memorandum for respondent · team 13 memorandum for respondent nineteenth annual international...

TEAM 13 MEMORANDUM FOR RESPONDENT

Nineteenth Annual International Maritime Law Arbitration Moot, 2018

NATIONAL LAW SCHOOL OF INDIA UNIVERSITY,

BANGALORE

TEAM 13

Memorandum for RESPONDENT

On behalf of

Dynamic Shipping LLC

945 Moccasin Road

Cerulean 9659

RESPONDENT

Against

Cerulean Beans and Aromas Ltd

23 Fuchsia Crescent

Cerulean 1268

CLAIMANT

TEAM

AKASH DEEP SINGH KSHITIJ SHARMA YASH SINHA

BANGALORE INDIA


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TABLE OF CONTENTS

TABLE OF ABBREVIATIONS ..................................................................................................... IV

TABLE OF AUTHORITIES ......................................................................................................... VI

ISSUES RAISED ........................................................................................................................ XII

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

ARGUMENTS ON JURISDICTION OF THE TRIBUNAL .................................................................. 3

Issue I: The Arbitral Panel Does not have the Jurisdiction to Determine the Claim for

Damages made by the Claimant ......................................................................................... 3

A. The Expert Determination provisions of the Charterparty relating to resolution of

technical matters are sufficiently certain to create a legally binding obligation. ............... 3

B. The claim for damages made by the Claimant is a technical matter and shall be

referred to Expert Determination. ...................................................................................... 5

C. In any case, the claim for damages cannot be decided without its cause of action

being referred to Expert Determination. ............................................................................ 6

ARGUMENTS ON MERITS OF THE CLAIM .................................................................................. 7

Issue II. The Claimant does not hold a valid maritime lien over the Madam Dragonfly

................................................................................................................................................ 7

A. The lien is contractual in nature .................................................................................... 7

B. The Claimant lacks possession of the ship .................................................................... 8

C. In any case, the maritime lien cannot be subrogated..................................................... 9

Issue III. Respondent is not liable to pay the Damages of USD 14,450,000 for the

Breach of Charterparty ..................................................................................................... 10

A. Respondent is not liable for the deviation to Spectre.................................................. 10

B. Respondent is not liable for the failure to deliver the goods on time .......................... 14

C. In any case, the contractual breaches have not caused the losses ............................... 17

Issue IV. Respondent is not liable to pay any damages for water damage to the cargo.

.............................................................................................................................................. 19


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A. The water damage to the cargo occurred after the delivery of the cargo was complete.

.......................................................................................................................................... 19

B. In any case, the liability of Respondent is limited as per Art. IV(5) of the Hague

Rules ................................................................................................................................ 22

ARGUMENTS ON MERITS OF THE COUNTER CLAIM............................................................... 23

Issue V. The Claimant is liable to pay demurrage. ......................................................... 23

A. The ship arrived at the discharge port at 7:00 AM on 29 July 2017. .......................... 23

B. The “Fault of the Shipowner” defence cannot be claimed. ......................................... 24

Issue V. Claimant is liable to pay the agency fees at Spectre ......................................... 25

Issue VI. Claimant is liable to pay the agency fees at Spectre ....................................... 25

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


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TABLE OF ABBREVIATIONS

ABBREVIATION TERM

AC Appeal Cases

AIR All India Reporter

ALL ER All England Reporter

ALR Australian Law Reports

App cas Law Reports Appeal Cases

Art. Article

Asp. M.L.C. Aspinall’s Maritime Law Cases

B&S Best and Smith’s Reports

BCC British Company Law Cases

BLR Business Law Reports

C.Rob Christopher Robinson’s Reports

Charterparty The voyage charterparty between Claimant

and Respondent

Claimant Cerulean Beans & Aromas Ltd

CLC Company Law Cases

Comc.Cas Company Cases

CommArb Commercial Arbitration

Edn. Edition

EWCA Civ. Court of Appeal of England and Wales

Decisions (Civil Division)

EWHC High Court of England and Wales

F 2d Federal Reporter (Second Series)

F. Supp 2nd Federal Supplement (Second Series)

FCA Federal Court of Australia

FCR Federal Court Reports

Hag. Adm Haggard’s Admiralty Reports

Inc Incorporated

K.B. Law Reports, King’s Bench

LJQB Law Journal, Queen’s Bench


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LLC Limited Liability Company

Lloyd’s Rep. Lloyd’s Reporter

LMAA London Maritime Arbitrators Association

LMLN Lloyd’s Maritime Law Newsletter

Ltd. Limited

Lush Lushington’s Admiralty Reports

NM Nautical Miles

NSWCA New South Wales Court of Appeal

NSWLR New South Wales Law Reports

NZLR New Zealand Law Review

P Law Reports Probate

Para./Paras. Paragraph/Paragraphs

Pg./Pgs. Page/Pages

PO 2 Procedural Order 2

QB Queen’s Bench

QBD Queen’s Bench Division, Law Reports

Qd R Queensland Reports

Respondent Dynamic Shipping LLC

SC Session Cases, Decisions of the Court of

Sessions (Scotland)

SC (HL) Session Cases (House of Lords) (Scotland)

Sec. Section

SGCA Singapore Court of Appeal

Sing HC Singapore High Court

SWAB Swabey’s Admiralty Reports

UKHL UK House of Lords

UKPC United Kingdom Privy Council Cases

USD United States Dollars

VSC Supreme Court of Victoria

W. Rob William Robinson’s Admiralty Reports

WASCA Western Australia Court of Appeal

WLR Weekly Law Report

WWD Weather Working Day


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TABLE OF AUTHORITIES

CASES REFERRED TO AT PAGE

American Hoesch v. Aubade, [1971] 2 Lloyd’s Rep. 423. 33, 34

Andrew Conquest v. Patrick McGinnis and Brian McGinnis,

[2007] EWHC 2943 (Ch).

22

Automatic Tube Company v. Adelaide Steamship (Operations)

Ltd. (The "Beltana"), [1967] 1 Lloyd's List L.R. 531.

33, 34

Badgin Nominees Pty Ltd v. Oneida Limited, [1998] VSC 188. 15

Barclays Bank Plc v. Nylon Capital LLP, [2011] EWCA Civ 826. 15

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

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

38

Boscawen v. Bajwa, [1996] 1 W.L.R. 328. 22

BP Refinery (Westernport) Pty Ltd v. Hastings Shire Council,

[1977] HCA 40.

16

Bristol Corporation v. John Aird & Co., [1913] AC 241. 16

Browner International Ltd. v. Monarch Shipping Co. Ltd. (The

European Enterprise), [1989] 2 Lloyd’s Rep. 185.

35

Budgett & Co. v Binnington & Co. [1891] 1 QB 35, 38. 38

Burridge v. Row, (1842) 1 Y & C Ch Cas 183. 21

Carslogie Steamship Co. v. Royal Norwegian Government, [1952]

A.C. 292 (HL).

28

Channel Tunnel Group Ltd v. Balfour Beatty Construction

Ltd., [1993] AC 334.

15

Codelfa Construction Pty Ltd v. State Rail Authority of N.S.W.,

[1982] HCA 24.

16

Constable v. National SS. Co., 154 U.S. 51 (1894). 33

Cook v. S, [1966] 1 W.L.R. 635. 29

Cott UK Ltd. v. Barber Ltd, [1997] 3 All ER 540. 18


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Dahl v. Nelson, Donkin & Co., (1881) 6 App Cases 38. 33

Dallah Real Estate and Tourism Co. v. Ministry of Religious

Affairs of the Government of Pakistan, [2011] 1 AC 763.

15

Daniel Harmer  v. William Errington Bell (The

Bold Buccleugh), (1852) 7 Moo.P.C. 267.

20

Dobbs v. The National Bank of Australasia, [1935] HCA 49. 18

E.L. Oldendorff & Co. v. Tradax Exports SA (The Johanna

Oldendorff), 1974 AC 479.

37

Ellis Shipping Corporation v. Voest Alpine Intertrading, [1991] 2

Lloyd’s Rep 599.

38

Federal Commerce & Navigation Co. Ltd. v. Molena Alpha Inc.,

(The Nanfri), [1979] A.C. 757.

21

Federal Commerce and Navigation Co. v. Tradax Exports SA

(The Maratha Envoy), [1975] 2 Lloyd’s Rep. 223.

37

Fletcher Construction Australia Ltd v. MPN Group Pty

Ltd (Unreported, Supreme Court of New South Wales, 14 July

1997).

16

Galoo v. Bright Grahame Murray, [1994] 1 W.L.R. 1360. 28

Gem Shipping Co of Monrovia v. Babanaft (Lebanon) SARL

(‘The Fontevivo’), [1975] 1 Lloyd’s Rep. 339.

38

Government Insurance Office of NSW v. Atkinson-Leighton Joint

Venture, [1981] HCA 9.

18

Great Eastern Shipping Co. Ltd v. Far East Chartering Ltd (The

Jag Ravi), [2012] 1 Lloyd’s Rep. 637.

34

Greater London Council v. Connolly, [1970] 2 Q.B. 100. 16

Hadley v. Baxendale, (1854) 9 Ex. 341. 31

Hartford Fire Insurance Co. v. OOCL Bravery, [2000] 1 Lloyd's

Rep. 394.

35

Heart Research Institute v. Psiron Ltd, [2002] NSWSC 646. 18

Helios A/S v. Ekman & Co., [1897] 2 Q.B. 83. 33

https://login.westlawindia.com/maf/wlin/app/document?src=doc&linktype=ref&&context=161&crumb-action=replace&docguid=IA5E9C770E42711DA8FC2A0F0355337E9


http://www.austlii.edu.au/au/cases/cth/HCA/1981/9.html

http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2002/646.html


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Holloway v. Chancery Mead Ltd, [2007] ADR.L.R. 07/30. 18

Huddart Parker Ltd v. The Ship Mill Hill, [1950] HCA 43. 16

IBM Australia Ltd v. National Distribution Services Ltd, (1991)

22 NSWLR 466.

18

JT Mackley & Co Ltd v. Gosport Marina Ltd, [2002] BLR 367. 18

Kidde de Mexico S.A.ea v. Scheepvaartonderneming Harns CV

(The Harns), Dutch Court of Appeal of Arnhem-Leeuwarden, 27

September 2016.

24

Kinderman Sons v. Nippon Yusen Kaisha Lines, 322 F. Supp.

939.

32

Kish v. Taylor, [1912] A.C. 604. 25, 26

Langham SS Co. Ltd. v. Gallagher, [1911] 12 Asp MLC 109. 33

Leonis Steamship Co v. Rank, 1908 1 K.B. 499. 37

Livingstone v. Rawyards Coal Co., (1880) 5 App. Cas. 25. 31

London Arbitration 5/90 – LMLN 274, 5 May 1990. 37

MDC Ltd v. NV Zeevaart Maatschappij (Beursstraat), [1962] 1

Lloyd’s Rep. 180.

24

Metropolitan Tunnel and Public Works Ltd v. London Electric

Railway Co., [1926] 1 Ch 371.

16

Mobil Oil New Zealand Ltd v. The Ship ‘Rangiora’ (No.

2), [2000] 1 NZLR 82.

20

Monarch S.S. Co. v. Karlshamns Oljefabriker, [1949] A.C. 196. 26, 29

Mulvenna v. Royal Bank of Scotland, [2003] EWCA Civ 1112. 31

Nairn v. Prowse, (1802) 6 Ves 752. 19

Nea Agrex S.A. v. Baltic Shipping Co. Ltd (The Agios Lazarus),

[1976] Q.B. 933.

35

Northern Shipping Co. v Deutsche Seereederei G.M.B.H. (The

Kapitan Sakharov), [2000] 2 Lloyd's Rep. 255.

24

Papera Traders Co. Ltd. v. Hyundai Merchant Marine Co. Ltd. 23, 25

http://www6.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/1950/43.html

http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281991%29%2022%20NSWLR%20466



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(The Eurasian Dream), [2002] 1 Lloyd’s Rep. 719.

Paul v. Speirway Ltd, (1976) Ch 220. 22

Petersen v. Freebody & Co., [1895] 2 Q.B. 294. 33

Postlethwaite v. Freeland, (1880) 5 App. Cas. 599. 33

President of India v. West Coast S.S. Co. (S.S. Portland Trader), 5

213 F. Supp. 352.

25

Procter Garrett Marston, Limited v. Oakwin Steamship Company

Limited, [1926] 1 K.B. 244.

33, 34

Public Authorities Superannuation Board v. Southern

International Developments Corporation Pty Limited,

(Unreported, Supreme Court of New South Wales, 19 October

1987).

18

QH Tours Ltd v. Ship Design and Management (Aust) Pty Ltd,

(1991) 105 ALR 371, 384.

15

Queensland National Bank Ltd v. Peninsular and Oriental Steam

Navigation Co., [1898] 1 Q.B. 567.

24

Republic Of France v. French Overseas Corporation (The

Malcolm Baxter, Jr.), 277 U.S. 323.

26

Ropner Shipping Co. Ltd v. Cleeves Western Valleys Anthracite

Collieries Ltd., (1927) 27 Lloyd’s Rep. 317.

38

Ruxley Electronics and Construction Co. Ltd. v. Forsyth, [1996]

A.C. 344.

30

Sailing Ship Garston & Co v. Hickie, 1885 15 Q.B.D. 580. 37

Santiren Shipping Ltd. v. Unimarine S.A.

(The Chrysovalandou Dyo), (1981) 1 Lloyd’s Rep. 159.

21

Scott v. Avery, [1856] EngR 810. 18

Strathlorne SS Co Ltd v. Hugh Baird & Sons Ltd., (1916) SC

(HL) 134.

33

Target Holdings Ltd. v. Redferns, [1996] A.C. 421. 29

The Achilleas, [2008] UKHL 48. 31


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The Aello, [1957] 1 W.L.R. 1228. 37

The Fontevivo [1975] 1 Lloyd’s Rep. 339. 38

The Jaederen, [1892] P 351. 33

The Mihalios Xilas, (1978) 2 Lloyd’s Rep. 186. 21

The Minerva, [1933] P 224. 20

The Oriental Victory, [1978] 1 CF 448. 20

The Polyfreedom, 1974 New York Arbitration. 37

The State of NSW v. UXC Limited, [2011] NSWSC 530. 18

Triarno Pty Ltd v. Triden Contractors Ltd, (1992) 10 BCL 305. 16

UBC Chartering Ltd v. Liepaya Shipping Co. Ltd. (The Liepaya),

[1999] 1 Lloyd’s Rep. 649.

24

United States Trust Company of New York v. Master and Crew of

Ship Ionian Mariner, (1997) 77 FCR 563, 583.

20

Ust-Kamenogorsk Hydropower Plant JSC v. AES Ust-

Kamenogorsk Hydropower Plant LLP, [2013] 1 W.L.R. 1889.

15

WTE Co-Generation v. RCR Energy Pty Ltd., [2013] VSC 314. 15

Yemgas FZCO v. Superior Pescadores S.A. (Superior Pescadores)

[2016] EWCA Civ 101.

35

BOOKS REFERRED TO AT PAGE:

CHITTY ON CONTRACTS (H.G. Beale et al eds., 31st edn., Sweet &

Maxwell, 2012)

16

D. Hodgson, THE LAW OF INTERVENING CAUSATION (Routledge,

2008).

16

E. Peel, TREITEL: THE LAW OF CONTRACT (14th edn., Sweet &

Maxwell, 2014).

17, 18

HALSBURY’S LAWS OF ENGLAND, Vol. 43 ( 4th edn.,

Butterworths, 1983)

20

I. Carr, INTERNATIONAL TRADE LAW (5th edn., Routledge, 13, 14


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2014).

J. Cooke et al, VOYAGE CHARTERS (4th edn., Informa Law from

Routledge, 2014)

13, 20

O. C. Giles, CHORLEY AND GILES’ SHIPPING LAW (8th edn.,

Pittman Publishing, 1988).

8

R. Grime, SHIPPING LAW (2nd edn., Sweet & Maxwell, l991).

8

REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION (6th

edn., Blackaby et al. eds., 2015) .

3

S. Hodges and C.J.S. Hill, PRINCIPLES OF MARITIME LAW (LLP,

2001).

8

ARTICLES REFERRED TO AT PAGE:

W. Tetley, Assignment and Transfer of Maritime Liens: Is There

Subrogation of the Privilege, 15 J. MAR. L. & COM. (1984).

9

STATUTES, TREATIES AND CONVENTIONS REFERRED TO AT PAGE:

International Convention for the Unification of Certain Rules of

Law relating to Bills of Lading ("Hague Rules"), 1924.

21, 22

UNCITRAL Model Law on International Commercial

Arbitration.

3

International Arbitration Act, 1974 (Cth). 3

Arbitration Act, 1996 (UK). 3

https://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22Otto+Charles+Giles%22

https://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22Susan+Hodges%22

https://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22Christopher+Julius+Starforth+Hill%22


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ISSUES RAISED

I. Whether the Arbitral Tribunal has the Jurisdiction to Determine the Claim for Damages

made by the Claimant?

II. Whether the Claimant holds a valid maritime lien on the Madam Dragonfly?

III. Whether the Respondent is liable to pay the Damages of USD 14,450,000 for the Breach

of Charterparty?

V. Whether the Respondent is liable to pay USD 15,750,000 as damages for water damage to

the cargo?

VI. Whether the Claimant is liable to pay any demurrage?

VII. Whether the Claimant is liable to pay the agency fees at Spectre?

VIII. Whether the Claimant is liable to pay the Electronic Tag Access Fees?


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STATEMENT OF FACTS

THE PARTIES AND THE CONTRACT OF AFFREIGHTMENT

1. Dynamic Shipping LLC (Respondent) is a corporation based in the State of Cerulean.

Cerulean Beans and Aromas (Claimant), a supplier of high-grade coffee beans, is also based

in the State of Cerulean. On or about 22 July 2017, the Respondent as “Owner” and the

Claimant as “Charterer” negotiated a voyage charter (the “Charterparty”) that provides for a

voyage from the port of Cerulean to the port of Dillamond. The Charterparty was for the

Madam Dragonfly (the ship).

PERFORMANCE OF THE CHARTERPARTY

2. On the request of the Respondent and supplementing the Charter, USD 100,000 was

deposited by the Claimant in an account earmarked for the purposes of paying the crew’s

wages.

3. The said cargo was delivered to the Respondent by the 24th of July, following which it was

loaded on the vessel after the application of sealants. The vessel departed Cerulean on the

same day. As per the Charterparty, the delivery of cargo to the destination port was

scheduled for the 28 July 2017. The scheduled delivery was negotiated upon considering the

Claimant’s obligations towards a third party that required the cargo.

5. The vessel made an unexpected deviation from the decided route as a result of solar flares,

a force majeure event. Consequently, the arrival of the vessel at the destination port was

delayed. Its berthing was further delayed due to a torrential rain-storm, the second force

majeure event that compelled the port to close.


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6. The cargo was delivered at 8:42 PM on 29 July 2017. Claimant though collected the cargo

on 31 July 2017. It was discovered that the cargo in three of the containers had gotten

damaged. In furtherance of discharging obligations to the third party, the Claimants incurred

charges for procuring replacements for the same. Furthermore, the vessel’s crew remained

unpaid post completion of the said voyage due to financial infirmities of the Respondent.

THE NOTICE OF CLAIMS AND THE ARBITRATION PROCEEDINGS

8. On 11 August, 2017, the Claimant referred the dispute to arbitration as per the arbitration

clause in the charter, for settlement of disputes arising out of the Charter. This arbitration was

not validly commenced.

As a result of the claims and counter-claims raised by the Claimant and the Respondent

respectively, these conjoined proceedings have begun and are being brought together for the

tribunal’s reference.


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ARGUMENTS ON JURISDICTION OF THE TRIBUNAL

ISSUE I: THE ARBITRAL PANEL DOES NOT HAVE THE JURISDICTION TO DETERMINE THE

CLAIM FOR DAMAGES MADE BY THE CLAIMANT

1. The Claimant alleged that the Respondent is liable to pay damages worth USD 30,200,000

for the breach of Charterparty and referred the dispute to arbitration.1 Respondent objects to

the jurisdiction of this arbitral tribunal to determine this claim relating to technical matters.

This is because, first, the Expert Determination provisions of the Charterparty relating to

resolution of technical matters are sufficiently certain to create a legally binding

obligation.[A] Secondly, the claim for damages made by the Claimant is a technical matter

and shall be referred to Expert Determination.[B] In any case, the claim for damages cannot

be decided without its cause of action being referred for Expert Determination.[C]

A. The Expert Determination provisions of the Charterparty relating to resolution of

technical matters are sufficiently certain to create a legally binding obligation.

2. It is a settled proposition of law that the Tribunal has power to determine its own jurisdiction

under the principle of ‘competence-competence’.2 The Courts have held that where parties

have made a special agreement requiring them to address a path to a potential solution, such

parties should be required to endeavour in good faith to achieve it.3 If there is a special

contract between the parties to refer the disputes to an expert, the courts consider the

1 Moot Scenario, Pg. 34. 2 REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION, 322, & 345 (6th edn., 2015); QH Tours Ltd v. Ship

Design and Management (Aust) Pty Ltd, (1991) 105 ALR 371, 384; Dallah Real Estate and Tourism Co v.

Ministry of Religious Affairs of the Government of Pakistan, [2011] 1 AC 763, 830 [84]; Ust-Kamenogorsk

Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower Plant LLP, [2013] 1 WLR 1889, 1902;

UNCITRAL Model Law on International Commercial Arbitration, Article 16(1); International Arbitration Act

1974 (Cth), Sec. 16; Arbitration Act 1996 (UK), Sec. 30(1). 3 Per Mustill LJ, Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd [1993] AC 334 at 353; Barclays

Bank Plc v. Nylon Capital LLP [2011] EWCA Civ 826; Badgin Nominees Pty Ltd v. Oneida Limited [1998]

VSC 188; WTE Co-Generation v. RCR Energy Pty Ltd., [2013] VSC 314.


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circumstances of a case with a strong bias in favour of maintaining the special bargain.4

Scrutton LJ has stated that the most natural guiding principle in such cases is that the parties

who have made a contract must adhere by it.5 Further, it has been held that a clause should be

declared void for uncertainty only as a last resort, where it is not possible to supply it with a

reasonable meaning at all.6

3. It is submitted that the expert determination clause is sufficiently certain to establish legally

binding obligation. This is because it clearly identifies the process that has to be adopted by

the parties. It clearly specifies that the disputes as to technical matters have to be referred to

“Expert Determination”.7 It may be argued that the clause is uncertain as it fails to set out in

detail the procedure that needs to be followed by the Expert. However, it has been held that a

clause will not be void if it merely did not specify the procedures the expert was required to

follow.8 In the absence of any express term, procedures have to be decided by the expert.9

4. Further, the Respondent might argue that the lack of provision for the method of appointment

of the expert will lead to uncertainty. However, it is submitted that it should be impliedly read

into the contract that the expert shall be appointed by the mutual consent of the parties. It is

established that a term can be impliedly read into a contract if it is so obvious that “it goes

without saying”.10 In the instant case, this clause is more than obvious, given that the parties

have opted for referral to an independent expert. On the basis of the abovementioned

submissions, it is submitted that the expert determination provisions are sufficiently certain to

give rise to a binding legal obligation.

4 Per Moulton LJ, Bristol Corporation v. John Aird & Co., [1913] AC 241; Per Dixon J, Huddart Parker Ltd v.

The Ship Mill Hill, [1950] HCA 43. 5 Per Scrutton LJ, Metropolitan Tunnel and Public Works Ltd v. London Electric Railway Co., [1926] 1 Ch 371;

Per Dixon J, Huddart Parker Ltd v. The Ship Mill Hill, [1950] HCA 43. 6 Per Lord Denning MR, Greater London Council v. Connolly, [1970] 2 QB 100. 7 Moot Scenario, Pg. 12, Clause 27(d). 8 Per Rolfe J, Fletcher Construction Australia Ltd v MPN Group Pty Ltd (Unreported, Supreme Court of New

South Wales, 14 July 1997). 9 Triarno Pty Ltd v Triden Contractors Ltd, (1992) 10 BCL 305 at 307; Fletcher Construction Australia Ltd v

MPN Group Pty Ltd (Unreported, Supreme Court of New South Wales, 14 July 1997). 10 Codelfa Construction Pty Ltd v. State Rail Authority of NSW, [1982] HCA 24; BP Refinery (Westernport)

Pty Ltd v. Hastings Shire Council, [1977] HCA 40.




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B. The claim for damages made by the Claimant is a technical matter and shall be

referred to Expert Determination.

5. The parties agreed to refer all disputes arising out of or in connection to the contract to

arbitration, but reserved specific disputes relating to technical matters to be referred to expert

determination by an independent master mariner.11 Further, Clause 27(e) prohibits the parties

from commencing any legal proceedings (including arbitral proceedings) in respect of a

dispute unless the technical matters are determined by the expert.12

6. Technical matters have been defined in the contract to mean “matters surrounding the

technical aspects of the performance of the Charterparty.”13 In the instant case, the Claimant

has claimed damages from the Respondent for the alleged breach arising from deviation,

delay in delivery and for the damage caused to the cargo.14 These claims for damages

squarely fall under the definition of ‘technical matters’ provided in the Charterparty as they

relate to the vessel’s route and storage conditions. It shall be noted here that the parties

expressly provided that the person appointed to determine the technical matters should act as

an expert and not as an arbitrator.15 Further, the parties have also agreed that the written

determination by the expert will be conclusive and binding on the parties.16 This clearly

indicates that the parties intended that these disputes should not be settled by way of

arbitration.

7. The Claimant may argue that the role of expert under such agreements should be limited to

the determination of factual matters and should not extend to the determination of issue of

damages. However, it is submitted that imposing such an artificial limitation on the

jurisdiction of the Expert will be in derogation of the Charterparty. Courts have rejected

11 Moot Scenario, Pg. 12, Clause 27(a) & (d). 12 Moot Scenario, Pg. 12, Clause 27(e). 13 Moot Scenario, Pg. 12, Clause 27(g). 14 Moot Scenario, Pg. 37, Para. 4-7. 15 Moot Scenario, Pg. 12, Clause 27(f). 16 Moot Scenario, Pg. 12, Clause 27(f).


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similar arguments made in the past and extended the matters which may be considered by

expert determination to issues of liability and quantum of damages.17 Further, Courts have

adopted a positive approach towards expert determination and have indicated willingness to

construe such dispute resolution clauses in an expansive manner.18 Therefore, in the instant

case, it is submitted that the jurisdiction of the expert should extend to the determination of

quantum of damages in technical matters.

C. In any case, the claim for damages cannot be decided without its cause of action

being referred to Expert Determination.

8. In any case, even if the Tribunal were to give a narrow construction to the clause, the

technical matters which form the cause of action for the claim have to be referred to expert

determination before those claims can be adjudicated by the Tribunal. Clause 27(e) of the

Charterparty makes referral to an expert a condition precedent to accrual of any rights

relating to the performance of technical matters.19 No cause of action for a claim for damages

can arise before expert makes a determination on rights and liabilities under the contract.20 As

previously established, the cause of action of the claim for damages is non-performance of

technical aspects of the Charterparty, i.e. storage conditions and vessel route.21 It is also

supported by the fact that the Tribunal itself has appointed a maritime engineer as an expert

witness.22 Therefore, it is submitted that the Claimant is not entitled to commence arbitral

proceedings.

17 Per Smart J, Public Authorities Superannuation Board v. Southern International Developments Corporation

Pty Limited, (Unreported, Supreme Court of New South Wales, 19 October 1987); Cott UK Ltd. v. Barber Ltd,

[1997] 3 All ER 540. 18 Government Insurance Office of NSW v. Atkinson-Leighton Joint Venture, [1981] HCA 9; IBM Australia

Ltd v. National Distribution Services Ltd, (1991) 22 NSWLR 466; Per Einstein J, Heart Research Institute v.

Psiron Ltd, [2002] NSWSC 646. 19 Scott v. Avery, [1856] EngR 810; Holloway v. Chancery Mead Ltd, [2007] ADR.L.R. 07/30 20 The State of NSW v. UXC Limited, [2011] NSWSC 530; Dobbs v. The National Bank of Australasia, [1935]

HCA 49; JT Mackley & Co Ltd v. Gosport Marina Ltd, [2002] BLR 367. 21 Memorandum, Para. 6. 22 Moot Scenario, Pg. 43.

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ARGUMENTS ON MERITS OF THE CLAIM

ISSUE II. THE CLAIMANT DOES NOT HOLD A VALID MARITIME LIEN OVER THE MADAM

DRAGONFLY

9. The Claimant deposited the crew’s wages in a separate bank account prior to the voyage.23

This amount was deposited merely for the purposes of security for the crew.24 However, the

Respondent had a separate contract with the crew regarding its wages.25 It is submitted that

the Claimant does not hold a valid maritime lien over the ship. This is because there is always

a presumption against the creditor being afforded double security, which is why in the

absence of an agreement to the contrary, it is presumed that the lien has been abandoned.26 It

is not in dispute that the sum advanced in this case was intended to be used as security for the

crew in the first place, removing the need of another security in the form of a lien.27

10. Even otherwise, the Claimant does not have a right to a valid maritime lien over the ship.

This is because, first, the Claimant’s lien has its basis in contract and not in admiralty,

making this a contractual lien. [A] Second, it is therefore invalidated by the fact that

possession is lacking in the present case. [B] Even if the Tribunal were to find the existence

of a valid lien, the lien is not subrogated to the Claimant.[C]

A. The lien is contractual in nature

11. The jurisdiction of Courts of Admiralty with respect to wage liens was restricted to ordinary

contracts since its very inception.28 In the instant case, the agreement for the employment of

crew was an ordinary contract.29 It has been established that the wages lien is a ‘contractual

23 Moot Scenario, Pg. 1. 24 Moot Scenario, Pg. 1. 25 Moot Scenario, Pg. 8. 26 Nairn v. Prowse, (1802) 6 Ves 752. 27 Moot Scenario, Pg. 2. 28 The Minerva, [1933] P 224. 29 Moot Scenario, Pg. 8.


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lien’ or that it arises ex contractu.30 Further, in a similar case that involved an ITF contract

between the shipowner and ITF, it was held that such a contract was for the benefit of the

individual crew members, the crew could accordingly recover their wages in personam.31

This is starkly different from a maritime lien where proceedings for recovery are actions in

rem.32

12. There are numerous instances in common law where courts have explicitly demanded the

crew to show that the wages claimed are derived from or associated with some enforceable

contract of employment, to establish a claim for a maritime lien.33 They go to a further extent

and mandate the crew to show a special type of ship-specific contractual term.34 Hence, wage

liens arising ex-contractu are not confined to a notional status for the purposes of ranking

different maritime liens, but treated as a different class of contractual liens. Therefore, it is

submitted that the Claimant does not hold a valid maritime equitable lien over the ship as the

lien in the instant case can only be a contractual lien and not a maritime lien.

B. The Claimant lacks possession of the ship

13. A lien is defined as a defence available to one in possession of a claimant’s goods who is

entitled at common law or by contract to retain possession until he is paid whatever is

owned.35 To claim lien, possession is an essential requirement, and has to be denied to the

party demanding the liened object.36 Maritime lien gives the right not only to retain

possession, but also to realize what is owed from that property.37 It has been held that lien

operates as an equitable charge upon what is due from the shipper to the charterer, and in

30 Otto Charles Giles, et al, CHORLEY AND GILES’ SHIPPING LAW, 80 (Pittman Publishing, London, 8th edn.,

1988); Susan Hodges and Christopher Julius Starforth Hill, PRINCIPLES OF MARITIME LAW 482 (LLP, London,

2001). 31 The Oriental Victory, [1978] 1 CF 448. 32 Daniel Harmer v. William Errington Bell (The Bold Buccleugh), (1852) 7 Moo.P.C.267. 33 United States Trust Company of New York v. Master and Crew of Ship Ionian Mariner, (1997) 77 FCR 563,

583. 34 Mobil Oil New Zealand Ltd v. The Ship ‘Rangiora’ (No 2), [2000] 1 NZLR 82, 86. 35 Santiren Shipping Ltd. v. Unimarine S.A. (The Chrysovalandou Dyo), (1981) 1 Lloyd’s Rep. 159. 36 The Mihalios Xilas (1978) 2 Lloyd’s Rep 186. 37 R. Grime, SHIPPING LAW 415 (Sweet & Maxwell Ltd.. 2nd edn., l991).

https://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22Otto+Charles+Giles%22

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order to be effective requires an ability to intercept the subject of the lien.38 Clearly, in the

present case, the lienor is deprived of the possession of the subject of the lien. Therefore, it is

submitted that the claim for the lien is invalidated.

C. In any case, the maritime lien cannot be subrogated

14. In the alternative, even if a maritime lien exists, it is submitted that it cannot be subrogated to

the Claimant. In cases where a maritime lien is said to exist, it has been held as a general rule

that the same is not transferable in law.39 English courts have been reluctant to recognize the

transfer of a maritime lien.40 Furthermore, with respect to transferability of liens it has been

held that a party does not acquire a lien even if it expends money for the benefit of another,

from the mere fact of having made that expenditure.41

15. It has been previously held that merely discharging the Claimant’s obligation to the

Respondent does not subrogate the crew’s right to the Claimant since law demands

“something more”.42 With respect to maritime liens for wages asserted by third parties on

behalf of the crew, the prevailing common law doctrine provides that a person who has paid

off the ultimate beneficiary will not have a right to claim lien on his behalf.43 In order to be

subrogated to the creditor’s security, the Claimant must prove, first, that the Claimant

intended that his money should be used to discharge the security in question and secondly,

that he intended to obtain the benefit of security by subrogation.44 The second of the two

above requirements is lacking in the present case. Rather, the money was transferred for the

sole benefit of providing the crew members with security.45

38 Federal Commerce & Navigation Co. Ltd. v. Molena Alpha Inc. (The Nanfri), [1979] A.C. 757. 39 The Petone, [1917] P 198. 40 W. Tetley, Assignment and Transfer of Maritime Liens: Is There Subrogation of the Privilege, 15 JOURNAL OF

MARITIME LAW & COMMERCE 393, 403 (1984). 41 Burridge v. Row, (1842) 1 Y & C Ch Cas 183. 42 Paul v. Speirway Ltd, (1976) Ch 220. 43 The Petone, [1917] P 198. 44 Boscawen v. Bajwa, [1996] 1 W.L.R. 328. 45 Moot Scenario, Pg. 1.


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16. Further, Respondent may argue that the lien should be subrogated to remedy an unjust

enrichment by the Claimant. However, it is submitted that this contention is without any

merit. This is because it has been held that if the Claimant intended that the Respondent

should be enriched at its expense, because it served Claimant’s commercial purposes, then it

is not unjust and subrogation is deemed inapplicable.46 In the instant case, the security was

deposited to enable the Respondent’s vessel to set sail with the crew’s wages secured and to

meet the urgency of its shipment.47 Therefore, it is submitted that the Claimant does not hold

a valid maritime lien over the ship.

ISSUE III. RESPONDENT IS NOT LIABLE TO PAY THE DAMAGES OF USD 14,450,000 FOR THE

BREACH OF CHARTERPARTY

17. It is submitted that the Respondent is not liable to pay any damages for the breach of the

Charterparty. This is because, first, Respondent is not liable for the deviation to the port of

Spectre.[A] Second, Respondent is not liable for the delay in delivery.[B] Lastly, the alleged

contractual breaches have not caused the losses in question.[C]

A. Respondent is not liable for the deviation to Spectre

18. The Claimant alleges that through an unjustified deviation, the Respondent has breached its

obligation to take the most direct route to Dillamond. However, it is submitted that the ship’s

deviation towards the port of Spectre has not led to a contractual breach as the deviation was

within the scope of the liberty clause present in the Charterparty.[1] In any event, it was a

result of necessity.[2]

46 Andrew Conquest v. Patrick McGinnis and Brian McGinnis, [2007] EWHC 2943 (Ch). 47 Moot Scenario, Pg. 1.


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1. The deviation to Spectre is within the scope of the liberty clause

19. As per the Charterparty, the ship can deviate for the purpose of saving life or property

(including the vessel).48 Due to solar flares, the ship’s communication and satellite navigation

systems became dysfunctional.49 Additionally, the ship did not have hardcopy maps for the

journey to Dillamond.50 Thus, to save the ship and cargo on board, the crew decided to

deviate towards Spectre to see if any repairs needed to be carried out.51

20. To avail the benefit of the liberty clause, it must be shown that due diligence was exercised to

make the ship seaworthy.52 The standard of due diligence which is required for a particular

voyage is “equivalent to the exercise of reasonable care and skill”.53 The shipowner is

required to exercise due diligence to ensure that the vessel is “properly equipped”54 to

withstand the “ordinary incidents”55 of the contractual voyage. The question to be posed is

“would a prudent shipowner, if he had known of the defect, have sent the ship to sea in that

condition?”56

21. It has been held that for a ship to be seaworthy, adequate and up to date nautical charts and

publications should be available on board.57 This obligation was fulfilled by Respondent as a

proper satellite navigation system was present. Further, the ship only needs to be properly

equipped to withstand the ordinary incidents. It is submitted that as large solar flares that can

48 Moot Scenario, Pg. 9, Clause 17. 49 Moot Scenario, Pg. 17. 50 Moot Scenario, Pg. 19. 51 Moot Scenario, Pg. 19. 52 Moot Scenario, Pg. 9, Clause 17. 53 Papera Traders Co. Ltd. v. Hyundai Merchant Marine Co. Ltd. (The Eurasian Dream), [2002] 1 Lloyd’s Rep.

719. 54 The Maori King v. Hughes, [1895] 2 Q.B. 550; Queensland National Bank Ltd v. Peninsular and Oriental

Steam Navigation Co., [1898] 1 Q.B. 567. 55 Northern Shipping Co. v Deutsche Seereederei G.M.B.H. (The Kapitan Sakharov), [2000] 2 Lloyd's Rep. 255. 56 MDC Ltd v. NV Zeevaart Maatschappij (Beursstraat), [1962] 1 Lloyd’s Rep. 180; UBC Chartering Ltd v.

Liepaya Shipping Co. Ltd. (The Liepaya), [1999] 1 Lloyd’s Rep. 649. 57 Kidde de Mexico S.A.ea v. Scheepvaartonderneming Harns CV (The Harns), Dutch Court of Appeal of

Arnhem-Leeuwarden, 27 September 2016.


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render navigation or satellite systems dysfunctional are rare, they should not be treated as

ordinary incidents.58

22. Further, reasonable care and skill cannot be exercised if the concerned shipowner was not

aware of the defect. The only information which is available is that Respondent kept itself

abreast of all news developments in Dillamond.59 The newspaper which published the report

about the solar flares is ‘The Cerulean Mail’.60 There is nothing to indicate that Respondent

had any knowledge of these newspaper reports and the defect in question.

23. The Claimant may argue that the Respondent should have made enquiries about the

impending voyage and taken necessary steps. However, it is submitted that the obligation

upon the Respondent is one of “reasonable care and skill”.61 NASA’s alert was limited to the

Cerulean region.62 The actual disruptive event was of a global level.63 The ship was moving

away from Cerulean, and thus away from the potentially affected area. In such circumstances,

having a properly updated electronic chart should satisfy the due diligence standard.

Requiring the ship to keep hardcopy backups for solar flare events anywhere else in the world

cannot be made a condition to satisfy the reasonable care and skill standard.

24. It might be contended by the Claimant that the Respondent’s failure to observe statutory duty

of maintaining prescribed communication and navigation equipment shows a lack of due

diligence. The contention lacks any merit because due diligence only requires reasonable care

and skill.64 Respondent has ensured that the ship is classed as +100A1 or its equivalent.65

This means that it is suitable for seagoing service and is kept in good and efficient

58 Solar Flares: Everything You Need to Know, THE TELEGRAPH available at

https://www.telegraph.co.uk/news/science/space/9097587/Solar-flares-everything-you-need-to-know.html (Last

visited on 14 May 2018). 59 PO 2, Pg. 1, Para. 1. 60 Moot Scenario, Pg. 19. 61 Papera Traders Co. Ltd. v. Hyundai Merchant Marine Co. Ltd. (The Eurasian Dream), [2002] 1 Lloyd’s Rep.

719. 62 Moot Scenario, Pg. 19. 63 Moot Scenario, Pg. 19. 64 Papera Traders Co. Ltd. v. Hyundai Merchant Marine Co. Ltd. (The Eurasian Dream), [2002] 1 Lloyd’s Rep.

719. 65 Moot Scenario, Pg. 4, Clause 1.


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condition.66 Moreover, seaworthiness does not require that the most modern equipment is

being used.67 Hence, due diligence has been exercised by Respondent. Thus, it is submitted

that the Respondent can take benefit of the liberty clause present in the Charterparty and is

not liable for the deviation to Spectre.

2. In any case, the deviation was a result of necessity

25. A shipowner or carrier cannot be held liable for deviation which is necessary for the safety of

the vessel or cargo.68 Such a deviation will be justified even though the necessity for the same

arises out of initial unseaworthiness.69 Further, this exception is not applicable if the

shipowner knew about the vessel’s unseaworthiness.70 The ship’s deviation towards Spectre

is justified as the Respondent was not aware of the unseaworthiness before sailing.

26. Two elements of initial unseaworthiness are in question: first, no backup arrangement had

been made. Second, the vessel’s navigation systems did not comply with the current Cerulean

regulations. As per Monarch S.S. Co., the standard required is of actual knowledge.71 It does

not matter howsoever grave the unseaworthiness is or whether there has been a lack of due

diligence as long as there is no actual knowledge.72 As submitted above, there is no evidence

to show that the Respondent was aware of the warning.73 With regard to the statutory breach,

there is again no proof to show that Respondent had actual knowledge of the fact that the

navigation system on the Madam Dragonfly was not as per the prescribed standard. In The

Malcolm Baxter, Jr.,74 it has been held that the master or shipowner should leave the port

with the express knowledge of the defect and with the intention to deviate due to it. Then

66 LLYOD’S REGISTER FOUNDATION, Frequently Asked Questions available at

http://www.lrfoundation.org.uk/public_education/research_resources/faqs/ (Last visited on 17 April 2018). 67 President of India v. West Coast S.S. Co. (S.S. Portland Trader), 5 213 F. Supp. 352. 68 J. Cooke et al, VOYAGE CHARTERS, 279 (4th ed., Routeledge, 2014); Kish v. Taylor, [1912] A.C. 604. 69 J. Cooke et al, VOYAGE CHARTERS, 279 (4th ed., Routeledge, 2014); Kish v. Taylor, [1912] A.C. 604. 70 Monarch S.S. Co. v. Karlshamns, [1949] A.C. 196. 71 Monarch S.S. Co. v. Karlshamns, [1949] A.C. 196. 72 I. Carr, INTERNATIONAL TRADE LAW, 204 (5th edn., Routledge, 2014); Republic Of France v. French Overseas

Corporation (The Malcolm Baxter, Jr.), 277 U.S. 323. 73 Memorandum, Paras. 23-25. 74 Republic Of France v. French Overseas Corporation (The Malcolm Baxter, Jr.), 277 U.S. 323.


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only will it be considered an unjustifiable deviation. Here, there is nothing to indicate that

Respondent had any intention at the time of departure from Cerulean to deviate towards

Spectre. Hence, it is not an unjustified deviation.

27. In any event, focusing on the cause of the peril rather than on the existence of it will defeat

the whole purpose of the defence of necessity.75 This is because the master of the ship might

be reluctant to deviate despite the existence of a peril to life and property, if the defence is not

available. Hence, Respondent is not liable for the deviation as it was due to necessity.

B. Respondent is not liable for the failure to deliver the goods on time

28. Respondent cannot be held liable for breaching its obligations under the Charterparty as it is

protected by the Force Majeure clause.76 The clause protects the Respondent from any

liability that might arise due to there being a delay in Respondent’s performance of its

obligations, as long as that delay, is due to a force majeure event.77 It is submitted that

Respondent is not liable for the failure to deliver as per the appointed time as the two force

majeure events prevented it from fulfilling its contractual obligations.[1] Even if solar flares

are not held to be a force majeure event, Respondent is not liable as the storm acted as the

novus actus interveniens and broke the chain of causation. [2]

1. The delay in delivery was due to two force majeure events

29. As per the Force Majeure clause in the Charterparty, ‘unforeseen weather events’ are

considered force majeure events.78 The two force majeure events are the solar flares [i] and

the storm [ii]. It is submitted that due to the combined operation of the two, Respondent is not

liable for the delay.

75 I. Carr, INTERNATIONAL TRADE LAW, 204 (5th edn., Routledge, 2014); Kish v. Taylor, [1912] A.C. 604. 76 Moot Scenario, Pg. 9, Clause 17. 77 Moot Scenario, Pg. 9, Clause 17. 78 Moot Scenario, Pg. 9, Clause 17.


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i. Solar Flares are a force majeure event

30. As stated above,79 there is nothing to indicate that Respondent was aware of the solar flare

explosions warning by NASA. Hence, the solar flare explosions should be treated as an

‘unforeseen weather event’. Thus, it is a force majeure event. Due to the solar flares, the

ship’s satellite and communication systems became dysfunctional for 17 hours and the vessel

had to deviate towards Spectre. This prevented Respondent from delivering the goods on time

and was also the reason behind the deviation undertaken by Madam Dragonfly. Hence,

Respondent should not be held liable for either of these breaches as Clause 17 states that a

party which has been prevented by a force majeure event from performing its obligations

cannot be held liable.

ii. The storm is a force majeure event

31. The storm has been described as a “once in a lifetime” storm and was not picked up by radars

until approximately 45 minutes before it hit Dillamond during peak hours.80 Hence, as there

was no way to foresee it, it is also a force majeure event as per Clause 17 of the Charterparty.

The storm closed down the port of Dillamond for 12 hours81 after it hit during peak hours on

28 July 201782 around 5 PM.83 The storm made it completely impossible for any vessel to

approach the port after it hit and even vessels which were on the way to the port were

affected. The Madam Dragonfly also had to stop out in the ocean. As the combined effect of

these two force majeure events prevented Respondent from delivering the containers

containing the coffee beans, Respondent cannot be held liable for this breach.

2. The storm acted as the novus actus interveniens and broke the chain of causation

32. It is submitted that even if the solar flares are not considered to be a force majeure event,

Respondent is still not liable for the breach of the Charterparty as the storm acts as the novus

79 Memorandum, Para. 23-25. 80 Moot Scenario, Pg. 21. 81 Moot Scenario, Pg. 21. 82 Moot Scenario, Pg. 21. 83 Moot Scenario, Pg. 19.


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actus interveniens to sever the chain of causation.84 Extraordinary heavy weather has been

held to be capable of severing the chain of causation.85 The Claimants must show that the

solar flares were the “effective or dominant cause”86 for the delay in delivery and not merely

an occasion for the damage.87 It is submitted that even if there had been no solar flares, the

storm would have still delayed the delivery of the cargo.[i] In the alternative, the solar flares

have acted as the occasion for the damage and not as the dominant or effective cause.[ii]

i. Even without the solar flares, the breach would have occurred

33. The storm was about to hit Dillamond at around 4:58 PM on 28 July 2017. Its effects were

already visible out on the sea as the ship could not proceed past its then current location.88

Further, the port of Dillamond was closed for 12 hours due to the storm while clean-up

efforts were going on.89 The Claimant might contend that if the ship had reached the port by

5:00 PM, the storm would not have affected it at all.

34. However, it is submitted that the loss would have been suffered regardless of the breach.90

The storm has been described as “once in a lifetime”91 and as per the ship’s captain, it was

more powerful at sea than at land.92 Under such circumstances, there was a high chance that

the ship would have got caught in the storm before reaching the port if it had been proceeding

as per the originally planned journey. Hence, it is submitted that the loss would have occurred

regardless of the solar flares.

ii. The solar flares were the occasion for the damage and not the effective or dominant cause

35. It is submitted that the original estimated time of delivery, i.e. 5 PM on 28 July 2017, was for

the original journey where no provisions had been made for the loss of time due to the solar

84 CHITTY ON CONTRACTS, Vol. I, 1799 (H.G. Beale et al eds., 31st edn., Sweet & Maxwell, 2012). 85 Carslogie Steamship Co. v. Royal Norwegian Government, [1952] A.C. 292 (HL). 86 Galoo v. Bright Grahame Murray, [1994] 1 W.L.R. 1360. 87 D. Hodgson, THE LAW OF INTERVENING CAUSATION, 149 (Routledge, 2008). 88 Moot Scenario, Pg. 19. 89 Moot Scenario, Pg. 21. 90 Target Holdings Ltd. v. Redferns, [1996] A.C. 421. 91 Moot Scenario, Pg. 21. 92 Moot Scenario, Pg. 19.


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flares. The delay occasioned by the solar flares provided the occasion for the damage93 as the

ship would not have been able to reach Dillamond by 5 PM and would have been delayed by

the storm. Thus, the storm is the effective or dominant cause of the loss and has acted as the

novus actus interveniens. Thus, it is submitted that the delay has occurred due to the second

force majeure event and Respondent is not liable.

C. In any case, the contractual breaches have not caused the losses

36. Even if the Tribunal decides to hold Respondent liable for contractual breaches such as the

deviation from the agreed route and for the failure to deliver the cargo by 7 PM on 28 July

2017, Respondent cannot be held liable for either the replacement coffee payment, i.e. USD

9,450,000 or the settlement payment, i.e. USD 5,000,000. The principle to be kept in mind

while calculating damages is that “damages are designed to compensate for an established

loss and not to provide a gratuitous benefit to the aggrieved party”.94 As the liability to pay

for the replacement coffee [1] and the settlement payment [2] does not arise from these

contractual breaches, Respondent cannot pay the same as damages for these breaches.

1. Respondent is not liable to pay for the replacement coffee

37. Claimant can only recover those damages which have adversely affected its position.95 Even

though Claimant has alleged that it had to buy the replacement coffee as a consequence of the

deviation to Spectre and the failure to deliver the containers of coffee on time, this is untrue.

Claimant’s actions clearly show that the replacement coffee was purchased on account of the

damage that was suffered by the cargo and not on account of these breaches. If it had

occurred due to the delay or deviation, Claimant would have immediately made arrangements

to buy replacement coffee rather than continue waiting at the port for the ship to arrive96 after

the discharging deadline had been breached. Further, Respondent waited till 31 July 2017 to

93 Cook v. S, [1966] 1 W.L.R. 635; Monarch S.S. Co. v. Karlshamns Oljefabriker, [1949] A.C. 196. 94 Ruxley Electronics and Construction Co. Ltd. v. Forsyth, [1996] A.C. 344. 95 E. Peel, TREITEL: THE LAW OF CONTRACT, 1110 (14th edn., Sweet & Maxwell, 2014). 96 Moot Scenario, Pgs. 19-20.


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buy the replacement coffee97 even though the festival had already begun on midday 29 June

2017.98 This clearly shows that the only reason why Claimant bought the replacement coffee

was because the cargo had gotten damaged. As damages are based on a compensatory

principle, they are only awarded for the losses that have actually occurred.99 Thus, for these

contractual breaches, Respondent should not be held liable to pay the replacement coffee

price.

2. Respondent is not liable to Claimant for the settlement payment

38. Claimant has stated that Respondent is liable to pay the settlement payment, i.e. USD

5,000,000, that was made to Coffees of the World. In lieu of this settlement payment, Coffees

of the World released and discharged Claimant from any claim that they have against it.100

Even in cases where a breach has occurred, the loss will not be recoverable as damages if it is

found to be too remote.101 Admittedly, Respondent knew that the coffee beans were needed

for a festival in Dillamond.102 However, it has been held that it is not enough to show that the

contracting party was aware of the special circumstances.103 It needs to be shown that the

contracting party had “assumed responsibility”104 for the potential loss. If it is an

unquantifiable and unpredictable loss that the defendant has no control over, then it cannot be

assumed that the contracting party has taken responsibility for it.105 The settlement payment

negotiations were between Claimant and Coffees of the World. Respondent had no say at all

as to what sort of a liability will Coffees of the World impose on Claimant. Hence, it cannot

be held that the Respondent has agreed to assume responsibility for it. Thus, it is submitted

97 Moot Scenario, Pg. 28. 98 PO 2, Pg. 2, Para. 6. 99 Livingstone v. Rawyards Coal Co., (1880) 5 App. Cas. 25. 100 Moot Scenario, Pg. 29. 101 Hadley v. Baxendale, (1854) 9 Ex. 341; E. Peel, TREITEL: THE LAW OF CONTRACT, 1173 (14th edn., Sweet

& Maxwell, 2014). 102 Moot Scenario, Pg. 2. 103 Mulvenna v. Royal Bank of Scotland, [2003] EWCA Civ 1112. 104 The Achilleas, [2008] UKHL 48. 105 The Achilleas, [2008] UKHL 48.


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that the loss is too remote and Respondent cannot be made liable for it. Thus, Respondent is

not liable for either the replacement coffee payment or the settlement payment to Claimant.

ISSUE IV. RESPONDENT IS NOT LIABLE TO PAY ANY DAMAGES FOR WATER DAMAGE TO THE

CARGO.

39. The Respondent was responsible for the shipment of coffee in completely waterproof

containers.106 Respondent carried the cargo in accordance with industry standard conditions.

The containers were sealed using sealants of exceptionally strong quality.107 After a

considerable delay, the Claimant picked the cargo from the port of Dillamond.108 Upon

unpacking, the Claimant discovered that the coffee inside three out of the four containers had

been damaged by water.109 The expert opined that the cargo was damaged within 24 hours

from 4:30 am on 30 July 2017 and the same is accepted by the tribunal.110 The Claimant

alleges that the Respondent is liable to pay damages of USD 15,750,000 for this damage

caused to the cargo.111 It is submitted that this claim is unfounded because, the damage to the

cargo occurred after the delivery of the cargo was complete. [A] In any case, the liability of

Respondent is limited as per Art. IV(5) of the Hague Rules. [B]

A. The water damage to the cargo occurred after the delivery of the cargo was

complete.

40. It is submitted that the Respondent delivered the cargo before the cargo was damaged,

thereby passing the risk of loss to the Claimant.112 This is because the cargo was delivered to

the Claimant at 8:42 PM on 29 July 2017.[1] Alternatively, the cargo was delivered to the

Claimant at 12:02 AM on 30 July 2017.[2]

106 Moot Scenario, Pg. 2. 107 Moot Scenario, Pg. 43. 108 Moot Scenario, Pg. 24. 109 Moot Scenario, Pg. 27. 110 Moot Scenario, Pg. 43, 45. 111 Moot Scenario, Pg. 48. 112 Kinderman Sons v. Nippon Yusen Kaisha Lines, (e.d.pa. 1971), 322 F. Supp. 939, 942


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1. The cargo was delivered to the Claimant at 8:42 PM on 29 July 2017

41. It is established that the delivery of the cargo marks the point of time at which the carrier’s

responsibility for safe custody of the goods comes to an end.113 Delivery is a joint act of the

shipowner and the consignee.114 The shipowner’s duty is to get the cargo out of the holds,

whereas it is the consignee’s duty to take delivery of it.115 The extent of their respective

obligations in any case is regulated by the custom of the port of discharge.116 It is an

established rule that the delivery must be according to the custom and usage of the port, and

such delivery will discharge the carrier of his responsibility.117

42. It is the custom of the Dillamond port to deliver always afloat.118 The same has also been

expressly included in the Charterparty.119 In the absence of any terms to the contrary, where

the ship is discharging her cargo afloat, the consignee must provide the necessary lighters and

lightermen.120 Thus, the consignee has to take the delivery of the goods from the ship’s

tackle. It has been held that in certain circumstances actual collection of the goods is not

necessary to complete the delivery of the cargo.121 The shipowner’s obligation ends when he

has put the goods in such a position that the consignee can take delivery of them i.e. when the

goods are placed at consignee’s disposal.122

43. Hence, in the instant case, Respondent’s obligation ended at 8:42 PM on 29 July 2017. This is

because the Respondent via its email at 8:42 PM on 29 July 2017 notified the Claimant that

113 J. Cooke et. al., VOYAGE CHARTERS, 217 (4th edn., 2014). 114 HALSBURY LAWS OF ENGLAND, Vol. 43, Para. 660 (4th edn.); Petersen v. Freebody & Co., [1895] 2 QB 294;

Langham SS Co. Ltd. v. Gallagher, [1911] 12 Asp MLC 109. 115 The Jaederen, [1892] P 351. 116 J. Cooke et. al., VOYAGE CHARTERS, 356 (4th edn., 2014); Postlethwaite v. Freeland, (1880) 5 App. Cas. 599;

Strathlorne SS Co Ltd v. Hugh Baird & Sons Ltd., (1916) SC (HL) 134. 117 Constable v. National SS. Co., 154 U.S. 51, 63 (1894). 118 Moot Scenario, Pg. 8, Clause 14. 119 Moot Scenario, Pg. 8, Clause 14. 120 Dahl v. Nelson, Donkin & Co., (1881) 6 App Cases 38; Helios A/S v. Ekman & Co., [1897] 2 QB 83 at 86. 121 Procter Garrett Marston, Limited v Oakwin Steamship Company Limited, [1926] 1 K.B. 244. Automatic

Tube Company v. Adelaide Steamship (Operations) Ltd. (The "Beltana"), [1967] 1 Lloyd's List L.R. 531;

American Hoesch v. Aubade [1971] 2 Lloyd’s Rep. 423. 122 Automatic Tube Company v. Adelaide Steamship (Operations) Ltd. (The "Beltana"), [1967] 1 Lloyd's List

L.R. 531.


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the cargo is available for collection. Therefore, it is submitted that the cargo was delivered to

the Claimant at 8:42 PM on 29 July 2017 and thus, Respondent is not liable for any damage

caused to the cargo by water.

2. Alternatively, the cargo was delivered to the Claimant at 12:02 AM on 30 July 2017.

44. It is submitted the cargo was delivered to the Claimant at 12:02 AM on 30 July 2017. This is

because the Respondent offloaded the cargo from the ship at this time and left it in the

custody of the Dillamond Port Authority.123 After this, the Claimant was free to collect cargo

by using the access barcode delivered by the Respondent.

45. It has been established that the delivery can be effected without an actual handing over of the

goods into the custody of the consignee, if the consignee fails to take delivery of the goods.124

The divesting or relinquishing of the power to compel any dealing in or with the cargo which

can prevent the consignee from obtaining possession is sufficient to complete delivery.125 In

the instant case, the Respondent completely relinquished the control over the cargo by

delivering the access barcode to the Claimant as the barcode was not negotiable.126 Hence,

the Respondent could not have exercised any control over the cargo after that.

46. Additionally, the Claimant might argue that the shipowner did not provide them reasonable

opportunity to claim delivery of the cargo from the ship and hence, the delivery was not

completed. However, it is submitted that this claim is without any merit. This is because the

Respondent notified Claimant that the ship was on her way in along with its exact distance

from the port via email at 8:58 AM on 29 July 2017.127 Further, the Respondent via their

email at 4:28 PM on 29 July 2017, specifically informed the Claimant that the ship is due to

123 Moot Scenario, Pg. 23. 124 Procter Garrett Marston, Limited v Oakwin Steamship Company Limited, [1926] 1 K.B. 244. Automatic

Tube Company v. Adelaide Steamship (Operations) Ltd. (The "Beltana"), [1967] 1 Lloyd's List L.R. 531;

American Hoesch v. Aubade [1971] 2 Lloyd’s Rep. 423. 125 Great Eastern Shipping Co. Ltd v. Far East Chartering Ltd (The Jag Ravi), [2012] 1 Lloyd’s Rep. 637. 126 Moot Scenario, Pg. 23. 127 Moot Scenario, Pg. 20.


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berth in 30 minutes and that they will wait until midnight before unloading the cargo.128 In

furtherance of this, the Respondent at 8:42 PM, again notified Claimant that the cargo is

available for collection.129 This clearly indicates that the Claimant was provided reasonable

opportunity to claim delivery of the cargo from the ship.

47. In conclusion, it is submitted that the Respondent is not liable to pay any damages for the

damage of cargo by water.

B. In any case, the liability of Respondent is limited as per Art. IV(5) of the Hague Rules

48. The parties have incorporated Clause Paramount in the Charterparty.130 The term ‘Clause

Paramount’ results in the Charterparty being governed by the Hague Rules.131 There has only

been partial incorporation of the Hague Rules, specifically of Art. IV(5).132 Thus, the period

of application of Art. IV(5) of the Rules will be decided as per the Charterparty.133 Under the

Charterparty, the Respondent does not fulfil its obligation until the cargo is delivered to the

Claimant.134 Clause 28 of the Charterparty states that “Owners to have benefit of Article

4(5).”135 The omission of Arts. I & II of the Rules and the failure to attach any qualifiers as to

the applicability of Art. IV(5) shows that the parties intended it to apply to all the obligations

arising under the Charterparty, including delivery. Even if the Tribunal uphelds Claimant’s

contention that the delivery did not occur till 1:55 PM on 31 July 2017, the limitation under

Art. IV(5) will be applicable. As the water damage to the goods occurred before delivery, the

same is limited by the package limitation present in Art. IV(5). In the absence of

128 Moot Scenario, Pg. 22. 129 Moot Scenario, Pg. 24. 130 Moot Scenario, Pg. 8, Clause 28. 131 Nea Agrex S.A. v. Baltic Shipping Co. Ltd (The Agios Lazarus), [1976] Q.B. 933; Yemgas FZCO v.

Superior Pescadores S.A. (Superior Pescadores) [2016] EWCA Civ 101. 132 Moot Scenario, Pg. 8, Clause 28; Browner International Ltd. V. Monarch Shipping Co. Ltd. (The European

Enterprise), [1989] 2 Lloyd’s Rep. 185. 133 Hartford Fire Insurance Co. v. OOCL Bravery, [2000] 1 Lloyd's Rep. 394. 134 Moot Scenario, Pg. 8, Clause 14. 135 Moot Scenario, Pg. 8, Clause 28.


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incorporation of Art. IX of the Hague Rules, the Respondent’s liability is limited to GBP

750,000.

ARGUMENTS ON MERITS OF THE COUNTER CLAIM

49. The Respondent has not addressed the amounts due for the freight, the agency fees at the port

of Dillamond and the cost of repairs for the damages caused to the ship. This is because the

Claimant has not contested the existence of these dues. The rest of the counter claims are

addressed below.

ISSUE V. THE CLAIMANT IS LIABLE TO PAY DEMURRAGE.

50. It is submitted that the Claimant is liable to pay demurrage of USD 100,000 as per the

Charterparty. This is because, first, the ship arrived at the discharge port at 7:00 AM on 29

July 2017. [A] Second, the “fault of the shipowner” defence cannot be claimed.[B]

A. The ship arrived at the discharge port at 7:00 AM on 29 July 2017.

51. It is submitted that the ship is considered to be arrived at the port of Dillamond when the ship

was at 100 nm out from Dillamond where the port instructed her to wait due to non-

availability of berth. This is because the limits of the port must be interpreted in their

commercial sense. The legal limits of a port refer to the commercial area of the port, and not the

geographical or fiscal limits of the port.136 The “commercial area” of the port refers to the area

that ordinary businessmen would refer to, which may be wider than the territorial limits of the

port.137 The test to determine “commercial area” requires inquiry into a set of circumstances

relevant to the voyage, such as freedom from port authorities and control.138

136 Leonis Steamship Co v. Rank, 1908 1 KB 499; The Aello, 1957 1 WLR 1228; E.L. Oldendorff & Co v.

Tradax Exports SA (The Johanna Oldendorff), 1974 AC 479. 137 The Johanna Oldendorff, 1974 AC 479; Polyfreedom, 1974 New York Arbitration; Federal Commerce and

Navigation Co v. Tradax Exports SA (The Maratha Envoy), 1975 2 Lloyds Rep 223. 138 Per Lord Radcliffe, The Aello, 1975 1 WLR 1228; London Arbitration 5/90 – LMLN 274, 5 May 1990.


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52. The test to determine whether a ship is within the commercial area of the port is the Reid Test

as laid down in The Oldendorff.139 As per the Reid test, port discipline and control over

movement of ships is a crucial factor in determining the limits of a port.140 In the instant case,

the direct control over the movement of the ship was exercised by the port authorities at that

location.141 The port authorities instructed the ship to wait there, along with other ships, and

the order was complied with.142 Therefore, the area will be deemed to be with the commercial

limits of the port.143

53. Thus, in the instant case, the permitted laytime of 0.5 WWD will be counted from 7:00 AM

on 29 July 2017 as the ship is considered to have arrived at the port then. The permitted

laytime finished at 7:00 PM on 29 July 2017. Therefore, the Claimant is liable to pay

demurrage of USD 100,000 for delaying the ship for 5 hours.

B. The “Fault of the Shipowner” defence cannot be claimed.

54. A delay will only interrupt laytime if it is due to the fault of the shipowner.144 It is submitted

that the delay in not caused by the fault of the shipowner. In the instant case, the effective

cause of the delay was the congestion at the port after the storm.145 The Claimant has

themselves claimed that they were unable to access the cargo due to this congestion.146 The

Respondent is in no way responsible for this congestion. Claimant did nothing to prevent the

vessel from being continuously available and at Respondent’s disposal for the delivery of the

cargo.147 Therefore, the Respondent cannot claim the fault of the shipowner defence.

139 The Johanna Oldendorff, 1974 AC 479; Sailing Ship Garston & Co v. Hickie, 1885 15 QBD 580. 140 The Johanna Oldendorff, 1974 AC 479; Sailing Ship Garston & Co v. Hickie, 1885 15 QBD 580. 141 Moot Scenario, Pg. 20. 142 Moot Scenario, Pg. 20. 143 Sailing Ship Garston & Co v. Hickie, 1885 15 QBD 580. 144 Budgett & Co. v Binnington & Co. [1891] 1 QB 35, 38 (Lord Esher); Gem Shipping Co of Monrovia v

Babanaft (Lebanon) SARL [1975] 1 Lloyd’s Rep 339 (‘The Fontevivo’), 342 (Donaldson J). 145 Moot Scenario, Pg. 24. 146 Moot Scenario, Pg. 24. 147 Ropner Shipping Co. Ltd v Cleeves Western Valleys Anthracite Collieries Ltd. (1927) 27 Ll L Rep 317, 320

(Sargant LJ); The Fontevivo [1975] 1 Lloyd’s Rep 339, 343 (Donaldson J); Blue Anchor Line Ltd. v Alfred C.

Toepfer International (The Union Amsterdam) [1982] 2 Lloyd’s Rep 432, 436 (Parker J); Ellis Shipping

Corporation v Voest Alpine Intertrading [1991] 2 Lloyd’s Rep 599, 608 (Evans J).


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ISSUE V. CLAIMANT IS LIABLE TO PAY THE AGENCY FEES AT SPECTRE

55. The Claimant has contended that as the payment has arisen from the Respondent’s breach it is

not liable for the same.148 As it has been submitted above, the deviation was justifiable.149

Hence, no breach has been committed by the Respondent. Therefore, it is submitted that the

Claimant is liable to pay the agency fee of the port of the Spectre.

ISSUE VI. CLAIMANT IS LIABLE TO PAY THE AGENCY FEES AT SPECTRE

56. The Claimant has contended that as the payment has arisen from the Respondent’s breach it is

not liable for the same.150 However, it contention is without any merit. As submitted above,

the Respondent had to deliver the cargo using the electronic tag access because the Claimant

failed to take the delivery of the cargo is usual manner.151 Hence, no breach has been

committed by the Respondent. Therefore, it is submitted that the Claimant is liable to pay the

agency fee of the port of the Spectre.

PRAYER FOR RELIEF

In light of the above submissions, the RESPONDENT requests the Tribunal to declare:

1. That it does not have jurisdiction to hear the Claimant’s pleadings;

2. Alternatively, that the Respondent is not liable for any damages;

3. That the Claimant does not hold a maritime equitable lien over the Madam Dragonfly;

4. That the Respondent is liable to pay the amount of the unpaid invoice.

148 Moot Scenario, Pg. 33. 149 Memorandum, Para. 26. 150 Moot Scenario, Pg. 33. 151 Memorandum, Paras. 45-46.

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