18th annual international maritime law arbitration … · 2021. 2. 3. · 18th a nnual i...

18TH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT, 2017

TEAM NO: 13

MEMORANDUM FOR RESPONDENT

ON BEHALF OF: AGAINST:

INFERNO RESOURCES SDN BHD

and FURNACE TRADING PTE LTD

IDONCARE BERJAYA UTAMA PTY. LTD.

RESPONDENTS CLAIMANTS

COUNSEL

SERAY ELİF CEMRE EDİP BATURAY TOLGA RÜSTEM KAĞAN

KAYA EKİZ YALÇIN ÖZKAN OKTAYKAAN

TEAM 13 | MEMORANDUM FOR RESPONDENT

II

TABLE OF CONTENTS

ABBREVIATIONS ......................................................................................................................... IV

LIST OF AUTHORITIES .............................................................................................................. VI

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

ARGUMENTS ON JURISDICTION............................................................................................... 2

I. FURNACE TRADING PTE LTD v. INFERNO RESOURCES SDN BDH ......................... 2

A. The tribunal has jurisdiction to determine RESPONDENT I’s defence and CLAIMANT’s

pleading ...................................................................................................................................... 2

B. The tribunal does not have jurisdiction or power to grant liberty to CLAIMANT to sell the

cargo ........................................................................................................................................... 4

II. FURNACE TRADING PTE LTD v. IDONCARE BENJAYA UTAMA PTY LTD .......... 5

A. The Tribunal does not have jurisdiction to determine RESPONDENT II’s defence and

CLAIMANT’s pleading for damages arising from the breach of contract under the Voyage

Charterparty ............................................................................................................................... 5

B. Nonetheless RESPONDENT acknowledges jurisdiction of the Tribunal based upon implied

arbitration agreement in compliance with Singapore International Arbitration Act ................. 6

ARGUMENTS ON MERIT .............................................................................................................. 8

I.RESPONDENT I DOES NOT OWE FREIGHT TO CLAIMANT ....................................... 8

A. CLAIMANT unlawfully terminated the Voyage Charterparty, claiming RESPONDENT I is

in repudiatory breach ................................................................................................................. 9

II.RESPONDENT I FULFILLED ITS OBLIGATION TO NOMINATE A VALID

DISCHARGE PORT ..................................................................................................................... 9

A. Busan can be nominated due to congestion on listed ports on Voyage Charterparty ......... 10

B. Busan is a safe port .............................................................................................................. 10

C. Even if Busan nomination is invalid, the Ningbo nomination is a valid nomination.......... 11

III. CLAIMANT IS NOT ENTITLED TO CLAIM DAMAGES FOR DETENTION ......... 12

A. Laytime has not started running because of CLAIMANT’s non-compliance to nominated

discharge port; therefore, it is not entitled to damages for detention ....................................... 12

B. Even if damages for detention can be demanded by RESPONDENT I, it cannot be

calculated by reference to the demurrage rate ......................................................................... 12

IV.CLAIMANT IS NOT ENTITLED TO LIEN OVER CARGO THEREFORE THE

EXERCISE OF LIEN IS VOID AND UNLAWFUL ................................................................ 13

A. CLAIMANT is not a party to the B/L and no charterers bill of lading was issued ............ 13

B. The charterparty incorporated to the B/L can only be the Time Charterparty .................... 14

C. CLAIMANT has no possession over the cargo on board thus is not qualified to lien over the

cargo ......................................................................................................................................... 15

V.CLAIMANT´S ACT OF NOT DISCHARGING THE CARGO ON BOARD IS

UNLAWFUL ................................................................................................................................ 16

VI. CLAIMANT DID NOT EXERCISE A VALID LIEN OVER SUB-FREIGHT TO BE

PAID BY RESPONDENT II ....................................................................................................... 17

A. CLAIMANT has no contractual right to lien on sub-freight .............................................. 17


III

a. No contractual right to lien on sub-freight arises from the Voyage Charterparty .............. 17

b. No contractual right to lien on sub-freight which CLAIMANT can exercise arises from

Time Charterparty .................................................................................................................. 18

B. No equitable assignment has been made by RESPONDENT I to CLAIMANT ................ 19

C. CLAIMANT is not the creditor under the B/L.................................................................... 19

VII. EVEN IF THE TRIBUNAL HAS JURISDICTION TO GRANT LIBERTY TO THE

CALIMANT TO SELL THE CARGO, THE CONDITION OF NECESSITY IS NOT

SATISFIED................................................................................................................................... 20

VIII. COSTS AND EXPENSES RELATED TO SALE OF CARGO ON BOARD AND

EXERCISING LIEN.................................................................................................................... 23

A. Costs of the arbitration and interests on sale of cargo ........................................................ 23

B. Costs and expenses incurred as a result of the exercise of the lien ..................................... 23

REQUEST FOR RELIEF ............................................................................................................... 24


IV

ABBREVIATIONS

B/L The bill of lading no. IMOBL11223344X

dated 4 October 2016

cl. Clause

CLAIMANT Furnace Trading Pte Ltd

Voyage Charterparty

The voyage charterparty between Furnace

Trading Pte Ltd and Inferno Resources Sdn

Bhd

Sub-voyage Charterparty

The voyage charterparty between Inferno

Resources SdnBhd and Idoncare Berjaya

Utama Pty. Ltd.

Disponent Owner Furnace Trading Pte Ltd

FURNACE Furnace Trading Pte Ltd

IAA International Arbitration Act Revised

Edition 2002

IMLAM Imlam Consignorist GmbH

INFERNO Inferno Resources Sdn Bhd

IDONCARE Idoncare Berjaya Utama Pty. Ltd.

Lloyd’s Law Rep. Lloyd’s Law Reports

Master Captain Tan Xiao Ming

NYPE New York Produce Exchange

p. Page

Para. Paragraph

Record 2017 International Maritime Law Arbitration

Moot Scenario

RESPONDENT I Inferno Resources Sdn Bhd

RESPONDENT II Idoncare Berjaya Utama Pty. Ltd.

s. Section

Shipowner Imlam Consignorist GmbH

Time Charterer Furnace Trading Pte Ltd


V

Time Charterparty The time charterparty between CLAIMANT

and Shipowner

The Vessel The M.V. “TARDY TESSA”

USD United States Dollar


VI

LIST OF AUTHORITIES

CASES AND ARBITRAL AWARDS REFERRED TO AT PAGE:

Acre 1127 Ltd (formerly Castle Galleries) v. De Montfort Fine

Art Ltd [2011] EWCA Civ 87 13

Agnew v. Commissioner of Inland Revenue (Re Brumark

Investments Ltd)[2001] U.K.P.C. 28, [2001] 3 W.L.R. 454 17, 18

Aktieselskabet Olivebank v Dansk Fabrik [1919] 2 K.B 162 12

Chitty on Contracts, 31st edn (Sweet & Maxwell, 2012), para.

24.025. 13

Cooper Ewing & Co. v. Hamel &Horley (1923) 13 Ll. L. Rep.

590 13

Dakin v. Oxley [1864] 15 CB (N.S.) 646, per Willes J. at pp.

664-665. 8

D’Oz International Pte Ltd v PSB Corp Ltd [2010] 3 SLR 262 7

Feoso (Singapore) Pte Ltd v Faith Maritime Company

Limited[2003] 3 SLR (R) 556 11, 13

Five Ocean Corporation v Cingler Ship Pte Ltd , [2015] SGHC

311 15, 20, 21

Gary Born, International Commercial Arbitration (Kluwer Law

International, 2nd ed, 2014 2

Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) (HL) [2003] UKHL 12; [2003] 1 Lloyd's Rep 13

Kodros Shipping Corpn v Empresa Cubana de Fletes (No 2) (The

Evia (No 2)) [1983] 1 AC 736 at 756; [1982] 2 Lloyd’s Rep 307

at 314.

10

Molthes Rederi v. Ellerman’s Wilson Line [1926] 26 Lloyd’s

Law Rep. 259 18, 19

Ocean Prime Maritime Ltd Partnership v Qingsao Ocean

Shipping Co [2007] EWHC 2796 (Comm); [2008] 1 Lloyd’s Rep

511.

12

https://www.i-law.com/ilaw/doc/xref.htm?citation_dest=LLR:90


http://library.justis.com/document.aspx?doc=d7jsrUrxA0LxsKjIo4KZm4uZn1WIivLerIOJitXKuJidmWmZi0GdnJmZi1uJnIWIikvNCPnhzPngDP9MBjrMi6atF&relpos=0

http://library.justis.com/document.aspx?doc=d7jsrUrxA0LxsKjIo4KZm4uZn1WIivLerIOJitXKuJidmWmZi0GdnJmZi1uJnIWIikvNCPnhzPngDP9MBjrMi6atF&relpos=0


VII

Ocean Projects Inc v Ultratech Pte Ltd[1994] SGCA 64 (CA) 12

Pacific Recreation Pte Ltd v S Y Technology Inc [2008] 2 SLR

491 7

Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd &Ors

(1993) 43 FCR 439, 444 2

PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA 4

RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another

appeal [2007] 4 SLR(R) 413 (“RDC Concrete”) 9

Reardon Smith Line v. Ministry of Agriculture, Fisheries and

Food, [1962] 1 Q.B. 42 at p. 110

10

Samsun Logix v. Oceantrade [2008] 1 Lloyd’s Law Rep. 450 17

Santiren Shipping Ltd. v. Unimarine S.A. (QB). [1981] 1 Lloyd’s

Rep. 159. p. 15

SIB International S.R.L v Metallgesellschaft Corp (the Noel Bay)

[1989] 1 Lloyd’s Rep. 361 at 366 (CA) 12

Sofial SA v Ove Skou Rederi (the Helle Skou)[1976] 2 Lloyd’s

Rep 205. 12

Somes v. British Empire Shipping Co. (1860) 8 HR Cas. 328 23

Tagart, Beaton & Co v Fisher& Sons [1903] 1KB 391 17

The Annangel Glory [1988] 1 Lloyd’s Rep 45 18

The Attika Hope [1988] 1 Lloyd’s Rep 439 18

The Bulk Chile [2013] 2 Lloyd’s Law Rep. 38 18, 19

The Cebu (No 2)[1990] 2 Lloyd’s Rep 316 18


VIII

The Epic [2000] SGCA 28 14

The Epsilon Rosa [2002] 2 Lloyd´s Rep 701 14

The Garbis [1982] 2 Lloyd´s Rep 283, 287 14

The Hill Harmony [2001] 1 Lloyd’s Rep, p. 147 (HL) 15, 16

The Ikariada [1999] 2 Lloyd´s Rep 365, 372 14

The Mathew [1990] 2 Lloyd’s Law Rep. 323 19

The Nanfri [1979] A.C. 757, 784 9, 17, 18

The San Nicholas [1976] 1 Lloyd´s Rep 8, 12 (CA) 18

The SLS Everest [1981] 2 Lloyd´s Rep 389, 391-92 (CA) 13

The Spiros C [2000] 2 Lloyd’s Law Rep. 319 18, 19

The Ugland Trailer [1985] 2 Lloyd’s Rep. 372 17, 18

The Western Moscow [2012] 2 Lloyd’s Rep 163 18

Unitramp v. Garnac Grain Co. (The Hermine) [1979] 1 Lloyd’s Rep.

212 10

Wehner v Dene Steamship Co [1905] 2 KB 92 18, 19

BOOKS and ARTICLES REFERRED TO AT PAGE:

Arms, W. Ray, The Ignition Temperature of Coal, University of Illinois

Bulletin, Vol. XIX, Bulletin. 128, p. 12-13, 1922. 22

Bowtle, Graeme, Liens on Sub-Hire and Freight, Lloyds Maritime and

Commercial Law Quarterly 18

Baatz et al, Maritime Law (Informa Law, 3rd Ed.,2014) 8




IX

Coglin et al, Time Charters (Informa Law, 7th

Ed., 2014) 17, 18

Cooke et al, Voyage Charters (Informa Law, 4th Ed., 2014) 17

Parr and others, The Spontaneous Combustion of Coal, University of

Illinois, Eng. Exp. Sta., Bulletin. 46, p. 50, 1910. 22

Profiles, Propensity of Coal to Self-Heat, International Energy Agency

Clean Coal Centre, p.1. 22

Stewart C Boyd and others, Scrutton on Charterparties and Bills of

Lading (Sweet and Maxwell, 21st Ed., 2008) 14, 18

Tham, Chee Ho, Notice of Assignment and Discharge by Performance,

Lloyd's Maritime and Commercial Law Quarterly, p.48 19

STATUTES AND CONVENTIONS REFERRED TO AT PAGE:

International Arbitration Act 2, 3, 4, 5, 6, 7

UNCITRAL Model Law on International Commercial Arbitration 2, 3, 6,7

SCMA Rules 3, 23


1

STATEMENT OF FACTS

1. Inferno Resources Sdn Bhd (RESPONDENT I) concluded a voyage charterparty with Furnace

Trading Pte Ltd (CLAIMANT) on 1 September 2016 for carriage of 80,000 mt 10% MOLOO

Australian Steam Coal. Subsequently, concluded a sub-voyage charterparty with Idoncare Berjaya

Utama Pty. Ltd. (RESPONDENT II).

2. The Master issued the B/L dated 4 October 2016 consigned “To order” which on the reverse of the

B/L incorporates all “terms and conditions, liberties and exceptions of “the Charter Party, dated as

overleaf”. The B/L refers on its face to “Freight payable as per charterparty dated” but no

charterparty has been identified.

3. CLAIMANT issued Invoice No. 1002/2016 to Inferno on 4 October 2016 for a sum of

USD771,120.48 due under the Voyage Charterparty on the basis Shang Hai would be the discharge

port.

4. CLAIMANT requested nomination for discharge port from RESPONDENT I, starting from 11

October 2016. RESPONDENT I nominated Busan on 16 October 2016 but CLAIMANT refused

this nomination. On 21 October 2016 Ningbo nomination is made. Within that period,

RESPONDENT I did not pay freight to CLAIMANT and RESPONDENT II did not pay sub-freight

to RESPONDENT I.

5. A lien was exercised by CLAIMANT over the cargo on board and the sub-freights under the

Voyage Charterparty on 20 October 2016. Subsequently the nomination of Ningbo was made on 21

October 2016.

6. CLAIMANT terminated the Voyage Charterparty on 22 October 2016.

7. On 25 November 2016, CLAIMANT sent notice of arbitration to RESPONDENTS and the two

arbitrations were consolidated forthwith into one arbitration proceeding on 1 December 2016.


2

ARGUMENTS ON JURISDICTION

I. FURNACE TRADING PTE LTD v. INFERNO RESOURCES SDN BDH

A. The tribunal has jurisdiction to determine RESPONDENT I’s defence and CLAIMANT’s

pleading

1. According to the doctrine of competence-competence, the Tribunal has power to determine its own

jurisdiction1 with its own interpretation of the arbitration agreement

2 signed between

RESPONDENT I and CLAIMANT in compliance with the applicable law stated in that agreement3.

Both parties agreed on the law of Singapore as the governing law of the Voyage Charterparty, dated

1 September 2016, and any dispute arising out of or in connection therewith.4

2. According to Singapore International Arbitration Act (IAA) Section 5.1, this Act shall apply only to

international arbitration which, pursuant to IAA Section 5.2.a, exists if at least one of the parties to

such arbitration agreement at the time of the conclusion of the agreement has its place of business in

any State other than Singapore. RESPONDENT I’s place of business is in Malaysia and

CLAIMANT’s place of business is in Singapore.5 Therefore, IAA shall apply to this dispute.

3. According to IAA Section 3, UNCITRAL Model Law, with the exception of Chapter VIII related to

recognition and enforcement of award, has the force of law in Singapore. Unless otherwise agreed

by the parties and the arbitral tribunal considers it inappropriate to allow such amendment having

regard to the delay in making it, either party may amend or supplement its claim or defense during

the course of the arbitral proceedings.6 Parties to the Voyage Charterparty did not prohibit the

expansion of claims in regard to Article 23.2 of the Model Law. Thus, RESPONDENT I is entitled

to amend or supplement its claims during the course of the arbitral proceedings.

1 International Arbitration Act (Chapter 143A), s.3; UNCITRAL Model Law on International Commercial Arbitration,

Article 16(1); International Arbitration Act (Chapter 143A), s.16. 2 Record p.23, 25, 32.

3 International Commercial Arbitration; Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd & Ors [1993] 43

FCR 439, 444 (French J). 4 Record p.23.

5 Record p.77.

6 UNCITRAL Model Law on International Commercial Arbitration, Article 23(2).


3

4. The Tribunal shall decide the dispute in accordance with such rules of law as are chosen by the

parties as applicable to the substance of the dispute.7 Any designation of the law or legal system of

a given State shall be construed, unless otherwise expressed, as directly referring to the substantive

law of that State and not to its conflict of laws rules.8 Therefore, clause 29 of Voyage Charterparty

shall be read as referring only to substantive law and not to the conflict of laws rules of Singapore.

5. Parties of Voyage Charterparty entered into an arbitration agreement in the form of an arbitration

clause.9 The exchange of emails containing the fixture recap dated 1 September 2016 between

RESPONDENT I and CLAIMANT10

is within the scope of IAA Section 2A.10 referring the scope

of electronic communication. In addition to that, the written form requirement satisfied is in

accordance with IAA Section 2A.5 with the medium of electronic communication. Therefore, the

arbitration agreement between the parties is a valid one.

6. Place of arbitration is not stated in the fixture recap concluded between CLAIMANT and

RESPONDENT I. According to Singapore Chamber of Maritime Arbitration Rules Rule 22.1,

unless otherwise agreed by the parties, the juridical seat of arbitration shall be Singapore. Where the

seat of the arbitration is Singapore, the law of the arbitration under these Rules shall be Singapore

law. Thus, place of arbitration is Singapore and the law that governs the arbitration procedure is the

law of Singapore including IAA and the Model Law.

7. According to clause 29 of Voyage Charterparty11

the law of Singapore is the governing law and any

dispute arising out of or in connection with Voyage Charterparty shall be referred to arbitration.

Even though parties did not specify the place of arbitration, with agreement on application of

SCMA Rules to procedure of arbitration the place of arbitration is Singapore by default.

8. For the above reasons, it is submitted that the Tribunal has jurisdiction to determine

RESPONDENT I’s defense and CLAIMANT’s pleading.

7 UNCITRAL Model Law on International Commercial Arbitration, Article 28.

8 UNCITRAL Model Law on International Commercial Arbitration, Article 28(1).

9 International Arbitration Act (Chapter 143A), s.2A.

10 Record p.20, 21, 22, 23.

11 Record p.23.


4

B. The tribunal does not have jurisdiction or power to grant liberty to CLAIMANT to sell the

cargo

9. According to Section 2 of IAA, “award” is a decision of the arbitral tribunal on the substance of the

dispute and includes any interim, interlocutory or partial award but excludes any orders or

directions made under s.12 which is related to the powers of the Tribunal on making orders or

giving directions to the Parties.

10. According to Section 12.6 of IAA, all orders or directions made or given by the Tribunal in the

ongoing process of arbitration are subject to the leave of the High Court or a judge in order to be

enforceable in the same manner as if these orders or directions were given by a court.

11. The distinction between “award” in Section 2 of IAA and “orders or directions” made pursuant to

Section 12 of IAA lies in the relation between “substance matter” and “procedure matter”. Orders or

directions itemized in Section 12 of IAA shall be related with procedural matters or protective

injunctions which shall be completely excluded from the extent of the substantive matter and not

have attributes of an award defined under Section 2 of IAA. The substance of an interim measure,

and not the label given to that interim measure by the Tribunal, shall be a determining criterion on

whether such order or direction is an interim measure or not.12

The application of CLAIMANT for

liberty to sell the cargo on board provided by an order with the attribute of irreversibility and

irreparability clearly introduces the nature of such order that is related to the merits. Seeking liberty

to sell the cargo on board by CLAIMANT in this present case, whether the Tribunal labels such

order as interim measure or not, shall be deemed as an award, although interim measure shall not be

prejudgment on substantive matter. Due to the close relation with substantive merits, the order of

liberty to sell the cargo on board shall be given at the end of the arbitral proceedings. Therefore,

such order is not within the scope of Section 12 of IAA and the Tribunal does not have jurisdiction

to order such interim relief.

12

PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA.


5

12. Additionally, even if the Tribunal gave such order with attributes of an award under Section 2 of

IAA providing liberty to sell the cargo, Section 24.b of IAA states that the High Court may set aside

the award of the Tribunal if a breach of rules of natural justice occurs in connection with the making

of the award by which the rights of any party may have been prejudiced. Therefore, ordering such

interim relief with the possibility of being set aside by the High Court or in addition refusing leave

given by High Court, will extend the time needed for arbitral proceeding and cause a breach of the

right to fair trial of RESPONDENT I. Besides ordering such interim relief will be detrimental to

procedural economy.

II. FURNACE TRADING PTE LTD v. IDONCARE BENJAYA UTAMA PTY LTD

A. The Tribunal does not have jurisdiction to determine RESPONDENT II’s defence and

CLAIMANT’s pleading for damages arising from the breach of contract under the Voyage

Charterparty

13. In the notice of arbitration dated 25 November 2016, CLAIMANT claims that clause 29 of Voyage

Charterparty signed between CLAIMANT and RESPONDENT I entitles it to refer such dispute to

arbitration.13

However this arbitration agreement defined in Section 2A of IAA as an agreement by

the parties to submit to arbitration all or certain disputes which have arisen or which may arise

between them in respect of a defined legal relationship was formed by CLAIMANT and

RESPONDENT I; therefore, only those parties are bound by this contract. The arbitration

agreement in the form of an arbitration clause in Voyage Charterparty between those parties shall

be considered enforceable only for the contracting parties and does not put RESPONDENT II in a

legal relationship with CLAIMANT.

14. According to Section 2A.8 of IAA a reference in a bill of lading to a charter party, as present in this

case, shall constitute an arbitration agreement in writing if the reference is such as to make that

clause part of the bill of lading. With consideration that such reference stated in the B/L14

is validly

13

Record p.72. 14

Record p.42.


6

incorporates the arbitration clause15

set forth in Voyage Charterparty, such arbitration agreement

shall be effective only between RESPONDENT II and the carrier, IMLAM. Therefore, where such

arbitration clause is enforceable only between the carrier and RESPONDENT II the incorporation

of arbitration agreement set forth in the overleaf of the B/L shall not be deemed as an arbitration

agreement concluded between CLAIMANT and RESPONDENT II.

15. For the foregoing reasons, the Tribunal does not have jurisdiction to determine RESPONDENT II’s

defence and CLAIMANT’s pleading for damages arising under Voyage Charterparty.

B. Nonetheless RESPONDENT acknowledges jurisdiction of the Tribunal based upon implied

arbitration agreement in compliance with Singapore International Arbitration Act

16. According to Singapore International Arbitration Act (IAA) Section 5.2.a, IAA shall apply only for

international arbitration which exists if at least one of the parties to such arbitration agreement at the

time of the conclusion of the agreement has its place of business in any State other than Singapore.

In accordance with IAA Article 3, UNCITRAL Model Law, with the exception of Chapter VIII

related to recognition and enforcement of awards has the force of law in Singapore. The place of

business of RESPONDENT II is in Australia and the place of business of CLAIMANT is in

Singapore.16

Therefore, IAA and the Model Law shall apply to this dispute.

17. According to IAA Section 2A.6 where in any arbitral or legal proceedings a party asserts the

existence of an arbitration agreement in a pleading, statement of case or any other document in

circumstances in which the assertion calls for a reply and the assertion is not denied, there shall be

deemed to be an effective arbitration agreement as between the parties to the proceedings.

Accordingly, the fact that RESPONDENT II did not challenge the jurisdiction of the Tribunal and

responded to the notice of arbitration sent by CLAIMANT on 25 November 2016 would constitute

the conclusion of an implied arbitration agreement between the parties as per IAA Section 2A.6.

15

Record p.23, 25, 32. 16

Record p.71.


7

Therefore, the Tribunal has the jurisdiction to determine RESPONDENT II’s defense and

CLAIMANT’s pleading.

18. In response to the notice of arbitration, RESPONDENT II’s acknowledgment on jurisdiction of the

Tribunal shall be deemed as an implied arbitration agreement. However, the applicable law was not

specified in the response to notice of arbitration of RESPONDENT II. According to the Model Law

Article 28.2, failing any designation by the parties, the Tribunal shall apply the law determined by

the conflict of laws rules which it considers applicable. Parties of this implied arbitration agreement

did not explicitly choose the governing law for the subject matter. In addition where the applicable

law has to be determined, foreign law is regarded as a fact which needs to be proved under the

common law.17

As a rule of convenience, in the absence of proof of foreign law18

, Singapore law

shall be applied by default.19

RESPONDENT II did not set forth any foreign law that should apply

to this dispute; therefore, the law applicable to the disputes arising between CLAIMANT AND

RESPONDENT II shall be the law of Singapore.

19. In addition to the foregoing, according to the doctrine of competence-competence, the Tribunal has

power to determine its own jurisdiction20

with its own interpretation of the implied arbitration

agreement between RESPONDENT II and CLAIMANT in compliance with the law of Singapore.

20. Finally, according to IAA Section 3, UNCITRAL Model Law, with the exception of Chapter VIII

related to recognition and enforcement of award, has the force of law in Singapore. Unless

otherwise agreed by the parties and the arbitral tribunal considers it inappropriate to allow such

amendment having regard to the delay in making it, either party may amend or supplement his

claim or defence during the course of the arbitral proceedings.21

Parties of the implied arbitration

agreement did not prohibit the expansion of claims in regard to Article 23.2 of the Model Law.

17

Pacific Recreation Pte Ltd v S Y Technology Inc [2008] 2 SLR 491. 18

ibid. 19

D’Oz International Pte Ltd v PSB Corp Ltd [2010] 3 SLR 262. 20

UNCITRAL Model Law on International Commercial Arbitration, Article 16(1); International Arbitration Act

(Chapter 143A), s.16. 21

UNCITRAL Model Law on International Commercial Arbitration, Article 23(2).


8

Thus RESPONDENT II is not bound by the claims set forth either herein or in the response to the

notice of arbitration and reserves the right to amend and supplement its claims.

ARGUMENTS ON MERIT

I.RESPONDENT I DOES NOT OWE FREIGHT TO CLAIMANT

21. RESPONDENT I has the obligation to pay freight according to the Voyage Charterparty22

but in

order for CLAIMANT to earn freight, CLAIMANT must also fulfill its obligations arising from

Voyage Charterparty. If not otherwise agreed, in order to earn freight, owner or disponent owner

must carry the cargo to the destination provided in the charterparty and be ready to deliver it there.23

A distinction must be drawn between the time which freight becomes due and the time it is

payable.24

In the present case only the time of payment of freight is agreed which is within five (5)

banking days after completion of loading and signing/releasing B/Ls, in any case BBB.”25

22. The principle on earning of freight has not been changed by the parties, CLAIMANT nevertheless

has to carry the cargo to the destination provided and ready to deliver it there. CLAIMANT, did not

divert the ship to the port which was nominated by RESPONDENT I, claiming the nomination was

invalid.26

As explained comprehensively below,27

the nomination of discharge port made by

RESPONDENT I is valid. Hence, the failure and unwillingness of CLAIMANT to perform its

obligation to carry to cargo to the destination provided is its own fault and prevents it from earning

the freight contracted for. This also causes its termination of Charterparty to be unlawful given that

RESPONDENT I does not owe any freight and certainly not in breach of Voyage Charterparty. (A)

22

Record p. 22, cl.19 23

Dakin v. Oxley (1864) 15 C.B. (N.S.) 646, per Willes J. at pp. 664-665. 24

Maritime Law, p.165 25

Record p. 22, cl.19 26

Record p. 58. 27

Memorandum for Respondent, para.25-31.


9

A. CLAIMANT unlawfully terminated the Voyage Charterparty, claiming RESPONDENT I

is in repudiatory breach

23. CLAIMANT terminated the Voyage Charterparty unlawfully, claiming RESPONDENT I has failed

to pay freight and is in repudiatory breach of the Voyage Charterparty.28

The contractual terms can

be categorized as; condition terms, warranties and innominate terms.29

One way for a breach to give

right to terminate the charterparty, the guilty party must be in breach of a condition term.30

24. CLAIMANT did not earn freight,31

thus RESPONDENT I is not in breach of Voyage Charterparty.

Even if it did, failure to pay freight cannot be deemed as a breach of a condition term. A condition

term must be understood as, “whether the intention of the parties to the contract was to designate

that term as one that is so important that any breach would entitle the innocent party to terminate

the contract.”. 32

The clause on freight in the Voyage Charterparty is not drafted in such a manner

that if breached, the innocent party would have the right to terminate the Voyage Charterparty, the

term does therefore not allude to a condition. RESPONDENT I consistently provided that it was

willing to perform its obligations under Voyage Charterparty and always has performed, therefore

the termination of CLAIMANT is unlawful.

II.RESPONDENT I FULFILLED ITS OBLIGATION TO NOMINATE A VALID

DISCHARGE PORT

25. Although RESPONDENT I has the obligation to nominate a discharge port which is listed in the

Voyage Charterparty,33

Busan nomination as a discharge port is a valid nomination. Due to

congestion at the listed ports, these ports became unsafe which made the Busan nomination

necessary. It is submitted that (A) Busan is a safe port (B) therefore, RESPONDENT I fulfilled its

obligation to nominate a valid discharge port. Without prejudice to our previous arguments, even if

28

Record p.68. 29

Federal Commerce & Navigation Co Ltd v Molena Alpha Inc (The Nanfri) [1979] A.C. 757 30

RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appeal [2007] 4 SLR(R) 413 (“RDC Concrete”), 31

Memorandum for Respondent, para.22. 32

RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appeal [2007] 4 SLR(R) 413 (“RDC Concrete”) 33

Record p.22.


10

Busan cannot be considered as a valid nomination, in any case the nomination of Ningbo as the

discharge port is valid and on time. (C)

A. Busan can be nominated due to congestion on listed ports on Voyage Charterparty

26. The safe port warranty is expressly stated in Voyage Charterparty.34

Although RESPONDENT I is

under the obligation to nominate one of the ports listed in cl.16 of the Voyage Charterparty as a

discharge port,35

if these ports become unsafe for any reason before nomination, RESPONDENT I

has to nominate a safe port.36

Even though congestion does not in principle render a port unsafe, if it

would frustrate the object of the charter, then the port will be considered as such.37

The present case

is an example illustrating such exception. CLAIMANT persistently demanded RESPONDENT I to

nominate a discharge port,38

therefore it was obvious from the correspondence with CLAIMANT

that any delay in the course of the voyage would not be tolerated by them. Congestions at Chinese

ports would be likely to delay the discharge of the goods considerably. Therefore, RESPONDENT I

had to nominate a port other than listed ones.

27. Congestion was of the nature to frustrate the object of the Voyage Charterparty. Thus, in the present

case, congestion makes the Chinese ports unsafe, which means that Busan can be nominated as a

discharge port.

B. Busan is a safe port

28. The safe port warranty is expressly stated in Voyage Charterparty.39

Busan is a safe port, thus,

CLAIMANT’s refusal of Busan port due to its not being safe is unlawful. The promise of

nominating a port that is safe means that the port shall prospectively be safe when the ship will be

using the port to discharge the goods; the port does not have to be safe at the time when the

34

Record p. 22. 35

Record p. 22. 36

Reardon Smith Line v. Ministry of Agriculture, Fisheries and Food, [1962] 1 Q.B. 42 at p. 110, “Even where the

charterer and owner have agreed on all the ports from which the charterer is to make his choice, the charterer is

nevertheless obliged to nominate a port which it is possible for the ship to reach.” 37

Unitramp v. Garnac Grain Co. (The Hermine) [1979] 1 Lloyd’s Rep. 212 38

Record p. 50-67. 39

Record p. 22.



11

nomination is made.40

The request to nominate Busan was made on 16 October 201641

and it was

refused by CLAIMANT due to the zombies arriving to Busan. On 17 October 2016,

RESPONDENT I repeated this request and by that time the Korean military had already secured the

area.42

The port would have therefore been a safe port when the ship had arrived and used it.

Additionally, it was provided that the zombies were travelling to Busan from on a train, therefore it

was in any case not certain that they could ever make their way to the port area. Therefore,

CLAIMANT’s refusal of Busan as the discharge port is unlawful.

C. Even if Busan nomination is invalid, the Ningbo nomination is a valid nomination

29. Without prejudice to our previous arguments, even if RESPONDENT I cannot nominate Busan as

the discharge port, on 21 October 2016 RESPONDENT I made the nomination of Ningbo which is

a port listed in the Voyage Charterparty.43

CLAIMANT sent an e-mail to RESPONDENT I, for

giving time to RESPONDENT I to nominate a valid discharge port and that if not its renunciation

of the charterparty would be accepted.44

30. This e-mail does not have any legal consequences, since there is no termination clause under the

Voyage Charterparty to determine the scope of termination. It is a unilateral declaration of

CLAIMANT’s intention. Therefore, the nomination of Ningbo would be a valid nomination.

31. Additionally, this nomination has been made on time, since RESPONDENT I is obliged to

nominate a discharge port when vessel passes Singapore for bunkering.45

As far as it is known, the

Vessel is drifting outside the port limits of Singapore and did not pass Singapore yet.46

40

Kodros Shipping Corpn v Empresa Cubana de Fletes (No 2) (The Evia (No 2)) [1983] 1 AC 736 at 756; [1982] 2

Lloyd’s Rep 307 at 314. 41

Record p.59. 42

Record p.61. 43

Record p.22. 44

Record p.64 45

Record p.21. 46

Record p.50-67


12

III. CLAIMANT IS NOT ENTITLED TO CLAIM DAMAGES FOR DETENTION

A. Laytime has not started running because of CLAIMANT’s non-compliance to nominated

discharge port; therefore, it is not entitled to damages for detention

32. In order for laytime to start, the ship must be an arrived ship47

and the notice of readiness must be

tendered. The statements of notice of readiness must be accurate and contain that the ship is arrived

and ready to discharge, unless otherwise is accepted by the charterers48

or their agents.49

In the

present case, these conditions were not fulfilled by CLAIMANT, because it did not divert the

Vessel to the nominated port, claiming it is an invalid nomination.50

33. A claim for detention will arise if the charterer’s breach causes delay of the voyage.51

In the present

case, RESPONDENT I is not in breach of the Voyage Charterparty because it fulfilled its obligation

to nominate a valid discharge port.52

Therefore, damages for detention cannot be demanded by

CLAIMANT.

B. Even if damages for detention can be demanded by RESPONDENT I, it cannot be

calculated by reference to the demurrage rate

34. Without prejudice to our previous arguments, if RESPONDENT I is entitled to claim damages for

detention, demurrage rate stated in Voyage Charterparty,53

cannot be applied for calculation of

damages for detention. If there is an alternative evidence of the earning capacity of the ship,

demurrage rate would not be applied for damages for detention.54

CLAIMANT sent itinerary to

RESPONDENT I starting from 10 October 2016 to 21 October 2016 which demonstrates its actual

47

Feoso (Singapore) Pte Ltd v Faith Maritime Company Limited [2003] 3 SLR (R) 556, “For a vessel to be an “arrived

ship”, not only must the vessel have arrived at the destination specified in the head charter, she must be both physically

and legally ready to discharge her cargo.” 48

Sofial SA v Ove Skou Rederi (the Helle Skou)[1976] 2 Lloyd’s Rep 205. 49

Ocean Prime Maritime Ltd Partnership v Qingsao Ocean Shipping Co [2007] EWHC 2796 (Comm); [2008] 1

Lloyd’s Rep 511. 50

Memorandum for Respondent, para. 25-31. 51

Aktieselskabet Olivebank v Dansk Fabrik [1919] 2 K.B 162. 52

Memorandum for Respondent. Para.25-31. 53

Record 22. Demurrage rate: 140k PDPR/HDWTS. 54

SIB International S.R.L v Metallgesellschaft Corp (the Noel Bay) [1989] 1 Lloyd’s Rep. 361 at 366 (CA).


13

damages in the amount of USD101,666.67.55

There is an evidence which shows CLAIMANT’s

actual damages, thus demurrage rate is inapplicable.

35. Additionally, this calculation of damages cannot be accepted either, since the nomination of Busan

as the discharge port is valid. The damages must be calculated starting from the date which the

nomination should have been made, until the date which the valid nomination is actually made.

Since the valid nomination is made on 16 October 2016, only USD51,666.67 can be demanded.

36. Furthermore, a claim for damages might be reduced to a nominal award, if CLAIMANT was

unwilling to perform its own obligations.56

In the present case, CLAIMANT terminated the

charterparty, while RESPONDENT I was willing to perform its obligations.57

CLAIMANT did not

discharge the cargo at the nominated port and was not in cooperation with RESPONDENT I. Even

though RESPONDENT I was always willing to perform and ready compensate any extra costs

which could arise from the Busan nomination,58

CLAIMANT chose to terminate the Voyage

Charterparty. Even if CLAIMANT is entitled to damages for detention, it must be reduced to a

nominal award.

IV.CLAIMANT IS NOT ENTITLED TO LIEN OVER CARGO THEREFORE THE

EXERCISE OF LIEN IS VOID AND UNLAWFUL

A. CLAIMANT is not a party to the B/L and no charterers bill of lading was issued

37. CLAIMANT is the disponent owner who has no right under the B/L since the B/L was issued on

behalf of the Shipowner to constitute a contract of carriage between RESPONDENT II and

“IMLAM”59

.

38. Both the Voyage Charterparty60

and the Time Charterparty61

have no clause giving the Master a

right to issue bill of lading on behalf of CLAIMANT and no charterers’ bill of lading was issued to

55

Record p.50-67. 56

Acre 1127 Ltd (formerly Castle Galleries) v. De Montfort Fine Art Ltd [2011] EWCA Civ 87, extending Cooper

Ewing & Co. v. Hamel & Horley (1923) 13 Ll. L. Rep. 590; Chitty on Contracts, para. 24.025. 57

Record p.70. 58

Record p.58. 59

Feoso (Singapore) Pte Ltd v Faith Maritime Co Ltd, [2003] SGCA 34, p. 41, The SLS Everest [1981] 2 Lloyd´s Rep

389, 391-92 (CA). p.3.


14

make CLAIMANT the contractual carrier. The logo or banner and the signature of the Master62

at

the foot of the B/L63

demonstrate Shipowner as the contractual carrier. Furthermore, even if the

fixture recap concluded between CLAIMANT and RESPONDENT I constitutes a written term

which modifies the COAL OREVOY Voyage Charterparty, it is only binding for the parties of that

charterparty and cannot be enforced as against RESPONDENT II. 64

First, the charterparty

incorporated to the B/L is the Time Charterparty. Even if for a moment it can be argued that the

Voyage Charterparty is incorporated, the fixture recap cl. 2665

giving the CLAIMANT a right to

allow Master to sign and issue B/L’s on behalf of disponent owners would not change the terms of

the standard form charterparty. Otherwise, an unknown material to the shipper would have been

intended to be incorporated to a document highly transferrable such as bill of lading and this would

be incompatible with the commercial life.66

B. The charterparty incorporated to the B/L can only be the Time Charterparty

39. The B/L refers under special instructions as the “freight payable as per Charterparty dated” but no

charterparty has been identified67

. The B/L as a contract of carriage must give Shipowner a right to

exercise lien by incorporating a lien clause either expressly or by reference into the contract68

. Since

the charterparty dated left blank on the B/L69

, it can only be the Time Charterparty which the

Shipowner party to it.70

40. Time Charterparty is hierearchly at the top of the charterparty chain, and the Voyage Charterparty is

unknown to both RESPONDENT II and the master of the vessel. If the Voyage Charterparty was

60

Record, p.32 cl.19. 61

Record, p.10, cl.23. 62

ICC Uniform Customs and Practice for Documentary Credits (UCP 600), cl.20; Homburg Houtimport BV v Agrosin

Private Ltd (The Starsin) (HL) [2003] UKHL 12; [2003] 1 Lloyd's Rep. 63

Record p.41. 64

The Epsilon Rosa [2002] 2 Lloyd´s Rep 701. 65

Record p.22. 66

The Epsilon Rosa [2002] 2 Lloyd´s Rep 701. 67

Record p.41. 68

Ocean Projects Inc v Ultratech Pte Ltd [1994] SGCA 64 (CA); The “Epic”, [2000] SGCA 28 69

English courts reluctant to hold that the incorporation is void. Scrutton, A38/3, p.72; The Garbis [1982] 2 Lloyd´s

Rep 283, 287; The Ikariada [1999] 2 Lloyd´s Rep 365, 372; The San Nicholas [1976] 1 Lloyd´s Rep 8, 12 (CA); The

SLS Everest [1981] 2 Lloyd´s Rep 389, 391-92. 70

The San Nicholas [1976] 1 Lloyd´s Rep 8.


15

known to parties the Master of would issue a bill of lading referred under cl.25 Voyage

Charterpary.71

Because, the cl 25 of the standard form Voyage Charterparty clearly stated that

“Bills of Lading shall be presented and signed by the Master as per the “Coal-Orevoybill” Bill of

Lading form, always in accordance with Mate´s Receipts and without prejudice to this

charterparty…” the bill of lading issued must be a COAL–OREVOYBILL and the master could

reject other forms of bill of lading and CLAIMANT would allege that the charterparty incorporated

is the Voyage Charterparty. However, the choice of Shipowners B/L was done willingly as to

evidence the Time Charterparty is incorporated.

41. Parties’ intention was to incorporate a charterparty to the B/L known to them which means that

CLAIMANT is not party to the B/L and the Shipowner is not in need to use his rights arising from

the B/L. Furthermore, as CALAIMANT is the disponent owner, the issue of incorporation does not

change the fact that CLAIMANT is not entitled to enjoy any rights under the B/L.

C. CLAIMANT has no possession over the cargo on board thus is not qualified to lien over

the cargo

42. Both the contractual carrier and the actual carrier is the Shipowner, meaning CLAIMANT has no

possession over the cargo on board thus have no right to lien. The lien on cargo is 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 he is owed”. 72

The decision of not discharging the

cargo until the sums owed to one in possession of that cargo is a special remedy in maritime law.

CLAIMANT -as the Time Charterer- does not have the possession of the cargo. In addition, the

physical carrier is also not entitled to lien over cargo since RESPONDENT II does not owe any

sums due under any contractual relationship to the Shipowner. Therefore, the lien exercised on the

cargo on board was void and the detention of the cargo is unlawful.

71

Record p.32. 72

Santiren Shipping Ltd. v. Unimarine S.A. (The "Chrysovalandou Dyo"), (QB). [1981] 1 Lloyd’s Rep. 159. p.

7; Five Ocean Corporation v Cingler Ship Pte Ltd , [2015] SGHC 311, p.22; as “A contractual lien is in the nature of

security and may be defined as a right to retain possession of goods or documents belonging to another until all claims

against that other are satisfied”.


16

V.CLAIMANT´S ACT OF NOT DISCHARGING THE CARGO ON BOARD IS

UNLAWFUL

43. CLAIMANT as the Time Charterer has the right to employ and direct the Master as long as it

fulfills its obligations to the Shipowner.73

However, the decision of not discharging the cargo on

board is not related to the employment but the navigation of the vessel. 74

In the case of The Hill

Harmony75

, House of Lords held that charterers’ right to use the vessel “cannot encroach on

matters falling within the specialised professional maritime expertise of the master, particularly

where safety or security of the vessel, her crew and cargo are involved”.

44. The e-mail sent by the master to the shipowner reveals that the ship has been kept adrift in open

seas, the crew is in need of help and the cargo shows signs of overheating that the cargo may self-

ignite and explode.76

In this case the discharge of the cargo is necessary due to the condition of the

crew and the cargo at the moment. Since the decision of not to discharge is a concern of seamanship

it should be categorized as an order that relate to navigation which does not fall under the rights of

the CLAIMANT.77

45. Furthermore, the right to employ the vessel does not give CLAIMANT the right to detain the cargo

belonging to a third party other than his debtor RESPONDENT I. Even if there was a late

nomination of discharge port, it would only be a breach of contract between the RESPONDENTS.

But for freight owed to CLAIMANT by RESPONDENT I does not give CLAIMANT a right to

detain the cargo belonging to a third party, the RESPONDENT II. Rather than using carriers’ rights

under the B/L, other charterparty obligations are only binding for those parties to that charter party.

Due to the Shipowner´s and CLAIMANT´S unlawful detention of the cargo on board the

RESPONDENTS damages should be indemnified.

73

Record p.3. 74

The Hill Harmony [2001] 1 Lloyd’s Rep, p. 147 (HL). 75

ibid. 76

Record p.37. 77

The Hill Harmony [2001] 1 Lloyd’s Rep, p. 147 (HL).


17

VI. CLAIMANT DID NOT EXERCISE A VALID LIEN OVER SUB-FREIGHT TO BE

PAID BY RESPONDENT II

46. CLAIMANT alleges that a lien on sub-freight has been exercised on 20 October 2016 by a notice of

lien on sub-freight78

and that the dispute arises from the Voyage Charterparty.79

However, the

alleged lien exercised on sub-freight was not lawful.

A. CLAIMANT has no contractual right to lien on sub-freight

47. Even though the juridical nature of lien on sub-freight is debatable,80

it is accepted that the right to

lien on sub-freights only exists if the charterparty explicitly grants a right to lien on sub-freights.81

However, CLAIMANT does not have a right to lien on sub-freights neither under the Voyage

Charterparty (a), nor under the Time Charterparty incorporated to the B/L (b).

a. No contractual right to lien on sub-freight arises from the Voyage Charterparty

48. CLAIMANT bases its alleged right to lien on sub-freight on the Voyage Charterparty, both in the

notice sent on 20 October 201682

and in the Notice of Arbitration.83

However, CLAIMANT has no

right under the Voyage Charterparty to lien on sub-freight, and in any case RESPONDENT II is not

bound by the Voyage Charterparty.

49. The lien clause under the Voyage Charterparty, gives right to lien only on cargo84

and not on sub-

freight. Given that the clause does not expressly give that right, no right to lien on sub-freight arises

from the Voyage Charterparty.

78

Record p.66. 79

Record p.73. 80

Agnew v. Commissioner of Inland Revenue (Re Brumark Investments Ltd) [2001] U.K.P.C. 28, [2001] 3 W.L.R. 454;

The Ugland Trailer [1985] 2 Lloyd’s Rep. 372; The Nanfri [1979] A.C. 757, 784; Tagart, Beaton & Co v Fisher& Sons

[1903] 1KB 391; Time Charters 30.32. 81

Samsun Logix v. Oceantrade [2008] 1 Lloyd’s Law Rep. 450.; Agnew v. Commissioner of Inland Revenue (Re

Brumark Investments Ltd) [2001] U.K.P.C. 28, [2001] 3 W.L.R. 454; The Ugland Trailer [1985] 2 Lloyd’s Rep. 37;

Time Charters 30.16; Voyage Charters 17A.16. 82

Record p.66. 83

Record p.74. 84

Record p.31 “(a)The owners shall have a lien on the cargo for freight, deadfreight, demurrage and general average

contribution due to them under this Charter Party. (b)The Charterers shall remain responsible for deadfreight and

demurrage, incurred at port of loading and for freight and demurrage incurred at port of discharge.”


18

50. Even if Voyage Charterparty were to give CLAIMANT a right to lien on sub-freight,

RESPONDENT II is not a party to the Voyage Charterparty, and the Voyage Charterparty was not

incorporated to the B/L,85

thus, RESPONDENT II is not bound by its clauses in any regard.86

b. No contractual right to lien on sub-freight which CLAIMANT can exercise arises from

Time Charterparty

51. As comprehensively explained above87

, the Time Charterparty dated 15 February 2016 was

incorporated into the B/L. Although there exists a right to lien on sub-freight in the Time

Charterparty, CLAIMANT cannot exercise that right to lien because the clause in the Time

Charterparty gives that right only to the Shipowner and not to CLAIMANT88

.

52. The lien clause in the NYPE Time Charterparty gives right to a shipowner to exercise a lien on sub-

freight in cases where the time charterer fails to make hire payment89

and can be exercised only in

respect of hire already accrued due at the time the sub-freights are liened.90

However in the present

case, all hire payment due under the Time Charterparty has been paid by CLAIMANT.91

Furthermore, although it is accepted that a lien on sub-sub-freight may be exercised based on that

clause, in order to do that back-to-back clauses must exist in the other charterparties in the

charterparty chain.92

Yet, there exists no such clause giving any right to lien on sub-freight in the

Voyage Charterparty.93

The party which could use the right under the lien clause and exercise a lien

on sub-freight could only be the Shipowner. Even if the Shipowner tried to exercise its right to lien

85


Memorandum for Respondent, para. 38. 87


Record p.10 “Liens The Owners shall have a lien upon all cargoes, sub-hires and sub-freights (including deadfreight

and demurrage) belonging or due to the Charterers or any sub-charterers, for any amounts due under this Charter

Party, including general average contributions...The Owners shall also have a lien over any bunkers on board the

Vessel, as well as over any sum due and/or payable to the Charterers under any sub-charter parties.” 89

Agnew v. Commissioner of Inland Revenue (Re Brumark Investments Ltd) [2001] U.K.P.C. 28, [2001] 3 W.L.R. 454;

Molthes Rederi v. Ellerman’s Wilson Line [1926] 26 Lloyd’s Law Rep. 259; Wehner v Dene Steamship Co [1905] 2 KB

92; The Ugland Trailer [1985] 2 Lloyd’s Rep. 372; The Nanfri [1979] A.C. 757, 784; The Western Moscow [2012] 2

Lloyd’s Rep 163.; The Bulk Chile [2013] 2 Lloyd’s Law Rep. 38; Time Charters 30.38; Scrutton on Charterparties

16.014. 90

ibid. 91

Record p.34,36,38. 92

The Cebu (No 2) [1990] 2 Lloyd’s Rep 316.; The Western Moscow [2012] 2 Lloyd’s Rep 163.; Time Charters 30.11-

30.46. 93

Memorandum for Respondent, para. 48-50.


19

on sub-freight, it could not do so because it has received the hire payment and back-to-back clauses

on lien on sub-freight did not exist in the charterparty chain, let alone CLAIMANT exercising a lien

on sub-freight.

B. No equitable assignment has been made by RESPONDENT I to CLAIMANT

53. The most commonly accepted theory as to the juridical nature of a lien on sub-freight is that it is

exercised by way of equitable assignment.94

It is accepted that the lien clause in the charterparties

creates this equitable assignment.95

In the present case the lien clause in the Voyage Charterparty

concluded between RESPONDENT I and CLAIMANT does not make CLAIMANT

RESPONDENT I’s assignee since it does not include the right to lien on sub-freights.96

Even if it

were to be assumed that an equitable assignment for sub-freights could be done in another way, the

assignor should make it clear that it assigns the debt immediately and irrevocably to the assignee.97

However, in the present case, there are no such statements of RESPONDENT which could serve as

an assignment.

C. CLAIMANT is not the creditor under the B/L

54. If CLAIMANT were the contractual carrier under the B/L, it would be the party which the freight

payment would be made.98

However, Shipowner clearly is the carrier under the B/L99

, therefore the

B/L is an owner’s bill. In owner’s bills, the creditor for freight payment is the owner.100

So, only the

Shipowner could intercept the B/L freight,101

but it did not. When an owner’s bill is prepared, the

charterer cannot exercise the rights under the B/L since it does not have any such rights.102

94

The Western Moscow [2012] 2 Lloyd’s Rep 163.; The Bulk Chile [2013] 2 Lloyd’s Law Rep. 38; The Cebu; The

Ugland Trailer [1985] 2 Lloyd’s Rep. 372; The Cebu [1983] 1 Lloyd’s Rep 302; The Annangel Glory [1988] 1 Lloyd’s

Rep 45; The Attika Hope [1988] 1 Lloyd’s Rep 439; The Spiros C [2000] 2 Lloyd’s Law Rep. 319.; Lien on Sub-hire

and Freight. 95

ibid. 96

Memorandum for Respondent para. 48-50 97

Notice of Assignment and Discharge by Performance, p.48. 98

The Bulk Chile [2013] 2 Lloyd’s Law Rep. 38; Wehner v Dene Steamship Co [1905] 2 KB 92. 99

Memorandum for Respondent para. 38,42. 100

Wehner v Dene Steamship Co [1905] 2 KB 92; Molthes Rederi v. Ellerman’s Wilson Line [1926] 26 Lloyd’s Law

Rep. 259; The Bulk Chile [2013] 2 Lloyd’s Law Rep. 38; The Spiros C [2000] 2 Lloyd’s Law Rep. 319. 101

The Bulk Chile [2013] 2 Lloyd’s Law Rep. 38; Wehner v Dene Steamship Co [1905] 2 KB. 102

The Bulk Chile [2013] 2 Lloyd’s Law Rep. 38.


20

55. If for just a second it were to be accepted that “freight payable as per charterparty” referred to the

Voyage Charterparty, CLAIMANT could not by itself claim the freight.103

Because, the creditor

under the B/L would still be the Shipowner.104

CLAIMANT would only be a party assigned by the

Shipowner for the payment to be made, but this would not render CLAIMANT the creditor105

. The

shipowner may choose to intercept freight for the benefit of the charterer, yet it does not have to.106

Therefore, CLAIMANT cannot act by itself to claim for the freight to be paid under the B/L and

Shipowner did not act for the benefit of CLAIMANT to intercept freight either.

56. Furthermore, the account details of CLAIMANT are given in the fixture recap, and fixture recap

does not bind a party which is not aware of it107

. Consequently, CLAIMANT’s account details are

not incorporated to the B/L and do not bind RESPONDENT II even in the case where the Voyage

Charterparty is assumed to be incorporated.

VII. EVEN IF THE TRIBUNAL HAS JURISDICTION TO GRANT LIBERTY TO THE

CALIMANT TO SELL THE CARGO, THE CONDITION OF NECESSITY IS NOT

SATISFIED

57. Even if Chinese coal market has been falling in line with electricity prices since Spring 2011 recent

prices have risen 9.85% between the dates 4 October 2016 and 30 November 2016 according to the

benchmark Newcastle NSW Australia price which serves the Asia/Pac coal market.108

On the other

hand the global trend is descending at the moment; moreover, the value of the cargo might be

displayed descending with an updated version of the benchmark in question according to Parties’

Joint Expert Report dated 3 December 2016. However, as the Joint Expert Report provides, the

value of the cargo in question may not have been greatly affected by the global trend of descent.109

Moreover, RESPONDENT’s arguments are based on more local and recent market value of

103

The Mathew [1990] 2 Lloyd’s Law Rep. 323. 104

Wehner v Dene Steamship Co [1905] 2 KB 92; Molthes Rederi v. Ellerman’s Wilson Line [1926] 26 Lloyd’s Law

Rep. 259; The Bulk Chile [2013] 2 Lloyd’s Law Rep. 38; The Spiros C [2000] 2 Lloyd’s Law Rep. 319. 105

ibid. 106

The Mathew [1990] 2 Lloyd’s Law Rep. 323. 107

Memorandum for Respondent para. 38,56 108

Record p.100. 109

Record p.100.


21

Australian steam coal. According to the joint expert report Mr. Coalman states that “My

methodology is simple and grounded in coal trading common practice”110

; therefore, the Tribunal

should only consider Mr. Coalman’s, who used ‘Coals “R” Us’ explicitly representing ascending

price of the coal from USD52,80 to USD58,00, marketing data. Therefore the descending price of

the cargo on board shall not be deemed as a drastic fall in the price and shall not indicate the

urgency of sale of the cargo on board.111

58. Additionally, the granting of liberty to sell the cargo on board by the Tribunal to CLAIMANT

would give rise to irreversible and irreparable results. Therefore, even though by ordering an

interim measure the Tribunal should not prejudge a decision on the subject matter, granting of

liberty to sell the cargo on board will be prejudgment on substantive matter that is against

RESPONDENT I’s interests. It has been provided that the unpaid freight corresponds to

USD771,120.48.112

Also it is known to the parties that additional costs such as daily hire bunker

costs amount to approximately USD100,000. In brief, the lien over sub-freight was allegedly

exercised for the benefit of CLAIMANT’s demand that amounts to nearly USD870,000.

Additionally, Mr. Coalman calculated the coal price in consideration of the current market

conditions, chemical compound of coal and other scientific standards. In the final analysis, the

expert declares that the cargo value is USD3,180,241.97 regarding best case scenario or

USD2,527,561.56 regarding distressed cargo discount value of cargo. In either case,

RESPONDENT underlines that there is a crucial disproportionate gap between unpaid freight and

the value of the cargo. After the sale of cargo, even though CLAIMANT satisfies its loss and

damage, the remaining amount is excessive which could lead to irreparable commercial results.

RESPONDENT was deprived of a great amount of capital during this period of time thus

RESPONDENT’s business will be severely and irreversibly influenced. This consequence is

absolutely unfair and unacceptable in terms of the rule of convenience. It is foreseeable that the

110

Record p.100. 111

Five Ocean v Cingler Ship [2015] SGHC 311. 112

Record p.49.


22

sales of cargo’s outcome results become irrecoverable commercial loss at the expense of

RESPONDENT. Therefore, the tribunal should not grant liberty to the sale of cargo on board and

oversees proportionate, fair protection on behalf of both parties.

59. In such event where available and alternative remedial response, that provides CLAIMANT’s

interests enough and reasonable security, is present, ordering interim relief as liberty to sell the

cargo shall not be equitable. Unlike in Five Ocean v Cingler Ship [2015] SGHC 311case where no

reasonably available alternative is considered as a criterion of necessity for sale cargo, in this

current case by ordering a interim relief as trustee assignment by the Tribunal, that provides

CLAIMANT reasonable alternative to its demand of liberty to sell the cargo and enough assurance

by deposit of the cargo to a designated terminal determined by the Tribunal, shall be considered as

reasonably alternative remedial response.

60. In addition, the cargo was qualified as Australian Anthracite in fixture recap.113

However, at the end

of the joint expert’s investigation the cargo is labeled as a Sub-bituminous coal.114

Even though

Anthracite is less self-ignite compared to Sub-bituminous coal,115

RESPONDENT I would like to

put emphasis on scientific research which observed that storage of coal in piles takes on a real

significance with regard to the ignition temperature.116

According to Professor S.W. Parr and

others117

, coal is actually burning at all times and even at low temperatures. If heat thus produced is

sufficiently confined and air is supplied to the coal at the proper rate, the rate of combustion also

rises and after the process goes on quite rapidly until burning or flame results.118

All in all,

qualification of coal is not significant to some extent in the context of explosion of the cargo.

Moreover, the scientific research shows that there are numerous factors influence the coal’s

ignition, actually the qualification is not primary source of ignition. To summarize, whether the

cargo is qualified as an anthracite or sub bituminous, CLAIMANT is obliged to mitigate the loss.

113

Record p.21. Fixture Recap cl.13. 114

Record p. 99. 115

Propensity of coal to self-heat, International Energy Agency Clean Coal Centre, Profiles, p.1. 116

The Ignition Temperature of Coal. 117

The Spontaneous Combustion of Coal. 118

The Ignition Temperature of Coal.


23

RESPONDENT deems that CLAIMANT fails to perform its duty to properly make the vessel

seaworthy for coal transportation at the beginning of the voyage.119

CLAIMANT disregards

specialties of the cargo, monsoon season and competence of his crew. In a nutshell, CLAIMANT

did not fulfill requirements of cautious and provident merchant seaman, thus RESPONDENT is not

liable to CLAIMANT’s own fault.

VIII. COSTS AND EXPENSES RELATED TO SALE OF CARGO ON BOARD AND

EXERCISING LIEN

A. Costs of the arbitration and interests on sale of cargo

61. Although an arbitral tribunal has power to make an award or order of costs of the proceedings,

including the arbitral proceedings against any party, RESPONDENT 1 denies that is liable to

Furnace in contract and/or in tort for any claims for damages, losses, interests and costs due to

CLAIMANT is not entitled to any remedy or relief as claimed.120

62. Even though RESPONDENT II disagrees that the dispute arises out of or in connection with the

Voyage Charterparty, RESPONDENT II had consented to having dealt with by SCMA rules which

declares that the Tribunal has power to order in its award that all or part of the legal or other costs

of one party shall be paid by the other party.121

However, RESPONDENT 2 denies that is liable to

CLAIMANT for freight, thus the CLAIMANT is not entitled to any remedy or relief including

claims for damages, losses, interests and costs.

B. Costs and expenses incurred as a result of the exercise of the lien

63. RESPONDENT 1-2 refuse to pay costs and expenses incurred as a result of the exercise of the lien

due to CLAIMANT is not entitled to sell the cargo on board. Moreover, CLAIMANT might

exercise a lien on the cargo to force RESPONDENT 1-2 to pay, but CLAIMANT is not entitled to

119

Record p. 26. 120

International Arbitration Act, Chapter 143A, article 10,7. 121

Singapore Chamber of Maritime Arbitration Rules, rule 41.3.


24

charge its charterers for the costs of exercising the lien pursuant to a long established practice

constituted by the House of Lord.122

REQUEST FOR RELIEF

For the reasons set out above, RESPONDENT I and RESPONDENT II requests the Tribunal to:

a) award that Tribunal has jurisdiction to hear RESPONDENTs’ defends on damages arising from

the breach of the contract and sale of cargo;

b) declare that CLAIMANT is not entitled to freight/sub-freight;

c) declare that CLAIMANT is not entitled to exercise lien on cargo or sub-freight, and the exercise

of the lien over cargo and sub-freight is unlawful;

d) declare that CLAIMANT is not entitled to all costs, claims, damages, losses and expenses

incurred as a result of their lien;

e) declare that CLAIMANT is not entitled to interest and cost on such amount and at such rate and

for such period as the Arbitral Tribunal deems fit;

f) declare that CLAIMANT is not entitled to damages for detention and further damages which

continue to accrue on a daily basis;

f) award further or other relief as the Tribunal considers fit.

122

Somes v. British Empire Shipping Co. (1860) 8 HR Cas. 328.

18th annual international maritime law arbitration … · 2021. 2. 3. · 18th a nnual i...

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