table of contents - murdoch university · table of contents table of contents ... pt perseroan...

i

TABLE OF CONTENTS

TABLE OF CONTENTS .......................................................................................................... i

LIST OF ABBREVIATIONS ................................................................................................ iii

TABLE OF AUTHORITIES ................................................................................................... v

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

JURISDICTION ....................................................................................................................... 3

I. THE TRIBUNAL DOES NOT HAVE JURISDICTION TO SETTLE THE

DISPUTE .......................................................................................................................... 3

A. There is No Valid Arbitration Agreement Between the Parties ...................................... 3

B. The Arbitration Shall Not Be Held in Melbourne ............................................................. 5

C. There is no close connection between the Contractual and Tortious Claims ................ 5

MERITS ..................................................................................................................................... 7

II. THE RESPONDENT IS NOT LIABLE FOR THE DAMAGE TO THE

WESTERN DAWN ......................................................................................................... 7

A. The Respondent Did Not Breach its Obligation to Provide Proper Bunkering ............. 7

B. The Respondent Did Not Commit Tort of Fraud............................................................... 9

i. There is No Misrepresentation with Respect to the Provision of Bunkering in Durban

or Cape Town ......................................................................................................................... 9

ii. ASA2 is Not the Agent of the Respondent ......................................................................... 10

III. THE RESPONDENT IS NOT LIABLE FOR THE PAYMENT OF THE

SECOND HIRE PERIOD ............................................................................................. 11

A. The Western Dawn Was Off-Hire Due to Breach of Order ........................................... 12

B. The Payment of the Second Hire Period is Not Payable Under the Piracy Clause ..... 13

C. Alternatively, the Contract Has Been Frustrated Due to Piracy .................................... 13

i. The Damage to Western Dawn Caused the Charterparty Impossible to be Performed14

ii. The Respondent is Not Liable for the Payment of the Second Hire Period Due to

Frustration of the Contract................................................................................................. 14

COUNTER CLAIMS.............................................................................................................. 15

IV. THE CLAIMANT SHALL BE LIABLE FOR ANY THIRD PARTY CLAIMS

ARISING FROM THE LOSS OF CARGO ................................................................ 15

ii

A. The Claimant is Liable for the Loss of the Cargo Due to Unseaworthiness of the

Western Dawn ...................................................................................................................... 16

i. The Western Dawn was Unseaworthy Since It Did Not Comply with the Standard

Anti-Piracy Measures .......................................................................................................... 16

ii. The Loss of the Cargo Was Caused by the Unseaworthiness of the Western Dawn .. 17

B. The Claimant is Liable for the Loss of the Cargo as Sub-Bailee of the Cargo ........... 18

i. The Claimant is the sub-bailee of the Cargo .................................................................... 18

ii. The Claimant is Liable for the Loss of the Cargo Since It Had Not Exercised

Reasonable Care as the Sub-bailee of the Cargo ............................................................ 18

INTEREST AND COST OF PROCEEDING ...................................................................... 19

V. THE RESPONDENT IS ENTITLED FOR INTERESTS AND COST ................... 19

A. The Respondent is Entitled for Compound Interest ........................................................ 19

B. The Claimant is Liable for the Cost of the Proceeding ................................................... 20

PRAYER FOR RELIEF......................................................................................................... 20

iii

LIST OF ABBREVIATIONS

¶ Paragraph

§ Section

ASA Atlantic Services Agency

ASA2 Atlantic STS Agency (ASA Angola Ltd)

CA Court of Appeal

Cargo 30,960 MT Jet A1 aviation fuel and 72,190 MT gasoil

Ch Chancery Division

Charterparty SHELLTIME 4 Charterparty dated 26 May 2014

Claimant Western Tankers Inc.

CLC Commercial Law Cases

Co Corporation

Comm Commercial Court

Ed. Edition

EWCA England and Wales Court of Appeal

EWHC High Court of England and Wales

Fixture Recap FULLY FIXED RECAP / CP DATED 26 MAY 2014

GmbH Gesellschaft mit beschränkter Haftung

HL House of Lords

Inc Incorporation

Kft Korlátolt Felelõsségû Társaság

Law and Litigation Clause Clause 46 of SHELLTIME

Ltd Limited

Master Captain Stelios Smith

iv

MT Metric Tonnes

M/V Motor Vessel

Plc Public Limited Company

Procedural Order IMLAM Procedural Order 2015

PT Perseroan Terbatas

Pte Private

QB Queen's Bench Division

SA Société Anonyme

SC Supreme Court

SHELLTIME SHELLTIME 4 Basis Proforma

Ship Broker Bill of IMWMB

SpA Societa per Azione

Srl Società a Responsabilità Limitata

Tbk Terbuka

Tribunal Arbitration Tribunal in Melbourne

Respondent Less Dependable Traders Pte

UK United Kingdom

Western Dawn M/T Western Dawn

v

TABLE OF AUTHORITIES

Cases

Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd‘s

Rep. 12 (CA) .............................................................................................................................. 5

Ampurius Nu Homes Holdings Ltd v Telford Homes (Creekside) Ltd [2013] EWCA Civ 577

(CA) ......................................................................................................................................... 12

Antonio Gramsci Shipping Corp v Stepanovs [2011] EWHC 333(Comm) ............................. 18

Aquavita International SA v Ashapura Minecham Ltd [2014] EWHC 2806 (Comm) (QB) ..... 3

Astro Vecendor Compania Naviera v Mabanaft GMBH (The Damianos) [1971] 2 All E.R.

1301 (CA) .................................................................................................................................. 5

Barclays Bank Plc v Grant Thornton UK LLP [2015] EWHC 320 (Comm) .................... 19, 20

Barwick v English Joint Stock Bank[1866-67] LR 2 Ex. 259(CA).......................................... 10

Blankley v Central Manchester and Manchester Children's University Hospitals NHS Trust

[2015] EWCA Civ 18 (CA) ..................................................................................................... 14

Braes of Doune v Alfred McAlpine [2008] EWHC 426 (TCC) (QB) ........................................ 5

British Racing Drivers Club Ltd v Hextall Erskine & Co [1996] BCC 727 (QB)................... 20

Caresse Navigation Ltd v Office National de L'Electricite (The Channel Ranger) [2013] 2

C.L.C. 480 (QB)......................................................................................................................... 4

Caresse Navigation Ltd v Zurich Assurances MAROC [2014] EWCA Civ 1366 (CA) ............ 4

Carvel USA Inc. v Seaton Insurance [2008] EWHC 3043 (Comm) (QB) .............................. 10

Chandler v Webster [1904] 1 KB 493 ¶499 (CA) ................................................................... 14

City Television v Conference and Training Office Ltd [2001] EWCA Civ 1770 (CA) ........... 18

Clarke v National Insurance and Guarantee Corp [1964] 1 QB 199 ..................................... 16

Classic Maritime Inc v Lion Diversified Holdings bhd [2010] 1 C.L.C. 445 (QB)................. 14

Compania Sud Americana de Vapires SA v Sinochem Tianjin Import & Export Corp (The

Aconcagua) [2009] EWHC 1880 (Comm) (QB) ..................................................................... 16

Cosco Bulk Carrier Co Ltd v Team-Up Owning Co Ltd (The Saldanha) [2010] EWHC 340

(Comm) (QB) ........................................................................................................................... 12

Dallah Real Estate v Pakistan [2010] UKSC 46 (SC) .............................................................. 5

Dallah Real Estate v Pakistan [2011] UKSC 46 (SC) .......................................................... 3, 5

Davis Contractors Ltd v Fareham Urban District Court [1956] AC 696(CA); BAS Capital

Funding Corp v Medfinco Ltd [2003] EWHC 1798 (Ch) (QB).............................................. 14

East West Corporation v DKBS 1912 [2003] 1 Lloyd‘s Rep. 239 .......................................... 18

Electrosteel Castings Ltd v Scan Trans Shipping & Chartering Sdn Bhd [2002] EWHC 1993

(Comm) (QB) ............................................................................................................................. 3

Empresa Exportadora De Azucar v Industria Azucarera Nacional (The Playa Larga and

Marble Islands) [1983] 2 Lloyd‘s Rep. 171 (CA) ..................................................................... 6

Equitas Ltd, Additional Underwriting Agencies (No. 9) Ltd v Walsham Brothers & Co. Ltd

[2013] EWHC 3264 (Comm) (QB) ......................................................................................... 19

F.C. Bradley & Sons Ltd v. Federal Steam Navigation Co.[1926] 24 Llyod‘s Rep. 446 ¶ 454

(HL).......................................................................................................................................... 16

Fail Oil Co Ltd v Petronas Trading Corp Sdn Bhd (The Devon) [2004] EWCA Civ 822 (CA)

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

Federal Bulk Carriers Inc v C. Itoh & Co. Ltd (The Federal Bulker) [1989] 1 Lloyd‘s Rep

103 (CA) .................................................................................................................................... 4

Federal Commerce & Navigation Co Ltd v Molena Alpha Inc (The Nanfri) [1978] Q.B. 927 . 7

Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd (1943) AC 32(HL) .......... 14

vi

Friends Provident Life & Pensions Ltd v Sirius International Insurance Corp[2005] EWCA

Civ. 601(CA)............................................................................................................................ 14

Fujitsu Services Ltd v IBM United Kingdom Ltd [2014] 1 C.L.C. 353 (QB) .......................... 10

Gabem Management Ltd v Revenue and Customs Commissioners [2007] STC (SCD) 247... 10

Golden Endurance Shipping SA v RMA Watanya SA [2014] EWHC 3917 (QB) ..................... 3

Golden Ocean v Humpuss Intermoda Tbk [2013] EWHC 1240 (QB) ...................................... 3

Golden Ocean v PT. Humpuss Intermoda [2013] EWHC 1240 (QB) ....................................... 5

Great China Metal Industries Co. Ltd v Malaysian International Shipping Corp (The Bunga

Seroja) [1999] 1 Ll. Rep. 512 (QB) ......................................................................................... 16

Guinomar of Conarky Samsung Fire & Marine Insurance Co Ltd(The Kamsar Voyager)

[2002] Lloyd‘s Rep. 57 ............................................................................................................ 17

Halliwells LLP(in Administration) v Austin [2012] EWHC 1194 (Ch) ................................... 10

Hongkong Fir Shipping Co. Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26 (CA) ........... 8

Hut Group Ltd v Nobahar-Cookson [2014] EWHC 3842 (QB) ........................................ 19, 20

Hyundai Merchant Marine Co Ltd v Furness Withy (Australia) Pty (The Doric Pride) [2005]

1 CLC 780 (QB)....................................................................................................................... 12

Hyundai Merchant Marine v Americas Bulk Transport Ltd (―The Pacific Champ‖) [2013]

EWHC 470 (Comm) (QB) ......................................................................................................... 4

IG Index Plc v Colley [2013] EWHC 478 (QB) ...................................................................... 10

JP Klausen & Co. AS v Mediterannian Shipping Co SA [2013] EWHC 3254 (Comm) (QB) 16

KH Enterprise v Pioneer Container [1994] 2 AC 324 (PC) .............................................. 18, 19

Kopitoff v Wilson [1875] 1 Lloyd‘s Law Report 277 (QB) ..................................................... 16

Lloyd v Grace Smith & Co[1912] AC 716 (HL) ...................................................................... 10

Lovett v Carson Country Homes Ltd [2009] EWHC 1143 (Ch) (QB) .................................... 10

Mammoth Bulk Carrier Ltd v Holland Bulk Transport B.V. (The Captain Diamantis) [1978]

1 Lloyd‘s Rep. 346 ..................................................................................................................... 7

Man Nutzfahrzeuge AG v Freightliner Ltd [2005] EWHC 2347(Comm) ......................... 19, 20

Manatee Towing Co Ltd v Oceanbulk Maritime SA (―The Bay Ridge‖) [1999] 2 Lloyd's Rep.

227 (QB) .................................................................................................................................... 4

Mareva Navigation Co v Canaria Armadora SA (The Mareva AS) [1977] 1 Lloyd‘s Rep. 368

(QB) ......................................................................................................................................... 12

McCowan v McCullogh [1926] 1 DLR 312 (CA); Marca v Christie Manson & Woods Ltd

[2004] QB 286 (QB) ................................................................................................................ 18

McFadden v Blue Star Line [1905] KBD .................................................................................. 8

Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1994] C.L.C.

808 (QB) .................................................................................................................................. 18

Metalfer Corp v Pan Ocean Shipping Co Ltd [1997] CLC 1574 (Comm) (QB) ...................... 3

Naviera v Compania [1988] 1 Lloyd's Rep. 116 ....................................................................... 5

Newman v Framewood Manor Management Co Ltd [2012] EWCA Civ 1727 (CA) ............. 20

Nippon Yusen Kaisha Ld v Scindia Steam Navigation Co Ltd (The Jalagouri) [2000] CLC

1051 (Comm) (CA) .................................................................................................................. 12

Nitrate Corporation of Chile Ltd. v Pansuiza de Navegacion S.A (The Hermosa) [1980] 1

Lloyd‘s Rep. 638 (CA) ............................................................................................................ 12

Northern Shipping Co v Deutsche Seereenderei G.M.B.H and Others (The Kapitan Shakarov)

[2000] 2 Lloyd‘s Rep. 255 (CA) ) ........................................................................................... 16

Ocean Marine Navigation Ltd v Koch Carbon Inc (The Dynamic) [2003] EWHC 1936

(Comm) (QB) ........................................................................................................................... 12

OMV Petrom v Glencore [2015] EWHC 666 (Comm) (QB) .................................................... 9

P & O Nedlloyd B.V. v Utaniko Limited [2003] EWCA Civ 83 (CA) .................................... 18

P&C Alternative Investment (Holdings) Ltd v Barthelemy [2011] EWHC 1731 (QB) ........... 10

vii

Papera Traders Co. Limited & Others v Hyundai Merchant Marine Co. Limited, The Keihin

Co. Limited (The Eurasian Dream) [2002] EWHC 118 (Comm) (QB) .................................. 16

Parsins Corp v CV Scheepvaartonderneming Happy Ranger [2006] EWHC 122 (Comm)

(QB) ......................................................................................................................................... 16

Paterson Steamships v Canadian Co-operative Wheat Producers [1934] A.C. 538 (PC) ....... 18

Premium Nafta Product Ltd v Fili Shipping Co Ltd and others (Fiona Trust) [2007] UKHL

40 (HL)................................................................................................................................... 5, 6

Queensland National Bank Ltd v Peninsular and Oriental Steam Navigation Co [1898] 1 QB

567 (CA) .................................................................................................................................. 16

Redland Aggregates Ltd v Shepherd Hill Civil Engieering Ltd (Stay of Proceeding) [2000]

CP Rep 7 .................................................................................................................................. 17

Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd(The Muncaster Castle)[1961] AC

807 (HL)................................................................................................................................... 18

Ryanair v Esso Italiana [2013] 2 C.L.C. 950 ............................................................................ 6

Sally Rosemary Noel v Jogn Poland & Michael Poland [2001] 2 B.C.L.C 645 (QB) ............ 10

Same v Mortgage UK Financial Services Ltd and others [2012] Bus. L.R. 203............... 19, 20

Scandinavian Trading Tanker Co AB v lota Petrolera Equatoriana (The Scaptrade) [1983] 2

All ER 763 (HL) ...................................................................................................................... 14

Scottish & Newcastle Internatioinal Ltd v Othon Ghalanos Ltd [2008] UKHL 11(HL) ........ 18

Shagang South-Asia (Hong Kong) v Daewoo Logistics [2015] EWHC 194 (Comm) (QB) ..... 5

Shashoua v Sharma [2009] EWHC 957 (Comm) (QB)............................................................. 5

SK Shipping (S) PTE Ltd v Petroexport Ltd [2009] EWHC 2974 (Comm) (QB) ................... 12

Smith v Hogg & Co Ltd v Black Sea & Baltic General Insurance Co Ltd [1940] 67 Lloyd‘s

Rep. 253 ................................................................................................................................... 17

Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd [2015] EWHC 718

(Comm) (QB) ........................................................................................................................... 12

Spar Shipping AS v Grand China Logistics Holding (Group) Co., Ltd [2015] EWHC 718

(Comm) .................................................................................................................................. 3, 8

Stellar Shipping Co LLC v Hudson Shipping Lines [2010] EWHC 2985 (Comm) (QB).......... 4

Telford Homes (Creekside) Limited v Ampurius Nu Homes Holdings Limited [2013] EWCA

civ 577(CA) ............................................................................................................................... 8

The Maori King [1895] 2 QB 550 (CA) .................................................................................. 16

TTMI Sarl v Statoil ASA (The Sibohelle) [2011] EWHC 1150 (Comm) (QB) .......................... 3

Urban 1 (Blonk Street) Ltd v Ayres [2014] 1 W.L.R. 756 ......................................................... 8

Welex AG v Rosa Maritime Ltd (‗The Epsilon Rosa‖) (No.2) [2003] EWCA Civ. 938 (CA) .. 4

Report

IMO on Piracy and Armed Robbery Against Ships,

http://www.imo.org/OurWork/Security/PiracyArmedRobbery/Pages/Default.aspx 18 April

2015.......................................................................................................................................... 17

Legislations

Arbitration Act 1996 ............................................................................................................ 5, 20

Law Reform (Frustrated Contract) Act 1943 ........................................................................... 15

No table of authorities entries found.Guidelines

Best Management Practices Version 4 for Protection against Somalia Based Piracy ........... 17

IMO Piracy and Armed Robbery Againsts Ships: Guidance to Shipowners and Ship

Operators,Ship Masters and Crews on Preventing and Supressing Acts of Piracy and Armed

Robbery Against Ship, MSC.1/Circ. 1334, 23 June 2009 ........................................................ 17

1

SUMMARY OF FACTS

Western Tankers Inc. (the ―Claimant‖) and Less Dependable Traders Pte (the

―Respondent‖) (the Claimant and Respondent, together hereinafter referred to as the

―Parties‖) conducted negotiations through a third party, IMWMB represented by Bill (the

―Ship Broker‖), to charter M/T Western Dawn (the ―Western Dawn‖).

Both parties fixed their agreement into a time charter dated 26 May 2014 which is based on

SHELLTIME 4 Basis Proforma (the ―Charterparty‖), with several amended terms and

incorporated special provisions — such as the Piracy Clause and the Respondent‘s Rider

Clauses — on a fixture recap of the same date (the ―Fixture Recap‖). Pursuant to the

Charterparty, the Respondent agreed to charter the Western Dawn for 3 months, to deliver

30,960 metric tonnes (―MT‘) Jet A1 aviation fuel and 72,190 MT gasoil (the ―Cargo‖) from

Singapore to West Africa.

Captain Stelios Smith (the ―Master‖) requested the Western Dawn to be bunkered with the

amount of 1,500 MT of PBT Fuel. However on 3 June 2014, the Respondent only provided

the bunker with the amount of 950 MT. The Master of the Western Dawn then protested to

the Respondent that the amount of bunker supplied did not meet the required itinerary and

was only enough to get the Western Dawn to the discharge area. The Respondent stated that

additional bunker would be given when the Western Dawn passed Durban or Cape

Town. The Cargo was loaded in Singapore on 8 June 2014, and the Western Dawn then

proceeded to West Africa.

On 20 June 2014, the Western Dawn approached Durban and on 25 June 2014, proceeded to

Luanda, electing to reduce the Western Dawn‘s speed to 12 knots from 13 knots.

On 28 June 2014, the Respondent informed the Master of the Western Dawn regarding the

next bunker supply and the discharge coordinate — which was on Ship-to-Ship (―STS‖) Area

2

1. Captain William Anya, the representative of ASA Angola (―ASA2‖), sent a

correspondence to the Master of the Western Dawn explaining the coordinate for STS

operation and supply of bunker from MV Antelope. The Master of the Western Dawn replied

by confirming the instructions from Captain Anya.

As the Western Dawn was approaching the discharge location, the Master of the Western

Dawn sent correspondences to ASA2 but received no reply. On 4 July 2014, The Master of

the Western Dawn sent a correspondence to the Claimant, the Respondent and ASA2 stating

that it had reached the coordinate for STS operation but the agent was not in sight. Between

4 July 2014 and 16 July 2014 there was no contact between the Master of the Vessel and the

Respondent. On July 17, 2014 the Master of the Vessel sent a report to both Parties

concerning pirate attack and cargo diversion.

Claimant initiated arbitral proceeding (the ―Proceeding‖) against the Respondent and

submitted the Claim Submission on 1 November 2014, based on Arbitration Act 1996 (UK).

The Respondent submitted its Statement of Defence on 29 November 2014. The Claimant

contends that the Respondent has breached the Charterparty by not paying the second hire

period. The Claimant also submits that the Respondent has committed tort of fraud. The

Respondent lodges counter-claims against the Claimant by contending that the Claimant has

failed to make the Western Dawn seaworthy and has breached its duty as a sub-bailee.

3

JURISDICTION

I. THE TRIBUNAL DOES NOT HAVE JURISDICTION TO SETTLE THE

DISPUTE

1. In relation to the claims brought by the Claimant against the Respondent (the ―Dispute‖), the

Respondent submits that this arbitral tribunal (the ―Tribunal‖) does not have jurisdiction to

hear such claims. Contrary to the Claimant‘s view, the Respondent submits that (A) there is

no valid arbitration agreement between the Parties to settle the Dispute. In any event, even if

there is an arbitration agreement governing the Dispute, (B) the arbitration shall not be

continued in Melbourne and (C) the Tribunal does not have any jurisdiction to hear any non-

contractual claim.

A. There is No Valid Arbitration Agreement Between the Parties

2. Consent of the contractual parties in the form of a valid arbitration agreement is required to

give an arbitral tribunal the capacity to resolve commercial dispute between them.1 Such

consent must be expressly stated and incorporated to the relevant contract.2

3. It is common practice that any clause in a charterparty may be amended by way of a fixture

recap.3 In order to validly incorporate an arbitration clause into the fixture recap, there must

be a clear reference under the recap as to what law is to be applied, and under what venue

1 Dallah Real Estate v Pakistan [2011] UKSC 46 (SC); Golden Ocean v Humpuss Intermoda Tbk [2013] EWHC

1240 (QB). 2 Trollope & Colls v North West Metropolitan [1973] 1 WLR 601 (HL); Lisnave Estaleiros v Chemikalien

Seetransport [2013] EWHC 338 (Comm) (QB). 3 Metalfer Corp v Pan Ocean Shipping Co Ltd [1997] CLC 1574 (Comm) (QB); Electrosteel Castings Ltd v

Scan Trans Shipping & Chartering Sdn Bhd [2002] EWHC 1993 (Comm) (QB); TTMI Sarl v Statoil ASA (The

Sibohelle) [2011] EWHC 1150 (Comm) (QB); Golden Endurance Shipping SA v RMA Watanya SA [2014]

EWHC 3917 (QB); Aquavita International SA v Ashapura Minecham Ltd [2014] EWHC 2806 (Comm) (QB).

4

will any arising dispute be settled.4

4. In the present case, the clauses of the SHELLTIME were amended and added with additional

provisions by way of Fixture Recap. However, the Law and Litigation Clause heading in the

Fixture Recap was left blank by the Parties.5 There is no clear reference as to what law had

been chosen by the Parties to govern the contract, and under what venue will the disputes be

settled.6 Therefore, lacking clear reference, one must conclude that the Law and Litigation

Clause under the Charterparty had not been validly incorporated into the Fixture Recap.

5. The Claimant may argue that express reference is unnecessary since the broker involved had

explicitly provided that the Fixture Recap is based on the standard form of SHELLTIME, and

therefore it is to be assumed that the terms of SHELLTIME is incorporated into the Fixture

Recap. The Respondent submits that this view cannot be accepted.

6. As established under The Federal Bulker,7 when there has been no previous contractual

relationship between certain parties, it is necessary to expressly incorporate an arbitration

agreement. In the absence of such clear reference, the parties are deemed to have not

concluded any arbitration agreement. In the present case, it is a known fact that the

Charterparty marked the first legal relationship between the Parties.8 As there has been no

previous relationship between the Parties, the Respondent is not familiar with the terms of the

SHELLTIME that the Claimant intended to incorporate. Hence, lacking such clear reference

in the Fixture Recap, there is no arbitration agreement concluded.

4 Manatee Towing Co Ltd v Oceanbulk Maritime SA (The Bay Ridge) [1999] 2 Lloyd's Rep. 227 (QB); Welex

AG v Rosa Maritime Ltd (The Epsilon Rosa) (No.2) [2003] EWCA Civ. 938 (CA); Stellar Shipping Co LLC v

Hudson Shipping Lines [2010] EWHC 2985 (Comm) (QB); Hyundai Merchant Marine v Americas Bulk

Transport Ltd (The Pacific Champ) [2013] EWHC 470 (Comm) (QB). 5 Moot Problem, p. 6.

6 Ibid.

7 Federal Bulk Carriers Inc v C. Itoh & Co. Ltd (The Federal Bulker) [1989] 1 Lloyd‘s Rep 103 (CA); Caresse

Navigation Ltd v Office National de L'Electricite (The Channel Ranger) [2013] 2 C.L.C. 480 (QB); Caresse

Navigation Ltd v Zurich Assurances MAROC [2014] EWCA Civ 1366 (CA). 8 Moot Problem, p. 2-4.

5

B. The Arbitration Shall Not Be Held in Melbourne

7. Should the Law and Litigation Clause apply in the present case, it stipulates that London shall

be the venue of arbitration. However, the Tribunal decided that it will consider all of the

jurisdiction and liability issues ―advanced in this arbitration in Melbourne.‖9 It is the

Respondent‘s contention that arbitration may not be commenced in a venue other than what

has been expressly consented by the parties in the Law and Litigation Clause.10

8. Although Arbitration Act (UK) 1996 does entitle an arbitration tribunal to decide when and

where any part of the proceedings is to be held,11

such decision is subject the parties‘

consent.12

Naviera v Compania upholds this principle,13

demonstrating that in order to

commence arbitration other than in the designated place, both parties need to agree where it

shall be commenced.14

9. In the present case, up to the time when Procedural Order No. 1 was issued, there had been

no discussion in any way − much less consent − by the Parties to have hearings in

Melbourne. Upholding the principle set out in Naviera, absent of any consent from the

Parties, the arbitration shall not be held in Melbourne.

C. There is no close connection between the Contractual and Tortious Claims

10. In any event, the Respondent submits that the tortious claim brought by the Claimant is

inadmissible. In order to put forward a tortious claim in arbitration, there are two conditions

that must be cumulatively fulfilled,15

namely first, referral term of the arbitration clause is

9 Procedural Order No. 1 ¶ 1.

10 Dallah Real Estate v Pakistan [2011] UKSC 46 (SC); Golden Ocean v PT. Humpuss Intermoda [2013]

EWHC 1240 (QB). 11

Arbitration Act 1996 (UK) § 34 (1) & (2). 12

Arbitration Act 1996 (UK) § 34 (1). 13

[1988] 1 Lloyd's Rep. 116 (CA); Braes of Doune v Alfred McAlpine [2008] EWHC 426 (TCC) (QB);

Shashoua v Sharma [2009] EWHC 957 (Comm) (QB); Shagang South-Asia (Hong Kong) v Daewoo Logistics

[2015] EWHC 194 (Comm) (QB). 14

Naviera v Compania (n.11). 15

Astro Vecendor Compania Naviera v Mabanaft GMBH (The Damianos) [1971] 2 All E.R. 1301 (CA);

Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd‘s Rep. 12 (CA);

Premium Nafta Product Ltd v Fili Shipping Co Ltd and others (Fiona Trust) [2007] UKHL 40 (HL).

6

wide enough to cover tortious claims,16

and second, there should be a sufficient close

connection between the contractual and tortious claims.17

In the present case, the second

condition is not fulfilled.

11. Under The Damianos,18

the owners claimed damages for the detention of the vessel arising

from the charterer‘s wrongful arrest of the vessel. It is held that the damages was the direct

consequence for the arrest of the vessel, thus the contractual and tortious disputes were

closely knitted together on the facts, and the agreement to arbitrate one can properly be

construed as covering the other.

12. However in this Dispute, such close connection was not present. The Claimant argued that

the Respondent breached its contractual obligation to pay for the second hire period.19

Additionally, the Claimant submitted that the Respondent has committed tort of fraud in

relation to its allegedly unfulfilled promise to provide bunker supply in Durban or Cape

Town and in STS Area 1.20

In this instance, the Respondent submits that the resolution of the

former is independent from that of the latter and vice versa.

13. The former and the latter are independent from each other because the point of issue between

the two is different. The issue of the former − namely the contractual breach − refers to the

Respondent‘s contractual obligation to pay hire.21

Whereas the issue of the latter − namely

the tortious claim − refers to the promise to provide bunker in Durban and/or Cape Town and

the act of the alleged agent of the Respondent.22

The Respondent thus submits that there is no

connection between the former and the latter.

16

Premium Nafta Product Ltd v Fili Shipping Co Ltd and others (Fiona Trust) [2007] UKHL 40 (HL) 17

Empresa Exportadora De Azucar v Industria Azucarera Nacional (The Playa Larga and Marble Islands)

[1983] 2 Lloyd‘s Rep. 171 (CA); Ryanair v Esso Italiana [2013] 2 C.L.C. 950. 18

Astro Vencedor Compania Naviera S.A. v Mabanaft G.m.b.H [1971] 1 Lloyd‘s Rep. 331, Mr. Justice Mustill;

Empresa Exportadora De Azucar v Industria Azucarera Nacional (The Playa Larga and Marble Islands)

[1983] 2 Lloyd‘s Rep. 171; Ryanair v Esso Italiana [2013] EWCA Civ 1450 (CA). 19

Moot Problem, p. 62. 20


Clause 8 & 9,Shelltime. 22

Moot Problem, p. 63 & 64.

7

14. Consequently, since the test set out to prove sufficient nexus between the tortious claims and

the contractual claims cannot be proven, the Tribunal hence does not have the jurisdiction to

rule upon the tortious claims submitted by the Claimant.

MERITS

II. THE RESPONDENT IS NOT LIABLE FOR THE DAMAGE TO THE

WESTERN DAWN

15. In its preliminary submissions, the Claimant submitted that the Respondent is liable for the

damage to the Western Dawn since the Respondent breached the Charterparty by not

providing proper bunkering, and committed tort of fraud as the instruction of ASA2 −

alleged agent of the Respondent – caused the Western Dawn to be susceptible to pirate‘s

attack.23

The Claimant further submitted that these series of events caused the Western

Dawn to suffer damage to its navigation equipment, main-deck hose crane and starboard-

side accommodation ladder, and bridge equipment (―Damage‖).24

On the contrary, the

Respondent submits that it is not liable for the above Damage since (A) the Respondent did

not breach its contractual obligation to provide proper bunkering, (B) the Respondent did

not commit tort of fraud, and (C) the Damage to the Western Dawn was not caused by the

Respondent.

A. The Respondent Did Not Breach its Obligation to Provide Proper Bunkering

16. Clause 7 (a) of the Charterparty stipulates that the charterers have the obligation to provide

and pay for all fuel.25

In The Captain Diamantis,26

when referring to a charterer‘s contractual

obligation to provide proper bunker, Lord Denning M.R., stated that ―‘all the fuel’ … means

23

Moot Problem, p. 40 & 41. 24


Clause 7 (Charterers to Provide), Shelltime: ―Charterers to provide and pay for all fuel..‖. 26

[1978] 1 Lloyd‘s Rep. 346 (C.A.); Federal Commerce & Navigation Co Ltd v Molena Alpha Inc (The Nanfri)

[1978] Q.B. 927 (QB).

8

‘all the fuel which is reasonably required in the course of the charter service and for the

purpose thereof‖27

and that ―the charterers should be allowed considerable discretion as to

what is reasonably required.‖ Further, in the case of McFadden v Blue Star Line,28

a

charterer in terms of its obligation to provide proper bunkering is allowed to apply doctrine

of stages, which is by providing reasonably sufficient bunker until the next bunkering port.

17. In accordance with the doctrine of stages, the Respondent‘s obligation in the present case to

provide and pay for all fuel is divided into several stages. The first stage would be the

Western Dawn‘s voyage from the loading port (Singapore) to the discharge port (Luanda),

where the bunker supply will be provided through STS operation.29

Second stage would be

from Luanda to Bonny,30

and the third stage would be from Bonny to Gibraltar31

before the

redelivery of the Western Dawn.

18. In this case, the Respondent submits that it had provided proper bunkering for the Western

Dawn by providing bunker in the amount of 950 MT ex PBT in Singapore.32

This is

sufficient for the Western Dawn to get to the next discharge port in Luanda.33

The

Respondent also exercised its discretion by intending to prepare the additional bunker supply

needed to complete discharge operation − in either Durban or Cape Town and STS Area 1 −

by ordering the Master to communicate with the STS coordinator.34

19. Thus, it can be concluded that the Respondent was, at all times during the voyage of the

Western Dawn, in compliance with Clause 7 of the Charterparty.

27

The Captain Diamantis (n. 24). 28

[1905] KBD; Hongkong Fir Shipping Co. Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26 (CA); Spar

Shipping AS v Grand China Logistics Holding (Group) Co., Ltd [2015] EWHC 718 (Comm); Urban 1 (Blonk

Street) Ltd v Ayres [2014] 1 W.L.R. 756; Telford Homes (Creekside) Limited v Ampurius Nu Homes Holdings

Limited [2013] EWCA civ 577(CA). 29



Ibid. 32



Moot Problem, p. 34.

9

B. The Respondent Did Not Commit Tort of Fraud

20. In its preliminary submissions, there are two events which the Claimant is relying on to base

its claim on tort of fraud in the form of misrepresentation. First, the Claimant alleged that the

Respondent has made a misrepresentation by not providing additional bunker in Durban or

Cape Town, and second the alleged agent of the Respondent has made misrepresentation with

respect to the failed bunker supply in STS Area 1.

21. A misrepresentation is a false statement of act or law which induces the representee to enter

to a contract.35

In order to prove that there is a misrepresentation, the elements that need to

be fulfilled are that there is a false statement and that such statement is invoked to induce

another party to enter into a contract.36

The Respondent submits that in both circumstances,

the elements of misrepresentation are not fulfilled.

i. There is No Misrepresentation with Respect to the Provision of Bunkering in

Durban or Cape Town

22. In alleging misrepresentation, the Claimant has made a misapplication of law. As mentioned

in the case of Derry v Peek,37

misrepresentation is a false statement made by one party

restricted to an event where there is an inducement of a party to enter into a contract.

However, in the present case, the Respondent's statement to provide additional bunker in

Durban or Cape Town was made following the conclusion of the Charterparty.38

Therefore,

the Respondent's action of not providing additional bunker in Durban or Cape Town does not

fall under the ambit of what is considered as misrepresentation, as such statement was not

made to induce the Claimant to enter into the Charterparty.

23. Further, the Claimant may argue that the Respondent has made misrepresentation by being

silent and not providing further information regarding the additional bunker supply when the

35

[1889] 14 App Cas 337, HL (E) (HL); OMV Petrom v Glencore [2015] EWHC 666 (Comm) (QB). 36

Derry v Peek (n. 35). 37

[1889] 14 App Cas 337, HL (E) (HL); OMV Petrom v Glencore [2015] EWHC 666 (Comm) (QB). 38

Moot Problem, p. 5 & 31-35.

10

Western Dawn passed Durban. As established in Carvel USA Inc. v Seaton Insurance,39

the

general rule to prove misrepresentation is that a positive act or representation is required and

mere silence will not establish a misrepresentation. Therefore, the Respondent's silence

cannot also be constituted as an intention to mislead the Claimant.

24. As the existence of misrepresentation on the Respondent's part cannot be proven, the

Respondent submits that there is no fraud committed by itself in the provision of bunkering in

Durban or Cape Town.

ii. ASA2 is Not the Agent of the Respondent

25. The Claimant also submits that the Damage was caused by the misrepresentation of the

alleged agent of the Respondent, ASA2. The Claimant argued that this is the cause of the

Western Dawn being idle in West Africa that is known to be pirate prone.40

However, the

Respondent submits that ASA2 has never been the agent of the Respondent since there is no

principal-agency relationship between the two, and therefore ASA2‘s action is not

attributable to the Respondent.

26. Principal-agency relationship is, by nature, a fiduciary and consensual relationship between

two parties where one party (the agent) acts on behalf of another party (the principal) and

where the agent can form a legal relationship on behalf of the principal.41

The creation of

principal-agency relationship arises when the agency is appointed through an agreement or

contract, or by ratification.42

The effect of principal-agency relationship is that the principal

shall be held liable for any act of the agent carried out in the relationship.43

27. The Respondent submits that any action made by ASA2 is not attributable to the Respondent,

39

[2008] EWHC 3043 (Comm) (QB); Halliwells LLP(in Administration) v Austin [2012] EWHC 1194

(Ch)(QB). 40


P&C Alternative Investment (Holdings) Ltd v Barthelemy [2011] EWHC 1731 (QB); Fujitsu Services Ltd v

IBM United Kingdom Ltd [2014] 1 C.L.C. 353 (QB). 42

Gabem Management Ltd v Revenue and Customs Commissioners [2007] STC (SCD) 247; Fujitsu Services

Ltd v IBM United Kingdom Ltd [2014] EWHC 752 (QB). 43

Barwick v English Joint Stock Bank[1866-67] LR 2 Ex. 259(CA); Lloyd v Grace Smith & Co[1912] AC 716

(HL); Sally Rosemary Noel v Jogn Poland & Michael Poland [2001] 2 B.C.L.C 645 (QB); Lovett v Carson

Country Homes Ltd [2009] EWHC 1143 (Ch) (QB); IG Index Plc v Colley [2013] EWHC 478 (QB).

11

since there is no contract or agreement from the Respondent appointing ASA2, and there has

never been a confirmation by the Respondent of ratifying ASA2 as its agent. Instead, the

Respondent has given an express actual authority to Atlantic Services Agency (―ASA‖)

within the voyage order dated 27 May 2014 (the ―Voyage Order‖) as the only agent

authorised to conduct STS operation in the discharge port.44

There is indeed no evidence

which indicates that the Respondent has given authority to ASA2 to act on its behalf.

28. The Claimant relied on the instructions given by ASA2, leading it to sail and eventually

remain idle in an area falsely designated by ASA2 as STS Area 1.45

Due to the fact that the

Western Dawn remained idle in that area, the Western Dawn became susceptible to piracy

and the subsequent event of piracy inflicted Damage to the Western Dawn. However, since it

is established that there is no principal-agency relationship between the Respondent and

ASA2, therefore ASA2‘s false instruction cannot be attributable to the Respondent, and the

Respondent shall not be deemed to have committed misrepresentation in STS Area 1.

29. As it has been established above, the Respondent did not breach its contractual obligation to

provide and pay for bunker as stipulated in Clause 7 of SHELLTIME46

and the Respondent

did not commit any misrepresentation to the Claimant.47

Therefore, the Respondent submits

that it is not liable for any loss for the Damage to the Western Dawn.

III. THE RESPONDENT IS NOT LIABLE FOR THE PAYMENT OF THE

SECOND HIRE PERIOD

30. In accordance with Clauses 8 and 9 of the Charterparty, the Respondent has the obligation to

pay hire per calendar month, at the time of the delivery to the time of redelivery.48

The

44



See supra II. A 47

See supra II. B 48

Clause 8 & 9, Shelltime.

12

amount of the hire is $19,950 per day pro-rated for 3 months +/- 30 days.49

31. As a response to the Claimant‘s claim regarding hire payment, the Respondent submits that

(A) the Western Dawn shall be considered as off-hire due to breach of order on the Master‘s

part, (B) the payment of the second hire period is not payable under the Piracy Clause of the

Charterparty, and (C) even if the Respondent was liable for the payment of the second hire

period and Western Dawn was not considered as off-hire, the Charterparty was frustrated.

A. The Western Dawn Was Off-Hire Due to Breach of Order

32. It is settled in law that prima facie hire is payable and that it is for the Charterer to bring

themselves clearly in the exception in the off-hire clauses if they contend that hire ceases.50

As it was held under The Hermosa,51

a vessel can be treated as off-hire only if its cused by ab

event enumerated in the off-hire clause.

33. The Respondent submits that the Western Dawn was considered to be off-hire at 28 June

2014, due to the Master‘s failure to follow the Respondent‘s order. Pursuant to Clause 21 of

the Charterparty, ―(a) On each and every occasion that there is an undisputed loss of time: ...

(ii) due to industrial action, refusal to sail, breach of order or neglect of duty on part of the

master, officer, or crew ..., the vessel shall be off-hire from the commencement of such loss of

time until she is again ready and in efficient state to resume her service ...‖52

34. In the present case, the Master of the Western Dawn has been expressly ordered by the

Respondent to contact ASA pursuant to the voyage order.53

However, such order was not

49


Mareva Navigation Co v Canaria Armadora SA (The Mareva AS) [1977] 1 Lloyd‘s Rep. 368 (QB); Nippon

Yusen Kaisha Ld v Scindia Steam Navigation Co Ltd (The Jalagouri) [2000] CLC 1051 (Comm) (CA);ni

Ocean Marine Navigation Ltd v Koch Carbon Inc (The Dynamic) [2003] EWHC 1936 (Comm) (QB); TS

Lines Ltd v Delphis NV [2009] EWHC 933 (Comm); Hyundai Merchant Marine Co Ltd v Furness Withy

(Australia) Pty (The Doric Pride) [2005] 1 CLC 780 (QB); Cosco Bulk Carrier Co Ltd v Team-Up Owning Co

Ltd (The Saldanha) [2010] EWHC 340 (Comm) (QB). 51

Nitrate Corporation of Chile Ltd. v Pansuiza de Navegacion S.A (The Hermosa) [1980] 1 Lloyd‘s Rep. 638

(CA); SK Shipping (S) PTE Ltd v Petroexport Ltd [2009] EWHC 2974 (Comm) (QB); Ampurius Nu Homes

Holdings Ltd v Telford Homes (Creekside) Ltd [2013] EWCA Civ 577 (CA); Spar Shipping AS v Grand China

Logistics Holding (Group) Co Ltd [2015] EWHC 718 (Comm) (QB). 52

Clause 21 (Off-Hire Clause), Shelltime. 53


13

followed by the Master and he contacted ASA2 instead on 28 June 2014,54

who was never

the agent of the Respondent.55

The aforementioned breach has led the Western Dawn to be

susceptible to piracy and eventually seized by pirates.56

35. Due to the aforementioned breach on the Master‘s part, the Western Dawn shall be

considered as off-hire since the time the Master has breached the Respondent‘s order, which

is on 28 June 2014.

B. The Payment of the Second Hire Period is Not Payable Under the Piracy Clause

36. Pursuant to Sub-Clause 4 of the Piracy Clause, in order for hire to be payable during the time

when the Western Dawn was captured by pirates, there are key requirements that need to be

fulfilled.57

First, the Claimant must have taken the preventive measures in accordance with

the Charterparty. Second, that in the event that the Claimant has failed to take such measure,

it is not caused by failing to exercise due diligence.

37. In the present case, the Claimant has failed to take preventative measures to protect the

Western Dawn from pirate attack by not to providing the Western Dawn with razor wire in

accordance with Best Management Practices Version 4 (BMP4) pursuant to Sub-Clause 1 of

the Piracy Clause.58

Further, the Claimant failed to show due diligence by not taking the

required equipment when Western Dawn went passing through Durban,59

when in fact the

equipment was ready to be delivered to the Western Dawn.60

Hence, the Claimant has failed

to fulfil the first and second requirement to be entitled for hire payment under Sub-Clause 4.

Consequently, there was no hire due and owed by the Respondent to the Claimant.

C. Alternatively, the Contract Has Been Frustrated Due to Piracy

38. A contract is frustrated if it has become incapable of being performed due to circumstances

54

Moot Problem, p. 35-38, 41. 55

See supra II. B. ii 56

Moot Problem, p. 42 57

Moot Problem, p.8. 58



Procedural Order No.2, ¶ 17.

14

radically different from what was undertaken in the contract,61

and it releases the party from

further performance of the contract.62

The Respondent submits that (i) the Charterparty was

frustrated due to the fact that the Western Dawn cannot continue its voyage because of the

damage to its equipment, and therefore, (ii) it is not liable for the payment of the second hire

period as hire ceases to be payable due to frustration of the Charterparty.

i. The Damage to Western Dawn Caused the Charterparty Impossible to be Performed

39. Time charter is a contract of services to be rendered to a charterer by a shipowner through the

use of a vessel by the shipowner‘s crew within a period of time.63

In the present case, the

Claimant and the Respondent are bound by the Charterparty to use Western Dawn for the

purpose of delivering the Cargo within the period of 3 months.64

Due to seizure by pirates,

the Western Dawn suffered the Damage65

that rendered the Western Dawn to be in no way fit

to continue its voyage and provide services to the Respondent. Consequently, the

Charterparty has been frustrated.

ii. The Respondent is Not Liable for the Payment of the Second Hire Period Due to

Frustration of the Contract

40. It is accepted that frustration releases the party from further performance of the contract.66

Under Fibrosa Spolka, the defendant purchased machinery from the plaintiff, which has been

paid one-third by the defendant. However, a war broke out when the machinery was in

transit, causing the obligations to be impossible to be performed. It is decided that the

61

Davis Contractors Ltd v Fareham Urban District Court [1956] AC 696 (CA); BAS Capital Funding Corp v

Medfinco Ltd [2003] EWHC 1798 (Ch) (QB); Classic Maritime Inc v Lion Diversified Holdings bhd [2010] 1

C.L.C. 445 (QB); Blankley v Central Manchester and Manchester Children's University Hospitals NHS Trust

[2015] EWCA Civ 18 (CA). 62

Chandler v Webster [1904] 1 KB 493 ¶499 (CA); Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe

Barbour Ltd (1943) AC 32(HL); . 63

Scandinavian Trading Tanker Co AB v lota Petrolera Equatoriana (The Scaptrade) [1983] 2 All ER 763

(HL); Friends Provident Life & Pensions Ltd v Sirius International Insurance Corp[2005] EWCA Civ.

601(CA). 64



Chandler v Webster [1904] 1 KB 493 ¶499 (CA); Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe

Barbour Ltd (1943) AC 32(HL); .

15

defendant has no obligation to pay and the amount already paid is recoverable. Applying the

above principle, the Respondent shall be discharged from its obligation to pay for the second

hire period due to frustration of the Charterparty.

41. Further, in accordance with Section 1(2) of the Frustrated Contracts Act of 1943, ―… all

sums paid or payable before the frustrating event shall, if paid, be recoverable and if not

paid, shall cease to be payable‖.67

Thus, where a time charter has been frustrated and there is

an unpaid monthly instalment of hire, such hire shall cease to be payable.68

In the present

case, the payment of the second hire payment was due before the event of piracy, namely on

3 July 2014.69

The Respondent submits that when the Charterparty was frustrated on 4 July

2014,70

in accordance with the abovementioned principle, although the payment of the

second hire period is due before the event leading to the frustration of the contract, the

Respondent‘s obligation in paying the second hire period shall cease.

COUNTER CLAIMS

IV. THE CLAIMANT SHALL BE LIABLE FOR ANY THIRD PARTY CLAIMS

ARISING FROM THE LOSS OF CARGO

42. The Respondent contends that the Claimant is liable for the amount of 28,190 MT of gasoil

that had been removed from Western Dawn as the result of the pirate attack due to (A) the

failure of the Claimant to make Western Dawn seaworthy and (B) the Claimant‘s breach of

its duty as a sub-bailee of the Cargo.

67

Law Reform (Frustrated Contract) Act 1943 § 1(3). 68

John F. Wilson, Ibid, 45. 69



16

A. The Claimant is Liable for the Loss of the Cargo Due to Unseaworthiness of the

Western Dawn

43. The Claimant as the shipowner of Western Dawn has the duty to provide a seaworthy ship.71

A vessel can be considered as seaworthy if it has a degree of fitness at the beginning of its

voyage, with regard to all the probable circumstances to it.72

The degree of fitness therefore

must meet the standard requirements of what is expected in the particular voyage, which in

this case, a voyage to the West Africa region. If the Claimant is proved to have failed to

provide a seaworthy ship for the voyage, it shall be liable for any loss caused by the

unseaworthiness.73

The Respondent submits that (i) the Western Dawn was unseaworthy as it

did not comply with the standard of anti-piracy measures, and (ii) it caused loss of the Cargo.

Therefore, the Claimant shall be liable for such loss as it breached its duty to provide a

seaworthy vessel.

i. The Western Dawn was Unseaworthy Since It Did Not Comply with the Standard

Anti-Piracy Measures

44. The Claimant has to ensure that the Western Dawn is ―properly equipped‖74

to withstand the

―ordinary perils‖75

of the contractual voyage in accordance with the standards and practices

of the industry at the relevant time.76

In present case, the Claimant is obliged to comply with

the Best Management Practice (BMP) 4 as it is the standard guideline to assist ships to avoid,

71

Papera Traders Co. Limited & Others v Hyundai Merchant Marine Co. Limited, The Keihin Co. Limited (The

Eurasian Dream) [2002] EWHC 118 (Comm) (QB); JP Klausen & Co. AS v Mediterannian Shipping Co SA

[2013] EWHC 3254 (Comm) (QB). 72

F.C. Bradley & Sons Ltd v. Federal Steam Navigation Co.[1926] 24 Llyod‘s Rep. 446 ¶ 454 (HL); Papera

Traders Co. Limited & Others v Hyundai Merchant Marine Co. Limited, The Keihin Co. Limited (The

Eurasian Dream) [2002] EWHC 118 (Comm) (QB). 73

The Eurasian Dream (n. 62). 74

The Maori King [1895] 2 QB 550 (CA); Queensland National Bank Ltd v Peninsular and Oriental Steam

Navigation Co [1898] 1 QB 567 (CA). 75

Northern Shipping Co v Deutsche Seereenderei G.M.B.H and Others (The Kapitan Shakarov) [2000] 2

Lloyd‘s Rep. 255 (CA); Fail Oil Co Ltd v Petronas Trading Corp Sdn Bhd (The Devon) [2004] EWCA Civ

822 (CA); Parsins Corp v CV Scheepvaartonderneming Happy Ranger [2006] EWHC 122 (Comm) (QB);

Compania Sud Americana de Vapires SA v Sinochem Tianjin Import & Export Corp (The Aconcagua) [2009]

EWHC 1880 (Comm) (QB). 76

Kopitoff v Wilson [1875] 1 Lloyd‘s Law Report 277 (QB); Clarke v National Insurance and Guarantee Corp

[1964] 1 QB 199; Great China Metal Industries Co. Ltd v Malaysian International Shipping Corp (The Bunga

Seroja) [1999] 1 Ll. Rep. 512 (QB).

17

deter or delay pirate attack.77

The Claimant has also recognised this guideline by

incorporating BMP4 into the Piracy Clause under the Charterparty.78

45. In the present case, the Western Dawn was hired to deliver the Cargo to West Africa, an area

known to piracy risk.79

The Claimant however failed to equip the Western Dawn with a

required preventive measure under the BMP4, namely providing the Western Dawn with

razor wire as a preventive measure from pirate attack.80

Due to the Claimant‘s failure to

equip Western Dawn with razor wire, and as such did not meet the standard of preventive

measure under BMP4, the Western Dawn must be regarded as an unseaworthy vessel.

ii. The Loss of the Cargo Was Caused by the Unseaworthiness of the Western Dawn

46. The Respondent submits that the cause of the Damage is the Claimant‘s failure to equip

Western Dawn with preventive measure. The test to decide whether the loss was caused by

the unseaworthiness of the vessel is whether the disaster would happen if the ship has been

made seaworthy.81

Taking into account the facts in the present case, the pirates would not

have been able to board the Western Dawn if it was provided with proper anti-piracy

measures, such as razor wire as physical barriers.82

Pirates use hooked ladders with a

climbing rope attached to board the vessel and the usage of razor wires as a physical barrier

would make it difficult to gain access to the vessel.83

Failing to have razor wires on board

would allow pirates to seize Western Dawn without significant physical barrier. As such, it

can be concluded that the absence of razor wire, which renders Western Dawn to be

unseaworthy to sail through a piracy prone area, caused the loss of the Cargo.

77

IMO Piracy and Armed Robbery Againsts Ships: Guidance to Shipowners and Ship Operators,Ship Masters

and Crews on Preventing and Supressing Acts of Piracy and Armed Robbery Against Ship, MSC.1/Circ. 1334,

23 June 2009. 78


Moot Problem, p. 36; IMO on Piracy and Armed Robbery Against Ships,

http://www.imo.org/OurWork/Security/PiracyArmedRobbery/Pages/Default.aspx 18 April 2015. 80

Procedural Order No.2, ¶ 17. 81

Smith v Hogg & Co Ltd v Black Sea & Baltic General Insurance Co Ltd [1940] 67 Lloyd‘s Rep. 253; Redland

Aggregates Ltd v Shepherd Hill Civil Engieering Ltd (Stay of Proceeding) [2000] CP Rep 7; Guinomar of

Conarky Samsung Fire & Marine Insurance Co Ltd(The Kamsar Voyager) [2002] Lloyd‘s Rep. 57 82


Best Management Practices Version 4, p. 27 § 8.5.

http://www.imo.org/OurWork/Security/PiracyArmedRobbery/Pages/Default.aspx

18

B. The Claimant is Liable for the Loss of the Cargo as Sub-Bailee of the Cargo

47. Between 4 until 17 July 2014, about 28,190 MT of gasoil was removed from Western

Dawn84

and the receiver named under the Bill of Lading, i.e. Angola Energy Imports (the

―Cargo Owner‖) had never received or took possession of the gasoil removed from the

Western Dawn. The Respondent contends that Claimant shall be held liable for such loss due

to the fact that (i) the Claimant is the sub-bailee of the Cargo and (ii) the Claimant had not

exercised due diligence as the sub-bailee of the Cargo.

i. The Claimant is the sub-bailee of the Cargo

48. A sub-bailee relationship exists where there has been a sub-bailment by the bailee to a sub-

bailee.85

In the present case, there has been a bailment relationship between the Cargo

Owner, and the Respondent.86

For the purpose of transporting the Cargo to the Cargo Owner,

the Respondent entered into a contract of sub-bailment with the Claimant in form of the

Charterparty, rendering the Cargo to be taken into the Claimant‘s custody.87

From this

relationship, it is then established that the Claimant is the sub-bailee of the Cargo.

ii. The Claimant is Liable for the Loss of the Cargo Since It Had Not Exercised

Reasonable Care as the Sub-bailee of the Cargo

49. A sub-bailee is responsible for exercising reasonable care when taking a cargo-owner‘s goods

in its custody.88

This principle is similar in nature as duty of a common carrier, where in

Paterson Steamships v Canadian Co-operative Wheat Producers,89

such duty imposes the

carrier of the goods to be: responsible for delivering in like order and condition at the

84


KH Enterprise v Pioneer Container [1994] 2 AC 324 (PC); P & O Nedlloyd B.V. v Utaniko Limited [2003]

EWCA Civ 83 (CA); Scottish & Newcastle Internatioinal Ltd v Othon Ghalanos Ltd [2008] UKHL 11(HL). 86


The Pioneer Container [1994] 2 AC 324; East West Corporation v DKBS 1912 [2003] 1 Lloyd‘s Rep. 239 88

Antonio Gramsci Shipping Corp v Stepanovs [2011] EWHC 333(Comm); McCowan v McCullogh [1926] 1

DLR 312 (CA); Marca v Christie Manson & Woods Ltd [2004] QB 286 (QB); City Television v Conference

and Training Office Ltd [2001] EWCA Civ 1770 (CA). 89

[1934] A.C. 538 (PC); Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd(The Muncaster

Castle)[1961] AC 807 (HL); Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona)

[1994] C.L.C. 808 (QB).

19

destination in respect of the goods bailed to him; exercise due care and skill in relation to the

carriage of the goods and furnish a ship that is fit for the voyage.

50. In the present case, it has been established that the Claimant has failed to exercise reasonable

care to provide a seaworthy ship fit for the voyage causing the failure to deliver the Cargo in

like order and condition to the discharge port.90

51. In KH Enterprise v Pioneer Container,91

the judges held that notwithstanding the fact that the

cargo owner was not the party in the sub-bailment contract, the sub-bailee is liable for the

loss of cargo to the cargo owner as he voluntarily took the cargo into his custody. In this

case, as it has been previously established that the loss of the Cargo was caused by the

unseaworthiness of the Western Dawn,92

the Claimant as the sub-bailee of the Cargo shall be

liable for any claims lodged by the Cargo Owner in relation to the loss of the Cargo.

INTEREST AND COST OF PROCEEDING

V. THE RESPONDENT IS ENTITLED FOR INTERESTS AND COST

A. The Respondent is Entitled for Compound Interest

52. In accordance with Section 49 of Arbitration Act 1996, the Tribunal has the power to award

simple or compound interest otherwise it has been agreed by the parties.93

As the Parties

have not reached an agreement in this regard, the Respondent submits that it is entitled for

the compound interest on the loss of Cargo that may potentially be claimed by the Cargo

Owner.

53. In Man Nutzfahrzeuge AG v Freightliner Ltd,94

to ensure that a party obtains proper

90

See supra IV. A. i. 91

KH Enterprise (n. 84). 92

See supra IV. A. ii. 93

Equitas Ltd, Additional Underwriting Agencies (No. 9) Ltd v Walsham Brothers & Co. Ltd [2013] EWHC

3264 (Comm) (QB). 94

[2005] EWHC 2347( Comm) ¶ 321; Barclays Bank Plc v Grant Thornton UK LLP [2015] EWHC 320

(Comm); Hut Group Ltd v Nobahar-Cookson [2014] EWHC 3842 (QB); Same v Mortgage UK Financial

Services Ltd and others [2012] Bus. L.R. 203.

20

compensation for his loss resulting from the act of another party, arbitrators commonly award

compound interest to the injured party.95

54. The Respondent therefore submits that in order to adequately compensate the price and value

of loss of the Cargo that may potentially be claimed by the third party as the Cargo Owner,

the Respondent is entitled for compound interest.

B. The Claimant is Liable for the Cost of the Proceeding

55. The Respondent submits that the Claimant is liable for the costs of this proceeding incurred

as a natural consequence from the Claimant‘s breach of duty in providing a seaworthy

vessel.96

Pursuant to Section 61 of the Arbitration Act 1996, the costs of arbitration may be

awarded in the absence of an agreement between the parties in the dispute97

by the Tribunal

in accordance with the general principle that the successful party will recover its costs from

the unsuccessful party.98

56. Consequently, should the Tribunal award in favour of the Respondent, the Respondent is

entitled to recover its costs of the Proceeding.

PRAYER FOR RELIEF

For the reasons submitted above, the Respondent requests this Tribunal to:

DECLARE that this Tribunal has no jurisdiction to hear this proceeding;

Alternatively,

DECLARE that this Tribunal cannot hear any tortious claims brought by the Claimant;

In the event that the Tribunal rules that it has jurisdiction to hear the Dispute,

95

Man Nutzfahrzeuge v Freightliner (n. 106). 96

See supra IV. A. ii 97

Arbitration Act 1996 (UK) § 61. 98

British Racing Drivers Club Ltd v Hextall Erskine & Co [1996] BCC 727 (QB); Newman v Framewood

Manor Management Co Ltd [2012] EWCA Civ 1727 (CA) ¶ 21.

21

ADJUDGE that the Respondent is not liable:

a. for the alleged breach of obligation in providing proper bunkering;

b. for the alleged tort of fraud;

c. for the alleged damage to the Western Dawn;

ADJUDGE that the Respondent is not liable to pay the second hire payment to the Claimant;

ADJUDGE that the Claimant is liable for any third party claims arising from the loss of

the Cargo;

And therefore,

AWARD damages and interest to the Respondent as claimed.

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