eighteenth annual international maritime law arbitration ... · eighteenth annual international...

EIGHTEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2017

MEMORANDUM FOR CLAIMANT

NALSAR UNIVERSITY OF LAW

TEAM 16

ON BEHALF OF: AGAINST:

FURNACE TRADING PTE LTD. INFERNO RESOURCES SDN BHD

AND IDONCARE BERJAYA UTAMA PTY. LTD.

IN THE MATTER OF AN ARBITRATION UNDER THE INTERNATIONAL

ARBITRATION ACT (CAP 143A, REV ED 2002) AND THE SINGAPORE

CHAMBER OF MARITIME ARBITRATION RULES

COUNSEL

SWINI NIPUNA SAMIHA PRAKHAR

KHARA VARMAN GOPAL GUPTA

TEAM 16 MEMORANDUM FOR CLAIMANTS

I

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ......................................................................................................... III

INDEX OF AUTHORITIES ......................................................................................................... IV

STATEMENT OF FACTS .............................................................................................................. 1

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

CLAIMANT TO SELL THE CARGO ON BOARD THE MV TARDY TESSA PENDENTE LITE. ...... 3

(A) SINGAPORE IS THE SEAT OF ARBITRATION .................................................................... 3

(B) SINGAPORE LAW AS PER SCMA RULES GIVES ARBITRAL TRIBUNALS THE POWER TO

ORDER INTERIM RELIEF ............................................................................................................ 4

(C) THE ARBITRATION CLAUSE IS WIDE ENOUGH TO COVER THIS DISPUTE .......................... 5

II. CLAIMANT IS ENTITLED TO DETENTION AND/OR OTHER DAMAGES UNDER THE

VOYAGE CHARTERPARTY. ........................................................................................................ 7

(A) REPUDIATORY BREACH OF THE CHARTERPARTY ........................................................ 7

(B) THERE IS NO BREAK IN THE CHAIN OF CAUSATION. ................................................. 11

(C) REMOTENESS OF DAMAGE ......................................................................................... 12

(D) FREIGHT IS EARNED ................................................................................................... 12

III. THE CLAIMANT IS ENTITLED TO EXERCISE LIEN ON CARGO ........................................ 13

(A) THERE IS A CONTRACTUAL RIGHT UNDER THE CHARTERPARTIES FOR THE

CLAIMANT TO EXERCISE LIEN. ............................................................................................. 14

(I) THE LIEN CLAUSE HAS SUCCESSFULLY BEEN INCORPORATED IN THE BILL OF

LADING. ............................................................................................................................. 14

(II) CLAIMANT IS A PARTY TO CONTRACT OF CARRIAGE ............................................... 15


II

(B) THE CLAIMANT HAS THE ABILITY TO EXERCISE LIEN .............................................. 16

(I) FREIGHT IS EARNED ................................................................................................... 16

(II) CLAIMANT IS IN THE RIGHTFUL POSSESSION OF THE CARGO ...................................... 16

(III) LIEN CAN BE EXERCISE BEFORE COMPLETION OF VOYAGE ................... 17

(C) CLAIMANT CAN EXERCISE LIEN ON SUB-FREIGHTS ................................ 18

(I) LIEN IS NOT LOST ................................................................................... 19

(II) SHIPOWNER CAN EXERCISE LIEN ON BEHALF OF THE CLAIMANT ........... 19

IV. IT IS JUST AND NECESSARY FOR THE CARGO TO BE SOLD PENDENTE LITE .. 20

(A) THE TRIBUNAL HAS UNFETTERED JURISDICTION TO ORDER INTERIM

MEASURES ........................................................................................................ 20

(B) THERE IS NO PREJUDGMENT OF MERITS ................................................. 21

(C) IT IS URGENT TO PREVENT IRREPARABLE HARM ....................................... 21

(D) BALANCE OF HARDSHIPS TIPS IN FAVOUR OF RELIEF ............................... 22

(E) IT IS JUSTIFIED FOR THIS TRIBUNAL TO MAKE AN ORDER ON COSTS .......... 24

REQUEST FOR RELIEF .......................................................................................... 26


III

LIST OF ABBREVIATIONS

BBB Before Breaking Bulk

Claimant Furnace Trading Pte Ltd.

Disponent Owner Furnace Trading Pte Ltd.

IAA International Arbitration Act, 2009

Headowners Imlam Consignorist GmbH.

Master Master of M.V. Tardy Tessa:- Tan Xiag Ming

Moot Problem International Maritime Law Arbitration Moot,

2017 Moot Scenario

Parties Claimant and Respondents

Respondent Inferno Resources Sdn Bhd.

SCMA rules Singapore Chamber of Maritime Arbitration,

2015

Shipper Idoncare Berjaya Utama Pty Ltd.

Time Charterer Furnace Trading Pte Ltd.

Time Charterparty Time Charterparty between Imlam Consignorist

GmbH and Furnace Trading Pte Ltd.

dated 15th

February, 2016.

UNCITRAL Model Law The United Nations Commission on

International Trade Law Model Law on International

Commercial Arbitration, 1985.

Vessel M.V. Tardy Tessa

Voyage Charterer Inferno Resources Sdn. Bhd.

Voyage Charterparty Voyage Charterparty between Furnace Trading

Pte Ltd. and Inferno Resources Sdn. Bhd.

dated 1st September, 2016.


IV

INDEX OF AUTHORITIES

CASES

Andreas Vergottis v. Robinson David & co. ltd. (1928) 31 Ll.L.rep. 23 15

Ashville Investment Ltd v Elmer Contractors Ltd [1989] QB 488 6

Banque Keyser Ullmann S.A. v Skandia (UK) Insurance Co. [1990] Q.B. 665 11

Bhudra Chand v Betts [1915] 22 Cal LJ 566: 33 IC 347 10

Bunge v Tradax Export [1981] 2 Lloyd‟s Rep 1 7, 8, 18

Canastrand Industries Ltd. v the "Lara S”, [1993] 2 F.C.R. 553 15

Care Shipping Corporation v Latin American Shipping Corporation, [1983] 1

Lloyd‟s Rep 302 20

Cetelem SA v Roust Holdings Ltd [2005] 1 WLR 3555 22

Colonial Bank v European grain & Shipping ltd [1989] 1 Lloyd‟s Rep.431 13

Coppée Lavalin v Ken-Ren (UK), [1994] 2 Lloyd's Rep. 109 25

Dubai Islamic Bank PJSC v Paymentech Merchant Services Inc [2001] 1

Lloyd‟s Rep 65 3

Duncan v Koster (The Teutonia) [1872] LR 4 PC 171 9

Ellis Shipping Corp v Voest Alpine intertrading [1991] 2 Lloyd‟s Rep.599 13

Emilia Shipping Co v State Enterprise for Pulp and Paper Industry, [1991] 1

SLR 411 5, 22

Ethiopian Oilseeds & Pulses Export Corp v Rio del Mar Foods Inc, [1990] 1

Lloyd's Rep 86, 6

Federal Commerce Ltd v Molena Alpha Inc (The Nanfri) [1978] 1 Lloyd‟s

Rep. 287 14

Fiona Trust & Holding Corporation and others v Privalov and others [2007]

2 All ER (Comm) 1053 6


V

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

Resources, intervener) 17, 24

Galoo Ltd and Others v Bright Grahame Murray [1994] 1 W.L.R. 1360 11

Gorrisen v Challoner [1925] 23 Lloyd‟s Rep.61 15

Great Elephant Corp. v Trafigura Beheer BV (The Crudesky) [2014] 1

Lloyd‟s Rep. 1 11

Hadley v Baxendale [1854] 9 Ex 341 12

Heskell v Continental Express [1950] 83 Ll. L. Rep. 438 11

HKL Group Co Ltd v Rizq International Holdings Pte Ltd [2013] SGHCR 5 4, 24, 25

Hong Kong Fir Shipping Co. Ltd. v Kawasaki Kisen Kaisha Ltd. [1962] 2 QB

26 (CA) [Hong Kong Fir] 7

ICC case no 8113, 11(1) ICC Bulletin 65 (2000) 67 21

K. Karunanidhi v R. Renganathan, AIR 1973 Mad 443 20

K/S Penta Shipping A/S v Ethiopean Shipping Lines Corp(The Saga Cob)

[1991] 2 Lloyd‟s Rep 398 9

Kaverit Steel Crane Ltd v Kone Corporation [1992] 87 DLR (4th) 129 (refd) 6

Lall v 53–55 Hall Street Pty Ltd [1978] 1 NSWLR 310 20

Lombard North Central plc v Butterworth [1987] QB 527 (CA) 10

Maldives Airport Co Ltd v GMR Male International Airport Pte Ltd

[2013] SGCA 16 24

Miramar Maritime Corporation v Holborn Oil Trading Ltd.(The Miramar)

[1984] 3 WLR 1 15, 20

Molthes Rederi v Ellerman‟s Wilson Line [1926] 26 LI.L. Rep. 259 19

Parker LJ in K/S Penta Shipping AS v Ethiopian Shipping Lines Corp (The 9


VI

Saba Cob) [1992] 2 Lloyd‟s Rep, 545

Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 10, 11, 17, 19

Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1961]

3 W.L.R. 110 8

Santiren Shipping Ltd v Unimarined S.A (The Chrysovalandou dyo) [1981] 1

Lloyd‟s Rep 159 15

SIB International S.R.L. v. Metallgesellschaft Corporation (“The Noel Bay”)

[1989] 1 Lloyd‟s Rep. 361 9, 10

Sulame´rica Cia Nacional de Seguros SA& Ors v Enesa Engelharia Saa &

Ors [2012] EWCA Civ 638 4

The China National Foreign Trade Transportation Corp v Evolgia Shipping

Co. Ltd (Mihalios Xilas), [1978] 2 Lloyd's Rep 186 17

The Evia (No.2) [1982] 2 Lloyd‟s Rep 307 8

The Stelios B Maritime Ltd. v Ibeto Cement Co (The „Stelios B‟) [2006]

EWHC 672 (Comm.), 2007 711 LMLN 2 44F 22

Vagres Compania Maritime SA v Nissho-Iwai America Corp (The Karin

Vatis)[1988] 2 Lloyd‟s Rep.330 13

STATUTES

Chinese Maritime Code,1992 (“The CMC”) 18

International Arbitration Act, 2009 4

SCMA rules, (3rd

edn., 2015) 4, 20

UNICTRAL Model Law (1985) 5

OTHER AUTHORITIES

Born, Gary, International Commercial Arbitration (2nd

edn., Kluwer Law

International, 2014) 5


VII

Higgins, Interim Measures in Transnational Maritime Arbitration, 65 Tulane

L. Rev. 1519, 1535-36 (1991). 5

John F Wilson, Carriage of Goods by Sea (7th

edn., Pearson Education Ltd,

2010) 7, 8

Julian Cooke et al., Voyage Charterers (4th

edn, Informa Law from

Routledge, 2014) 11

LEW/Mistelis/Kroll, Comparitive International Commercial Arbitration (1st

edn., Kluwer Law International 2003) 5

Scrutton, Thomas E, Stewart C. Boyd, A S. Burrows, and David Foxton,

Scrutton on Charterparties and Bills of Lading, (22nd

edn. Sweet & Maxwell

2011)

7, 14, 15, 19,

20, 21

Van den Berg, Yearbook Commercial Arbitration (41st edn., Kluwer Law

International Arbitration 2016). 25

Y. C. Ong & M. P. O'Reilly, Costs in International Arbitration, 83,

(LexisNexis 2016) 20


1

STATEMENT OF FACTS

1. Furnace Trading Pvt Ltd (hereinafter “Claimant”) is a company based in Singapore

who chartered the ship M.V.Tardy Tessa from Imlam Consignorist GmbH

(Hereinafter “Head owners”) under a Time Charterparty for a period of two years.

The Claimant sub-chartered the vessel to Inferno Resources Sdn Bhd (hereinafter

“Respondent”) for the carriage of 84,000.052 MT of Australian Steam Coal.

2. The Claimant is unable to verify the further sub-chartering of the vessel by the Inferno

to Idoncare Berjaya Utama Pty. Ltd (hereinafter referred to as Idoncare) and no

corresponding Charterparty has been identified. A Bill of Lading was issued dated 4th

October 2016, in favour of Idoncare, listing the cargo as 84,000.052 MT of Australian

Steam Coal, and as per Clause (1) of the conditions of carriage on the reverse of the

Bill of Lading, it incorporates all “terms and conditions, liberties and exceptions of

the Charter Party, dated as overleaf”. However, no Charterparty has been identified.

3. The vessel, M.V. Tardy Tessa was carrying coal from Australia to China. The

discharge port had to be selected from a list of eight previously nominated ports as

specified in the Voyage Charterparty, viz. Dalian, Jinzhou, Yingkou, Yantai, Qingdao,

Shanghai, Tianjin, Ningbo. As per the Voyage Charter, the Respondent had to

nominate a discharge port before the vessel passed Singapore for bunkering.

However, the vessel reached the Singapore on 11th

October 2016 and they failed to do

so. The Respondent requested the Claimant to discharge at Busan, South Korea on

16th

October 2016 but the request was denied due to the zombie outbreak in Busan

which made it an unsafe port and non-permissible under both Voyage and Head

Charterparties.

4. Further, respondent had not made payments of freight to the Claimant which, as per

Voyage Charter party, had been due in five banking days after the bill of lading was


2

issued. Respondent alleges that the payment of freight was not made as they did not

receive freight payable from Idoncare. The freight was not paid after repeated

requests by the Claimant. Thus, in order to enforce payment of freight, Claimant sent

a notice of lien on cargo to the respondent, and put Idoncare on notice of lien on

subfreight payable to the respondent.

5. Subsequently, the Respondent nominated the port of Ningbo as the port of discharge

on the 22nd

October along with the declaration that they shall make the payment of

freight after discharge of cargo. However, Claimant took this to be a renunciation of

contract along with the failure to nominate legitimate discharge ports and thereby

terminated the contract.

6. The dispute was submitted to arbitration on 25th

November 2016, but the vessel was

still stranded OPL Singapore, and the crew, not being prepared for such a long

voyage, were suffering from shortage in supplies. Further, the cargo on board was

also deteriorating. To the best of the Claimant‟s knowledge, the vessel remains adrift

OPL Singapore till date.

7. The Claimant intending to exercise lien on cargo on board Tardy Tessa, has requested

the Tribunal to grant them the power to sell the cargo pendente lite, and demands

damages for detention and other damages. The Claimant commenced the arbitral

proceedings to exercise lien over cargo, receipt of damages, and to sell the cargo

pendente lite. The Respondent has denied the claims and has challenged the

jurisdiction of the Tribunal.


3

ARGUMENTS ADVANCED

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

THE CLAIMANT TO SELL THE CARGO ON BOARD THE MV TARDY TESSA

PENDENTE LITE.

The Claimant, Furnace Trading Pte Ltd sub chartered the vessel, Tardy Tessa, to the

Respondent. Tardy Tessa has been adrift the off-port limits of Singapore since 11th

October, 2016, the vessel carries perishable cargo i.e. coal which is overheating to the

extent of apprehension of danger of self-ignition and explosion. Meanwhile, there is a

diabetic person on board and the food and medical supplies are running out. The

Claimant has asked for the permission to sell the cargo on board pendente lite.

Pursuant to S. 16(1) of the International Arbitration Act, 2009 (hereinafter IAA) and

Rule 20(a) of the SCMA rules, which encapsulate the Kompetenz-Kompetenz

principle which is widely accepted in international arbitration, this Tribunal has the

power to rule on its own jurisdiction.

The Tribunal has been approached by the Claimant to allow the sale of cargo on board

the Tardy Tessa pendente lite, as the vessel is adrift and has not been discharged. The

Tribunal has the jurisdiction to hear the proceedings because (A) Singapore is the seat

of arbitration (B) the arbitration Clause covers this dispute (C) the SCMA rules allow

the Tribunal to order interim relief as per the lex arbitri.

(A) SINGAPORE IS THE SEAT OF ARBITRATION

1. As per the Voyage Charterparty concluded between Furnace and Inferno dated

1/9/2016, under Clause 291 this Tribunal has the jurisdiction to hear the proceedings.

Since no seat has been nominated explicitly, it must be determined having regard to

the parties‟ agreement and all the relevant circumstances.2 There is always a strong

1 Voyage Charterparty, Clause 29, Moot Problem, p. 23.

2 Dubai Islamic Bank PJSC v Paymentech Merchant Services Inc [2001] 1 Lloyd‟s Rep 65.


4

presumption that the law of the arbitration agreement should be the law which is most

closely connected to it.3 Therefore, since the contract is governed by Singapore Law

and one of the parties is from Singapore, the law of the arbitration agreement should

also be Singaporean Law. Further, the indication of which procedural rules shall

apply is an indicator of intent as to the seat of arbitration.4 The SCMA rules provide

that where no seat has been declared, “The juridical seat of arbitration shall be

Singapore. Where the seat of arbitration is Singapore, the law of the arbitration under

these Rules shall be Singapore law and the (International Arbitration) Act.” 5

Therefore, it is submitted that Singapore is the seat of arbitration.

(B) SINGAPORE LAW AS PER SCMA RULES GIVES ARBITRAL TRIBUNALS THE POWER TO

ORDER INTERIM RELIEF

2. According to Rule 33(h), the Tribunal has the power to “make orders or give such

directions as it deems fit so far as they are not inconsistent with the (International

Arbitration) Act or any statutory re-enactment thereof… or such law which is

applicable.”6 Where the arbitral rules are silent, the Tribunal may fill in those gaps

with the provisions of the lex arbitri.7 S. 12(1)(d) of the International Arbitration Act,

“12(1) Without prejudice to the powers set out in any other provision of this Act and

in the Model Law, an Arbitral Tribunal shall have powers to make orders or give

directions to any party for –(d) the preservation, interim custody, or sale of any

property which is or forms part of the subject-matter of the dispute;”8 Art. 17 of the

UNCITRAL Model Law (1985) states “Unless otherwise agreed by the parties, the

Arbitral Tribunal may, at the request of a party, order any party to take such interim

3 Sulame´rica Cia Nacional de Seguros SA& Ors v Enesa Engelharia Saa & Ors [2012] EWCA Civ 638.

4 Ibid.

5 22, SCMA rules, (3

rd edn., 2015).

6 HKL Group Co Ltd v Rizq International Holdings Pte Ltd [2013] SGHCR 5.

7 Born, International Commercial Arbitration, 411-13, (2nd edn., Kluwer Law International, 2014), Rubins, In

God We Trust All Others Pay Cash; Security For Costs In International Commercial Arbitration, 11 Am Rev

Intl Arb 307. 8 S.12(1)(d), International Arbitration Act, 2009.


5

measure of protection as the Arbitral Tribunal may consider necessary in respect of

the subject matter of the dispute.”9 In the Voyage Charterparty, it is evident prima

facie that the parties have not barred the provision of interim relief by the Arbitral

Tribunal. By expressly consenting to the arbitration of their dispute in a jurisdiction

that unambiguously gives the Tribunal to order such a sale, the parties have implicitly

consented to the Tribunal‟s jurisdiction to do so. Further, in the Claimant‟s

application to the Tribunal dated 1/12/2016, it is clear that it is an application

concerning a request to sell cargo pendente lite. Additionally, both parties have

brought it up in their petition/response. Such an arbitration Clause ought to be

interpreted to mean that such powers extend not only to the main subject matter of the

dispute, but also to all matters incidental thereto.10

Thus, even if the breach of

Charterparty or lien is considered to be the subject-matter of the dispute, the cargo

also forms a part of the same because it is the subject of the Charter party and the

lien.11

Thus, it is submitted that the parties conferred the Tribunal with jurisdiction to

award interim relief.

(C) THE ARBITRATION CLAUSE IS WIDE ENOUGH TO COVER THIS DISPUTE

3. The crafting of the Law and Dispute Resolution Clause, implies that the parties‟

intention was that it corresponds to Clause 26(c) which provides for arbitration in the

forum of the parties‟ choice. Usually, the kind of dispute that may be validly

submitted to arbitration are contractual claims or claims arising in connection with

contracts, and usually not tortuous, criminal, familial or statutory claims.18

9 Art.17, UNICTRAL Model Law (1985).

10 Higgins, Interim Measures in Transnational Maritime Arbitration, 65 Tulane L. Rev. 1519, 1535-36 (1991).

11 Emilia Shipping Co v State Enterprise for Pulp and Paper Industry, [1991] 1 SLR 411.

18 LEW/Mistelis/Kroll, Comparitive International Commercial Arbitration, 129-164 (1

st edn., Kluwer Law

International 2003); Born, Gary, International Commercial Arbitration, 636-670, (2nd

edn., Kluwer Law

International, 2014)


6

Accordingly, Clause 26(c) states that “any dispute arising out of or in connection with

this Charter Party shall be referred to arbitration.” This Clause is wide enough to

bring within its scope any claim that relied on the existence of a contractual

relationship, even if the claim itself was a claim in tort.19

The Claimant is referring

this dispute to the Tribunal based on the contractual relationship of the (disponent)

Owner and Charterer. Therefore, it is submitted that this dispute is covered by the

arbitration agreement.

4. Even if the Respondent submits that Clause 26(c) cannot correspond to the dispute

resolution Clause, there is always a strong presumption that the parties as

businessmen intended to submit all disputes to arbitration unless expressly agreed

otherwise.20

In the absence of a clear intention to the contrary, it should not be

supposed that parties wanted a split jurisdiction.21

There is no clear contrary intention

expressed on the face of the instrument, and further, the COAL-OREVOY form

provides for only arbitration as a method of dispute resolution. In the light of the

same, it would be erroneous to assume that the parties wanted to submit certain

disputes to litigation, absent express intention. In the light of ambiguities judicial

trends22

worldwide mandate an interpretation which gives effect to the arbitration

clause over one which does not.23

It is therefore submitted that this dispute is covered

by the arbitration agreement and should be adjudicated upon by the Tribunal.

19

Kaverit Steel Crane Ltd v Kone Corporation [1992] 87 DLR (4th) 129 (refd) 20

Fiona Trust & Holding Corporation and others v Privalov and others [2007] 2 All ER (Comm) 1053. 21

Landgericht Hamburg, 20 April 1977, IV YBCA 261 (1979); Ashville Investment Ltd v Elmer Contractors Ltd

[1989] QB 488, 517: “very slow to attribute to a reasonable party an intention that there should in any

foreseeable eventuality be two sets of proceedings”; see also Ethiopian Oilseeds & Pulses Export Corp v Rio del

Mar Foods Inc, [1990] 1 Lloyd's Rep 86, 97: presumption against having two sets of proceedings arising from a

particular transaction. 22

Id at 20. 23

Id at 20.


7

II. CLAIMANT IS ENTITLED TO DETENTION AND/OR OTHER DAMAGES UNDER THE

VOYAGE CHARTERPARTY.

Detention of the vessel caused by the Charterer‟s breach of contract by not giving

orders in due time can hold him liable for damages.30

The Respondent has failed to

nominate a safe port on time and has failed to make the payment of freight within the

stipulated period of time. The vessel has been detained for 10 days prior to the

termination of the contract on 22nd

October, 2016. The additional costs have been

adding up to USD 101,666.67. The Claimant is entitled to detention and other

damages because of (A) the repudiatory breach of the Charterparty (B) there is no

break in chain of causation (C) the damage is not remote (D) the freight is earned.

(A) REPUDIATORY BREACH OF THE CHARTERPARTY

5. The Tardy Tessa is adrift OPL of Singapore, detained for 10 days until the

termination of the Charterparty and the Respondent has not paid freight and refuses to

pay freight until the discharge of cargo. The non-payment of freight has been

considered a repudiatory breach of the contract by the Respondent.

6. A condition is a fundamental term, non-performance of which would entitle the

innocent party to consider the contract as repudiated and itself as discharged from all

outstanding obligations.31

The breach of such a condition deprives the innocent party

substantially the whole benefit of the Charterparty and is generally treated as a

repudiatory breach.32

In absence of indicators, the time clauses of mercantile contracts

are often treated as conditions, so that the innocent party can ascertain the course of

action whether to wait or exercise their rights for breach.33

30

Scrutton, Thomas E, Stewart C. Boyd, A S. Burrows, and David Foxton, Scrutton on Charterparties and Bills

of Lading, 381-389, (22nd

edn. Sweet & Maxwell 2011). 31

John F Wilson, Carriage of Goods by Sea, 348, (7th

edn., Pearson Education Ltd, 2010). 32

Hong Kong Fir Shipping Co. Ltd. v Kawasaki Kisen Kaisha Ltd. [1962] 2 QB 26 (CA) [Hong Kong Fir]. 33

Lord Roskill in Bunge v Tradax Export [1981] 2 Lloyd‟s Rep 1 at p 12.


8

7. An essential term like nomination of a port is a condition as the performance of the

contract by one party depends on the other party‟s performance of another term.34

Here, Clause 16 of the head Voyage Charterparty specifies that the Charterers may

decide the discharge port when the vessel passes Singapore for bunkering. Hence, it is

a temporal/time clause as it sets the specific event before which the discharge port

should be nominated. Hence, the completion of voyage and performance of contract

depends on the Charterers‟ duty to nominate the port of discharge and the term is a

condition to contract.

8. The Respondent failed to nominate the port of discharge by the time the vessel

reached i.e. 11th

October in violation of the condition of the contract. After repeated

requests, the Respondent finally nominated Busan, South Korea as port of discharge

due to congestion at the Chinese ports. The Claimant could not allow the vessel to

proceed to the port of Busan for the two reasons:

1) Busan is not among the list of nominated ports under the Voyage Charterparty

and the vessel is not obliged to proceed to any port not mentioned in the

Charterparty.35

2) Clause 1(b) and 1(c) of the Head Time Charterparty permits “lawful trades

between safe ports and safe places within Asia and Australia”. However, Busan is

not within the permitted range as it is unsafe due to the zombies arriving from

Seoul and the vessel is unequipped to combat any attack. The Charterer is under

the obligation to nominate a safe port36

and not an impossible port.37

The presence

of zombies in Busan is a threat covered under war risks mentioned in Clause

34

Ibid, at p 15. 35

Supra n.31, at 16-20. 36

The Evia (No.2) [1982] 2 Lloyd‟s Rep 307. 37

Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1961] 3 W.L.R. 110.


9

34(a)38

of the Head Time Charterparty and Clause 18(a)(ii)39

of the Voyage

Charterparty. The Charterers have not nominated a safe port. The safety of a port

can be ascertained through the test of foreseeability.40

The reasonable foresight of

the Master of the vessel41

and the Charterers can give them the benefit of

declining the vessel to proceed to the nominated port. Clause 34 (b) and Clause

18(c) mention that the vessel is not obliged to continue to proceed to a port which

by reasonable judgment may be exposed to war risk. The need for having razor

wires, armed guards etc. on-board signify the gravity of the situation. Despite the

request of assurance by the Respondent, the vessel is not obligated to proceed due

to reasonable apprehension of danger. The Claimant has not expressly accepted

the repudiation of the Charterparty by delayed nomination of an unsafe port

because the Claimant has recognized the secondary obligation of the Respondent

to nominate a safe port.42

Also, the secondary obligation arises under the Clause

18 of the Head Voyage Charterparty which states that the Respondent may

nominate any other safe port and the contract may be cancelled only if such port is

not nominated within 48 hours of receipt of such notice of requirement. Here, the

Respondent has not nominated the port within 48 hours of refusal of accepting

Busan as the port of discharge through communication dated 17th

October, 2016.

In the case of Noel Bay43

, it was held that waiting for a couple of days before

accepting repudiation was not an unreasonable delay as it is within reasonable

prospect of the Claimant that the nomination of a safe port would be nominated

38

Time Charterparty, Clause 34 (b), Moot Problem, p. 13. 39

Voyage Charterparty, Clause 18(a)(ii), Moot Problem, p. 30. 40

Charles G. C.H. Baker and Paul Davids, “The Politically Unsafe Port” (1986), L.M.C.L.Q. 112; Reardon

Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1961] 3 W.L.R. 110; K/S Penta Shipping A/S v

Ethiopean Shipping Lines Corp(The Saga Cob) [1991] 2 Lloyd‟s Rep 398 a. 41

Parker LJ in K/S Penta Shipping AS v Ethiopian Shipping Lines Corp (The Saba Cob) [1992] 2 Lloyd‟s Rep,

545 at 551. 42

Duncan v Koster (The Teutonia) [1872] LR 4 PC 171. 43

SIB International S.R.L. v. Metallgesellschaft Corporation (“The Noel Bay”) [1989] 1 Lloyd‟s Rep. 361.


10

and the payment would be made. Therefore, initial non-acceptance of the

repudiation does not amount to unreasonableness and failure of mitigation on the

part of the Claimant. However, they are entitled to damage for the detention from

the failure to nominate till the termination of Charterparty.44

The nomination of port of Ningbo was nominated after the completion of 48 hours

in violation of the term of the Charterparty. Further, the nomination of Ningbo as

a final port of discharge was accompanied with renunciation of performance for

contractual obligations through communication dated 21st October, 2016. The

acceptance of such renunciation and repudiation was made through

communication dated 22nd

October, 2016. Thus, the contract was repudiated due

to non-nomination of port of discharge thereby raising claims for damages and

detention.

9. Further, Clause 19 of the Voyage Charterparty mentions that freight should be paid

within 5 Banking days of the singing and releasing the bills of lading i.e. 9th

October,

2016. The time period is the essence of the contract.45

If time period was not the

essence of the contract, the Respondent would not have asked for an extension of the

time.46

Therefore, non-payment of freight will substantially deprive the innocent party

of the whole benefit of the contract as it is the main purpose making it a very

fundamental term of the contract. Hence, the payment of freight is a condition to the

contract.

10. Upon the breach of a contract by one of the parties, the innocent party has the right to

claim damages. Non-performance of the primary obligation of the Charterparty arises

the secondary obligation to pay damages.47

Liability of to pay freights is an essential

44

ibid. 45

Lombard North Central plc v Butterworth [1987] QB 527 (CA). 46

Bhudra Chand v Betts [1915] 22 Cal LJ 566: 33 IC 347 47

Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 848−849.


11

term to the contract and is a primary obligation. Non- payment of freight can arise a

cause for damages.

11. In the present case, despite repeated demands the Respondent has failed to make the

payment of freight. Communication dated 21st October, 2016 indicates the

renunciation of the Charterparty by the Respondent as they have failed to remit the

freight payment within 5 banking days of the loading, and signing/releasing of the

bills of lading. The request for remitting payment after discharge of cargo is clearly in

repudiation of the object of the agreement and breach of the Charterparty condition.

Therefore, this breach gives rise to liability of damages.

(B) THERE IS NO BREAK IN THE CHAIN OF CAUSATION.

12. The validity of the claim of damages depends on the factors like remoteness and

causation.48

The Respondent did not appoint a port of discharge which left the Tardy

Tessa adrift. If there is a break in chain of causation then no damages can be claimed.

13. Damages can be claimed when the cause responsible for loss is dominant and

effective and not necessarily the only cause.49

Ascertaining the break in chain of

causation is highly fact sensitive.50

For a break in the chain of causation, the act of the

Claimant should be unreasonable and impactful enough to obliterate the breach by the

Respondent.51

14. The Respondent first breached the Charterparty by not nominating the port of

discharge before the vessel passed Singapore. The port finally nominated was Busan,

South Korea which was refused by the Claimant on the grounds of war risks under

48

Julian Cooke et al., Voyage Charterers, 448, (4th

edn, Informa Law from Routledge, 2014). 49

Heskell v Continental Express [1950] 83 Ll. L. Rep. 438 at p. 457 and Banque Keyser Ullmann S.A. v Skandia

(UK) Insurance Co. [1990] Q.B. 665, 813–814; cf. Galoo Ltd and Others v Bright Grahame Murray [1994] 1

W.L.R. 1360, where the phrase “dominant or effective cause” was used to contrast recoverable loss from loss

which arose merely because of an opportunity afforded by a breach of contract: see the incisive analysis by

Poole in [2007] L.M.C.L.Q. 63. 50

Great Elephant Corp. v Trafigura Beheer BV (The Crudesky) [2014] 1 Lloyd‟s Rep. 1, at para. 45. 51

Supra n.47, at 635.


12

Clause 18 of the Voyage Charterparty. The refusal of Busan as discharge port and

non-acceptance of repudiation by the Claimant was not unreasonable. Further, the

nomination of port of Ningbo as the discharge port was accompanied by renunciation

of the Charterparty which was duly accepted. Hence, it is submitted that the

Respondent is solely liable for causing the damage and there is no break in the chain

of causation.

(C) REMOTENESS OF DAMAGE

15. Losses cannot be recovered through claims for damages if the loss is a remote

consequence of the breach of Charterparty.52

The only proximate losses are those

which can reasonably foreseeable by the parties during the formation of the contract

and may occur in the due course of nature.53

16. In the present case, nomination of an unsafe port and non-payment of freight is

reasonably foreseeable by the parties. The presence of Clause 18 of the Voyage

Charterparty which provides for the re-nomination of port in case of previous

nomination of an unsafe port indicates that the parties have reasonably foreseen the

possibility of such a breach of contract.

17. Thus, the breach of Charterparty in nomination of discharge port was foreseeable and

was in due course of action and performance of obligations. Therefore, the damage

caused is not too remote. Hence, the Respondent can be held liable for damages and

detention.

(D) FREIGHT IS EARNED

52

Hadley v Baxendale [1854] 9 Ex 341 at p 354. 53

ibid.


13

18. A provision that freight is “deemed earned” will normally enable a Shipowner to

recover any balance of freight to be payable on the completion of the voyage, even

when the voyage is not completed.54

19. Clause 15(b) of the standard coal and ore Voyage Charterparty states that the freight

is deemed to be earned after shipment and the number of days as decided within

which the amount of freight is earned.

20. The Respondent has failed to pay the freight amount of USD 771,120.48 in breach of

Clause 19 of the Voyage Charterparty which states that, Inferno failed to pay the

freight amount within 5 banking days of signing of the Bills of Lading by the Master

resulting in breach of Charterparty. The freight has been earned and is due as per the

conditions of the Charterparty and the question of freight being due at BBB does not

arise. Non-payment by the Respondent is a serious breach of the Charterparty. Hence,

the Respondent is liable to pay the damages.

III. THE CLAIMANT IS ENTITLED TO EXERCISE LIEN ON CARGO

The Respondent has failed to pay the freight amounting to USD 771,120.48 and

additional costs amounting to USD 101,666.67 despite repeated demands from the

Claimant. Hence, the Claimant has ordered the vessel to stay adrift off port limits of

Singapore.

The Claimant seeks to exercise rightful lien over cargo and the sub-freights for breach

of Charterparty terms, the Claimant has the right for the same because (A) there is a

contractual right under Charterparties for the Claimant to exercise lien, (B) the

Claimant has ability to exercise lien.

54

Vagres Compania Maritime SA v Nissho-Iwai America Corp (The Karin Vatis)[1988] 2 Lloyd‟s Rep.330;

Colonial Bank v European grain & Shipping ltd [1989] 1 Lloyd‟s Rep.431; Ellis Shipping Corp v Voest Alpine

intertrading [1991] 2 Lloyd‟s Rep.599.


14

(A) THERE IS A CONTRACTUAL RIGHT UNDER THE CHARTERPARTIES FOR THE

CLAIMANT TO EXERCISE LIEN.

The Claimant has claimed a right to exercise lien over the cargo and sub-freights. The

Respondent has failed to pay freight and therefore a lien over the cargo is necessary

for the Claimant to recover the costs, the Claimant has the right to exercise lien as (i)

the lien clause has successfully been incorporated in the bill of lading, (ii) Claimant is

a party to the contract of carriage.

(i) THE LIEN CLAUSE HAS SUCCESSFULLY BEEN INCORPORATED IN THE BILL OF

LADING.

21. Bills of lading are evidence to contract of carriage between the shipper and the

carrier.55

It is a common practise for bills of lading to have a provision which

incorporates the terms of the Charterparty.56

In cases of multiple Charterparties, the

Voyage Charterparty is incorporated in case the Head Charterparty is a Time

Charter.57

22. In the present case, the Claimant is the disponent Owner of the vessel, M.V. Tardy

Tessa, and has sub-chartered the vessel to Respondent under a Voyage Charterparty

which includes the terms under Clause 19 (a), which states that the Owners shall have

the right to exercise lien. Respondent further sub-chartered the vessel to Idoncare

under a bill of lading contract which includes an incorporation clause, the bill of

lading states “freight payable as per Charterparty.” Here, the Voyage Charterparty

has been included as the Charterparty, as it includes the conditions of freight payable

and not hire.

55

Supra n.30, at 1. 56

Supra n.30, at 91-106. 57

Federal Commerce Ltd v Molena Alpha Inc (The Nanfri) [1978] 1 Lloyd‟s Rep. 287.


15

23. The above incorporation clause has wide words of incorporation and brings into the

bill of lading almost everything that is there in the Charterparty as long as they are

not inconsistent to the express provisions of the bill.58

Reference to „terms and

conditions‟ incorporated lien clauses.59

Hence, the Bill of lading validly incorporates

the lien clauses of the Voyage Charterparty.60

(ii) CLAIMANT IS A PARTY TO CONTRACT OF CARRIAGE

24. The Voyage Charterparty has been expressly incorporated in the bill of lading to

which the Claimant is a party. This incorporation makes Claimant a party to the

contract of carriage evidenced by bill of lading with the Idoncare. Where the vessel is

under a Time Charter, usually both the Charterer and Owners could be held liable as

carriers notwithstanding the existence of a demise clause in the bill of lading.61

Therefore, both the Charterer and the Owners are parties to contract of carriage

evidenced by the bill of lading between carriers and the shipper.

25. Clause 8 (a) of the Time Charterparty dated 15th

February, 2016 states the Master

will be under the directions and order of the Charterer for the purposes of employment

and agency.62

Bill of lading is a receipt for goods and a contract governing the receipt

carriage and delivery of goods.63

The Claimant has the authority to direct and order

the Master in regards to cargo handling which is evidenced in the bill of lading as

receipt of goods. The clause shows the intention and the knowledge of the Master

regarding cargo handling and the voyage in its entirety which is directed by the

Charterers. Thus, the signing of bills of lading is by the Master in his capacity as an

58

Andreas Vergottis v. Robinson David & co. ltd. (1928) 31 Ll.L.rep. 23 per Roche J. at pg. 26. 59

Gorrisen v Challoner [1925] 23 Lloyd‟s Rep.61. 60

Miramar Maritime Corporation v Holborn Oil Trading Ltd.(The Miramar) [1984] 3 WLR 1 ; Santiren

Shipping Ltd v Unimarined S.A (The Chrysovalandou dyo) [1981] 1 Lloyd‟s Rep 159. 61

Canastrand Industries Ltd. v the "Lara S, [1993] 2 F.C.R. 553. 62

Time Charterparty, Clause 8(a), Moot Problem, p. 3. 63

Supra n. 30, at 200-213.


16

employee/agent of the Claimant as it signifies the details of the cargo. Hence, the

Charterer is a party to the contract with the Respondent.

(B) THE CLAIMANT HAS THE ABILITY TO EXERCISE LIEN

The Claimant has the right to exercise the lien over cargo and sub freights to recover

the cost for non-payment of freights. They have the ability to exercise such lien

because (i) the freight is earned, (ii) Claimant is in the rightful possession of the cargo

(iii) lien can be exercised before the completion of the voyage.

(i) FREIGHT IS EARNED

26. As argued above, freight has been deemed to be earned and is payable by the

Respondent as per Charterparty. As the due date for clearing all payments had already

passed and the repudiation has been accepted by the Claimant, the Respondent is in

breach of Charterparty. The breach of Charterparty for non-payment of freight by the

Respondent gives the Claimant a legitimate cause for exercising lien over the cargo.

(ii) CLAIMANT IS IN THE RIGHTFUL POSSESSION OF THE CARGO

27. From the signing and delivery of bills of lading while the goods are in course of

carriage without unreasonable delay and until they are delivered to the merchant, the

Master of the vessel has a lien on them for the freight due for such carriage, and

cannot be compelled to part with them till such freight is paid and the bills of lading

delivered up.

28. As per Clause 8(a) of the Time Charterparty the Master acts like an employee/agent of

the Claimant. The Master has physical possession of cargo and can exercise lien on

their behalf just as a Master exercises lien for the Ship Owner.

29. Even if, the Master cannot be considered to be an employee with the rights to exercise

possessory lien over the cargo, the Ship Owner can exercise lien over the cargo as

Master is appointed by the Ship Owner, as per Clause 8(a) of the Time Charterparty


17

and has the physical possession over the cargo. According to the case of Five Oceans

Corp v Cingler Ship which is largely similar to the present case, a Shipowner who has

physical possession of the cargo can exercise lien as a trustee for the Time Charterer

and for his benefit.64

The Shipowner may seek and receive the due freight for the

benefit of a Charterer who has discharged his obligations to the Shipowner but who

may be owed freight under a sub-charter or booking note which is incorporated.65

30. Thus, Imlam Consignorist can exercise valid lien over the cargo on behalf of the

Claimant. This has been established in the email dated 20th

October, 2016 where the

Shipowner has extended support and help in exercising lien over the cargo. Hence, on

Claimant‟s orders, the Shipowner can justly exercise lien over cargo.

(iii) LIEN CAN BE EXERCISE BEFORE COMPLETION OF VOYAGE

31. Owners can validly exercise a lien on cargo before completing the carrying voyage in

exceptional circumstances: i.e., where it is impossible or commercially impracticable

to exercise the lien at or off the discharge port.66

This includes two reasons:

a. Cost: Exercising lien on cargo by bringing the vessel to the discharge port

would cause unnecessary expense and congestion at the port. Storing the cargo

in warehouses would further add to the cost of exercising lien.

b. Loss of right to lien: Exercising lien at berth would endanger the Owners‟

right to lien as they might be forced to discharge the cargo losing the right to

possession of cargo which is an essential condition for exercising lien.

32. In the present case, the Claimant was first requested by the Respondent to proceed

to Busan, South Korea due to congestion at Chinese ports. However, the Claimant

64

Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources, intervener)

[2015] SGHC 311. 65

Supra n. 47. 66

The China National Foreign Trade Transportation Corp v Evolgia Shipping Co. Ltd (Mihalios Xilas) [1978] 2

Lloyd's Rep 186.


18

refused to divert due to legitimate reasons. First, Busan is not a safe port as within

the reasonable judgment and foresight of the Master and the Charterers. Secondly,

Busan is not among the list of nominated ports under the Voyage Charterparty

which does not oblige the vessel to proceed to any port not mentioned in the

Charterparty.67

33. The Claimant refused to proceed to Ningbo as the port of discharge as the

nomination of the discharge port was not accompanied with the freight payable.

Hence, the vessel is not obligated to move towards the nominated port as the

Respondent is in repudiatory breach of Charterparty. According to Section 87 of

Chinese Maritime Code68

the Chinese port Ningbo does not allow the exercise of

lien over cargo unless it is owned by the defaulting party. In the present case,

Respondent is the defaulting party due to non-payment of freight but is not the

Owner of the cargo. The loss of right to lien at the port would not be in the best

security interests of the party.

34. The cost of discharging and warehousing the goods would increase the costs of

exercising lien. Further, by discharging cargo at port would take away the

possession of the Claimant over the cargo as a security to exercise lien.

35. Hence, it is impossible and commercially impracticable to exercise lien at

discharge port. Therefore, despite Singapore being a port of bunkering, lien can be

exercised off port limits due to commercial impracticability and impossibility of

proceeding to the nominated discharge port.

(C) CLAIMANT CAN EXERCISE LIEN ON SUB-FREIGHTS

Despite repeated demands, the Respondent has failed to pay the freight and

drifting costs. In order to recover the amount of freight payable and security of

67

Supra n. 33. 68

S.87, Chinese Maritime Code,1992 (“The CMC”) .


19

debt, the Claimant seeks to exercise lien on the sub-freights payable by Idoncare

to Respondent. The Claimant has right of exercising lien over sub-freights as (i)

the lien is not lost (ii) Shipowner can exercise lien on behalf of the Claimant.

(i) LIEN IS NOT LOST

36. Lien on sub-freights is the right of Owners to intercept sub freights as an equitable

charge on what is due from the shipper to the Charterer.69

The right of lien on sub-

freights is lost when the debt has been paid off to the Charterers.70

The notice for

exercising lien should be in time before the sub-freights have been paid.

37. Communication by the sub-charterers to the Claimant dated 19th

October, 2016

clearly mentions that the freights payable by the Idoncare have not been paid. The

notice of lien over sub-freights has been communicated over to the Respondent

through the e-mail dated 20th

October, 2016. Hence, the right of exercising lien is

not lost and can be exercised by the Claimant.

(ii) SHIPOWNER CAN EXERCISE LIEN ON BEHALF OF THE CLAIMANT

38. Time Charterer has the lawful power to order the Shipowner to exercise right of

lien on his behalf.71

The Shipowner acts like the trustee of the Time Charterer and

for his benefit exercises lien72

.

39. Though Voyage Charterparty has been incorporated into the Bill of Lading, the

Shipowner is still a party to the contract of carriage. The Bills of Lading has been

signed by the Master who is appointed as an employee by the Shipowner

according to Clause 8 of the Time Charterparty. Further, the Shipowner is a

69

Supra n.56. 70

Molthes Rederi v Ellerman‟s Wilson Line [1926] 26 LI.L. Rep. 259. 71

Supra n.63. 72

Supra n.47, at 105-113.


20

carrier to the bill of lading.73

In usual practise, the carrier issues the bill of lading

to the shipper.74

Hence, the Headowners are a party to the contract of carriage.

40. Clause 23 of the Time Charterparty confers upon the Shipowner the right to

exercise lien on any sub-freights belonging or due to the Charterers. In the case of

Cebu, it was held that in an NYPE form of Charterparty, the term “sub-freights”

can be interpreted to include “sub-sub freights.”75

Furthermore, communication

dated 20th

October has extended support in exercise of lien. In the present case,

the Claimant can exercise their right of lien over sub-freights through the ship

Owners as they are trustees of the Claimant and can exercise valid right of lien on

the behalf of the Claimant.

IV. IT IS JUST AND NECESSARY FOR THE CARGO TO BE SOLD PENDENTE LITE

(A) THE TRIBUNAL HAS UNFETTERED JURISDICTION TO ORDER INTERIM MEASURES

41. Rule 33.1(h) of SCMA rules gives the Tribunal broad power to make “any order”

which does not conflict with the IAA or the Model Law.76

This rule extends to

making orders for security of costs and claims and/or preserving the subject matter

of the dispute. This power does not come with any predetermined interpretive test.

The statute does not provide any express exclusion of or qualification on the

power to order interim relief. Additionally, Claimant has a prima facie case in

light of the merit of submissions enumerated above. Since these submissions are

not scandalous or oppressive,77

clearly hopeless,78

or suffering from some other

obvious defect,79

it should be entitled to relief. However, with a view to cement

the Claimant‟s submissions, the Claimant will strive to prove it based on

73

Supra n.60. 74

Supra n.30, at 200-213. 75

Care Shipping Corporation v Latin American Shipping Corporation, [1983] 1 Lloyd‟s Rep 302. 76

33.1 (h), SCMA rules, (3rd

edn., 2015) 77

Y. C. Ong & M. P. O'Reilly, Costs in International Arbitration, 83, (LexisNexis 2016). 78

Lall v 53–55 Hall Street Pty Ltd [1978] 1 NSWLR 310 79

K. Karunanidhi v R. Renganathan, AIR 1973 Mad 443.


21

international standards, i.e, that it is (A) there is no prejudgment of merits, (B) it is

urgent to prevent irreparable harm to the Claimant, (C) balance of hardships tips

in favour of relief, (D) the Tribunal should exercise its discretion to order costs.

(B) THERE IS NO PREJUDGMENT OF MERITS

42. Interim measures should not prejudge the merits of the case.80

This requirement

entails that the measures should not cover what is asked for in the final award.81

The Claimant has requested that the Tribunal hold the Respondent liable for their

repudiatory breach of contract, and to declare that the lien on the cargo is valid.

Ordering a sale of cargo does not prejudge the merits of the case because it does

not award the final relief. It does not hold the Respondent liable for their breach of

contract because the sale proceeds will be returned to them based on the final

determination of the issue. Similarly, a sale of cargo does not validate the lien

because a lien normally does not give rise to a right of sale.82

Therefore, it is

submitted that an order for sale of cargo would not prejudge the merits of the case.

(C) IT IS URGENT TO PREVENT IRREPARABLE HARM

43. The route between Australia to China on an average takes around 20-25 days, and

arrangements have been made accordingly. However, because of the Claimant‟s

actions, the voyage has now come to be 10 months long. The crew has been facing

several problems because of this, including risk to life, sickness and lack of

supplies. While the Claimant is unaware whether the crew members have been

evacuated by the Headowners, the crew has also threatened mass resignation and

complaint to the ITF, which would severely tarnish both the Claimant‟s and the

Headowner‟s reputations. Given the inhospitable conditions present on the ship, it

must be directed to a port as soon as possible.

80

Partial Award in ICC CaseNo.8113, 11(1) ICCCt.Bull.65(2000). 81

ICC case no 8113, 11(1) ICC Bulletin 65 (2000) 67. 82

Supra n.74.


22

44. Notwithstanding the Tribunal‟s unfettered power to order interim measures, one

of the standards laid down in the Model Law is that the measure ought to be

necessary to protect the subject matter of the dispute (here, the cargo). A sale of

cargo is required to preserve the cargo, not in terms of the physical entity, but in

terms of value.83

While a lien over cargo does not normally give rise to a right of

sale, the sale can be ordered if it is perishable in nature or likely to deteriorate if

kept or which for any good reason is desirable to sell forthwith.84

The value of the

cargo has been deteriorating continuously. The coal, being exposed to more and

more moisture, is absorbing it and hence becoming of a lower grade85

, and

therefore more likely to combust86

and the market value of coal is falling with no

projected recovery in the short-term.87

Additionally, the demurrage and other

storage costs being accrued are eroding the value of the cargo such that

prospective buyers and cargo interests would have no residual financial interest in

the cargo,88

leading to the outcome that after a certain point, the Respondent would

be willing to let the cargo remain onboard the vessel, having no remaining

financial interest in it. It is necessary to sell the cargo as urgently as possible to

preserve its value and to preserve the parties‟ interest in it.

(D) BALANCE OF HARDSHIPS TIPS IN FAVOUR OF RELIEF

45. The definition of irreparable harm ought not to be taken in the common-law

context of harm that cannot be repaired, but rather as grave, serious, or substantial

harm. It has already been shown above that the Respondent owes a significant

amount to the Claimant. In addition to this, Claimant is running the risk of loss of

83

Cetelem SA v Roust Holdings Ltd [2005] 1 WLR 3555. 84

Supra at 11. 85

Email dated 30/11/2016, Moot Problem, p. 37. 86

Ibid. 87

Parties‟ Joint Report, Moot Problem, p. 97-102. 88

The Stelios B Maritime Ltd. v Ibeto Cement Co (The „Stelios B‟) [2006] EWHC 672 (Comm.), 2007 711

LMLN 2 44F.


23

life and possible damage to the vessel because of combustion of the cargo. Every

day that the cargo is exposed to moisture it runs a greater risk of combusting. If

damage is caused to the vessel because of this, the Claimant will be liable to the

Headowners for damages. Furthermore, in merchant shipping time is money, and

due to the Respondent‟s actions, the Claimant has been unable to make use of its

Charter, which is time bound. In the entire time the vessel has been adrift, it has

been on-hire, and the Claimant has been paying hire to the Headowners, while

being unable to earn any profits because the vessel is adrift. The Claimant is

facing serious losses and will continue to do so if the sale of cargo is not ordered.

On the other hand, the only loss the Respondent is facing is that the cargo value is

diminishing, but they neither have title to the cargo, nor do they have to answer to

prospective buyers about the cargo. Their only liability is to Idoncare, who has

anyway not paid sub-freight to the Respondent. Therefore, balancing the hardships

of the parties, it is clear that a greater deal of harm will be done to the Claimant if

the cargo is not sold than to the Respondent if the cargo is sold.

46. In the Parties‟ Joint Expert Report the expert estimates that at maximum, the cargo

could be valued at $3.1m, but that a more realistic expectation would be of around

$1.9 m - $2.5 m. The Respondent already has dues to the Claimant of around

$900,000, which is mounting daily due to the cost of exercising the lien. It is

likely that even at this stage the proceeds from the sale of cargo would not be

adequate to cover the Claimant‟s costs or damages which have been accruing

since October. Unless the cargo is sold as soon as possible, there will be no

adequate recompense for the Claimant‟s continuously piling costs, causing a great

deal of serious harm to the Claimant. A measure is considered to be necessary


24

when no other reasonably available alternative exists.89

Here, there are no

available alternatives, because the vessel cannot proceed to the designated

discharge port in China as Chinese law does not allow or exercising lien once the

ship has docked and the cargo is discharged.90

Docking in Singapore would be

impracticable because it is commercially unviable to find warehousing space for

84,000MT of coal in Singapore (which takes up around 3,360,000 cu ft of space)91

and costs of warehousing, expensive given the high cost of property in Singapore,

would be similar to the cost of exercising lien while at sea.92

Furthermore, the

cargo cannot be expected to remain on board for indefinite period of time as there

does not seem to be any end to the impasse which has been created. Therefore, in

order to preserve the Claimant‟s rights, only one option exists: for this Tribunal to

order the sale of cargo.

(E) IT IS JUSTIFIED FOR THIS TRIBUNAL TO MAKE AN ORDER ON COSTS

47. As long as there are reasonable grounds for believing that a party‟s financial condition

is inadequate, a Tribunal is justified in concluding that there is a sufficient risk of

severe harm. 93

So far, Respondent has been unwilling or unable to meet any of their

financial commitments to the Claimant, including payments for freight and detention.

The reason they cited for this is that they have not received payment from their sub-

Charterers. This is indicative of the fact that they are operating from transaction to

transaction or at least that they have significant cash-flow problems. This is

worrisome because they are relying on payments from others to meet their financial

obligations. If they were unable to pay the relatively minor sums of freight because

89

Maldives Airport Co Ltd v GMR Male International Airport Pte Ltd [2013] SGCA 16. 90

Supra n.64. 91

Stopford M, Maritime Economics,575–576. (3rd

edn, Routeledge, 2009). 92

Ibid. 93

Supra n.6.


25

they had not been paid, it is certainly plausible that they will be able to honour a final

award, which is likely to amount to much more.

48. Further, arbitrators derive their power to adjudicate from the agreement of the parties,

they should strive to match procedure and substance with the ex-ante expectations of

participants.94

Thus, it is submitted that the Tribunal should make an order consistent

with the parties‟ expectations and positions on security for costs.95

49. While it is true that the parties contracted with each other in the face of all the risks

inherent in that relationship, the probability that a contract would lead to conflict and

that one party would not meet a costs award was incorporated into the contract

price.96

However, parties often adopt governing rules to protect them against just such

contingencies.97

By selecting the SCMA Rules, which, unlike many arbitral regimes,

expressly provides for security for costs, the parties built into the contract protection

against the risk of non-payment. If the contractual mechanisms it bargained for are

withheld from Claimant, and it is successful in the arbitration, it would be an

ineffective remedy.98

94

Supra n.6. 95

Coppée Lavalin v Ken-Ren (UK), [1994] 2 Lloyd's Rep. 109 96

Supra n.6, at p.358. 97

Supra n.6, at p.364. 98

Van den Berg, Yearbook Commercial Arbitration, 143, (41st edn., Kluwer Law International Arbitration

2016).


26

REQUEST FOR RELIEF

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

1. Declare that it has the jurisdiction and/or power to grant liberty to the Claimant to sell

the cargo on board the MV TARDY TESSA pendente lite.

2. Hold the Respondent is liable to the Claimant for detention and/or other damages

under the Voyage Charterparty.

3. Declare that the Claimant is entitled to exercise lien over the cargo and subfreight.

4. Allow the claimant liberty to sell the cargo on board the MV TARDY TESSA

pendente lite, as is just and necessary.

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