SEVENTEENTH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2017

YOGI BRATAJAYA DENI MULYANA M IRFAN DIMASYQI FADEL AROZI

MEMORANDUM FOR RESPONDENT

UNIVERSITAS PADJADJARAN

TEAM 20

ON BEHALF OF

INFERNO RESOURCES SDN BHD

CLAIMANT

CLAIMANT

AGAINST

FURNACE TRADING PTE LTD

CLAIMANT

COUNSEL

TEAM 20 MEMORANDUM FOR RESPONDENT

I

TABLE OF CONTENTS

LIST OF ABBREVIATIONS IV

LIST OF AUTHORITIES V

STATEMENT OF FACTS 1

ARGUMENTS ON JURISDICTION 2

I. THIS ARBITRAL TRIBUNAL DOES NOT HAVE JURISDICTION AND/OR

POWER TO GRANT LIBERTY TO THE CLAIMANT TO SELL THE CARGO ON

BOARD THE VESSEL PENDENTE LITE

2

A. This Case does not Meet the Requirements for Granting an Interim Award 2

i. CLAIMANT will not suffer irreparable harm if an interim award is not granted 3

a. The moisture and sulphur level of the CARGO do not meet the requirements of self-

combustion

3

b. The supposed damage is reparable by monetary compensation 3

ii. In the event that the interim award is granted by the arbitral tribunal, RESPONDENT will

likely suffer far greater damages

4

iii. There is no reasonable chance that CLAIMANT will succeed on merits 5

II. IT IS NEITHER NECESSARY NOR JUST FOR CLAIMANT TO SELL THE

CARGO ON BOARD THE VESSEL PENDENTE LITE

6

A. CLAIMANT Cannot Sell the CARGO since a Lien on Cargo is Possessory in Nature 6

B. There is No Element of Urgency for the Sale of CARGO

7

i. The cargo is unlikely to self-ignite or combust 7

TEAM 20 MEMORANDUM FOR RESPONDENT

II

ii. The current situation on board the vessel does not satisfy the urgency to sell the CARGO 8

iii. There is no plausible evidence indicating RESPONDENT is unable to pay 9

iv. The discrepancy between the value of the cargo and the sums due is not close enough to

constitute an order of sale

10

ARGUMENTS ON THE MERITS OF THE CLAIM 11

III. RESPONDENT IS NOT LIABLE TO CLAIMANT FOR DETENTION AND/OR

OTHER DAMAGES UNDER THE VOYAGE CHARTERPARTY

11

A. The Delay was caused by CLAIMANT’s own Conduct and hence amounts to Novus Actus

Interveniens

12

i. CLAIMANT Breached Clause 10(b) of CHARTERPARTY 12

B. In the Event that the Delay was not Caused by CLAIMANT’s Breach of Contract, it was at

the Fault of the Shipmaster’s Negligence

13

C. The Event that Caused the Delay Falls within the Force Majeure Clause 14

i. The Supervening Event Falls under, “any other event,” in Clause 24 of the CHARTERPARTY 14

IV. CLAIMANT IS NOT ENTITLED TO EXERCISE ANY LIEN OVER THE CARGO 15

A. CLAIMANT does not have the Right to Exercise Lien over CARGO 15

i. There is a lack of contractual relationship between CLAIMANT and Idoncare 16

ii. In the event CLAIMANT had exercised a common-law lien on CARGO, lien on the basis of

advanced freight is not within the scope of the common-law lien

17

B. CLAIMANT’s Location in Exercising Lien is Unlawful 18

i. There is no element of illegality in the discharge port 19

ii. It is not commercially impractical for CLAIMANT to exercise the lien ashore or off the

discharge port

19

TEAM 20 MEMORANDUM FOR RESPONDENT

III

V. CLAIMANT’S TERMINATION OF THE CHARTERPARTY WAS WRONGFUL 20

A. RESPONDENT has not Committed any Renunciation of the CHARTERPARTY 20

B. Alternatively, the Liability to Pay Freight has been Transferred to Idoncare on the Basis

of the B/L

21

C. The Lien on Sub-Freight Exercised by CLAIMANT exempted RESPONDENT from Liability to

Pay Freight

23

D. Even if RESPONDENT is held Responsible for the Payment of Freight, Its Failure to Perform

the Obligation does not Constitute as a Repudiatory Breach

24

REQUEST FOR RELIEF 25

TEAM 20 MEMORANDUM FOR RESPONDENT

IV

LIST OF ABBREVIATIONS

CLAIMANT Furnace Trading Pte Ltd

RESPONDENT Inferno Resources Sdn Bhd

CHARTERPARTY The Voyage Charterparty between CLAIMANT and

RESPONDENT

Clean Fixture Recap Clean Fixture Recap of the CHARTERPARTY

SUB-CHARTERPARTY The Voyage Charterpary between RESPONDENT

and THIRD-PARTY

CARGO 84,000.052MT of Australian Steam Coal in Bulk on

board the M.V. TARDY TESSA

Idoncare Idoncare berjaya Utama Pty. Ltd

Record 2017 International Maritime Law Arbitration Moot

Scenario

VESSEL M.V. TARDY TESSA, Singapore

SCMA Singapore Chamber Maritime Arbitration

Sub-Charterers Idoncare Berjaya Utama Pty. Ltd.

Charterer Inferno Resources Sdn. Bhd.

Disponent-Owner Furnace Trading Pte. Ltd.

Head-Owner Imlam Consignorist GmbH

Sub-freight US$771,120.48

OPL Outside Port Limit

SPSB Safe Port Safe Berth

Shipmaster Captain Tan Xiao Ming

IAA International Arbitration Act (1994) Cap 143A

B/L Bill of Lading

B/L Act Bill of Lading Act 1992 Singapore

UNCITRAL Model Law UNCITRAL Model Law on International

Commercial Arbitration 1985

TEAM 20 MEMORANDUM FOR RESPONDENT

V

LIST OF AUTHORITIES

TABLE OF CASES

Allen v Emmerson [1944] 1 All ER 344 14

Allison v Bristol Marine Insurance (1876) 1 App Cas 209, HL. 17

Ampurius Nu Homes Holdings Ltd v. Telford Homes (“Creekside”) Ltd [2013] EWCA Civ

577; [2013] 4 All ER 377, at [70]

21, 24

Baldwin’s Ltd. v. Halifax Corporation [1916] 85 L.J.K.B. 1769 14

Caparo Industries pIc v Dickman [1990] 2 AC 605 13

Compania Comercial Y Naviera San Martin S.A. V. China National Foreign

Trade Transportation Corporation (The “Constanza M”) [1980] 1 Lloyd’s Rep

505, QB.

21

Dickenson v Lano [1860] 2 F. & F. 188 22

Donoghue v Stevenson [1932] AC 562 12

Driefontein Consolidated Gold Mines Ltd. v Janson [1900] 2 Q.B. 339. 14

Federal Commerce Ltd v Molena Alpha Inc (The “Nanfri”) [1978] 1 Lloyd’s

Rep. 287

17

Financings Ltd v. Baldock [1963] 2 QB 104 24

Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy

Resources, intervener) [2015] SGHC 311

7, 9,

10

Heyman v Darwins Ltd [1942] AC 356 at 378 20

India Steamship Co. v. Louis Dreyfus Sugar Ltd (The “Indian Reliance”) [1997]

1 Lloyd’s Rep. 52

23

International Bulk Carriers (BEIRUT) S.A.R.L. v Evlogia Shipping Co. S.A., and

Marathon Shipping Co. Ltd. (The “Mihalios Xilas”) [1978] 2 Lloyd’s Rep. 186

18

Jennensen v. Secretary of State for India [1916] 2 K.B. 702 23

Jet Holding Ltd v Cooper Cameron (Singapore) Pte Ltd [2006] 3 SLR (R) 769 11

Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23;

[1989] 166 CLR 623

20

Lignell v Samuelson & Co Ltd (1921) 9 Lloyd's Rep 361/362 and 415/416 17

London Arbitration 13/87 LMLN 205 18

TEAM 20 MEMORANDUM FOR RESPONDENT

VI

Mitsui v Garnac (The “Myrtos”) [1984] 2 Lloyd’s Rep 449 7

Navrom v. Callitsis Ship Management S.A. (The “Radauti”) [1987] 2 Lloyd’s

Rep. 276.

15

Nesbitt v. Lushington (1792) 4 T.R. 783. 14

Norman v Federal Commissioner of Taxation [1963] 109 CLR 9, 26 23

Occidental Petroleum Corporation, Occidental Exploration and Production

Company v Republic of Ecuador, ICSID Case No. ARB/06/11.

4

Olsson & Olsson v Dyson [1967] L.S.J. Scheme 336 23

Overseas Transportation Company V. Mineralimportexport (The “Sinoe”)

[1972] 1 Lloyd’s Rep 201

19

Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2006] FCAFC 40

[31]

23

Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios

Compania Naviera SA (The “San Nicholas”) [1976] 1 Lloyd's Rep 8

17

Perenco Ecuador Ltd. v Republic of Ecuador and Empresa Estatal Petróleos del

Ecuador (“Petroecuador”), ICSID Case No. ARB/08/6

4

Santiren Shipping Ltd. V Unimarine S.A. (The “Chrysovalandou Dyo”) [1981] 1

Lloyd’s Rep. 159

16, 18

Steelwood Carriers Inc. Of Monrovia, Liberia V. Evimeria Compania Naviera

S.A. Of Panama (The “Agios Giorgis”) [1976] 2 Lloyd's Rep 192.

16

Thames Iron Works v. Patent Derrick Co. (1860) 2 L.T. 208 6

Tomvaco v Simpson (1866) LR 1 CP. 17

Tradigrain SA v King Diamond Marine Ltd (The Spiros C) [2000] Int.Com.L.R.

07/13

24

Transco plc v Stockport Metropolitan Borough Council [2003] UKHL 61 14

Turner and Another v Haji Goolam Mahomed Azam (“The Bombay”) [1904] AC

826

16

Ultramares Corporation v. Touche (1931) 174 N.E. 441, 444 13

TEAM 20 MEMORANDUM FOR RESPONDENT

VII

BOOKS

David Caron and Lee Caplan, The UNCITRAL Arbitration Rules: A Commentary

(Second Edition), Oxford: Oxford University Press, 2006, p. 521.

5

David D. Caron, Interim Measures of Protection: Theory and Practice in Light

of the Iran United States Claims Tribunal, 1986, p. 490.

5

Emmanuel Gaillard and John Savage, Fouchard, Gaillard, Goldman on

International Commercial Arbtration, The Hague: Kluwer Law International,

1999, p. 254.

2

Gary B. Born, International Commercial Arbitration (Second Edition),

Biggleswade: Kluwer Law International, 2014, p. 2481.

5

John A. Cartner, Richard P. Fiske, and Tara. L Leiter, The International Law of

The Shipmaster, London: Informa Law, 2009, p. 156.

8

John F. Wilson, 7th Edition Carriage of Goods by Sea, Essex: Pearson Education

Limited, 2010, p. 305; p. 303.

16, 18

Julian Cooke, Voyage Charters (Fourth Edition), London: Informa Law from

Routledge, 2014, p. 462.

23

Neil Andrews, Arbitration and Contract Law: Common Law Perspectives,

Switzerland: Springer International Publishing, 2016, p. 251.

21

Peter Binder, International Commercial Arbitration and Conciliation in

UNCITRAL Model Law Jurisdictions (Third Edition), London: Thomson

Reuters, 2010, p. 248.

4, 5

Peter K. Berger, International Economic Arbitration, Alphen aan den Rijn:

Kluwer Law International, 1993, p. 337.

4

Richard Aikens, Richard Lord and Michael Bools, Bills of Lading, London:

Informa Law from Routledge, 2006.

22

Simon Baughen, The Shipping Law 4th Edition, New York: Routledge-

Cavendish, 2009, p. 284; p. 233; p. 232; p. 231.

6, 12

Yvonne Baatz, Maritime Law (3rd Edition), London: Informa Law from

Routledge, 2014

19

TEAM 20 MEMORANDUM FOR RESPONDENT

VIII

JOURNALS

Environment Safety and Healt Bulletin, U. S. Departement of energy,

Spontaneous Combustion in Coal.

3

G. Tolhurst, The Assignment of Contractual Rights (2006) 3 [1.01] 23

Gaskell, et.al, Bills of Lading: Law and Contracts (2000), [18.20]. 19

J. T. Riley, J. W. Reasoner, S. M. Fatemi, and G. S. Yates Department of

Chemistry and Center for Coal Science Western Kentucky University, Bowling

Green, Kentucky 42101, Self Heating of Coal, p. 162; p. 168

3

M. Smith, The Law of Assignment: The creation and transfer of choses in action

(2013) 234 [11.43]

23

Maritime Claims & Services Pte Ltd, Singapore, Singapore: Risk of Contact

Damage When Anchoring Outside Port Limits

13

Meteorological Service Singapore Online Report of the Climate of Singapore 9

Thomas, Legal issues Relating to Time Charterparties (2008), [16.27] 19

STATUTES

Chinese Maritime Code 1993, Art. 141. 19

International Maritime Solid Bulk Cargoes Code 2011, s. 9.2.2.2. 8

Merchant Shipping (Maritime Labour Convention) Act 2014, s. 34(2). 4

Singapore Arbitration Act 2001, s. 21(1) 2

The Hague-Visby Rules 22

UNCITRAL Model Law on International Commercial Arbitration, s. 16(1) 2

TEAM 20 MEMORANDUM FOR RESPONDENT

1

STATEMENT OF FACTS

1. February 15th 2016, Inferno Resources Sdn Bhd (RESPONDENT), signed into a Voyage Charterparty

dated 1 September 2016 (CHARTERPARTY) with Furnace Trading Pte Ltd (CLAIMANT), the

disponent owners of a Singapore flagged vessel the MV Tardy Tessa. The vessel was subsequently

sub Voyage Chartered by RESPONDENT to Idoncare.

2. October 4th 2016, a B/L was issued by the Shipmaster at the port of loading. Clause (1) of the B/L

incorporates all “terms and conditions, liberties and exceptions of the Charterparty,” but the

Charterparty has not been specified.

3. On the 10th of October 2016, the vessel arrived at Singapore for bunkering and left at the 11th of

October. RESPONDENT could not nominate a discharge as per CHARTERPARTY, 1 SPSB in China

[Dalian, Jinzhou, Yingkou, Yantai, Qingdao, Shanghai, Tianjin, Ningbo], due to heavy congestion

in China. Despite many efforts to redirect the Ship to a safer port, namely Bussan, CLAIMANT still

insisted on staying in Singapore’s OPL, which has been known for its dangerous weather and a

high frequency for collision.

4. October 20th 2016, CLAIMANT issued a notice of lien towards RESPONDENT over cargo owned by

Idoncare, and simultaneously a Lien for Sub-Freight was issued to Idoncare demanding that sub-

freight be paid directly to CLAIMANT.

5. October 21st 2016, RESPONDENT nominated an eligible discharge port in Ningbo and requested

CLAIMANT to proceed. However, CLAIMANT refused the nomination and on the 22nd of October

issued a Notice of Termination of the CHARTERPARTY against RESPONDENT.

6. CLAIMANT commenced arbitral proceedings with RESPONDENT on 11th December 2016 for the

liberty to appraise and sell the cargo on board the vessel pendente lite.

TEAM 20 MEMORANDUM FOR RESPONDENT

2

ARGUMENTS ON JURISDICTION

I. THIS ARBITRAL TRIBUNAL DOES NOT HAVE JURISDICTION AND/OR POWER

TO GRANT LIBERTY TO THE CLAIMANT TO SELL THE CARGO ON BOARD THE

VESSEL PENDENTE LITE

1. Under the doctrine of kompetenz-kompetenz, an arbitral tribunal has the power to determine its

own jurisdiction1 by construing the extent of the arbitration agreement.2 Under this doctrine,

RESPONDENT contends that this arbitral tribunal does not have jurisdiction and/or power to grant

liberty to the CLAIMANT to sell the cargo on board the VESSEL pendente lite since this case does

not meet the requirements for granting interim awards.

A. This Case does not Meet the Requirements for Granting an Interim Award

2. As a preliminary matter, CLAIMANT’s claim for the order of the sale of the cargo pendente lite shall

be construed as a request for an interim award. An interim award is any award issued by the

tribunal pending the issuance of the award by which the dispute is decided.3 Section 17(A) of the

UNCITRAL Model Law provides requirements that must be satisfied for the party requesting an

interim measure.4

3. RESPONDENT contends that the requirements for the issuance of an interim award are not met since

(i) CLAIMANT will not suffer irreparable if the interim award is not granted, (ii) in the event that

interim measure is granted by the arbitral tribunal, RESPONDENT will likely suffer far greater

damages, and (iii) there is no reasonable chance that CLAIMANT will succeed on the merits.

1 Singapore Arbitration Act 2001, S21(1); UNCITRAL Model Law on International Commercial Arbitration, Section

16(1) 2 Emmanuel Gaillard and John Savage, Fouchard, Gaillard, Goldman on International Commercial Arbtration, The

Hague: Kluwer Law International, 1999, p. 254 3 UNCITRAL Model Law Article 17(A) 4 UNCITRAL Model Law Article 17(A)

TEAM 20 MEMORANDUM FOR RESPONDENT

3

i. CLAIMANT will not suffer irreparable harm if an interim award is not granted

4. CLAIMANT asserted that it would suffer irreparable harm since the lives of the crew and the

shipmaster is at stake due to signs of overheating emitted by the cargo.5 However, in response to

this, RESPONDENT argues that such harm is not likely to occur.

a. The moisture and sulphur level of the CARGO do not meet the requirements of self-

combustion

5. Self-heating is a process which results in an increase in temperature of a thermally-isolated mass

of coal that may result in spontaneous combustion.6 The moisture content in coal is an important

variable in the self-heating since it prevents the oxidation process. Moisture content within coal

should not be less than 3% and sulphur content should not exceed 1%, "as mined”.7 Only when

these conditions are not met the CARGO is prone to self-combustion.

6. In the present case, the moisture level of the CARGO is at 30% and the sulphur level is at 0,75%.8

It shall therefore be considered theoritically that the CARGO is unlikely to combust since the

moisture and sulphur level do not meet the requirements of self-combustion. Thus, since

CLAIMANT’s contention is merely speculative, the first requirement of Article 17(A) of the

UNCITRAL Model Law is not met.

b. The supposed damage is reparable by monetary compensation

7. In the event that this tribunal favours CLAIMANT’s argument of risk towards the SHIPMASTER and

its crew, CLAIMANT would still not suffer irreparable harm. It was established in the case of

5 Record, p. 37. 6 J. T. Riley, J. W. Reasoner, S. M. Fatemi, and G. S. Yates Department of Chemistry and Center for Coal Science

Western Kentucky University, Bowling Green, Kentucky 42101, Self Heating of Coal, p. 162. 7. J. T. Riley, J. W. Reasoner, S. M. Fatemi, and G. S. Yates Department of Chemistry and Center for Coal Science

Western Kentucky University, Bowling Green, Kentucky 42101, Self Heating of Coal, p. 168. 8 Record, p. 99.

TEAM 20 MEMORANDUM FOR RESPONDENT

4

Perenco v Ecuador and Petroecuador that irreparable harm was construed as irreparable loss

which was understood as injury not that could not be monetarily compensable.9 Contradictory to

the case above, according to the section 34(2) of the Merchant Shipping Act, CLAIMANT’s

argument of the imminent harm concerning the death of SHIPMASTER and crew may be

compensated financially.10 Thus, CLAIMANT’s argument regarding the risk that the Shipmaster and

crew are facing shall not be considered as irreparable harm.

ii. In the event that the interim award is granted by the arbitral tribunal, RESPONDENT will

likely suffer far greater damages.

8. When deciding on a request for interim relief, an arbitral tribunal is required to balance the

hypothetical harm that the parties will suffer.11 The arbitral tribunal shall deny grating an interim

award if the possible injury suffered by the defendant would be out of proportion with the

advantages the requesting party hopes to derive from it.12

9. In the present case, RESPONDENT submits that if the interim award is granted by the arbitral

tribunal, RESPONDENT will likely be the one to suffer irreparable harm. RESPONDENT would be

unable to fulfil its contractual obligation to ship the CARGO to the consignee, which would amount

to a breach of contract. This would consequently cause damages to RESPONDENT’s company

commercial reputation and its ability to enter into new contracts. A damaged commercial

9 Perenco Ecuador Ltd. v Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador), ICSID

Case No. ARB/08/6 10 Merchant Shipping (Maritime Labour Convention) Act 2014, Sec. 34(2). 11 Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions

Thomson Reuters, London, 3rd ed., 2010, p. 248. 12 Peter K. Berger, International Economic Arbitration Kluwer Law International, Alphen aan den Rijn, 1993, p.

337; Occidental Petroleum Corporation, Occidental Exploration and Production Company v Republic of Ecuador,

ICSID Case No. ARB/06/11.

TEAM 20 MEMORANDUM FOR RESPONDENT

5

reputation and a loss of business opportunities amounts to loss not adequately reparable by any

award for damages.13

10. Under these circumstances, it shall be taken into account that the potential harm that is likely to be

suffered by RESPONDENT due to an interim award granted by the arbitral tribunal will outweigh the

severity of CLAIMANT’s damages. Therefore, the arbitral tribunal should refrain from granting any

interim awards.

iii. There is no reasonable chance that CLAIMANT will succeed on merits.

11. The second requirement of Article 17(A) of the UNCITRAL Model Law provides that a party

seeking emergency measures must prove that it has a reasonable chance of success at the final

stage of the proceedings.14 Where the applicant fails on a prima facie view to advance any plausible

basis for its claims, an interim award must be denied.15

12. CLAIMANT’S intention to sell the cargo is based on the fact that it has suffered substantial losses in

damages for detention and the failure for the payment of freight. However, RESPONDENT contends

that the damages suffered by CLAIMANT was not at the fault of the RESPONDENT.16 Moreover,

RESPONDENT will prove to the arbitral tribunal that there is no urgency to sell the cargo. Therefore,

there is no reasonable expectation that CLAIMANT will succeed on the merits of this case.

RESPONDENT requests this arbitral tribunal to refer to Submission II of this written memorandum

for further elaboration.

13 David Caron and Lee Caplan, The UNCITRAL Arbitration Rules: A Commentary 2nd ed. Oxford University Press,

2006, p. 521. Peter Binder, International Commercial Arbitration in UNCITRAL Model Law Jurisdictions Sweet &

Maxwell, 2009 , p. 247. 14 David D. Caron, Interim Measures of Protection: Theory and Practice in Light of the Iran United States Claims

Tribunal, p. 490. 15 Gary B. Born, International Commercial Arbitration (Second Edition), Biggleswade: Kluwer Law International,

2014, p. 2481. 16 Refer to Memorandum paragraph 31

TEAM 20 MEMORANDUM FOR RESPONDENT

6

II. IT IS NEITHER NECESSARY NOR JUST FOR CLAIMANT TO SELL THE CARGO ON

BOARD THE VESSEL PENDENTE LITE

13. After CLAIMANT had exercised their contractual lien over CARGO, CLAIMANT intended to appraise

and sell the CARGO on board the vessel to cover unpaid freight payment and any substantial losses

suffered.17 CLAIMANT issued an application to this arbitral tribunal for the liberty to appraise and

sell the cargo on board the vessel pendente lite.18

14. As a response, RESPONDENT submits that it is neither necessary nor just for CLAIMANT to sell the

cargo since (A) liens on cargo are possessory in nature, and (B) there is no urgency to sell the

CARGO at the current time.

A. CLAIMANT Cannot Sell the CARGO since a Lien on Cargo is Possessory in Nature

15. As a general rule, a lien on cargo is a right to detain the cargo until freight or other sums due is

paid.19 It is not accompanied by a right of sale, unlike a pledge, nor does it confer any title on the

holder.20 In Thames Iron Works v. Patent Derrick Co., it was held that a possessory lien shall only give

the right to detain the vessel or the property without the right to sell it.21

16. In the present case, CLAIMANT has exercised a contractual lien over cargo on board the vessel on

the basis of Clause 19 of the CHARTERPARTY,22 which the RESPONDENT contends must be

categorised as a possessory lien. Therefore, CLAIMANT does not have liberty to sell the CARGO

since the lien it exercised is possessory.

17 Record, p. 90. 18 Record, p. 90. 19 Simon Baughen, The Shipping Law 4th Edition, New York: Routledge-Cavendish, 2009, p. 232. 20 Simon Baughen, The Shipping Law 4th Edition, New York: Routledge-Cavendish, 2009, p. 233. 21 Thames Iron Works v. Patent Derrick Co. (1860) 2 L.T. 208 (a case on a shipbuilder’s lien). 22 Record, p. 80.

TEAM 20 MEMORANDUM FOR RESPONDENT

7

B. There is No Element of Urgency for the Sale of CARGO

17. This arbitral tribunal should not make an order for the appraisement and sale of cargo pendente

lite except for good reason.23 In the recent case of Five Ocean Corporation v Cingler Ship Pte Ltd,

the order for a sale of cargo was only granted if and when there was proven to be a clear element

of urgency as to why it was necessary for the order of sale to be made.24 In the aforementioned

case, the elements that constituted an urgency for the sale of cargo was that: overheating of the

cargo had been detected, the crew were falling ill and there was a lack of fresh food, water and

medical supplies, the defendant appeared unable to pay, and there was a risk that the sums due

would exceed the value of the cargo.25

18. RESPONDENT holds firmly that there is indeed no clear element of urgency to make it necessary

for the sale of the CARGO on board the VESSEL since (i) the CARGO is still unlikely to self-ignite

or combust, (ii) the current situation on board does not satisfy the urgency, (iii) RESPONDENT still

appears able and willing to pay the sums due, (iv) and that the discrepancy between the value of

the cargo and the sums due is not close enough to constitute an order of sale.

i. The cargo is unlikely to self-ignite or combust

19. On the 30th of November 2016, the SHIPMASTER issued a report regarding the conditions on board

the VESSEL after having been stranded in Singapore’s OPL around a month.26 The SHIPMASTER

reported signs of the coal overheating.27 Firstly, as has been elaborated above, the material

composition of the CARGO does not support spontaneous combustion.28 Secondly, the VESSEL and

its crew are undoubtedly seaworthy since there is no evidence stating the contrary, hence the

23 Mitsui v Garnac(The “Myrtos”) [1984] 2 Lloyd’s Rep 449 24 Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources, intervener) [2015] SGHC

311 25 Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources, intervener) [2015] SGHC 26 Record, p. 37. 27 Record, p. 37. 28 Refer to Memorandum paragraph 6

TEAM 20 MEMORANDUM FOR RESPONDENT

8

regulations under the International Maritime Solid Bulk Cargoes Code are followed. The code

provides a certain set of guidelines in transporting coal to make sure that spontaneous combustion

does not occur on board the vessel.29

20. The inference that can be drawn from the two aforementioned reasons is that the CARGO is not

susceptible to spontaneous combustion.

ii. The current situation on board the vessel does not satisfy the urgency to sell the CARGO

21. One of the reasons which has driven CLAIMANT to apply for the liberty to sell the CARGO is the

circumstances on board the VESSEL at the current time. The SHIPMASTER reported that crew was

in a critical condition due to lack of fresh water supply, medicine, and fresh food provisions.30

Furthermore, the VESSEL is in a concerning situation where there is a member of the crew

diagnosed with diabetes that has run out of insulin.31 However, the urgencies mentioned above

have arisen from the SHIPMASTER’S breach of his duty.

22. A master has the concurrent duties of ensuring the safety of the lives on board the ship as well as

making sure the economic interests of the shipowner, operator or charterer are served to the fullest

extent.32 As a protection of the interest of the shipowner and the crew of the VESSEL, Clause 10(b)

of the CHARTERPARTY provides that: “If the Charterers have not nominated a suitable port, or if

such berth should not be available, the Vessel is to wait at a suitable place at or off the port. The

Charterers shall have the right to designate a safe waiting place, otherwise the Master shall

choose a waiting place using due diligence to minimize extra shifting costs.”33

29 International Maritime Solid Bulk Cargoes Code 2011 30 Record, p. 37 31 Record, p. 37 32 John A. Cartner, Richard P. Fiske, and Tara. L Leiter, The International Law of The Shipmaster, London: Informa

Law, 2009, p. 156. 33 Record, p. 28 CHARTERPARTY, Clause 10(b)

TEAM 20 MEMORANDUM FOR RESPONDENT

9

23. In casu, the SHIPMASTER should have directed the VESSEL to a safe waiting place until

RESPONDENT nominate a suitable port. Instead of sailing the vessel towards any possible “suitable

place” nearby, he decided to anchor the vessel at Singapore’s OPL.34 RESPONDENT’s argues that

Singapore’s OPL cannot be categorized as a “suitable place”.

24. The word “suitable place” shall be taken into account when considering if and whether the

Shipmaster had committed breach of contract or not. At the time of the delay (October-November),

Singapore’s OPL is well known of its inter-monsoon period.35 This period consists of constant

thunderstorms, which are at times severe,36 This danger, alongside with the severity of the health

condition of the crew and shortage of supply on board can be easily avoided had the SHIPMASTER

adhered to the stipulation of 10(b) of CHARTERPARTY.

25. Moreover, RESPONDENT had requested CLAIMANT to direct the VESSEL to port of Busan and

discharge the cargo there.37 CLAIMANT’S contention that the nomination was outside of the scope

of CHARTERPARTY can be justified by clause 20 of the CHARTERPARTY38, which gives the

SHIPMASTER the liberty to go without pilot on purpose of saving life or any other property.

26. Therefore, it is CLAIMANT’S own choice that serves as the causation of the situation on board, and

hence cannot be used as a justification to sell the CARGO.

iii. There is no plausible evidence indicating RESPONDENT is unable to pay

27. In Five Ocean Corporation v Cingler Ship Pte Ltd,39 the Court issued an order for the sale of cargo

where lienor has proven that the lienee appeared unable to pay the freight. RESPONDENT contends

that this condition is non-existent.

34 Record, p. 34. 35 Meteorological Service Singapore Online Report of the Climate of Singapore 36 Meteorological Service Singapore Online Report of the Climate of Singapore 37 Record, p. 57. 38 Record, p. 31, COAL-OREVOY standard coal and ore charter party, Cl. 20. 39 Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources,intervener) [2015] SGHC

311.

TEAM 20 MEMORANDUM FOR RESPONDENT

10

28. Firstly, RESPONDENT has promised that the payment of freight will be made at discharge port after

cargo discharge.40 This shows that RESPONDENT was and still appears able and willing to pay

freight to CLAIMANT. Secondly, RESPONDENT was not solely responsible for the payment of

freight, rather that the liability was assigned to the B/L holder Idoncare,41 who has also agreed to

make the payment at the discharge port.42 In light of the above, CLAIMANT is not entitled to sell

the CARGO since the payment due can still be made.

iv. The discrepancy between the value of the cargo and the sums due is not close enough to

constitute an order of sale

29. Referring back to Five Ocean Corporation v Cingler Ship Pte Ltd, it was held that the court

allowed the lienor to sell the CARGO with consideration that the sums due to the disponent owners

would, in a short period, exceed the CARGO value.43 In the aforementioned case the value of the

CARGO was estimated as to be around US$1.9m to US$2.5m and FOC’s position that Cingler owed

them at least US$1.4m with costs and expenses mounting daily. 44 Based on the case above, the

reason behind the court’s allowance to grant FOC liberty to sell the CARGO was constituted by the

close gap between the lowest estimated value of the CARGO and the sums Cringler owed to FOC.

30. However, this is unlike our present case. Based on the Parties Joint Expert Report issued by Mr.

Caleb Coalman, the founder and chief Executive Officer of an International Coal Trading

Company Coals “R” US, the value of the CARGO was US$2.5m to US$3.1m.45 The sums

RESPONDENT owed to CLAIMANT was US$771,120. Based on these data, it can be seen that there

40 Record, p. 68. 41 Refer to Memorandum page 21 42 Record, p. 68 43 Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources,intervener) [2015] SGHC

311. 44 Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources,intervener) [2015] SGHC

311. 45 Record, p. 101-102.

TEAM 20 MEMORANDUM FOR RESPONDENT

11

is a considerably large gap between even the lowest value of the CARGO and the sums due from

RESPONDENT to the CLAIMANT. Therefore, RESPONDENT submits that the amount of money owed

to CLAIMANT is too far from the value of the CARGO and hence cannot justify the sell of CARGO.

ARGUMENTS ON THE MERITS OF THE CLAIM

III. RESPONDENT IS NOT LIABLE TO CLAIMANT FOR DETENTION AND/OR OTHER

DAMAGES UNDER THE VOYAGE CHARTERPARTY

31. The VESSEL has been halted and delayed for over a month now anchored in Singapore’s OPL.46

CLAIMANT claims that this delay was caused by RESPONDENT’s failure to perform its obligations.

However, RESPONDENT contends that the delay and the following damages for detention was

caused by Claimant’s own conduct and hence amounts to Novus Actus Interveniens. Furthermore,

the events that caused the delay fall within the scope of the Force Majeure clause.

B. The Delay was caused by CLAIMANT’s own Conduct and hence amounts to Novus Actus

Interveniens

32. Novus Actus Interveniens is defined as an intervening event that breaks the chain of causation.47

In Jet Holding Ltd v Cooper Cameron (Singapore) Pte Ltd,48 it was held that to break the chain of

causation, the act must be something extraneous which disturbs the sequence of events. Where a

defendant has created a situation of danger which requires the claimant to take immediate averting

action, the defendant will be liable even if, in the ‘agony of the moment,’ the claimant makes the

wrong decision and suffers damage which could have been avoided had he acted differently.

46 Record, p. 37 47 Simon Baughen, The Shipping Law 4th Edition, New York: Routledge-Cavendish, 2009, p. 284. 48 Jet Holding Ltd v Cooper Cameron (Singapore) Pte Ltd [2006] 3 SLR (R) 769

TEAM 20 MEMORANDUM FOR RESPONDENT

12

33. In this present case, RESPONDENT submits that CLAIMANT failed to direct the VESSEL to a safe

place. This omission amounts to a breach of contract, or alternatively, negligence, and hence serves

as novus actus interveniens.

ii. CLAIMANT Breached Clause 10(b) of CHARTERPARTY

34. RESPONDENT claims that the detention and/or all the damages suffered was caused by the

circumstances of the VESSEL being held drifting at open seas for more than a month.49 CLAIMANT

asserts that this was resulted by the failure of the RESPONDENT to nominate legitimate discharge

port. However, RESPONDENT submits that this is due to the SHIPMASTER’S failure to fulfil his

contractual obligation pursuant to Clause 10(b) of CHARTERPARTY.

35. As has been elaborated in the above submission, CLAIMANT failed to adhere with the stipulation

of clause 10(b) of the CHARTERPARTY and hence has breached the contract.50 Had the SHIPMASTER

adhered to this clause and directed the VESSEL to a safe place, the damages would not have

occurred. It is therefore clear that the SHIPMASTER’S omission breaks the chain of causation

between RESPONDENT’S delay in nominating discharge port and the damages suffered by

CLAIMANT.

C. In the Event that the Delay was not Caused by CLAIMANT’s Breach of Contract, it was at

the Fault of the Shipmaster’s Negligence

36. Alternatively, RESPONDENT contends that there is an occurrence of negligence on behalf of the

SHIPMASTER. An action is considered to be negligent when there is a breach of duty of care, and

consequently damage caused by the breach.51 Regarding the first requirement, it is well established

49 Record, p. 37 50 Refer to Memorandum paragraph 23 51 Donoghue v Stevenson [1932] AC 562

TEAM 20 MEMORANDUM FOR RESPONDENT

13

that a duty of care exists whereby there is foreseeable damage52 which constitutes an obligation to

avoid causing injury to the person or property of others.53

37. RESPONDENT claims that the SHIPMASTER has breached a duty of care by ignoring the fact that

Singapore’s OPL is notorious for its congestion which causes a high risk of harm when it comes

to anchoring the vessel.54 In the other words, Singapore’s OPL was not safe since there is a very

high risk of damage and collision.55 The SHIPMASTER’S conduct to anchor the vessel at Singapore’s

OPL despite his knowledge of all the facts above serves as a viable basis that the SHIPMASTER has

breached the duty of care.

38. Furthermore, the SHIPMASTER’S conduct to anchor the VESSEL and stay for more than two weeks

at Singapore’s OPL56 resulted to not only in the endangerment of the crew but also the CARGO

which had shown signs of overheating.57 The consequence of this conduct are damages that are

suffered by CLAIMANT itself and the CARGO, which has a direct commercial interest from

RESPONDENT. In light of the above, RESPONDENT submits that all the requirements for the

SHIPMASTER’S actions to be considered as negligent are met.

39. Therefore, RESPONDENT submits that the SHIPMASTER’S negligence has disturbed the sequence of

events between RESPONDENT’S delay in nominating discharge port and damages suffered by

CLAIMANT, hence exempted RESPONDENT from liability.

52 Caparo Industries pIc v Dickman [1990] 2 AC 605 53 Ultramares Corporation v. Touche (1931) 174 N.E. 441, 444 54 Maritime Claims & Services Pte Ltd, Singapore, Singapore: Risk of Contact Damage When Anchoring Outside

Port Limits. 55 Maritime Claims & Services Pte Ltd, Singapore, Singapore: Risk of Contact Damage When Anchoring Outside

Port Limits. 56 Record, p. 37. 57 Record, p. 37.

TEAM 20 MEMORANDUM FOR RESPONDENT

14

D. The Event that Caused the Delay Falls within the Force Majeure Clause

40. In the event that CLAIMANT cannot be held responsible for the delay, RESPONDENT is not liable for

damages for detention since the delay suffered by the VESSEL was caused by a Force Majeure

event that falls within the scope of “…any other event whatsoever…” in Clause 24 of the

CHARTERPARTY. The legal effect of the operation of Clause 24 of the CHARTERPARTY is that

neither party shall be responsible for any loss or damage or delay or failure in performance of their

contractual obligations.58

i. The Supervening Event Falls under, “any other event,” in Clause 24 of the

CHARTERPARTY

41. RESPONDENT submits that the port congestion that occurred in China which prevented

RESPONDENT from nominating a dischrage port falls within the scope of the Clause 24, specifically

in the phrase “any other event”.

42. It is of Respondent’s contention that the phrase must be interpreted broadly since there exists no

intention by both parties to use a narrow interpretation. Consequently, CLAIMANT cannot exempt

port congestion from Clause 24 by using the ejusdem generis rule. For the ejusdem generis rule to

apply the words that came before the general words must be restrictive.59 The events explicitly

stated in Clause 24 are, “Act of God, war, terrorism, civil commotion, quarantine, strikes, lockouts,

arrest or restraint of princes, rulers and peoples.”60 These events do not create a restrictive

interpretation61 and thus the general words of, “any other events whatsoever,” should be construed

widely and involve port congestion.

58 Record, p. 32 CHARTERPARTY, clause 24 59 Allen v Emmerson [1944] 1 All ER 344 60 Record, p. 32 CHARTERPARTY, clause 24 61 Act of God: Baldwin’s Ltd. v. Halifax Corporation [1916] 85 L.J.K.B. 1769; Transco plc v Stockport

Metropolitan Borough Council [2003] UKHL 61. Wat, terrorism, civil commotion: Driefontein Consolidated Gold

Mines Ltd. v Janson [1900] 2 Q.B. 339. Quarantine, strikes, lockouts, restraints, arrests: Nesbitt v. Lushington

(1792) 4 T.R. 783.

TEAM 20 MEMORANDUM FOR RESPONDENT

15

43. If both parties would like to apply the ejusdem generis rule, the intention must be made

unequivocally without using a presumption as a basis. In The Radauti, the court refused to apply

the rule because it cannot be right to approach a document with the presumption that there should

be such an implication.62

44. Therefore, since “any other events” must be construed widely, port congestion falls within the

scope of the phrase and consequently no party shall be held liable for any loss or damages that

arise from it.

IV. CLAIMANT IS NOT ENTITLED TO EXERCISE ANY LIEN OVER THE CARGO

45. On the 20th October 2016, CLAIMANT issued a Notice of Lien over the CARGO on board the

VESSEL63 and is still continuing to enforce the lien until now. CLAIMANT is not entitled to exercise

lien over the cargo since (A) CLAIMANT cannot exercise lien over cargo of which that is not

RESPONDENT’S, and (B) CLAIMANT’s location of lien is unlawful.

A. CLAIMANT does not have the Right to Exercise Lien over CARGO

46. CLAIMANT exercised a lien over cargo on board the vessel in accordance with Clause 19 of the

Charterparty whereby CLAIMANT and RESPONDENT were the parties.64 CLAIMANT’s lien over cargo

was deemed enforceable due to the unpaid advance freight.65 As provided under the B/L, the owner

of the cargo is Idoncare.66 Hence, CLAIMANT’s lien on cargo was invalid since (i) there is a lack of

contractual relationship between CLAIMANT and Idoncare and (ii) in the event that CLAIMANT

62 Navrom v. Callitsis Ship Management S.A. (The “Radauti”) [1987] 2 Lloyd’s Rep. 276. 63 Record, p. 66. 64 Record, p. 31 CHARTERPARTY clause 19 65 Record, p. 22 Clean Fixture Recap point 19, 66 B/L, Record, p. 41,43,45.

TEAM 20 MEMORANDUM FOR RESPONDENT

16

exercised common law lien on cargo, lien on the basis of advanced freight is not within common

law lien scope.

i. There is a lack of contractual relationship between CLAIMANT and Idoncare

47. CLAIMANT’S exercise of contractual lien is only enforceable against a party to the contract of

carriage.67 CLAIMANT does not have an enforceable lien over the CARGO since it is owned by

Idoncare, who is not a party to the CHARTERPARTY.68 For such a lien to be enforced it is necessary

that the lien clause was incorporated by an appropriate term in the B/L issued to the third-party

shipper. 69

48. In the case at hand, the first clause in the B/L states that, “All terms and conditions, liberties and

exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration

Clause/Dispute Resolution Clause, are herewith incorporated,”70 though no Charterparty has been

identified.71

49. There are three charterparties in this case: one time charter concluded between Imlam Consignorist

Gmbh and CLAIMANT, and two voyage charters, one was concluded between CLAIMANT and

RESPONDENT, and the other was concluded between RESPONDENT and Idoncare. The term “Freight

Payable as per Charterparty” contained on the face of the B/L eliminates the possibility of the

incorporation of the terms of the time charter since time charters do not recognize the concept of

freight,72 leaving two voyage charters as the possible option that can be incorporated into the B/L.

67 John F. Wilson, 7th Edition Carriage of Goods by Sea, Essex: Pearson Education Limited, 2010, p. 305 68 Record, p. 41; Turner v Haji Goolam [1904] AC 826; Steelwood Carriers Inc. Of Monrovia, Liberia V. Evimeria

Compania Naviera S.A. Of Panama (The “Agios Giorgis”) [1976] 2 Lloyd's Rep 192. 69 Santiren Shipping Ltd. V Unimarine S.A. (The “Chrysovalandou Dyo”) [1981] 1 Lloyd’s Rep. 159 70 Record, p. 42 71 Record, p. 41 72 Itex Itagrani Export SA v Care Shipping Corporation and others (The “Cebu”) (No 2) [1990] 2 Lloyd’s Rep 316

at 321

TEAM 20 MEMORANDUM FOR RESPONDENT

17

50. The case of Lignell v Samuelson & Co Ltd, 73 can be used to determine which voyage charter was

incorporated into the B/L. The court laid down the rule of the determination in a case where a

chain of charterparties is present and the B/L does not specify as to which charterparty is

incorporated into it. It was held that the incorporation clause of the B/L would refer to the

document under which the parties whose names appeared in the B/L were also parties.

51. On the face of the B/L, it is the name of Idoncare that appears, hence the voyage charter that was

incorporated into the B/L would be the voyage charter concluded by Idoncare and RESPONDENT,

the one that does not involve CLAIMANT. From this legal standpoint, Idoncare, who is the owner

of the CARGO, is a third party from CLAIMANT’S perspective, and does not have any contractual

relations with CLAIMANT. Hence, CLAIMANT is prevented from exercising lien over Idoncare’s

CARGO.

ii. In the event CLAIMANT had exercised a common-law lien on CARGO, lien on the basis of

advanced freight is not within the scope of the common-law lien

52. It is deep-rooted in the case of Allison v Bristol Marine,74 that there is no common law or implied

lien in respect of freight which is contractually payable in advance of or after delivery. The

decision is, that where the agreed time for payment of freight is not contemporaneous with the

time of delivery of the cargo, there is no implied right of lien.75

53. Applicably, it was expressly stated that the freight was to be paid within five banking days after

the completion of loading and signing or B/L.76 RESPONDENT submits that the freight payment and

the date of the delivery of CARGO in this particular case cannot be treated as concurrent

73 Lignell v Samuelson & Co Ltd (1921) 9 Lloyd's Rep 361/362 and 415/416; Pacific Molasses Co and United

Molasses Trading Co Ltd v Entre Rios Compania Naviera SA (The “San Nicholas”) [1976] 1 Lloyd's Rep 8;

Federal Commerce Ltd v Molena Alpha Inc (The “Nanfri”) [1978] 1 Lloyd’s Rep. 287 74 Allison v Bristol Marine Insurance (1876) 1 App Cas 209, HL. 75 Tomvaco v Simpson (1866) LR 1 CP. 76, Record, p. 22 Clean Fixture Recap point 19

TEAM 20 MEMORANDUM FOR RESPONDENT

18

obligations,77 hence the time for payment of the freight is not contemporaneous with the time of

the delivery of the CARGO. Conclusively, the common-law lien is not applicable to the present

case.

B. CLAIMANT’s Location in Exercising Lien is Unlawful

54. If, arguendo, CLAIMANT was entitled to exercise a lien over CARGO, CLAIMANT’S location in

exercising lien is unlawful. CLAIMANT issued the Notice of Lien over the CARGO on board the

VESSEL at the current position of the VESSEL which had been drifting in Singapore’s OPL.78

RESPONDENT challenges the validity for the location of the exercise of lien over CARGO on board

the VESSEL since it is unlawful to exercise the lien in Singapore’s OPL without reasonable

justification.79

55. Generally, lien can only be exercised when the cargo is located at a warehouse or ashore.80 While

it is possible to exercise lien at an OPL, there are several requirements that must be met. CLAIMANT

has clearly refused to continue to the discharge port and insists on staying and exercising their lien

at Singapore’s OPL. In order to justify CLAIMANT’S location of lien, it must be proven that

exercising the lien elsewhere would be considered impossible.81 In the instant case, CLAIMANT’S

exercise of lien on board the vessel is unlawful since (i) there is no element of illegality when

exercising the lien in the discharge port, and (ii) exercising the lien ashore is not commercially

impractical for CLAIMANT.

77 John F. Wilson, 7th Edition Carriage of Goods by Sea, Essex: Pearson Education Limited, 2010, p. 303. 78 Record, p. 65. 79 International Bulk Carriers (BEIRUT) S.A.R.L. v Evlogia Shipping Co. S.A., and Marathon Shipping Co. Ltd.

(The “Mihalios Xilas”) [1978] 2 Lloyd’s Rep. 186; Santiren Shipping Ltd. V Unimarine S.A. (The “Chrysovalandou

Dyo”) [1981] 1 Lloyd’s Rep. 159 80 Santiren Shipping Ltd. V Unimarine S.A. (The “Chrysovalandou Dyo”) [1981] 1 Lloyd’s Rep. 159 81 Santiren Shipping Ltd. v Unimarine S.A. (The “Chrysovalandou Dyo”) [1981] 1 Lloyd’s Rep. 159; International

Bulk Carriers (Beirut) S.A.R.L. v Evlogia Shipping Co. S.A., and Marathon Shipping Co. Ltd. (The “Mihalios Xias”)

[1978] 2 Lloyd’s Rep. 186; London Arbitration 13/87 LMLN 205;

TEAM 20 MEMORANDUM FOR RESPONDENT

19

i. There is no element of illegality in the discharge port

56. In order for a lien on cargo to be lawful, the Shipowner must consult a local lawyer to ascertain

whether the local law permits the exercise of the lien; whether, the cargo may be sold if the sums

due are not paid and, if so, in accordance with what procedure.82

57. To adhere to the general rule of exercising lien and to act in good faith by proceeding its contractual

obligation, CLAIMANT could have exercised their lien over CARGO in China, which in this present

case is the discharge port. RESPONDENT submits that it is perfectly lawful to exercise lien over

cargo in China, hence CLAIMANT cannot use illegality of exercising lien in China as an argument.

58. Article 141 of the Chinese Maritime Code 1993 allows shipowners to exercise a lien on charterer’s

goods, other property on board for sums due.83 In light of this, CLAIMANT cannot invoke an element

of illegality to justify exercising its lien over CARGO in Singapore’s OPL.

ii. It is not commercially impractical for CLAIMANT to exercise the lien ashore or off the

discharge port

59. To justify its lien on-board the VESSEL CLAIMANT must also prove that exercising its lien at the

discharge port or into another port would be commercially inadvisable. RESPONDENT argues that

exercising the lien onboard the VESSEL would increase the burden of costs rather than exercising

the lien ashore. As previously mentioned, the current location of the lien poses a high-risk towards

the VESSEL, whether it be from the high risk of collision in Singapore’s OPL to the dangerous

nature of the CARGO itself. Exercising the lien ashore at the discharge port or at another port would

be commercially safer than risking to pay for damages if the VESSEL were to be damaged or if the

CARGO would be lost.

82 Yvonne Baatz, Maritime Law (3rd Edition), London: Informa Law from Routledge, 2014; Thomas, Legal issues

Relating to Time Charterparties (2008), [16.27]; Overseas Transportation Company V. Mineralimportexport (The

“Sinoe”) [1972] 1 Lloyd’s Rep 201; Gaskell, et.al, Bills of Lading: Law and Contracts (2000), [18.20]. 83 Chinese Maritime Code 1993, Article 141.

TEAM 20 MEMORANDUM FOR RESPONDENT

20

V. CLAIMANT’S TERMINATION OF THE CHARTERPARTY WAS

WRONGFUL

60. RESPONDENT hereby claims to seek damages from CLAIMANT for wrongful termination of the

CHARTERPARTY. CLAIMANT has issued a Notice of Termination against RESPONDENT for the

termination of the CHARTERPARTY for what they deem to be a renunciation and repudiatory breach

of the CHARTERPARTY.84 However, RESPONDENT contends that CLAIMANT was not entitled to

terminate the CHARTERPARTY due to a lack of the occurrence of (A) the renunciation of the

CHARTERPARTY. Additionally, (B) the liability to pay freight has been transferred to Idoncare on

the basis of the B/L or in the alternative, (C) the freight was equitably assigned to Idoncare. (D)

In the event that RESPONDENT is held responsible for the payment of freight failure to perform does

not constitute a repudiatory breach of the contract by RESPONDENT.

A. RESPONDENT has not Committed any Renunciation of the CHARTERPARTY

61. The term of renunciation refers to conduct which evinces an unwillingness or an inability to render

substantial performance of the contract,85 or sometimes described as conduct of a party which in a

manner substantially inconsistent with the party's obligations.86 The renunciation can be either by

words or implication from conduct.87

62. In the absence of any express words from RESPONDENT regarding renunciation, it is deemed that

CLAIMANT’S argument was on the basis of implicit renunciation. In the case of The Creekside,

implicit renunciation was defined as actions of the party in default that lead a reasonable person to

84 Record, p. 68. 85 Heyman v Darwins Ltd [1942] AC 356 at 378 86 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 87 Neil Andrews, Arbitration and Contract Law : Common Law Perspectives, Switzerland : Springer International

Publishing, 2016, p. 251.

TEAM 20 MEMORANDUM FOR RESPONDENT

21

conclude that he no longer intends to be bound by its provisions.88 The renunciation is then

evidenced by conduct.

63. In the case at hand, RESPONDENT had nominated a legitimate discharge port to CLAIMANT pursuant

to CHARTERPARTY89 one day before the “Notice of Termination” was issued to RESPONDENT.90

Moreover, RESPONDENT had also committed to pay freight at the time the CARGO will be

discharged. 91 A mere delay of performance of a contractual obligation is not sufficient to constitute

an implied renunciation. The stated facts shall be taken into consideration by the arbitral tribunal

that RESPONDENT always remained ready and willing to perform CHARTERPARTY.92

B. Alternatively, the Liability to Pay Freight has been Transferred to Idoncare on the Basis

of the B/L

64. In the event that this tribunal holds that the CHARTERPARTY is incorporated into the B/L,

RESPONDENT still cannot be held liable for the payment of freight as per CHARTERPARTY. Provided

that the wording of the charter freight clause does not impose a liability on the charterer alone, the

holder of the B/L that incorporates the terms of the head charter will also become liable for freight

due under the head charter.93 The obligation to pay freight is constituted in the B/L where it was

instructed that “Freight payable as per charter party”.94 From this wording, it is safe to conclude

that the liability to pay freight is not imposed on RESPONDENT alone, but can also be borne by

Idoncare as the holder of the B/L.

88 Ampurius Nu Homes Holdings Ltd v. Telford Homes (Creekside) Ltd [2013] EWCA Civ 577; [2013] 4 All ER 377, at

[70]. 89 Clean Fixture Recap, Cl. 16, Record, p. 21. 90 Record, p. 68. 91 Record, p. 56. 92 Record, p. 69. 93 Compania Comercial Y Naviera San Martin S.A. V. China National Foreign Trade Transportation Corporation

(The “Constanza M”) [1980] 1 Lloyd’s Rep 505, QB. 94 Record, p. 41.

TEAM 20 MEMORANDUM FOR RESPONDENT

22

65. RESPONDENT submits that its liability to pay for freight has been transferred to Idoncare. In order

to justify this transfer of liability to the B/L holder, it must first be proven that Idoncare, as the

named shipper within the B/L, is the holder of said B/L. Article III rule 3 of the Hague-Visby Rules

provides ‘for issue of the bill to “the shipper”’, which must mean in this context the party entitled

to the bill as a receipt for the goods rather than the contracting party.95 Idoncare as the named

shipper within the B/L,96 is the lawful holder of the B/L and therefore will be and remain liable for

any unpaid or untendered charter freight.97

66. This transfer of liability to the holder of the B/L is also supported by the Bill of Lading Act 1994.

Subject to section 3 of the Act the B/L Holder will become liable to the Shipowner on the terms

of the B/L.98 As this B/L has incorporated the terms of the CHARTERPARTY, the holder of the B/L

will indirectly have been made subject to the terms of a contract, the charter, to which it was not

directly a party.99

67. Furthermore, RESPONDENT’S liability for freight was ceased due to provisions under the cesser

clause contained in clause 19 of the Charterparty. The premise underlying all cesser clauses is that

the cessation of liability should be co-extensive with the ambit of the lien created.100 Despite the

lack of an express cesser clause, there is a cesser element within clause 19 of the Charterparty.

Clause 19 provides that “Charterers shall remain responsible for deadfreight and demurrage,

incurred at port of loading and for freight and demurrage incurred at port of discharge”.101 This

clause implies that Charterers liabilities for payment of freight shall cease when Shipowners have

95 The Hague-Visby Rules, Article III Rule 3; Craven v Ryder; Bills of Lading by Richard Aikens, Richard Lord and

Michael Bools (2006), Informa Law from Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN. 96 Record. Page 41 97 The Constanza M [1980] 1 Lloyd’s Rep 505, QB; Dickenson v Lano [1860] 2 F. & F. 188; The Sevonia Team

[1983] 2 Lloyd’s Rep 640. 98 Carriage of Goods by Sea Act 1992 99 Shipping Law 4th edition, Simon Baughen, MA. Routledge-Cavendish 2 Park Square, Milton Park, p. 231 100 Julian Cooke, Voyage Charters (Fourth Edition), London: Informa Law from Routledge, 2014, p. 462. 101 Clean Fixture Recap, Cl. 19, Record, p. 22.

TEAM 20 MEMORANDUM FOR RESPONDENT

23

successfully exercised a lien over the cargo, not taking into account the position of the vessel.102

Since CLAIMANT has exercised a lien over the CARGO, RESPONDENT’S liability to pay freight had

ceased and has been transferred to Idoncare.

C. The Lien on Sub-Freight Exercised by CLAIMANT exempted RESPONDENT from Liability

to Pay Freight

68. Alternatively, RESPONDENT shall no longer be liable to pay freight since it has been equitably

assigned to Idoncare by way of lien on sub freight. Equitable assignment is the transfer of

contractual rights or liabilities from the owner (assignor) to the transferee (assignee),103 whereby

the original debtor has no further ability to pay its sums to the creditor because the debt has been

equitably assigned to another party.104

69. CLAIMANT issued a Notice of Lien on Sub-Freight towards Idoncare and demanded that the sub-

freight be paid to CLAIMANT.105 The fact that there is no contractual relationship between Claimant and

Idoncare does not prevent this exercise since the lien shall operate as an equitable assignment of the debt.

106 In the case of The Spiros C, Rix LJ stated that the Notice of Lien issued towards the sub-

charterer was enough to perfect the Shipowner’s right of lien, even though there was otherwise no

direct contractual relationship. The Lord also stated that the Shipowner’s lien on cargo was an

equitable property right, meaning that it was possible to follow the debt into the hands of the third

party.107

102 Jennensen v. Secretary of State for India [1916] 2 K.B. 702 103 G. Tolhurst The Assignment of Contractual Rights (2006) 3 [1.01]; M. Smith The Law of Assignment: The

creation and transfer of choses in action (2013) 234 [11.43]:; Norman v Federal Commissioner of Taxation [1963]

109 CLR 9, 26; Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 915; );

Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2006] FCAFC 40 [31] 104 Olsson & Olsson v Dyson [1967] L.S.J. Scheme 336; 105 Record, p. 66. 106 India Steamship Co. v. Louis Dreyfus Sugar Ltd (The Indian Reliance) [1997] 1 Lloyd’s Rep. 52 107 Tradigrain SA v King Diamond Marine Ltd (The Spiros C) [2000] Int.Com.L.R. 07/13

TEAM 20 MEMORANDUM FOR RESPONDENT

24

70. As a legal consequence of the exercise of the lien on sub-freight, RESPONDENT does not have any

contractual obligation to pay freight to CLAIMANT since the liability has been transferred to

Idoncare. Therefore, the failure to pay freight punctually cannot be used as a basis to terminate

Charterparty by Claimant.

D. Even if RESPONDENT is held Responsible for the Payment of Freight, Its Failure to Perform

the Obligation does not Constitute as a Repudiatory Breach

71. Respondent contends that even if it is held liable for failure to pay freight on time and nomination

of , the failure is not sufficient to give Claimant right to terminate the Charterparty.

72. In the case of Financing Ltd v Baldock, the court held that in the absence of any express provision

which stated that time of payment was the essence of the contract, the failure to pay on the due

date did not go to the root of the contract.108 In casu, there is no express provision which states

that the payment of freight at the punctual time was the essence of the contract and that failure to

perform shall not give the right to CLAIMANT to terminate the CHARTERPARTY.

73. Moreover, to constitute a fundamental breach, the breach must result in actual loss in the part of

the injured party. In the case of The Creek,109 at the date Ampurius purported to terminate the

contract, it had accepted that the delay of the performance had not yet caused any actual loss. The

court held that it would be unusual for a breach that caused no actual loss to amount to a repudiatory

breach.

74. In the present case, there has been no substantial losses suffered due to the absence of any explicit

statements that says so. It is submitted that the delay of the vessel at the time the CHARTERPARTY

was terminated CLAIMANT did not incur any substantial losses.

108 Financings Ltd v. Baldock [1963] 2 QB 104 109 Telford Homes (“Creekside”) Ltd v Ampurius Nu Homes Holdings Ltd [2013] EWCA Civ 577

TEAM 20 MEMORANDUM FOR RESPONDENT

25

75. In summation, Respondent submits that because of first, the stipulation of payment of freight is

not accompanied with an express stipulation of it being the essence of the contract and second,

Respondent’s lateness in paying freight has not caused Claimant to incur any actual loss, it is

unreasonable for Claimant to use the failure of termination of Charterparty.

REQUEST FOR RELIEF

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

a) Declare that it does not have jurisdiction and/or power to grant liberty to the CLAIMANT to sell

the CARGO on board the vessel pendente lite;

b) Declare that it is neither necessary nor just for the cargo on board the VESSEL to be sold

pendente lite;

c) Declare that RESPONDENT is not liable to CLAIMANT for detention and/or other damages under

the CHARTERPARTY;

d) Declare that CLAIMANT is not entitled to exercise any lien over the CARGO;

e) Declare that CLAIMANT’S termination of the CHARTERPARTY was wrongful; and

f) Award further or other relief as the Tribunal considers fit