eighteenth annual international … annual international maritime law arbitration moot ... in re...

EIGHTEENTH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2017

MEMORANDUM FOR RESPONDENTS

NATIONAL LAW UNIVERSITY ODISHA

TEAM 02

ON BEHALF OF: AGAINST:

INFERNO RESOURCES SDN BHD FURNANCE RESOURCES TRADING PTE. LTD.

&

IDONCARE BERJAYA UTAMA PTY. LTD.

COUNSEL

ANKITA ANKITA TANMAY VISHESH

SEN DHABU BHATNAGAR MEHROTRA

TEAM 02 -TABLE OF CONTENTS-

MEMORANDUM FOR RESPONDENTS Page I

TABLE OF CONTENTS

INDEX OF AUTHORITIES ________________________________________________ IV

LIST OF ABBREVIATIONS _____________________________________________ XIV

ISSUES RAISED _______________________________________________________ XVII

STATEMENT OF FACTS ___________________________________________________ 1

ARGUMENTS ADVANCED _________________________________________________ 3

[ISSUE I.] CL. 29 OF THE HEAD VOYAGE CHARTERPARTY BETWEEN CLAIMANT AND

RESPONDENT NO. 1 IS NOT BE MADE APPLICABLE TO RESPONDENT NO. 2 ______________ 3

A. THE TRIBUNAL HAS COMPETENCE TO DECIDE ON ITS OWN JURISDICTION. __________ 3

B. IDONCARE IS NOT BOUND BY THE ARBITRATION CLAUSE OF THE HEAD VOYAGE

CHARTERPARTY. ________________________________________________________ 4

B.1 The incorporation clause in the bill of lading is invalid. _____________ 4

B.2 Idoncare is not bound by the arbitration clause included by the

incorporation clause _______________________________________________ 4

C. THE DISPUTE CONCERNING IDONCARE DOES NOT ARISE OUT OF OR IN CONNECTION

WITH THE HEAD VOYAGE CHARTERPARTY. _____________________________________ 5

[ISSUE II.] THE CLAIMANT’S EXERCISE OF LIEN ON SUB-FREIGHT IS NOT VALID ____ 7

A. IN THE ABSENCE OF AN EXPRESS CONTRACTUAL CLAUSE, THE EXERCISE OF LIEN ON

SUB-FREIGHT BY FURNACE IS INVALID.________________________________________ 7

B. THE EXERCISE OF LIEN ON SUB-FREIGHT BY FURNACE IS NOT SUPPORTED BY THE

THEORY OF ASSIGNMENT. __________________________________________________ 7


MEMORANDUM FOR RESPONDENTS Page II

C. FURNACE, NOT BEING THE CARRIER, CANNOT VALIDLY EXERCISE LIEN ON SUB-

FREIGHT. _______________________________________________________________ 8

C.1 Furnace is not the carrier in the present case. ____________________ 8

[I.] It is the shipowner, and not the charterer who is generally presumed to be the

carrier. ____________________________________________________________ 8

[II.] Due regard must be given to the peculiar facts and circumstances of a

particular case. _____________________________________________________ 10

C.2 Freight under the bill of lading is due to the carrier, that is, IMLAM. 11

[ISSUE III.] THE CLAIMANT’S EXERCISE OF LIEN ON CARGO IS NOT VALID ________ 11

A. THE LIEN CLAUSE IN THE HEAD VOYAGE CHARTERPARTY CANNOT BE USED TO

EXERCISE LIEN ON THE GOODS OF IDONCARE. __________________________________ 12

B. IN ORDER TO EXERCISE A VALID LIEN, THE PARTY SEEKING TO EXERCISE SUCH LIEN

MUST MAKE A VALID DEMAND. _____________________________________________ 13

C. THE LIEN MUST BE EXERCISED ONLY FOR SUCH CLAIMS THAT HAVE BEEN SPECIFIED IN

THE CHARTERPARTY. ____________________________________________________ 14

D. A LIEN CAN BE EXERCISED ONLY AT THE PORT OF DISCHARGE. _________________ 15

E. FURNACE IS NOT ENTITLED TO RECOVER THE COST OF EXERCISING THE LIEN. ______ 15

[ISSUE IV.] THE CLAIMANT HAS COMMITTED REPUDIATORY BREACH OF THE HEAD

VOYAGE CHARTERPARTY __________________________________________________ 16

A. FURNACE HAS WRONGFULLY TERMINATED THE HEAD VOYAGE CHARTERPARTY, IN

THE ABSENCE OF RENUNCIATION OF THE CHARTERPARTY BY INFERNO. ______________ 16


MEMORANDUM FOR RESPONDENTS Page III

B. INFERNO NOW HOLDS FURNACE IN REPUDIATORY BREACH OF THE CHARTERPARTY. 17

[ISSUE V.] THE APPLICATION MADE BY THE CLAIMANT FOR SALE OF CARGO NOT BE

GRANTED __________________________________________________________ 18

A. THE TRIBUNAL DOES NOT POSSESS THE JURISDICTION TO GRANT TO FURNACE THE

LIBERTY TO SELL THE CARGO ON BOARD MV TARDY TESSA. ______________________ 19

B. FURNACE HAS NO RIGHT OF LIEN ON THE CARGO. ___________________________ 20

C. A RIGHT OF LIEN DOES NOT AUTOMATICALLY GIVE RISE TO A RIGHT TO SELL SUCH

CARGO. _______________________________________________________________ 20

D. IT WAS NOT JUST AND NECESSARY TO SELL THE CARGO. ______________________ 20

PRAYER _____________________________________________________________ XVIII

TEAM 02 -INDEX OF AUTHORITIES-

MEMORANDUM FOR RESPONDENTS Page IV

INDEX OF AUTHORITIES

CASES AND ARBITRAL AWARDS

“The Berkshire”, [1974]1 Lloyd’s Rep 185, 188 10

Agnew v. Commissioner Of Inland Revenue, [2001] 2 AC 710, 727 7

Albemarle Supply Co. Ltd. v. Hind & Co., [1928] 1 KB 307, 308 13

Amoco Oil Company v. M.T. Mary Ellen, 529 F.Supp. (SDNY 1981) 227, 231 4

Ampurius NV Homes Holdings Ltd v. Telford Homes (Creekside) Ltd, [2013]

EWCA Civ. 577, 579

18

Ashville Investments Ltd. v. Elmer Contractors Ltd., [1988] 2 Lloyd’s Rep 73, 75 5

BCY v. BCZ, [2016] SGHC 249, 262 5

British Westing House Electric And Manufacturing Co. v. Underground Electric

Railways Co., [1912] AC 673, 676

14

Chembulk Trading LLC v. Chemex Ltd., [2005] AMC 146, 147 (5th Cir. 2004) 5

Chilean Nitrate Sales Corporation v. Marine Transport Co. Ltd. (“The

Hermosa”), [1982] 1 Lloyd’s Rep 570 , 572

16

Coastal States Trading, Inc. v. Zenith Navigation S.A. And Sea King

Corporation, 446 F.Supp. (SDNY 1977) 330, 338

4

Coulter v. Chief Constable Of Dorset Police, [2004] EWCA Civ. 1259, 1263 8


MEMORANDUM FOR RESPONDENTS Page V

E. B Aaby’s Rederi A/S v. Union Of India (“The Evje”), [1974] 2 Lloyd’s Rep

57, 65

6

Engineering Company v. Engineering Company, Producer, Final Award, ICC

Case Nos. 6515 and 6516, Yearbook Commercial Arbitration, Vol. XXIV (1999).

3

Faith Maritime Co. Ltd. v. Feoso (Singapore)Pte Ltd, [2002] SGHC 229, 244 20

Fetim B.V. v. Oceanspeed Shipping Ltd. (“The Flecha”), [1999] 1 Lloyd’s Rep

612, 618

11

Five Ocean Corporation v. Cingler Ship Pte Ltd. (PT Commodities & Energy

Resources, Intervener), [2015] SGHC 311, 340

21

Flat-Top Fuel Co. Inc. v. Martin, 85 F.2d (1936) 39, 40 12

Freeth v. Burr, (1874) LR 9 CP 208, 213 18

Geden Operations Ltd v. Dry Bulk Handy Holdings Inc (“The Bulk Uruguay”),

[2014] EWHC (Comm) 885, 891

17

Gericke Pte Ltd v. Nortans Shipping Pool Pte Ltd,[1997] 2 SLR(R) 652, 655 14

Go Go Delicacy Pte Ltd. v. Carona Holdingd Pte Ltd. and Others, [2008]

1SLR(R) 161, 168

5

Grand China Logistics Holding (Group) Co. Ltd. v. Spar Shipping, [2016]

EWCA Civ 982, 997

16

Halesowen Presswork and Assemblies Ltd v. Westminster Bank Ltd, [1971] 1 QB

1, 27.

20


MEMORANDUM FOR RESPONDENTS Page VI

Hatfield v. Health Insurance Commission, [1987] 77 ALR 103, 107 6

Hi-Fert Pty Ltd v. Kiukiang Maritime Carriers Incorporation (“The Kiukiang

Career”), [1999] 2 Llyod’s Rep 782, 800

6

Homburg Houtimport B.V. v. Agrosin Private Ltd. (“The Starsin”), [2003] 1

Lloyd’s Rep 571, 583

10

IM Skaugen SE & Anr. v. MAN Diesel And Turbo SE & Anr, [2016] SGHCR 6,

31

8

In Re North Atlantic And Gulf S.S. Co, 204 F.Supp. (SDNY 1962) 899, 903 7

International Bulk Carriers (Beirut) S.A.R.L. v Evlogia Shipping Co SA of

Panama (“The Mihalios Xilas”), [1978] 2 Lloyd’s Rep 186, 192

15

Jianf Haiying v. Tan Lim Hui And Anr., [2009] SLR(R) 13, 20 5

Johnstone v. Milling, (1886) 16 Q.B.D. 460, 460 16

Kurt A. Becher v. Roplak Enterprises (“The World Navigator”), [1991] 2

Lloyd’s Rep 23, 33

14

Larner v. Fawcett, [1950] 2 All ER 727, 731 20

MacSteel International US Corp. v. M/V Jag Rani, [2004] AMC (SDNY 2003)

220, 225

4

Maldives Airports Co Ltd and another v. GMR Malé International Airport Pte

Ltd, [2013] 2 SLR 449, 465

20


MEMORANDUM FOR RESPONDENTS Page VII

Marine Traders Inc v. Seasons Navigation Corporation, 422 F.2d (1970) 804,

805

7

MB Pyramid Sound NV v. Briese Schiffarts GmbH and Co. KG MS “Sina” And

Latvian Shipping Association Ltd (“The Ines”), [1995] 2 Lloyd’s Rep 144, 149

11

Mersey Steel & Iron Company v. Naylor, Benzon & Co., [1884] 9 A.C. 434, 439 16

Ocean Projects Inc. v. Ultratech Pte Ltd, [1994] 2 SLR(R) 245, 246 13

Patterson Steamships Limited v. Aluminium Company of Canada, [1951] S.C.R.

852, 854

9

Sabah Shipping (Pakistan) Ltd v. Government Of The Islamic Republic Of

Pakistan, [2004] 3 SLR(R) 184, 189

6

Sandeman v. Scurr, [1866] LR 2 QB 86, 98 9

Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 SCR 633, 650 5

Somes v. British Empire Shipping Co, 8 H.L. Cas. 338, 342 14,15

Southwestern Sugar & M. Co. v. the Eliza Jane Nicholson, 126 F.Supp. (SDNY

1954) 666, 667

4

SS. Knutsford, Limited v. Tillmanns & Co., [1908] A.C. 406, 410 10

Thorpe v. Fasey, [1949] 2 All ER 393, 394 16

Turner v. Haji Goolam, [1904] AC 826, 832 12

Vastfame Camera Ltd. v. Birkart Globistics Ltd., [2005] 4 H.K.C. 117, 126 11


MEMORANDUM FOR RESPONDENTS Page VIII

Walter Rau Neusser Oel Fett AG v. Cross Pacific Trading Ltd., [2005] FCA

1102, 1112

6

Western Bulk Shipowning III A/S v. Carbofer Maritime Trading ApS (“The

Western Moscow”), [2012] 2 Lloyd’s Rep 163, 168

8

Whener v. Dene Steam Shipping Co., [1905] 2 K.B. 92, 95 8

Woodar Investment Development Ltd. v. Wimpey Comstructions (UK) Ltd.,

[1980] 1 WLR 277, 296

17

BOOKS AND DICTIONARIES

Alan Redfern, Law And Practice Of International Commercial Arbitration, Sweet

& Maxwell, 1st Ed. (2004), Pg. 248

19

David Glass, Freight Forwarding And Multi Modal Transport Contracts, Informa

Law Routledge, 2nd Ed. (2012), Pg.114

13

David Jackson, Enforcement Of Maritime Claims, Informa, 4th Ed. (2005), Pg.

463

12

David Yates, Contract For The Carriage Of Goods By Land, Sea And Air,

Lloyd’s Of London Press, (2000), Pg. 29

20

Felix W. H. Chan, Jimmy J. M. Ng, Bobby K.Y. Wong, Shipping And Logistics

Law : Principles And Practice In Hong Kong, Hong Kong University Press, 1st

Ed. (2002), Pg. 332

12


MEMORANDUM FOR RESPONDENTS Page IX

G.H Treitel,, Francis Martin, Baillie, Reynolds, Thomas Gilbert Carver, Carver

On Bills Of Lading, Sweet & Maxwell, 3rd Ed. (2011), Pg. 184

9

Halsbury, Lord Simond, Halsbury's Laws of England: Vol. 24, 3rd Ed. (1958), Pg.

144

20

Janet O’ Sullivan, Jonathan Hilliard, The Law Of Contract, Oxford University

Press, 7th Ed. (2016), Pg. 372

18

Jill Poole, Textbook On Contract Law, Oxford University Press, 13th Ed. (2016),

Pg. 299

17

John A.C. Cartner, Richard Fiske, Tara Leiter, The International Law Of The

Shipmaster, Informa Law Routledge, 1st Ed. (2009), Pg. 140

9

Joseph Chitty, H.G. Beale, Chitty On Contracts- Vol.1, Sweet & Maxwell, 21st

Ed. (2012), Pg. 1712

17

Julian Cooke, Timothy Young Q.C., Michael Ashcroft Q.C., Andrew Taylor,

John D. Kimball, David Martowski, LeRoy Lambert, Michael Sturley, Voyage

Charters, Informa Law Routledge, 4th Ed. (2014)

11, 13

Lachmi Singh, The Law Of Carriage Of Goods By Sea, Bloomsbury Professional,

Pg. 221

14

Lee Roach, Card And James’ Business Law, Oxford University Press, 4th Ed.

(2016), Pg. 291.

18

Linda Mulcahy, John Tillotson, Contract Law In Perspective, Cavendish

Publishing Limited, 4th Ed. (2004), Pg. 232

18


MEMORANDUM FOR RESPONDENTS Page X

Lowndes, Rudolf, The Law Of General Average And The York-Antwerp Rule, 13th

Ed. (2008), Pg. 608

15

Melis Ozdel, Bills Of Lading Incorporating Charterparties, Bloomsbury

Publishing, 2nd Ed. (2015), Pg. 88

12

Neil Andrews, Arbitration And Contract Law: Common Law Perspectives,

Springer International Publishing, 1st Ed. (2016), Pg. 251

17

Simon Baughen, Shipping Law, Routledge, 5th Ed. (2012), Pg. 214 12

Stewart C. Boyd, Steven Berry, Andrew S. Burrows, Bernard Eder, David

Foxton, Christopher F. Smith, Scrutton On Charterparties And Bills Of Lading,

Sweet & Maxwell, 21st Ed. (2008), Pg. 344

14

Terence Coghlin, Andrew W. Baker Q.C., Julian Kenny, John D. Kimball,

Thomas H. Belknap, Time Charters, Informa Law Routledge, 7th Ed. (2014), Pg.

395

10



583

15



592

11

Thomas Gilbert Carver, Raoul P. Colinvaux, Carver’s Carriage By Sea, Stevens

& Sons Ltd., 13th Ed. (1982), Pg. 575

9


MEMORANDUM FOR RESPONDENTS Page XI

Yvonne Baatz, Maritime Law, Inorma Law From Routledge, 3rd Ed. (2014), Pg.

173

14

JOURNAL ARTICLES

Felix Sparka, Jurisdiction And Arbitration Clauses In Maritime Transport

Documents: A Comparative Analysis, Springer Science & Business Media, 1st Ed.

(2010), Pg. 78

5

Interpretation Of Arbitration Agreements, Ludmila B. Herbst, Continuing Legal

Education Society of British Columbia, Pg. 3, available at

https://www.cle.bc.ca/PracticePoints/BUS/12-ArbitrationAgreements.pdf, last

visited: March 25, 2017

5

Maritime Liens, The American Law Register, The University Of Pennsylvania

Law Review, Vol.5 (1857), Pg. 129, 134

12

Not Party, Not Bound? Not Necessarily: Binding Third Parties to Maritime

Arbitration, Michael H. Bagot, Jr., Dana A. Henderson, Tulane Maritime Law

Journal, Vol. 26 (2002), Pg. 430

5

The Arbitrator’s Jurisdiction to Determine Jurisdiction, William W. Park, 13

ICCA Congress Series 55, Pg. 25, available at http://www.arbitration-

icca.org/media/4/1653246 3870041/media0124 09326410 520 jurisdiction _to

determine _jurisdiction_w_w_park.pdf, last visited: March 26, 2017

3


MEMORANDUM FOR RESPONDENTS Page XII

The Identity Of Carrier Problem Under Time Charters: Diversity Despite

Unification Of Law, Caslav Pejovic, Journal Of Maritime Law And Commerce,

Vol. 31 (2000), Pg.379, 382

9

The Identity Of Carrier Problem Under Time Charters: Diversity Despite

Unification Of Law, Caslav Pejovic, Journal Of Maritime Law And Commerce,

Vol. 31 (2000), Pg.379, 398

11

The Identity Of The Carrier Under Bills Of Lading, J. Bassindale, Clifford

Chance Maritime Review, Vol. 11 (1992), Pg. 1, 5; The Rewia, [1991] 2 Lloyd’s

Rep 325, 333

10

The Juridical Nature Of A Lien On Sub-Freights, Fidelis Oditah, Lloyd’s

Maritime And Commercial Law Quarterly (1989), Pg. 191, 197

7

The Liability Of A Carrier Under A Bill oF Lading When The Goods Are Not

Received By The Carrier, H.S. Ross, Michigan Law Review, Vol. 15 (1916), Pg.

38, 38

11

The Shipowner’s Lien On Sub-Freights And Personal Property Securities

Regimes, Matthew Woolley, Australian And New Zealand Maritime Law Journal,

Vol. 28 (2014), Pg. 69, 74

7

STATUTES AND CONVENTIONS

§ 10(2), International Arbitration Act (Ch. 143A), 1994 3

§ 127, Merchant Shipping Act (Ch. 179), 1994 21


MEMORANDUM FOR RESPONDENTS Page XIII

§ 4(8), Civil Law Act (Ch. 43), 1909 8

RULES

R. 20, SCMA Rules, 3rd Ed. (2015) 3

OTHERS

CN Marine Incorporation v. Carling O’ Keefe Breweries Of Canda and

Others, LMLN (March 1990), Pg. 1.

11

TEAM 02 -LIST OF ABBREVIATIONS-

MEMORANDUM FOR RESPONDENTS Page XIV

LIST OF ABBREVIATIONS

§ Section

¶ Paragraph

5th Cir. 5th Circuit

All ER All England Reports

ALR Australian Law Reports

AMC American Maritime Cases

Art. Article

Bundle IMLAM Moot Scenario December 9, 2016

CA Court Of Appeals

Ch. Chapter

Cl. Clause

Co. Company

Ed. Edition

EWCA England And Wales Court Of Appeal

EWCA Civ. England And Wales Court Of Appeal (Civil

Division)

EWHC England And Wales High Court


MEMORANDUM FOR RESPONDENTS Page XV

EWHC (Comm) England And Wales High Court

(Commercial Division)

F.2d Federal Reporter (Second Series)

F.Supp Federal Supplement

FCA Federal Court Of Australia

FCJ Federal Court Judgment

FCR Federal Courts Reports

HKC Hong Kong Cases

H.L. Cas Clarke’s House Of Lords Cases

ICC International Chamber of Commerce

KB King’s Bench

Lloyd’s Rep Lloyd’s Reporter

LMLN Lloyd’s Maritime Law Newsletter

LR Law Reports

Ltd. Limited

No. Number

Pg. Page

QB Queen’s Bench


MEMORANDUM FOR RESPONDENTS Page XVI

QBD Queen’s Bench Division

R. Rule

SCMA Singapore Chamber Of Maritime

Arbitration

SCR Supreme Court Reports

SDNY Southern District Of New York

SGHC High Court Of Singapore

SGHCR High Court Of Singapore Reporter

SLR Singapore Law Reports

SLR(R) Singapore Law Reports Reissue

v. Versus

Vol. Volume

WLR Weekly Law Reports

TEAM 02 -ISSUES RAISED-

MEMORANDUM FOR RESPONDENTS Page XVII

ISSUES RAISED

ISSUE I

Whether or not Cl. 29 of the head voyage Charterparty between the Claimant and Respondent

No. 1 be made applicable to Respondent No.2?

ISSUE II

Whether or not the Claimant’s exercise of lien on sub-freight is valid?

ISSUE III

Whether or not the Claimant’s exercise of lien on cargo is valid?

ISSUE IV

Whether or not the Claimant has validly terminated the head voyage Charterparty dated

September 1, 2016?

ISSUE V

Whether or not the application made by the Claimant for sale of cargo be granted?

TEAM 02 -STATEMENT OF FACTS-

MEMORANDUM FOR RESPONDENTS Page 1

STATEMENT OF FACTS

Formation of Charterparties and issue of The Bill of Lading:

The Claimant, Furnace Trading Pte Ltd. (“Furnace”) entered into a ‘time charterparty’ with

IMLAM Consignorist GmbH (“IMLAM”) on February 15, 2016 for the charter of the vessel,

MV Tardy Tessa. Furnace subsequently entered into a voyage charter (‘head voyage

charterparty’) with Respondent No. 1, Inferno Resources Sdn Bhd (“Inferno”) on September

1, 2016 for carriage of Australian Anthracite coal from Newcastle, New South Wales, Australia

to one of eight Chinese ports at the charterer’s option. Inferno further sub-let the charter to

Respondent No. 2, Idoncare Berjaya Utama Pty. Ltd. (“Idoncare”).

Inability of Inferno to perform obligations under the head voyage charterparty:

A bill of lading had been signed by the Master of MV Tardy Tessa on October 4, 2016.

However, Inferno could not pay freight to Furnace within 5 days from the signing of the bill of

lading because of non-payment of freight to it by Idoncare. Also, though willing, Inferno could

not nominate the port of discharge, because of non-nomination of disport by Idoncare.

Attempts by Inferno to fulfil the charterparty Obligations:

On October 16, 2016, Inferno nominated Busan, South Korea as the discharge port, which was

rejected by Furnace on account of it being unsafe and not within permitted range under the

relevant charterparties. Inferno however, expressed its willingness to amend the freight rate,

considering the extra distance to the discharge port. On October 17, 2017, Inferno further

assured Furnace regarding the safety of Busan. Furnace rejected all requests made by Inferno.

An urgent notice was mailed to Inferno on October 19, 2016 by Furnace requiring Inferno to

nominate a legitimate disport and to pay the freight due by 1200H LT on 20th October 2016,

failing which their conduct would be considered to be a renunciation of the head voyage

Charterparty.

TEAM 02 -STATEMENT OF FACTS-


Notices of Lien served by Furnace:

Furnace sent Notices of Lien on Cargo and Sub-freight to Inferno and Idoncare, respectively,

on October 20, 2016. On October 21, 2016, in another attempt to express its willingness to

perform the Charterparty, Inferno nominated Ningbo as the discharge port. It further, promised

payment of freight to Furnace at the discharge port after discharge of cargo.

Notice of Termination by Furnace:

On October 22, 2016 Furnace issued a Notice of Termination on October accepting the alleged

renunciation of the head voyage Charterparty by Inferno.

Response by Inferno to Furnace:

On October 22, 2016, Inferno responded to Furnace’s Notice of Termination that such notice

is wrongful, considering the constant willingness of Inferno to perform its obligations. It further

held Furnace to be in repudiatory breach of the Charterparty and thereby accepted such breach.

Notices of arbitration:

Furnace sent Notices of arbitration to Inferno and Idoncare on November 25, 2016. Inferno and

Idoncare sent their own Responses to Notices of arbitration sent to them on November 26,

2016. Furnace also made an urgent application for sale of coal on MV Tardy Tessa, pendente

lite.

Inferno through its Response dated December 2, 2016, has denied all claims including that of

sale of cargo, while Idoncare has denied all claims, other than sale of cargo, and has objected

to the jurisdiction of the arbitral panel to determine the claim.

The arbitral tribunal has issued Procedural Order no. 1 dated December 11, 2016, Procedural

Order No. 2 and No. 3 dated February 17, 2017. Thereby, the oral arguments have been

scheduled for July 1-5, 2017.

TEAM 02 -ARGUMENTS ADVANCED-


ARGUMENTS ADVANCED

[ISSUE I.] CL. 29 OF THE HEAD VOYAGE CHARTERPARTY BETWEEN CLAIMANT AND

RESPONDENT NO. 1 IS NOT BE MADE APPLICABLE TO RESPONDENT NO. 2

[¶1.] It is submitted before the Tribunal that Respondent No.2, that is, Idoncare agrees that

the Tribunal has competence to decide on its own jurisdiction. [A] However, it contends that it

is not bound by the arbitration clause that is, Cl.29 of the head voyage Charterparty between

the Claimant, that is, Furnace and Respondent No. 1, Inferno. [B] Also, the dispute concerning

Idoncare does not arise out of or in connection with the head voyage Charterparty. [C]

A. THE TRIBUNAL HAS COMPETENCE TO DECIDE ON ITS OWN JURISDICTION.

[¶2.] It is submitted that according to the principle of ‘competence-competence’, an arbitral

tribunal has the authority to decide issues relating to its own jurisdiction.1 This principle is a

basic principle in international commercial arbitration.2

In the present case, the law in Singapore empowers the arbitration tribunal to rule on its own

jurisdiction.3 The procedural rules governing the arbitration also uphold the principle of

competence-competence.4 Hence, Idoncare does not dispute the competence of the arbitral

tribunal to decide on its own jurisdiction.

1 The Arbitrator’s Jurisdiction to Determine Jurisdiction, William W. Park, 13 ICCA Congress Series 55, Pg.

25, available at http://www.arbitration-icca.org/media/4/1653246 3870041/media0124 09326410 520

jurisdiction _to determine _jurisdiction_w_w_park.pdf, last visited: March 26, 2017. 2 Engineering Company v. Engineering Company, Producer, Final Award, ICC Case Nos. 6515 and 6516,

Yearbook Commercial Arbitration, Vol. XXIV (1999). 3 § 10(2), International Arbitration Act (Ch. 143A), 1994. 4 R. 20, SCMA Rules, 3rd Ed. (2015).



B. IDONCARE IS NOT BOUND BY THE ARBITRATION CLAUSE OF THE HEAD VOYAGE

CHARTERPARTY.

[¶3.] It is submitted before the Tribunal that the incorporation clause in the bill of lading is

invalid. [B.1] Thus, Idoncare is a third party and is not bound by the arbitration clause included

by such incorporation clause. [B.2]

B.1 The incorporation clause in the bill of lading is invalid.

[¶4.] It is submitted that the provisions of a Charterparty including its arbitration clause may

be incorporated in a bill of lading only by an appropriate reference.5 If an incorporation clause

does not identify a Charterparty in an unmistakable and specific language, such incorporation

is invalid, irrespective of the constructive or actual knowledge of the existence of the

Charterparty to the bill of lading holder.6 Absence of a specific reference to a Charterparty

indicates that the parties did not intend to incorporate such Charterparty.7

[¶5.] In the present case, the bill of lading contains the phrase ‘Charterparty, dated as

overleaf’.8 However, the date or the parties to the Charterparty have not been clearly

mentioned, thereby not identifying any specific Charterparty. Hence, the incorporation clause

is in itself invalid.

B.2 Idoncare is not bound by the arbitration clause included in the incorporation

clause.

[¶6.] It is submitted that in the absence of a specifically identified Charterparty in the

incorporation clause, the holder of the bill of lading cannot be bound by the arbitration clause

in a Charterparty.9 This is because in order to enforce an arbitration agreement both parties

5 Coastal States Trading, Inc. v. Zenith Navigation S.A. And Sea King Corporation, 446 F.Supp. (SDNY 1977)

330, 338. 6 MacSteel International US Corp. v. M/V Jag Rani, [2004] AMC (SDNY 2003) 220, 225. 7 Amoco Oil Company v. M.T. Mary Ellen, 529 F.Supp. (SDNY 1981) 227, 231. 8 Bill Of Lading- Conditions Of Carriage, Pg. 42 of Bundle. 9 Southwestern Sugar & M. Co. v. the Eliza Jane Nicholson, 126 F.Supp. (SDNY 1954) 666, 667.



must have consented in advance to submit their disputes to arbitration under such agreement.10

[¶7.] In the present case, the incorporation clause in the bill of lading has failed to identify a

specific Charterparty. Hence, Idoncare which is the holder of the bill of lading cannot be said

to have consented to be bound by the arbitration clause in the head voyage Charterparty.

[¶8.] Further, the interpretation of such an arbitration clause is governed by the law by which

the arbitration agreement is governed.11 Courts of Singapore have held that an entity that is not

a party to an agreement containing an arbitration clause cannot be compelled to arbitrate its

dispute under such clause.12

[¶9.] In the present case, the law that governs the arbitration clause is Singapore law.13

Hence, in accordance with the law of Singapore, Idoncare which is not a party to the arbitration

agreement cannot be compelled to arbitrate under Cl. 29 of the head voyage Charterparty.

C. THE DISPUTE CONCERNING IDONCARE DOES NOT ARISE OUT OF OR IN CONNECTION WITH

THE HEAD VOYAGE CHARTERPARTY.

[¶10.] It is submitted that in order to determine whether a particular dispute falls under the

ambit of an arbitration agreement, importance must be accorded to the nature of such dispute,

wording of the arbitration clause, contractual terms and the factual matrix.14 If such factual

scenario relates to a claim of lien on sub-freights, it must be considered that such a claim cannot

be allowed unless the contract expressly allows the same.15 Further, the use of the expression

10 Not Party, Not Bound? Not Necessarily: Binding Third Parties to Maritime Arbitration, Michael H. Bagot,

Jr., Dana A. Henderson, Tulane Maritime Law Journal, Vol. 26 (2002), Pg. 430. 11 Felix Sparka, Jurisdiction And Arbitration Clauses In Maritime Transport Documents: A Comparative

Analysis, Springer Science & Business Media, 1st Ed. (2010), Pg. 78. 12 Jianf Haiying v. Tan Lim Hui And Anr., [2009] SLR(R) 13, 20; Go Go Delicacy Pte Ltd. v. Carona Holdingd

Pte Ltd. and Others, [2008] 1SLR(R) 161, 168. 13 Fixture Recap: Cl. 29, Pg. 23 of Bundle. 14 BCY v. BCZ, [2016] SGHC 249, 262; Ashville Investments Ltd. v. Elmer Contractors Ltd., [1988] 2 Lloyd’s

Rep 73, 75 ; Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 SCR 633, 650; Interpretation Of Arbitration

Agreements, Ludmila B. Herbst, Continuing Legal Education Society of British Columbia, Pg. 3, available at

https://www.cle.bc.ca/PracticePoints/BUS/12-ArbitrationAgreements.pdf, last visited: March 25, 2017. 15 Chembulk Trading LLC v. Chemex Ltd., [2005] AMC 146, 147 (5th Cir. 2004).



‘in connection with’ in the arbitration clause calls for an interpretation, that though wide, is

subject to the context of the contract in which it is used.16 A claim that is made pursuant to

such an arbitration clause must have a direct connection with the Charterparty.17 Thus, an

arbitration clause cannot be interpreted in a liberal manner such that it attaches to the clause a

meaning that the wording of the clause does not ordinarily bear.18 Also, the use of the

expression ‘arising out of’ indicates that only such claims that concern issues referred to in the

contract can be considered to fall under the ambit of the arbitration agreement.19 Issues that are

non-contractual do not fall within the purview of the arbitration clause.20 Further, the use of

the word ‘charter’ in the arbitration clause refers to the instrument and not the transaction

between the parties.21

[¶11.] In the present case, the head voyage Charterparty contains the expression ‘arising out

of or in connection with this Charter Party’.22 This indicates that the scope of the arbitration

clause cannot be extended to include within its ambit, non-contractual issues, that have only

some form of indirect connection with the Charterparty. Thus, the issue relating to lien on sub-

freights that has not been mentioned in the head voyage Charterparty23 is a non-contractual

issue and does not relate to the ‘charter’ itself. Hence, the claim of lien on sub-freight made

against Idoncare cannot fall under the ambit of ‘arising out of or in connection with this Charter

party’, thereby making the arbitration clause of the head voyage Charterparty inapplicable to

Idoncare.

16 Hatfield v. Health Insurance Commission, [1987] 77 ALR 103, 107. 17 Sabah Shipping (Pakistan) Ltd v. Government Of The Islamic Republic Of Pakistan, [2004] 3 SLR(R) 184,

189. 18 Walter Rau Neusser Oel Fett AG v. Cross Pacific Trading Ltd., [2005] FCA 1102, 1112. 19 E. B Aaby’s Rederi A/S v. Union Of India (“The Evje”), [1974] 2 Lloyd’s Rep 57, 65. 20 Hi-Fert Pty Ltd v. Kiukiang Maritime Carriers Incorporation (“The Kiukiang Career”), [1999] 2 Llyod’s

Rep 782, 800 21 Ibid at 791. 22 “COAL-OREVOY” Standard Coal and Ore Charterparty: Cl. 26(c), Pg. 32 of Bundle. 23 “COAL-OREVOY” Standard Coal and Ore Charterparty: Cl. 19(a), Pg. 31 of Bundle.



[ISSUE II.] THE CLAIMANT’S EXERCISE OF LIEN ON SUB-FREIGHT IS NOT

VALID

[¶12.] It is submitted before the Tribunal that in the absence of an express right to exercise

lien, the Claimant, that is, Furnace’s exercise of lien on sub-freight is invalid. [A] Also, the

exercise of lien on sub-freight by Furnace is not supported by the theory of assignment. [B]

Further, it is the headowner, that is, IMLAM who is the carrier and not Furnace. Hence, Furnace

cannot demand freight from Respondent No. 2, that is, Idoncare. [C]

A. IN THE ABSENCE OF AN EXPRESS CONTRACTUAL CLAUSE, THE EXERCISE OF LIEN ON SUB-

FREIGHT BY FURNACE IS INVALID.

[¶13.] It is respectfully submitted that the right of lien on sub-freight can be exercised only

when such right is provided by an express clause in the Charterparty.24 The right of lien on

sub-freight is therefore a non-possessory contractual right25 and cannot be claimed as an

equitable lien.26

[¶14.] In the present case, the head voyage Charterparty does not provide Furnace with the

right to exercise lien on sub-freight.27 Hence, the exercise of such lien by Furnace is invalid.

B. THE EXERCISE OF LIEN ON SUB-FREIGHT BY FURNACE IS NOT SUPPORTED BY THE THEORY OF

ASSIGNMENT.

[¶15.] It is submitted that the prevalent view regarding exercise of lien on sub-freights,

provides for exercise of such lien by way of assignment of freight due to a charterer as security

24 In Re North Atlantic And Gulf S.S. Co, 204 F.Supp. (SDNY 1962) 899, 903; Marine Traders Inc v. Seasons

Navigation Corporation, 422 F.2d (1970) 804, 805. 25 Agnew v. Commissioner Of Inland Revenue, [2001] 2 AC 710, 727; The Juridical Nature Of A Lien On Sub-

Freights, Fidelis Oditah, Lloyd’s Maritime And Commercial Law Quarterly (1989), Pg. 191, 197. 26 The Shipowner’s Lien On Sub-Freights And Personal Property Securities Regimes, Matthew Woolley,

Australian And New Zealand Maritime Law Journal, Vol. 28 (2014), Pg. 69, 74. 27 “COAL-OREVOY” Standard Coal and Ore Charterparty: Cl. 19(a), Pg. 31 of Bundle.



against freight owed by the charterer to the owner.28 Under the Civil Law Act, 190929 of

Singapore, assignment must be in writing and notice of the same must be given to the debtor.

However, if any of the aforementioned requirements is not fulfilled, assignment can be in the

form of equitable assignment only.30 For such a claim of equitable assignment to succeed, an

intention to assign must be proved.31

[¶16.] In the present case, the statutory requirements under Singapore law have not been

fulfilled. Also, due to lack of intention on the part of Inferno to assign to Furnace, the right to

collect freight from Idoncare, the equitable assignment theory does not apply. Hence, Furnace

is not entitled to claim lien on sub-freight as per the theory of assignment.

C. FURNACE, NOT BEING THE CARRIER, CANNOT VALIDLY EXERCISE LIEN ON SUB-FREIGHT.

[¶17.] It is submitted before the Tribunal that Furnace is not the carrier of the goods in the

present case. [C.1] Hence, it cannot demand from Idoncare, the freight that is unpaid by it to

Inferno. [C.2]

C.1 Furnace is not the carrier in the present case.

[¶18.] It is submitted before the Tribunal that it is the shipowner, and not the charterer who is

generally presumed to be the carrier. [I]. Also, in order to determine the identity of the carrier

in a case, regard must be given to the peculiar facts and circumstances of that case. [II]

[I.] It is the shipowner, and not the charterer who is generally presumed to be the carrier.

[¶19.] It is submitted that in case of a Charterparty, not being a demise charter, the contract of

carriage of goods is made with the shipowner and not with the charterer.32 This indicates clearly

28 Western Bulk Shipowning III A/S v. Carbofer Maritime Trading ApS (“The Western Moscow”), [2012] 2

Lloyd’s Rep 163, 168. 29 § 4(8), Civil Law Act (Ch. 43), 1909. 30 IM Skaugen SE & Anr. v. MAN Diesel And Turbo SE & Anr, [2016] SGHCR 6, 31. 31 Coulter v. Chief Constable Of Dorset Police, [2004] EWCA Civ. 1259, 1263. 32 Whener v. Dene Steam Shipping Co., [1905] 2 K.B. 92, 95.



that the shipowner, and not the charterer, is the carrier in such circumstances. Under a time

Charterparty, the general rule that the shipowner is the carrier, persists, unless the charterer on

his part gives a contrary undertaking.33

[¶20.] In the present case, there is no demise charter involved at any stage in the chain of

charterparties. Also, the time charterer, that is, Furnace has given no undertaking contrary to

the general rule that the shipowner is the carrier. Hence, the shipowner, that is, IMLAM and

not Furnace, is the carrier.

[¶21.] Further, it is submitted that the master who has no direct relationship with the charterer,

acts under the charterer’s directions, by virtue of stipulations in the charter, mainly the

‘employment clause.’34 The ‘employment clause’ that provides for the master to sign bills as

presented by the charterer, however, does not mean that the master acts as the agent of the

charterer.35 The master, instead, acts on behalf of the shipowner who is the true principal of the

master.36 It is therefore the shipowner who, through the master, contracts with shippers for the

charterer’s benefit.37 Till the relationship between the master and the shipowner subsists, with

respect to shippers who are unaware of any change in the master’s authority, the general rule

is that the master by signing the bills of lading binds the shipowner.38 This is because,

irrespective of the charter being a voyage or a time charter, it is the shipowner who employs

the master and the crew that perform the voyage.39

[¶22.] In the present case, the master of MV Tardy Tessa acts under the directions of the time

33 Patterson Steamships Limited v. Aluminium Company of Canada, [1951] S.C.R. 852, 854. 34 Thomas Gilbert Carver, Raoul P. Colinvaux, Carver’s Carriage By Sea, Stevens & Sons Ltd., 13th Ed. (1982),

Pg. 575. 35 G.H Treitel,, Francis Martin, Baillie, Reynolds, Thomas Gilbert Carver, Carver On Bills Of Lading, Sweet &

Maxwell, 3rd Ed. (2011), Pg. 184. 36 The Identity Of Carrier Problem Under Time Charters: Diversity Despite Unification Of Law, Caslav

Pejovic, Journal Of Maritime Law And Commerce, Vol. 31 (2000), Pg.379, 382. 37 John A.C. Cartner, Richard Fiske, Tara Leiter, The International Law Of The Shipmaster, Informa Law

Routledge, 1st Ed. (2009), Pg. 140. 38 Sandeman v. Scurr, [1866] LR 2 QB 86, 98. 39 Ibid at 90.



charterer, that is, Furnace.40 However, this does not indicate that the master is acting on behalf

of Furnace. It means that the master is acting on behalf of IMLAM, who is the true principal

and from whom he derives his authority. Hence, IMLAM is the carrier, and not Furnace.

[II.] In order to determine the identity of the carrier, due regard must be given to the

peculiar facts and circumstances of a particular case.

[¶23.] It is submitted that a clause in a time charter, that allows the master to sign bills of

lading as presented in conformity with Mates’ receipt, indicates that any bill issued under such

clause will bind the shipowner as carrier.41 Such clause allows the charterer to present a bill to

the master that is to be signed by the master as shipowner’s bill, affirming a contract between

the shipowner and shippers.42 Also, when the bill of lading clause allows the charterer to sign

bills on the master’s behalf, it suggests that the intention was to designate the shipowner as

carrier.43 Thus, the charterer acts as agent of the master44, who is in turn acts on behalf of the

shipowner.

[¶24.] In the present case, the bill of lading clause in the time charter between IMLAM and

Furnace contains provisions similar to the aforementioned terms.45 Hence, it substantiates the

fact that the contract of carriage was entered into by IMLAM, as the carrier, with Idoncare.

[¶25.] Further, it is respectfully submitted that to identify the carrier in a particular case, the

face of the bill of lading must be examined at the first instance.46 If the face of the bill indicates

clearly and without ambiguity, the carrier’s identity, the shipper is expected to rely on the same

40 Time Charterparty: Cl. 8, Pg. 3 of Bundle. 41 SS. Knutsford, Limited v. Tillmanns & Co., [1908] A.C. 406, 410. 42 “The Berkshire”, [1974]1 Lloyd’s Rep 185, 188. 43 The Identity Of The Carrier Under Bills Of Lading, J. Bassindale, Clifford Chance Maritime Review, Vol. 11

(1992), Pg. 1, 5; The Rewia, [1991] 2 Lloyd’s Rep 325, 333. 44 Terence Coghlin, Andrew W. Baker Q.C., Julian Kenny, John D. Kimball, Thomas H. Belknap, Time

Charters, Informa Law Routledge, 7th Ed. (2014), Pg. 395. 45 Time Charterparty: Cl. 31, Pg. 12 of Bundle. 46 Homburg Houtimport B.V. v. Agrosin Private Ltd. (“The Starsin”), [2003] 1 Lloyd’s Rep 571, 583.



and not resort to detailed conditions on the reverse of the bill.47 Instances like signature of the

master on the bill,48 mention of the terms ‘IN WITNESS whereof the Master or the agent of

the said vessel has signed...’ in the attestation clause,49 the bill containing the name of the

shipowner in its heading,50 mention of the name of the vessel on the face of the bill51 strongly

indicate that the shipowner is the carrier of the goods.

[¶26.] In the present case the face of the bill of lading contains all the aforementioned

instances.52 Hence, the headowner, that is, IMLAM is the carrier.

C.2 Freight under the bill of lading is due to the carrier, that is, IMLAM.

[¶27.] It is submitted that the expression ‘freight payable as per Charterparty’ mentioned in a

bill of lading, gives the shipowner, a legal right to claim freight from the shipper, when the

shipowner is party to such bill of lading.53 This indicates that when a bill of lading is an

‘owner’s bill’, the obligation to pay freight under the bill of lading is towards the owner.54

In the present case, the headowner, that is, IMLAM is the carrier and is thus entitled to claim

freight from Indoncare. Hence, Furnace which is not the carrier cannot validly claim freight

under the bill of lading, from Idoncare.

[ISSUE III.] THE CLAIMANT’S EXERCISE OF LIEN ON CARGO IS NOT VALID

[¶28.] It is submitted before the Tribunal that the lien clause in the head voyage Charterparty

47 Vastfame Camera Ltd. v. Birkart Globistics Ltd., [2005] 4 H.K.C. 117, 126. 48 The Liability Of A Carrier Under A Bill oF Lading When The Goods Are Not Received By The Carrier, H.S.

Ross, Michigan Law Review, Vol. 15 (1916), Pg. 38, 38. 49 MB Pyramid Sound NV v. Briese Schiffarts GmbH and Co. KG MS “Sina” And Latvian Shipping Association

Ltd (“The Ines”), [1995] 2 Lloyd’s Rep 144, 149; Fetim B.V. v. Oceanspeed Shipping Ltd. (“The Flecha”),

[1999] 1 Lloyd’s Rep 612, 618. 50 The Identity Of Carrier Problem Under Time Charters: Diversity Despite Unification Of Law, Caslav

Pejovic, Journal Of Maritime Law And Commerce, Vol. 31 (2000), Pg.379, 398. 51 CN Marine Incorporation v. Carling O’ Keefe Breweries Of Canda and Others, LMLN (March 1990), Pg. 1. 52 Bill of Lading, Pg. 41 of Bundle. 53 Julian Cooke, Timothy Young Q.C., Michael Ashcroft Q.C., Andrew Taylor, John D. Kimball, David

Martowski, LeRoy Lambert, Michael Sturley, Voyage Charters, Informa Law Routledge, 4th Ed. (2014), Pg.

316. 54 Terence Coghlin, Andrew W. Baker Q.C., Julian Kenny, John D. Kimball, Thomas H. Belknap, Time

Charters, Informa Law Routledge, 7th Ed. (2014), Pg. 592.



cannot be used by the Claimant, that is, Furnace to exercise lien on the goods of Respondent

No. 2, that is, Idoncare. [A] Further, in order to exercise a valid lien, the party seeking to

exercise such lien must make a valid demand, [B] and the lien must be exercised only for such

claims that have been specified in the Charterparty. [C] Moreover, a lien can be exercised only

at the port of discharge. [D] Furnace is not entitled to recover the cost of exercising the lien.

[E]

A. THE LIEN CLAUSE IN THE HEAD VOYAGE CHARTERPARTY CANNOT BE USED TO EXERCISE

LIEN ON THE GOODS OF IDONCARE.

[¶29.] It is submitted that, in a case that involves the exercise of a contractual lien, such lien

can be enforced only against a party to that particular contract.55 Such a contractual lien

depends completely on the terms of the contract.56 A lien clause in a particular Charterparty

thus, does not give the shipowner under that Charterparty the right of lien against the goods of

the shipper who has no contractual relationship with the shipowner.57 The shipowner, thus,

does not have a lien over the goods of the sub-charterer who is also the shipper, for a freight

payable under the head voyage Charterparty.58 In order to bind the holder of bill of lading,

there must be a valid incorporation clause in the bill that incorporates the lien clause of the

Charterparty into the bill.59 In the absence of a valid incorporation the rule of privity of contract

would apply and the owners will thus not be able to exercise a lien over the cargo of the

shipper,60 who has entered into agreement with the charterer.61

[¶30.] In the present case, the cargo on which Furnace, seeks to exercise a lien, is owned by

55 Felix W. H. Chan, Jimmy J. M. Ng, Bobby K.Y. Wong, Shipping And Logistics Law : Principles And

Practice In Hong Kong, Hong Kong University Press, 1st Ed. (2002), Pg. 332. 56 David Jackson, Enforcement Of Maritime Claims, Informa, 4th Ed. (2005), Pg. 463. 57 Turner v. Haji Goolam, [1904] AC 826, 832. 58 Flat-Top Fuel Co. Inc. v. Martin, 85 F.2d (1936) 39, 40. 59 Simon Baughen, Shipping Law, Routledge, 5th Ed. (2012), Pg. 214. 60 Melis Ozdel, Bills Of Lading Incorporating Charterparties, Bloomsbury Publishing, 2nd Ed. (2015), Pg. 88. 61 Maritime Liens, The American Law Register, The University Of Pennsylvania Law Review, Vol.5 (1857),

Pg. 129, 134.



the shipper, Idoncare, who has no contractual relationship with Furnace. Also, there has been

no valid incorporation of the lien clause of the head voyage Charterparty into the bill of lading

issued to the shipper. Thus, the rule of privity of contract applies and Furnace cannot exercise

a lien on the goods of the shipper who is not a party to the contract between Inferno and

Furnace.

[¶31.] Further, even in the presence of a lien clause in the bill of lading, a disponent owner

who has no contractual relationship with the shipper cannot exercise a lien on the goods owned

by the shipper.62

[¶32.] In the present case, even if the lien clause of the head voyage Charterparty is considered

to have been incorporated in the bill of lading, Furnace being a disponent owner cannot exercise

lien on the goods of Idoncare, with which it has no contractual relationship.

B. IN ORDER TO EXERCISE A VALID LIEN, THE PARTY SEEKING TO EXERCISE SUCH LIEN MUST

MAKE A VALID DEMAND.

[¶33.] It is submitted that, one of the fundamental requirements to exercise a lien is that a valid

demand must be made for the sum with regard to which the lien is sought be exercised.63 In

order to make a valid demand, the party that exercises the lien must specify a definite amount

for the same or give to the owner of the goods such details from which he can calculate the

sum for which lien is being exercised.64 Thus, a lien can be exercised only for a sum that is due

only if such sum is ascertainable and not for mere claims of unliquidated damages that are not

ascertainable.65 The party relying on the lien clause must be careful so that it insists on payment

62 Ocean Projects Inc. v. Ultratech Pte Ltd, [1994] 2 SLR(R) 245, 246. 63 Julian Cooke, Timothy Young Q.C., Michael Ashcroft Q.C., Andrew Taylor, John D. Kimball, David

Martowski, LeRoy Lambert, Michael Sturley, Voyage Charters, Informa Law Routledge, 4th Ed. (2014), Pg.

468. 64 Albemarle Supply Co. Ltd. v. Hind & Co., [1928] 1 KB 307, 308. 65 David Glass, Freight Forwarding And Multi Modal Transport Contracts, Informa Law Routledge, 2nd Ed.

(2012), Pg.114.



of only such sums that are properly ascertained.66 Claiming lien on terms like ‘damages’ cannot

be valid because damages could refer to any amount of money that will place the innocent party

in the same place as if it had suffered no loss.67 It is not a completely factual question, but also

involves determination of rights, liabilities and liberties of the parties.68

[¶34.] In the present case, Furnace has served upon Inferno, a notice of lien for claims of

damages, loss, costs and expenses that have been incurred and are continuing to incur.69 Such

aforementioned claims, being general in nature, can include a wide variety of amounts and

therefore, cannot be calculated in the absence of any details. Hence, no valid demand has been

made by Furnace, thereby invalidating its exercise in lien on cargo.

C. THE LIEN MUST BE EXERCISED ONLY FOR SUCH CLAIMS THAT HAVE BEEN SPECIFIED IN THE

CHARTERPARTY.

[¶35.] It is submitted that an agreement providing for a lien will be constricted only to such

terms that are expressly given.70 No lien can be exercised for sums that are due under a contract

other than the terms that have been expressly mentioned.71 Thus, if a Charterparty does not

provide for lien with respect to damages for detention, no lien can be claimed for the same.72

Also, the lienee cannot claim lien for cost incurred in exercising the lien in the absence of any

express provision in the Charterparty.73

[¶36.] In the present case, the Charterparty between Furnace and Inferno provides for lien for

freight, dead freight, demurrage and general average contribution that is due under the

66 Gericke Pte Ltd v. Nortans Shipping Pool Pte Ltd,[1997] 2 SLR(R) 652, 655. 67 British Westing House Electric And Manufacturing Co. v. Underground Electric Railways Co., [1912] AC

673, 676. 68 Kurt A. Becher v. Roplak Enterprises (“The World Navigator”), [1991] 2 Lloyd’s Rep 23, 33. 69 E-mail Conversation Dated October 20, 2016- Notice Of Lien, Pg. 65 of Bundle. 70 Stewart C. Boyd, Steven Berry, Andrew S. Burrows, Bernard Eder, David Foxton, Christopher F. Smith,

Scrutton On Charterparties And Bills Of Lading, Sweet & Maxwell, 21st Ed. (2008), Pg. 344. 71 Lachmi Singh, The Law Of Carriage Of Goods By Sea, Bloomsbury Professional, Pg. 221. 72 Yvonne Baatz, Maritime Law, Inorma Law From Routledge, 3rd Ed. (2014), Pg. 173. 73 Somes v. Directors Of British Empire Shipping Co., 8 H.L. Cas. 338, 342.



Charterparty.74 Hence, in the absence of express contractual terms, Furnace cannot claim lien

for damages, losses, costs and expenses that had incurred under the Charterparty.

D. A LIEN CAN BE EXERCISED ONLY AT THE PORT OF DISCHARGE.

[¶37.] It is submitted that, lien on cargo must be exercised at the discharge port or reasonably

close to such port.75 The lien can be exercised only at a place where there is a demand for the

cargo and the lienor can validly deny possession to someone who demands such cargo.76

[¶38.] In the present case, Furnace is exercising lien on cargo while the vessel is positioned at

Singapore OPL, which is neither the designated discharge port nor close to it. There is no

demand of possession of the cargo at this place. Hence, the exercise of lien on cargo by the

Claimant is invalid.

E. FURNACE IS NOT ENTITLED TO RECOVER THE COST OF EXERCISING THE LIEN.

[¶39.] It is submitted that a party that is claiming an exercise of a possessory lien against the

interest of a true owner, cannot recover the cost of exercising such lien.77 Even though a claim

for lien is allowed, the aggrieved party that is exercising the lien for his own benefit cannot be

given the costs for enforcing such lien.78 So, in the absence of an express contractual provision,

the party claiming a lien on the cargo must enforce such lien at his own cost and expense.79

[¶40.] In the present case, Idoncare has relinquished any interest in the cargo and takes no

position with regard to the application for sale of the cargo.80 So, the preservation and

maintenance of the liened cargo confers no benefit to Idoncare and it is Furnace that is the sole

74 “COAL-OREVOY” Standard Coal And Ore Charterparty: Cl. 19, Pg. 31 of Bundle. 75 Terence Coghlin, Andrew W. Baker Q.C., Julian Kenny, John D. Kimball, Thomas H. Belknap, Time

Charters, Informa Law Routledge, 7th Ed. (2014), Pg. 583. 76 International Bulk Carriers (Beirut) S.A.R.L. v Evlogia Shipping Co SA of Panama (“The Mihalios Xilas”),

[1978] 2 Lloyd’s Rep 186, 192. 77 Somes v. British Empire Shipping Co, 8 H.L. Cas. 338, 342. 78 Ibid at 340. 79 Lowndes, Rudolf, The Law Of General Average And The York-Antwerp Rule, 13th Ed. (2008), Pg. 608. 80 Response Claimant’s Urgent Application For Consolidation And Liberty To Sell The Cargo On Board The

MV “Tardy Tessa” Pendente Lite, Pg. 93 of Bundle.



beneficiary of the preservation of the liened cargo. Hence, Furnace is not entitled to recover

from Inferno, the costs of exercising and maintaining the lien on cargo.

[ISSUE IV.] THE CLAIMANT HAS COMMITTED REPUDIATORY BREACH OF THE HEAD

VOYAGE CHARTERPARTY

[¶41.] It is submitted before the Tribunal that the Claimant, that is, Furnace has wrongfully

terminated the head voyage Charterparty, in the absence of renunciation of the Charterparty by

Respondent No.1, that is, Inferno. [A] Further, on account of such wrongful termination,

Inferno now holds Furnace in repudiatory breach of the Charterparty. [B]

A. FURNACE HAS WRONGFULLY TERMINATED THE HEAD VOYAGE CHARTERPARTY, IN THE

ABSENCE OF RENUNCIATION OF THE CHARTERPARTY BY INFERNO.

[¶42.] It is submitted that renunciation refers to a conduct by which a party to the contract

infers that the opposite party has no intention to perform its obligations under the contract.81 In

order to examine whether or not a conduct amounts to renunciation and thereby a repudiatory

breach, a party must see whether there is an absolute refusal by the opposite party to perform

its contractual obligations.82 Further, for renunciation to amount to an anticipatory breach, there

must be an absolute refusal to perform, such that the renunciation is not conditional upon the

occurring of some circumstance.83

[¶43.] If a party, due to some circumstance is unable to perform, it does not amount to

renunciation and hence, not repudiation.84 This is to say that inability of a party, coupled with

its willingness to perform does not lead to repudiation of the Charterparty by such party.85 A

81 Grand China Logistics Holding (Group) Co. Ltd. v. Spar Shipping, [2016] EWCA Civ 982, 997. 82 Mersey Steel & Iron Company v. Naylor, Benzon & Co., [1884] 9 A.C. 434, 439. 83 Chilean Nitrate Sales Corporation v. Marine Transport Co. Ltd. (“The Hermosa”), [1982] 1 Lloyd’s Rep 570

, 572. 84 Johnstone v. Milling, (1886) 16 Q.B.D. 460, 460. 85 Thorpe v. Fasey, [1949] 2 All ER 393, 394.



party can be held guilty of repudiatory breach only if it evinces an absolute communicated

intention to abandon the contract.86 The innocent party must be able to identify whether or not

the other party has committed a repudiatory breach.87

[¶44.] If a party is unable to bring the conduct of the opposite party under the ambit of

renunciation, termination of the contract on the ground of uncertainty of future performance is

unjustified.88 Thus, words or conduct not amounting to renunciation will not discharge the

innocent party of its contractual obligations.89

[¶45.] In the present case, Inferno, has not been able to nominate discharge port or pay freight

due to the inaction of its charterers, Idoncare.90 Inferno has always been willing to perform the

contractual obligations and have tried to negotiate with Furnace, regarding both nomination of

disport and payment of freight on various occasions.91 Furnace never lacked the intention to

perform the obligations under the head voyage Charterparty and had never communicated to

Furnace, an absolute refusal to perform the contract. Its inability to perform was conditional

on the performance of Idoncare. Hence, Furnace cannot bring Inferno into the ambit of

renunciation. This renders the termination of the head voyage Charterparty by Furnace

wrongful.

B. INFERNO NOW HOLDS FURNACE IN REPUDIATORY BREACH OF THE CHARTERPARTY.

[¶46.] It is submitted that explicit renunciation92 of a particular contract is said to have

occurred when a party expresses a total and absolute refusal to perform the contractual

86 Woodar Investment Development Ltd. v. Wimpey Comstructions (UK) Ltd., [1980] 1 WLR 277, 296. 87 Jill Poole, Textbook On Contract Law, Oxford University Press, 13th Ed. (2016), Pg. 299. 88 Geden Operations Ltd v. Dry Bulk Handy Holdings Inc (“The Bulk Uruguay”), [2014] EWHC (Comm) 885,

891. 89 Joseph Chitty, H.G. Beale, Chitty On Contracts- Vol.1, Sweet & Maxwell, 21st Ed. (2012), Pg. 1712. 90 E-mail Conversation Dated October 15, 2016, Pg. 56 of Bundle; E-Mail Conversation Dated October 19,

2016, Pg.62 of Bundle. 91 E-mail Conversation Dated October 16, 2016, Pg.58 of Bundle; E-mail Conversation Dated October 17, 2016,

Pg.60 of Bundle; E-mail Conversation Dated October 21, 2016, Pg.67, 68 of Bundle. 92 Neil Andrews, Arbitration And Contract Law: Common Law Perspectives, Springer International Publishing,

1st Ed. (2016), Pg. 251.



obligations.93Thus, renunciation includes an intimation to abandon the contract altogether.94

By termination, a party seeks to discharge itself completely from all contractual obligations.95

However, if such termination is wrongful, the party that terminated the contract can now be

held liable for renouncing the contract and thus, for a repudiatory breach of the same.96

Therefore, when a party that terminates a contract when it was not entitled to do the same, the

other party will be able to treat the ‘wrongful termination’ as a ground on which it can

legitimately claim repudiatory breach and hence, termination.97

[¶47.] In the present case, there was no renunciation on the part of Inferno. However, Furnace

has terminated the head voyage Charterparty on the ground of renunciation by Inferno.98 Such

termination is wrongful and thus, Inferno now holds Furnace in repudiatory breach of the head

voyage Charterparty.

[ISSUE V.] THE APPLICATION MADE BY THE CLAIMANT FOR SALE OF CARGO NOT BE

GRANTED

[¶48.] It is submitted before the Tribunal that the Tribunal does not possess the jurisdiction to

grant to the Claimant, that is, Furnace the liberty to sell the cargo on board MV Tardy Tessa.

[A] Also, Furnace has no right of lien on the cargo.[B] Without prejudice to the previous

submissions, Respondent No. 1, that is, Inferno contends that a right of lien does not

automatically give rise to a right to sell such cargo. [C] Further, with regard to the facts and

circumstances of this case, it was not just and necessary to sell the cargo. [D]

93 Ampurius NV Homes Holdings Ltd v. Telford Homes (Creekside) Ltd, [2013] EWCA Civ. 577, 579. 94 Freeth v. Burr, (1874) LR 9 CP 208, 213. 95 Lee Roach, Card And James’ Business Law, Oxford University Press, 4th Ed. (2016), Pg. 291. 96 Janet O’ Sullivan, Jonathan Hilliard, The Law Of Contract, Oxford University Press, 7th Ed. (2016), Pg. 372. 97 Linda Mulcahy, John Tillotson, Contract Law In Perspective, Cavendish Publishing Limited, 4th Ed. (2004),

Pg. 232. 98 E-mail Conversation Dated October 22, 2016- Notice Of Termination, Pg.68 of Bundle.



A. THE TRIBUNAL DOES NOT POSSESS THE JURISDICTION TO GRANT TO FURNACE THE LIBERTY

TO SELL THE CARGO ON BOARD MV TARDY TESSA.

[¶49.] It is submitted that the Tribunal derives its jurisdiction to arbitrate from the law and

arbitration clause of the Charterparty.99 Arbitration agreements are a form of contract that must

be interpreted and construed according to the rules general contractual interpretation.100 An

arbitration clause must be construed according to its language, in the context of the agreement

as a whole, and in the light of the circumstances in which it is made.101 Further, the intention

of parties as to arbitration has to be discerned from the wording of the arbitration clause and

parties cannot be compelled to arbitrate, if they have not consented to arbitrate their disputes.102

The use of the expression ‘arising out of’ in an arbitration clause requires an interpretation

based on the context in which it is used.103 With respect to the expression ‘in connection with’,

although it calls for a wide interpretation, a claim made pursuant to an arbitration clause using

such expression must have a direct connection with the Charterparty.104

[¶50.] In the present case, the arbitration clause of the head voyage Charterparty uses the

expression ‘any dispute arising out of or in connection with this Charter Party…’105 The

purpose of the Charterparty was to provide for the carriage of goods and it could not have been

the intention of the parties to include the issue of sale under the ambit of the Charterparty.

Thus, the parties could not have intended to allow the Tribunal to exercise its jurisdiction under

the said clause regarding the matter of the sale of cargo on board the vessel. It would therefore,

99 Alan Redfern, Law And Practice Of International Commercial Arbitration, Sweet & Maxwell, 1st Ed. (2004),

Pg. 248. 100 Interpretation Of Arbitration Agreements, Ludmila B. Herbst, Continuing Legal Education Society of British

Columbia, Pg. 2, available at https://www.cle.bc.ca/PracticePoints/BUS/12-ArbitrationAgreements.pdf, last

visited: March 25, 2017. 101 Cindy Huras v. Primerica Financial Services Ltd. (2001), CanLII 17321 (ON CA) 1, 4. 102 Premium Nafta Products Limited and Others v. Fili Shipping Company Limited and Others, [2007] EWCA

Civ. 20, 23. 103 Samick Lines Co. Ltd v. Owners of the ‘Antonis P Lemos’ (The ‘Antonis P Lemos’), [1985] AC 711, 727. 104 Sabah Shipping (Pakistan) Ltd v. Government Of The Islamic Republic Of Pakistan, [2004] 3 SLR(R) 184,

189. 105 “COAL-OREVOY” Standard Coal and Ore Charterparty: Cl. 26(c), Pg. 32 of Bundle.



be incorrect to treat the dispute as one which is ‘arising out or in connection with’ the

charterparty. Thus, the Tribunal would not have jurisdiction to grant to Furnace the liberty to

sell the cargo.

B. FURNACE HAS NO RIGHT OF LIEN ON THE CARGO.

[¶51.] It is submitted that the lien exercised by Furnace is not sustainable in law. Furnace thus

has no interest in the cargo. Hence, Furnace cannot maintain a claim for sale of such cargo.

C. A RIGHT OF LIEN DOES NOT AUTOMATICALLY GIVE RISE TO A RIGHT TO SELL SUCH CARGO.

[¶52.] Without prejudice to the previous submissions, it is submitted that the right to exercise

lien on goods does not confer a right to sell the goods so retained by the lien.106 The nature of

a right of lien is a passive right to hold the goods in possession, unless payment of the amount

due is made.107 Thus, possessory lien on cargo does not give to the person exercising the lien,

a right to use or sell such cargo.108

[¶53.] In the present case, Furnace is claiming to exercise a lien on the cargo on board MV

Tardy Tessa.109 Even if the same is assumed to be valid, it cannot confer upon Furnace the right

to sell such cargo.

D. IT WAS NOT JUST AND NECESSARY TO SELL THE CARGO.

[¶54.] It is submitted that to determine whether or not it is necessary to order the sale of a

cargo, it must be seen as to whether there are other alternatives available, whose recourse can

be taken, to preserve the cargo.110 One such reasonable alternative is to warehouse the cargo.111

106 Halsbury, Lord Simond, Halsbury's Laws of England: Vol. 24, 3rd Ed. (1958), Pg. 144. 107 Faith Maritime Co. Ltd. v. Feoso (Singapore)Pte Ltd, [2002] SGHC 229, 244. 108 Larner v. Fawcett, [1950] 2 All ER 727, 731; Halesowen Presswork and Assemblies Ltd v. Westminster

Bank Ltd, [1971] 1 QB 1, 27. 109 E-Mail Conversation Dated October 20, 2016- Notice Of Lien On Cargo, Pg. 65 of Bundle. 110 Maldives Airports Co Ltd and another v. GMR Malé International Airport Pte Ltd, [2013] 2 SLR 449, 465. 111 David Yates, Contract For The Carriage Of Goods By Land, Sea And Air, Lloyd’s Of London Press, (2000),

Pg. 29.



Also, the law of Singapore allows the warehousing the cargo without losing the lien on such

goods.112

[¶55.] In the present case, Furnace claims a lien over the cargo on board MV Tardy Tessa,

thereby justifying its right to sell the cargo.113 However, in light of the law in Singapore, it is

clear that where alternative remedies like warehousing the cargo were available to Furnace, its

claim of lien over the cargo cannot justify its right to sell such cargo. Hence, it is not ‘necessary’

for Furnaceto sell the cargo.

[¶56.] Further, in order to determine the necessity of sale of cargo, it is important to compare

the value of such cargo with the amount due to the lienor, such that the amount due should not

exceed the cargo value.114

[¶57.] In the present case, the freight due from Inferno to Furnace amounts to USD

771,120.48115 and the drifting costs that Furnace seeks to impose amounts to a total of USD

101666.67.116 The combination of these dues does not exceed the value of the cargo

presently117 and is also not likely to exceed the cargo value in the near future. Hence, it is not

just and necessary for Furnace to sell the cargo.

112 § 127, Merchant Shipping Act (Ch. 179), 1994. 113 Urgent Application For Consolidation And Liberty To Sell The Cargo On Board The MV “Tardy Tessa”

Pendente Lite, Pg. 89 of Bundle. 114 Five Ocean Corporation v. Cingler Ship Pte Ltd. (PT Commodities & Energy Resources, Intervener), [2015]

SGHC 311, 340. 115 Invoice, Pg. 49 of Bundle. 116 E-mail Conversation Dated October 21, 2016, Pg. 67 of Bundle. 117 Parties’s Joint Expert Report, Pg. 101 of Bundle.

TEAM 02 -PRAYER-

MEMORANDUM FOR RESPONDENTS Page XVIII

PRAYER

In response to the CLAIMANT’s memorandum, procedural orders issued by the TRIBUNAL,

and in light of the above submissions, the RESPONDENTS respectfully request the

TRIBUNAL to find and DECLARE that:

1. The TRIBUNAL does not have jurisdiction to try this dispute between the CLAIMANT and

the RESPONDENT NO. 2.

2. The exercise of the lien over sub-freight is invalid and unlawful.

3. The exercise of the lien over cargo is invalid and unlawful.

4. RESPONDENT NO. 1 is not liable to the CLAIMANT for any claims for breach of

Charterparty obligations.

5. The TRIBUNAL does not have the jurisdiction and/or power to grant liberty to the

CLAIMANT to sell the cargo on board the M.V. Tardy Tessa.

6. The CLAIMANT is not at liberty to appraise or sell the cargo presently lying on board

M.V. Tardy Tessa.

7. Any other interests & costs in favour of the RESPONDENTS.

Dated this 19th day of April 2017 by the Counsel for RESPONDENTS NO. 1 and 2, Inferno

Resources Sdn Bhd and Idoncare Berjaya Utama Pty. Ltd., respectively.