memorandum for claimant · transfield shipping inc v mercator shipping inc (‘the achilleas’)...

THE TWENTIETH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

UNIVERSITAS PADJADJARAN

TEAM 24

MEMORANDUM FOR CLAIMANT

v

COUNSEL

ON BEHALF OF

Panther Shipping Inc.

AGAINST

Omega Chartering Limited

TRAVIS TIO P.

WALUYO

LUE

ESTHERINA

SAMUEL

SIMARMATA

CLARA PUSPA

JELITA

MEMORANDUM FOR CLAIMANT TEAM 24

i

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ............................................................................................... ii

LIST OF AUTHORITIES ................................................................................................... iv

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

I. RESPONDENT HAS BREACHED THE CHARTERPARTY .................................... 4

A. RESPONDENT has breached clause 83 of Rider Clauses in relation to cleaning ............. 4

i. RESPONDENT has failed to perform cleaning at their risk, cost, expense and time prior

to redelivery ............................................................................................................... 4

ii. RESPONDENT is not prevented from performing cleaning ......................................... 5

B. RESPONDENT failed to redeliver prior to maximum expiry period ................................. 6

II. RESPONDENT IS LIABLE TO RECOVER THE LOSS, DAMAGES AND

INTEREST ........................................................................................................................ 7

A. RESPONDENT is liable for damages in relation to cleaning ............................................ 7

i. RESPONDENT is liable for cleaning costs of USD 41,000.00 ..................................... 7

ii. RESPONDENT is liable for voyage costs of USD 55,567.42 ....................................... 8

B. RESPONDENT is liable for the damages of late redelivery of USD 15,330,000.00 ......... 9

i. The loss of Next Fixture is not too remote from breach of contract ......................... 9

ii. The incorporation of ‘WOG’ does not exclude RESPONDENT’s liability ................ 10

C. Interest shall accrue upon loss and damages ................................................................ 11

i. The Tribunal shall grant compound interest............................................................ 11

ii. Calculations of interest ............................................................................................ 12

III. CLAIMANT IS NOT LIABLE FOR INDEMNITY NOR RESTITUTION .......... 14

A. CLAIMANT is not liable for indemnity for Cargo Claim ............................................... 14

i. RESPONDENT has not given notification of valid Cargo Claim ............................... 14

ii. In the alternative, the claim cannot be apportioned under clause 8(a) of ICA ........ 15

iii. In any event, the claim cannot be apportioned under clause 8(b) of ICA ............... 17

B. RESPONDENT is not entitled to restitution for off-hire .................................................. 17

i. The full working of the vessel had not been prevented ........................................... 18

ii. The present event falls outside the off-hire clause .................................................. 18

iii. The off-hire clause shall be interpreted restrictively ............................................... 19

IV. INTEREST SHALL NOT ACCRUE UPON ANY RESPONDENT’S CLAIMS ... 20

A. There is no principal liability for the interest to accrue on...........................................20

B. In the alternative, it is unreasonable to grant interest on any damages since claims for it

were unjustly delayed...................................................................................................21

REQUEST FOR RELIEF ................................................................................................... 22


ii

LIST OF ABBREVIATIONS

ABBREVIATION TERM

ABT About

BIMCO Baltic and International Maritime Council

Brokers Clark Kent & Sons

Cargo English Breakfast Tea

Champion Champion Chartering Corp.

CHARTERPARTY The Time Charter

CLAIMANT Panther Shipping Inc.

ICA Inter-club New York Produce Exchange Agreement 1996

(as amended September 2011)

LIBOR London Inter-bank Offered Rate

LMAA London Maritime Arbitrators Association

Managers Hulk Hulls

Master M/V Thanos Quest’s Shipmaster

Next Fixture Time Charter between Owners and Champion Chartering

Corp.

North Titan The Port of North Titan

NYPE New York Produce Exchange Form 2015

Parties Owners and Charterers

Port State Control Wahanda Port State Control

Receivers Hawkeye Import and Export Pty


iii

Record International Maritime Law Arbitration Moot 2019 Moot

Scenario

Replacement Fixture Time Charter between Owners and Fairwind International

RESPONDENT Omega Chartering Limited

Rider Clauses Omega Chartering Rider Clauses

South Island The Port of South Island

Vessel M/V Thanos Quest

Wahanda The Port of Wahanda

West Coast The Port of West Coast

WOG Without Guarantee


iv

LIST OF AUTHORITIES

A. CASES

A/S Iverans Rederi v. KG MS Holstencruiser Seeschiffahrtsgesellschaft m.b.H & CO. and

Others (‘The Hostencruiser’) [1992] 2 Lloyd's Rep. 378 Vol. 2 Q.B. (Com. Ct.)

Action Navigation Inc v Bottigliere di Navigazione SpA (‘The Kitsa’) [2005] 1 Lloyd’s Rep.

432

Actis Co. Ltd. v. Sanko Steamship Co. Ltd. (‘The Aquacharm’) [1982] 1 W.L.R. 119

Andre & Cie S.A. v. Orient Shipping (Rotterdam) B.V. (‘The Laconian Confidence’) [1997]

1 Lloyd’s Rep. 139

AXL Resourses Ltd v Antares Underwriting Services Ltd & another [2010] EWHC 3244

(Comm)

B.P. Exploration Co. (Libya) Ltd. v. Hunt (No. 2) [1979] 1 W.L.R. 783

Banque Keyser Ullman SA v Skandia UK Insurance Co Ltd and ors (unreported, 11

December 1987)

Belcore Maritime Corporation v F.LLI. Moretti Cereali S.p.A. (‘The Mastro Giorgis’) [1983]

2 Lloyd’s Rep. 66

Ben Line Streamers LTD. v. Pacific Steam Navigation CO. (‘The Benlawers’) [1989] 2 Ll

Rep 51 Vol. 2 Q.B. (Com. Ct.)

Birkett v Hayes [1982] 1 WLR 816

Blyth v Birmingham Waterworks (1856) 11 Ex R 781

Blythe & Co v Richards Turpin & Co (1916) 114 L.T. 755

British Columbia Saw Mill Co Ltd v. Nettleship (1868) LR 3 CP 499

British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Rlys Co of

London Ltd [1912] A.C. 673

Bulfracht (Cyprus) Ltd v Boneset Shipping Co Ltd (‘The Pamphilos’) [2002] 2 Lloyd’s Rep

681

C Czarnikow Ltd v Koufos [1969] 1 AC 350

Ca Venezolana De Navegacion v. Bank Line Limited (‘Roachbank’) [1987] 2 Lloyd's Rep.

498

Claymore Services Ltd v Nautilus Properties Ltd [2007] BLR 452


v

Continental Pacific Shipping Ltd v Deemand Shipping Co. Ltd. [1997] 1 Lloyd's Rep. 404

Cosco Bulk Carrier Co Ltd v. Team-Up Owning Co Ltd (‘The Saldanha’) [2010] EWHC

1340 (Comm)

Court Line Ltd v Dant & Russell Inc (‘The Errington Court’) (1939) 44 Com Cas 345

Derby Resources AG v Blue Corinth Marine Co Ltd (No 2) (‘The Athenian Harmony’) [1998]

2 Lloyd’s Rep 425

Dixon v. Sadler (1839) 5 M. & W. 405, 151 E.R. 172

Dunavant Enterprises Inc v Olympia Spinning & Weaving Mills Ltd [2011] EWHC 2028

(Comm)

Elbinger Aktiengesellschaft v. Armstrong (1874) LR 9 QB 473

ENE Kos 1 Ltd v Petroleo Brasileiro SA (No 2) [2012] 2 AC 164

Exportelisa SA v Giuseppe & Figli Soc. Coll. [1978] 1 Lloyd’s Rep. 433

F J Chalke Limited, A C Barnes (Wokingham) Limited v. The Commissioners for Her

Majesty's Revenue & Customs [2009] EWHC 952 (Ch) 2009 WL 1246904

Fairclough Dodd & Jones Ltd v J.H. Vantol Ltd [1957] 1 W.L.R. 136

Fiona Trust & Holding Corporation and others v Yuri Privalov and others [2011] EWHC

664 (Comm)

Ford v White & Co. [1964] 1 W.L.R. 885

Fyffes Group Ltd v Reefer Express Lines Pty Ltd [1996] 2 Lloyd's Rep 171

Gray v Christie (1889) 5 TLR 577

Hadley v Baxendale (1854) EWHC 9 Exch 341

Hedley v. The Pinkney and Sons Steamship Company, Limited. [1892] 1 Q.B. 58

Horne v. Midland Ry (1872) LR 7 CP 583

Hudson v. Ede (1867-68) L.R. 3 Q.B. 412

Hyundai Merchant Marine Co Ltd v Furness Withy (Australia) Pty (‘The Doric Pride’)

[2006] 2 Lloyd’s Rep. 175

Imperator I Maritime Co v Bunge SA (‘The Coral Seas’) [2016] 2 Lloyd’s Rep 293

Kinetics Technology v Cross Seas Shipping (‘The Mosconici’) [2001] 2 Lloyds Reports 313


vi

Koninklijke Bunge v Cie Commerciale d’Importation [1973] 2 Lloyd’s Rep. 44

Koufos v Czarnikow Ltd (‘The Heron II’) [1967] 2 Lloyd’s Rep 457

Kuwait Airways v Kuwait Insurance [2000] 1 AER (Comm) 972

Lesotho Highlands Development Authority v Imreglio SpA [2002] EWHC 2435 (Comm)

Lesotho Highlands Development Authority v Imreglio SpA [2006] 1 AC 221

LG&E Energy Corp, LG&E Capital Corp, and LG&E International Inc v The Argentine

Republic (Award, ICSID Case No ARB/02/1; IIC 295, 25 July 2007)

London Arbitration 10/15, Lloyd's Maritime Law Newsletter (2015) 929 LMLN 4




Mamidoil-Jetoil Greek Petroleum Company SA v Okta Crude Oil Refinery, AD [2003] 1

Lloyd's Rep 42

Man Nutzfahrzeuge AG v Freightliner Ltd [2005] EWHC 2347 (Comm)

Manifest Shipping & Co. Ltd. v. Uni-Polaris Insurance Co. Ltd. and la Réunion Europeene,

(‘The Star Sea’) [1997] 1 Lloyd's Rep. 360

Mareva Navigation Co Ltd v Canaria Armadora SA (‘The Mareva AS’) [1977] 1 Lloyd's Rep

368

Monarch Steamship Co Ltd v Karlshamms Oljefabriker (A/B) [1949] AC 196

Natwest Markets Plc (Formerly Known As The Royal Bank Of Scotland Plc) V. Stallion Eight

Shipping Co Sa (‘The Mv Alkyon’) [2018] EWHC 2033 (Admlty)

Nissho v Livanos (1941) 69 Ll L Rep 125

Papera Traders Co. Ltd. v Hyundai Merchant Marine Co. Ltd. (‘Eurasian Dream’) [2002]

EWHC 118

Petrobras v FPSO Construction Inc. [2007] EWHC 1357 (Comm)

Re Comptoir Commercial Anversois and Power Son & Co [1920] 1 K.B. 168

Robin Hood Flour Mills, Ltd. v. N. M. Paterson & Sons, Ltd. (‘The Farrandoc’) [1967] 1

Lloyd's Rep. 232

Robophone Facilities Ltd v. Blank [1966] 1 WLR 1428

Rowson v. Atlantic transport Company, Limited [1903] 2 K.B. 666

https://www.i-law.com/ilaw/doc/view.htm?queryString=+cleaning&citiPub=Lloyd%27s+Maritime+Law+Newsletter&sort=date&sort=date&searchType=advanced-search&se=16&id=347513&searched=true


vii

Royal Greek Govt v Minister of Transport (‘The Ann Stathatos’) (1948) 82 LlL Rep 196

Santa Martha Baay Scheepvaart & Handelsmaatschappij N.V. v Scanbulk A/S (‘The Rijn’)

[1981] 2 Lloyd’s Rep 267

Seimens AG v The Argentine Republic (Award, ICSID Case No ARB/02/8; IIC 227, 6

February 2007)

Sempra Metals Limited (formerly Metallgesellschaft Limited) v. Her Majesty's

Commissioners of Inland Revenue and another [2007] UKHL 34 WL 2025760

Steel et Al. v. The State Line Steamship Company (1877-78) L.R. 3 App. Cas. 72

Sylvia Shipping Co Ltd v Progress Bulk Carrier Ltd [2010] EWHC (comm)

Tate and Lyle Food and Distribution Ltd v GLC [1982] 1 WLR 149

Tennants (Lancashire) Ltd v C.S. Wilson & Co Ltd [1917] A.C. 495

The Al Bida [1987] 1 Lloyd’s Rep. 124

The Amstelslot [1963] 2 Lloyd’s Rep. 223

The Atlantic Star [1974] AC 436

The Berge Tasta [1975] 1 Lloyd’s Rep 422

The Lendoudis Evangelos II ‘(No.1)’ (1988, unreported)

The Makedonia [1962] 1 Lloyd’s Rep 316

The Maule [1997] 1 WLR 528

The Roberta (1938) 60 Ll L Rep 84

Transfield Shipping Inc v Mercator Shipping Inc (‘The Achilleas’) [2008] UKHL 48

Triad Shipping Co v Stellar Chartering and Brokerage Inc (‘The Island Archon’) [1994]

UKCA 2 Lloyd’s Rep 227

Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 CA

Warinco A.G. v Fritz Mauthner [1978] 1 Lloyd’s Rep. 151


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B. ARTICLES / BOOKS

Baltic and International Maritime Council, ‘BIMCO Special Circular No. 3: BIMCO Hull

Fouling Clause for Time Charterparties Explanatory Notes’, [2015]

Barış Professor Soyer & Andrew Tettenborn, Charterparties: Law, Practice and Emerging

Legal Issues, (2017)

Black’s Law Dictionary (10th Edition, 2014)

Bohm-Bawerk E., Capital and Interest: A Critical History of Economic Theory (Macmillan,

London, 1890)

Chartered Institute of Arbitrators Practice Guidelines, Guideline 13

H. McGregor, McGregor on Damages, (17th Edition, 2002)

Hugh Beale, Chitty on Contract, (32nd Edition, Sweet & Maxwell U.K., 2017)

INCE & CO., Shipping E-Brief, Retrieved from www.incegdlaw.com.

International Convention Relating to the Arrest of Sea-Going Ships 1952, Article 1(2)

John Dewar, International Project Finance: Law and Practice, (1st Edition, 2011)

John F. Wilson, Carriage of Goods by Sea, (7th Edition, Pearson, England, 2010)

Joseph Chitty, Chitty on Contracts, (29th Edition, 2004)

Lachmi Singh, The Law of Carriage of Goods by Sea, (1st Edition, Bloomsbury

Professional, 2011)

Lloyd’s Maritime and Commercial Law Quarterly, What Obligation Does ‘Without

Guarantee’ In A Charterparty Include?, [1997]

London Maritime Arbitration Associations Publications, LMAA Committee Report (2013)

Martin Dockray, Cases & Materials on the Carriage of Goods by Sea (3rd Edition, 2004)

Matthew Secomb, Interest in International Arbitration, (1st Edition, Oxford University

Press, 2009)

Michael Bundock, Shipping Law Handbook, (6th Edition, 2019)

Michael Howard et al., Foreign Currency: Claims, Judgments, and Damages, (Informa

Law from Routledge, 2016)

Nicholas Ryder et al., Commercial Law Principles and Policy, (1st Edition, Cambridge

University Press, 2012)


ix

Nigel Blackaby et al, Redfern and Hunter on International Arbitration, Oxford University

Press, (5th Edition, 2009)

Richard Stone, Modern Law of Contract, (8th Edition, Routledge-Cavendish, 2009)

Ship Arrests in Practice, (11th Edition)

Simon Baughen, Shipping Law, (4th Edition, Routledge-Cavendish 2009)

Sir Thomas Edward Scrutton, Scrutton on Charterparties, (20th Edition, Sweet & Maxwell,

England, 1996)

Steven J. Hazelwood & David Semark, P. &. I Clubs Law and Practice, (4th Edition, 2010)

Terence Coghlin et al., Time Charters, (7th Edition, 2014)

William Tetley, International Encyclopedia of Comparative Law, (12th Installment,

Martinus Nijhoff Publishers, Dordrecht, Boston & Lancater, 1981)

C. LEGISLATIONS

Arbitration Act 1996

Inter-Club New York Produce Exchange Agreement 1996 (as amended September 2011)

International Convention Relating to the Arrest of Sea-Going Ships 1952

New York Produce Exchange Form 2015 (NYPE)


1

STATEMENT OF FACTS General Facts

1. On 18 March 2016, Panther Shipping Inc. (CLAIMANT) and Omega Chartering Limited

(RESPONDENT) entered a time charterparty (CHARTERPARTY) of M/V Thanos Quest

(Vessel) for about 50-55 days from West Coast to Wahanda.1 The CHARTERPARTY

consisted of the details of the fixture and Omega Chartering Rider Clauses (Rider

Clauses) and incorporated the New York Produce Exchange Form 2015 (NYPE). The

Vessel was delivered to RESPONDENT on 29 March 2016.2 Despite a serious Ebola

outbreak reported on 18 April 2016,3 the Vessel sailed to Wahanda 2 days later upon

completing the loading process.4

Facts Relating to Hire

2. The Vessel arrived at Wahanda on 7 May 2016 but was unable to berth and was held at

the anchorage due to speculation of Ebola infecting the Vessel’s crew.5 On 11 May 2016,

Port State Control attended the Vessel and allegedly found crew members with high-

fevers, when in fact only the cook and one motormen had a cold.6 The Vessel was held

for 50 days before being cleared to berth on 26 June 2016.7

Facts Relating to Cleaning

3. During the detainment period, the Vessel’s hull became fouled and required cleaning.8

Unfortunately, cleaning could not be performed at Wahanda due to dirty water and

absence of cleaning services.9 Following this, RESPONDENT offered a lump sum of USD

15,000 in lieu of performing cleaning.10 CLAIMANT replied they could not agree on a

1 Record, 2: Email of 18 March 2016, Details of Fixture. 2 Record, 66: Claim Submissions, ¶3. 3 Record, 22: West Coast Daily Echo’s News of 18 April 2016. 4 Record, 66: Claim Submissions, ¶3. 5 Record, 25: Email of 7 May 2016. 6 Record, 24: First and Second Email of 11 May 2016. 7 Record, 81: Procedural Order No. 2, ¶7. 8 Record, 81: Procedural Order No. 2, ¶5; Record, 84: Picture of Vessel’s fouled hull. 9 Record, 26: First Email of 25 May 2016. 10 Record, 29: Second Email of 8 June 2016.


2

lump sum before inspection and recommended inspection and cleaning be performed at

the next convenient port.11

4. RESPONDENT proposed to arrange cleaning at North Titan for USD 33,000 or pay a lump

sum of USD 20,000.12 When CLAIMANT instead requested cleaning at South Island,13

RESPONDENT refused and raised their lump sum offer to USD 30,000.14 After being

redelivered dirty, CLAIMANT sailed the Vessel for cleaning at South Island on 30 June

2016 and said cleaning was completed on 4 July 2016. 15

Facts Relating to Late Redelivery

5. On 15 June 2016, CLAIMANT entered a following time charterparty (Next Fixture) with

Champion Chartering Corp. (Champion) for maximum 4-years in Next Charterers’

option,16 worth approximately USD 15,330,000.00.17 Delivery was to be DLSOP

Wahanda with a laycan from 22-28 June 2016.18 Although RESPONDENT estimated

redelivery to be on 22 May 2016, they only redelivered by 30 June 2016 hence failing to

redeliver within the maximum expiry date.19 Consequently, CLAIMANT was unable to

deliver the Vessel to Champion, resulting the Next Fixture’s cancellation on 28 June

2016.20

6. On 4 July 2016, CLAIMANT entered into a time charterparty (Replacement Fixture) with

Fairwind International (Fairwind) for a period of 50-55 days,21 worth approximately

11 Record, 28: First Email of 9 June 2016. 12 Record, 39: Third Email of 27 June 2016. 13 Record, 43: Second Email of 29 June 2016. 14 Record, 42-43: First Email of 30 June 2016. 15 Record, 50-51: Cleaning Invoice from South Island; Record, 52: Final Hire Statement. 16 Record, 30: Email of 15 June 2016, Details of Next Fixture. 17 Record, 32: Email of 15 June 2016, Details of Next Fixture. 18 Record, 31: Email of 15 June 2016, Details of Next Fixture. 19 Record, 68: Claim Submissions ¶21(2); Record, 70: Defence and Counterclaim Submissions ¶10(2). 20 Record, 40: Email of 28 June 2016. 21 Record, 53: Email of 4 July 2016, Details of Replacement Fixture.


3

USD 550,000.22 Delivery under the Replacement Fixture was DLSOP South Island with

a laycan of 4-6 July.23

Facts Relating to Cargo Claim

7. In a Bill of Lading between RESPONDENT and Hawkeye Import and Export Pty

(Receivers), RESPONDENT was established as the carrier of shipment English Breakfast

Tea (Cargo).24 Upon discharging on 30 June 2016, the cargo was found damaged due to

water ingress.25 The Bill of Lading incorporated the Hague Rules which require parties

to either raise lawsuit within a 1-year time bar from cargo delivery or agree to extend said

time bar. The CHARTERPARTY incorporates the Inter-club New York Produce Exchange

Agreement 1996 as amended September 2011 (ICA) to settle cargo claim disputes

between CLAIMANT and RESPONDENT.26

8. On 23 May 2017 and 23 August 2017, CLAIMANT and RESPONDENT agreed to grant 2

back-to-back 3-month time extensions to the Receivers.27 Following this, on 23

November 2017, RESPONDENT unilaterally granted a third extension to the Receivers.28

Facts Relating to Arbitration and Claims

9. CLAIMANT referred the dispute to arbitration on 15 October 2018, claiming damages for

loss of Next Fixture and cleaning costs.29 RESPONDENT denied full liability for the claims

and counterclaimed indemnity in Cargo Claim and restitution of off-hire.30 CLAIMANT

subsequently denied full liability.31 Both Parties assert interest on their claims.32

22 Record, 55: Email of 4 July 2016, Details of Replacement Fixture. 23 Record, 54: Email of 4 July 2016, Details of Replacement Fixture. 24 Record, 47: Bill of Lading. 25 Record, 38: First Email of 27 June 2016. 26 Record, 10: Rider Clauses, cl. 53; New York Produce Exchange Form 2015 (NYPE), cl. 27. 27 Record, 57-58: Emails of 23 May 2017, 29 May 2017, 23 August 2017, 28 August 2017, 23 November 2017. 28 Record, 57: Email of 23 November 2017. 29 Record, 69: Claim Submissions ¶22. 30 Record, 73-74: Defence and Counterclaim Submissions ¶11,15. 31 Record, 77: Reply and Defence to Counterclaim Submissions ¶8. 32 Record, 69: Claim Submissions ¶23; Record, 74: Defence and Counterclaim Submissions ¶16.


4

SUBMISSIONS ON THE MERITS

I. RESPONDENT HAS BREACHED THE CHARTERPARTY

1. According to the principle of Pacta Sunt Servanda, parties must adhere to the provisions to

a contract they have entered into.33 However, RESPONDENT has violated this principle by (A)

breaching clause 83 of Rider Clauses in relation to cleaning and (B) failing to redeliver the

Vessel before the maximum expiry period of the CHARTERPARTY.

A. RESPONDENT has breached clause 83 of Rider Clauses in relation to cleaning

2. Under common law, a vessel’s defouling is considered as a part of an owners’ maintenance

obligation save where exceptional circumstances arise.34 Clause 83 of Rider Clauses

provides a concrete threshold for ‘exceptional circumstances’.35 These circumstances will

transfer the obligation to perform hull cleaning to the charterers when requirements set out

in sub-clause (a) has been fulfilled.36 RESPONDENT failed to fulfill their obligation hence

breached clause 83 of Rider Clauses, because (i) RESPONDENT failed to perform cleaning

prior to redelivery. Moreover, (ii) RESPONDENT is not prevented from their obligation.

i. RESPONDENT has failed to perform cleaning at their risk, cost, expense and time prior

to redelivery

3. In accordance with clause 83 of Rider Clauses, when the Vessel remains idle for more than

30 days in a port located outside tropical zone, RESPONDENT is obliged to perform cleaning

before redelivery at their own risk, cost, expense, and time when either party calls for it.37

33 Richard Stone, The Modern Law of Contract, (8th Edition, Routledge-Cavendish, 2009), 7-10. 34 Triad Shipping Co v Stellar Chartering and Brokerage Inc (‘The Island Archon’) [1994] UKCA 2 Lloyd’s Rep

227; Action Navigation Inc v Bottigliere di Navigazione SpA (‘The Kitsa’) [2005] 1 Lloyd’s Rep 432; Imperator I

Maritime Co v Bunge SA (‘The Coral Seas’) [2016] 2 Lloyd’s Rep 293; Barış Professor Soyer & Andrew Tettenborn,

Charterparties: Law, Practice and Emerging Legal Issues, (2017), 84; Simon Baughen, Shipping Law, (4th Edition,

Routledge-Cavendish, 2009), 205. 35 Record, 16: Rider Clauses, cl. 83. 36 Baltic and International Maritime Council, ‘BIMCO Special Circular No. 3: BIMCO Hull Fouling Clause for

Time Charterparties Explanatory Notes’, [2015], 1. 37 Record, 16: Rider Clauses, cl. 83.


5

Separately, it follows that RESPONDENT is also required to fulfil the obligation to redeliver

the Vessel in like good order and condition.38

4. Here, the Vessel remained at Wahanda for 55 days39 and both Parties have acknowledged

the need to perform cleaning.40 Applying the above rule, RESPONDENT is obliged to perform

cleaning at their risk, cost, expense, and time prior to redelivery.41 By redelivering the Vessel

dirty,42 RESPONDENT has failed to perform said obligation and consequently breached the

CHARTERPARTY.

ii. RESPONDENT is not prevented from performing cleaning

5. Where one party seeks to rely on clause 83(d) of Rider Clauses to relieve them from their

obligation to clean by paying an agreed amount of lump sum,43 they must prove that

performance of cleaning was prevented.44 Charterers must demonstrate that performance has

become physically or legally impossible, and not merely more difficult or unprofitable.45

Prevention cannot be proven as long as there exists an option to perform even if that option

is more difficult or commercially prohibitive to execute.46

38 NYPE, cl. 4; Terence Coghlin et al., Time Charters, (7th Edition, 2014), 217. 39 Record, 25: Email of 7 May 2016; Record, 68: Claim Submissions ¶21(2); Record, 70: Defence and

Counterclaim Submissions ¶10(2). 40 Record, 81: Procedural Order No. 2, ¶5; Record, 84: Picture of Vessel’s fouled hull. 41 Record, 16: Rider Clauses, cl. 83(c). 42 Record, 42-43: First Email of 30 June 2016. 43 Record, 16: Rider Clauses, cl. 83(d). 44 Baltic and International Maritime Council, ‘BIMCO Special Circular No. 3: BIMCO Hull Fouling Clause for

Time Charterparties Explanatory Notes’, [2015], 3; Michael Bundock, Shipping Law Handbook, (6th Edition,

2019), 896. 45 Blythe & Co v Richards Turpin & Co (1916) 114 L.T. ¶755 (Scrutton J.); Tennants (Lancashire) Ltd v C.S. Wilson

& Co Ltd [1917] A.C. 495; Re Comptoir Commercial Anversois and Power Son & Co [1920] 1 K.B. 168; Fairclough

Dodd & Jones Ltd v J.H. Vantol Ltd [1957] 1 W.L.R. 136, 143, 144; Warinco A.G. v Fritz Mauthner [1978] 1

Lloyd’s Rep 151; Exportelisa SA v Giuseppe & Figli Soc. Coll. [1978] 1 Lloyd’s Rep 433; Dunavant Enterprises

Inc v Olympia Spinning & Weaving Mills Ltd [2011] EWHC 2028 (Comm) [2011] 2 Lloyd’s Rep 619 ¶29,32; John

Dewar, International Project Finance: Law and Practice, (1st Edition, 2011), 104; Hugh Beale, Chitty on Contract,

(32nd Edition, Sweet & Maxwell U.K., 2017), ¶15-156. 46 Hudson v. Ede (1867-68) L.R. 3 Q.B. 412; Blythe & Co v Richards Turpin & Co (1916) 114 L.T. ¶755 (Scrutton

J.); Tennants (Lancashire) Ltd v C.S. Wilson & Co Ltd [1917] A.C. 495.


6

6. For example, in sale of goods contracts, a seller cannot be said to have been prevented from

supplying the goods by merely showing that his intended supplier is unable to supply the

goods if he can obtain goods of the contract description from another supplier.47

7. Although cleaning at Wahanda was not possible,48 RESPONDENT could have consulted and

came to an agreement with CLAIMANT to arrange cleaning at a different place49 even if it

would require extra risk, cost, expense and time. The cleaning performance was merely

commercially prohibitive and not physically nor legally impossible, hence performance of

cleaning was not prevented. Therefore, RESPONDENT cannot rely on clause 83(d) of Rider

Clauses to exempt them from their obligation.

B. RESPONDENT failed to redeliver prior to maximum expiry period

8. In a time charter, a vessel must be redelivered to owners before the end of the maximum

expiry period. Although common shipping practice may allow a 5% margin of tolerance for

said redelivery, tardiness past said margin will surely result in breach.50 The Vessel was

delivered on 29 March 2016 for a time charter trip of about 50-55 days.51 Accounting for a

margin of tolerance, the maximum expiry period would end no later than 25 May 2016.52

Presently, the CHARTERPARTY ran for approximately 93 days before concluding on

RESPONDENT’s redelivery on 30 June 2016, about 36 days after the maximum period of the

CHARTERPARTY.53 Thus, the RESPONDENT’s failure to redeliver prior to the maximum expiry

47 Fairclough Dodd & Jones Ltd v J. H. Vantol Ltd [1957] 1 W.L.R. 136, 146; Koninklijke Bunge v Cie Commerciale

d’Importation [1973] 2 Lloyd’s Rep 44; Exportelisa SA v Giuseppe & Figli Soc. Coll. [1978] 1 Lloyd’s Rep 433. 48 Record, 26: First and Second Email of 25 May 2016. 49 Record, 43: Second Email of 29 June 2016. 50 Gray v Christie (1889) 5 TLR 577; The Berge Tasta [1975] 1 Lloyd’s Rep 422; The Al Bida [1987] 1 Lloyd’s

Rep 124; John F. Wilson, Carriage of Goods By Sea, (7th Edition, Pearson, England, 2010), 85–86; William Tetley,

International Encyclopaedia of Comparative Law, (12th Installment, Martinus Nijhoff Publishers, Dordrecht,

Boston & Lancaster, 1981); Sir Thomas Edward Scrutton, Scrutton on Charterparties, (20th Edition, Sweet &

Maxwell, England, 1996), 90-91; Lachmi Singh, The Law of Carriage of Goods by Sea, (1st Edition, Bloomsbury

Professional, 2011), 116; Nicholas Ryder, Margaret Griffiths & Lachmi Singh, Commercial Law Principles and

Policy, (1st Edition, Cambridge University Press, 2012), 257; Terence Coghlin et al., Time Charters, (7th Edition,

2014), 102-103, 105. 51 Record, 4: Email of 18 March 2016. 52 29 March 2016 + (55 days + 5% (55 days)) = 25 May 2016. 53 Record, 43: First Email of 30 June 2016.


7

period amounts to a breach of contract. Furthermore, the RESPONDENT has admitted their

fault.54

II. RESPONDENT IS LIABLE TO RECOVER THE LOSS, DAMAGES AND

INTEREST

9. When an innocent party has suffered the consequences of a breach of contract, the party at

fault is liable to pay remedy in the form of loss, damages and interest in order to put the first

party in ‘as good a situation as if the contract had been performed’.55 In the present case,

RESPONDENT is liable for (A) damages in relation to cleaning and (B) damages in relation to

late redelivery. (C) Additionally, the RESPONDENT is liable for interest to accrue on the

aforementioned.

A. RESPONDENT is liable for damages in relation to cleaning

10. It is commonly accepted that charterers will be held liable for damages arising from cleaning

costs when they have breached both the obligation to perform cleaning56 and redeliver in

like good order and condition.57 Here, RESPONDENT is liable for (i) cleaning costs of USD

41,000.00 and (ii) voyage costs of USD 55,567.42.

i. RESPONDENT is liable for cleaning costs of USD 41,000.00

11. Charterers at fault are expected to indemnify owners for the costs of hull cleaning when the

expenses arise from a risk that the owners had not agreed to bear.58 Charterers will be liable

54 Record, 73: Defence and Counterclaim Submissions, ¶10(2). 55 Ford v White & Co. [1964] 1 W.L.R. 885, 887 (Pennycuick J.); British Westinghouse Electric & Manufacturing

Co Ltd v Underground Electric Rlys Co of London Ltd [1912] A.C. 673, 689 (Lord Haldane); Hugh Beale, Chitty

on Contract, (Vol. I, 32nd Edition, Sweet & Maxwell U.K., 2017), ¶1-193. 56 London Arbitration 25/17, Lloyd's Maritime Law Newsletter (2017) 986 LMLN 3; London Arbitration 18/14,

Lloyd's Maritime Law Newsletter (2014) 910 LMLN 1; INCE & CO., (2017, November), Shipping E-Brief, retrieved

from www.incegdlaw.com. 57 Bulfracht (Cyprus) Ltd v Boneset Shipping Co Ltd (‘The Pamphilos’) [2002] 2 Lloyd’s Rep 68; The Kitsa [2005]

1 Lloyd’s Rep 432; ENE Kos 1 Ltd v Petroleo Brasileiro SA (No 2) [2012] 2 AC 164. 58 Santa Martha Baay Scheepvaart & Handelsmaatschappij N.V. v Scanbulk A/S (‘The Rijn’) [1981] 2 Lloyd’s Rep

267; The Pamphilos [2002] 2 Lloyd’s Rep 681; The Kitsa [2005] 1 Lloyd’s Rep 432 [23] (Aikens J); Barış Professor

Soyer & Andrew Tettenborn, Charterparties: Law, Practice and Emerging Legal Issues, (2017), 84.

https://www.i-law.com/ilaw/doc/view.htm?queryString=+cleaning&citiPub=Lloyd%27s+Maritime+Law+Newsletter&sort=date&sort=date&searchType=advanced-search&se=16&id=347513&searched=trueabout:blank


8

for damages arising from breach of their obligation to perform cleaning, including owners’

losses for the costs of hull cleaning.59 Presently, RESPONDENT has breached the above

obligations.60 As a consequence, CLAIMANT had suffered the damages of Vessel’s hull

fouling and therefore RESPONDENT the cost of cleaning at South Island of USD 41,000.00.

ii. RESPONDENT is liable for voyage costs of USD 55,567.42

12. If charterers cannot perform their obligations under the BIMCO Hull Fouling Clause due to

a physical prevention at a designated port, owners can arrange hull cleaning at a convenient

intermediate port and recover the voyage costs that might have entailed.61 A ship shall

remain on-hire until the voyage and cleaning process are completed,62 and as further proven

by sub-clause (c) of BIMCO Hull Fouling Clause, the cleaning shall be performed at the

charterer’s time.63

13. The Parties have agreed to incorporate said BIMCO Hull Fouling Clause to the

CHARTERPARTY.64 Presently, RESPONDENT could not perform the cleaning at Wahanda.65 In

response to this, CLAIMANT arranged cleaning at South Island, a nearby convenient

intermediate port.66 Pursuant to the above rule, CLAIMANT is entitled to recover the costs of

the voyage to South Island, which include hire, CVE and bunker in the sums of USD

56,766.64.67 Since RESPONDENT has paid address commission of 1,199.22,68 the remaining

voyage costs unpaid by RESPONDENT amounts to USD 55,567.42.

59 London Arbitration 18/14, Lloyd's Maritime Law Newsletter (2014) 910 LMLN 1; London Arbitration 25/17,

Lloyd's Maritime Law Newsletter (2017) 986 LMLN 3; INCE & CO., (2017, November), Shipping E-Brief, retrieved

from www.incegdlaw.com. 60 Supra Submission I(A), ¶2-7. 61 London Arbitration 18/14, Lloyd's Maritime Law Newsletter (2014) 910 LMLN 1. 62 The Rijn [1981] 2 Lloyd’s Rep 267. 63 Record, 16: Rider Clauses, cl. 83(c); The Pamphilos [2002] 2 Lloyd’s Rep 681, 690-1 (Colman J). 64 Record, 16: Rider Clauses, cl. 83. 65 Record, 26: First and Second Email of 25 May 2016. 66 Record, 50-51: Cleaning Invoice from South Island; Record, 52: Final Hire Statement. 67 Record, 52: Final Hire Statement. 68 Ibid.

https://www.i-law.com/ilaw/doc/view.htm?queryString=+cleaning&citiPub=Lloyd%27s+Maritime+Law+Newsletter&sort=date&sort=date&searchType=advanced-search&se=16&id=347513&searched=trueabout:blank


9

B. RESPONDENT is liable for the damages of late redelivery of USD 15,330,000.00

14. RESPONDENT is liable for the damage of late redelivery of USD 15,330,000.00, because (i)

the loss of Next Fixture is not too remote from RESPONDENT’s breach and (ii) the

incorporation of ‘WOG’ does not exclude RESPONDENT’s liability.

i. The loss of Next Fixture is not too remote from breach of contract

15. Damages are recoverable from a breach of contract when they are not too remote from said

breach.69 Damages are not too remote when they are reasonably foreseeable70 as well as can

be controlled and calculated.71 First, reasonable foreseeability is measured under one of two

limbs; damages arising naturally from the usual course of things as a result of contract or

when a defendant has been provided with a special knowledge prior to the formation of the

contract regarding the existence of the special circumstances.72 Second, the ability to control

and quantify is observed when the alleged party holds sufficient knowledge about the

potential damages in advanced.73

16. The facts of the case pass the above test. Firstly, it is only logical that RESPONDENT must

have contemplated that a commercial vessel such as the present Vessel would not be idle for

long and would likely have a subsequent charter fixed, especially given that CLAIMANT had

a wide audience on Chatter.74 Moreover, CLAIMANT had confirmed the existence of such a

following fixture.75 Secondly, RESPONDENT must have been aware of a Next Fixture with

69 Hadley v Baxendale [1854] 9 Ex 341. 70 Hadley v Baxendale [1854] 9 Ex 341. 71 Transfield Shipping Inc v Mercator Shipping Inc (‘The Achilleas’) [2008] 2 Lloyd’s Rep 275. 72 Hadley v Baxendale [1854] EWHC 9 Exch 341; C Czarnikow Ltd v Koufos [1969] 1 AC 350. 73 Hadley v Baxendale [1854] EWHC 9 Exch 341; British Columbia Saw Mill Co Ltd v. Nettleship (1868) LR 3

CP 499, 509 (Willes J); Horne v. Midland Ry (1872) LR 7 CP 583, 591–592 (Willes and Keating JJ); (1873) LR 8

CP 131, 139 (Martin B), 145 (Lush J); Elbinger Aktiengesellschaft v. Armstrong (1874) LR 9 QB 473, 478–479

(Blackburn J); Robophone Facilities Ltd v. Blank [1966] 1 WLR 1428, 1448 (Diplock LJ); C Czarnikow Ltd v

Koufos [1969] 1 AC 350, 386; Joseph Chitty, Chitty on Contracts, (Vol. I, 29th Edition, 2004), ¶26-005,26-044; H.

McGregor, McGregor on Damages, (17th Edition, 2002), ¶6-175.; Sir Thomas Edward Scrutton, Scrutton on

Charterparties, (20th Edition, Sweet & Maxwell, England, 1996), 347. 74 Record, 1: Owners’ Advertisement Publication on Chatter. 75 Hadley v Baxendale (1854) 9 Exch 341; Nissho v Livanos (1941) 69 Ll L Rep 125; Victoria Laundry (Windsor)

Ltd v Newman Industries Ltd [1949] 2 KB 528 CA; Koufos v Czarnikow Ltd (‘The Heron II’) [1967] 2 Lloyd’s

Rep 457; Fyffes Group Ltd v Reefer Express Lines Pty Ltd [1996] 2 Lloyd's Rep 171, 194.


10

the potential duration of four years because prior to the formation of the CHARTERPARTY,

CLAIMANT had published advertisements that their looking for a charter fixed for 3-5 years.76

This information combined with the predictable market rate77 proves that not only the loss

of minimum two years, but rather the entire four years were in RESPONDENT’s contemplation

as well as predictable and quantifiable.78 The knowledge of natural and probable damage is

sufficient to ensure the liability of RESPONDENT.79 Because the damages fail to be too

remote, RESPONDENT must be liable for the loss of Next Fixture of $15,330,000.00.

ii. The incorporation of ‘WOG’ does not exclude RESPONDENT’s liability

17. When the term ‘WOG’ is incorporated, it excludes the obligation of charterers to redeliver

the vessel within the estimated period set out at the formation of the contract.80 However,

there are three new obligations imposed on charterers with the incorporation of the term:

First, they must exercise reasonable care to calculate the estimation;81 second, give the

estimation in good faith;82 and third, attempt to meet the estimation to the best of their

abilities by trying to mitigate potential circumstances that they might meet.83 If a charterer

takes no actions to try to mitigate circumstances that might disturb the voyage, they will still

be held liable for tardiness despite the presence of ‘WOG’.84

76 Record, 1: Owners’ Advertisement Publication on Chatter. 77 (Next Fixture hire + Replacement Fixture hire): 2 = Market Hire

(USD10500 + USD11000): 2 = USD10750. 78 The Achilleas [2008] 2 Lloyd’s Rep 275; Sylvia Shipping Co Ltd v Progress Bulk Carrier Ltd [2010] EWHC

(comm). 79 Monarch Steamship Co Ltd v Karlshamms Oljefabriker (A/B) [1949] AC 196, 225. 80 The Lendoudis Evangelos II ‘(No.1)’ (1988, unreported); Continental Pacific Shipping Ltd v Deemand Shipping

Co. Ltd. [1997] 1 Lloyd's Rep 404. 81 Continental Pacific Shipping Ltd v Deemand Shipping Co. Ltd. [1997] 1 Lloyd's Rep 404. 82 Continental Pacific Shipping Ltd v Deemand Shipping Co. Ltd. [1997] 1 Lloyd's Rep 404. 83 Lloyd’s Maritime ad Commercial Law Quarterly, What Obligation Does “Without Guarantee” In A

Charterparty Include?, [1997], 360. 84 Ibid.


11

18. Here, Ebola outbreak occurred in West Coast,85 2 days prior to the journey of the Vessel

from West Coast to Wahanda.86 The journey to Wahanda required a minimum of 17 days.87

Knowing that the Vessel had just departed from a Ebola-infected port, RESPONDENT should

have anticipated the likely possibility of the Vessel being detained for sanitation and health

reasons thus hindering the redelivery occurring before the maximum expiry period.

19. Within the 19 days, they should have taken measures to prevent or mitigate such an event.

At the very least they might have consulted with CLAIMANT on how to prevent late redelivery

by detainment. Had RESPONDENT attempted such measures, they would be exempted from

liability even if they redelivered past the maximum expiry period since they had fulfilled all

three obligations imposed by the incorporations of ‘WOG’. However, RESPONDENT failed

to do so by ordering the Vessel to enter Wahanda before taking measures in anticipation of

detainment. Consequently, their third ‘WOG’ obligation remains unfulfilled and

RESPONDENT cannot rely on the defence of ‘WOG’ to exempt liability for late redelivery.

C. Interest shall accrue upon loss and damages

20. As the Tribunal has the jurisdiction to grant interest ex aequo et bono,88 in addition to the

damage above, CLAIMANT submits they are also entitled to interest since (i) the Tribunal

shall grant compound interest (ii) as calculated as below:

i. The Tribunal shall grant compound interest

21. Courts and tribunals should award interest simply because the plaintiff has been deprived of

the use of money which was due to him, including money lost due to a defendant’s breach

of contract.89 A plaintiff might have invested or made use of said money, thus the

85 Record, 22: News Article from West Coast Daily Echo of 18 April 2016. 86 Record, 66: Claim Submissions ¶3. 87 Record, 66: Claim Submissions ¶4. 88 Arbitration Act 1996, s. 49. 89 B.P. Exploration Co. (Libya) Ltd. v. Hunt (No. 2) [1979] 1 W.L.R. 783, 845G; Banque Keyser Ullman SA v

Skandia UK Insurance Co Ltd and ors (unreported, 11 December 1987) (Steyn J.); Tate and Lyle Food and


12

defendant’s deprivation of such opportunity results in ‘a massive interest-free loan’ when

unremedied.90 Consequently, said plaintiff is entitled to interest he proves as actual losses.91

It follows that the Tribunal should award compound interest as it more adequately

compensates a wronged party and is a closer, more realistic remedy to actual modern

business practice in comparison to simple interest.92

22. The principles set out above can be applied to accrue interest on both the debt of cleaning

costs and the debt from the damages from loss of Next Fixture. As elaborated above,

RESPONDENT is guilty of wrongfully withholding, first, an amount of USD 96,567.42

relating to cleaning costs,93 and second, an amount of USD 15,330,000.00 relating to the

loss of the Next Fixture.94 Both resulted in an unlawful loss against CLAIMANT in need of

remedy. Had RESPONDENT not conducted a breach of contract, CLAIMANT would not have

been deprived from the usage of said amount and any potential profit CLAIMANT might have

turned from it; at the very least they could have received compound interest at a bank rate.

In conclusion, in order for the CLAIMANT to be correctly remedied, they must be granted

compound interest.

ii. Calculations of interest

23. In calculating awards of interest, the tribunal must consider the rate and period on which the

interest should accrue on. In the past it has been conventional to award interest upon US

Distribution Ltd v GLC [1982] 1 WLR 149, 154; Kuwait Airways v Kuwait Insurance [2000] 1 AER (Comm) 972 ,

991F. 90 Sempra Metals Limited (formerly Metallgesellschaft Limited) v. Her Majesty's Commissioners of Inland Revenue

and another [2007] UKHL 34 WL 2025760, 19 (Lord Nicholls); Matthew Secomb, Interest in International

Arbitration, Oxford University Press, (1st Edition, 2009), 132-135 ¶3.342-3.357. 91 Sempra Metals Limited (formerly Metallgesellschaft Limited) v. Her Majesty's Commissioners of Inland Revenue

and another [2007] UKHL 34 WL 2025760, 21 (Lord Nicholls); F J Chalke Limited, A C Barnes (Wokingham)

Limited v. The Commissioners for Her Majesty's Revenue & Customs [2009] EWHC 952 (Ch) 2009 WL 1246904,

27, 39 (Mr. Justice Henderson); Matthew Secomb, Interest in International Arbitration, Oxford University Press,

(1st Edition, 2009), 126 ¶3.301-3.302; 128, ¶3.312-3.313. 92 Sempra Metals Limited (formerly Metallgesellschaft Limited) v. Her Majesty's Commissioners of Inland Revenue

and another [2007] UKHL 34 WL 2025760 (Lord Nicholls). 93 Supra Submission II(A), ¶10-13. 94 Supra Submission II(B), ¶14-19.


13

Dollar awards according US Prime Rate.95 However, the present practice of London

Maritime Arbitrators Association tribunals and other international arbitration is that unless

parties in a dispute propose a more appropriate rate, the interest upon US Dollar maritime

awards shall apply at the LIBOR rate raised by 2.5% and compounded every three-months.96

The period shall accrue both pre-judgement, from the point date of cause of action,97 and

post judgement, to the date of judgement.98

24. Interest shall accrue on damages relating to both cleaning costs and the loss of Next Fixture

pursuant to the above. First, in relation to the cleaning costs, interest shall accrue from 4 July

2016, when performance of cleaning was completed at the wrongful cost of CLAIMANT.99

The interest rate shall be 4.547%,100 compounded at three-month intervals.

25. Second, in relation to the loss of Next Fixture, Champion were to pay the first 45 days of

their charter within 3 banking days of the Vessel’s delivery while the remainder of the 4

years were to be paid at 15-day intervals.101 As the Vessel would have been delivered no

later than 28 June 2016,102 the interest should be measured from 3 July 2016103 to the

95 Kinetics Technology v Cross Seas Shipping (‘The Mosconici’) [2001] 2 Lloyd’s Reports 313, 316 (David Steel

J); Mamidoil-Jetoil Greek Petroleum Company SA v Okta Crude Oil Refinery, AD [2003] 1 Lloyd's Rep 42 ¶16

(Aikens J); AXL Resourses Ltd v Antares Underwriting Services Ltd & another [2010] EWHC 3244 (Comm)

(Gloster J). 96 Petrobras v FPSO Construction Inc. [2007] EWHC 1357 (Comm) ¶ 287 (Cresswell J); Fiona Trust & Holding

Corporation and others v Yuri Privalov and others [2011] EWHC 664 (Comm) (Mr. Justice Andrew Smith);

London Maritime Arbitration Associations Publications, LMAA Committee Report (2013); Chartered Institute of

Arbitrators Practice Guidelines, Guideline 13; H. McGregor, McGregor on Damages (18th Edition, Sweet &

Maxwell, London, 2014) ¶15-116. 97 Arbitration Act 1996, s. 49(3)(a); Lesotho Highlands Development Authority v Imreglio SpA [2002] EWHC 2435

(Comm) (Mr. Justice Morrison); Lesotho Highlands Development Authority v Imreglio SpA [2006] 1 AC 221 ¶50

(Lord Phillips); Michael Howard et al., Foreign Currency: Claims, Judgments, and Damages, (Informa Law from

Routledge, 2016), 273, ¶12.40-12.41; 275-276, ¶12.50-12.51; H. McGregor, McGregor on Damages (19th Edition,

London, Sweet & Maxwell, 2014), ¶19.073-19.074, ¶19.078. 98 Arbitration Act 1996, s. 49(3)(b); Michael Howard et al., Foreign Currency: Claims, Judgments, and Damages

(Informa Law from Routledge, 2016), 276, ¶12.52-12.53. 99 Record, 51: Cleaning Invoice from South Island; Record, 52: Final Hire Statement. 100 (Average LIBOR Interest Rate 2016-2019) + 2.5% ≈ 2.047% + 2.5% ≈ 4.547%. 101 Record, 31-32: Email of 15 June 2016, Details of Next Fixture. 102 Ibid. 103 28 June 2016 + 3 Banking Days = 3 July 2016.


14

payment date of interest. The interest will accrue at 4.547%104 and compounded at three-

month intervals, factoring in the method of payment at the Tribunal’s discretion.

III. CLAIMANT IS NOT LIABLE FOR INDEMNITY NOR RESTITUTION

26. RESPONDENT in their counterclaims has asserted that they should be entitled to certain

indemnities and restitutions. This is not true, since CLAIMANT is not liable for (A) indemnity

in Cargo Claim, and (B) restitution for off-hire.

A. CLAIMANT is not liable for indemnity for Cargo Claim

27. The ICA is a standard form agreement made with the goal of reducing costs in determining

the exact legal allocation each party’s liability when a third party (typically a cargo owner)

sues either party.105 In order for a plaintiff’s cargo claim to be valid under the ICA, it must

fulfil certain requirements to fall within the ICA’s scope of apportionment.106 Even when a

plaintiff’s claims are valid, they must then prove their entitlement under clause 8 of ICA.107

Here, CLAIMANT cannot be liable for the alleged Cargo Claim, since (i) RESPONDENT has

not given notification of valid Cargo Claim, or (ii) in the alternative, their claim cannot be

apportioned under clause 8(a), (iii) nor clause 8(b) of the ICA.

i. RESPONDENT has not given notification of valid Cargo Claim

28. Clause 6 of ICA provides that notification of cargo claims must be within 2-years of the

delivery of cargo.108 Additionally, clause 4 of ICA stipulates that the agreement’s scope of

application for apportionment only applies to cargo claims seeking to indemnify original

claim that have already properly been settled under a contract of carriage.109 It follows that

104 (Average LIBOR Interest Rate 2016-2019) + 2.5% ≈ 2.047% + 2.5% ≈ 4.547%. 105 Terence Coghlin et al., Time Charters, (7th Edition, 2014), 366, ¶20.46-20.48. 106 Inter-Club New York Produce Exchange Agreement 1996 as amended September 2011, (ICA), cl. 1-5; Terence

Coghlin et al., Time Charters, (7th Edition, 2014), 368-374, ¶20.53-20.72. 107 ICA, cl. 8; Terence Coghlin et al., Time Charters, (7th Edition, 2014), 375-376, ¶20.77-20.78. 108 ICA, cl. 6; Terence Coghlin et al., Time Charters, (7th Edition, 2014), 374, ¶20.73-20.75. 109 ICA, cl. 4(c); A/S Iverans Rederi v. KG MS Holstencruiser Seeschiffahrtsgesellschaft m.b.H & CO. and Others

(‘The Hostencruiser’) [1992] 2 Lloyd's Rep 378 Vol. 2 Q.B. (Com. Ct.), 384 (Hobhouse, J.); Ben Line Streamers

LTD. v. Pacific Steam Navigation CO. (‘The Benlawers’) [1989] 2 Lloyd’s Rep 51 Vol. 2 Q.B. (Com. Ct.), 62


15

a notification under clause 6 must refer to cargo claims that can be apportioned under clause

4. Failure to comply with the conditions above will result in invalid cargo claims.110

29. RESPONDENT did in fact deliver notification within the ICA’s 2-year time bar111 on 7 July

2016.112 However, when they delivered said notification, no original claim had been made

nor settled by Receivers under the contract of carriage.113 Thus, the requirements set out in

clause 4 of ICA are not fulfilled and the RESPONDENT’s notification of cargo claim are

inevitably invalid.

30. It follows, however, that nothing prevented RESPONDENT from giving notification after the

Receivers’ original cargo claim had been settled and before the time bar expired. Receiver’s

settled their original claims with RESPONDENT sometime after 23 November 2017 when

RESPONDENT granted them a third time extension. RESPONDENT would have had around 6

months to make notification of a valid claim. Instead, they failed to take proper action during

this period and consequently, they are barred from asserting their Cargo Claim.

ii. In the alternative, the Cargo Claim cannot be apportioned under clause 8(a) of ICA

31. According to clause 53 of Rider Clauses and clause 27 of NYPE, both Parties have agreed

on the use of ICA in dealing with cargo claims.114 Under clause 8(a) of ICA, RESPONDENT

pursues indemnity of cargo damage due to error made during the ballasting process by

apportion 100% of the Cargo Claim to the CLAIMANT.115 To be entitled to the above,

(Hobhouse, J.); London Arbitration 30/16, Lloyd's Maritime Law Newsletter (2016) 967 LMLN 4; Steven J.

Hazelwood & David Semark, P. &. I Clubs Law and Practice, (4th Edition, 2010), 276, 278-280 ¶15.49-15.50,

¶15.58. ¶15.61-15.64. 110 London Arbitration 30/16, Lloyd's Maritime Law Newsletter (2016) 967 LMLN 4; London Arbitration 10/15,

Lloyd's Maritime Law Newsletter (2015) 929 LMLN 4. 111 ICA, cl. 6. 112 Record, 45: Email of 7 July 2016. 113 Record, 45: Email of 7 July 2016; Record, 57: Email of 23 November 2017; Record, 81: Procedural Order No.2

¶10. 114 Record, 10: Rider Clauses, cl. 53; NYPE, cl. 27. 115 Record, 38: First Email of 27 June 2016.


16

RESPONDENT must prove unseaworthiness and/of error in management of the vessel.116 Here,

RESPONDENT fails in proving both.

32. An unseaworthy vessel is unfit to encounter ordinary perils of the voyage.117 Such

unseaworthiness may arise from a crew member’s errors on board a vessel if it amounts to

incompetence and not negligence.118 An incompetent crew member does not possess the

necessary skill to carry out the particular task or duty,119 such as ballasting.120 On the other

hand, if members of the crew are chosen with due care and possess all the required

qualifications, knowledge and experience, failure to utilize their competence to prevent any

danger to the vessel will amount to negligence and not incompetence,121 and subsequently a

seaworthy ship.

33. The crew of the Vessel was fully competent as evidenced by the incorporation of clause

68(a)(ii) of the Rider Clauses regarding Shipboard Personnel and Their Duties which

provides that all shipboard personnel hold valid certificates of competency.122 This signifies

said certificate holders have fulfilled the minimum standard of competence, including on

how to operate a standard ballasting system. The inevitable logical inference is that the crew

acted with negligence at the time of ballasting by accidentally opening the wrong valve.123

Consequently, CLAIMANT is not liable since the crew was not incompetent and the vessel

was seaworthy.

116 ICA, cl. 8(a). 117 Dixon v. Sadler (1839), 5 M. & W. 405, 151 E.R. 172; Steel v. State Line Steamship Co, (1878) L.R. 3 App. Cas.

72. 118 The Roberta (1938) 60 Ll L Rep 84; Robin Hood Flour Mills, Ltd. v. N. M. Paterson & Sons, Ltd. (‘The

Farrandoc’) [1967] 1 Lloyd's Rep 232. 119 The Makedonia [1962] 1 Lloyd’s Rep 316; Manifest Shipping & Co. Ltd. v. Uni-Polaris Insurance Co. Ltd. and

la Réunion Europeene (‘The Star Sea’) [1997] 1 Lloyd's Rep 360; Papera Traders Co. Ltd. v Hyundai Merchant

Marine Co. Ltd. (‘Eurasian Dream’) [2002] EWHC 118 (Justice Creswell). 120 Record, 46: Preliminary Survey Report of 30 June 2016. 121Blyth v Birmingham Waterworks (1856) 11 Ex R 78; Steel et Al. v. The State Line Steamship Company (1877-78)

L.R. 3 App. Cas. 72. (Lord Blackburn) at p. 90-91; Hedley v. The Pinkney and Sons Steamship Company, Limited.

[1892] 1 Q.B. 58; The Amstelslot [1963] 2 Lloyd’s Rep 223, 230 (Lord Reid). 122 Record, 46: Rider Clauses, cl. 68(a)(ii). 123 Record, 46: Preliminary Survey Report of 30 June 2016.


17

34. Furthermore, incompetence of crew cannot be proven through error in management of the

Vessel. In the case of error in Vessel’s management, the crew cannot be deemed as

incompetent as they are qualified and competent, which is not an indication of unseaworthy

vessel.124 For the reasons here and above, CLAIMANT is not liable for 100% apportionment

of the Cargo Claim.

iii. In any event, the claim cannot be apportioned under clause 8(b) of ICA

35. In any event, CLAIMANT is still not liable for the cargo claims under clause 8(b) of ICA. This

clause provides that CLAIMANT may be liable for 100% of the cargo-claims125 if such

damage is cause by the unseaworthiness of the Vessel. However, it has been proven that the

Vessel was, in fact, seaworthy.126

36. Furthermore, CLAIMANT also cannot be held liable for 50% of the Cargo Claim under the

same clause. When an amendment is made that assigns responsibility for cargo handling to

the Master of the ship, the Parties will by default share equal apportionments of a cargo

claim.127 In casu, although such an amendment was made,128 CLAIMANT should not be liable

for equal apportionment for the cargo claims since the damage of the cargo was not caused

by loading, stowage, lashing, discharge, storage or other handling of the cargo.

B. RESPONDENT is not entitled to restitution for off-hire

37. The vessel was detained by Wahanda Port Authorities from 7 May 2016 to 26 June 2016.129

RESPONDENT argues that they have overpaid hire in the amount of USD 375,000.00 as the

Vessel was off-hire during her detainment.130 This is misconstrued. In order for a vessel to

124 Rowson v. Atlantic transport Company, Limited, [1903] 2 K.B. 666. 125 ICA, cl. 8(b). 126 Supra Submission III(A)(2), ¶31-34. 127 ICA, cl. 8(b). 128 Record, 5: Email of 18 March 2016, Details of Fixture. 129 Record, 72: Defence and Counterclaim Submissions ¶15(2). 130 Record, 74: Defence and Counterclaim Submissions ¶15(2).


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be off-hire, a vessel should be prevented by events within the off-hire clause.131 Presently,

RESPONDENT is not entitled to their alleged restitution because: (a) the full working of the

vessel had not been prevented; and (b) the circumstances do not amount to an off-hire event

under clause 17 of NYPE.

i. The full working of the vessel had not been prevented

38. The Vessel cannot be put to off-hire as the ‘full working of the vessel’ had not been

prevented during its detention by the Port State Control. ‘Full working of the vessel’ is

prevented when she is fully inefficient and incapable in herself of performing the service

immediately required by the charterers.132

39. Here, the detainment of the Vessel had not prevented her ‘full working’ as she remained

fully efficient in all respects and was still capable of performing the discharge on 27 June

2016 which was the service required of her.133 Therefore, the Vessel must be considered as

on-hire during the time it was detained.

ii. The present event falls outside the off-hire clause

40. In clause 17 of NYPE, off-hire will only arise when the preventing event falls within the

clause which consisted of limited amount of events.134 Within said clause, only certain types

of detention will cause the off-hire of the vessel: detention for physical vessel deficiencies,

detention by average accidents to the vessel or cargo, and detention by the arrest of the

vessel.

131 Court Line Ltd v Dant & Russell Inc (‘The Errington Court’) (1939) 44 Com Cas 345; Mareva Navigation Co

Ltd v Canaria Armadora SA (‘The Mareva AS’) [1977] 1 Lloyd's Rep 368; Belcore Maritime Corporation v F.LLI.

Moretti Cereali S.p.A. (‘The Mastro Giorgis’) [1983] 2 Lloyd’s Rep 66; Andre & Cie S.A. v. Orient Shipping

(Rotterdam) B.V. (‘The Laconian Confidence’) [1997] 1 Lloyd’s Rep 139; Barış Professor Soyer & Andrew

Tettenborn, Charterparties: Law, Practice and Emerging Legal Issues, (2017), 82. 132 Actis Co. Ltd. v. Sanko Steamship Co. Ltd. (‘The Aquacharm’) [1982] 1 W.L.R. 119; Ca Venezolana De

Navegacion v. Bank Line Limited (‘The Roachbank’) [1987] 2 Lloyd's Rep 498. 133 Record, 81: Procedural Order No.2 ¶7. 134 Royal Greek Government v. Minister of Transport (‘The Ann Stathatos’) (1948) 82 Ll.L.Rep 196, 199; Hyundai

Merchant Marine Co Ltd v Furness Withy (Australia) Pty (‘The Doric Pride’) [2006] 2 Lloyd’s Rep 175, 179;

Terence Coghlin et al., Time Charters, (7th Edition, 2014), 441, ¶25.4; NYPE, cl.17.


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41. The present detainment does not fall within the above categories. The first and second are

rightly disproved since the Vessel was detained due to Port State Control’s suspicion of

Ebola contamination135 and not for any physical deficiencies or accidents.

42. Third, the detention here cannot be considered as an ‘arrest’. ‘Arrest’ is restricted to judicial

processes to secure a maritime claim, such as salvage and towage.136 Such processes may be

evidenced by an arrest warrant released by a state.137 Presently, there is no evidence of any

judicial process. Rather, it is evidenced that the detention was actually due to the likelihood

of Ebola contamination138 and in conclusion, the present event does not fall within the off-

hire clause.

iii. The off-hire clause shall be interpreted restrictively

43. A plaintiff may attempt to interpret an off-hire clause broadly to allow an event not listed

within the clause to invoke off-hire. When the meaning of an off-hire clause is uncertain,

the words must be read in favour of the owners.139 A party cannot interpret the off-hire clause

broadly by relying on ‘any other similar cause’, especially in the absence of the term

‘whatsoever’.140 The use of ‘whatsoever’ in an off-hire clause allows parties to interpret

events not expressly mentioned in the clause as able to render a vessel off-hire. In its

absence, the ejusdem generis rule must apply.141 This means that the off-hire clause must be

135 Record, 25: Email of 7 May 2016. 136 The Atlantic Star [1974] AC 436, 454 (Lord Reid), 461 (Lord Morris), 470 (Lord Wilberforce); The Maule [1997]

1 WLR 528, 531 (Lord Lloyd); Natwest Markets Plc (Formerly Known As The Royal Bank Of Scotland Plc) v.

Stallion Eight Shipping Co Sa (‘The Mv Alkyon’) [2018] EWHC 2033 (Admlty); International Convention Relating

to the Arrest of Sea-Going Ships 1952, Article 1(2). 137 Ship Arrests in Practice, (11th Edition), 130. 138 Record, 25: Email of 7 May 2016. 139 The Ann Stathatos (1948) 82 LlL Rep 196, 199; Terence Coghlin et al., Time Charters, (7th Edition, 2014), 441,

¶25.4. 140 The Aquacharm [1982] 1 W.L.R. 119; The Laconian Confidence [1997] 1 Lloyd’s Rep 139. 141 The Roachbank [1987] 2 Lloyd's Rep 498; The Laconian Confidence [1997] 1 Lloyd’s Rep 139.


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interpreted restrictively to only mean as previously enumerated on events listed under it,142

even in the presence of phrases such as ‘any other similar cause’.

44. In the absence of the word ‘whatsoever’, it is clear the Parties intended to interpret clause

17 of NYPE restrictively. Therefore, RESPONDENT cannot rely on the term ‘any other similar

cause’ to interpret the present off-hire clause broadly and justify the delay.143

IV. INTEREST SHALL NOT ACCRUE UPON ANY RESPONDENT’S CLAIMS

45. Interest is the ‘compensation fixed by agreement or allowed by law for the use or detention

of money, or for the loss of money by one who is entitled to its use’,144 and is granted to

compensate the deprivation of a plaintiff’s money.145Although the Tribunal has jurisdiction

to grant interest,146 RESPONDENT was not deprived of use of their money and therefore not

entitled to interest since (A) there is no principal liability for the interest to accrue on, and

(B) in the alternative, they have unjustly delayed their claims.

A. There is no principal liability for the interest to accrue on

46. Interest is awarded as damages by applying a certain rate to a principal amount of damages

over a determined period of time.147 In any logical event, in order for interest to accrue, a

principal sum must be present for said interest to accrue on. In the case at hand, as proved

above,148 there is no principal liability for said interest to accrue on.

142 The Roachbank [1987] 2 Lloyd's Rep 498; The Laconian Confidence [1997] 1 Lloyd’s Rep 139; Cosco Bulk

Carrier Co Ltd v. Team-Up Owning Co Ltd (The ‘Saldanha’) [2010] EWHC 1340 (Comm); Martin Dockray, Cases

& Materials on the Carriage of Goods by Sea, p. 330. 143 John Wilson, Carriage of Goods by Sea, (7th Edition, Pearson, England, 2010), 86. 144 Black’s Law Dictionary, (10th Edition, 2014), 935; Matthew Secomb, Interest in International Arbitration, 19-20. 145 B.P. Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783, ¶845. 146 Arbitration Act 1996, s. 49. 147 Bohm-Bawerk, E., Capital and Interest: A Critical History of Economic Theory (Macmillan, London, 1890) 148 Supra Submission III, ¶26-44.


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B. In the alternative, it is unreasonable to grant interest on any damages since claims for

it were unjustly delayed

47. If a plaintiff delays in pursuing a claim of interest, interest is reduced or disallowed

completely.149 As interest is granted to compensate loss of use, when parties fail to prosecute

in a timely manner, they have become the cause of their own loss of use.150 This behaviour

also unlawfully lulls a defendant into a position of false security, furthering disallowance of

interest to a plaintiff.151

48. In casu, RESPONDENT had not promptly made their claims against CLAIMANT. Instead of

moving swiftly to pursue lawsuit, RESPONDENT only made their counterclaims and

subsequent claims for interest after CLAIMANT pursued their own loss and damages. The

record shows that RESPONDENT was not materially prevented from pursuing such claims at

an earlier time: first, they could have pursued Cargo Claims immediately upon settlement of

the original cargo claims with the Receivers but instead waited almost an entire year;152

second, they should have pursued restitution of alleged off-hire upon receiving the Final

Hire Statement but rather delayed for approximately 2.5 years.153 This proves CLAIMANT’s

lack of promptness was unreasonable and, in any event, the Tribunal shall not grant interest

upon their claims.

149 Birkett v Hayes [1982] 1 WLR 816, Derby Resources AG v Blue Corinth Marine Co Ltd (No 2) (‘The Athenian

Harmony’) [1998] 2 Lloyd’s Rep 425; Claymore Services Ltd v Nautilus Properties Ltd [2007] BLR 452. 150 The Athenian Harmony [1998] 2 Lloyd’s Rep 425 at 427. 151 The Athenian Harmony [1998] 2 Lloyd’s Rep 425 at 427. 152 Record, 70-74: Defence and Counterclaim Submissions; Record, 82: Procedural Order No. 2 ¶10. 153 Record, 52: Final Hire Statement; Record, 74: Defence and Counterclaim Submissions.


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REQUEST FOR RELIEF

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

a. Declare that RESPONDENT has breached the CHARTERPARTY;

b. Declare that RESPONDENT is liable for damages in respect of:

i. USD 41,000.00 for the cleaning costs,

ii. USD 55,567.42 for the voyage costs,

iii. USD 15,330,000.00 for the damages of late redelivery, and

iv. interest on the above amounts;

c. Declare that CLAIMANT is not liable for indemnity nor restitution;

d. Declare that CLAIMANT is not liable for interest of the above;

e. Award further or other relief as the Tribunal considers fit.

memorandum for claimant · transfield shipping inc v mercator shipping inc (‘the achilleas’)...

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