memorandum!for!the!respondent! claimant!!...summary of facts ! ... parsons corporation and others v...

Team 22 Memorandum for the Claimant

I

THE FOURTEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION

2013

The University of Southampton United Kingdom

IN THE RESPECT OF ARBITRAL PROCEEDINGS HELD IN LONDON

MEMORANDUM FOR THE CLAIMANT

On the behest of: Against: Twilight Carriers Aardvark Ltd.

RESPONDENT CLAIMANT

Team 22 Henriette Nilsson Tøssebro Guérin Loisel Vasileios Mavrakis Tine Therese Trulsen Olga Kasatkina Bahar Sayhan


1

THE THIRTEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT

COMPETITION 2012

The University of Southampton

United Kingdom Team 3

IN RESPECT OF ARBITRAL PROCEEDINGS IN BRISBANE

MEMORANDUM FOR THE

CLAIMANT At the behest of: Against: Markka Trading Company Lira Steamship Company 10 Crow Street Level 4 Schilling West Circle

Paseta CLAIMANT RESPONDENT Contributors: Robert Veal Josua Nel Schoeman Angeliki Kofopoulou Mateusz Bek No Reiff Robert Caldwell

! "#$ %&' % % ( "$ ) *#+, -‐ $ %.) *%/"01)+, "+2%

I

THE TWELFTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT

COMPETITION

2011

The University of Southampton

England Team 13

IN THE MATTER OF AN ARBITRATION HELD AT SINGAPORE

MEMORANDUM FOR THE RESPONDENT

On Behalf Of: Against: Neuland Petroleum Refinery Co Ltd Blue Sky Holdings Inc. 48 King Level 22, 80 Greater South Street Makai City Panama City Neuland Panama RESPONDENT CLAIMANT Team Ayodeji Sasegbon Robert Graham Caldwell Anne-Linn Heldens Forbord Kathryn Jane Law Alexandra Vella Oluwatobi Seriki Viktor Weber Nicole Lavalas Serhan Handani


II

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ........................................................................................................................................... IV

INDEX OF AUTHORITIES .............................................................................................................................................. V

SUMMARY OF FACTS ..................................................................................................................................... 1

1. JURISDICTIONAL ISSUES ......................................................................................................................... 2

1.1 THE ARBITRATION CLAUSE IS VALIDLY INCORPORATED AND COVERS THE DISPUTED MATTER ....... 2

1.2 THE CHOICE OF LAW IS ENGLISH LAW ................................................................................................................. 3

1.3 THE TRIBUNAL HAS JURISDICTION TO AWARD COMPOUND INTEREST (AA S. 49) ................................. 3

1.4 THE TRIBUNAL HAS JURISDICTION TO REVISIT THE ISSUE OF COSTS RELATED TO THE DUTCH

PROCEEDINGS ...................................................................................................................................................................... 4

2. THE RIGHTS OF SUIT ................................................................................................................................. 5

2.1 THE RESPONDENT HAS WRONGFULLY DEVIATED FROM THE CONTRACTUAL ROUTE ........................... 5

2.2 THE CLAIMANT IS THE LAWFUL HOLDER OF THE BS/L ................................................................................... 6

3. THE RESPONDENT DID NOT FULFIL HIS OBLIGATIONS AS PER CONTRACT OF

CARRIAGE ........................................................................................................................................................... 7

3.1 THE CLAIMANT DID NOT AGREE TO CHANGING THE PORT OF DISCHARGE TO LIVERPOOL ................ 7

3.2 THE RESPONDENT DEVIATED WITHOUT ANY JUSTIFIABLE REASON .......................................................... 8

3.2.1 The Hague Visby Rules do not provide grounds justifying the deviation .......................................... 8 3.2.2 The Liberty Clause does not provide grounds justifying the deviation .............................................. 8

3.3 ACCORDINGLY, THE CLAIMANT IS ENTITLED TO DAMAGES FOR THE WRONGFUL DEVIATION OF

THE RESPONDENT ........................................................................................................................................................... 10

3.4 THE CLAIMANT MUST BE PAID IN FULL AS THE RESPONDENT CANNOT RELY ON THE LIMITATION

OF LIABILITY CLAUSE .................................................................................................................................................... 10

4. DELIVERY ..................................................................................................................................................... 11

4.1 THE RESPONDENT WAS TO DELIVER THE GOODS TO THE CLAIMANT AT LIVERPOOL ........................ 11

4.2 THE SELLER INTENDED TO TRANSFER THE OWNERSHIP IN THE GOODS TO THE CLAIMANT ............ 11

4.3 THE CLAIMANT IS THE LAWFUL HOLDER OF THE BS/L ................................................................................ 11

4.4 NO REPRESENTATION WAS MADE TO THE RESPONDENT ............................................................................. 11

4.5 ALTERNATIVELY, THE CLAIMANT HAS RESERVED HIS RIGHTS ................................................................. 12

4.6 THE RESPONDENT IS IN BREACH OF THE CONTRACT OF CARRIAGE BY DELIVERING THE CARGO AT

ROTTERDAM AND NOT LIVERPOOL ........................................................................................................................... 12


III

4.7 THE RESPONDENT IS IN BREACH OF THE CONTRACT OF CARRIAGE BY DELIVERING THE CARGO

OTHER THAN AS AGAINST PRESENTATION OF THE BS/L ..................................................................................... 13

4.8 BREACH OF THE CONTRACT OF CARRIAGE RESULTS FROM DELIVERING THE CARGO NOT TO THE

CLAIMANT, THE PERSON IMMEDIATELY ENTITLED TO POSSESSION THEREOF AND THE LAWFUL

HOLDER OF THE BS/L ..................................................................................................................................................... 14

4.9 THE RESPONDENT IS IN BREACH OF COGSA 1971 REQUIREMENTS ........................................................ 14

5. LIABILITY: THE PIRACY ATTACK ................................................................................................... 15

5.1 THE RESPONDENT IS LIABLE BASED ON ART. III R. 1 HVR ........................................................................ 15

5.1.1 The Vessel was unseaworthy .............................................................................................................................. 15

.......................................................................................................................................................................... 16 5.2 THE RESPONDENT CANNOT ESCAPE LIABILITY BASED ON ART. IV HVR .............................................. 16

..................................................................................... 16 ............................................................................................ 17

........................................................................................................... 19 5.2.4 There is no escape through the no actual fault on the side of the Respondent. ............................ 19

6. TORT OF CONVERSION .......................................................................................................................... 20

6.1 THE RESPONDENT IS LIABLE IN CONVERSION ................................................................................................. 20

6.2 THE CLAIMANT HAS TITLE TO BRING AN ACTION IN CONVERSION .......................................................... 21

6.3 IGNORANCE AS TO THE CLAIMANT S BETTER POSSESSORY TITLE IS NO DEFENCE FOR THE

RESPONDENT .................................................................................................................................................................... 21

6.4 THE REMEDY CLAIMED: DAMAGES .................................................................................................................... 21

7. QUANTUM OF DAMAGES ...................................................................................................................... 22

7.1 THE CLAIMANT ARE ENTITLED TO THE INVOICE VALUE OF THE CARGO PURCHASED BY THE

SELLER ............................................................................................................................................................................... 22

7.2 ALTERNATIVELY, THE CLAIMANT IS ENTITLED TO THE DIFFERENCE BETWEEN THE INVOICE PRICE

AND THE VALUE OF THE CARGO IN LIVERPOOL ON 30 MARCH IN ADDITION TO THE LATTER VALUE . 22

7.3 THE RESPONDENT IS LIABLE FOR DAMAGES IN CONVERSION .................................................................... 23

7.4 THE RESPONDENT IS LIABLE FOR DAMAGES ARISING FROM THE TORT OF CONVERSION.................. 23

7.5 THE RESPONDENT IS LIABLE FOR COURT EXPENSES AND LEGAL FEES INCURRED BY THE

CLAIMANT FOR THE DUTCH PROCEEDINGS. ........................................................................................................... 23

7.6 ALTERNATIVELY, THE CLAIMANT IS ENTITLED TO BE COMPENSATED FOR ANY ADDITIONAL

EXPENSES THEY HAD TO MAKE BECAUSE OF THE NON-DELIVERY OF THE CARGO. .................................... 24

8. PRAYER FOR RELIEF .............................................................................................................................. 25


IV

List of Abbreviations

the Claimant Aardvark Ltd

the Respondent Twilight Carriers Inc

the Seller Beatles Oils & Fats Ltd

the Vessel m/v Twilight Trader the Charterparty, C/P Vegoilvoy charterparty between the Respondent and the Seller the arbitration clause Cl. 25 of the Charterparty

B/L, Bs/L Bill(s) of lading

CIF Cost Insurance Freight

FOB Free On Board

GMQ Good Merchantable Quality

PFAD Palm Fatty Acid Distillate

s. Section

Art. Article

r. Rule

para Paragraph

cl. Clause

HVR International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 as amended by the Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading 1968

the Regulation Brussels I Regulation (Council Regulation (EC) No 44/2001)

COGSA 1971 Carriage of Goods by Sea Act 1971

COGSA 1992 Carriage of Goods by Sea Act 1992

SOGA 1979 Sale of Goods Act 1979 (as amended)

Torts Act 1977 Torts (Interference with Goods) Act 1977

AA Arbitration Act 1996

UNCLOS United Nations Convention on the Law of the Sea 1982

A.S.M.V. Arrived Sound Market Value

A.D.M.V. Arrived Damaged Market Value


V

Index of Authorities A. Case Law European Union

Allianz SpA and Others v West Tankers Inc [2009] EUECJ C-185/07 .... 4

United Kingdom

Acatos v Burns 3 ExD 282 .......................................................................................................... 23

Aegean Sea Traders Corporation v Repsol Petroleo SA (The "Aegean Sea") [1998] 2 Lloyd's

Rep 39 ....................................................................................................................................... 7

Agius v Great Western Colliery Co [1899] 1 QB 413 ............................................................ 4, 23 Akrokerri (Atlantic) Mines Ltd v Economic Bank [1904] 2 KB 465 .......................................... 11

Allianz SpA v West Tankers Inc (The "Front Comor") [2012] EWHC 854 (Comm) ................... 5

Armory v Delamirie (1721) 1 Stra 505 ..................................................................................... , 21

Attorney General of the Republic of Ghana v Texaco Overseas Tankships Ltd (The "Texaco Melbourne") [1994] 1 Lloyd's Rep 473 .................................................................................. 22

Balian & Sons v Jolu, Victoria & Co Ltd (1890) 6 TLR 345 ....................................................... 5

Banning v Wright [1972] 1 WLR 972 ........................................................................................ 12

Berry v British Transport Commission ................................................................................... 4, 23

Braun v Bergenske S.S. Co (1921) 8 Ll.L.R. 81 ................................................................... 23, 24

Bremer Handelsgesellschaft mbH v C. Mackprang Jr [1979] 1 Lloyd's Rep 221 ..................... 12

BS & N Ltd v Micado Shipping Ltd (The "Seaflower") .................... 12

Crooks v Allan (1879) 5 QBD 38 ............................................................................................... 13

Cunard v Buerger [1927] 1 AC 1 ............................................................................................... 10

Curtis & Sons v Matthew (1919) 1 KB 425 ................................................................................ 18

Davies v Garrett (1830) 6 Bing 716 ............................................................................................. 5

East West Corp v DKBS ................................................................... 11

Ewbank v Nutting 137 ER 316 ................................................................................................... 22

Fiona Trust Holding Corporation v Privalov and Others [2007] UKHL 40 ............................... 2

Garbis Maritime Corporation v Philippine National Oil Co (The "Garbis") [1982] 2 Lloyd's

Rep 283 ..................................................................................................................................... 8

Glynn v Margetson & Co [1891] AC 351 .................................................................................. 10

Henderson v Williams [1895] QB 521, CA 530 ................................................................... 22, 23


VI

I.F.P. & C Insurance v Silversea [2004] Ll. R.I. Rep. 696 ........................................................ 17

Internationale Guano en Superhospaat-Werken v Robert Macandrew & Co [1909] 2 KB

360 ................................................................................................................................. 10

Islamic Investment Co 1 SA v Transorient Shipping Ltd and Alfred C Toepfer International GmbH (The "Nour") [1999] 1 Lloyds Rep 1 ......................................................................... 10

Jones v Winkworth (1658) Hard. 111 ......................................................................................... 21

Joseph Thorley Lt v Orchis Steamship Co [1907] 1 KB 660 ..................................................... 10

Koufos v C Czarnikow Ltd (The "Heron II") [1969] 1 AC 350 .................................................... 5

Kuwait Airways v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883 ............................ 20, 22, 23

Leduc v Ward [1888] 20 QBD 475 ......................................................................................... 5, 10

Lesotho Highlands Development Authority v Impregilo SpA [2005] 2 Lloyd's Rep 310 ............ 4

Livingstone v Raywards Coal C (1880) 5 App. Cas. 25 ............................................................. 22

London Joint Stock Bank Ltd v British Amsterdam Maritime Agency Ltd (1910) 11 Asp MLC

571 .......................................................................................................................................... 13

Low v Bouverie [1891] 3 Ch 82 .................................................................................................. 12

Martindale v Smith (1841) 1 QB 389 ......................................................................................... 20

Mercer v Jones (1813) 3 Camp 477 ..................................................................................... 22, 23

Millen v Brasch (1882) 10 QBD 142 .......................................................................................... 24

Miramar Maritime Corporation v Holborn Oil Trading Ltd [1983] 2 Lloyd's Rep 319............. 3 Miramar Maritime Corporation v Holborn Oil Trading Ltd (CA) [1984] 1 Lloyd's Rep 142.... 3 Monarch Steamship Company Ltd v A/B Karlshamns Oljefabriker and Others [1949] 1 All ER

1 ................................................................................................................................................ 5

Money v Jordan 51 ER 88 .......................................................................................................... 11

Morrison v Shaw Savill [1916] 2 KB 783 .............................................................................. 6, 10

Motis Exports Ltd v Dampskibsselskabet AF 1912 Aktieselskab and Aktieselskabet Dampskibsselskabet Svendborg ................................................. 21

Motis Export Ltd v Dampskibsselkabet AF 1912 Aktiesekkab [2000] 1 Lloyd's Rep 211..........4 Motor Oil Hellas (Corinth) Refineries S.A. v Shipping Corporation of India (The

[1990] 1 Lloyd's Rep 391 .................................................................. 11, 12

National Navigation Co v Endesa Generacion SA [2009] EWCA Civ 1397 ............................... 4

O'Hanlan v The Great Western Railway Company 122 ER 1274 .............................................. 22

Owners of Cargo on Board The Merak v The Merak (Owners). (The "Merak") [1964] 2 Lloyd's

Rep 527 ..................................................................................................................................... 3

Parsons Corporation and others v CV Scheepvaartonderneming "Happy Ranger" and Others. (The "Happy Ranger") [2002] 2 Lloyd's Rep 257 .................................................................. 11


VII

Partenreederei M/S 'Heidberg' v Grosvenor Grain and Feed Co Ltd (The "Heidberg") [1994]...

1 Lloyd's Rep 287 ..................................................................................................................... 9

Paterson Steamships v Canadian Co-operative Wheat Producers [1934] AC 538 ................... 19

Pesquerías y Secaderos de Bacalao v Beer (1949) 1 All ER 845 .............................................. 18

Petrograde Inc v Stinnes G. 142 ............................................................. 13

Reardon Smith Line v Baltic and Black Sea Insurance [1939] AC 562 ....................................... 5

Rodocanachi v Milburn (1887) 18 QBD 67 ............................................................................... 22

SA Sucre Export v Northern River Shipping Ltd.(The "Sormovskiy") 3068 266 .......................................................................................................................................... 13

Sanders v Maclean (1883) 11 QBD 327 .................................................................................... 11

Sanderson v Marsden (1922) 10 Ll. L. Rep 467 ........................................................................ 20

Sewell v Burdick (1884) 10 App Cas p 105 ................................................................................ 13

SIAT di dal Ferro v Tradax Overseas SA [1980] 1 Lloyd's Rep 53 ............................................. 6

Solloway v McLaughlin [1938] AC 247 ..................................................................................... 21

Spinneys (1948) Ltd. V. Royal Insurance Co. Ltd ........................... 17

Stag Line v Foscolo, Mango & Co Ltd [1932] AC 328 .......................................................... 8, 10

Suisse Atlantique Societe d'Armament SA v NV Rotterdamsche Kolen Centrale [1967] 1 AC

361 .......................................................................................................................................... 10

Sulamérica v Enesa Engenharia [2012] Lloyd's Rep IR 405 ....................................................... 3

Sutton v Baillie (1891) 65 LT 528 .............................................................................................. 24

Swiss Bank Corporation v Novorissiysk Shipping Co. (The "Petr Shmidt") 202 ............................................................................................................................................ 3

Sze Hai Tong Bank v Rambler Cycle Co [1959] AC 576 ........................................................... 13

Tate & Lyle v Hain Steamship Co (1936) 55 Ll L Rep 177 ......................................................... 5

The Arpad (1934) 48 Ll L Rep 202 ............................................................................................ 23

The Voltaz ............................................................................................... 3

UGS Finance Ltd v National Mortgage Bank of Greece (1964) 1 Lloyd's Rep 446 .................. 10

Wibraham v Snow (1669) 2 Wms. Saund. 47a ........................................................................... 21

Whistler Internationa Ltd v Kawasaki Kisen Kaisha Ltd (The "Hill Harmony")........................ 6 Wilson Sons & Co v Owners of Cargo per the Xantho (The "Xantho") (1887) 12 App Cas 483

................................................................................................................................................ 16

Australia Thiess Bros (Queensland) Proprietary Ltd v Australian Steamships Proprietary Ltd [1955] 1

Lloyd's Rep. 459 ......................................................................................................................... 8


VIII

B. Statutes Statutes

Carriage of Goods by Sea Act 1971 ................................................................................... passim

Carriage of Goods by Sea Act 1992 .................................................................................... passim

Sale of Goods Act 1979 (as amended) ....................................................................................... 12

Torts (Interference with Goods) Act 1977 ..................................................................... 20, 21, 23

C. Treaties

International Convention for the Unification of Certain Rules of Law relating to Bills of Lading

(adopted 25 August 1924; entered into force 2 June 1931) as amended by the Protocol to

Amend the International Convention for the Unification of Certain Rules of Law Relating to

Bills of Lading (adopted 23 February 1968; entered into force 23 June 1977) (The Hague-

Visby Rules) ............................................................................................................................................ passim

D. Books Aikens R., Lord R. and Bools M., Bills of Lading (1st edn, Informa London 2005) .... 13, 19, 20

Bridge M. G. and Benjamin J.P., Benjamin's sale of goods (8th edn, Sweet & Maxwell 2010) 6,

20

Dugdale A., Jones M., Clerk and Lindsell on Torts (20th edn, Sweet and Maxwell 2010) . 21, 23

Gaskell N., Asariotis R. and Baatz Y., Bills of Lading: Law and Contracts (Informa London

2000) ........................................................................................................................... 5, 6, 7, 20

Girvin S., Carriage of Goods by Sea (2nd edn, OPU Oxford 2011) ............................................ 5

McGregor H., McGregor on Damages (18th edn, Sweet & Maxwell 2009) ....................... 23, 24

Tetley W., Marine Cargo Claims (4th edn, Thomson Carswell 2008) ................................... 9, 17

Thomas R., Carriage of Goods under the Rotterdam Rules (Informa London 2010) .... 14, 17, 20

Todd P., Bills of Lading and Bankers documentary Credits (4rd edn, Informa London 2007) . 14

Treitel G., Reynolds F.M.B. and Carver T.G., Carver on Bills of Lading (3rd edn, Sweet &

Maxwell 2011) ............................................................................................................ 5, 6, 9, 18

E. Journal (2009) African

Security Review 18, 3 ............................................................................................................. 19


IX

2011 Vol. 1, 175 ..................................................................................................................... 16

.................................................................................................. 17

by Atlantic treaty Association in Atlantic Voice Vol. 1, No. 1 (Oct 2011) 3. Available at <

http://issuu.com/atlantic_treaty_association/docs/

vol._1__no._1__oct_2011_ > accessed 21 April 2013 ........................................................... 18

....................................... 18

f Force: Developments off the Coast of

-414 ...................................................................... 18

Team 22 Memorandum for the Respondent

1

Summary of facts

1 On 23 May 2008 the Seller sold a cargo of PFAD to the Claimant CIF Rotterdam, subsequently

changed to CIF Liverpool. The Seller contracted with the Respondent to use the Vessel, by C/P

dated 12 September 2008. On 25 October 2008 a set of four Bs/L were issued, which

incorporated the C/P, including the Law and Arbitration Clause. The contract price was paid on

26 January 2009 and the Bs/L were endorsed to the Claimant.

2 On 14 November 2008 the Vessel entered the Gulf of Aden and the crew commenced anti-

pirate watch.1 On 15 November the Vessel was boarded by Somali pirates and was held hostage

until 13 February 2009.

3 According to the PFAD sample analysis, cargo contamination was within normal limits. This

result might not have been indicative of the overall quality of the cargo and the possibility of

unauthorized access to the cargo during the period of captivity could not have been discounted.

4 On 2 December 2008 and 20 January 2009 the Claimant sold certain quantities of PFAD to

Delta Ltd. and Caspian BV. On 23 and 25 November 2009 these buyers confirmed that the

outstanding sale contracts were for technical use only and accordingly they were prepared to

take the original, now non GMQ, cargo.

5 On 6 March 2009 the Claimant informed the Seller that the latter was in repudiatory breach of

the sale contract, based on their failure to insure the cargo under the agreed terms and rejected

delivery of the cargo. The Seller accepted this as a notice of anticipatory breach of contract by

the Claimant and informed the Claimant that the latter had abandoned the cargo and was no

longer the legal holder of the Bs/L and that the Vessel would proceed to Rotterdam. Against a

letter of indemnity, issued by the Seller, the Respondent delivered the cargo to the Seller upon

arrival at Rotterdam, without production of the Bs/L.

1 see Report by Aspinall Lewis International. Moot scenario 41


2

6 On 23 March 2009 the Seller arrested the cargo, as security against the Claimant. By

permission of the Dutch Court, the cargo was sold with the proceeds of the sale being held in

its account, pending a decision in this London arbitration. The Claimant made an unsuccessful

appeal to suspend enforcement of the sale and have the arrest of the cargo set aside.

7 The Claimant arrested the Vessel as a security for their claims for damages against the

Respondent for delivering the cargo without the production of the Bs/L. By order of the

Rotterdam Court the arrest of the Vessel was lifted in return for the Seller providing security of

USD 1,400,000 by way of the Paradox Bank Guarantee. The Respondents failed to have the

arrest of the Vessel set aside.

8 According to the expert jointly instructed by the Claimant and the Respondent, there is a

market for non GMQ PFAD in the UK and Europe; the price for non GMQ PFAD in the UK is

the same as for the GMQ product, while in the rest of Europe it is from 60% to 70% of the

GMQ PFAD.

9 The Claimant referred the dispute to arbitration.

1. Jurisdictional Issues

1.1 The arbitration clause is validly incorporated and covers the disputed matter

10 In Fiona Trust v Privalov2 it was held that the general presumption is that the courts should not

purport to delimit the scope of an arbitration clause based on fine differences in wording. In

after

this example evinces the general application of their Lordships.

11 The wording of the incorporating clause in the Bs/L is of a general nature and referred to

to

refer to arbitration the entirety of the disputes related to the relationship between the carrier and

the holder of the Bs/L.

2 [2007] UKHL 40


3

12 At first sight it might appear as if the arbitration clause introduces an inapposite waiver of

freight, deadfreight and demurrage. Viewing the incorporation view of the C/P terms as a

whole, it is evident that cl. 25 is incorporated as well. This clause expressly refers to a lien

continuing after delivery into the possession of the B/L holder.3Additional support can be

drawn from The Merak, 4 where general words were held to be able to incorporate an arbitration

clause that made specific reference to the B/L holder.

13 For these reasons the arbitration clause is apt for incorporation in its entirety.

1.2 The choice of law is English law

14 5 and therefore the choice

of law is explicit and conclusive. One can infer that the parties intended the rider provision,

ies intended English law to govern the procedural matters of the arbitration,

completely discarding the default choice of law in cl. 31 of the C/P.

15 Additionally, the wording selected by the parties evinces their choice of supervisory

jurisdiction of English courts on matters concerning the arbitral procedure. This is however

only possible if the seat is in England, as expressed in s. 2(1) of the AA and in Sulamérica v

Enesa Engenharia.6

1.3 The Tribunal has jurisdiction to award compound interest (AA s. 49)

16 In The Petr Shmidt,7 a reference to London was sufficient to allow application of the 1950

Arbitration Act, London being the seat of the arbitration. The similarity with the recap telex in

the present case is compelling and the clause should therefore be interpreted in the same way.

3 in this respect see Miramar Maritime Corporation v Holborn Oil Trading Ltd [1983] 2 Lloyd's Rep 319 approved by the Court of Appeal in [1984] 1 Lloyd's Rep 142 where a similar clause in a C/P was effectively incorporated by a similar clause in a B/L 4 [1964] 2 Lloyd's Rep 527 5 e.g. moot scenario p 17 6 [2012] EWCA Civ 638, see para 29 7 The Voltaz


4

17 Alternatively, compound interest is a matter of substantive law. This has been held8 to be either

the substantive law of the contract or the law of the seat, both of which point to English law.

Further on, in Lesotho Highlands Development Authority v. Impregilo SpA,9 a judgment upheld

by the House of Lords,10 it was held that the question of interest is a question of substance. For

these reasons, English law applies in any case and compound interest should be awarded.

1.4 The Tribunal has jurisdiction to revisit the issue of costs related to the Dutch proceedings

18 There is no issue estoppel precluding the Tribunal from dealing with the costs issue. The claim

is one for damages, a different issue than the costs and therefore the tribunal will not have to re-

open the case brought before the Dutch courts. The court fees refer to the proceedings for the

arrest of the cargo, in which the Claimant attempted to secure his substantive rights as lawful

holder of the Bs/L.11

19 In our case the Claimant had entered into a contract with the Respondent as a result of the

transfer of the Bs/L to him. One of the duties of the carrier is not to deliver the shipment

without presentation of the required documentation.12 The Respondent should be deemed to

know that delivery to a non-B/L holder would result in suit by the actual Bs/L holder.

20 Alternatively, it is submitted that the obiter comments in The Wadi SUDR13 cannot be relied

upon. The basis of the discussion was whether an anti-suit injunction could be granted when a

European Union court had held it had jurisdiction to deal with the issue, applying The Front

Comor.14 The issue at hand allows the aforementioned cases to be distinguished insofar our

claim is a claim for damages and therefore leaves the case as decided by the Dutch courts

8 [2012] EWCA Civ 638 9 10 11Agius v Great Western Colliery Co Ltd [1899] 1 QB 413 interpreted by Berry v British Transport Commission [1962] 1 QB 306 as holding that loses an action brought by a third party, he may recover against the wrongdoer who has broken his contract [...] the costs of the

12 Motis Export Ltd v Dampskibsselkabet AF 1912 Aktiesekkab [1999] 1 Lloyd's Rep 837; upheld by the Court of Appeal [2000] 1 Lloyd's Rep 211 13 National Navigation Co v Endesa Generacion SA [2009] EWCA Civ 1397 14 Allianz SpA v West Tankers Inc Case C-185/07


5

untouched. For this reason, effect should be given to The Front Comor,15 where it was held that

arbitrators are not bound by the principle of effective judicial protection enshrined in the

Regulation.

21 In the further alternative, the Regulation itself in s.32 appears to consider court orders

determining costs as individual judgments. If this is true, the nature of those judgments is not in

rem, as it does not determine the status of the res and therefore the Claimant is not estopped.

2. The Rights of Suit

2.1 The Respondent has wrongfully deviated from the contractual route

22 Contrary to the geographical route clarified by the named ports in the Bs/L, the Vessel berthed

in the port of Rotterdam, Netherlands.16 The transhipment was not acknowledged with the

Claimant. Without any further agreement with the Claimant, the route constitutes a de facto

deviation from the agreed route in breach of both the HVR and the contract of carriage.17

Against this background the Claimant has a claim for damages for the fall in the market,18 and

transhipment of cargo.19

23 A carrier is under an implied undertaking to prosecute the voyage by the usual and customary

course.20 The C/P does not make any express provision as for the route to be followed. In the

absence of an express provision, the usual and proper route is a direct geographical route.21

24 The Bs/L and C/P both stipulate Liverpool as port of discharge. The fact that the original sale

to the carriage contract.22

15 Allianz SpA v West Tankers Inc (The Front Comor) [2012] EWHC 854 (Comm) 16 Moot scenario, 53, para 1 17 Nicholas Gaskell, Regina Asariotis and Yvonne Baatz, Bills of lading : law and contracts (LLP 2000) 177 18 Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350. 19 Monarch Steamship Company Ltd v A/B Karlshamns Oljefabriker and Others [1949] 1 All ER 1; Nicholas Gaskell, Regina Asariotis and Yvonne Baatz, Bills of lading : law and contracts (LLP 2000) 179 20 Tate & Lyle v Hain Steamship Co (1936) 55 Ll L Rep 177; Balian & Sons v Jolu, Victoria & Co Ltd (1890) 6 TLR 345; Davies v Garrett (1830) 6 Bing 716; Guenter H. Treitel, Francis M. B. Reynolds and Thomas Gilbert Carver, Carver on bills of lading (3rd edn, Sweet & Maxwell 2011) p 609 21 cf Leduc v Ward [1888] 20 QBD 475; Reardon Smith Line v Baltic and Black Sea Insurance [1939] AC 562; Stephen Girvin, Carriage of goods by sea (2nd edn, OUP Oxford 2011) 401


6

25 By steering east through the English Channel to Rotterdam, the Respondents did not follow the

geographical route, which would be to continue North directly towards Liverpool. The distance

between these ports is 688 nautical miles (791 miles),23 which cannot be regarded as on the

course of the voyage. 24 Neither can the route be regarded as modified for navigational

reasons.25

26 Any deviation from the discharging port given in the contract of carriage must be declared and

agreed with the lawful holder of the Bs/L.26 In the present case, the Claimant, as a lawful holder

of the Bs/L,27 expressly notified the Respondent that discharging in Rotterdam is a breach of

the contract. 28 It is clear from the facts 29 that there are no other justifiable reasons for

Respondents to deviate, either statutory or contractual.

2.2 The Claimant is the lawful holder of the Bs/L

27 The Claimant is the lawful holder of the Bs/L in good faith, and thus is entitled to the rights of

suit and of delivery under ss. 2(1) and 5(2)(a) COGSA 1992. Good faith is required at the

appropriation of the

statements that good faith is not negated by negligence, 30 lead a minori ad maius to the

lawful holder.

28 Knowledge that the sale contract has come to an end cannot negative the bona fide state of

mind of the endorsee at the time of the endorsement and before the delivery. The good faith

requirement, as shown in the previous paragraph, covers the act of appropriation, not the

22 SIAT di dal Ferro v Tradax Overseas SA [1980] 1 Lloyd's Rep 53; Charles Debattista, Bills of Lading in Export Trade (3rd edn, Tottel 2008) 173; Michael G. Bridge and Judah P. Benjamin, Benjamin's sale of goods (8th edn, Sweet & Maxwell 2010) 1518 23 http://www.searates.com/reference/portdistance/> accessed 12 February 2013 24 cf Morrison v Shaw Savill [1916] 2 KB 783, where the extra distance was only 54 miles 25 cf The Hill Harmony [1999] 2 Lloyds Rep 209 26 Nicholas Gaskell, Regina Asariotis and Yvonne Baatz, Bills of lading : law and contracts (LLP 2000) 177 27 s. 5(2)(c) COGSA 1992 28 Moot scenario, 36 30 see infra 30 Guenter H. Treitel, Francis M. B. Reynolds and Thomas Gilbert Carver, Carver on bills of lading (3rd edn, Sweet & Maxwell 2011) at para 5-025

http://www.searates.com/reference/portdistance/


7

was no underlying sales contract. Therefore, in the present case there has been no conduct on

the part of the Claimant, let alone bad faith.

29 The Aegean Sea Traders Corporation v Repsol Petroleo SA. The Aegean Sea [1998] 2 Lloyd's

Rep 3931 is clearly distinguishable, since it applies to situations where both the endorsement

and the delivery did not correspond to any contract. It was held that s. 5(2)(b) COGSA 1992

accepted delivery of it as the endorsee or transferee. As soon as they saw the endorsement to

32 In the present,

however, case the claimants were endorsees in the ordinary course of the Bs/L.

3. The Respondent did not fulfil his obligations as per contract of carriage

3.1 The Claimant did not agree to changing the port of discharge to Liverpool

30 As a party to the contract of carriage, contained in or evidenced by the Bs/L, the Claimant may

agree to any deviation from the route.33 In the present case the Claimant has expressly notified

the Respondent that discharging in Rotterdam is a breach of the contract.34 The Claimant has

thereby made it clear that he wanted the vessel to continue in her ordinary course directly

towards Liverpool. The correspondence between the Respondent and the Claimant was not

directed towards the Seller, and is therefore without relevance in this regard.

31 An allegation on waiver made by the Respondent on the deviation issue will not succeed. In a

situation where the intention to discharge the goods in Rotterdam is made clear and

unequivocal to the Respondents, further actions taken by the Claimant are all actions which are

necessary in order to minimise the loss resulting from the R ch.

31 [1998] 2 Lloyd's Rep 39 32 The Aegean Sea [1998] 2 Lloyd's Rep 39, 60 33 Nicholas Gaskell, Regina Asariotis and Yvonne Baatz, Bills of lading : law and contracts (LLP 2000) 177 34 Moot scenario, 36


8

32 Alternatively, the Claimant acted while reserving all his rights.35

3.2 The Respondent deviated without any justifiable reason

33 Neither the HVR nor the contract of carriage provide grounds justifying the deviation.

3.2.1 The Hague Visby Rules do not provide grounds justifying the deviation

34

Liverpool. Furthermore, the property had already diminished in value at the time of the

deviation and thus it was not necessary to discharge the property in Rotterdam in order to save

within the meaning of Art. IV r. 4 HVR.

35 Prima facie the threshold to invoke the provision seems high, and thus such contention rarely

succeeded.36 According to Stag Line v Foscolo, Mango & Co,37

departure from the contract voyage might a prudent person controlling the voyage at the time

make and maintain, having in mind all the relevant circumstances existing at the time,

including the terms of the contract and the interests of all parties concerned, but without

38

36 In the present case the C/P provided for no other destination port than Liverpool. The

wrongfulness of any deviation was put to the Responden

2009.39 There was no other reason to deviate but the fact that the Seller found buyers of the

cargo and thereby ordered the Respondent to discharge the cargo in Rotterdam against an

indemnity. Consequently, the deviation has been unreasonable.

3.2.2 The Liberty Clause does not provide grounds justifying the deviation

37 35 see e.g. Moot scenario, 27 36 John Furness Wilson, Carriage of goods by sea (7th edn, Pearson Longman 2010) 208 37 [1932] AC 328 38 see also Thiess Bros (Queensland) Proprietary Ltd v Australian Steamships Proprietary Ltd [1955] 1 Lloyd's Rep 459 39 Moot scenario, 36


9

contract of carriage.40 Consequently, the liberty clause in the C/P does not apply.

38 The C/P is not identifiable as neither the type nor date is specified in the Bs/L. It follows from

the obiter statement of Judge Diamond in The Heidberg41 y dated --

- may be capable of referring to the recap telex between the parties to the contract of

affreightment, but not to the terms of the voyage charter itself. Indeed, the fixture recap e-mail

42 However, this e-mail was sent

before the Claimant became a party to the contract of carriage as a lawful holder of the Bs/L.

39 If the C/P

onditions,

incorporate the liberty clause (cl. 11) of the C/P.43

40 If the liberty clause is incorporated, it nevertheless follows from Art. III r. 8 HVR, that a clause

than as provided in these Rules, shall be null and void and of no e

on the issue, Tetley argues that a general clause must be rendered ineffective by virtue of Art.

III r. 8 HVR.44

over the terms of the contract of carriage.

41 The liberty clause gives the shipowner a

40 Garbis Maritime Corporation v Philippine National Oil Co (The Garbis) [1982] 2 Lloyd's Rep 283 41 Partenreederei M/S 'Heidberg' v Grosvenor Grain and Feed Co Ltd (The Heidberg) [1994] 1 Lloyd's Rep 287 42 Moot scenario, 3-4 43 Guenter H. Treitel, Francis M. B. Reynolds and Thomas Gilbert Carver, Carver on bills of lading (3rd edn, Sweet & Maxwell 2011) 114 44 William Tetley, Marine Cargo Claims (4th edn, Thomson Carswell 2008) 752


10

IV r. 4 HVR. Consequently, cl. 29 of the C/P shall be regarded null and void and of no effect.

42 A liberty clause is to be construed according to the principle of contra proferentem.45 Widely

drafted liberty clauses have been given effect in case-law. 46 As for cl. 21, giving the

The Nour47 that such a

phrase must be construed by reference to the contractual route (which in the present case does

not permit deviation to Rotterdam). In addition, the wording of cl. 29 is all-embracing, allowing

wide discretion to the Respondent, which is contrary to the main purpose of the contract.48

43 In the present case the deviation was made for the purposes of discharging the goods other than

to the holder of the Bs/L. In any case, the grounds given in either clause are not fulfilled.

3.3 Accordingly, the Claimant is entitled to damages for the wrongful deviation of the

Respondent

44 Drawing from the above, there has been unjustified deviation from the voyage contracted for.

There is no need to prove causation between the loss and the deviation.49 Consequently, the

Claimant is entitled to damages constituted of the possible price to be paid in Liverpool

irrespectively of any causal link.

3.4 The Claimant must be paid in full as the Respondent cannot rely on the limitation of

liability clause

45 T him from invoking the HVR exceptions and limitations.50

Furthermore, the deviation deprived him from any contractual limitations.51 It does not matter

that the damage to the cargo occurred before the deviation took place.52

45 Glynn v Margetson & Co [1891] AC 351; Leduc v Ward 20 QBD 475 46 Glynn v Margetson & Co [1891] AC 351 47 [1999] 1 Lloyds Rep 1 48 Glyn v Margetson [1983] AC 391 49 Joseph Thorley Lt v Orchis Steamship Co [1907] 1 KB 660 50 James Morrison v Shaw, Savill & Albion [1916] 1 KB 783; Cunard v Buerger [1927] 1 AC 1; Stag Line v Foscolo, Mango & Co Ltd [1932] AC 328 51 UGS Finance Ltd v National Mortgage Bank of Greece (1964) 1 Lloyd's Rep 446; Suisse Atlantique Societe d'Armament SA v NV Rotterdamsche Kolen Centrale [1967] 1 AC 361 52 Internationale Guano en Superhospaat-Werken v Robert Macandrew & Co [1909] 2 KB 360


11

4. Delivery

4.1 The Respondent was to deliver the goods to the Claimant at Liverpool

46 It has been established hereinbefore that the Claimant is the lawful holder of the Bs/L. 53 These

54,55 Thus, they

operate as documents of title and are transferable by endorsement. 56 Neither party to this

57

4.2 The Seller intended to transfer the ownership in the goods to the Claimant

47 At the time of the endorsement the Seller had the intention to transfer the ownership in the

goods covered by it.58 This was not contested by any of the parties. Thus, possession of the bills

is equivalent to possession of the goods covered by them; consequently, the Claimant was

entitled to delivery of the goods at the port of discharge.

4.3 The Claimant is the lawful holder of the Bs/L59

4.4 No representation was made to the Respondent

48 Alternatively, if the Respondent contends that the Claimant is cannot dispute that Liverpool

was the contractual port of discharge, this argument is bound to fail. The correspondence

between the Claimant and the Seller was not communicated to the Respondent, as required by

authority.60 Even if the Respondent had come across the correspondence this would amount to

a soliloquy, therefore not allowing a successful plead of estoppel.61

53 see Claimant memorandum at 2.2 54 Parsons Corporation and others v CV Scheepvaartonderneming "Happy Ranger" and others. (The "Happy Ranger") [ 2002] 2 Lloyd's Rep 257 55 Moot scenario, 14 56 John Wilson, Carriage of Goods by Sea (7th edn, Pearson 2010) 132 57 see Lord Justice Bowen in Sanders v Maclean (1883) 11 QBD 327, 341 58 ibid, see also East West Corp v DKBS 59 supra under 2.2 60 [1990] 1 Lloyd's Rep 391 61 Robarts v Tucker (1851) 16 QB 560; Money v Jordan 51 ER 88, Akrokerri (Atlantic) Mines Ltd v Economic Bank [1904] 2 KB 465


12

49 Further or alternatively and for the reasons stated above, the letter sent to the Respondent on 20

March 2009 does falls short of amounting to unequivocal representation62 because it does not

or delivery to the Seller.

4.5 Alternatively, the Claimant has reserved his rights

50 -mail dated 16 March 2009, including the rights to

the cargo, was not overridden by the subsequent correspondence between the parties. The

Pegasus63 established that such a clause is negated by unequivocal conduct amounting to

waiver by estoppel. In order for that case to apply in the present state of facts unequivocal

conduct is required64 on behalf of the Claimant, so that they had relinquished their rights to

delivery of the cargo.

51 However, in the e-ma

to the prospective sales destinations. This clearly displays that the decision was not solely for

the Sellers to make.

52 The following day the Claimant explicitly stated that they would exercise their rights as to the

cargo. This correspondence is far from unequivocal in showing that the Claimant gave up his

reservation, and thus can only be deemed to have reserved his rights.

4.6 The Respondent is in breach of the contract of carriage by delivering the cargo at

Rotterdam and not Liverpool

53 The Seaflower65

66 S. 13 SOGA

Consequently, it is a contractual breach if goods do not correspond to their description.

Concerning the identification of the delivery point, the port of loading was held to be it is 62 Low v Bouverie [1891] 3 Ch 82, Motor Oil Hellas (Corinth) Refineries S.A. v Shipping Corporation of India (The

[1990] 1 Lloyd's Rep 391, Banning v Wright [1972] 1 WLR 972 63 Bremer Handelsgesellschaft mbH v C Mackprang Jr [1979] 1 Lloyd's Rep 221 64 supra no3-6 66 67 at [348]


13

67 Equally, in a

CIF contract the delivery point is of the same importance for the buyer, i.e. vital, and the port of

discharge is part of the description of the goods.

54 68 Pari passu, the

Bs/L 69 70 they

71 Thus, by delivering the

cargo at Rotterdam, the Respondent breached a condition of the contract of carriage.

4.7 The Respondent is in breach of the contract of carriage by delivering the cargo other than

as against presentation of the Bs/L

55 Pursuant to the presentation rule,72 the Carrier must deliver the goods against presentation of

the B/L. Otherwise he commits a breach of contract 73 depriving him of any contractual

limitation of liability.74

56 By delivering the goods without presentation of the corresponding B/L, the Respondent acts at

his peril, since such actions amount to a wilful misconduct and a deliberate breach of his

contractual obligation.75 Only two exceptions exist,76 namely, where the place of discharge

requires delivery without presentation77and where a binding custom at the port of discharge has

the same result.78

57 As the Respondent failed to deliver the goods against production of the original Bs/L, held by

the Claimant, and has no contractual justification for doing so, he is in breach of the contract of

68 Petrograde Inc v Stinnes G 69 Moot scenario, 3 70 see Mister Justice Lush in Crooks v Allan (1879) 5 QBD 38 at 40. See also Lord Bramwell in Sewell v Burdick (1884) 10 App Cas 105 70 see Richard Aikens, Richard Lord and Michael Bools, Bills of Lading (Informa, London 2005) para 2.32 71 Moot scenario, 14 72 London Joint Stock Bank Ltd v British Amsterdam Maritime Agency Ltd (1910) 11 Asp MLC 571 73 The Sormovskiy 74 Sze Hai Tong Bank v Rambler Cycle Co [1959] AC 576 75 The Sormovskiy 3068 76 see Charles Debatistta, Bills of Lading in Export Trade (3rd edn Tottel, 2009) 39 77 The Sormovskiy 3068 78 ibid


14

carriage. There is nothing in the present factual matrix that allows applicability of any of the

exceptions stated. Thus, the Respondent is in breach of the contract of carriage.

4.8 Breach of the contract of carriage results from delivering the cargo not to the Claimant,

the person immediately entitled to possession thereof and the lawful holder of the Bs/L

58 If the holder of a B/L is able to demand possession from the Carrier, the latter must be under an

obligation to deliver to the holder, and must not deliver to anyone else;79

gone as the trigger to title to sue, buyers covered by the 1992 Act can ask the carrier for the

goods and sue the carrier in case of loss, damage or short- 80

59 As developed hereinbefore,81 the Claimant is the lawful holder of the Bs/L and he is then

covered by COGSA 1992. By a letter sent to the Respondent on 20 March 2009, the Claimant

specified that he had not authorised the discharge of the cargo in Rotterdam. Since the

Respondent did not deliver the cargo to the holder of the Bs/L, but to someone else, he is in

breach of the contract of carriage. Thus, after demanding the goods from the Respondent, the

Claimant is entitled to bring an action against him for non-delivery.

4.9 The Respondent is in breach of COGSA 1971 requirements

60

Art. III.2 COGSA 1971.82

have properly and carefully kept and cared

for the cargo if he had delivered it at Liverpool on 20 March 2009 as required.83 Being in

breach of this duty, the Respondent is in breach of COGSA 1971 requirements.

79 see Paul Todd, Bills of Lading and Bankers documentary Credits (4rth edn Informa, London 1998) 107 80 see Charles Debatistta, Bills of Lading in Export Trade (3rd edn Tottel, 2009) 32 81 supra under 2.2 82 see Rhidian Thomas, Carriage of Goods under the Rotterdam Rules (Informa, London 2010) at para 9.14 83 Moot scenario, 3


15

5. Liability: the piracy attack

5.1 The Respondent is liable based on Art. I I I r. 1 HVR

5.1.1 The Vessel was unseaworthy

61 Art. III r. 1(b) HVR requires the vessel to be seaworthy in the sense that it must be adequately

equipped and manned properly with competent crew to undertake the carriage of cargo.

62 It is clear on the facts that, despite the high risk of piracy in the area,84 the Vessel did not have

adequate security, including, but not limited to, weapons and/or non-lethal methods of resisting

pirates and the Vessel and its crew did not have an adequate security plan in an effective way to

fend off pirates. The sole countermeasure taken against the imminent danger of piracy was

- 85

63 Both the Respondent and the crew should have been aware that this was not enough to prevent

a pirate attack. There is no other evidence that any other preventive measures were taken. Thus,

the Vessel is deemed to have been poorly equipped and suitable precautions were not taken

when the Vessel was approaching an area where attacks by pirates were likely to happen.

64 There is also a strong causal link86 between the unseaworthiness and the Claimant's losses

resulting from the hijacking of the vessel. Therefore, the Respondent is in breach of Art III r. 2

HVR and liable for any damages to the cargo due to the fact that they have provided an

unseaworthy ship. Consequently, the Respondent is liable for the loss the Claimant has suffered

due to the unseaworthiness of the vessel.

84 Years of 2001 to 2008, 206 of the 274 piracy attacks in East Africa has occured in Somalian waters, see International Maritime Bu

85 report of Aspinall Lewis International. Moot scenario, 41 86 cf. The Torepo [2002] 2 Lloyd's Rep 535 for the importance of the causal link between the failure and the loss or damage claimed


16

5 for, and

87

65 As a result of the piracy attack, the cargo was not cared for, as it was open to tampering and

possible contamination by the pirates. The crew has admitted to not knowing whether the

pirates have opened the hatches or broached the cargo and the crew was not able to take proper

care of the cargo themselves during that period. 88 This constitutes a clear breach of Art. III r. 2

HVR which resulted in the cargo being contaminated and consequently becoming non-GMQ.

Therefore, the Respondent is liable for all losses incurred by the Claimant as a result of the

contamination of the PFAD cargo.

5.2 The Respondent cannot escape liability based on Art. IV HVR

66 In the defence submission the Respondent was wrong to claim that he is to be held liable by

erroneous application of Art. IV r. 2 HVR.

67 As a general notion it is argued that piracy is not expressly mentioned in the COGSA 1971 that

incorporates the HVR, and therefore should not be added to its content. Scrutton is of the

89 Further, it is strongly suggested that,90 whilst drafting the HVR,

if the draftsmen had intended to incorporate piracy as an exception, they would have drafted it

so in clear and unequivocal writing. This was not done, and therefore it cannot be interpreted

into the wordings of the exceptions.

5

68 Unforeseeability has been identified as one of the main elements of perils of the seas.91 As a

87 Art. III r. 2 HVR 88 report of Aspinall Lewis International. Moot scenario, 42 89 Bernard Eder and others, Scrutton on Charterparties and Bills of Lading (21st edn, Sweet & Maxwell 2008) 21 90

91 Wilson Sons & Co v Owners of Cargo per the Xantho (The Xantho) (1887) 12 App Cas 483something which could not be foreseen as one of the necessary incidents of the


17

weather or event at sea that would not be expected in the area of voyage, at the time of the year

92

69 In this case, however, the piracy attack in the Gulf of Aden was foreseeable: the Gulf of Aden

is an area known for acts of piracy, making its waters dangerous for water transport. Numerous

piracy attacks have occurred in the area, i.e. in the years of 2001 to 2008, 206 of the 274 piracy

attacks in East Africa have occurred in Somali waters, 93 a fact known and quite likely

anticipated by the Respondent in advance. Therefore the at

70

shall not apply due to the fact that the Respondent was negligent and at fault in not exercising

due diligence to make the vessel seaworthy.94 By providing the Claimant with an unseaworthy

vessel to complete the journey through the Gulf of Aden and allowing the vessel to be hijacked

by pirates and putting the cargo at risk, the Respondent has not exercised reasonable care, and

therefore the exception is not applicable.

5

71 95 is a term that should be interpreted narrowly, as is shown by the opinions

96 It was held97 that an armed

conflict amounts to war when it is between opposing sides with significant numbers and

armaments appropriate for participating in war, by analysing the objectives of the sides98 and

how they set about pursuing them. 99 One must therefore look at the scale of the conflict and the

effect on the public order and the lives of the inhabitants.

92 William Tetley, Marine Cargo Claims (4th edn, Thomson Carswell 2008) 93 International Chamber

94 supra 3.1.1 95 Art. IV r. 2(e) HVR 96 Rhidian Thomas, Carriage of Goods under the Rotterdam Rules (Informa London 2010) para 8.31 97 Spinneys (1948) Ltd v Royal Insurance Co Ltd , 429-430, considered and applied in I.F.P. & C Insurance v Silversea [2004] Ll RI Rep 696 98 i.e. attempting to seize political power 99 i.e. with a considerable upheaval of public order with attacks that are not sporadic


18

72 100

committed by countries in war, not violence between private parties.101 A final point to be

made is that state authority almost always sanctions war. 102

73 In the present case there was an attack by Somali pirates but no opposing sides, merely a

vulnerable and unseaworthy ship. The objectives of the pirates were related to the ransom, i.e.

private ends. The pirates in this area103 do not seem to have a political greater good for which

they are fighting for, and are not sanctioned by the state authority.

74 The present piratical activity had minimal effect on shore and, although at the time its scale was

increasing, it was sporadic and random. Generally speaking, 104 ransom money is used for

private ends, which means acts of piracy are not acts of war but mere robberies or thefts on the

high seas. Only approximately 10 % of the ransom spoils goes to funding on-land militias.105

75 Piracy is a serious act with potentially deadly effects and gross economical losses, yet it is not

an act of war. An act of war is a matter sanctioned by state authority, piracy, on the other hand,

is an activity for private ends.106

76 In addition, Carver also is of the belief that pirates do not fall within the classificati

107

77 Therefore, it is clear, based on the facts, that the piracy attack on the Vessel cannot amount to

an act of war and the Respondent is not free from liability.

100 Pesquerías y Secaderos de Bacalao v Beer (1949) 1 All ER 845 101 Curtis & Sons v Matthew (1919) 1 KB 425 and Pesquerías y Secaderos v Beer (1949) 1 All ER 845 102 103 (2) 399-414 104 (2) 399-414 105 published by Atlantic treaty Association in Atlantic Voice Vol. 1, No. 1 (Oct 2011) 3. Available at < http://issuu.com/atlantic_treaty_association/docs/ vol._1__no._1__oct_2011_ > accessed 21 April 2013 106 Art. 101(a) UNCLOS 107 Guenter H. Treitel, Francis M. B. Reynolds and Thomas Gilbert Carver, Carver on bills of lading (3rd edn, Sweet & Maxwell 2011) 9-006

http://www.justcite.com/Document/d7jsrUrxA0LxsKjIoZiJnWmJm4WIikvNCPnhzPngDP9MBjrMi6atF

http://www.justcite.com/Document/d7jsrUrxA0LxsKjIoZiJnWmJm4WIikvNCPnhzPngDP9MBjrMi6atF


19

5 108

78 Pirates do not fall within the term public enemies. The term evolved from the standard common

109 110

5.2.4 There is no escape through the no actual fault on the side of the Respondent.

79 The catch-all exception111 demands that the Respondent is able to prove that the loss was not

his actual fault nor arose with his privity or knowledge. It is rare for this sub-rule to be applied

when it is relied upon if none of the other exceptions apply.112 Nevertheless, the sub-rule

cannot be relied upon where there is fault by the carrier, as is the case here.

80 It is clear that pirates were a known hazard in the sea off the coast of Somalia. The IMB has

stated that the Gulf of Aden and waters near the Somali coast accounted for 63 of the 199

reported pirate attacks between January and September 2008.113 For the same time period of

2007 there were 26 attacks blamed on Somali pirates. On 23 October 2008, just over three

weeks before the ship sailed, at least 11 ships were being held for ransom by Somali pirates.114

This made Somali waters the most dangerous in the world for the year 2008.115

81 This steep increase in attacks along with the knowledge of ships being held for ransom must be

viewed as to have been in the knowledge of the Respondent when the ship left Malaysia.

Therefore, the Respondent should have taken more appropriate measures, rather than merely

commencing anti-piracy watch, to make its ship less of a target to pirates and more able to repel

an attack if one occurred.

108 Art IV r. 2(f) HVR 109 Richard Aikens, Richard Lord and Michael Bools, Bills of Lading (Informa, London 2005) )10.223 110 Bernard Eder and others, Scrutton on Charterparties and Bills of Lading (21st edn, Sweet & Maxwell 2008) )at page 220-221 and 442 111 Art IV r. 2(q) HVR 112 Paterson Steamships v Canadian Co-operative Wheat Producers [1934] AC 538 113 - <http://www.icis.com/Articles/2008/10/23/9165971/somali-pirate-attacks-double-year-to-date-imb.html> accessed 21 April 2013 114 - <http://www.icis.com/Articles/2008/10/23/9165971/somali-pirate-attacks-double-year-to-date-imb.html> accessed 21 April 2013 115


20

82 The burden of proof under this sub-rule is strict and it is for the Respondent to refute the clear

would depend on whether a reasonable shipowner would have fo

involved a risk of damaging the cargo, and if so, what it would have done in response to the

116 The underlying principle is the need to disprove personal fault in order to be relieved

from liability.117 However, on the facts the Respondent is not free from fault or knowledge as

he knew or could have known the risk and took minimal actions to prevent an attack.

6. Tort of Conversion

6.1 The Respondent is liable in conversion

83 Conversion118 is defined as an act of deliberate dealing with a chattel in a manner inconsistent

119

84 By failing to deliver the goods to the Claimant, the lawful holder of the Bs/L120 and the person

entitled to delivery of the goods,121 and delivering them to the Seller without the authority of

the Claimant at an incorrect discharge port, the Respondent committed the tort of conversion.122

The Respondent committed deliberate acts which constituted an extensive encroachment on the

rights of the Claimant and excluded him from use and possession of the goods.123 By doing so

the Respondent evinced an intention to exercise temporary dominion over the goods.124

85 Thereby, all elements establishing the tort of conversion are satisfied.125

116 Nicholas Gaskell, Regina Asariotis and Yvonne Baatz, Bills of lading : law and contracts (LLP 2000) 8.63 117 Rhidian Thomas, Carriage of Goods under the Rotterdam Rules (Informa London 2010) 8.48 118 s. 1(a) Torts Act 1977 119 Kuwait Airways v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883 at [425] 120 s. 5(2) COGSA 1992 121 s. 2(1)(a) COGSA 1992. Richard Aikens, Richard Lord and Michael Bools, Bills of Lading (Informa, London 2005) )5.3 122 Kuwait Petroleum Corp v I & D Oil Carriers (The Houda) [1994] 2 Lloyd Barclays Bank Ltd v Commisioners of Customs and Excise SA Sucre Export v Northern River Shipping Ltd (The Sormovskiy 3068) 123 Kuwait Airways v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883 at [425]; Martindale v Smith (1841) 1 QB 389 124 Sanderson v Marsden (1922) 10 Ll L Rep 467, 472 125 s. 1(a) Torts Act 1977 Kuwait Airways v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883


21

6.2 The Claimant has title to bring an action in conversion

86 By receiving the Bs/L,126 the Claimant obtained constructive possession of the goods covered

by these documents127 and became entitled, as the lawful holder of it,128 to demand delivery of

the goods.129 Therefore, the Claimant had an immediate right to possess the goods130 and a

better possessory title to the goods than the Seller and the Respondent.131 As the Claimant had

an immediate right to possess the goods at the time the conversion took place, he has a title to

bring an action against the Respondent in conversion.132

6

87 Furthermore, misdelivery in ignorance of the fact that the Claimant had a better possessory title

to the goods than the Seller,133 is no defence for the Respondent.134 From the moment the

Respondent was put on notice as to the existence of the competing claims to the goods,135 he

delivered them to either at his own peril. Delivery to anyone other than the Claimant or the

136

6.4 The Remedy claimed: damages

88 For the reasons stated above and since the Respondent is no longer in possession of the goods,

137

89 The damages are assessed by reference to the market value of the goods at the time of

conversion.138

126 Moot scenario, 29 127 Michael G. Bridge and Judah P. Benjamin, Benjamin's sale of goods (8th edn, Sweet & Maxwell 2010) 18-007 ) 128 s. 5(2) COGSA 1992 129 s. 2(1)(a) COGSA 1992. See also Richard Aikens, Richard Lord and Michael Bools, Bills of Lading (Informa, London 2005)); Charles Debattista, Bills of Lading in Export Trade (3rd edn, Tottel 2008) )2.8 130 Wibraham v Snow (1669) 2 Wms Saund 47a; Jones v Winkworth (1658) Hard 111. In an action of conversion ownership does not need to be proved (Armory v Delamirie (1721) 1 Stra 505) 131 Armory v Delamirie (1721) 1 Stra 505 132 Wilbraham v Snow (1669) 2 Wms Saund 47a 133 Armory v Delamirie (1721) 1 Stra 505 134 Motis Exports Ltd v Dampskibsselskabet AF 1912 Aktieselskab and Aktieselskabet Dampskibsselskabet Svendborg [1999] 1

, 845 135 Moot scenario, 36 136 Anthony Dugdale and Michael Jones, Clerk and Lindsell on Torts (20th edn, Sweet and Maxwell 2010) 17-78 137 s. 3(2)(c) Torts Act 1977; see also Anthony Dugdale and Michael Jones, Clerk and Lindsell on Torts (20th edn, Sweet and Maxwell 2010) 17-87


22

7. Quantum of Damages

7.1 The Claimant are entitled to the invoice value of the cargo purchased by the Seller

In Ewbank v Nutting139 it was held that the price the converted goods had been sold for was not

an adequate test, market value falling to be calculated according to what the claimant had paid

for said goods. Applying this test to the present case, the Claimant is entitled to the price paid

for the PFAD under the original sale contract.

7.2 Alternatively, the Claimant is entitled to the difference between the invoice price and the

value of the cargo in Liverpool on 30 March in addition to the latter value

90 Damages for breach of the obligations under the B/L are calculated by subtracting the

A.D.M.V. of the cargo, at the contractual port of discharge from the A.S.M.V. of the cargo140.

As no evidence of the market price of GMQ PFAD CIF Liverpool has been furnished, the

A.S.M.V. of the cargo falls to be calculated according to the price paid by the Claimant less the

value the cargo would have had, had it been delivered to the contractual place of discharge. 141

91 ,142 said place of discharge can only be

said to be the agreed destination, i.e. Liverpool.143

92 Additionally, since the Claimant was deprived of the goods because of the Respondent

wrongfully delivering it to the Seller, in clear breach of the contract present in or evidenced by

the Bs/L, the Claimant is also entitled to the A.D.M.V. of the PFAD. This is precisely the

position the Claimant would have been in, had the contract been duly performed.144

138 Mercer v Jones (1813) 3 Camp 477; Henderson v Williams [1895] QB 521, CA, 530, 532; Solloway v McLaughlin [1938] AC 247, 257; Kuwait Airways v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883, 67. See also Anthony Dugdale and Michael Jones, Clerk and Lindsell on Torts (20th edn, Sweet and Maxwell 2010) 17-93 139 137 ER 316 applied by analogy; in the present case the breach of the contract of sale resulted in the total loss of the value of the cargo, a result similar to the total loss of the cargo because of conversion. 140 Rodocanachi v Milburn (1887) 18 QBD 67; Attorney General of the Republic of Ghana v Texaco Overseas Tankships Ltd (Texaco Melbourne) [1994] 1 Lloyd's Rep 473 141 O'Hanlan v The Great Western Railway Company 122 ER 1274 142 supra under 2.3.2 143 Art. IV r. 5(b) HVR 144 Livingstone v Raywards Coal Co (1880) 5 App Cas 25


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7.3 The Respondent is liable for damages in conversion145

81 , under the Bs/L and the HVR, the quality of

the cargo was altered to such an extent that the other parcel on board the Vessel cannot function

as a basis for the calculation of damages.146 Therefore, reference has to be made to the market

value of GMQ PFAD.

82 Thus, the Claimant is entitled to losses he is bearing thereof, namely the difference between the

price they have paid for the cargo and its value at the contractual place of discharge, Liverpool.

7.4 The Respondent is liable for damages arising from the tort of conversion

83 For the reasons stated above and since the Respondent is no longer in possession of the goods,

147 The damages are assessed by reference to the market

value of the goods at the time of conversion.148 If there is no such market value, one is to

calculate damages by reference to the price at which same goods would have been purchased

by a solvent purchaser.149 As it has been shown, 150 there was no market data on GMQ PFAD

CIF Liverpool, therefore the claimants are entitled to recover for the price they originally sold

the cargo to their sub-buyers.151

7.5 The Respondent is liable for Court expenses and legal fees incurred by the Claimant for

the Dutch proceedings.

84 A claimant taking reasonable steps to mitigate losses

for these losses so incurred.152 This also when a claimant has

145 supra under 4 146 The Arpad (1934) 48 Ll L Rep 202 147 s. 3(2)(c) Torts Act 1977; see also Anthony Dugdale and Michael Jones, Clerk and Lindsell on Torts (20th edn, Sweet and Maxwell 2010) 17-87 148 Mercer v Jones (1813) 3 Camp 477; Henderson v Williams [1895] QB 521, CA, 530, 532; Solloway v McLaughlin [1938] AC 247, 257; Kuwait Airways v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883, 67. See also Anthony Dugdale and Michael Jones, Clerk and Lindsell on Torts (20th edn, Sweet and Maxwell 2010) 17-93. 149 Braun v Bergenske SS Co (1921) 8 Ll LR 81; see also The Arpad (1934) 48 Ll L Rep 202should be the value to the purchaser or goods owner at the time of the conversion. If there is a market in which he can buy, this will fix the value; if ther

Acatos v Burns 3 ExD 282 150 supra under 5.2 151 Moot scenario, 22-23 152 Harvey McGregor, McGregor on Damages (18th edn, Sweet & Maxwell 2009) 7-005, Agius v Great Western Colliery Co Ltd [1899] 1 QB 413 interpreted by Berry v British Transport Commission [1962] 1 QB 306


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wrong, unsuccessfully but reasonably brought or defended a claim against a third party, to

which he was held liable for costs.153

85 It is not disputed that the first instance costs are generally recoverable, but it was established in

the Sutton v Baillie154 costs of the unsuccessful

155 Applying it,

the Claimant is entitled to the costs of first instance and the appeal, as well as his own costs of

bringing the action, which entails the costs incurred by hiring the English solicitors.

7.6 Alternatively, the Claimant is entitled to be compensated for any additional expenses they

had to make because of the non-delivery of the cargo.

86 In the unlikely event that the Claimant's previous claim for damages is rejected, the Claimant

shall recover, as a minimum, the expenses incurred as per following the sub-sale agreement

with the buyers the Claimant previously had entered into agreement with. The base price of

PFAD in these sales shall be accepted as market value for the quantum of damages.

87 The Claimant is entitled to be compensated for expenses made necessary by the breach, such as

acquiring goods which in the absence of a market are the nearest substitute.156

88 It was established through case law157

the goods from the claimant may be treated as evidence of the market value at due delivery

158 Note that it is rather difficult to ascertain the market value of a

non-GMQ product, therefore, the Claimant's sale shall, alternatively, be considered when

determining the market value of the cargo, as a minimum.

153 Harvey McGregor, McGregor on Damages (18th edn, Sweet & Maxwell 2009) 7-005 154 (1891) 65 LT 528 155 Harvey McGregor, McGregor on Damages (18th edn, Sweet & Maxwell 2009) 17-093 156 Millen v Brasch (1882) 10 QBD 142 note that despite this case being about delay in delivery instead of non-delivery, it shall apply mutatis mutandis 157 Braun v Bergenske SS Co (1921) 8 Ll LR 81 158 McGregor H., McGregor on Damages (18th edn, Sweet & Maxwell 2009) 27-005(b)


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8. Prayer for Relief

Based on the submissions presented above, the Claimant respectfully requests this Tribunal to:

DECLARE that it has jurisdiction to hear the current dispute, rule on the issue of costs in

respect of the Dutch proceedings and award compound interest pursuant to s. 49 AA;

Further,

ADJUDGE that the Respondent is in breach of the contract of carriage:

(i) for breach of Art. III r. 2 HVR; and/or

(ii) for failure to deliver the goods to the Claimant as the lawful holder of the Bs/L; and/or

(iii)for delivering the cargo other than as against presentation of the Bs/L; and/or

(iv) for delivering the cargo to persons other than the lawful holder of the Bs/L,

entitling the Claimant to the difference between the value paid for the cargo and the value of

the cargo in Liverpool in addition to the value of the cargo in Liverpool on or about 30 March;

Further and alternatively,

ADJUDGE that the Respondent is liable to the Claimant for the tort of conversion, entitling the

Claimant to recovery -buyers;

Further,

ADJUDGE that the Respondent is liable to the Claimant for the expenses incurred by the latter

in the Dutch proceedings;

And therefore AWARD the Claimant damages in the amount of USD 3,236,756.26;

Further and alternatively,

ADJUDGE that the Claimant is entitled to the value of the substitute cargo purchased due to

non-delivery of the original cargo;

And therefore AWARD the Claimant damages in the amount of USD 2,336,756.20;

Further,

AWARD costs with compound interest on costs.

memorandum!for!the!respondent! claimant!!...summary of facts ! ... parsons corporation and others v...

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