TEAM 13 MEMORANDUM FOR RESPONDENT
Nineteenth Annual International Maritime Law Arbitration Moot, 2018
NATIONAL LAW SCHOOL OF INDIA UNIVERSITY,
BANGALORE
TEAM 13
Memorandum for RESPONDENT
On behalf of
Dynamic Shipping LLC
945 Moccasin Road
Cerulean 9659
RESPONDENT
Against
Cerulean Beans and Aromas Ltd
23 Fuchsia Crescent
Cerulean 1268
CLAIMANT
TEAM
AKASH DEEP SINGH KSHITIJ SHARMA YASH SINHA
BANGALORE INDIA
TEAM 13 MEMORANDUM FOR RESPONDENT
ii | P a g e
TABLE OF CONTENTS
TABLE OF ABBREVIATIONS ..................................................................................................... IV
TABLE OF AUTHORITIES ......................................................................................................... VI
ISSUES RAISED ........................................................................................................................ XII
STATEMENT OF FACTS .............................................................................................................. 1
ARGUMENTS ON JURISDICTION OF THE TRIBUNAL .................................................................. 3
Issue I: The Arbitral Panel Does not have the Jurisdiction to Determine the Claim for
Damages made by the Claimant ......................................................................................... 3
A. The Expert Determination provisions of the Charterparty relating to resolution of
technical matters are sufficiently certain to create a legally binding obligation. ............... 3
B. The claim for damages made by the Claimant is a technical matter and shall be
referred to Expert Determination. ...................................................................................... 5
C. In any case, the claim for damages cannot be decided without its cause of action
being referred to Expert Determination. ............................................................................ 6
ARGUMENTS ON MERITS OF THE CLAIM .................................................................................. 7
Issue II. The Claimant does not hold a valid maritime lien over the Madam Dragonfly
................................................................................................................................................ 7
A. The lien is contractual in nature .................................................................................... 7
B. The Claimant lacks possession of the ship .................................................................... 8
C. In any case, the maritime lien cannot be subrogated..................................................... 9
Issue III. Respondent is not liable to pay the Damages of USD 14,450,000 for the
Breach of Charterparty ..................................................................................................... 10
A. Respondent is not liable for the deviation to Spectre.................................................. 10
B. Respondent is not liable for the failure to deliver the goods on time .......................... 14
C. In any case, the contractual breaches have not caused the losses ............................... 17
Issue IV. Respondent is not liable to pay any damages for water damage to the cargo.
.............................................................................................................................................. 19
TEAM 13 MEMORANDUM FOR RESPONDENT
iii | P a g e
A. The water damage to the cargo occurred after the delivery of the cargo was complete.
.......................................................................................................................................... 19
B. In any case, the liability of Respondent is limited as per Art. IV(5) of the Hague
Rules ................................................................................................................................ 22
ARGUMENTS ON MERITS OF THE COUNTER CLAIM............................................................... 23
Issue V. The Claimant is liable to pay demurrage. ......................................................... 23
A. The ship arrived at the discharge port at 7:00 AM on 29 July 2017. .......................... 23
B. The “Fault of the Shipowner” defence cannot be claimed. ......................................... 24
Issue V. Claimant is liable to pay the agency fees at Spectre ......................................... 25
Issue VI. Claimant is liable to pay the agency fees at Spectre ....................................... 25
PRAYER FOR RELIEF ............................................................................................................... 25
TEAM 13 MEMORANDUM FOR RESPONDENT
iv | P a g e
TABLE OF ABBREVIATIONS
ABBREVIATION TERM
AC Appeal Cases
AIR All India Reporter
ALL ER All England Reporter
ALR Australian Law Reports
App cas Law Reports Appeal Cases
Art. Article
Asp. M.L.C. Aspinall’s Maritime Law Cases
B&S Best and Smith’s Reports
BCC British Company Law Cases
BLR Business Law Reports
C.Rob Christopher Robinson’s Reports
Charterparty The voyage charterparty between Claimant
and Respondent
Claimant Cerulean Beans & Aromas Ltd
CLC Company Law Cases
Comc.Cas Company Cases
CommArb Commercial Arbitration
Edn. Edition
EWCA Civ. Court of Appeal of England and Wales
Decisions (Civil Division)
EWHC High Court of England and Wales
F 2d Federal Reporter (Second Series)
F. Supp 2nd Federal Supplement (Second Series)
FCA Federal Court of Australia
FCR Federal Court Reports
Hag. Adm Haggard’s Admiralty Reports
Inc Incorporated
K.B. Law Reports, King’s Bench
LJQB Law Journal, Queen’s Bench
TEAM 13 MEMORANDUM FOR RESPONDENT
v | P a g e
LLC Limited Liability Company
Lloyd’s Rep. Lloyd’s Reporter
LMAA London Maritime Arbitrators Association
LMLN Lloyd’s Maritime Law Newsletter
Ltd. Limited
Lush Lushington’s Admiralty Reports
NM Nautical Miles
NSWCA New South Wales Court of Appeal
NSWLR New South Wales Law Reports
NZLR New Zealand Law Review
P Law Reports Probate
Para./Paras. Paragraph/Paragraphs
Pg./Pgs. Page/Pages
PO 2 Procedural Order 2
QB Queen’s Bench
QBD Queen’s Bench Division, Law Reports
Qd R Queensland Reports
Respondent Dynamic Shipping LLC
SC Session Cases, Decisions of the Court of
Sessions (Scotland)
SC (HL) Session Cases (House of Lords) (Scotland)
Sec. Section
SGCA Singapore Court of Appeal
Sing HC Singapore High Court
SWAB Swabey’s Admiralty Reports
UKHL UK House of Lords
UKPC United Kingdom Privy Council Cases
USD United States Dollars
VSC Supreme Court of Victoria
W. Rob William Robinson’s Admiralty Reports
WASCA Western Australia Court of Appeal
WLR Weekly Law Report
WWD Weather Working Day
TEAM 13 MEMORANDUM FOR RESPONDENT
vi | P a g e
TABLE OF AUTHORITIES
CASES REFERRED TO AT PAGE
American Hoesch v. Aubade, [1971] 2 Lloyd’s Rep. 423. 33, 34
Andrew Conquest v. Patrick McGinnis and Brian McGinnis,
[2007] EWHC 2943 (Ch).
22
Automatic Tube Company v. Adelaide Steamship (Operations)
Ltd. (The "Beltana"), [1967] 1 Lloyd's List L.R. 531.
33, 34
Badgin Nominees Pty Ltd v. Oneida Limited, [1998] VSC 188. 15
Barclays Bank Plc v. Nylon Capital LLP, [2011] EWCA Civ 826. 15
Blue Anchor Line Ltd. v Alfred C. Toepfer International (The
Union Amsterdam), [1982] 2 Lloyd’s Rep 432.
38
Boscawen v. Bajwa, [1996] 1 W.L.R. 328. 22
BP Refinery (Westernport) Pty Ltd v. Hastings Shire Council,
[1977] HCA 40.
16
Bristol Corporation v. John Aird & Co., [1913] AC 241. 16
Browner International Ltd. v. Monarch Shipping Co. Ltd. (The
European Enterprise), [1989] 2 Lloyd’s Rep. 185.
35
Budgett & Co. v Binnington & Co. [1891] 1 QB 35, 38. 38
Burridge v. Row, (1842) 1 Y & C Ch Cas 183. 21
Carslogie Steamship Co. v. Royal Norwegian Government, [1952]
A.C. 292 (HL).
28
Channel Tunnel Group Ltd v. Balfour Beatty Construction
Ltd., [1993] AC 334.
15
Codelfa Construction Pty Ltd v. State Rail Authority of N.S.W.,
[1982] HCA 24.
16
Constable v. National SS. Co., 154 U.S. 51 (1894). 33
Cook v. S, [1966] 1 W.L.R. 635. 29
Cott UK Ltd. v. Barber Ltd, [1997] 3 All ER 540. 18
TEAM 13 MEMORANDUM FOR RESPONDENT
vii | P a g e
Dahl v. Nelson, Donkin & Co., (1881) 6 App Cases 38. 33
Dallah Real Estate and Tourism Co. v. Ministry of Religious
Affairs of the Government of Pakistan, [2011] 1 AC 763.
15
Daniel Harmer v. William Errington Bell (The
Bold Buccleugh), (1852) 7 Moo.P.C. 267.
20
Dobbs v. The National Bank of Australasia, [1935] HCA 49. 18
E.L. Oldendorff & Co. v. Tradax Exports SA (The Johanna
Oldendorff), 1974 AC 479.
37
Ellis Shipping Corporation v. Voest Alpine Intertrading, [1991] 2
Lloyd’s Rep 599.
38
Federal Commerce & Navigation Co. Ltd. v. Molena Alpha Inc.,
(The Nanfri), [1979] A.C. 757.
21
Federal Commerce and Navigation Co. v. Tradax Exports SA
(The Maratha Envoy), [1975] 2 Lloyd’s Rep. 223.
37
Fletcher Construction Australia Ltd v. MPN Group Pty
Ltd (Unreported, Supreme Court of New South Wales, 14 July
1997).
16
Galoo v. Bright Grahame Murray, [1994] 1 W.L.R. 1360. 28
Gem Shipping Co of Monrovia v. Babanaft (Lebanon) SARL
(‘The Fontevivo’), [1975] 1 Lloyd’s Rep. 339.
38
Government Insurance Office of NSW v. Atkinson-Leighton Joint
Venture, [1981] HCA 9.
18
Great Eastern Shipping Co. Ltd v. Far East Chartering Ltd (The
Jag Ravi), [2012] 1 Lloyd’s Rep. 637.
34
Greater London Council v. Connolly, [1970] 2 Q.B. 100. 16
Hadley v. Baxendale, (1854) 9 Ex. 341. 31
Hartford Fire Insurance Co. v. OOCL Bravery, [2000] 1 Lloyd's
Rep. 394.
35
Heart Research Institute v. Psiron Ltd, [2002] NSWSC 646. 18
Helios A/S v. Ekman & Co., [1897] 2 Q.B. 83. 33
TEAM 13 MEMORANDUM FOR RESPONDENT
viii | P a g e
Holloway v. Chancery Mead Ltd, [2007] ADR.L.R. 07/30. 18
Huddart Parker Ltd v. The Ship Mill Hill, [1950] HCA 43. 16
IBM Australia Ltd v. National Distribution Services Ltd, (1991)
22 NSWLR 466.
18
JT Mackley & Co Ltd v. Gosport Marina Ltd, [2002] BLR 367. 18
Kidde de Mexico S.A.ea v. Scheepvaartonderneming Harns CV
(The Harns), Dutch Court of Appeal of Arnhem-Leeuwarden, 27
September 2016.
24
Kinderman Sons v. Nippon Yusen Kaisha Lines, 322 F. Supp.
939.
32
Kish v. Taylor, [1912] A.C. 604. 25, 26
Langham SS Co. Ltd. v. Gallagher, [1911] 12 Asp MLC 109. 33
Leonis Steamship Co v. Rank, 1908 1 K.B. 499. 37
Livingstone v. Rawyards Coal Co., (1880) 5 App. Cas. 25. 31
London Arbitration 5/90 – LMLN 274, 5 May 1990. 37
MDC Ltd v. NV Zeevaart Maatschappij (Beursstraat), [1962] 1
Lloyd’s Rep. 180.
24
Metropolitan Tunnel and Public Works Ltd v. London Electric
Railway Co., [1926] 1 Ch 371.
16
Mobil Oil New Zealand Ltd v. The Ship ‘Rangiora’ (No.
2), [2000] 1 NZLR 82.
20
Monarch S.S. Co. v. Karlshamns Oljefabriker, [1949] A.C. 196. 26, 29
Mulvenna v. Royal Bank of Scotland, [2003] EWCA Civ 1112. 31
Nairn v. Prowse, (1802) 6 Ves 752. 19
Nea Agrex S.A. v. Baltic Shipping Co. Ltd (The Agios Lazarus),
[1976] Q.B. 933.
35
Northern Shipping Co. v Deutsche Seereederei G.M.B.H. (The
Kapitan Sakharov), [2000] 2 Lloyd's Rep. 255.
24
Papera Traders Co. Ltd. v. Hyundai Merchant Marine Co. Ltd. 23, 25
TEAM 13 MEMORANDUM FOR RESPONDENT
ix | P a g e
(The Eurasian Dream), [2002] 1 Lloyd’s Rep. 719.
Paul v. Speirway Ltd, (1976) Ch 220. 22
Petersen v. Freebody & Co., [1895] 2 Q.B. 294. 33
Postlethwaite v. Freeland, (1880) 5 App. Cas. 599. 33
President of India v. West Coast S.S. Co. (S.S. Portland Trader), 5
213 F. Supp. 352.
25
Procter Garrett Marston, Limited v. Oakwin Steamship Company
Limited, [1926] 1 K.B. 244.
33, 34
Public Authorities Superannuation Board v. Southern
International Developments Corporation Pty Limited,
(Unreported, Supreme Court of New South Wales, 19 October
1987).
18
QH Tours Ltd v. Ship Design and Management (Aust) Pty Ltd,
(1991) 105 ALR 371, 384.
15
Queensland National Bank Ltd v. Peninsular and Oriental Steam
Navigation Co., [1898] 1 Q.B. 567.
24
Republic Of France v. French Overseas Corporation (The
Malcolm Baxter, Jr.), 277 U.S. 323.
26
Ropner Shipping Co. Ltd v. Cleeves Western Valleys Anthracite
Collieries Ltd., (1927) 27 Lloyd’s Rep. 317.
38
Ruxley Electronics and Construction Co. Ltd. v. Forsyth, [1996]
A.C. 344.
30
Sailing Ship Garston & Co v. Hickie, 1885 15 Q.B.D. 580. 37
Santiren Shipping Ltd. v. Unimarine S.A.
(The Chrysovalandou Dyo), (1981) 1 Lloyd’s Rep. 159.
21
Scott v. Avery, [1856] EngR 810. 18
Strathlorne SS Co Ltd v. Hugh Baird & Sons Ltd., (1916) SC
(HL) 134.
33
Target Holdings Ltd. v. Redferns, [1996] A.C. 421. 29
The Achilleas, [2008] UKHL 48. 31
TEAM 13 MEMORANDUM FOR RESPONDENT
x | P a g e
The Aello, [1957] 1 W.L.R. 1228. 37
The Fontevivo [1975] 1 Lloyd’s Rep. 339. 38
The Jaederen, [1892] P 351. 33
The Mihalios Xilas, (1978) 2 Lloyd’s Rep. 186. 21
The Minerva, [1933] P 224. 20
The Oriental Victory, [1978] 1 CF 448. 20
The Polyfreedom, 1974 New York Arbitration. 37
The State of NSW v. UXC Limited, [2011] NSWSC 530. 18
Triarno Pty Ltd v. Triden Contractors Ltd, (1992) 10 BCL 305. 16
UBC Chartering Ltd v. Liepaya Shipping Co. Ltd. (The Liepaya),
[1999] 1 Lloyd’s Rep. 649.
24
United States Trust Company of New York v. Master and Crew of
Ship Ionian Mariner, (1997) 77 FCR 563, 583.
20
Ust-Kamenogorsk Hydropower Plant JSC v. AES Ust-
Kamenogorsk Hydropower Plant LLP, [2013] 1 W.L.R. 1889.
15
WTE Co-Generation v. RCR Energy Pty Ltd., [2013] VSC 314. 15
Yemgas FZCO v. Superior Pescadores S.A. (Superior Pescadores)
[2016] EWCA Civ 101.
35
BOOKS REFERRED TO AT PAGE:
CHITTY ON CONTRACTS (H.G. Beale et al eds., 31st edn., Sweet &
Maxwell, 2012)
16
D. Hodgson, THE LAW OF INTERVENING CAUSATION (Routledge,
2008).
16
E. Peel, TREITEL: THE LAW OF CONTRACT (14th edn., Sweet &
Maxwell, 2014).
17, 18
HALSBURY’S LAWS OF ENGLAND, Vol. 43 ( 4th edn.,
Butterworths, 1983)
20
I. Carr, INTERNATIONAL TRADE LAW (5th edn., Routledge, 13, 14
TEAM 13 MEMORANDUM FOR RESPONDENT
xi | P a g e
2014).
J. Cooke et al, VOYAGE CHARTERS (4th edn., Informa Law from
Routledge, 2014)
13, 20
O. C. Giles, CHORLEY AND GILES’ SHIPPING LAW (8th edn.,
Pittman Publishing, 1988).
8
R. Grime, SHIPPING LAW (2nd edn., Sweet & Maxwell, l991).
8
REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION (6th
edn., Blackaby et al. eds., 2015) .
3
S. Hodges and C.J.S. Hill, PRINCIPLES OF MARITIME LAW (LLP,
2001).
8
ARTICLES REFERRED TO AT PAGE:
W. Tetley, Assignment and Transfer of Maritime Liens: Is There
Subrogation of the Privilege, 15 J. MAR. L. & COM. (1984).
9
STATUTES, TREATIES AND CONVENTIONS REFERRED TO AT PAGE:
International Convention for the Unification of Certain Rules of
Law relating to Bills of Lading ("Hague Rules"), 1924.
21, 22
UNCITRAL Model Law on International Commercial
Arbitration.
3
International Arbitration Act, 1974 (Cth). 3
Arbitration Act, 1996 (UK). 3
TEAM 13 MEMORANDUM FOR RESPONDENT
xii | P a g e
ISSUES RAISED
I. Whether the Arbitral Tribunal has the Jurisdiction to Determine the Claim for Damages
made by the Claimant?
II. Whether the Claimant holds a valid maritime lien on the Madam Dragonfly?
III. Whether the Respondent is liable to pay the Damages of USD 14,450,000 for the Breach
of Charterparty?
V. Whether the Respondent is liable to pay USD 15,750,000 as damages for water damage to
the cargo?
VI. Whether the Claimant is liable to pay any demurrage?
VII. Whether the Claimant is liable to pay the agency fees at Spectre?
VIII. Whether the Claimant is liable to pay the Electronic Tag Access Fees?
TEAM 13 MEMORANDUM FOR RESPONDENT
1 | P a g e
STATEMENT OF FACTS
THE PARTIES AND THE CONTRACT OF AFFREIGHTMENT
1. Dynamic Shipping LLC (Respondent) is a corporation based in the State of Cerulean.
Cerulean Beans and Aromas (Claimant), a supplier of high-grade coffee beans, is also based
in the State of Cerulean. On or about 22 July 2017, the Respondent as “Owner” and the
Claimant as “Charterer” negotiated a voyage charter (the “Charterparty”) that provides for a
voyage from the port of Cerulean to the port of Dillamond. The Charterparty was for the
Madam Dragonfly (the ship).
PERFORMANCE OF THE CHARTERPARTY
2. On the request of the Respondent and supplementing the Charter, USD 100,000 was
deposited by the Claimant in an account earmarked for the purposes of paying the crew’s
wages.
3. The said cargo was delivered to the Respondent by the 24th of July, following which it was
loaded on the vessel after the application of sealants. The vessel departed Cerulean on the
same day. As per the Charterparty, the delivery of cargo to the destination port was
scheduled for the 28 July 2017. The scheduled delivery was negotiated upon considering the
Claimant’s obligations towards a third party that required the cargo.
5. The vessel made an unexpected deviation from the decided route as a result of solar flares,
a force majeure event. Consequently, the arrival of the vessel at the destination port was
delayed. Its berthing was further delayed due to a torrential rain-storm, the second force
majeure event that compelled the port to close.
TEAM 13 MEMORANDUM FOR RESPONDENT
2 | P a g e
6. The cargo was delivered at 8:42 PM on 29 July 2017. Claimant though collected the cargo
on 31 July 2017. It was discovered that the cargo in three of the containers had gotten
damaged. In furtherance of discharging obligations to the third party, the Claimants incurred
charges for procuring replacements for the same. Furthermore, the vessel’s crew remained
unpaid post completion of the said voyage due to financial infirmities of the Respondent.
THE NOTICE OF CLAIMS AND THE ARBITRATION PROCEEDINGS
8. On 11 August, 2017, the Claimant referred the dispute to arbitration as per the arbitration
clause in the charter, for settlement of disputes arising out of the Charter. This arbitration was
not validly commenced.
As a result of the claims and counter-claims raised by the Claimant and the Respondent
respectively, these conjoined proceedings have begun and are being brought together for the
tribunal’s reference.
TEAM 13 MEMORANDUM FOR RESPONDENT
3 | P a g e
ARGUMENTS ON JURISDICTION OF THE TRIBUNAL
ISSUE I: THE ARBITRAL PANEL DOES NOT HAVE THE JURISDICTION TO DETERMINE THE
CLAIM FOR DAMAGES MADE BY THE CLAIMANT
1. The Claimant alleged that the Respondent is liable to pay damages worth USD 30,200,000
for the breach of Charterparty and referred the dispute to arbitration.1 Respondent objects to
the jurisdiction of this arbitral tribunal to determine this claim relating to technical matters.
This is because, first, the Expert Determination provisions of the Charterparty relating to
resolution of technical matters are sufficiently certain to create a legally binding
obligation.[A] Secondly, the claim for damages made by the Claimant is a technical matter
and shall be referred to Expert Determination.[B] In any case, the claim for damages cannot
be decided without its cause of action being referred for Expert Determination.[C]
A. The Expert Determination provisions of the Charterparty relating to resolution of
technical matters are sufficiently certain to create a legally binding obligation.
2. It is a settled proposition of law that the Tribunal has power to determine its own jurisdiction
under the principle of ‘competence-competence’.2 The Courts have held that where parties
have made a special agreement requiring them to address a path to a potential solution, such
parties should be required to endeavour in good faith to achieve it.3 If there is a special
contract between the parties to refer the disputes to an expert, the courts consider the
1 Moot Scenario, Pg. 34. 2 REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION, 322, & 345 (6th edn., 2015); QH Tours Ltd v. Ship
Design and Management (Aust) Pty Ltd, (1991) 105 ALR 371, 384; Dallah Real Estate and Tourism Co v.
Ministry of Religious Affairs of the Government of Pakistan, [2011] 1 AC 763, 830 [84]; Ust-Kamenogorsk
Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower Plant LLP, [2013] 1 WLR 1889, 1902;
UNCITRAL Model Law on International Commercial Arbitration, Article 16(1); International Arbitration Act
1974 (Cth), Sec. 16; Arbitration Act 1996 (UK), Sec. 30(1). 3 Per Mustill LJ, Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd [1993] AC 334 at 353; Barclays
Bank Plc v. Nylon Capital LLP [2011] EWCA Civ 826; Badgin Nominees Pty Ltd v. Oneida Limited [1998]
VSC 188; WTE Co-Generation v. RCR Energy Pty Ltd., [2013] VSC 314.
TEAM 13 MEMORANDUM FOR RESPONDENT
4 | P a g e
circumstances of a case with a strong bias in favour of maintaining the special bargain.4
Scrutton LJ has stated that the most natural guiding principle in such cases is that the parties
who have made a contract must adhere by it.5 Further, it has been held that a clause should be
declared void for uncertainty only as a last resort, where it is not possible to supply it with a
reasonable meaning at all.6
3. It is submitted that the expert determination clause is sufficiently certain to establish legally
binding obligation. This is because it clearly identifies the process that has to be adopted by
the parties. It clearly specifies that the disputes as to technical matters have to be referred to
“Expert Determination”.7 It may be argued that the clause is uncertain as it fails to set out in
detail the procedure that needs to be followed by the Expert. However, it has been held that a
clause will not be void if it merely did not specify the procedures the expert was required to
follow.8 In the absence of any express term, procedures have to be decided by the expert.9
4. Further, the Respondent might argue that the lack of provision for the method of appointment
of the expert will lead to uncertainty. However, it is submitted that it should be impliedly read
into the contract that the expert shall be appointed by the mutual consent of the parties. It is
established that a term can be impliedly read into a contract if it is so obvious that “it goes
without saying”.10 In the instant case, this clause is more than obvious, given that the parties
have opted for referral to an independent expert. On the basis of the abovementioned
submissions, it is submitted that the expert determination provisions are sufficiently certain to
give rise to a binding legal obligation.
4 Per Moulton LJ, Bristol Corporation v. John Aird & Co., [1913] AC 241; Per Dixon J, Huddart Parker Ltd v.
The Ship Mill Hill, [1950] HCA 43. 5 Per Scrutton LJ, Metropolitan Tunnel and Public Works Ltd v. London Electric Railway Co., [1926] 1 Ch 371;
Per Dixon J, Huddart Parker Ltd v. The Ship Mill Hill, [1950] HCA 43. 6 Per Lord Denning MR, Greater London Council v. Connolly, [1970] 2 QB 100. 7 Moot Scenario, Pg. 12, Clause 27(d). 8 Per Rolfe J, Fletcher Construction Australia Ltd v MPN Group Pty Ltd (Unreported, Supreme Court of New
South Wales, 14 July 1997). 9 Triarno Pty Ltd v Triden Contractors Ltd, (1992) 10 BCL 305 at 307; Fletcher Construction Australia Ltd v
MPN Group Pty Ltd (Unreported, Supreme Court of New South Wales, 14 July 1997). 10 Codelfa Construction Pty Ltd v. State Rail Authority of NSW, [1982] HCA 24; BP Refinery (Westernport)
Pty Ltd v. Hastings Shire Council, [1977] HCA 40.
TEAM 13 MEMORANDUM FOR RESPONDENT
5 | P a g e
B. The claim for damages made by the Claimant is a technical matter and shall be
referred to Expert Determination.
5. The parties agreed to refer all disputes arising out of or in connection to the contract to
arbitration, but reserved specific disputes relating to technical matters to be referred to expert
determination by an independent master mariner.11 Further, Clause 27(e) prohibits the parties
from commencing any legal proceedings (including arbitral proceedings) in respect of a
dispute unless the technical matters are determined by the expert.12
6. Technical matters have been defined in the contract to mean “matters surrounding the
technical aspects of the performance of the Charterparty.”13 In the instant case, the Claimant
has claimed damages from the Respondent for the alleged breach arising from deviation,
delay in delivery and for the damage caused to the cargo.14 These claims for damages
squarely fall under the definition of ‘technical matters’ provided in the Charterparty as they
relate to the vessel’s route and storage conditions. It shall be noted here that the parties
expressly provided that the person appointed to determine the technical matters should act as
an expert and not as an arbitrator.15 Further, the parties have also agreed that the written
determination by the expert will be conclusive and binding on the parties.16 This clearly
indicates that the parties intended that these disputes should not be settled by way of
arbitration.
7. The Claimant may argue that the role of expert under such agreements should be limited to
the determination of factual matters and should not extend to the determination of issue of
damages. However, it is submitted that imposing such an artificial limitation on the
jurisdiction of the Expert will be in derogation of the Charterparty. Courts have rejected
11 Moot Scenario, Pg. 12, Clause 27(a) & (d). 12 Moot Scenario, Pg. 12, Clause 27(e). 13 Moot Scenario, Pg. 12, Clause 27(g). 14 Moot Scenario, Pg. 37, Para. 4-7. 15 Moot Scenario, Pg. 12, Clause 27(f). 16 Moot Scenario, Pg. 12, Clause 27(f).
TEAM 13 MEMORANDUM FOR RESPONDENT
6 | P a g e
similar arguments made in the past and extended the matters which may be considered by
expert determination to issues of liability and quantum of damages.17 Further, Courts have
adopted a positive approach towards expert determination and have indicated willingness to
construe such dispute resolution clauses in an expansive manner.18 Therefore, in the instant
case, it is submitted that the jurisdiction of the expert should extend to the determination of
quantum of damages in technical matters.
C. In any case, the claim for damages cannot be decided without its cause of action
being referred to Expert Determination.
8. In any case, even if the Tribunal were to give a narrow construction to the clause, the
technical matters which form the cause of action for the claim have to be referred to expert
determination before those claims can be adjudicated by the Tribunal. Clause 27(e) of the
Charterparty makes referral to an expert a condition precedent to accrual of any rights
relating to the performance of technical matters.19 No cause of action for a claim for damages
can arise before expert makes a determination on rights and liabilities under the contract.20 As
previously established, the cause of action of the claim for damages is non-performance of
technical aspects of the Charterparty, i.e. storage conditions and vessel route.21 It is also
supported by the fact that the Tribunal itself has appointed a maritime engineer as an expert
witness.22 Therefore, it is submitted that the Claimant is not entitled to commence arbitral
proceedings.
17 Per Smart J, Public Authorities Superannuation Board v. Southern International Developments Corporation
Pty Limited, (Unreported, Supreme Court of New South Wales, 19 October 1987); Cott UK Ltd. v. Barber Ltd,
[1997] 3 All ER 540. 18 Government Insurance Office of NSW v. Atkinson-Leighton Joint Venture, [1981] HCA 9; IBM Australia
Ltd v. National Distribution Services Ltd, (1991) 22 NSWLR 466; Per Einstein J, Heart Research Institute v.
Psiron Ltd, [2002] NSWSC 646. 19 Scott v. Avery, [1856] EngR 810; Holloway v. Chancery Mead Ltd, [2007] ADR.L.R. 07/30 20 The State of NSW v. UXC Limited, [2011] NSWSC 530; Dobbs v. The National Bank of Australasia, [1935]
HCA 49; JT Mackley & Co Ltd v. Gosport Marina Ltd, [2002] BLR 367. 21 Memorandum, Para. 6. 22 Moot Scenario, Pg. 43.
TEAM 13 MEMORANDUM FOR RESPONDENT
7 | P a g e
ARGUMENTS ON MERITS OF THE CLAIM
ISSUE II. THE CLAIMANT DOES NOT HOLD A VALID MARITIME LIEN OVER THE MADAM
DRAGONFLY
9. The Claimant deposited the crew’s wages in a separate bank account prior to the voyage.23
This amount was deposited merely for the purposes of security for the crew.24 However, the
Respondent had a separate contract with the crew regarding its wages.25 It is submitted that
the Claimant does not hold a valid maritime lien over the ship. This is because there is always
a presumption against the creditor being afforded double security, which is why in the
absence of an agreement to the contrary, it is presumed that the lien has been abandoned.26 It
is not in dispute that the sum advanced in this case was intended to be used as security for the
crew in the first place, removing the need of another security in the form of a lien.27
10. Even otherwise, the Claimant does not have a right to a valid maritime lien over the ship.
This is because, first, the Claimant’s lien has its basis in contract and not in admiralty,
making this a contractual lien. [A] Second, it is therefore invalidated by the fact that
possession is lacking in the present case. [B] Even if the Tribunal were to find the existence
of a valid lien, the lien is not subrogated to the Claimant.[C]
A. The lien is contractual in nature
11. The jurisdiction of Courts of Admiralty with respect to wage liens was restricted to ordinary
contracts since its very inception.28 In the instant case, the agreement for the employment of
crew was an ordinary contract.29 It has been established that the wages lien is a ‘contractual
23 Moot Scenario, Pg. 1. 24 Moot Scenario, Pg. 1. 25 Moot Scenario, Pg. 8. 26 Nairn v. Prowse, (1802) 6 Ves 752. 27 Moot Scenario, Pg. 2. 28 The Minerva, [1933] P 224. 29 Moot Scenario, Pg. 8.
TEAM 13 MEMORANDUM FOR RESPONDENT
8 | P a g e
lien’ or that it arises ex contractu.30 Further, in a similar case that involved an ITF contract
between the shipowner and ITF, it was held that such a contract was for the benefit of the
individual crew members, the crew could accordingly recover their wages in personam.31
This is starkly different from a maritime lien where proceedings for recovery are actions in
rem.32
12. There are numerous instances in common law where courts have explicitly demanded the
crew to show that the wages claimed are derived from or associated with some enforceable
contract of employment, to establish a claim for a maritime lien.33 They go to a further extent
and mandate the crew to show a special type of ship-specific contractual term.34 Hence, wage
liens arising ex-contractu are not confined to a notional status for the purposes of ranking
different maritime liens, but treated as a different class of contractual liens. Therefore, it is
submitted that the Claimant does not hold a valid maritime equitable lien over the ship as the
lien in the instant case can only be a contractual lien and not a maritime lien.
B. The Claimant lacks possession of the ship
13. A lien is defined as a defence available to one in possession of a claimant’s goods who is
entitled at common law or by contract to retain possession until he is paid whatever is
owned.35 To claim lien, possession is an essential requirement, and has to be denied to the
party demanding the liened object.36 Maritime lien gives the right not only to retain
possession, but also to realize what is owed from that property.37 It has been held that lien
operates as an equitable charge upon what is due from the shipper to the charterer, and in
30 Otto Charles Giles, et al, CHORLEY AND GILES’ SHIPPING LAW, 80 (Pittman Publishing, London, 8th edn.,
1988); Susan Hodges and Christopher Julius Starforth Hill, PRINCIPLES OF MARITIME LAW 482 (LLP, London,
2001). 31 The Oriental Victory, [1978] 1 CF 448. 32 Daniel Harmer v. William Errington Bell (The Bold Buccleugh), (1852) 7 Moo.P.C.267. 33 United States Trust Company of New York v. Master and Crew of Ship Ionian Mariner, (1997) 77 FCR 563,
583. 34 Mobil Oil New Zealand Ltd v. The Ship ‘Rangiora’ (No 2), [2000] 1 NZLR 82, 86. 35 Santiren Shipping Ltd. v. Unimarine S.A. (The Chrysovalandou Dyo), (1981) 1 Lloyd’s Rep. 159. 36 The Mihalios Xilas (1978) 2 Lloyd’s Rep 186. 37 R. Grime, SHIPPING LAW 415 (Sweet & Maxwell Ltd.. 2nd edn., l991).
TEAM 13 MEMORANDUM FOR RESPONDENT
9 | P a g e
order to be effective requires an ability to intercept the subject of the lien.38 Clearly, in the
present case, the lienor is deprived of the possession of the subject of the lien. Therefore, it is
submitted that the claim for the lien is invalidated.
C. In any case, the maritime lien cannot be subrogated
14. In the alternative, even if a maritime lien exists, it is submitted that it cannot be subrogated to
the Claimant. In cases where a maritime lien is said to exist, it has been held as a general rule
that the same is not transferable in law.39 English courts have been reluctant to recognize the
transfer of a maritime lien.40 Furthermore, with respect to transferability of liens it has been
held that a party does not acquire a lien even if it expends money for the benefit of another,
from the mere fact of having made that expenditure.41
15. It has been previously held that merely discharging the Claimant’s obligation to the
Respondent does not subrogate the crew’s right to the Claimant since law demands
“something more”.42 With respect to maritime liens for wages asserted by third parties on
behalf of the crew, the prevailing common law doctrine provides that a person who has paid
off the ultimate beneficiary will not have a right to claim lien on his behalf.43 In order to be
subrogated to the creditor’s security, the Claimant must prove, first, that the Claimant
intended that his money should be used to discharge the security in question and secondly,
that he intended to obtain the benefit of security by subrogation.44 The second of the two
above requirements is lacking in the present case. Rather, the money was transferred for the
sole benefit of providing the crew members with security.45
38 Federal Commerce & Navigation Co. Ltd. v. Molena Alpha Inc. (The Nanfri), [1979] A.C. 757. 39 The Petone, [1917] P 198. 40 W. Tetley, Assignment and Transfer of Maritime Liens: Is There Subrogation of the Privilege, 15 JOURNAL OF
MARITIME LAW & COMMERCE 393, 403 (1984). 41 Burridge v. Row, (1842) 1 Y & C Ch Cas 183. 42 Paul v. Speirway Ltd, (1976) Ch 220. 43 The Petone, [1917] P 198. 44 Boscawen v. Bajwa, [1996] 1 W.L.R. 328. 45 Moot Scenario, Pg. 1.
TEAM 13 MEMORANDUM FOR RESPONDENT
10 | P a g e
16. Further, Respondent may argue that the lien should be subrogated to remedy an unjust
enrichment by the Claimant. However, it is submitted that this contention is without any
merit. This is because it has been held that if the Claimant intended that the Respondent
should be enriched at its expense, because it served Claimant’s commercial purposes, then it
is not unjust and subrogation is deemed inapplicable.46 In the instant case, the security was
deposited to enable the Respondent’s vessel to set sail with the crew’s wages secured and to
meet the urgency of its shipment.47 Therefore, it is submitted that the Claimant does not hold
a valid maritime lien over the ship.
ISSUE III. RESPONDENT IS NOT LIABLE TO PAY THE DAMAGES OF USD 14,450,000 FOR THE
BREACH OF CHARTERPARTY
17. It is submitted that the Respondent is not liable to pay any damages for the breach of the
Charterparty. This is because, first, Respondent is not liable for the deviation to the port of
Spectre.[A] Second, Respondent is not liable for the delay in delivery.[B] Lastly, the alleged
contractual breaches have not caused the losses in question.[C]
A. Respondent is not liable for the deviation to Spectre
18. The Claimant alleges that through an unjustified deviation, the Respondent has breached its
obligation to take the most direct route to Dillamond. However, it is submitted that the ship’s
deviation towards the port of Spectre has not led to a contractual breach as the deviation was
within the scope of the liberty clause present in the Charterparty.[1] In any event, it was a
result of necessity.[2]
46 Andrew Conquest v. Patrick McGinnis and Brian McGinnis, [2007] EWHC 2943 (Ch). 47 Moot Scenario, Pg. 1.
TEAM 13 MEMORANDUM FOR RESPONDENT
11 | P a g e
1. The deviation to Spectre is within the scope of the liberty clause
19. As per the Charterparty, the ship can deviate for the purpose of saving life or property
(including the vessel).48 Due to solar flares, the ship’s communication and satellite navigation
systems became dysfunctional.49 Additionally, the ship did not have hardcopy maps for the
journey to Dillamond.50 Thus, to save the ship and cargo on board, the crew decided to
deviate towards Spectre to see if any repairs needed to be carried out.51
20. To avail the benefit of the liberty clause, it must be shown that due diligence was exercised to
make the ship seaworthy.52 The standard of due diligence which is required for a particular
voyage is “equivalent to the exercise of reasonable care and skill”.53 The shipowner is
required to exercise due diligence to ensure that the vessel is “properly equipped”54 to
withstand the “ordinary incidents”55 of the contractual voyage. The question to be posed is
“would a prudent shipowner, if he had known of the defect, have sent the ship to sea in that
condition?”56
21. It has been held that for a ship to be seaworthy, adequate and up to date nautical charts and
publications should be available on board.57 This obligation was fulfilled by Respondent as a
proper satellite navigation system was present. Further, the ship only needs to be properly
equipped to withstand the ordinary incidents. It is submitted that as large solar flares that can
48 Moot Scenario, Pg. 9, Clause 17. 49 Moot Scenario, Pg. 17. 50 Moot Scenario, Pg. 19. 51 Moot Scenario, Pg. 19. 52 Moot Scenario, Pg. 9, Clause 17. 53 Papera Traders Co. Ltd. v. Hyundai Merchant Marine Co. Ltd. (The Eurasian Dream), [2002] 1 Lloyd’s Rep.
719. 54 The Maori King v. Hughes, [1895] 2 Q.B. 550; Queensland National Bank Ltd v. Peninsular and Oriental
Steam Navigation Co., [1898] 1 Q.B. 567. 55 Northern Shipping Co. v Deutsche Seereederei G.M.B.H. (The Kapitan Sakharov), [2000] 2 Lloyd's Rep. 255. 56 MDC Ltd v. NV Zeevaart Maatschappij (Beursstraat), [1962] 1 Lloyd’s Rep. 180; UBC Chartering Ltd v.
Liepaya Shipping Co. Ltd. (The Liepaya), [1999] 1 Lloyd’s Rep. 649. 57 Kidde de Mexico S.A.ea v. Scheepvaartonderneming Harns CV (The Harns), Dutch Court of Appeal of
Arnhem-Leeuwarden, 27 September 2016.
TEAM 13 MEMORANDUM FOR RESPONDENT
12 | P a g e
render navigation or satellite systems dysfunctional are rare, they should not be treated as
ordinary incidents.58
22. Further, reasonable care and skill cannot be exercised if the concerned shipowner was not
aware of the defect. The only information which is available is that Respondent kept itself
abreast of all news developments in Dillamond.59 The newspaper which published the report
about the solar flares is ‘The Cerulean Mail’.60 There is nothing to indicate that Respondent
had any knowledge of these newspaper reports and the defect in question.
23. The Claimant may argue that the Respondent should have made enquiries about the
impending voyage and taken necessary steps. However, it is submitted that the obligation
upon the Respondent is one of “reasonable care and skill”.61 NASA’s alert was limited to the
Cerulean region.62 The actual disruptive event was of a global level.63 The ship was moving
away from Cerulean, and thus away from the potentially affected area. In such circumstances,
having a properly updated electronic chart should satisfy the due diligence standard.
Requiring the ship to keep hardcopy backups for solar flare events anywhere else in the world
cannot be made a condition to satisfy the reasonable care and skill standard.
24. It might be contended by the Claimant that the Respondent’s failure to observe statutory duty
of maintaining prescribed communication and navigation equipment shows a lack of due
diligence. The contention lacks any merit because due diligence only requires reasonable care
and skill.64 Respondent has ensured that the ship is classed as +100A1 or its equivalent.65
This means that it is suitable for seagoing service and is kept in good and efficient
58 Solar Flares: Everything You Need to Know, THE TELEGRAPH available at
https://www.telegraph.co.uk/news/science/space/9097587/Solar-flares-everything-you-need-to-know.html (Last
visited on 14 May 2018). 59 PO 2, Pg. 1, Para. 1. 60 Moot Scenario, Pg. 19. 61 Papera Traders Co. Ltd. v. Hyundai Merchant Marine Co. Ltd. (The Eurasian Dream), [2002] 1 Lloyd’s Rep.
719. 62 Moot Scenario, Pg. 19. 63 Moot Scenario, Pg. 19. 64 Papera Traders Co. Ltd. v. Hyundai Merchant Marine Co. Ltd. (The Eurasian Dream), [2002] 1 Lloyd’s Rep.
719. 65 Moot Scenario, Pg. 4, Clause 1.
TEAM 13 MEMORANDUM FOR RESPONDENT
13 | P a g e
condition.66 Moreover, seaworthiness does not require that the most modern equipment is
being used.67 Hence, due diligence has been exercised by Respondent. Thus, it is submitted
that the Respondent can take benefit of the liberty clause present in the Charterparty and is
not liable for the deviation to Spectre.
2. In any case, the deviation was a result of necessity
25. A shipowner or carrier cannot be held liable for deviation which is necessary for the safety of
the vessel or cargo.68 Such a deviation will be justified even though the necessity for the same
arises out of initial unseaworthiness.69 Further, this exception is not applicable if the
shipowner knew about the vessel’s unseaworthiness.70 The ship’s deviation towards Spectre
is justified as the Respondent was not aware of the unseaworthiness before sailing.
26. Two elements of initial unseaworthiness are in question: first, no backup arrangement had
been made. Second, the vessel’s navigation systems did not comply with the current Cerulean
regulations. As per Monarch S.S. Co., the standard required is of actual knowledge.71 It does
not matter howsoever grave the unseaworthiness is or whether there has been a lack of due
diligence as long as there is no actual knowledge.72 As submitted above, there is no evidence
to show that the Respondent was aware of the warning.73 With regard to the statutory breach,
there is again no proof to show that Respondent had actual knowledge of the fact that the
navigation system on the Madam Dragonfly was not as per the prescribed standard. In The
Malcolm Baxter, Jr.,74 it has been held that the master or shipowner should leave the port
with the express knowledge of the defect and with the intention to deviate due to it. Then
66 LLYOD’S REGISTER FOUNDATION, Frequently Asked Questions available at
http://www.lrfoundation.org.uk/public_education/research_resources/faqs/ (Last visited on 17 April 2018). 67 President of India v. West Coast S.S. Co. (S.S. Portland Trader), 5 213 F. Supp. 352. 68 J. Cooke et al, VOYAGE CHARTERS, 279 (4th ed., Routeledge, 2014); Kish v. Taylor, [1912] A.C. 604. 69 J. Cooke et al, VOYAGE CHARTERS, 279 (4th ed., Routeledge, 2014); Kish v. Taylor, [1912] A.C. 604. 70 Monarch S.S. Co. v. Karlshamns, [1949] A.C. 196. 71 Monarch S.S. Co. v. Karlshamns, [1949] A.C. 196. 72 I. Carr, INTERNATIONAL TRADE LAW, 204 (5th edn., Routledge, 2014); Republic Of France v. French Overseas
Corporation (The Malcolm Baxter, Jr.), 277 U.S. 323. 73 Memorandum, Paras. 23-25. 74 Republic Of France v. French Overseas Corporation (The Malcolm Baxter, Jr.), 277 U.S. 323.
TEAM 13 MEMORANDUM FOR RESPONDENT
14 | P a g e
only will it be considered an unjustifiable deviation. Here, there is nothing to indicate that
Respondent had any intention at the time of departure from Cerulean to deviate towards
Spectre. Hence, it is not an unjustified deviation.
27. In any event, focusing on the cause of the peril rather than on the existence of it will defeat
the whole purpose of the defence of necessity.75 This is because the master of the ship might
be reluctant to deviate despite the existence of a peril to life and property, if the defence is not
available. Hence, Respondent is not liable for the deviation as it was due to necessity.
B. Respondent is not liable for the failure to deliver the goods on time
28. Respondent cannot be held liable for breaching its obligations under the Charterparty as it is
protected by the Force Majeure clause.76 The clause protects the Respondent from any
liability that might arise due to there being a delay in Respondent’s performance of its
obligations, as long as that delay, is due to a force majeure event.77 It is submitted that
Respondent is not liable for the failure to deliver as per the appointed time as the two force
majeure events prevented it from fulfilling its contractual obligations.[1] Even if solar flares
are not held to be a force majeure event, Respondent is not liable as the storm acted as the
novus actus interveniens and broke the chain of causation. [2]
1. The delay in delivery was due to two force majeure events
29. As per the Force Majeure clause in the Charterparty, ‘unforeseen weather events’ are
considered force majeure events.78 The two force majeure events are the solar flares [i] and
the storm [ii]. It is submitted that due to the combined operation of the two, Respondent is not
liable for the delay.
75 I. Carr, INTERNATIONAL TRADE LAW, 204 (5th edn., Routledge, 2014); Kish v. Taylor, [1912] A.C. 604. 76 Moot Scenario, Pg. 9, Clause 17. 77 Moot Scenario, Pg. 9, Clause 17. 78 Moot Scenario, Pg. 9, Clause 17.
TEAM 13 MEMORANDUM FOR RESPONDENT
15 | P a g e
i. Solar Flares are a force majeure event
30. As stated above,79 there is nothing to indicate that Respondent was aware of the solar flare
explosions warning by NASA. Hence, the solar flare explosions should be treated as an
‘unforeseen weather event’. Thus, it is a force majeure event. Due to the solar flares, the
ship’s satellite and communication systems became dysfunctional for 17 hours and the vessel
had to deviate towards Spectre. This prevented Respondent from delivering the goods on time
and was also the reason behind the deviation undertaken by Madam Dragonfly. Hence,
Respondent should not be held liable for either of these breaches as Clause 17 states that a
party which has been prevented by a force majeure event from performing its obligations
cannot be held liable.
ii. The storm is a force majeure event
31. The storm has been described as a “once in a lifetime” storm and was not picked up by radars
until approximately 45 minutes before it hit Dillamond during peak hours.80 Hence, as there
was no way to foresee it, it is also a force majeure event as per Clause 17 of the Charterparty.
The storm closed down the port of Dillamond for 12 hours81 after it hit during peak hours on
28 July 201782 around 5 PM.83 The storm made it completely impossible for any vessel to
approach the port after it hit and even vessels which were on the way to the port were
affected. The Madam Dragonfly also had to stop out in the ocean. As the combined effect of
these two force majeure events prevented Respondent from delivering the containers
containing the coffee beans, Respondent cannot be held liable for this breach.
2. The storm acted as the novus actus interveniens and broke the chain of causation
32. It is submitted that even if the solar flares are not considered to be a force majeure event,
Respondent is still not liable for the breach of the Charterparty as the storm acts as the novus
79 Memorandum, Para. 23-25. 80 Moot Scenario, Pg. 21. 81 Moot Scenario, Pg. 21. 82 Moot Scenario, Pg. 21. 83 Moot Scenario, Pg. 19.
TEAM 13 MEMORANDUM FOR RESPONDENT
16 | P a g e
actus interveniens to sever the chain of causation.84 Extraordinary heavy weather has been
held to be capable of severing the chain of causation.85 The Claimants must show that the
solar flares were the “effective or dominant cause”86 for the delay in delivery and not merely
an occasion for the damage.87 It is submitted that even if there had been no solar flares, the
storm would have still delayed the delivery of the cargo.[i] In the alternative, the solar flares
have acted as the occasion for the damage and not as the dominant or effective cause.[ii]
i. Even without the solar flares, the breach would have occurred
33. The storm was about to hit Dillamond at around 4:58 PM on 28 July 2017. Its effects were
already visible out on the sea as the ship could not proceed past its then current location.88
Further, the port of Dillamond was closed for 12 hours due to the storm while clean-up
efforts were going on.89 The Claimant might contend that if the ship had reached the port by
5:00 PM, the storm would not have affected it at all.
34. However, it is submitted that the loss would have been suffered regardless of the breach.90
The storm has been described as “once in a lifetime”91 and as per the ship’s captain, it was
more powerful at sea than at land.92 Under such circumstances, there was a high chance that
the ship would have got caught in the storm before reaching the port if it had been proceeding
as per the originally planned journey. Hence, it is submitted that the loss would have occurred
regardless of the solar flares.
ii. The solar flares were the occasion for the damage and not the effective or dominant cause
35. It is submitted that the original estimated time of delivery, i.e. 5 PM on 28 July 2017, was for
the original journey where no provisions had been made for the loss of time due to the solar
84 CHITTY ON CONTRACTS, Vol. I, 1799 (H.G. Beale et al eds., 31st edn., Sweet & Maxwell, 2012). 85 Carslogie Steamship Co. v. Royal Norwegian Government, [1952] A.C. 292 (HL). 86 Galoo v. Bright Grahame Murray, [1994] 1 W.L.R. 1360. 87 D. Hodgson, THE LAW OF INTERVENING CAUSATION, 149 (Routledge, 2008). 88 Moot Scenario, Pg. 19. 89 Moot Scenario, Pg. 21. 90 Target Holdings Ltd. v. Redferns, [1996] A.C. 421. 91 Moot Scenario, Pg. 21. 92 Moot Scenario, Pg. 19.
TEAM 13 MEMORANDUM FOR RESPONDENT
17 | P a g e
flares. The delay occasioned by the solar flares provided the occasion for the damage93 as the
ship would not have been able to reach Dillamond by 5 PM and would have been delayed by
the storm. Thus, the storm is the effective or dominant cause of the loss and has acted as the
novus actus interveniens. Thus, it is submitted that the delay has occurred due to the second
force majeure event and Respondent is not liable.
C. In any case, the contractual breaches have not caused the losses
36. Even if the Tribunal decides to hold Respondent liable for contractual breaches such as the
deviation from the agreed route and for the failure to deliver the cargo by 7 PM on 28 July
2017, Respondent cannot be held liable for either the replacement coffee payment, i.e. USD
9,450,000 or the settlement payment, i.e. USD 5,000,000. The principle to be kept in mind
while calculating damages is that “damages are designed to compensate for an established
loss and not to provide a gratuitous benefit to the aggrieved party”.94 As the liability to pay
for the replacement coffee [1] and the settlement payment [2] does not arise from these
contractual breaches, Respondent cannot pay the same as damages for these breaches.
1. Respondent is not liable to pay for the replacement coffee
37. Claimant can only recover those damages which have adversely affected its position.95 Even
though Claimant has alleged that it had to buy the replacement coffee as a consequence of the
deviation to Spectre and the failure to deliver the containers of coffee on time, this is untrue.
Claimant’s actions clearly show that the replacement coffee was purchased on account of the
damage that was suffered by the cargo and not on account of these breaches. If it had
occurred due to the delay or deviation, Claimant would have immediately made arrangements
to buy replacement coffee rather than continue waiting at the port for the ship to arrive96 after
the discharging deadline had been breached. Further, Respondent waited till 31 July 2017 to
93 Cook v. S, [1966] 1 W.L.R. 635; Monarch S.S. Co. v. Karlshamns Oljefabriker, [1949] A.C. 196. 94 Ruxley Electronics and Construction Co. Ltd. v. Forsyth, [1996] A.C. 344. 95 E. Peel, TREITEL: THE LAW OF CONTRACT, 1110 (14th edn., Sweet & Maxwell, 2014). 96 Moot Scenario, Pgs. 19-20.
TEAM 13 MEMORANDUM FOR RESPONDENT
18 | P a g e
buy the replacement coffee97 even though the festival had already begun on midday 29 June
2017.98 This clearly shows that the only reason why Claimant bought the replacement coffee
was because the cargo had gotten damaged. As damages are based on a compensatory
principle, they are only awarded for the losses that have actually occurred.99 Thus, for these
contractual breaches, Respondent should not be held liable to pay the replacement coffee
price.
2. Respondent is not liable to Claimant for the settlement payment
38. Claimant has stated that Respondent is liable to pay the settlement payment, i.e. USD
5,000,000, that was made to Coffees of the World. In lieu of this settlement payment, Coffees
of the World released and discharged Claimant from any claim that they have against it.100
Even in cases where a breach has occurred, the loss will not be recoverable as damages if it is
found to be too remote.101 Admittedly, Respondent knew that the coffee beans were needed
for a festival in Dillamond.102 However, it has been held that it is not enough to show that the
contracting party was aware of the special circumstances.103 It needs to be shown that the
contracting party had “assumed responsibility”104 for the potential loss. If it is an
unquantifiable and unpredictable loss that the defendant has no control over, then it cannot be
assumed that the contracting party has taken responsibility for it.105 The settlement payment
negotiations were between Claimant and Coffees of the World. Respondent had no say at all
as to what sort of a liability will Coffees of the World impose on Claimant. Hence, it cannot
be held that the Respondent has agreed to assume responsibility for it. Thus, it is submitted
97 Moot Scenario, Pg. 28. 98 PO 2, Pg. 2, Para. 6. 99 Livingstone v. Rawyards Coal Co., (1880) 5 App. Cas. 25. 100 Moot Scenario, Pg. 29. 101 Hadley v. Baxendale, (1854) 9 Ex. 341; E. Peel, TREITEL: THE LAW OF CONTRACT, 1173 (14th edn., Sweet
& Maxwell, 2014). 102 Moot Scenario, Pg. 2. 103 Mulvenna v. Royal Bank of Scotland, [2003] EWCA Civ 1112. 104 The Achilleas, [2008] UKHL 48. 105 The Achilleas, [2008] UKHL 48.
TEAM 13 MEMORANDUM FOR RESPONDENT
19 | P a g e
that the loss is too remote and Respondent cannot be made liable for it. Thus, Respondent is
not liable for either the replacement coffee payment or the settlement payment to Claimant.
ISSUE IV. RESPONDENT IS NOT LIABLE TO PAY ANY DAMAGES FOR WATER DAMAGE TO THE
CARGO.
39. The Respondent was responsible for the shipment of coffee in completely waterproof
containers.106 Respondent carried the cargo in accordance with industry standard conditions.
The containers were sealed using sealants of exceptionally strong quality.107 After a
considerable delay, the Claimant picked the cargo from the port of Dillamond.108 Upon
unpacking, the Claimant discovered that the coffee inside three out of the four containers had
been damaged by water.109 The expert opined that the cargo was damaged within 24 hours
from 4:30 am on 30 July 2017 and the same is accepted by the tribunal.110 The Claimant
alleges that the Respondent is liable to pay damages of USD 15,750,000 for this damage
caused to the cargo.111 It is submitted that this claim is unfounded because, the damage to the
cargo occurred after the delivery of the cargo was complete. [A] In any case, the liability of
Respondent is limited as per Art. IV(5) of the Hague Rules. [B]
A. The water damage to the cargo occurred after the delivery of the cargo was
complete.
40. It is submitted that the Respondent delivered the cargo before the cargo was damaged,
thereby passing the risk of loss to the Claimant.112 This is because the cargo was delivered to
the Claimant at 8:42 PM on 29 July 2017.[1] Alternatively, the cargo was delivered to the
Claimant at 12:02 AM on 30 July 2017.[2]
106 Moot Scenario, Pg. 2. 107 Moot Scenario, Pg. 43. 108 Moot Scenario, Pg. 24. 109 Moot Scenario, Pg. 27. 110 Moot Scenario, Pg. 43, 45. 111 Moot Scenario, Pg. 48. 112 Kinderman Sons v. Nippon Yusen Kaisha Lines, (e.d.pa. 1971), 322 F. Supp. 939, 942
TEAM 13 MEMORANDUM FOR RESPONDENT
20 | P a g e
1. The cargo was delivered to the Claimant at 8:42 PM on 29 July 2017
41. It is established that the delivery of the cargo marks the point of time at which the carrier’s
responsibility for safe custody of the goods comes to an end.113 Delivery is a joint act of the
shipowner and the consignee.114 The shipowner’s duty is to get the cargo out of the holds,
whereas it is the consignee’s duty to take delivery of it.115 The extent of their respective
obligations in any case is regulated by the custom of the port of discharge.116 It is an
established rule that the delivery must be according to the custom and usage of the port, and
such delivery will discharge the carrier of his responsibility.117
42. It is the custom of the Dillamond port to deliver always afloat.118 The same has also been
expressly included in the Charterparty.119 In the absence of any terms to the contrary, where
the ship is discharging her cargo afloat, the consignee must provide the necessary lighters and
lightermen.120 Thus, the consignee has to take the delivery of the goods from the ship’s
tackle. It has been held that in certain circumstances actual collection of the goods is not
necessary to complete the delivery of the cargo.121 The shipowner’s obligation ends when he
has put the goods in such a position that the consignee can take delivery of them i.e. when the
goods are placed at consignee’s disposal.122
43. Hence, in the instant case, Respondent’s obligation ended at 8:42 PM on 29 July 2017. This is
because the Respondent via its email at 8:42 PM on 29 July 2017 notified the Claimant that
113 J. Cooke et. al., VOYAGE CHARTERS, 217 (4th edn., 2014). 114 HALSBURY LAWS OF ENGLAND, Vol. 43, Para. 660 (4th edn.); Petersen v. Freebody & Co., [1895] 2 QB 294;
Langham SS Co. Ltd. v. Gallagher, [1911] 12 Asp MLC 109. 115 The Jaederen, [1892] P 351. 116 J. Cooke et. al., VOYAGE CHARTERS, 356 (4th edn., 2014); Postlethwaite v. Freeland, (1880) 5 App. Cas. 599;
Strathlorne SS Co Ltd v. Hugh Baird & Sons Ltd., (1916) SC (HL) 134. 117 Constable v. National SS. Co., 154 U.S. 51, 63 (1894). 118 Moot Scenario, Pg. 8, Clause 14. 119 Moot Scenario, Pg. 8, Clause 14. 120 Dahl v. Nelson, Donkin & Co., (1881) 6 App Cases 38; Helios A/S v. Ekman & Co., [1897] 2 QB 83 at 86. 121 Procter Garrett Marston, Limited v Oakwin Steamship Company Limited, [1926] 1 K.B. 244. Automatic
Tube Company v. Adelaide Steamship (Operations) Ltd. (The "Beltana"), [1967] 1 Lloyd's List L.R. 531;
American Hoesch v. Aubade [1971] 2 Lloyd’s Rep. 423. 122 Automatic Tube Company v. Adelaide Steamship (Operations) Ltd. (The "Beltana"), [1967] 1 Lloyd's List
L.R. 531.
TEAM 13 MEMORANDUM FOR RESPONDENT
21 | P a g e
the cargo is available for collection. Therefore, it is submitted that the cargo was delivered to
the Claimant at 8:42 PM on 29 July 2017 and thus, Respondent is not liable for any damage
caused to the cargo by water.
2. Alternatively, the cargo was delivered to the Claimant at 12:02 AM on 30 July 2017.
44. It is submitted the cargo was delivered to the Claimant at 12:02 AM on 30 July 2017. This is
because the Respondent offloaded the cargo from the ship at this time and left it in the
custody of the Dillamond Port Authority.123 After this, the Claimant was free to collect cargo
by using the access barcode delivered by the Respondent.
45. It has been established that the delivery can be effected without an actual handing over of the
goods into the custody of the consignee, if the consignee fails to take delivery of the goods.124
The divesting or relinquishing of the power to compel any dealing in or with the cargo which
can prevent the consignee from obtaining possession is sufficient to complete delivery.125 In
the instant case, the Respondent completely relinquished the control over the cargo by
delivering the access barcode to the Claimant as the barcode was not negotiable.126 Hence,
the Respondent could not have exercised any control over the cargo after that.
46. Additionally, the Claimant might argue that the shipowner did not provide them reasonable
opportunity to claim delivery of the cargo from the ship and hence, the delivery was not
completed. However, it is submitted that this claim is without any merit. This is because the
Respondent notified Claimant that the ship was on her way in along with its exact distance
from the port via email at 8:58 AM on 29 July 2017.127 Further, the Respondent via their
email at 4:28 PM on 29 July 2017, specifically informed the Claimant that the ship is due to
123 Moot Scenario, Pg. 23. 124 Procter Garrett Marston, Limited v Oakwin Steamship Company Limited, [1926] 1 K.B. 244. Automatic
Tube Company v. Adelaide Steamship (Operations) Ltd. (The "Beltana"), [1967] 1 Lloyd's List L.R. 531;
American Hoesch v. Aubade [1971] 2 Lloyd’s Rep. 423. 125 Great Eastern Shipping Co. Ltd v. Far East Chartering Ltd (The Jag Ravi), [2012] 1 Lloyd’s Rep. 637. 126 Moot Scenario, Pg. 23. 127 Moot Scenario, Pg. 20.
TEAM 13 MEMORANDUM FOR RESPONDENT
22 | P a g e
berth in 30 minutes and that they will wait until midnight before unloading the cargo.128 In
furtherance of this, the Respondent at 8:42 PM, again notified Claimant that the cargo is
available for collection.129 This clearly indicates that the Claimant was provided reasonable
opportunity to claim delivery of the cargo from the ship.
47. In conclusion, it is submitted that the Respondent is not liable to pay any damages for the
damage of cargo by water.
B. In any case, the liability of Respondent is limited as per Art. IV(5) of the Hague Rules
48. The parties have incorporated Clause Paramount in the Charterparty.130 The term ‘Clause
Paramount’ results in the Charterparty being governed by the Hague Rules.131 There has only
been partial incorporation of the Hague Rules, specifically of Art. IV(5).132 Thus, the period
of application of Art. IV(5) of the Rules will be decided as per the Charterparty.133 Under the
Charterparty, the Respondent does not fulfil its obligation until the cargo is delivered to the
Claimant.134 Clause 28 of the Charterparty states that “Owners to have benefit of Article
4(5).”135 The omission of Arts. I & II of the Rules and the failure to attach any qualifiers as to
the applicability of Art. IV(5) shows that the parties intended it to apply to all the obligations
arising under the Charterparty, including delivery. Even if the Tribunal uphelds Claimant’s
contention that the delivery did not occur till 1:55 PM on 31 July 2017, the limitation under
Art. IV(5) will be applicable. As the water damage to the goods occurred before delivery, the
same is limited by the package limitation present in Art. IV(5). In the absence of
128 Moot Scenario, Pg. 22. 129 Moot Scenario, Pg. 24. 130 Moot Scenario, Pg. 8, Clause 28. 131 Nea Agrex S.A. v. Baltic Shipping Co. Ltd (The Agios Lazarus), [1976] Q.B. 933; Yemgas FZCO v.
Superior Pescadores S.A. (Superior Pescadores) [2016] EWCA Civ 101. 132 Moot Scenario, Pg. 8, Clause 28; Browner International Ltd. V. Monarch Shipping Co. Ltd. (The European
Enterprise), [1989] 2 Lloyd’s Rep. 185. 133 Hartford Fire Insurance Co. v. OOCL Bravery, [2000] 1 Lloyd's Rep. 394. 134 Moot Scenario, Pg. 8, Clause 14. 135 Moot Scenario, Pg. 8, Clause 28.
TEAM 13 MEMORANDUM FOR RESPONDENT
23 | P a g e
incorporation of Art. IX of the Hague Rules, the Respondent’s liability is limited to GBP
750,000.
ARGUMENTS ON MERITS OF THE COUNTER CLAIM
49. The Respondent has not addressed the amounts due for the freight, the agency fees at the port
of Dillamond and the cost of repairs for the damages caused to the ship. This is because the
Claimant has not contested the existence of these dues. The rest of the counter claims are
addressed below.
ISSUE V. THE CLAIMANT IS LIABLE TO PAY DEMURRAGE.
50. It is submitted that the Claimant is liable to pay demurrage of USD 100,000 as per the
Charterparty. This is because, first, the ship arrived at the discharge port at 7:00 AM on 29
July 2017. [A] Second, the “fault of the shipowner” defence cannot be claimed.[B]
A. The ship arrived at the discharge port at 7:00 AM on 29 July 2017.
51. It is submitted that the ship is considered to be arrived at the port of Dillamond when the ship
was at 100 nm out from Dillamond where the port instructed her to wait due to non-
availability of berth. This is because the limits of the port must be interpreted in their
commercial sense. The legal limits of a port refer to the commercial area of the port, and not the
geographical or fiscal limits of the port.136 The “commercial area” of the port refers to the area
that ordinary businessmen would refer to, which may be wider than the territorial limits of the
port.137 The test to determine “commercial area” requires inquiry into a set of circumstances
relevant to the voyage, such as freedom from port authorities and control.138
136 Leonis Steamship Co v. Rank, 1908 1 KB 499; The Aello, 1957 1 WLR 1228; E.L. Oldendorff & Co v.
Tradax Exports SA (The Johanna Oldendorff), 1974 AC 479. 137 The Johanna Oldendorff, 1974 AC 479; Polyfreedom, 1974 New York Arbitration; Federal Commerce and
Navigation Co v. Tradax Exports SA (The Maratha Envoy), 1975 2 Lloyds Rep 223. 138 Per Lord Radcliffe, The Aello, 1975 1 WLR 1228; London Arbitration 5/90 – LMLN 274, 5 May 1990.
TEAM 13 MEMORANDUM FOR RESPONDENT
24 | P a g e
52. The test to determine whether a ship is within the commercial area of the port is the Reid Test
as laid down in The Oldendorff.139 As per the Reid test, port discipline and control over
movement of ships is a crucial factor in determining the limits of a port.140 In the instant case,
the direct control over the movement of the ship was exercised by the port authorities at that
location.141 The port authorities instructed the ship to wait there, along with other ships, and
the order was complied with.142 Therefore, the area will be deemed to be with the commercial
limits of the port.143
53. Thus, in the instant case, the permitted laytime of 0.5 WWD will be counted from 7:00 AM
on 29 July 2017 as the ship is considered to have arrived at the port then. The permitted
laytime finished at 7:00 PM on 29 July 2017. Therefore, the Claimant is liable to pay
demurrage of USD 100,000 for delaying the ship for 5 hours.
B. The “Fault of the Shipowner” defence cannot be claimed.
54. A delay will only interrupt laytime if it is due to the fault of the shipowner.144 It is submitted
that the delay in not caused by the fault of the shipowner. In the instant case, the effective
cause of the delay was the congestion at the port after the storm.145 The Claimant has
themselves claimed that they were unable to access the cargo due to this congestion.146 The
Respondent is in no way responsible for this congestion. Claimant did nothing to prevent the
vessel from being continuously available and at Respondent’s disposal for the delivery of the
cargo.147 Therefore, the Respondent cannot claim the fault of the shipowner defence.
139 The Johanna Oldendorff, 1974 AC 479; Sailing Ship Garston & Co v. Hickie, 1885 15 QBD 580. 140 The Johanna Oldendorff, 1974 AC 479; Sailing Ship Garston & Co v. Hickie, 1885 15 QBD 580. 141 Moot Scenario, Pg. 20. 142 Moot Scenario, Pg. 20. 143 Sailing Ship Garston & Co v. Hickie, 1885 15 QBD 580. 144 Budgett & Co. v Binnington & Co. [1891] 1 QB 35, 38 (Lord Esher); Gem Shipping Co of Monrovia v
Babanaft (Lebanon) SARL [1975] 1 Lloyd’s Rep 339 (‘The Fontevivo’), 342 (Donaldson J). 145 Moot Scenario, Pg. 24. 146 Moot Scenario, Pg. 24. 147 Ropner Shipping Co. Ltd v Cleeves Western Valleys Anthracite Collieries Ltd. (1927) 27 Ll L Rep 317, 320
(Sargant LJ); The Fontevivo [1975] 1 Lloyd’s Rep 339, 343 (Donaldson J); Blue Anchor Line Ltd. v Alfred C.
Toepfer International (The Union Amsterdam) [1982] 2 Lloyd’s Rep 432, 436 (Parker J); Ellis Shipping
Corporation v Voest Alpine Intertrading [1991] 2 Lloyd’s Rep 599, 608 (Evans J).
TEAM 13 MEMORANDUM FOR RESPONDENT
25 | P a g e
ISSUE V. CLAIMANT IS LIABLE TO PAY THE AGENCY FEES AT SPECTRE
55. The Claimant has contended that as the payment has arisen from the Respondent’s breach it is
not liable for the same.148 As it has been submitted above, the deviation was justifiable.149
Hence, no breach has been committed by the Respondent. Therefore, it is submitted that the
Claimant is liable to pay the agency fee of the port of the Spectre.
ISSUE VI. CLAIMANT IS LIABLE TO PAY THE AGENCY FEES AT SPECTRE
56. The Claimant has contended that as the payment has arisen from the Respondent’s breach it is
not liable for the same.150 However, it contention is without any merit. As submitted above,
the Respondent had to deliver the cargo using the electronic tag access because the Claimant
failed to take the delivery of the cargo is usual manner.151 Hence, no breach has been
committed by the Respondent. Therefore, it is submitted that the Claimant is liable to pay the
agency fee of the port of the Spectre.
PRAYER FOR RELIEF
In light of the above submissions, the RESPONDENT requests the Tribunal to declare:
1. That it does not have jurisdiction to hear the Claimant’s pleadings;
2. Alternatively, that the Respondent is not liable for any damages;
3. That the Claimant does not hold a maritime equitable lien over the Madam Dragonfly;
4. That the Respondent is liable to pay the amount of the unpaid invoice.
148 Moot Scenario, Pg. 33. 149 Memorandum, Para. 26. 150 Moot Scenario, Pg. 33. 151 Memorandum, Paras. 45-46.