team 4 nineteenth annual international … · aktieselskabetreidar v arcos ltd [1927] 1 kb 352....

MEMORANDUM ON BEHALF OF THE RESPONDENT

COUNSELS

Sanya Kapoor

Riya Gupta

Arushi Sethi

Rupal Gupta

NINETEENTH ANNUAL INTERNATIONAL MARITIME

LAW ARBITRATION MOOT

2018

Guru Gobind Singh Indraprastha University, New Delhi, India

IN THE MATTER OF:

CERULEAN BEANS AND AROMAS LTD. … CLAIMANT

v.

DYNAMIC SHIPPING LLC. … RESPONDENT

TEAM 4

TEAM 4 MEMORANDUM FOR RESPONDENT

II

TABLE OF CONTENTS

ABBREVIATIONS IV

LIST OF AUTHORITIES V

STATEMENT OF FACTS 1

ARGUMENTS ON JURISDICTION 2

1. THAT THE TRIBUNAL DOES NOT HAVE JURISDICTION TO DETERMINE

THE CLAIM FOR DAMAGES MADE BY THE CLAIMANT. 2

A. The English law governs the arbitration agreement 2

(i) The English law has the closest and most real connection to the arbitration

agreement. 2

(ii) The choice of London as the arbitral seat is testimony to this conclusion 3

B. That the claimant has superseded Clause 27 leading to pre-mature arbitration 3

(i) Pursuant to Clause 27(d) of the Record, referring the matter to

the jurisdiction of a Master Mariner for expert determination was a

pre-arbitral step. 3

(ii)The Claimant is liable for the repercussions of invoking a pre-mature

arbitration. 4

C. The Master Mariner has the expertise to analyse technical matters 5

ARGUMENTS ON THE MERITS OF THE CLAIM 6

2. THAT THE RESPONDENTS ARE NOT LIABLE FOR THE BREACH OFTHE

CHARTERPARTY 6

A. That the deviation of madam dragonfly was effected by instances of force majeure 6

B. That the Respondents had exhibited reasonable and prudent behaviour 8

C. That Respondents cannot be made liable for reasonable deviation 9

D. That the commercial object of the contract has not been frustrated 11


III

E. That the Charterer’s breached their liability of nominating a safe port of delivery 11

3. THAT THE CLAIMANT DOES NOT HOLD MARITIME EQUITABLE LIEN

ON THE VESSEL 12

A.Claimant is not entitled to hold maritime lien 12

B. Claimant is not entitled to hold equitable lien 12

4. THAT THE CLAIMANT IS LIABLE TO PAY THE DAMAGES CLAIMED 14

A.That the delivery took place on 29th July, 2017. 14

B. That the Claimant is liable to pay the freight. 15

C.That the Claimant is liable to pay for repairs to hull. 16

D.That the Claimant is liable to pay demurrage. 17

E.That the Claimant is liable to pay for use of electronic access systems. 19

F.That the Claimant is liable to pay the agency fee. 21

ARGUMENTS ON THE MERITS OF THE COUNTER CLAIM 22

5.THAT RESPONDENTS ARE NOT LIABLE TO PAY DAMAGES CLAIMED

BY THE CLAIMANT. 22

A.That the Respondent is not liable to pay the damages for the damages goods and

replacement cargo 22

B.That the Respondent is not liable to pay the settlement payment 24

REQUEST FOR RELIEF 25


IV

ABBREVIATIONS

Claimant Cerulean Beans and Aromas Ltd.

Cl. Clause

Respondents Dynamic Shipping LLC

WWD Weather Working Days

S. Section

p. Page

Para. Paragraph

LMAA London Maritime Arbitration Association

USD US Dollars

NSW New South Wales

HVR Hague Visby Rules by Brussels Protocol, 1968

UNCTAD United Nations Conference on Trade and

Development

ICC International Chamber of Commerce

Charterparty The Voyage Charterparty between Claimant and

Respondent.

Hon’ble Honourable


V

LIST OF AUTHORITIES

CASES AND ARBITRAL AWARDS

AktieselskabetReidar v Arcos Ltd [1927] 1 KB 352.

Aldebaran Compania Maritime SA Vs Aussenhandel AG (The Darrah), [1977] AC 157.

Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50, 61

Anderson, & Co v The Owners of San Roman(1873-74) L.R 5P C 301.

Aries Tanker Corp v Total Transport [1977] 1 Lloyd’s Rep 334 at p 337

Attorney General of the Republic of Ghana v Texaco Overseas Tankships Ltd – “Texaco Melbourne”

(1993) 1 Lloyd’s Rep 471 (CA).

Automatic Tube Company et al., v. Adelaide Steamship (Operations) Ltd. et al. [1967] 1 Lloyd's List

L.R.

Badgin Nominees Pty. Ltd. v Oneida Ltd. Anr [1998] VSC 188.

Banco de Portugal v Waterlow [1932] AC 452

Barnes v Alexander 232 US 117, 121.

Beechwood Birmingham v. Hoyer Group UK [2011] Q.B. 357

Beier Howlett Pc v. Police & Fire Retirement Systems 858 N.W.2d 432 (2015).

Black Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg [1981] 2 Lloyd’s Rep 446.

Bonython v Commonwealth (1950) 81 CLR 486, 498

Bourne v Gatliffe (1841) 133 ER 1298

Brecknock,etc., Nay. Co. v. Pritchard, 6 T. R. 750

Bridge (1989) 105 LQR 398; The Oregon, 55 F. 666, 673 (6th Cir. 1893)

British Movietonews Ltd v London and District Cinemas Ltd [1952] AC 166, 185

British Westinghouse Electric Co Ltd v. Underground Electric Rys Co of London Ltd, [1912] AC 673,

689

Brown v. Nitrate Producers S.S. Co. (1937) 58 LI.L.R.188

Buntin v. Fletchas, 257 F.2d 512, 514 (5th Cir. 1958)

Calcot, Ltd. v. Isbrandtsen Company, 318 F.2d 669 (1st Cir. 1963)

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VI

Cf. AIC Ltd v. Marine Pilot (The Archimidis) [2008] 1 Lloyd’s Rep. 597.

cf. Empresa Cubana Importada de Alimentos v. Iasmos Shipping Co. S.A. (The Good Friend) [1984] 2

Lloyd’s Rep. 586

Chanler v. Wayfarer Marine Corp., 302 F. Supp. 282, 286 (S.D. Me. 1969)

Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd. (HL) [1993] 1 Lloyd’s Rep 291

Circle Finance Company vs. Jessie L. Peacock and Sara A. Peacock 399 So. 2d 81 (1981).

Coast Lines Ltd v Hudig &Veder Chartering NV [1972] 2 WLR 280 (‘Coast Lines’)

Compania De Vapore sInsco, S.A. v. Missouri Pacific R. Co., 232 F.2d 657 (5th Cir. 1956).

Compania Naviera Aeolus SA v Union of India (The Spalmatori) [1964] AC 868, 879 (Lord Reid)

Compania Naviera Aeolus SA v Union of India [1964] AC 868 at 899 (Lord Guest)

Comyn Ching v. Oriental Tube [1979] B.L.R. 56, esp. pp. 80

Contine xInc v SS Flying Independent [1952] AMC 1499 at p 1503

Cransfield Bros. v. Tatem S.N.Co. (1939) 64 LI.L.R. 264, 275

Dakin v Oxley (1864) 143 ER 938

Dallah Real Estate and Tourism Co v Ministry of Religious Affairs of the Government of Pakistan

[2011] 1 AC 763, 830

Dammers & Van der Heide Shipping & Trading, Inc. v. S.S. Joseph Lykes 300 F. Supp. 358 (E.D. La.

1969).

Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500

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

Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 729

Derby Resources A.G. v. Blue Corinth Marine Co. (The Athenian Harmony)[1998] 2 Lloyd’s Rep. 410

Dias Compania Naviera SA v Louis Dreyfus Corporation [1978] 1 WLR 261 at 263

Easter City, [1958] 2 Lloyd’s Rep. 127.

Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm)

Exmar BV v. National Iranian Tanker Co. (The Trade Fortitude) [1992] 1 Lloyd’s Rep. 169, 177

FC Bradley & Sons Ltd v Federal Steam Navigation Co Ltd (1926) 24 Ll LR 446, 455

Federal Insurance Co. v. Sabine Towing & Transp. Co.783 F.2d 347


VII

Fisher v. Val de Travers Asphalte (1876) 45 L.J.C.P. 479

Fitzgerald v. Lona (Owners) (1932) 44 Ll. L. Rep. 212

Freedom Maritime Corp. v. International Bulk Carriers (The Khian Captain (No. 2)) [1986] 1 Lloyd’s

Rep. 429.

Fulton Shipping Inc of Panama v Globalia Business Travel S.A.U. [2015] EWCA Civ 1299.

G.W. Grace & Co Ltd v General Steam Navigation Co Ltd (The Sussex Oak) [1950] 2 KB 383

Gatliffev Bourne (1838) 4 Bing. N.C. 314, (1841) 3 M. & G. 643.

Gebruder Metelmann GmbH & Co KG v NBR (London) Ltd [1984] 1 Lloyd’s Rep 614 at 633

Gelb v. Minneford Yacht Yard, Inc., 108 F. Supp. 211 (S.D.N.Y. 1952)

General Feeds Inc. v. Slobodna Plovidba, [1999] 1 Lloyd’s Rep. 688.

Gilroy, Sons & Co v W R Price & Co [1893] AC 56, 64

Glyn Mills v East and West India Dock Co (1882) 7 App Cas 591

Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] 2 A.C. 353

Grad Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2013] EWH C

2199 (Comm) 2013 WL 3878761.

Guan Bee v. Palembang Shipping Co. [1969] 1 May L.J.

Hadley v. Clarke, 8 T. R. 259.

Harlow & Jones, Ltd v Panex (International), Ltd [1967] 2 Lloyd’s Rep 509

Harris v Jacobs (1885) 15 QBD 247, 251 (Brett MR)

Hedley v Pinkney & Sons Steamship Co [1894] AC 222

Hellenic Dolphin [1978] 2 Lloyd’s Rep. 336.

Hellenic Lines, Ltd. v. Embassy of Pakistan 467 F.2d 1150, 1154 (2d Cir. 1972)

Him Portland, Llc v. Devito Builders, Inc. 211 F. Supp. 2d 230 (D. Me. 2002)

Hooper Bailie Associated Ltd. v. Natcon Group Pty Ltd., (1992) 28 N.S.W.L.R. 194

Huddart Parker Ltd v Cotter (1942) 66 CLR 624

In re Arbitration between Nereus Shipping, S.A. and Island Creek Coal Sales Co., SMA 1763 (1982)

International Packers London Ltd v Ocean Steamship Co Ltd [1955] 2 Lloyd’s Rep 218

J. Gerber & Co. v. S.S. Sabine Howaldt, 437 F.2d 580, 588, 1971 AMC 539 (2d Cir. 1971).


VIII

John F. Hunt Demolition v. Asma Engineering Ltd [2008] 1 All E.R. 180, [2007] EWHC 1507 (TCC).

Johnston Bros v Saxon Queen SS Co (1913) 108 LT 564.

Kiddle v. Lovett (1885) 16 Q. B. D. 605.

Kish (JE) v Charles Taylor & Sons [1912] AC 604, 616

Kish v Taylor [19121 A.C. 604

Kodros Shipping Corp. v. Empresa Cubana de Fletes [1981] 2 Lloyd’s Rep. 613

Koufos v C Czarnikow Ltd[1967] UKHL 4

Lebeaupin v Richard Crispin & Co (1920) 2 KB 714.

Leeds Shipping Co. Ltd. v. Société Française Bunge [1958] 2 Lloyd’s Rep. 127

Leeds SS. Co. v. Duncan Fox (1932) 37 Com. Cas. 213

Leigh And Sillavan Ltd V Aliakmon Shipping Co Ltd (The Aliakmon), [1985] UKHL 10.

Leonard v Leyland & Co (1902) 28 TLR 727

Lim Kim Som v Sheriffa Taibahbte Abdul Rahman [1994] 1 SLR(R) 233, 246 [28].

Lockhart v Falk (1875) LR 10 Ex 132, 135 (Cleasby B)

London Arbitration 2/2005, (2005) 659 LMLN 1.

Lord Mansfield in Forward v. Pittard (1785) 1 T.R. 2.

Lord Mansfield in Proprietors, v.Wood, 3 Esp. 127; Forward v. Pittard, IT. R. 27; 2 Greenl. Ev. (14 th

ed.), p. 209.

M.D.C. v. N.V.Z.M. Beursstraat[1962] 1 Lloyd’s Rep. 180

Macrae v. H.G. Swindells, [1954] 1 W.L.R. 597

MDC Ltd. v. NV Zeevaart Maatschapij Beursstraat [1962] 1 Lloyd’s Rep. 180, 186.

Mediolanum Shipping Co v Japan Lines Ltd (The Mediolanum) [1984] 1 Lloyd’s Rep 136 (CA)

Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366, 369

Metropolitan Tunnel and Public Works Ltd v. London ElectricRailway Co [1926] 1 Ch 371 at 390.

Montedison S.P.A. v. Icroma S.p.A. (The Caspian Sea) [1980] 1 Lloyd’s Rep. 91.

National Packaging Corp. v. N.Y.K. Line [1973] 1 Lloyd’s Rep. 46

Newcastle Protection and Indemnity Association v. Assuranceforeningen Gard [1998] 2 Lloyd’s Rep.

387 at p. 407


IX

Nissho Iwai Australia Ltd v Malaysian International Shipping Corporation (1989) 167 CLR 219

North American Smelting Co. v. Moller S.S. Co., 204 F.2d 384 (3rd Cir. 1953)

Notura v Henderson[1870] L.R 5 Q.B 354.

Nugent v Smith 4 (1876) 1 CPD 423 at p 444.

Nuzzo v. Rederi, 304 F.2d 506, 510 (2nd Cir. 1962).

Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197, 217

P. Dougherty Co. v. 2,471 Tons of Coal, 278 F. 799, 803 (D. Mass. 1922)

Palace Shipping Co v Gans SS Line [1916] 1 KB 138

Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd &Ors (1993) 43 FCR 439, 444.

Potomac Poultry Food Co., Inc. v. M/V Anna Maersk, 1934 AMC 166, 172 (D. Md. 1934).

President of India v West Coast Steamship Co (The Portland Trader) [1963] 2 Lloyd’s Rep 278,

280‐281 (Dist Ct, Oregon).

QH Tours Ltd v Ship Design and Management (Aust) Pty Ltd (1991) 105 ALR 371, 384

R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 500, 529

R&W Paul Ltd v National Steamship Co Ltd (1937) 59 Ll L Rep 28

R.R .CO. vs Reeves 77 U.S. 10 Wall. 176 176 (1869).

Re United Railways of Havana and Regla Warehouses Ltd [1961] AC 1007, 1021

Reardon Smith Line V Australian Wheat Board [1956] 1 Lloyd's Rep. 1.

Red. “Macedonia” v. Slaughter (1935) 40 Com. Cas. 227

RiverWear Comrs. v. Adamson, iQ. B. Div.548

Rothwells Ltd (in liq) v Connell (1993) 27 ATR 137, 143

Ruxley Electronics and Construction Ltd v. Forsyth [1996] A.C. 344

Shell International Petroleum Co. v. Seabridge Shipping (The Metula) [1977] 2 Lloyd’s Rep. 436,

[1978] 2 Lloyd’s Rep. 5

Shubrickv. Salmond, 3 Burr. 1637

Skandia Ins. Co. v. Star Shipping 173 F. Supp. 2d 1228, 2001 AMC 1527

Slater v. Hoyle & Smith [1920] 2 K.B. 11

Smailes and Son v Hans Dessen and Co (1906) 94 LT 492




X

Southampton Container Terminals v. Hansa Sch. (The Maersk Colombo) [1999] 2 Lloyd’s Rep. 491.

Stag Line Ltd v Foscolo Mango [1932] AC 328 at p 343-4.

Steel v State Line Steamship Co (1877) 3 App Cas 72

Steel v State Line Steamship Co (1877) 3 App Cas 72

Stegemann v. Miami Beach Boatslips, Inc., 213 F.2d 561, 1954 AMC 1372 (5th Cir. 1954)

Straits Exploration (Australia) Pty Ltd v Murchison United NL [2005] WASCA 241.

Sul America Cia Nacional De Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638.

Supershield v. Siemens Building Technologies [2010] 1 Lloyd’s Rep. 349.

Swedish contractor v The Secretary of the People's Committee for a municipality of an Arab State ICC

Case Nos. 6276 and 6277, 1990

Taylor v. Caldwell, [1863] EWHC QB J1.

The “Sivand” [1998] 2 Lloyd’s Rep 97

The Amstelslot [1962] 2 Lloyd’s Rep. 336.

The Asia Star [2010] 2 Lloyd’s Rep. 121

The Assunzione [1954] 2 WLR 234 (‘Assunzione’), 261

The Brede [1973] 2 Lloyd’s Rep 333

The Dagmar [1968] 2 Lloyd’s Rep 563

The Eastern City, [1958] 2 Lloyd’s Rep 127.

The Elena D’Amico [1980] 1 Lloyd’s Rep 75 at p 89.

The Fjord [1999] 1 Lloyd´s Rep. 307.

The Forum Craftsman (Islamic Republic of Iran Shipping Lines v. Ierax Shipping Co. [1991] 1

Lloyd’s Rep. 81

The Greta Holme [1897] A.C. 596

The Iron Gippsland [1994] 1 Lloyd's Rep. 335

The Metagama, (1928) 29 LIL Rep 253 (HL); Le Blanche v. L.N.W Ry, (1876) 1 C.P.D. 286

The Oceano , 148 F. 131, 133 (S.D.N.Y. 1906).

The Pentland (1897) 13 TLR 430

The Polyglory [1977] 2 Lloyd's Rep. 353

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XI

The President Monroe [1972] 1 Lloyd’s Rep. 385, 386 (U.S. District Ct).

The Rona 5 Aspinal M.C 259.

The Sanix Ace [1987] 1 Lloyd’s Rep 465

The Schwan [1909] AC 450, 464.

The Solholt [1983] 1 Lloyd’s Rep 605 at p 608

The Solomon, SMA 3106 (1994).

The Stena Conquest, SMA 4075 (2010)

The Stolt Avance, SMA 3010 (1993)

The Stranna [1938] P 69; The Diamond [1906] P 282

TheTbilisi, SMA 3935 (2006)

The Torepo [2002] EWHC 1481 (Admlty).

The Varing [1931]

Transco Plc v Stockport Metropolitan Council, [2003] UKHL 61

Transamerican Steamship Corporation v Tradax Export S.A. (The Oriental Envoy) [1982] 2 Lloyd’s

Rep 266, 271 (Parker J)

Tucker v. Linger, (1882) 21 Ch D 18

Universal Cargo Carriers Corp v Citati [1957] 2 QB 401.

Vinmar International v. Theresa Navigation (The Atrice) [2001] 2 Lloyd’s Rep. 1

Virginia Carolina Chemical Co v Norfolk & North American Steam Shipping Co Ltd (1912) 17 Com

Cas 277

Wilson v Lancs &Yorks Ry (1861) 9 CBNS 632

XL Insurance Ltd v Owens Corning [2000] 2 Lloyd’s Rep 500.

Zeke Services Pty Ltd v Traffic Technologies Limited [2005] QSC 135.

BOOKS AND JOURNALS REFERRED

Alexander Jollies, Consequences of Multi-Tier Arbitration Clauses: Issues of Enforcement (Reprinted

from (2006) 72 Arbitration)

Allyson Matvey, Incidental Damages Vs Consequential Damages: A Distinction of Consequence,

(2017)


XII

Álvaro López De Argumedo Piñeiro with Miguel Ángel Fernández-Ballesteros and David Arias (eds):

Multi-Step Dispute Resolution Clauses (2010)

Anderson, 234.

Baizeau, Domitille; Anne-Marie Loong with Manuel Arroyo (ed): Chapter 13, Part X: Multi-tiered

and Hybrid Arbitration Clauses

Benjamin’s Sale of Goods, 9th ed (2014)

C.J.S. Act of God (1985)

David J.A. Cairns, Advocacy and the Functions of Lawyers in International Arbitration.

Didem Kayali, Enforceability of Multi-Tiered Dispute Resolution Clauses, Journal of International

Arbitration, (Kluwer Law International 2010, Volume 27 Issue 6).

Domitille Baizeau and Anne-Marie Loong, Chapter 13, Part X: Multi-tiered and Hybrid Arbitration

Clauses

Dyala Jimenez-Figueres, Multi-Tiered Dispute Resolution Clauses in ICC Arbitration, 14 ICC Bull. 71

(No. 1, 2003)

Fouchard, Gaillard, Goldman: On International Commercial Arbitration (Kluwer Law International,

1999)

Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd ed., 2014).

Gilmore & Black, The Law of Admiralty (1957).

International Journal of Arab Arbitration, (International Journal of Arab Arbitration 2009, Volume 1

Issue 4)

J. Beatson et al., Anson’s Law of Contract (29th Edition, 2010)

John Schofield, Laytime and demurrage, Lloyd Shipping Law Library

Julian Cooke et al., Voyage Charters (4th edn, 2014)

Kayali, Didem: Enforceability of Multi-Tiered Dispute Resolution Clauses (Kluwer Law International

2010, Volume 27 Issue 6)

Kerry Powell, What Is Force Majeure? (Heavy Construction News 110 (June 2001)).

Laytime Definitions for Charterparties 2013


XIII

Manuel Arroyo (ed) Arbitration in Switzerland: The Practitioner's Guide, (Kluwer Law International

2013)

Marko Mećar, Enforceability Of Multi-Tiered Clauses Leading To Arbitration

McGregor on Damages (19th ed. 2014)

Petition of United States, 300 F. Supp. 358, 366 and n. 2 (E.D. La. 1969) (Hurricane Betsy)

Pryles, Michael: Multi-Tiered Dispute Resolution Clauses, Volume 18, no. 2 (2001), Journal of

International Arbitration

Redfern and Hunter, International Arbitration (Oxford University Press, 6th ed. 2015)

Schoenbaum. Vol. 2

Scrutton on Charterparties, 23nd ed.

Simon Baughen, Shipping Law, (4th edition, 2009)

Tariq Alawneh, A Critical Analysis of The Implied Obligation Against Unjustified Deviation: Is the

Rule Still Relevant to The Modern Law on Carriage of Goods by Sea? (April 2015)

Tetley, Marine Cargo Claims, Vol. 1

Treitel on the Law of Contract (Sweet & Maxwell)

Varady, Tibor, et. al International Commercial Arbitration, a Transnational Perspective, Fifth Edition,

2012, American Casebooks.

STATUTES AND CONVENTIONS

Arbitration Act 1996 (UK).

Carriage of Goods by Sea Act 1992

Hague Visby Rules, 1968.

Ports and Maritime Administration Act 1995 (NSW)

UNCITRAL Model Law on International Commercial Arbitration.

SUMMARY OF THE FACTS

I. AGREEMENT BETWEEN PARTIES

Cerulean Beans, serving as the Charterers and Dynamic Shipping, owner of the vessel named Madam

Dragonfly had entered into a voyagecharterparty, dated 22 July, 2017 for the shipment of cargo entailing

high quality coffee beans. The shipment had to be delivered by 7 pm on 28 July, 2017 at Port Dillamond

by the most direct route, as there was a parallel contract running between the Charterer and a third party,

Coffees of the World.

II. PERFORMANCE OF THE CONTRACT

Madam Dragonfly deviated to Port Spectre during the voyage due to the hampering of the communication

and navigational systems for a period of 17 hours owing to the solar flares which the vessel was struck

with. Once the communication system was restored, the vessel started the journey towards Dillamond,

however a storm rolled in which led to the closure of the Ports for 12 hours.Before the arrival of the vessel

at the port, the Owners had mandated that they would deliver the goods via a barcode access if the

Charterer is unable to collect the same. After the arrival of the ship at the port on 29 July, the goods were

ready for delivery by 8:42 pm the same day. Due to congestion on the port, agents of the Charterers were

unable to collect the goods until 31 July, 2017, 3/4th of which were found to be damaged.

III. MARITIME EQUITABLE LIEN ON THE VESSEL

On 22 July 2017, the Charterer paid the amount of USD100,000 on account of wages which would

become payable to the crew of the Madam Dragonfly following the voyage into a special Bank account of

the Respondent established for that purpose. The Respondent did not pay the crew of the Madam

Dragonfly wages due for the voyage and has not repaid the US$100,000 to the Charterer, pursuant to

which the Charterer kept a maritime equitable lien on the vessel.

IV. DAMAGES CLAIMED BY BOTH THE PARTIES

Owing to such circumstances the Charterers referred the case to arbitration and both sides submit their

points of claim. The Charterer claims damages in the amount of USD30,200,000 while owner claims

damages in amount of USD 1,160,000.


2

ARGUMENTS ON JURISDICTION

I. THAT THE TRIBUNAL DOES NOT HAVE JURISDICTION TO DETERMINE THE CLAIM

FOR DAMAGES MADE BY THE CLAIMANT

1. It is submitted that under the doctrine of competence-competence,1 the Tribunal has power to determine its

own jurisdiction2 by construing the arbitration agreement according to its governing law.3 The

Respondents object to the jurisdiction of the Hon’ble Tribunal, in alternative, the English law governs the

arbitration agreement (A). That the claimant has superseded Clause 27 leading to pre-mature arbitration.

(B). The Master Mariner has the expertise to analyse technical matters, subject to the provisions of the

charterparty (C).

A. The English law governs the arbitration agreement.

2. The Parties have not expressly chosen a governing law for the arbitration agreement. In the absence of

such a choice, the system of law with the “closest and most real connection” to the arbitration agreement

governs that agreement.4

(i) The English law has the closest and most real connection to the arbitration agreement.

3. Itis also advanced that both the claimant and the respondent are based in Cerulean5 which has adopted the

laws of the United Kingdom.6 Therefore, four additional factors indicate that the English law has the

closest and most real connection to the arbitration agreement. First, both Parties are located in states that

apply the English law.7 Second, both Parties executed their counterparts of the Charterparty in states that

apply English law.8 Third, the subject matter9 of the arbitration agreement is “disputes arising under the

Charterparty”, which is an agreement for the voyage of a ship bound by English law. Fourth, the arbitration

1Fouchard, Gaillard, Goldman: On International Commercial Arbitration (Kluwer Law International, 1999) p. 213. 2Redfern and Hunter, International Arbitration (Oxford University Press, 6th ed., 2015), 322, 345; QH Tours Ltd v Ship Design and

Management (Aust) Pty Ltd (1991) 105 ALR 371, 384; Dallah Real Estate and Tourism Co v Ministry of Religious Affairs of the

Government of Pakistan [2011] 1 AC 763, 830; UNCITRAL Model Law on International Commercial Arbitration, Article 16(1). 3Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd ed., 2014), 1405-6; Paper Products Pty Limited v

Tomlinsons (Rochdale) Ltd &Ors (1993) 43 FCR 439, 444. 4Bonython v Commonwealth (1950) 81 CLR 486, 498; Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50, 61;

Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197, 217. 5Procedural Order No. 2, Clause 1. 6Moot Scenario, 45. 7Rothwells Ltd (in liq) v Connell (1993) 27 ATR 137, 143. 8R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 500, 529; Re United Railways of Havana

and Regla Warehouses Ltd [1961] AC 1007, 1021; Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366, 369. 9R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 500, 529; The Assunzione [1954] 2 WLR

234 (‘Assunzione’), 261; Coast Lines Ltd v Hudig&Veder Chartering NV [1972] 2 WLR 280 (‘Coast Lines’), 286 ,289..


3

is regulated by LMAA, which is an English set of institutional rules10 and involved preliminary activities

such as appointing arbitrators and exchanging points of claim, which took place in states that apply English

law.

(ii) The choice of London as the arbitral seat is testimony to this conclusion

4. Following the doctrine of separability established under S.7 of the Arbitration Act11, it does not necessarily

follow that the law governing the main Charterparty should also govern the arbitration clause. In Sul

America v Enesa Engenharia12 that “in principle the proper law of an arbitration agreement which itself

formed part of a substantive contract13 might differ from that of the contract as a whole”.14Indeed, the

Court of Appeal held that the place chosen for the arbitration proceedings, and the consequential lex

arbitri, was an “important factor” which (where London was the ‘seat’) “tended to suggest that the parties

intended English law15 to govern all aspects of the arbitration agreement.”

5. That it would be rare for the law of the arbitration agreement to be different from the law of the seat of the

arbitration.16 The reason is that an agreement to arbitrate will normally have a more real connection with

the place where the parties have chosen to arbitrate17 than with the place of the law of the underlying

contract in cases where the parties have deliberately chosen to arbitrate in one place disputes which have

arisen under a contract governed by the law of another place.18 Thus it is submitted that the arbitration

agreement is to be governed by the English law.

6. Notwithstanding, the Respondents object to the jurisdiction of the Hon’ble Tribunal and mandate that the

matter should be referred to the jurisdiction of the Master Mariner.

B. That the claimant has superseded Clause 27 leading to pre-mature arbitration.

7. That the claimant in approaching this Tribunal has superseded the arbitration agreement and thus it has led

to pre-mature arbitration, which in turn hampers the rights of the Respondents.

10Moot Scenario, 12. 11Arbitration Act 1996 (UK). 12Sul America Cia Nacional De Seguros SA v EnesaEngenharia SA [2012] EWCA Civ 638. 13Ibid, p. 679. 14Ibid, p. 672. 15XL Insurance Ltd v Owens Corning [2000] 2 Lloyd’s Rep 500. 16Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd. (HL) [1993] 1 Lloyd’s Rep 291. 17Black Clawson International Ltd v PapierwerkeWaldhof-Aschaffenburg [1981] 2 Lloyd’s Rep 446. 18Ibid.


4

(i) Pursuant to Clause 27(d) of the Record, referring the matter to the jurisdiction of a Master

Mariner for expert determination was a pre-arbitral step.

8. It is mandated that pursuant to Clause 27(d) of the Record, the dispute, involving a ‘technical matter’ had

to be referred to a Master Mariner for expert determination and thereafter to the Tribunal. In the instant

case, the dispute does involve the vessels route and unloading of cargo, making the matter a technical one

as per Clause 27(g) of the Charterparty.19 Thus, this makes it incumbent upon the Tribunal to refer the

matter to the Master for expert determination.

9. It is further mandated that by expressly stipulating that arbitration may not start before the mandatory pre-

arbitration mechanism is employed,20 or by simply contracting that dispute “shall” be submitted to such

pre-arbitration mechanism,21 makes it mandatory for the matter to be referred to the pre-arbitral

mechanism.22 The use of the word “shall” clearly means that the pre-arbitration mechanism are contracted

as “a prior mandatory process of communication between the parties in conflict”.23 That pursuant to the

Clause 27(d) of the Record, the word ‘shall’ makes it incumbent upon the Claimant to refer the dispute,

involving a technical matter to a Master Mariner and thereafter, the matter ‘may’24be referred for

arbitration.

10.It is submitted that the appointment of Simon Webster, maritime engineer by profession, by the arbitral

tribunal cannot be considered as the Master Mariner as it does not equate to the fulfilment of Clause 27(d)

of the Record and the Claimant has evidently evaded the procedural requirement of the arbitration

agreement.

11.That the purpose of referring the matter to the jurisdiction of the Master for expert determination25 was

aimed at reaching an amicable solution between the parties26 and to provide a “filtering effect”27. That,

19Moot Scenario, 12. 20Swedish contractor v The Secretary of the People's Committee for a municipality of an Arab State ICC Case Nos. 6276 and 6277,

1990, International Journal of Arab Arbitration 2009, Volume 1 Issue 4) pp. 363 – 367. 21Varady, Tibor, et. al International Commercial Arbitration, a Transnational Perspective, Fifth Edition, 2012, American Casebooks p.

14 22Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm). 23Dyala Jimenez-Figueres, Multi-Tiered Dispute Resolution Clauses in ICC Arbitration, 14 ICC Bull. 71 (No. 1, 2003) pp. 84 – 85. 24Moot Scenario, 12. 25Pryles, Michael: Multi-Tiered Dispute Resolution Clauses, Volume 18, no. 2 (2001), Journal of International Arbitration, p. 159. 26Baizeau, Domitille; Anne-Marie Loong with Manuel Arroyo (ed): Chapter 13, Part X: Multi-tiered and Hybrid Arbitration Clauses,

Manuel Arroyo (ed) Arbitration in Switzerland: The Practitioner's Guide, (Kluwer Law International 2013) p. 1453. 27Álvaro López De ArgumedoPiñeiro with Miguel Ángel Fernández-Ballesteros and David Arias (eds): Multi-Step Dispute Resolution

Clauses (2010) p. 733


5

only after the failure of the same;28 the matter could have been referred for arbitration29 otherwise it may

lead to a pre-mature arbitration.30 That thus, the Claimant is liable for superseding Clause 27 of the Record

leading to pre-mature arbitration.

(ii) The Claimant is liable for the repercussions of invoking a pre-mature arbitration.

12.It is mandated that arbitral tribunals have adopted two main procedural approaches31 in handling situations

where the Claimant has submitted the claim to tribunal before complying to the stipulated multi-tiered

clause.32

13.According to the procedural approach, the multi-tiered clause leading to arbitration is of procedural nature

and the whole pre-arbitration procedure should be exhausted before the arbitration proceedings may start

or continue.33 When the Claimant submits the dispute to arbitral tribunal by skipping the contracted pre-

arbitration mechanisms, the arbitral tribunal may either dismiss the claim34 or may order stay of the

arbitration proceedings35 until the contracted procedure has been complied with36 by the Claimant.37It has

further been held that the court clearly has a jurisdiction to stay a court proceeding38 on the simple basis

that "a contract is a contract" and the parties should abide by it. 39

14.That as per the facts and circumstances of the instant case, it is prayed by the Respondents that the arbitral

tribunal grants a stay on the arbitral proceedings and refers the matter to a Master Mariner first for expert

determination. That this will prevent violation of the arbitration agreement and will not act as a prejudice

against the Respondents’ right.

C. The Master Mariner has the expertise to analyse technical matters

28DidemKayali, Enforceability of Multi-Tiered Dispute Resolution Clauses, Journal of International Arbitration, (Kluwer Law

International 2010, Volume 27 Issue 6) p. 552. 29Jollies, Alexander: Consequences of Multi-tier Arbitration Clauses: Issues of Enforcement (Reprinted from (2006) 72 Arbitration 4

(Sweet and Maxwell, London)) p. 329. 30Supra 19. 31Marko Mećar , Enforceability Of Multi-Tiered Clauses Leading To Arbitration. 32Ibid. 33Jollies, Alexander: Consequences of Multi-tier Arbitration Clauses: Issues of Enforcement (Reprinted from (2006) 72 Arbitration 4

(Sweet and Maxwell, London)) p. 329. 34Álvaro López De ArgumedoPiñeiro with Miguel Ángel Fernández-Ballesteros and David Arias (eds): Multi-Step Dispute Resolution

Clauses (2010); David J.A. Cairns, Advocacy and the Functions of Lawyers in International Arbitration.; Alexander Jollies,

Consequences of Multi-tier Arbitration Clauses: Issues of Enforcement, Reprinted from (2006) 72 Arbitration, pp. 336 - 337. 35Hooper Bailie Associated Ltd. v. Natcon Group Pty Ltd., (1992) 28 N.S.W.L.R. 194; Him Portland, Llcv..Devito Builders, Inc. 211 F.

Supp. 2d 230 (D. Me. 2002); DidemKayali, “Enforceability of Multi-Tiered Dispute Resolution Clauses”, Journal of International

Arbitration, (Kluwer Law International 2010, Volume 27 Issue 6) p. 562. 36Metropolitan Tunnel and Public Works Ltd v. London ElectricRailwayCo[1926] 1 Ch 371 at 390. 37Alexander Jollies, Consequences of Multi-Tier Arbitration Clauses: Issues of Enforcement (Reprinted from (2006) 72 Arbitration) p.

331. 38Straits Exploration (Australia) Pty Ltd v Murchison United NL(2005) 31 WAR 187; [2005] WASCA 241. 39Badgin Nominees Pty. Ltd. v Oneida Ltd. Anr [1998] VSC 188.


6

15.It is mandated that the evident advantage of an expert determination of a contractual dispute is that it is

expeditious because they are informal and because the expert applies his own store of knowledge, his

expertise, his skill of a valuer, to his observations of facts, which are of a kind with which he is familiar.40It

is submitted that the level of expertise, qualification and experience of a Master Mariner is aptly wide in

ambit and it is only the Master Mariner who has the capability of understanding and analysing a technical

matter owing to a charterparty.

16.It is humbly prayed before the tribunal, that pursuant to the above-mentioned contentions, the Tribunal

refers the matter to the Master Mariner for expert determination, thereby abiding by the procedural

requirement of the arbitration agreement.

ARGUMENTS ON THE MERITS OF THE CLAIM

II.THAT THE RESPONDENTS ARE NOT LIABLE FOR THE BREACH OF THE

CHARTERPARTY

16. The Respondent’s humbly submit that, owing to the facts and circumstances of the said case read with

the following contentions, it is evident that the Respondent’s cannot be made liable for the breach of the

charterparty as the deviation of Madam Dragonfly was effected by instances of force majeure (A).The

Respondents had exhibited reasonable and prudent behaviour (B). There was reasonable and justified

deviation (C). The commercial object of the contract has not been frustrated (D).The Charterer’s breached

their liability of nominating a safe port of delivery (E).

(A) That the deviation of Madam Dragonfly was effected by instances of force majeure

17. The Respondents are covered under the Exception Clause 17(b) of the Charterparty41 which specifies that

neither party shall be liable for any failure to perform this Contract, where the party prevented from doing

so by reasons of any Force Majeure Event.It is submitted that the term force majeure is prevention of a

party's performance that is caused by circumstances and events which are recognized as being above and

beyond the control of contracting parties and which could not reasonably have been foreseenor avoided42

by the due care of either of the parties.

40Zeke Services Pty Ltd v Traffic Technologies Limited [2005] QSC 135. 41Cl 17 (b), Voyage Charterparty. 42Petition of United States, 300 F. Supp. 358, 366 and n. 2 (E.D. La. 1969)(Hurricane Betsy); Gilmore & Black, The Law of Admiralty

(1957) Ch. VII p. 396.


7

17. That Act of God means any accident, due directly and exclusively to natural causes without human

intervention, which by no amount of foresight, pains, or care, reasonably to have been expected could have

been prevented.43That the phrase "peril of the sea," is said to occur when conditions "are of an

extraordinary nature or arise from irresistible force or overwhelming power, and which cannot be guarded

against by the ordinary exertions of human skill and prudence.' 44 Considering these definitions it is

apparent on the face of record that instances of heavy storm in the high seas, as faced by the Respondents

in the instant case, forms a part of perils of the sea which could not have been guarded against.

17. It is submitted that a force majeure clause generally requires four elements for an event to qualify as a

force majeure: (1)the event must be external; (2) it must render the performance radically different from

that originally contemplated;45(3) it must have been unforeseeable (objective standard) or at least

unforeseen (subjective standard);46 and (4) its occurrence must be beyond the control of the party

concerned. 47

18. It is submitted that owing to the above-mentioned contentions, it is evident that the solar flares which

occurred between 25th July, 2017- 26th July, 2017 and the adjoining storm which followed were major

instances of Force Majeure as all four elements requisite for an event to qualify as a force majeure event

are fulfilled and acted upon.

19. That as per Article IV(2)(c) and (d) of the Hague Visby Rules48, neither the shipper nor the carrier will be

responsible in any event of perils, dangers and accidents of the sea or other navigable waters and Act of

God.

20. That when the damage is shown to have resulted from the immediate act of God, such as a sudden and

extraordinary flood49, the carrier would be exempt from liability, unless the plaintiff shall prove that the

defendant was guilty of some negligence50 in not providing for the safety of the goods.51 That there are

43C.J.S. Act of God, at 757 (1985);Compania de Vapores INSCO S.A. v. Missouri Pac. R.R., 232 F.2d 657, 660, 1956

AMC 764, (5th Cir. 1956); Proprietors, v.Wood, 3 Esp. 127; Forward v. Pittard, IT. R. 27; 2 Greenl. Ev. (14 th ed.), p. 209. 44J. Gerber & Co. v. S.S. Sabine Howaldt, 437 F.2d 580, 588, 1971 AMC 539 (2d Cir. 1971). 45Taylor v. Caldwell, [1863] EWHC QB J1. 46Skandia Ins. Co. v. Star Shipping 173 F. Supp. 2d 1228, 2001 AMC 1527; Compania De VaporesInsco, S.A. v. Missouri Pacific R.

Co., 232 F.2d 657 (5th Cir. 1956). 47Transco Plc v Stockport Metropolitan Council, [2003] UKHL 61; Lebeaupin v Richard Crispin & Co (1920) 2 KB 714. 48Article IV(2)(c) of Hague Visby Rules, 1968. 49Treitel on the Law of Contract (Sweet & Maxwell), p. 415 50Dammers& Van der Heide Shipping & Trading, Inc. v. S.S. Joseph Lykes 300 F. Supp. 358 (E.D. La. 1969). 51R.R .CO. vs Reeves77 U.S. 10 Wall. 176 176 (1869).


8

numerous other cases in which courts have exonerated defendants because the claimed damage was caused

by a storm that was found to be an act of God.52 Further, solar flares can temporarily alter the upper

atmosphere creating disruptions with signal transmission.53 The harmful solar radiation disturbs the

atmosphere in the layer where GPS and communications signals travel.54

21. In the instant case, the Respondents had to face both severe and harmful solar flares, which resulted in

deviation of Madam Dragonfly due to the hampering of the communication and navigational systems,

followed by a fierce storm which was considered to be “Once in a Lifetime storm” which brought with it

rain, hail and severe winds.55 It is evident that both these events qualify to be Force Majeure events. That

thus the Respondents cannot be made liable for the breach of the charterparty.

(B) That the Respondents had exhibited reasonable and prudent behaviour

22. It is mandated that a common carrier is not liable for any accident as to which he can show that it is due to

natural causes, directly and exclusively without human intervention56, and that it could not have been

prevented by any amount of foresight and care reasonably to be expected from him.57 Where the law

creates a duty or charge, and the party is disabled by an act of God, without any fault, from performing it,

and has no remedy over, then the law will excuse him.58

23. In the instant case, the Respondents had taken all adequate and reasonable measures as the Respondents

had made sure that the ship conforms to the standards prescribed by the relevant law and adequate and

reasonable technological systems were adopted. Further, all technological systems cannot be advocated

and only reasonable technical aspects are required to be included in the vessel59, as is in the instant case.

24. It is further mandated that the Shippers are to make inspections of the vessel before the commencement of

the voyage within the parameter of reasonableness60 and keeping in mind what a prudent man would

52Chanler v. Wayfarer Marine Corp., 302 F. Supp. 282, 286 (S.D. Me. 1969); Buntin v. Fletchas, 257 F.2d 512, 514 (5th Cir. 1958);

Stegemann v. Miami Beach Boatslips, Inc., 213 F.2d 561, 1954 AMC 1372 (5th Cir. 1954); Gelb v. Minneford Yacht Yard, Inc., 108 F.

Supp. 211 (S.D.N.Y. 1952); Potomac Poultry Food Co., Inc. v. M/V Anna Maersk, 1934 AMC 166, 172 (D. Md. 1934). 53https://www.nasa.gov/mission_pages/sunearth/news/flare-impacts.html 54NASA on Sept. 10, 2017. (https://www.nasa.gov/feature/goddard/2017/active-region-on-sun-continues-to-emit-solar-flares ). 55Moot Scenario, 21. 56Lord Mansfield in Forward v. Pittard (1785) 1 T.R. 2. 57Nugent v Smith 4 (1876) 1 CPD 423 at p 444. 58Paradinev. Jane, Alleyn27; River Wear Comrs. v. Adamson, iQ. B. Div.548; Shubrickv. Salmond, 3 Burr. 1637; Brecknock,etc., Nay.

Co. v. Pritchard, 6 T. R. 750; Hadley v. Clarke, 8 T. R. 259. 59Nuzzo v. Rederi, 304 F.2d 506, 510 (2nd Cir. 1962). 60Brown v. Nitrate Producers S.S. Co. (1937) 58 LI.L.R.188; Cransfield Bros. v. TatemS.N.Co. (1939) 64 LI.L.R. 264, 275; Guan Bee

v. Palembang Shipping Co. [1969] 1 May L.J. 90, 91; M.D.C. v. N.V.Z.M. Beursstraat[1962] 1 Lloyd’s Rep. 180; The President

Monroe [1972] 1 Lloyd’s Rep. 385, 386 (U.S. District Ct).

https://www.nasa.gov/mission_pages/sunearth/news/flare-impacts.html

https://www.nasa.gov/feature/goddard/2017/active-region-on-sun-continues-to-emit-solar-flares


9

inspect.61 In the instant case the shippers and the agents of the Charterers themselves had inspected the

vessel before the accrual of the voyage.62 This corresponds to the fact that the vessel was in perfect shape

and every technological system was adequately and robustly fit in.

25. That the standard required is not an accident‐free ship,63 nor an obligation to provide a ship which might

withstand all conceivable hazards64 and fulfils a demand for perfection.65 A temporary defect or one which

is trivial and can be remedied will not be enough to render the vessel unseaworthy to encounter the perils

of the voyage. 66 Further, the test to determine whether the shipper is liable for the eventual

unseaworthiness of the vessel depends not on absolute perfection but on commercial reality.67 Thus, in the

instant case, the Respondents cannot be made liable under any circumstance as they are devoid of the

obligation of providing an accident free ship able to withstand all hazards at the high seas.

26. In Torepo68 the vessel was accused of being unseaworthy for not being equipped with adequate charts. The

court did not hold the vessel liable as the seaworthiness standard is not one of perfection and nor the ISM

demands perfection.69Thus it is submitted that in the instant case the vessel was reasonably seaworthy and

the failure of the navigational and communication systems for some hours was due to the occurrence of

harmful solar flares, which was a defect which could not be foreseen or avoided.

27. It is further advanced that if a seaworthiness defect arises while the vessel is at sea, the shipowner will not

be liable for damages caused by such a defect to the cargo previously loaded.70 In the instant case, the

communication systems were knocked down only after the ship was on its voyage, attributable to the solar

flares. Thus the Respondents cannot be held liable under any circumstances, for the breach of the

charterparty.

61The Amstelslot [1962] 2 Lloyd’s Rep. 336. 62Moot Scenario, 5. 63Hellenic Dolphin [1978] 2 Lloyd’s Rep. 336. 64President of India v West Coast Steamship Co (The Portland Trader) [1963] 2 Lloyd’s Rep 278, 280‐281 (Dist Ct, Oregon). 65Tetley, Marine Cargo Claims, Vol. 1, 929. 66Steel v State Line Steamship Co (1877) 3 App Cas 72; Hedley v Pinkney & Sons Steamship Co [1894] AC 222, 228; ThePentland

(1897) 13 TLR 430; The Stranna [1938] P 69; The Diamond [1906] P 282; Virginia Carolina Chemical Co v Norfolk & North

American Steam Shipping Co Ltd (1912) 17 Com Cas 277, 278; FC Bradley & Sons Ltd v Federal Steam Navigation Co Ltd (1926) 24

Ll LR 446, 455; Huddart Parker Ltd v Cotter (1942) 66 CLR 624, 663‐4; International Packers London Ltd v Ocean Steamship Co Ltd

[1955] 2 Lloyd’s Rep 218; London Arbitration 2/2005, (2005) 659 LMLN 1; Steel v State Line Steamship Co (1877) 3 App Cas 72,

90‐91; Leonard v Leyland & Co (1902) 28 TLR 727; Gilroy, Sons & Co v W R Price & Co [1893] AC 56, 64; The Schwan [1909] AC

450, 464. 67Schoenbaum. Vol. 2, 32.; MDC Ltd. v. NV ZeevaartMaatschapijBeursstraat [1962] 1 Lloyd’s Rep. 180, 186. 68The Torepo [2002] EWHC 1481 (Admlty). 69Anderson, 234. 70Tetley, Marine Cargo Claims, Vol. 1, 896; The Fjord [1999] 1 Lloyd´s Rep. 307.


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(C) That Respondents cannot be made liable for reasonable deviation

28. It is submitted that as per Article IV (4) of the Hague-Visby Rules71 to save or attempting to save

property72 at sea; and any reasonable deviation73 of the vessel is considered to be justifiable and should not

to be considered a breach of the contract of carriage. It is further submitted that according to Clause 17 of

the Charterparty,74 the Respondents were allowed to deviate for the purpose of saving life and property

(including the vessel). It is further submitted that a contract of affreightment is not put to an end either by a

breach of the warranty of seaworthiness or by a deviation which is in fact necessary for the safety of the

ship and crew.75

29. That in the instant case the Respondents were obligated to deviate to Port Spectre from the most direct

route to Port Dillamond due to the failure of the communication and navigational satellites which was

affected by the unforeseeable solar flares and radiations. It is stated that it is often difficult in practice to

separate the crew (human life) from the ship and its cargo. It will be quite often the case that the intention

of the master in deviating under such circumstances is to offer protection not just to the crew, but also to

the ship and its cargo.76 Given that the three elements are often inseparable it is submitted by the

Respondents that saving of human life of the crew onboard and the cargo was an obligation of the

shipmaster77 and acting in furtherance of this obligation the Respondent deviated from the prescribed route.

30. It is further put forward that the master is not only allowed to deviate in order to save cargo on board, but it

would have amounted to recklessness78 and negligence on the master79 to continue on the voyage without

attempting to save the cargo80 It is thus advanced that in such situations the carrier’s obligation relating to

care and preservation of the cargo would seem to take precedence over the implied obligation not to

deviate.

31. That the Respondents reasonably deviated to the Port of Spectre owing to the shipper’s obligation towards

the safety of cargo and human life on board. That thus the Respondents cannot, under any circumstances be

71Article IV (4) of the Hague-Visby Rules. 72Stag Line Ltd v Foscolo Mango [1932] AC 328 at p 343-4. 73Article IV of Carriage of Goods by Sea Act 1971. 74Moot Scenario, 9. 75Kish v Taylor [19121 A.C. 604 (The Europa). 76Julian Cooke et al., Voyage Charters (4th edn, 2014) 77Kish v Taylor [19121 A.C. 604. 78Anderson, & Co v The Owners of San Roman,(1873-74) L.R 5P C 301. 79Notura v Henderson[1870] L.R 5 Q.B 354. 80The Rona 5 Aspinal M.C 259.


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made liable from deviating and thus breaching the charterparty as owing to the above contentions it is

evident that the deviation of Madam Dragonfly was a reasonable and unavoidable one.

32. Arguendo if the deviation of the vessel of the shipper was unjustified, as alleged by the Charterer’s, they

had been informed about the same via mail dated 26th July, 2017 at 2:32pm. That it is an established fact in

shipping law that where the cargo owner elects to affirm the contract, it is said that he “waives the

deviation”, leaving intact his other rights and remedies arising out of the deviation. It is further accepted

that since unjustified deviation is itself a breach, the carrier remains liable in damages for the loss resulting

from the deviation, unless liability for this loss is itself covered by an exceptions clause.81

33. That however it has to be kept in mind that in the instant case the deviation was caused due to the solar

flares and the storms which have already been established as major force majeure events. That thus the

Respondents are covered and cannot be made liable under the Exception Clause 17(b) of the Charterparty.

(D) That the commercial object of the contract has not been frustrated

34. A contract is only frustrated if there has been such a change as to render an obligation ‘radically different’

to what the contract contemplated.82

35. The commercial object of the voyage – the delivery of the cargo – would not have been defeated, but

simply delayed. Absent any evidence that this delay was inordinate, and because the contract already

contemplated delay in its laytime and demurrage clauses, it cannot be said that performance became ‘a

different thing from that contracted for.83Thus it can be very well concluded that the commercial purpose

of the contract has not been frustrated by the Respondents and they cannot be made liable for the same.

(E) That the Charterer’s breached their liability of nominating a safe port of delivery

36. It is submitted that it is a well known fact that a safe port means that the loading and destination ports are

adequate in the relevant period of time, the particular ship can reach it, use it and return from it without, in

the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good

81Julian Cooke et al., Voyage Charters (4th edn, 2014) 82Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 728–9; Lim Kim Som v SheriffaTaibahbte Abdul Rahman

[1994] 1 SLR(R) 233, 245–6 [27]–[29]. 83British Movietonews Ltd v London and District Cinemas Ltd [1952] AC 166, 185; Davis Contractors Ltd v Fareham Urban District

Council [1956] AC 696, 729; Lim Kim Som v SheriffaTaibahbte Abdul Rahman [1994] 1 SLR(R) 233, 246 [28].


12

navigation84 and seamanship. 85 That the relevant period of time means the entire period from the moment

of the vessel’s arrival till the time of her departure.86

37. That in the instant case the Respondents had to deliver the goods to Port Dillamond nominated by the

Charterer’s. That owing to the facts of the case, Port Dillamond is deemed to be an unsafe port as even

after using good navigation techniques, the danger, the vessel and the crew was exposed to was

insurmountable.

38. In the case of Reardon Smith Line v Australian Wheat Board87, a clause in a charterparty provided that the

ship was to load "at such safe dock, pier, wharves, and/or anchorage as ordered." It was held, the words of

the charterparty were an undertaking by the charterers to nominate a safe port and a safe dock within the

port. Ergo, the Claimant is in breach of clause 11 of the charterparty88 which is similar in its wording.

39. Thus it is finally advanced, owing to the facts and circumstances and the contentions made in the present

case, the Respondents cannot be held liable for the breach of the charterparty.

III. THAT THE CLAIMANT DOES NOT HOLD MARITIME EQUITABLE LIEN ON THE

VESSEL

40. It is submitted that the Claimant is neither entitled to hold maritime lien (A) nor is entitled to hold

equitable lien (B).

(A) Claimant is not entitled to hold maritime lien

41. The Hon’ble Court in the case The Oceano89, stated that: “As soon as the performance of a charter party is

commenced a lien exists on the vessel in favor of the shipper or charterer, and a suit in rem may be

maintained for any liability of the master or owner arising therefore…Damages sustained by a charterer

through breach of a charter contract constitute a lien on the vessel.”

42. A lien on the vessel arises in the charterer’s favour for virtually any breach of charter committed by an

owner.90Therefore, the above authorities cited establish that only in the event of breach of charter party,

84Grad Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2013] EWH C 2199 (Comm) 2013 WL

3878761. 85Eastern City, [1958] 2 Lloyd’s Rep. 127. 86Ibid. 87Reardon Smith Line v Australian Wheat Board[1956] 1 Lloyd's Rep. 1 88Cl 11, Voyage Charterparty. 89The Oceano , 148 F. 131, 133 (S.D.N.Y. 1906). 90Julian Cooke et al., Voyage Charters (4th edn, 2014)


13

right of maritime lien comes into existence. However, the Respondent is covered by the defence of force

majeure as proved earlier in para. 19and hence, has not committed a breach of charter party. In view of the

same, the Claimant does not hold a right to hold maritime lien over Madam Dragonfly.

(B) Claimant is not entitled to hold equitable lien

43. It is humbly submitted that the Claimant does not hold equitable lien over Madam Dragonfly. The Court, in

the case Beier Howlett Pc v. Police & Fire Retirement Systems91stated that “An equitable lien arises from

an agreement that both identifies property and evidences an intention that such property serve as security

for an obligation” This means that to give rise to an equitable lien, there must be an agreement identifying

that property, in this case the vessel, as a security for an obligation. However, in the instant case, there was

no such prior agreement as to identification of Madam Dragonflyas a security.

44. Similarly, in the case of Barnes v Alexander92, the Court while discussing equitable lien stated that “The

form or particular nature of the agreement which shall create a lien is not very material, for equity looks at

the final intent and purpose rather than at the form; and if intent appear to give, or to charge, or to pledge

property, real or personal, as a security for an obligation, and the property is so described that the principal

things intended to be given or charged can be sufficiently identified, the lien follows.”

45. This leads to the fact that there must be an intention and purpose to hold a particular thing, which in this

case is the vessel, as security for securing an unpaid obligation. Since, there is an apparent lack of any such

agreement or even expression or implication of intention to hold Madam Dragonfly as security, there arises

no question of existence of equitable lien.

46. It is further submitted that there was no unjust enrichment upon the Respondent by the Claimants which

constitutes an equitable lien. The fund created for the payment of wages was not an enrichment for the

Respondent nor was it a benefit for the Respondents. It was merely for the payment of wages to the crew

which will be done in the due course of time. The Claimant was aware of the fact that the Respondent was

facing certain financial distress93 and hence, the money was merely temporarily put to such use so that the

Respondent company would not have to let go off a large number of its crew, which would leave them

91Beier Howlett Pc v. Police & Fire Retirement Systems 858 N.W.2d 432 (2015) 92Barnes v Alexander, 232 US 117, 121 93Moot scenario, page 1


14

unemployed. So, the Respondent had the goodwill of the crew in mind while stalling the payment of

wages.

47. It is submitted that as earlier mentioned in the charter party, to the best of the Respondent’s knowledge the

vessel has never been involved in any action or dispute or been blacked by any maritime or transport

organisation in or in connection with crew wages or conditions94. In continuance of the same, the

Respondent shall pay the crew wages and return the money to the Claimant.

IV. THAT THE CLAIMANT IS LIABLE TO PAY THE DAMAGES CLAIMED

48. It is submitted that the Claimant is liable to pay the requisite damages to the amount of USD 1,610,000 as

the delivery took place on 29th July, 2017 (A) for the amount of Freight (B), Repairs to Hull (C),

Demurrage (D), Usage of Electronic Facilities at port (E) and Agency fee for the Port of Spectre and

Dillamond (F).

(A) That the delivery took place on 29th July, 2017

49. It is submitted that the Cargo was delivered to the Claimant at 8:42pm on 29 July 2017.It is mandated that

delivery need not consist only of a physical transfer of the property. There can be a symbolic or

constructive delivery of which the classic instance is the delivery of a key to the warehouse where goods

are stored.95

50. Further, shipowner is required to allow the consignee a reasonable time in which to collect the cargo, after

which he may land and warehouse it at the consignee’s expense96 as after the expiry of a reasonable time,

the shipowner is entitled to do what is reasonable in the circumstances to prevent delay to his ship. In the

present case, sufficient time was given to the Claimant to take delivery of the goods, yet they procured the

goods only after 41 hours (time difference between the delivery times claimed by both the parties) from the

port. Further, on 29th July at 8:58 am, the Claimant was made aware that the ship is on her way to the port.

On the same day at 4:28 pm, the claimant was again reminded that the ship is about to birth in another 30

minutes. After receiving no reply from the Claimant, they were again informed at 8:42 pm that their goods

94Moot scenario, page 8. 95Benjamin’s Sale of Goods, 9th ed (2014) 96National Packaging Corp. v. N.Y.K. Line [1973] 1 Lloyd’s Rep. 46; Bourne v Gatliffe(1841) 133 ER 1298; North American Smelting

Co. v. Moller S.S. Co., 204 F.2d 384 (3rd Cir. 1953); Calcot, Ltd. v. Isbrandtsen Company, 318 F.2d 669 (1st Cir. 1963)





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are available for collection. Ergo, only after giving reasonable time for taking the delivery, goods were

discharged at the port and delivery constituted.

51. In the case of The "Beltana" 97 The Australian court rejected the actual physical transfer definition and held

that "in this case delivery of the goods was made either when the goods were landed on the wharf and freed

from the ship's tackles . . . or at the very latest at the time they were placed [at the consignee's disposal]".

In the instant case, by discharging the goods at the port, they were placed at the Claimant’s disposal.

52. In furtherance of this, the mail containing the barcode access was itself a “delivery order” for the

purposes of section 1(4) of the Carriage of Goods by Sea Act 199298; and the claimant is estopped from

contending that delivery of the cargo upon presentation of a pin code was a breach of contract and/or duty

on the part of the carrier.

53. Reliance is placed on the classic case of Glyn Mills v East and West India Dock Co99. That case established

that there was a duty on the part of the carrier to deliver goods to the presenter of a genuine original bill of

lading. Similarly, in the present case there should be no difficulty in regarding the delivery of a pin code as

the relevant symbolic act and the possession of the pin code as that which entitles the possessor to delivery

of the goods, the obligation of the carrier being to deliver to the person who first enters the pin code into

the machine. Therefore, only after giving the means of access to the port as well as reasonable time,

delivery was constituted at 8:42pm on 29 July 2017.

(B)That the Claimant is liable to pay the freight

54. Freight is the remuneration payable for the carriage of the cargo.100 The primary payment obligation under

a voyage charter is freight.101 Freight is a fixed price for a particular voyage carrying a particular cargo or

cargoes.102 Under a voyage charter, the shipowner is entitled to freight which will cover costs, including

fuel and crew as well as profit.103

97Automatic Tube Company et al., v. Adelaide Steamship (Operations) Ltd. et al. [1967] 1 Lloyd's List L.R. at 540 98Section 1(4) of the Carriage of Goods by Sea Act 1992. 99Glyn Mills v East and West India Dock Co (1882) 7 App Cas 591. 100Julian Cooke et al., Voyage Charters (4th ed., 2014) 101Simon Baughen, Shipping Law, P. 225 (4th ed., 2009). 102Ibid. 103Id. at P. 220.


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55. As a rule, freight is earned by the carriage and arrival of the goods ready to be delivered to the merchant,

though they may be in a damaged state when they arrive.104

56. It is submitted that freight is payable on the entire quantity loaded as the provisions of the charter indicate

that the amount of cargo on which freight was payable should be ascertained on loading and there were no

provisions for remeasurement or adjustment at the port of discharge.105 The amount of freight was

therefore fixed on loading, although it was not payable until delivery.106Therefore, freight is required to be

paid for all 1000 bags of coffee loaded on 24th July 2017.

57. It is argued that since the cargo retained the form and substance of coffeebeans, and had not entirely lost

commercial value, freight was payable. The mere fact of damage or contamination was irrelevant. The

question is whether an honest merchant would be forced to qualify the description applicable to the goods

on shipment to such an extent as to destroy it. If the qualification destroys the description, no freight has

been earned because ‘the cargo’ has not been delivered. If the description is merely qualified, ‘the cargo’

has been delivered, albeit damaged or as the case may be contaminated.107 Thus, since the cargo could

properly be described as “coffee beans”, albeit “damaged coffee beans”, the freight is payable.

58. Furthermore, a claim in respect of cargo cannot be asserted by way of deduction from freight is a long

established rule in English law.108 The rule against deduction from freight extended beyond claims for

damages and was to the effect that a claim for freight was “sacrosanct” and therefore unaffected by any

cross-claim of the charterer.109Therefore, where the contract contains an arbitration clause, the owner may

obtain an immediately enforceable interim award for freight before the tribunal adjudicates upon the

charterer’s cross-claims.110

(C) That the Claimant is liable to pay for repairs to hull.

59. During the course of the voyage, the hull was damaged111 and the Respondents are entitled to claim for its

repairs from the Claimant.

104Dakin v Oxley (1864) 143 ER 938; Kish (JE) v Charles Taylor & Sons [1912] AC 604, 616. 105Moot scenario, 11, cl 22. 106Shell International Petroleum Co. v. Seabridge Shipping (The Metula) [1977] 2 Lloyd’s Rep. 436, [1978] 2 Lloyd’s Rep. 5. 107Montedison S.P.A. v. Icroma S.p.A. (The Caspian Sea) [1980] 1 Lloyd’s Rep. 91. 108Aries Tanker Corp v Total Transport [1977] 1 Lloyd’s Rep 334 at p 337; The Brede [1973] 2 Lloyd’s Rep 333. 109Freedom Maritime Corp. v. International Bulk Carriers (The Khian Captain (No. 2)) [1986] 1 Lloyd’s Rep. 429. 110Exmar BV v. National Iranian Tanker Co. (The Trade Fortitude) [1992] 1 Lloyd’s Rep. 169, 177. 111Moot scenario, 20.


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60. The loss incurred by the owners as a result of physical damage to the ship consists normally of the cost of

the repairs themselves, as long at least as they are reasonable112 and of loss of income113 resulting from

detention through repairs.

61. A port will not be safe unless, in the relevant period of time, the particular ship can reach it, use it and

return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot

be avoided by good navigation and seamanship.114 Since a port is not safe if the ship is exposed to a danger

even while approaching it, in the present case, the ship was damaged whilst approaching the port. Ergo, the

charterers will be liable for any damage caused to the ship whilst approaching the port as happened in this

case.

62. The charterer does not guarantee that the most direct route or any particular route to the port is safe, but the

voyage he orders must be one which an ordinarily prudent and skilful master can find a way of making in

safely.115 This entails prevention of vessel from risks such as exceptional risks at the open sea.116

63. Where charterers nominate an unsafe port or berth, the normal117 consequences where the order is obeyed

are physical damage to the ship. Even negligent navigation following the charterer's order to proceed to

an unsafe port will not necessarily break the chain of causation.118A grounding caused by the charterer’s

nomination of an unsafe port may result in hull damage for which charterer is liable.119

64. Furthermore, where by the terms of a charterparty the charterer gives an undertaking to nominate a safe

port and he breaks that undertaking and nominates an unsafe port and the ship is damaged through going

there, he will be liable for the damage.120It is immaterial in point of law where the danger is located. 121

65. A port may be unsafe because of uncharted reef122 deficient anchorages,123 wind conditions124 and other

kinds of adverse weather125 In the case at hand, the port is rendered unsafe as the object on which the

anchor got tangled was an uncharted coral reef due to which the hull was damaged and costs accrued.126

112Ruxley Electronics and Construction Ltd v. Forsyth [1996] A.C. 344 113The Greta Holme [1897] A.C. 596 and Beechwood Birmingham v. Hoyer Group UK [2011] Q.B. 357, at paras 33–47. 114Leeds Shipping Co. Ltd. v. SociétéFrançaise Bunge [1958] 2 Lloyd’s Rep. 127, at p. 131; Kodros Shipping Corp. v. Empresa

Cubana de Fletes [1981] 2 Lloyd’s Rep. 613. 115Ibid. 116Palace Shipping Co v Gans SS Line [1916] 1 KB 138. 117Cf. AIC Ltd v. Marine Pilot (The Archimidis) [2008] 1 Lloyd’s Rep. 597. 118The Polyglory [1977] 2 Lloyd's Rep. 353, p.366. 119The Solomon, SMA 3106 (1994) (Engelbrecht, Leon, Arnold). 120Reardon Smith Line V Australian Wheat Board[1956] 1 Lloyd's Rep. 1. 121G.W. Grace & Co Ltd v General Steam Navigation Co Ltd (The Sussex Oak) [1950] 2 KB 383. 122Mediolanum Shipping Co v Japan Lines Ltd (The Mediolanum) [1984] 1 Lloyd’s Rep 136 (CA)

https://login.westlawindia.com.elibrary.symlaw.ac.in/maf/wlin/app/document?src=doc&linktype=ref&&context=137&crumb-action=replace&docguid=ID569D031E42711DA8FC2A0F0355337E9


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(D) That the Claimant is liable to pay demurrage

66. Demurrage is the agreed damages to be paid for delay if the ship is delayed in loading or discharging

beyond the agreed period”. 127 If the laytime is exceeded, the charterers are in breach of an innominate

term of the contract.128 Thus they are liable for damages for breach, but in reality, these are always fixed as

demurrage. Demurrage is therefore liquidated damages for exceeding the laytime.129

67. Where the laytime allowed is measured in weather working days then during the period the vessel is

waiting for a berth (whether the delay is due to weather or congestion) time will count except for any

periods during which loading or discharging wouldn’t have been possible due to weather, had the

particular vessel been in berth. 130 Since in the present case, laytime allowed was 0.5 WWD131, laytime

began to run at 7 AM on 29th July 2017 when the port instructed the ship to wait outside the port of

Dillamond due to unavailability of berths. 132 Had a berth been available, she would have docked earlier

and discharged the cargo.

68. It is submitted that in port charters, laytime commences when the vessel arrives at the port, and the

charterer takes the risk of delays due to congestion.133 Charterer’s position and plea of ignorance of the

prevailing port conditions lacks any commercial reality.134 Since there was a port charter in the present

case, charterer is liable for demurrage as a result of delays due to congestion.

69. Laytime Definitions for Charterparties 2013135, defines the word “port” as follows. “PORT shall mean any

area where vessels load or discharge cargo and shall include, but not be limited to, berths, wharves,

anchorages, buoys and offshore facilities as well as places outside the legal, fiscal or administrative area

where vessels are ordered to wait for their turn no matter the distance from that area.” Therefore, in the

123The Eastern City, [1958] 2 Lloyd’s Rep 127. 124Johnston Bros v Saxon Queen SS Co (1913) 108 LT 564. 125The Dagmar [1968] 2 Lloyd’s Rep 563. 126Moot scenario, 20. 127AktieselskabetReidar v Arcos Ltd [1927] 1 KB 352. 128Universal Cargo Carriers Corp v Citati[1957] 2 QB 401. 129CompaniaNaviera Aeolus SA v Union of India [1964] AC 868 at 899 (Lord Guest); Dias CompaniaNaviera SA v Louis Dreyfus

Corporation [1978] 1 WLR 261 at 263; The Forum Craftsman (Islamic Republic of Iran Shipping Lines v. Ierax Shipping Co. [1991] 1

Lloyd’s Rep. 81, at p. 87.) 130Aldebaran Compania Maritime SA Vs Aussenhandel AG (The Darrah) [1977] AC 157. 131Cl 8 (c) of Voyage Charterparty. 132Moot scenario, 20. 133P. Dougherty Co. v. 2,471 Tons of Coal, 278 F. 799, 803 (D. Mass. 1922); In re Arbitration between Nereus Shipping, S.A. and

Island Creek Coal Sales Co., SMA 1763 (1982); Hellenic Lines, Ltd. v. Embassy of Pakistan 467 F.2d 1150, 1154 (2d Cir. 1972) 134The StoltAvance SMA 3010 (1993). 135Laytime Definitions for Charterparties 2013.


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instant case, at 7 AM on 29th July 2017, when the vessel was ordered to wait at a place 100 nm out from

Dillamond136, it was within the port limits, hence the laytime commenced.

70. The vessel arrived at Port of Dillamond at approximately 4 pm on 29th July 2017. Notice of readiness was

then given. The laytime allowed for discharging expired on arrival as it was communicated to the

Claimant that demurrage shall accrue from arrival, which was acquiesced by the Claimant.137 Thus

demurrage accrued from 4 pm till the discharge of cargo at 9 pm. Hence, the Claimant owes demurrage

charges to the Respondent to the amount of USD 100,000 at the rate of USD 20,000/hour.

71. In alternative, even if the discharge by the Claimant was delayed due to congestion, it is stated that if the

selected method of discharge is hindered or prevented by an excepted peril the charterer must change to

another available method, failing which he risks incurring demurrage.138

72. It is submitted that the Claimant cannot rely on Clause 8(e)139 to excuse its failure to pay demurrage since

laytime continued to run, demurrage accrued for each subsequent hour of delay after it expired.140The onus

is on charterer to demonstrate that it can benefit from either of these exemptions, which as exclusion

clauses should be construed narrowly and against the party that seeks to rely on them.141 Adopting this

approach, the Tribunal should find neither exclusionary factor applies.

(E) That the Claimant is liable to pay for use of electronic access systems.

73. It is submitted that the Claimant is liable to pay USD 10,000 for use of electronic access systems at port of

Dillamond on the basis that such facility was used only for the benefit of the Claimant due to advantages

such as improved speed, reduced expense and paperwork. The Respondent was aware about the urgency of

delivery, hence opted to use such facility to mitigate the losses that claimant might incur due to the delay.

The Claimant can recover for loss incurred in reasonable attempts to avoid loss.142

136Moot scenario, 20. 137Moot scenario, 22. 138The Varing [1931] P. 79; Fitzgerald v. Lona (Owners) (1932) 44 Ll. L. Rep. 212; Red. “Macedonia” v. Slaughter (1935) 40 Com.

Cas. 227. 139Cl 8 (e) of Voyage Charterparty. 140John Schofield, Laytime and demurrage, Lloyd Shipping Law Library 357 [6.2], [6.7]; Lockhart v Falk (1875) LR 10 Ex 132, 135

(Cleasby B); Harris v Jacobs (1885) 15 QBD 247, 251 (Brett MR); Transamerican Steamship Corporation v Tradax Export S.A. (The

Oriental Envoy) [1982] 2 Lloyd’s Rep 266, 271 (Parker J) 141CompaniaNaviera Aeolus SA v Union of India (The Spalmatori) [1964] AC 868, 879 (Lord Reid); Darlington Futures Ltd v Delco

Australia Pty Ltd (1986) 161 CLR 500, 510; Nissho Iwai Australia Ltd v Malaysian International Shipping Corporation (1989) 167

CLR 219, 227. 142McGregor on Damages (19th (2014) edition); Fulton Shipping Inc of Panama v Globalia Business Travel S.A.U. [2015] EWCA Civ

1299.


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74. Where the owner does take steps, going beyond his legal obligations, to speed up the loading or

discharging process and thus diminish the time his vessel spends on demurrage he is entitled to recover any

costs reasonably incurred in so doing.143 It is submitted that the Respondent used the electronic facility

only to speed up the discharging process due to urgent nature of the delivery, hence the claimant shall be

liable to pay for costs incurred.

75. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him

has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover

the cost of such measures merely because the party in breach can suggest that other measures less

burdensome to him might have been taken.144 Since the charterers breached their duty to nominate a safe

port, owners acted reasonably by adopting alternate and quicker method of delivery of cargo by using the

electronic access system, hence the charterers will be liable to pay such costs incurred by owners in

adopting such remedial measure.

76. As has been upheld in the case of The Asia Star145, the claimant can recover expenses reasonably incurred

in the course of taking mitigation measures. Therefore, subject to the reasonableness of the actions of the

aggrieved party and the foreseeability of its additional loss in mitigation, recovery of such additional loss is

allowed146

77. While the principle of mitigation does not require an aggrieved party to nurse the defaulting party’s

interests at the expense of its own interests147, it has also long been said that the aggrieved party must act

with both the defaulting party’s interests as well as its own interests in mind148.

78. Considering that quick delivery of cargo was in the interest of both the parties, using electronic access

systems at port of Dillamond was reasonable and the charterers will be liable for the costs incurred for the

same.

143Leeds SS. Co. v. Duncan Fox (1932) 37 Com. Cas. 213 144Banco de Portugal v Waterlow [1932] AC 452 145The Asia Star [2010] 2 Lloyd’s Rep. 121 146Browne-Wilkinson LJ in GebruderMetelmann GmbH & Co KG v NBR (London) Ltd [1984] 1 Lloyd’s Rep 614 at 633;The

“Sivand” [1998] 2 Lloyd’s Rep 97 147Harlow & Jones, Ltd v Panex (International), Ltd [1967] 2 Lloyd’s Rep 509 at 530 per Roskill J. 148Smailes and Son v Hans Dessen and Co (1906) 94 LT 492 at 493 per Channell J.



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79. Claimants are also liable to pay for use of electronic access systems in accordance with Section 56 of Ports

and Maritime Administration Act 1995 (NSW)149as the electronic facility was used to access the port

cargo.

(F) That the Claimant is liable to pay the agency fee

80. That the Claimants are liable for the payment of agency fee at the Port of Spectre and the Port of Dilamond

to the Respondents. Agency fee at the Port of Spectre (A). Agency fee at the Port of Dilamond (B).

(i) Agency fee at the Port of Spectre

81. It is mandated that pursuant to the charterparty, the unforeseeable and inevitable weather conditions and

hampering of communication systems owing to the solar flares,150 made it incumbent upon the

Respondents to deviate to the Post of Spectre due to the obligation on the Respondents regarding safety of

cargo, human life and property.151

82. It is stated before the Tribunal that the agency fee claimed by the Respondents is part of an incidental

expense, while carrying out the execution of the contract. It is settled that incidental damages are incidental

expenses such as commercially reasonable charges in stopping delivery, in transportation, care and custody

of goods, incurred by the non-breaching party in order to avoid other direct and consequential losses of

breach.152 Furthermore, owing to the above contentions it is evident that the Charterer’s have breached

Clause 11 of the charterparty153 by nominating an unsafe port of delivery.

83. That thus the Respondents have rightfully claimed the agency fees incurred at the Port of Spectre, as that

expense was unavoidable and incidental to the execution of the contract, which has to be mandatorily

recovered by the Charterer’s. Hence the claim.

(ii) Agency fee at the Port of Dilamond

84. It is submitted that according to the Part 5 of Ports and Maritime Administration Act, 1995,154 the site

occupation and the wharfage charges have to be paid to the port by the person utilizing such site and agents

for the purpose of loading and unloading of cargo. That this makes it an evident fact, that the expenses

149Ports and Maritime Administration Act 1995 (NSW), Section 56. 150Moot Scenario, 17,19. 151Notura v Henderson[1870] L.R 5 Q.B 354. 152Allyson Matvey, Incidental Damages Vs Consequential Damages: A Distinction of Consequence, (2017) 153Clause 11, Voyage Charterparty. 154Part 5 of Ports and Maritime Administration Act, 1995 of No.13.


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incurred by the Respondents in paying the agency fees to the port authority, due to the unavailability of the

Claimant’s agents, the Claimant is liable to reimburse the requisite agency fees to the Respondents.

85. It is thus submitted that the Respondents have claimed the agency fees at both the ports rightly and the

Claimant is liable for it.

ARGUMENTS ON THE MERITS OF THE COUNTER CLAIM

V. THAT RESPONDENTS ARE NOT LIABLE TO PAY DAMAGES CLAIMED BY THE

CLAIMANT.

(A) That the Respondents are not liable to pay the damages for the damaged goods and replacement

cargo

86. It is submitted that pursuant to the above mentioned contentions, the Respondents had delivered the cargo

at 8:42 pm on 29th July, 2017. Further, on consideration of the reports submitted by the Tribunal appointed

expert, it is apparent that the cargo was damaged on 30th July, 2017155 after the delivery was affected. It is

stated that in order to claim from a person for loss caused by him by reason of loss of or damage to

property, he must have had either the legal ownership of or a possessory title156 to the property concerned

at the time when the loss or damage occurred157. Thus, under any circumstance, the Respondents cannot be

made liable for the damaged cargo therefore, payment of the replacement cargo is out of question.

87. The innocent party cannot claim to be compensated by the party in default for loss which is really due not

to the breach but to its own failure to behave reasonably after the breach.158A defendant is only liable for

such part of the claimant’s loss as is properly to be regarded as caused by the defendant’s breach of

duty.’159 By failing to take available steps to mitigate, the claimant may run the risk of the court holding

that the resultant loss is not attributable to the original breach.160

155Moot scenario, 43. 156Gatliffev. Bourne (1838) 4 Bing. N.C. 314, (1841) 3 M. & G. 643 157Leigh and Sillavan Ltd V Aliakmon Shipping Co Ltd (The Aliakmon), [1985] UKHL 10. 158British Westinghouse Electric Co Ltd v. Underground Electric Rys Co of London Ltd, [1912] AC 673, 689; The Metagama, (1928)

29 LIL Rep 253 (HL); Le Blanche v. L.N.W Ry, (1876) 1 C.P.D. 286; Tucker v. Linger, (1882) 21 Ch D 18; Macrae v. H.G. Swindells,

[1954] 1 W.L.R. 597; The Stena Conquest, SMA 4075 (2010); Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden

Victory) [2007] 2 A.C. 353; Attorney General of the Republic of Ghana v Texaco Overseas Tankships Ltd – “Texaco Melbourne”

(1993) 1 Lloyd‟s Rep 471 (CA). 159The Solholt [1983] 1 Lloyd’s Rep 605 at p 608; Robert Goff J in The Elena D’Amico [1980] 1 Lloyd’s Rep 75 at p 89. 160Bridge (1989) 105 LQR 398; The Oregon, 55 F. 666, 673 (6th Cir. 1893); The Tbilisi, SMA 3935 (2006) (Jarashow, Berg,

Martowski); Federal Insurance Co. v. Sabine Towing & Transp. Co.783 F.2d 347; J. Beatson et al., Anson’s Law of Contract (29th

Edition, 2010) at p.555.


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88. In the present case, since the cargo was damaged on 30 July 2017161 i.e. after the delivery by the

Respondent, it is evident that the damage was not caused due to their late delivery but due to delay by

Claimants in collecting the cargo from the port. Furthermore, claimants didn’t take any steps to mitigate

their losses by using appropriate methods to dry the coffee and selling it nor did they exercise reasonable

care by reaching the port at time to collect the delivered cargo. Ergo, Respondents are not liable to pay for

damaged cargo.

89. In alternative, it is submitted that the use of packaging which is normal or customary in the trade will

generally exonerate the shipper even though it cannot guarantee protection against every possible form of

damage.162Coffee is ordinarily shipped in fibre bags placed into well sealed/waterproof shipping

containers163 as happened in the instant case, therefore, the Respondent cannot be held liable to pay for the

resultant damage to cargo.

90. In The Iron Gippsland164, it was stated that it was reasonable for the plaintiff to reprocess a contaminated

cargo of oil and therefore the cost of cure was held to be the appropriate measure of damages. Similarly in

the present case coffee beans could have been dried up by subjecting them to appropriate methods and used

to sell again. Hence, the Respondents are not liable to pay any damages for the replaced coffee.

91. Even if damages are payable, in the absence of special facts or terms, the normal measure of damages

when cargo is delivered damaged is the sound value at the destination, less the damaged value and the

costs of carriage (if not already paid),165 a measure which may, in an appropriate case, be reflected by the

repair or reconditioning costs. Thus in the present case, if cost of the damaged cargo has to be claimed, it

can not be claimed for the sound value of coffee.

92. It is also apparent on the face of record that the damages for replacement cargo (USD 9,450,000) claimed

by the Claimant are unreasonable and not in proportion. That it is a well settled law that providing extra

financial benefit166 to the aggrieved party would lead to their unjust enrichment167, leading to miscarriage

161Moot scenario, 43. 162ContinexInc v SS Flying Independent [1952] AMC 1499 at p 1503. 163Procedural Order 2, cl 12. 164The Iron Gippsland [1994] 1 Lloyd's Rep. 335. 165Vinmar International v. Theresa Navigation (The Atrice) [2001] 2 Lloyd’s Rep. 1, para. 56; Slater v. Hoyle & Smith [1920] 2 K.B.

11; Derby Resources A.G. v. Blue Corinth Marine Co. (The Athenian Harmony)[1998] 2 Lloyd’s Rep. 410; cf. Empresa

CubanaImportada de Alimentos v. Iasmos Shipping Co. S.A. (The Good Friend) [1984] 2 Lloyd’s Rep. 586; Wilson v Lancs&Yorks Ry

(1861) 9 CBNS 632; Koufos v C Czarnikow Ltd, (The Heron II), [1969] 1 A.C. 350. 166Southampton Container Terminals v. Hansa Sch. (The Maersk Colombo) [1999] 2 Lloyd’s Rep. 491.


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of justice for the Respondents. Thus, it is submitted that the Respondents cannot be made liable to pay such

an amount for replacement cargo.

93. Arguendo, liability of respondent is limited.It is mandated that in furtherance of the Clause Paramount168,

Article 4(5) (a) and (e) of Hague Visby Rules, limits the liability of the Respondent to 666.67 SDR per

package or unit or 2 SDR per kilogram of gross weight of the goods lost or damaged, whichever is

higher.169 That the Claimant has claimed USD 1, 57, 50,000 (52,500 kg x $300) for the damaged cargo,

however pursuant to the limitation of liability on the Respondents, they are liable to pay approximately

USD 7, 26, 392.72 (666.67 SDR x 750) or USD 1, 52, 7751 (2 SDR x 52,500 kg), whichever is higher.

Thus the Respondents can be made liable only to the extent of USD 7, 26, 392.72, if adjudged liable.

(B)That the Respondents are not liable to pay the settlement payment

94. The provisions of contracts of sale and purchase to which the goods owner is a party are, in the absence of

special circumstances, res inter aliosacta which are not to be taken into account in assessing the damages to

be paid to the goods owner. 170The carriers of goods are not concerned, in the absence of special

circumstances, with rights of indemnity or rights to recover or recoup the price, or rights to damages as

between goods owners and mercantile parties with whom they may be in contractual relations. Such

considerations are too remote.171

95. In order to show that the settlement was reasonable the claimant must prove that the sum paid is at least as

big as their liability to the Coffees of the World. In order to do that they must establish their case by

evidence and figures.172If the settlement is not thus “reasonable”, it is then irrelevant in law.173 This issue

involves determining, first whether it was reasonable to settle the claim at all, and second whether the level

of settlement was within a reasonable range174

167Circle Finance Company vs. Jessie L. Peacock and Sara A. Peacock 399 So. 2d 81 (1981) 168Cl 28 of Voyage charterparty. 169Article 4(5) (a) of HVR. 170 R&W Paul Ltd v National Steamship Co Ltd (1937) 59 Ll L Rep 28; Scrutton on Charterparties, 23nd edn, Art. 212. 171The Sanix Ace [1987] 1 Lloyd’s Rep 465 172Kiddle v. Lovett (1885) 16 Q. B. D. 605. 173John F.Hunt Demolition v. Asma Engineering Ltd [2008] 1 All E.R. 180, [2007] EWHC 1507 (TCC). 174Fisher v. Val de Travers Asphalte (1876) 45 L.J.C.P. 479; Comyn Ching v. Oriental Tube [1979] B.L.R. 56, esp. pp. 80, 83 and 92,

and Supershield v. Siemens Building Technologies [2010] 1 Lloyd’s Rep. 349.


25

96. Unless the claim is of sufficient strength reasonably to justify a settlement and the amount paid in

settlement is reasonable having regard to the strength of the claim, it cannot be shown that the loss has

been caused by the relevant eventuality or breach of contract175

It is submitted that it was not reasonable to settle the claim as Coffees of the World accepts that the breach

was beyond the control of the claimant and had already made sufficient efforts to minimise the loss by

securing replacement coffee. 176The festival for which the coffee was required was also successful in the

end177, showing that a loss to the amount of $5,000,000 claimed as settlement payment was not reasonable.

Therefore, it is submitted thatthe Respondents are not liable to pay the settlement payment.

REQUEST FOR RELIEF

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

1. Refer the matter to the jurisdiction of a Master Mariner, pursuant to the Charterparty.

2. Uphold that there has been no breach of the charterparty by the Respondents.

3. Adjudge that the Claimant does not hold a maritime equitable lien on the vessel.

4. Declare that the Respondent is entitled for the damages amounting to USD 1,610,000 and that they are

not liable for the payment of the claimed damages by the Claimant.

Dated this 18th day of April, 2018.

Agents for the Respondents

Dynamic Shipping LLC.

175Newcastle Protection and Indemnity Association v. Assuranceforeningen Gard [1998] 2 Lloyd’s Rep. 387 at p. 407; General Feeds

Inc. v. SlobodnaPlovidba (The Krapan J.) [1999] 1 Lloyd’s Rep. 688. 176Moot scenario, 29. 177Ibid.

team 4 nineteenth annual international … · aktieselskabetreidar v arcos ltd [1927] 1 kb 352....

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