INTERNATIONAL MARITIME LAW A MOOT 2014

15 t h I N T E R N A T I O N A L MA R I T I M E LA W AR B I T R A T I O N MO O T, 2014

N A T I O N A L L A W U N I V E R S I T Y O D I S H A

I N D I A

[ T E A M N O . 5 ]

M E M O R A N D U M f o r R E L I A B L E H O L D I N G S I N C .

In the matter of an Arbitration between

RELIABLE TANKERS INC. (CLAIMANTS/OWNERS)

SUPER CHARTERS INC. (CLAIMANTS/CHARTERERS)

AND AND

SUPER CHARTERS INC. (RESPONDENTS/CHARTERERS)

RELIABLE HOLDINGS INC. (RESPONDENTS/OWNERS)

TEAM

ANMOL AWASTHI ♦ HARNEET KAUR ♦ KSHETRAGYA NATH SINGH ♦ PRAKHAR RAJA BISHNOI

TEAM NO. 5 MEMORIAL for RELIABLE HOLDINGS

TABLE OF CONTENTS | PAGE II

TABLE OF CONTENTS

TABLE OF AUTHORITIES IV

LIST OF ABBREVIATIONS XIII

ISSUES PRESENTED XV

STATEMENT OF FACTS 1

PRELIMINARY ISSUES 3

I. THE ARBITRAL TRIBUNAL HAS THE JURISDICTION TO HEAR THE PRESENT DISPUTE 3

A. The Fixture Confirmation Recap constitutes the Charter Party 3

B. The Arbitration Clause evidences a valid agreement to arbitrate 3

II. THE ARBITRATION WAS VALIDLY COMMENCED ON 28TH JANUARY 2012 3

A. Notice of Appointment dated 28th Jan 2012 was valid 4

B. The second reference stands unfounded 5

MERITS 5

I. THE APPROACH VOYAGE HAD COMMENCED 5

A. The obligation to ‘start in time’ attached from the time the charter was entered into 5

B. The absolute obligation to start in time is non-recurring 6

C. The bunker port was not the last port of call 6

II. THE OWNERS ARE NOT IN BREACH OF THE OBLIGATIONS UNDER ASBATANKVOY PART

II CL.1 7

A. The delay is not attributable to non exercise of due diligence to make the vessel

financially seaworthy 7

B. In any case, the owners may rely on the exceptions under Clause 19 of

ASBATANKVOY Part II 9

C. The owner is not liable for breach of his obligation to proceed with ‘convenient

despatch’ 12

III. ALTERNATIVELY, ASSUMING APPROACH VOYAGE HAD NOT COMMENCED, FAILURE TO

START IN TIME WAS NOT REPUDIATORY 12

A. The start in time obligation is an intermediate term 12


TABLE OF CONTENTS | PAGE III

B. Failure to commence approach voyage was not repudiatory 12

IV. THE PRESENCE OF THE ENTIRE AGREEMENT CLAUSE PRECLUDES RELIANCE ON EXTRINSIC

EVIDENCE 13

A. The EAC precludes reliance on prior negotiations for construction 13

B. The EAC prevents incorporation of new term through rectification 15

V. CLAUSE 2 OF OWNER’S STANDARD TERMS RELEASES BOTH PARTIES FROM ALL

LIABILITIES 15

A. The words ‘Without recourse to either party whatsoever’ should be given their

ordinary meaning 16

B. The principle of Contra proferentem is not applicable 17

C. The contract is binding on its true construction even if parties were not in agreement

17

D. Purposive construction cannot override contractual language 17

VI. RECTIFICATION CANNOT BE PLEADED 18

A. There was mistake in formation of common intention and not documentation 18

B. Absence of qualifying knowledge or conduct counters the claim for unilateral mistake

rectification 19

VII. THE ADVANCE FREIGHT IS NOT RECOVERABLE BY THE CHARTERERS 19

A. Advance freight was unconditionally earned on lifting of subjects 20

B. Advance Freight is irrecoverable in nature 20

VIII. HEADS OF DAMAGES 21

A. The alleged losses are consequential, excluding the liability of the owners 21

B. There has been no gross negligence by the owners 23

C. The damages for increased freight should be awarded considering the market scenario

23

D. Alternatively, Set off is not allowed against freight accrued 24

PRAYER 25


TABLE OF AUTHORITIES | PAGE IV

TABLE OF AUTHORITIES

CASES

[ A ] A/S Awilco of Oslo v. Fulvia S PA di Navigazione of Cagliari — “The Chikuma” [1981] 1 WLR 314 (HL)

14,17

ABB Lummus Global Ltd. v. Keppel Fells Ltd. [1999] 2 Lloyd’s Rep. 24 3

Agip S.p.A. v. Navigazione Alta Italia S.p.A.— “ Nai Genova, Nai Superba” [1984] 1 Lloyd’s Rep. 353

19

Ailsa Craig Fishing Co. Ltd. v. Malvern Fishing Ltd. [1983] 1 WLR 964 (HL) 18

Allianz Versicherungs- Aktiengesellschaft v. Fortuna Co. Inc. — “The Baltic Universal” [1999] 1 Lloyd’s Rep. 497

4

Allison v. Bristol (1875) 1 AC 209 20

Alstom Ltd. v. Yokogawa Australia Pty. Ltd. (No.7) [2012] SASC 49 18

Aries Tanker Corp. v. Total Transport Ltd. — “The Aries” [1977] 1 All ER 398 24

ASM Shipping Ltd. v. TTMI Ltd. —“The Amer Energy” [2009] 1 Lloyd’s Rep. 293 22

AXA Sun Life Services Plc. v. Campbell Martin Ltd. [2011] EWCA Civ. 133 15

[ B ] Bank of Australasia and Others v. Clan Line Steamers Limited [1916] 1 KB 39

8

Bank of Australasia v. Palmer [1897] AC 540 PC (Australia) 13

Bank of Credit and Commerce International SA v. Ali [2001] UKHL 8 16

Bank of Nova Scotia v. Hellenic Mutual War Risks Association (Bermuda) Ltd. [1992] 1 AC 233

22

Baron de Bode v. The Queen (1845) 8 QB 208 4

Beaufort Developments (NI) Ltd. v. Gilbert — “Ash NI Ltd.” [1999] AC 266 (HL) 16

BHP Petroleum v. British Steel [1999] 2 Lloyd’s Rep. 583 22

Blackgold Trading v. Almare SPA — “The Almare Seconda” [1981] 2 Lloyd’s Rep. 433

12


TABLE OF AUTHORITIES | PAGE V

British Columbia Saw Mill Company v. Nettleship (1868) LR 3 CP 499 21

British Fermentation Products Ltd. v. Compair Reavell Ltd. [1999] BLR 352 17

Bunge Corporation v. Tradax Export SA [1981] 1 WLR 711 12

Byrne v. Schiller (1871) LR 5 Ex 319 20

[ C ] Carmichael v. National Power Plc. [1999] 1 WLR 2042 (HL)

13

Charles H Windschuegl Ltd. v. Alexander Pickering and Co. Ltd. (1950) 80 Lloyd’s Rep. 89

9

Chartbrook Ltd. v. Persimmon Homes Ltd. [2007] EWHC 409 19

Classic Maritime v. Lion Diversified Holdings [2009] EWHC 1142 (Comm.) 22

Club Cape Schanck Resort Co. Ltd. v. Cape Country Club Pty. Ltd. (2001) 3 V.R. 526

19

Codelfa Construction Pty. v. State Rail Authority of New South Wales (1982) 149 CLR 337

17

Colonial Bank (Now Bank of Boston Connecticut) v. European Grain and Shipping Ltd. — “The Dominique” [1989] 1 Lloyd's Rep. 431 (HL)

20,24

[ D ] Daventry DC v. Daventry and District Housing Ltd. [2011] EWCA Civ. 1153

19

Davies Middleton and Davies Ltd. v. Toyo Engineering Corporation 1997 WL 1105718

16

Deepak Fertilizers & Petrochemicals v. ICI [1999] Lloyd’s Rep. 38 22

Dolphin Tanker SRL v. Westport Petroleum Inc.[2010] EWHC 2617 (Comm.) 16

Dubai Islamic Bank PJSC v. PSI Energy Holding Company BSC [2011] EWHC 2718 (Comm.)

18

[ E ] Easybiz Investments v. Sinograin Chinatex [2011] 1 Lloyd’s Rep. 688

4

Elena Shipping Ltd. v. Aidenfield Ltd. [1986] 1 Lloyd's Rep. 425 24

Etablissements Georges et Paul Levy v. Adderley Navigation Co. — “The Olympic Pride” [1980] 2 Lloyd’s Rep. 67

15, 19


TABLE OF AUTHORITIES | PAGE VI

Evera S A Commercial v. North Shipping Company [1956] 2 Lloyd's Rep 367 6,7,12,13

[ F ] Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. [1943] AC 32

20

Forest Oak Steam Shipping Co. v. Richard (1899) 6 Com. Ca. 100 7

Frederick E Rose (London) Ltd. v. William H Pim Junior & Co. Ltd. [1953] 2 QB 450

17

[ G ] Geogas SA v. Trammo Gas Ltd. — “The Baleares” [1993] 1 Lloyd's Rep. 215

6

George Wimpey UK Ltd. v. VI Construction Ltd. [2005] EWCA Civ. 77 19

Goldman v. Thai Airways [1983] 1 WLR 1186 23

[ H ] Hadley v. Baxendale [1854] EWHC Exch. J 70

22

Handelsbanken Svenska v. Dandridge — “The Aliza Glacial” [2002] 2 Lloyd’s Rep. 421

11

Harper Versicherungs AG (also known as Harper Insurance Ltd. and formerly Turegum Versicherungsgesellschaft and Turegum Insurance Co.) v. Indemnity Marine Assurance Co. Ltd. [2006] EWHC 1500 (Comm.)

4

Harrison v. Garthorne (1872) 26 L.T. (N.S.) 508 5

Heyman v. Darwins Ltd. [1942] AC 356 (HL) 16

Holt & Co. v. Collyear (1881) 16 Ch D 718 16

Hourani v. Harrison (1927) 32 Com. Cas. 305 10

Hudson v. Hill (1874) 43 L.J.C.P. 273 5

Hydraulic Engineering Co. Ltd. v. McHaffe Goslet & Co. (1878) 4 QBD 670 22

Hyundai Heavy Industries Co. Ltd. v. Papadoupoulous [1980] 1 WLR 1129 16

[ I ] Inntrepreneur Pub Co. v. East Crown Ltd. [2000] 2 Lloyd's Rep. 611 Ch D.

14

Investors Compensation Scheme Ltd. v. West Bromwich Building Society [1998] 1 WLR 896

14


TABLE OF AUTHORITIES | PAGE VII

[ J ] Jackson v. Bank of Scotland [2005] UKHL 3

22

Jahn (t/a CF Otto Weber) v. Turnbull Scott Shipping Co. Ltd. — “The Flowergate” [1967] 1 Lloyd’s Rep. 1

9

JJ Huber (Investments) Ltd. v The Private DIY Co. Ltd. (1995) 70 P. & C.R. D 33 Ch D

18

Johnson v. Agnew [1980] AC 362 16

[ K ] Kingsley IT Consulting Ltd. v. McIntosh [2006] EWHC 1288 (Ch)

14

Kleinwort Benson Ltd. v. Sherkate Sahami Sakht — “The Myrto” [1984] 2 Lloyd’s Rep. 341

6,12

Kopitoff v. Wilson (1876) 1 QBD 377 8

[ L ] Lay v. Ackerman [2004] EWCA Civ. 184

4

Leesh River Tea Co. Ltd. v. British India Steam Navigation Co. Ltd. —“The Cheybassa” [1967] 2 QB 250

10

London County Council v. Henry Boots & Sons Ltd. [1959] 1 WLR 1069 (HL) 17

Louis Dreyfus v. Lauro (1938) 60 Lloyd’s Rep. 94 6

[ M ] M D C Ltd. v. N V Zeevaart Maatschappij — “ The Beursstraat” [1962] 1 Lloyd’s Rep. 180

8

MacDonald v. Shinko Australia Pty. Ltd. [1999] 2 Qd. R. 152 18

Mander Pty. Ltd. v. Clements (2005) 30 W.A.R. 46 19

Mannai Investment Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] AC 749 4

Mare Schiffahrtskontor v. M/V Ocean Haven, 763 F.2d 633, (4th Cir. 1985) 8

Maredelanto Compania Naviera SA v. Bergbau-Handel GmbH — “The Mihalis Angelos" [1971] 1 QB 164

6

Marex Financial Ltd. v. Fluxo-Cane Overseas Ltd. [2010] EWHC 2690 (Comm.) 23

McCain Foods GB Limited v. ECO-TEC (Europe) Limited [2011] EWHC 66 (TCC) 22


TABLE OF AUTHORITIES | PAGE VIII

McFadden v. Blue Star Line [1905] 1 KB 697 8, 9

Millar's Machinery Co. Ltd. v. David Way & Son (1935) 40 Com. Cas. 204 22

Mitsui OSK Lines v. Garnac Grain Co. Inc. [1984] 2 Lloyd's Rep. 449 6

Monroe Bros. v. Ryan [1935] 2 KB 28 6,10

Morrisey v. The S S A & J Faith 252 F. Supp. 54 (N.D. Ohio 1965) 8

[ N ] National Bank of Greece and Athens SA v. Metliss [1958] AC 509

4

National Justice Compania Naviera SA v. Prudential Assurance Co.—“The Ikarian Reefer” [1993] 2 Lloyd's Rep. 68

4

National Westminster Bank v. Utrecht-America Finance Co. [2001] EWCA Civ. 658

17

Nelson v. Bridport (1845) 8 Beav. 527 4

New York and Cuba Mail Steamship Co. v. Eriksen and Christensen (1922) 27 Com. Cas. 330

8

Northern Shipping Co. v. Deutsche Seereederei GmbH and Others — “The Kapitan Sakharov” [2000] 2 Lloyd's Rep. 255

8

NSW Medical Defence Union Ltd. v. Transport Industries Insurance Co. Ltd. (1986) 6 N.S.W.L.R. 740

19

[ O ] Overseas Buyers Ltd. v. Grenadex SA [1980] 2 Lloyd’s Rep. 608

9

Owners of the Sardinia Sulcis v. Owners of the Al Tawwab, Al Tawwab — “The Sardinia Sulcis” [1991] 1 Lloyd's Rep. 201

4

[ P ] Papera Traders v. Hyundai Merchant Marine — “The Eurasian Dream” [2002] 1 Lloyd’s Rep. 719

8

Photo Productions Ltd. v. Securicor [1980] AC 827 16

Potash Company of Canada, Ltd. v. S S Raleigh 361 F. Supp. 120 (1973) 8

Procter & Gamble [2012] EWHC 498 (Ch) 15


TABLE OF AUTHORITIES | PAGE IX

Proforce Recruit Ltd. v. The Rugby Group Ltd. [2006] EWCA Civ. 69 14,17

Pukallus v. Cameron (1982) 180 C.L.R. 447 19

[ Q ] Quest-4-Finance Ltd. v. Maxfield [2007] EWHC 2313 (QB)

14

[ R ] Red Sea Tankers Ltd. v. Papachristidis [1997] 2 Lloyd’s Rep. 547

23

Reed v. Page [1927] 1 KB 743 8

Rowett Leakey & Co. v. Scottish Provident Institution [1927] 1 CH 55 16

Ryanair Ltd. v. SR Technics Ireland Ltd. [2007] EWHC 3089 (QB) 16

[ S ] Saint Line v. Richardsons Westgarth [1940] 2 KB 99

23

Satef-Huttenes Albertus SpA v. Paloma Tercera Shipping Co. SA — “The Pegase” [1981] 1 Lloyd’s Rep. 175 (QB)

21

Scandinavian Trading Tanker Co. A.B. v. Flota Petrolera Ecuatoriana — “The Scaptrade” [1983] 2 AC 694

13

Scott v. Foley (1899) 5 Com. Cas. 53 8

Seabridge Shipping AB v. Orsleff’s EFTS A/S [1999] 2 Lloyd’s Rep. 685 4

SEB Trygg Holding AB v. Manches [2005] EWHC 35 (Comm.) 4

SERE Holdings Ltd. v. Volkswagen Group UK Ltd. [2004] EWHC 1551 (Ch) 14

Smith v. Tregarthen (1887) 56 L.J.Q.B. 437 23

Soc. D’Avances Commerciales Ltd. v. A Besse and Co. Ltd. [1952] 1 Lloyd’s Rep. 242

9

Societe Anonyme Marocaine de l’Industrie du Raffinage v. Notos Maritime Corp. — “The Notos” [1987] 1 Lloyd’s Rep. 503

10

Starways Ltd. v. UN (1969) 44 ILR 433 4

Sucden Financial v. Fluxo-Cane Overseas Ltd. [2010] EWHC 2133 (Comm.) 23

Surgicraft Limited v. Paradigm Biodevices Inc. [2010] EWHC 1291 14, 15

Surgicraft Ltd. v. Paradigm Biodevices Inc. [2010] EWHC 1291 (Ch) 18, 19


TABLE OF AUTHORITIES | PAGE X

Swiss Bank Corporation v. Novrissiysk Shipping [1995] 1 Lloyd’s Rep. 202 3

Sylvia Shipping Corporation Co. Ltd. v. Progress Bulk Carriers Ltd. — “The Sylvia” [2010] EWHC 542 (Comm.)

22

[ T ] The Athenian Harmony [1998] 2 Lloyd’s Rep. 35

24

The Maria Jose T SMA No. 2205 (1986) 8

The Procter & Gamble Company, Procter & Gamble International Operations SA, Procter & Gamble Product Supply (UK) Ltd. v. Svenska Cellulosa Aktiebolaget SCA, SCA Hygiene Products UK Ltd. [2012] EWHC 498 (Ch)

15

The Union of India v. N V Reederij Amsterda — “The Amstelslot” [1963] 2 Lloyd’s Rep. 223

8,9

Thomas Witter Ltd. v. TBP Industries Ltd. [1996] 1 All ER 573 14

Tilden Rent-A-Car Co. v. Clendenning (1978) 83 D.L.R. (3d) 400 14

Total Gas Marketing Ltd. v. Arco British Ltd. [1998] 2 Lloyd’s Rep. 209 (HL) 17

Tradigrain SA v. Internek Testing Services [2007] EWCA Civ. 154 23

Transfield Shipping Inc. v. Mercator Shipping Inc. — “The Achilleas” [2008] UKHL 48

21

Transworld Oil Ltd. v. North Bay Shipping — “The Rio Claro” [1987] 2 Lloyd’s Rep. 173

10

[ U ] Union Eagle Ltd. v. Golden Achievement Ltd., [1997] AC 514

13

Union Trans-Pacific Co. Ltd. v. Orient Shipping Rotterdam BV [2002] EWHC 1451 (Comm.)

4

Unisys International Services Ltd. (formerly Sperry Rand) v. Eastern Counties Newspapers Group [1991] 1 Lloyd's Rep. 538

4, 5

[ V ] Vagres Compania Maritime SA v. Nissho-Iwai American Corporation — “The Karin Vatis” [1988] 1 Lloyd’s Rep. 330

20

Vallejo v. Wheeler (1774) 1 Cowper’s Rep. 143 18

Victoria Laundry (Windsor) Ltd v. Newman Industries Ltd. [1949] 2 KB 528 21,22


TABLE OF AUTHORITIES | PAGE XI

[ W ] Welex A.G. v. Rosa Maritime Ltd. — “The Epsilon Rosa” [2003] 2 Lloyd’s Rep. 509

3

West of England Ship Owners Mutual Protection and Indemnity Association (Luxembourg) Ltd. v. Hellenic Industrial Development Bank SA [1999] 1 Lloyd’s Rep. 93

4

White v. Bristol Rugby Ltd. [2002] I.B.L.R. 204 14

[ Z ] Zurich Insurance (Singapore) Pte. Ltd. v. B-Gold Design & Construction Pte. Ltd. [2008] SGCA 27

17

BOOKS

A Burrows CONTRACT TERMS (Oxford University Press 2007,1st Ed. ) 15

Bruce Harris et. al.

THE ARBITRATION ACT, 1996: A COMMENTATORY, (Wiley Blackwell 2014, 5th Ed.)

4

Bryan A. Garner

Black’s Law Dictionary, (West Group 2009, 9th Ed.) 16

Catherine Mitchell

INTERPRETATION OF CONTRACTS: CURRENT CONTROVERSIES IN

LAW (Routledge-Cavendish 2007, 1st Ed.) 14

D Hodge RECTIFICATION (Sweet &Maxwell 2010) 18

Francesco Berlingieri

BERLINGIERI ON ARREST OF SHIPS, (Informa 2011, 5th Ed.) 8

Gerald Mc Meel THE CONSTRUCTION OF CONTRACTS – INTERPRETATION, IMPLICATION AND RECTIFICATION (Oxford University Press 2011, 2nd Ed.)

16

Hugh Beale CHITTY ON CONTRACTS (Sweet & Maxwell 2008, 30th Ed.) 21

I C F Spry THE PRINCIPLES OF EQUITABLE REMEDIES: SPECIFIC

PERFORMANCE, INJUNCTIONS, RECTIFICATION AND EQUITABLE

DAMAGES (Thomson Reuters 2013, 9th Ed.)

18


TABLE OF AUTHORITIES | PAGE XII

Julian Cooke et. al.

VOYAGE CHARTER (Informa 2007, 3rd Ed.) passim

K Lewison THE INTERPRETATION OF CONTRACTS (Sweet & Maxwell 2011, 5th Ed.)

15

Maurice Waite OXFORD DICTIONARY & THEASURUS (Oxford University Press 2007, 2nd Ed.)

16

R Stevens OBJECTIVITY, MISTAKE AND THE PAROL EVIDENCE RULE IN

CONTRACT TERMS (Oxford University Press 2007) 13

Redfern & Hunter et. al.

REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION (Oxford University Press 2009, 5th Ed.)

4

Robert Merkin ARBITRATION ACT 1996 (Informa 2005, 3rd Ed.) 3, 4

Simon Baughen SHIPPING LAW (T and F Publishing 2009, 4th Ed.) 8, 9

Sir Guenter Treitel et. al.

CARVER ON BILLS OF LADING (Sweet & Maxwell 2011, 3rd Ed.) 7

Stephen Girvin CARRIAGE OF GOODS BY SEA (Oxford University Press 2011, 2nd Ed.)

20

Steven J Hazelwood & David Semark

P&I CLUBS LAW AND PRACTICE (Informa 2010, 4th Ed.) 9, 11

ARTICLES

Chan Leng Sun ‘What Can We Expect from the “Expected Ready to Arrive” Clause’ (1993) 14 Sing L. Rev. 382

7, 10

David Gek Sian Chong

‘Reasonable Despatch in Voyage Charterparties’ (1993) Sing. J. Legal Stud. 419

6, 12

David McLauchlan

‘The "Drastic" Remedy of Rectification for Unilateral Mistake’ (2008) L.Q. Rev. 608

19

David McLauchlan

‘The Entire Agreement Clause: Conclusive or a Question of Weight?’ (2012) L.Q. Rev

15

Dewey R ‘The Concept of Due Diligence in Maritime Law’ (1971) 2 Journal 8


TABLE OF AUTHORITIES | PAGE XIII

Villareal of Maritime Law and Commerce 776

E Palser ‘Rectification for Unilateral Mistake: How Heavy is the Burden of Proof?’ [2006] LMCLQ 139

19

E Peden & J W Carter

‘Entire Agreement—and Similar—Clauses’ (2006) 22 J.C.L. 1 14

G Williams ‘Mistake and Rectification in Contract’ (1954) 17 M.L. Rev. 154 17

J Cartwright ‘Remoteness of Damage in Contract and Tort: A Reconsideration’ (1996) 53 Cambridge Law Journal 488

21

J J Spigelman ‘Contractual Interpretation: A Comparative Perspective’ (2011) 85 A.L.J. 412

14

J W Carter ‘Termination Clauses’ (1990) 3 J.C.L 90 16

Matthew Barber

‘The Limits of Entire Agreement Clauses’ (2012) 6 Journal of Business Law 486

14, 15

Raymond A Connell

‘Charter Party Termination and the Approach Voyage’ (2000-2001) 25 Tulane Maritime Law Journal 469

6

S Rowan ‘For the Recognition of Remedial Terms Agreed Inter Parties’ (2010) 126 L.Q. Rev. 448

16

Simon Crookenden

‘Correction of the Name of a Party to an Arbitration’ (2009) 25 Arbitration International 207

5

LIST OF ABBREVIATIONS

s. Section

¶ Paragraph

ASBATANKVOY Tanker Voyage Charter Party, (Association of Ship Brokers and Agents (U.S.A.), Inc., 1977)

Cl. Clause

ETA Estimated Time of Arrival


TABLE OF AUTHORITIES | PAGE XIV

EAC Entire Agreement Clause

Lloyd’s Rep. Lloyd’s Law Reports

USD United States Dollars

Owner Reliable Tankers Inc. (merged into Reliable Holdings Inc.)

P&I Protection and Indemnity

Charterer Super Charters

VLCC Very Large Crude Carrier


ISSUES PRESENTED | PAGE XV

ISSUES PRESENTED

1. Does the arbitration tribunal have jurisdiction to hear the present dispute?

2. Did arbitration validly commence in the first reference?

3. Whether the approach voyage to the loading port had commenced?

4. Did failure to commence approach voyage amount to repudiatory breach?

5. Whether the owners are in breach of obligations under ASBATANKVOY Part II Clause

1?

6. Does presence of Entire Agreement Clause preclude reliance on extrinsic evidence?

7. Does Clause 2 of owner’s Standard terms release both parties of all liabilities?

8. Are the grounds for seeking rectification of the final fixture confirmation recap well

founded?

9. Is the charterer liable to pay advance freight to the owner?

10. To what extent is the owner liable for damages and is charterer entitled to set-off its claim

for damages against the owner’s claim for freight?

TEAM NO. 5 MEMORIAL FOR RELIABLE HOLDINGS

STATEMENT OF FACTS | PAGE 1

STATEMENT OF FACTS

THE PARTIES AND THE CHARTER

Reliable Tankers Inc. (the Owners) and Super Charters (the Charterers) entered into a single

voyage charterparty on 19th Nov 2011 for carriage of a cargo of crude oil on board the Owner’s

vessel Reliable Butterfly (the Vessel) from Blueland to Indigoland. The charter was on an

amended ASBATANKVOY form and contained rider clauses.

ARREST AND THE PERFORMANCE OF THE CHARTER

On 22nd Nov 2011, the vessel was arrested by third party bunker suppliers at an en route bunker

port, Redland (the Bunker Port). The laycan was narrowed to 5th Dec 2011 by the charterers and

it was agreed by both the parties that the vessel had to sail from the Bunker Port by 25th Nov

2011 in order to meet the laycan. As the arrest could not be lifted by 25th Nov 2011, it was

informed to the charterers that the vessel would not meet her laycan. It was also informed that a

revised laycan would be given when the same would be possible.

TERMINATION OF THE CHARTER

On 27th Nov 2011, the charterers sent a Notice of Cancellation to the owners, declining to accept

any later laycan and invoking their right to cancel under Clause 2 of the owner’s standard terms

to terminate the charter party. Through their e-mail dated 28th Nov 2011, the owners confirmed

the cancellation of charter party and informed the charterers about the outstanding freight which

was unaffected by the charterer’s decision to cancel. A sister VLCC was also offered to the

charterers for the performance of the fixture. Subsequently, Reliable Holdings Inc. Became the

successor of Reliable Tankers Inc. By universal succession.


STATEMENT OF FACTS | PAGE 2

THE CLAIMS

On 28th Jan 2012, the owners commenced arbitration proceedings in the name of ‘Reliable

Tankers Inc.’ against the charterers contending the alleged breach of the charter by the charterers

in failing to pay the deemed earned freight. They claimed the same as owing under the charter or

alternatively, as damages for the breach by the charterer.

By their e-mail dated 12th Feb 2012, the charterers contended the invalidity of the owner’s

Notice of Appointment on grounds of claimant being a non-existent entity, and commenced

another separate arbitration proceedings against the owners. They also noted that the owners

were time barred in this reference due to the operation of the contractual time bar present in

Clause 4 of charterer’s standard terms.

By their e-mail dated 24th Feb 2012, the owners denied the allegation that arbitration was not

validly commenced by them and clarified that the intended claimant was the surviving entity,

that is, Reliable Holdings Inc., pleading a genuine misnomer in the alternative.


ARGUMENTS ADVANCED | PAGE 3

PRELIMINARY ISSUES

I. THE ARBITRAL TRIBUNAL HAS THE JURISDICTION TO HEAR THE

PRESENT DISPUTE

1. The jurisdiction of the arbitral tribunal is premised on a valid agreement to arbitrate between the

parties.1 Under s. 30(1) of the Arbitration Act, 1996, a tribunal can rule on its own jurisdiction. It

is submitted that the fixture confirmation recap constitutes the Charter Party (A) and, there exists

a valid agreement to arbitrate between the parties (B).

A. THE FIXTURE CONFIRMATION RECAP CONSTITUTES THE CHARTER PARTY

2. A fixture recap constitutes a valid Charter Party when a final agreement on all the essential terms

has been reached and when the recap is read in conjunction with a standard form charter.2 Thus,

the fixture confirmation recap dated 19th Nov 2011 constitutes a valid Charter Party and the same

is substantiated by Rider Cl. 43 which details on Charter Party administration.

B. THE ARBITRATION CLAUSE EVIDENCES A VALID AGREEMENT TO ARBITRATE

3. Clause 24 of ASBATANKVOY Part II and the “English Law and London to apply”3 amendment

in confirmation recap, evidence the existence of a valid agreement to arbitrate.

II. THE ARBITRATION WAS VALIDLY COMMENCED ON 28TH JANUARY 2012

4. S.14 of the Arbitration Act, 1996 lays down the requirements of valid commencement of arbitral

proceedings which must be construed in a broad and flexible manner.4 On the present facts, it is

1 ABB Lummus Global Ltd. v. Keppel Fells Ltd. [1999] 2 Lloyd’s Rep. 24; See also, Robert Merkin, ARBITRATION

ACT 1996 (Informa 2005, 3rd Ed.) 83. 2 Welex A.G. v. Rosa Maritime Ltd. — “The Epsilon Rosa” [2003] 2 Lloyd’s Rep. 509. 3 Swiss Bank Corporation v. Novrissiysk Shipping [1995] 1 Lloyd’s Rep. 202. 4 West of England Ship Owners Mutual Protection and Indemnity Association (Luxembourg) Ltd. v. Hellenic



submitted that (A) the Notice of Appointment (hereinafter, the NOA) dated 28th Jan 2012 was

valid, and therefore, the second reference stands unfounded (B).

A. NOTICE OF APPOINTMENT DATED 28TH JAN 2012 WAS VALID

5. A mistake to a claimant’s name in the NOA can be corrected if it was a genuine mistake5 not

amounting to fundamental error,6 and was within the contemplation of a reasonable respondent.7

On the present facts, Reliable Holdings Inc. was the universal successor8 of the original

contracting party (Reliable Tankers Inc.) and had acquired all its contractual rights and liabilities9

before the NOA was made. The same is substantiated by the report10 of jointly appointed

expert.11 The NOA was thus made with the authority12 of Reliable Holdings Inc. and correctly

described the intended dispute,13 evidenced by the appended charter party. Further, the misnomer

Industrial Development Bank SA [1999] 1 Lloyd’s Rep. 93; See also, Allianz Versicherungs- Aktiengesellschaft v. Fortuna Co. Inc. — “The Baltic Universal” [1999] 1 Lloyd’s Rep. 497; Seabridge Shipping AB v. Orsleff’s EFTS A/S [1999] 2 Lloyd’s Rep. 685. 5 Harper Versicherungs AG (also known as Harper Insurance Ltd. and formerly Turegum Versicherungsgesellschaft and Turegum Insurance Co.) v. Indemnity Marine Assurance Co. Ltd. [2006] EWHC 1500 (Comm.); See also, Bruce Harris et. al., THE ARBITRATION ACT, 1996: A COMMENTARY (Wiley Blackwell 2014, 5th Ed.) 62. 6 Unisys International Services Ltd. (formerly Sperry Rand) v. Eastern Counties Newspapers Group [1991] 1 Lloyd's Rep. 538; See also Robert Merkin, ARBITRATION ACT 1996 (Informa 2005, 3rd Ed.) 54. 7 Owners of the Sardinia Sulcis v. Owners of the Al Tawwab, Al Tawwab — “The Sardinia Sulcis” [1991] 1 Lloyd's Rep. 201; See also Bruce Harris et. al., THE ARBITRATION ACT, 1996: A COMMENTARY (Wiley Blackwell 2014, 5th Ed.) 62. 8 MOOT PROPOSITION, p.100; See also, Redfern & Hunter et. al., REDFERN AND HUNTER ON INTERNATIONAL

ARBITRATION (Oxford University Press 2009, 5th Ed.) 105. 9 Starways Ltd. v. UN (1969) 44 ILR 433; See also, Union Trans-Pacific Co. Ltd. v. Orient Shipping Rotterdam BV [2002] EWHC 1451 (Comm.); National Bank of Greece and Athens SA v. Metliss [1958] AC 509. 10 MOOT PROPOSITION, p. 113. 11 Baron de Bode v. The Queen (1845) 8 QB 208, 246-247; See also, Nelson v. Bridport (1845) 8 Beav. 527, 536; National Justice Compania Naviera SA v. Prudential Assurance Co.—“The Ikarian Reefer” [1993] 2 Lloyd's Rep. 68, 81-82. 12 SEB Trygg Holding AB v. Manches [2005] EWHC 35 (Comm.); See also, Eurosteel Ltd. v. Stinnes AG [2000] 1 All ER (Comm.) 964. 13 Lay v. Ackerman [2004] EWCA Civ. 184; See also; Mannai Investment Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] AC 749; Easybiz Investments v. Sinograin Chinatex [2011] 1 Lloyd’s Rep. 688.



was genuine as it concerned only the name of the intended claimant14 and was within the

contemplation of the charterers. Thus, being technical in nature, the mistake should be corrected

and the fact that such correction will deprive the charterers of their accrued time bar defense does

not amount to significant prejudice to the charterers.15

B. THE SECOND REFERENCE STANDS UNFOUNDED

6. Since arbitration was validly commenced by the owners within the contractual limitation period

in the first reference and the misnomer in the NOA dated 28th Jan 2012 was corrected by the

owners, it makes the second reference unfounded.

MERITS

I. THE APPROACH VOYAGE HAD COMMENCED

7. Approach voyage begins at that point in time when the vessel embarks upon the chartered

service.16 It is submitted that the obligation to ‘start in time’ attached from the time the charter

was entered into (A). The obligation to start in time is non-recurring (B), and does not reattach at

every port the vessel halts. Further, the bunker port cannot be characterized as the last port of call

as being fully bunkered was a contractual requirement and hence, a part of the chartered service

(C). Therefore, the vessel had embarked upon its chartered service on 19th Nov 2011.

A. THE OBLIGATION TO ‘START IN TIME’ ATTACHED FROM THE TIME THE CHARTER WAS

ENTERED INTO

14 Unisys International Services Ltd. (formerly Sperry Rand) v. Eastern Counties Newspapers Group [1991] 1 Lloyd's Rep. 538. 15 Simon Crookenden, ‘Correction of the Name of a Party to an Arbitration’, (2009) 25 Arbitration International 207-216. 16Julian Cooke et. al., VOYAGE CHARTER (Informa 2007, 3rd Ed.) 92-95; See also, Harrison v. Garthorne (1872) 26 L.T. (N.S.) 508; Hudson v. Hill (1874) 43 L.J.C.P. 273.



8. Indeed, the vessel was under an obligation to ‘start in time’, conferred by the conjunct reading of

the express qualified obligation to proceed to the loading port ‘with convenient despatch’ under

ASBATANKVOY Part II Clause 1 and the Estimated Time of Arrival (hereinafter, the ETA) at

load port.17 The start in time date is computed by reference to the ETA as the end date by which

the vessel has to arrive at the load port.18 It is submitted that 19th Nov 2011 should be

contemplated to be the ‘start in time date’.19 Taking into account the terminal shutdown at

disport, the vessel was required to start from wherever she was20 in sufficient time21 and with

reasonable despatch to proceed to the load port to meet the ETA.22 As the charter was entered

into on 19th Nov 2011, the obligation to start in time attached from that day.

B. THE ABSOLUTE OBLIGATION TO START IN TIME IS NON-RECURRING

9. Once the approach voyage has commenced, the ship owner's duty is limited to proceed with

reasonable despatch.23 There is no absolute duty to "start in time" at every stop along the route

during the approach voyage.24 Since the owner in the present case had started in time when the

charter was signed, his duty did not reattach from the bunker port.

C. THE BUNKER PORT WAS NOT THE LAST PORT OF CALL

17 Evera SA Commercial v. North Shipping Company [1956] 2 Lloyd's Rep. 367, 37; See also, Monroe Bros. v. Ryan [1935] 2 KB 28; Kleinwort Benson Ltd. v. Sherkate Sahami Sakht — “The Myrto” [1984] 2 Lloyd’s Rep. 341; Mitsui OSK Lines v. Garnac Grain Co. Inc. [1984] 2 Lloyd's Rep. 449; Geogas SA v. Trammo Gas Ltd. — “The Baleares” [1993] 1 Lloyd's Rep. 215. 18 Geogas SA v. Trammo Gas Ltd. — “The Baleares” [1993] 1 Lloyd's Rep. 215; See also, Maredelanto Compania Naviera SA v. Bergbau-Handel GmbH — “The Mihalis Angelos" [1971] 1 QB 164. 19Mitsui OSK Lines v. Garnac Grain Co. Inc. [1984] 2 Lloyd's Rep. 449; See also, Louis Dreyfus v. Lauro (1938) 60 Lloyd’s Rep. 94; Geogas SA v. Trammo Gas Ltd. — “The Baleares”[1993] 1 Lloyd's Rep. 215. 20 Louis Dreyfus v. Lauro (1938) 60 Lloyd’s Rep. 94. 21 David Gek Sian Chong, ‘Reasonable Despatch in Voyage Charterparties’, (1993) Sing. J. Legal Stud. 401. 22 Mitsui OSK Lines v. Garnac Grain Co. Inc. [1984] 2 Lloyd's Rep. 449. 23 David Gek Sian Chong, ‘Reasonable Despatch in Voyage Charterparties’, (1993) Sing. J. Legal Stud. 401. 24 Raymond A Connell, ‘Charter Party Termination and the Approach Voyage’, (2000-2001) 25 Tulane Maritime Law Journal 469.



10. The ‘last port of call’ refers to the last port of call under an intermediate charter party.25 In the

present case, the visit to the en route bunker port (Redland) was not an intermediate

engagement26 but a part of performing the contractual requirement of ‘being fully bunkered’.27

The itinerary clearly provided for ETA at bunker port as 22nd Nov. 2011 This suffices to show

that the vessel started in time with convenient despatch from 19th Nov. 2011, to meet the

expected date at bunker port. Therefore, the vessel had embarked upon its chartered service on

19th Nov 2011 as she was free of her previous engagements and was proceeding to the loading

port for the purpose of loading cargo. 28

II. THE OWNERS ARE NOT IN BREACH OF THE OBLIGATIONS UNDER

ASBATANKVOY PART II CL.1

11. ASBATANKVOY Part II Cl.1 expressly obliges the owner to proceed to the loading port ‘with

all convenient despatch’, while ‘being seaworthy’ and ‘in every respect fitted for the voyage’. In

the present case, the delay is not attributable to non exercise of due diligence to make the vessel

financially seaworthy and, (A) in any case, the owners are exempted under Clause 19 of

ASBATANKVOY Part II (B). Therefore, the owner is not liable for breach of its obligation to

proceed with convenient despatch (C).

A. THE DELAY IS NOT ATTRIBUTABLE TO NON EXERCISE OF DUE DILIGENCE TO MAKE THE

VESSEL FINANCIALLY SEAWORTHY

25 Chan Leng Sun, ‘What Can We Expect from the “Expected Ready to Arrive” Clause’, (1993) 14 Sing. L. Rev. 382. 26 Evera SA Commercial v. North Shipping Co. Ltd. [1956] 2 Lloyd's Rep. 367. 27 Forest Oak Steam Shipping Co. v. Richard (1899) 6 Com. Ca. 100; See also, Sir Guenter Treitel et. al., CARVER ON BILLS OF LADING (Sweet & Maxwell 2011, 3rd Ed.) 294. 28 Evera SA Commercial v. North Shipping Co. Ltd. [1956] 2 Lloyd's Rep. 367; See also, Julian Cooke et. al., VOYAGE CHARTER (Informa 2007, 3rd Ed.) 98.



12. Cl.1 of ASBATANKVOY Part II imposes an express obligation29 on the owners to provide a

seaworthy vessel for the contractual voyage, including the approach voyage30 and the duty is

qualified by the exercise of due diligence. It is submitted that the owners exercised due diligence

to make the vessel financially seaworthy (i), and there exists no causal link between the

unseaworthiness and the loss to the charterers (ii).

i. The owners exercised due diligence to make the vessel financially seaworthy

13. Seaworthiness refers to that degree of fitness that a prudent owner31 would require his vessel to

have at the commencement of the voyage32 to undergo the ordinary perils of the sea and includes

the financial condition of the vessel.33 On the present facts, the demand for an unreasonably high

security was a custom of the bunker port, as is evident from the internal report of the owners

dated 23rd Nov 2011.34 As a matter of business efficacy35 and commercial prudence,36 the owners

did exercise due diligence by strenuously negotiating to reduce the security amount to a

reasonable figure.

14. In any event, the obligation of due diligence only requires the taking of reasonable efforts on a 29 Bank of Australasia and Others v. Clan Line Steamers Limited [1916] 1 KB 39; See also, (Board of Trade) Minister of Materials v. Steel Brothers & Co. Ltd. [1952] 1 Lloyd's Rep. 485. 30 Reed v. Page [1927] 1 KB 743, 754; See also, New York and Cuba Mail Steamship Co. v. Eriksen and Christensen (1922) 27 Com. Cas. 330, 336; Scott v. Foley (1899) 5 Com. Cas. 53. 31 M D C Ltd. v. N V Zeevaart Maatschappij — “ The Beursstraat” [1962] 1 Lloyd’s Rep. 180; See also, McFadden v. Blue Star Line [1905] 1 KB 697, 706; Papera Traders v. Hyundai Merchant Marine — “The Eurasian Dream” [2002] 1 Lloyd’s Rep. 719. 32 McFadden v. Blue Star Line [1905] 1 KB 697, 706; See also, Kopitoff v. Wilson (1876) 1 QBD 377, 380; Simon Baughen, SHIPPING LAW (T and F Publishing 2009, 4th Ed.) 88. 33 Morrisey v. The S S A & J Faith 252 F. Supp. 54 (N.D. Ohio 1965); See also, The Maria Jose T SMA No. 2205 (1986); Mare Schiffahrtskontor v. M/V Ocean Haven 763 F.2d 633 (4th Cir. 1985) 637-39; Potash Company of Canada, Ltd. v. S S Raleigh 361 F. Supp. 120 (1973); Dewey R. Villareal, ‘The Concept of Due Diligence in Maritime Law’, (1971) 2 Journal of Maritime Law and Commerce 776-777. 34 MOOT PROPOSITION, p. 93. 35 Northern Shipping Co. v. Deutsche Seereederei GmbH and Others — “The Kapitan Sakharov” [2000] 2 Lloyd's Rep. 255, 266. 36 The Union of India v. N V Reederij Amsterdam –—“The Amstelslot” [1963] 2 Lloyd’s Rep. 223, 235; See also, Francesco Berlingieri, BERLINGIERI ON ARREST OF SHIPS, (Informa 2011, 5th Ed.) 334-335.



balance of probabilities37 and not the undertaking of any method which could be unreasonably

hazardous to the ship owner.38 Thus, owing to their financial condition at the time of the arrest39,

it was not reasonable on the part of the owners to agree to the unreasonable security and for the

same reasons, no immediate Letter of Indemnity40 was sought from the P&I Club41 before

reasonable negotiations.

ii. No causal link exists between the vessel’s unseaworthiness and loss to the charterer

15. The chain of causation is broken if due diligence was actually exercised but it failed to produce

any successful result.42 On the present facts, want of due diligence and resultant unseaworthiness

were not the effective causes of the loss.43 The owners satisfied the requirement of a reasonable

carrier by negotiating with the bunker suppliers on reasonable grounds to reduce the

preposterous amount of security. Since, the tests of commercial prudence and business efficacy

were duly followed by the owners, they are not in breach of the due diligence obligation under

Clause 1 of ASBATANKVOY Part II.

B. IN ANY CASE, THE OWNERS MAY RELY ON THE EXCEPTIONS UNDER CLAUSE 19 OF

ASBATANKVOY PART II

37 Jahn (t/a CF Otto Weber) v. Turnbull Scott Shipping Co. Ltd. — “The Flowergate” [1967] 1 Lloyd’s Rep. 1; See also, Julian Cooke et. al., VOYAGE CHARTER (Informa 2007, 3rd Ed.) 1035. 38 The Union of India v. N V Reederij Amsterda — “The Amstelslot” [1963] 2 Lloyd’s Rep. 223, 235; See also, Julian Cooke et. al., VOYAGE CHARTER (Informa 2007, 3rd Ed.) 970. 39 MOOT PROPOSITION, p.93, 100. 40 “The Oakwell” [1991] 1 Lloyd’s Rep. 253. 41 Steven J Hazelwood & David Semark, P&I CLUBS LAW AND PRACTICE (Informa 2010, 4th Ed.) 307-309. 42 Charles H Windschuegl Ltd. v. Alexander Pickering and Co. Ltd. (1950) 80 Lloyd’s Rep. 89, 92; See also, Soc. D’Avances Commerciales Ltd. v. A Besse and Co. Ltd. [1952] 1 Lloyd’s Rep. 242, 249; Overseas Buyers Ltd. v. Grenadex SA [1980] 2 Lloyd’s Rep. 608, 612. 43 McFadden v. Blue Star Line [1905] 1 KB 697, 703; See also, Simon Baughen, SHIPPING LAW (T and F Publishing 2009, 4th Ed.) 92.



16. The general rule is that the exceptions clause44 applies from the time the chartered service

commences, including the approach voyage.45 Thus, the arrest of the Reliable Butterfly and the

subsequent delay are covered under the exceptions contained in Clause 19 of ASBATANKVOY

Part II.

i. The Owners are exempted from liability under the ‘catch-all exception contained in

Clause 19 of ASBATANKVOY Part II

17. The owners are exempted from failure and delay in performance resulting from ‘any other cause

of whatsoever kind’ provided that it occurs ‘without the actual fault or privity’ of the owner. The

onus is on the ship owner to establish the above condition.

a. Arrest is within the meaning of ‘any other cause of whatsoever kind’

18. The effect of the term ‘whatsoever’ is to show the generality of the exception and to exclude the

eiusdem generis rule.46 Thus, ‘arrest of the vessel’ would be within its scope.

b. The loss occurred ‘without the actual fault or privity of the owner’

19. ‘Actual fault’ refers to a negligent act or omission and is equated with want of due diligence on

the part of the owner.47 On the present facts, the owners were not at fault for the inevitable delay

arising out of the prevalent custom of the bunker port to demand an unreasonably high security.

As the obligation of due diligence was discharged by the owners by prudently negotiating with

the bunker suppliers, they can rely on this exception. 44 Chan Leng Sun, ‘What Can We Expect from the "Expected Ready to Arrive” Clause’, (1993) 14 Sing L. Rev. 384-385. 45 Monroe v. Ryan [1935] 2 KB 28; See also, Transworld Oil Ltd. v. North Bay Shipping — “The Rio Claro” [1987] 2 Lloyd’s Rep. 173. 46 Societe Anonyme Marocaine de l’Industrie du Raffinage v. Notos Maritime Corp. — “The Notos” [1987] 1 Lloyd’s Rep. 503; See also, Julian Cooke et. al., VOYAGE CHARTER (Informa 2007, 3rd Ed.) 35-36, 886. 47 Leesh River Tea Co. Ltd. v. British India Steam Navigation Co. Ltd. —“The Cheybassa” [1967] 2 QB 250; See also, Hourani v. Harrison (1927) 32 Com. Cas. 305.



ii. The owners may rely on the ‘unseaworthiness’ exception contained in Clause 19 of

ASBATANKVOY Part II

20. To invoke this exception, the owner has to establish that he exercised due diligence to make the

vessel seaworthy. It is submitted that owing to the means available at the time of the arrest, the

owners discharged their obligation of due diligence by taking the reasonable steps that would

have been taken by a prudent carrier in the given circumstances.

iii. The Owner may rely on the ‘seizure under legal process’ exception contained in

Clause 19 of ASBATANKVOY Part II

21. To invoke this exception, it must be established by the owners that they promptly furnished the

bond for security to release the vessel.

a. Arrest is within the meaning of ‘seizure under legal process’

22. The phrase ‘seizure under legal process’ covers any forcible dispossession or taking of ship in

accordance with the ordinary judicial processes.48 Seizure refers to every act of effective

possession at the suit of a non-governmental person or body utilizing ordinary legal processes,49

and thus, covers arrest.

b. The owners took reasonable efforts to ‘promptly’ furnish the bond for security

23. ‘Promptly’ here refers to without unreasonable delay and within a reasonable time, and should

be adjudged on the basis of surrounding circumstances and means available at the time of the

arrest.50 As evident from the internal report, the custom of the bunker port was such that despite

all the reasonable efforts, the amount of security could not be reduced to a reasonable figure

48Julian Cooke et. al., VOYAGE CHARTER (Informa 2007, 3rd Ed.)1033. 49 Handelsbanken Svenska v. Dandridge — “The Aliza Glacial” [2002] 2 Lloyd’s Rep. 421. 50 Steven J Hazelwood & David Semark, P&I CLUBS LAW AND PRACTICE (Lloyd’s List 2010, 4th Ed.) 307-309.



within three days of the arrest. Thus, as the owners took all the reasonable efforts to release the

vessel, they can rely on this exception.

C. THE OWNER IS NOT LIABLE FOR BREACH OF HIS OBLIGATION TO PROCEED WITH

‘CONVENIENT DESPATCH’

24. As established above, the owners discharged their obligation of due diligence and are in any case

exempted under Clause 19 of ASBATANKVOY Part II. Thus, the loss resulting out of delay is

not attributable to the owners as the vessel did proceed with convenient despatch.

III. ALTERNATIVELY, ASSUMING APPROACH VOYAGE HAD NOT

COMMENCED, FAILURE TO START IN TIME WAS NOT REPUDIATORY

25. It is submitted that the obligation to start in time is an intermediate term (A), and failure to

commence approach voyage was not repudiatory (B).

A. THE START IN TIME OBLIGATION IS AN INTERMEDIATE TERM

26. As established above, the obligation to ‘start in time’ is derived from the obligation to proceed

with ‘convenient despatch’ and the ETA at loadport.51 Since failure to ‘start in time’ relates to

owner’s failure to exercise convenient despatch in commencement of the approach voyage,

which in itself is an intermediate term,52 it is submitted that the ‘start in time’ obligation should

be characterized as an intermediate term. Further, when the charter contains an express

termination clause, the term cannot be regarded as a condition.53

B. FAILURE TO COMMENCE APPROACH VOYAGE WAS NOT REPUDIATORY

51 Evera S A Commercial v. North Shipping Company [1956] 2 Lloyd's Rep. 367, 371; See also, Kleinwort Benson Ltd. v. Sherkate Sahami Sakht — “The Myrto” [1984] 2 Lloyd’s Rep. 341. 52 David Gek Sian Chong, ‘Reasonable Despatch in Voyage Charterparties’, (1993) Sing. J. Legal Stud. 419. 53Blackgold Trading v. Almare SPA — “The Almare Seconda” [1981] 2 Lloyd’s Rep. 433, 435; See also, Bunge Corporation v. Tradax Export SA [1981] 1 WLR 711.



27. Cl.2 of owners’ standard terms was invoked as it became evident that the vessel would not be

able to meet her laycan. However, non-meeting of laycan was not decisive of owner’s ability to

ensure fulfilling the commercial purpose had the charterers continued with the charter party. The

itinerary shows that reasonable margin of time was saved for contingencies that commonly arise

in mercantile trade during the laden voyage. The laycan was narrowed down to 5th Dec 2011 by

the charterers saving a day, and the vessel would have finished discharging by 10th Jan 2012,

which was five days before the terminal shutdown. Therefore, the delay did not frustrate the

commercial purpose of the charter.54 Hence, it is not a case of repudiatory breach.55

IV. THE PRESENCE OF THE ENTIRE AGREEMENT CLAUSE PRECLUDES

RELIANCE ON EXTRINSIC EVIDENCE

28. The Entire Agreement Clause (hereinafter, the EAC) integrates the contract and calls for non-

reliance on extrinsic evidence to “allow, contradict, vary, add to or subtract from the terms of a

written contract”.56 It is submitted that on consideration of totality of evidence, the EAC

precludes reliance on prior negotiations for the purpose of construction (A) and, prevents the

effect of incorporation of a new term through rectification (B).

A. THE EAC PRECLUDES RELIANCE ON PRIOR NEGOTIATIONS FOR CONSTRUCTION

i. Inclusion of the EAC was a result of common intention of the parties

29. The totality of evidence is used to determine whether the agreement was exclusively contained

54Evera S A Commercial v. North Shipping Company [1956] 2 Lloyd's Rep. 367, 371. 55 Scandinavian Trading Tanker Co. A.B. v. Flota Petrolera Ecuatoriana — “The Scaptrade” [1983] 2 AC 694, 703; See also, Union Eagle Ltd. v. Golden Achievement Ltd. [1997] AC 514. 56 Bank of Australasia v. Palmer [1897] AC 540 PC (Australia); See also, R Stevens, OBJECTIVITY, MISTAKE AND THE PAROL EVIDENCE RULE IN CONTRACT TERMS (Oxford University Press 2007) 110.



and integrated in the contract. 57 In the present contract, the EAC was a part of the Rider Clauses

of Charterers. Further, the fact of its inclusion was explicitly mentioned in the offer and final

fixture recaps, during negotiations through travelling drafts. Therefore, it cannot be contended

that such inclusion was without charterer’s knowledge.58

ii. The presence of an EAC is decisive on the application of the parol evidence rule

30. Prior negotiations and declaration of subjective intentions are not admissible for the purpose of

construction 59 and the incorporation of EAC reiterates such principles of parol evidence rule.60

It is submitted that in the present case, the EAC has a binding effect, in the absence of fraud,

misrepresentation or non est factum, and the charterer will be bound by the terms even if the

document had not been read.61

iii. Effect to non-reliance should be given in case of arm’s length negotiation

31. The phrase ‘supersedes any earlier agreements and discussions’ in the EAC points that the things

superseded are to have no bearing on the meaning of the agreement.62 Such declaration of non-

reliance was to ensure that in the interests of certainty,63 the rights of the parties should be

governed by the terms of the written contact64 and pre-defined extent of commercial risks,

57 Carmichael v. National Power Plc. [1999] 1 WLR 2042 (HL). 58 Catherine Mitchell, INTERPRETATION OF CONTRACTS: CURRENT CONTROVERSIES IN LAW (Routledge-Cavendish 2007, 1st Ed.) 131; See also, Surgicraft Limited v. Paradigm Biodevices Inc. [2010] EWHC 1291. 59 Investors Compensation Scheme Ltd. v. West Bromwich Building Society [1998] 1 WLR 896. 60 J J Spigelman, ‘Contractual Interpretation: A Comparative Perspective’, (2011) 85 A.L.J. 412. 61 E Peden & J W Carter, ‘Entire Agreement—and Similar—Clauses’ (2006) 22 J.C.L. 1; See also, Tilden Rent-A-Car Co. v. Clendenning (1978) 83 D.L.R. (3d) 400. 62 Proforce Recruit Ltd. v. The Rugby Group Ltd. [2006] EWCA Civ. 69; See also, Matthew Barber, ‘The Limits of Entire Agreement Clauses’, (2012) 6 Journal of Business Law 486. 63 White v. Bristol Rugby Ltd. [2002] I.B.L.R. 204; See also, SERE Holdings Ltd. v. Volkswagen Group UK Ltd. [2004] EWHC 1551 (Ch); Kingsley IT Consulting Ltd. v. McIntosh [2006] EWHC 1288 (Ch). 64 Quest-4-Finance Ltd. v. Maxfield [2007] EWHC 2313 (QB).



remedies and relief.65 The owners and charterers bargained at arm’s length 66 and had equal

bargaining power. The fact that EAC was incorporated shows the intention of the parties to

delineate reliance on prior statements.67

B. EAC PREVENTS INCORPORATION OF NEW TERM THROUGH RECTIFICATION

32. The presence of an EAC does not prevent the recourse to rectification. However, rectification is

available only ‘to correct an errant provision’ and ‘not to bring in terms presently not there’.68 On

ending the cancellation clause at ‘without recourse’, the charterer seeks to bring a change in the

post discharge liability regime, by making parties liable for incurred obligations and liabilities,

when in fact there was no provision to such effect. Such deletion amounts to de facto

incorporation of a new term, hence supplementing rather than correcting a mistake.69 Such

incorporation of terms through rectification is impermissible70 and the conclusion is reinforced

by the presence of an EAC, incorporated to provide legal certainty71 and prevent such disputes.

V. CLAUSE 2 OF OWNER’S STANDARD TERMS RELEASES BOTH PARTIES

FROM ALL LIABILITIES

33. On a true construction of the contract, it is submitted that the words ‘without recourse to either

65 Inntrepreneur Pub Co. v. East Crown Ltd. [2000] 2 Lloyd's Rep. 611 Ch D. 66 A/S Awilco of Oslo v. Fulvia SPA di Navigazione of Cagliari —“The Chikuma” [1981] 1 WLR 314 (HL); See also, Thomas Witter Ltd. v. TBP Industries Ltd. [1996] 1 All ER 573. 67 K Lewison, THE INTERPRETATION OF CONTRACTS (Sweet & Maxwell 2011, 5th Ed.) ¶ 3.11, 3.15; AXA Sun Life Services Plc. v. Campbell Martin Ltd. [2011] EWCA Civ. 133. 68 Procter & Gamble [2012] EWHC 498 (Ch); See also, Matthew Barber, ‘The Limits of Entire Agreement Clauses’, (2012) 6 Journal of Business Law 486. 69 David McLauchlan, ‘The Entire Agreement Clause: Conclusive or a Question of Weight?’, (2012) L.Q. Rev; See also, Procter & Gamble [2012] EWHC 498 (Ch). 70Etablissements Georges et Paul Levy v. Adderley Navigation Co. — “The Olympic Pride” [1980] 2 Lloyd’s Rep. 67; See also, A Burrows, CONTRACT TERMS (Oxford University Press 2007, 1st Ed.) 77. 71 Surgicraft Limited v. Paradigm Biodevices Inc. [2010] EWHC 1291; See also, The Procter & Gamble Company, Procter & Gamble International Operations SA, Procter & Gamble Product Supply (UK) Ltd. v. Svenska Cellulosa Aktiebolaget SCA, SCA Hygiene Products UK Ltd. [2012] EWHC 498 (Ch).

http://uk.practicallaw.com/D-016-1035?source=relatedcontent



party whatsoever’ must be given their ordinary meaning (A) and, the principle of contra

proferentum is not applicable (B). Further, the contract is binding even if parties were not in

agreement (C) and lastly, purposive construction cannot override contractual language (D).

A. THE WORDS ‘WITHOUT RECOURSE TO EITHER PARTY WHATSOEVER’ SHOULD BE GIVEN

THEIR ORDINARY MEANING

34. Cl.2 of owner’s standard term was an express termination clause where parties were free to

devise their own express regime for termination of the contract.72 The primary source for

understanding what the parties meant is by interpreting their language in accordance with

conventional usage.73 The dictionary meaning suffices to point out the ordinary meaning.74

‘Without recourse’ refers to lack of such means through which a judgment or a reimbursement

can be obtained against an entity. 75 It negates the enforcement of, or a method for enforcing a

right.76 Further, the word ‘whatsoever’ which means ‘at all’77 simply acts to reinforce the

absence of such a right. Together, they seek to negate the remedies which arise by operation of

law on discharge,78 for liabilities incurred before termination.79 Therefore, the phrase ‘without

recourse to either party whatsoever’ is clearly indicative of the intention of the parties to release 72 S Rowan, ‘For the Recognition of Remedial Terms Agreed Inter Parties’, (2010) 126 L.Q. Rev. 448; See also, J W Carter, ‘Termination Clauses’, (1990) 3 J.C.L 90. 73 Bank of Credit and Commerce International SA v. Ali [2001] UKHL 8. 74 Holt & Co. v. Collyear (1881) 16 Ch D 718; See also, Rowett Leakey & Co. v. Scottish Provident Institution [1927] 1 CH 55. 75 Bryan A Garner, BLACK’S LAW DICTIONARY (West Group 2009, 9th Ed.) 1159. 76 Ibid 1388, 1740. 77 Maurice Waite, OXFORD DICTIONARY & THEASURUS (Oxford University Press 2007, 2nd Ed.) 1177; See also, Davies Middleton and Davies Ltd. v. Toyo Engineering Corporation 1997 WL 1105718; Dolphin Tanker SRL v. Westport Petroleum Inc.[2010] EWHC 2617 (Comm.). 78 Heyman v. Darwins Ltd. [1942] AC 356 (HL); See also, Ryanair Ltd. v. SR Technics Ireland Ltd. [2007] EWHC 3089 (QB). 79 Beaufort Developments (NI) Ltd. v. Gilbert — “Ash NI Ltd.” [1999] AC 266 (HL) 279-80; See also, Johnson v. Agnew [1980] AC 362, 392-3; Photo Productions Ltd. v. Securicor [1980] AC 827; Hyundai Heavy Industries Co. Ltd. v. Papadoupoulous [1980] 1 WLR 1129; Gerald McMeel, THE CONSTRUCTION OF CONTRACTS – INTERPRETATION, IMPLICATION AND RECTIFICATION (Oxford University Press 2011, 2nd Ed.) 53.



both the parties from all liabilities.

B. THE PRINCIPLE OF CONTRA PROFERENTEM IS NOT APPLICABLE

35. It is well acknowledged that ship owners and charterers bargain at arm’s length.80 In such a case,

where parties had equal bargaining power, shared responsibility and an elective choice to include

a particular provision, it is submitted that the principle of contra proferentem becomes

inapplicable.81

C. THE CONTRACT IS BINDING ON ITS TRUE CONSTRUCTION EVEN IF PARTIES WERE NOT IN

AGREEMENT

36. The purpose of interpretation is to give effect to the intention of the parties as objectively

ascertained.82 The difference of opinion as to the scope of a particular clause, if not clarified in

the contract, will have no effect on the binding nature of the contract.83 Prior negotiations that

are reflective of parties’ actual intentions and expectations are thus, not receivable.84

37. In any case, even if reliance be placed on prior negotiations, it suggests decision on words and

not the effect of the words. On the present facts, the evidence is declarative of parties’ subjective

state of mind and does not show that the parties negotiated on an agreed basis that particular

words bore a particular meaning. Thus, the disparity in subjective intentions of the parties has no

effect on the clarity and fixity of what was objectively agreed upon.85

D. PURPOSIVE CONSTRUCTION CANNOT OVERRIDE CONTRACTUAL LANGUAGE 80 A/S Awilco of Oslo v. Fulvia S PA di Navigazione of Cagliari — “The Chikuma” [1981] 1 WLR 314 (HL). 81 British Fermentation Products Ltd. v. Compair Reavell Ltd. [1999] BLR 352; See also, National Westminster Bank v. Utrecht-America Finance Co. [2001] EWCA Civ. 658. 82 Zurich Insurance (Singapore) Pte. Ltd. v. B-Gold Design & Construction Pte. Ltd. [2008] SGCA 27. 83 London County Council v. Henry Boots & Sons Ltd. [1959] 1 WLR 1069 (HL). 84 Codelfa Construction Pty. v. State Rail Authority of New South Wales (1982) 149 CLR 337, 348; See also, Proforce Recruit v. The Rugby Group [2007] EWHC 1621 (QB) 87. 85 Frederick E Rose (London) Ltd. v. William H Pim Junior & Co. Ltd. [1953] 2 QB 450, 462; See also, G Williams, ‘Mistake and Rectification in Contract’, (1954) 17 M.L. Rev. 154.



38. Purposive interpretation cannot override express contractual language86 and expressed objective

intention of the parties.87 The express contractual language of Cl. 2 of owners’ standard terms

depicts clear objective intention of the parties to oust both parties of all liabilities on its

invocation. Thus, the difficulty in construction of the phrase does not amount to ambiguity.88

VI. RECTIFICATION CANNOT BE PLEADED

39. It is submitted that there was a mistake in formation of the common intention and not the

documentation (A) and, absence of qualifying knowledge or conduct counters the claim for

unilateral mistake rectification (B).

A. THERE WAS MISTAKE IN FORMATION OF COMMON INTENTION AND NOT

DOCUMENTATION

40. The prerequisite for seeking rectification on ground of common mistake89 and unilateral

mistake90 is proving common continuing intention.91 It is submitted the objective prior accord of

deleting the said phrase ceased to continue when on 19th Nov 2011, the owner removed the

amendment to Cl.2 from the final fixture recap. This change in the final fixture recap clearly

signalled the owner’s deviation from the objective prior accord. It was clear from the change that

owner did not intend to commit on the terms previously finalised.

86 Total Gas Marketing Ltd. v. Arco British Ltd. [1998] 2 Lloyd’s Rep. 209 (HL). 87 Vallejo v. Wheeler (1774) 1 Cowper’s Rep. 143. 88 Ailsa Craig Fishing Co. Ltd. v. Malvern Fishing Ltd. [1983] 1 WLR 964 (HL). 89 Dubai Islamic Bank PJSC v. PSI Energy Holding Company BSC [2011] EWHC 2718 (Comm.); See also, Surgicraft Ltd. v. Paradigm Biodevices Inc. [2010] EWHC 1291 (Ch) 73; JJ Huber (Investments) Ltd. v The Private DIY Co. Ltd. (1995) 70 P. & C.R. D 33 Ch D; MacDonald v. Shinko Australia Pty. Ltd. [1999] 2 Qd. R. 152; Alstom Ltd. v. Yokogawa Australia Pty. Ltd. (No.7) [2012] SASC 49 ¶ 355; D Hodge, RECTIFICATION (Sweet &Maxwell 2010) ¶ 3.165–3.168. 90 D Hodge, RECTIFICATION (Sweet &Maxwell 2010) ¶ 3.165–3.168. 91 C H Pearce & Sons Ltd. v. Stonechester Ltd. The Times 17 November 1983; See also, I C F Spry, THE PRINCIPLES

OF EQUITABLE REMEDIES: SPECIFIC PERFORMANCE, INJUNCTIONS, RECTIFICATION AND EQUITABLE DAMAGES (Thomson Reuters 2013, 9th Ed.) 612.



41. The charterer was negligent in proof-reading the final fixture and also, did not make changes

under Rider Cl.43 within three days of lifting of subjects. The effective cause of charterer’s

mistake was his negligence.92 In the present case, mistake occurred in the formation of an

objective intention as opposed to documentation of the objective intention. 93

B. ABSENCE OF QUALIFYING KNOWLEDGE OR CONDUCT COUNTERS THE CLAIM FOR

UNILATERAL MISTAKE RECTIFICATION

42. If the tribunal deems fit to consider the case for unilateral rectification, it is submitted that in the

present case the request is unfounded as the requirement of qualifying knowledge or conduct94 is

not satisfied. Actual knowledge here is the sole basis of relief, 95 in absence of other vitiating

factors. The knowledge of mistake on the part of the charterer, cannot be established in the

present case96, and therefore, rectification for unilateral mistake should not be granted when such

knowledge is not conclusively proven.97

VII. THE ADVANCE FREIGHT IS NOT RECOVERABLE BY THE CHARTERERS

43. On the present facts, it is submitted that advance freight was unconditionally earned on lifting of

subjects (A) and it is irrecoverable in nature (B). 92 Daventry DC v. Daventry and District Housing Ltd. [2011] EWCA Civ. 1153; See also, David McLauchlan, ‘Refining Rectification’, (2014) L.Q. Rev.608. 93 Pukallus v. Cameron (1982) 180 C.L.R. 447; See also, Club Cape Schanck Resort Co. Ltd. v. Cape Country Club Pty. Ltd. (2001) 3 V.R. 526; Mander Pty. Ltd. v. Clements (2005) 30 W.A.R. 46; NSW Medical Defence Union Ltd. v. Transport Industries Insurance Co. Ltd. (1986) 6 N.S.W.L.R. 740; David McLauchlan, ‘The "Drastic" Remedy of Rectification for Unilateral Mistake’, (2008) L.Q. Rev. 608. 94Etablissements Georges et Paul Levy v. Adderley Navigation Co. — “The Olympic Pride” [1980] 2 Lloyd’s Rep. 67. 95 Gerald McMeel, THE CONSTRUCTION OF CONTRACTS – INTERPRETATION, IMPLICATION AND RECTIFICATION (Oxford University Press 2011, 2nd Ed.) 511. 96 Agip S.p.A. v. Navigazione Alta Italia S.p.A.— “ Nai Genova, Nai Superba” [1984] 1 Lloyd’s Rep. 353, 365, CA; See also, George Wimpey UK Ltd. v. VI Construction Ltd. [2005] EWCA Civ. 77; E Palser, ‘Rectification for Unilateral Mistake: How Heavy is the Burden of Proof?’, [2006] LMCLQ 139. 97 Surgicraft Ltd. v. Paradigm Biodevices Inc. [2010] EWHC 1291 (Ch) ¶ 69; See also, Chartbrook Ltd. v. Persimmon Homes Ltd. [2007] EWHC 409.

http://www.justcite.com/Document/cYCZnXiJm4Wca/agip-spa-v-navigazione-alta-italia-spa-nai-genova-nai-superba



A. ADVANCE FREIGHT WAS UNCONDITIONALLY EARNED ON LIFTING OF SUBJECTS

44. The liability for freight is treated as a liability in debt98 when it is accrued as a result of freight

being deemed to have been earned. Advance freight is not adjustable according to what

subsequently occurs and is not repayable on subsequent incidents and misfortune of voyage.99 It

is not treated as a contractual obligation to which rules of failure of consideration, or partial

consideration apply.100 Once earned, advance freight is at the risk of the charterer.101 The only

necessary condition is that, the right of advance freight must accrue unconditionally before the

termination of charter party.102 Cl.4 of owners’ standard terms states that the freight was deemed

to be earned in full, discountless, non-returnable and 95% of minimum freight was payable upon

lifting of subjects. In the present case, on 19th Nov, on lifting of subjects, the owners had

unconditionally acquired the right to 95% of the freight and it became payable, before

termination of the charter party on 27th Nov 2011.103

B. ADVANCE FREIGHT IS IRRECOVERABLE IN NATURE

45. The irrecoverable nature of the payment is determined by custom or law unless the contract

stipulates otherwise.104 Under English law, the advance payment of freight is irrecoverable even

if the consideration fails.105 As there was no stipulation in the charter party which made the

advance freight recoverable in nature, therefore by way of custom, the advance freight cannot be

98 Stephen Girvin, CARRIAGE OF GOODS BY SEA (Oxford University Press 2011, 2nd Ed.) 351. 99 Byrne v. Schiller (1871) LR 5 Ex 319, 325; See also, Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. [1943] AC 32; Colonial Bank (Now Bank of Boston Connecticut) v. European Grain and Shipping Ltd. — “The Dominique” [1989] 1 Lloyd's Rep. 431 (HL). 100 Stephen Girvin, CARRIAGE OF GOODS BY SEA (Oxford University Press 2011, 2nd Ed.) 355. 101 Allison v. Bristol (1875) 1 AC 209, 253. 102 Vagres Compania Maritime SA v. Nissho-Iwai American Corporation — “The Karin Vatis” [1988] 1 Lloyd’s Rep. 330. 103 MOOT PROPOSITION, p. 96. 104 Byrne v. Schiller (1871) LR 5 Ex 319. 105 Allison v. Bristol (1875) 1 AC 209, 253.



recovered by the charterers. The same is further substantiated by Cl.4 of owners’ standard terms

which states that once earned,106 the advance freight is non-returnable.

VIII. HEADS OF DAMAGES

46. It is submitted that the owners are not responsible to pay damages because losses are

consequential and thus, the owners are excluded from any kind of liability due to operation of

Cl.5 of owners’ standard terms (A). Further, the owners cannot be held liable for gross

negligence (B) and, the damages for increased freight should be awarded considering the market

scenario (C). Lastly, the charterers are not entitled to set-off damages against the freight (D).

A. THE ALLEGED LOSSES ARE CONSEQUENTIAL, EXCLUDING THE LIABILITY OF THE

OWNERS

i. Owners did not assume responsibility for such losses

47. Damages are recoverable only if one is said to have assumed liability for such damage.107 Mere

foresight that damage is not unlikely is insufficient;108 knowledge of purpose109 and special

circumstances110 determines the scope of assumed responsibility. On the present facts, it was not

possible for the owners to know that such a loss was not unlikely to occur as a consequence of

breach111 in relation to relevant sale contracts entered by the charterers at the loading and

discharge port.112

106 MOOT PROPOSITION, p. 87. 107 Transfield Shipping Inc. v. Mercator Shipping Inc. — “The Achilleas” [2008] UKHL 48; See also, J Cartwright, ‘Remoteness of Damage in Contract and Tort: A Reconsideration’, (1996) 53 Cambridge Law Journal 488, 505. 108 Satef-Huttenes Albertus SpA v. Paloma Tercera Shipping Co. SA — “The Pegase” [1981] 1 Lloyd’s Rep. 175 (QB) 183; See also, Hugh Beale, CHITTY ON CONTRACTS (Sweet & Maxwell 2008, 30th Ed.) 1660. 109 Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd. [1949] 2 KB 528. 110 British Columbia Saw Mill Company v. Nettleship (1868) LR 3 CP 499. 111 Victoria Laundry (Windsor) Ltd v. Newman Industries Ltd. [1949] 2 KB 528. 112 MOOT PROPOSITION, p. 112.



ii. The alleged losses are consequential

48. Consequential damages are those which are not the direct and natural result of the breach113and

which are special to the circumstances of the particular plaintiff.114 On the present facts, the

contracts entered by the charterers at the loading and discharge port and loss suffered thereon,

are consequential losses and owners will be protected under Cl.5 of their standard terms.

49. Further, consequential damages are recoverable only on proof of special circumstances.115 It is

submitted that such special circumstances are absent and even if such special circumstances

existed, owners had no knowledge116 of the same. Such knowledge must have existed at or

before the making of the contract.117 On the present facts, the owners had no knowledge about

contracts entered by the charterers at the loading and discharge port.118

iii. Cl. 5 of owners’ standard terms excludes liability from consequential losses

50. It has been held119 that a clause excluding liability for consequential damages excludes liability

only for damages which would be recoverable under the second limb of Hadley v. Baxendale.120

It is submitted that damages in the present case are covered under the second limb of the

aforesaid rule and continues to be applied in majority cases.121

51. Where a contracting party seeks to protect himself from liability for damages recoverable by law

113 Millar's Machinery Co. Ltd. v. David Way & Son (1935) 40 Com. Cas. 204, 210. 114 Ibid. 115 BHP Petroleum v. British Steel [1999] 2 Lloyd’s Rep. 583. 116 Bank of Nova Scotia v. Hellenic Mutual War Risks Association (Bermuda) Ltd. [1992] 1 AC 233. 117 Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd. [1949] 2 KB 528; See also, Jackson v. Bank of Scotland [2005] UKHL 3; Hydraulic Engineering Co. Ltd. v. McHaffe Goslet & Co. (1878) 4 QBD 670. 118 MOOT PROPOSITION, p. 112. 119 Deepak Fertilizers & Petrochemicals v. ICI [1999] Lloyd’s Rep. 38;See also BHP Petroleum v. British Steel [1999] 2 Lloyd’s Rep. 583; McCain Foods GB Limited v. ECO-TEC (Europe) Limited [2011] EWHC 66 (TCC). 120 Hadley v. Baxendale [1854] EWHC Exch. J 70. 121 ASM Shipping Ltd. v. TTMI Ltd. —“The Amer Energy” [2009] 1 Lloyd’s Rep. 293; See also, Classic Maritime v. Lion Diversified Holdings [2009] EWHC 1142 (Comm.); Sylvia Shipping Corporation Co. Ltd. v. Progress Bulk Carriers Ltd. — “The Sylvia” [2010] EWHC 542 (Comm.).



for breach of contract, he must do so in clear and unambiguous language122 by using terminology

which has settled meaning in English law.123It is submitted that wordings of Cl. 5 are clear and

unambiguous and protects the owners from consequential damages.

B. THERE HAS BEEN NO GROSS NEGLIGENCE BY THE OWNERS

52. If the tribunal is of the opinion that owners have been negligent, it is submitted that the degree

was not such that it would qualify to be gross negligence. Although English authorities have

regarded gross negligence and negligence as the same,124 it is submitted that gross negligence

involves the intention to inflict the damage or recklessness and knowledge that damage would

probably result.125 In the present case, the owner’s duty to proceed with convenient despatch and

provide a seaworthy vessel was qualified by due diligence, which was well exercised, as already

proven.126 Further, the burden of proving the requisite mental element is on the charterers, which

has not been discharged.

C. THE DAMAGES FOR INCREASED FREIGHT SHOULD BE AWARDED CONSIDERING THE

MARKET SCENARIO

53. On breach, when a suitable alternate vessel is obtained, damages are fixed with reference to the

market.127 The charterer’s decision was merely a decision triggered off by the breach but had not

122 Saint Line v. Richardsons Westgarth [1940] 2 KB 99. 123Gerald McMeel, THE CONSTRUCTION OF CONTRACTS – INTERPRETATION, IMPLICATION AND RECTIFICATION (Oxford University Press 2011, 2nd Ed.) 81. 124 Sucden Financial v. Fluxo-Cane Overseas Ltd. [2010] EWHC 2133 (Comm.); See also, Marex Financial Ltd. v. Fluxo-Cane Overseas Ltd. [2010] EWHC 2690 (Comm.); Tradigrain SA v. Internek Testing Services [2007] EWCA Civ. 154. 125 Goldman v. Thai Airways [1983] 1 WLR 1186; See also, Red Sea Tankers Ltd. v. Papachristidis [1997] 2 Lloyd’s Rep. 547. 126 Refer to Issue II. 127 Julian Cooke et. al., VOYAGE CHARTER (Informa 2007, 3rd Ed.) 613; See also, Smith v. Tregarthen (1887) 56 L.J.Q.B. 437



caused any breach.128 Considering the Spot tanker Market Report of Week 48, it is evident that

the market had thin availability of VLCCs and the prices for Suez maxes were on a high end.

Also, the rates for VLCC in the 48th week were also higher compared to the 47th week. Although

the owners gave the charterers an option to continue on the same terms with another sister VLCC

of Reliable Butterfly, the charterers chose to go with the two Suez maxes for a much higher rate.

Considering the market scenario, the choice to pay an extra USD 824,000 was not prudent.

D. ALTERNATIVELY, SET OFF IS NOT ALLOWED AGAINST FREIGHT ACCRUED

54. If the tribunal is of the opinion that advance freight is recoverable, it is submitted that as a

defense to a claim for freight, the claimant is not entitled to set-off for damage suffered by him

by reason of some breach of contract by the defendant for causing loss or damage.129 The

principle of no set-off against freight applies to all categories of breach130 including both a

repudiatory and a non-repudiatory breach of the charter party.131 In light of this rule, it is

submitted that even if there has been a repudiatory breach of the charter party, the charterers are

not allowed to set-off the damages against the right to freight accrued of the owners.

128 The Athenian Harmony [1998] 2 Lloyd’s Rep. 35. 129 Aries Tanker Corp. v. Total Transport Ltd. — “The Aries” [1977] 1 All ER 398. 130 Elena Shipping Ltd. v. Aidenfield Ltd. [1986] 1 Lloyd's Rep. 425. 131 Colonial Bank (Now Bank of Boston Connecticut) v. European Grain and Shipping Ltd. — “The Dominique” [1989] 1 Lloyd's Rep. 431 (HL).


PRAYER | PAGE 25

PRAYER

In light of the above submissions, the owner requests the tribunal to declare:

(i) That the tribunal has the jurisdiction to adjudge the present dispute.

(ii) The arbitration was validly commenced in the first reference.

(iii) The approach voyage to the loading port had commenced on 19th November 2011.

(iv) The Charter was automatically cancelled without recourse on 27th November 2011,

relieving both the parties of all liabilities.

(v) 95% of freight was deemed earned on 19th November 2011 and is due to the owner.

To adjudge:

(i) The owners are not in breach of the charter.

(ii) The charters are in breach of the charter by failing and refusing to pay the advance

freight.

And therefore award the owner:

(i) USD 4,935,368.75 as freight, or alternatively the same amount as damages.

(ii) Interest on a compound interest basis pursuant to s. 49 of the Arbitration Act, 1996.

(iii) Costs with compound interest on costs; and

(iv) Any other relief as deemed fit.

INTERNATIONAL MARITIME LAW A MOOT 2014

Documents

Transcript of INTERNATIONAL MARITIME LAW A MOOT 2014