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EIGHTEENTH ANNUAL

INTERNATIONAL MARITIME ARBITRATION LAW MOOT

2017

MEMORANDUM FOR RESPONDENT

GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY

TEAM 15

ON BEHALF OF: AGAINST:

Inferno Resources Sdn. Bhd. Furnace Trading Private Limited

RESPONDENT CLAIMANT

COUNSELS

Bhavya Noel Akash Gayatri Smriti Amitanshu

Vatsa Therattil Singh Virmani Kohli Satyarthi

TEAM 15 MEMORANDUM FOR RESPONDENT

I

TABLE OF CONTENTS

ABBREVIATIONS III

LIST OF AUTHORITIES V

STATEMENT OF FACTS 1

ARGUMENTS ON THE MERITS OF THE CLAIM 2

I. THAT RESPONDENT HAS NOT BREACHED THE CONTRACT 2

A. Non- Nomination of port is not a breach of contract 2

i. There existed a Force Majure Condition 2

ii. Geographical Deviation permitted by the Charter-party 3

iii. Non-Nomination of port is not a fundamental breach of contract 4

iv. Repudiation is not necessary termination of contract 5

B. Non-payment of freight on time is not a breach of Charter-Party 6

i. Freight wasn‟t paid by the sub-charterers to the Charterers 6

ii. Fundamental condition of contract is of Payment rather than payment on the due

date 7

C. That the Claimants did not mitigate the losses and instead wrongfully terminated the

contract 9

II. CLAIMANTS ARE WRONG TO EXERCISE LIEN ON CARGO 9

A. Lien has been exercised without provisions for the same 9

i. The Head Voyage charter-party is the governing charter-party for Lien 9

ii. Head Voyage Charter Party is the one intended to be incorporated in the B/L 11


II

B. Rules of interpretation of ambiguous Bill of Lading 12

III. COURT IS NOT ENTITLED TO SELL THE CARGO PENDENTE LITE 13

A. There should be a „good reason‟ to sell 13

B. Interim orders should not be granted to Claimants 14

C. Forced sale of cargo will incur a „distress discount‟ 15

D. Judicial Sale at a pre-determined price is prejudiced 15

IV. THAT CLAIMANTS ARE NOT ENTITLED TO ANY REMEDY 17

A. Respondent is not liable to pay any damages 17

i. „Cost of exercising Lien‟ is not payable 17

B. No damages for delay caused by a „Force Majure‟ event 19

C. Damages asked by Claimants are too remote 21

D. Respondents are not liable to pay for the loss of earnings to Claimants 21

E. Freight does not have to be paid 21

F. Respondents is not liable to pay Demurrage as a Force Majure as under Clause 24 caused the

delay 22

G. Claimant liable to pay Diminution value 22

H. Respondent is not liable to pay damages for detention 23

I. That there is a duty to mitigate losses in case of breach 23

REQUEST FOR RELIEF 25


III

LIST OF ABBREVIATIONS

& And

B/L Bill of Lading

BIMCO Baltic and International Maritime

Council

Charterers Furnace Trading Pte Ltd

Claimant Furnace Trading Pte Ltd

Co. Company

COGSA The Carriage of Goods by Sea Act

CP Charterparty

EWHC England & Wales High Court

FTR For the record

GmbH GesellschaftmitbeschränkterHaftung

LMLN Lloyd's Maritime Law Newsletter

Ltd. Limited

Master Captain Tan Xiao Ming

Moot Proposition/ Moot Problem 2017 International Maritime Law

Arbitration Moot Scenario

Owners / Shipowners ImlamConsignorist GmbH

Parties Claimant and Respondent

Pvt./ Pte Private

Respondent Inferno Resources SDN BHD


IV

SDN BHD SendirianBerhad

SGCA Court of Appeal

SGHC High Court

SLR Singapore Law Reports

UNCITRAL The United Nations Commission on

International Trade Law

Vessel MV. Tardy Tessa


V

LIST OF AUTHORITIES

CASES AND ARBITRAL AWARDS REFERRED AT PAGE

NO.

Aerospace Publishing v. Thames Water Utilities [2006] All E.R.(D)

39

22

American Cyanamid Co. v. Ethicon Ltd, 2 WLR 316, (1975) 14

Ansett (Operations) Pty v. Australian Association of Air Pilots

[1991] 2 V.R. 636, 649

19

Bank of Scotland plc v The Owners of the MV Union Gold and

others, EWHC 1696, 1979

15

Bannister v. Breslauer(1867) L.R. 2 C.P. 497 23

Bettini v. Gye (1876), 1 Q.B.D 183, 188 7

Borealis v. Geogas Trading [2011] 1 Lloyd‟s Rep. 482 21

Bristol and West Building Society v Mothew [1998] Ch 1 (CA) 22,

23 (Millet LJ)

5

Cf. Beocov. Alfa Laval Co. [1995] Q.B. 137 21

Cf. The Conqueror, 166U.S. 110 (1897) 17

Choil Trading S.A. v. Sahara Energy Resources Ltd [2010] EWHC

374 (Comm); (2010) 793 L.M.L.N. 1

20

Clink v. Radford [1891] 1 Q.B. 625 23

CompaniaNavieraTermar v Tradax Export [1966] 1 Lloyd's Rep

566

3

Cornwall v. Henson, [1900] 2 8


VI

Corporation Of India v. United Industrial Bank, 4 SCC 625,

(1983)

14

Cory v. Thames Ironworks and Shipbuilding Co. (1868 ) L.R. 2

Q.B. 181,190

19

Dominion Mosaics v. Trafalgar Trucking [1990] 2 All E.R. 246 22

Fidelitas v. Exportchleb[1963] 2 Lloyd‟s Rep. 113 23

Fox v. Abel, 2 Conn. 541 6

Galoo Ltd v. Bright Grahame Murray [1994] 1 W.L.R. 1360 20

Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA

235, [224] (Basten JA)

22

Geogasv. Trammo Gas [1993] 1 Lloyd‟s Rep. 215 20

Glynn v. Margetson [1893] AC 351 6

Great Elephant Corp. v. TrafiguraBeheer BV (The Crudesky)

[2014] 1 Lloyd‟s Rep. 1

21

Horne v. Midland Railway (1872) L.R. 7 C.P. 583, 591 19

Huntoon v. Kolynos [1930] 1Ch. 528 7

Kpohrarorv. Woolwich Building Society [1996] 4 All E.R. 119 20

Kurt A. Becherv. Roplak Enterprises (The World Navigator) [1991]

2 Lloyd‟s Rep. 23

19

Lebeaupin v Richard Crispin & Co [1920] 2 KB 714, 720

(McCardie J)

22

McCormick v National Motor Insurance (1934) 40 Comm Cas 76,

93 (Slesser LJ)

5


VII

Mersey Steel and Iron Co. v. Naylor, (1884), 9 App. Cas. 434 8

Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation

of India (The Kanchenjunga)[1990] 1 Lloyd's Rep 391

5

Mytro, 2 Lloyd's Rep 243, 260 (1977) 10, 13

Navromv. Callitsis Ship Management (The Radauti) [1988] 2

Lloyd‟s Rep. 416

3, 4

Palmer vs. Connecticut Ry& Lighting Co. 311 US 544 (1941) 17

Paula Lee v. Robert Zehil[1983] 1 All E.R. 390 19

Quinn v. Leathem[1901] A.C. 495, 537 19

Racing Drivers Club v. Hextall Erskine & Co. [1996] 3 All E.R.

667

20

Sally Wertheim v. Chicoutimi Pulp Company[1911] A.C. 301 19

Sealion Shipping Ltd v. Valiant Insurance (The Toisa Pisces) [2013]

1 Lloyd‟s Rep.108

21

Stag Line v. Foscolo, Mango & Co. [1932] AC 328 6

Stinnesv. Halcoussis[1982] 2 Lloyd‟s Rep. 445, 454, [1984] 1

Lloyd‟s Rep. 676, 682

7

The “Turtle Bay”, SGHC 165, 2013 15, 16

The Yanxilas[1982] 2 Lloyd's Rep. 445 20

Victoria Laundry v. Newman Industries[1949] 2 K.B. 528, 539

(C.A.)

19

Youell v Bland Welch & Co (The Superhulls Cover Case) (No 2)

[1990] 2 Lloyd‟s Rep 431, 450 (Phillips J)

5


VIII

ARTICLES

REFERRED AT PAGE NO.

„Grappling with the Nettle‟: Common Law Possessory Liens in

Admiralty Law by James McGeorge

9

Cargo liens for unpaid hire and freight due under a time or

voyage charterparty by GhoSzeKee, Deputy Claims Manager

11

China Ocean Law Review- „An Analysis of the Legal Issues in

Lien Clause in the Time Charter Party‟

13

Dato Jude P Benny, Joseph Tan Jude Bennt LLP - Ship Arrest in

Practice, 10th Edition

12

Defence class cover liens on cargo - The Standard (March 2015) 9,11

Kenneth R. O'Rourke, „A Shipowner 's Lien on Sub-Sub-Freight

in England and the United States‟, New York Produce

Exchange Time Charter Party Clause 18

13

Maritime Law in Singapore and Beyond – Its Origins, Influence

and Importance- Keynote address delivered by Justice Steven

Chong at the Official Launch of the Centre for Maritime Law

17

Relationship between admiralty, employment and common law

remedies (enforcing and recovering the debt) – Keynote

Address presented to NZ Branch Conference for the Maritime

Law Association of Australia and New Zealand.

16

SAL Annual Review, 2013 16

The master's role in charter performance by Norman Lopez 12


IX

BOOKS REFERRED AT PAGE NO.

Admiralty and Maritime Law by Robert Force Niels F.

Johnsen Professor of Maritime LawCo-Director, Tulane

Maritime Law CenterTulane Law School

14

Bes' Chartering and Shipping Terms by Norman J. Lopez

(Eleventh Edition)

12

Carriage of Goods by Sea by John F Wilson (Seventh

Edition)

15

Cheshire, Fifoot & Furmston‟s ; Ed. 15 8

Voyage Charters by Julian Crooke(Informa publishers 4th

Edition)

5,6,7,9, 21, 22, 23,24

Chitty on Contracts, p. 248, 13th 8,12

Maritime Liens – The American Law Register (January,

1857)

13

Sean Wilken, The Law of Waiver, Variation and Estoppel

(Oxford Univerity Press 2nd

ed 2002) ch 4

15

Joshua Thomson, Leigh Warnick and Kenneth Martin,

Commercial Contract Clauses: Principles and

Interpretation (Thomson Reuters (Professional) Australia

Ltd, 2nd

ed, 2016) („Thomson et al.‟)

22

Shipping Law by Simon Baughen, MA, Solicitor, Reader

in Law, University of Bristol (Fourth Edition)

16


X

STATUTES AND CONVENTIONS REFERRED AT PAGE NO.

Bill of Lading Act, 1994 5,6

Black‟s Law Dictionary 6

Carriage of Goods by Sea Act, 1998 7,12

Hague-Visby Rules, 1968 6

International Arbitration Act CAP 143A 7,9

Maritime Conventions Act 1911; (Chapter IA3) 13,15

Merchant Shipping Act, 1894 12

UNCITRAL Model Law on International

Commercial Arbitration 1985

13

UNCITRAL Secretariat on the United Nations

Convention on Contracts for the International Sale

of Good

15


1

STATEMENT OF FACTS

I. On 15th

February, 2016, Imlam Consignorist GmbH entered into a time charter party with

Furnace Trading Pte Ltd to hire the vessel MV Tardy Tessa for a period of 2 years. On 1st

September, 2016 Furnace Trading Pte Ltd. decided to sub charter the vessel to Inferno

Resources SdnBhd as a voyage charter party.

II. Inferno Resources SdnBhdentered into a contract to transport Australian Steam Coal for

Idoncare Berjaya Utama Pty Ltd. from Newcastle, New South Wales (loading port) to any

SPSB in China i.e. the discharge port.

III. On 1st October, Captain Tan Xiao Ming, Master of the VESSEL MV Tardy Tessa, signed the

Notice of Readiness. The loading was completed by 08:00 HRS on the 4th

October, 2016 and

after the final clearances from the Port Authorities the “VESSEL” sailed at 16:45 HRS on the

4th

of October, 2016.

IV. The Vessel arrived in Singapore for bunkering on the 10th

October, 2016. On the same day the

Owners sent an email stating that they haven‟t received the freight from the charterers which

was to be paid within 5 banking days after the completion of loading and signing of B/L and

that they haven‟t nominated a legitimate discharge port. On 14th

October the Owners via email

put the Owners on Notice as to owners right to terminate Charter party on basis of non-payment

of freight.

V. The charterers requested the owners to proceed to Busan, South Korea due to congestion at

Chinese ports. The owner‟s declined to proceed with the request. On 20th

October, 2016 the

Owner‟s gave Notice of Lien as well as a Notice of Lien on Sub- Freight, due to the Charterers

failure to nominate a discharge port or remit freight.On 22nd

of October, 2016 the Owner‟s sent a

NOTICE OF TERMINATION citing breach on part of the Charterers.


2

ARGUMENTS ON THE MERITS OF THE CLAIM

I. THAT RESPONDENTS HAVE NOT BREACHED THE CONTRACT

1.RESPONDENT has not breached the contract by non-nomination of the discharge port. All the

ports named in the voyage charter party were congested, and hence the delay in nomination. It is

encompassed as „Force Majure‟, something the charterers could not guard against. Non-payment

of freight within 5 banking days is not substantial reason to repudiate the contract, as payment

within 5 banking days was not the fundamental condition, rather it was a warranty. The sub-

charterers have not paid the charterers; hence the charterers were unable to pay the freight to the

Owners.

[A] NON – NOMINATION OF PORT IS NOT A BREACH OF CONTRACT

2. The ports from the given list of ports could not be nominated due to congestion. The charterers

had suggested the port of Busan, South Korea. However, the CLAIMANTS rejected without citing

any proper reason for the same. Busan was a safe port and the same was assured to the

CLAIMANTS vide the email dated 17 October 2016.1

(i)There existed aForce Majure condition

3. The Voyage Charter has the „Force Majure‟2 clause which says – „..any other event whatsoever

which cannot be avoided or guarded against.‟ In the present situation all the ports as listed by the

owners are congested which the charterers could not have possibly foreseen and hence

RESPONDENT cannot be held liable for non-nomination of the same. Certain types of delay are

1 Facts-p.60; Email of 17 October 2016

2 Clause 24-p.32, COAL OREVOY


3

presumed to be beyond its control, such as bad weather and, in the usual case, congestion.3

4. RESPONDENTS would like to point that contrary to the claims, CLAIMANTS have breached

the contract by not allowing RESPONDENTS to proceed to their choice of port, which is in

transgression to the Voyage Charter-party. The „COAL-OREVOY‟ contract clearly mentions that

– 'The vessel shall be loaded and discharged as and where ordered by the Charterers.'4 The

charterers nominated Busan as the disport much before the stipulated time elapsed. Furthermore,

the charterers assured the safety of it.5

(ii) Geographical deviation permitted by the Charter Party

5. The choice of Busan was not ultra-vires to the contract. The contract between Owner and

Charterer has allowed Geographical Deviation.6 Thus, the owners could have very easily deviated

to Busan since congestion of the ports was a „reasonable purpose‟ of deviation. Charterers were

willing to pay the extra costs for the same.

6. Owners no-where in the contract have made Charterers responsible if the ports as suggested by

the owners are congested. If the owner is reluctant to accept liability for delays if the port is

congested, they should have opted to include the same in the charterparty, which will shift the risk

of such delays on to the charterer.7

7.Lord Reid in the Suisse Atlantique case8held, notably, “In the ordinary way the customer has no

time to read them, and if he did read them he would probably not understand them. And if he did

3Navrom v. Callitsis Ship Management (The Radauti) [1988] 2 Lloyd‟s Rep. 416


5 Facts-p.60, Email of 17 October 2016


7CompaniaNavieraTermar v Tradax Export [1966] 1 Lloyd's Rep 566.

8 Suisse AtlantiqueSocieted'Armament SA v NV RotterdamscheKolenCentrale [1967] 1 AC 361


4

understand and object to any of them, he would generally be told he could take it or leave it. And

if he then went to another supplier the result would be the same. Freedom to contract must surely

imply some choice or room for bargaining.”

8.Their Lordships distinguished delay from the "deviation" cases. In a typical deviation case, a

party would take a ship off the pre-agreed route. Upon doing so, that would take the party's

conduct outside that contemplated by the contract, and so the party could not rely on a clause in

the contract limiting their liability for damages. Their Lordships distinguished the case on the

grounds that the delays were contemplated by the contract.

9.In certain cases, deviation will be justified (apart from any express terms of the contract)9. These

cases are the following: [A] Necessary purposes for the prosecution of the voyage or for the safety

of the adventure; [B]To save human life but not to save property at sea unless this is expressly

stipulated in the charterparty.

(iii) Non-Nomination of port is nota fundamental breach of contract

10. A contract is breached when a fundamental condition is not complied with. In the present case,

nomination of the discharge port was not a fundamental condition. It was a warranty. There is no

implied promise by the charterer that it is possible for the vessel to reach the named port. Reaching

the port is contingent upon various other circumstances, over which the Charterer has no control

and neither is he responsible for it.10

9 Cooke, J., Young, T., Ashcroft, M., Taylor, A., Kimball, A Review of Shipowner‟s& Charterer‟s Obligations in

Various Types of Charter 321 J., Martowski, D., Lambert, L., and Sturley, M. 2014. Voyage Charters. 4th edition.

Lloyd‟s Shipping Law Library, London: Informa Law from Routledge. 10

Navromv. Callitsis Ship Management (The Radauti) [1988] 2 Lloyd‟s Rep. 416


5

(iv) Repudiation is not necessary termination of contract.

11. However, repudiation does not result in the termination of the contract11

Rather, the contract is

voidable de futuro at the election of the CLAIMANT who may either rescind or affirm the

contract.12

It remains binding until the contract is rescinded.

12. There are two requirements to establish election.13

First, there must be a representation by the

CLAIMANT, either by express words or conduct, to the RESPONDENT in a manner, which is

'unequivocal, definite, clear, cogent and complete.'14

The representation must demonstrate an

unequivocal intention that the contract either binds the parties, or that it is rescinded.15

13. The CLAIMANT has provided an unequivocal representation to affirm the contract. This is

clear from the CLAIMANT‟s letter dated 11 October 2016.16

Specifically, the statement

„Time/Costs for deviation due to late declaration for disport for charterers account.‟ Firstly, it

nowhere mentions that such a deviation would be illegal, and secondly CLAIMANT is consistent

with treating the deviation as a breach of contract rather than an event occasioning rescission.

14. If the CLAIMANT considered deviation to be an event where it would rescind the contract, it

would be reasonable that the letter would read, 'should you...unlawfully deviate...we will consider

this contract to be at an end and will seek all costs and losses.' Since the owners have not

11

See generally, Dominic O‟Sullivan, Steven Elliot and Rafal Zakrzewski, The Law of Rescission (Oxford University

Press, 2008) ch 23, 24; Sean Wilken, The Law of waiver, Variation and Estoppel (Oxford University Press 2nd

ed

2002) ch4 12

Bristol and West Building Society v Mothew [1998] Ch 1 (CA) 22, 23 (Millet LJ); Motor Oil Hellas (Corinth)

Refineries SA v Shipping Corporation of India (The Kanchenjunga)[1990] 1 Lloyd's Rep 391. See generally, Dominic

O‟Sullivan, Steven Elliot and RafalZakrzewski, The Law of Rescission(Oxford University Press, 2008) ch 23, 24;

Sean Wilken The Law of waiver, Variation and Estoppel (Oxford University Press 2nd

ed 2002) ch4 13

Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The Kanchenjunga) [1990] 1 Lloyd's

Rep 391. See generally, Dominic O‟Sullivan, Steven Elliot and RafalZakrzewski, The Law of Rescission (Oxford

University Press, 2008) ch 23, 24; Sean Wilken The Law of waiver, Variation and Estoppel (Oxford University Press

2nd

ed 2002) ch4 14

McCormick v National Motor Insurance (1934) 40 CommCas 76, 93 (Slesser LJ) 15

Youell v Bland Welch & Co (The Superhulls Cover Case) (No 2) [1990] 2 Lloyd‟s Rep 431, 450 (Phillips J). 16

Facts, p.50 ; Email dated 11 October, 2016


6

considered the deviation to be a fundamental condition, hence the breach of the same will not

rescind the contract and will be strictly against the CLAIMANT.17

Article IV, Rule 4, of the

Hague-Visby Rules18

also allow deviation to save life and property.19

[B] THAT NON-PAYMENT OF FREIGHT ON TIME IS NOT A BREACH OF CHARTER PARTY

(i) Freight wasn’t paid by the sub-charterers

15. Freight, as was supposed to be paid by the sub-charterers who are also the Shippers on the Bill

of Lading did not pay Charterers. In the present scenario multiple contracts are made and each

contract is dependent on the fulfillment of the other contracts, they are not singular in nature. Thus,

Charterers do not have the capacity to pay the Owners. The Non-Payment of freight is a

fundamental breach of the contract, since consideration for the requisite work done is the basis of

the formation of the contract. However, the payment of the freight on the stipulated time is not of

the essence.

16. A distinction must be drawn between the date on which the freight becomes due and that on

which it becomes payable. According to the Voyage Charter-Party20

the payment was supposed to

be done within 5 banking days after the signing of the Bill of Lading and receipt of the Freight

Invoice. The point to be noted here is that the injunction „and‟ has been used here implying that

both the requisite must be fulfilled before the counting for the days begin. The Freight invoice has

been signed on the 9th

October 2016.21

A day is calculated as period of time consisting of twenty-

four hours and including the solar day and the night.22

The calculation of the same gives the due

date to be 17th

October 2016.

17

Glynn v. Margetson [1893] AC 351 and Stag Line v. Foscolo, Mango & Co. [1932] AC 328 18

Article IV, Rule 4, Hague-Visby Rules, 1968 19

Glynn v. Margetson [1893] AC 351 and Stag Line v. Foscolo, Mango & Co. [1932] AC 328 20

Clause 19, page 22 21

Facts-p.49 22

Co. Litt. 135a; Fox v. Abel, 2 Conn. 541. ; Black‟s Law Dictionary


7

17. A contract such as this is of an elaborate nature and contains large numbers of stipulations and

it would clearly be unjust for one party to be discharged from all liability owing to a trifling

default by the other. The fundamental condition of a charter-party is payment for the service done

and not payment on time the due date. Thus, payment of freight was more important rather than

payment on the due date. And such a stipulation, unless the parties have agreed that breach of it

shall not entitle the non-defaulting party to treat the contract as repudiated, is a „condition‟.23

(ii) Fundamental condition is payment rather than payment on a due date

18. The landmark judgment of Bettini v. Gye24

distinguished between condition and warranty. In

this case the plaintiff set a condition that an opera singer has to report in London, at least 6 days

before his engagement. This condition was held to be a warranty and not a condition. Freight

payable after shipment within a certain fixed number of days is treated as freight Prepaid.25

The

basic jurisprudence behind prepaid freight is that there should be no tussle between the Owner and

Cargo at the time of payment and delivery of cargo.

19.The reason is not to provide security of money to the owner. Shipping is a risky business hence

100% payment of freight within the given time is not only unreasonable but unjust to the

Charterers as well. The Charterers are left with no security, neither the cargo nor the payment.

Hence, such a clause should be read contra proferentem, meaning it should be interpreted against

the person who proposed the draft.

20.Arguendo, even if it were to be assumed that the freight clause was a prior condition, then the

23

Cooke, J., Young, T., Ashcroft, M., Taylor, A., Kimball, A Review of Shipowner‟s& Charterer‟s Obligations in



Bettini v. Gye (1876), 1 Q.B.D 183, 188; Huntoon v. Kolynos [1930] 1Ch. 528 25

Clause 15(b), COAL-OREVOY,p.29


8

condition is divisible and capable of partial fulfillment. In such cases it must always be a question

of fact whether the breach of condition is so substantial as to go to the whole root of the contract

and discharge the other person of the liability.26

The House of Lords in Mersey Steel case27

said,

'the law is now clear that the breach of one stipulation does not necessarily carry with it even an

implication of an intention to repudiate the whole contract.'28

21. In contract law, very often time is not a 'material term,' which means that one party cannot

repudiate the contract the other party is late with the payment or more often, with the installment

payments. In general, if that party is late, they usually don't oblige to pay damages for their

lateness, even if the other party suffered from them.

22. When there is a special term in a contract which states that 'time is of the essence,' both parties

realize that there can be repudiation if one party performs late, and lateness may subject the

breaching party to 'consequential' damages as a result of the lateness. In the present charter-party,

nowhere has it been mentioned that if the freight is not paid then the contract would be repudiated.

23. It must be observed that even if one of the parties wrongfully repudiates all further liability or

has been guilty of a fundamental breach, the contract will not automatically come to an end. Since

its termination is the converse of its creation, principle demands that it should not be recognized

unless this is what both parties intend.29

And such a stipulation, unless the parties have agreed that

breach of it shall not entitle the non-defaulting party to treat the contract as repudiated, is a

„condition‟.

26

Chitty on contracts, p. 248, ed. 13th 27

Mersey Steel and Iron Co. v. Naylor, (1884), 9 App. Cas. 434 28

Per Collins, L.J. in Cornwall v. Henson [1900] 2 Ch.298 at pg. 303 29

Cheshire, Fifoot&Furmston‟s ; ed. 15


9

[C] THATTHE CLAIMANTS DID NOT MITIGATE THE LOSSES AND INSTEAD WRONGFULLY

TERMINATED THE CONTRACT

24.The duty to mitigate depends on two factors :[A]The claimant has acted unreasonably in

response to the breach.30

[B] Claimant‟s loss if he acted reasonably.31

Claimant instead of giving a

grace period and trying to mitigate the losses has terminated the contract. If the claimant had acted

reasonably then the cargo would have been delivered to the port in a few days. The crew is

suffering for over 40 days now, in the middle of the Sea because of the CLAIMANT‟s

unreasonable decision. Although mitigation is an element of causation,32

the principle that the

claimant must prove his loss was caused by the defendant‟s breach does not apply.

II. THAT THE CLAIMANTS ARE WRONG TO EXERCISE LIEN ON THE CARGO

[A] LIEN HAS BEEN EXERCISED WITHOUT ANY PROVISION FOR THE SAME.

25. The claimant has no right to exercise a contractual right of lien since the Head voyage charter

according to which the B/L is to be governed make no references to „Lien on cargo for sub

freight‟. Firstly, The bill of lading is prima facie evidence of the condition, marks, quantity of

goods, and date of loading as between the shipper and shipowner33

. On reference to this „evidence‟

it is evident that the bill of lading makes reference to a „charter party‟.

(i) The Head Voyage Charter-Party is governing Charter-Party for Lien

26. Prima facie it may be difficult to identify which charter party it refers to but where a bill of

lading is issued in such circumstances and is silent as to the identity of the charter party whose

terms are to be incorporated, it is submitted that, in line with the clear principle set out above and

30

Garnac Grain v. Faure &Fairclough [1968] A.C. 1130, 1140. 31

The Elena d‟Amico [1980] 1 Lloyd‟s Rep. 75. 32



Lloyd‟s Shipping Law Library, London: Informa Law from Routledge. Page 639, Para 21.53 33

Singapore Commercial Law, Section 25.4.5 (2).


10

for practical reasons, the incorporated charterparty is the head voyage charter and not the sub-

voyage charter.34

This has also been held in Michalakis case.35

27. It is true that the time charterer who has the lawful power to direct the ship owner to exercise

carriers‟ rights under the bill of lading, in particular a lien, as his trustee. However, as Andrew

Smith J noted that the exercise of the lien requires default under the charter containing it and is

therefore entirely independent of the owner‟s right to intercept bill of lading freight.36

The carrier's

rights under the bill of lading, in this case, are governed by the head voyage charterparty and

therefore as a consequence the time charterer cannot exercise the lien as a trustee. Not to mention

that the claimant itself cannot exercise lien.

28. Where shipowners are considering whether to exercise a lien over the goods on board their

vessel, they must ensure that the charterparty grants them a lien over the cargo for the debt, which

is due to them. In addition, the shipowners must remember that the existence of the right of lien

over cargo in the charterparty will not entitle them to exercise a lien under the bill of lading

contract unless [A]the charterer is the owner of the cargo or [B] the bill of lading gives the owners

a specific contractual right of lien over the cargo as against the consignees for sums due under the

charterparty.37

29. Should the owners exercise a lien over cargo under the charterparty without enjoying a

corresponding right under the bill of lading contract, they may be acting properly under the

charterparty but would be in breach of the bill of lading contract and be exposed to an action at the

suit of the consignees. Therefore once the lien clause is incorporated the lien that is exercised must

34



Lloyd‟s Shipping Law Library, London: Informa Law from Routledge. Pg 511. 35

Savelis v. E Vlachos the Michalakis, 1987. 36

The Bulk Chile, 1 All ER 177, 36 2013. 37

Mytro, 2 Lloyd's Rep 243, 260 (1977).


11

be consistent with the contract, which provides for the said lien.38

30. David Steel J. in The Michalakis39

in which he stated the principles as follows: [A] the court

should be very reluctant to conclude that the identification of the relevant charterparty is too

uncertain, and that is even where neither the parties to nor the date of the charter are included; [B]

the presumption is that it is the head charter which is incorporated; and [C] that presumption is

reinforced if the parties to the bill of lading are unaware of the existence of any sub-voyage

charters at the time of the bill‟s issue.

(ii) Head Voyage Charter incorporated in B/L

31. In the present matter the Head voyage charter has been incorporated by the B/L, the charterer

does not own the cargo, and the bill of lading gives the owners a specific contractual right of lien.

Therefore the Claimant can neither exercise lien on the cargo nor on the sub freight since the Head

voyage charter makes no provisions for the same. Clause 19(a) of the Coal Orevoy provides for

lien on cargo only for freight, demurrage, GA and dead freight. It does not provide for sub-

freight.40

The CLAIMANT is exercising lien on the freight owed by shipper to sub-charter, which

qualifies as sub freight41

and therefore not covered by the CP.

32. On this point it must be noted that Bill of lading is an admixture of clauses of charter party and

clause of Bill of lading, giving superiority to the clause of the Bill of lading regarding lien for

freight. Unless there is a clear language to the contrary, there is only a lien for the amount for

freight state in the bill of lading.42

33. In a similar case the claimant had, had deleted the standard clause permitting a lien on sub-

freight. In its place, the charterparty provided „no lien‟. The judge held that the effect of this clause

38

G. H. Treitel Francis Martin Baillie Reynolds Thomas Gilbert Carver, „Carver on Bills of Lading‟, 3rd

edition. 39

Xiamen Xindaan Trade Co. Ltd v. North China Shipping Co. Ltd, EWHC 588, 2009. 40

Singapore Commercial Law, Section 19(a). 41

Moot Problem Pg. 66. 42

G. H. Treitel Francis Martin Baillie Reynolds Thomas Gilbert Carver, „Carver on Bills of Lading‟, 3rd

edition.


12

was to preclude the owner from asserting its lien against those below Charterer in the charter

chain.43

In the present situation the „no lien‟ clause exists by its very absence and by implication.

A lien may therefore be enjoyed by a shipowner only if the bill of lading covering the cargo or sub

freight gives him one gives him one.

34. Assuming that there indeed exists a lien clause the obiter dictum of Lord Millett in Agnew v.

Commissioner of Inland Revenue44

, gains relevance; the Owner‟s inability to follow a liened debt

into the hands of its payee meant that the lien clause simply could not be explained on the basis of

an equitable charge. Therefore, if there was a proprietary right in equity, one ought to be able to

follow it into the hands of the recipient.

35. Lord Millett therefore opined that the lien on sub-hires is a rule peculiar to „the maritime law‟,

giving the Owner a mere contractual right to sue the Sub-Charterer. The same applies to sub-

freights. It is accepted that the lien clause should be included in the bills of lading, preferably in

full or otherwise by a general reference to the conditions of the charterparty.45

[B] RULES OF INTERPRETATION OF AMBIGUOUS BILL OF LADING.

36. Bill of lading should be construed by the courts in the same manner as any other contract.46

When a bill of lading is ambiguous, Hague-Visby Rules cases have often cited 6 disjunctive rules

to be applied.47

In the present case two rules are applicable. Firstly the rule of Contra

Proferentemstates that a contract is construed against the interest of the author of the contract.48

Therefore in Mormaclynx49

Judd D.J. held that a bill of lading, as a contract of adhesion is

construed strictly against the carrier.

43

Western Bulk Shipowning III A/S v. Carbofer Maritime Trading ApS& others (The Western Moscow), EWHC 1224,

2012. 44

Agnew v. Commissioner of Inland Revenue, 2 AC 710, 41 2001. 45

Norman J Lopez, „Bes‟ Chartering and Shipping Terms‟, Pg 28,11th

edition. 46

Amco overseas Co. v. S.T. Avenger, 387 F. Supp. 589 at p. 594 AMC 782 47

William Tetly, „Marine Cargo Claims‟, 4th Edition. 48

Huge Beale, Chitty on Contracts, 25th edition. 49

Leather‟s Best v. S.S. Mormaclynx, 313 F. Supp. 1373, 1380 1971.


13

37. The second rule states that negligence, if any in the present case, in the contract must be

strictly construed.50

Further, there exists no superseding clause in the bill of lading and therefore

the Time charter has not been given primacy even through this mean.

III. THAT THE COURT IS NOT ENTITLED TO SELL THE CARGO PENDENTE LITE

[A] THERE SHOULD BE A ‘GOOD REASON’ TO SELL

38. The Court should not make an order for the appraisement and sale of a ship pendente lite

except for „good reason‟.51

Justice Brandon noted that the question of whether a ship under arrest

should be sold pendente lite normally only arises where there is a default of appearance or

defense.52

An order for sale pendente lite may be made even if opposed by the defendants,

however, it is a draconian order, and will not be made without good reason.53

39. A mortgagee will be restrained (bad faith apart) from acting where the enforcement of his

security would be in disregard of the rights of third parties, which are superior to the mortgagee's

rights.54

Furthermore, despite emphasis on value, claim and ongoing costs, it is suggested by the

that the ratio between the value of the vessel (in this case cargo), the value of maintaining it until

disposition and the value of the claim ought not be determinative, and lesser weight should be

placed on this criterion.55

40. Section 3 of IAA gives force of law to the Model law. Therefore Article 17 and Article 17A

are harmoniously applicable. The CLAIMANT is also eligible to seek interim order for sale of the

coal under Article 17(2)(c) to provide a means of preserving assets. The party requesting an

interim measure under article 17(2)(c)56

shall satisfy the arbitral tribunal that:

50

Burdines Inc. v. Pan-Atlantic S.S. Corp, 199 F.2d 571 (1952). 51

Mytro, 2 Lloyd's Rep 243, 260 (1977). 52

Mytro, 2 Lloyd's Rep 243, 260 (1977). 53

Mytro, 2 Lloyd's Rep 243, 260 (1977). 54

Myrto, 2 Lloyd's Rep 243, 260 (1977). 55

TOH Kian Sing, SAL Annual Review, Admiralty law, 2013. 56

UNCITRAL Model Law on International Commercial Arbitration 1985, with amendments as adopted in


14

[A]Harm not adequately reparable by an award of damages is likely to result if the measure is not

ordered, and such harm substantially outweighs the harm that is likely to result to the party against

whom the measure is directed if the measure is granted; and[B] There is a reasonable possibility

that the requesting party will succeed on the merits of the claim. The determination on this

possibility shall not affect the discretion of the arbitral tribunal in making any subsequent

determination.

[B] INTERIM ORDER SHOULD NOT BE GRANTED TO CLAIMANTS

41. In the current matter the sale of the cargo at a price lower than what the RESPONDENT would

have earned would cause great damage. While passing such an interim order the court must

consider the hypothesis that if the RESPONDENT were to succeed in establishing his right would

be adequately compensated for the irreparable injury caused by the interim order57

.

42.„Irreparable injury‟ merely means a material injury, i.e. which cannot be adequately

compensated by damages. It will regarded as irreparable where there exists no specific or fixed

pecuniary standards for measuring damages.58

Once the sale of the cargo is ordered free of all

encumbrance the RESPONDENT may suffer losses if the Claimant‟s claim is not granted the

tribunal in later proceedings. Hence, once the sale of the cargo is ordered free of all encumbrance

the RESPONDENT may suffer losses if the claimant‟s claim is not granted the tribunal in later

proceedings.

43. Article 17E59

is harmoniously applicable. Since irreversible harm may occur the

2006 (Vienna: United Nations, 2008), Article 17A (1)(a). 57

American Cyanamid Co. v. Ethicon Ltd, 2 WLR 316, (1975). 58

Corporation Of India v. United Industrial bank, 4 SCC 625, (1983). 59


2006 (Vienna: United Nations, 2008), Article 17E


15

RESPONDENT also seeks that if the order were to be granted the CLAIMANT provide

appropriate security under A 17E(2). On this note it is again important to question the ability of the

CLAIMANT to pay costs and damages caused by the measure or the order to any party if the

arbitral tribunal later determines that, in the circumstances, the measure or the order should not

have been granted - as provided by A17G consequently the RESPONDENT prays that the

application be quashed on nonpayment of the security.60

[C] FORCED SALE OF CARGO WILL INCUR A ‘DISTRESS DISCOUNT’

44. By ordering the sale of the cargo at this juncture the value of the cargo would be diminished

due to it being „distressed cargo‟. The cargo is distressed due to the current matter being

subjudice. The „distressed‟ cargo discount may vary from 5% to 15% which translates to an

estimated loss of $446,040.28 to $148,680.0961

. Furthermore the current market conditions may

not be overly affected by the world market trends62

therefore there does not exist any imminent

danger to the value of the cargo.

[D]JUDICIAL SALE AT A PREDETERMINED PRICE IS PREJUDICED.

45. An application for a court-sanctioned private sale is advanced for the applicant‟s own purpose

and benefit and is prima facie unfair.63

It was observed that a direct judicial sale at a pre-

determined price to a named person is generally not the accepted way to sell a vessel under

arrest.64

Further, as a matter of general principle the court should not order a sale to a buyer found

by the arresting party at a predetermined price.65

60


2006 (Vienna: United Nations, 2008), Article 17I (1)(a)(ii). 61

Pg 101 Moot problem Coal Report. 62

Pg 100 Moot Problem Coal Report. 63

The “Turtle Bay”, SGHC 165, 2013. 64

Xiamen Xindaan Trade Co. Ltd v. North China Shipping Co. Ltd, EWHC 588, 2009 65

Bank of Scotland plc v The Owners of the MV Union Gold and others, EWHC 1696, 1979.


16

46. Furthermore as Ang J has noted66

as in Turtle Bay67

the CLAIMANT may or has not found

„significantly higher or equal‟ price for the cargo, there is scant information about any serious

bidders and most importantly the estimates expense of maintaining the vessels under arrest were,

per se, insufficient to constitute „powerful special features‟ or „special circumstances‟ warranting

court sanction of a private sale.

47. The normal order that the Sheriff sells a vessel under arrest by appraisement, advertisement,

and inviting bids to purchase the vessel68

. The process is long and tedious. After the Sheriff is

commissioned to appraise and sell the vessel, he is under a duty to first appraise the vessel to

ascertain the value. The Sheriff would then be assisted by professional and experienced appraisers

who as court-appointed appraisers who have to act faithfully and impartially.

48.When the court is asked to exercise its discretion to approve a judicial sale where the highest

bid price is below the appraised value, the Sheriff hands over the confidential appraisement report

of the court-appointed appraiser in a sealed envelope for the court‟s consideration.69

49. After the order has been granted for the vessel to be sold pendente lite, the question as to how

long it will take it actually sell the vessel will depend on the commercial circumstances, i.e. the

prevailing market conditions and demand for that type of vessel. The vessel will usually be put up

for public auction and the potential purchasers will have to meet the reserve price put up by the

Sheriff. In bad market conditions, it may take several auctions to sell the vessel (or cargo as the

case maybe)70

50. The position of the parties at this juncture places the parties in a unique dilemma. The need to

sell the cargo immediately must not be reason to compromise on judicial integrity and vice versa.

66

SAL Annual Review 2013. 67



O46 Singapore ROC- Sale by Sheriff. 70

Dato Jude P Benny, Joseph Tan Jude Bennt LLP - Ship Arrest in Practice, 10th edition.


17

It is therefore suggested that the cargo be returned to the RESPONDENT so as to ensure the

normal transaction after which the RESPONDENT may from the proceeds obtained after

completion of the contract pay all claims of sub-freight. Hence the quick sale and fulfillment of

all-claims may be done without „distressing‟ the value of the coal and without questioning judicial

integrity.

IV. THAT THE CLAIMANTS ARE NOT ENTITLED TO ANY REMEDY

51. Respondents have not breached any essential condition of the charter party hence they are not

liable to pay damages for the same. It is averred that Claimant is not entitled to any remedy or

relief as so claimed.

[A] THAT THE RESPONDENT IS NOT LIABLE TO PAY ANY DAMAGES

52. Liability to pay some compensation/damages is established when the claimant proves, on the

balance of probabilities, that the Respondent‟s fault was causative of some tangible

harm/loss/injury. Some harm right to some compensation/duty to assess damages.71

When the

burden of proof has been discharged/the claimant has proved causation of some harm, it gives rise

to a right/entitlement to damages and a corresponding duty on the court/tribunal to assess the

amount of compensation attributable to the harmful consequences.72

In the present case no such

damage has been done by the breach of any condition by the Respondent.

(i) ‘Cost of exercising Lien’ is not payable

53.The respondent is not legally obliged to pay costs for exercising lien. There is a general rule

that the costs of retaining possession of goods in the exercise of a lien are not recoverable from

71




Palmer vs. Connecticut Ry& Lighting Co. 311 US 544, 1941; Cf. The Conqueror, 166 U.S. 110,1897.


18

their owner and, a fortiori, the lien cannot be excercised in respect of those costs73

.

54.Though the claimant is acting as a bailee of the cargo and has a right to recover expense

incurred by him in safeguarding cargo incurred after the termination of the adventure by

frustration or in consequence of repudiation by the cargo owner.74

But this right may enable him to

recover (only) the costs of landing and storing goods over which he has a lien in order to save the

costs of retention on board.75

55.Moreover while the decision in the Lehmann Timber allowed for recovering costs it was careful

in mentioning that it does not inevitably mean that there is also a lien for the recovery of those

expenses. That will depend upon the true construction of the contract or the terms of any relevant

bailment.76

56. The general principle is, beyond all question, that work and labour done or money expended

by one man to preserve or benefit the property of another do not according to English law create

any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to

repay the expenditure. Liabilities are not to be forced upon people behind their backs any more

than you can confer a benefit upon a man against his will.77

57.Common Law demands that there must be a contractual right, which could supplement the

jejuneness of the common law remedy. If there wasnt it could be said that the exercise of the lien

was merely for the benefit of the lienee withoutfault on the part of the lienor so that the expense

73

Somes v. British Empire Shipping Co., 8 H.L. Cas. 338, 1860. 74



Lloyd‟s Shipping Law Library, London: Informa Law from Routledge., Chapter 22. 75



Lloyd‟s Shipping Law Library, London: Informa Law from Routledge. Para. 17.37. 76



Lloyd‟s Shipping Law Library, London: Informa Law from Routledge., Para 17.39. 77

Flacke v. Scottish Imperial Insurance Co., 34 Ch D 234, 248, 1886.


19

involved in the retention of the chattel by the lienee was to be regarded as being for his own

account.78

[B] NO DAMAGES WHEN THE BREACH WAS FORCE MAJURE

58. Even if the likely factual result of compliance with the discrete broken obligation would in fact

have left the claimant better off and also, it seems, even where events were beyond the control of

the party in breach and thus beyond his actual ability to exercise his rights in the way most

favorable to him.79

[C] DAMAGES ASKED BY CLAIMANTS ARE TOO REMOTE

59.No loss may be recovered by way of damages if it is too remote a consequence of the breach.80

The governing purpose of damages is to put the party whose rights have been violated in the same

position, so far as money can do so, as if his rights had been observed.81

This purpose, if

relentlessly pursued, would provide him with a complete indemnity for all loss de facto resulting

from a particular breach, however improbable, however unpredictable. This, in contract at least, is

recognized as too harsh a rule.82

Hence, Claimants cannot hold the Respondents liable to pay

damages.

60.The Voyage charter party signed between the Claimant and the Respondent had no

Damage/Limitation Liability clause/Indemnity clause. Thus, making the Respondents liable for

damages without incorporating the same in the contract is unjustified. It is a matter of the

78

Moot Problem Para. 124. 79

Kurt A. Becherv v. Roplak Enterprises (The World Navigator), 2 Lloyd‟s Rep. 23, 1991. 80

Victoria Laundry v. Newman Industries, 2 K.B. 528, 539, 1949; Horne v. Midland Railway, L.R. 7 C.P., 591, 1872. 81

Sally Wertheim v. Chicoutimi Pulp Company, A.C. 301, 1911. 82



Lloyd‟s Shipping Law Library, London: Informa Law from Routledge., Pg. 628, Para 21.27.


20

construction of each contract into which particular category the wrongdoer‟s obligation falls83

and

in the present case the Claimants in the contract have not identified the category.

61. In the case where no special knowledge is proved by the Claimant, the question is whether a

reasonable and typical contracting party entering into the contract in question would contemplate

that loss or damage of the type claimed would result from the relevant breach.84

The test of

remoteness has to be applied assuming the particular breach which has occurred of the term held to

have been broken85

and it is unnecessary to enquire whether it was or was not probable that the

defendant‟s conduct would result in that particular breach.86

62.It is a matter of fact, in any particular case what degree of knowledge and contemplation is

found to be, or reasonably treated as, possessed by the party in breach.87

In The Baleares,88

the

Court of Appeal upheld the arbitrators‟ view that in a specialized trade a carrier would be expected

to know a considerable number of the patterns of trading of the product being carried.

[D] THAT RESPONDENT IS NOT LIABLE TO PAY THE LOSS OF EARNINGS TO CLAIMANTS

63. Whether a particular breach has caused a claimed loss and whether there has been a break in

the chain of causation is predominantly a question of fact and common sense.89

There may be

events, which break the chain between breach and claimed loss, and they may originate in the

claimant himself or in the actions or omissions of third parties or even in the claimant‟s failure to

83




Choil Trading S.A. v. Sahara Energy Resources Ltd, EWHC 374, 2010. 85

Stinnes Interoil g.m.b.h. v. a. Halcoussis & co. (The "Yanxilas"). [ 1982] 2 Lloyd's rep. 445. Queen's bench

division(commercial court) 86

Stinnes v. Halcoussis, 2 Lloyd‟s Rep. 445, 1984. 87

Kpohraror v. Woolwich Building Society, 4 All E.R. 119, 127, 1996. 88

Geogas v. Trammo Gas, 1 Lloyd‟s Rep. 215, 1993. 89

Galoo Ltd v. Bright Grahame Murray, 1 W.L.R. 1360, 1994.


21

avoid the consequences of such third party acts or omissions.90

64. The legal burden of proof rests throughout on the claimant to prove that the defendant‟s breach

of contract caused its loss.91

Claimant very specifically refused the nomination of Ningbo as the

discharge port, thus taking away the last way to complete the contract on the stipulated date. Thus,

Claimants have broken the chain of causation, and such a conduct of the Claimant „obliterated‟ the

wrongdoing of the Respondent and made the true cause of the loss the conduct of the claimant

rather than the breach of contract on the part of the defendant.92

65. If the breach of contract by the defendant and the claimant‟s subsequent conduct were

concurrent causes,93

it is unlikely that the chain of causation would be broken. Reckless conduct by

the claimant would ordinarily break the chain of causation.94

Claimants without getting any

response from the Respondents declared the contract breached and repudiated, thus acting

recklessly.

[E] THAT FREIGHT DOES NOT HAVE TO BE PAID

66. Claimants have breached the contract by terminating the contract without any just cause. Since

the vessel is still at sea95

and the Cargo is not in the process of shipment hence the Respondents

thus no freight is to be paid. Furthermore, Claimants have wrongfully breached the contract.

[F] RESPONDENT IS NOT LIABLE TO PAY DEMURRAGE BECAUSE A FORCE MAJEURE EVENT AS

90

Borealis v. Geogas Trading, 1 Lloyd‟s Rep. 482, 2011. 91

Borealis v. Geogas Trading, 1 Lloyd‟s Rep. 482, 2011. 92



Lloyd‟s Shipping Law Library, London: Informa Law from Routledge. Page 635, Para 21.43. 93

Cf. Beoco v. Alfa Laval Co., Q.B. 137, 1995. 94



Lloyd‟s Shipping Law Library, London: Informa Law from Routledge, Page 635, Para 21.43. 95

Clarifications, Moot Problem.


22

UNDER CLAUSE 24 CAUSED THE DELAY

67. Clause 19 of the Charter party excludes liability where a failure or delay in performance is

caused by a Force Majeure Event.96

RESPONDENT is not liable to pay demurrage because the

delay of the M.V. Tardy Tessa was by reason of a Force Majeure Event listed in Clause 24, and the

Parties intended for Clause 24 to cover long and indefinite delays.

68.A force majeure clause is a risk allocation mechanism.97

It gives commercial parties flexibility

and certainty by excluding liability where performance is prevented by events beyond their

control.98

The scope of a force majeure clause is a question of construction. 99

[G] THAT THE CLAIMANTS ARE LIABLE TO PAY THE DIMINUTION VALUE

69. Diminution in value is often seen as the diminution in sale value, rather than the cost of

purchase and there can be a considerable spread between the two.100

Where, for example, a

damaged chattel of little resale value is necessary to the claimant‟s business, it may be reasonable

to spend more on effecting restitution of the damaged chattel and the damages should reflect this

fact together with compensation for loss of profits in the meantime,101

but, as held in The Maersk

Colombo, the burden of proving the reasonableness of restitution lies on the claimant.

70.Claimants by exercising unnecessary lien over the cargo and not moving to the discharge port

nominated have put the cargo in grave danger. According to the letter of the master, the cargo

96

Moot Problem, Pg 32. 97

Joshua Thomson, Leigh Warnick and Kenneth Martin, Commercial Contract Clauses: Principles and

Interpretation , Thomson Reuters (Professional) Australia Ltd, 552, 2nd

ed, 2016. 98

Joshua Thomson, Leigh Warnick and Kenneth Martin, Commercial Contract Clauses: Principles and Interpretation ,

Thomson Reuters (Professional) Australia Ltd, 552, 2nd

ed, 2016. 99

Lebeaupin v. Richard Crispin & Co., 2 KB, 714, 720, 1920. 100



Lloyd‟s Shipping Law Library, London: Informa Law from Routledge. Page 642. Para 21.58. 101

Aerospace Publishing v. Thames Water Utilities, All E.R.(D) 39, 1990.


23

shows signs of over heating and might self ignite.102

The market value of the best quality coal has

been degrading and according to the report of Mr. Caleb Coalman103

the estimated loss of the

cargo comes up to $652,680.41104

which should be duly paid by the Claimants.

[H] THAT RESPONDENT IS NOT LIABLE TO PAY THE DAMAGES FOR DETENTION

71.Claimants have not provided for any detention clause hence they cannot ask for any detention

charges. Where the lien is for „demurrage‟ it will prima facie include both loading and discharging

port demurrage,105

but it will not extend to damages for detention106

unless, perhaps, the charter

contains no provision for demurrage in the strict sense.107

72. At whatever stage the default occurs, the owner is entitled to be compensated for the lost time.

If the lost time is not covered by the laytime and demurrage clauses of the charter, detention

damages will be allowed.108

But in the present case the lost time is already covered by the

demurrage clause.

[I] THAT THERE IS A DUTY TO MITIGATE LOSSES IN CASE OF A BREACH

73.The ship-owner is under a duty to when the charterer breaches/terminates a charter party.109

This requires the ship-owner to act as a prudent person who will bear the loss himself. This usually

means that the ship-owner will organise an alternative fixture at the earliest opportunity, even if

this means steaming to another loading port or area to employ the vessel. Failure to take measures

to find alternative work for the vessel could prevent the ship-owner from recovering the full loss of

102

Moot Proposition, Page 37. 103

Moot Problem, Page 97. 104

Moot Problem, Page 99- 100. 105

Fidelitas v. Exportchleb, 2 Lloyd‟s Rep. 113, 1963. 106

Clink v. Radford, 1 Q.B. 625, 1891. 107

Bannister v. Breslauer, L.R. 2 C.P. 497, 1867. 108

The Continental Reliance, SMA 2366, 1987. 109

Garnac Grain v. Faure & Faircloug, A.C. 1130, 1140, 1967.


24

gross profit they have incurred from the charterer‟s breach.110

74.If for argument‟s sake, it may be accepted that the charterers are in breach of the charter party,

the Owner‟s did nothing whatsoever to mitigate the losses. The fact that the charterers provided

the owners with multiple discharge ports during the course of the charter party which maybe noted

from the emails dated 16th

October (suggestion to divert vessel to Busan, South Korea) and as per

the email dated 21st October, 2016 (owners were requested to proceed to Ningbo), clearly shows

an intention on part of the charterer‟s to fulfill their obligations as per the charter party. All the

aforementioned requests from the charterer‟s had been ignored so as to purposefully and

intentionally frustrate the charter party.

110

The Elena d‟Amico, 1 Lloyd‟s Rep. 75, 1980.


25

REQUEST FOR RELIEF

For the reasons set out above, RESPONDENT requests that the Tribunal:

a) declare that the RESPONDENT was not in breach of the charter-party.

b) declare that the CLAIMANT is not entitled to exercise a valid lien over the cargo.

c) declare that it is neither just nor necessary for the cargo to be sold pendente lite.

d) declare that the CLAIMANT is not entitled to damages.

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

2017 memorandum f r - murdoch.edu.au€¦ · arbitration moot scenario ... trammo gas [1993] 1...

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