18th

ANNUAL INTERNATIONAL MARITIME LAW

ARBITRATION MOOT 2017

In the matter of an Arbitration under the International Arbitration Act (Cap.

143A, Rev Ed 2002) and the Singapore Chamber of Maritime Arbitration Rules

Between

Furnace Trading Pte Ltd

…Claimant

and

Inferno Resources Sdn Bhd

…Respondent

________________________________________________________________

Claimant’s Memorandum

________________________________________________________________

Team 22

Douglas Lok Bao Guang

Leung Liwen

Law Jia Hao

Tan Yi Wei Nicholas

Wang Yufei

2

List of Authorities

Statutes

International Arbitration Act (Cap. 143A, Rev Ed 2002)

Interpretation Act (Cap. 1, Rev Ed 2002)

Cases

A/S Tank v Agence Maritime L Strauss (1939) 64 Lloyd’s List Law Reports 19

Aktieselskabet Olivebank v Dansk Svovlsyre Fabrik (The Springbank) [1919] 2 KB 162 (CA)

Bangladesh Chemical Industries Corporation v Henry Stephens Shipping Co. Ltd. and Tex-

Dilan Shipping Co. Ltd. (The SLS Everest) [1981] 2 Lloyd’s Rep 389 (CA)

Beard v Moira Colliery Co Ltd [1915] 1 Ch 257 (CA)

Castleton Commodities Shipping Co Pte Ltd v Silver Rock Investments (The Clipper

Monarch) [2015] EWHC 2584 (Comm), [2016] 1 Lloyd’s Rep 1

Compania Naviera General SA v Kerametal Ltd (The Lorna I) [1983] 1 Lloyd’s Rep 373

Five Ocean Corp v Cingler Ship Pte Ltd [2015] SGHC 311, [2016] 1 SLR 1159

Great Western Railway and Midland Railway v Bristol Corporation (1918) 87 LJ Ch 414

(HL)

Greenshields, Cowie & Co v Stephens & Sons Ltd [1908] AC 431 (HL)

Johs. Thode v Vda. de Gimeno Y Cia. S.L. (The Steendiek) [1961] 2 Lloyd’s Rep 138 (CA)

L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 (HL)

Maldives Airports Co Ltd and another v GMR Malé International Airport Pte Ltd [2013]

SGCA 16, [2013] 2 SLR 449

Mansel Oil Ltd and another v Troon Storage Tankers SA (The Ailsa Craig) [2009] 2 Lloyd’s

Rep 371 (CA)

NCC International AB v Alliance Concrete Singapore Pte Ltd [2008] SGCA 5, [2008] 2

SLR(R) 565

Oriental Steamship Co Ltd v Tylor [1893] 2 QB 518 (CA)

Robertson v French (1803) 4 East 130

3

ST Shipping & Transport Inc v Kriti Filoxenia Shipping Co SA (The Kriti Filoxenia) [2015]

EWHC 997 (Comm), [2015] 2 Lloyd’s Rep 609

Swift-Fortune Ltd v Magnifica Marine SA [2006] SGCA 42, [2007] 1 SLR(R) 629

The Athanasia Comninos and Georges Chr Lemos [1990] 1 Lloyd’s Rep 277 (QB)

Books and Treatises

Gary B. Born, International Commercial Arbitration, vol 2 (2nd

edn, Kluwer Law

International 2014)

Julian Cooke and others, Voyage Charters (4th

edn, Informa 2014)

Bernard Eder and others, Scrutton on Charterparties and Bills of Lading (23rd

edn, Sweet &

Maxwell 2015)

Stephen Girvin, Carriage of Goods by Sea (2nd

edn, OUP 2011)

William V Packard, Sea–trading, vol 2 (Cargoes, Fairplay Publications 1985)

Philip Rogers, John Strange and Brian Studd, Coal: Carriage by Sea (2nd

edn, LLP 1997)

Others

Attorney-General’s Chambers, ‘Singapore Statutes Online’ (International Arbitration Act: 01

January 2006 version s 12(7) (repealed), Attorney-General’s Chambers)

<http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=a3332e34-9b49-4503-

9f2a-02ba2f791f7f;page=0;query=DocId%3Afdb4f13d-0fdb-4083-806a-

0c16554efd0b%20ValidTime%3A30%2F12%2F2009%20Depth%3A0%20Status%3Ai

nforce;rec=0#pr12-he-.> accessed 14 April 2017

‘International Maritime Law Arbitration Moot 2017 Moot Scenario’ (9th December 2016)

<http://www.murdoch.edu.au/School-of-Law/_document/IMLAM/IMLAM-

2017/2017-IMLAM-Moot-scenario-FINAL-9-December.pdf> accessed 12 December

2016

‘International Maritime Solid Bulk Cargoes (IMSBC) Code’ (IMO Maritime Safety

Committee, 2008)

<http://www.marine.gov.my/jlm/pic/article/service/notice/msn/2011/IMSBC%20COD

E.pdf> accessed 15 April 2017

Lloyd’s Maritime Law Newsletter, ‘London Arbitration 20/86’ (24 November 1986, Informa)

Lloyd’s Maritime Law Newsletter, ‘London Arbitration 8/14’ (03 April 2014, Informa)

Lloyd’s Register, UK P&I Club and Intercargo, ‘Carrying Solid Bulk Cargoes Safely’ (2nd

edn, Lloyd’s Register 2016) <http://www.lr.org/en/_images/229-

4

77020_IMSBC_Code_pocket_guide_v1_1.0_August%202016.pdf> accessed 15 April

2017

Singapore Chamber of Maritime Arbitration, ‘SCMA Rules’ (3rd

edn, October 2015)

<http://www.scma.org.sg/pdf/rules_201510_eng.pdf> accessed 29 December 2016

Singapore Parliamentary Debates: Official Report 19 October 2009, vol 86, col 1626 (K

Shanmugam, Minister for Law)

5

Table of Contents

I. STATEMENT OF FACTS ..................................................................................... 6

A. THE PARTIES ................................................................................................ 6

B. THE CHARTERPARTY CHAIN ................................................................. 6

C. PERFORMANCE OF THE CHARTERPARTY ......................................... 7

II. SUMMARY OF THE ISSUES .............................................................................. 9

III. THE TRIBUNAL HAS JURISDICTION AND/OR POWER TO

ORDER THE SALE PENDENTE LITE OF THE CARGO ........................................... 9

A. THE TRIBUNAL HAS THE POWER TO ORDER AN SALE

PENDENTE LITE ................................................................................................... 9

B. THE WORD “PROPERTY” UNDER S 12(1)(D) OF THE IAA

ENCOMPASSES CHOSES IN ACTION ........................................................... 10

1. “Property” under s 12(1)(d) of the IAA should be construed as

having the same meaning as “assets” in s 12A(4) of the IAA............. 10

2. “Assets” in s 12A(4) of the IAA includes a chose in action ................ 12

C. THE CLAIMANT HAS A CHOSE IN ACTION IN THE FORM OF

A SUI GENERIS INTEREST .............................................................................. 13

1. The Claimant exercised the contractual right ..................................... 14

2. The Claimant possesses the requisite beneficial right ........................ 21

D. THE SALE OF THE CARGO IS A MEANS OF PRESERVING

THE CLAIMANT’S INTEREST IN THE CARGO ......................................... 23

IV. THE TRIBUNAL SHOULD ORDER THE SALE PENDENTE LITE ........... 23

A. A SALE IS COMMERCIALLY REASONABLE SO AS TO

MITIGATE LOSS ARISING FROM THE PENDENCY OF

ARBITRATION .................................................................................................... 24

B. THE RISK OF SERIOUS HARM TEST IS SATISFIED ......................... 25

1. There is a risk of serious harm to the Claimant if the Cargo is

not sold. For the same reasons, a sale is also urgently required. ....... 26

2. The Claimant has established a prima facie case ................................ 27

V. PRAYER FOR RELIEF....................................................................................... 28

6

I. STATEMENT OF FACTS

A. THE PARTIES

1. The Claimant is Furnace Trading Pte Ltd, a Singaporean company. The Respondent is

Inferno Resources Sdn Bhd, a Malaysian company. The registered shipowner of the

Singapore-flagged M.V. TARDY TESSA (the “Vessel”) is Imlam Consignorist GmbH

(“CMI”), a German company. The shipper of the cargo on board the Vessel is Idoncare

Berjaya Utama Pty Ltd (“Idoncare”), an Australian company.

B. THE CHARTERPARTY CHAIN

2. The Claimant time chartered the Vessel for a period of two years from CMI pursuant to a

time charterparty dated 15 February 2016 (the “Time Charterparty”).

3. On or about 1 September 2016, the Claimant sub-voyage chartered the Vessel to the

Respondent for the carriage of 80,000 mt 10% MOLOO Australian Steam Coal from

New South Wales, Australia, to a port in China which the Respondent had the obligation

to nominate (the “Voyage Charterparty”). The charterparty terms are based upon the

COAL-OREVOY form as amended by the parties in a fixture recap set out in an email

dated 1 September 2016 (the “Fixture Recap”). The relevant clauses are set out below:

(a) Cl 16 of the Fixture Recap is titled “Discharge Port”. It states the following:

“1 spsb China (Dalian, Jinzhou, Yingkou, Yantai, Qingdao, Shanghai, Tianjin,

Ningbo) CHOPT […] CHTRS to declare discharge port when vessel passes

Singapore for bunkering. […]”.

7

(b) Cl 19 of the Fixture Recap (the “Freight Clause”) stipulates that “100% FRT to be

paid within five (5) banking days after completion of loading and signing/releasing

B/Ls marked “freight payable as per charter party” and rcpt of owners’ FRT INV,

but in any case BBB. […]”.

(c) Cl 19 of the COAL-OREVOY form (the “Lien Clause”) stipulates that “The Owners

shall have a lien on the cargo for freight, […] due to them under this Charter Party.”

(d) Cl 29 of the Fixture Recap provides for dispute resolution according to “Singapore

law and arbitration as per SCMA Rules with 3 arbitrators”.

C. PERFORMANCE OF THE CHARTERPARTY

4. Under the Voyage Charterparty, 84,000.052 mt of Australian Steam Coal (the “Cargo”)

was loaded at the load port in Kooragang Precinct, Australia by 0800h, 4 October 2016.

The Vessel departed at 1615h, 4 October 2016 and sailed for Singapore.

5. Three clean on board bills of lading numbered IMOBL11223344X (the “Bills”) were

issued on 4 October 2016. These were issued on CMI’s letterhead and signed by the

Master. The shipper named on the Bills of Lading was Idoncare.

6. The Bills were consigned “To Order”. Pursuant to Cl 1 of the Conditions of Carriage, the

Bills incorporate all “terms and conditions, liberties and exceptions of the Charter Party,

dated as overleaf”. However, the Bills did not identify any specific charterparty.

7. On 9 October 2016, the Claimant issued Invoice No. 1002/2016 (the “Freight Invoice”)

in respect of freight due under the Voyage Charterparty for a sum of USD771,120.48

being 100% freight on the basis that Shanghai would be the discharge port. The actual

quantum payable under the Freight Invoice is calculated according to the formula

8

specified in the Voyage Charterparty and depends on the actual discharge port nominated

by the Respondent. Despite repeated reminders, the Respondent refused to pay.

8. The Vessel arrived in Singapore at 1515h, 10 October 2016. Bunkering was completed by

0002h, 11 October 2016. However, as the Respondent failed to nominate a contractual

discharge port, the Vessel drifted outside Singapore port limits, pending discharge

instructions. Many reminders were sent to the Respondent. They were ignored.

9. As a result of the Respondent’s intransigence in failing to pay freight, on 20 October

2016, the Claimant invoked its lien over the Cargo pursuant to the Lien Clause.

10. On 21 October 2016, the Respondent belatedly nominated Ningbo as the discharge port.

Be that as it may, the Respondent persisted in refusing to pay freight.

11. By 21 October 2016, the Vessel had waited outside Singapore port limits for about ten

days. As a result, the Claimant suffered huge losses. In accordance with its contractual

rights, the Claimant regarded the Respondents to be in repudiatory breach of the Voyage

Charterparty and terminated accordingly.

12. On 25 November 2016, the Claimant commenced arbitration proceedings against the

Respondent and Idoncare. On 1 December 2016, the Claimant filed an urgent application

for the consolidation of the various proceedings and liberty to sell the Cargo on board the

Vessel pendente lite. Idoncare has indicated that it does not object to the sale and is

content to comply with any orders made by the Tribunal.

13. Meanwhile, the situation on board the Vessel is deteriorating by the day. The Vessel

continues to drift in international waters outside Singapore port limits. The Vessel is

constantly battered by strong winds and waves brought on by the monsoon season. The

9

Cargo has shown signs of overheating. There is genuine concern that it might self-ignite

and explode. The situation is dire and immediate action is necessary.

II. SUMMARY OF THE ISSUES

14. Whether the Tribunal has jurisdiction and/or power to order the sale of the Cargo on

board the Vessel pendente lite.

15. Whether the circumstances of the case are such that the Tribunal should order the sale.

III. THE TRIBUNAL HAS JURISDICTION AND/OR POWER TO ORDER THE

SALE PENDENTE LITE OF THE CARGO

A. THE TRIBUNAL HAS THE POWER TO ORDER AN SALE

PENDENTE LITE

16. The Tribunal’s power to order a sale pendente lite is governed by the rules chosen by the

parties in the arbitration agreement and the lex arbitri. In the present case, the parties

have, pursuant to Cl 29 of the Fixture Recap, agreed on “arbitration as per SCMA Rules”.

Rule 22.1 of the SCMA Rules1 provides that the juridical seat of arbitration shall be

Singapore unless agreed otherwise by the parties. Rule 22.1 states that where the seat is

Singapore, the lex arbitri shall be Singapore law and, in particular, the International

Arbitration Act (“IAA”).2

17. Section 12(1)(d) of the IAA empowers the Tribunal to make orders for the preservation,

interim custody or sale of any property which is or forms part of the subject-matter of the

1 Singapore Chamber of Maritime Arbitration, ‘SCMA Rules’ (3rd edn, October 2015)

<http://www.scma.org.sg/pdf/rules_201510_eng.pdf> accessed 29 December 2016. 2 International Arbitration Act (Cap. 143A, Rev Ed 2002) (“IAA”).

10

dispute. Although not expressly stated in s 12(1)(d), the Singapore courts have recognised

that s 12(1)(d) allows the Tribunal to order a “sale” of a cargo if that order has the effect

of preserving property which is (or forms part of) the subject-matter of the dispute.3

18. In these submissions, the Claimant will show that: (a) the word “property” under s

12(1)(d) of the IAA encompasses not only physical property but also intangible property

such as choses in action; (b) the Claimant has such a chose in action in the form of a sui

generis interest; and (c) that the Claimant’s chose in action ought to be preserved by an

order for the sale of the Cargo.

B. THE WORD “PROPERTY” UNDER S 12(1)(D) OF THE IAA

ENCOMPASSES CHOSES IN ACTION

1. “Property” under s 12(1)(d) of the IAA should be construed as

having the same meaning as “assets” in s 12A(4) of the IAA

19. In construing the word “property” in s 12(1)(d), the Tribunal is guided by the approach

taken by Singapore courts in the context of the court’s power in s 12A(4) of the IAA to

order preservation of “assets” in a dispute to be resolved by arbitration.

20. This approach is justified for two reasons. First, the rationale of section 12A(4) is the

same as that of section 12(1)(d), i.e. “to preserve the property which is or forms part of

the subject matter of the dispute that is or will be referred to arbitration”.

21. Secondly, a plain reading of s 12A(2) shows that the Singapore High Court has the same

power as an arbitral tribunal in respect of making of an order concerning any of the

3 Five Ocean Corp v Cingler Ship Pte Ltd [2015] SGHC 311, [2016] 1 SLR 1159 [41] (“Cingler”).

11

matters set out in s 12(1)(c) to (i) of the IAA. Section 12A(4) empowers the Singapore

High Court to make such orders as it thinks “necessary for the purpose of preserving

evidence or assets”. A fortiori, the court’s power to order a sale under s 12A(4) of the

IAA is conditional on the “asset” also qualifying as “property” under s 12(1)(d) of the

IAA. Any other interpretation runs the risk of an inconsistency in the scope of the powers

exercisable by the Singapore courts and the arbitral tribunals.

22. This interpretation of s 12(1)(d) finds support in Cingler, a Singapore High Court case.

Belinda Ang J held that before the court could exercise its power to sell cargo under s

12A(4) of the IAA, the applicant must prove “that an order would be necessary for the

purpose of preserving assets (i.e., under s 12(1)(d), the property which is or forms part of

the subject-matter of the dispute)”.4 Ang J clearly considered that the words “assets” and

“property” have the same meaning.

23. This interpretation is further justified by the rules governing interpretation of Singapore

statutes. Section 9A of the Interpretation Act5 states that an interpretation that would

promote the purpose or object underlying the written law (whether that purpose or object

is expressly stated in the written law or not) shall be preferred to an interpretation that

would not promote that purpose or object.

24. To understand the purpose of s 12A, it is necessary to examine its legislative history.

Section 12A was enacted to replace s 12(7) of the IAA. Section 12(7) stated that “[t]he

High Court or a Judge thereof shall have, for the purpose of and in relation to an

arbitration to which this Part applies, the same power of making orders in respect of any

of the matters set out in subsection (1) as it has for the purpose of and in relation to an

4 Cingler (n 3) [41]. 5 Interpretation Act (Cap. 1, Rev Ed 2002).

12

action or matter in the court”.6 This has been interpreted by the Singapore Court of

Appeal as conferring upon the Singapore High Court “concurrent jurisdiction with the

arbitral tribunal to order interim measures”.7 It is therefore clear that when s 12(7) was

in force, the power of the Singapore High Court to order interlocutory relief was similar

to that of an arbitral tribunal and vice versa.

25. Section 12A does not alter that position. Its stated aim was to reverse the ruling of the

Singapore Court of Appeal in Swift-Fortune.8 In that case, it was held that the wording

and legislative history of s 12(7) meant that s 12(7) “does not apply to foreign

arbitrations but applies to Singapore international arbitrations” only.9 Section 12A now

provides that the Singapore High Court has the power to order interlocutory relief for

both local and foreign international arbitrations.10

Nothing was said in Parliament about

altering the scope of the Court’s powers other than the above.11

26. For the reasons given above, the Tribunal should find that “property” under s 12(1)(d) of

the IAA has the same meaning as “assets” under s 12A(4) of the IAA.

2. “Assets” in s 12A(4) of the IAA includes a chose in action

27. The term “assets” in s 12A(4) of the IAA was defined by the Singapore Court of Appeal

in Maldives Airports12

to include choses in action i.e. “contractual rights…which lend

themselves to being preserved or, put another way, those which, if lost, would not be

6 Attorney-General’s Chambers, ‘Singapore Statutes Online’ (International Arbitration Act: 01 January 2006 version s 12(7)

(repealed), Attorney-General’s Chambers) <http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=a3332e34-9b49-

4503-9f2a-02ba2f791f7f;page=0;query=DocId%3Afdb4f13d-0fdb-4083-806a-

0c16554efd0b%20ValidTime%3A30%2F12%2F2009%20Depth%3A0%20Status%3Ainforce;rec=0#pr12-he-.> accessed 14

April 2017; cf IAA (n 2) s 12(7). 7 NCC International AB v Alliance Concrete Singapore Pte Ltd [2008] SGCA 5, [2008] 2 SLR(R) 565 [41]. 8 Swift-Fortune Ltdv Magnifica Marine SA [2006] SGCA 42, [2007] 1 SLR(R) 629 (“Swift-Fortune”). 9 Swift-Fortune (n 8) [96(a)]. 10 IAA (n 2) s 12A(1)(b). 11 Singapore Parliamentary Debates: Official Report 19 October 2009, vol 86, col 1626 (K Shanmugam, Minister for Law). 12 Maldives Airports Co Ltd and another v GMR Malé International Airport Pte Ltd [2013] SGCA 16, [2013] 2 SLR 449

(“Maldives Airports”).

13

adequately be remediable by an award of damages”. Maldives Airports was followed in

Cingler13

where the Singapore High Court held that a head charterer’s right to detain

possession of cargo akin to a contractual lien security interest (“sui generis interest”)

amounted to a chose in action.14

Thus, the Tribunal has the power to order the sale of the

Cargo if the Claimant can demonstrate that it has a chose in action in the form of a sui

generis interest in the cargo.

C. THE CLAIMANT HAS A CHOSE IN ACTION IN THE FORM OF A

SUI GENERIS INTEREST

28. A time charterer’s sui generis interest in the cargo is an interest akin to, though not

equivalent to, a security interest in the cargo conferred by a contractual lien.15

This

interest arises if two requirements are met. First, the time charterer must have exercised

its contractual right to detain possession of the cargo against its sub-charterer (the

“contractual right”), a right typically provided by a lien clause offering security for the

sub-charterer’s obligation to pay, inter alia, freight.16

Secondly, the time charterer must

have a beneficial right in the shipowner’s lien over the cargo (the “beneficial right”).17

This requires the shipowner to have exercised its right of lien over the cargo as “trustee”

for the time charterer,18

and is typically achieved by incorporating the same lien clause

from the relevant charterparty into the bill of lading contract.

13 Cingler (n 3) [42]. 14 Cingler (n 3) [46]. 15 Cingler (n 3) [46]. 16 Cingler (n 3) [36], [46]. 17 Cingler (n 3) [46]. 18 Cingler (n 3) [34], [36], [46].

14

1. The Claimant exercised the contractual right

29. On the facts of Cingler and the present case, both time charterers (i.e. Cingler’s time

charterer and the Claimant respectively) had the contractual right against their sub-

charterers due to their lien clauses.19

Both time charterers had exercised their contractual

right to detain possession of the cargo, seeking payment of freight.20

a) The conditions for exercising the contractual right were

satisfied.

30. As the Claimant’s contractual right arises out of the Lien Clause,21

the conditions in the

Lien Clause must be satisfied before the right is exercisable. The Lien Clause may be

invoked when, inter alia, freight is due under the Voyage Charterparty.22

Under the

Freight Clause,23

the Respondent’s obligation to pay freight has three preconditions: (a)

completion of loading; (b) signing/releasing of bills of lading marked “freight payable as

per charter party”; and (c) receipt of the owner’s freight invoice.

31. On the facts, preconditions (a) and (b) are satisfied as the completion of loading24

and the

signing of the Bills25

took place on 4 October 2016.

32. The Respondent received the Freight Invoice26

on 9 October 2016.

33. The question is whether the Freight Invoice, is a relevant invoice for the purposes of (c)

19 Cingler (n 3) [10]; Page 31 of the ‘International Maritime Law Arbitration Moot 2017 Moot Scenario’ (9th December

2016) <http://www.murdoch.edu.au/School-of-Law/_document/IMLAM/IMLAM-2017/2017-IMLAM-Moot-scenario-

FINAL-9-December.pdf> accessed 12 December 2016 (“Moot Scenario”). 20 Cingler (n 3) [16]; Moot Scenario (n 19) 65. 21 Moot Scenario (n 19) 31. 22 Moot Scenario (n 19) 20-33. 23 Moot Scenario (n 19) 22. 24 Moot Scenario (n 19) 47-48. 25 Moot Scenario (n 19) 41-46. 26 Moot Scenario (n 19) 49.

15

This turns on the construction of the term “FRT INV” in the Freight Clause.

(1) The Freight Invoice is a relevant invoice for the

purposes of determining when the Respondent’s obligation to

pay freight arises

34. Charterparties, like commercial contracts, are interpreted to ascertain and give effect to

the intention of the parties.27

This is done by “considering what […] the document would

convey to a reasonable person having [relevant] background knowledge”.28

35. In particular, the words used in charterparties are to be understood in their plain, ordinary

and popular meaning,29

unless the context shows that the parties, for the purposes of the

contract, intended to place a different meaning on them.30

36. There can be no dispute that “FRT INV” is an abbreviation for “freight invoice”. In the

present case, the context does not show that the parties intended to depart from its plain,

ordinary and popular meaning.

37. The Freight Invoice issued by the Claimant is clearly a “FRT INV” for the purposes of the

Freight Clause. The Freight Invoice tells the Respondent the quantum of freight payable,

depending on where the Cargo would eventually be discharged. For example, if the

Respondent had eventually nominated Shanghai as a discharge port, the sum stated in the

Invoice i.e. USD 771,120.40, would have been the amount of freight that the Respondent

was supposed to pay, given the fact that the Invoice used Shanghai (being the “cheapest”

27 Bernard Eder and others, Scrutton on Charterparties and Bills of Lading (23rd edn, Sweet & Maxwell 2015) para 2-047

(“Scrutton on Charterparties”). 28 Julian Cooke and others, Voyage Charters (4th edn, Informa 2014) para 1.95 (“Voyage Charters”); Scrutton on

Charterparties (n 27) para 2-047. 29 Robertson v French (1803) 4 East 130, 136 (“Robertson”); Beard v Moira Colliery Co Ltd [1915] 1 Ch 257 (CA) 268;

Great Western Railway and Midland Railway v Bristol Corporation (1918) 87 LJ Ch 414 (HL). 30 Robertson (n 29) 136.

16

discharge port) as a basis.31

38. The fact that the Respondent may eventually nominate another discharge port32

does not

change the nature of the Freight Invoice for the purposes of determining when the

Respondent’s obligation to pay freight arises. The different freight rates payable for each

contractual discharge port were set out in the Freight Clause:33

“Dalian: USD 10.01 PMT

Jinzhou: USD 10.45 PMT

Yingkou: USD 10.15 PMT

Yantai: US 9.78 PMT

Qingdao: USD 9.64 PMT

Shanghai: USD 9.18 PMT

Tianjin: USD 9.92 PMT

Ningbo: USD 9.24 PMT”

Moreover, pursuant to Clause 19 of the Fixture Recap, the Respondent has the obligation

of nominating the discharge port. In other words, even if the Respondent had nominated

another discharge port instead of Shanghai, it must have known that it had to pay at least

USD 771,120.48, and would be able to immediately determine the additional freight

payable by the Respondent (if any) by reference to the Freight Clause.34

In the

circumstances, there was no need for any other invoice.

31 Moot Scenario (n 19) 49. 32 Moot Scenario (n 19) 21. 33 Moot Scenario (n 19) 22. 34 Moot Scenario (n 19) 22.

17

39. Although it is arguable that the phrase “100% FRT” in the Freight Clause35

means that the

“FRT INV” can only be issued after nomination, such a construction could not have been

intended by the parties.

40. As observed in Voyage Charters,36

where the language of the contract is capable of more

than one interpretation, that interpretation which most accords with commercial

commonsense is to be preferred. As Lord Reid said in Schuler v Wickman37

“[t]he more

unreasonable the result, the more unlikely it is that the parties can have intended it, and if

they do intend it […] they should make that intention abundantly clear”.

41. In London Arbitration 8/14,38

the relevant clause read: “Freight payments: […] Balance

5% freight payable […] within 60 days after agreement of Sof”. There, charterers argued

that they were not liable for the balance 5% freight because the parties did not come to an

“agreement of Sof”. The tribunal rejected this argument, noting that “if the charterers’

position were correct, it would be open to charterers generally, under wording such as

used in the present charter, simply to refuse to agree a statement of facts and thus never

to have any liability to pay a balance of freight. Little could be more absurd.”39

42. Similarly, given that “freight is the consideration payable to the carrier for the

carriage”,40

accepting that the “FRT INV” could only be issued after nomination leads to

an unreasonable and absurd result. It would mean that the Respondent can indefinitely

avoid its liability to pay freight by refusing to nominate the discharge port, and arguing

that any invoice issued before nomination is ineffective. This could not have been the

35 Moot Scenario (n 19) 22. 36 Voyage Charters (n 28) para 1.106. 37 L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 (HL) 251 (Lord Reid). 38 Cited in Lloyd’s Maritime Law Newsletter, ‘London Arbitration 8/14’ (03 April 2014, Informa) (“London Arbitration

8/14”). 39 London Arbitration 8/14 (n 38). 40 Compania Naviera General SA v Kerametal Ltd (The Lorna I) [1983] 1 Lloyd’s Rep 373 (CA) 374.

18

parties’ intention.

43. Indeed, the Respondent has accepted that the Freight Invoice was a relevant invoice for

the purposes of its obligation to pay freight. If the parties had intended for the “FRT INV”

to be issued only after nomination, one would have expected the Respondent to object to

the Freight Invoice. Instead, the Respondent’s excuse for non-payment was that they have

yet to receive freight from their sub-charterers; the same excuse was given thrice.41

44. In any event, the Respondent was contractually obliged to nominate a discharge port by

11 October 2016. The Respondent received the Freight Invoice on 9 October 2016. If the

Respondent had duly nominated on 11 October 2016, it could have ascertained and made

payment of “100% FRT within five (5) banking days from the receipt of the Invoice” i.e.

by 14th

October 2016.

45. Pursuant to Clause 16 of the Fixture Recap,42

the Respondent was to nominate “when

vessel passes Singapore for bunkering”. On a commercially sensible reading, that phrase

means that the parties intended for nomination no later than by the completion of

bunkering at Singapore, and in any event before the vessel departs Singapore for the next

leg of the voyage. This is justified on at least two grounds.

(a) It is commercially sensible that a shipowner knows the destination port of the vessel

in good time, so as to plan and execute the carrying voyage with the utmost despatch.

In A/S Tank,43

it was held that a clause stipulating that nomination must be made “on

signing bills of lading” imposed a duty to nominate “not later than, or before,

signing bills of lading”. The court identified the underlying rationale:

41 Moot Scenario (n 19) 56, 62, 67-68. 42 Moot Scenario (n 19) 21. 43 A/S Tank v Agence Maritime L Strauss (1939) 64 Lloyd’s List Law Reports 19.

19

“[…] this is a commercial document and has to be given a reasonable

meaning, and it is quite obvious that from the owners' point of view the sooner

they know where their ship has to go, the better, and I should have thought

that the business meaning of these words was this, "as ordered not later than,

or before, signing bills of lading"-at any rate, not later than the signing of the

bills of lading-an order which must be given by the time the bills of lading

come to be signed. I think that is what it means, because it protects the owner.

He then knows before the ship sails where he has to go to, and in that way it

gives the charterer as much time as can be reasonably given to him. […]”.

On this basis, “when vessel passes Singapore for bunkering” should also mean that

the Respondent was obligated to nominate not later than, or before, the completion of

bunkering at Singapore, and in any event before the Vessel departs Singapore.

(b) A nomination at any time after the completion of bunkering would lead to losses to

the shipowner. It is well-established that a charterer is guilty of unreasonable delay in

nominating a discharge port if the shipowner is put to additional expense as a result

of the charterer’s delay.44

In this case, the Claimant has incurred and is continuing to

incur losses (hire and bunkers) as the Vessel is not put to productive use following

the completion of bunkering.45

Accordingly, the parties could not have intended for

the Respondent to be entitled to nominate any later than the completion of bunkering.

46. As such, the Respondent was to nominate no later than 11th

October 2016, which was

when the Vessel had completed bunkering. Had the Respondent had complied with this, it

44 Johs. Thode v Vda. de Gimeno Y Cia. S.L. (The Steendiek) [1961] 2 Lloyd’s Rep 138 (CA) 148; Mansel Oil Ltd and

another v Troon Storage Tankers SA (The Ailsa Craig) [2009] 2 Lloyd’s Rep 371 (CA) [13], cited in ST Shipping &

Transport Inc v Kriti Filoxenia Shipping Co SA (The Kriti Filoxenia) [2015] EWHC 997 (Comm), [2015] 2 Lloyd’s Rep

609 [91]. 45 Moot Scenario (n 45) 50.

20

would have been able to make full payment of freight by 14 October 2016.

47. For all the reasons above, the obligation to pay freight pursuant to the Freight Clause

arose on 9 October 2016 when the Respondent received the Freight Invoice. To date, the

Respondent has not paid freight. In the circumstances, the Claimant is entitled to exercise

his contractual right to postpone discharge and delivery of the Cargo.

(2) Even if the Freight Invoice is not a relevant invoice for

the purposes of the Freight Clause, the failure to issue the

relevant invoice was due to the Respondent’s default, which

cannot be relied on by the Respondent to avoid its obligation to

pay freight

48. Even if the Tribunal finds that the Freight Invoice is not a relevant invoice for the

purposes of the Freight Clause, the lack of a relevant invoice was due to the Respondent’s

failure to nominate in time. The Respondent was obliged to nominate on 11 October

2016. However, it only nominated a legitimate discharge port on 21 October 2016. It does

not lie in the mouth of the Respondent to say that the relevant invoice was never issued.

49. Where the charterer, by a breach of the charter, prevents the owner from earning freight,

for example by failing to make a valid nomination of a discharging port46

where freight is

earned and payable on delivery there, or failing to present bills of lading when freight is

payable upon signature,47

the courts have allowed recovery of freight as such, “simply on

the grounds that the event which prevented the completion of the voyage as originally

agreed was brought about by the charterer’s own default”.48

46 Voyage Charters (n 28) para 13.25; citing Aktieselskabet Olivebank v Dansk Svovlsyre Fabrik (The Springbank) [1919] 2

KB 162 (CA). 47 Voyage Charters (n 28) para 13.25; citing Oriental Steamship Co Ltd v Tylor [1893] 2 QB 518 (CA) (“Oriental

Steamship”). 48 Voyage Charters (n 28) para 13.25.

21

50. In Oriental Steamship,49

one-third of the freight was to be paid “on signing of bills of

lading.” The charterers sought to avoid payment by not presenting bills of lading for

signature. But it was held that they were still bound to present them and were liable in the

amount of the freight payable in advance.

51. In such situations, as observed from London Arbitration 8/14 referred to above,50

the

Tribunal should deem an appropriate date from when freight was payable, based on the

surrounding facts. There, the tribunal took the view that “it was right to infer that [a

statement of facts] would have been drawn up and signed on [a certain date]”.

52. In the present case, even if the Freight Invoice is not a relevant invoice for the purposes

of the Freight Clause, the relevant invoice would have been issued but for the

Respondent’s failure to comply with its obligation to nominate a legitimate discharge port

by 11 October 2016. Accordingly, the Tribunal should deem the relevant invoice to have

been issued on 11 October 2016 so that freight was payable within five banking days

from 11 October 2016. However, as the Respondent did not and has not paid freight, the

Claimant is entitled to invoke its contractual right under the Lien Clause.

2. The Claimant possesses the requisite beneficial right

53. Similar to that in Cingler, the Claimant in the present case has a beneficial right due to

the shipowner’s valid exercise of the shipowner’s lien over the shipper’s cargo.51

This is

because the facts in both cases are indistinguishable. CMI retained physical possession of

49 Oriental Steamship (n 47). 50 London Arbitration 8/14 (n 38). 51 Cingler (n 3) [34], [36], [46].

22

the cargoes at all relevant times.52

This was supported by an identical lien clause which

was incorporated into the bill of lading contract from the voyage charterparty.

54. Similar to that in Cingler, the Bills states on their faces, “freight payable as per

charterparty”, without expressly specifying any charterparty.53

Both contain conditions of

the carriage that incorporates the “terms and conditions, liberties and exceptions of the

Charter Party…including the Law and Arbitration Clause…”.54

55. When no charterparty is specifically incorporated, the rule in The SLS Everest55

presumes

that a voyage charterparty is incorporated instead of a time charterparty. Hence, the lien

clause of the Voyage Charterparty, and not the Time Charterparty,56

is incorporated into

the Bills. The word ‘freight’ on the face of the Bills supports this.57

56. Thus, CMI has a contractual lien security interest over the Cargo against the shipper

Idoncare. This contractual lien can be exercised by the shipowners for the benefit of the

time charterer.58

On the facts, CMI has exercised the shipowner’s lien over cargo as

security for the unpaid freight owed by the voyage charterer (the Respondent) to the time

charterer (the Claimant), for the benefit of its time charterer.59

In its email to the

Claimant, CMI has expressly agreed to render any and all assistance to the Claimant in

exercising the lien over the Cargo within the ambit of the contracts, so long as timely

payment of hire is made.60

Indeed, CMI has permitted the Vessel to drift in international

52 Cingler (n 3) [15]; Moot Scenario (n 19) 36-37. 53 Cingler (n 3) [23]; Moot Scenario (n 19) 41, 43, 45. 54 Cingler (n 3) [23]; Moot Scenario (n 19) 42, 44, 46. 55 Bangladesh Chemical Industries Corporation v Henry Stephens Shipping Co. Ltd. and Tex-Dilan Shipping Co. Ltd. (The

SLS Everest) [1981] 2 Lloyd’s Rep 389 (CA) 392 (“The SLS Everest”). 56 The SLS Everest (n 55) 392. 57 Cingler (n 3) [31]. 58 Cingler (n 3) [34]-[36], [46], [50]. 59 Cingler (n 3) [34]-[36], [46], [50]; Moot Scenario (n 19) 35-36. 60 Moot Scenario (n 19) 35-36.

23

waters,61

detaining possession of the Cargo. This provides the Claimant with the

beneficial right to CMI’s security interest over the Cargo.62

57. The foregoing shows that the Claimant possesses a sui generis interest,63

which is a chose

in action which can be preserved and is therefore “property” under s 12(1)(d) of the IAA.

The Tribunal therefore has the power to order a sale pendente lite so as to preserve the

Claimants’ asset.

D. THE SALE OF THE CARGO IS A MEANS OF PRESERVING THE

CLAIMANT’S INTEREST IN THE CARGO

58. The Claimant’s sui generis interest may be preserved by means of an order for sale of that

Cargo. An order for sale preserves the value of the interest in the cargo.64

The interest in

the cargo transforms “into a right to the proceeds of sale of the cargo concerned”.65

The

Claimant’s interest need not provide for a right to sell, as “the lack of a substantive

contractual right of sale would not preclude the court’s exercise of a discretionary power

of sale”.66

Ergo, the Tribunal has the power to order the sale under s 12(1)(d) of the IAA

because the order for sale preserves the value of the Claimant’s interest in that Cargo.

IV. THE TRIBUNAL SHOULD ORDER THE SALE PENDENTE LITE

59. In considering whether to grant interim measures, the Tribunal is guided by international

standards as “they ensure that (a) a single, uniform standard will be applied to requests

for provisional measures in an arbitration; (b) a single, uniform standard will apply to

61 Moot Scenario (n 19) 36-37. 62 Cingler (n 3) [36]. 63 Cingler (n 3) [46]. 64 Cingler (n 3) [48]. 65 Castleton Commodities Shipping Co Pte Ltd v Silver Rock Investments (The Clipper Monarch) [2015] EWHC 2584

(Comm), [2016] 1 Lloyd’s Rep 1 [9]. 66 Cingler (n 3) [47], [49]-[55].

24

the same sorts of requests regardless what the seat of the arbitration may be; and (c) the

standard for provisional relief will be tailored to international arbitral procedures,

rather than to the procedures of a national court system”.67

60. There are two tests to apply: (a) the commercially reasonable test; and (b) the risk of

serious harm test.68

As we will show below, the Claimant has satisfied both tests.

A. A SALE IS COMMERCIALLY REASONABLE SO AS TO MITIGATE

LOSS ARISING FROM THE PENDENCY OF ARBITRATION

61. While the usual approach of a Tribunal is to consider whether a claimant faces a risk of

serious harm, “[a] different question is presented where a Tribunal is asked to order the

sale…of property. In some cases, such requests are made simply to mitigate loss arising

from the pendency of the arbitration that would generally fall on both parties – similar to

cases of sale of perishable goods, which would otherwise become valueless. In these

instances, there is a substantial argument that a Tribunal should generally order

commercially-reasonable actions, without inquiry into issues of serious harm to one party

or into the prima facie merits of the parties’ claims, in order to minimize the overall

losses resulting from the parties’ dispute”.69

62. The instant case is one where both parties face losses arising from pendency of

arbitration. For as long as the Cargo remains on board the Vessel, the Claimant is unable

to charter the Vessel to another charterer. At the same time, the Claimant loses about

USD10,000 per day, which represents the amount of hire due to CMI under the Time

67 Gary B. Born, International Commercial Arbitration, vol 2 (2nd edn, Kluwer Law International 2014) 2462-2464

(“Born”). 68 Born (n 67) 2498. 69 Born (n 67) 2498.

25

Charterparty and wasted bunkers.70

The shipper Idoncare also faces substantial losses

represented by the global downward trend in the coal market.71

Additionally, Idoncare

runs the risk of the entire Cargo being lost due to self-ignition or explosion of the coal as

reported by the master.72

Coal is a dangerous cargo,73

and “steam coal” can combust

spontaneously.74

Crucially, “the longer coal is laden, the greater the fire risk”.75

Further,

the Cargo, with its substantial moisture content, can increasingly corrode and weaken the

Vessel’s structure over time.76

The Vessel faces the risk of breaking up due to the

corrosion and rough weather.77

Should the Vessel perish in international waters, then both

the Claimant and Idoncare will suffer losses of the Vessel’s employment and the Cargo

respectively. The Tribunal should consider a sale of the Cargo justified as it is a

commercially-reasonable action in itself. It removes two ‘perishables’ from danger: the

Cargo and the Vessel. As such, it is unnecessary for the Tribunal to consider the risk of

serious harm test or the prima facie merits of either party’s case.

B. THE RISK OF SERIOUS HARM TEST IS SATISFIED

63. However, if the Tribunal requires the Claimant to fulfill the risk of serious harm test

before granting the sale order, then the Claimant can show that the test is satisfied. To do

so, the Claimant must show (1) a risk of serious damage to the Claimant; (2) urgency; and

70 Moot Scenario (n 19) 5. 71 Moot Scenario (n 19) 99-100. 72 Moot Scenario (n 19) 37; William V Packard, Sea–trading, vol 2 (Cargoes, Fairplay Publications 1985) 60 (“Packard”). 73 The Athanasia Comninos and Georges Chr Lemos [1990] 1 Lloyd’s Rep 277 (QB) 277, 283; Stephen Girvin, Carriage of

Goods by Sea (2nd edn, OUP 2011) paras 1.04, 21.20 (“Girvin”); Philip Rogers, John Strange and Brian Studd, Coal:

Carriage by Sea (2nd edn, LLP 1997) 134-138, 245-246, 265-270 (“Rogers”); Lloyd’s Register, UK P&I Club and

Intercargo, ‘Carrying Solid Bulk Cargoes Safely’ (2nd edn, Lloyd’s Register 2016) 12-13

<http://www.lr.org/en/_images/229-77020_IMSBC_Code_pocket_guide_v1_1.0_August%202016.pdf> accessed 15 April

2017; ‘International Maritime Solid Bulk Cargoes (IMSBC) Code’ (IMO Maritime Safety Committee, 2008)

<http://www.marine.gov.my/jlm/pic/article/service/notice/msn/2011/IMSBC%20CODE.pdf> accessed 15 April 2017. 74 Greenshields, Cowie & Co v Stephens & Sons Ltd [1908] AC 431 (HL) 434, 436; Lloyd’s Maritime Law Newsletter,

‘London Arbitration 20/86’ (24 November 1986, Informa); Girvin (n 73) para 1.04. 75 Packard (n 72) 60. 76 Packard (n 72) 60; Rogers (n 73) 134-135, 137. 77 Moot Scenario (n 19) 37.

26

(3) the presence of a prima facie case.78

1. There is a risk of serious harm to the Claimant if the Cargo is not

sold. For the same reasons, a sale is also urgently required

64. To determine if there is a “risk of serious damage to the plaintiff”,79

the Tribunal should

consider the extent to which: (a) “the claimant will suffer serious injury” during the

proceedings; (b) “such injury appears compensable” in an award; and (c) such injury or

“risk of loss during the arbitral proceedings” falls unfairly on one party.80

65. The Claimant would have suffered serious injury before the proceedings. Losing

USD10,000 per day81

from November 2016 is devastating to the Claimant. These losses

must not escalate any further.

66. Further, no final award, by itself, can fully compensate the Claimant. First, the

Respondent was never able to pay the freight. Their excuse for non-payment is that they

have yet to receive the freight from their sub-charterers.82

This suggests that they are out-

of-pocket and judgment-proof from the final award. Therefore, the sums owed to the

Claimant must be satisfied out of the proceeds of sale. Second, the net remaining value of

these proceeds are decreasing daily due to the Claimant’s escalating losses. A sale

pendente lite must be ordered as soon as possible. Third, the value of the Cargo is at risk

of serious harm. The overheating Cargo is at risk of self-ignition or explosion.83

Market

78 Born (n 67) 2467. 79 Born (n 67) 2470. 80 Born (n 67) 2470. 81 Moot Scenario (n 19) 5. 82 Moot Scenario (n 19) 56, 62, 67-68. 83 Moot Scenario (n 19) 37.

27

prices are dropping.84

Some Cargo could be lost at sea, as the Vessel remains adrift in

rough weather.85

67. Finally, the risk of loss falls unfairly on the Claimant. The Claimant will suffer losses

exceeding USD2,581,120.48. This sum is for the hire payable from 1 January 2017 to 30

June 2017 and the freight owed (basis Shanghai). In contrast, Idoncare would suffer a

smaller loss of USD642,680.51 if the Cargo was sold. This sum is the difference between

the best-case scenario cargo value and its mid-value price with a 15% discount for

distressed cargo.86

Since a final award is inadequate, interim measures become

appropriate87

and necessary. A sale pendente lite is urgently required to stem the

Claimant’s losses.

2. The Claimant has established a prima facie case

68. The Claimant has established a prima facie case that the Respondent is in breach of its

obligations to pay freight. The Tribunal need only consider “the prima facie strength of

the parties’ respective claims and defenses in deciding whether to grant provisional

measures”.88

Here, the Claimant has shown that the Respondent’s contractual obligation

to pay freight had arisen, which the Respondent has not fulfilled. The Claimant has also

demonstrated that it has a sui generis interest in the Cargo. Finally, the Respondent has

not shown a reasonable defence to the claim. The Tribunal should find that the Claimant

has established a prima facie case against the Respondent, and that an order for sale

pendente lite would not prejudice the Respondent.

84 Moot Scenario (n 19) 99. 85 Moot Scenario (n 19) 37. 86 Moot Scenario (n 19) 101. 87 Born (n 67) 2474. 88 Born (n 67) 2478.

28

69. In the circumstances, as the Claimant is facing a risk of serious harm, an order of sale is

urgently necessary, and the Claimant has established a prima facie case, the Tribunal

should exercise its power to order the sale of the Cargo pendente lite.

V. PRAYER FOR RELIEF

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

FIND that the Tribunal has jurisdiction and/or power to order the sale of the Cargo

onboard the Vessel;

APPROVE the Claimant’s application for sale of the Cargo pendente lite; and

AWARD interest and costs in favour of the Claimant.

Dated this 19th

day of April 2017

Solicitors for the Claimant

Furnace Trading Pte Ltd