2017 memorandum for claimant - murdoch university · pdf filebowater v rowley regis corp...

SEVENTEENTH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2017

YOGI BRATAJAYA DENI MULYANA M IRFAN DIMASYQI FADEL AROZI

MEMORANDUM FOR CLAIMANT

UNIVERSITAS PADJADJARAN

TEAM 20

ON BEHALF OF

FURNACE TRADING PTE LTD

CLAIMANT

AGAINST

INFERNO RESOURCES SDN BHD

RESPONDENT

COUNSEL

TEAM 20 MEMORANDUM FOR CLAIMANT

I

LIST OF ABBREVIATIONS III

LIST OF AUTHORITIES IV

STATEMENT OF FACTS 1

ARGUMENTS ON JURISDICTION 2

I. THIS TRIBUNAL HAS JURISDICTION TO GRANT LIBERTY AND/OR POWER

TO THE CLAIMANT TO SELL THE CARGO ON BOARD THE VESSEL

PENDENTE-LITE

2

A. This Tribunal has Jurisdiction to Order the Sale of CARGO 2

B. CLAIMANT’S Request for an Interim Award Must be Granted 3

i. This Tribunal has Jurisdiction to Grant Interim Awards under the IAA and other

Applicable Laws

3

ii. The Sale of CARGO Meets all the Requirements Provided by the UNCITRAL Model Law 4

a. CLAIMANT will likely suffer irreparable harm if the interim award is not granted 4

b. CLAIMANT’S potential harm substantially outweighs the harm suffered by

RESPONDENT

5

c. There is a reasonable possibility that CLAIMANT will succeed on the merits 6

TABLE OF CONTENTS


II

II. CLAIMANT IS AT LIBERTY TO APPRAISE AND SELL THE CARGO 7

A. Sale of the CARGO is Necessary in Order to Protect the Safety and Wellbeing of the

Crew

7

B. Sale of CARGO is Necessary in Fear that the Sums Due would Exceed the Value of the

Cargo

8

C. The Sale is Necessary as the VESSEL is Facing Dangerous Weather 9

D. Keeping the CARGO on board is Dangerous 10

ARGUMENTS ON THE MERITS OF THE CLAIM 11

III. RESPONDENT IS LIABLE TO PAY FOR DAMAGES FOR DETENTION 11

A. RESPONDENT Failed to Nominate a Discharge Port 11

B. The Nomination to the Port of Busan is not Eligible 12

i. CLAIMANT’S Refusal of Nomination to Busan was Justified since the Port was Unsafe 12

ii. The Nomination to the Port of Busan is not within the CHARTERPARTY 13

C. RESPONDENT Cannot Rely on Clause 24 of the CHARTERPARTY to Excuse Paying for

Damages

13

D. The Delay was not at Fault of the SHIPMASTER’s Negligence 15

i. RESPONDENT has consented to the risk of delay 15


III

ii. RESPONDENT contributed in the SHIPMASTER’s decision to stay within Singapore’s OPL 16

E. RESPONDENT is Liable for Damages as a Result of its Conduct 17

IV. CLAIMANT’S EXERCISE OF LIEN IS LAWFUL 17

A. CLAIMANT’S Lien was Properly Conducted Pursuant to the Lien Clause within the

CHARTERPARTY

17

i. RESPONDENT is liable to pay freight under the terms of the CHARTERPARTY 18

ii. The CHARTERPARTY was incorporated into the B/L 19

B. CLAIMANT’S Location of Lien is Lawful 21

i. There was a risk that exercising the lien at the discharge port would waiver CLAIMANT’S

right to lien

21

ii. Exercising the lien on board the VESSEL is commercially safest 21

V. CLAIMANT WAS ENTITLED TO TERMINATE THE CHARTERPARTY 22

A. RESPONDENT’S has Commited a Fundamental Breach 23

i. The contract has been breached in a serious manner going to the root of CLAIMANT’S

contractual expectations

23

ii. RESPONDENT has shown a clear unwillingness to perform the CHARTERPARTY 23

B. The Lack of a Termination Clause does not Deny CLAIMANT’S Right to Terminate the

CHARTERPARTY

24


IV

C. CLAIMANT is still Entitled to Claim for Freight and Other Damages Even if the

CHARTERPARTY was Terminated

25

LIST OF ABBREVIATIONS

CLAIMANT Furnace Trading Pte Ltd

RESPONDENT Inferno Resources Sdn Bhd

CHARTERPARTY The Voyage Charterparty between CLAIMANT and

RESPONDENT

Clean Fixture Recap Clean Fixture Recap of the CHARTERPARTY

SUB-CHARTERPARTY The Voyage Charterpary between RESPONDENT

and THIRD-PARTY

CARGO 84,000.052MT of Australian Steam Coal in Bulk on

board the M.V. TARDY TESSA

Parties Koyala Global Resources Ltd

Record 2017 International Maritime Law Arbitration

Record

VESSEL M.V. TARDY TESSA, Singapore

SCMA Singapore Chamber Maritime Arbitration

Sub-Charterers Idoncare Berjaya Utama Pty. Ltd.

Charterer Inferno Resources Sdn. Bhd.

Disponent-Owner Furnace Trading Pte. Ltd.

Head-Owner Imlam Consignorist GmbH

Sub-freight US$771,120.48

OPL Outside Port Limit

SPSB Safe Port Safe Berth

SHIPMASTER Captain Tan Xiao Ming


V

IAA International Arbitration Act (1994) Cap 143A

B/L Bill of Lading

B/L Act Bill of Lading Act 1992 Singapore

UNCITRAL Model Law UNCITRAL Model Law on International

Commercial Arbitration 1985

LIST OF AUTHORITIES

TABLE OF CASES

Allen v Emmerson [1944] 1 All ER 344 14

Allison v Bristol Marine Insurance [1875] AC 209 18

Ampurius Nu Homes Holdings Ltd v. Telford Homes (“Creekside”) Ltd [2013]

EWCA Civ 577; [2013] 4 All ER 377, at [70].

24

Astro Valiente Compania Naviera SA v The Government of Pakistan Ministry of

Food and Agriculture (The “Emmanuel Colocotronis” (No. 2)) [1982] 1 WLR

1096; [1982] 1 Lloyd's Rep 286.

19

Badger v Ministry of Defence [2006] 3 All ER 173

Baldwin’s Ltd. v. Halifax Corporation [1916] 85 L.J.K.B. 1769 14

Barrett v Ministry of Defence [1995] 3 All ER 86 16

Blake v Galloway [2004] 3 All ER 315 16

Blue Anchor Line Ltd. v Alfred C. Toepfer International (The “Union

Amsterdam”) [1982] 2 Lloyd’s Rep. 432.

15

Blyth v Birmingham Waterworks [1856] 11 Ex R781 15

Bowater v Rowley Regis Corp [1944] KB 476 16


VI

Butterfield v Forrester [1809] 11 East 60 16

Capital and Suburban Properties Ltd v Swycher [1976] 1 Ch 319 25

Cetelem SA v Roust Holdings Ltd [2005] 1 WLR 3555 8

Compania Naviera General S.A. v Kerametal Ltd., (The “Lorna I”) [1983] 1

Lloyd’s Rep. 373

18

Condon v Basi [1985] 2 All ER 453 16

Court of First Instance (Fifth Chamber) Esedra Sprl v. Comm. of the EC T-

169/00R.

6

Davies v Mann [1842] 10 M&W 546 16

Davies v Swan Motor Co (Swansea) Ltd [1949] 2 KB 291 16

De Silvale v Kendall (1815) 4 M & S 37

Driefontein Consolidated Gold Mines Ltd. v Janson [1900] 2 Q.B. 339 14

Emilia Shipping Inc. v State Enterprise for Pulp and Paper Industries (“Emilia

Shipping”) [1991] 1 SLR(R) 411;

8,11

Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SGHC 311 7,8,11

Froom v Butcher [1976] QB 286; 16

Fulton Shipping Inc of Panama v Globalia Business Travel S.A.U. (The “New

Flamenco”) [21.12.15]

9

Gard Marine & Energy v China National Chartering (The “Ocean Victory”)

[2015] EWCA Civ 16.

12

Gregory v Fearn [1953] 2 All ER 559 14


VII

Hammonds and Another, Executors of Blight, v Barclay and Others, Assignees of

Fentham a Bankrupt [1802] EngR 107, (1802) 2 East 227

18

Hillel v Christoforides [1991] 63 P&CR 301 (ChD) 25

Hurst v Byrk [2000] UKHL 19 25

ICI Ltd v Shatwell [1965] AC 656 16

International Bulk Carriers (Beirut) S.A.R.L. v Evlogia Shipping Co. S.A., and

Marathon Shipping Co. Ltd. (The “Mihalios Xilas”) [1978] 2 Lloyd’s Rep.186

18

Jaggard v Sawyer [1994] EWCA Civ 1 25

Johnson v Agnew [1980] AC 367 25

Jones v Livox Quarries Ltd [1952] 2 QB 608 16

K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The “Saga Cob”)

[1922] 2 Lloyd’s Rep 545, CA.

12

Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes, (The “Evia”)

(No 2) [1983] 1 AC 736

13

Kuwait Rocks Co v AMN Bulkcarriers Inc (The “Astra”) [2013] EWHC 865

(Comm)

23

Leeds Shipping Co Ltd v Societé Francaise Bunge (The “Eastern City”) [1958] 2

Lloyd’s Rep 127

12

London Arbitration 13/87 LMLN 205 22

McKew v Holland & Hannen & Cubbitts [1969] 3 All ER 1621 17

Molthes Rederi Akt v Ellerman’s Wilson Line Ltd [1927] 1 KB 710 18

Morris v Murray [1990] 3 All ER 801 16


VIII

Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India, (The

“Kanchenjunga”) [1990] Lloyd’s Rep 391, HL

13

Nesbitt v. Lushington (1792) 4 T.R. 783 15

Occidental Petroleum Corporation, Occidental Exploration and Production

Company v Republic of Ecuador, ICSID Case No. ARB/06/11.

5

Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania

Naviera SA (The “San Nicholas”) [1976] 1 Lloyd’s Rep 8.

20

Perenco Ecuador Ltd. v Republic of Ecuador and Empresa Estatal Petróleos del

Ecuador (“Petroecuador”), ICSID Case No. ARB/08/6

4

Pitts v Hunt [1990] 3 All ER 344 16

Portsmouth Steamship Co v Liverpool Salvage Co [1929] 34 LIL Rep 459. 13

Powell v Kempton Park [1897] 2 QB 242 14

Quiborax S.A., Non Metallic Minerals S.A. y Allan Fosk Kaplún v Plurinational

State of Bolivia, ICSID Case ARB/06/2

4

R. v Cleworth, 4B. & S.927 14

Safe Kids in Daily Supervision Limited v. McNeill, High Court, Auckland, New

Zealand, 14 April 2010, [2010] NZHC 605).

6

Sandiman v Breach, 7B. & C.96 14

Santiren Shipping Ltd. v Unimarine S. A. (The “Chrysovalandou Dyo”) [1981] 1

Lloyd’s Rep. 159

22

Scriven Brothers & Co v Hindley & Co [1913] 3 KB 564 15

Somes v British Empire Shipping Co (1858) El. Bl. & El. 353 (QB) 18

Staffordshire Area Health Authority v. South Staffordshire Waterworks Co [1978] 3 All ER 769 24


IX

Stapley v Gypsum Mines Ltd [1953] AC 663 17

The “Myrto” [1977] 2 Lloyd’s Rep. 243 8

The Athanasia Comminos [1968] 2 Lloyd’s Rep. 57 10

The Dominique [1987] 1 Lllyd’s Rep 239 18

The Whippingham [1934] 48 LIL Rep. 49 10

Thompson v Gillespy (1855) 5 E & B 209 18

Transco plc v Stockport Metropolitan Borough Council [2003] UKHL 61 14

Tyne Tugs v Owner of the MV Aldora (The “Aldora”) [1975] QB 748. 10

United Kingdom Aegean Sea Traders Corp. v Repsol Oil International Ltd. and

Repsol Petroleo, (The “Aegean Sea”) [1998] 1 Lloyd’s Rep 39

13

Vagres Compania Maritima SA v Nissho-Iwai American Corpn, (The “Karin

Vatis”) [1988] 2 Lloyd’s Rep 330

18,19

Wooldridge v Sumner [1963] 2 QB 43 16

BOOKS

Ali Yesilirmak, Provisional Measures in International Commercial Arbitration,

Kluwer Law International, 2005, p. 205.

6

Colin R. Ward, Coal Geology and Coal Technology, Melbourne: Blackwell

Scientific Publications, 1984,

10

Dr. L. L. Sloss, Assessing and Managing Spontaneous Combustion of Coal,

London : IEA Clean Coal Centre, 2015, p. 10.

5

https://en.wikipedia.org/wiki/Transco_plc_v_Stockport_Metropolitan_Borough_Council


X

Ewan McKendrick, Force Majeure and Frustration of Contract, Abingdon:

Informa Law from Routledge, 2013, p. 153

14

Gary B. Born, International Arbitration: Law and Practice. The Netherlands:

Kluwer Law International, 2012, p. 66

4

Gary B. Born, International Commercial Arbitration (Second Edition), Kluwer

Law International, 2014, p. 2479

6

John F. Wilson, Carriage of Goods by Sea: Seventh Edition, Essex: Pearson

Education Limited, 2010

15,21,25

Margaret L. Moses, The Principles and Practice of International Commercial

Arbitration, New York: Cambridge University Press, 2008, p. 186.

5

Meltem Deniz Guner-Ozbek, The Carriage of Dangerous Goods by Sea, Istanbul:

Springer-Verlag Berlin Heidelberg, 2008, p. 262

10

Simon Baughen, The Shipping Law (Fourth Edition), New York: Routledge &

Cavendish, 2009, p. 84

19

Sir Bernard Eder et al, Scrutton on Charterparties and Bills of Lading, 22nd ed,

:Sweet & Maxwell, 2011,p. 1; p. 95

19

Sir Guenter Treitel and F M B Reynolds, Carver on Bills of Lading, :Sweet &

Maxwell, 2001, p. 61.

19


XI

JOURNALS

Meteorological Service Singapore Online Report of the Climate of Singapore 9

STATUTES

UNCITRAL Model Law on International Commercial Arbitration, Art. 16(1); Art.

17(2); Art. 17(1); Art. 17(A)

2,3,4

INTERNATIONAL ARBITRATION ACT (1994), Cap 143A, Art. 12; Art. 12(1)(d); Art.

21(1)(i); Art. 2(1);

2,3

Singapore Chamber of Maritime Arbitration Rules, Rule 36.2. 4

Maritime Labour Convention 2014, Art. 13(a); Art. 13(c); Art. 13(d) 8


1

STATEMENT OF FACTS

1. February 15th 2016, Inferno Resources Sdn Bhd (RESPONDENT), signed into a Voyage Charterparty

dated 1 September 2016 (CHARTERPARTY) with Furnace Trading Pte Ltd (CLAIMANT), the

disponent owners of a Singapore flagged vessel the MV Tardy Tessa. The vessel was subsequently

sub Voyage Chartered by RESPONDENT to Idoncare.On October 4th 2016, a B/L was issued by the

SHIPMASTER at the port of loading. Clause (1) of the B/L incorporates all “terms and conditions,

liberties and exceptions of the Charterparty,” but the Charterparty has not been specified.

2. On 10th of October 2016, the VESSEL arrived at Singapore for bunkering and left at the 11th of

October. RESPONDENT has failed to nominate a legitimate discharge port as per CHARTERPARTY,

1 SPSB in China [Dalian, Jinzhou, Yingkou, Yantai, Qingdao, Shanghai, Tianjin, Ningbo], despite

numerous requests from CLAIMANT. To remedy the situation, RESPONDENT redirects the VESSEL

to the Port of Busan which was rejected by CLAIMANT due to rumours of zombies on board a train

to Busan making the port unsafe.

3. On October 20th 2016, CLAIMANT issued a notice of lien towards RESPONDENT for freight over

CARGO on board the VESSEL, and simultaneously a Lien for Sub-Freight was issued to Idoncare

demanding that sub-freight be paid directly to CLAIMANT.

4. On October 22nd 2016, CLAIMANT issued a Notice of Termination towards RESPONDENT for their

repudiatory breach in the form of failure to pay freight as per CHARTERPARTY.

5. CLAIMANT commenced arbitral proceedings with RESPONDENT on 11th December 2016 for the

liberty to appraise and sell the CARGO on board the VESSEL pendente lite.


2

ARGUMENTS ON JURISDICTION

I.THIS TRIBUNAL HAS JURISDICTION TO GRANT LIBERTY AND/OR POWER TO

THE CLAIMANT TO SELL THE CARGO ON BOARD THE VESSEL PENDENTE-LITE

1. The principle of Kompetenz-Kompetenz provides the arbitral tribunal power to determine its own

jurisdiction.1 This arbitral tribunal has jurisdiction (A) to grant CLAIMANT liberty to sell the CARGO

(B) in the form of an interim award.

2. As a preliminary matter, Singapore law shall govern this arbitration as per SCMA Rules. Clause

26(c) of the CHARTERPARTY grants the liberty to the parties to decide on the law which governs

the contract, as well as the law and place of the arbitration.2 Point 29 of the Clean Fixture Recap

regarding Law and Dispute Resolution explicitly states that “Singapore law and arbitration as per

SCMA Rules.”3

A. This Tribunal has Jurisdiction to Order the Sale of CARGO

3. This tribunal has jurisdiction to order the sale of CARGO pursuant to the provisions of the IAA. As

mentioned previously, Singapore law governs this arbitration4 and thus Statutes, Acts, and other

products of law ratified by the Government of Singapore shall be binding.

4. Clause 12 of the IAA provides the arbitral tribunal with powers to make orders and give directions.5

More specifically, clause 12(1)(d) grants the arbitral tribunal power for the preservation, interim

custody or sale of any property which is or forms part of the subject-matter of the dispute.6

Therefore, this arbitral tribunal has jurisdiction to grant CLAIMANT’S request for the sale of CARGO.

1 UNCITRAL Model Law on International Commercial Arbitration, Article 16(1). 2 Record, p. 32 CHARTERPARTY, Clause 26(c) 3 Record, p. 23 Clean Fixture Recap, point 29 4 Record, p. 23 Clean Fixture Recap, point 29 5 IAA (Singapore), s 12 6 IAA (Singapore), s 12(1)(d)


3

B. CLAIMANT’S Request for an Interim Award Must be Granted

5. CLAIMANT submits that CLAIMANT’s request for the order of sale of the CARGO pendente lite shall

be construed as a request for an interim award. An interim award is any award issued by the

tribunal pending the issuance of the award by which the dispute is decided.7 This tribunal has such

jurisdiction to grant interim awards pursuant to the provisions of the (i) IAA, the SCMA Rules and

other model laws applicable in this arbitration, and that (ii) the sale of CARGO meets all the

requirements provided by the UNCITRAL Model Law.

i. This Tribunal has Jurisdiction to Grant Interim Awards under the IAA and other

Applicable Laws

6. Firstly, this tribunal has jurisdiction pursuant to the provisions of the IAA. Clause 12 of the IAA

provides that an arbitral tribunal governed by the law of Singapore has the power to make orders

or give directions to any part for an interim injunction or any other interim measures.8

7. Secondly, both parties have mutually agreed that Singapore Law shall govern this arbitration.9

Therefore, provisions within the UNCITRAL Model are applicable. Article 17(1) of the UNCITRAL

Model Law states that, “Unless otherwise agreed by the parties, the arbitral tribunal may, at the

request of a party, grant interim measures.”10 There is no statement within the arbitration

agreement to exclude the arbitral tribunal from granting interim measures.

8. Lastly, this arbitration is conducted pursuant to SCMA Rules11, as explicitly stated in the arbitration

clause and the arbitration agreement.12 Rule 36.2. of the SCMA Rules grants the arbitral tribunal

7 UNCITRAL Model Law on International Commercial Arbitration, Article 17(2) 8 IAA (Singapore), s 21(1)(i) 9 Record, p. 23 Clean Fixture Recap, point 29 10 UNCITRAL Model Law on International Commercial Arbitration, Article 17(1) 11 Born B., Gary. 2012. International Arbitration: Law and Practice. The Netherlands: Kluwer Law International.

Page 66 12 Record, p. 23, Clean Fixture Recap, point 29; p. 72, 78, 84


4

power to make any interim awards or separate awards on different issues at different times.13 From

both the arbitration law and the arbitration rules applied to this arbitration, this tribunal has

jurisdiction to grant interim awards.

ii. The Sale of CARGO Meets all the Requirements Provided by the UNCITRAL Model Law

9. Article 17(A) of the UNCITRAL Model Law laid out two requirements that must be satisfied by a

party intending to be granted an interim award.14 Namely, (a) the requesting party will likely to

suffer irreparable harm if the interim award is not granted, (b) the potential harm to the requesting

party substantially outweighs the harm suffered by the other party, and (c) that the requesting party

has a reasonable possibility to succeed on merits. CLAIMANT submits that these requirements are

met.

d. CLAIMANT will likely suffer irreparable harm if the interim award is not granted

10. CLAIMANT’S application for an interim award should be granted since CLAIMANT will potentially

suffer irreparable harms in the event that the interim award regarding the order for the sale of

CARGO is not granted. The limitation of irreparable harm was well defined in the case of Quiborax

S.A., Non Metallic Minerals S.A. y Allan Fosk Kaplún v Plurinational State of Bolivia. 15 The case

defined irreparable harm as harm not adequately reparable by an award of damages, inter alia, an injury not

monetarily compensable.16

11. In the present case, the VESSEL has been drifting at Singapore’s OPL for more than two weeks,

and the CARGO on board of the VESSEL has shown signs of overheating.17 These circumstances are

13 SCMA Rules, Rule 36.2. 14 UNCITRAL Model Law, Sec. 17(A) 15Quiborax S.A., Non Metallic Minerals S.A. y Allan Fosk Kaplún v Plurinational State of Bolivia, ICSID Case

ARB/06/2 16 Perenco Ecuador Ltd. v Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador), ICSID

Case No. ARB/08/6 17 Record, p. 37.


5

excerbated by the fact that Australian Steam Coal is classified as subbituminous coals,18 and such

coals are notorious of its high propensity to self-heat which can cause dangerous and expensive

accidents.19 Thus, if this situation is prolonged, CLAIMANT contends that it shall endanger the lives

of the SHIPMASTER and his crew, since there is high risk that the CARGO will spontaneously

combust.

12. The loss of life of the Shipmaster and his crew shall be categorized as irreparable harm, since it is

not compensable either monetarily or by an award of damages. It is acknowledged that the main

purpose of monetary relief is that it will put the non-breaching party back in the position it would

have been if the breach had not occurred.20 CLAIMANT asserts that the loss of life should

unquestionably not be considered reparable by an award of monetary damages, since the lives of

human beings cannot be restituted simply either by an award of damages or monetary

compensation.

13. Thus, it is urgent for CLAIMANT to seek an order for the sale of CARGO in order to prevent the

irreparable harm that CLAIMANT shall likely suffer. Therefore, CLAIMANT’ submission in regards

to an order for an interim award must be made when it has been concluded that it is necessary and

urgent to avoid imminent and irreparable harm.21

e. CLAIMANT’S potential harm substantially outweighs the harm suffered by RESPONDENT

14. Under the doctrine of proportionality, an enquiry must be conducted in order to make any

immediate adverse effects of disrupting the status quo, while maintaining the balance between the

parties’ interests.22 In other words, this requirement is essential to assess the balance of

18 Record, p. 99. 19 Dr L L Sloss, Assessing and Managing Spontaneous Combustion of Coal, London : IEA Clean Coal Centre, 2015,

p. 10. 20 Margaret L. Moses, The Princiles and Practice of International Commercial Arbitration, p. 186. 21 Occidental Petroleum Corporation, Occidental Exploration and Production Company v Republic of Ecuador,

ICSID Case No. ARB/06/11. 22 Ali Yesiliirmak, Provisional measures in International Commercial Arbitration, 2005, p. 205.


6

convenience.23 In the present case, CLAIMANT denies that any loss or damages suffered by

RESPONDENT shall be irreparable by an award of damages.

15. In regards to RESPONDENT’S argument regarding the damage to the company’s reputation, such

harm shall be considered reparable by an award of damages. It was held in the case of Court of

First Instance (Fifth Chamber) Esedra Sprl v. Comm. of the EC, a fall of reputation would not be

fatal to the future of company and thus is not considered as an irreparable harm.24 In light of the

above, CLAIMANT’S potential damages far outweigh RESPONDENT’S if the interim award is not

granted.

f. There is a reasonable possibility that CLAIMANT will succeed on the merits

16. The third requirement that must be fulfilled is that CLAIMANT must have a reasonable possibility

that it will succeed on the merits of the claim. This inquiry into the merits of the parties’ claims

and defences is solely on a prima facie basis.25

17. Firstly, CLAIMANT submits that it intends to sell the CARGO on the basis that they have suffered

substantial losses from damages for detention and RESPONDENT’S failure to pay freight. Based on

this evidence it is apparent that RESPONDENT is liable for the damages and other losses suffered by

CLAIMANT.

18. Secondly, based on the evidence provided by the SHIPMASTER and the Parties’ Joint Expert Report

there is a clear element of urgency for the sale of CARGO. CLAIMANT requests that this tribunal

refer to Submission II of this written memorandum for further elaboration.

23 Safe Kids in Daily Supervision Limited v. McNeill, High Court, Auckland, New Zealand, 14 April 2010, [2010]

NZHC 605). 24 Court of First Instance (Fifth Chamber) Esedra Sprl v. Comm. of the EC T-169/00R. 25 Gary B. Born, International Commercial Arbitration (Second Edition), Biggleswade: Kluwer Law International,

2014, p. 2481


7

II. CLAIMANT IS AT LIBERTY TO APPRAISE AND SELL THE CARGO

19. The VESSEL has been stranded drifting outside of Singapore’s OPL for over 20 days due to

RESPONDENT’S failure to nominate a discharge port.26 As a result of this delay the VESSEL as well

as the CARGO onboard has suffered immensely.27

20. In the case of Five Ocean Shipping Corporation v Cingler Ship Pte Ltd, the court granted an order

for the sale of cargo if and when there is a clear urgency that constitutes it necessary for the sale

of cargo.28 CLAIMANT submits that such urgency for the sale of CARGO is present since (A) the

wellbeing and health of the crew were dire, (B) the sale is necessary in order to preserve the value

of the CARGO and (C) prevent damage to the VESSEL from weather, and to (D) prevent the CARGO

from self-combustion.

A. Sale of the CARGO is Necessary in Order to Protect the Safety and Wellbeing of the Crew

21. On 30th November 2016, CLAIMANT received a report from the SHIPMASTER describing the

conditions of the crew on board the VESSEL after having been stranded for over 20 days.29 In the

report, the SHIPMASTER stated that crew morale is very low and that there is a lack of essential

supplies such as fresh food and water.30 To add to the severity of the situation, the VESSEL has also

run out of crucial medicine which is fatal since the first officer suffers from diabetes.31 The

SHIPMASTER is also facing en masse resignations and has asked that, “urgent measures be

undertaken immediately before it is too late”.32

26 Record, p. 37 27 Record, p. 37 28 Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources,intervener) [2015] SGHC

311 29 Record, p. 37 30 Record, p. 37 31 Record, p. 37 32 Record, p. 37


8

22. Under the Merchant Shipping (Maritime Labour Convention) Act 2014, a ship-owner has the

obligation to provide its crew members a safe and secure workplace with decent working and

living conditions.33 This includes an obligation to protect the health of seafarers and ensure their

prompt access to medical care onboard ship and ashore.34 These conditions are one of the major

factors that demonstrate the urgency and necessity for the sale of CARGO.35 CLAIMANT’S request

for an interim award is an attempt of adherence of this stipulation.

23. It is not ethical to hold the crew onboard the VESSEL under these dire conditions. Furthermore,

CLAIMANT does not want to risk incurring more charges from maintaining the crews’ wages,

supply of food and water, and also incurring charges from the ITF.36 By selling the CARGO as

quickly as possible CLAIMANT is protecting the safety and wellbeing of the crew and making sure

not to incur more fees and charges. Claimant requests this tribunal to share the same concern in

regards to the wellbeing of the crew.

B. Sale of CARGO is Necessary in Fear that the Sums Due would Exceed the Value of the

Cargo

24. CLAIMANT has the right to sell the CARGO since the CARGO on board the VESSEL will deteriorate

in terms of its value. In The Cetelem,37 it was held that the sale of cargo for the purpose of

preserving assets is necessary. It was further elaborated that the necessity of assets preservation

applied when there is a probability of the assets diminishing in value.

25. In the present case, CLAIMANT’S objective to sell the CARGO is to preserve the assets in a way to

prevent any further loss in term of its value. In accordance to the Joint Parties’ Expert Report it is

33 Merchant Shipping (Maritime Labour Convention) Act 2014, Article 13 34 Merchant Shipping (Maritime Labour Convention) Act 2014, Regulation 4.1 35 Emilia Shipping [1991] 1 SLR(R) 411; Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities &

Energy Resources, intervener) [2015] SGHC311 36 Mitsui v Garnac (The “Myrtos”) [1984] 2 Lloyd’s Rep 449 37 Cetelem SA v Roust Holdings Ltd [2005] 1 WLR 3555 ("Cetelemâ€)


9

estimated that the value of the CARGO will decrease from US$3.1m to US$2.5m.38 Thus,

CLAIMANT urges to sell the CARGO pendente lite, in order to recover the sums due to CLAIMANT

by RESPONDENT.

26. Presently, the sums due to CLAIMANT is in total at US$771,120.48, with damages mounting daily.

The estimated value of the CARGO is US$2.5m.39 The gap between the CARGO value and the sums

due to CLAIMANT, while still considerable, is reducing daily. CLAIMANT urges this tribunal not to

wait until the gap no longer exists.

27. In The New Flamenco,40 The High Court granted the claim for the sale of asset, regardless of the

US$15m gap from the value of the VESSEL itself with the sums that the charterer owed to the ship-

owner. In light of this, the order for the sale of CARGO shall be granted regardless of the gap

between CARGO value and the sums due.

C. The Sale is Necessary as the VESSEL is Facing Dangerous Weather

28. The SHIPMASTER has reported being at the mercy of strong winds and swell owing to the monsoon

season.41 The VESSEL and her CARGO on board are at high risk of being damaged or lost.42 The

months of October-November during the year are the inter-monsoon period for Singapore.43 This

period consists of constant thunderstorms, which are at times severe,44 as evident in the

SHIPMASTER’s report.45 Such weathers pose danger to the VESSEL which inevitably the VESSEL

would need to be saved by salvage, which would incur more costs.46 Selling the CARGO on board

immediately saves the VESSEL from having to stay drifting facing such dangerous weather.

38 Record, p. 101-102. 39 Record, p. 101-102. 40 Fulton Shipping Inc of Panama v Globalia Business Travel S.A.U. (The New Flamenco) [21.12.15] 41 Record, p. 37 42 Record, p. 37 43 Meteorological Service Singapore Online Report of the Climate of Singapore 44 Meteorological Service Singapore Online Report of the Climate of Singapore 45 Record, p. 37 46 The Whippingham [1934] 48 LIL Rep. 49; The Aldora [1975] QB 748.


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D. Keeping the CARGO on board is Dangerous

29. As stated within B/L, the VESSEL is carrying on board 84,000.052 MT of Australian Steam Coal

in Bulk.47 Coal is considered as an inherently dangerous material hazardous in bulk48 and can cause

serious accidents resulting not only in the loss of the ship, but also in loss of life.49 The SHIPMASTER

has reported noticed signs of overheating and the crew is extremely concerned that the CARGO

may self-ignite and explode.50

30. The coal specific to this case has volatile matter of 40.30%.51 Volatile matter is the substance in

coal that determines the ease of ignition of the coal, the higher the percentage, the more likely it is

to spontaneously combust.52 The needs of holding the temperature of the CARGO so that it does

not decrease in value are important. What’s also important is giving the coal ventilation so that the

temperature does not rise too high and combust by opening the CARGO holder at certain intervals.53

31. The current situation of the VESSEL prevents the crew from opening the CARGO holder because of

fear heavy rain will ruin the value of the CARGO. CLAIMANT is currently facing a “loss-loss”

situation since allowing ventilation would ruin the CARGO while holding the CARGO in an enclosed

space will risk combustion and result in loss of the VESSEL and human life. Thus, the best option

here is to sell the CARGO to prevent impending losses that may arise.54

47 Record, p. 41 48 Guner-Ozbek Deniz, Meltem. The Carriage of Dangerous Goods by Sea. 2008. Istanbul: Springer-Verlag Berlin

Heidelberg, p. 51 49 The Athanasia Comminos [1968] 2 Lloyd’s Rep. 57 50 Record, p. 37 51 Record, p. 99. 52 Ward, Colin R. 1984. Coal Geology and Coal Technology. Melbourne: Blackwell Scientific Publications, p. 45 53 Captain J Isbester FNI MRIN. Bulk Carrier Practice. 1993 p. 34 54 Emilia Shipping [1991] 1 SLR(R) 411; Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities &

Energy Resources, intervener) [2015] SGHC311


11

ARGUMENTS ON THE MERITS OF THE CLAIM

III. RESPONDENT IS LIABLE TO PAY FOR DAMAGES FOR DETENTION

32. On the 1st of September 2016, both parties agreed to enter into a CHARTERPARTY and hence must

fulfil their obligations to the said CHARTERPARTY.55 However, RESPONDENT failed to fulfill a

crucial obligation to nominate a discharge port as agreed in the Clean Fixture Recap.56 As a result

the VESSEL was stranded drifting at OPL Singapore for more than a month.57

33. RESPONDENT is liable to compensate for damages for detention because the delay that occurred

due to (A) the failure to nominate a discharge port at the specified time, (B) the nomination for the

Port of Busan was not eligible, (C) RESPONDENT’S reliance on the Force Majeure clause is invalid

and (D) that the delay was not at fault of the SHIPMASTER’s negligence, (E) RESPONDENT is liable

for damages caused by its conduct.

A. RESPONDENT Failed to Nominate a Discharge Port

34. From the Clean Fixture Recap, both parties have agreed that the discharge port would be 1 SPSB

in China (Dalian, Jinzhou, Yingkou, Yantai, Qingdao, Shanghai, Tianjin, Ningbo) chosen by

RESPONDENT.58 RESPONDENT was obligated to declare the discharge port when the VESSEL passes

Singapore for bunkering.59 When it was time for the RESPONDENT to fulfil their obligation they

failed to nominated a discharge port. This lasted for 10 days and despite numerous requests

RESPONDENT was still yet to nominate a discharge port, thus the VESSEL was left drifting without

orders.60

B. The Nomination to the Port of Busan is not Eligible

55 Record, p. 20 56 Record, p. 68 57 Record, p. 37 58 Record, p. 21 Clean Fixture Recap, point 16 59 Record, p. 21 Clean Fixture Recap, point 16 60 Record, p. 37


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35. 16 October 2016, RESPONDENT advises the VESSEL to divert to a port in Busan, after having failed

to originally nominate a port in China.61 CLAIMANT declares that the diversion to Busan is not

eligible since the port is not safe (i) and that it is a substantial deviation from the CHARTERPARTY

(ii).

i. CLAIMANT’ Refusal of Nomination to Busan was Justified since the Port was Unsafe

36. There have been rumours of zombies arriving from Seoul onboard a train to Busan upon the

nomination of Busan as a port. 62 CLAIMANT contends that the event made the port unsafe. The

most widely accepted definition for an unsafe port comes from the Eastern City which established

that, “a port will not be safe unless, in the relevant period of time, the particular ship can reach it,

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”.63

37. Although the port was considered safe at the time of the nomination,64 the ‘prospective safety’ did

not guarantee ‘absolute safety’ of the port.65 That an abnormal occurrence would not suddenly

appear causing harm to VESSEL and the CARGO.66 The abnormal occurrence in this case being the

zombies onboard a train to Busan.67 The prospective safety of the port at the time of the nomination

was not enough to guarantee that the VESSEL would not face any danger.68 Hence it would have

been reasonable for any party to deem the port as “prospectively unsafe,” with the knowledge that

zombies were arriving and thus CLAIMANT was justified in refusing the order to the Port of Busan.

61 Record, p. 57 62 Record, p. 58. 63 Leeds Shipping Co Ltd v Societé Francaise Bunge, The Eastern City [1958] 2 Lloyd’s Rep 127 64 Problem, p. 60. 65 K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp, The Saga Cob [1922] 2 Lloyd’s Rep 545, CA. 66 The Ocean Victory [2015] EWCA Civ 16. 67 Problem, p. 58. 68 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes, The Evia (No 2) [1983] 1 AC 736; Motor Oil

Hellas (Corinth) Refineries SA v Shipping Corp of India, The Kanchenjunga [1990] Lloyd’s Rep 391, HL;

Portsmouth Steamship Co v Liverpool Salvage Co [1929] 34 LIL Rep 459.


13

ii. The Nomination to the Port of Busan is not within the CHARTERPARTY.

38. It was agreed upon by both parties that the discharging port would be 1 SPSB in China (Dalian,

Jinzhou, Yingkou, Yantai, Qingdao, Shanghai, Tianjin, Ningbo) charterer’s option.69 If there is a

range of loading or discharging ports named, once the voyage charterer has selected the contractual

port or ports of loading or discharge, the voyage charter-party usually operates as if that port or

those ports had originally been written into the charter-party, and the charterer then has no further

right of nomination or renomination.70 Thus RESPONDENT has no right to renominate the discharge

port to Busan since it is not one of the available options within the CHARTERPARTY.

C. RESPONDENT Cannot Rely on Clause 24 of the CHARTERPARTY to Excuse Paying for

Damages

39. Clause 24 of the CHARTERPARTY excludes liability where a failure or delay in performance is

caused by a Force Majeure Event.71 RESPONDENT cannot rely on Clause 24 to excuse its failure to

pay for damages for detention. In particular, RESPONDENT cannot incorporate port congestion at

China into the scope of the Force Majeure Clause due to the ejusdem generis rule.

40. The ejusdem generis rule is a doctrine in interpreting clauses meaning thereby when general words

in a statutory text are flanked by restrictive words, the meaning of the general words are taken to

be restricted by implication with the meaning of restricted words.72 Clause 24 of the

CHARTERPARTY provides an enumeration of Force Majeure Events followed by a general

statement. 73

69 Record, p. 21 Clean Fixture Recap, point 16 70 The Aegean Sea [1998] 1 Lloyd’s Rep 39; Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes, The

Evia (No 2) [1983] 1 AC 736 71 Record, p. 32, CHARTERPARTY, Clause 24 72 Gregory v Fearn [1953] 2 All ER 559; Powell v Kempton Park [1897] 2 QB 242; Allen v Emmerson [1944] 1 All

ER 344; Sandiman v Breach, 7B. & C.96; R. v Cleworth, 4B. & S.927 73 Record, p. 32 CHARTERPARTY, Clause 24


14

41. The first part of the Force Majeure clause exempts liability for damages resulting from an “Act of

God”.74 An Act of God has been defined in English law as an unforeseeable natural phenomenon

involves no human agency, which is not realistically possible to guard against, which is due

directly and exclusively to natural causes, and which could not have been prevented by any amount

of foresight, plans, and care.75 Port congestion does not fit into any of these requirements and thus

it should be excluded from the Force Majeure clause.

42. Secondly, the delay was not caused by “war, terrorism, or civil commotion”.76 Said terms fall

under the umbrella for the definition of “war”.77 Neither Singapore nor China was in a state of war

when the delay occurred. There was no use of force or any acts of violence that would be

considered a breach of the peace.78 Therefore, the delay was not caused by war, terrorism or civil

commotion.

43. Thirdly, CLAIMANT argues that the congestion cannot be categorized as any acts and restraints of

princes and rulers. It is defined that “acts and restraints of princes and rulers” have reference to the

forcible interference of a state or of the government of a country taking possession of the goods.79

The above passage shows that the exception of “restraint of princes, rulers or people” covers any

forcible interference with the goods or the voyage by persons acting with governmental or quasi-

governmental authority backed by force. As will be seen below, it is enough that there is simply

the threat of force, whether explicit or implicit, or the potential for the use of force. It has long

74 Record, p. 32 CHARTERPARTY, Clause 24 75 Baldwin’s Ltd. v. Halifax Corporation [1916] 85 L.J.K.B. 1769; Transco plc v Stockport Metropolitan Borough

Council [2003] UKHL 61 76 Record, P. 32 CHARTERPARTY, Clause 24 77 McKendrick, Ewan. Force Majeure and Frustration of Contract. 2013. Abingdon: Informa Law from Routledge

Page 153 78 Driefontein Consolidated Gold Mines Ltd. v Janson [1900] 2 Q.B. 339 79 Wilson, F. John. Carriage of Goods by Sea: Seventh Edition. 2010. Essex: Pearson Education Limited, p. 268




15

been held that the exception does not apply to the acts of persons not purporting to act legally or

with governmental authority.80

44. In light of the reasons above, the congestion which occurred at the Chinese ports cannot be

categorized as an acts and restraints of princes and rulers since the congestion at the Chinese ports

was not an act caused by any governmental or quasi-governmental authority. Therefore, clause 24

of the CHARTERPARTY which provides that neither party shall be responsible for any loss or

damage or delay for “any other event whatsoever,” shall be read ejusdem generis and does not

cover RESPONDENT’S failure to nominate a discharge port.

D. The Delay was not at Fault of the SHIPMASTER’s Negligence

45. RESPONDENT intends to avoid liability for damages by accusing the SHIPMASTER of negligence as

the cause of the VESSEL’s delay. Negligence is the omission to do something which a reasonable

man, guided upon those considerations which normally regulate the conduct of human affairs,

would do, or doing something which a prudent and reasonable man would not do.81 The

SHIPMASTER did not act negligently when faced with the circumstances that caused the delay since

(i) RESPONDENT consented to the risk of delay and (ii) that RESPONDENT contributed to the

Shipmaster’s conduct.

i. RESPONDENT has consented to the risk of delay

46. Under the doctrine of volenti non fit injuria, a party shall not be held liable for damages due to

negligence if it is proved that the innocent party agreed to undertake the legal risk of harm at his

own expense.82 There are certain requirements that must be fulfilled in order for volenti non fit

80 Nesbitt v. Lushington (1792) 4 T.R. 783, involving a “tumultuous mob” which did not come within the word

“people”, which term meant the governing power of the country. 81 Blyth v Birmingham Waterworks [1856] 11 Ex R781; Scriven Brothers & Co v Hindley & Co [1913] 3 KB 564;

Blue Anchor Line Ltd. v Alfred C. Toepfer International (The Union Amsterdam) [1982] 2 Lloyd’s Rep. 432. 82 Wooldridge v Sumner [1963] 2 QB 43; Condon v Basi [1985] 2 All ER 453; Blake v Galloway [2004] 3 All ER

315


16

injuria to apply. The requirements being; the innocent party acted voluntarily; there was an explicit

agreement to the risks; and whether the innocent party had knowledge of the risks.

47. Firstly, RESPONDENT was given the option within the CHARTERPARTY to choose from seven

discharge ports in China.83 RESPONDENT had a genuine freedom of choice and that he had

voluntarily undertaken to run the risk of delay when they did not nominate a discharge port and

thus the SHIPMASTER should not be held responsible in causing the delay.84

48. Secondly, where the parties have reached an express agreement that the RESPONDENT will

voluntarily assume the risk of harm and this agreement is made before the negligent act, then

volenti non fit injuria will operate.85 RESPONDENT has agreed to the terms of the CHARTERPARTY

and thus was aware and had knowledge of the risks and consequences when certain obligations

provided within the CHARTERPARTY are not fulfilled. RESPONDENT actions prior to the delay

should be considered volenti non fit injuria and thus the SHIPMASTER should not be held

accountable for causing the delay.

ii. RESPONDENT contributed in the SHIPMASTER’s decision to stay within Singapore’s OPL

49. In the defense of the SHIPMASTER, RESPONDENT failed to take reasonable care of the VESSEL and

the CARGO’s safety and that this delay was caused by the RESPONDENT.86 RESPONDENT’S failure

to nominate a discharge port was the main cause of the delay,87 since the SHIPMASTER did not

receive further instructions and thus was forced to stay drifting in Singapore’s OPL.88 From this

83 Record, p. 21 Clean Fixture Recap, point 16 84 Bowater v Rowley Regis Corp [1944] KB 476; ICI Ltd v Shatwell [1965] AC 656; Barrett v Ministry of Defence

[1995] 3 All ER 86 85 Morris v Murray [1990] 3 All ER 801; Pitts v Hunt [1990] 3 All ER 344 86 Butterfield v Forrester [1809] 11 East 60; Davies v Mann [1842] 10 M&W 546; Jones v Livox Quarries Ltd

[1952] 2 QB 608; Badger v Ministry of Defence [2006] 3 All ER 173; Davies v Swan Motor Co (Swansea) Ltd

[1949] 2 KB 291; Froom v Butcher [1976] QB 286; 87 Refer to Memorandum paragraph 34 88 Record, p. 67


17

cause, RESPONDENT should be wholly to blame for damages for detention and not the

SHIPMASTER.89

E. RESPONDENT is Liable for Damages as a Result of its Conduct

50. The detention of the VESSEL caused by the conduct of RESPONDENT has resulted in USD10,000

per day worth of damages from the 12th of October 2016.90 Until the date of the Notice of

Arbitration the sums have reached USD451,666.67. CLAIMANT submits that RESPONDENT shall be

held liable to compensate for these sums resulting from its conduct.

IV. CLAIMANT’S EXERCISE OF LIEN IS LAWFUL

51. On the 20th October 2016, CLAIMANT issued a Notice of Lien towards RESPONDENT for the CARGO

on board the VESSEL. CLAIMANT’S lien is valid and lawful on the basis that (A) such conduct is in

accordance with lien clause provided by the CHARTERPARTY, (B) the CHARTERPARTY was

incorporated into the B/L and (C) that the location of lien is lawful.

A. CLAIMANT’S Lien was Properly Conducted Pursuant to the Lien Clause within the

CHARTERPARTY

52. It is expressly stipulated within lien clause of the CHARTERPARTY that “the owners shall have a

lien on the cargo for freight, deadfreight, demurrage and general average contribution due to

them under this Charterparty”.91 Pursuant to this Clause, CLAIMANT is entitled to exercise the lien

over CARGO for unpaid freight from RESPONDENT.

89 McKew v Holland & Hannen & Cubbitts [1969] 3 All ER 1621; Stapley v Gypsum Mines Ltd [1953] AC 663 90 Record, p. 52 91 Record, p. 31 CHARTERPARTY, Cl. 19


18

53. It is aknowledged that the very nature of a lien is that one party is entitled by common law or by

contract to retain possession of goods belonging to another until he is paid what he is owed.92 In

this case CLAIMANT has right over possession over the CARGO since freight has not yet been paid

by RESPONDENT. CLAIMANT submits that (i) RESPONDENT is liable to pay freight under the terms

of the CHARTERPARTY and (ii) the rightful termination of the CHARTERPARTY (iii) does not excuse

RESPONDENT from its liability to pay freight.

iii. RESPONDENT is Liable to Pay Freight Under the Terms of the CHARTERPARTY

54. Point 19 of the Clean Fixture Recap stipulates that total freight be paid within 5 banking days after

completion of loading and signing of B/L.93 This classifies the payment of freight as advance

freight. Advance freight does not require the voyage to be completed for the payment to be due by

the RESPONDENT as long as there are provisions within the CHARTERPARTY.

55. Freight is to be deemed earned once CLAIMANT has fulfilled their obligations set out by the

CHARTERPARTY.94 Since the CHARTERPARTY uses advance freight stipulation, these obligations

only include providing a seaworthy ship, loading the CARGO, and proceeding to Singapore for

bunkering.

56. Loading had been completed alongside the signing of the B/L by the SHIPMASTER.95 At this time,

the timeframe for the payment of the freight has started as the VESSEL has started to sail towards

its destination.96 The freight was due on the 10th of November 2016 when the VESSEL had left

92 The Chrysovalandou Dyo [1981] 1 Lloyd’s Rep. 159; The Mihalios Xilas [1978] 2 Lloyd’s Rep.186; Molthes

Rederi Akt v Ellerman’s Wilson Line Ltd [1927] 1 KB 710; Somes v British Empire Shipping Co (1858) El. Bl. & El.

353 (QB); Hammonds and Another, Executors of Blight, against Barclay and Others, Assignees of Fentham a

Bankrupt [1802] EngR 107, (1802) 2 East 227; 93 Record, p. 22 Clean Fixture Recap point 19 94 Thompson v Gillespy (1855) 5 E & B 209; Allison v Bristol Marine Insurance [1875] AC 209; Compania Naviera

General S.A. v Kerametal Ltd., (The Lorna I) [1983] 1 Lloyd’s Rep. 373; The Dominique [1987] 1 Lllyd’s Rep 239;

Vagres Compania Maritima SA v Nissho-Iwai American Corpn, The Karin Vatis [1988] 2 Lloyd’s Rep 330 95 Record, p. 41, 47. 96 Vagres Compania Maritima SA v Nissho-Iwai American Corpn, The Karin Vatis [1988] 2 Lloyd’s Rep 330


19

Singapore after bunkering.97 CLAIMANT has requested numerous times and sent an invoice in the

sum of USD 771,120.48 for the payment of freight from RESPONDENT yet still has not received

it.98 RESPONDENT’S failure to pay freight serves as a viable justification for CLAIMANT to exercise

lien over the CARGO.

ii. The CHARTERPARTY was Incorporated into the B/L

57. An exercise of a contractual lien can be enforceable against a party to the contract of carriage.99 If

the lien is to be exercised to a third-party shipper it is necessary that the lien clause was

incorporated by an appropriate term in the B/L issued to the third-party.100

58. A B/L can evidence a contract of carriage.101 The B/L may contain express contractual terms that

will usually be found on the reverse.102 Where a B/L purports to include the terms of a charterparty,

the general terms of the charterparty are incorporated into the contract of carriage.103 However, it

has to be established first which charterparty was incorporated into the B/L, and then decide

whether any specifically relevant clause of the charterparty is also included in the B/L.104

59. In the present case, the B/L refers on its face to “Freight payable as per Charterparty dated” but

no charterparty has been identified.105 These circumstances arise a question of which charterparty

had been incorporated. The determination of which charterparty had been incorporated was

97 Record, p. 51 98 Record. p. 49 99 Carriage of Goods by Sea 7th Edition halaman 305 100 The Chrysovalandou Dyo [1981] 1 Lloyd’s Rep 159 101 Sir Bernard Eder et al, Scrutton on Charterparties and Bills of Lading (Sweet & Maxwell, 22nd ed, 2011)p. 1;

Sir Guenter Treitel and F M B Reynolds, Carver on Bills of Lading (Sweet & Maxwell, 2001), p. 61. 102 Simon Baughen, The Shipping Law (Routledge & Cavendish, 4th ed, 2009), p. 84. 103 Sir Bernard Eder et al, Scrutton on Charterparties and Bills of Lading (Sweet & Maxwell, 22nd ed, 2011) p. 95;

Sir Guenter Treitel and F M B Reynolds, Carver on Bills of Lading (Sweet & Maxwell, 2001) p. 71. 104 Astro Valiente Compania Naviera SA v The Government of Pakistan Ministry of Food and Agriculture (The

Emmanuel Colocotronis (No. 2)) [1982] 1 WLR 1096; [1982] 1 Lloyd's Rep 286. 105, Record, p. 73 Statement of Claim


20

therefore indecisive. In this stance, CLAIMANT contends that it is the Head Voyage Charter between

CLAIMANT and RESPONDENT that had been incorporated into the B/L.

60. In The SLS Everest,106 it was held where a bill of lading is issued in such circumstances and is

silent as to the identity of the charterparty whose terms are to be incorporated, an unidentified

charterparty in an incorporation clause refers to the voyage and not the time charterparty. It has to

be emphasised, however, that the word ‘freight’ could, in fact, only have referred to a voyage and

not to a time Charterparty because ‘freight’ is an expression normally not used in time

charterparties. Moreover, in a strict sense freight means B/L freight and freights earned under a

voyage Charterparty.107 Applying this to the present case, it shall leave two voyage charterparties

to be an option as the incorporated charterparty into B/L. One is the voyage charter that concluded

between Imlam Consignorist and CLAIMANT, and another voyage charter was concluded between

RESPONDENT and Idoncare.

61. In the case of The San Nicholas,108 in a situation where the B/L is silent to what the incorporated

Charterparty was when faced with a chain of Voyage Charterparties, the Court of Appeal held that

the terms of the Head Charterparty were incorporated. In light of the reasons above, it is our

submission that the incorporated Charterparty in B/L is the CHARTERPARTY between CLAIMANT

and RESPONDENT.

62. Since the terms of the CHARTERPARTY, including the lien clause, has been incorporated into B/L

where Idoncare as a third-party shipper is a party, lien is exercisable to the CARGO owned by

Idoncare.

106 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. 107 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. 108 Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania Naviera SA (The San

Nicholas) [1976] 1 Lloyd’s Rep 8.


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B. CLAIMANT’S Location of Lien is Lawful

63. CLAIMANT exercised lien over the CARGO on board the VESSEL in its current state, drifting in

Singapore’s OPL.109 The location of the lien is one that is valid and lawful since (i) there is a risk

that exercising the lien at the discharge port would waiver CLAIMANT’S right to lien, and (ii) that

exercising the lien ashore would be commercially impractical and inadvisable.

i. There was a risk that exercising the lien at the discharge port would waiver CLAIMANT’S

right to lien

64. CLAIMANT’S location for the exercise of lien in Singapore’s OPL is lawful since CLAIMANT

would lose their exercise of lien if they were to exercise it at the port of discharge in China. The

essence of a lien is that it is possessory thus he must not give up possession of the cargo to a

consignee or waive his right of lien.110 When a shipowner retains possession, he may do so either

on board or on land, as long as he retains exclusive control against the person claiming

possession.111

65. There is a high risk that where CLAIMANT would exercise their lien ashore at the discharge port,

he would lose possession of the CARGO to the B/L holder, thus losing his entitlement to the lien

over CARGO.112

ii. Exercising the lien on board the VESSEL is commercially safest

66. Alternatively, CLAIMANT’S exercise of lien onboard the VESSEL is still lawful since exercising the

lien off the discharge port or at another port would be commercially inadvisable.113 It would have

been impossible for CLAIMANT to exercise the lien off the discharge port in China since the

109 Record, p. 65 110 Tamvaco v. Simpson (1866) L.R. 1 C.P. 363 111 Mors-Le Blanch v. Wilson (1873) L.R. 8 C.P. 227 112 John F. Wilson, 7th Edition Carriage of Goods by Sea, Essex: Pearson Education Limited, 2010. P. 305 113 Santiren Shipping Ltd. v Unimarine S.A. (The Chrysovalandou Dyo) [1981] 1 Lloyd’s Rep. 159; International

Bulk Carriers (Beirut) S.A.R.L. v Evlogia Shipping Co. S.A., and Marathon Shipping Co. Ltd. (The Mihalios Xias)

[1978] 2 Lloyd’s Rep. 186; London Arbitration 13/87 LMLN 205;


22

discharge has not yet been nominated at the time of issuing the Notice of Lien. The VESSEL had

already been delayed for 10 days at the time114 and waiting for RESPONDENT to finally nominate

an eligible discharge port in order to continue the voyage would cause even more delay and

charges. 115

67. Proceeding to another port would also be commercially impractical since doing so would incur

more charges in the form of shifting costs. Proceeding to another port would be impractical since

it would require the issuance of another Notice of Readiness, the nomination of a safe port and

hiring agents at that port.116 By exercising the lien onboard the VESSEL, CLAIMANT is avoiding

additional unnecessary costs and obligations.

V. CLAIMANT WAS ENTITLED TO TERMINATE THE CHARTERPARTY

68. On the 22nd of October 2016, CLAIMANT issued a Notice of Termination towards RESPONDENT for

their failure to pay freight. CLAIMANT was entitled to terminate the CHARTERPARTY since (A)

RESPONDENT has commited a fundamental breach of the CHARTERPARTY, and that (B) CLAIMANT

has delivered a notice of termination to the RESPONDENT. (C) The termination of the

CHARTERPARTY does not deprive CLAIMANT’S right to claim for freight and other damages.

A. RESPONDENT has Commited a Fundamental Breach

i. The contract has been breached in a serious manner going to the root of CLAIMANT’S

contractual expectations

69. It is clear that CLAIMANT’S intention to enter into the CHARTERPARTY with RESPONDENT was

concerning its commercial advantages, since the expectation of CLAIMANT to perform the

114 Record, p. 65 115 International Bulk Carriers (Beirut) S.A.R.L. v Evlogia Shipping Co. S.A., and Marathon Shipping Co. Ltd. (The

Mihalios Xias) [1978] 2 Lloyd’s Rep. 186; 116 London Arbitration 13/87 LMLN 205.


23

CHARTERPARTY is to be paid monetarily. In the case of The Astra, following several delays in

payment of the freight, the Owner was obliged to send the Charterer an anti-technicality notice

asking the charterer to fulfil those obligations assumed under the charterparty, and therefore to pay

the freight within 48 hours. The Court specified that failure to pay freight will entitle the owner to

terminate the contract.117

70. In the instant case, RESPONDENT has breached the contract in a manner that denies CLAIMANT’S

contractual expectations. RESPONDENT has failed to pay freight pursuant to Point 19 of the Clean

Fixture Recap, which stated that “100 % freight to be paid within five (5) banking days after

completion of loading and signing/releasing B/L’s marked ‘freight payable as per charter”.118

71. The facts stated that the B/L was issued on Tuesday 4th October 2016,119 and the VESSEL had left

the loading port at the same day,120 hence RESPONDENT was liable to pay the full freight at 10th

October 2016. However, it has appeared that RESPONDENT failed to pay for the freight on the

agreed time. Therefore, CLAIMANT is entitled to terminate the CHARTERPARTY since RESPONDENT

has failed to pay freight which is CLAIMANT’S commercial expectation of the CHARTERPARTY.

ii. RESPONDENT has shown a clear unwillingness to perform the CHARTERPARTY

72. RESPONDENT’S conduct to deny the performance of the CHARTERPARTY is widely construed as a

renunciation of the contract. RESPONDENT’S renunciation of CHARTERPARTY was evident through

the actions that lead to the conclusion that RESPONDENT no longer intends to be bound by its

provisions.121 RESPONDENT’S failure to make the payment of freight within the agreed time shall

be construed as RESPONDENT’S renunciation of the CHARTERPARTY.

117 Kuwait Rocks Co v AMN Bulkcarriers Inc (The Astra) [2013] EWHC 865 (Comm) 118 Record, p. 22 Clean Fixture Recap, point 19 119 B/L, Record, p. 41,43,45. 120 Record, p. 50. 121 Ampurius Nu Homes Holdings Ltd v. Telford Homes (Creekside) Ltd [2013] EWCA Civ 577; [2013] 4 All ER 377, at [70].


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73. In good faith, CLAIMANT has issued a “reminder-notice” towards RESPONDENT regarding the

payment of freight 4 days after the payment was due.122 Regrettably, RESPONDENT was still unable

to make the payment of freight within 48 hours after the notice was sent. RESPONDENT’S failure to

pay freight despite having received an extension of time serves as evidence that RESPONDENT was

no longer willing to carry out the CHARTERPARTY. CLAIMANT therefore is entitled to terminate the

CHARTERPARTY on this basis.

B. The Lack of a Termination Clause does not Deny CLAIMANT’S Right to Terminate the

CHARTERPARTY

74. Despite the lack of a termination provision within CHARTERPARTY, CLAIMANT’S conduct to

terminate the CHARTERPARTY stands lawful. In Staffordshire Area Health Authority v. South

Staffordshire Waterworks Co,123 it was held that there is an implied term that either party can

terminate the contract by giving the other reasonable notice.

75. In the present case, CLAIMANT sent the “Notice of Termination” to RESPONDENT through the

broker.124 It was responded afterwards by the broker stipulated that the “Notice of Termination”

had been sent to RESPONDENT.125 Furthermore, the “Notice of Termination” was also sent in an

“electronic-writing” form pursuant to Clause 28.126 In light of the reasons above, CLAIMANT as an

injured party shall have the right to terminate the voyage charter since the “Notice of Termination”

was delivered to RESPONDENT.

C. CLAIMANT is still Entitled to Claim for Freight and Other Damages Even if the

CHARTERPARTY was Terminated

122 Record, p. 51. 123 Staffordshire Area Health Authority v. South Staffordshire Waterworks Co [1978] 3 All ER 769 124 Record, p. 68. 125 Record, p. 68. 126, Record, p.33 CHARTERPARTY, Clause 28


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76. Though the termination of contract relieves both parties from performing their obligations within

the contract any further, it does not exempt the innocent party from claiming for damages or other

sums due to him.127 In the landmark contract law case of Johnson v Agnew, the repudiation of the

contract still left both parties’ accrued rights intact.128 Therefore, in the event that the

CHARTERPARTY was terminated,129 CLAIMANT is still entitled to claim for freight and other

damages towards RESPONDENT.

REQUEST FOR RELIEF

For the reasons set out above, CLAIMANT requests that the tribunal:

a) Declare that it has jurisdiction and/or power to grant liberty to CLAIMANT sell the CARGO on

board the VESSEL pendent lite;

b) grant the CLAIMANT liberty to sell the CARGO on board the VESSEL;

c) award CLAIMANT damages for detention in the sum of USD451,666.67;

d) declare that Claimant has a valid and lawful lien over the CARGO;

e) declare that the termination of the CHARTERPARTY was lawful;

f) and award further or other relief as the Tribunal considers fit

127 Johnson v Agnew [1980] AC 367; Hillel v Christoforides [1991] 63 P&CR 301 (ChD); Jaggard v Sawyer [1994]

EWCA Civ 1; Hurst v Byrk [2000] UKHL 19; Capital and Suburban Properties Ltd v Swycher [1976] 1 Ch 319 128 Johnson v Agnew [1980] AC 367 129 Record, p. 68

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