrier.14

18. Thus s 2(1)15 acts as a statutory assignment of rights and on its wording it is16 clear that

the person holding a bill of lading has the same rights as if they had been party to the

contract.

2.2 Further or in the alternative, the claimant has rights under bailment

19. As the respondent / shipowner is in possession of the cargo as described on the bills of

lading, but the claimant is the legal owner of said cargo, a bailment scenario arises. On

this basis the claimant adopts the status of bailor and the respondent is the bailee.

20. Diplock LJ, stated, a contract for carriage of goods by sea that is evidenced by a bill of

lading is a combined contract of bailment and transportation.17 As a corollary, the

shipowner undertakes to accept possession of goods from the shipper and deliver them as

per the contract.18

21. Under the doctrine of attornment the claimant, whilst not the original shipper, (bailor),

now has title to the cargo and is entitled to delivery.19 Thus if an attornment on terms

exists the claimant, as the new bailor can rely on these terms. On the facts the terms of

the carriage of contract are defined and as such for the basis of the bailment.

22. Even if the claimant does not have rights under legislation20, it is still possible that the

claimant has rights under bailment. This concept was noted by the Court of Appeal

where it was noted that a carrier was in breach of duty in bailment by virtue of their

12 The Hague-Visby Rules – The Hague Rules as Amended by the Brussels Protocol 1968. 13 Carriage of Goods by Sea Act 1992 (UK) 14 UCO Bank v Golden Shore Transportation Pte Ltd [2006] 1 SLR(R) 1,40. 15 Above n 10. 16 Girvin Strephen, Carriage of Goods by Sea, 2nd Ed. Oxford University Press 2011. 17 Bacleys Bank Ltd v Commissioners of Customs and Excise [1963] 1 Lloyds Rep 81 (CA), 88. 18 Ibid. 19 Mitisui & Co Ltd v Novorossiysk Shipping Co (The Gudermes) [1993] 1 Lloyds Rep 311 (CA), 324. 20 Carriage of Goods by Sea Act 1992 (UK).

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failure to deliver the cargo to the person entitled to the cargo on presentation of the

original bill of lading or, if they parted with possession of the goods to a third party.21

23. As a bailment relationship exists, the respondent as bailee has certain duties to the

claimant as bailor. These include but are not limited to, a duty to take reasonable care of

the cargo and to redeliver the cargo in accordance with the terms of the bailment.22 These

terms can be express or implied and can include the Hague-Visby rules.

24. At the very least a general duty not to do something ‘intentionally in relation to the goods,

an act inconsistent with the bailor’s right to property in therein.’23

25. The respondent failed to deliver the cargo to Liverpool and passed the cargo to someone

other than the claimant.

26. Thus, the respondent is in breach of his duties as bailee.

2.3 Conclusion

27. The claimant is entitled to the rights of suit under the contract of carriage that existed

between the Charterer and the Owner / Respondent through either legislation24 or in the

alternative the law of bailment.

3 The Respondent/Owner did not provide a ship that was “seaworthy” in accordance with Article III, Rule 1(a) of the H(V).

3.1 The definition of “seaworthy”.

28. A seaworthy vessel is one which is ‘fit to meet and undergo the perils of the sea and other

incidental risks to which of necessity she must be exposed in the course of a voyage.’25

29. Further, Scrutton LJ stated “The ship must have that degree of fitness which an ordinary

careful owner would require his vessel to have at the commencement of her voyage

21 East West Corp v DKBS 1912 & AKTS Svendborg [2003] QB 1509, [24]-[30]. 22 Morris v CW Martin & Sons Ltd [1966] 1 QB 716, 731. 23 East West Corp v DKBS 1912 & AKTS Svendborg [2003] QB 1509, 28. 24 Carriage of Goods by Sea Act 1992 (UK). 25 Kopitoff v Wilson (1876) 1 QBD 377, 380 (Field J).

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having regard to all the probable circumstances of it. Would a prudent owner have

required that it (the fault/defect) should be made good before sending his ship to sea, had

he known of it?”26

3.2 3.2 Somali Piracy an ‘incidental risk’ and ‘probable circumstance’ of the chosen route

30. The Respondent/Owner should have been aware of the dangers of piracy on the route

taken by the vessel, and in particular Somali piracy in the Gulf of Aden as it had received

attention from, amongst others, Maritime Industry bodies and the United Nations”:

“During the first nine months of 2008, much of the increase in piracy can be directly

attributed to the Gulf of Aden and east coast of Somalia. This region appears as the most

dangerous zone with the 63 incidents reported there by IMB Piracy Reporting Centre,

almost a third of the overall reported attacks.”27 When presenting these figures, Captain

Mukundan, the head of the Piracy Reporting Centre, added: “The number of piracy

attacks off the coast of Somalia is unprecedented.”28

3.3 A failure to protect against Somali Piracy left the vessel unseaworthy.

31. The “Best Management Practices for Protection against Somalia Based Piracy – version

4” (BMP4)29 recommends a suite of self-protection measures, particularly the use of

armed guards for vessels travelling through waters exposed to Somali Piracy. It is

reported to the present date, no single vessel under the Privately Contracted Armed

Security Personal (PCASP) protection has been hijacked, this being a strong incentive

towards the continuing use of this option.

26 FC Bradley & Sons v Federal Steam Navigation Co (1926) 24 LI. Rep 446. 27 Piracy off the Somali Coast Workshop commissioned by the Special Representative of the Secretary General of the UN to Somalia Ambassador Ahmedou Ould-­‐Abdallah, Nairobi 10-­‐21 November 2008, Final report Assessment and recommendations http://www.imcsnet.org/imcs/docs/somalia_piracy_intl_experts_report_consolidated.pdf 28 Ibid, p 13. 29 Maritime Security Centre – Horn of Africa & NATO Shipping Centre, Best Management Practices for Protection against Somalia Based Pircacy, (Version 4 – August 2011.)

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32. As the facts are silent on this matter and the vessel was captured, we can assume no such

measures were undertaken.

3.4 The Respondent failed their overriding obligation to ‘properly and carefully … care for .. the goods carried’30 in accordance with Article 111, Rule 2 of the H(V)R.

33. ‘Care’ in the context of this H(V)R rule is defined as ‘protective or supervisory control’.

‘Properly’ has been defined as: ‘in accordance with a sound system …’. 31 Combined,

they impose upon the carrier an obligation to exercise protective, supervisory control over

the goods carried in accordance with a sound system.

34. Article III(2) is regarded as an ‘absolute obligation’32 of which the failure to fulfil

bestows culpability upon the carrier. The exemptions listed in H(V)R art.IV(2) are non-

culpable. There exists the possibility that damage to goods could occur as a result of both

the failure of the carrier to fulfil an absolute obligation (a culpable cause) and as a result

of an accepted peril as detailed in art. IV(2) (non-culpable).

35. The challenge for the court, as canvassed in the Report of Working Group III

(UNCITRAL) is that ‘… in such cases of cargo damage caused by more than one cause

(culpable and non-culpable) is how liability should be apportioned.’33

36. In the matter before the tribunal, the cause of the damage is as a result of ‘competing

faults’;34 both the decision to navigate in close proximity to the pirates and the restrictions

placed upon the crew regarding their ability to properly care and protect the goods whilst

in the consequential period of detention by them. The Claimant submits that, had the

30 N12 above – Art. 111, R2. 31 Albacora v Westcott & Laurance Line Ltd [1966] 2 Lloyds Rep 53 (HL), 58 32 Margetson N J, Dissertation:The system of liability of articles 111 and 1V of the Hague (Visby) Rules, (Faculty of Law, University of Amsterdam, 2008), Downloaded from UvA-DARE, the institutional repository of the University of Amsterdam (UvA) http://dare.uva.nl/document/106754. 33United Nations Commission on International Trade Law (UNICTRAL), Working Group 111, 12th Session, Draft Convention on contracts for the carriage of goods wholly or partly by sea (revised), Document A/CN.9/544, p. 42-45. 34 N28, p68.

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Owner not chosen to expose the vessel to the real threat of piracy by virtue of the route

taken, the ship would not have been detained and the crew’s ability to properly care for

the cargo would not have been impinged.

37. Where two competing causes exist ‘… the burden of proof passed from the consignees to

the shipowners to prove some accepted peril which relieved them from liability, and

further, as a condition of being allowed the benefit of that exception, … to negative

negligence or misconduct of the master, officers and crew … during the voyage and the

discharge …’35

38. In negligence, the application of both the ‘but for’ rule and the common sense test is

appropriate in this matter to establish a causal link between damage of the cargo and the

act or omission of the Respondent. In this matter, but for the decision of the Owner to

navigate the vessel in perilous waters subject to the threat of piracy, the crew would have

been unhindered in their efforts to properly care for the cargo; or by applying ‘common

sense’, the “’proximate’, ‘real’, ‘efficient’ or ‘substantial’ cause …’36 is the action by the

Owner to navigate through dangerous waters.

39. The onus is on the Respondent to prove that an exemption exists under article IV rule 2

(a) – (p).37 Whilst not referring specifically to the Hague-Visby rule the obiter of Lopes

LJ in The Glendarroch38 makes it clear that someone relying on an exemption needs to

prove that the damage occurred because of this exemption.

40. It is submitted that the respondent was negligent in adopting a route which exposed the

vessel to the threat of piracy, the subsequent detention by whom caused the failure by the

Owner/Respondent to fail to take sufficient care of the cargo.

35 Ibid 421, 426, 427. 36 Mendelson D, The new law of torts, (Oxford University Press, 2nd ed., 2010). 37 Milan Nigria Ltd V Angeliki B Maritime Co [2011] EWHC 892 (Comm). 38 [1894] P 226 (CA) at 234-235.

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3.5 Conclusion

41. On the facts it is clear that the respondent has failed to provide safe passage for the cargo

thereby placing it in direct threat of piracy, the primary cause of the damage to the cargo.

4 The cargo was delivered to Rotterdam rather than Liverpool

4.1 Liverpool is clearly identified as port of discharge

42. On the facts the bills of lading clearly state that port of discharge is to be Liverpool

Merseyside UK. Agents for the master have signed these bills.

43. By delivering the cargo to Rotterdam the respondents acted in direct contravention to the

claimants express orders. This was communicated to the respondents by email on the 20th

March 2009.

4.2 Clause 29 of the charterparty does not apply

44. The charterparty at cl 29, the liberty clause, allows for the discharge of the cargo at

another or substitute port declared or requested by the Charter. In essence this clause

purports to allow a deviation from the designated route. It is important that the described

voyage as per the bill of lading and the liberty to deviate must be read together and

reconciled. A liberty clause however worded could not frustrate but must be subordinate

to the described voyage.39

45. At common law a justifiable deviation exists to save human life and for the purpose of

avoiding danger to the ship or cargo. Deviation is also justifiable when the fear of

capture by hostile forces is prevalent.40

46. The deviation from Liverpool to Rotterdam occurred after the ship was released from

capture therefore and reliance on the liberty clause (cl 29) is not valid under common law.

39 Frenkel v MacAndrews & Co Ltd [1929] AC 545, 562. 40 Duncan v Koster (The Teutonia) (1872) LR 4 PC 171, 179

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4.3 The respondent cannot rely on Article IV r 4 of H(V)R.

47. To benefit from the exemption under Article IV rule 4 of the H(V)R’s the deviation must

take place in an effort to save life or property or be a reasonable deviation.

48. There is nothing in the facts to support the proposition that the deviation was in an

attempt to save life or property. The deviation occurred after the vessel was released

from detention arising from piracy.

49. For a deviation to be considered reasonable Lord Atkin stated a reasonable deviation

needs to be considered in terms of what would a prudent person do having in mind all the

relevant circumstances existing at the time.41

50. Recently Philips J in Al Taha42 found that a reasonable deviation could be a deviation that

is planned prior to the voyage commencing or the bills of lading being signed.43

51. As the deviation occurred after the vessel was released by pirates and the facts are silent

on deviation being necessary to save life or property, the claimant submits the respondent

has no cause to rely on Article IV rule 4 of the H(V)R’s.

5 The respondents delivered the cargo without presenting the bills of lading.

52. On the 25th of August the cargo was unloaded in Rotterdam and subsequently sold to A B

Buyers. The respondents did so without being the lawful holders of the bills of lading.

5.1 The claimant had not abandoned the cargo

53. The claimant is the legal owner of the cargo as evidenced by having in their control the

bills of lading, and having paid the purchase price of the cargo on the 26th January 2009.

The respondent as bailee is in possession of the cargo.

41 Stag Line v Foscolo, Mango & Co Ltd [1932] AC 328, 343-344. 42 Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyds Rep 117. 43 Ibid, 128.

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54. The claimant wrote to the charterer on the 6th March 2009 requesting a refund of the

purchase price. This request was made following receipt of the cargo insurance policy,

which was not in accordance with the contract of sale.

55. The purchase price was not refunded and as such the claimant on the 18th of March

advised the charterer that they would not relinquish possession of the bills of lading and

therefore by default, the cargo.

56. Ipp J made the observation that abandonment requires an intentional giving up or

relinquishment of property of goods manifest in some appropriate outward form of

conduct.44 This judgement by Ipp J draws on the dicta from Simpson v Gowers (1981)

121 DLR (3d) 709:

Abandonment occurs when there is 'a giving up, a total desertion, and absolute relinquishment' of private goods by the former owner. It may arise when the owner with the specific intent of desertion and relinquishment casts away or leaves behind his property ... '"

57. Further Keifel J noted that cases of abandonment would be relatively rare, and that as a

general proposition abandonment could be likened to throwing something away, as this

represents an intention to no longer retain possession of something.45

58. Applying the dicta above there is no evidence on the facts to suggest that the claimant

abandoned the cargo.

5.2 As the cargo was not abandoned the respondent was obliged to deliver the cargo to the claimant.

59. The general principle at law, referred to as the presentation rule is; in the absence of

anything to the contrary the master is required to deliver the cargo to the lawful holders of

the bills of lading.46

44 Keene v Carter (1994) 12 WAR 20, 26. 45 Re Jigrose Pty Ltd [1994] 1 Qd R 382. 46 Carewins Development (China) Ltd v Bright Fortune Shipping Ltd [2009] 3 HKLRD 409, [22].

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60. In the event of a bill of lading being assigned to another, Lord Selborne LC stated that it

is the responsibility of the assignee to give notice of his title to the shipowner.47 The

claimant submits that this was done as evidenced by the letter written to the respondent

on the 20th of March 2009, stating that they, the claimant, are the lawful holders of the

bills of lading.

61. If the respondent was faced with uncertainty such as in the case of more than one

potential holder of a bill of lading, then they should have interpleaded and allowed the

courts to settle the matter.48

62. It is clear from the facts and the preceding discussion, the claimant is the lawful holder of

the bills of lading and as such the cargo should only have been released to them. By not

complying with this requirement the respondent is in breach of the contract of carriage.

5.3 The respondent has committed the tort of conversion.

63. To succeed in a claim of the conversion the claimant needs to show that they either had

possession or had an immediate right to possession at the time of conversion.49 As the

lawful holder of the bills of lading the claimant has a right to possession of the cargo.

64. Elements to the tort of conversion:50

• The respondent actions in selling the cargo was inconsistent with the rights of the

claimant who is the owner of the cargo

• The respondent deliberately sold the cargo despite the claimant advising that this was

against their wishes

• The selling of the cargo by the respondent was an encroachment on the rights of the

claimant as the action precludes the claimant from the proper use and enjoyment of

the cargo 47 Glyn Mills Currie & Co v The East & West India Dock Co. (1892) 7 App Cas 591, 596. 48 Transpacific Eternity SA v Kanematsu Corp (The Antares III) [2002] 1 Lloyd’s Rep 233. 49 Gordon v Harper (1796) 7 Term Rep 9. 50 Kuwait Airways Corporation v Iraqi Airways Company (no. 4 and 5)[2002] 2 AC 833.

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65. At the time the cargo was sold by the respondent, the claimant was the true owner of the

cargo and was entitled to possession of the cargo.51

66. The claimant has to show mere possessory rights. That is, possession in fact, not

possession in law. On the facts the claimant has legal title to the cargo as they are the

legal holders of the bills of lading and have paid the purchase price. This entitles the

claimant to possession of the cargo on discharge.

6 Request for relief

6.1 The claimant respectfully requests that the tribunal find:

67. The respondent / shipowner has breached essential terms of the contract of carriage.

68. For the above reasons Aardvark claim damages for breach of the Owners’ duties under

the Bills of Lading and/or in bailment for the tort of conversion.

69. By reason of their failure to properly and/or carefully load, handle, stow, carry, keep, care

for and discharge the cargo the cargo went from being GMQ cargo to non-GMQ cargo

which was worthless, alternatively was worth considerably less than GMQ cargo. In the

premises Aardvark are entitled to the difference between the price they paid for the cargo,

namely USD 747.50 per mt and its value at Liverpool on or about 30 March 2009 when it

should have been delivered, plus its value at Liverpool on or about 30 March 2009

because it was not delivered i.e. USD 747.50 per mt x 4,000 mt = USD 2,990,000 plus the

Dutch court costs (as set out below) namely USD 3,236,756.26.69

70. Further and/or alternatively Aardvark paid USD 522.50 per mt to buy goods in to sell to

their sub-buyers in Liverpool. Their sub-buyers have since confirmed that they would

have accepted the non-GMQ cargo following the piracy as they were not intended for the

human food chain. Aardvark further incurred legal fees in relation to the Dutch

51 Oakley v Lyster [1931] 1 KB 148.

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proceedings. Accordingly Aardvark claim USD 2,329,912.26 plus interest and costs as

follows:

(1) USD 522.50 per mt x 4,000 = USD 2,090,000

(2) Court fees of USD 138,843.14; and

(3) Legal fees in respect of the Court proceedings of USD 107,913.12.

AND the Claimants claim:

(1) USD 3,236,756.26, alternatively USD 2,329,912.26, alternatively damages; and

(2) Interest on a compound basis pursuant to s. 49 of the Arbitration Act 1996; and

(3) Costs with compound interest on costs.