the fourteenth annual - murdoch university · fosfa federation of oil, seeds and fats association...

THE FOURTEENTH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

7 - 12 JULY 2013

SOUTHAMPTON, ENGLAND

IN A MATTER OF AN ARBITRATION

MEMORANDUM FOR THE RESPONDENT

ON BEHALF OF AGAINST

TWILIGHT CARRIERS AARDVARK LTD.

(RESPONDENT) (CLAIMANT)

TEAM NO. 17

HESKY O. MANURUNG • PAULA APRIJANTO

SALMA IZZATII • YOGA B. PRANANTO

TEAM NO. 17

MEMORANDUM FOR

THE RESPONDENT

TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT

i

TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................................................................ i

LIST OF ABBREVIATIONS ................................................................................................ II

LIST OF AUTHORITIES .................................................................................................... IV

SUMMARY OF FACTS.......................................................................................................... 1

SUMMARY OF ARGUMENTS ............................................................................................. 3

ARGUMENTS PRESENTED................................................................................................. 4

I. THE TRIBUNAL SHOULD GRANT A STAY OF THE CURRENT

PROCEEDING ................................................................................................................ 4

II. THE RESPONDENT IS NOT LIABLE TO COMPENSATE THE CLAIMANT

BY REASON OF PURPORTED MISDELIVERY ........................................................ 6

A. The Respondent is not liable towards the Claimant as the Claimant is not the

Cargo owner ................................................................................................................ 7

1. The Claimant does not hold the ownership of the Cargo since it has rejected

the Cargo .................................................................................................................. 7

2. The Respondent does not incur any liability towards the Claimant as the Cargo

had been delivered to the rightful owners ............................................................... 9

B. The Respondent has committed no tort of conversion .............................................. 10

1. The Claimant is not the owner of the Cargo .......................................................... 10

2. The Respondent did not deny the rights of the Cargo owner ................................ 10

III. THE RESPONDENT SHOULD NOT BE LIABLE FOR THE DETERIORATION OF

THE CARGO ....................................................................................................................... 11

A. The Respondent is exempted from any liability for damage caused by act of

pirates ........................................................................................................................ 12

1. The deterioration of the Cargo was caused by act of pirates ................................. 12

2. Act of pirates fall under Article IV rule 2 of the Hague-Visby Rules ................... 13

a. Perils and Dangers of the Sea ............................................................................ 13

b. Act of public enemies ........................................................................................ 13

c. Any other cause arising without the actual fault or privity of the carrier, or

without the fault or neglect of the agents or servants of the carrier ................... 14

3. Alternatively, act of pirates shall exempt the Respondent’s liability pursuant to

the General Exception Clause ................................................................................ 15

B. The Respondent’s reliance on the exemptions is not precluded by any alleged

unseaworthiness of the Vessel .................................................................................. 15

1. The Claimant cannot prove that the Vessel is unseaworthy .................................. 15

2. Even if the Vessel is unseaworthy, the Respondent should not be liable for the

deterioration of the Cargo since unseaworthiness is not the cause of the

deterioration ........................................................................................................... 16

IV. IN ANY CASE, THE AMOUNT OF DAMAGES CLAIMED IS NOT

RECOVERABLE ................................................................................................................ 17

A. The Claimant cannot claim the amount in the Sales Contract or the price they

paid to uphold the sub-contract with its sub-buyers ................................................. 18

B. The correct measure of damages should be based on the market value when

and where it should be discharged ............................................................................ 19

C. The Claimant is not entitled to the costs that have been incurred in relation

to the Dutch proceedings ........................................................................................... 20

PRAYER FOR RELIEF........................................................................................................ 22


ii

LIST OF ABBREVIATIONS

¶ /para./paras. Paragraph(s)

AC Appellate Court

AG Aktiengesellschaft

All E.R. All England Law Reports (United Kingdom)

Arbitration Clause Clause 31 of the Charterparty

Beatles Beatles Oils and Fats, Ltd.

Bhd./ Sdn.Bhd. Berhad/Sendirian Berhad

Bills of Lading Bills of Lading Number PG1-PG4

BV Besloten Vennootschap

Cargo 4000 mt PFAD that the Claimant bought from Beatles

Ch. Chancery Division

Charterparty Vegoilvoy Charterparty between Beatles and Respondent

dated 12 September 2008

CIF Cost, Insurance, and Freight

Civ Civil Division

Claimant Aardvark Ltd.

C.L.R. Commonwealth Law Reports

CLC Commercial Law Cases

Co. Company

Com. Cas. Commercial Law Reports

Comm Commercial Court

Commrs Commisioners

Corp. Corporation

edn. Edition

EWCA England and Wales Court of Appeal

EWHC High Court of England and Wales

FOSFA Federation of Oil, Seeds and Fats Association

General Exception Clause Clause 17 of the Charterparty

GmbH Gesellschaft mit beschränkter Haftung

Inc. Incorporated

J Justice

KB Court of King’s Bench

LJKB Law Journal King's Bench

Lloyd’s Rep. Lloyd’s Law Reports

LR Law Reports

Ltd. Limited

Mbh. Mit Beschränkter Haftung


iii

mt metric tonne

NIQB Northern Ireland Queen’s Bench Division

No. Number

NSWLR New South Wales Law Reports

p. Page/Pages

PC Privy Council Appeal Cases

PFAD Palm Fatty Acid Distillate

Plc. Public Limited Company

Procedural Order IMLAM Procedural Order 2013

Proceeding The present proceeding

Pty. Proprietary

QB/QBD Queen’s Bench Division

RCS Rapports de la Cour Supreme

Record IMLAM Moot Scenario, 2013

Respondent Twilight Carriers

SA Società Anonima

Sales Contract PFAD Contract No. 1234 and 1235 between Claimant and Beatles

SC Court of Session cases

SCLR Scottish Council of Law Reporting

SpA Società per Azioni

TCC Technology and Construction Court

Tribunal The present arbitral tribunal

UAE United Arab Emirates

UK United Kingdom

UKHL United Kingdom House of Lords

USD U.S. Dollars

Vessel MT Twilight Trader

WLR Weekly Law Reports


iv

LIST OF AUTHORITIES

CASES

Abbas (t/a A H Design) v Rotary (International) Ltd. [2012] NIQB 41 ................................ 13

Aes Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower

Plant JSC [2011] EWCA Civ 647 ...................................................................................... 6

Almare Seconda and Almare Quinta, The [1981] 2 Lloyd's Rep. 433 .................................. 19

Aratra Potato Co. Ltd. v Egyptian Navigation Co. (The El Amria) [1981]

2 Lloyd’s Rep. 119 .............................................................................................................. 4

Arpad (No. 2), The [1934] P 189 (CA) ........................................................................... 18, 19

Asiatic Petroleum Company Ltd. v Lennard’s Carrying Company Ltd.

[1915] AC 705 ................................................................................................................. 14

Attorney General of the Republic of Ghana (Ghana National Petroleum Corp.)

v Texaco Overseas Tank Ships Ltd. (The Texaco Melbourne) [1994] CLC 155 ............. 19

Barclays Bank Ltd. v C & E Commrs [1963] 1 Lloyd’s Rep. 81 ............................................ 9

Becker Gray v London Assurance Corporation [1918] AC 101 ........................................... 12

Braun v Bergenske Steamship Company (1921) 8 Lloyd’s Rep. 51 ...................................... 20

Breams Trustees Ltd. (as Trustee of the Baker 1988 Discretionary Settlement) v

Upstream Downstream Simulation Services Inc. [2004] EWHC 211 (Ch.) ............... 4, 5, 6

Bulk Oil (Zug) A.G. v Trans-Asiatic Oil Ltd. S.A [1973] 1 Lloyd's Rep. 132 ......................... 6

Canelhas Comercio Importacao e Exportacao Ltd. v Wooldridge [2004]

EWHC 643 (Comm) ......................................................................................................... 12

Caxton Publishing v Sutherland Publishing [1939] AC 178 ................................................ 10

Citi-March Ltd. v Neptune Orient Lines Ltd. [1996] 2 All E.R. 545 .............................. 4, 5, 6

City & General (Holborn) Ltd. v AYH Plc. [2005] EWHC 2494 (TCC) ................................ 6

Club Cruise Entertainment and Travelling Services Europe BV v Department

for Transport (The Van Gogh) [2008] EWHC 2794 (Comm) ......................................... 10

Cosco Bulk Carrier Co. Ltd. v Team-Up Owning Co. Ltd. (The Saldanha)

[2010] EWHC 1340 (Comm) ........................................................................................... 14

Deutsche Bank AG v Sebastian Holdings Inc [2010] 1 All E.R. (Comm) 808 ........................ 4

Donohue v Armco Inc and others [2002] 1 Lloyd’s Rep. 425 ........................................ 4, 5, 6

East West Corporation v DKBS 1912 and Akts Svendborg Utaniko Ltd. v P&O

Nedlloyd BV [2002] EWHC 83 (Comm) ............................................................................ 9

El Greco (Australia) Pty Ltd. and Another v Mediterranean Shipping Co. SA

[2004] 2 Lloyd's Rep. 537 ................................................................................................ 20

Enichem Anic SpA v Ampelos Shipping Co. Ltd. (The Delfini) [1990] 1 Lloyd's

Rep. 252 ............................................................................................................................. 9

Erichsen v Barkworth (1858) 3 H & N 894 ............................................................................ 9

Evans Marshall & Co. Ltd. v Bertola SA [1973] 1 All E.R. 992 ............................................. 4

F.C. Bradley & Sons Ltd. v Federal Steam Navigation Co. (1926) 24 Lloyd’s Rep. 446 .... 15

Fjord Wind, The [1999] 1 Lloyd's Rep. 307 ......................................................................... 16

Future Express, The [1992] 2 Lloyd’s Rep. 79 ....................................................................... 9

Global Process Systems Inc v Syarikat Takaful Malaysia Bhd. (The Cendor Mopu)

[2011] UKSC 5 ................................................................................................................. 12


v

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

Bhd. (The Bunga Seroja) [1999] 1 Lloyd's Rep. 512 ....................................................... 12

Halifax Overseas Freighters v Rasno Export; Techno-Prominport; and

Polskie Linie Oceaniczne P.P.W. (The Pine Hill) [1958] 2 Lloyd's Rep. 146 ........... 4, 5, 6

Hawksford Trustees Jersey Ltd. v Stella Global UK Ltd. [2011] EWHC 503 (Ch.) ............. 14

Interbulk Ltd. v Aiden Shipping Co. Ltd. I.C.C.O. International Corn Co. N.V. V.

Interbulk Ltd. (The Vimeira) [1983] 2 Lloyd's Rep. 424 .................................................... 6

J Jarvis & Sons Limited v Blue Circle Dartford Estates Limited [2007] EWHC

1262 (TCC) ........................................................................................................................ 4

Jack L. Israel Ltd. v Ocean Dynamic Lines S.A. and Ocean Victory Ltd.

(The Ocean Dynamic) [1982] 2 Lloyd’s Rep. 88 ............................................................. 21

JI MacWilliam Co. Inc. v Mediterranean Shipping Co. SA (The Rafaela S)

[2003] EWCA Civ 556 ...................................................................................................... 9

Jindal Iron and Steel Co. Ltd. v Islamic Solidarity Shipping Company Jordan

Inc. [2003] EWCA Civ 144 ............................................................................................. 14

KG Bominflot Bunkergesellschaft Für Mineralöle Mbh. & Co. v Petroplus Marketing

AG (The Mercini Lady) [2012] EWHC 3009 (Comm) .................................................... 21

Kuwait Airways Corp. v Iraqi Airways Co. [2003] 1 CLC 183 ............................................. 10

Kuwait Petroleum Corp. v I & D Oil Carriers Ltd. (The Houda) [1994] CLC 1037 ........... 13

Kwei Tek Chao and Others (Trading As Zung Fu Co.) v British Traders and

Shippers LD [1954] 2 QB 459 ........................................................................................... 7

Lancs and Yorks Rly v McNicholl [1918] 88 LJKB 601 ....................................................... 10

Leigh and Sillavan Ltd. v Aliakmon Shipping Co. Ltd. [1986] 2 WLR 902 ........................... 9

Leyland S.S. Co. v Norwich Union [1918] AC 350 .............................................................. 12

Lickbarrow v Mason (1794) 5 T.R. 683 .................................................................................. 9

London Joint Stock Bank v British Amsterdam Maritime Agency (1910)

16 Com. Cas. 102 ............................................................................................................... 9

Maxine Footwear Co. Ltd. v Canadian Government Merchant Marine [1959] AC 589 ...... 15

MC Pearl, The [1997] 1 Lloyd’s Rep. 566 ............................................................................. 4

Meyerstein v Barber (1870) LR 4 H.L. 317 ............................................................................ 9

Mitsubishi Corp. v Eastwind Transport Ltd. and others [2004] EWHC 2924 (Comm) ....... 15

Mobile Shipping Co. v Shell Eastern Petroleum Ltd. (The Mobile Courage)

[1987] Lloydʼs Rep. 655 .................................................................................................... 9

Murdo Donald MacDonald v Robert & Elizabeth Pollock [2012] 1 Lloyd's Rep. 425 ...... 7, 8

Noble Denton Middle East v Noble Denton International [2011] 1 Lloyd’s Rep. 387 .......... 4

Oakley v Lyster [1931] 1 KB 148 .......................................................................................... 10

Oxford Shipping Co. Ltd. v Nippon Yusen Kaisha (The Eastern Saga) [1984]

2 Lloyd's Rep. 373 ......................................................................................................... 4, 6

Oxus Gold Plc., Oxus Resources Corporation v Templeton Insurance Limited

[2007] EWHC 770 (Comm) ............................................................................................. 19

Pacific Interlink Sdn. Bhd. v Owner of the Asia Star [2009] SGHC 91 ................................ 19

Papera Traders Co. Limited & Others v Hyundai Merchant Marine Co. Limited,

The Keihin Co. Limited, (The Eurasian Dream) [2002] EWHC 118 (Comm) .......... 15, 16

Rey Banano Del Pacifico C.A. and Others v Transportes Navieros Ecuatorianos

and Another (The Isla Fernandina) [2000] 2 Lloyd's Rep. 15 ........................................ 17

Rodocanachi, Sons & Co. v Milburn Brothers (1887) LR 18 QBD. 67 ............................... 19

Russell and others v Niemann [1864] 17 C B. (N. S.) 168 ................................................... 13

Serena Navigation Ltd. v Dera Commercial Establishment (The Limnos) [2008]


vi

EWHC 1036 (Comm) ...................................................................................................... 19

Sewell v Burdick (1884) 10 App. Cas. 74 ................................................................................ 9

Singh v Yaqubi [2013] EWCA Civ 23 .................................................................................. 19

Sinochem v Mobil Sales [2000] 1 Lloyd’s Rep. 670 ............................................................... 4

Skips A/S Nordheim And Others v Syrian Petroleum Co. Ltd. and Petrofina SA

(The Varenna) [1983] 1 Lloyd’s Rep. 416 ...................................................................... 13

Smith v Rosario Co. (1893) 2 QB 323 .................................................................................. 12

Smith, Hogg & Co. v Black Sea and Baltic [1940] AC 997 ................................................. 17

Spencer v Commonwealth of Australia (1907) 5 C.L.R. 418 ................................................. 20

Standard Chartered Bank v Pakistan National Shipping Corporation and

Others (No.3) [1999] 1 Lloyd's Rep. 747 (QB) ................................................................ 19

Stroms Bruks Aktie Bolag v John & Peter Hutchison [1905] AC 515 .................................. 20

Sucre Export SA v Northern River Shipping Ltd. (The Sormovskiy 3068)

[1994] CLC 433 ................................................................................................................. 9

Sze Hai Tong Bank Ltd. v Rambler Cycle Co. Ltd. [1959] 2 Lloyd’s Rep. 114 ...................... 9

Taunton-Collins v Cromie [1964] 1 WLR 633 ............................................................... 4, 5, 6

Teutonia, The [1872] LR 4 PC 171 ...................................................................................... 13

Toledo, The [1995] 1 Lloyd's Rep. 40 .............................................................................. 15, 16

Tradax Export S.A. v European Grain & Shipping Ltd. [1983] 2 Lloyd’s Rep. 100 .............. 7

Vargas Pena Apezteguia Y Cia Saic v Peter Cremer GmbH [1987] 1 Lloyd's Rep. 394 ........ 7

Vinmar International Ltd. And Another v Theresa Navigation SA [2001] 2 Lloyd's Rep. 1 .. 19

Xantho, The [1887] 12 App. Cas. 503 ................................................................................... 12

STATUTES

Arbitration Act 1996 (UK) ...................................................................................................... 4

SECONDARY MATERIALS

Bazier, David, Hostage to a Fortune: International Piracy on the Somali Sea

Lanes <http://www.un.org/wcm/content/site/chronicle/home/archive/webarticles2012/

hostagetoafortune. ............................................................................................................ 17

Committee Maritime International, The Travaux-Préparatoires of the Hague Rules

and of the Hague-Visby Rules (Antwerp, 1997) .............................................................. 14

Scrutton, Sir Thomas Edward, Scrutton on Charterparties and Bills of Lading

(18th edn, Sweet & Maxwell London 1974) ................................................................. 9, 13


1

SUMMARY OF FACTS

1. Aardvark Ltd. (the ‘Claimant’) concluded a contract (the ‘Sales Contract’) with

Beatles Oils and Fats, Ltd. (‘Beatles’) for the purchase of 4,000 mt of Palm Fatty Acid

Distillate – PFAD (the ‘Cargo’), agreed on CIF terms (Incoterms 2000). The Sales

Contract was amended, in which the Cargo was priced USD 747.50 per mt, CIF and

shipped to Liverpool, Merseyside.

2. To execute its contractual obligation to deliver the Cargo to the Claimant, Beatles

chartered the MT Twilight Trader (the ‘Vessel’) owned by Twilight Carriers (the

‘Respondent’) based on the standard form VEGOILVOY voyage charterparty (the

‘Charterparty’). The Charterparty was modified, in so far that it applies English law,

and to have dispute settlement in London Arbitration (‘Arbitration Clause’).

3. On 25 October 2008, four standard Congenbill form bills of lading (the ‘Bills of

Lading’) were issued under the Charterparty in Pasir Gudang, Malaysia. The Bills of

Lading provide that the port of discharge shall be Liverpool, Merseyside, UK. Within

its reverse side, it was stipulated that the terms within the Charterparty, including its

law of the seat and Arbitration Clause, shall be incorporated therein. The Vessel loaded

the Cargo in Pasir Gudang, and further loaded full cargo of 5,000 mt PFAD and 9,500

mt Crude Palm Oil – CPO in Dumai, Indonesia. On 5 November 2008, the Vessel

sailed from Dumai and proceeded to Liverpool, via the Suez Canal.

4. On 14 November 2008, the Vessel entered the Gulf of Aden and commenced anti-pirate

watch. However, on 15 November 2008, the Vessel was boarded by Somali pirates and

detained in the Somali coast where the crew were held hostage for three months. The

Vessel was released on 13 February 2009. Subsequently, the Vessel continued the

voyage and arrived in Fujairah, UAE, on 21 February 2009 to undergo survey of the


2

state of Cargo after the hijacking. The Cargo had been found contaminated with

arsenic substance likely due to unauthorized access of pirates during the time of

captivity. The deterioration of the Cargo has lowered its quality and price.

5. On 6 March 2009, the Claimant received the cargo insurance policy, which was

allegedly inconsistent with the terms of the Sales Contract. The Claimant also stated

that by reason of piracy the Cargo would have no value and ordered the Vessel to

proceed to Rotterdam. The Claimant asserted that Beatles committed repudiatory

breaches that bring the Sales Contract to an end, and demanded repayment from Beatles

of the contract price paid on 26 January 2009. Beatles denied liability, though

accepting termination of the Sales Contract.

6. Owing to the termination of the Sales Contract, Beatles requested the Claimant to

deliver the Bills of Lading to them. However, the Claimant refused while stating that

the dispute with Beatles would be pursued through normal FOSFA contractual

channels.

7. As the Bills of Lading were retained by the Claimant, Beatles issued a letter providing

an indemnity (‘Letter of Indemnity’) to the Respondent in place of the Bills of Lading

to discharge the Cargo in Rotterdam. On the other hand, the Claimant sent a letter to

the Respondent not to follow Beatles’s orders. On 20 March 2009 the Vessel arrived in

Rotterdam and discharged all the cargo aboard, pertaining to Beatles’ request.

8. On 23 March 2009, Beatles brought a petition to seize the Cargo to the Dutch Court.

On 23 May 2009, Beatles issued an application to the District Court of Rotterdam for

an order of sale of Cargo, granted on 24 July 2009. On 25 August, the Cargo was then

sold to AB Buyers for USD 1,695,752.38. The Dutch Court, pending resolutions to the

present proceeding, retained the proceeds. The Claimant contested the decision to the


3

Dutch Court of Appeal, which was dismissed, and the Claimant was ordered to pay

court fees (USD 138,843.14) and lawyer fees (USD 107,913.12).

9. On 23 March 2009, the Claimant (based on an application to the Dutch court) arrested

the vessel as security for their claims against the Respondent. The Vessel was released

with security of USD 1.4 million, which is the assessed value of the Cargo by the Dutch

Court.

10. On 16 April 2009, the Claimant bought 7,000 mt of PFAD rated USD 522.50 per mt in

order to fulfil the sales to its sub-buyers in Liverpool (Delta Ltd. and Caspian BV).

11. The Claimant initiated London arbitral proceedings (the ‘Proceeding’) against the

Respondent and submitted the Claim Submissions on 6 April 2010. The Respondent

submitted their defence on 16 June 2010.

SUMMARY OF ARGUMENTS

The Respondent is sued by the Claimant for its action of discharging the Cargo in Rotterdam

instead of Liverpool. The Respondent submits that it is not liable for misdelivery of the

Cargo towards the Claimant, since the Claimant does not hold the ownership of the Cargo. In

any event, the Respondent rejects any allegation of committing tort of conversion. The

Respondent further asserts that it is not liable for the deterioration of the Cargo since it is

exempted by virtue of Article IV rule 2 of the Hague-Visby Rules and/or the General

Exception Clause. Even if the Tribunal held that the Respondent is liable towards the

Claimant, the Respondent maintains that the Claimant’s calculation of damages as written in

the Claim Submission is incorrect and it proposes another calculation of damages. The

Respondent highlights that there is a risk of multiplicity of proceeding in the present case

and, consequently, this Proceeding ought to be stayed.


4

ARGUMENTS PRESENTED

I. THE TRIBUNAL SHOULD GRANT A STAY OF THE CURRENT

PROCEEDING

12. The Respondent submits that the Tribunal should grant a stay of the present Proceeding

since there are strong reasons to do so. The power to stay the Proceeding derives from

Section 33(1)(a) of the Arbitration Act 1996 (‘Arbitration Act’). 1 The Section

provides that “the tribunal shall adopt procedures suitable to the circumstances of

particular case, avoiding unnecessary delay or expense, so as to provide a fair means

for the resolution of the matters falling to be determined.”2

13. Pursuant to the Charterparty which has been incorporated in the Bills of Lading, the

London Arbitration has exclusive jurisdiction to hear the dispute. 3 However, an

exclusive jurisdiction clause4 would not be enforced when there are strong reasons to

depart from it.5 Multiplicity of proceedings, as held in several cases6, is a strong reason

to grant a stay of proceeding.

14. Multiplicity of proceedings occurs in a situation when there are two separate

proceedings and the merits of there being only one.7 It is a strong reason for a stay as

has been elaborated in The Pine Hill.8 In the instant case, a shipowner sued the holders

of bills of lading and the charterers in two different proceedings. It was held that these

1 J Jarvis & Sons Limited v Blue Circle Dartford Estates Limited [2007] EWHC 1262 (TCC). 2 Section 30(1), UK Arbitration Act. 3 Bills of Lading No. PG1-PG4, Record, p. 4, 11, 15, 17, 19, 21. 4 Noble Denton Middle East v Noble Denton International [2011] 1 Lloyd’s Rep. 387, p. 388. 5 Aratra Potato Co. Ltd. v Egyptian Navigation Co. (The El Amria) [1981] 2 Lloyd’s Rep. 119; Citi-March Ltd.

v Neptune Orient Lines Ltd. [1996] 2 All E.R. 545; The MC Pearl [1997] 1 Lloyd’s Rep. 566; Donohue v Armco

Inc and others [2002] 1 Lloyd’s Rep. 425; Deutsche Bank AG v Sebastian Holdings Inc [2010] 1 All E.R.

(Comm) 808; Noble Denton Middle East v Noble Denton International [2011] 1 Lloyd’s Rep. 387, p. 388. 6 Evans Marshall & Co. Ltd. v Bertola SA [1973] 1 All E.R. 992; Aratra Potato Co. Ltd. v Egyptian Navigation

Co. (The El Amria) [1981] 2 Lloyd’s Rep. 119 Citi-March Ltd. v Neptune Orient Lines Ltd. [1996] 2 All E.R.

545; The MC Pearl [1997] 1 Lloyd’s Rep. 566; Sinochem v Mobil Sales [2000] 1 Lloyd’s Rep. 670. 7 Oxford Shipping Co. Ltd. v Nippon Yusen Kaisha (The Eastern Saga) [1984] 2 Lloyd's Rep. 373. 8 Halifax Overseas Freighters v Rasno Export; Techno-Prominport; and Polskie Linie Oceaniczne P.P.W. (The

Pine Hill) [1958] 2 Lloyd's Rep. 146; Taunton-Collins v Cromie [1964] 1 WLR 633; Citi-March Ltd. v Neptune

Orient Lines Ltd. [1996] 2 All E.R. 545; Donohue v Armco Inc. and Others [2001] UKHL 64; Breams Trustees

Ltd. (as Trustee of the Baker 1988 Discretionary Settlement) v Upstream Downstream Simulation Services Inc.

[2004] EWHC 211 (Ch.).


5

parallel actions were not allowed to proceed and the actions were to be consolidated

into one proceeding. McNair J laid out two reasons for this. First, the fact that

multiplicity of proceedings leads to a substantial increase in costs, usually also to

substantial delay, and generally to inconvenience. Second, there is a risk for

inconsistent findings between these two proceedings.

15. The circumstances in the abovementioned case are analogous to the present dispute.

Regardless whether the proceeding against Beatles has commenced, the Claimant has

expressed its intention to litigate in two proceedings. The first proceeding is against

Beatles as the Seller in Federation of Oils Seeds and Fats Association (‘FOSFA’)

contractual channels 9 and the second against the Respondent as the carrier in this

present dispute. 10 Both proceedings are arising from the same event, namely the

discharge of the Cargo in Rotterdam. Such intention to litigate in two proceedings

creates the risk for multiplicity of proceedings.

16. Critical to the adjudication of each of the proceedings is a determination by the relevant

court/tribunal on the issue of ownership of the Cargo.11 There is a real risk and

possibility that the findings and decision in each proceeding may be diametrically

opposite and inconsistent. This situation showcases that multiplicity of proceedings,

causes substantial injustice.12

17. In addition, it should be noted that the damages which the Claimant is seeking for in

these present proceedings would be exactly the same as those it is seeking in the

FOSFA proceedings. Without in any way detracting from the aforementioned risk of

inconsistent findings or making any concessions on the merits or otherwise of the

Claimant’s case herein, the court/tribunal in both proceedings may find in favour of the

9 Correspondence from Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record p. 35. 10 Claim Submission, Record, p. 65. 11 Claim Submissions ¶ 21(4), Record, p. 69; Defence Submissions ¶ 10(3), Record, p. 73; Correspondence from

Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 35. 12 The Pine Hill (n 8).


6

Claimant. The result of such case would be that the Claimant is entitled to satisfaction

of two presumably similar sets of damages. It goes without saying that it is against all

rules of natural justice and is repugnant to all sound legal principles if the Claimant is

to be awarded such “double damages”.13

18. As such, it is the Respondent’s submission that the Tribunal herein should readily grant

a stay of the present Proceeding. To allow these proceedings to proceed, thereby

possibly resulting in inconsistent findings14 and enabling the Claimant to “have its cake

and eat it” through double damages would undoubtedly cause substantial injustice.15

19. In light of the aforementioned circumstances, the appropriate option that the Claimant

should have taken is by settling the dispute involving all the relevant parties in one

proceeding, namely court. Unlike arbitration that has no inherent power to order

consolidated/concurrent hearings without the consent of all parties,16 the court will have

the power to compel all relevant parties to participate, thus avoiding the multiplicity of

proceedings.17

II. THE RESPONDENT IS NOT LIABLE TO COMPENSATE THE CLAIMANT

BY REASON OF PURPORTED MISDELIVERY

20. The Claimant has alleged that the Respondent is liable to compensate the Claimant

since the Respondent has discharged the Cargo in Rotterdam instead of Liverpool.18

The Claimant based its claims in breach of contract and tort of conversion. However, it

is the Respondent’s position that the Respondent is not liable towards the Claimant as

13 Bulk Oil (Zug) A.G. v Trans-Asiatic Oil Ltd. S.A [1973] 1 Lloyd's Rep. 132; City & General (Holborn) Ltd. v

AYH Plc. [2005] EWHC 2494 (TCC). 14 Interbulk Ltd. v Aiden Shipping Co. Ltd. I.C.C.O. International Corn Co. N.V. V. Interbulk Ltd. (The Vimeira)

[1983] 2 Lloyd's Rep. 424; Oxford Shipping Co. Ltd. v Nippon Yusen Kaisha (The Eastern Saga) [1984] 2

Lloyd's Rep. 373. 15 Aes Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2011] EWCA

Civ 647. 16 Section 35(2), UK Arbitration Act. 17 The Pine Hill (n 8). 18 Claim Submission ¶ 21, Record, p. 68.


7

the Claimant is not the Cargo owner (A). Furthermore, the Respondent did not commit

tort of conversion (B).

A. The Respondent is not liable towards the Claimant as the Claimant is not the

Cargo owner

21. The Claimant’s assertion that the Respondent is liable towards the Claimant19 is a one-

dimensional view to the issues in the present case. The Claimant based its arguments

on the fact that it currently holds the Bills of Lading.20 Nonetheless, the Tribunal

should assess the facts that have transpired beyond the mere possession of the Bills of

Lading. As a matter of fact, the Claimant does not hold the ownership of the Cargo

since it has rejected the Cargo (1). Accordingly, the Respondent does not incur any

liability towards the Claimant as the Cargo had been delivered to the rightful owners

(2).

1. The Claimant does not hold the ownership of the Cargo since it has

rejected the Cargo

22. In Kwei Tek Chao and Others (trading as Zung Fu Co.) v British Traders and Shippers

Ltd21, it was affirmed that the consequence of rejection of goods by a buyer is that

ownership of the goods revests to the seller. It is the Respondent’s submission that the

Claimant had rejected the Cargo, thus the Claimant lost its ownership upon the Cargo.

23. To constitute a rejection, there must be a clear and unequivocal expression.22 In

Vargas Pena Apezteguia Y Cia Saic v Peter Cremer GmbH.,23 Saville J established that

“… a clear and unequivocal rejection is one where buyers indicate that they want and

will have nothing more to do with the goods.” It is further illustrated in Murdo Donald

19 Claim Submissions, Record, p. 68-9. 20 Clarification, Procedural Order No. 2 ¶ 6. 21 Kwei Tek Chao and Others (Trading As Zung Fu Co.) v British Traders and Shippers LD [1954] 2 QB 459. 22 Tradax Export S.A. v European Grain & Shipping Ltd. [1983] 2 Lloyd’s Rep. 100; Vargas Pena Apezteguia Y

Cia Saic v Peter Cremer GmbH [1987] 1 Lloyd's Rep. 394; Murdo Donald MacDonald v Robert & Elizabeth

Pollock [2012] 1 Lloyd's Rep. 425. 23 Vargas Pena Apezteguia Y Cia Saic v Peter Cremer GmbH [1987] 1 Lloyd's Rep. 394.


8

MacDonald v Robert & Elizabeth Pollock24 as a condition where the buyer requested

the seller to take the goods back, claiming the goods were defective and requesting the

repayment of the purchase price. The court held that this request constitutes a situation

where a buyer rejected goods.

24. In the present case, through its correspondences with Beatles, the Claimant complained

about the state of the Cargo.25 The Claimant requested Beatles not to deliver the Cargo

to the Claimant 26 but to any place preferable to Beatles. 27 Further, the Claimant

requested Beatles to return the purchase price.28 In addition, in its correspondences, the

Claimant had referred Beatles as the “cargo owner”. 29 Such actions indicate that the

Claimant did not want and would have nothing more to do with the Cargo. Hence, this

shows that the Claimant had made a clear and unequivocal rejection of the Cargo.

25. The Claimant may argue that it did not make an unequivocal rejection since it still

retained the Bills of Lading. However, if there is a clear indication that the goods are

rejected, the rejection would not be affected by subsequent conduct or statements.30

Therefore, such an argument by the Claimant cannot be entertained for the reason that

the Claimant may not act inconsistent with what it had stated previously.

26. Based on the abovementioned elaboration, the Claimant has rejected the Cargo and the

Claimant’s act to retain the Bills of Lading does not affect the consequence of the

rejection. Accordingly, ownership of the Cargo has revested to the Seller and

correspondingly, the Claimant no longer holds the Cargo ownership.

24 Murdo Donald MacDonald v Robert & Elizabeth Pollock [2012] 1 Lloyd's Rep. 425 25 Correspondence from Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 25, 27. 26 Correspondence from Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 27. 27 Correspondence from Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 29 28 Correspondence from Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 25. 29 Correspondence from Mark Wiggins (Beatles) to Paul Taylor (the Claimant), Record, p. 26. 30 Graanhandel T. Vink B.V. v. European Grain & Shipping Ltd [1989] 2 Lloyd’s Rep 531; See Murdo Donald

MacDonald v Robert & Elizabeth Pollock [2012] 1 Lloyd's Rep. 425.


9

2. The Respondent does not incur any liability towards the Claimant as

the Cargo had been delivered to the rightful owners

27. The main aim of a contract of carriage is to transport goods to the person who is the

rightful owner of the goods. 31 When a shipowner decides to discharge cargo to

someone who cannot produce a bill of lading, it does so at its own risk;32 that is to say,

the shipowner must prove that it has discharged the cargo to the rightful owner to be

free from any liability. Thus, a mere physical presence of a bill of lading is not

decisive to determine where the ownership of the cargo lies.33

28. Furthermore, when a shipowner delivers the goods to the rightful owner, the shipowner

will not incur any liability to the holder of the bill of lading. This is because the bill of

lading will no longer serve as a document of title.34

29. In the present case, pursuant to the Claimant’s rejection of the Cargo, ownership would

revest back to the Seller, namely Beatles. Thus, by delivering the Cargo to Beatles, the

Respondent had delivered the Cargo to the rightful owner.35 Consequently, the Bills of

Lading, which are retained by the Claimant, became exhausted. Thus, the Respondent

does not incur any liability towards the Claimant.

31 Erichsen v Barkworth (1858) 3 H & N 894. 32 Sze Hai Tong Bank Ltd. v Rambler Cycle Co. Ltd. [1959] 2 Lloyd’s Rep. 114; Barclays Bank Ltd. v C & E

Commrs [1963] 1 Lloyd’s Rep. 81; East West Corporation v DKBS 1912 and Akts Svendborg Utaniko Ltd. v

P&O Nedlloyd BV [2002] EWHC 83 (Comm); See also Mobile Shipping Co. v Shell Eastern Petroleum Ltd.

(The Mobile Courage) [1987] Lloydʼs Rep. 655. 33 Lickbarrow v Mason (1794) 5 T.R. 683; Leigh and Sillavan Ltd. v Aliakmon Shipping Co. Ltd. [1986] 2 WLR

902; The Future Express [1992] 2 Lloyd’s Rep. 79. 34 Meyerstein v Barber (1870) LR 4 H.L. 317, p. 330, 335; London Joint Stock Bank v British Amsterdam

Maritime Agency (1910) 16 Com. Cas. 102; Enichem Anic SpA v Ampelos Shipping Co. Ltd. (The Delfini)

[1990] 1 Lloyd's Rep. 252 Sucre Export SA v Northern River Shipping Ltd. (The Sormovskiy 3068) [1994] CLC

433, p. 455; JI MacWilliam Co. Inc. v Mediterranean Shipping Co. SA (The Rafaela S) [2003] EWCA Civ 556;

Sewell v Burdick (1884) 10 App. Cas. 74; East West Corporation v DKBS 1912 and Akts Svendborg Utaniko

Ltd. v P&O Nedlloyd BV [2002] EWHC 83 (Comm); Sir Thomas Edward Scrutton, Scrutton on Charterparties

and Bills of Lading (18th edn, Sweet & Maxwell London 1974) art. 102 par. (5) p. 199. 35 Agreed Statement of Facts for Arbitration Re: The Dutch Proceedings and Sale of the Cargo. Record, p. 53;

Surveys Inc. Records p. 48.


10

B. The Respondent has committed no tort of conversion

30. Atkin J defines tort of conversion as dealing with goods in a manner inconsistent with

the right of the true owner, provided that it is also established that there is also an

intention on the part of the defendant in so doing to deny the owner's right or to assert a

right which is inconsistent with the owner's right.36 In the present case, the Respondent

did not commit tort of conversion since the Claimant is not the true owner of the Cargo

(1) and the Respondent did not deny the rights of the Cargo owner (2).

1. The Claimant is not the owner of the Cargo

31. A person claiming for tort of conversion must have the ownership of the goods.

Pursuant to the previous elaboration, the Claimant had rejected the Cargo making it no

longer the owner of the Cargo.37 Therefore, this element is not fulfilled.

2. The Respondent did not deny the rights of the Cargo owner

32. Flaux J in the Van Gogh38 had formulated the essential feature of tort of conversion

which is an absolute denial by the defendant of the plaintiff’s ownership of the goods.39

In the instant case, the plaintiff’s vessel was detained by the defendant, for the purpose

of an inspection. The plaintiff then claimed that the defendant’s action amounted to

tort of conversion. However, the court held that such detainment did not involve a

sufficiently extensive encroachment on the plaintiff’s rights to constitute tort of

conversion, rather it was a lesser act of interference.40

33. Similarly in the present case, notwithstanding whether the Claimant has right over the

Cargo, the Respondent’s act to discharge the Cargo in Rotterdam does not amount to an

36 Lancs and Yorks Rly v McNicholl [1918] 88 LJKB 601, p. 605; Oakley v Lyster [1931] 1 KB 148 p. 153;

Caxton Publishing v Sutherland Publishing [1939] AC 178 p. 201; Kuwait Airways Corp. v Iraqi Airways Co.

[2003] 1 CLC 183. 37 See ¶ 11-5. 38 Club Cruise Entertainment and Travelling Services Europe BV v Department for Transport (The Van Gogh)

[2008] EWHC 2794 (Comm). 39 ibid. 41 ibid.


11

absolute denial. The Cargo was discharged for storage purpose, pending the resolution

of issues between the Claimant and Beatles.41 It was made clear by Beatles that it did

not intend to discharge the Cargo in Rotterdam, as an exercise of their claimed

ownership.42 In the absence of any positive assertion by Beatles as to ownership of the

Cargo, it is apparent that the Claimant was not absolutely deprived of its right to

ownership over the Cargo. Correspondingly, the claim by the Claimant premised upon

the tort of conversion is entirely misconceived.

III. THE RESPONDENT SHOULD NOT BE LIABLE FOR THE

DETERIORATION OF THE CARGO

34. During the Voyage, pirates captured and detained the Vessel for three months.43 The

Respondent’s entire crew of the Vessel was confined for 24 hours where they lived in

the clothes they had on with one blanket on the bridge of the vessel.44 Moreover, they

were only allowed to sit or lie and not allowed to look outside. 45 Under such

conditions, the crew was unable to take any measures to safeguard the Cargo. Despite

the circumstances suffered by the Respondent, the Claimant submits that the

Respondent is liable for the deterioration of the Cargo.46 The Claimant alleged that the

Respondent allowed the pirates to board the Vessel and did not take any measures to

safeguard the Cargo during the Vessel’s captivity.47 The Respondent submits that such

assertions should not be entertained for two reasons: first, the Respondent is exempted

from any liability for damage caused by act of pirates (A), and second, the

41 ibid. 42 Correspondence from Mark Wiggins (Beatles) to Paul Taylor (the Claimant), Record, p. 34. 43 Aspinall Lewis International Report ¶ 1.2.2, Record, p. 41. 44 ibid., ¶ 1.2.5, p. 42. 45 ibid. 46 Claim Submissions ¶ 21(1), Record, p. 68-9. 47 ibid.


12

Respondent’s reliance on the exemptions is not precluded by any alleged

unseaworthiness of the Vessel (B).

A. The Respondent is exempted from any liability for damage caused by act of

pirates

35. The Claimant has relied on Article III rule 2 of the Hague-Visby Rules to assert that the

Respondent is liable for deterioration of the Cargo. 48 However, upon further

inspection, it can be seen that the applicability of the aforesaid Article is subject to the

exemptions within Article IV rule 2 of the Hague-Visby Rules. If the cause of the

damage falls within the exemptions, the shipowner shall be free from all liabilities.49

The Respondent submits that the deterioration of the Cargo was caused by act of pirates

(1), which falls under the exemptions contained within Article IV rule 2 of the Hague-

Visby Rules (2). Alternatively, acts of pirates shall exempt the Respondent’s liability,

pursuant to the General Exception Clause (3).

1. The deterioration of the Cargo was caused by act of pirates

36. To assess whether damage to cargo was caused by an excepted peril, the excepted peril

should be the immediate, direct,50 and dominant51 cause, and not a remote cause.52 In

the present case, the cause of the Cargo deterioration arises from act of pirates.

37. Upon shipment, the Cargo was Good Merchantable Quality (‘GMQ’).53 However, as

the pirates detained the Vessel during the passage to the Gulf of Aden, there was a

likelihood that the pirates had somehow come into contact and interfered with the

48 ibid. 49 Great China Metal Industries Co. Ltd. v Malaysian International Shipping Corp. Bhd. (The Bunga Seroja)

[1999] 1 Lloyd's Rep. 512, p. 516. 50 Becker Gray v London Assurance Corporation [1918] AC 101, at p. 114 (Lord Summer); Canelhas Comercio

Importacao e Exportacao Ltd. v Wooldridge [2004] EWHC 643 (Comm). 51 Leyland S.S. Co. v Norwich Union [1918] AC 350, p. 363 (Lord Dunedin); Global Process Systems Inc v

Syarikat Takaful Malaysia Bhd. (The Cendor Mopu) [2011] UKSC 5. 52 Smith v Rosario Co. [(1893) 2 Q. B. 323, p. 328; Leyland S.S. Co. v Norwich Union [1918] AC 350; The

Xantho [1887] 12 App. Cas. 503. 53 Sales Contract, Record, p. 1-2.


13

Cargo.54 In fact, the Claimant has itself affirmed that by reason of act of pirates, the

Cargo had turned into non-GMQ pursuant to the Product Authentication International,

Ltd. (‘PAI’) ruling.55 Ultimately, the Cargo had lost its traceability due to the act of

pirates and rendering it unfit for consumption.56 There cannot be any doubt that the act

of pirates is the immediate, direct and dominant cause for the deterioration of the

Cargo.

2. Act of pirates fall under Article IV rule 2 of the Hague-Visby Rules

38. The Respondent is exempted from any liability of damage arising from act of pirates as

it falls within, at least, three exemptions within Article IV rule 2 of the Hague-Visby

Rules, namely perils of the sea (a), act of public enemies (b), and any other cause

arising without the actual fault or privity of the carrier, or without the fault or neglect of

the agents or servants of the carrier (c).

a. Perils and Dangers of the Sea

39. Historically, act of pirates fall within the definition of “perils of the sea”.57 In the case

of Russell v Niemann,58 it was established that pirates should be put into the same

category as dangers of the sea. Likewise, in The Teutonia,59 it was affirmed that act of

pirates is one of the instances of perils of the sea. Consequently, based on Article IV

rule 2 (c) of the Hague-Visby Rules, the Respondent should not be responsible for any

loss and damage to the Cargo which had arisen or resulted from an act of pirates.

b. Act of public enemies

54 Thomas, Cropper, Benedict Report ¶ 4.,Record, p. 38; Aspinall Lewis Report ¶ 3.1, Record, p. 43. 55 Correspondence from Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 27. 56 Single Joint Expert Report ¶ D, Record, p. 58. 57 Russell and others v Niemann [1864] 17 C B. (N. S.) 168; The Teutonia [1872] LR 4 PC 171; Skips A/S

Nordheim And Others v Syrian Petroleum Co. Ltd. and Petrofina S.A., (The Varenna) [1983] 1 Lloyd’s Rep.

416; Kuwait Petroleum Corp. v I & D Oil Carriers Ltd. (The Houda) [1994] CLC 1037; Abbas (t/a A H Design)

v Rotary (International) Ltd. [2012] NIQB 41; Sir Thomas Edward Scrutton, Scrutton on Charterparties and

Bills of Lading (18th edn, Sweet & Maxwell London 1974) p. 259. 58 Russell and others v Niemann [1864] 17 C B. (N. S.) 168 p. 175 (Byles J). 59 The Teutonia [1872] LR 4 PC 171 p. 179 (Milles LJ).


14

40. Based on the travaux préparatoires of the Hague-Visby Rules, Lord Phillimore and Sir

Norman Hill stated that the meaning of “act of public enemies” includes act of pirates

and it has been agreed by all of the Hague-Visby Rules’ drafters.60 In the case of Jindal

Iron and Steel Co. Ltd. v Islamic Solidarity Shipping Company Jordan Inc.,61 Lord

Steyn had laid down that the travaux préparatoires of the Hague-Visby Rules is a well-

established supplementary means of interpretation. Therefore, by virtue of the travaux

préparatoires, the Respondent can rely on Article IV rule 2 (f) of the Hague-Visby

Rules to exempt itself from liability.

c. Any other cause arising without the actual fault or privity of the

carrier, or without the fault or neglect of the agents or servants of the

carrier

41. Act of pirates also falls under the exemption within Article IV rule 2 (q) of the Hague-

Visby Rules. In Asiatic Petroleum Company Ltd. v Lennard’s Carrying Company

Ltd.,62 the words “actual fault or privity” infer something personal to a shipowner,

something blameworthy in him. In contrast, act of pirates does not arise out of the

condition on efficiency of the vessel, or the crew, or the cargo, or the trading history, or

any reasonable perception of such matters by outside body.63 In fact, act of pirates is a

truly extraneous cause. 64 Consequently, the Respondent is exempted by virtue of

Article IV rule 2 (q) Hague-Visby Rule because it arose without the actual fault or

privity of the Respondent as a shipowner.

60 The Travaux-Préparatoires of The International Convention for The Unification of Certain Rules of Law

Relating to Bills of Lading of 25 August 1924 The Hague Rules and of The Protocols of 23 February 1968 and

21 December 1979 The Hague-Visby Rules, p. 408. 61 Jindal Iron and Steel Co. Ltd. v Islamic Solidarity Shipping Company Jordan Inc. [2003] EWCA Civ 144. 62 Asiatic Petroleum Company Ltd. v Lennard’s Carrying Company Ltd. [1915] AC 705; Hawksford Trustees

Jersey Ltd. v Stella Global UK Ltd. [2011] EWHC 503 (Ch.). 63 Cosco Bulk Carrier Co. Ltd. v Team-Up Owning Co. Ltd. (The Saldanha) [2010] EWHC 1340 (Comm). 64 ibid.


15

3. Alternatively, act of pirates shall exempt the Respondent’s liability pursuant

to the General Exception Clause

42. Under contract, the Respondent is exempted from liability by virtue of Clause 17 of the

Charterparty (‘General Exception Clause’)65 , which provides that “... neither the

Vessel, her Master nor Owner, ... shall be held liable for any loss of or damage to ... the

cargo ... arising or resulting from ... pirates.”

43. In Mitsubishi Corp. v Eastwind Transport Ltd. and others,66 it was held that parties to a

contract could make any terms for exceptions from liabilities, which will bind the

parties. If the Respondent cannot be exempted from act of pirates, it would render the

General Exception Clause ineffective and otiose, which is inconsistent with the

contractual arrangements entered into under the Charterparty.

B. The Respondent’s reliance on the exemptions is not precluded by any alleged

unseaworthiness of the Vessel

44. In order to preclude the Respondent from relying on the exemptions, the Claimant must

prove that the Vessel is unseaworthy and that the unseaworthiness caused the damage

to the Cargo.67 In the present case, the relevant facts and law do not support an

assertion that the Vessel is unseaworthy (1). In any case, the Respondent should not be

liable since unseaworthiness is not the cause of the deterioration of the Cargo (2).

1. The Claimant cannot prove that the Vessel is unseaworthy

45. The established definition of “seaworthiness” is found in the case of F.C. Bradley &

Sons Ltd. v Federal Steam Navigation Co.,68 where Scrutton LJ stated that “… the ship

65 Clause 17, Charterparty, Record, p. 9. 66 Mitsubishi Corp. v Eastwind Transport Ltd. and others [2004] EWHC 2924 (Comm). 67 The Toledo [1995] 1 Lloyd's Rep. 40; Papera Traders Co. Limited & Others v Hyundai Merchant Marine Co.

Limited, The Keihin Co. Limited (The Eurasian Dream) [2002] EWHC 118 (Comm); Maxine Footwear Co. Ltd.

v Canadian Government Merchant Marine [1959] AC 589. 68 F.C. Bradley & Sons Ltd. v Federal Steam Navigation Co. (1926) 24 Lloyd’s Rep. 446, p. 454; Papera

Traders Co. Limited & Others v Hyundai Merchant Marine Co. Limited, The Keihin Co. Limited (The Eurasian

Dream) [2002] EWHC 118 (Comm).


16

must have that degree of fitness which an ordinary careful owner would require his

vessel to have at the commencement of her voyage having regard to all the probable

circumstances of it”. This would include the physical condition of the vessel and its

equipment, the competence of the Master and crew, and the adequacy of stores and

documentation.69 In addition, the nature of the ship together with the circumstances of

the voyage must also be taken into consideration.70

46. The burden of proof to establish that the Vessel was unseaworthy lies on the

Claimant.71 The Record does not indicate that the Vessel’s physical condition, its crew,

together with the availability of documentation were in any way lacking in relation to

the Vessel’s ability to reasonably deal with an encounter with pirates.72

47. On the contrary, the fact is that the crew of the Vessel had commenced anti-pirate

watch during the Vessel’s entrance to the Gulf of Aden 73 , which shows that the

Respondent had performed due diligence to prepare the Vessel in readiness to

encounter with pirates. Thus, there is no ground whatsoever that indicates the Vessel

was unseaworthy before and at the beginning of the voyage. Therefore, the Claimant

cannot prove that the Vessel was unseaworthy.

2. Even if the Vessel is unseaworthy, the Respondent should not be liable

for the deterioration of the Cargo since unseaworthiness is not the

cause of the deterioration

69 Papera Traders Co. Limited & Others v Hyundai Merchant Marine Co. Limited, The Keihin Co. Limited (The

Eurasian Dream) [2002] EWHC 118 (Comm). 70 The Fjord Wind [1999] 1 Lloyd's Rep. 307, p. 315; Papera Traders Co. Limited & Others v Hyundai

Merchant Marine Co. Limited, The Keihin Co. Limited, (The Eurasian Dream) [2002] EWHC 118 (Comm). 71 The Toledo [1995] (n 67). 72 Correspondence from John Walker (Walker Brokers) to Paul Taylor (the Claimant), Record, p. 3-4; Thomas,

Cropper, Benedict Report, Record, p. 37-9; Aspinall Lewis International Report, Record, p. 40-3. 73 Aspinall Lewis International Report ¶ 1.2.2. Record, p. 41.


17

48. In Smith, Hogg & Co. v Black Sea and Baltic,74 the test to prove unseaworthiness as the

cause of the damage is whether the damage would not have happened had the ship been

seaworthy. As there is lack of evidence on what had transpired during the time the

Vessel was hijacked, the Claimant cannot prove with any degree of certainty that

pirates would not have boarded the Vessel had there been more anti-pirate measures

undertaken. In any case, it was a likelihood that the pirates would adopt any means75 to

take over the Vessel, leaving any measures that may have been taken by the

Respondent futile. Therefore, unseaworthiness is not the cause of the damage to the

Cargo in the present case. In effect, the Respondent is entitled to rely on the exemptions

within Article IV rule 2 of the Hague-Visby Rules.

IV. IN ANY CASE, THE AMOUNT OF DAMAGES CLAIMED IS NOT

RECOVERABLE

49. Even if the Tribunal is of the view that the Respondent is liable, the amount of damages

set out in the Claim Submissions76 cannot be awarded on the ground that the Sales

Contract price or the price to uphold contract with sub-buyers are not the correct

measures of damages claimable (A). Applying the correct test, the damages should be

measured based on the market value (B). Furthermore, the Claimant is not entitled to

costs that have been incurred in relation to the Dutch court proceedings (C).

74 Smith, Hogg & Co. v Black Sea and Baltic [1940] AC 997 (Lord Wright); Rey Banano Del Pacifico C.A. and

Others v Transportes Navieros Ecuatorianos and Another (The Isla Fernandina) [2000] 2 Lloyd's Rep. 15. 75 Pirates in Somalia are armed with fast powerboats, which would carry 4-8 people, each armed with machine

guns and rocket-propelled grenades (RPGs). The amount of pirates that witheld the Vessel (around 30)

showcases the severity of the situation at hand. David Bazier, “Hostage to a Fortune: International Piracy on

the Somali sea lanes”, http://www.un.org/wcm/content/site/chronicle/home/

archive/webarticles2012/hostagetoafortune. 76 Claim Submissions ¶ 21(1), Record, p.70.


18

A. The Claimant cannot claim the amount in the Sales Contract or the price

they paid to uphold the sub-contract with its sub-buyers

50. In the present case, the Claimant has claimed on the basis of USD 747.50 per metric

tonne (“mt”), which is the value of the Cargo added with the difference between that

value and the contract price.77 Such amount is equal to the Sales Contract price.78 In

the alternative, the Claimant has also claimed for the price of the replacement cargo, on

the basis of USD 522.50 per mt.79 It is the Respondent’s submission that these claims

should not be granted by the Tribunal because it was not based on the correct test on

the measure of damages.

51. In The Arpad No. 2,80 a plaintiff buyer procured a sales contract for the purchase of

goods with a seller. The goods were shipped in the defendant’s vessel. However, a

portion of the goods was not delivered due to the defendant’s breach. As a

consequence, the plaintiff claimed for a return of the sales contract price to the

defendant. The Court held that the defendant, as a shipowner, is not liable for the sales

contract price between the plaintiff and the seller since it was not privy to sales

contract. Conversely, the sales contract entered into by the buyer, unless contemplated

by the defendant as the liable party, cannot be the basis to award damages.81

52. Similar with the reasoning in the above case, the submissions by the Claimant should

be rejected. As a shipowner, the Respondent had no knowledge of the price paid by the

Claimant under the Sales Contract, or the price of the replacement cargo.82 As these

amounts are outside the contemplation of the Respondent, such amounts cannot be used

as a basis to calculate the damages.

77 Claim Submissions ¶ 21(1), Record, p. 69. 78 Correspondence between Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 25. 79 D&F Brokers Ltd. Sales Note No. 0164, Record, p. 46-7. 80 The Arpad (No. 2) [1934] P 189 (CA). 81 ibid., p. 192. 82 Defence Submissions ¶ 6, Record, p. 72.


19

B. The correct measure of damages should be based on the market value when

and where it should be discharged

53. Having established that the Claimant has applied the incorrect measure of damages, the

Tribunal should apply the correct measure of damages, which is the market value of the

goods when and where it should be discharged.83 This rule goes with the rationale that,

as a result of the misdelivery, the plaintiff is assumed to have bought replacement cargo

at the price of market value in the place it should be discharged.84 As has been

elaborated, the Respondent is not liable for the Cargo turning to non-GMQ. 85

Therefore, the value shall be determined based on the market value of non-GMQ cargo

in the place when and where it should be discharged, namely on or about 20-30 March

2009 in Liverpool.

54. Market value is defined as the price at which actual buying and selling take place.86 In

the present case, there were no actual buying and selling of non-GMQ PFAD in

Liverpool during the time the Cargo was discharged.87 In consequence, there was no

market value of non-GMQ PFAD in Liverpool. In such circumstances, the market

value of non-delivered goods can be determined from the nearest market where such

cargo is available.88 In The Texaco Melbourne,89 a shipowner failed to deliver the

goods at the contractual port of discharge, Takoradi, Ghana. There was no market

83 Rodocanachi, Sons & Co. v Milburn Brothers (1887) LR 18 QBD. 67; The Almare Seconda and Almare

Quinta [1981] 2 Lloyd's Rep. 433; Attorney General of the Republic of Ghana (Ghana National Petroleum

Corp.) v Texaco Overseas Tank Ships Ltd. (The Texaco Melbourne) [1994] CLC 155, p. 156; Standard

Chartered Bank v Pakistan National Shipping Corporation and Others (No.3) [1999] 1 Lloyd's Rep. 747

(QBD); Vinmar International Ltd. And Another v Theresa Navigation SA [2001] 2 Lloyd's Rep. 1; Oxus Gold

Plc., Oxus Resources Corporation v Templeton Insurance Limited [2007] EWHC 770 (Comm). 84 Serena Navigation Ltd. v Dera Commercial Establishment (The Limnos) [2008] EWHC 1036 (Comm). 86 The Arpad (No. 2) [1934] P 189 (CA); Singh v Yaqubi [2013] EWCA Civ 23; Pacific Interlink Sdn. Bhd. v

Owner of the Asia Star [2009] SGHC 91. 86 The Arpad (No. 2) [1934] P 189 (CA); Singh v Yaqubi [2013] EWCA Civ 23; Pacific Interlink Sdn. Bhd. v

Owner of the Asia Star [2009] SGHC 91. 87 Single Joint Expert Re rtt ¶ 3 F, Record, p. 58. 88 Attorney General of the Republic of Ghana (Ghana National Petroleum Corp.) v Texaco Overseas Tank Ships

Ltd. (The Texaco Melbourne) [1994] CLC 155, p. 156. 89 ibid.


20

value of such goods during that time at Takoradi. The Court awarded the damages

based on the market value at the nearest place where such goods were available, which

was in Italy, added with the freight cost to ship the goods to Takoradi.

55. In the present case, non-GMQ PFAD was only available in Europe. The nearest place

with available non-GMQ PFAD was in Holland.90 Therefore, the Claimant would need

to procure the Cargo replacement from Holland and ship it from the closest port,

namely Rotterdam, to Liverpool.

56. Even though the market value of non-GMQ PFAD in Rotterdam is not provided within

the Record,91 the sales price of similar cargo during the relevant time is a strong

evidence of the market value.92 In this instance, the market value shall be based on the

sales price of non-GMQ PFAD cargo aboard the Vessel, which is USD 350 per mt,93

added with freight cost to Liverpool, which is USD 30 per mt,94 amounting to USD 380

per mt.

C. The Claimant is not entitled to the costs that have been incurred in relation

to the Dutch proceedings

57. The Claimant had incurred costs in relation to the Dutch court proceedings against

Beatles.95 It should be noted that the appeal of such proceedings were ultimately

dismissed.96 The Claimant is now seeking to recover the costs incurred, including the

lawyer fees, in the Dutch court proceedings to the present Tribunal. However, the

Respondent submits otherwise.

90 Single Joint Expert ¶ 3 B, Record, p. 57-8. 91 Surveys Inc. Report, Record, p. 49; Dutch Surveryors BV Report, Record, p. 51; Single Joint Expert, Record,

p. 58-9; Correspondence from Mark Wiggins (Beatles) to the Respondent, Record, p. 62-4. 92 Braun v Bergenske Steamship Company (1921) 8 Lloyd’s Rep. 51; Stroms Bruks Aktie Bolag v John & Peter

Hutchison [1905] AC 515; Spencer v Commonwealth of Australia (1907) 5 C.L.R. 418, p. 431 (Isaacs J); El

Greco (Australia) Pty Ltd. and Another v Mediterranean Shipping Co. SA [2004] 2 Lloyd's Rep. 537. 93 Defence Submission ¶ 26, Record, p. 73. 94 Correspondence from Mark Wiggins (Beatles) to the Respondent, Record, p. 62. 95 Agreed Statement of Facts for the Arbitration Re: The Dutch Proceedings and Sale of the Cargo, Record, p.

54. 96 ibid.


21

58. In The Ocean Dynamic,97 it was held that costs incurred in foreign proceedings cannot

be awarded. It is also pertinent to refer to The Mercini Lady,98 where a buyer was

involved in a proceeding with a shipowner, claiming that the damage to the cargo was

caused by the shipowner’s breach. However, the buyer lost the proceeding and the

court ordered it to pay for the legal costs. The buyer then sued the seller for the

damage to the cargo and won the case. However, the court did not grant the legal costs

the buyer incurred in the previous proceeding with the shipowner. The reasoning of

such judgment was that the previous proceeding was the consequence of the buyer’s

own choice, which is a sufficiently independent matter and was not caused by the

seller’s breach.

59. In the present case, the Claimant’s entire issue in the Dutch court proceedings against

Beatles was independent of the Respondent’s action to discharge Cargo in Rotterdam.

It was the Claimant’s own choice to proceed, hence it cannot be regarded as a

consequence of the Respondent’s breach. Conversely, the Respondent cannot be held

liable for the Dutch court costs.

97 Jack L. Israel Ltd. v Ocean Dynamic Lines S.A. and Ocean Victory Ltd. (the Ocean Dynamic) [1982] 2

Lloyd’s Rep. 88. 98 KG Bominflot Bunkergesellschaft Für Mineralöle Mbh & Co. v Petroplus Marketing AG (The Mercini Lady)

[2012] EWHC 3009 (Comm).


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PRAYER FOR RELIEF

For all the reasons submitted above, the Respondent respectfully requests this Tribunal to:

DECLARE that the current Proceeding is stayed;

Alternatively,

ADJUDGE that the Claimant is not entitled to any relief claimed since the Claimant is not

the owner of the Cargo;

Further,

ADJUDGE that the Respondent is not liable:

a. Under the tort of conversion; and

b. For any losses arising from deterioration of the Cargo.

Even if the Respondent is held liable, the Respondent respectfully requests this Tribunal to:

ADJUDGE that, the Claimant has miscalculated the damages and the amount recoverable

shall be limited to the market value in Liverpool on the basis of USD 380 per mt.

ADJUDGE that the following damages are not recoverable:

a. Dutch court fees;

b. Legal fees in respect of the Dutch court proceedings;

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