17thannual international m l a m 2016€¦ · 17thannual international maritime law arbitration...

17THANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT, 2016

NATIONAL UNIVERSITY OF JURIDICAL SCIENCES, KOLKATA TEAM NUMBER: 2

MEMORANDUM FOR ZEUS SHIPPING AND TRADING COMPANY

ON BEHALF OF AGAINST

ZEUS SHIPPING AND TRADING COMPANY HESTIA INDUSTRIES CLAIMANT RESPONDENT

TEAM

AKSHITA JHA, ISHITA MISHRA, PRAKHAR KAINTURA, SAMARTH SHARMA

-Table of Contents -

i TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING COMPANY

TABLE OF CONTENTS

Table of Contents ............................................................................................................................................................... i Questions Presented ......................................................................................................................................................... iii List of Abbreviations ....................................................................................................................................................... iv Index of Authorities ......................................................................................................................................................... vi Statement of Facts ............................................................................................................................................................. 1 Arguments Advanced ........................................................................................................................................................ 2

1. THE ARBITRAL TRIBUNAL HAS JURISDICTION TO HEAR THESE PROCEEDINGS. ..................................................... 2

1.1. The Tribunal has Jurisdiction over the claim of Frustration and hence demurrage under Cl 30. ... 2

1.1.2. The term ‘arising under’ includes within its scope the claim of frustration and hence demurrage. ...... 3 1.1.2.1. No distinction between differently phrased arbitration clauses. ..................................................... 3 1.1.2.2. Frustration and hence demurrage is a claim contemplated under this arbitration agreement. ..... 4 1.1.2.3. Exclusion of Judicial Intervention through Arbitration .................................................................. 5

1.2. In Arguendo, even if the Court in Poseidon has jurisdiction, the Tribunal will decide the claim for

frustration and hence demurrage ............................................................................................................... 6

2. THERE WAS NO FRUSTRATION OF CHARTERPARTY IN THE PRESENT CASE AND ZEUS IS ENTITLED TO DAMAGES

FROM HESTIA FOR BREACH OF CHARTERPARTY OBLIGATIONS. ................................................................................... 6

2.2. Alternatively, Hestia is liable for self–induced frustration of Charterparty and thus it cannot claim

frustration. ............................................................................................................................................... 10

2.1.1. There was an express warranty by Hestia of a safe port nomination in the Charterparty. .................. 10 2.1.2. The port of Hades as nominated by Hestia was politically unsafe. ....................................................... 11 2.1.3. Hestia should have reasonably known about the unsafe conditions at the Port of Hades as the events were not an abnormal occurrence. ..................................................................................................................... 12 2.1.4. The cargo was dangerous for political reasons which Hestia knew. .................................................... 13 2.1.5. Hestia failed to provide a proper notice of the dangerous nature of the cargo. ................................... 14 2.1.7. Zeus is entitled to damages from Hestia for breach of Charterparty obligations. ................................ 16

3. LAYTIME HAD EXCEEDED DUE TO WHICH DEMURRAGE HAD ACCRUED AND HESTIA IS LIABLE TO PAY THE

DEMURRAGE TO ZEUS. ................................................................................................................................................ 16

3.1. Laytime exceeded the contracted time of 10 days. ........................................................................ 17

3.1.1. Laytime was not interrupted as per Cl 9(e) of the Charterparty. .......................................................... 18

-Table of Contents -

ii TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING COMPANY

3.2. The deviation of the ship by Zeus which lead to the delay was justified and the ship Master was

not negligent in following the orders of the Coast Guard. ...................................................................... 18

4. HESTIA CANNOT ESCAPE LIABILITY AS THE FORCE MAJEURE CLAUSE WAS NOT IN APPLICATION IN THE PRESENT

CASE. ........................................................................................................................................................................... 20 5. THERE WAS NO SALVAGE OPERATION AND HESTIA IS NOT ENTITLED TO A SALVAGE REWARD ........................ 21

5.1. MV Athena was not in danger. ...................................................................................................... 22

5.2. The services were under an already existing contractual obligation. ............................................ 23

5.3. Hestia had own interest in salving the vessel. ............................................................................... 25

Prayer .............................................................................................................................................................................. 26

-Questions Presented-

iii TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING

QUESTIONS PRESENTED

1. Whether the arbitral tribunal has jurisdiction to try this dispute between the Claimant and the Respondent?

2. Whether there has been frustration of Charterparty in the present case and is Zeus entitled to damages from

Hestia for breach of Charterparty obligations?

3. Whether the laytime exceeded due to which demurrage accrued and is Hestia liable to pay the demurrage to

Zeus?

4. Whether the assistance provided by Hestia was a salvage operation and is Hestia entitled to a salvage

reward?

-List of Abbreviations-

ivTEAM 2 -

TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING

LIST OF ABBREVIATIONS

AB QB Alberta Court of Queen’s Bench

All ER All England Law Reports

Bing NC Bingham New Cases

Bundle IMLAM Moot Scenario 4 December 2015

Ch Law Reports Chancery

Charter Charterparty

Charterer, Hestia Hestia Industries

Cl. Cl

CLJ Cambridge Law Journal

Com Cas Company Cases (England)

EAA English Arbitration Act, 1996

EWCA (Civ) Court of Appeal (Civil Division)

EWHC England and Wales High Court

i.e. That is

KB Law Reports King’s Bench

-List of Abbreviations-

v TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING COMPANY

LJQB Law Journal, Queen’s Bench

LJP Law Journal, Probate Divorce and Admirality

LR Ex Exchequer

LRPC Privy Council Appeals

Lloyd’s Rep Lloyd’s Law Reports

Lush. Lushington

MLC Crockford’s Maritime Law Cases( First Series) (1860-1871)

MNC March’s Reports, King’s Bench and Common Pleas(1639-1642) [ER 82]

Moo PC Moore’s Privy Council Cases [ER 12-15]

Owner, Zeus Zeus Shipping and Trading

PC Pleas of the Crown

¶ Paragraph

§ Section

SDNY United States District Court for the Southern District of New York

TLR Times Law Reports

UKHL United Kingdom House of Lords

-Index of Authorities-

viTEAM 2 -


INDEX OF AUTHORITIES

CASES

A

Anderson v Ocean Steamship Co,(1883) 13 QBD 651 .................................................................................. 27

AIC Ltd v. Marine Pilot Ltd (The Archimidis), [2008] 1 Lloyd’s Rep. 597 .................................................. 12

Aircraft Recovery, L.L.C., v. Abandoned Aircraft, 54 F.Supp. 2d 1172, 1179 (1999). ................................. 25

Atlantic Oil Carriers v. British Petroleum Co., [1957] 2 Lloyd’s Rep.55 ...................................................... 16

B

Bamfield v. Goole & Sheffield Transport, [1910] 2 K.B. 94, 113 ................................................................ 16

Bank Line Ltd v. Arthur Capel & Co, [1919] AC 435 ................................................................................... 10

Barclays Bank PLC v Nylon Capital LLP, (2011) EWCA Civ 826 T ............................................................. 5

Baxter’s Leather Co. v. Royal Mail Co., [1908] 1 K.B. 796 .......................................................................... 23

Bensuade & Co v. Thames and Mersey Marine Insurance Co, [1897] 1 QB 29,31 ......................................... 9

Brass v. Maitland, [1856] 26 LJ QB 49, QB .................................................................................................. 16

Bunge S.A. v. ADM Do Brasil Ltda (The Darya Radhe), [2009] 2 Lloyd’s Rep. 175 .................................. 16

C

Cantiere Navale Triestina v. Handelsvertretung der Russe Soviet Republik Naphtha Export, [1925] 21 LI L

Rep 204 (CA) .............................................................................................................................................. 19

Charles Mauritzen Ltd v Baltic Shipping Co, 1948 SC 646. ............................................................................ 6

Classic Maritime v. Lion Diversified Holdings, [2010] 1 Lloyd’s Rep. 59 ................................................... 17

Codelfa Construction Pty Ltd v State Rail Authority of NSW. [1982] HCA 24 .......................................... 5, 7


vii TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING COMPANY

Comandate Marine Corp v. Pan Australia Shipping Pty, 2008 1 Lloyd’s Rep 119 (Fed Ct of Australia, NSW

Dist Registry) ................................................................................................................................................ 5

Compania Sud Americana de Vapores v. Sinochem Tianjin Import & Export Corp (The Aconcagua), [2010]

1 Lloyds Rep 1 ............................................................................................................................................ 16

Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd, [1999] Lloyd's Rep 767 ............................. 5

D

Davis v. Fareham U..D.C., [1956] A.C. 696 .................................................................................................... 8

Deutsche Bank AG v Tongkah Habour Public Company Ltd, (2011) EWHC 2251 (QB) .............................. 5

Dow Europe v. Novoklav Inc., [1998] 1 Lloyd’s Rep. 306 ............................................................................ 14

E

Effort Shipping v. Linden Mamagement, [1998] 1 Lloyd’s Rep. 337 ............................................................ 16

Empresa Ecportadora De Azucar v. Industria Azucarera Nacional (The Playa Larga), [1983] 2 Lloyd’s

Rep.171 ......................................................................................................................................................... 8

F

Fat Amplin Steamship Co Ltd v. Anglo-Mexican Petroleum Products Co Ltd, [1916] 2 AC 397, 405 .......... 9

Fiona Trust & Holding Corp v Privalov, [2007] 4 All ER 951 ........................................................................ 4

G

Gard Marine & Energy Ltd. v. China National Chartering Co. Ltd (The Ocean Victory), [2013] EWHC

2199 ............................................................................................................................................................. 13

Gark v.Straits Towing Ltd. and Sayer [1966] 2 Ll.R.Rep.227 ....................................................................... 25

General Feeds Inc v. Burnham Shipping Corporation (The Amphion), [1991] 2 Lloyd’s Rep 101 .............. 16

Gibraltar v Kenney [1956] 2 Q.B. 410 ............................................................................................................. 5

Glynn v. Maregetson, [1893] A.C. 351 .......................................................................................................... 24


viii TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING COMPANY

Gold Group Properties v. BDW Trading, [2010] 1 Lloyd’s Re.p 529 ............................................................. 8

Governor Raffles 2 Dods. 14 .......................................................................................................................... 27

H

Habas Sinai v. VSC [(2013) EWHC 4071]. ..................................................................................................... 7

Heyman v Darwin [1942] A.C. 356 .................................................................................................................. 5

Heyman v Darwins, [1942] AC 356 ................................................................................................................. 6

Hirji Mulji v Cheong Yue Steamship Co, [1926] AC 497 ............................................................................... 5

J

J Jarvis & Sons Ltd. v Blue Circle Dartford Estates Ltd. [2007] EWHC 1262 (TCC) .................................... 6

J Lauritzen AS v. Wijsmuller BV, The Super Servant Two, [1990] 1 Lloyd’s Rep 1,8 .................................. 9

Jackson v. Union Marine Insurance Co Ltd, [1874] LR 10 CP 125 ............................................................. 8, 9

Jones v. Sea Tow Services Freeport NY Inc., 30 F.3d 360 (2d Cir. 1994) .................................................... 25

Joseph Constantine Steamship Line Ltd v. Imperial Smelting Corp Ltd, [1942] AC 154, 164 ....................... 8

K

K/S Penta Shipping v. Ethipian Shipping Lines Corp. (The Saga Cob), [1992] 2 Lloyd’s Rep. 545 ............ 12

Klöckner Pentaplast Gmbh & Co Kg v Advance Technology (H.K.) Company Limited, 14/07/2011,

HCA1526/2010 ............................................................................................................................................. 7

Kruse v Questier & Co. LD., [1953] 1 Q.B. 669 .............................................................................................. 5

L

Leeds Shipping Co. Ltd. v. Societe Francaise Bunge, [1958] 2 Lloyd’s Rep. 127 ........................................ 12

M

Metropolitan Water Board v. Dick, Kerr & Co Ltd, [1918] AC 199, 131 ....................................................... 9

Mitchell, Cotts & Co v. Steel Bros & Co Ltd, [1916], 2 KB 610 ...................................................................... 15


ix TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING COMPANY

Motor Oil Hellas Refineries S.A. v. Shipping Corporation of India (The “Kanchenjunga”), [1990], 1 Lloyds

Rep 391 ....................................................................................................................................................... 18

N

National Carriers Ltd v. Panalpina (Northern) Ltd, [1981] AC 675, 700 ......................................................... 8

NTPC v Singer [AIR 1993 SC 998] (India) ..................................................................................................... 7

O

Ogden v. Graham, [1861] 1 B & S 773. ......................................................................................................... 13

Owners of the SS Melaine v Owners of the SS San Ofre [1925] AC 2462 .................................................... 25

R

Renton v. Palmyra, [1957] A.C. 149 .............................................................................................................. 24

Republic of Kazakhstan v Istil Group Inc (No 3) [2008] 1 Llyod’s Rep 382 .................................................. 6

S

Scott & Sons v. Del Sel, 1923 S. C. (H. L.) 37. ................................................................................................ 5

Smith v. G.W.Ry, [1922] A.C. 178. ............................................................................................................... 23

Sulamerica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA Civ 638 ........................ 4, 7

Sze Hai Tong v. Rambler Cycle Co., [1959] A.C. 576 (P.C.) ........................................................................ 24

T

The Aegen Sea, [1998] 2 Lloyds Rep. 39 ....................................................................................................... 12

The Albion,(1861) Lush.282 .......................................................................................................................... 23

The Aztecs,(1870) 3 Asp. M.L.C.326 ............................................................................................................. 22

The Bengloe,(1940) 67 Ll.L.Rep.307,309 ...................................................................................................... 25

The Carrie [1927] 86 L.J.P. 178 P .................................................................................................................. 22

The Charlotte,(1848) 3 W Rob 68 .................................................................................................................. 22


xTEAM 2 -

TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING COMPANY

The Ella Constance,(1864) 33 L.J. Adm.189,193 .......................................................................................... 23

The Fountain,(1866) L.R. 1 A. & E. 58, 60 .................................................................................................... 23

The Francis and Eliza, 2 Dods. 115 ................................................................................................................ 24

The Galatea, (1858) Swab. 349,350 ............................................................................................................... 23

The Glasidale,(1945) 78 Ll.L. Rep. 477,478 .................................................................................................. 23

The I.C.Potter(,1870) L.R. 3A.&E. 292,298 .................................................................................................. 22

The Leon Blum[1915] P.90,101 ..................................................................................................................... 24

The Mount Cynthos,(1937) 58 Ll.R.Rep.285,287 .......................................................................................... 23

The Perfective (1949) 82 Ll.L.Rep. 873,875 .................................................................................................. 23

The Ranger,(1845) 3 N.o.C.589,590 .............................................................................................................. 22

The Refrigerant [1925] P.130; 95 L.J.P.11 ..................................................................................................... 24

THE SABINE, (1879) 101 U.S. 384, 2 ............................................................................................................ 25

The St.Patrick,(1930) 35 Ll.L.Rep.231,236 ................................................................................................... 24

The Saratoga,(1861) Lush.318,321 ................................................................................................................. 22

The Strathnaver, (1875) 1 App.Cas. 58,65 (P.C.) ........................................................................................... 23

The Suevic,(1908) 154,158;77 L.J.P.92 ......................................................................................................... 23

The Trelawney,(1802) 165 E.R. 592 (Sir W.Scott) ........................................................................................ 25

The White Star,(1866) L.R. 1.A & E. 68 CF .................................................................................................. 22

The Wilhelmine,(1842) 1 N.o.C. 376,378 ...................................................................................................... 22

Tsakiroglou & Co Ltd v. Noblee Thorl GmbH, [1962] AC 93 ........................................................................ 9

U

Ullises Shipping Corporation v. Fal Shipping Co Ltd (The “Greek Fighter”), [2006] 1 Lloyds Rep 99 ....... 15

V


xi TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING COMPANY

Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 474

(1989) ............................................................................................................................................................ 3

W

Ward v McCorkill,(1861) 15 Moo PC 133 ..................................................................................................... 25

Woolf v. Collis Removal Service, [1948] 1 K.B. 11, 17 .................................................................................. 5

STATUTES & RULES

English Arbitration Act, 1996 .................................................................................................................. iii, 4, 6

Maritime Law Association of Australia and New Zealand Arbitration Rules ................................................. 3

United National Commission on International Trade Law Model Law ................................................................. 7

York-Antwerp Rules 1994 .............................................................................................................................. 18

TREATISES

GEOFFREY BRICE, BRICE ON MARITIME LAW OF SALVAGE (JOHN REEDER ED. 5TH ED. 2011) ........................ 27

CHRISTIAN BORRIS, NEW YORK CONVENTION: CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN

ARBITRAL AWARDS, C.H. BECK, (2012) ............................................................................................................. 7

DAVID FOXTON, SCRUTTON ON CHARTERPARTIES, (21ST ED. 2008) ................................................................. 23

EDWARD V. LEWIS, PRINCIPALS OF NAVAL ARCHITECTURE, VOL II, (1988) .................................................. 26

EWAN MCKENDRICK, FORCE MAJEURE AND FRUSTRATION OF CHARTERPARTY, (2013) ................................... 23

FRANCIS D.ROSE, KENEDDY AND ROSE THE LAW OF SALVAGE, (THE HON. SIR DAVID STEEL, RICHARD AA.

SHAW EDS. 6TH ED. 2002) ............................................................................................................................. 26

GARY B.BORN, INTERNATIONAL COMMERCIAL ARBITRATION, KLUWER ARBITRATION, (2ND ED. 2014) .......... 4

GEORGIOS I. ZEKOS, INTERNATIONAL COMMERCIAL AND MARINE ARBITRATION ROUTLEDGE, 2008 ............. 4

JACK BEATSON, ANDREW BURROWS AND J.CARTWRIGHT ,ANSON’S LAW OF CONTRACTS, (29TH ED. 2010). .. 8


xii TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING COMPANY

JOANNA STEELE, BENTLEYS, STOKES AND LOWLESS, CHARTERER’S LIABILITY FOR UNSAFE PORTS - A

COMPARISON OF ENGLISH AND SCANDINAVIAN LAW, VICTOR BOGESJÖ, LUND UNIVERSITY (2014) .............. 14

JOHN LIVERMORE, TRANSPORT LAW IN AUSTRALIA, (2ND ED. 2014) ................................................................ 13

JOHN SCHOFIELD, LAWYTIME AND DEMURRAGE, (2011). ................................................................................ 19

JULIAN COOKE, VOYAGE CHARTERS, (4TH ED. 2014). .................................................................................... 8, 16

KIM LEWISON’S THE INTERPRETATION OF CONTRACTS, FIFTH EDITION, SWEET & MAXWELL, 2011 ................... 5

MARGARET L. MOSES, THE PRINCIPLES AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION,

CAMBRIDGE UNIVERSITY PRESS, (2012). ....................................................................................................... 3

MUSTILL & BOYD, COMMERCIAL ARBITRATION (1989) ................................................................................... 5

SIMON RAINEY , THE LAW OF TUG & TOW AND OFFSHORE CONTRACTS (3RD ED.2013) ................................. 28

STEPHEN GIRVIN, CARRIAGE OF GOODS BY SEA, (2007). ................................................................................. 12

TERENCE COGHLIN, TIME CHARTERS, (7TH ED. 2014). ...................................................................................... 13

WILLIAM STATSKY, LEGAL THEASAURUS DICTIONARY, (2001). ................................................................. 20, 24

YVONNE BAATZ, MARITIME LAW, (2ND ED. 2011). ........................................................................................... 13

JOURNAL ARTICLES

Admiralty Salvage, Voluntary Service, 34(6) HARV L. REV. 670,671 (1921) ............................................... 27

H. Edwin Anderson, III, The Nationality of Ships and Flags of Convenience: Economics, Politics, and

Alternatives, 21 TUL. MAR. L.J. 139, 141 (1996) ..................................................................................... 21

H. Edwin Anderson, III, The Nationality of Ships and Flags of Convenience: Economics, Politics, and

Alternatives, 21 TUL. MAR. L.J. 139, 143 (1996). .................................................................................... 21


xiii TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING COMPANY

Jeffrey W. Yeats, Clearing Up the Confusion: A Strict Standard of Abandonment For Sunken Public

Vessels, University of San Francisco Maritime Law Journal, 1999- 2000,365 .......................................... 25

Jeremy Firestone & James Corbett, Combating Terrorism in the Environmental Trenches: Responding to

Terrorism: Maritime Transportation: A Third Way for Port and Environmental Security, WID. L. SYMP.

J. 419,437 NOTE 15 (2003). ....................................................................................................................... 21

Newell D. Smith, The Law of Salvage (February 5th 1994), available at -

http://www.mikkelborg.com/files/salvage.pdf (last visited Aug. 20, 2009) ............................................... 25

Tina Shaughnessy & Ellen Tobin, Flags of Inconvenience: Freedom and Insecurity on the High Seas, 5

Penn. J. Intl'l L. & Pol'y 345, 347 (2006) .................................................................................................... 21

TREATIES

International Salvage Convention ....................................................................................................... 26, 27, 28

New York Arbitration Convention 330 UNTS 38 ........................................................................................... 7

United Nations Convention on the Law of the Sea (1982) ............................................................................. 22

-Statement of Facts-

1TEAM 2 -


STATEMENT OF FACTS

Claimant is Zeus Shipping and Trading Company who is the owner of the ship “MV Athena” (the “Ship”) and is

based in Poseidon. The Respondent is Hestia Industries, who is a new producer of Liquefied Natural Gas (“LNG”)

based in Hades. On 22 July 2014, the Claimant as “Owners” and the Respondent as “Charterers” entered into an

agreement for the hire of the Ship for the transport of LNG produced from Hades Shale Gas from Hades to

Poseidon for a period of 30 days (the “Charterparty”).

A day before the Charterparty was signed, it was reported in a Hades based newspaper that environmental objectors

were planning significant protests over the export of HLNG from Hades. Upon arrival of the Ship at the Port of

Hades, protests were held which gave rise to a flashpoint of political and public anger in Hades. This lead to the

Opposition Leader of Hades to seize control of the parliament while being backed by the Hades military, and it was

reported that she had instructed the Hades Coast Guard to intercept the Ship and have it return to the port. The Ship

was subsequently intercepted on the 7th October 2014 as it was on its voyage course to Poseidon and directed to

return to the Port of Hades, which the Ship Master complied with. The Ship was stranded at the port until 20th

September 2015 when upon resignation of the new President, the Ship was released by the Coast Guard. While

stranded at the Port of Hades, the Ships propellers were tampered which subsequently broke as the Ship set sail

from the Port. It was then guided to open waters by tugs which belonged to Hestug, a company owned by Hestia.

Subsequently dispute arose between the parties and they referred to arbitration as per Cl 30 of the Charterparty.

Zeus has claimed demurrage amounting to US$ 17.9m and has contended that the Ship never left the Port of Hades

which Hestia has denied and further contended that the Charterparty was frustrated as a result of the delay in

performance. Further, Hestia objected to the jurisdiction of the arbitral panel to determine the claim regarding

frustration of Charterparty and Claimant’s demurrage pleading. Hestia has also counterclaimed a salvage reward

from Zeus.

- Arguments Advanced-

2TEAM 2 -


ARGUMENTS ADVANCED

1. THE ARBITRAL TRIBUNAL HAS JURISDICTION TO HEAR THESE PROCEEDINGS.

1. Arbitration is a creature of consent and parties are free to tailor their arbitration agreements as they feel fit.1 It is

submitted that in keeping with the intension of the Owner and Charterer, the Tribunal has jurisdiction to hear this matter as

first, the claim of frustration and hence demurrage is covered under the arbitration agreement under Cl (‘Cl’) 30 [1.1] and

second, assuming but not conceding that the courts of Poseidon have jurisdiction over these proceedings, the Tribunal

would still have jurisdiction over the claim of frustration and hence demurrage[1.2].

1.1. The Tribunal has Jurisdiction over the claim of Frustration and hence demurrage under Cl 30.

2. It is submitted that in the present case the law governing the substantive contract is Western Australian (‘Australian

law’),2 procedural law is Maritime Law Association of Australia and New Zealand Arbitration Rules (‘MLAANZ’)3 and

Cl 30 is a London based arbitration clause. Under the MLAANZ the jurisdiction of the Tribunal is under the legislation

governing the arbitration agreement.4 It is our contention that, first, English law is the law governing the arbitration

agreement [1.1.1], second, ‘arising under’ includes within its scope the claim of frustration and hence demurrage [1.1.2]

and lastly, the courts of London and not Poseidon have jurisdiction, if any, to hear these proceedings [1.1.3].

1.1.1. Law governing the arbitration agreement is English law.

3. In the present case, the parties have not expressly identified the law governing the arbitration agreement. It is our

contention that English law has been identified by the parties as the law governing the arbitration agreement.5 In

1 Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989); Margaret L. Moses, The Principles and Practice of International Commercial Arbitration, Cambridge University Press, 19 (2012). 2 Cl. 31, Page 46 of Bundle. 3 Maritime Law Association of Australia and New Zealand Arbitration Rules (hereinafter “MLAANZ”) 4 Rule 15, MLAANZ. 5 Page 25 of Bundle.

-Arguments Advanced-

3 TEAM 2 - MEMORANDUM FOR ZEUS SHIPPING AND TRADING COMPANY

Sulamérica v. Enesa6 an enquiry into express choice, implied choice and ‘closest and most real’ connection were the

factors used for identifying the law governing the arbitration agreement. In the absence of an express choice, the factors

utilized to decipher implied choice are parties’ intention as inferred from pre-contractual negotiations, terms of the

arbitration agreement or the consequences of choosing the proper law of the substantive contract.7 It is asserted that in

the present case, the Charterer did not sign the Charterparty till dispute resolution was only assured of in London.8 This

choice of London as the place of arbitration evidences that the same was to be the law governing the arbitration

agreement and not only venue of the arbitration. Therefore, it is submitted that the law governing the arbitration

agreement will be English and the English Arbitration Act, 1996 (‘EAA’) would govern the arbitration agreement.

1.1.2. The term ‘arising under’ includes within its scope the claim of frustration and hence demurrage.

4. It is emphasised that in the present case, the term ‘arising under’ includes within its scope the jurisdiction to adjudicate

upon the claim of frustration and hence demurrage as first, there is no distinction between differently phrased arbitration

clauses [1.1.2.1], second, frustration and hence demurrage is a claim contemplated under this arbitration agreement

[1.1.2.2] and third, there is exclusion of judicial intervention through the agreement [1.1.2.3].

1.1.2.1. No distinction between differently phrased arbitration clauses.

5. It is contended that in the English case of Fiona Trust v. Privalov (‘Fiona Trust’), 9 the courts did away with the

various distinctions in terminologies between phrases like ‘arising under’, ‘arising out of’, ‘in relation to’, among others.

The courts have inferred that the parties as commercially sound entities intend on adopting a dispute resolution clause

6 Sulamerica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA Civ 638; GARY B.BORN, INTERNATIONAL COMMERCIAL ARBITRATION, KLUWER ARBITRATION,66 (2nd ed. 2014); GEORGIOS I. ZEKOS, INTERNATIONAL COMMERCIAL AND MARINE ARBITRATION Routledge, 2008 at page 233. 7 Sulamerica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA Civ 638. 8 Page 25 of Bundle. 9 Fiona Trust & Holding Corp v Privalov, [2007] 4 All ER 951.



that would operate as a one-stop arbitration forum.10 The courts have also remarked that this presumption is to be

discarded only when the parties expressly exclude some disputes and keep the same to be litigated upon;11 or attack the

arbitration agreement itself or if certain remedies have been explicitly reserved by the courts.12 In the present situation

we can see that through the intention apparent in the letters between the Owner and Charterer that both parties intended

for all disputes but those with respect to formation related issues were to be addressed by the Tribunal.13 Therefore, it is

submitted that there is no difference between the jurisdiction commanded through differently phrased arbitration clauses.

1.1.2.2. Frustration and hence demurrage is a claim contemplated under this arbitration agreement.

6. It is averred that the phrase ‘arising under’ has been interpreted in several cases to include all those claims which have

a real connection with the contract even if they are not explicitly covered by the arbitration agreement.14 It is for this

reason that traditionally frustration claims have been admitted before arbitral tribunals under similar arbitration clauses in

the past.15 In the case of Scott & Sons v Del Sel16 the Court had denied having jurisdiction over claims of frustration and

had deferred the same to the arbitral tribunal under an arbitration clause which stated, “Any dispute arising under this

charter shall be referred to the arbitration of two persons.” They had even explained in detail their consideration and the

reason behind their subsequent disregard for the case of Hirji Mulji v Cheong Yue Steamship Co (‘Hirji Mulji’).17 In

Hirji Mulji their Lordships did not read frustration into the arbitration agreement as the Charterparty had frustrated

before performance had started. However, it is argued that in the present case, there was part performance and the

10 Fiona Trust & Holding Corp v Privalov, [2007] 4 All ER 951 ; Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd, [1999] Lloyd's Rep 767; Deutsche Bank AG v Tongkah Habour Public Company Ltd, (2011) EWHC 2251 (QB); Kim Lewison’s The Interpretation of Contracts, Fifth Edition, Sweet & Maxwell, 2011 11 Barclays Bank PLC v Nylon Capital LLP, (2011) EWCA Civ 826 T , ¶27 12 Comandate Marine Corp v. Pan Australia Shipping Pty, 2008 1 Lloyd’s Rep 119 (Fed Ct of Australia, NSW Dist Registry); MUSTILL

& BOYD, COMMERCIAL ARBITRATION 149 (1989) 13 Page 25, 27, 28 and 73 of Bundle. 14 Woolf v. Collis Removal Service, [1948] 1 K.B. 11, 17. 15 Id.; Heyman v Darwin [1942] A.C. 356; Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45 at 90; Codelfa Construction Pty Ltd v State Rail Authority of NSW. [1982] HCA 24; Gibraltar v Kenney [1956] 2 Q.B. 410; Kruse v Questier & Co. LD., [1953] 1 Q.B. 669. 16 Scott & Sons v. Del Sel, 1923 S. C. (H. L.) 37. 17 Hirji Mulji v Cheong Yue Steamship Co, [1926] AC 497.



Charterparty had been partly executed as the Ship had already reached the Port of Hades and had loaded the cargo on its

board.18 Consequently, the ratio in Hirji Mulji will not hold. This has also been upheld in the case of Charles Mauritzen

v Baltic Shipping19 where a similar arbitration clause as ours of ‘arising under’ was under review. In Heyman v

Darwins20 their Lordships in their obiter have stated that frustration is a claim that can be arbitrated upon by a Tribunal.

It is urged that frustration is a claim over which this Tribunal would have jurisdiction and consequently as demurrage is

an issue premised on frustration the Tribunal would have jurisdiction.

1.1.2.3. Exclusion of Judicial Intervention through Arbitration

7. Assuming but not conceding that courts would have the jurisdiction to decide the claim of frustration and hence

demurrage, the Owner contends that the courts of London and not Poseidon would have jurisdiction as the law

governing the arbitration agreement is English law. EAA precludes an anti-arbitration injunction but for the most

extraordinary of cases like fraudulent or unconscionable conduct on part of the person pursuing the arbitration.21

8. In the present case, none of the issues on the basis of which an anti-arbitration injunction could be possibly claimed by

the Respondent before an English court are in contention.22 Additionally, only formation based disputes have been

excluded by the parties.23 Consequently, it is submitted that, the Charterer cannot preclude the Tribunal from having

jurisdiction over the claim of frustration and hence demurrage as the same is ‘arising under’ this Charterparty.

18 Pages 60, 63 and 68 of Bundle. 19 Charles Mauritzen Ltd v Baltic Shipping Co, 1948 SC 646. 20 Heyman v Darwins, [1942] AC 356. 21Republic of Kazakhstan v Istil Group Inc (No 3) [2008] 1 Llyod’s Rep 382; J Jarvis & Sons Ltd. v Blue Circle Dartford Estates Ltd. [2007] EWHC 1262 (TCC). 22 §1(c), English Arbitration Act, 1996. 23 Pages 25 and 27 of Bundle.



1.2. In Arguendo, even if the Court in Poseidon has jurisdiction, the Tribunal will decide the claim for

frustration and hence demurrage

9. If English law is not established as the law of the seat and the courts of Poseidon are seen as having jurisdiction over

this arbitration agreement;24 then as well the Tribunal would have jurisdiction over the subject matter of frustration and

hence demurrage. London would be reduced to a venue of arbitration. In the case of Codelfa Construction v. State

Rail,25 the Australian High Court has spoken in favour of arbitrating claims of frustration and has chosen to utilize the

principles in Heyman v. Darwin’s26 obiter over that of Hirji Mulji27. The Federal Court in Comandate Marine Corp v.

Pan Australia28 has also endorsed the reasoning in Fiona Trust and rejected Hirji Mulji. Even international conventions

governing arbitration like United National Commission on International Trade Law Model Law29 and New York

Convention30 provide for minimal interference of curial nature with the award of an arbitral tribunal to help encourage

the development of a pro arbitration policy. Consequently, it is submitted that even if Courts in the country of Poseidon

had jurisdiction, that the Tribunal will have jurisdiction over adjudging over the claim of frustration and demurrage.

2. THERE WAS NO FRUSTRATION OF CHARTERPARTY IN THE PRESENT CASE AND ZEUS IS ENTITLED TO

DAMAGES FROM HESTIA FOR BREACH OF CHARTERPARTY OBLIGATIONS.

10. It is submitted first, that there the Charterparty was not frustrated due to the delay [2.1], second, alternatively, that

Hestia is liable for breach of Charterparty obligations relating to unsafe port nomination and transportation of goods of a

24 Sulamerica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA Civ 638; NTPC v Singer [AIR 1993 SC 998] (India); Klöckner Pentaplast Gmbh & Co Kg v Advance Technology (H.K.) Company Limited, 14/07/2011, HCA1526/2010; Habas Sinai v. VSC [(2013) EWHC 4071]. 25 Codelfa Construction Pty Ltd v State Rail Authority of NSW. [1982] HCA 24. 26 Supra n 20. 27 Supra n 17. 28 Comandate Marine Corp v Pan Australia Shipping Pty Ltd, [2006] FCAFC 192. 29 Art. 34, 35 &36, United National Commission on International Trade Law Model Law, 1985. 30 Article V, New York Convention 330 UNTS 38; Christian Borris, New York Convention: Convention on the Recognition and Enforcement of Foreign Arbitral Awards, C.H. Beck, (2012)



dangerous nature and for self-induced frustration of Charterparty [2.2], and third, that Zeus is entitled to damages from

Hestia for breach of Charterparty obligations [2.3].

2.1. There was no frustration of the Charterparty as the delay was foreseeable.

11. It is submitted that the Charterparty had not frustrated in the present case as the conditions required for frustration of

a contract have not occurred or satisfied. The appropriate test to apply to determine whether a contract has been

frustrated is that of a ‘radical change in the obligations of the parties under the contract.’31 It has been sated in National

Carriers Ltd v. Panalpina32 that frustration of an event requires the happening of a supervening event, without default of

either party and for which the contract makes no sufficient provision, which significantly changes the contractual rights

of the parties, and which the parties could not have reasonably be held to have contemplated at the time of its execution

and that it would be unjust to hold them to the literal sense of the contractual obligations in the new circumstances.33

12. Thus the doctrine of frustration is not of supervening impossibility, but rather of an unexpected occurrence where the

performance would be, as a matter of business, radically different from the contractually stipulated performance.34 It

requires that the commercial purpose of the adventure for which the Charterparty provides to become impossible for

attainment.35 It is however cautioned that since the application of the doctrine can even absolve the parties of all their

liabilities under the contract, it is not to be lightly invoked and must be kept in narrow limits.36

31 JACK BEATSON, ANDREW BURROWS AND J.CARTWRIGHT ,ANSON’S LAW OF CONTRACTS, 487 (29th ed. 2010). 32 [1981] AC 675

33 National Carriers Ltd v. Panalpina (Northern) Ltd, [1981] AC 675, 700. See also, JACK BEATSON, ANDREW BURROWS AND

J.CARTWRIGHT ,ANSON’S LAW OF CONTRACTS, 487 (29th ed. 2010). 34 Joseph Constantine Steamship Line Ltd v. Imperial Smelting Corp Ltd, [1942] AC 154, 164; Jackson v. Union Marine Insurance Co Ltd, [1874] LR 10 CP 125. See also, JACK BEATSON, ANDREW BURROWS AND J.CARTWRIGHT ,ANSON’S LAW OF CONTRACTS, 473 (29th ed. 2010). 35 Davis v. Fareham U..D.C., [1956] A.C. 696; Empresa Ecportadora De Azucar v. Industria Azucarera Nacional (The Playa Larga), [1983] 2 Lloyd’s Rep.171; Gold Group Properties v. BDW Trading, [2010] 1 Lloyd’s Re.p 529 at para.3. See also, JULIAN COOKE, VOYAGE CHARTERS, 696 (4th ed. 2014). 36 J Lauritzen AS v. Wijsmuller BV, The Super Servant Two, [1990] 1 Lloyd’s Rep 1,8. See also, JACK BEATSON, ANDREW BURROWS AND J.CARTWRIGHT ,ANSON’S LAW OF CONTRACTS, 473 (29th ed. 2010).



13. Thus, a mere rise in cost or expense or hardship or inconvenience is held to be not a sufficient cause for frustration of

contract.37 Similarly, even delay would not be a sufficient ground unless the same renders the adventure absolutely

nugatory,38 or to make it unreasonable to require the parties to go on,39 or to put an end in a commercial sense to the

undertaking.40

14. In the present case, although a supervening event did occur in the form of the Ship having to follow the Coast

Guard’s orders and return to the Port of Hades which leads to the eventual delay, there is no significant change in the

contractual expectations of the parties to the Charterparty. The parties had contracted for a voyage Charterparty under

which Zeus was obligated to provide suitable LNG tanker oil that could transport HLNG and Hestia was required to

provide the ship with the goods that would be transported.41 Even after the alleged supervening event occurred as to the

deviation of the ship to the Port of Hades, it had not become unreasonable to expect the parties to not comply further

with their obligations. The only change that occurred was the length of the voyage, which was contractually agreed by

the parties to be 30 days, which alone is not a substantial change to render the Charterparty frustrated.42 In Bank Line Ltd

v. Arthur Capel & Co., it was stated by the Court that,

“Delay even of considerable length and of wholly uncertain duration is an incident of maritime adventure, which is

clearly within the contemplation of the parties … so much so as to be often the subject of express provisions. Delays such

as these may very seriously affect the commercial object of the adventure, for the ship’s expenses and overhead charges

are running on…None the less this is not frustration.”43

37 Tsakiroglou & Co Ltd v. Noblee Thorl GmbH, [1962] AC 93. See also, JACK BEATSON, ANDREW BURROWS AND J.CARTWRIGHT ,ANSON’S LAW OF CONTRACTS, 488 (29th ed. 2010). 38 Bensuade & Co v. Thames and Mersey Marine Insurance Co, [1897] 1 QB 29,31. See also, JACK BEATSON, ANDREW BURROWS AND J.CARTWRIGHT ,ANSON’S LAW OF CONTRACTS, 492 (29th ed. 2010). 39 Metropolitan Water Board v. Dick, Kerr & Co Ltd, [1918] AC 199, 131; Fat Amplin Steamship Co Ltd v. Anglo-Mexican Petroleum Products Co Ltd, [1916] 2 AC 397, 405. See also, JACK BEATSON, ANDREW BURROWS AND J.CARTWRIGHT ,ANSON’S LAW OF CONTRACTS, 492 (29th ed. 2010). 40 Jackson v. Union Marine Insurance Co Ltd, [1874] LR 10 CP 125. 41 Page 2 of Bundle. 42 Page 2 of Bundle. 43 Bank Line Ltd v. Arthur Capel & Co, [1919] AC 435, 458-9. See also, JACK BEATSON, ANDREW BURROWS AND J.CARTWRIGHT

,ANSON’S LAW OF CONTRACTS, 491 (29th ed. 2010).



15. Further, the deviation did not render the performance of the Charterparty to be impossible as performance was still

possible as the ship could have resumed its voyage to Poseidon upon release by the Coast Guard and could have

delivered the cargo. Thus the purpose of the contract was still possible to attain. Further, there was the absence of any

facts from which it could be inferred that a long delay could be anticipated. Thus the Charterparty obligations of the

parties remained the same during the entire duration of the delay. Further, Hestia Industries being situated in Hades can

reasonably be expected to know about the huge protests that were being planned by environmentalists groups against the

export of HLNG by as early as 20th July 2014, the day before Hestia finally signed the Charterparty.44 The newspaper

report on the same day shows clear aversion to the export of HLNG by use of the words that expressly state that the

protesting groups were not going to rest until the exports had stopped.45 Further, a supervening event for which full

provision is made in the Charterparty cannot give rise to frustration, since the legal consequence of the event must be

determined by applying the contractual provisions rather than the general law.46 Also, a force majeure clause is regarded

as the doctrine of frustration developed into a standard form of contract.47 In the present case the parties at the time of

formation of the Charterparty had incorporated a force majeure clause as Cl 19 of the Charterparty which dealt with the

parties’ obligations upon occurrence of events that would have led to delay in the performance of the Charterparty.48

Thus, the force majeure clause dealt with the party’s obligations upon occurrence of events similar that would have led

to frustration of Charterparty, and thus its incorporation in the Charterparty at the time of formation shows clear intent of

foreseeability by parties of a delay in the performance. Also, it would be unjust upon Zeus if the Charterparty is deemed

to be held frustrated as Hestia being based in Hades was in a better commercial position to be acquainted and foresee the

events that would have led to the delay. Thus it stated that the Charterparty had not frustrated as the change in the

Charterparty obligation of the parties was not significant and the delay reasonably foreseeable.

44 Page 26 of Bundle. 45 Id. 46 JULIAN COOKE, VOYAGE CHARTERS, 699 (4th ed. 2014). 47 JACK BEATSON, ANDREW BURROWS AND J.CARTWRIGHT ,ANSON’S LAW OF CONTRACTS, 474 (29th ed. 2010). 48 Page 39 of Bundle.



2.2. Alternatively, Hestia is liable for self–induced frustration of Charterparty and thus it cannot claim

frustration.

16. It is submitted in the alternative, first, that there was an express safe port nomination warranty in the Charterparty

[2.2.1], second, that the Port of Hades as nominated was politically unsafe [2.2.2], third, that Hestia could have

reasonably foreseen the events as they were not an abnormal occurrence [2.2.3], fourth, that the cargo to be transported

was dangerous in nature [2.2.4], fifth, that Hestia had failed to give a proper notice of this dangerous cargo [2.2.5], sixth,

that these breaches of obligations by Hestia had led to deviation and delay to occur for which they are liable for self-

induced frustration [2.2.6], and seventh, that Zeus is entitled to damages for breach of Charterparty obligations by Hestia

[2.2.7].

2.1.1. There was an express warranty by Hestia of a safe port nomination in the Charterparty.

17. As per Cl 1 of the Charterparty, the duty for the nomination of the Loading Place in Box 5 of the Charterparty lay on

the Charters.49 Thus, the duty of nomination of the loading place under the Charterparty rested on the charters, Hestia

Industries. In the present case, the nomination of Hades as the Load Port was done by the Charterer in their Request for

Proposal directed towards Zeus on 1st July 2014.50 Accordingly, the final Charterparty was drafted by Hestia under

which Cl 5 or the Loading Place was nominated and elected by Hestia as “1 safe port, Hades”.51 The use of the words

“safe” in Box 5 of the Charterparty by Hestia shows their absolute intention that the warranty of safety extended by them

under the Charterparty is an express safety warranty.52 Courts have held that there is no justification as a matter of law or

construction, for excluding the operation of an express term that provides that a port is safe simply because it is named in

the Charterparty.53 Further, in The Aegen Sea54, the Court held that there must be an implied warranty that any port

49 Page 31 of Bundle. 50 Page 1 of Bundle. 51 Page 29 of Bundle. 52 STEPHEN GIRVIN, CARRIAGE OF GOODS BY SEA, 321 (2007). 53 AIC Ltd v. Marine Pilot Ltd (The Archimidis), [2008] 1 Lloyd’s Rep. 597, paras 22-33. See also, JULIAN COOKE, VOYAGE CHARTERS, 124 (4th ed. 2014).



nominated must be one that is possible for the vessel to reach. Thus, Hestia had nominated the Port of Hades along with

an express warranty for its safety by using the words “safe” in the Charterparty Box 5 and every port nomination has an

implied safe port warranty. It is submitted that there was an express warranty of safety of loading port in the present

case.

2.1.2. The port of Hades as nominated by Hestia was politically unsafe.

18. It is argued that the port of Hades was politically unsafe and Hestia was in breach of its safe port nomination under

the Charterparty. In the case of The Eastern City55 it was held:

“A port will not be unsafe unless, in the relevant period of time, the particular ship can reach, use it and return from it

without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good

navigation and seamanship.”

19. Dangers affecting the physical integrity of the vessel created by political or non-seafaring activities are embraced as

political safety56 and also dangers affecting the owner’s proprietary rights.57 A port may be unsafe as a result of

political conditions58 such as, if an outbreak of hostilities results in a ship to be trapped at her port.59 What is warranted

is the safety, not merely the reasonable safety of the relevant place, but whether any dangers can be avoided by good

navigation and seamanship.60 A port would only be considered unsafe if the risk is such that a reasonable master or

ship owner would decline to send or sail his vessel there.61 In Ogden v Graham62 the vessel The “Respigadera” was

chartered to proceed from England to a safe port in Chile, which was to be decided upon calling Valparaiso. On the

54 The Aegen Sea, [1998] 2 Lloyds Rep. 39, at p.67. See also, JULIAN COOKE, VOYAGE CHARTERS, 123 (4th ed. 2014). 55 Leeds Shipping Co. Ltd. v. Societe Francaise Bunge, [1958] 2 Lloyd’s Rep. 127, at p.131. 56 K/S Penta Shipping v. Ethipian Shipping Lines Corp. (The Saga Cob), [1992] 2 Lloyd’s Rep. 545. See also, JULIAN COOKE, VOYAGE CHARTERS, 134 (4th ed. 2014). 57 JULIAN COOKE, VOYAGE CHARTERS, 134 (4th ed. 2014). 58 JOHN LIVERMORE, TRANSPORT LAW IN AUSTRALIA, 66 (2nd ed. 2014). See also, TERENCE COGHLIN, TIME CHARTERS, 201 (7th ed. 2014). 59 YVONNE BAATZ, MARITIME LAW, 152 (2nd ed. 2011). 60 Gard Marine & Energy Ltd. v. China National Chartering Co. Ltd (The Ocean Victory), [2013] EWHC 2199, paras 93-101. 61 DAVID FOXTON, SCRUTTON ON CHARTERPARTIES, 122 (21st ed. 2008). 62 Ogden v. Graham, [1861] 1 B & S 773.



arrival at Valparaiso, the charterer directed her to Carrisal Bajo for discharging. However, at the time of the order the

port in Carrisal Bajo was closed under the order from the Chilean Government, and the ship could not call there

without being confiscated. The ship was therefore detained for a while in Valparaiso pending the re-opening of the port

in Carrisal Bajo. The judge held that the port was not safe, as the vessel could not enter it without being confiscated by

the government of the place.

20. A similar inference can be drawn in the present case, where MV Athena was under the risk of being deviated by the

Coast Guard and possibly, of being detained at the Port of Hades.63 This order of deviation was promulgated by the new

President of Hades64 and was followed by the Commander of the Coast Guard.65 Thus, as the ship was under the threat

of deviation and detention, it is submitted that the Port of Hades was politically unsafe for the ship MV Athena.

2.1.3. Hestia should have reasonably known about the unsafe conditions at the Port of Hades as the events were not

an abnormal occurrence.

21. It is asserted that Hestia should have reasonably known about the unsafe conditions of the Port of Hades and should

not have nominated the port as it was politically unsafe. In Dow Europe v. Novoklav Inc., it was held that a due

diligence obligation has been held to lie upon the charterer or on whosoever nominates the port, wherein such a person is

required to make proper inquiries and take proper precautions.66 Also, an abnormal occurrence under maritime law is

considered to be an exceptional event that is not happening every year and is not a characteristic of the port.67

22. In the present case, on 20th July 2014, the newspaper The Hades Advocate had reported that certain environmental

objectors, such as James Parker of the Save Hades Group, were planning significant protests around the commissioning

63 Page 57 of Bundle. 64 Page 55 of Bundle. 65 Page 57 of Bundle. 66 Dow Europe v. Novoklav Inc., [1998] 1 Lloyd’s Rep. 306. See also, JULIAN COOKE, VOYAGE CHARTERS, 129 (4th ed. 2014). 67 JOANNA STEELE, BENTLEYS, STOKES AND LOWLESS, CHARTERER’S LIABILITY FOR UNSAFE PORTS - A COMPARISON OF ENGLISH AND SCANDINAVIAN LAW, VICTOR BOGESJÖ, LUND UNIVERSITY (2014).



of the Hestia HLNG plant.68 The report also mentioned that the intention of such protests were to completely stop the

gas exports from Hades.69 Hestia Industries can reasonably be expected to have known the possibility of there being

protests leading to a dangerous circumstance under which the Port of Hades could become unsafe for the Ship. Hestia

Industries knew that the cargo being transported was under protest from environmentalist groups and that it lead to a

military coup in Hades and could have foreseen that there was the possibility of interference with the transportation by

the ship as it was the reason behind the military coup. Despite this reasonable possibility, Hestia Industries went ahead

and nominated Port of Hades as the loading place. It is submitted as the unsafe conditions at the Port of Hades could

have been reasonably expected to be known to Hestia, the events were not an abnormal occurrence.

2.1.4. The cargo was dangerous for political reasons which Hestia knew.

23. It is submitted that the LNG cargo that was contracted to be transported in the present case was dangerous in nature

and was unsafe. In Mitchell, Cotts v. Steel Bros, the Court held that loading of unlawful cargo which might involve the

vessel in risk of seizure or delay would regard the cargo as being dangerous in nature.70 Further, reliance is placed on the

case of The “Greek Fighter”71, where a vessel was at anchor off Khorfakkan, UAE, where she loaded and discharged

oil from smaller tankers. The UAE coastguard then arrested the vessel on the basis that Iraqi oil was onboard, which at

the time was illegal. The vessel was subsequently confiscated and sold at the public auction. Accordingly, the Court held

that the port of Khorfakkan was unsafe as the cargo loaded onboard was considered as contraband due to its origin. The

cargo in the present case was dangerous as the new government of Hades was against the export of LNG from Hades

and the new President of Hades had given orders to bring back the Ship transporting LNG.72 The President of Hades had

68 Page 26 of Bundle. 69 Page 26 of Bundle. 70Mitchell, Cotts & Co v. Steel Bros & Co Ltd, [1916], 2 KB 610. See also, STEPHEN GIRVIN, CARRIAGE OF GOODS BY SEA, 248 (2007). 71 Ullises Shipping Corporation v. Fal Shipping Co Ltd (The “Greek Fighter”), [2006] 1 Lloyds Rep 99. 72 Page 55 of Bundle.



instructed the Hades Coast Guard to intercept the Ship and return it to the Port of Hades as it was carrying LNG whose

transportation was ordered to be stopped.73 It is averred that the HLNG cargo was of a dangerous nature.

2.1.5. Hestia failed to provide a proper notice of the dangerous nature of the cargo.

24. It is submitted that there was an implied understanding under the Charterparty to not transport cargo which was

dangerous in nature. It has been accepted by the courts in Atlantic Oil Carriers v. British Petroleum Co that charter

parties contain an implied term of the obligation to not ship dangerous goods without giving notice to the carrier so as to

enable him to take precautions to ensure that goods can be carried without causing damage.74 Further, it has been settled

by the House of Lords that in the case of The Giannis NK75 that a duty on the shipper to give a notice to the carrier was

an absolute contractual duty. In that case, a shipper who did not provide notice of the dangerous character of the goods

shipped was taken to warrant that they are fit for carriage in the ordinary way, and are not dangerous.76 The purpose of

the common law obligation to give notice is to enable the carrier to make an informed choice as to whether he will carry

the goods and if he does so, to take appropriate precautions in their carriage so as to keep the hazards involved in their

carriage to an acceptable level.77 Further, the shipper’s lack of knowledge of the dangerous characteristics of cargo does

not amount to a defense.78 Also, the fact that the ship owner is aware of the mere foreseeability of risk that a particular

cargo possesses does not relieve the charterer of his liability, where the risks develop in such an unpredictable way

which cannot have been accepted by the carrier.79

73 Page 55 of Bundle. 74 Atlantic Oil Carriers v. British Petroleum Co., [1957] 2 Lloyd’s Rep.55, 95. See also, JULIAN COOKE, VOYAGE CHARTERS, 176 (4th ed. 2014). 75 Effort Shipping v. Linden Mamagement, [1998] 1 Lloyd’s Rep. 337. See also, JULIAN COOKE, VOYAGE CHARTERS, 176 (4th

ed. 2014). 76 Bamfield v. Goole & Sheffield Transport, [1910] 2 K.B. 94, 113. See also, JULIAN COOKE, VOYAGE CHARTERS, 696 (4th ed. 2014). 77 Bunge S.A. v. ADM Do Brasil Ltda (The Darya Radhe), [2009] 2 Lloyd’s Rep. 175. 78 Brass v. Maitland, [1856] 26 LJ QB 49, QB. See also, SIMON BAUGHEN, SHIPPING LAW, 140 (4th ed. 2009). 79 General Feeds Inc v. Burnham Shipping Corporation (The Amphion), [1991] 2 Lloyd’s Rep 101; Compania Sud Americana de Vapores v. Sinochem Tianjin Import & Export Corp (The Aconcagua), [2010] 1 Lloyds Rep 1. See also, STEPHEN GIRVIN, CARRIAGE OF GOODS BY SEA, 317 (2007).



25. In the present case, there was such an implied obligation under the Charterparty which required Hestia to give a

notice to Zeus regarding the dangerous nature of the LNG which was supposed to be transported. Thus, in the absence of

any such notice by Hestia to Zeus, it can be regarded that Hestia undertook an absolute warranty that the good was safe

to carry. Also Hestia cannot take the defense of lack of reasonable foresight regarding the dangerous nature of the goods

they contracted for to be carried. Had proper notice of the dangerous nature of the goods been provided by Hestia, Zeus

could have had the opportunity to access the safety of the ship while transporting the goods and could have taken

reasonable precaution or could have not undertaken the voyage in the first place with the goods which would not have

lead to further deviation and delay. Consequently, it is submitted that Hestia is in breach of its Charterparty obligation of

transporting dangerous cargo which lead to the frustrating event.

2.1.6. Hestia is liable for self-induced frustration and thus cannot claim frustration of Charterparty.

26. It is submitted that as Hestia has caused breach of its obligations relating to unsafe port nomination and

transportation of dangerous cargo, Hestia is responsible for the events that lead to the deviation and delay and so cannot

claim frustration of Charterparty. A party cannot rely upon frustration of Charterparty if the event which prevents

performance is brought about by his own election, act or default, which is that he cannot rely on self-induced

frustration.80 Thus if the event or its effect on the Charterparty was brought about by a breach of Charterparty, it cannot

give rise to frustration.81 In the present case, the deviation and delay occurred as a direct result of the unsafe port

nomination and transportation of goods of a dangerous nature caused by Hestia. Hestia nominated the unsafe Port of

Hades where the ship MV Athena was deviated back by the Coast Guard due to the nature of the cargo it was

transporting, and this lead to the delay in the performance of the Charterparty. Thus it is submitted that as Hestia is

directly responsible for causing the events that lead to the delay, Hestia is liable for self-induced frustration of

Charterparty. Thus Hestia cannot claim frustration of the Charterparty and is not entitled to benefit under it. 80 The Kyla; Classic Maritime v. Lion Diversified Holdings, [2010] 1 Lloyd’s Rep. 59, ¶64. See also, JULIAN COOKE, VOYAGE CHARTERS, 697 (4th ed. 2014). 81 JULIAN COOKE, VOYAGE CHARTERS, 697 (4th ed. 2014).



2.1.7. Zeus is entitled to damages from Hestia for breach of Charterparty obligations.

27. It is submitted that Hestia is liable to pay Zeus the damages arising out of its breach of its Charterparty obligations

relating to unsafe port nomination and transportation of dangerous cargo.

28. It has been held that if the owner elects to proceed to the port despite their knowledge of the facts that give them the

rights to reject orders, then they waive their further rights to later reject the charterer’s order. However, they do not

forfeit their rights to have their losses covered.82

29. Thus, even if Zeus had the knowledge of the unsafe situation at the Port of Hades or regarding the dangerous nature

of the cargo, Zeus can still validly claim damages from Hestia for the losses they suffered for breaching their

Charterparty obligations. Further, giving an order to sail to an unsafe port is a breach of Charterparty and the person

giving that order is liable in damages for the consequences.83 Any time during which a vessel is not working and

earning, represents a loss in freight for a ship owner, since the fixed overheads continue to accrue irrespective of whether

the vessel is actually employed.84 Zeus incurred damages as it was unable to use and profit out of their ship MV Athena

for a period of 11 months as it was still chartered by Hestia under the Charterparty.

30. Thus, Zeus is entitled for damages from Hestia for breach of its Charterparty obligations relating to unsafe port

nomination and of transportation of goods of a dangerous character, which lead to the delay in the performance of the

Charterparty and damages for Zeus.

3. LAYTIME HAD EXCEEDED DUE TO WHICH DEMURRAGE HAD ACCRUED AND HESTIA IS LIABLE TO PAY THE

DEMURRAGE TO ZEUS.

82 Motor Oil Hellas Refineries S.A. v. Shipping Corporation of India (The “Kanchenjunga”), [1990], 1 Lloyds Rep 391. 83 JOHN LIVERMORE , TRANSPORT LAW IN AUSTRALIA, 66 (2nd ed. 2014). 84 JOHN LIVERMORE , TRANSPORT LAW IN AUSTRALIA, 68 (2nd ed. 2014).



31. It is submitted that first, laytime had exceeded in the present case and demurrage started to accrue [3.1], second, that

laytime was not interrupted as per Cl 9(e) of the Charterparty [3.2], and third, that deviation by the ship MV Athena was

justified and Zeus is entitled to demurrage [3.3].

3.1. Laytime exceeded the contracted time of 10 days.

32. It is submitted that laytime had exceeded the contracted time of 10 days under the Charterparty and demurrage had

started to accrue. Under common law, it has been held that laytime and demurrage continue to run if the vessel’s absence

from the port is only temporary.85 In the case of the Cantiere Navale v. Handelsvertretung der Russe Soviet Republik

Naphtha86 an Italian vessel was chartered to load at Batum. After she had arrived there laytime had begun to run, when

she had to leave Batum because of a dispute which had broken out between the Italian and Russian Governments. She

was taken to Constantinople, eventually returning to Batum to complete loading. It was argued that time ceased to run

during the period the vessel was away from Batum, but this argument was rejected by Atkin LJ, who remarked,87

33. In the present case, the Master of the Ship MV Athena had tendered a NOR on 3 October 2014 at 09:15 a.m.88 Thus,

this is the time when the Ship was deemed to have arrived and when laytime is said to have commenced as per Cl 9(c) of

the Charterparty.89 The time permitted for loading was 10 WWD SHINC.90 On 7th October 2014, as the ship was

heading towards Poseidon, the ship was intercepted by the Hades Coast Guard and was ordered to return to the Port of

Hades.91 Thus, as the ship returned to its berth at the Port of Hades, its absence was only temporary and there was no

fault on part of Zeus in this deviation. Thus laytime continued to run as the absence was temporary and demurrage

started to run as per Cl 10 of the Charterparty from 11th October 2014.

34. Thus, laytime was exceeded and demurrage started to run in the present case.

85 JOHN SCHOFIELD, LAWYTIME AND DEMURRAGE, 471 (2011). 86 Cantiere Navale Triestina v. Handelsvertretung der Russe Soviet Republik Naphtha Export, [1925] 21 LI L Rep 204 (CA). 87 Id. 88 Page 51 of Bundle. 89 Page 34 of Bundle. 90 Page 34 of Bundle. 91 Page 57 of Bundle.



3.1.1. Laytime was not interrupted as per Cl 9(e) of the Charterparty.

35. It is submitted that there was no interruption of laytime in the present case as per Cl 9(e) of the Charterparty. Cl 9(e)

of the Charterparty lays down events upon which laytime is interrupted and demurrage will not count. Two specific

events under Cl 9(e) are “war” and “arrest”. It is argued that neither of these two events have occurred that could

interrupt the counting of laytime. The term “war” in legal sense refers to hostile contention by means of an armed force

carried on between nations, states, rulers, citizens in the same nation or state.92 The facts in the present case have no such

instance of any event that can directly be regarded as a war or as a hostile situation. There was no such presence of arms

or hostility or an aggression between the parties to the Charterparty. The events in the state of Hades were the seizing of

control of the Parliament by the Opposition Leader of Hades by a coup which was precipitated by protests and public

opposition to the export of HLNG by Hestia Industries.93 These events in no way can be termed as a war which required

activities by an armed force. There is no such reference of any active armed conflict or aggression in any manner to

which can be referred to as a war. Similarly, in the present case the ship MV Athena was never arrested or detained at

the Port of Hades. The ship was only ordered to return to the Port of Hades by the Hades Coast Guard but it was never

arrested or detained.94 There is no reference of any such arrest of the ship in the present factual case. Thus as no such

event had occurred that could have interrupted laytime, laytime was not interrupted and it kept on counting.

3.2. The deviation of the ship by Zeus which lead to the delay was justified and the ship Master was not

negligent in following the orders of the Coast Guard.

36. It is submitted that the since the ship MV Athena was carrying the Hades flag and was registered in Hades, it was

under a duty to follow the orders of the Coast Guard of Hades and thus the Master of the ship was justified in returning

the ship back to the Port of Hades. According to international maritime law, and to the admiralty laws of most states,

every vessel engaged in international trade must register in a country and is subject to the regulatory control of the 92 WILLIAM STATSKY, LEGAL THEASAURUS DICTIONARY, 796 (2001). 93 Page 55 of Bundle. 94 Page 57 of Bundle.



country whose flag it flies.95 When a vessel owner registers a vessel with a nation, the owner agrees to abide by that

nation’s law and regulations96 in lieu for protection and the right of its vessel to be of that sovereign state.97 The purpose

behind flagging is to grant ships a nationality so they can be regulated and registering is the administrative formality that

grants nationality.98 The ship registration is an agreement between the ship owner and the flag state that the ship will

abide by the flag state’s laws and regulations in return for the flag state’s protection of the ship.

37. Article 94 of UNCLOS titled “Duties of Flag State” states that “Every State shall effectively exercise its jurisdiction

and control in administrative, technical and social matters over ships flying its flag.”99 Further, there has to be a “genuine

link” between the state and the ship entitling it to register and to authorize the ship to use its flag, in accordance with

Article 91 of UNCLOS.100 If a ship visits the ports of that state with some degree of frequency, then the genuine link

will be found to exist.101

38. In the present case, the ship MV Athena was flagged with the flag of Hades by Zeus as a mark to show the

commitment to the development of the Hades Shale Gas Industry.102 Further, the Port of Hades was the loading port in

the Charterparty between the parties and thus a “genuine link” between the vessel and its flagged state is evident.

39. Further, as along with the flag of the ship being Hades, the port of registry of the ship MV Athena was also the state

of Hades103, the ship was under an obligation to follow the laws and regulations of Hades as it had the jurisdiction and

control over MV Athena. The duty of a nations Coast Guard is to protect its maritime interests and enforce maritime law,

95Tina Shaughnessy & Ellen Tobin, Flags of Inconvenience: Freedom and Insecurity on the High Seas, 5 Penn. J. Intl'l L. & Pol'y 345, 347 (2006). See also, H. Edwin Anderson, III, The Nationality of Ships and Flags of Convenience: Economics, Politics, and Alternatives, 21 TUL. MAR. L.J. 139, 141 (1996). 96 Jeremy Firestone & James Corbett, Combating Terrorism in the Environmental Trenches: Responding to Terrorism: Maritime Transportation: A Third Way for Port and Environmental Security, WID. L. SYMP. J. 419,437 NOTE 15 (2003). 97 Id.; See also, H. Edwin Anderson, III, The Nationality of Ships and Flags of Convenience: Economics, Politics, and Alternatives, 21 TUL. MAR. L.J. 139, 143 (1996). 98 Supra n 42. 99 Article 94, United Nations Convention on the Law of the Sea (1982). 100 Tina Shaughnessy & Ellen Tobin, Flags of Inconvenience: Freedom and Insecurity on the High Seas, 5 Penn. J. Intl'l L. & Pol'y 345, 355 (2006). See also, H. Edwin Anderson, III, The Nationality of Ships and Flags of Convenience: Economics, Politics, and Alternatives, 21 TUL. MAR. L.J. 139, 145 (1996). 101 Id. Pg.147. 102 Page 3 of Bundle. 103 Page 54 of Bundle.



with jurisdiction over the territorial waters of the state.104 The Coast Guard intercepted MV Athena on 8th October 2014

and directed the Master of the ship to return back to the Port of Hades.105 This order had been given by the new President

Jacqueline Simmons to instruct the Hades Coast Guard to intercept the ship and have it return to the port.106

40. Thus, as the ship was under the valid jurisdiction and control of Hades, the Master of the ship was obligated to

follow the orders of the Coast Guard of Hades and his act of brining the ship back to the Port of Hades was justified.

4. HESTIA CANNOT ESCAPE LIABILITY AS THE FORCE MAJEURE CLAUSE WAS NOT IN APPLICATION IN THE

PRESENT CASE.

41. It is submitted that the force majeure clause under the Charterparty was not in application in the present case as no

force majeure event had occurred. Cl 19 of the Charterparty is titled the force majeure clause which lays down events

upon which no party is liable for any failure of performance of any obligation on their part as laid down in the

Charterparty.107 Cl 19(d) lays down that the term force majeure encompasses of “mobilization, war (declared or

undeclared), hostilities, riots, barratry of the master and crew or other similar cause”.108 It is asserted herein that no such

force majeure had occurred and Cl 19 does not come under application in the present case. The duty to show that the

loss was not caused by an expected force majeure event in the Charterparty lies upon the ship owner.109 Further, a force

majeure clause is to be treated as an exception clause110 and the courts have placed a narrow construction on an

exceptions clause to the extent necessary to avoid inconsistency with the main purpose of the contract.111

104A.V. LOWE AND S.A.G. TALMON, THE LEGAL ORDER OF THE OCEANS: BASIC DOCUMENTS ON THE LAW OF THE SEA, 126 (2009). 105 Page 57 of Bundle. 106 Page 55 of Bundle. 107 Page 39 of Bundle. 108 Page 40 of Bundle. 109 Baxter’s Leather Co. v. Royal Mail Co., [1908] 1 K.B. 796; Smith v. G.W.Ry, [1922] A.C. 178. See also, DAVID FOXTON, SCRUTTON ON CHARTERPARTIES, 218 (21st ed. 2008). 110 EWAN MCKENDRICK, FORCE MAJEURE AND FRUSTRATION OF CHARTERPARTY, 17 (2013). 111 Glynn v. Maregetson, [1893] A.C. 351; Sze Hai Tong v. Rambler Cycle Co., [1959] A.C. 576 (P.C.); Renton v. Palmyra, [1957] A.C. 149. See also, DAVID FOXTON, SCRUTTON ON CHARTERPARTIES, 205 (21st ed. 2008).



42. The term “war” in legal sense refers to hostile contention by means of an armed force carried on between nations,

states, rulers, citizens in the same nation or state112 and “hostility” refers to an unfriendly aggression.113 The facts in the

present case present so no such instances of any event that can directly be regarded as a war or as a hostile situation. There

was no such presence of arms or hostility or an aggression between the parties to the Charterparty. The events in the state

of Hades were the seizing of control of the parliament by the Opposition Leader of Hades by a coup which was

precipitated by protests and public opposition to the export of HLNG by Hestia Industries.114 These events refer to an

overt seizure of a state by an Opposition Leader and in no way can be termed as a war which requires activities by an

armed force. There is no such reference of any active armed conflict or aggression in any manner to which can be referred

to as a war. Similarly, no such event that can be regarded as a mobilization or riot has occurred in the present case. The

term “mobilization” legally refers to marshal or organize115 and the term “riot” denotes an unlawful assembly that

incorporates violence.116 No such organization of people or troops has happened and only peaceful protests have occurred

in the present case. The protests at the Port of Hades were peaceful and the only six injuries were while the protesters were

being arrested.117 These events cannot be termed as incorporation of violence by a group of people who seem to be raising

their demand peacefully and were only injured during arrests. Thus, as there was no violence in the protests, the events

cannot be termed as a protest or a mobilization. Thus it is submitted that no event that can be termed as force majeure and

Hestia is not relieved of its obligations under the Charterparty.

5. THERE WAS NO SALVAGE OPERATION AND HESTIA IS NOT ENTITLED TO A SALVAGE REWARD

112 WILLIAM STATSKY, LEGAL THEASAURUS DICTIONARY, 796 (2001). 113 Id., 375. 114 Page 55 of Bundle. 115 Supra n. 112, 498. 116 Id., 666. 117 Page 52 of Bundle.



43. It is submitted that salvage, as under common law, is the amount of compensation that voluntary salvors are entitled

to if they were successful, in whole or in part, in saving an imperilled vessel.118 To bring a claim for compensation for

pure salvage before the court, the salvor must establish three elements:119 first, there must be marine peril; second, the

salvage service was conducted voluntarily, and not under any pre-existing obligation and third, the salvage service must

succeed in part or in whole, as a result of the efforts that the salvor expended to salvage the vessel. Only when all three

elements are established, is the claim considered successful.120 As a result, if any single element is not established, a valid

pure salvage claim does not exist. It is submitted that the Hestia shall not be entitled to a salvage reward considering that

the vessel MV Athena was not in maritime peril or danger [5.1]. In addition to that, the element of voluntariness will be

negated due to a pre-existing contract of towage between the parties [5.1] and the ownership of the cargo by Hestia shall

disentitle them of any claim to salvage reward because of a clear self-interest involved [5.1].

5.1. MV Athena was not in danger.

44. It is asserted that the vessel Athena was not in any sort of maritime peril or danger and therefore there was no salvage

operation. This was because she was not exposed to any risk of loss or damage occurring from the hazards associated with

the task of carrying cargo.121 Danger forms the foundation of a salvage claim as the degree of danger is a major criterion

while fixing a salvage reward.122 Thus, it is not important to show that a stranded vessel would not or might not have got

away before reasonably apprehended peril became an actual danger; it is sufficient she should not have come free without

118Aircraft Recovery, L.L.C., v. Abandoned Aircraft, 54 F.Supp. 2d 1172, 1179 (1999). 119 See Newell D. Smith, The Law of Salvage (February 5th 1994), available at - http://www.mikkelborg.com/files/salvage.pdf (last visited Aug. 20, 2009); Jones v. Sea Tow Services Freeport NY Inc., 30 F.3d 360 (2d Cir. 1994); Jeffrey W. Yeats, Clearing Up the Confusion: A Strict Standard of Abandonment For Sunken Public Vessels, University of San Francisco Maritime Law Journal, 1999- 2000,365. 120 THE SABINE, (1879) 101 U.S. 384, 2 121 FRANCIS D.ROSE, KENEDDY AND ROSE THE LAW OF SALVAGE, 159 (The Hon. Sir David Steel, Richard AA. Shaw eds. 6th ed. 2002); The Perfective (1949) 82 Ll.L.Rep. 873,875; See also, International Salvage Convention, art 8, July 14,1996,1953 UNTS 193 122 The Wilhelmine,(1842) 1 N.o.C. 376,378 ; The Ranger,(1845) 3 N.o.C.589,590; The Charlotte,(1848) 3 W Rob 68 at 7; The Strathnaver, (1875) 1 App.Cas. 58,65 (P.C.); The Albion,(1861) Lush.282;



the services provided.123 The malfunctioning of propeller shafts is not regarded as an extraordinary peril.124 The vessel

broke its shafts in the middle of the voyage because of being tampered by a competitor of Hestia at the Port of Hades and

was drifting aimlessly.125 There was no evidence that it was placed in a position of a substantial or real sea peril. Here,

though the propeller shafts were not functioning properly, there was no risk to the safety of the ship.126 It needed to be

towed in the right direction only, for which Hestug was called.127 Therefore, the nature of service provided by Hestug was

towage and not salvage.

45. Salvage operation arises when “a person , acting as a volunteer i.e. without any pre-existing contractual or other

obligations preserves or contributes to preserving at sea , any vessel , cargo , freight or other recognized subjects of

salvage from danger”. In the present case, since there was no substantial maritime peril or danger, the first element of

salvage would not be established therefore, any salvage operation will not arise and Hestia will not be entitled to any

salvage reward.

5.2. The services were under an already existing contractual obligation.

46. It is submitted that the assistance provided by Athena was already under a pre-existing contractual obligation to the

vessel and was just an extension of this contract and not a separate salvage operation. Therefore, the Hestia will not be

entitled to any salvage reward. Salvage should be purely done under an agreement to save the vessel, in the absence of

that, without any other contractual or other obligation of such nature.128 Therefore, the master and crew of the ship or a tug

engaged to tow her are generally not entitled to a salvage reward because they have a duty to assist the ship which

negatives voluntariness and debars a claim to salvage, leaving the parties’ relationship to be governed by the general

123 FRANCIS D.ROSE, KENEDDY AND ROSE THE LAW OF SALVAGE, (The Hon. Sir David Steel, Richard AA. Shaw eds. 6th ed. 2002) ; The Mount Cynthos,(1937) 58 Ll.R.Rep.285,287; The Suevic,(1908) 154,158;77 L.J.P.92; The Aztecs,(1870) 3 Asp. M.L.C.326; The White Star,(1866) L.R. 1.A & E. 68 CF; The Ella Constance,(1864) 33 L.J. Adm.189,193 and The Bengloe,(1940) 67 Ll.L.Rep.307,309; The Fountain,(1866) L.R. 1 A. & E. 58, 60. 124 York-Antwerp Rules 1994, Rule B. 125 Pages 67 and 71 of Bundle. 126 EDWARD V. LEWIS, PRINCIPALS OF NAVAL ARCHITECTURE, Vol II, (1988) 127 Id. 128 Admiralty Salvage, Voluntary Service, 34(6) HARV L. REV. 670,671 (1921)



contract of salvage.129 It has been established that the salvage services should be “voluntary” in nature.130 Thus, if a

service has been rendered under a pre-existing duty to work for the benefit of a vessel, it will not amount to salvage.131

Hestia will not be entitled to a salvage reward even after assisting the vessel due to a pre-existing contractual obligation to

tow. Where there is no contract of towing between the parties, the court will easily grant the salvage reward but when such

a contract exists, the claim for salvage may only be admitted on a very clear proof of circumstances to justify such a

claim.132 Pursuant to this rule, a tug becomes entitled to a salvage reward only when the towage will be subject to

extraordinary peril,133 which was absent in this case. The tug, under the circumstances of supervening peril, is bound by

the already existing contractual relations between the parties to assist the vessel.134As a general rule, tugs are only entitled

to get remuneration on the normal basis whether by virtue of contract or on quantum meruit. 135

47. In this case, the tugging agency, Hestug was employed to tow the Ship into high seas. Thus, when the propeller

shafts broke and the vessel started drifting aimlessly, Hestug assisted the ship to propel in the desired direction.136 This

was an extension of its task of tugging for which they already had a contract with Zeus. That Hestia had conducted the

operation involuntarily is not established. Therefore, the act of assisting the ship was done in accordance with the duties

and obligations of Hestug under the towage contract and was not of voluntary nature. It is submitted that Hestia must not

be entitled to a salvage award but only remuneration as envisaged under the contract.

129 FRANCIS D.ROSE, KENEDDY AND ROSE THE LAW OF SALVAGE, 244,(The Hon. Sir David Steel, Richard AA. Shaw eds. 6th ed. 2002) ; The Francis and Eliza, 2 Dods. 115 ; Governor Raffles 2 Dods. 14. 130 FRANCIS D.ROSE, KENEDDY AND ROSE THE LAW OF SALVAGE, (The Hon. Sir David Steel, Richard AA. Shaw eds. 6th ed. 2002) ; GEOFFREY BRICE, BRICE ON MARITIME LAW OF SALVAGE 43 (John Reeder ed. 5th ed. 2011) ; The Carrie [1927] 86 L.J.P. 178 P.224,230. ; Owners of the SS Melaine v Owners of the SS San Ofre [1925] AC 2462 131 Gark v Straits Towing Ltd and Sayer,(1966) 2 Ll.L. Rep.227; Anderson v Ocean Steamship Co,(1883) 13 QBD 651 at 660-661. 132 FRANCIS D.ROSE, KENEDDY AND ROSE THE LAW OF SALVAGE,295, (The Hon. Sir David Steel, Richard AA. Shaw eds. 6th ed. 2002) 133 Supra, York-Antwerp Rules; Watson v Firemen’s Fund Co [1922] 2 K.B. 355; International Salvage Convention, art 8, July 14,1996,1953 UNTS 193. 134 SIMON RAINEY , THE LAW OF TUG & TOW AND OFFSHORE CONTRACTS 1673 (3rd ed.2013) ; The Galatea, (1858) Swab. 349,350 ; The Saratoga,(1861) Lush.318,321; Ward v McCorkill,(1861) 15 Moo PC 133; The White Star,(1866) L.R. 1 A. & E. 68,70; The I.C.Potter(,1870) L.R. 3A.&E. 292,298; The Thalatta Shipping Gazette, May 26, 1905,cited in The Leon Blum[1915] P.90,101; The Refrigerant [1925] P.130; 95 L.J.P.11; 135 The Glasidale,(1945) 78 Ll.L. Rep. 477,478; The St.Patrick,(1930) 35 Ll.L.Rep.231,236. 136 Page 71 of Bundle.



5.3. Hestia had own interest in salving the vessel.

48. It is submitted that Hestia had its own interest in saving the vessel as it was the owner of the cargo contracted for

carriage by her. Therefore, Hestia will not be entitled to a salvage reward. It has been held that if the owner of the saving

ship is also the owner of the cargo which is salved, he may be precluded from claiming a salvage reward on the basis of

his legal obligations arising towards the carrier of the ship.137 The cargo owner has a pre-existing duty towards the carriers

for providing assistance in peril.138 Thus, Hestia had a duty to assist the salvage operation and had an obligation towards

the carrier of the ship and thus will not be entitled to a salvage reward.

49. Hestug, which was a tugging agency of Hestia, had its own interest in saving MV Athena as the vessel was carrying

the cargo owned by Hestia, the principal company of Hestug.139 Thus, salving the vessel would automatically salve the

cargo, which was beneficial for Hestia. This negates the general rule of voluntariness, which states that only those are

entitled to salvage, who save the cargo without any benefit arising from the vessel in peril.140 The salvors, if having an

interest in salving their own property, they are not deemed to be the volunteers in the salvage operation. When vessels are

associated to each other by any contractual or other basis, they do not stand independent of each other as much as ships

falling accidentally in each other’s way do.141 Therefore, their interest or existing obligations negate their voluntariness

and debar any claims for salvage. Since the requisite elements for establishing salvage i.e. presence of danger,

voluntariness and a salvage operation are not satisfied, it is submitted that there was no act of salvage from the side of

Hestia and thus, it will not be entitled to a salvage reward.

137 Gark v.Straits Towing Ltd. and Sayer [1966] 2 Ll.R.Rep.227 ; FRANCIS D.ROSE, KENEDDY AND ROSE THE LAW OF SALVAGE, 232, (The Hon. Sir David Steel, Richard AA. Shaw eds. 6th ed. 2002) 138 International Salvage Convention, art 8, July 14,1996,1953 UNTS 193 139 Page 73 of Bundle. 140 Ward v McCorkill,(1861) 15 Moo PC 133 141 The Trelawney,(1802) 165 E.R. 592 (Sir W.Scott);

- Prayer-

26TEAM 2 -


PRAYER

For the reasons set out above, the Claimant requests the Tribunal to:

1. Declare that the arbitral tribunal has jurisdiction to try this dispute between the Claimant and the

Respondent.

2. Hold that this is not a case of frustration of Charterparty in the present case and Declare that Zeus is

entitled to damages from Hestia for breach of Charterparty obligations.

3. Hold that the laytime had exceeded due to which demurrage had accrued and Declare that Hestia is liable

to pay the demurrage to Zeus.

4. Hold that the assistance provided by Hestia was not a salvage operation and Declare that Hestia is not

entitled to a salvage reward.

5. AWARD any other interests & costs in favour of the Owner.

Dated this 20th day of April 2016 by the Counsel for Claimant, Zeus Shipping and Trading.

17thannual international m l a m 2016€¦ · 17thannual international maritime law arbitration...

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