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NINETEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION

MOOT, 2018

________________________________________________________________________

MEMORANDUM FOR RESPONDENT

________________________________________________________________________

THE NATIONAL UNIVERSITY OF ADVANCED LEGAL STUDIES, KOCHI

TEAM 28

________________________________________________________________________

________________________________________________________________________

COUNSEL

SNEHA VIJAYAN

JOSHUA DAVIS DALUS

ATUL NARAYAN

SALMA JENNATH

THAREEQ ANVER

RHEA SYDNEY

ON BEHALF OF:

DYNAMIC SHIPPING LLC

AND

THE SHIP ‘MADAM DRAGONFLY’

RESPONDENT

AGAINST:

CERULEAN BEANS AND AROMAS LTD.

MEMORANDUM FOR THE RESPONDENT

1

TABLE OF CONTENTS

LIST OF ABBREVIATION ........................................................................................................... 3

INDEX OF AUTHORITIES........................................................................................................... 5

STATEMENT OF FACTS ............................................................................................................. 9

JURSIDICTIONAL ISSUES .................................................................................................... 10

1. The Tribunal lacks the jurisdiction to entertain the instant claim ..................................... 10

2. Applicable Laws to the Counter Claims ........................................................................... 11

THE RESPONDENT IS NOT LIABLE FOR BREACH OF THE CHARTERPARTY ......... 12

1. The Owners are not liable for delay in delivery of the cargo ........................................... 12

2. The Respondent is not liable for the damage to the Cargo ............................................... 16

DYNAMIC SHIPPING LLC. IS NOT LIABLE TO PAY FOR DAMAGED CARGO,

REPLACEMENT COFFEE OR SETTLEMENT PAYMENT ................................................ 19

1. Dynamic Shipping LLC is not liable to pay for the damaged cargo ................................ 20

2. Dynamic Shipping LLC is not liable to pay for the Replacement Coffee ........................ 21

3. Dynamic Shipping LLC is not liable to pay the Settlement Payment .............................. 21

CERULEAN DOES NOT HAVE A MARITIME EQUITABLE LIEN OVER MADAM

DRAGONFLY .......................................................................................................................... 22

1. Maritime Lien Is Non-Transferrable ................................................................................. 22

COUNTER CLAIM .................................................................................................................. 23

1. The Claimant is liable to pay damages for hull repairs .................................................... 23


2

2. The Claimant is liable to pay Demurrage ......................................................................... 23

3. The Claimant is liable to pay freight................................................................................. 25

4. The claimant is liable to pay agency fee at spectre ........................................................... 26

5. The Claimant is liable to pay agency fee at Dillamond .................................................... 27

6. The Claimant is liable to pay for the use of electronic access system .............................. 27

REQUEST FOR RELIEF ............................................................................................................. 29


3

LIST OF ABBREVIATION

AC Appeal Cases

All ER All England Law Reports

Art Article

BBL Barrel

Bing Bingham

C Chapter

Co Ltd Company Limited

Com Case Company Cases (England)

C/P Charter Party

Ed Edition

Et al Et alia

EWCA (Civ) Court of Appeal (Civil Division)

Ex Exchequer

i.e. That is

ICC International Chamber of Commerce

Int’l International

ISM International Safety Management


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ISPS International Ship and Port Safety Security

KB Law Reports King’s Bench

LMAA London Maritime Arbitrators Association

M/T Motor Tanker

M/V Motor Vessel

PNLR Professional Negligence and Liability Reports

QB Law Reports Queen’s Bench

r. Rule

r/w Read with

Lloyd’s Rep Lloyd’s Law Report

SC United Kingdom Supreme Court

SOLAS Safety of Life at Sea

STS Ship to Ship

UNTS United Nations Treaty Series

USD United States Dollar

v. Versus

Vsl Vessel

WLR Weekly Law Reports


5

INDEX OF AUTHORITIES

Cases

Age Old Builders Pty Ltd v. Swintons Pty Ltd, [2003] VSC 307. ................................................. 10

Aries Tanker Corporation v Total Transport Ltd (The Aries) [1977] 1 Lloyd’s Rep 334............ 24

Arnada Tankers, Ltd. v. Delphi Petroleum, Inc.(‘The Shoun Nectar’) SMA 3133 (1994) .......... 13

AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 648,106 S.Ct. 1415, 89

L.Ed.2d 648 (1986) ............................................................................................................... 9, 20

Badgin Nominees Pty Ltd v Oneida Ltd & Anor, [1998] VSC 188. ............................................. 10

Booth Steamship Company Ltd v. Cargo Fleet Iron Company [1916] 2 KB 570. ....................... 16

Briddon v. G. N. Ry. (1858) 28L.J.Ex 51 ...................................................................................... 14

Comalco Aluminium Ltd. v Mogal Freight Services Pty Ltd. (1993) 113 A.L.R. 677. ............... 11

Connect Shipping Inc And Another v. Sveriges Angfartygs Assurans Forening (The Swedish Club)

And Others (The Renos”), [2018] 1 Lloyd's Rep. 285. ............................................................. 17

Dornoch Ltd &Ors v. Westminster International BV &Ors [2009] EWHC 1782 (Admlty). ....... 20

E. L. Oldendorff & Co. G.M.B.H. v Tradax Export S.A. (The Johanna Oldendorff)[1974] A.C. 479

................................................................................................................................................... 23

El Greco v Mediterranean Shipping [2004] 2 Lloyd’s Rep 537 .................................................. 19

Eriksen v. Barkworth (1858) 3 H. & N. 601, 606 ......................................................................... 16

Farrell Lines, Inc. v. Highlands Ins. Co, 532 F. Supp. 77, 79 (S.D.N.Y.) aff’d, 696 F.2d 28 (2d

Cir. 1982) .................................................................................................................................. 15

Fletcher Construction Case, Triarno Pty Limited v Triden Contractors Limited NSWSC, 22 July

1992 (unreported)...................................................................................................................... 10

Forward v. Pittard (1785) 1 T.R. 2 .............................................................................................. 12


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Great Eastern Shipping Co. Ltd v. Far East Chartering Ltd (The Jag Ravi) [2012] 1 Lloyd’s Rep.

638............................................................................................................................................. 17

Gunnstein A/S & Co K/S v Jensen, Krebs and Nielsen (The Alpha Nord) [1977] 2 Lloyds Rep 434,

CA ............................................................................................................................................. 24

Hadley v Baxendale ...................................................................................................................... 19

Henriksens Rederi A/S THZ Rolimpex (The Brede) [1973] 2 Lloyd’s Rep. 333 .......................... 24

Notara v. Henderson (1870) L.R. 5 Q.B. 346; L. R. 7 Q. B ......................................................... 14

Peterson v. Freebody& Co. [1895] 2 QB 294 ............................................................................... 16

Phelps v. Hill [1891] 1 Q. B. 605 ................................................................................................. 14

Pipeline Services WA Pty Ltd. v. ATCO Gas Australia Pty Ltd, [2014] WASC 10. .................... 10

Procter, Garrett, Marston v. Oakwin SS. Co. [1926] 1 K.B.244 .................................................. 16

Savcor Pty Limited v New South Wales (2001) 52 NSWLR 587. .................................................. 9

See Keane v. Australian Steamships, (1929) 41 C.L.R. 484. ........................................................ 18

Skandia Ins. Co., Ltd. v. Star Shipping As, 173 F. Supp. 2d 1228 (2001); citing Warrior & Gulf

Navigation Co. v. United States, 864 F.2d 1550, 1553 (11th Cir. 1989). ................................. 12

Smailes v. Hans Dessen (1906) 12 Com Cas 117 ......................................................................... 16

Tapco Nigeria Ltd. v. M/V West Wind, 702 F.2d 1252 (5th Cir. 1983). ....................................... 18

Taylor v. G.N. Ry. (1866) L. R. 1 C.P.385 .................................................................................... 14

The "Polyfreedom" (April 7, 1975) noted (1975) 4/LMCLQ/443 ............................................... 23

The Adolf Leonhardt [1986] 2 Lloyd’s Rep. 395 .......................................................................... 22

The Beryl, SMA 2779 (1991) (Arnold, Greenbaum, Proeller) and The Genmar Boss, SMA 3781

(2003) (Arnold, Berg, Martin). ................................................................................................. 23

The Janet Wilson(1857) Swab. 261 .............................................................................................. 20


7

The Malcom Baxter (1927) 277 U.S. 323..................................................................................... 19

The Petone [1917] P. 198.............................................................................................................. 21

The Rona (1884) 51 L.T. 28.......................................................................................................... 14

Turner, Nott v. Bristol Corporation (1928) 31 Ll. L. Rep. 359 .................................................... 16

Turner, Nott v. Bristol Corporation (1928) 31 Ll. L. Rep. 359. 244 ............................................ 16

Worms v. Storey (1855) 11 Ex.427 ............................................................................................... 14

Other Authorities

Ryan F. Mandelbaum, Huge Solar Flare Disrupts GPS Satellites, (Apr. 18, 2017, 12:00 AM),

https://gizmodo.com/huge-solar-flare-disrupts-gps-satellites-1801838410 ............................. 12

Books

2 RAOUL COLINVAUX, CARVER’S CARRIAGE BY SEA 613,( 12th edition, 1971) ...... 14, 15

British Shipping Laws, Volume 14; Maritime Liens by D.R. Thomas, LL.B., M.A., London,

Stevens & Sons, 1980 ............................................................................................................... 20

EWAN MCKENDRICK, FORCE MAJEURE AND FRUSTRATION OF CONTRACT 18 (2nd

edition, 2013). ........................................................................................................................... 11

JULIAN COOKE JOHN D. KIMBALL, TIMOTHY YOUNG DAVID MARTOWKSI, MICHAEL ASHCROFT

LEROY LAMBERT, ANDREW TAYLOR MICHAEL STURLEY, VOYAGE CHARTERERS 218 (4th ed.

2014). ............................................................................................................................ 12, 16, 24

Kish v. Taylor [1912] A.C. 604............................................................................................... 15, 19


8

International Conventions

International Convention on Safety of Life at Sea (SOLAS), Chapter V Regulations 2,9,27 (1974).

................................................................................................................................................... 24


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STATEMENT OF FACTS

1. The Respondent is the owner of the vessel Madam Dragonfly, a commercial cargo ship

flagged in Cerulean. The Claimant chartered the vessel from the Respondent vide a Voyage

Charterparty dated July 22, 2017 executed after an advance payment of USD100,000 was

made to the Respondent’s special bank account.

2. According to the Charterparty, the vessel was to sail on July 24, 2017 from the Port of

Cerulean to the Port of Dillamond. Discharge of the cargo of 1000 bags of coffee (4

containers) was to be made at the Port of Dillamond by 7pm on July 28, 2017.

3. However, owing to two unforeseeable incidents, namely solar flares and an unprecedented

storm, the vessel could reach the port of Dillamond only by July 29, 2017 morning at

8:58am and make the cargo available for the Respondent by 8:42pm on the same day.

4. As the Agents of the Claimant did not take delivery of the cargo at 8:42pm, after waiting

till 12:00 in the midnight, the Respondent discharged the cargo at the Port of Dillamond

availing the electronic access by barcode facility.

5. A subsequent communication made by the Claimant to the Respondent alleged that coffee

worth USD15,750,000 which formed 3/4th of the cargo was water-damaged and unusable

at the time of delivery. The Claimant also intimated that it assisted its client in Dillamond

to source alternate coffee and, in addition, made a settlement payment for breach of its

contract.

6. As per the terms of the Charterparty, the Freight was due to be paid by the Claimant with

the other charges on August 1, 2017. However, even after repeated issuance of the invoice,

the Claimant failed to make any payment in this regard to the Respondent.


10

7. Afterwards, the Claimants initiated the proceedings of Arbitration issuing a notice of

arbitration on August 11, 2017.

JURSIDICTIONAL ISSUES

8. The Arbitration clause in the Voyage Charterparty, dated July 22, 2017, between the

Claimant and the Respondent (hereinafter referred to as “the Charterparty”) requires the

proceedings in pursuance of the clause to be conducted in accordance with the Arbitration

Rules of the London Maritime Arbitrators Association, 2017 (hereinafter referred to as “the

LMAA Terms”).1 By virtue of the provisions of the LMAA Terms, the law applicable to

the arbitration is English and the juridical seat of Arbitration is in England.2

9. The English law on Arbitration, namely Arbitration Act, 1996, incorporates the principle

of kompetenz-kompetenz, which confers, on the arbitral tribunal, the power to determine its

own jurisdiction.3 The provision expressly empowers the tribunal to ascertain the matters

which have been submitted to arbitration as per the arbitration agreement.

1. THE TRIBUNAL LACKS THE JURISDICTION TO ENTERTAIN THE INSTANT

CLAIM

10. Arbitration is a matter of contract and a party cannot be required to submit to arbitration

any dispute which he has not agreed so to submit.4 In the instant case, Clause 27(d) requires

every technical matters (including the related legal aspects5) in relation to the Charterparty

1 Clause 27(a), Charterparty; Pg. 12, Moot Scenario.

2 Rule 6 of the Arbitration Rules of the London maritime Arbitrators Association, 2017.

3 S.30(1) of the Arbitration Act, 1996.

4 AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 648,106 S.Ct. 1415, 89 L.Ed.2d 648 (1986).

5 Savcor Pty Limited v New South Wales (2001) 52 NSWLR 587.


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to be resolved by conclusive and final expert determination, expressly excluding those from

the ambit of arbitration.

11. When the parties expressly provide that the resolution of dispute should be by an expert,

and not an arbitrator, the parties clearly intend that the procedure should not be by way of

arbitration6 or in a court of law.7 The expert determination clause is not void for uncertainty

merely because it makes no mention of procedural matters.8

12. Further, as there is an express prohibition stipulated as “may not commence” any legal

proceedings regarding dispute before reference of the technical matters for expert

determination, that signifies intention of parties to make expert determination a mandatory

pre-requisite before commencement of arbitration.9

2. APPLICABLE LAWS TO THE COUNTER CLAIMS

13. Without prejudice to the foregoing submissions, the Claimant submits to the jurisdiction

of the tribunal to decide on the counter claims raised by in its submissions as those are not

technical matters in the expert knowledge of a Master Mariner.

14. As the LMAA terms have specified, the lex arbitri of the arbitration proceedings is the

English Arbitration Act, 1996, unless the same has been supplemented, modified, or

supplanted by the provisions of LMAA Terms.10

6 Badgin Nominees Pty Ltd v Oneida Ltd & Anor, [1998] VSC 188.

7 Age Old Builders Pty Ltd v. Swintons Pty Ltd, [2003] VSC 307.

8 Fletcher Construction Case, Triarno Pty Limited v Triden Contractors Limited NSWSC, 22 July 1992 (unreported).

9 See Pipeline Services WA Pty Ltd. v. ATCO Gas Australia Pty Ltd, [2014] WASC 10.

10 Rule 7(a) of the Arbitration Rules of the London maritime Arbitrators Association, 2017.


12

15. Further, Clause 28 of the Charterparty requires the substantive law to be the laws of New

South Wales, Australia, although the liability on collision of the vessel is to be determined

as per the laws of United States of America.

16. It has also been stipulated in the Charterparty under Clause 28 that the owners shall have

the benefit of Article 4(5) of Hague-Visby Rules. Hence, the limitation of liability as

envisaged under the aforesaid provision may be considered to have been incorporated in

the Charterparty11 and applicable in the instant case.

THE RESPONDENT IS NOT LIABLE FOR BREACH OF THE CHARTERPARTY

1. THE OWNERS ARE NOT LIABLE FOR DELAY IN DELIVERY OF THE CARGO

17. The Respondent is not liable for delay in delivery of the cargo occasioned owing to force

majeure, for it is permitted under the Charterparty.12 The force majeure clause ensures that

non-performance is no breach because no performance was due in the circumstances which

have occurred.13

1.A. The original adventure to Dillamond was delayed due to two events of Majeure

18. The term force majeure has been defined to include “unforeseen weather events, acts of

God, accidents, fire, explosions, flood, landslips, ice, frost or snow.”14 The solar flares

which knocked down the systems of the vessel, and the storm which hit Dillamond qualifies

as force majeure.

11 See Comalco Aluminium Ltd. v Mogal Freight Services Pty Ltd. (1993) 113 A.L.R. 677.

12 Clause 17, Charterpary; pg. 9, Moot Scenario.

13EWAN MCKENDRICK, FORCE MAJEURE AND FRUSTRATION OF CONTRACT 18 (2nd edition, 2013).

14 Clause 17, Charterparty; pg. 9 , Moot Scenario.


13

THE SOLAR FLAMES WHICH KNOCKED OUT THE SYSTEMS OF THE

VESSEL WAS A FORCE MAJEURE EVENT

19. The continuing solar flares which knocked down the systems were reported as an

unprecedented international emergency.15 It has been observed that radio blackouts caused

by solar flares are the most common space weather event to immediately affect the Earth.16

20. The solar flares which was emitted by the sun, can be classified as an “act of God,” which

the Owners did not have control over. Act of God has been one of the few common law

exceptions to the ancient strict liability of common carriers.17Act of God refers to an effect

immediately produced without the interposition of any human cause.18An act of God

amounts to absolution of liability under the Hague-Visby Rules as well, that have been

incorporated into the Carriage of Goods by Sea Act, 1991.19

THE STORM AMOUNTS TO FORCE MAJEURE

21. In general, the "Act of God" defense includes those occurrences that are "so extraordinary

that the history of climatic variations and other conditions in the particular locality affords

no reasonable warning of them."20

15 Solar Flares Knock out Global Communications, THE CERULEAN MAIL 25 July 2017; pg. 35, Moot scenario.

16 Ryan F. Mandelbaum, Huge Solar Flare Disrupts GPS Satellites, (Apr. 18, 2017, 12:00 AM),

https://gizmodo.com/huge-solar-flare-disrupts-gps-satellites-1801838410.

17 JULIAN COOKE JOHN D. KIMBALL, TIMOTHY YOUNG DAVID MARTOWKSI, MICHAEL ASHCROFT LEROY LAMBERT &

ANDREW TAYLOR MICHAEL STURLEY, VOYAGE CHARTERS 1089 (4th edition, 2014).

18Forward v. Pittard (1785) 1 T.R. 2.

19Carriage of Goods by Sea Act, 1991, Act No. 160 of 1991, Schedule 1A, Article 4, Rule 2.

20Skandia Ins. Co., Ltd. v. Star Shipping As, 173 F. Supp. 2d 1228 (2001); citing Warrior & Gulf Navigation Co. v.

United States, 864 F.2d 1550, 1553 (11th Cir. 1989).


14

22. The freak storm which was described as “once in a lifetime”21 was not picked up until

approximately 45 minutes before it hit, could not have been reasonably anticipated.

Therefore, the storm that hit Dillamond and delayed the delivery of the cargo amounts to a

force majeure event.

1.B.The Respondent followed the procedure required under clause 17, in case of a Force

Majeure event.

RESPONDENT EXERCISED DUE DILIGENCE

23. The respondent had exercised due diligence to ensure that the ship is seaworthy and

properly manned when she set sail on the voyage, in keeping with clause 17 of the

Charterparty. The mere fact of machinery problems does not, in and of itself, establish a

lack of due diligence by the Owner to have the ship in a seaworthy condition.22 It is

pertinent to note that the ship carried the necessary navigational charts required by law.23

PROCEDURE TO BE FOLLOWED IN CASE OF A FORCE MAJEURE EVENT

WAS ADHERED TO

24. The owners, on the event happening was required to give the charterers prompt written

notice of the force majeure event, and take all reasonable steps to minimise the delay

21 Once in a Lifetime” Storm Closes Airport, Port, Rivers, THE DILLAMOND TIMES, July 29, 2017; pg. 21, Moot

scenario.

22 Arnada Tankers, Ltd. v. Delphi Petroleum, Inc.(‘The Shoun Nectar’) SMA 3133 (1994).

23 Navigation Act 2012, No. 128, 2012, Section 225.


15

caused. The owners had promptly informed the charterers of the event of solar flares24 and

of the storm25 keeping the charterers updated on the position of the vessel.

25. Further, the Respondent resumed the performance of the obligation under the contract as

soon as practicable. The vessel continued in its course to Dillamond shortly after the effects

of the solar flares died down. Having adhered to all the conditions requisite to make the

force majeure clause applicable, the Owners are not liable for the delay in delivery of the

cargo.

1.C. The deviation to Spectre was justifiable

26. A deviation may be justifiable and even obligatory.26 Where the safety of the adventure

under the master’s control requires that he should delay, or go out of his course, he is not

only justified in doing so, but that becomes his duty in the right performance of the contract

made with the owners of the cargo.27 The shipowner, through his master, is bound to act

with prudence, skill and care in avoiding dangers, and in mitigating the consequences of

any disaster which may have been met with.28

27. The shipowner undertakes to be diligent in carrying the goods on the agreed voyage

without any unnecessary deviation. However, this undertaking is to be understood with

reference to the circumstances that arise during the performance of the contract. He is not

24 Letter dt 26 July 2017; pg. 17, Moot scenario.

25 Letter dt 28 July 2017; pg. 19, Moot scenario.

26 2 RAOUL COLINVAUX, CARVER’S CARRIAGE BY SEA 613,( 12th edition, 1971).

27 Id.

28 Worms v. Storey (1855) 11 Ex.427; Notara v. Henderson (1870) L.R. 5 Q.B. 346; L. R. 7 Q. B. 225; The Rona

(1884) 51 L.T. 28; Phelps v. Hill [1891] 1 Q. B. 605, 2 RAOUL COLINVAUX, CARVER’S CARRIAGE BY SEA

613,( 12th edition, 1971).


16

answerable for delays or deviations which are occasioned or become necessary without

default on his part.29

28. The Charterparty permits the vessel to make a deviation, so as to save life or property,

including the vessel.30 The vessel had to deviate because the vessel’s systems had been

knocked off.31 A deviation to a port of refuge that is reasonably necessary to save the ship

from sea perils is justifiable even though the ship was unseaworthy, and though, but for

that unseaworthiness, she would not have been in any danger.32

29. The solar flares, which is one of the force majeure events, made the ship unseaworthy to

sail and forced it to make a deviation to the port of Specter.

2. THE RESPONDENT IS NOT LIABLE FOR THE DAMAGE TO THE CARGO

30. The Respondent has complied with Clause 11 of the Charterparty33, which provides for the

“Ship to discharge at such safe docks, wharves, or places, always afloat, within the limits

of the port or ports of discharge, as Charterers may name on or before the ship’s arrival.”

It is in pursuance of this clause that the Respondent had discharged the cargo at the Port of

Dillamond.

29 Briddon v. G. N. Ry. (1858) 28L.J.Ex 51; Taylor v. G.N. Ry. (1866) L. R. 1 C.P.385; 2 RAOUL COLINVAUX,

CARVER’S CARRIAGE BY SEA 608,( 12th edition, 1971).

30 Clause 17, Charterparty; pg. 9, Moot Scenario.

31 Letter dated 28 July 2017 at 4:58 pm; pg. 19, Moot Scenario.

32 Kish v. Taylor [1912] A.C. 604; 2 RAOUL COLINVAUX, CARVER’S CARRIAGE BY SEA 613, (12th edition,

1971).

33 Pg. 7, Moot scenario.


17

2.A. The delivery was completed on 29 July, 2017.

31. In the absence of any custom or usage to the contrary, proper delivery by the carrier

contemplates delivery of the cargo to the consignee or designee set forth in the bill of

lading, at a fit and proper wharf, with the duty upon the carrier to give reasonable notice to

the consignee that the cargo has arrived, with a reasonable opportunity to pick it up, and a

duty on the consignee to receive the goods at the place of out-turn .34

2.B. The claimants had a duty to discharge towards delivery.

32. In common law, the carrier is said to have fulfilled his contractual duty when the voyage

has reached a point where the consignee or the person taking delivery is bound to act.35

Delivery requires the ship-owner divesting or relinquishing the power to compel any

dealing in or with the cargo which could prevent the true consignee from obtaining

possession of it. 36 Further, the carrier is deemed to have discharged the goods when they

are put in a position enabling the consignee to take delivery thereof.37

33. In the absence of agreement or a usage of the port to the contrary the ship-owner must wait

for a reasonable time before landing the goods to allow the consignee to claim them, since

a consignee who is ready to receive his goods within a reasonable time is entitled to

delivery directly from the ship.38

34Farrell Lines, Inc. v. Highlands Ins. Co, 532 F. Supp. 77, 79 (S.D.N.Y.) aff’d, 696 F.2d 28 (2d Cir. 1982).

35Booth Steamship Company Ltd v. Cargo Fleet Iron Company [1916] 2 KB 570.

36 JULIAN COOKE JOHN D. KIMBALL, TIMOTHY YOUNG DAVID MARTOWKSI, MICHAEL ASHCROFT

LEROY LAMBERT, ANDREW TAYLOR MICHAEL STURLEY, VOYAGE CHARTERERS 218 (4TH EDITION,

2014).

37Peterson v. Freebody& Co. [1895] 2 QB 294.

38Eriksen v. Barkworth (1858) 3 H. & N. 601, 606; Procter, Garrett, Marston v. Oakwin SS. Co. [1926] 1 K.B.244;

Turner, Nott v. Bristol Corporation (1928) 31 Ll. L. Rep. 359. 244; Turner, Nott v. Bristol Corporation (1928) 31 Ll.

L. Rep. 359.


18

34. If the consignee or holder of the bill of lading does not appear to take delivery of the cargo

within a reasonable time, then at common law the master may land and warehouse the

cargo at the expense of the cargo owner.39

35. It was in exercise of this right that the respondent, after discharging his Charterparty

obligation, albeit the justified delay occasioned owing to events of Force Majeure,

delivered the Cargo to the Claimant at 20:42 on 29 July, 2017.40

2.C. The Respondent had given reasonable notice and opportunity to the Claimant

36. The Respondents had an obligation to give reasonable notice and time to the Claimants to

complete their obligation under the Charterparty. In this regard, the question of what is

"reasonable" is a question of fact and will depend on the circumstances of the case.41

37. It is submitted that it was conveyed with adequate prior notice that the respondents would

wait until midnight for the Claimants and that demurrage would accrue over this period.

Further, to prevent inordinate delay to the ship and accruing demurrage charges, the

Respondents left the port of Dillamond, thereby divesting itself of all power to compel any

physical dealing with the Cargo.

38. It has been held that, shipowners, when possession of cargo is surrendered to port authority

and issued a delivery order (which was, in practice irrevocable), was thereby divested of

all power to compel any physical dealing with the cargo.42

39Smailes v. Hans Dessen (1906) 12 Com Cas 117.


41 Connect Shipping Inc And Another v. Sveriges Angfartygs Assurans Forening (The Swedish Club) And Others (The

Renos”), [2018] 1 Lloyd's Rep. 285.

42 Great Eastern Shipping Co. Ltd v. Far East Chartering Ltd (The Jag Ravi) [2012] 1 Lloyd’s Rep. 638.


19

2.D. The respondent was not negligent in handling the Cargo

39. The evidence of the expert which is accepted by the Tribunal43, clearly states that the

sealant used to seal the containers in which the coffee was stored was exceptionally strong

for 5 days after its application.44 The voyage was originally estimated to take 4 days and 8

hours45. Hence, the Respondent had taken the necessary precaution to ensure safe delivery

of the cargo.

40. Furthermore, discharge to governmental authorities charged with receiving Cargo and

distributing it to the consignee under the law and custom of the port is “proper delivery”

under the general maritime law.46 Therefore, delivery of the cargo to port authorities cannot

be considered to be a negligent act on the part of the Respondent.47

41. As evidenced by the expert opinion accepted by the Tribunal, the water damage occurred

while the cargo was in the possession of port authorities.48 Hence, the water damage of the

cargo occurred after the rightful delivery of the cargo and without any negligence on the

part of the Respondents.

DYNAMIC SHIPPING LLC. IS NOT LIABLE TO PAY FOR DAMAGED CARGO,

REPLACEMENT COFFEE OR SETTLEMENT PAYMENT


44 Ibid, Point No. 4.

45 Clarification No. 17, Procedural Order No.2.

46Tapco Nigeria Ltd. v. M/V West Wind, 702 F.2d 1252 (5th Cir. 1983).

47 See Keane v. Australian Steamships, (1929) 41 C.L.R. 484.



20

1. DYNAMIC SHIPPING LLC IS NOT LIABLE TO PAY FOR THE DAMAGED

CARGO

42. According to the Charterparty, the Respondent undertook to transport the assigned cargo

from Cerulean port to the Dillamond port by 7pm on 28th July. Although a delay had

occurred, it was due to intervening unforeseen circumstances, which was beyond the

control of the Respondent. Despite such unforeseeable events, the respondent performed

its part of the Contract as soon as the impediment was removed.

43. The delay that occurred were due to two unforeseen events, i.e. the solar flares which

knocked out the navigation systems and the storm which prevented the respondents from

discharging the cargo on time. Such events come under the definition of force majeure as

is given in Clause 17 of the Charterparty and absolves the parties from any liability arising

from delay or failure to perform by reasons of any force majeure events has been

established in the contention above.

44. The delay caused due to deviation cannot be seen as a breach of the Charterparty as a

deviation to a port of refuge that is reasonably necessary to save the ship from sea perils is

justifiable even though the ship was unseaworthy, and though, but for that unseaworthiness,

she would not have been in any danger.49 It is also stated in the Charterparty that the vessel

has the liberty to deviate for the purpose of saving life or property.50

49 Kish v. Taylor [1912] A.C. 604; The Malcom Baxter (1927) 277 U.S. 323.

50 Clause 17, Charterparty; pg. 9, Moot Scenario.


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45. In arguendo, it is stated that the carrier’s liability in cases of damage of goods is

limited.51And that damages will be calculated based not on the kilograms or the bags of

coffee but on the number of containers as specified in the voyage Charterparty.52

46. It is to be noted that according to the statement of the expert opinion53 damage to the cargo

did not happen while in the possession of respondents but while it was at the port and

reason for it as stated by the expert is the combination of prolonged use of the sealant and

unprecedented rainfall which caused the sealants to leak. This could have been avoided

had the claimants collected the cargo on 29th July as soon as it had arrived. Hence it is

contended that the respondents are not liable for the damaged cargo.

2. DYNAMIC SHIPPING LLC IS NOT LIABLE TO PAY FOR THE REPLACEMENT

COFFEE

47. In arguendo, as has been propounded in Hadley v Baxendale, 54 a party can only

successfully claim for losses stemming from breach of contract where the loss is reasonably

viewed to have resulted naturally from the breach and hence in the instant case it is

contented that the claim for replacement coffee is too remote for the claimants to be

claiming from the respondents.

3. DYNAMIC SHIPPING LLC IS NOT LIABLE TO PAY THE SETTLEMENT

PAYMENT

51 Carriage of Goods by Sea Act 1991, Amended Hague Rules, Art 4 (5) (a) (2001).

52 Carriage of Goods by Sea Act 1991, Amended Hague Rules, Art 4 (5) (c) (2001); El Greco v Mediterranean

Shipping [2004] 2 Lloyd’s Rep 537.

53 Pg. 43, Moot Scenario.

54Hadley V Baxendale, (1854) 9 EXCH 341.


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48. It is also contended that the doctrine of privity of contract which states that a contract

cannot, as a general rule, confer rights or impose obligations arising under it on any person

except the parties to it55 will be applicable in this scenario and hence will absolve the

respondents from the liability of the settlement payment as the amount of the settlement

payment is for the breach of the contract between Cerulean Beans and Aromas Ltd and

Coffees of the World, a contract in which the respondent is not a party to.

CERULEAN DOES NOT HAVE A MARITIME EQUITABLE LIEN OVER MADAM

DRAGONFLY

49. An equitable lien confers a charge upon property and arises by operation of equity from

the relationship between the parties.56 In the present case, an equitable lien may arise as a

claim for payment of wages to the crew but such a lien is not transferrable to Cerulean .

50. Moreover, it is not competent to any person, without leave of the Court, to pay wages which

might have been incurred, and then come to the Court and make application to have that

money refunded.57

1. MARITIME LIEN IS NON-TRANSFERRABLE

51. A maritime lien represents an interest, which is incapable of transfer so as to convey to the

transferee the same privilege and right in rem as enjoyed by the transferor.58A seaman’s

55GH TRIETEL, THE LAW OF CONTRACT 343 (12THed. 2007).

56Dornoch Ltd &Ors v. Westminster International BV &Ors [2009] EWHC 1782 (Admlty).

57The Janet Wilson(1857) Swab. 261.

58British Shipping Laws, Volume 14; Maritime Liens by D.R. Thomas, LL.B., M.A., London, Stevens & Sons, 1980.


23

maritime lien for wages arises from the fact of service rendered to a ship and is independent

of agreement and of personal liability on the part of a ship owner.59

52. The weight of authority is strongly against the doctrine that the man who has paid off the

privileged claimant stands in the shoes of the privileged claimant and has his lien, whether

it is to be regarded as a general doctrine or as applied to wages only.60

COUNTER CLAIM

1. THE CLAIMANT IS LIABLE TO PAY DAMAGES FOR HULL REPAIRS

53. It is humbly submitted by the respondents that Cerulean is liable to compensate for the

damage to the hull. The hull was damaged at 100 nm from the port of Dillamond where the

ship was instructed by the port to wait along with other ships waiting to berth. The damage

was caused as a result of the anchor getting tangled on a coral bed on which the ship

inadvertently stopped on. The crew had cut the anchor after struggling to lift the anchor,

ultimately exercising due diligence.

54. The ship is not answerable for losses through explosion, bursting of boilers, breakage of

shafts, or any latent defect in the machinery or Hull not resulting from want of due diligence

by the Owners of the ship or any of them or by the ship's husband or manager.61

55. Therefore it is submitted that the ship owners had exercised due diligence to avoid the

damage to the hull which occurred where the ship inadvertently stopped.

2. THE CLAIMANT IS LIABLE TO PAY DEMURRAGE

59Id.

60 The Petone [1917] P. 198.

61Clause 17, Charterparty; pg. 9, Moot Scenario.


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56. Ship was instructed to wait ~100nm from Dillamond at 7am on 20th of July along with the

other ships waiting to berth. The ship owners had only started charging demurrage for the

cargo from 7pm till 12pm for an amount of USD 100,000. The laytime is not to commence

before 0700 hours.62 The demurrage was charged keeping in view the laytime of 0.5 WWD

(12 hours),calculated from when vessel arrived at the discharge port until all cargo had

been discharged63. Therefore there is no need for a NOR to be tendered.

57. The arrival of ship outside port limits is justified so long as the ship was at an usual waiting

area for the port.64 The arrival of ship, 200 miles from the port is justified so long as the

vessel was at an usual waiting area for the port.65

58. Definition of port in Laytime Definitions published by BIMCO in 2013 embraces any

waiting area irrespective the distance.

“PORT shall mean any area where vessels load or discharge cargo and shall

include, but not be limited to, berths, wharves, anchorages, buoys and

offshore facilities as well as places outside the legal, fiscal or administrative

area where vessels are ordered to wait for their turn no matter the distance

from that area.”

59. The physical and geographical location of the waiting point (provided it is within the usual

waiting area) is of no importance as long as vessel has reached a point as close as she may


63Clause8c(ii), Charterparty; pg. 6, Moot Scenario.

64 See Lond. Arb. 8/03 (2003) L.M.L.N. 615, JULIAN COOKE JOHN D. KIMBALL, TIMOTHY YOUNG DAVID

MARTOWKSI, MICHAEL ASHCROFT LEROY LAMBERT, ANDREW TAYLOR MICHAEL STURLEY,

VOYAGE CHARTERERS 218 (4TH ED. 2014).

65R. Pagnan & Fratelli V. Finagrain Compagnie Commerciale Agricole Et Financiere S.A.(The Adolf Leonhardt)

[1986] 2 Lloyd’s Rep. 395.


25

reasonably arrive to the designated discharging berth, and can prove that it was not possible

or practical to get nearer.66If the ship is at a usual waiting place within the port, it can

generally be presumed that she is there fully at the charterer’s disposal.67

60. Ship was instructed to wait 100nm from Dillamond at 7am on 20th of July along with the

other ships waiting to berth. Thus, laytime would commence from 7:00 am when the ship

arrived. Even after repeated attempts at communication on the 29th of July, the claimants

did not respond. Therefore the claimants are liable to pay the demurrage of USD 100,000.

3. THE CLAIMANT IS LIABLE TO PAY FREIGHT

61. The late delivery of cargo was a result of force majeure and therefore the claimants cannot

withhold the freight for the reason of breach of Charterparty. The owner’s right to freight

without discount is generally considered sacrosanct and the charterer is not entitled to

deduct any sums other than those specifically set forth in the charter.68

62. The Cargo was damaged because the sealant used to seal the containers in which it was

stored whilst exceptionally strong, is designed for short-term (up to 5 days) use only. The

combination of prolonged use of the sealant and unprecedented rainfall caused the sealant

used on all but one of the containers to leak. But it is clear from the expert opinion of

Simon Webster that the damage had occurred in the 24 hours from 4:30 am on 30th of July.

Therefore, the respondents have not breached the Charterparty for the reason of damage of

cargo.

66The "Polyfreedom" (1975) 4/LMCLQ/443.

67E. L. Oldendorff & Co. G.M.B.H. v Tradax Export S.A. (The Johanna Oldendorff)[1974] A.C. 479.

68The Beryl, SMA 2779 (1991) (Arnold, Greenbaum, Proeller) and The Genmar Boss, SMA 3781 (2003) (Arnold,

Berg, Martin).


26

63. Arbitrators have consistently held that charterers’ withholding of freight as security is

inappropriate, not only for cargo loss and damage, but also for a variety of other claims.69

64. The law applicable to contracts for freight is distinguished from the rule of abatement

arising from defective performance of the contractual service.70 No defense of recoupment

is allowed.71 The rule against deduction in cases of carriage by sea is, in fact, as well settled

as any common law rule can be.72The charterer is not entitled to set off against the freight

claim for damages for an alleged failure to prosecute the voyage with reasonable dispatch.73

65. Therefore the freight cannot be withheld for reason of deduction or set off by the claimants

in any case.

4. THE CLAIMANT IS LIABLE TO PAY AGENCY FEE AT SPECTRE

66. The deviation towards the port of Spectre that had to be taken was as a result of the act of

god i.e. the solar flares due to which further navigation towards the port of Dillamond was

curtailed.

67. From the three SOLAS regulations74, the requirements for charts and publications to be

carried can be fulfilled by:

69 See The Joseph P. Grace, SMA 1768 (1983); The In Salah, SMA 1576 (1978); The Team Augwi and Fiona Jane,

SMA 2378 (1987); The Universal Frontier, SMA 2499 (1988); The World Dawn, SMA 2565 (1989); The Zeus, SMA

3110 (1994); The Siteam Merkur, SMA 4016 (2008), JULIAN COOKE JOHN D. KIMBALL, TIMOTHY YOUNG DAVID

MARTOWKSI, MICHAEL ASHCROFT LEROY LAMBERT, ANDREW TAYLOR MICHAEL STURLEY, VOYAGE CHARTERERS

218 (4th ed. 2014).

70Henriksens Rederi A/S THZ Rolimpex (The Brede) [1973] 2 Lloyd’s Rep. 333; [1973] 3 All ER 589.

71Id.

72Aries Tanker Corporation v Total Transport Ltd (The Aries) [1977] 1 Lloyd’s Rep 334.

73Gunnstein A/S & Co K/S v Jensen, Krebs and Nielsen (The Alpha Nord) [1977] 2 Lloyds Rep 434, CA. 74International Convention on Safety of Life at Sea (SOLAS), Chapter V Regulations 2,9,27 (1974).


27

• Carriage of official and up-to-date paper charts, or

• Carriage of a type-approved Electronic Chart Display and Information System

(ECDIS), using official and up-to-date Electronic Navigational Charts (ENC)

together with an appropriate back up arrangement.

68. The appropriate back up arrangement does not necessarily mean use of paper charts. The

back-up arrangements may constitute an electronic back up system which is much more

advantageous to paper charts.

69. Therefore it cannot be proved that the respondents did not exercise due diligence to prevent

the deviation to the port of Spectre. Thus there is no breach of contract by delay and

absolves the ship owners liability for the agency fees at spectre. Also Owners shall pay any

dues or charges levied on the ship by reason of cargo being on board and all other dues or

charges whatsoever.75Therefore claimants are liable to pay amount USD 75,000.

5. THE CLAIMANT IS LIABLE TO PAY AGENCY FEE AT DILLAMOND

70. The ship shall be consigned to Charterer’s agents at the port or ports of load and discharge,

paying all customary fees at each port, for attending to matters concerning the cargo and

the vessel.76Even after repeated attempts at communication, the charterers did not respond

during discharge of cargo. Therefore the liability to pay the agency fees falls on the

charterers.

6. THE CLAIMANT IS LIABLE TO PAY FOR THE USE OF ELECTRONIC ACCESS

SYSTEM


76Clause 12(a) Charterparty; pg. 7, Moot Scenario.


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71. The charterers are liable to pay for the use of electronic access system at the port of Dillamond.

The charterers did not respond even after repeated attempts at communication for collection

of cargo from the ship owners. Therefore the ship owners had to discharge the cargo onto the

port. Since the electronic access system acts as a mechanism of retrieval of goods from the

port. It can be considered that the amount of USD 10,000 demanded as wharfage charges.

72. In the Charterparty, it is laid down that wharfage, if any, at load and discharge port to be for

charterers’ account.77 Therefore the claimants are required to pay USD 10,000 for use of

electronic access system at port of Dillamond.

77Clause 23, Charterparty; pg.11, Moot Scenario


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REQUEST FOR RELIEF

For the reasons set out above, RESPONDENTS request this Tribunal to:

a) declare that this arbitral panel does not have jurisdiction to arbitrate on the claims raised

by the claimant;

b) declare that DYNAMIC SHIPPING LLC is not liable for breach of Charterparty;

c) declare that DYNAMIC SHIPPING LLC has lien over Madam Dragonfly;

d) declare that DYNAMIC SHIPPING LLC is not liable in relation to the claim for damages

made by CERULEANS BEANS AND AROMAS Ltd.;

e) award DYNAMIC SHIPPING LLC the damages claimed in the counter claim; and

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

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