singapore management university memorandum for … · 2021. 1. 23. · a. laytime commenced when...

19th Annual International Maritime Law Arbitration Moot

In the matter of an arbitration under the LMAA Arbitration Rules

SINGAPORE MANAGEMENT UNIVERSITY

MEMORANDUM FOR

RESPONDENT

CLAIMANT RESPONDENT

Cerulean Beans & Aromas Ltd

v

Dynamic Shipping LLC

945 Moccasin Road 23 Fuchsia Crescent

Cerulean Cerulean

TEAM 22

COUNSEL

Berwin CHUA | FOUNG Han Peow | Isaiah ZHAO | Sean LEE | Terence YEO | Theodore TOH

Team 22 Memorandum for Respondent

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TABLE OF CONTENTS

LIST OF AUTHORITIES ....................................................................................................... 4

I. Articles and Books ............................................................................................................ 4

II. Cases ................................................................................................................................... 4

III. Legislation.......................................................................................................................... 5

STATEMENT OF FACTS ...................................................................................................... 7

PRELIMINARY MATTERS .................................................................................................. 9

I. The Tribunal has no jurisdiction to determine the Claimant’s claim for damages ... 9

A. The damages sought by the Claimant falls within the ambit of “technical matters”

9

B. The opinion of an independent Master Mariner has not been sought ................... 10

SUBMISSIONS ON THE ISSUE OF MARITIME LIEN ................................................. 11

SUBMISSIONS ON THE CLAIMANT’S CLAIMS .......................................................... 12

I. The Respondent is not liable for the Claimant’s claims as the Force Majeure

(“FM”) clause applies ..................................................................................................... 12

A. The Solar Flares were an “act of God” within the meaning of the FM clause ..... 12

B. The Storm was an “unforeseen weather event” within the meaning of the FM

clause ......................................................................................................................... 13

C. The Respondent has complied with the procedural requirements of the FM clause

13

II. The Claimant is not entitled to claim the value of the damaged goods and the cost of

replacement ..................................................................................................................... 14

III. The Respondent's liability is limited by the Hague-Visby Rules ................................ 16

A. Liability can be limited because the value and nature of the goods were not

appropriately declared .............................................................................................. 16

B. An unreasonable deviation does not preclude the limitation of liability ................ 16

C. As the Hague-Visby Rules were incorporated into the Charterparty, the

Respondent’s liability is limited to a sum less than the claims ............................... 17

D. Even if the Hague Rules apply, the Respondent’s liability is limited to a sum less

than the claims .......................................................................................................... 17

SUBMISSIONS ON THE RESPONDENT’S COUNTERCLAIMS ................................. 19

I. The Claimant is liable for freight of the delivered cargo ............................................ 19

A. The Charterparty stipulates that 90% of freight is payable within two banking days

of the delivery of cargo ............................................................................................. 19

B. Freight is payable regardless if cargo was damaged ............................................... 19

C. Freight is an exception to the general rule of set-off .............................................. 20


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II. The Claimant is liable for the agency fees at Spectre .................................................. 21

A. The agency fees were reasonably incurred .............................................................. 21

B. The Claimant could not have nominated its agents at Spectre ............................... 21

III. The Claimant is liable for the agency fees at Dillamond ............................................. 22

IV. The Claimant is liable for the cost of repairs to the Ship ............................................ 22

A. The Claimant nominated an unsafe port ................................................................. 23

B. The Respondent was not negligent either in anchoring the Ship or in the way it

anchored .................................................................................................................... 24

C. The damage was not caused by the Respondent’s negligence when cutting the

anchor........................................................................................................................ 24

V. The Claimant is liable for demurrage ........................................................................... 25

A. Laytime commenced when the vessel arrived at waiting area ................................ 25

B. The exceptions to laytime as stipulated in Clause 8(e) do not apply....................... 26

C. Calculation of laytime and demurrage .................................................................... 27

VI. The Claimant is liable for the use of electronic access systems at Dillamond ........... 27

PRAYER FOR RELIEF........................................................................................................ 28


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LIST OF AUTHORITIES

I. Articles and Books

G.H. Treitel, Frustration and Force Majeure (Sweet & Maxwell, 3rd Ed, 2014)

Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014)

John Schofield, Laytime and Demurrage (6th Ed., 2011)

Sir Bernard Eder, Howard Bennett, Steven Berry, David Foxton and Christopher F Smith,

Scrutton on Charterparties (22nd Edition, Sweet & Maxwell, 2011)

II. Cases

Aldebaran Compania Maritima SA v Aussenhandel AG (The Darrah) [1977] AC 157

Anglia Television v Reed [1972] 1 Q.B. 60

Bim Kemi AB v Blackburn Chemicals [2001] 2 Lloyd’s Rep. 93

Blanchet v Powell’s Llantivit Collieries [1874] L.R. 9 Ex. 74

Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (The Nadezhda Krupskaya) [1989] 1

Lloyd's Rep. 518

Bunge SA v Kyla Shipping Co. Ltd [2013] EWCA Civ 734 at [70];

Daewoo Heavy Industries v Klipriver Shipping (The Kapitan Petko Voivoda) [2003] 2 Lloyd’s

Rep. 1

Elena Shipping v Aidenfield Ltd [1986] 1 Lloyd's Rep. 425

Freedom Maritime Corporation v International Bulk Carriers SA and another (The Khian

Captain) [1985] 2 Lloyd’s Rep 212

ISS Machinery Services v Aeolian Shipping [2001] 2 Lloyd’s Rep. 641

Kodros Shipping Inc. v Empresa Cubana de Fletes (No. 2) [1983] 1 A.C. 736

Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc [2009] EWCA Civ

531

Merchant Shipping v Armitage [1873] L.R. 9 Q.B. 99


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Nugent v Smith [1876] 1 C.P.D. 421

Oldendorff (EL) & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1973] 2 Lloyd’s

Rep 285

Pust v Dowie [1864] 5 B. & S. 20

Rankin v The Ship, Eliza Fisher [1895] 4 Ex CR 461

Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] 1 Lloyd’s Rep.

12

Ships “Hako Endeavour”, “Hako Excel”, “Hako Esteem” and “Hako Fortress” v

Programmed Total Marine Services Pty Ltd [2013] FCAFC 21

The Berostar [1970] 2 Lloyd’s Rep 403

The Elena [1986] 1 Lloyd’s Rep 425

The Mogileff [1921] P 236

The Owners of the Norway v Ashburner (The Norway) (No. 2) (1865) 3 Moo. P.C. 254

The Rosa S [1989] Q.B. 419

The Superior Pescadores Syemgas Fzco and others v Superior Pescadores SA [2016] EWCA

Civ 101

The Thekos SMA 2405 [1987]

The Vasilia [1972] 1 Lloyd’s Rep 51

The World Star [1987] 1 Lloyd’s Rep 452

III. Legislation

Carriage of Goods by Sea Act 1991 (Act No. 160/1991) (Australia)

Coinage Act (Cap 10, 1870)

Coinage Act (Cap 24, 1971)

International Convention for the Unification of Certain Rules of Law relating to Bills of Lading

(“The Hague Rules”) (1924)


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Protocol to Amend the International Convention for the Unification of Certain Rules of Law

Relating to Bills of Lading (“The Hague-Visby Rules”) (1968)


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STATEMENT OF FACTS

1. On 22 July 2017, Cerulean Beans and Aromas Ltd (the “Claimant”) entered into a voyage

charterparty (the “Charterparty”) with Dynamic Shipping LLC (the “Respondent”),

owners of the Madam Dragonfly (“the Ship”). The cargo to be shipped was 1000 bags of

high-grade coffee each weighing 70kg, placed in four large containers. It was agreed that

the cargo is to be discharged by 7pm on Friday, 28 July 2017.

2. On or around 22 July 2017, the Claimant paid the amount of US$100,000 on account of

wages which would become payable to the crew of the Ship following the voyage into a

special Bank account of the Respondent established for that purpose. The Respondent has

not paid the crew of the Madam Dragonfly wages due for the voyage and has not repaid

the US$100,000 to the Claimant.

3. On 26 July 2017, the Respondent informed the Claimant that the Ship’s communication

and satellite systems were knocked out by solar flares (“Solar Flares”) for 17 hours. The

Solar Flare was reported to be an “unprecedented international emergency” which

knocked out radio and satellite communications systems “around the world”. During the

period where its systems were down, the Ship made a detour to the port of Spectre

(“Spectre”) as it only had the charts to Spectre.

4. The Ship arrived at the waiting area outside Dillamond at 7am on 29 July 2017. The Ship

could not enter the port as a “once in a lifetime” storm (“Storm”) caused delays in the port.

The Ship berthed in Dillamond at approximately 5pm on 29 July 2017. The cargo was then

discharged and placed in a warehouse at Dillamond at 12.02am on 30 July 2017. The

Claimant took delivery of the cargo at 1.17pm on 31 July 2017.

5. Three of the containers were completely water damaged. The value of the damaged cargo

was US$15,750,000 (“the Damaged Cargo Claim”).


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6. On 1 August 2017, the Claimant entered into a settlement agreement with Coffees of the

World Ltd, whom the former was contractually obliged to supply coffee. The Claimant

and Coffees of the World agreed that the Claimant would source for replacement coffee at

a price of US$9,450,000 (“the Replacement Coffee Payment”) in addition to a settlement

payment of US$5,000,000 (“the Settlement Payment”).

7. The Claimant served notices of arbitration to the Respondent on 11 August 2017 in

accordance with Clause 27 of the Charterparty. The Respondent’s counter-claims include

freight, agency fees at Spectre and Dillamond, cost of repairs to the Ship, demurrage and

use of electronic access systems at Dillamond.


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PRELIMINARY MATTERS

I. The Tribunal has no jurisdiction to determine the Claimant’s claim for damages

8. The Tribunal has no jurisdiction to determine the Claimant’s claim for damages as the

claims arise from “technical matters” which the Charterparty provides should be

determined by an “independent Master Mariner”.1 Clause 27(e) states that arbitral

proceedings cannot be commenced unless disputes relating to technical matters have been

referred to expert determination by an independent Master Mariner.2 The Respondent

submits that (A) the damages sought by the Claimant falls under the ambit of “technical

matters” as defined in Clause 27(g) and (B) the opinion of an independent Master Mariner

has not been sought.

A. The damages sought by the Claimant falls within the ambit of “technical matters”

9. The claim for damages falls within the definition of “technical matters” under Clause

27(g).3 Clause 27(g) states that “technical matters” refer to matters surrounding technical

aspects of the performance of the Charterparty, such as the vessel's route, storage

conditions and matters which can reasonably be considered within the expert technical

knowledge of a Master Mariner.4 Here, the dispute arose over a breach in the Charterparty,

triggered by the route taken by the Ship and its seaworthiness. The route taken by the Ship

falls squarely within the ambit of the clause and seaworthiness is a technical matter which

can reasonably be considered within the expert technical knowledge of a Master Mariner.

Hence, the clause applies to the damages claimed sought by the Claimant, and the Claimant

cannot validly commence arbitration until the dispute on technical matters underlying the

damages has been determined by an independent Master Mariner.

1 The Charterparty, Cl 27(d). 2 The Charterparty, Cl 27(e). 3 The Charterparty, Cl 27(g). 4 The Charterparty, Cl 27(g).


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B. The opinion of an independent Master Mariner has not been sought

10. Clause 27(d) requires disputes on “technical matters” to be referred to expert

determination by an independent Master Mariner.5 As the damages claimed are being

disputed on technical matters, the Claimant’s claim for damages falls within Clause 27(d).

The expert report that was referred to was from a maritime engineer, not an “independent

Master Mariner”. Hence, Clause 27(d) has not been satisfied.6

11. Given the above, the Respondent submits that Clause 27(e) applies to bar arbitral

proceedings and hence the Tribunal has no jurisdiction to determine the Claimant’s claim

for damages.

5 Moot Scenario, p 12. 6 Moot Scenario, p 43.


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SUBMISSIONS ON THE ISSUE OF MARITIME LIEN

12. The Claimant’s claim to a maritime lien over the Ship can only arise by way of subrogation

to the crew’s wage lien. However, in the present case, the requirements for the Claimant

to be subrogated to the rights under the wage lien have not been satisfied.

13. The UK admiralty courts have consistently insisted on the requirement of prior court

approval. Strict enforcement of this particular requirement has been observed in various

cases such as The Mogileff,7 The Berostar,8 The Vasilia9 and The Worldstar10. This

requirement should similarly be strictly enforced under Australian law.11

14. Requirement of prior court approval provides an essential safeguard for the seamen’s

interests and ensures that they are not taken advantage of by lower ranking creditors whose

only interest is the protection of their own commercial interest which may be at the expense

of the ship’s crew.12 Thus, judicial scrutiny acts as an important balance between the

commercial interests of other creditors and the protection of seafarer’s wages.

15. In the present case, the Claimant had not obtained prior leave of court for the payment of

crew’s wages or its subrogation to the crew’s maritime lien. Hence, the wage lien was

effectively extinguished when the US$100,000 was used to satisfy the crew’s wages.

16. Therefore, the Claimant is not entitled to any kind of maritime lien over the Ship.

7 The Mogileff [1921] P 236. 8 The Berostar [1970] 2 Lloyd’s Rep 403. 9 The Vasilia [1972] 1 Lloyd’s Rep 51. 10 The World Star [1987] 1 Lloyd’s Rep 452. 11 Ships “Hako Endeavour”, “Hako Excel”, “Hako Esteem” and “Hako Fortress” v Programmed Total Marine

Services Pty Ltd [2013] FCAFC 21 at [99]. 12 Rankin v The Ship, Eliza Fisher [1895] 4 Ex CR 461 at 469.


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SUBMISSIONS ON THE CLAIMANT’S CLAIMS

I. The Respondent is not liable for the Claimant’s claims as the Force Majeure (“FM”)

clause applies

17. FM would serve as a defence to what would have otherwise been a breach of the

Charterparty. This would concurrently defeat the Claimant’s claim for the Replacement

Coffee Payment, the Damaged Cargo Claim and the Settlement Payment which are losses

flowing from the alleged breach of the Charterparty. In this regard, the Respondent submits

that: (A) the Solar Flares which disrupted the communication systems on 25 July 2017

constituted an “act of God” event;13 (B) the Storm occurring on 28 July 2017 was an

“unforeseen weather event” within the meaning of the FM clause and;14 (C) the

Respondent has complied with the procedural requirements of the FM clause.

A. The Solar Flares were an “act of God” within the meaning of the FM clause

18. In determining whether an event falls within the ambit of an FM clause, the inquiry is

“whether on its true construction, the contract under consideration provides for the

event … [that] has occurred”.15 This requires a careful consideration of the terms within

the Charterparty.

19. Clause 17 explicitly defines FM events as including an “act of God”.16 An “act of God”

refers to an irresistible event which the shipowner can neither avoid nor guard against.17

The Respondents would thus have to show that there was no reasonable precaution under

all circumstances that could have prevented the delay.18 The Respondent respectfully

13 The Charterparty, Cl 17. 14 The Charterparty, Cl 17. 15 Bunge SA v Kyla Shipping Co. Ltd [2013] EWCA Civ 734 at [70]; Sir Bernard Eder, Howard Bennett, Steven

Berry, David Foxton and Christopher F Smith, Scrutton on Charterparties (22nd Edition, Sweet & Maxwell,

2011) at 1-089. 16 The Charterparty, Cl 17. 17 Nugent v Smith [1876] 1 C.P.D. 421, at 437. 18 Nugent v Smith [1876] 1 C.P.D. 421, at 437.


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submits that no precaution could have been taken since it was not aware of the impending

Solar Flares. There is no indication as to the Respondent’s awareness of Cerulean news

reports on the impending Solar Flares.19

20. Therefore, the Respondent can rely on the FM clause.

B. The Storm was an “unforeseen weather event” within the meaning of the FM clause

21. The Charterparty makes express provision for “unforeseen weather events”.20 The

Respondent submits that the Storm which occurred on 28 July 2017 falls within the

aforementioned definition. In its email correspondence with the Claimant, the Respondent

has described it as “roll[ing] in very suddenly” and that the crew “…[did not] see it on

the radar until about 30 min[utes] ago”.21 Furthermore, the Storm was described by a

news agency as a “once in a lifetime” storm event.22 Cumulatively, these facts lead to the

conclusion that the Storm was unforeseen.

22. Therefore, the Storm falls within the ambit of the FM clause and the Respondent is entitled

to rely on Clause 17 to excuse its delayed performance.

C. The Respondent has complied with the procedural requirements of the FM clause

23. The central issue here is whether the procedural requirements in the FM clause have been

breached by the Respondent, thereby precluding the Respondent from relying on the FM

clause.23 To this end, the Respondent submits that prompt written notice was given by the

Respondent

24. In the Charterparty, the word “prompt” is used to denote the prescribed notice period.24

19 Procedural Order No. 2, Cl 7 & 8. 20 The Charterparty, Cl 17. 21 Moot Scenario, p 19. 22 Moot Scenario, p 21. 23 G.H. Treitel, Frustration and Force Majeure (Sweet & Maxwell, 3rd Ed, 2014) at 12-048. 24 The Charterparty, Cl 17.


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25. With respect to the Solar Flares incident, the Respondent submits that such notice has been

given since the Claimant was informed of the delay as soon as the communications with

the Ship have been restored.25 The Respondent has given such notice as practicably as it

could in the circumstances, after it has established the status and whereabouts of the Ship.26

In the same vein, the Respondent was not aware that a delay has resulted from the Solar

Flares.27

26. With respect to the Storm, the Respondent has notified the Claimant within 30 minutes of

the crew detecting the Storm. This, it is submitted, constitutes prompt written notice.

27. Therefore, the Respondent has not breached this requirement of the FM clause in respect

of both FM events.

II. The Claimant is not entitled to claim the value of the damaged goods and the cost of

replacement

28. Even if the Respondent is found by the Tribunal to be liable to the Claimant for the breach

of the Charterparty, the Respondent submits the Claimant would be barred from recovering

all heads of claims. This is due to the issue of double recovery.

29. It is trite law that a plaintiff claiming damages for breach of contract has to elect between

claiming for loss of profits or for incurred expenditures.28 Loss of profits is defined as the

pecuniary loss suffered by a contracting party due to non-delivery of property.29 Such loss

of profits may be due to a loss of a specific sale to a third party.30 Here, the value of the

damaged cargo includes the margin of profits that the Claimant would have received by

selling the cargo to Coffees of the World. On the other hand, incurred expenditures refer

25 Moot Scenario, p 17. 26 Moot Scenario, p 17. 27 Moot Scenario, p 17. 28 Anglia Television v Reed [1972] 1 Q.B. 60. 29 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 4-018. 30 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 4-018.


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to the expenses incurred by a plaintiff in searching for replacement goods due to non-

delivery under a contract of carriage.31 Expenses incurred by way of settlement with a third

party are also considered as incurred expenditure.32 Applying these principles to the

present case, the Replacement Coffee Payment and Settlement Payment can be classified

as incurred expenditures.

30. An allowance for both loss of profits and incurred expenditure would result in double

recovery.33 This is because a claim for loss of profits also encompasses expenses which

were necessarily incurred to fulfil contractual obligations.34 Applying this to the present

case, the coffee cargo and the replacement coffee are alternative ways in which the

Claimant could fulfil its contractual obligations with Coffees of the World. Since the

purpose of contractual damages is to put a plaintiff in the position as he would have been

in had the contract been performed,35 the Claimant should only be allowed to claim either

the value of the damaged cargo or a combination of the Replacement Coffee Payment and

the Settlement Payment, but not both.

31. In light of the foregoing, the Respondent submits that even if the Tribunal finds that

liability is established, the Claimant is only entitled to either the damaged cargo claim or

the combination of the Replacement Coffee Payment and the Settlement Payment.

However, given that the Respondent’s liability is limited by the Hague-Visby Rules, the

Claimant’s claims should not be allowed in full.

31 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 4-022. 32 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 4-023. 33 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 4-024. 34 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 4-024. 35 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 2-003.


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III. The Respondent's liability is limited by the Hague-Visby Rules

32. The Claimant submits that the Hague-Visby Rules were incorporated into the Charterparty

instead of the Hague Rules (“HR”). Whether the Clause Paramount36 incorporates the

HVR or the HR depends on the applicable law. Where the specific state has already

incorporated the HVR, the Clause Paramount will also incorporate the particular

legislation.37 Since the Charterparty is governed by the laws of New South Wales, and

Australia’s Carriage of Goods by Sea Act 199138 enacts the HVR, the HVR were

incorporated into the Charterparty and provide the relevant limitation of the Respondent’s

liability in this case.

A. Liability can be limited because the value and nature of the goods were not appropriately

declared

33. Unless the Claimant has appropriately declared the value and nature of the goods shipped,

the Respondent can limit its liability under both the HVR and the HR.39 The declaration

of value by the Claimant in this case was not included in the Charterparty itself40 and

therefore is not binding on the Respondent. The Claimant is not entitled to recover in

excess of the limit provided by the HR through a declaration of value before shipment.

Accordingly, the Respondent is entitled to limit its liability under the HVR.

B. An unreasonable deviation does not preclude the limitation of liability

34. The Claimant cannot argue that an unreasonable deviation disentitles the Respondent from

limiting its liability under the HVR and the HR. Article IV rule 5 of both the HVR and the

HR, which uses the term “in any event”, may still provide the carrier with a defence of

package limitation even in the case of an unreasonable deviation.41 Therefore, the Claimant

36 The Charterparty, Cl 28. 37 The Superior Pescadores Syemgas Fzco and others v Superior Pescadores SA [2016] EWCA Civ 101. 38 Carriage of Goods by Sea Act 1991 (Act No. 160/1991) (Australia). 39 Article IV Rule 5 of the Hague Rules and Hague-Visby Rules. 40 Moot Scenario, p 2. 41 Daewoo Heavy Industries v. Klipriver Shipping (The Kapitan Petko Voivoda) [2003] 2 Lloyd’s Rep. 1.


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cannot argue that an unreasonable deviation renders the defence of package limitation

irrelevant.

C. As the Hague-Visby Rules were incorporated into the Charterparty, the Respondent’s

liability is limited to a sum less than the claims

35. Pursuant to the HVR, the Respondent is not liable for any damage or loss exceeding the

equivalent of 666.67 units of account per package or unit or 2 units of account per kilo of

gross weight of the goods lost or damaged, whichever is the higher.

36. The Respondent submits that the relevant packages were the “four containers” as this was

what was listed in the dock receipt. Even though this was amended by the Respondent,

the Claimant raised no objections to that, signifying their agreement to contract on the

amended terms. The higher limit would thus be based on the gross weight of the goods

damaged and the Respondent’s liability is limited at only 140,000 SDR (1,000 x 70 x 2).

37. If the Tribunal finds that the relevant package or unit is each bag of coffee, the higher limit

would be 666, 670 SDR (1000 x 666.67). This amount is still less than what is sought by

the Claimant.

D. Even if the Hague Rules apply, the Respondent’s liability is limited to a sum less than

the claims

38. If the Tribunal finds that the Clause Paramount42 had the effect of incorporating the HR

and not the HVR, the applicable limitation of liability is £100 sterling gold value per

package or unit. The value of £100 sterling would be considered by reference to the

quantity of gold equivalent to £100 sterling in 1924.43 The gold content of £100 sterling

was in 1924 defined as a matter of English law by the Coinage Act 1870,44 and was at the

date of the Charterparty, defined by the Coinage Act 1971,45 as being 798.805 grammes

42 The Charterparty, Cl 28. 43 The Rosa S [1989] Q.B. 419. 44 Coinage Act (Cap 10, 1870). 45 Coinage Act (Cap 24, 1971).


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of gold at a millesimal fineness 916.66, which is the same as 732.238 grammes of fine

gold. Taking the relevant date of the assessment of the Respondent’s liability as being the

date of delivery of the goods,46 which is 31 July 2017, this gives a gold value of £100

sterling as US$32,790.57.47 The Respondent submits that the relevant packages were the

“four containers” as this was what was listed in the dock receipt. Even though this was

amended by the Respondent, the Claimant raised no objections to that, signifying their

agreement to contract on the amended terms. The Respondent would thus not be liable for

an amount exceeding US$131,162.28 (32,790.57 x 4), which is significantly less than what

was sought by the Claimant.

39. If the Tribunal finds that the “packages” were the 1000 bags, the limit of liability would

be US$32,790,570 (32,790.57 x 1000).

46 The Rosa S [1989] Q.B. 419. Endorsed in Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (The

Nadezhda Krupskaya) [1989] 1 Lloyd's Rep. 518. 47 The price per ounce of fine gold on 31 July 2017 is estimated at USD 1269.55.


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SUBMISSIONS ON THE RESPONDENT’S COUNTERCLAIMS

I. The Claimant is liable for freight of the delivered cargo

40. The Respondent is claiming for the freight of US$500,000 for the following reasons: (A)

Clause 22 of the Charterparty states that 90% of the freight is payable within two banking

days of the delivery of cargo; (B) freight is payable regardless if the cargo was damaged

and (C) freight is a general exception to set-off.

A. The Charterparty stipulates that 90% of freight is payable within two banking days of

the delivery of cargo

41. Freight is the remuneration payable for carriage of the cargo. The freight rate is contracted

to be a lumpsum of US$500,000 for four containers of coffee beans.48 Clauses 11 and 22

of the Charterparty stipulates that 90% of the freight has to be paid within two banking

days of cargo delivery.49 Therefore, since the Claimant has acknowledged delivery,50 it is

liable for the payment of freight.

B. Freight is payable regardless if cargo was damaged

42. The Respondent submits that the Claimant is liable for the payment of freight as long as

the cargo was delivered. This is so even if the cargo was damaged.

43. Where the charterparty provides for a lump sum freight, payable on delivery, the entire

freight is payable even if part of the cargo is lost by excepted perils.51 Applying this

principle to the present case, the Claimant is liable for the payment of freight even if it

contends that the cargo was damaged. Therefore, since the Claimant has acknowledged

delivery,52 it is liable for the payment of freight regardless of the damage to the cargo.

48 Moot Scenario, p 3. 49 Moot Scenario, p 7 & 11. 50 Moot Scenario, p 24. 51 The Owners of the Norway v Ashburner (The Norway) (No. 2) [1865] 3 Moo. P.C. 254. See also Merchant

Shipping v Armitage [1873] L.R. 9 Q.B. 99. 52 Moot Scenario, p 24.


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C. Freight is an exception to the general rule of set-off

44. Even though the cargo delivered was damaged, the Claimant is not entitled to set-off the

claim for breach of contract against the freight.

45. Freight is an exception to the general rule that claims for breach of contract can be set off

in diminution or extinction of a different claim for a sum due under the same contract.53 It

is also trite law that where freight is due and payable under the terms of the charter, and a

claim under a possible breach of contract for damages arises, both the owner and the

charterer are required to pursue their claims independently as they cannot be set off against

each other.54 Applying these principles to the present case, the Claimant cannot set off

freight against the claims it is pursuing for the damaged cargo. Freight is payable by the

Claimant independent of the claims it seeks to recover from the losses arising from the

damaged cargo.

46. Furthermore, the Respondent submits that there is no basis for apportioning lump sum

freight even when part of the cargo is not delivered. This is due to the rule that freight is

either fully recoverable or non-recoverable.55 In the present case, all four containers of

coffee beans were delivered.56 As such, it is unreasonable for the Claimant to contend that

it is not liable for freight.

47. Given the above, the Respondent respectfully submits that the full lump sum freight is still

payable by the Claimant, and a claim for damages can be raised independently of the

freight by the Claimant instead.57

53 Bim Kemi AB v Blackburn Chemicals [2001] 2 Lloyd’s Rep. 93; ISS Machinery Services v Aeolian Shipping

[2001] 2 Lloyd’s Rep. 641. 54 Elena Shipping v Aidenfield Ltd [1986] 1 Lloyd's Rep. 425. 55 Merchant Shipping v Armitage [1873] L.R. 9 Q.B. 99 at 110 – 111. As to the non-apportionability of

lumpsum freight see also Pust v. Dowie [1864] 5 B. & S. 20; Blanchet v. Powell’s Llantivit Collieries [1874]

L.R. 9 Ex. 74. 56 Moot Scenario, p 24. 57 The Elena [1986] 1 Lloyd’s Rep 425.


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II. The Claimant is liable for the agency fees at Spectre

48. The Respondent is claiming US$75,000 for the agency fees at Spectre as (A) these fees

were reasonably incurred and (B) the Claimant could not have nominated its agents.

A. The agency fees were reasonably incurred

49. The Respondent submits that the agency fees were reasonably incurred. This is because

the Respondent did not breach its obligation to ensure the seaworthiness of the Ship.

50. It is submitted that the failure of the Ship’s communication and navigation systems was

not due to any fault in the equipment, but the severity of the Solar Flares. It was reported

in the Cerulean newspaper that the Solar Flare was an “unprecedented international

emergency” and that satellites systems “around the world” were knocked out.58 The report

also suggests that only delays of 20 hours or more in reconnection could be attributed to

old or faulty equipment.59

51. The Ship’s communications systems were up within a short time frame of 17 hours.60 The

Respondent submits that this time frame is acceptable and does not indicate

unseaworthiness because it was consistent with other systems based on a report published

in the Cerulean newspaper dated 25 July 2017.61 As such, the Ship was forced to detour to

Spectre due to the severity of the Solar Flares, and not due to a breach of the Respondent’s

obligation to ensure the seaworthiness of the Ship. It is therefore reasonable for the

Claimant to reimburse the Respondent for the agency fees incurred at Spectre.

B. The Claimant could not have nominated its agents at Spectre

52. The Respondent further submits that the Claimant could not have possibly nominated its

agents at Spectre. This is because the Ship’s navigation and communication systems were

58 Moot Scenario, p 35. 59 Moot Scenario, p 35. 60 Moot Scenario, p 17. 61 Moot Scenario, p 35.


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down due to the Solar Flares.62 As such, it was impossible for the Ship to have contacted

the Claimant for the latter to nominate its agents at Spectre. Furthermore, there was no

obligation on the Respondent to communicate this deviation to the Claimant beforehand,

since such an obligation only arises if the Ship calls at a port for cargo purposes.63

Therefore, it was reasonable for the Respondent to have nominated its own agents at

Spectre. The Claimant should thus reimburse the Respondent for these fees.

III. The Claimant is liable for the agency fees at Dillamond

53. The Respondent is claiming US$50,000 as the agency fees at Dillamond since the

Charterparty specifies that this cost is to be borne by the Claimant.

54. Clause 12(a) of the Charterparty stipulates that the Ship shall be consigned to the

charterer’s agents at the discharge port.64 The clause also states that the charterer shall pay

all customary fees at the discharge port.65 On a plain reading of the clause, this means that

the Ship is consigned to the Claimant at Dillamond, and the Claimant is to pay all

customary fees at Dillamond. Since agency fees can be considered as a form of customary

fees, the Respondent submits that it is fair and reasonable for the Claimant to be liable for

this head of claim.

IV. The Claimant is liable for the cost of repairs to the Ship

55. The Respondent is claiming USD$875,000 for the cost of repairs to the Ship. This is

because the damage to the Ship was suffered due to (A) the nomination of an unsafe port

by the Claimant. The Respondent also submits that (B) it was not negligent either in

anchoring the Ship or in the way it anchored, and (C) the damage was not caused by the

62 Moot Scenario, p 17. 63 The Charterparty, Cl 12(b). 64 The Charterparty, Cl 12(a). 65 The Charterparty, Cl 12(a).


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Respondent’s negligence when cutting the anchor after it was tangled in the coral bed

outside Dillamond.66

A. The Claimant nominated an unsafe port

56. The Claimant breached the implied warranty of port safety when it nominated an unsafe

port. The Respondent submits that this was the proximate cause of the damage to the Ship.

The Claimant is liable for the cost of repairs as there is no break in the chain of causation

resulting from any negligence on the part of the Respondent's as the safety of a port must

be warranted throughout the entire voyage.

57. It is trite law that where a charterparty provides for the nomination of a port, but is silent

as to its safety, a warranty that the port is safe will be implied.67 The obligation to nominate

a safe port extends from the time of nomination to the period of the vessel's likely visit,

hence prospective safety of the port must be taken into consideration.68 Applying these

principles to the present case, although there is no express warranty by the Claimant as to

the safety of Dillamond, such a warranty must necessarily be implied into the Charterparty.

Such implication is necessary from the terms of the Charterparty as the Claimant did not

offer the Respondent any alternative port of discharge. The Claimant by requiring the

cargo to be delivered directly and only to Dillamond,69 must have implied that the port is

safe for the Ship to berth and for the cargo to be unloaded.

58. A storm which passes through a port after nomination can render it unsafe, and this is a

breach of the safe port warranty by the charterer.70 The shipowner will be entitled to

recover the cost of repairs to the vessel from the charterer.71 In present case, the Storm

66 Moot Scenario, p 20. 67 Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc [2009] EWCA Civ 531. 68 Kodros Shipping Inc. v Empresa Cubana de Fletes (No. 2) [1983] 1 A.C. 736. 69 The Charterparty, Cl 1. 70 The Thekos SMA 2405 (1987) (van Gelder, Boulalas, Mavriks, Nelson, Nichols). 71 The Thekos SMA 2405 (1987) (van Gelder, Boulalas, Mavriks, Nelson, Nichols).


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rendered Dillamond unsafe,72 resulting in the eventual damage suffered by the Ship when

it had to anchor outside Dillamond. As such, the Respondent submits that the Claimant

breached its implied warranty to nominate a safe port.

59. Given that safety includes the prospective safety of the port, and not just during the period

of nomination, the Claimant breached its implied warranty to nominate a safe port, and is

thus liable for the damage suffered by the Ship.

B. The Respondent was not negligent either in anchoring the Ship or in the way it anchored

60. The Respondent was not negligent in anchoring the Ship when waiting, or in the way it

anchored. The chain of causation was not broken, and the Claimant's breach in nominating

an unsafe port remains the proximate cause of the damage suffered by the Ship.

61. The Respondent was instructed to wait at the area outside the port, along with other ships,

while Dillamond was closed due to the Storm.73 It was reasonable for the Respondent to

anchor the ship to avoid the Storm as the crew did not expect the Storm to reach them

where they anchored.74 Therefore, the facts and sequence of events suggested that the

Respondent has exercised all reasonable care in the circumstances, and was not negligent

in anchoring the Ship. The act and place of anchoring were well considered by the

Respondent to be safe.

62. Therefore, the Respondent was not negligent in anchoring the Ship, and it did not break

the chain of causation.

C. The damage was not caused by the Respondent’s negligence when cutting the anchor

63. The Respondent also submits that the eventual damage suffered by the ship was not due to

the negligence of the Respondent when removing the anchor.

72 Moot Scenario, p 21. 73 Moot Scenario, p 20. 74 Moot Scenario, p 20.


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64. The Storm reached the Ship while it was anchored, and the Storm was much heavier than

it was at land.75 The crew had to cut the anchor to minimise damage to the hull. The facts

strongly indicated that the crew were constrained to act the way they did due to the Storm

and conditions that were unexpected and beyond their control. Therefore, the damage to

the Ship was not due to any inadvertence or negligence of the Respondent.

65. Given the above, the Respondent is not liable for the damage to the Ship. The damage

suffered by the Ship was due to the necessary act of anchoring outside the unsafe port

nominated by the Claimant. The Respondent was not negligent either in anchoring the Ship

or in the way it anchored. The Claimant is thus liable for the damage to the Ship as the

nomination of the unsafe port was the proximate cause of damage to the Ship.

V. The Claimant is liable for demurrage

66. The Respondent is claiming US$100,000 in demurrage as (A) the laytime commenced

when the vessel arrived at the waiting area and (B) laytime exceptions as stipulated in

Clause 8(e) do not apply.

A. Laytime commenced when the vessel arrived at waiting area

(1) Vessel arrived at writing area at 7am on 29 July 2017

67. Clause 8(c)(ii) of Charterparty states that laytime is calculated from when the Ship arrives

at the discharge port until all cargo has been discharged.76 The Ship arrived at the waiting

area at 7am on 29 July 2017.77 It is trite law that the waiting area is considered as part of

the port. It is trite law that the port area includes the usual places where ships wait for their

turn to berth.78 In the present case, the Ship was instructed by the port to wait at the waiting

75 Moot Scenario, p 20. 76 The Charterparty, Cl 8(c)(ii). 77 Moot Scenario, p 20. 78 Oldendorff (EL) & Co GmbH v. Tradax Export SA (The Johanna Oldendorff) [1973] 2 Lloyd’s Rep 285, at p

291. See also Charterparty Laytime Definitions 1980 in John Schofield, Laytime and Demurrage (6th Ed.,

2011).


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area, along with the other ships waiting for a berth.79 As such, the Ship should be

considered as an “arrived ship” when it reached the waiting area.

(2) “WWD” includes Saturdays

68. A WWD is defined as a type of working day which the weather allows the particular ship

in question to load or discharge the cargo.80 Although 29 July 2017 is a Saturday, it is well-

established that WWD includes Saturdays provided that the weather permits work.81 In the

present case, the storm only lasted throughout Friday night and the weather was clear on

Saturday.82 This is obvious from the fact that (i) the discharging operation occurred on

Saturday and (ii) many other vessels conducted their operations at the port as well.83 29

July 2017 should thus be considered as a WWD under clause 8(c)(ii) of the Charterparty.

B. The exceptions to laytime as stipulated in Clause 8(e) do not apply

69. The Respondent submits that the exceptions to laytime as stated in Clause 8(e) do not apply

to the facts of the present case. This is because, on a literal interpretation of the clause, it

is only applicable to exempt “time occupied in shifting ports or berths” from being

calculated within laytime.84 In the present case, the laytime ran whilst the Ship was waiting

for its turn outside the port, which does not fall within the exception. As such, Clause 8(e)

cannot be invoked in the present case.

70. Furthermore, Clause 8(e) only exempts the period of delay caused by the Storm from being

counted as laytime.85 The Ship’s travelling time from the waiting area to the berth is thus

not exempted by Clause 8(e). In the present case, the Ship started to make its way into the

79 Moot Scenario, p 20. 80 Aldebaran Compania Maritima SA v Aussenhandel AG (The Darrah) [1977] AC 157 (HL). See also Freedom

Maritime Corporation v International Bulk Carriers SA and another (The Khian Captain) [1985] 2 Lloyd’s Rep

212. 81 Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] 1 Lloyd’s Rep. 12, at p. 32. 82 Moot Scenario, p 21. 83 Moot Scenario, p 25. 84 The Charterparty, Cl 8(e). 85 The Charterparty, Cl 8(e).


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berth at around 7am on 29 July 2017.86 Laytime should have thus started to accrue from

that moment onwards.

C. Calculation of laytime and demurrage

71. Clause 8(c)(ii) of the Charterparty provided for the laytime to be 0.5 WWD.87 Since

laytime commenced at 7am on 29 July 2017, laytime would expire 12 hours later, at 7pm

on 29 July 2017. The cargo was only discharged at 12.02am on 30 July 2017.88 As such,

laytime was exceeded by 5 hours. Since the agreed demurrage rate was US$20,000/hour89,

the total demurrage is US$100,000.

VI. The Claimant is liable for the use of electronic access systems at Dillamond

72. The Claimant is liable to compensate the Respondent USD$10,000 for the use of electronic

access systems (“EAS”) at Dillamond because the Claimant failed to take delivery of the

cargo upon discharge.90 Clause 11 of the Charterparty allows the Respondent to discharge

at a usual berth in Dillamond should the Claimant’s agents fail to take delivery.91 Since

the Claimant’s agents were not available, the only reasonable cause of action for the

Respondent was to offload the cargo and store it in the port’s warehouses. As the port uses

an EAS for its warehouses, the incurrence of such a cost was inevitable and hence

reasonable.92

86 Moot Scenario, p 20. 87 The Charterparty, Cl 8(c)(ii). 88 Moot Scenario, p 23. 89 The Charterparty, Cl 9. 90 Moot Scenario, p 24. 91 The Charterparty, Cl 11. 92 Moot Scenario, p 23.


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PRAYER FOR RELIEF

For the reasons set out above, the Respondent seeks the following orders and declarations:

a. A declaration that the Tribunal has no jurisdiction to determine the Claimant’s claim

for damages;

b. A declaration that the Claimant is not entitled to any maritime lien over the Ship

c. A declaration that the Respondent is not liable for the Claimant’s claims due to the

application of the Force Majeure clause;

d. An order that the Claimant pays the Respondent freight in the amount of USD$500,000;

e. An order that the Claimant pays the Respondent the agency fees at Spectre in the

amount of USD$75,000;

f. An order that the Claimant pays the Respondent the agency fees at Dillamond in the


g. An order that the Claimant pays the Respondent the cost of repairs to the Ship in the


h. An order that the Claimant pays the Respondent demurrage in the amount of

USD$100,000;

i. An order that the Claimant pays the Respondent the fees for the use of electronic access

systems in Dillamond in the amount of USD$10,000; and

j. An order for costs.

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