international maritime law arbitration moot · calculation of the laytime does not continue when...

THE SEVENTEENTH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

3 – 8 JULY 2016

EXETER & LONDON, ENGLAND

IN A MATTER OF AN ARBITRATION

MEMORANDUM FOR THE RESPONDENT

ON BEHALF OF

HESTIA INDUSTRIES

(RESPONDENT)

AGAINST

ZEUS SHIPPING & TRADING CO

(CLAIMANT)

TEAM NO. 9

ALBERTUS J. SUKARDI – DENNY ADIPUTRA –

GREITA ANGGRAENI – RAISYA MAJORY

MEMORANDUM FOR

THE RESPONDENT

TEAM NO. 9

TEAM NO. 9 – MEMORANDUM FOR THE RESPONDENT

i

TABLE OF CONTENTS

TABLE OF CONTENTS ......................................................................................................... i

LIST OF ABBREVIATIONS ............................................................................................... iii

LIST OF AUTHORITIES ....................................................................................................... v

SUMMARY OF FACTS.......................................................................................................... 1

SUMMARY OF ARGUMENTS ............................................................................................. 2

ARGUMENTS PRESENTED................................................................................................. 3

I. THIS ARBITRAL TRIBUNAL IS WITHOUT JURISDICTION TO HEAR THIS

PROCEEDING ..................................................................................................................... 3

A. The phrase “any dispute arising under this contract” does not extend to the claim

related to frustration ............................................................................................................ 4

B. Moreover, both Parties did not intend to include claims related to frustration to be

arbitrable under the Arbitration Clause .............................................................................. 5

II. THE RESPONDENT IS NOT LIABLE FOR THE PAYMENT OF

DEMURRAGE ..................................................................................................................... 7

A. The Charterparty had been frustrated as of the occurrence of a frustrating event ...... 8

i. The inordinate delay in delivering the cargo frustrates the Charterparty .............. 9

a. The delay rendered the performance radically different from what was

contemplated in the Charterparty ................................................................................ 9

b. The delay was not caused by either Party .......................................................... 10

c. The delay was unforeseeable ............................................................................. 12

ii. Since the Charterparty was frustrated even before the laytime had expired, there is

no demurrage accrued .................................................................................................. 13

B. Alternatively, the Respondent had completed loading before the expiry of the

laytime… .......................................................................................................................... 14

i. The Athena had left the Loading Port for the purpose of Clause 9.c.i of the

Charterparty before the laytime expired ....................................................................... 14

a. The Claimant has conceded that she had left the Loading Port ......................... 15

b. The Athena had left the Loading Port in the commercial sense ........................ 15

c. The exercise of control by the Coast Guard does not extend the limit of the

Loading Port.. ............................................................................................................ 16

ii. Calculation of the laytime does not continue when the Athena returned to the

Loading Port……… ...................................................................................................... 17

a. The loading had been completed ....................................................................... 17

b. The Athena had “finally sailed” from the Loading Port when she was intercepted

by the Coast Guard .................................................................................................... 18


ii

C. In any event, the Respondent is not liable by virtue of exceptions to demurrage ..... 18

i. The demurrage accrued due to the Claimant’s fault ............................................. 19

a. The act of the Master prevented the Athena to leave the Loading Port ............. 19

b. The Claimant’s default is attributable to the shipowner .................................... 20

ii. In any event, the Respondent is exempted from the liability by virtue of the Force

Majeure Clause ............................................................................................................. 20

a. The detention was an incident covered by the Force Majeure Clause ............... 20

b. The Force Majeure Clause should be construed as a corollary to the Interruption

to Laytime Clause...................................................................................................... 21

III. THE RESPONDENT IS ENTITLED TO CLAIM SALVAGE REWARDS .... 22

A. The Athena was exposed to the dangers of the sea ................................................... 23

B. The salvage was done voluntarily ............................................................................. 23

i. Salvage done by Hestug did not arise from any contractual obligation ............... 24

ii. Salvage conducted was not out of self-interest ...................................................... 24

C. The salvage succeeded in saving the Athena and the Cargo ..................................... 25

PRAYER FOR RELIEF........................................................................................................ 25


iii

LIST OF ABBREVIATIONS

¶

AC

Arbitral Tribunal

Arbitration Clause

Athena

CA

Charterparty

Claimant

Coast Guard

Civ

CLC

CLR

Comm

Com Cas

Ed

EWCA

EWHC

FCA

FCAFC

FCR

Force Majeure Clause

HCA

Hestug

HL

Interruption to Laytime

Clause

KB

Loading Port

paragraph

Appellate Court

Arbitral Tribunal in London

Clause 30 of the Charterparty

H Max LNG Carrier assigned for the voyage charterparty

between Zeus Shipping and Trading Company and Hestia

Industries

Court of Appeal

The voyage charterparty between Zeus Shipping and

Trading Company and Hestia Industries regarding the vessel

the Athena

Zeus Shipping and Trading Company

Hades Coast Guard

Civil Division

Commercial Law Cases

Commonwealth Law Reports

Commercial Court

Commercial Cases

Edition

England and Wales Court of Appeal

High Court England and Wales

Federal Court of Australia

Federal Court of Australia Full Court

Federal Court Reports

Clause 19 of the Charterparty

High Court of Australia

tug company owned by the Claimant

House of Lords

Clause 9.e of the Charterparty

King's Bench Division

port of Hades


iv

Lloyd's Rep/Ll.L.Rep

Master

Moot Scenario

NOR

NSWLR

NSWSC

p.

Parties

QB/QBD

Respondent

SASC

UK

WA

WASCA

WLR

WWD SHINC

Lloyd's Law Reports

Master of the Athena

IMLAM 2016 Moot Scenario

Notice of Readiness

New South Wales Law Reports

New South Wales Supreme Court

page

Zeus Shipping and Trading Company and

Hestia Industries

Queen's Bench Division

Hestia Industries

Supreme Court of South Australia

United Kingdom

Western Australia

Supreme Court of Western Australia

Weekly Law Reports

weather working days, Sundays and holidays included


v

LIST OF AUTHORITIES

Cases Pages

ACD Tridon v Tridon Australia [2002] NSWSC 896 ................................................................ 4

Admiral Shipping Co Ltd v Weidner Hopkins & Co [1916] 1 KB 429 ..................................... 9

Allen v Carbone [1975] 132 CLR 528 ....................................................................................... 6

Arsanovia Ltd & Ors v Cruz City 1 Mauritius Holdings [2012] EWHC 3702.......................... 3

Ashville Investments v Elmer Contractors [1988] Q.B. 488 ...................................................... 6

Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd [1988] 18 NSWLR

540 .......................................................................................................................................... 6

Bank Line Ltd v Arthur Capel & Co [1919] A.C. 435 (1918) ................................................... 8

Bostonian (Owners, Master and Crew) and Another v Gregerso (Owners) The Gregerso

[1971] 2 W.L.R 955 ............................................................................................................. 23

Brisbane City Council v Group Projects Pty Ltd [1979] 145 CLR 143 .................................... 9

British & Foreign Marine Insurance Co v Samuel Sanday & Co [1916] 1 A.C. 650 (1916). 11

Budgett & Co v Binnington & Co [1891] 1 Q.B. 35 ................................................................ 14

Bunge SA v Kyla Shipping Co Ltd [2012] 2 C.L.C. 998 (2012). ............................................. 10

Cantiere Navale Triestina v Handelsvertretung der Russ. Soz. Föd. Soviet Republik Naphtha

Export [1925] 2 K.B. 172 ..................................................................................................... 17

Chandris v Isbrandtsen-Moller Co Inc [1951] 1 K.B. 240 ...................................................... 21

Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192 ..................... 4

Davis Contractors Ltd v Fareham Urban District Council [1956] A.C. 696............................ 9

DGM Commodities Corp v Sea Metropolitan SA (The Andra) [2012] WL 2500858 (2012) .. 10

Embiricos v Sydney Reid & Co [1914] 19 CC 263. ................................................................... 8

ERG Raffinerie Mediterranee SpA v Chevron USA Inc (t/a Chevron Texaco Global Trading)

[2006] WL 1732503 ............................................................................................................. 14

Fibrosa Spolka Akcyna v Fairbairn Lawson Combe Barbour Ltd [1934] A.C. 32. ................ 13

Fillite (Runcorn) Ltd v Aqua-Lift [1989] 26 Con LR 66 ........................................................... 4

Finlay v Liverpool and Great Western Steamship Co [1870] 23 L.T. 251, 254 ...................... 21

Gem Shipping v Babanaft (The Fontevivo) [1975] 1 Lloyd's Rep. 339 ................................... 19

Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi AS v VSC Steel Company Ltd [2013] EWHC

4071 (Comm) ......................................................................................................................... 3

Hedley v Pikney & Sons [1892] Q.B. 58 .................................................................................. 20

Herman v Morris [1919] 35 Times L.R. 574 ........................................................................... 21

Heyman v Darwins Ltd [1942] A.C. 356 (1942) ....................................................................... 5

Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc [1998] 90 FCR 1 ....................................... 6

High Seas Venture Ltd Partnership v Sinom (Hong Kong) [2007] WL 919379 ..................... 16

Hirji Mulji v Cheong Yue Steamship Co Ltd [1926] A.C. 497 .................................................. 5

Hudson v Belton [1856] 119 E.R. 975 ..................................................................................... 17

Hydro Agri (UK) Ltd v The Owners of the ship “The Sava Star” [1995] 2 Lloyd’s Rep. 134 24

Islamic Republic of Iran Shipping Lines v Ierax Shipping Co (The Forum Craftsman) [1991]

1 Lloyd’s Rep. 81. ................................................................................................................ 14

J Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] WL 754790 (1989) .......... 10


vi

John Jamieson and Co v James Laurie [1796] 2 E.R. 1209 .................................................... 17

John R Keith Pty Ltd v Multiplex Constructions (NSW) Pty Ltd [2002] NSWSC 43 ................ 6

Joseph Constantine Steamship Line Ltd v Imperial Smelting Corporation [1942] A.C. .......... 3

Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] A.C. 524 (1935) .......................... 10

Mertens v Home Freeholds Co [1921] 2 K.B. 526 (1921) ...................................................... 11

Mishara Construction Company Inc v Transit Mixed Concrete Corp [1974] 310 N E 2s 363,

367 ........................................................................................................................................ 12

National Carriers Ltd v Panalpina (Northern) Ltd [1981] A.C. 675 (1980) .......................... 12

Nicholas E Ambatielos v Anton Jurgens’ Margarine Works [1922] All ER Rep 543 ............. 21

Ocean Tramp Tankers Corp v V/O Sovfracht (The Eugenia) [1964] 2 Q.B. 226 (1963) ........ 12

Ooh! Media Roadside Pty Ltd v Diamond Wheels [2011] WL 1616390 ................................ 12

Overseas Transportation Co v Mineralimportexport (The Sinoe) [1972] 1 Ll Rep 201 ......... 19

Overseas Union Insurance Ltd v AA Mutual International Insurance Co Ltd [1988] 2 Lloyd's

Rep 63 .................................................................................................................................... 5

Owners of Cargo Lately Laden on Board the Troilus v Owners, Masters and Crew of the

Glenogle (The Troilus) [1951] A.C. 820 .............................................................................. 23

Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller [1972] A.C. 242 (HL); The

India [1842] 1 Wm Rob 406. ............................................................................................... 25

Owners of Voutakos v Tsavliris Salvage (International) Ltd [2008] EWHC 1581 (Amlty) ... 23

Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd & Ors [1993] 43 FCR 439 ............ 4

Petrinovic & Co Ltd v Mission Française des Transports Maritimes [1941] 71 Ll.L.Rep. 208

.............................................................................................................................................. 17

Pioneer Shipping Ltd & Others v B.T.P. Tioxide (The Nema) [1982] A.C. 724 ....................... 9

President of India v N.G Livanos Maritime Co (The John Michalos) [1987] Q.B. (Com. Ct . 22

Price v Livingstone [1881-82] L.R. 9 Q.B.D. 679 ................................................................... 18

Rinehart v Welker [2012] NSWCA 95 (2012) ........................................................................... 4

Ropner Shipping Company Limited v Cleeves Western Valleys Anthracite Collieries Limited

[1927] 1 KB 879 ................................................................................................................... 19

Sailing-ship “Garston” Co v Hickie & Co [1885] 15 Q.B.D. 580 .......................................... 15

Scott & Sons v Del Sel [1932] S.C. (H.L) 37 ............................................................................. 5

Sociedad Financiera de Bienes Raices S.A. v Agrimpex Hungarian Trading Company for

Agricultural Products [1961] A.C. 135 (1960) .................................................................... 15

Stolt Tankers Inc v Landmark Chemicals SA [2001] WL 1479871 ......................................... 19

Sulamérica Cia Nacional de Seguros SA and others v Enesa Engelharia SA and others

[2012] EWCA Civ 638 ........................................................................................................... 3

The Charlotte [1848] 3 W Rob 68 ........................................................................................... 23

The Glaucus [1948] 81 Ll. L. Rep. 262 ................................................................................... 23

The Glaucus [1948] 81 Ll. L. Rep. 262. .................................................................................. 23

The Glengyle [1898] P. 97 ....................................................................................................... 23

The Neptune [1824] 1 Hagg 227 .............................................................................................. 23

The Ship Loretta v Bubb [1970] 18 FLR 141 ,;,(1970). ........................................................... 23

Total Transport Corp v Amoco Trading Co (The Altus) [1985] 1 Ll Rep 423 ........................ 19

Turnbull v Owners of the Strathnaver [1875] 1 App. Cas. 58 ................................................. 23

Ullises Shipping Corp v Fal Shipping Co Ltd (The Greek Fighter) [2006] EWHC 1729

(Comm). ............................................................................................................................... 11

Visscher v BHP Petroleum Pty Ltd [2002] NSWSC 65. ......................................................... 23


vii

William Alexander & Sons v Aktieselskabet Dampskibet Hansa [1919] S.C. 89 .................... 19

WJ Tatem Ltd v Gamboa [1939] 1 K.B. 132 (1938). ............................................................... 13

Books

Ewan McKendrick, Contract Law, 11th Ed., (London: Palgrave Macmillan, 2015) ............... 12

Guenter Treitel, Frustration and Force Majeure, 2nd Ed., (London: Sweet & Maxwell, 2004)

.............................................................................................................................................. 12

Harold Gill Reuschlein & William A. Gregory, Handbook on the Law of Agency and

Partnership, 3rd Ed., (Georgia: West Publishing Co, 2001) ................................................ 20

John Schofield, Laytime and Demurrage, 6th Ed., (New York: Informa Law, 2011) ............... 8

Peter Brodie, Commercial Shipping Handbook, 3rd Ed., (New York: Informa Law, 2014) .... 16

Journals

Joachim Delaney and Katharina Loewis, “The Presumptive Approach to the Construction of

Arbitration Agreements and the Principle of Separability - English Law Post Fiona Trust

and Australian Law Contrasted,” 31 U.N.S.W.L.J. 341 2008 ............................................... 6


1

SUMMARY OF FACTS

1. Zeus Shipping and Trading Company as the shipowner (“Claimant”) entered into a voyage

charterparty (“Charterparty”) with Hestia Industries as the charterer (“Respondent”) to

ship a newly developed liquefied natural gas produced from Hades Shale Gas (“HLNG”).

The shipment of the HLNG required a vessel equipped with new technology to be able to

safely transport the HLNG. The vessel assigned for this voyage was the Athena, which

borne the Hades flag.

2. The Laytime provision in Clause 9(c)(i) of the Charterparty stipulated that time permitted

for loading is 10 Weather Working Days Sundays and Holidays Included (“WWD

SHINC”), which was calculated from when Notice of Readiness was tendered until the

vessel left the Loading Place, which was the Port of Hades (“Loading Port”). Pursuant to

Clause 10 of the Charterparty, demurrage would be payable if loading was not completed

within the permitted laytime.

3. During the conclusion of the Charterparty, there was a news reporting the objection by the

environmentalist towards the export of the HLNG since it was considered to emit ten times

CO2 compared to conventional gas liquefaction plant. This protest came into realization

when the arrival of the Athena at Loading Port on 3 October 2014 was then greeted with

violent rampage by the environmentalists. Despite this situation, the Athena continued the

loading operation.

4. The Athena finished loading on 7 October 2014 and then “sailed from Hades” as recorded

in the Statement of Facts issued by Master of the Athena (the “Master”). On the same day,

a coup took place; the leader of Hades Opposition Party, Jacqueline Simmons, seized

control of the Parliament, backed by Hades military. The coup was precipitated by the

protest and public opposition to the export of HLNG.


2

5. As the new President, Jacqueline Simmons immediately instructed the Hades Coast Guard

to intercept the Athena and have her returned to her berth. On 7 October 2014, Hades Coast

Guard managed to intercept the Athena and ordered the Master to return to port. The Master

followed, resulting in detainment of the Athena in the Loading Port.

6. After almost a year of detainment, the Athena was then released. As per the Claimant’s

request, it was Hestug, a tug company owned by the Respondent (“Hestug”), which guided

the Athena to the open water. However, when she was at the open water, her propellers

broke. Hestug, which was not far, assisted the Athena.

SUMMARY OF ARGUMENTS

The Claimant contended that laytime continued to run during the period of detainment and

since the Athena had not left the Loading Port before the laytime expired, the Respondent

was liable to pay demurrage, for 358 days amounted to USD17.9 million.

In response, the Respondent claimed that the Charterparty had been frustrated, thus the

Claimant’s claim on demurrage could not stand. The Respondent also alleged that the

Athena had left the Loading Port at the time of interception, rendering it not liable for

demurrage. Additionally, the Respondent submitted a counterclaim for salvage reward for

its assistance to the Athena when her propellers broke.


3

ARGUMENTS PRESENTED

I. THIS ARBITRAL TRIBUNAL IS WITHOUT JURISDICTION TO HEAR THIS

PROCEEDING

1. Absent of any express stipulation to the contrary, the law governing a contract is assumed

to be the governing law of an arbitration agreement related to disputes arising from such

contract.1 In the present Case, the Charterparty did not expressly provide the governing law

of the arbitration agreement but it expressly provided that the law governing the

Charterparty is Western Australian law.2 As there is no express stipulation to the contrary,

Western Australian Law is assumed to be the governing law of Clause 30 of the

Charterparty (the “Arbitration Clause”).

2. The Respondent submits that this arbitral tribunal (“Arbitral Tribunal”) lacks jurisdiction

to resolve the present dispute. In response to the Claimant’s demurrage pleading,3 the

Respondent is contending that the Charterparty was frustrated.4 Given that demurrage is an

obligation under the Charterparty, the claim for demurrage is closely intertwined and

dependent upon whether or not the Charterparty was still on foot.5 Hence, this Arbitral

Tribunal could not determine demurrage claim without first deciding whether the

Charterparty was frustrated.

3. In this regard, this Arbitral Tribunal has no jurisdiction to hear claims related to frustration

since the Arbitration Clause is not wide enough to cover such dispute. Consequently, the

1 Sulamérica Cia Nacional de Seguros SA and others v Enesa Engelharia SA and others [2012] EWCA Civ 638;

Arsanovia Ltd & Ors v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm); Habas Sinai Ve Tibbi

Gazlar Istihsal Endustrisi AS v VSC Steel Company Ltd [2013] EWHC 4071 (Comm). 2 Charterparty Cl. 30, 31, Moot Scenario p. 45, 46. 3 Statement of Claim ¶8, Moot Scenario, p. 75. 4 Statement of Defense ¶3, Moot Scenario, p. 76. 5 Joseph Constantine Steamship Line Ltd v Imperial Smelting Corporation [1942] A.C.

154 (“Joseph Constantine”).


4

Arbitral Tribunal lacks jurisdiction to entertain the demurrage claim presented by the

Claimant.6

4. The Arbitration Clause stipulates that “[a]ny dispute arising under this contract shall be

referred to arbitration…”7 The Arbitration Clause does not confer upon this Arbitral

Tribunal jurisdiction to hear the claim related to frustration since (A) the phrase “any

dispute arising under this contract” is not wide enough to cover a claim related to

frustration, and (B) the Parties did not intend to include a claim related to frustration as an

arbitrable dispute.

A. The phrase “any dispute arising under this contract” does not extend to the

claim related to frustration

5. The phrase "arising under" has a narrow interpretation, which excludes any question on

frustration.8

6. In Comandate Marine Corp v Pan Australia Shipping Pty Ltd (“Comandate”), it is

acknowledged that a liberal approach shall be taken in construing the scope of an arbitration

clause. 9 However, this rule is not absolute; the phrase used in the arbitration clause

concerned is determinative since not all phrases bear the same meaning.10 Consequently,

to determine the scope of an arbitration clause, the primary assessment shall be made on

the natural meaning of the language used,11 that is whether or not such phrase is elastic so

as to be construed liberally.12

6 Statement of Defense, ¶5, Moot Scenario, p. 76. 7 Charterparty Cl. 30, Moot Scenario, p. 45. 8 Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd & Ors [1993] 43 FCR 439 (“Paper Products”);

Rinehart v Welker [2012] NSWCA 95 (2012) (“Rinehart”); Fillite (Runcorn) Ltd v Aqua-Lift [1989] 26 Con LR

66 (“Fillite”). 9 Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192 (“Comandate”). 10 Ibid. 11 Ibid.; Paper Products, supra n.8; Rinehart, supra n.8; ACD Tridon v Tridon Australia [2002] NSWSC 896. 12 Comandate, supra n.9.


5

7. The phrase “arising under” naturally has a narrow interpretation, in contrast to the phrases

“arising out of,” “in connection with,” or “in relation to”.13 When narrow language is

chosen by the parties instead of a more elastic phrase, it will limit matters which could be

referred to arbitration with little room for movement to stretch the scope of such arbitration

clause.14

8. A claim is regarded as a dispute “arising under” a contract if it concerns rights and

obligations created by or incorporated in the contract, and depends upon the contract for its

enforcement.15 If the claim is concerning frustration, it must be shown that there is an

express term which had the effect of frustrating such contract.16

9. In the Case at hand, the Respondent claimed that the detention of the Athena by Hades

Coast Guard (“Coast Guard”) frustrates the Charterparty.17 This is not a dispute arising

under the Charterparty because there is no provision in the Charterparty which governs the

effect of detainment of the Athena or a provision concerning frustration. Therefore, the

claim related to frustration is not a dispute arising under the Charterparty and the

Arbitration Clause does not extend to claims related to frustration.

B. Moreover, both Parties did not intend to include claims related to frustration to

be arbitrable under the Arbitration Clause

10. Even if the Arbitral Tribunal finds that the phrase “arising under” prima facie has a wide

scope, clear intention of the parties expressing otherwise are paramount, and therefore will

13 Heyman v Darwins Ltd [1942] A.C. 356 (1942); Overseas Union Insurance Ltd v AA Mutual International

Insurance Co Ltd [1988] 2 Lloyd's Rep 63 (“Overseas Union Insurance”); Fillite, supra n.8. 14 Paper Products, supra n.8. 15 Rinehart, supra n.8; Fillite, supra n.8; Scott & Sons v Del Sel [1932] S.C. (H.L) 37 (“Scott v Del Sel”). 16 Hirji Mulji v Cheong Yue Steamship Co Ltd [1926] A.C. 497; Scott v Del Sel, supra n.16. 17 Statement of Defense, ¶4, Moot Scenario, p. 76.


6

limit such broad interpretation.18 Australian Courts have consistently taken into account

the intention of the parties in interpreting the scope of an arbitration clause.19

11. In Comandate,20 it was held that a wide interpretation of phrases chosen in an arbitration

clause was underpinned by the assumption that the parties did not intend the inconvenience

of having to settle a dispute in two different forums.21 However if there is a clear intention

to limit the scope of the arbitration clause and the parties are willing to take the risk of

bringing disputes to two different forums, such intention will prevail.22 Such intention can

be seen from prior negotiation and exchange of communications.23

12. In the Case at bar, the circumstances surrounding the conclusion of the Charterparty was

that the Respondent was not ready to settle a dispute which did not concern the rights and

obligations created by the Charterparty.24

13. The Respondent had conveyed its intention to limit the scope of the Arbitration Clause to

the Claimant due to the Respondent’s unfavourable experience in the past when submitting

the disputes to one forum.25 The Claimant accepted it by amending the Arbitration Clause

to be in line with the Respondent's request, changing the previous phrase of “arising out of

or in connection with” to the current phrase “arising under.”26 Moreover, the phrase “any

question regarding its existence, validity, or termination” was also removed.27 It shows

18 Joachim Delaney and Katharina Loewis, “The Presumptive Approach to the Construction of Arbitration

Agreements and the Principle of Separability - English Law Post Fiona Trust and Australian Law Contrasted,”

31 U.N.S.W.L.J. 341 2008. 19 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc [1998] 90 FCR 1; John R Keith Pty Ltd v Multiplex

Constructions (NSW) Pty Ltd [2002] NSWSC 43; Allen v Carbone [1975] 132 CLR 528 (“Allen v Carbone”). 20 Comandate, supra n.9. 21 Ibid. 22 Overseas Union Insurance, supra n.13; Ashville Investments v Elmer Contractors [1988] Q.B. 488. 23 Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd [1988] 18 NSWLR 540; Allen v

Carbone, supra n.19. 24 Moot Scenario, p. 25. 25 Ibid. 26 Charterparty Cl. 30, Moot Scenario, p. 45. 27 Ibid.


7

that any question that is not expressly regulated under the Charterparty, including

frustration, is excluded.

14. The Parties have accepted the risk of resolving issues regarding frustration in different

forums.28 Therefore, based on the surrounding circumstances, it is clear that the Parties

intended the Arbitration Clause to be interpreted narrowly, which is to exclude claims

related to frustration.

15. In the absence of the Arbitral Tribunal’s jurisdiction to hear claims related to frustration,

claim on demurrage cannot stand. This is because the Arbitral Tribunal could not determine

demurrage claim without first deciding whether the Charterparty was frustrated, given that

the claim for demurrage is closely intertwined and dependent on whether or not the

Charterparty was still on foot. 29 Therefore, the Arbitral Tribunal does not have the

jurisdiction to hear this proceeding.

II. THE RESPONDENT IS NOT LIABLE FOR THE PAYMENT OF DEMURRAGE

16. The Athena arrived at the port of Hades (“Loading Port”) and commenced her loading

operation on 3 October 2014 after the Notice of Readiness (“NOR”) was tendered.30

Pursuant to the laytime provision in Clause 9.c.i of the Charterparty, the time permitted for

loading is 10 weather working days, Sundays and holidays included (“WWD SHINC”).31

To comply with this laytime provision, the Respondent was obliged to finish loading by

leaving the Loading Port at the latest on 12 October 2014.32 The Respondent completed

loading on 7 October 2014.33 After the completion of loading, the Athena sailed from the

28 Moot Scenario, p. 25. 29 Joseph Constantine, supra n.5. 30 Moot Scenario, p. 51. 31 Charterparty Cl. 9(c)(i), Moot Scenario, p. 34. 32 Ibid. 33 Moot Scenario, p. 54.


8

Loading Port. 34 On the same day, the Athena was intercepted by the Coast Guard, 35

subsequently returned to the Loading Port, and was detained in the Loading Port for nearly

one year.36 The Claimant is claiming for demurrage during the period of detention. 37

17. The Respondent is not liable for demurrage since there is no actual demurrage accrued. The

Respondent submits that (A) the Charterparty had been frustrated as of the occurrence of a

frustrating event, and (B) alternatively, the Respondent had completed loading before the

expiry of the laytime. Even if the Arbitral Tribunal finds that demurrage actually accrued,

(C) the Respondent is still not liable to pay for demurrage as (i) the demurrage accrued due

to the Claimant’s fault, and/or (ii) the Respondent is exempted from the liability under the

Charterparty.

A. The Charterparty had been frustrated as of the occurrence of a frustrating event

18. A contract could be frustrated due to the occurrence of inordinate delay.38 In determining

whether a party is still bound by the contract or not, the party does not need to wait until

the end of such a long delay.39 For instance, in Bank Line Ltd v Arthur Capel & Co which

concerns requisitioning, it was held that the frustration occurred at the moment of

requisitioning.40

19. In the present Case, (i) the Charterparty had been frustrated due to inordinate delay

resulting from the detention by the Coast Guard. The Respondent is not required to wait

until the detention is over to determine whether it is still bound by the Charterparty.

Therefore, the Respondent submits that the Charterparty had been frustrated as of the

occurrence of the detainment, which was on 7 October 2014.41 Consequently, (ii) since the

34 Ibid. 35 Moot Scenario, p. 57. 36 Ibid., p. 74. 37 Statement of Defense, ¶8, Moot Scenario, p. 75. 38 John Schofield, Laytime and Demurrage, 6th Ed., (New York: Informa Law, 2011), p. 458. 39 Embiricos v Sydney Reid & Co [1914] 19 CC 263. 40 Bank Line Ltd v Arthur Capel & Co [1919] A.C. 435 (1918) (“Bank Line”). 41 Moot Scenario, p. 57.


9

Charterparty was frustrated even before the laytime had expired, there is no demurrage

accrued.

i. The inordinate delay in delivering the cargo frustrates the Charterparty

20. There are three requirements which need to be satisfied to invoke frustration by reason of

inordinate delay, namely that (a) the delay rendered the performance radically different

from what was contemplated in the Charterparty; (b) the delay was without default of either

party; and (c) the delay was unforeseeable.

a. The delay rendered the performance radically different from what was

contemplated in the Charterparty

21. In Davis Contractors Ltd v Fareham Urban District Council,42 it was held that frustration

occurs when the performance becomes “radically different” from what both parties had

agreed under the contract. For a delay to result in a radically different performance

amounting to frustration, it must prevent the accomplishment of the objective which the

parties had in view at the time they made the contract.43 As elucidated in Admiral Shipping

Co Ltd v Weidner Hopkins & Co,44 specifically in voyage charterparties, “the charterer’s

only object must be to have his goods carried within a reasonable time.” The occurrence of

an inordinate delay would defeat the charterer’s only objective.45

22. Similarly, the Respondent’s only objective as the charterer is for the cargo to be delivered

by 2 November 2014.46 This was made clear during negotiations prior to the conclusion of

the Charterparty,47 and was again reiterated by the Respondent after the detention.48 The

42 Davis Contractors Ltd v Fareham Urban District Council [1956] A.C. 696 (“Davis Contractors”); Brisbane

City Council v Group Projects Pty Ltd [1979] 145 CLR 143; Pioneer Shipping Ltd & Others v B.T.P. Tioxide

(The Nema) [1982] A.C. 724 (“The Nema”). 43 Admiral Shipping Co Ltd v Weidner Hopkins & Co [1916] 1 KB 429. 44 Ibid. 45 Ibid. 46 Moot Scenario, p. 61. 47 Ibid., p. 2. 48 Ibid., p. 61.


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Claimant was well aware that failure to deliver the cargo on time will be detrimental for

the Respondent as it will cause significant losses.49 In this particular circumstance, time is

of the essence. The delay caused the Claimant’s performance under the Charterparty to be

radically different, since the Claimant failed to deliver the cargo within a reasonable time.

23. The assessment for the duration of a delay to be considered inordinate shall be made on a

case-by-case basis.50 In The Nema,51 the voyage charterparty was frustrated because of

delay which lasted for over three and a half months due to strike.

24. In the Case at bar, the detainment persisted for over a year, which is much longer than The

Nema. The voyage of the Athena is now in excess of six times the length of time which the

parties anticipated the Charterparty would be on foot.52 This proves that the voyage was

radically different and defeats the objective of the Charterparty since the detainment.

b. The delay was not caused by either Party

25. Frustration applies when the frustrating event was without default of either party; 53

otherwise, it constitutes as self-induced frustration.54 Frustration is considered as self-

induced when the act or election of the party claiming frustration was the real or proximate

cause of the occurrence of the frustrating event.55 The doctrine of frustration does not apply

if the frustration is self-induced. In case of a self-induced frustration, the party who has

brought those circumstances about himself is not entitled to take advantage of

circumstances as a frustration of the contract.56

49 Ibid., p. 2, 61. 50 The Nema, supra n.42. 51 Ibid. 52 Ibid., p. 65. 53 Davis Contractors, supra n.42. 54 Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] A.C. 524 (1935) (“Maritime National Fish”); J

Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] WL 754790 (1989) (“The Super Servant Two”). 55 Maritime National Fish, supra n.55; DGM Commodities Corp v Sea Metropolitan SA (The Andra) [2012] WL

2500858 (2012); Bunge SA v Kyla Shipping Co Ltd [2012] 2 C.L.C. 998 (2012). 56 Mertens v Home Freeholds Co [1921] 2 K.B. 526 (1921).


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26. In The Greek Fighter,57 the court held that a proximate cause is a cause that is causally

significant that it and not the other causes has to be characterized as the predominant cause

of the loss. To say that a cause is not the proximate cause, that cause has to have no more

impact on the chain of events than any of the other causes.58

27. In British & Foreign Marine Insurance Co v Samuel Sanday & Co (“British v Samuel”),59

a British vessel was on a voyage to Germany when war broke out between England and

Germany, and the shipowner was directed to return a British port. The shipowner complied.

The cargo owners claimed against the insurer that the voyage was frustrated due to the

declaration of war that constitutes “restraint of princes,” which is covered under the

insurance policy. On the contrary, the insurer contended that the voyage was frustrated

because of the voluntary act of the shipowner to turn aside from the voyage. The court held

that the frustration of the voyage was proximately caused by the declaration of war which

made the voyage illegal, since it stopped the voyage and destroyed the venture. The

presence of any specific action or force to actually restrain the vessel is not necessary, since

“every state would ultimately enforce its law by force.”60

28. In our Case, as stated in paragraph 14,61 the Athena sailed from the Loading Port on 7

October 2014.62 On the same day, a coup d’etat occurred whereby Jacqueline Simmons,

the Opposition Leader of Hades, seized control of the parliament and became the new

President.63 She then instructed the Coast Guard to intercept the Athena and have it return

57 Ullises Shipping Corp v Fal Shipping Co Ltd (The Greek Fighter) [2006] EWHC 1729 (Comm). 58 Ibid. 59 British & Foreign Marine Insurance Co v Samuel Sanday & Co [1916] 1 A.C. 650 (1916). 60 Ibid. 61 See supra ¶14. 62 Moot Scenario, p. 54. 63 Ibid., p. 55.


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to the Loading Port.64 The Coast Guard subsequently intercepted the Athena65 and detained

her for almost a year,66 resulting in an inordinate delay.

29. In the present Case, the Respondent submits that the real cause of the frustration is the order

from the new President to stop the export of HLNG by intercepting the Athena. The

presidential order is so causally significant to the chain of events that it and not the other

causes had to be characterised as the predominant cause of the loss. It is only after the

President gave her order that the voyage stopped and the venture was destroyed.

30. The Claimant argued that the detention was caused by the Respondent's cargo,67 thus the

doctrine of frustration does not apply. However, the Respondent’s cargo is not the real

cause since it has no more impact than the other causes in the chain of events. The shipment

of HLNG did not by itself effectively stop the voyage and destroy the venture.

31. Therefore, the real reason of the delay was the order from the new President, which

consequently led to the detention of the Athena. As this is not an act or election of the

Respondent, it is not a self-induced frustration.68 Consequently, the Respondent may rely

on the doctrine of frustration.

c. The delay was unforeseeable

32. To invoke the doctrine of frustration, the event which the claim on frustration is relied on

must be unforeseeable at the time the parties entered the contract.69 The event shall not be

one “which any person of ordinary intelligence would regard as likely to occur.”70

64 Ibid. 65 Ibid., p. 57. 66 Ibid., p. 71. 67 Ibid., p. 60. 68 Ibid., p. 74. 69 Ocean Tramp Tankers Corp v V/O Sovfracht (The Eugenia) [1964] 2 Q.B. 226 (1963);

National Carriers Ltd v Panalpina (Northern) Ltd [1981] A.C. 675 (1980) (“National Carriers”). 70 National Carriers, supra n.69; Ooh! Media Roadside Pty Ltd v Diamond Wheels [2011] WL 1616390; Mishara

Construction Company Inc v Transit Mixed Concrete Corp [1974] 310 N E 2s 363, 367; Guenter Treitel,

Frustration and Force Majeure, 2nd Ed., (London: Sweet & Maxwell, 2004) (“Treitel”), ¶ 13-102; Ewan

McKendrick, Contract Law, 11th Ed., (London: Palgrave Macmillan, 2015), p. 336.


13

33. In Tatem v Gamboa,71 even though the parties “may well thought” that the vessel would be

seized, the Charterparty was frustrated since the extent of the detention was not foreseeable.

To say that an event is foreseeable, the extent of the frustrating event has to be

foreseeable.72

34. In the present Case, the detention of the Athena by the new Hades government could not

have been foreseeable to both parties at the time of the conclusion of the Charterparty.

Before the Charterparty was concluded, there was only an indication that there was to be a

protest conducted by a group of environmentalists.73

35. When the Athena arrived at the Loading Port, the protest was conducted only by a group

of environmentalists.74 A person of ordinary intelligence would not regard that such protest

would likely be violent as that had never occurred at the Loading Port before.75 It was even

more unforeseeable that the violent protest would then precipitate an overnight military

coup d’etat by the Opposition Leader in the Hades parliament, which resulted in the new

president’s instruction to stop the HLNG export by intercepting the Athena.76 She was then

detained for over a year.77 Therefore, the detention of the Athena is of the kind and extent

which was not foreseeable by either Party at the conclusion of the Charterparty.

ii. Since the Charterparty was frustrated even before the laytime had expired,

there is no demurrage accrued

36. Frustration will put the contract to an end and discharge the parties from their future

obligations under the contract after the occurrence of the frustrating event.78 Here, as stated

71 WJ Tatem Ltd v Gamboa [1939] 1 K.B. 132 (1938). 72 Treitel, supra n.70. 73 Moot Scenario, p. 26. 74 Ibid., p. 52. 75 Ibid. 76 Ibid., p. 55. 77 Ibid., p. 71. 78 Fibrosa Spolka Akcyna v Fairbairn Lawson Combe Barbour Ltd [1934] A.C. 32.


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in paragraph 16, the Respondent is only liable to pay demurrage if it has not finished

loading by leaving the Loading Port by 12 October 2014.79

37. The Charterparty was frustrated as of the occurrence of the detainment on 7 October 2014.80

It was still within the period of the laytime provided in the Charterparty. 81 Since the

Charterparty was frustrated during the period of the laytime, there is no demurrage accrued.

Consequently, there is no liability for the Respondent to pay demurrage.

B. Alternatively, the Respondent had completed loading before the expiry of the

laytime

38. In a voyage charterparty, the charterer is obliged to complete loading within the laytime.82

Demurrage will only accrue if the charterer fails to discharge such obligation.83

39. As previously mentioned, the Athena arrived at the Loading Port on 3 October 2014 and

the laytime expired on 12 October 2014. Here, the Athena had finished loading and left the

Loading Port on 7 October 2014, which was before expiry of the laytime.84

40. Therefore, the Respondent is not liable for demurrage because (i) the Respondent had left

the Loading Port before the laytime expired and (ii) the calculation of the laytime does not

continue when the Athena returned to the Loading Port after she was intercepted by the

Coast Guard.

i. The Athena had left the Loading Port for the purpose of Clause 9.c.i of the

Charterparty before the laytime expired

79 See supra ¶16. 80 Moot Scenario, p. 55, 57. 81 Charterparty Cl. 9(c)(i), Moot Scenario, p. 34. 82 Budgett & Co v Binnington & Co [1891] 1 Q.B. 35; ERG Raffinerie Mediterranee SpA v Chevron USA Inc (t/a

Chevron Texaco Global Trading) [2006] WL 1732503; John Schofield, Laytime and Demurrage, 6th Ed., (New

York: Informa Law, 2011), ¶4.18. 83 Islamic Republic of Iran Shipping Lines v Ierax Shipping Co (The Forum Craftsman) [1991] 1 Lloyd’s Rep.

81. 84 Moot Scenario, p. 54.


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41. To complete loading for the purpose of Clause 9.c.i. of the Charterparty, the vessel has to

leave the loading port before the laytime expired.85 Here, the Athena had left the Loading

Port, proven by (a) the fact that the Claimant has conceded that she had left the Loading

Port, and (b) the Athena had left the Loading Port in the commercial sense. (c) In the event

that the Claimant argues that the exercise of control by the Coast Guard extends the limit

of the Loading Port, the Respondent submits otherwise.

a. The Claimant has conceded that she had left the Loading Port

42. In an internal correspondence between the Claimant and the Master dated 8 October 2014,

the Claimant conveyed his disapproval of the Master’s act in complying with the Coast

Guard’s order.86 The Claimant explicitly stated that the Master’s conduct is completely

unacceptable as the Athena was already outside the territorial limits of Hades.87 It is

common ground between the parties that the territorial limit of Hades is the outer limit of

the Loading Port.88 Therefore, the Claimant has conceded that the Athena had left the

Loading Port at the time of interception.

b. The Athena had left the Loading Port in the commercial sense

43. Determination on whether or not a vessel has left a loading port requires an assessment on

what constitutes a “port”.89 Based on The Aello, which concerns a port charter, the judge

held that a port within a port charter should be construed in a “commercial sense” in relation

to the objective of the particular transaction. 90 It is commonly understood that, in its

“commercial sense,” a port is a place to load and unload goods for the purposes of the

Charterparty.91

85 Charterparty Cl. 9(c)(i), Moot Scenario, p. 34. 86 Moot Scenario, p. 58. 87 Ibid. 88 Ibid., p. 63. 89 Sociedad Financiera de Bienes Raices S.A. v Agrimpex Hungarian Trading Company for Agricultural Products

[1961] A.C. 135 (1960) (“The Aello”). 90 The Aello, supra n.89. 91 Ibid.; Sailing-ship “Garston” Co v Hickie & Co [1885] 15 Q.B.D. 580 (“Garston”).


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44. In the present Case, the Athena had left the port in its commercial sense as proven by the

issuance of the Statement of Facts dated 7 October 2014. 92 The Statement of Facts

functions as a log to record events that have occurred during a vessel’s stay in a port, such

as the completion of loading and customs clearance.93 It is of high evidentiary value and an

unquestionably strong form of evidence.94

45. Here, the Statement of Facts, which functions as prima facie evidence, recorded that the

Athena had completed loading and “sailed from Hades” on 7 October 2014.95 Since there

are no facts to the contrary, this proves that the Athena had left the Loading Port in its

“commercial sense” before the laytime expired. Therefore, there is no demurrage accrued.

c. The exercise of control by the Coast Guard does not extend the limit of the

Loading Port

46. A port might be extended to also cover an area where a port authority exercises control

over ships, and the shippers who have ships within those waters submit to such exercise of

control.96 As pronounced in Sailing-Ship “Garston” Co. v Hickie & Co,97 this rule is

applicable if the control is exercised by the port authority. Therefore, this rule is not

applicable in the present Case since the Athena was intercepted by the Coast Guard.98

47. Therefore, the exercise of control by the Coast Guard does not extend the limit of the

Loading Port and the facts remain that the Athena was outside the Loading Port when she

was intercepted by the Coast Guards.99 As a conclusion, at the time of the interception, the

Athena had finished loading for the purpose of 9.c.i. of the Charterparty.

92 Moot Scenario, p. 54. 93 High Seas Venture Ltd Partnership v Sinom (Hong Kong) [2007] WL 919379 (“High Seas Venture”); Peter

Brodie, Commercial Shipping Handbook, 3rd Ed., (New York: Informa Law, 2014), p. 78. 94 High Seas Venture, supra n.91. 95 Moot Scenario, p. 54. 96 Garston, supra n.91. 97 Ibid. 98 Moot Scenario, p. 55, 57. 99 Ibid., p. 58.


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ii. Calculation of the laytime does not continue when the Athena returned to the

Loading Port

48. The fact that the Athena returned to the Loading Port does not render the laytime to continue

to run, since laytime had ceased when (a) the loading had been completed and (b) the

Athena had “finally sailed” from the Loading Port when she was intercepted by the Coast

Guard.

a. The loading had been completed

49. In Petrinovic v Mission Française des Transports Maritimes,100 when a vessel has finished

loading and has sailed without any intention to return, the laytime will cease to run. Any

incident which occurred after the completion of the loading stage is not within the liability

of the charterer, rather it would fall upon the shipowner, as he is the one who bears the

responsibility in performing the subsequent carrying voyage.101

50. The laytime will only continue to run if the vessel was forced to leave the loading port

before she has completed loading, and therefore returned for the purpose to finish

loading.102 For instance, in Cantiere Navale Triestina v Handelsvertretung der Russ. Soz.

Föd. Soviet Republik Naphtha Export (“Cantiere”),103 the vessel was compelled to leave

the port before she finished loading. After some period of time, the vessel returned to the

port to continue loading. In that case, the laytime continued to run only because there was

an apparent intention to return to complete the loading of the cargo.104

51. In stark contrast, when the Athena sailed from the Loading Port on 7 October 2014, she had

no intention whatsoever of returning to the Loading Port. The Respondent had placed all

100Petrinovic & Co Ltd v Mission Française des Transports Maritimes [1941] 71 Ll.L.Rep. 208 (“Petrinovic”);

Hudson v Belton [1856] 119 E.R. 975 (“Hudson v Belton”); John Jamieson and Co v James Laurie [1796] 2 E.R.

1209 (“John Jamieson”). 101Petrinovic, supra n.100; John Jamieson, supra n. 100. 102 Cantiere Navale Triestina v Handelsvertretung der Russ. Soz. Föd. Soviet Republik Naphtha Export [1925] 2

K.B. 172. 103 Ibid. 104 Ibid.

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cargo on board and passed the port and customs clearance as stated in the Statement of

Facts; therefore, she had completed loading.105 More importantly, the Athena was already

outside the Loading Port when she was intercepted by the Coast Guard. As such, on 7

October 2014, the laytime ceased to run.106

b. The Athena had “finally sailed” from the Loading Port when she was

intercepted by the Coast Guard

52. A vessel is regarded as having finally sailed if she has got out of the port in a state of

readiness to proceed with her voyage without any intention to return.107 If there is an

interruption which compelled the vessel to return to the port, the vessel will still be regarded

as finally sailed.108

53. In Price v Livingstone,109 the vessel was already at sea proceeding for her voyage without

any intention to return. When she was driven back to the port due to adverse weather

conditions, the court held that “it does not entitle us to say that she had not finally sailed.”

54. In the Case at hand, the Athena had finally sailed from the Loading Port, since she was out

of the Loading Port and had proceeded with her voyage.110 She had on board the vessel’s

papers and customs clearance.111 The fact that she was intercepted by the Coast Guard does

not entitle the Claimant to say that the Athena had not finally sailed. The Athena should be

regarded as having left the port before the expiry of the laytime, even if she was ordered to

return and subsequently detained. Therefore, the Respondent had completed loading before

the expiry of the laytime and no demurrage accrued.

C. In any event, the Respondent is not liable by virtue of exceptions to demurrage

105 Moot Scenario, p. 54. 106 Ibid., p. 58. 107 Petrinovic, supra n.100; Hudson v Belton, supra n.100. 108 Price v Livingstone [1881-82] L.R. 9 Q.B.D. 679. 109 Ibid. 110 Moot Scenario, p. 54, 62. 111 Ibid., p. 54.

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55. In the event that the Arbitral Tribunal finds that the Athena did not leave the Loading Port

for the purpose of Clause 9.c.i of the Charterparty before the laytime expired and demurrage

then accrued, the Respondent is still not liable to pay for demurrage as (i) the demurrage

accrued due to the Claimant’s fault, and/or (ii) the Respondent is exempted from the

liability under the force majeure clause in Clause 19 of the Charterparty (“Force Majeure

Clause”)

i. The demurrage accrued due to the Claimant’s fault

56. A charterer is not responsible for demurrage if it arises due to the fault of the shipowner or

of whomever he is responsible. 112 The Respondent submits that the demurrage arose

because (a) the act of the Master of the Athena (the “Master”) prevented the completion

of loading, and (b) the act of the Master is attributable to the Claimant.

a. The act of the Master prevented the Athena to leave the Loading Port

57. As pronounced in Total Transport Corp v Amoco Trading Co (The Altus),113 the notion

“fault” is not necessarily an actionable wrong, but it implies that the shipowner has

prevented the loading operation to be performed by the charterer.

58. In Gem Shipping v Babanaft,114 it was held that in establishing the fault of the shipowner,

the burden of the charterer is only to show that the loading operation was prevented by an

act on the part of the shipowner. The burden of proof then shifts to the shipowner to justify

its act.115

59. In the Case at bar, it is clear that the Master had prevented the Athena from leaving the

Loading Port by following the Coast Guard’s order to return to the Loading Port, leading

112 William Alexander & Sons v Aktieselskabet Dampskibet Hansa [1919] S.C. 89; Stolt Tankers Inc v Landmark

Chemicals SA [2001] WL 1479871 (“Stolt Tankers”); Overseas Transportation Co v Mineralimportexport (The

Sinoe) [1972] 1 Ll Rep 201. 113 Total Transport Corp v Amoco Trading Co (The Altus) [1985] 1 Ll Rep 423; Stolt Tankers, supra n.114. 114 Gem Shipping v Babanaft (The Fontevivo) [1975] 1 Lloyd's Rep. 339 (“The Fontevivo”); Ropner Shipping

Company Limited v Cleeves Western Valleys Anthracite Collieries Limited [1927] 1 KB 879; Stolt Tankers, supra

n.114. 115 The Fontevivo, supra n.116.


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to her detention.116 As had also been admitted by the Claimant, it is unjustifiable for the

Master to follow the Coast Guard’s order as he was already outside the territorial limits of

Hades,117 not to mention that the legitimacy of such an order is also highly questionable.118

Therefore, since the act of the Master, without any justifiable excuse, prevented the Athena

to leave the Port and complete loading for the purpose of Clause 9.c.i of the Charterparty,

the Respondent is not liable for demurrage accrued.

b. The Claimant’s default is attributable to the shipowner

60. As an employer of a master,119 a shipowner is vicariously liable for the act or conduct of

the master.120 Hence, the act of the Master is attributable to the Claimant.

ii. In any event, the Respondent is exempted from the liability by virtue of the

Force Majeure Clause

61. In the event that this Arbitral Tribunal finds that the Respondent did not complete loading

before the laytime expired, the Respondent shall not be liable for demurrage by virtue of

the Force Majeure Clause, which has the effect of discharging the Respondent’s liability

for demurrage. This is because (a) the detention was an incident covered by the Force

Majeure Clause, and (b) the Force Majeure Clause shall be construed as a corollary to

Clause 9.e of the Charterparty (“Interruption to Laytime Clause”).

a. The detention was an incident covered by the Force Majeure Clause

62. The Force Majeure Clause stipulates that the Parties shall not be liable in the event of force

majeure events, namely: “… riots, intervention of sanitary or custom authorities, Court

issued arrest proceedings, acts of the Queen’s enemies… or other similar cause.”121 The

116 Moot Scenario, p. 58, 60. 117 Ibid, p. 58. 118 Ibid, p. 74. 119 Hedley v Pikney & Sons [1892] Q.B. 58. 120 Harold Gill Reuschlein & William A. Gregory, Handbook on the Law of Agency and Partnership, 3rd Ed.,

(Georgia: West Publishing Co, 2001) ¶49; The Super Servant Two, supra n.55. 121 Charterparty Cl. 19, Moot Scenario, p. 40.


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phrase “other similar cause” is wide enough to be interpreted under the ejusdem generis

principle122 to incorporate the detention event as one of the force majeure events for the

purpose of the Charterparty.

63. In Ambatielos v Anton Jurgens’ Margarine Works,123 it was held that the existence of an

“catch-all” phrase or general words, such as ‘et cetera’, ‘other similar…’, or other general

words or ‘all-encompassing’ phrases opens up a wider interpretation to incorporate other

force majeure events outside the stipulated list of events. However, under the ejusdem

generis principle, the catch-all phrase must be interpreted strictly based on the specific

events preceding the all-catch phrase.124

64. Applying the rule above in the present Case, the detention of the Athena by the new Hades

government is included in the Force Majeure Clause. The event in the present case

constitutes as a “restraint of princes,” which is defined as a hindrance conducted by a

government authority. 125 Even though the Force Majeure Clause does not expressly

provide for “restraint of princes”, the events preceding the catch-all phrase refers to other

forms of hindrance by government or authoritative bodies, such as “court ordered arrest

proceedings” or “intervention by sanitary or customs authority.”126

65. Thus, applying the ejusdem generis principle, the Force Majeure Clause shall be interpreted

to include “restraint of princes” within the scope of the Force Majeure Clause. Therefore,

the detention of the Athena is covered by the Force Majeure Clause.

b. The Force Majeure Clause should be construed as a corollary to the

Interruption to Laytime Clause

122 Nicholas E Ambatielos v Anton Jurgens’ Margarine Works [1922] All ER Rep 543 (“Nicholas E

Ambatielos”). 123 Nicholas E Ambatielos, supra n.124; Chandris v Isbrandtsen-Moller Co Inc [1951] 1 K.B. 240. 124 Herman v Morris [1919] 35 Times L.R. 574. 125 Finlay v Liverpool and Great Western Steamship Co [1870] 23 L.T. 251, 254. 126 Charterparty Cl. 19(d), Moot Scenario, p. 40.


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66. The Claimant might argue that the Force Majeure Clause will not affect the running of the

laytime and demurrage without express provisions covering both issues. However, the

Respondent submits that the Force Majeure Clause affects the running of the laytime and

demurrage since it is to be read as a corollary with another exception clause.127

67. In The John Michalos,128 the charterparty contained two clauses; one clause expressly

provided the exemption towards laytime and demurrage, whilst the other did not. By

reading the clauses in a corollary manner, it is possible to extend the ambit of the latter

clause to also exempt the charterer’s liability towards the laytime and demurrage.129

68. In the present Case, the Interruption to Laytime Clause expressly provided for exceptions

to the laytime and demurrage, while the Force Majeure Clause did not.130 Applying the rule

in The John Michalos, the Force Majeure Clause shall be read as a corollary to the

Interruption to Laytime Clause, to the effect that the events under the Force Majeure Clause

also affect the running of the laytime and demurrage.

69. As stated in paragraph 62, the detention of the Athena is covered under the Force Majeure

Clause.131 Therefore, the occurrence of this event exempts the Respondent from its liability

to pay demurrage.

III. THE RESPONDENT IS ENTITLED TO CLAIM SALVAGE REWARDS

70. After the Athena sailed into open water, a tug owned by the Respondent (“Hestug”)

rendered assistance to the Athena when it could no longer proceed under its own power due

to broken propellers.132 Such assistance amounts to salvage. Consequently, the Respondent

is entitled to claim salvage rewards.

127 President of India v N.G Livanos Maritime Co (The John Michalos) [1987] Q.B. (Com. Ct.). 128 Ibid. 129 Ibid. 130 Charterparty Cl. 9(e), 19, Moot Scenario, p. 35, 39. 131 See supra ¶62. 132 Moot Scenario, p. 71.


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71. To claim salvage rewards, there are three cumulative elements that needs to be satisfied,

namely: (A) the Athena was exposed to the dangers of the sea; (B) the salvage was done

voluntarily; and (C) the salvage succeeded in saving both the Athena and the cargo from

danger.133 Here, all the elements have been fulfilled.

A. The Athena was exposed to the dangers of the sea

72. A vessel is considered to be exposed to the dangers of the sea when, at the time of

assistance, she may encounter damage or misfortune which might possibly cause harm if

the services were not rendered.134 The danger need not to be imminent or actual.135

73. In The Troilus, when propellers of the vessel broke, the court held that the assistance

rendered to her amounted to salvage, despite the absence of any imminent danger.136 The

court held that as long as she remained at sea without any motive power, she is deemed to

be exposed to dangers of the sea.137

74. The situation in The Troilus is similar to what happened in the present Case, in which the

Athena was adrift at sea due to her broken propellers.138 As such, although there was no

imminent danger encountered by the Athena, her broken propellers exposed her to the

dangers of the sea.

B. The salvage was done voluntarily

75. Salvage must be done voluntarily, meaning it must not be conducted under a pre-existing

contract or official duty.139 In this Case, the salvage done by Hestug (i) did not arise from

any contractual obligation, and (ii) was not conducted out of self-interest.

133 The Ship Loretta v Bubb [1970] 18 FLR 141 (1970).; Bostonian (Owners, Master and Crew) and Another v

Gregerso (Owners) The Gregerso [1971] 2 W.L.R 955; The Glengyle [1898] P. 97; Owners of Voutakos v

Tsavliris Salvage (International) Ltd [2008] EWHC 1581 (Amlty) 134 The Charlotte [1848] 3 W Rob 68. 135 Turnbull v Owners of the Strathnaver [1875] 1 App. Cas. 58.; The Glaucus [1948] 81 Ll. L. Rep. 262. 136 Owners of Cargo Lately Laden on Board the Troilus v Owners, Masters and Crew of the Glenogle (The Troilus)

[1951] A.C. 820. 137 Ibid. 138 Moot Scenario, p. 71. 139 The Neptune [1824] 1 Hagg 227; Visscher v BHP Petroleum Pty Ltd [2002] NSWSC 65.


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i. Salvage done by Hestug did not arise from any contractual obligation

76. Based on the facts, there was no contractual obligation for Hestug to salve the Athena when

her propellers broke after sailing into open water.140 The only existing contract between

Hestug and the Claimant was a towage contract to guide the Athena to open waters.141 It

was only after the towlines were released that the Athena began to drift in an uncontrolled

manner.142 The release of the towlines indicates that the towage had been performed. As

such, any assistance rendered afterwards is not carried out under the towage contract. In

the present Case, Hestug rendered assistance to the Athena when her propellers broke after

she was already in open waters.

77. Therefore, this assistance was not carried out under the towage contract and is to be

considered as voluntary.

ii. Salvage conducted was not out of self-interest

78. The Claimant might argue that the Respondent’s assistance was not voluntary because the

Respondent is the cargo-owner of the salved vessel;143 hence, the salvage was done out of

self-interest. In The Sava Star,144 the judge held that there are no rigid categories of salvors;

they include any volunteer who renders services of a salvage nature. Salvage conducted by

a cargo-owner can still be considered as ‘voluntary’ if the services rendered were in the

nature of salvage services and were not rendered pursuant to a duty owed to the

shipowner.145

79. In the present Case, Hestug’s assistance was in the nature of a salvage service, and was not

based on any duty owed to the Claimant. Therefore, despite the Respondent being a cargo-

140 Moot Scenario, p. 68, 71. 141 Ibid. 142 Statement of Defense, ¶7, Moot Scenario, p. 76. 143 Moot Scenario, p. 71. 144 Hydro Agri (UK) Ltd v The Owners of the ship “The Sava Star” [1995] 2 Lloyd’s Rep. 134. 145 Ibid.


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owner, the Respondent still qualifies as a salvor because the assistance rendered by Hestug

was voluntary.

C. The salvage succeeded in saving the Athena and the Cargo

80. In The India, salvors are only entitled to salvage rewards if their services actually succeed

in saving the vessel.146 In the present Case, Hestug succeeded in saving the Athena and her

cargo.147 Therefore, the Respondent meets all the three cumulative elements required,

which entitles the Respondent to salvage rewards.

PRAYER FOR RELIEF

For the reasons submitted above, the Respondent respectfully requests this Arbitral Tribunal

to:

DECLARE that this Tribunal has no jurisdiction to hear this proceeding.

In the event that the Arbitral Tribunal rules that it has jurisdiction to hear this proceeding,

ADJUDGE that the Respondent is not liable for the payment of demurrage, since:

a. the Charterparty had been frustrated as of the occurrence of the frustrating event;

b. alternatively, the Respondent had completed loading before the expiry of laytime; and

c. even if the Arbitral Tribunal finds that demurrage actually accrued, the Respondent is

still not liable to pay for demurrage as:

i. the demurrage accrued due to the Claimant’s fault; and/or

ii. the Respondent is exempted from liability under the Charterparty;

Further,

ADJUDGE that the Respondent is entitled to claim salvage rewards.

146 Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller [1972] A.C. 242 (HL); The India [1842] 1

Wm Rob 406. 147 Moot Scenario, p. 71.

international maritime law arbitration moot · calculation of the laytime does not continue when...

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