THE NINETEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT

Memorandum for the Claimant

On Behalf of:

Cerulean Beans and Aromas Ltd

(CLAIMANT)

Against:

Dynamic Shipping LLC

(RESPONDENT)

A. NAMIRA IMANI – CINDY RAHMADAVITA – JEVON HOLLY – RAISYA MAJORY – VINKA DAMIANDRA

TEAM NO. 17

MEMORANDUM FOR THE CLAIMANT

TEAM NO. 17

iii

TABLE OF CONTENTS

TABLE OF CONTENTS iii

LIST OF AUTHORITIES v

LIST OF ABBREVIATIONS viii

SUMMARY OF FACTS 1

ARGUMENTS PRESENTED 2

I. THIS TRIBUNAL HAS THE CAPACITY TO RULE ON ITS OWN JURISDICTION 2

II. THIS TRIBUNAL HAS THE JURISDICTION TO RULE ON CLAIMANT’S CLAIMS

FOR DAMAGES 2

III. THE RESPONDENT IS LIABLE FOR THE LOSS CAUSED BY THE DELAY 3

A. The Delay was Caused by the Respondent’s Breach of Warranty to Provide Seaworthy

Ship 4

i. The Respondent has breached its warranty to provide seaworthy ship 4

ii. Respondent’s breach was the cause of the delay 6

B. In the Alternative, the Delay was Caused by the Respondent’s Unlawful Deviation to the

Port of Spectre 7

i. The deviation was beyond what is reasonably necessary 8

ii. The deviation was not due to a Force Majeure Event 8

iii. The Respondent’s unlawful deviation caused the delay 9

C. In any event, the Respondent Cannot be Exempted by Clause 17 of the Charterparty 10

D. The Delay Caused Claimant’s Loss 11

IV. THE RESPONDENT IS LIABLE FOR THE LOSS RESULTING FROM ITS FAILURE

TO TAKE REASONABLE CARE OF THE CARGO UNDER BAILMENT 11

A. The Respondent is under a Duty to Take Reasonable Care of the Cargo as a Bailee 12

B. The Cargo was Damaged under the Respondent's Custody as a Bailee 12

C. The Damage to The Cargo was Caused by The Respondent’s Failure to Take Reasonable

Care of The Cargo 14

D. The Claimant is entitled to recover for the damaged Cargo and the replacement cargo 16

E. The Respondent Cannot Limit Its Liability Pursuant to Article IV rule 5 of the HVR 16

V. THE CLAIMANT IS ENTITLED TO AN EQUITABLE MARITIME LIEN OVER THE

VESSEL 17

A. There is a Maritime Lien Over the Vessel for the Crews’ Wages 18

B. The Claimant Is Entitled to The Equitable Maritime Lien for The Crews’ Wages By Way

Of Subrogation 18

iv

i. The circumstances give rise to equitable subrogation to the crew’s maritime lien 19

ii. Further, there are no circumstances precluding such equitable subrogation 19

VI. THE CLAIMANT IS NOT LIABLE TO PAY FOR AMOUNTS CLAIMED UNDER

THE CHARTERPARTY IN FULL 21

A. The Claimant is not responsible for demurrage, the use of electronic access at the Port of

Dillamond, the agency fee at the Port of Spectre, and the repair to the Vessel’s hull 21

i. No demurrage is recoverable under the present circumstances 21

ii. The Respondent's non-compliance with Clause 15 of the Charterparty bars from it

claiming demurrage, the use of electronic access at the Port of Dillamond, the

agency fee at the Port of Spectre, and the repair to the Vessel's hull 22

B. The Respondent is not entitled to freight in full upon damages to the Cargo 23

C. The Claimant is not liable for the payment of agency fee at the Port of Dillamond in a

separate amount with the freight 24

PRAYER FOR RELIEF 25

v

LIST OF AUTHORITIES

CASES

Adamastos Shipping Co Ltd v Anglo Saxon Petroleum Co Ltd [1959] A.C. 133

Asfar v. Blundell [1896] 1 Q.B. 123

Australasian United Steam Navigation Co. Ltd. v. Hiskens (1914) 18 CLR 646

Automatic Totalisators Ltd v Oceanic Steamship Co [1965] NSWR 702

Automatic Tube Co and Email Ltd v Adelaide Steamship Co (The Beltana) [1966] WAR 103

B.P. Refinery (Westernport) Pty. Ltd v Hastings Shire Council (1977) 180 CLR 266

Baldwin’s Ltd v Halifax Corporation (1916) 85 LJ KB

Bankers Trust International v Todd Shipyards Corp (The Halcyon Isle) [1981] A.C. 221 (1980)

Banque Financiere de la Cite SA v Parc (Battersea) Ltd [1999] 1 A.C. 226

Benedetti v Sawiris [2014] AC 938

Berard Trading Inc. v. Empire Stevedoring Co. Ltd. (1976) Carswell BC 1033

Boodle Hatfield & Co v British Film Ltd (1986) 2 B.C.C. 99221

Boscawen v. Bajwa [1996] 1 W.L.R. 32

Brazzill v Willoughby [2009] EWHC 1633 (Ch)

Burston Finance Ltd v Speirway Ltd, [1974] 1 W.L.R. 1648

Butler v Rice [1910] 2 Ch. 277

C V Sheepvaartonderneming Ankergracht v Stemcor (Asia) Pty Ltd [2007] FCAFC 77

Chartered Bank v. British India S.N. Co. [1909] A.C. 369, 375

Cheltenham & Gloucester Plc v Appleyard & Another [2004] EWCA Civ 291

Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337

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

Dallah Real Estate v. Gov’t of Pakistan [2010] UKSC 46

Danae v. T.P.A.O. [1983] 1 Lloyd’s Rep. 498

David Duncan v Daniel Augustus (The Teutonia) (1873) LR 4 PC 179

Davis v Garrett (1830) 6 Bing 716 Duthie v. Hilton (1868) L.R. 4 C.P. 138

East & West Steamship Co v Hossain Bros [1968] 2 Lloyd's Rep 145

Elder Dempster & Co Ltd v Paterson, Zochonis & Co Ltd [1924] AC 522

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523

Eridania SpA & Ors v. Oetker & Ors (The Fjord Wind) [2000] C.L.C. 1376

Fairline Shipping Corporation v Adamson [1975] QB 180

FC Bradley & Sons Ltd v Federal Steam Navigation Co [1926] 24 Ll L Rep 446, 454

Federal Commerce v. Tradax Export (The Maratha Envoy) [1978] A.C. 1

Felthouse v Bindley (1862) 11 CB (NS) 869142 ER 1037

Ghana Commercial Bank v. Chandiram [1960] 3 W.L.R. 328

Gilchrist Watt & Sanderson Pty Ltd v York Products Pty Ltd [1970] 1 WLR 1262

Glencore International AG v. MSC Mediterranean Shipping Co SA & Anor [2015] EWHC 1989

(Comm)

Global Dress Company Ltd. v. Boase & Co. Ltd. [1966] 2 Ll.L.R. 72

Goldman v Thai Airways International Ltd [1983] 1 WLR 1186, 1194

Great Eastern Shipping Co Ltd v Far East Chartering Ltd (2012) WL 608696

Hadley v Baxendale (1854) 2 CLR 517

vi

Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 Houghland v. R. R. Low (Luxury Coaches) Ltd. [1962] 1 QB 694

Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd [2006] FCA 1324

Investment Trust Companies v Revenue and Customs Comrs [2012] STC 1150

Kopitoff v Wilson (1876) 1 QBD 377

Koufos v C Czarnikow Ltd (The Heron II), [1969] 1 A.C. 350 (1967)

Kyokuyo Co Ltd v. AP Moller-Maersk A/A (t/a Maersk Line [2017] EWHC 654 (Comm)

McFadden v Blue Star Line, [1905] 1 K.B. 697 (UK)

Mediterranean Shipping Co SA v Delumar BVBA (The MSC Rosa M) [2000] 2 Lloyd’s Rep 399,

401

Menelaou v Bank of Cyprus Plc [2015] UKSC 66

Mercury Communication Ltd v The Director General of Telecommunications [1994] C.L.C. 1125

Mogilyuk v Australian Maritime Safety Authority [2014] AATA 409

Monarch Steamship v Karlshamns Oljefabriker [1949] A.C. 196

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

Morris v C W Martin & Sons Ltd [1966] 1 QB 716

Nea Agrex SA v Baltic Shipping Co Ltd (The Agios Lazarus), [1976] Q.B. 933

Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd (1998) 44 NSWLR 371

Nugent v Smith, (1876) 1 CPD 423

Ontario Bus Industries Inc v Federal Calumet (The) [1991] FCJ 535

Orakpo v Manson Investments Ltd. [1978] AC 95

Paterson Steamships, Limited Appellants v. Canadian Co-Operative Wheat Producers, Limited

Respondents [1934] A.C. 538

Paul v. Speirway Ltd. [1976] Ch. 220

Phelps, James & Co v Hill [1891] 1 QB 605 CA

Reardon Smith Line v. Ministry of Agriculture, Fisheries and Food [1963] A.C. 691

Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd (The Muncaster Castle) [1961] AC

807

Roger v Whitaker (1992) 175 CLR 479.

Sailing Ship Garston Co v. Hickie (1885) 15 QBD 580

Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 C.L.R. 169

Scaramanga & Co v Stamp (1880) 5 CPD 295 (CA)

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51

Smith Hogg & Co Ltd v Black Sea and Baltic General Insurance Co Ltd [1940] 3 All ER 405.

Société Telus Communications v Peracomo Inc [2011] FC 494, 521

SS Pharmaceutical Co Ltd v Qantas Airways Ltd (1988) 92 FLR 231

Stag Line v. Foscolo, Mango [1932] A.C. 328

Stemcor (A/sia) Pty Ltd v CV Scheepvaartonderneming Ankergracht [2005] FCA 1808

Swynson Ltd v Lowick Rose LLP (formerly Hurst Morrison Thomson LLP) (in liquidation)

[2017] UKSC 32

The Arawa [1977] 2 Lloyd's Rep 416

The “British Trade” [1924] P. 104

The “Ruby” (No. 2) [1898] P. 59

The “Tacoma City” [1991] 1 Lloyd’s Rep. 330

The Bold Buccleugh (1851) 7 Moo P.C. 284

The British Shipowners’ Company (Limited) v. J. and A. D. Grimond No. 152. (1876) 3 R. 968

The Colorado [1923] P. 102

The Commonwealth of Australia v Amann Aviation Pty. Limited [1991] HCA 54

The Eurasian Dream [2002] 1 Lloyd’s Rep 719

The Express (1872) L.R. 3 A. & E. 597

vii

The Johanna Oldendorff (E.L. Oldendorff & Co. v. Tradax Export) [1974] A.C. 479 (H.L.)

The Maria G [1985] 1 Lloyd's Rep 616

The Patria (1871) L.R. 3 A. & E. 436

The Pioneer Container [1994] C.L.C. 332

The San Roman (1872) L.R. 5 P.C. 301

The Tolten [1946] P. 135.

The Two Ellens (1872) L.R. 4 P.C. 161

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

Westrac Equipment Pty Ltd v Owners of Ship (Assets Venture) [2002] FCA 440 (2002)

Wylie v. Carlyon [1922] 1 Ch. 51; Paul v. Speirway Ltd. [1976] Ch. 220

Yemgas FZCO v Superior Pescadores SA Panama [2016] EWCA Civ 101

STATUTES AND REGULATIONS

Australia Navigation Act 2012

Australia’s National Standard for Commercial Vessel

Australian Marine Order 27

English Arbitration Act 1996

CONVENTIONS

International Convention for Safety of Life at Sea 1974 (SOLAS)

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

Lading 1968 (Hague-Visby Rules)

BOOKS

Ewan McKendrick. Force Majeure and Frustration of Contract, 2nd edn, LLP, London, 1995

Gary B Born. International Commercial Arbitration Vol 1. Kluwer Law International 2009.

Graham Virgo. The Principles of the Law of Restitution. Oxford University Press, 2016.

International Chamber of Shipping. "Safe TransPort of Containers by Sea: Guidelines on Best

Practices". London: Marisec Publications, 2008.

International Trade Centre. "The Coffee Exporter's Guide". Genevam 2011.

Julian Cooke. Voyage Charters. 4th Edn, 2014.

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

5th ed, 2009.

Nigel Meeson. Admiralty Jurisdiciton and Practice. Third Edition, Lloyd’s Shipping Law

Library, 2003.

JOURNAL & OTHERS

Australian Maritime Safety Authority. “Navigation System.” AMSA.

https://www.amsa.gov.au/safety-navigation/navigation-systems (accessed on 15 April 2018)

viii

LIST OF ABBREVIATIONS

AATA

A.C.

All ER

ALJR

ALMD

Bing.

Cargo

C.P.D.

Claimant

C.L.C.

Charterparty

Delivery Deadline

FCA

HCA

HVR

K.B.

Lloyd’s Rep

L.R.

Moo. P.C.

Administrative Appeals Tribunal

UK Law Reports, Appeal Cases

All England Law Reports (United Kingdom)

Australian Law Journal Reports

Australia Legal Monthly Digest

Bingham's Common Pleas Reports (England)

1,000 bags of 70,000 kilograms of high-grade coffee

beans contained inside four containers, carried by the

Vessel

Common Pleas Division - Law Reports

Cerulean Beans and Aromas Ltd

Commercial Law Cases

Voyage charterparty between the Parties

7:00 PM 28 July 2017

Federal Court of Australia

High Court of Australia

Hague-Visby Rules

King’s Bench

Lloyd’s Law Report

Law Reports (England)

Moore's Privy Council Cases

ix

LIST OF ABBREVIATIONS

NSWLR

p.

¶

Parties

Respondent

QBD

SOLAS

Storm

UKSC

Vessel

Voyage

WAR

WLR

New South Wales Law Report

page

paragraph

the Claimant and the Respondent

Dynamic Shipping LLC

Queen’s Bench Division

International Convention for Safety of Life at Sea 1974

The storm occurred at 5:13 PM on 28 July 2017

United Kingdom Supreme Court

Madam Dragonfly

The voyage concerning the carriage of the Cargo from

Cerulean to Dillamond on 24 July 2017

Western Australia Reports

Weekly Law Reports

1

SUMMARY OF FACTS

1. On 22 July 2017, Cerulean Beans and Aromas (the “Claimant”) and Dynamic Shipping (the

“Respondent”) (together, the “Parties”) entered into a contract of carriage (the

“Charterparty”) to deliver 70,000 kilograms of high-grade coffee beans (the “Cargo”) from

Cerulean to Dillamond on 24 July 2017 (the “Voyage”) on board the Respondent’s vessel, the

Madam Dragonfly (the “Vessel”). The Cargo was to be delivered at 7:00 PM on 28 July 2017

(the “Delivery Deadline”) to the Claimant’s client, Coffees of the World, for an impending

coffee festival in Dillamond. The Claimant also agreed to loan the Respondent USD100,000 to

pay for the Vessel’s crew wages prior to the Voyage.

2. Due to solar flares from 24 July 2017 until 25 July 2017, the Vessel’s communication and

navigation failed at approximately 9:32 PM on 25 July 2017 for 17 hours. Shortly after the

Vessel’s communication and navigation systems failed, it deviated to the Port of Spectre. The

Vessel did not proceed with the Voyage until 27 July 2017.

3. A heavy storm occurred near the Vessel’s location at 5:13 PM on 28 July 2017 (the “Storm”),

causing the Respondent to fail to meet the Delivery Deadline.

4. At 8:42 PM on 29 July 2017, the Vessel docked at the Port of Dillamond and the Cargo was

available for collection. The Respondent has sent an electronic authority access barcode to allow

the collection of the Cargo past 12:02 AM, on 30 July 2017.

5. The Claimant collected the Cargo at 1:17 PM, on 31 July 2017. Three containers of the Cargo

were found to be completely water damaged. The Claimant suffered loss, was forced to find

replacement coffee, and has to make settlement payment to prevent legal action by its client.

6. The Claimant issued a notice of breach to the Respondent on 1 August 2017, demanding

damages in respect of damage towards the Cargo, replacement coffee, and a settlement payment

with the Claimant’s client. The Claimant commenced arbitration proceedings on 11 August 2017.

2

ARGUMENTS PRESENTED

I. THIS TRIBUNAL HAS THE CAPACITY TO RULE ON ITS OWN JURISDICTION

7. Under Section 30 (1) of Arbitration Act 1996,1 an arbitral tribunal may rule on its own

jurisdiction pursuant to an arbitration agreement. Accordingly, this Tribunal may adjudicate

matters submitted to arbitration in accordance with an arbitration agreement. This reflects a well-

established principle of international arbitration, known as the ‘competence-competence’

principle.2 Therefore this Tribunal has the capacity to rule on its own jurisdiction.

II. THIS TRIBUNAL HAS THE JURISDICTION TO RULE ON CLAIMANT’S CLAIMS

FOR DAMAGES

8. In its Points of Defense, the Respondent objects to the jurisdiction of this Tribunal to adjudicate

the claims made by the Claimant because its claims for damages are matters which should be

determined in accordance with Clause 27 (d) to (g) of the Charterparty (the “Expert

Determination Provisions”).3

9. Clause 27 (d) provides that, “...any dispute as to technical matters arising out of or in connection

with this contract shall be referred to expert determination by an independent Master Mariner.”4

The scope of ‘technical matters’ defined under Clause 27 (g) is limited to only cover matters

“which could reasonably be considered to be within the expert technical knowledge of a Master

Mariner.”5 In deciding such matter, the expert may only decide matters, which fall within the

scope of the Expert Determination Provisions that have been agreed by both Parties.6 As such, an

expert may not decide on matters which fall outside the scope of the Expert Determination

Provisions have been agreed by both Parties.

1 Moot Scenario, p. 12. 2 Dallah Real Estate v. Gov't of Pakistan [2010] UKSC 46; Gary B Born, International Commercial Arbitration (Kluwer

Law International 2009) vol 1, p, 853; Nigel Blackaby et al, Redfern and Hunter on International Arbitration (Oxford

University) Press, 5th ed, 2009), p. 346-7. 3 Moot Scenario, p. 40. 4 Ibid, p. 12. 5 Ibid. 6 Mercury Communication Ltd v The Director General of Telecommunications [1994] C.L.C. 1125.

3

10. In the present case, there are no disputes as to technical matters in respect of the Claimant’s

claims for damages. The cruxes of these claims for damages are matters regarding the

interpretation of contract, determination of liability, and the quantum of damages. The

determination of these issues could not in any way be deemed to fall within the definition of

technical matters as envisioned by Clause 27 (g).

11. The Respondent might argue that there is a dispute regarding technical matters with regards

whether the Respondent had exercised satisfactory due diligence to ensure the Vessel’s

seaworthiness and whether the Respondent has fulfilled the standard of duty of care for the cargo.

However, in the case of Roger v Whitaker (1992),7 it was affirmed that on a question on whether

a defendant’s action conforms to the standard of reasonable care, which is a question of law, is a

question exclusively for the court and cannot be delegated to any profession or group in the

community. Therefore, the Claimant’s claims for damages are questions of law that must be

determined by this Tribunal, not a Master Mariner.8 Consequentially, this Tribunal has

jurisdiction to adjudicate the Claimant’s claims for damages.

III. THE RESPONDENT IS LIABLE FOR THE LOSS CAUSED BY THE DELAY

12. The Claimant submits that the Respondent is liable for the losses incurred as a result of the

Respondent’s delay in delivering the Cargo to Dillamond, because (A) the delay was caused by

the Respondent’s breach of warranty to provide seaworthy ship, and (B) in the alternative, the

delay was caused by the Respondent’s unlawful deviation to the Port of Spectre. In any event,

(C) the Respondent cannot be exempted by Clause 17 of the Charterparty, and (D) the delay

caused the Claimant’s loss.

7 Roger v Whitaker (1992) 175 CLR 479. 8 Ibid.

4

A. The Delay was Caused by the Respondent’s Breach of Warranty to Provide Seaworthy

Ship

13. It is implied under a Charterparty that a shipowner has a duty to provide seaworthy ship.9 This

duty is further stipulated under Clause 1, where both parties have agreed that, “…the said ship,

warranted tight, staunch and strong and in every way fitted for the voyage”.10 The Respondent is

liable for the delay, because (i) the Respondent has breached its warranty to provide a seaworthy

ship, and (ii) such breach is the dominant cause of the delay.

i. The Respondent has breached its warranty to provide seaworthy ship

14. For a ship to be deemed as seaworthy, a ship must have that degree of fitness which an ordinary

careful and prudent owner would require his ship to have at the commencement of her voyage,

having regard to all the probable circumstances of it.11 In the present case, the Respondent has

breached its warranty to provide seaworthy ship, as it has failed to make the Vessel has that

“degree of fitness” at the commencement of the Voyage, having regard to all the probable

circumstances that might occur during the Voyage.

15. On 18 July 2017, a week prior to the Voyage, it was reported in Cerulean that solar flares were

expected to occur.12 As solar flares were known to have been strong enough to disrupt radio and

satellite communications systems, anyone who relied on radio and satellite communication

systems were warned to have back-up arrangements to anticipate the effect of such solar flares.13

16. Considering the possibility of the solar flares and its effect to radio and satellite communication

systems, an ordinary careful and prudent owner would not have allowed the Vessel to undertake

its Voyage without adequate back-up arrangements and equipment capable to anticipate the

adverse effect of such solar flares.

9 Kopitoff v Wilson (1876) 1 QBD 377; Paterson Steamships, Limited Appellants; v. Canadian Co-Operative Wheat

Producers, Limited Respondents [1934] A.C. 538. 10 Moot Scenario, p. 4; Elder Dempster & Co Ltd v Paterson, Zochonis & Co Ltd [1924] AC 522. 11 McFadden v Blue Star Line, [1905] 1 K.B. 697 (UK); FC Bradley & Sons Ltd v Federal Steam Navigation Co [1926]

24 Ll L Rep 446, 454; Eridania SpA & Ors v. Oetker & Ors (The Fjord Wind) [2000] C.L.C. 1376. 12 Moot Scenario, p. 35. 13 Ibid.

5

17. Under Section 224 of Australia Navigation Act 2012, an owner of a regulated Australian must

ensure that his vessel is supplied with nautical charts (including charts in electronic form)

necessary for use on the particular voyage.14 Further, under Section 23 of Australian Marine

Order No. 27, where a shipowner relies on electronic nautical charts, it is obliged to ensure the

vessel is equipped with back-up arrangements in the event its electronic nautical charts is not

available,15 by installing a back-up electronic nautical charts or procurement of hardcopy nautical

charts.16 In cases where a shipowner is aware of the likelihood of events that may hamper their

reliance on electronic nautical charts, the maintenance of hardcopy nautical charts as back-up

arrangement becomes obligatory,17 and the hardcopy nautical charts for such purposes must be

up-to-date and relevant for the intended voyage.18 Failure to provide appropriate nautical charts

will render the ship unprepared to encounter any unexpected events that may occur during the

voyage, and expose the crew to potentially threatening danger.19

18. In the present case, the Respondent failed to equip the Vessel with the necessary hardcopy

nautical charts before the commencement of the Voyage. It did not replace the hardcopy nautical

charts from the Vessel’s previous journey, leaving the Spectre nautical charts the only hardcopy

nautical charts available onboard.20 As such, at the commencement of the Voyage, the Vessel

was not equipped with adequate back-up arrangements in the event solar flares occurred and

affected its electronic navigation system.

19. Further, under Australia’s National Standard for Commercial Vessel, a shipowner has the

obligation to arrange communications equipment that reduces navigation risks associated with

operating the vessel, and significantly enhances the probability of survival in the event of an

14 Australia Navigation Act 2012 No. 128, 2012; SOLAS Chapter V regulation 27. 15 International Maritime Organization, ECDIS – Guidance for Good Practice, MSC.1/Circ.1503, Section 14. 16 Australian Marine Order No. 27, Section 23. 17 Primar Stavanger, IC-ENC Working Group on information (PSIWG), Facts about Charts and Carriage Requirements,

1st Edition, (Kort & Matrikelstyrelsen: 2004), p. 7. 18 Australian Marine Order No. 27, Section 23. 19 Mogilyuk v Australian Maritime Safety Authority [2014] AATA 409. 20 Moot Scenario, p. 18.

6

incident.21 Under Australian Marine Order 27, a shipowner is responsible to ensure a receiver of

global navigation satellite system or a terrestrial radio navigation system suitable for use at all

times throughout the intended voyage.22 Being aware of the possibility of the solar flares a week

before the commencement of the Voyage, an ordinary careful and prudent owner would have

provided communications equipment that is fit to encounter the effect of such solar flares.

20. According to the report provided by Cerulean National Communications Agency, any navigation

or satellite communication systems which comply with applicable regulations for utilisation in

commercial ventures should have reconnected straight away after the solar flares attack.23

Meanwhile, on 25 July 2017, the Vessel’s systems went down for 17 hours due to the effect of

the solar flares.24 Such prolonged delay shows that the Vessel was not equipped with

communication equipment capable of significantly enhance the probability of survival in the

event of solar flares attack. Therefore, by failing to arrange proper communication and

navigation equipment at the time of the commencement of the Voyage, the Respondent has

breached its warranty to provide seaworthy ship.

ii. Respondent’s breach was the cause of the delay.

21. The Vessel’s unseaworthiness is the cause of the delay in delivering the Cargo, as the delay

would not have happened had the Vessel was seaworthy when it sails on the Voyage.

22. The Respondent admitted that the reason of its deviation to the Port of Spectre on 25 July 2017

was because the only hardcopy nautical charts on board the Vessel were for Spectre.25 Had the

Vessel been equipped with the necessary navigation and communications system to counter the

effect of the solar flares, deviation to the Port of Spectre would be avoidable.

23. After deviating to Spectre, the Vessel attempted to proceed to Dillamond, but was halted at 4:58

PM on 28 July due to the Storm.26 Meanwhile, at the beginning of the Voyage, the Respondent

21 Australia’s National Standard for Commercial Vessel, Part C, Section 7, Subsection 7B, Section 2.3. 22 Marine Order 27 (Safety of navigation and radio equipment) 2016 s. 20; SOLAS, Regulation 19, Section 2.1.6. 23 Moot Scenario, p. 35. 24 Ibid, p. 17. 25 Ibid, p. 19. 26 Ibid.

7

had expected delivery to be completed by 5:00 PM on 28 July 2017.27 Had the Vessel been

seaworthy, the Storm would not have prevented the Respondent to deliver the Cargo on time, as

delivery would have been completed before the Storm even occurred.

24. The Respondent may further argue that the Storm, exempted the Respondent from its liability for

the delay by virtue of Clause 17 of the Charterparty. However, unseaworthiness as a cause,

operates immediately whenever it comes into effect.28 According to Lord Wright in Smith Hogg v

Baltic General Insurance (1940),29 if a shipowner’s breach of duty to provide a seaworthy ship is

‘a’ cause of the loss, then the shipowner is liable for such damage though there were other co-

operating causes of such damage.30 The House of Lords in Monarch Steamship v Karlshamns

Oljefabriker (1949),31 had affirmed the general rule of causation in the event of unseaworthiness:

“The shipowner, of course, under the familiar general rule, is debarred by his breach of duty [to

provide seaworthy ship] from relying on the specific exception. Though he would not be liable for

the consequences caused by the specific excepted peril or the accident alone if he were not in

default … yet the breach of the warranty operates directly as a cause and, indeed, a dominant

cause.” Therefore, the Vessel’s unseaworthiness was the cause of the delay, and the Respondent

is liable despite the existence of the Storm as co-operating cause.

B. In the Alternative, the Delay was Caused by the Respondent’s Unlawful Deviation to the

Port of Spectre

25. Under the Charterparty, the Respondent is under the obligation to carry the Cargo from Cerulean

to Dillamond without deviation, unless for cause justifying such deviation.32 The Claimant

submits that the Respondent’s deviation to the Port of Spectre was unlawful, since (i) the

deviation was beyond what is reasonably necessary, and (ii) it was not due to a Force Majeure

Event. Further, (iii) such deviation caused the delay in delivering the Cargo.

27 Ibid, p. 15. 28 Monarch Steamship v Karlshamns Oljefabriker [1949] A.C. 196. 29 Smith Hogg & Co Ltd v Black Sea and Baltic General Insurance Co Ltd [1940] 3 All ER 405. 30 Ibid. 31 Monarch Steamship v Karlshamns Oljefabriker [1949] A.C. 196. 32 Scaramanga & Co v Stamp (1880) 5 CPD 295 (CA).

8

i. The deviation was beyond what is reasonably necessary

26. Under Clause 17 of the Charterparty, the Vessel has liberty to deviate for the purpose of saving

life or property at the sea.33 Under common law, deviation is only allowed when it is done to save

lives on board.34 In The Teutonia (1873),35 it was held that a Master is justified to deviate where

he "... receives credible information that if he continues in the direct course of his voyage his

ship will be exposed to some imminent peril."36 However, when a ship deviates on the grounds of

necessity, the deviation must not exceed what is reasonable for the purpose of achieving its

justifiable object.37 Where the deviation consists of delay, the delay must not exceed what is

reasonable in the light of the danger that it is sought to avoid.38

27. Here, the Vessel’s communication and navigation systems had successfully recovered from the

effect of the solar flares on 26 July 2017 at 2:32 PM.39 If the deviation was needed to avoid risks

imposed to the crew and the Vessel due to the effect of the solar flares, the Vessel should have

been able to proceed back to its course immediately after such material time. However, the

Vessel chose to stay at the Port of Spectre until 27 July 2017,40 making its deviation beyond what

is reasonably necessary. Hence, the Respondent’s deviation is unlawful.

ii. The deviation was not due to a Force Majeure Event

28. Clause 17 of the Charterparty releases a party from any liability when the party is being delayed

or prevented from performing its obligations by reasons of the relevant Force Majeure Event in

which defined as, among others, “unforeseen weather events, acts of God, accidents, fire,

explosions, flood, landslips, ice, frost or snow.”41 However, the Solar flares do not qualify as a

Force Majeure Event stipulated under such clause.

33 Moot Scenario, p. 9. 34 Scaramanga And Co v. Stamp (1880) 5 C.P.D. 295. 35 David Duncan v Daniel Augustus (The Teutonia) (1873) LR 4 PC 179. 36 Ibid. 37 Phelps, James & Co v Hill [1891] 1 Q.B. 605; Stag Line v. Foscolo, Mango [1932] A.C. 328; Danae v. T.P.A.O.

[1983] 1 Lloyd’s Rep. 498. 39 Ibid, p. 17. 39 Ibid, p. 17. 40 Ibid, p. 18. 41 Moot Scenario, p. 9.

9

29. The solar flares could not be classified as “unforeseen weather events” as it was foreseeable by

the Respondent before and at the time of the commencement of the Voyage. To be considered as

a force majeure event, an event must have been unforeseeable by a reasonable person at the time

of the conclusion of the contract.42 In the present case, it was predicted in The Cerulean Mail on

18 July 2017 that solar flares were to occur for the next two weeks.43 As a company based in

Cerulean,44 the Respondent should have foreseen the occurrence of the solar flares at the time of

the conclusion of the Charterparty.

30. Further, the solar flares could not be classified as an act of God. An Act of God is defined as

accident caused by nature without any human intervention that could not have been anticipated

and prevented by a reasonably prudent person.45 In the present case, the accident caused by the

solar flares was the Vessel’s inability to proceed to Dillamond. As solar flares were known to

have been strong enough to disrupt radio and satellite communications,46 NASA has warned

vessels to have back up plans to anticipate the effect of such solar flares.47 The Vessel's inability

to proceed could have been prevented by having hardcopy nautical charts as a form of back-up

arrangement for the Vessel to continue the Voyage when it lost its electronic navigation system.48

Therefore, the solar flares could be anticipated by a reasonable prudent person, and cannot be

classified as a Force Majeure Event.

iii. The Respondent’s unlawful deviation caused the delay

31. When a loss is caused by a shipowner’s unlawful deviation, he is liable for the loss.49 He is only

exempted if he can show that the delay would have occurred even if the vessel did not deviate.50

42 Ewan McKendrick, Force Majeure and Frustration of Contract 2nd edn, LLP, London, 1995 at p. 24; Hyundai

Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd [2006] FCA 1324. 43 Moot Scenario, p. 35. 44 Procedural Order No. 2, ¶1. 45 Nugent v Smith, (1876) 1 CPD 423; Baldwin’s Ltd v Halifax Corporation (1916) 85 LJ KB; Commissioner of Railways

(WA) v Stewart, 56 CLR 520 (1936). 46 Moot Scenario, p. 35. 47 Ibid. 48 Team 17 Memorandum for Claimant, ¶17. 49 Davis v Garrett (1830) 6 Bing 716. 50 Ibid.

10

32. In this case, the delay in delivering the Cargo is caused by the Respondent’s unlawful deviation.

The Storm does not exempt the Respondent from any liability pursuant to Clause 17, as the delay

would not have happened if the Vessel had not deviated to the Port of Spectre. As argued in

paragraph 23-24, had the Voyage proceeded as planned, the Storm would not have prevented the

Respondent to deliver the Cargo on time, as delivery would have been completed before the

Storm even occurred. Therefore, the delay was caused by the Respondent’s unlawful deviation,

and the Respondent is liable for the delay.

C. In any event, the Respondent Cannot be Exempted by Clause 17 of the Charterparty

33. In any event, the Respondent cannot rely on any exemptions under Clause 17 of the Charterparty,

as it has failed to fulfill the condition to rely on Clause 17. To rely on Clause 17, the Respondent

has to exercise due diligence to ensure that the Vessel is seaworthy,51 i.e. to exercise a reasonable

care and skill to make the vessel fit for foreseeable perils of the sea.52

34. In the present case, the Claimant maintains its position that the Vessel was unseaworthy when it

sails on the Voyage. The Respondent, despite knowing the possibility of the solar flares since a

week before the Voyage, failed to equip the Vessel with hardcopy nautical charts to Dillamond as

well as communication equipment capable to significantly enhance the probability of survival in

the event of such solar flares.53 A reasonable prudent owner, exercising reasonable care, would

not have allowed the Vessel to undertake its Voyage without such hardcopy nautical charts and

adequate communication equipment on board. Therefore, the Respondent has failed to exercise

its due diligence to ensure the Vessel was seaworthy when it sails on the Voyage, and the

Respondent cannot be exempted under Clause 17.

51 Moot Scenario, p. 9. 52 Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd (The Muncaster Castle) [1961] AC 807; The Eurasian

Dream [2002] 1 Lloyd’s Rep 719; McFadden v Blue Star Line, [1905] 1 K.B. 697 (UK); FC Bradley & Sons Ltd v

Federal Steam Navigation Co [1926] 24 Ll L Rep 446, 454; Eridania SpA & Ors v. Oetker & Ors (‘The Fjord Wind’)

[2000] C.L.C. 1376. 53 Team 17 Memorandum for Claimant, ¶¶14-20.

11

D. The Delay Caused Claimant’s Loss

35. The settlement payment arising out of the delay is recoverable. Damages resulting from breach of

contract are claimed upon what may be reasonably be supposed to be in the contemplation of

both parties at the time they made the contract as the probable result of the breach.54 In the

present case, the Respondent was informed at the time the Charterparty was signed that the Cargo

was to be urgently shipped to meet the demands of the Claimant’s client.55 A settlement payment

would be a loss which would have been reasonably contemplated by the Respondent, having

been informed of the urgent nature of the shipment demanded by a third party. Hence, the loss

caused by the delay is recoverable, and the Claimant is entitled to claim the settlement payment.

IV. THE RESPONDENT IS LIABLE FOR THE LOSS RESULTING FROM ITS FAILURE

TO TAKE REASONABLE CARE OF THE CARGO UNDER BAILMENT

36. On 31 July 2017, approximately at 1:17 PM, the Claimant took the Cargo.56 It was later found

that the Cargo inside three containers was damaged.57 As a result, the Claimant suffered loss for

the damaged Cargo and had to purchase a replacement cargo for Coffees of The World. The

Claimant submits that the Respondent is liable for the damages.

37. As set out in Hobbs v Petersham Transport Co Pty Ltd (1971),58 "the obligation of a carrier as

bailee is to exercise due care, skill and diligence for the safety of chattels entrusted to him."59

The duty only ceases when the goods have been delivered.60 A failure to deliver them safely at

the end of the bailment constitutes a prima facie evidence of a failure to perform his duty to

54 Hadley v Baxendale (1854) 2 CLR 517; Automatic Totalisators Ltd v Oceanic Steamship Co [1965] NSWR 702;

Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB; Koufos v C Czarnikow Ltd (The Heron II),

[1969] 1 A.C. 350 (1967); The Commonwealth of Australia v. Amann Aviation Pty. Limited [1991] HCA 54. 55 Moot Scenario, p. 2. 56 Ibid, p. 24. 57 Ibid, p. 43. 58 Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220; Westrac Equipment Pty Ltd v Owners of Ship “Assets

Venture” [2002] FCA 440 (2002). 59 Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220; 45 ALJR 356; Gilchrist Watt & Sanderson Pty Ltd v

York Products Pty Ltd [1970] 1 WLR 1262; Morris v C W Martin & Sons Ltd [1966] 1 QB 716; The Pioneer Container

[1994] C.L.C. 332. 60 Gilchrist Watt & Sanderson Pty Ltd v York Products Pty Ltd [1970] 2 NSWR 156.

12

exercise due care, rendering him liable for the damages.61 He can only be exempted by showing

that their loss or damage was not the result of any default on his part. 62

38. In the present case, (A) the Respondent is under duty to take reasonable care of the Cargo as

bailee; (B) the Cargo was damaged under the Respondent's custody as a Bailee; further (C.) the

damage was caused by the Respondent's failure to take reasonable care of the Cargo. Further, (D)

the Claimant is entitled to recover for the damaged Cargo and the replacement cargo, and (E) the

Respondent cannot limit its liability pursuant to Article IV rule 5 of the HVR.

A. The Respondent is under a Duty to Take Reasonable Care of the Cargo as a Bailee

39. Bailment exists upon "a delivery of goods of one person, the bailor, into the possession of

another person, the bailee, upon a promise ... that they will be re-delivered to the bailor or dealt

with in a stipulated way."63 Here, on 24 July 2017 the Claimant delivered, and the Respondent

accepted the possession of the Cargo, evidenced by the dock receipt.64 Further, under the

Charterparty the Respondent undertook to deliver the Cargo back to the Claimant at the Port of

Dillamond.65 This shows that the relationship between the Claimant and the Respondent

constitutes a bailment. Therefore, the Respondent owes a duty of care for the Cargo.

B. The Cargo was Damaged under the Respondent's Custody as a Bailee

40. The Respondent’s duty as a bailee to take reasonable care of the Cargo only ceases after it has

delivered the Cargo.66 Here, the Cargo was damaged sometime between 4:30 AM on 30 July

2017 and 4:30 AM on 31 July, before it was delivered to the Claimant.67

41. In Australian United Steam Navigation Co. Ltd v. Hiskens (1914), the court held that delivery as

a transfer of possession is a matter of agreement, and thus delivery occurred when the carrier had

61 Morris v C W Martin & Sons Ltd [1966] 1 QB 716. 62 Ibid. 63 Hobbs v Petersham Transport Co Pty Ltd 1971) 124 CLR 220; Westrac Equipment Pty Ltd v Owners of Ship (Assets

Venture) [2002] FCA 440 (2002). 64 Moot Scenario, p. 16. 65 Ibid, p. 3, 4. 66 Gilchrist Watt & Sanderson Pty Ltd v York Products Pty Ltd [1970] 2 NSWR 156. 67 Moot Scenario, p. 43.

13

performed the agreed mode of transfer of possession.68 However, in the present case, there was

no agreement as the method of Cargo delivery. Clause 14 of the Charterparty only provides that

delivery must be made "always afloat as customary to the nominated discharge port or ports,

bearing in mind the individual port / berth restrictions to which the vessel must comply."69 This

does not govern the method as to how the Cargo has to be transferred.

42. The Respondent might argue that the Parties have agreed to use the electronic access sent by the

Respondent at 4:28 PM on 29 July 2017 as the method of delivery since the Claimant did not

reply to its email. However, it is established that silence or failure to reject an offer will not

constitute an acceptance.70 Hence, the Claimant’s silence after the Respondent sent the electronic

access attached to the Respondent’s email on 29 July 2017 does not constitute as an agreement as

to the mode of the delivery. Since there has been no agreement as to the method of delivery, the

Respondent’s dispatch of electronic access does not constitute as delivery of the Cargo.

43. In the absence of any agreement as to the method of delivery, delivery only occurs when the

goods are “placed under the absolute dominion and control of the consignees.”71 That is when

“they are so completely in the custody of the consignee that he may do as he pleases with

them.”72 The carrier has to surrender the possession of the goods to the consignee, which is done

when the carrier has divested himself of all powers to control any physical dealing in the goods

to the person entitled to receive the goods.73 Delivery only occurs when the Cargo is placed

68 Australasian United Steam Navigation Co. Ltd. v. Hiskens (1914) 18 CLR 646. 69 Moot Scenario, p. 8. 70 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 ; Felthouse v Bindley (1862) 11

CB (NS) ; 869142 ER 1037; Fairline Shipping Corporation v Adamson [1975] QB 180; M Powell, “Acceptance by

Silence in the Law of Contract” (1977) 5 Aust Bus L Rev 260; W J Grosse, “Silence as Acceptance” (1982) 9 Sthn Uni L

Rev 81; J Beatson, “Abandoning the Contract of Abandonment?” (1986) 102 LQR 19 at 21; M J Lawson “Silence May

Not be Golden” (1987) Lloyd's Maritime and Com LQ 155; M J Lawson, “Abandonment of Arbitration by Silence or

Inactivity” (1987) Lloyd's Maritime and Com LQ 263. 71 Australasian United Steam Navigation Co Ltd v Hiskens (1914) 18 CLR 646; Chartered Bank v. British India S.N. Co.

[1909] A.C. 369, 375. 72 The British Shipowners’ Company (Limited) v. J. and A. D. Grimond No. 152. (1876) 3 R. 968. 73 Glencore International AG v. MSC Mediterranean Shipping Co SA & Anor. [2015] EWHC 1989 (Comm); Cooke on

Voyage Charters (4th Edn, 2014) at ¶10.4; Australasian United Steam Navigation Co. Ltd. v. Hiskens (1914) 18 CLR

646.; Automatic Tube Co and Email Ltd v Adelaide Steamship Co (The Beltana), The "Beltana" [1966] WAR 103.

14

under the Claimant’s absolute dominion, free from the Respondent’s power to control the

physical dealing of the goods.74

44. The Cargo was also not under the dominion of the Claimant when the Cargo was offloaded and

stored in the electronic system maintained by the port authority. In Great Eastern Shipping Co

Ltd v Far East Chartering Ltd (2012),75 it was held that delivery occurred because the shipowner

had surrendered possession to the consignee. In contrast, the Respondent in the present case had

not surrendered possession when it offloaded the Cargo into the electronic system. Anyone with

the barcode, including the Respondent, can always take the Cargo.

45. The Cargo was only under the Claimant’s absolute dominion at 1:17 PM on 31 July 2017, i.e.

when the Claimant had the possession of the Cargo.76 That was the time when the Cargo was

placed under the absolute dominion and control of the Claimant, so as the Claimant could do

anything with the Cargo.

46. In the event that this Tribunal deems the Claimant’s use of the electronic access as an acceptance

to the Respondent's offer, this only occurred at 1:17 PM, after the Cargo was damaged. Hence,

the damage still occurred before the delivery, and the Respondent remains liable.

C. The Damage to The Cargo was Caused by The Respondent’s Failure to Take

Reasonable Care of The Cargo

47. A bailee is only exempted by the liability arising from the damages to the Cargo if he can prove

that the loss or damage was not the result of any default on his part.77 It is the Respondent's

burden to show that the Cargo was not damaged by any default on his part. However, the

Respondent is not exempted under this present circumstance. The standard of care and diligence

is that which a careful and vigilant man would exercise in respect of goods of his own of the

74 Glencore International AG v. MSC Mediterranean Shipping Co SA & Anor [2015] EWHC 1989 (Comm); Australasian

United Steam Navigation Co. Ltd. v. Hiskens (1914) 18 CLR 646; Automatic Tube Co and Email Ltd v Adelaide

Steamship Co (The Beltana) [1966] WAR 103. 75 Great Eastern Shipping Co Ltd v Far East Chartering Ltd (2012) WL 608696. 76 Moot Scenario, p. 24, 25. 77 Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220; Westrac Equipment Pty Ltd v Owners of Ship “Assets

Venture” [2002] FCA 440 (2002); Houghland v. R. R. Low (Luxury Coaches) Ltd. [1962] 1 QB 694; Global Dress

Company Ltd. v. Boase & Co. Ltd. [1966] 2 Ll.L.R. 72.

15

same kind in similar circumstances.78 In this present case, In the present case, as evidenced in the

statement of expert opinion, the Cargo was damaged due to an unprecedented rainfall and

prolonged use of the sealant.79 The Respondent failed to fulfill its duty of care to the Cargo, by

using waterproof containers that only lasted for five days and subsequently discharging the Cargo

during a heavy rainfall.80

48. It is a general practice that containers used to ship coffee beans had to be watertight.81 In Stemcor

v CV Scheepvaartonderneming Ankergracht (2005),82 when it is known to the carrier that the

Cargo was sensitive to moisture, it was reasonable for the carrier to take steps to prevent the

Cargo to be water-damaged, even though the steps are beyond what is required in general

practice.83 Further, heavy weather and ordinary perils which might delay the voyage are usually

expected.84 In the present case, the Claimant emphasised prior to the Voyage that since the risk of

moisture damage to the Cargo is too great, it is imperative that the containers used are entirely

waterproof.85

49. A vigilant man would not provide waterproof sealants that only last for five days knowing that it

ordinarily takes more than four days to complete the voyage, as risk of delay is well-known in the

shipping industry. A vigilant man would fear that the voyage might be delayed, and the Cargo

might be exposed to water. Therefore, the Respondent should have taken reasonable care and

provide waterproof sealants that last longer than the Voyage to provide for unexpected peril.

50. Further, when it is known to the carrier that the goods are perishable by water, he is considered to

be negligence when he discharges the during a heavy rain.86 In the present case, the Cargo was

78 Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220. 79 Moot Scenario, p. 43. 80 Ibid, p. 14, 43. 81 Procedural Order No. 2, ¶12; International Chamber of Shipping, "Safe TransPort of Containers by Sea: Guidelines on

Best Practices" (London: Marisec Publications, 2008), p. 38; International Trade Centre, "The Coffee Exporter's Guide",

(Genevam, 2011) p. 94. 82 Stemcor v CV Scheepvaartonderneming Ankergracht [2005] FCA 1808. 83 Stemcor (A/sia) Pty Ltd v CV Scheepvaartonderneming Ankergracht [2005] FCA 1808; C V Sheepvaartonderneming

Ankergracht v Stemcor (A/sia) Pty Ltd [2007] FCAFC 77. 84 Gamlen Chemical Co (A/asia) Pty Ltd v Shipping Corporation of India Ltd 34 FLR 305. 85 Moot Scenario, p. 2. 86 Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd (1998) 44 NSWLR 371; East & West Steamship Co v Hossain

Bros [1968] 2 Lloyd's Rep 145; The Arawa [1977] 2 Lloyd's Rep 416.

16

offloaded at 12:02 AM on 30 July 2017. It was reported that 350 mL of rain fell 24 hours since

1:00 AM 29 July 2017 and haven’t eased up since then. Hence, on 29 July, when the Cargo was

discharged, it should be known by the Respondent that the containers were no longer waterproof

and the Cargo might be damaged by the rain. Yet, the Respondent discharged the Cargo and

exposing the Cargo to the rain. Therefore, the Respondent has failed its duty to take care of the

Cargo and hence liable for the loss resulting from the damage to the Cargo.

D. The Claimant is entitled to recover for the damaged Cargo and the replacement cargo

51. A party can recover from a loss that is within the reasonable contemplation of the parties.87 That

is, when the loss ‘does not unlikely to result from a breach’.88 When there are special

circumstances resulting to a loss that does not naturally arise from a breach, the Claimant is

entitled to damages when such circumstances were made known to the Respondent prior to the

conclusion of the contract.

52. In the present case, the Claimant has informed the Respondent that it has promised to deliver the

Cargo to its client for a coffee festival in Dillamond on 29-31 July.89 It is again reiterated on the

Dock Receipt that the Cargo was meant for immediate sale.90 It is not unlikely that as a result of a

damaged Cargo, the Claimant had to buy a replacement cargo to fulfill its promise to a third

party. Hence, the Claimant is entitled to recover for such loss.

E. The Respondent Cannot Limit Its Liability Pursuant to Article IV rule 5 of the HVR

53. The Respondent is not entitled to limit its liability pursuant to Article IV rule 5 of the HVR by

virtue of the Paramount Clause contained in the Charterparty, because the damage to Cargo

resulted from its own personal act, which was committed recklessly, with the knowledge that the

loss would probably result.

87 Hadley v. Baxendale (1854) 9 Exch. 341; Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB;

Koufos v C Czarnikow Ltd (The Heron II), [1969] 1 A.C. 350 (1967); The Commonwealth of Australia V. Amann

Aviation Pty. Limited [1991] HCA 54. 88 Ibid. 89 Moot Scenario, p. 1, 38, 41; Procedural Order ¶6. 90 Ibid, p. 16.

17

54. Article IV rule 5 (e) of HVR stipulates that a carrier will not be entitled to limit its liability if it is

proved that the damage is results an act or omission of the carrier which is committed with

“intent to cause damage”, or “recklessly” and “with knowledge that damage would probably

result”. On a proper construction, it is to be interpreted that commission of the act or omission is

not only qualified by the alternative adverbs “with intent to cause damage” or “recklessly”, but

also by the adverbial phrase “with knowledge that damage would probably result.”91 However,

when an act or omission is alleged to be done “recklessly”, it is sufficient to prove the word

“recklessly”,92 since a conduct is stigmatised as reckless when a conduct is done with omission

of the knowledge that damage would probably result.93

55. In the present case, the Respondent provided the Cargo with waterproof sealants that only last for

five days despite knowing the risk of delay in the shipping industry. Further, despite knowing

that the containers were no longer waterproof, the Respondent decided to discharge the Cargo at

the Port of Dillamond, causing it to be exposed to heavy rain. Knowing that the Cargo was water-

sensitive and the risk of moisture damage was too great, the Respondent neglected the risk that

such conduct may cause damage to the Cargo. As a result, the Cargo was damaged, as

corroborated by the statement of expert opinion.94 As such, the damage to the Cargo was a result

from the Respondent’s reckless act, and as a consequence, it is not entitled to limit its liability

under Article IV Rule 5 of Hague Visby Rules.

V. THE CLAIMANT IS ENTITLED TO AN EQUITABLE MARITIME LIEN OVER THE

VESSEL

56. The Claimant advanced USD100,000 to cover the Vessel's crew wages at the Respondent’s

request.95 Until the present time, the Respondent has not paid its crew nor has it repaid the

91 Ontario Bus Industries Inc v Federal Calumet (The) (TD) [1991] FCJ 535; Goldman v Thai Airways International Ltd

[1983] 1 WLR 1186, 1194. 92 Goldman v Thai Airways International Ltd [1983] 1 WLR 1186, 1194. 93 Goldman v Thai Airways International Ltd [1983] 1 WLR 1186, 1194; Mediterranean Shipping Co SA v Delumar

BVBA (The “MSC Rosa M”) [2000] 2 Lloyd’s Rep 399, 401; Société Telus Communications v Peracomo Inc [2011] FC

494, 521; SS Pharmaceutical Co Ltd v Qantas Airways Ltd (1988) 92 FLR 231. 94 Moot Scenario, p. 43. 95 Ibid, p. 1, 38, 41.

18

Claimant.96 Although the outstanding amount does not give rise to a maritime lien, nonetheless,

(A) there is a maritime lien over the Vessel for the crew’s wages, and (B) the Claimant is entitled

to the equitable maritime lien for the crews’ wages by way of equitable subrogation.

A. There is a Maritime Lien Over the Vessel for the Crews’ Wages

57. A maritime lien is a right of one creditor of a particular claim to receive the proceeds of sale of a

vessel in priority over other creditors through an in rem proceeding against the vessel.97 A claim

that gives rise to a maritime lien under common law is crew wages,98 which exists in this present

case. A maritime lien for crew wages arises for the sums due to the crew for work done to the

ship,99 and is only extinguished at the moment the wages are paid to the crew.100 In the present

case, payment of crew wages provided by the Claimant in the amount of USD100,000 was

payable to the crew following the Voyage.101 However, the crew has not received such

payment.102 Therefore, the outstanding and unpaid wages to the Vessel's crew, allows for a

maritime lien over to the Vessel to be made, which survives until the present time.

B. The Claimant Is Entitled to The Equitable Maritime Lien for The Crews’ Wages By

Way Of Subrogation

58. The Claimant is entitled to receive the crews’ maritime lien for the sums advanced on account of

the crews’ wages under doctrine of equitable subrogation. This is because (i) the circumstances

give rise to equitable subrogation of the crew’s maritime lien; and (ii) nothing precludes this

equitable subrogation.

96 Ibid, p. 38, 41. 97 Bankers Trust International v Todd Shipyards Corp (The halcyon Isle) [1981] A.C. 221 (1980); The Bold Buccleugh

(1851) 7 Moo. P.C. 267. 98 Bankers Trust International v Todd Shipyards Corp (The Halcyon Isle) [1981] A.C. 221 (1980); The Bold Buccleugh

(1851) 7 Moo. P.C. 267; Nigel Meeson, Admiralty Jurisdiciton and Practice (Third Edition, Lloyd’s Shipping Law

Library, 2003), p. 62. 99 The “Tacoma City” [1991] 1 Lloyd’s Rep. 330; The “Chieftan” (1863) Br. & L. 104; The “Ruby” (No. 2) [1898] P.

59; The Tagus [1903] P. 44. 100 The Bold Buccleugh (1851) 7 Moo. P.C. 267. 101 Moot Scenario, p. 38, 41. 102 Ibid, 36; Procedural Order No.2, ¶11.

19

i. The circumstances give rise to equitable subrogation to the crew’s maritime lien.

59. Equitable subrogation allows a party that has made payments for another party to lay a claim to

the recovery of damages from a third-party, to prevent unjust enrichment.103 For example, where

a loan arrangement provides that a loan by a lender to a borrower is made to repay another third-

party secured loan,104 the lender is entitled to a subrogation of such third-party security.105

Mutual consent is not required for a party to claim for equitable subrogation.106

60. Before entering into the Charterparty, the Respondent requested the Claimant to loan

USD100,000 to the Respondent, to subsequently pay the Vessel's crew at the Voyage's

conclusion.107 The Claimant understood that once this payment has been disbursed to the

Respondent, the Respondent would then proceed to pay the wages of the Vessel's crew.108 In this

vein, a maritime lien may be asserted over the Vessel crew’s wages in respect of the

Respondent’s obligation to pay its crew.109

ii. Further, there are no circumstances precluding such equitable subrogation.

61. The Respondent may argue that the Claimant is precluded to be subrogated to the crew’s

maritime lien. Under these circumstances, equitable subrogation is not possible when the terms

of an agreement bar it,110 or if its application would produce an unjust result,111 for example,

when a party already receives what they bargained for.112 Thus, if the true nature of the

103 Menelaou v Bank of Cyprus Plc [2015] UKSC 66; Benedetti v Sawiris [2014] AC 938; Cheltenham & Gloucester Plc

v Appleyard & Another [2004] EWCA Civ 291; Orakpo v Manson Investments Ltd. [1978] AC 95; Graham Virgo, The

Principles of the Law of Restitution (Oxford University Press, 2016), p. 9. 104 Burston Finance Ltd v Speirway Ltd, [1974] 1 W.L.R. 1648 (1974); Swynson Ltd v Lowick Rose LLP (formerly Hurst

Morrison Thomson LLP) (in liquidation) [2017] UKSC 32.; Orakpo v Manson Investments Ltd. [1978] AC 95; Boodle

Hatfield & Co v British Film Ltd, (1986) 2 B.C.C. 99221 (1985); Brazzill v Willoughby [2009] EWHC 1633 (Ch); Ghana

Commercial Bank Appellants; v D. T. Chandiram and Another Respondents [1960] 3 W.L.R. 328; Wylie v. Carlyon

[1922] 1 Ch. 51; Paul v. Speirway Ltd. [1976] Ch. 220; Butler v Rice [1910] 2 Ch. 277. 105 Orakpo v Manson Investments Ltd. [1978] AC 95; Boodle Hatfield & Co v British Film Ltd, (1986) 2 B.C.C. 99221

(1985); Wylie v. Carlyon [1922] 1 Ch. 51; Paul v. Speirway Ltd. [1976] Ch. 220. 106 Banque Financiere de la Cite SA v Parc (Battersea) Ltd [1999] 1 A.C. 226. 107 Moot Scenario, p. 38, 41. 108 Ibid. 109 Ibid, p. 38, 41. 110 Boodle Hatfield & Co v British Film Ltd. (1986) 2 B.C.C. 99221 (1985); Orakpo v Manson Investments Ltd. [1978]

AC 95. 111 Boodle Hatfield & Co v British Film Ltd, (1986) 2 B.C.C. 99221 (1985); Paul v Speirway (In Liquidation), (1976) 31

P. & C.R. 353 (1976). 112 Paul v Speirway (In Liquidation), (1976) 31 P. & C.R. 353 (1976).

20

transaction is shown to be no more than a creation of an unsecured loan, there will be no

subrogation to any security.113

62. However, no such circumstances appear in this case. First, no terms have been agreed between

the Parties to bar subrogation of the maritime lien. Second, the true nature of the transaction at

hand is a secured one, and does not displace subrogation. Although it may seem that there has

been no agreement or discussion on security for the loan, this does not affect the right of

subrogation. In Boodle Hatfield & Co. v. British Films Ltd (1986)114 it was held that, the failure

of the lender to ask for security prior to entering into the loan agreement does not preclude

subrogation.115 If time constraints made it commercially unreasonable to hold further discussions

on security, the lender was deemed to not waive its right and interest for security.

63. Before the Voyage's commencement, its crew would not have sailed, without the sums advanced

by the Claimant. 116 The urgency of the Voyage made it imprudent to hold further negotiations on

security for the loan arrangement which may prove to be lengthy.117 Because of the approaching

deadline and the legal action threatened by the coffees of the world,118 it was only commercially

sensible not to not impend the Voyage further.119 However, this does not mean the Claimant has

forfeited any right as to security. The Claimant made it clear that it insisted on repayment and

take steps “to ensure our interest are adequately protected”.120 Thus, the absence of an agreement

or negotiation on security does not affect the Claimant's right to security.

64. Consequentially, as there are no circumstances preventing subrogation, the Claimant remains

entitled for the subrogation to the Crew’s maritime lien.

113 Paul v Speirway (In Liquidation), (1976) 31 P. & C.R. 353 (1976); Orakpo v Manson Investments Ltd. [1978] AC

95;Boodle Hatfield & Co. v. British Films Ltd. [1986] P.C.C. 176; Menelaou v Bank of Cyprus Plc [2016] A.C. 188;

Banque Financiere de la Cite SA v Parc (Battersea) Ltd [1999] 1 A.C. 226. 114 Boodle Hatfield & Co. v. British Films Ltd. [1986] P.C.C. 176. 115 Boodle Hatfield & Co. v. British Films Ltd. [1986] P.C.C. 176; Banque Financiere de la Cite SA v Parc (Battersea)

Ltd [1999] 1 A.C. 221 (1998). 116 Moot Scenario, p. 1. 117 Ibid. 118 Ibid, p. 1, 2. 119 Ibid, p. 1. 120 Ibid.

21

VI. THE CLAIMANT IS NOT LIABLE TO PAY FOR AMOUNTS CLAIMED UNDER THE

CHARTERPARTY IN FULL

65. In its Point of Defence, the Respondent submitted that the Claimant is liable for certain

outstanding amounts under the Charterparty.121 The Claimant denies its liability in full because

(A) the Claimant is not responsible for demurrage, the use of electronic access at the Port of

Dillamond, agency fee at the Port of Spectre, and the repair to the Vessel’s hull. Further, (B) the

Claimant is not liable for freight in full due to damages to the Cargo and (C) the Claimant is not

liable for the payment of the agency fee at the Port of Dillamond.

A. The Claimant is not responsible for demurrage, the use of electronic access at the Port

of Dillamond, the agency fee at the Port of Spectre, and the repair to the Vessel’s hull.

66. The Claimant is not obligated to make payment for the demurrage, use of electronic access at the

Port of Dillamond, agency fee at the Port of Spectre, and the repair to the Vessel’s hull from

Claimant. This is because (i) no demurrage is recoverable under the present circumstances.

Further, (ii) the Respondent's non-compliance with Clause 15 of the Charterparty bars from it

claiming demurrage, the use of electronic access at the Port of Dillamond, the agency fee at the

Port of Spectre, and the repair to the Vessel's hull.

i. No demurrage is recoverable under the present circumstances.

67. Under Clause 9 of the Charterparty, demurrage accrues when the discharge of the Cargo exceeds

laytime.122 Clause 8 (c) (ii) provides that the time allowed for discharge is 0.5 Weather Working

Days (“WWD”).123 Laytime only starts to count when the Vessel arrives at the discharge port,124

i.e. when the Vessel arrives at certain space of water where port can have its authority.125

121 Ibid, p. 41, 42. 122 Ibid, p. 7. 123 Ibid. 124 Ibid. 125 E.L. Oldendorff & Co. v. Tradax Export (The Johanna Oldendorff) [1974] A.C. 479 (H.L.); Federal Commerce v.

Tradax Export (The Maratha Envoy) [1978] A.C. 1; Sailing Ship Garston Co v. Hickie (1885) 15 QBD 580.

22

68. As decided in the case of Reardon Smith Line v. Ministry of Agriculture, Fisheries and, Food

(1963),126 ‘Weather Working Days’ means the time where weather allows discharging to

commence.127 Whether weather allows discharging to commence shall be determined by the

relevant circumstances and the Cargo.128

69. On 29 July 2017 at 7:00 AM, the Vessel had been instructed by the port authority to wait for

berth in the Port of Dillamond’s usual waiting area, and thus could be deemed to mark the start of

the laytime. Nonetheless, although laytime began on 29 July 2017 at 7:00 AM, 350 mL of rain

fell in Dillamond for 24 hours starting from 1:00 AM on 29 July 2017.129 This period could not

be deemed as a time where weather allows discharging to commence, since the Cargo was not fit

to be discharged during the rain. Although the Cargo was carried inside 4 containers sealed with

waterproof sealants,130 the Cargo was no longer protected by the waterproof sealants at the time

the Vessel arrived at the Port of Dillamond. These sealants were intended to be used for 5 days

only,131 starting from 24 July 2017 at 5:00 AM132 and ended on 29 July 2017 at 5:00 AM.

70. As discharging the Cargo from 5:00 AM on 29 July 2017 to 1:00 AM on 30 July 2017 was not

possible, this period does not qualify as a Weather Working Day, and laytime did not count

during such period. Thus, laytime has not ended when the Respondent decided to discharge the

Cargo on 30 July 2017 at 00:02 AM. Therefore, no demurrage accrued in the present case.

ii. The Respondent's non-compliance with Clause 15 of the Charterparty bars from it

claiming demurrage, the use of electronic access at the Port of Dillamond, the agency fee

at the Port of Spectre, and the repair to the Vessel's hull

71. Under Clause 15 (a) (i) of the Charterparty, the Respondent must ensure that the Vessel complies

with the applicable provisions under the Commonwealth of Australia Navigation Act 2012 and

126 Reardon Smith Line v. Ministry of Agriculture, Fisheries and Food [1963] A.C. 691, esp. p. 739; The Maria G [1985]

1 Lloyd's Rep 616. 127 Ibid. 128 Ibid. 129 Moot Scenario, p. 36. 130 Ibid, p. 14, 43. 131 Ibid, p. 42. 132 Procedural Order No. 2, ¶13.

23

the Regulations thereunder.133 For any delay caused by the Vessel’s failure to comply with such

requirements, Clause 15 (b) provides that, “… time shall not count nor demurrage accrue during

the period of such delay and any extra expenses incurred, including cost of stevedoring/receival

labour, equipment and truck demurrage, ordered and not used, to be for Owners’ account.”

72. In the present case, the Respondent’s failure to comply with the Commonwealth of Australia

Navigation Act 2012 and the Regulations caused its failure to deliver the Cargo on time.134

Demurrage, if any, would accrue during the period of the delay. Here, the period of delay is

accounted from the time between the Delivery Deadline and the actual time of the Cargo's

discharge, namely on 1:17 PM on 31 July 2017. Consequentially, demurrage could only be

claimed by the Respondent if it was not during the period of such delay. Therefore, there is no

demurrage payable to the Respondent.

73. Consequentially, the use of electronic access at Dillamond, the agency fee at the Port of Spectre,

and the repair to the Vessel’s hull are also not claimable by the Respondent. These costs are extra

expenses that have not been agreed by the Parties under the Charterparty, all of which were

incurred after the Respondent’s own failure to comply with the applicable regulations. Therefore,

pursuant to Clause 15 (b), none of these extra expenses are recoverable to the Respondent.

B. The Respondent is not entitled to freight in full upon damages to the Cargo

74. When there is damage to cargo to such a degree that it destroys the commercial identity of the

cargo, the cargo is regarded as totally lost. Consequentially, where the earning of freight is

dependent upon delivery, freight is not earned, irrespective of whether the shipowner is liable for

the loss.135 The test for whether there is a total loss of the goods was provided in Asfar & Co. v

Blundell (1896),136 where Lord Esher MR held that, “If it is so changed in its nature by the perils

of the sea as to become an unmerchantable thing, which no buyer would buy and no honest seller

133 Moot Scenario, p. 8. 134 Team 17 Memorandum for Claimant, ¶¶14-24. 135 Duthie v. Hilton (1868) L.R. 4 C.P. 138; Asfar v. Blundell [1896] 1 Q.B. 123; Montedison S.p.A. v. Icroma S.p.A.

(The Caspian Sea) [1980] 1 Lloyd’s Rep. 91. 136 Asfar & Co. v Blundell [1896] 1 Q.B. 123

24

would sell, then there is a total loss.” Kay LJ further affirmed that a mere destruction of the

merchantable character of the goods is sufficient to create total loss.137

75. In the present case, 75% of the Cargo became unmerchantable when it was delivered to the

Claimant, verified by the analysis of an independent surveyor to be completely water damaged,138

depriving the Claimant with any willful buyers.139 Thus, the Respondent is not entitled to freight

in its full amount. At best, the Respondent it is only entitled to 25% of the freight in the amount

of USD125,000.

C. The Claimant is not liable for the payment of agency fee at the Port of Dillamond in a

separate amount with the freight

76. Under Clause 12 of the Charterparty, customary fees at the discharge port shall be paid by the

Vessel.140 The Parties have further agreed under Clause 22 that the calculation of the freight is

based on bill of lading weight on completion of load, “…in full of all port charges, pilotages,

light dues and all other dues usually paid by vessels.”141 This means that the Parties have

intended that all dues usually paid by the Vessel is included as part of the freight.

77. However, the current freight was not calculated on the bill of lading weight on completion of

load as stipulated under Clause 22, but based on the numbers of containers loaded upon the

conclusion of the Charterparty.142 This has caused a void on who should bear the fees paid by the

Vessel, when the freight was not calculated based on the method stipulated under Clause 22.

78. When there is a deficiency in the express term of an agreement, to foster business efficacy, a

tribunal is open to imply a term to foster business efficacy.143 The ground for implication of a

term lies on five conditions to be, i.e. it must be: “(1) reasonable and equitable; (2) necessary to

give business efficacy to the contract; (3) so obvious that ‘it goes without saying’; (4) capable of

137 Asfar & Co. v Blundell [1896] 1 Q.B. 123. 138 Moot Scenario, p. 44. 139 Ibid, p. 27. 140 Ibid, p. 7. 141 Ibid, p. 11. 142 Ibid, p. 3. 143 Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; Secured Income Real Estate

(Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51.

25

clear expression; (5) not contrary with any express term of the contract.”144 In assessing such

condition, this Tribunal shall objectively ascertain and reinforce the presumed intention of the

Parties by seeing the factual matrices.145

79. In the present case, seeing the absence of contradictory express terms under the Charterparty, it

would only be reasonable to imply that under Clause 22, the Parties have intended that the fees

charged at the discharge port to be included as part of the calculation of freight. Consequently,

the Respondent is not entitled to claim such fees in a separate amount with the freight.

PRAYER FOR RELIEF

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

DECLARE that it does have jurisdiction to hear the merits of the Claimant’s claims;

Further,

ADJUDGE that the Respondent is liable to the Claimant for:

1. USD15,750,000 on account of the damaged Cargo;

2. USD9,450,000 for the replacement cargo; and

3. USD5,000,000 on account of the settlement payment;

Further,

ADJUDGE that the Respondent is not entitled to limit its liability in respect of the Claimant’s

claims;

Further,

ADJUDGE that the Claimant holds a maritime equitable lien over the Vessel; and

ADJUDGE that the Claimant is not liable for the sums claimed by the Respondent in full.

144 B.P. Refinery (Westernport) Pty. Ltd v Hastings Shire Council. (1977) 180 CLR 266. 145B.P. Refinery (Westernport) Pty. Ltd v Hastings Shire Council. (1977) 180 CLR 266; Scanlan's New Neon Ltd v

Tooheys Ltd (1943) 67 C.L.R. 169.