NINETEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION

MOOT COMPETITION 2018

IN THE MATTER OF AN ARBITRATION HELD IN LONDON

CLAIMANT RESPONDENT

AND

CERULEAN BEANS DYNAMIC SHIPING LLC

AND AROMAS

MEMORANDUM FOR THE RESPONDENT

TEAM NO. 7

Athir Al Asadi

Karla Fernandes

Riley Mercer

Sarah Payne

i

CONTENTS

CONTENTS......................................................................................................................................................I

LISTOFAUTHORITIES.............................................................................................................................III

LISTOFABBREVIATIONS........................................................................................................................XI

STATEMENTOFFACTS..............................................................................................................................1

THEAGREEMENT........................................................................................................................................1

THESOLARFLARES....................................................................................................................................1

THESTORMANDPORTCLOSURE..........................................................................................................1

THEARBITRATION.....................................................................................................................................2

PARTONE:JURISDICTION........................................................................................................................3A. THETRIBUNALHASTHEPOWERTORULEONITSOWNJURISDICTION...............................................................3B. THEARBITRATIONAGREEMENTISGOVERNEDBYENGLISHLAW......................................................................3C. THECONDITIONPRECEDENTTOCOMMENCINGLEGALPROCEEDINGSISENFORCEABLE...............................4

I. TheExpertDeterminationclauseisenforceablebecauseitdoesnotneedtoprovidethe

processforappointingaMasterMariner...................................................................................................4II. TheExpertDeterminationclauseisenforceablebecauseitdoesnotneedtoprovidethe

methodologyusedbytheMasterMariner.................................................................................................5D. THECONDITIONPRECEDENTHASNOTBEENSATISFIED......................................................................................5

PARTTWO:LIEN..........................................................................................................................................6A. THETRIBUNALDOESNOTHAVETHEJURISDICTIONTOENFORCEAMARITIMELIEN......................................6B. THECLAIMANTISNOTENTITLEDTOAMARITIMELIEN.......................................................................................6C. THERESPONDENTDOESNOTHAVEANIMPLIEDOBLIGATIONTORETURNTHEUSD100,000TOTHE

CLAIMANT......................................................................................................................................................................7D. THECLAIMANTCANNOTRELYONUNJUSTENRICHMENTASACAUSEOFACTION............................................7

PARTTHREE:MERITS................................................................................................................................8A. THERESPONDENTDIDNOTBREACHITSDUTYUNDERCOMMONLAWBECAUSEITPROVIDEDA

SEAWORTHYVESSEL.....................................................................................................................................................8I. TheRespondentprovidedaseaworthyvessel..........................................................................................8II. TheVessel’sunseaworthinessdidnotcausedamage............................................................................9

B. THERESPONDENTDIDNOTBREACHITSDUTYUNDERCOMMONLAWBECAUSEITPROPERLYCAREDFOR

THECARGO..................................................................................................................................................................10I. TheRespondentdidnotbreachitsdutyasaninvoluntarybailee...............................................10II. TheRespondenthasnotbreacheditsdutyasagratuitousbailee...............................................10

ii

C. THERESPONDENTISNOTLIABLEFORDEVIATIONORDELAYBYOPERATIONOFTHECHARTERPARTY...11I. TheRespondentexercisedduediligencetoensureaseaworthyvessel.....................................12II. Therewasaforcemajeureevent................................................................................................................13III. TheRespondentdeviatedtosaveCargo..................................................................................................14

D. THECHARTERPARTYWASFRUSTRATED...............................................................................................................15I. ThecommercialpurposeoftheCharterpartycouldnotbeachieved.........................................16II. Theseriesoffrustratingeventswereunforeseeable..........................................................................18III. Theseriesoffrustratingeventswerenotself-induced......................................................................18

PARTFOUR:COUNTERCLAIM..............................................................................................................19A. THECLAIMANTISLIABLEFORFREIGHT................................................................................................................19B. THECLAIMANTISLIABLEFORDEMURRAGE........................................................................................................20C. THECLAIMANTISLIABLEFORTHEDAMAGETOTHEVESSEL’SHULLBECAUSEITNOMINATEDANUNSAFE

PORT.............................................................................................................................................................................21D. THECLAIMANTISLIABLEFORAGENCYFEESATTHEPORTOFDILLAMOND.................................................22E. THECLAIMANTISLIABLEFORCOSTSINCURREDFORUSINGTHEELECTRONICSYSTEMSATTHEPORTOF

DILLAMOND................................................................................................................................................................22

PARTFIVE:DAMAGES.............................................................................................................................23A. THERESPONDENT’SLIABILITYISLIMITEDUNDERLEGISLATION.....................................................................23B. THECLAIMANT’SNEGLIGENCECONTRIBUTEDTOTHELOSS.............................................................................23C. THECLAIMANT’SLOSSESARETOOREMOTE.........................................................................................................24D. THECLAIMANTFAILEDTOREASONABLYMITIGATETHEIRLOSSES.................................................................25

PRAYERFORRELIEF...............................................................................................................................25

iii

LIST OF AUTHORITIES

A CASES

Actis Co Ltd v Sanko Steeamship Co Ltd [1982] 1 All ER 390 ................................................... 8

Addenbrooke Pty Ltd v Woollahra Municipal Council [2008] NSWLEC 190 ........................... 5

AGL Sales (QLD) Pty Ltd v Dawson Sales Pty Ltd [2009] QCA 262 ....................................... 12

Agrimpex Hungarian Trading Company for Agricultural Products v Sociedad

Financiera De Bienes Raices S A [1960] 1 Lloyd’s Rep 623 .................................................... 19

AIC Ltd v Marine Pilot Ltd [2007] 2 Lloyd’s Rep 101 .............................................................. 21

Aktieselskabet Reidar v Arcos Ltd [1927] 1 KB 352 ................................................................. 19

Alanbert Pty Ltd v Bulevi Pty Ltd [2000] NSWSC 261 ............................................................. 17

Allied Mills Ltd v Gwydir Valley Oilseeds Pty Ltd [1978] 2 NSWLR 26 ................................. 18

Andrea Merzario Ltd v Internationale Spedition Leitner Gesellschaft GmbH

[2001] 1 Lloyd’s Rep 490 .................................................................................................... 18, 19

Aries v Total Transport [1977] 1 Lloyd’s Rep 334 ................................................................... 19

Ausgrid v Redbank Project Pty Ltd [2013] NSWSC 1596 ........................................................ 12

Australian Medic-Care Company Ltd v Hamilton Pharmaceutical Pty Ltd

[2009] FCA 1220 ....................................................................................................................... 24

Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452 ...................................................... 25

Barclays Bank plc v Nylon Capital LLP [2011] EWCA Civ 826 ................................................ 5

Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd [2017] FCA 250 ........................... 5

BBB Constructions Pty Ltd v Aldi Foods Pty Ltd [2010] NSWSC 1352 ..................................... 4

Beaton v McDivitt (1987) 13 NSWLR 162 ................................................................................ 17

BHP Petroleum (Australia) Pty Ltd v Sagasco South East Inc [2001] WASCA 159 ............... 13

Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 ................................................................ 7

Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 ...................................................................... 9

Bremer Handelsgesellschaft mbH v C Mackprang Jr [1979] 1 Lloyd’s Rep 221 ............... 11, 12

iv

Brisbane City Council v Group Projects Pty Ltd (1979) 145 CLR 143 .............................. 15, 17

British Road Services Ltd v Arthur V Crutchley & Co Ltd [1968] 1 All ER 811 ...................... 11

British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric

Railways Co of London Ltd [1912] AC 673 .............................................................................. 25

Brown v K.M.R. Services Ltd [1995] 2 Lloyd’s Rep 513 .......................................................... 24

Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187 ............................................... 4

Byrne v Australian Airlines Ltd (1995) 185 CLR 410 ................................................................. 7

Caves Beachside Cuisine Pty Ltd v Boydah Pty Ltd [2015] NSWSC 1273 ................................ 4

Channel Island Ferries Ltd v Sealink UK Ltd [1988] 1 Lloyd’s Rep 323 ..................... 11, 12, 14

Chapman v The Great Western Railway Co (1880) 5 QBD 278 ............................................... 10

Christopher Brown Ltd v Genossenschaft Oesterreichiser

Waldbesitzer Holzwirtschaftsbetriebe Registrierte GmbH [1953] 3 WLR 689 .......................... 3

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales

(1982) 149 CLR 337 .................................................................................................. 7, 15, 16, 17

Colonial Bank v European Grain & Shipping Ltd (‘The Dominique’)

[1989] 1 Lloyd’s Rep 431 .......................................................................................................... 19

Commissioner of Railways (WA) v Stewart (1936) 56 CLR 520 ............................................... 13

Compania Naviera General SA v Kerametal Ltd (‘The Lorna I’) [1983] 1 Lloyd’s Rep 373 .. 18

Coomera Resort Pty Ltd v Kolback Securities Ltd [1998] QCA 20 .......................................... 17

CV Sheepvaartonderneming Ankergracht v Stemcor Pty Ltd (2007) 160 FCR 342 ............. 8, 12

Dakin v Oxley [1864] 15 CB(NS) 646 ....................................................................................... 19

David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 .................. 7

Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 .............................. 17

Davis v Garrett (1830) All ER Rep 286 .................................................................................... 11

Davis v Swift [2014] NSWCA 458 ............................................................................................ 23

Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699 ................................ 17

v

DGM Commodities Corp v Sea Metropolitan SA (‘The Andra’) [2012] EWHC 1984 ............. 14

Dixon v Sadler [1839] 151 ER 172 .............................................................................................. 8

Driver v War Service Homes Commissioner (1923) 44 ALT 130 ............................................. 25

DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 19 ALR 223 ........................................ 16

East West Corpn v DKBS AF 1912 A/S [2003] QB 1509 .......................................................... 11

Eighty-Second Agenda Pty Ltd v Handberg [2015] FCA 1136 ................................................. 16

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 .................. 16

Embiricos v Sydney-Reid and Co [1914] 3 KB 45 .................................................................... 17

Empresa Exportadora de Azucar v Industria Azucarera Nacional SA ('The Playa Larga')

[1983] 2 Lloyd’s Rep 171 .......................................................................................................... 15

Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 ................................................... 7

Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL [2005] VSCA 228 ............ 4

Fairbridge v Pace (1844) 174 ER 828 ...................................................................................... 20

Fal Oil Ltd v Petronas Trading Corp SDN BHD [2004] 2 Lloyd’s Rep 282 ............................ 19

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 ......................................... 7

Finlayson v Finlayson [2002] FCA 898 .................................................................................... 17

Firth v Halloran (1926) 38 CLR 251 ........................................................................................ 15

Gard Marine and Energy Ltd v China National Chartering Co Ltd

('The Ocean Victory') [2017] 1 WLR 1793 ................................................................................ 21

Gaudet v Brown (‘Cargo ex Argos’) (1873) LR 5 PC 134 ........................................................ 18

Geelong Harbour Trust Commissioners v Gibbs Bright (1974) 129 CLR 576 ......................... 13

GL Sales (Qld) P/L v Dawson Sales P/L & Ors (No 2) [2009] QCA 75 ................................... 12

Graham v Voigt (1989) 95 FLR 146 .......................................................................................... 10

Grand Champion Tankers Ltd v Norpipe A/S (‘The Marion’) [1984] 1 AC 563 ...................... 12

Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad

(1998) 196 CLR 161 .......................................................................................................... 8, 9, 12

vi

Gul Bottlers (PVT) Ltd v Nichols Plc [2014] EWHC 2173 ....................................................... 25

Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi AS v VSC Steel Co Ltd [2013] EWHC 4071 .. 3

Heimann v Commonwealth (1938) 38 SR (NSW) 691 ................................................................ 7

Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 .............................................. 10

Howard v Harris (1884) Cab & El 253 ..................................................................................... 10

Hunter v Prinsep (1808) 10 East 378 ........................................................................................ 18

Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd (2006) 236 ALR 115 .... 12

In Marriage of Cawthorn (1998) 144 FLR 255 ......................................................................... 15

Inc v Petroleo Brasileiro SA Petrobras (No 3) [2006] 1 Lloyd's Rep 121 .................................. 4

Indian Company v Pakistani Bank, Award, ICC Case No. 1512, 1971 in Yearbook 1976, Vol I,

128................................................................................................................................................ 3

Interim Award in ICC Case No 7929, XXV YB Comm Arb 312 (2000) ................................... 3

International Plc v Crayford Freight Services Ltd (1997) 78 FCR 302 .................................... 10

Itex Itagrani Export SA v Care Shipping Corp (‘The Cebu’) [No 2] [1993] QB 1 ................... 18

J & E Kish v Charles Taylor, Sons & Co [1912] AC 604 ........................................................... 9

Jackson v Union Marine Insurances Co Ltd (1874) LR 10 CP 125 .......................................... 15

Kawasaki Steel Corp v Owners of Ship Daeyang Honey (1993) 120 ALR 109 ........................ 13

Kopitoff v Wilson (1876) 1 QBD 377 .......................................................................................... 8

Kristiansands Tankrederi A/S v Standard Tankers (Bahamas) Ltd (‘The Polygory’)

[1977] 2 Lloyd’s Rep 353 .......................................................................................................... 21

Lauritzen AS v Wijsmuller BV ('The Super Servant Two') [1990] 1 Lloyd’s Rep 1 .................. 18

Lethbridge v Phillips (1819) 171 ER 731 .................................................................................. 10

Logs & Timber Products Singapore Pte Ltd v Keeley Granite (Pty) Ltd (‘The Freijo’)

[1978] 1 Lloyd’s Rep 257 .......................................................................................................... 19

March v E&H Stramere (1991) 171 CLR 506 ............................................................................. 9

McFadden v Blue Star Line [1905] 1 KB 697 ............................................................................. 8

vii

McLeod v G Casanova & Son Pty Ltd (1979) 84 LSJS 409 ...................................................... 10

Melachrino v Nickoll [1920] 1 KB 693 ..................................................................................... 24

Mineral Resources Ltd v Pilbara Minerals Ltd [2016] WASC 338 ............................................ 5

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 ................... 16

New South Wales v Banabelle Electrical Pty Ltd (2002) 54 NSWLR 503 ................................. 7

Notara v Henderson (1872) LR 7 QB 225 ........................................................................... 11, 22

Nugent v Smith (1876) 1 CPD 423 ............................................................................................. 13

Ocean Tramp Tankers Corp v V/O Sovfracht (‘The Eugenia’) [1964] 2 QB 227 ............... 15, 18

Opal Mariime agencies Pty Ltd v Baltic Shipping Co (1998) 158 ALR 416 ............................ 19

Otrava Pty Ltd v Mail Boxes Etc (Australia) Pty Ltd [2004] NSWSC 1066 ............................. 17

Overlook Management BV v Foxtel Management Pty Ltd [2002] NSWSC 187 ......................... 4

Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd ('The Eurasian Dream')

[2002] EWHC 118 ..................................................................................................................... 12

Parsons (Livestock) Ltd v Utley Ingham & Co Ltd [1977] 2 Lloyd’s Rep 522 ......................... 24

Partial Award in Case 6276, 14 (1) ICC Ct Bull 76, 76 (2003); ................................................. 5

Payzu Ltd v Saunders [1919] 2 KB 581 ..................................................................................... 25

Petroleo Brasillerio SA v ENE Kos 1 Limited [2012] UKSC 17 ............................................... 21

Pialba Commercial Gardens Pty Ltd v Braxco Pty Ltd [2011] QCA 148 ................................. 25

Pioneer Shipping Ltd v BTP Tioxide Ltd (‘The Nema’) [1982] AC 734 ....................... 13, 14, 15

PJ van der Zijden Wildhandel NV v Tucker & Cross Ltd [1975] 2 Lloyd’s Rep 240 ............... 12

Port Swettenham Authority v TW Wu & Co (M) Sdn Bhd [1979] AC 580 ................................ 10

Qantas Airways Ltd v Christie (1998) 193 CLR 280 ................................................................ 15

Qenos Pty Ltd v Ship ‘APL Sydney’ [2009] FCA 1090 ............................................................. 23

Re Continental C and G Rubber Co Pty Ltd (1919) 27 CLR 194 ............................................. 15

Re Louis Dreyfus & Co and Sir William Reardon Smith & Sons Ltd [1928] SASR 117 .......... 19

Reardon Smith Line Ltd v Australian Wheat Board (1956) 93 CLR 577 .................................. 21

viii

Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 .................................... 16

Ringstad v Golling and Co Pty Ltd (1924) 35 CLR 303 ............................................................ 17

Sanko Steamship Co Ltd & Grandslam Enterprise Corporation v Sumitomo Australia Ltd

(No 2) (1995) 63 FCR 227 .......................................................................................................... 9

Scanlan’s New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169 ........................................ 12, 15, 17

Shell Oil Co v ‘The Lastrigoni’ (1974) HCA 27 .......................................................................... 6

Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd (‘Hako’)

(2013) 211 FCR 369 .................................................................................................................... 6

Sotiros Shipping Inc v Sameiet Solholt (‘The Solholt’) [1983] 1 Lloyd's Rep 605 ................... 25

Spain v Union Steamship Co of New Zealand Ltd (1923) 33 CLR 555 .................................... 11

Stanton v Austin (1872) LR 7 CP 651 ........................................................................................ 20

Stellar Chartering and Brokerage Inc v Efibanca-Ente Finanziario Interbancario SpA

(‘The Span Terza No 2’) [1984] 1 WLR 27 .............................................................................. 10

Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 ............................................. 24

Sulamerica CIA Nacional de Seguros SA v Enesa Engenharia SA [2012] EWCA Civ ............. 3

Sun Luck Co Ltd v Mu Gung Wha [1999] FCA 220 .................................................................. 21

Tabet v Gett [2010] 265 ALR 227 ............................................................................................... 9

The Europa [1908] P 84 ......................................................................................................... 9, 14

The Heart Research Institute Ltd v Psiron Ltd [2002] NSWSC 646 ........................................... 5

The Savona [1900] P 252 ........................................................................................................... 22

The Thrunscoe [1897] P 301 ...................................................................................................... 12

Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Aust) Pty Ltd

(1966) 115 CLR 353 .................................................................................................................. 10

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

Lloyd’s Rep 227 ......................................................................................................................... 21

Triarno Pty Ltd v Triden Contractors Ltd (1992) 8 BCL 305 ..................................................... 5

ix

Truong v Gordon [2014] NSWCA 97 ....................................................................................... 23

Tsakiroglou & Co Ltd v Noblee Thorl Gmbh [1962] AC 93 ..................................................... 15

Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 ........................... 24

Victrawl Pty Ltd v Telstra Corporation Ltd (1995) 183 CLR 595 ............................................ 23

WGH Nominees Pty Ltd v Tomblin (1985) 39 SASR 117 ......................................................... 10

Wong Lai Yin v Chinachem Investment (1980) 13 BLR 81 ....................................................... 13

B STATUTES

Admiralty Act 1988 (Cth) ............................................................................................................. 6

Arbitration Act 1996 (UK) ........................................................................................................... 3

Law Reform (Miscellaneous Provisions) Act 1965 (NSW) ....................................................... 23

C RULES

London Maritime Arbitrators Association Terms (2017) r 6. ...................................................... 3

D BOOKS

Born, Gary B, International Commercial Arbitration (Kluwer Law International, 2014) .......... 5

Boyd, Stewart C, Scrutton on Charterparties and Bills of Lading (21st ed, Sweet & Maxwell,

2008) .......................................................................................................................................... 18

E ARTICLES

Columbia Law Review Association Inc, ‘The Legal Status of an Involuntary Depositary’

(1992) 22 (4) Columbia Law Review ........................................................................................ 10

Isliker, Heinz, ‘Are solar flares random processes?’ (1996) 310, Astronomy and Astrophysics ...

…………………………………………………………………………………..………9, 12, 13

x

F OTHER

‘Model Clause for Expert Determination’ QLD Law Society ...................................................... 5

‘Rules for Expert Determination’ NSW Law Society ................................................................... 5

US Department of Commerce, Coral Reef Education Kit (06 July 2017) National Oceanic and

Atmospheric Administration

< https://oceanservice.noaa.gov/education/kits/corals/coral04_reefs.html> ............................. 22

xi

LIST OF ABBREVIATIONS

Arbitration Rules

London Maritime Arbitrators Association Rules

Claimant

Cerulean Beans and Aromas Ltd

Condition Precedent clause

Clause 27(e) of the Charterparty agreement

Expert Determination

clause

Clause 27(d) of the Charterparty agreement

Force Majeure clause Clause 17 of the Charterparty agreement

Limitations Act

Limitation of Liability for Maritime Claims Act

1989 (Cth)

nm Nautical Miles

Port of Cerulean Port of Loading

Port of Dillamond Port of Discharge

Respondent Dynamic Shipping LLC

SDR Special Drawing Right

xii

The Charterparty The voyage charterparty agreement between

Cerulean Beans and Aromas Ltd & Dynamic

Shipping LLC

Vessel The Madam Dragonfly

WWD Weather Working Day

1

STATEMENT OF FACTS

THE AGREEMENT

1. On 22 July 2017 Cerulean Beans and Aromas Ltd (the Claimant) emailed Dynamic

Shipping LLC (the Respondent) to arrange an agreement to transport four containers of

coffee beans from the Port of Cerulean to the Port of Dillamond. The Cargo had to

arrive by 19:00 on 28 July 2017 for the coffee festival and had to be transported in

waterproof containers. The Respondent applied a sealant to make the containers

waterproof.

2. The Claimant transferred USD100,000 to the Respondent to secure the crew for the

voyage. The Claimant and Respondent entered into a voyage charterparty (the

Charterparty) to transport the Cargo on the Madam Dragonfly (the Vessel).

THE SOLAR FLARES

3. On 18 July 2017, the Cerulean Mail reported that solar flares were occurring in the

Cerulean region.

4. On 24 July 2017, the Vessel set sail from the Port of Cerulean. On 25 July 2017, solar

flares disabled the Vessel’s navigational and radio communication systems. The Vessel

had to deviate to the Port of Spectre to obtain maps.

THE STORM AND PORT CLOSURE

5. On 28 July 2017 at 16:30, the crew observed an approaching storm on the Vessel’s

radar. The crew dropped anchor at approximately 16:58. On 29 July 2017 prior to

07:00, the Vessel was instructed to move and wait with other vessels approximately

100nm from the Port of Dillamond. The Vessel’s anchor became tangled in a coral bed

when the crew attempted to follow those instructions and the Vessel’s hull was

damaged.

6. On 29 July 2017 at 16:30, the Respondent gave the Claimant notice that the Vessel was

due to berth at 17:00 and the Cargo could be collected at approximately 19:00.

2

7. The Vessel docked at 20:42. The Respondent held the Cargo onboard the Vessel until

30 July 2017 at 00:00. The Claimant did not collect the Cargo. Subsequently, the

Respondent placed the Cargo into storage at the Port and provided the Claimant with an

electronic access barcode.

8. The Claimant collected the Cargo on 31 July 2017 at 13:17. Three of the four containers

became water damaged while held in the storage facility.

9. As a result of the damage to the Cargo, the Claimant was unable to provide the Cargo to

Coffees of the World to sell at the coffee festival. The Claimant sourced alternative

coffee beans and entered into a settlement agreement with Coffees of the World.

THE ARBITRATION

10. On 1 August 2017, the Claimant demanded that the Respondent pay the losses the

Claimant incurred. The Respondent denied that it was liable.

11. On 7 August 2017, the Respondent issued an invoice to the Claimant seeking payment

of freight, agency fees at the Port of Spectre and the Port of Dillamond, repairs to the

hull, demurrage and the use of the electronic access systems at the Port of Dillamond.

The Claimant has not paid the Respondent for these charges.

12. On 11 August 2017, the Claimant referred the dispute to arbitration pursuant to clause

27 of the Charterparty.

3

PART ONE: JURISDICTION

1. The Respondent argues that the Tribunal does not have the jurisdiction to hear the merits

of this dispute because: (A) the Tribunal has the power to rule on its own jurisdiction;

(B) the Arbitration Agreement is governed by English law; (C) the Condition Precedent

to commencing legal proceedings is enforceable; (D) the Condition Precedent has not

been satisfied.

A. The Tribunal has the power to rule on its own jurisdiction

2. An arbitral tribunal has the power to rule on its own jurisdiction.1 The Respondent

argues that this Tribunal has the power to rule on its own jurisdiction.

B. The Arbitration Agreement is governed by English law

3. Parties to an arbitration agreement can choose the law which governs the agreement.2

Clause 27(a) of the Charterparty provides that the arbitration is to be held in England in

accordance with the Arbitration Rules of the London Maritime Arbitrators Association

(Arbitration Rules).3 Rule 6 of the Arbitration Rules provides that the law applicable to

the arbitration agreement is English law and the seat of arbitration is in England unless

the parties specify otherwise.4

4. The Respondent argues that English law applies to this Arbitration Agreement. Clause

27(a) of the Charterparty provides that the arbitration is to be held in England, in

accordance with the Arbitration Rules. As the Parties have not specified otherwise, the

law applicable to this Arbitration Agreement is English law and the seat of arbitration is

England.

1 Arbitration Act 1996 (UK) s 30; Christopher Brown Ltd v Genossenschaft Oesterreichiser Waldbesitzer

Holzwirtschaftsbetriebe Registrierte GmbH [1953] 3 WLR 689, 693-4 (Devlin J); Interim Award in ICC Case No 7929, XXV YB Comm Arb 312 (2000).

2 Sulamerica CIA Nacional de Seguros SA v Enesa Engenharia SA [2012] EWCA Civ [25] (Moore-Bick LJ); Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi AS v VSC Steel Co Ltd [2013] EWHC 4071 [101(2)] (Hamblen J); Indian Company v Pakistani Bank, Award, ICC Case No. 1512, 1971 in Yearbook 1976, Vol I, 128.

3 Moot Problem, 12. 4 London Maritime Arbitrators Association Terms (2017) r 6.

4

C. The Condition Precedent clause to commencing legal proceedings is

enforceable

5. Clause 27(e) of the Charterparty (Condition Precedent clause) provides that either party

may not commence legal proceedings until clause 27(d) (Expert Determination clause)

is complied with first. 5 This includes arbitral proceedings under the Arbitration

Agreement.6 The Expert Determination clause provides that any dispute as to technical

matters arising out of or in connection with the Charterparty shall be referred to expert

determination by an independent Master Mariner.7

6. The Respondent argues that the Expert Determination clause is enforceable because it

does not need to provide: (I) the process for appointing a Master Mariner; and (II) the

methodology used by the Master Mariner.

I. The Expert Determination clause is enforceable because it does not need to provide the process for appointing a Master Mariner

7. Parties to a commercial contract must act in good faith.8 The obligation to act in good

faith includes an obligation to negotiate to resolve a dispute.9

8. The Respondent argues that the Parties must negotiate in good faith to appoint a Master

Mariner under the Expert Determination clause. The Expert Determination clause does

not provide a process for appointing a Master Mariner. However, the Parties can

negotiate in good faith to appoint a Master Mariner. The Parties appointed Simon

Webster to determine when the Cargo was damaged.10 Accordingly, the Respondent

5 Moot Problem, 12. 6 Ibid. 7 Ibid.

8 Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187 [185] (Sheller, Beazley and Stein JJA); Overlook Management BV v Foxtel Management Pty Ltd [2002] NSWSC 187 [62] (Barrett J); Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL [2005] VSCA 228 [25] (Buchanan JA).

9 Caves Beachside Cuisine Pty Ltd v Boydah Pty Ltd [2015] NSWSC 1273 [103] (Kunc J); Inc v Petroleo Brasileiro SA Petrobras (No 3) [2006] 1 Lloyd's Rep 121, 153 (Longmore LJ); BBB Constructions Pty Ltd v Aldi Foods Pty Ltd [2010] NSWSC 1352 [174] (McDougall J).

10 Moot Problem, 43.

5

argues that this indicates that the Expert Determination clause can be enforced despite

not providing a process for appointing a Master Mariner.

II. The Expert Determination clause is enforceable because it does not need to provide the methodology used by the Master Mariner

9. An expert determination clause does not need to provide the process that the expert must

undertake.11 Where an expert determination clause does not specify a process, the

expert will determine the process they will undertake.12

10. Accordingly, the Respondent argues that the Expert Determination clause does not need

to provide the process that the expert must undertake.

D. The Condition Precedent clause has not been satisfied

11. Expert determination clauses are pre-arbitral procedures that are strictly binding on

parties to a contract.13

12. The Respondent argues that the Parties must strictly adhere to the Charterparty’s Expert

Determination clause. The Respondent argues that the Expert Determination clause has

not been complied with because there are other technical matters in dispute.

Accordingly, the Condition Precedent has not been satisfied.

13. A technical matter includes questions concerning the necessary requirements to carry

out something.14

14. The Respondent argues that there are other technical matters in dispute. Clause 27(g)

defines technical matters. It is not an exhaustive definition because it includes other

11 The Heart Research Institute Ltd v Psiron Ltd [2002] NSWSC 646, 657 (Einstein J); Triarno Pty Ltd v Triden Contractors Ltd (1992) 8 BCL 305, 307 (Cole J); ‘Model Clause for Expert Determination’ QLD Law Society; ‘Rules for Expert Determination’ NSW Law Society, r 3.2.

12 The Heart Research Institute Ltd v Psiron Ltd [2002] NSWSC 646, 657 (Einstein J); Triarno Pty Ltd v Triden Contractors Ltd (1992) 8 BCL 305, 307 (Cole J); see Barclays Bank plc v Nylon Capital LLP [2011] EWCA Civ 826.

13 Partial Award in Case 6276, 14 (1) ICC Ct Bull 76, 76 (2003); Barclays Bank PLC v Nylon Capital LLP [2011] EWCA Civ 826, [23] (Thomas, LJ); Gary B Born, International Commercial Arbitration (Kluwer Law International, 2014) 256, 925, 929.

14 See Addenbrooke Pty Ltd v Woollahra Municipal Council [2008] NSWLEC 190; Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd [2017] FCA 250; Mineral Resources Ltd v Pilbara Minerals Ltd [2016] WASC 338.

6

matters which are considered to be within the expert knowledge of a Master Mariner.15

The Respondent argues that the adequacy of the Vessel’s navigational system and

whether the Port of Dillamond was a safe port are technical matters in dispute. Both

issues involve resolving questions concerning the necessary requirements to carry out

the voyage. Accordingly, the Respondent argues that these matters must be referred to a

Master Mariner in order to strictly adhere to the Expert Determination clause.

PART TWO: LIEN

15. The Respondent denies that the Claimant holds a maritime lien over the Vessel because:

(A) the Tribunal does not have the jurisdiction to enforce a maritime lien; alternatively,

(B) the Claimant is not entitled to a maritime lien; alternatively, (C) the Respondent

does not have an implied obligation to return the USD100,000 to the Claimant; and in

any event, (D) the Claimant cannot rely on unjust enrichment as a cause of action.

A. The Tribunal does not have the jurisdiction to enforce a maritime lien

16. A maritime lien can only be enforced by an action in rem.16 An action in rem can only

be heard by courts vested with federal jurisdiction.17

17. The Respondent argues that the Tribunal does not have the jurisdiction to enforce a

maritime lien because it is not a court vested with federal jurisdiction.

B. The Claimant is not entitled to a maritime lien

18. A party is entitled to a maritime lien if it has a claim for damage done by a ship, salvage,

seamen’s wages or a master’s wages and disbursements.18 Only a master and the

seamen can claim a maritime lien for unpaid wages.19

15 Moot Problem, 12. 16 Admiralty Act 1988 (Cth), ss 10, 15, 16. 17 Ibid s 9(1). 18 Ibid s 4(3); See Shell Oil Co v ‘The Lastrigoni’ (1974) HCA 27, 31 (Menzies J). 19 Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd (‘Hako’) (2013) 211 FCR 369 [2] (Siopis J).

7

19. The Respondent argues that the Claimant is not entitled to a maritime lien. The

Claimant does not have a claim for damage done by the Vessel, salvage, seamen’s

wages or a master’s wages and disbursements. The Respondent argues that the

Claimant cannot claim a maritime lien on behalf of the seamen.

C. The Respondent does not have an implied obligation to return the USD100,000

to the Claimant

20. A party who seeks to imply a term into a contract must prove that the term was intended

to be implied and is necessary to give business efficacy to the contract.20 The implied

term must be necessary for the contract to operate as the parties intended.21

21. The Respondent argues that there is no implied term requiring the Respondent to return

the USD100,000 to the Claimant. The Charterparty does not refer to the USD100,000

payment. There is no fact to suggest that the Respondent intended to return the

USD100,000. Accordingly, the Respondent argues that such an implied term is not

necessary for the Charterparty to operate as the Parties intended. Further, there is no

evidence that the Parties intended such a term to be implied into the Charterparty.

D. The Claimant cannot rely on unjust enrichment as a cause of action.

22. Unjust enrichment is a legal principle and not a cause of action.22 Accordingly, the

Claimant cannot argue that the Respondent would be unjustly enriched by retaining the

USD100,000.

20 Heimann v Commonwealth (1938) 38 SR(NSW) 691, 695 (Jordan CJ); Esso Australia Resources Ltd v Plowman

(1995) 183 CLR 10, 31 (Mason CJ); Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 450 (McHugh, Gummow JJ); Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 347 (Mason J).

21 New South Wales v Banabelle Electrical Pty Ltd (2002) 54 NSWLR 503, 521 (Einstein J). 22 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, 406 (Dawson J); Bofinger v

Kingsway Group Ltd (2009) 239 CLR 269, 299 (Gummow, Hayne, Heydon, Kiefel and Bell JJ); Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89, 156 (Gleeson CJ, Gummow, Callinan, Heydon, Crennan JJ).

8

PART THREE: MERITS

23. The Respondent argues that it has not breached its duties under common law and the

Charterparty because: (A) it provided a seaworthy vessel; (B) it properly cared for the

Cargo; (C) it is not liable for deviation or delay by operation of the Charterparty; and in

any event, (D) the Charterparty was frustrated.

A. The Respondent did not breach its duty under common law because it

provided a seaworthy vessel

24. The Respondent argues that it did not breach its duty under common law to provide a

seaworthy vessel because: (I) it provided a seaworthy vessel; alternatively, (II) the

Vessel’s unseaworthiness did not cause damage.

I. The Respondent provided a seaworthy vessel

25. Carriers have an absolute duty to supply a seaworthy vessel.23 This duty arises when a

vessel begins loading and is discharged when it sets sail.24 A vessel is seaworthy if it is

capable of safely arriving at the port and safely carrying the cargo.25 This requires a

vessel to be ready to overcome all the ordinary perils of the voyage.26 Ordinary perils

do not include catastrophic or extraordinary events that may damage the vessel or its

cargo.27

23 Kopitoff v Wilson (1876) 1 QBD 377, 381 (Blackburn, Quain and Field JJ); Great China Metal Industries Co Ltd

v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161, 174 [27] (Gaudron, Gummow and Hayne JJ); CV Sheepvaartonderneming Ankergracht v Stemcor Pty Ltd (2007) 160 FCR 342, 364 [68] (Ryan and Dowsett JJ).

24 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161, 174 [27] (Gaudron, Gummow and Hayne JJ); CV Sheepvaartonderneming Ankergracht v Stemcor Pty Ltd (2007) 160 FCR 342, 364 [68] (Ryan and Dowsett JJ).

25 CV Sheepvaartonderneming Ankergracht v Stemcor Pty Ltd (2007) 160 FCR 342, 365 [69] (Ryan and Dowsett JJ); McFadden v Blue Star Line [1905] 1 KB 697, 703 (Channell J); Dixon v Sadler [1839] 151 ER 172, 175 (Parke B); Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161, 175 [33] (Gaudron, Gummow and Hayne JJ).

26 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161, 174-5 [27]-[31] (Gaudron, Gummow and Hayne JJ); Actis Co Ltd v Sanko Steeamship Co Ltd [1982] 1 All ER 390, 393 (Lord Denning MR); McFadden v Blue Star Line [1905] 1 KB 697, 703 (Channell J).

27 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161, 174-5 [27]-[31] (Gaudron, Gummow and Hayne JJ); Actis Co Ltd v Sanko Steamship Co Ltd [1982] 1 All ER 390, 393 (Lord Denning MR); McFadden v Blue Star Line [1905] 1 KB 697, 703 (Channell J).

9

26. The Respondent argues that the Vessel was seaworthy. Solar flares are random celestial

events arising from changes in heat on the sun’s surface.28 The Respondent argues that

the solar flares are not an ordinary peril of the voyage because they are extraordinary

events. Accordingly, the Respondent provided a seaworthy vessel fit for the ordinary

perils of the voyage.

II. The Vessel’s unseaworthiness did not cause damage

27. A Plaintiff must prove that a vessel’s unseaworthiness is the substantive cause of

damage to cargo.29 A vessel’s unseaworthiness will be the substantive cause of damage

when, using a common sense approach, there is a causative link between the

unseaworthiness and the damage.30

28. The Respondent argues that if the Vessel was unseaworthy, the unseaworthiness was not

the substantive cause of damage to the Cargo. The Cargo was damaged after it was

unloaded from the Vessel. 31 The Cargo was damaged because the sealant on the

containers expired.32 Accordingly, the substantive cause of damage to the Cargo was

the sealant expiring, after the Cargo was discharged from the vessel, and not the

Vessel’s unseaworthiness.

28 Heinz Isliker, ‘Are Solar Flares Random Processes?’ (1996) 310 Astronomy and Astrophysics 672-680 [67]. 29 Sanko Steamship Co Ltd & Grandslam Enterprise Corporation v Sumitomo Australia Ltd (No 2) (1995) 63 FCR

227, 237 (Sheppard J); J & E Kish v Charles Taylor, Sons & Co [1912] AC 604, 620 (Lord Atkinson); The Europa [1908] P 84 [97]-[98] (Bucknill J); Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161, 194 [87] (McHugh J).

30Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161, 194 [87] (McHugh J); March v E&H Stramere (1991) 171 CLR 506, 522 (Deane J); Tabet v Gett [2010] 265 ALR 227, 254 (Gummow ACJ); Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1, 6 (Dixon, Williams, Webb, Fullagar and Kitto JJ).

31 Moot Problem, 43. 32 Ibid.

10

B. The Respondent did not breach its duty under common law because it

properly cared for the Cargo

29. The Respondent argues that it has not breached its duty to properly care for the Cargo

because: (I) it did not breach its duty as an involuntary bailee; alternatively, (II) it did

not breach its duty as a gratuitous bailee.

I. The Respondent did not breach its duty as an involuntary bailee

30. A party becomes an involuntary bailee when it involuntarily takes possession of goods it

does not own.33 A carrier becomes an involuntary bailee when it retains possession of

the cargo after the contracted voyage is completed.34 An involuntary bailee must not

recklessly or willfully damage the cargo.35

31. The Respondent argues that it was an involuntary bailee because the Cargo remained in

its possession after the completion of the Charterparty. The Claimant failed to collect

the Cargo by 30 July 2017 at 00:00. 36

32. The Respondent further argues that it did not recklessly or willfully damage the Cargo.

The Respondent ensured the safety of the Cargo by placing it in the Port’s storage

facility on 30 July 2017 at 00:02.37

II. The Respondent has not breached its duty as a gratuitous bailee

33. A party becomes a gratuitous bailee when it voluntarily takes possession of goods it

does not own after a contract is completed.38 A bailee must take reasonable care of the

33 Chapman v The Great Western Railway Co (1880) 5 QBD 278, 281-2 (Cockburn, CJ, Lush and Manisty JJ);

Norman Palmer, Bailment (Lawbook Co, 2nd ed, 1991) 677. 34 Chapman v The Great Western Railway Co (1880) 5 QBD 278, 281-2 (Cockburn, CJ, Lush and Manisty JJ). 35 Chapman v The Great Western Railway Co (1880) 5 QBD 278, 281-2 (Cockburn, CJ, Lush and Manisty JJ);

Columbia Law Review Association Inc ‘The Legal Status of an Involuntary Depositary’(1992) 22 (4) Columbia Law Review 354, 357. See Lethbridge v Phillips (1819) 171 ER 731; Above n 33, 680–4.

36 Moot Problem, 7. 37 See Moot Problem, 23. 38 Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220, 238 (Barwick CJ); Stellar Chartering and

Brokerage Inc v Efibanca-Ente Finanziario Interbancario SpA (‘The Span Terza No 2’) [1984] 1 WLR 27, 33 (Lord Diplock; Lord Fraser, Lord Keith, Lord Brandon and Lord Templeman agreeing). See International Plc v Crayford Freight Services Ltd (1997) 78 FCR 302.

11

bailed goods.39 This is determined by what a prudent person would do given the nature

of the cargo.40 A bailee who does not receive instructions from a bailor must do what is

necessary to protect that cargo, and may be compensated for their work. 41 If damage to

the goods occur, it is for the bailee to prove that such damage occurred without their

fault.42

34. Alternatively, if the Respondent is a gratuitous bailee, it did not breach its duty to take

reasonable care of the Cargo. The Respondent placed the Cargo into the Port’s storage

facility after the Claimant failed to collect the Cargo.43 The Respondent argues that this

was reasonable because this is consistent with industry practice. Accordingly, the

Respondent has not breached its duty as a gratuitous bailee.

C. The Respondent is not liable for deviation or delay by operation of the

Charterparty

35. Deviation and delay can be excused by the charterparty.44 A force majeure clause can

exclude liability and keep a charterparty on foot if a specified force majeure event

occurs.45

36. Clause 17 of the Charterparty (the Force Majeure clause) provides that the Respondent

will not be liable for damages due to delay or deviation to save cargo where there is a

39 Graham v Voigt (1989) 95 FLR 146, 154 (Kelly J); Thomas National Transport (Melbourne) Pty Ltd v May &

Baker (Aust) Pty Ltd (1966) 115 CLR 353, 387–8 (Windeyer J); China-Pacific SA v Food Corp of India (‘The Winson’) [1982] AC 939, 960 (Lord Diplock). See WGH Nominees Pty Ltd v Tomblin (1985) 39 SASR 117.

40 Graham v Voigt (1989) 95 FLR 146, 154 (Kelly J); Port Swettenham Authority v TW Wu & Co (M) Sdn Bhd [1979] AC 580, 589 (Lord Salmon); McLeod v G Casanova & Son Pty Ltd (1979) 84 LSJS 409, 411 (Brebner J); Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Aust) Pty Ltd (1966) 115 CLR 353, 387–8 (Windeyer J).

41 China Pacific SA v Food Corpn of India (The Winson) [1982] AC 939, 960-2 (Lord Diplock); Notara v Henderson (1872) LR 7 QB 225, 236 (Kelly, Martin, Channell, Cleasby, Willes Byles and Keating JJ).

42 East West Corp v DKBS AF 1912 A/S [2003] QB 1509, 1531 (Mance LJ; Laws and Brooke LJ agreeing); Morris's case [1966] 1 QB 716, 729 (Lord Denning); British Road Services Ltd v Arthur V Crutchley & Co Ltd [1968] 1 All ER 811, 822 (Sachs LJ).

43 Moot Problem, 23. 44 Davis v Garrett (1830) All ER Rep 286, 288 (Tindal CJ); Spain v Union Steamship Co of New Zealand Ltd

(1923) 33 CLR 555, 562 (Knox CJ and Starke J). 45 Channel Island Ferries Ltd v Sealink UK Ltd [1988] 1 Lloyd’s Rep 323, 328 [67] (Ralph Gibson LJ). See

Bremer Handelsgesellschaft mbH v C Mackprang Jr [1979] 1 Lloyd’s Rep 221.

12

force majeure event.46 The Respondent is entitled to rely on the Force Majeure clause

when it exercises due diligence to ensure a seaworthy vessel.

37. The Respondent argues that it is not liable for deviation or delay due to the Force

Majeure clause because: (I) the Respondent exercised due diligence to ensure a

seaworthy vessel; (II) there was a force majeure event; and (III) the Respondent

deviated to save cargo.

I. The Respondent exercised due diligence to ensure a seaworthy vessel

38. A carrier will exercise due diligence when it takes reasonable care and skill to ensure

seaworthiness.47 Reasonable care is determined by reference to the ordinary perils that

the vessel is likely to encounter on that voyage.48 Ordinary perils include rain and other

weather occurrences.49

39. The Respondent argues that it exercised due diligence to ensure seaworthiness. The

solar flares are not an ordinary peril of the voyage because they are random celestial

events.50 The Respondent prepared for bad weather by applying a sealant on the

containers to make them waterproof.51 Accordingly, the Respondent has exercised due

diligence to ensure the seaworthiness of the Vessel.

46 Moot Problem, 9. 47 Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd (‘The Eurasian Dream’) [2002] EWHC 118, 155

(Cresswell J); CV Sheepvaartonderneming Ankergracht v Stemcor Pty Ltd (2007) 160 FCR 342, 364 [68] (Ryan and Dowsett JJ); Grand Champion Tankers Ltd v Norpipe A/S (‘The Marion’) [1984] 1 AC 563, 572 (Lord Brandon).

48 Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (1998) 196 CLR 161, 174 [27] (Gaudron, Gummow and Hayne JJ); CV Sheepvaartonderneming Ankergracht v Stemcor Pty Ltd (2007) 160 FCR 342, 364 [68] (Ryan and Dowsett JJ).

49 Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad [1998] 196 CLR 161, 174 [27] (Gaudron, Gummow and Hayne JJ); The Thrunscoe [1897] P 301, 303 (Barnes J).

50 Heinz Isliker, ‘Are Solar Flares Random Processes?’ (1996) 310, Astronomy and Astrophysics, 672-680 [67]. 51 Moot Problem, 14.

13

II. There was a force majeure event

40. A charterparty can provide that particular events are force majeure events. 52 Force

majeure events are unusual forces of nature that cannot be prevented by care or

foresight. 53 This event must not be self-induced by the actions or omissions of the party

wishing to rely on the clause.54

41. The Charterparty’s Force Majeure clause provides that a force majeure event includes an

act of God, bad weather and an event which prevents discharge of the Cargo.55 The

Respondent argues that it is entitled to rely on the Force Majeure clause because: (a) the

solar flares were a force majeure event; further and in the alternative, (b) the storm was

a force majeure event; and further and in the alternative, (c) the closure of the Port of

Dillamond was a force majeure event.

a. The solar flares were a force majeure event

42. An act of God is a natural occurrence that cannot be reasonably guarded against by any

amount of foresight or care. 56 Solar flares are random celestial events which cannot be

prevented by foresight or care.57

43. The Respondent argues that the solar flares were a force majeure event. The solar flares

were an act of God because the Respondent’s foresight or care could not have prevented

them from occurring. Further, the Respondent did not induce the solar flares.

52 Channel Island Ferries Ltd v Sealink UK Ltd [1988] 1 Lloyd’s Rep 323, 328 [67] (Ralph Gibson LJ). See

Bremer Handelsgesellschaft mbH v C Mackprang Jr [1979] 1 Lloyd’s Rep 221; PJ van der Zijden Wildhandel NV v Tucker& Cross Ltd [1975] 2 Lloyd’s Rep 240.

53 Ausgrid v Redbank Project Pty Ltd [2013] NSWSC 1596 [42] (Stevenson J); BHP Petroleum (Australia) Pty Ltd v Sagasco South East Inc [2001] WASCA 159 [37] (Owen and Steytler JJ); GL Sales (Qld) P/L v Dawson Sales P/L & Ors (No2) [2009] QCA 75 [17] (McMurdo J).

54 Scanlan’s New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169, 186 (Latham CJ); Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd (2006) 236 ALR 115, 130 (Kiefel J); AGL Sales (QLD) Pty Ltd v Dawson Sales Pty Ltd [2009] QCA 262, 284 (Chesterman JA).

55 Moot Problem, 9. 56 Commissioner of Railways (WA) v Stewart (1936) 56 CLR 520, 528 (Latham CJ); Nugent v Smith (1876) 1 CPD

423, 441 (James LJ); Geelong Harbour Trust Commissioners v Gibbs Bright (1974) 129 CLR 576, 578 (Lord Diplock).

57 Above n 50.

14

b. The storm was a force majeure event

44. Bad weather includes catastrophic events.58

45. The Respondent argues that the storm was a force majeure event. The storm caused

significant rainfall and flooding.59 The storm was a once in a lifetime weather event.60

It was not induced by the Respondent. Accordingly, the Respondent argues that the

storm constitutes bad weather under the Force Majeure clause.

c. The closure of the Port of Dillamond was a force majeure event

46. The Respondent argues that the Port’s closure was a force majeure event. The storm

caused the Port of Dillamond to close.61 This caused delay at the Port which prevented

the Respondent from berthing.62 The Respondent argues that this constitutes a force

majeure event because it prevented discharge of the Cargo.63 The Respondent did not

induce the Port’s closure.

III. The Respondent deviated to save Cargo

47. A deviation to save cargo arises when a vessel requires repair to carry the cargo safely to

discharge.64 Such deviation is permitted because the cargo cannot be safely carried

onboard the vessel until it is repaired.

48. The Respondent argues that the Vessel deviated to the Port of Spectre to save Cargo.

The solar flares rendered the Vessel’s navigational system inoperative. 65 The

Respondent argues that without a functioning navigational system, the Cargo was in

58 Kawasaki Steel Corp v Owners of Ship Daeyang Honey (1993) 120 ALR 109, 114 (Gummow J); Pioneer Shipping Ltd v BTP Tioxide Ltd (‘The Nema’) [1982] AC 734, 745 (Lord Diplock, Lords Tullybelton, Lord Russell, Lord Kieth and Lord Roskill); Wong Lai Yin v Chinachem Investment (1980) 13 BLR 81, 90 (Lord Diplock).

59 Moot Problem, 21. 60 Ibid. 61 Moot Problem, 21. 62 See Moot Problem, 20-22. 63 Ibid 22, 24. 64 J & E Kish v Charles Taylor, Sons & Co [1912] AC 604, 620 (Lord Atkinson); The Europa [1908] P 84 [97]-[98]

(Bucknill J); Channel Island Ferries Ltd v Sealink UK Ltd [1988] 1 Lloyd’s Rep 323, 328 [67] (Ralph Gibson LJ).

65 Moot Problem, 19.

15

danger of being damaged. The Cargo was highly sensitive to water and the sealant used

to prevent water damage would expire after five days.66 The Respondent argues that the

deviation was necessary to complete the journey without the sealant expiring.

Accordingly, the deviation was necessary to repair the Vessel to enable the Cargo to be

safely carried to discharge.

D. The Charterparty was frustrated

49. Frustration applies to voyage charterparties.67 Frustration discharges parties from their

future contractual obligations. 68 A frustrating event is a supervening event which

renders the performance of a charterparty radically different from what was originally

intended by the parties.69 A charterparty may be frustrated by a series of events.70

50. The Respondent argues that the Charterparty was frustrated by a series of frustrating

events being the solar flares, storm and closure of the Port of Dillamond. The

Respondent argues that the Charterparty was frustrated because: (I) the commercial

purpose of the Charterparty could not be achieved; (II) the series of frustrating events

were unforeseeable; and (III) the series of frustrating events were not self-induced.

66 Moot Problem, 2, 14. 67 DGM Commodities Corp v Sea Metropolitan SA (‘The Andra’) [2012] EWHC 1984, 1999 (Hurley J); Pioneer

Shipping Ltd v BTP Tioxide Ltd (‘The Nema’) [1982] AC 734, 745 (Lord Diplock, Lord Tullybelton, Lord Russell, Lord Kieth and Lord Roskill); Ocean Tramp Tankers Corp v V/O Sovfracht (‘The Eugenia’) [1964] 2 QB 227, 237 (Lord Denning MR).

68 Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169, 203 (McTiernan J); Firth v Halloran (1926) 38 CLR 251, 266 (Higgins J); Re Continental C and G Rubber Co Pty Ltd (1919) 27 CLR 194, 201 (Knox CJ and Barton J); Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 407 (Mason J).

69 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 357 (Mason J); Brisbane City Council v Group Projects Pty Ltd (1979) 145 CLR 143, 160 (Stephen J); Qantas Airways Ltd v Christie (1998) 193 CLR 280, 394 (Gaudron J).

70 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 357 (Mason J); Brisbane City Council v Group Projects Pty Ltd (1979) 145 CLR 143, 160 (Stephen J); Pioneer Shipping Ltd v BTP Tioxide Ltd (‘The Nema’) [1982] AC 734, 745 (Lord Diplock, Lord Tullybelton, Lord Russell, Lord Kieth and Lord Roskill). See; Tsakiroglou & Co Ltd v Noblee Thorl Gmbh [1962] AC 93.

16

I. The commercial purpose of the Charterparty could not be achieved

51. A contract will be frustrated if its commercial purpose cannot be performed.71 The

commercial purpose of a contract is the common purpose for which parties entered into

the agreement.72

52. The Respondent argues that the commercial purpose of the Charterparty was frustrated

because: (a) the commercial purpose of the Charterparty extends to the delivery of the

Cargo in a saleable condition for the coffee festival; and (b) the delay in delivery was

sufficient to render the commercial purpose of the Charterparty radically different.

a. The commercial purpose of the Charterparty extends to the delivery of the Cargo in

a saleable condition for the coffee festival

53. The commercial purpose of a contract is determined by construing the words of the

contract.73 Extraneous information may be used to determine the commercial purpose

of the contract.74 Extraneous information that may be taken into account includes

mutually known facts, circumstances and events.75

54. The Respondent argues that the correspondence from the Claimant dated 22 July 2017

contains mutually known facts about the commercial purpose of the Charterparty. The

71 Brisbane City Council v Group Projects Pty Ltd (1979) 145 CLR 143, 162-3 (Stephen J); In Marriage of

Cawthorn (1998) 144 FLR 255, 262 (Ellis, Lindenmayer and Joske JJ); Jackson v Union Marine Insurances Co Ltd (1874) LR 10 CP 125, 130 (Cleasby and Bramwell BB).

72 Jackson v Union Marine Insurances Co Ltd (1874) LR 10 CP 125, 130 (Cleasby and Bramwell BB); Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169, 179 (Stephen J); Empresa Exportadora de Azucar v Industria Azucarera Nacional SA (‘The Playa Larga’) [1983] 2 Lloyd’s Rep 171, 189 (Ackner LJ).

73 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 351 (Mason J); Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [48] (French CJ, Nettle and Gordon JJ); Eighty-Second Agenda Pty Ltd v Handberg [2015] FCA 1136 [40] (Middleton J).

74 Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989, 996 (Lord Wilberforce); Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [48] (French CJ, Nettle and Gordon JJ); Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, 657 [35] (French CJ, Hayne, Crennan and Kiefel JJ).

75 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [48] (French CJ, Nettle and Gordon JJ); Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 351 (Mason J); DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 19 ALR 223, 228 (Stephen, Mason and Jacobs JJ); Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989, 996 (Lord Wilberforce); Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, 657 [35] (French CJ, Hayne, Crennan and Kiefel JJ).

17

correspondence attaches the Charterparty. 76 The correspondence provided that the

Cargo had to arrive by 28 July 2017 at 19:00 so that it could be sold at the coffee

festival.77 To ensure this, the Cargo had to be shipped in waterproof containers.78 The

Respondent argues that this correspondence outlines the reasons why the Parties entered

into the Charterparty. Accordingly, the Respondent argues that the extraneous

information contained in the correspondence forms part of the commercial purpose of

the Charterparty. Therefore, the commercial purpose of the Charterparty extends to the

delivery of the Cargo in a saleable condition in time for the coffee festival.

b. The delay in delivery was sufficient to render the commercial purpose of the

Charterparty radically different

55. If the commercial purpose of the contract cannot be achieved, then performance has

been rendered radically different.79 Delay will frustrate a contract when it renders the

performance of the contract radically different.80

56. The Respondent argues that the delay in delivering the Cargo has rendered the

commercial purpose of the Charterparty radically different to what the Parties

contemplated. Delivery of the Cargo was delayed by 42 hours.81 The Cargo could not

be delivered in a saleable condition in time for the coffee festival.82 Accordingly, the

commercial purpose of the Charterparty could not be achieved.

76 Moot Problem, 2. 77 Ibid. 78 Ibid, 3. 79 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 729 (Lord Radcliffe); Brisbane City

Council v Group Projects Pty Ltd (1979) 145 CLR 143, 159-63 (Stephen J); Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 351 (Mason J).

80 Scanlan's New Neon Ltd v Tooheys (1943) 67 CLR 169, 184 (Latham CJ); Ringstad v Golling and Co Pty Ltd (1924) 35 CLR 303, 316 (Isaacs J); Embiricos v Sydney-Reid and Co [1914] 3 KB 45, 54 (Scrutton J); Otrava Pty Ltd v Mail Boxes Etc (Australia) Pty Ltd [2004] NSWSC 1066 [92] (Nicholas J).

81 Moot Problem, 24. 82 See Moot Problem, 25.

18

II. The series of frustrating events were unforeseeable.

57. A frustrating event cannot be within the serious contemplation of the party seeking to

claim frustration.83 It is not sufficient to foresee an event of a similar nature. 84

58. The Respondent argues that the solar flares, storm and closure of the Port of Dillamond

formed a series of events that frustrated the Charterparty. The solar flares are random

celestial events.85 The once in a lifetime storm was only detected by the Vessel’s radar

30 minutes before it happened.86 The Port of Dillamond closed as a result of the

storm.87 The Respondent argues that these events were not in the serious contemplation

of the Parties when they entered into the Charterparty because they could not be

foreseen. Accordingly, the series of frustrating events could have been within the

serious contemplation of the Parties.

III. The series of frustrating events were not self-induced

59. A frustrating event cannot be induced by either party.88 A party may not rely on

frustration when the party induced the frustrating event.89

60. The Respondent argues that the series of frustrating events were not self-induced. The

solar flares, storm and closure of the Port of Dillamond were all events that occurred

83 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 351 (Mason J); Scanlan’s New

Neon Ltd v Tooheys Ltd (1943) 67 CLR 169, 222-3 (Williams J); Coomera Resort Pty Ltd v Kolback Securities Ltd [1998] QCA 20 [49] (Fitzgerald P, McPherson JA and Mackenzie J); Alanbert Pty Ltd v Bulevi Pty Ltd [2000] NSWSC 261 [45] (Hamilton J); Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699, 725 (Salmon LJ).

84 Beaton v McDivitt (1987) 13 NSWLR 162, 176-7 (Kirby P); Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 359 (Mason J); Coomera Resort Pty Ltd v Kolback Securities Ltd [1998] QCA 20 [49] (Fitzgerald P, McPherson JA and Mackenzie J); Alanbert Pty Ltd v Bulevi Pty Ltd [2000] NSWSC 261 [45] (Hamilton J); Finlayson v Finlayson [2002] FCA 898 [169-75] (Boland J).

85 Above n 50. 86 Moot Problem, 19. 87 Ibid 20-21. 88 Lauritzen AS v Wijsmuller BV (‘The Super Servant Two’) [1990] 1 Lloyd’s Rep 1, 8 (Bingham LJ); Ocean

Tramp Tankers Corp v V/O Sovfracht (‘The Eugenia’) [1964] 2 QB 227, 237 (Lord Denning MR); Allied Mills Ltd v Gwydir Valley Oilseeds Pty Ltd [1978] 2 NSWLR 26 [29]-[30] (Moffitt P, Maloney and Hutley JJA).

89Allied Mills Ltd v Gwydir Valley Oilseeds Pty Ltd [1978] 2 NSWLR 26 [29]-[30] (Moffitt P, Maloney and Hutley JJA); Lauritzen AS v Wijsmuller BV (‘The Super Servant Two’) [1990] 1 Lloyd’s Rep 1, 8 (Bingham LJ); Ocean Tramp Tankers Corp v V/O Sovfracht (‘The Eugenia’) [1964] 2 QB 227, 237 (Lord Denning MR).

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outside the Respondent’s control.90 Accordingly, the Respondent did not induce the

series of frustrating events.

PART FOUR: COUNTERCLAIM

61. The Respondent claims that the Claimant is liable for: (A) freight; (B) demurrage; (C)

the damage to the Vessel’s hull; (D) agency fees at the Port of Dillamond; and (E) costs

incurred for using the electronic systems at the Port of Dillamond.

A. The Claimant is liable for freight

62. Freight is the consideration for the carriage of goods to the contracted port of delivery.91

The obligation to pay freight occurs at the time the goods are delivered.92 If cargo is

damaged the obligation to pay freight remains. 93 There is no right to equitable set-off

under voyage charters.94

63. The Respondent argues that it is entitled to freight in the amount of USD500,000. The

Cargo was delivered to the Port of Dillamond as provided in the Charterparty.95 An

invoice was issued on 29 July 2017 that was payable on 1 August 2017.96 Therefore,

payment for freight is overdue. The Claimant is unable to claim set-off under the

Charterparty. Accordingly, the Respondent is entitled to freight.

90 See Moot Problem 22, 35, 36. 91 Compania Naviera General SA v Kerametal Ltd (‘The Lorna I’) [1983] 1 Lloyd’s Rep 373, 374 (O’Connor LJ);

Itex Itagrani Export SA v Care Shipping Corp (‘The Cebu’) [No 2] [1993] QB 1, 10-14 (Steyn J); Stewart C Boyd, Scrutton on Charterparties and Bills of Lading (Sweet & Maxwell, 21st ed, 2008) Ch 15.

92 Gaudet v Brown (‘Cargo ex Argos’) (1873) LR 5 PC 134, 156 (Smith J); Hunter v Prinsep (1808) 10 East 378, 394 (Lord Ellenborough); Andrea Merzario Ltd v Internationale Spedition Leitner Gesellschaft GmbH [2001] 1 Lloyd’s Rep 490, 503 (Rix LJ).

93 Andrea Merzario Ltd v Internationale Spedition Leitner Gesellschaft GmbH [2001] 1 Lloyd’s Rep 490, 503 (Rix LJ); Opal Mariime agencies Pty Ltd v Baltic Shipping Co (1998) 158 ALR 416, 424-5 (Tamberlin J); Henriksens Rederi A/S v THZ Rolimpex (‘The Brede’) [1974] QB 233, 388 (Lord Denning).

94 Aries v Total Transport [1977] 1 Lloyd’s Rep 334, 337-8 (Lord Wilberforce); Colonial Bank v European Grain & Shipping Ltd (‘The Dominique’) [1989] 1 Lloyd’s Rep 431, 440 (Lord Brandon); Henriksens Rederi A/S v THZ Rolimpex (‘The Brede’) [1974] QB 233, 388 (Lord Denning). See Dakin v Oxley [1864] 15 CB(NS) 646.

95 Moot Problem, 3, 24. 96 Ibid 32.

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B. The Claimant is liable for demurrage

64. Demurrage is the payment for delays beyond the permitted time for loading and

discharge of cargo (laytime) as agreed by the parties.97 Laytime commences when a

vessel arrives.98 A vessel will be considered arrived when it is at the immediate disposal

of the charterer.99 A vessel will be at the immediate disposal of the charterer when it is

in the usual waiting place or within the geographical limits of the port.100 An area will

be considered within a port if the port authority can exercise its powers in that area.101

A notice of readiness at the discharge port is not required for laytime to commence

unless the charterparty provides otherwise.102

65. The Respondent argues that it is entitled to demurrage because laytime expired. The

Vessel sailed to the Port of Dillamond on 28 July 2017. The Port Authority ordered the

Vessel to wait approximately 100nm from the Port on 29 July 2017 at 07:00.103 The

Respondent argues that the Vessel was within the Port because the Vessel was in an area

where the Port Authority exercised its powers. The Charterparty does not provide that a

notice of readiness must be given at the discharge port for laytime to commence.104

Accordingly, as the Vessel arrived and a notice of readiness was not required, laytime

commenced on 29 July 2017 at 07:00.

97 Aktieselskabet Reidar v Arcos Ltd [1927] 1 KB 352, 359 (Bankes LJ); Re Louis Dreyfus & Co v Sir William Reardon Smith & Sons Ltd [1928] SASR 117, 122 (Murray CJ, Napier and Richards JJ); Fal Oil Ltd v Petronas Trading Corp SDN BHD [2004] 2 Lloyd’s Rep 282, 294 (Mance LJ).

98 Re Louis Dreyfus & Co and Sir William Reardon Smith & Sons Ltd [1928] SASR 117, 122 (Murray CJ, Napier and Richards JJ); Fal Oil Ltd v Petronas Trading Corp SDN BHD [2004] 2 Lloyd’s Rep 282, 294 (Mance LJ); Aktieselskabet Reidar v Arcos Ltd [1927] 1 KB 352, 359 (Bankes LJ).

99Fal Oil Ltd v Petronas Trading Corp SDN BHD [2004] 2 Lloyd’s Rep 282, 294 (Mance LJ); Aktieselskabet Reidar v Arcos Ltd [1927] 1 KB 352, 359 (Bankes LJ); Re Louis Dreyfus & Co and Sir William Reardon Smith & Sons Ltd [1928] SASR 117, 122 (Murray CJ, Napier and Richards JJ).

100 Oldendorff (EL) & Co GmbH v Tradax Export SA (‘The Johanna Oldendorff’) [1973] 2 Lloyd’s Rep 285, 307 (Lord Reid); Re Louis Dreyfus & Co and Sir William Reardon Smith & Sons Ltd [1928] SASR 117, 122 (Murray CJ, Napier and Richards JJ); Agrimpex Hungarian Trading Company for Agricultural Products v Sociedad Financiera De Bienes Raices S.A [1960] 1 Lloyd’s Rep 623, 637-8 (Lord Radcliffe).

101 Oldendorff (EL) & Co GmbH v Tradax Export SA (‘The Johanna Oldendorff’) [1973] 2 Lloyd’s Rep 285, 291 (Lord Reid); Logs & Timber Products Singapore Pte Ltd v Keeley Granite (Pty) Ltd (‘The Freijo’) [1978] 1 Lloyd’s Rep 257, 262 (Donaldson J).

102 See Fairbridge v Pace (1844) 174 ER 828; Stanton v Austin (1872) LR 7 CP 651. 103 Moot Problem, 20. 104 See Moot Problem, 3, 6.

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66. The Charterparty provides that laytime for discharge of the Cargo is .5WWD.105 This is

12 hours. The Charterparty provides that demurrage accrues at USD20,000 per hour.106

The Claimant did not collect the Cargo at 19:00. The Respondent had to discharge the

Cargo into the Port’s storage facility on 30 July 2017 at 00:02.107 Accordingly, the

Respondent argues that laytime expired on 29 July 2017 at 19:00 and demurrage began

at that time. Therefore, the Respondent argues that it is entitled to five hours of

demurrage, being USD100,000.

C. The Claimant is liable for the damage to the Vessel’s hull because it nominated

an unsafe port

67. A charterer has the obligation to nominate a safe port.108 A port is safe when the vessel

can reach, use and exit the port without danger which cannot be avoided by ordinary

care and skill.109 A port will be considered a safe port if damage to a vessel is caused by

an abnormal occurrence of the port.110 An abnormal occurrence is an event that is rare

to the port.111

105 Moot Problem, 6. 106 Ibid 3. 107 Ibid 24. 108 Bulk Shipping AG v Ipco Trading SA (‘The Jasmine B’) [1992] 1 Lloyd’s Rep 39, 42 (Diamond J); Reardon

Smith Line Ltd v Australian Wheat Board (‘The Huston’) (1956) 93 CLR 577, 585 (Lord Somervell). See AIC Ltd v Marine Pilot Ltd [2007] 2 Lloyd’s Rep 101.

109 Kristiansands Tankrederi A/S v Standard Tankers (Bahamas) Ltd (‘The Polygory’) [1977] 2 Lloyd’s Rep 353, 365 (Parker J); Leeds Shipping Co v Societe Francaise Bunge (‘The Eastern City’) [1958] 2 Lloyd’s Rep 127, 131 (Sellers J); Gard Marine and Energy Ltd v China National Chartering Co Ltd (‘The Ocean Victory’) [2017] 1 WLR 1793 [27] (Lord Clarke, Lord Sumption, Lord Mance, Lord Hodge and Lord Toulson).

110 Kristiansands Tankrederi A/S v Standard Tankers (Bahamas) Ltd (‘The Polygory’) [1977] 2 Lloyd’s Rep 353, 365 (Parker J); Leeds Shipping Co v Societe Francaise Bunge (‘The Eastern City’) [1958] 2 Lloyd’s Rep 127, 131 (Sellers J); Gard Marine and Energy Ltd v China National Chartering Co Ltd (‘The Ocean Victory’) [2017] 1 WLR 1793 [27] (Lord Clarke, Lord Sumption, Lord Mance, Lord Hodge and Lord Toulson).

111 K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (‘The Saga Cob’) [1992] 2 Lloyd’s Rep 545, 550-1(Parker LJ); Gard Marine and Energy Ltd v China National Chartering Co Ltd (‘The Ocean Victory’) [2017] 1 WLR 1793 [27] (Lords Clarke, Sumption Mance, Hodge and Toulson); Leeds Shipping Co v Societe Francaise Bunge (‘The Eastern City’) [1958] 2 Lloyd’s Rep 127, 131 (Sellers J).

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68. A charterer will breach its obligation to nominate a safe port even if the charterer,

exercising reasonable diligence, could not have known that the port was unsafe.112 It is

irrelevant that the charterer could not have determined whether the port was safe.113 If a

vessel is damaged due to an unsafe port, the charterer will be liable for damages.114

69. The Respondent argues that the Port of Dillamond was unsafe because the Vessel was

damaged by a normal occurrence of the Port. The Vessel stopped on a coral bed which

damaged the hull.115 A coral bed is a fixed part of the ocean floor. 116 Accordingly, the

Respondent argues that a coral bed is not an abnormal occurrence because it is not rare

to the Port.

D. The Claimant is liable for agency fees at the Port of Dillamond

70. The Charterparty provides that the Claimant is liable to pay customary fees at the port of

discharge.117 Accordingly, the Claimant is liable for the agency fees at the Port of

Dillamond.

E. The Claimant is liable for costs incurred for using the electronic systems at the

Port of Dillamond

71. A bailee is entitled to be compensated for its work in protecting the cargo.118

112 K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (‘The Saga Cob’) [1992] 2 Lloyd’s Rep 545, 550-1

(Parker LJ); Gard Marine and Energy Ltd v China National Chartering Co Ltd (‘The Ocean Victory’) [2017] 1 WLR 1793 [27] (Lords Clarke, Sumption Mance, Hodge and Toulson); Leeds Shipping Co v Societe Francaise Bunge (‘The Eastern City’) [1958] 2 Lloyd’s Rep 127, 131 (Sellers J).

113 AIC Ltd v Marine Pilot Ltd [2007] 2 Lloyd’s Rep 101; Bulk Shipping AG v Ipco Trading SA (‘The Jasmine B’) [1992] 1 Lloyd’s Rep 39, 42 (Diamond J); Reardon Smith Line Ltd v Australian Wheat Board (‘The Huston’) (1956) 93 CLR 577, 585 (Lord Somervell).

114Triad Shipping Co v Stellar Chartering and Brokerage Inc (‘The Island Archon’) [1994] Lloyd’s Rep 227, 231 (Mann and Evans LJJ); Petroleo Brasillerio SA v ENE Kos 1 Limited [2012] UKSC 17 [36] (Lord Mance); Sun Luck Co Ltd v Mu Gung Wha [1999] FCA 220 [23] (Tamberlin J).

115 Moot Problem, 20. 116 US Department of Commerce, Coral Reef Education Kit (06 July 2017) National Oceanic and Atmospheric

Administration < https://oceanservice.noaa.gov/education/kits/corals/coral04_reefs.html>. 117 Moot Problem, 11. 118 China Pacific SA v Food Corpn of India (‘The Winson’) [1982] AC 939, 960-2 (Lord Diplock); Notara v

Henderson (1872) LR 7 QB 225, 236 (Kelly, Martin, Channell, Cleasby, Willes Byles and Keating JJ). See The Savona [1900] P 252.

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72. The Respondent argues that the Claimant is liable for the fees incurred for using the

electronic systems at the Port of Dillamond. The Respondent placed the Cargo in the

Port’s electronic storage facility in order to protect the Cargo and perform its obligations

as a bailee.119 Accordingly, the Respondent should be compensated for its work in

protecting the Cargo.

PART FIVE: DAMAGES

73. The Respondent argues that it is not liable to pay the Claimant damages because: (A) the

Respondent’s liability is limited under legislation; alternatively, (B) the Claimant’s

negligence contributed to the loss; alternatively, (C) the Claimant’s losses are too

remote; and further, (D) the Claimant failed to reasonably mitigate their losses.

A. The Respondent’s liability is limited under legislation

74. In Australia, a party’s liability for a maritime claim is limited under the Limitation of

Liability for Maritime Claims Act 1989 (Cth) (Limitation Act).120 The liability for a

vessel not exceeding 2,000 tons is limited to 1.51 million Special Drawing Right (SDR).

75. The Respondent argues that its liability is limited under the Limitation Act. The Vessel

weighs 2,000 tons.121 Accordingly, the Respondent argues that if it is liable to pay the

Claimant damages, the quantum of damages is limited to USD2,122,365.40.122

B. The Claimant’s negligence contributed to the loss

76. Where a plaintiff’s negligence contributes to the loss, their entitlement to damages will

be reduced by the extent of their contribution.123

119 Moot Problem 23. 120 Limitation of Liability for Maritime Claims Act 1989 (Cth), Sch 1, Art 2, 1(a); Qenos Pty Ltd v Ship ‘APL

Sydney’ [2009] FCA 1090 [8] (Finkelstein J); Victrawl Pty Ltd v Telstra Corporation Ltd (1995) 183 CLR 595, 601 (Brennan J).

121 Moot Problem, 3. 122 International Monetary Fund, SDR Valuation (31 July 2017)

<https://www.imf.org/external/np/fin/data/rms_sdrv.aspx>,International Monetary Fund. 123 Law Reform (Miscellaneous Provisions) Act 1965 (NSW), ss 8(b), 9(1); Truong v Gordon [2014] NSWCA 97

[13] (Basten JA); Davis v Swift [2014] NSWCA 458, 478 (Meagher JA).

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77. The Respondent argues that the Claimant contributed to their loss because they failed to

collect the Cargo on 29 July 2017.124 The Respondent placed the Cargo into the Port’s

storage facility where it was subsequently damaged.125 The Claimant failed to collect

the Cargo until 31 July 2017.126 The Respondent argues that the Cargo would not have

been damaged if the Claimant had collected the Cargo on 29 July 2017. Accordingly,

the Claimant has contributed to its loss and its entitlement to damages should be

reduced.

C. The Claimant’s losses are too remote

78. A plaintiff can only recover losses that are not too remote.127 Losses are too remote

when the type of damage suffered was not reasonably foreseeable when the contract was

entered into. 128 Reasonable foreseeability depends on the amount of knowledge

possessed by the party who commits the breach.129

79. The Respondent argues that at the time they entered the Charterparty, it was not

reasonably foreseeable that the Cargo would be damaged by water while in the Port’s

storage facility. It was imperative that the Cargo be discharged on 28 July 2017 at 19:00

for the coffee festival. The Respondent argues that it was not reasonably foreseeable

that the Claimant would not collect the Cargo when it arrived. Accordingly, the loss is

too remote.

124 Moot Problem, 24. 125 See Moot Problem, 43. 126 Moot Problem, 24.

127 Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528, 540 (Asquith LJ); Brown v KMR Services Ltd [1995] 2 Lloyd’s Rep 513, 521 (Gatehouse J); Parsons (Livestock) Ltd v Utley Ingham & Co Ltd [1977] 2 Lloyd’s Rep 522, 528 (Scarman LJ).

128 Ibid. 129 Ibid.

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D. The Claimant failed to reasonably mitigate their losses

80. A plaintiff is not entitled to damages it could have avoided by taking reasonable steps to

mitigate its loss.130 A plaintiff will not be entitled to damages if it took unreasonable

steps to mitigate its loss.131 Steps taken to mitigate are not judged by hindsight.132 What

is reasonable is determined by the circumstances of the particular case.133

81. The Respondent argues that the Claimant has not acted reasonably in mitigating their

loss. The USD5,000,000 settlement payment was made prior to the end of the coffee

festival.134 The Claimant would not know if the third party would suffer any damage

until the conclusion of the coffee festival. Accordingly, the payment of the settlement

sum was not a reasonable step to mitigate losses.

PRAYER FOR RELIEF

For the reasons set out above, the Respondent request the Tribunal to:

(I) DECLARE that the Tribunal does not have the jurisdiction to hear the merits of

this dispute;

(II) FIND that the Respondent is not liable for breaches of its duties under the

common law and Charterparty;

(III) FIND that the Claimant is not entitled to a maritime lien over the Vessel;

(IV) FIND that the Claimant is liable to pay the Respondent freight, demurrage,

agency fees and repair costs; and

(V) AWARD the Respondent damages and interests for the amounts claims.

130 Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574, 598 (Lord Berwick); Australian Medic-Care

Company Ltd v Hamilton Pharmaceutical Pty Ltd [2009] FCA 1220 [364] (Finn J); Melachrino v Nickoll [1920] 1 KB 693, 697 (Bailhache J).

131 British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673, 689 (Viscount Haldane LC); Driver v War Service Homes Commissioner (1923) 44 ALT 130, 134 (Irvine CJ); Pialba Commercial Gardens Pty Ltd v Braxco Pty Ltd [2011] QCA 148 [95]-[97] (Wilson AJA).

132 Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452, 506 (Lord Macmillan). 133 Payzu Ltd v Saunders [1919] 2 KB 581, 588, 589 (Bankes LJ); Gul Bottlers (PVT) Ltd v Nichols Plc [2014]

EWHC 2173 (Comm) [22] (Cooke J); Sotiros Shipping Inc v Sameiet Solholt (‘The Solholt’) [1983] 1 Lloyd's Rep 605, 608 (Lord Donaldson, MR).

134 See Moot Problem, 28.