Memorandum for CLAIMANT - Murdoch University€¦ · TEAM NO. 13 MEMORANDUM FOR CLAIMANT Nineteenth...

TEAM NO. 13 MEMORANDUM FOR CLAIMANT

Nineteenth Annual International Maritime Law Arbitration Moot, 2018

NATIONAL LAW SCHOOL OF INDIA UNIVERSITY,

BANGALORE

TEAM 13

Memorandum for CLAIMANT

On behalf of

Cerulean Beans and Aromas Ltd 945 Moccasin Road

Cerulean 9659

CLAIMANT

Against

Dynamic Shipping LLC 23 Fuchsia Crescent

Cerulean 1268

RESPONDENT

TEAM

AKASH DEEP SINGH KSHITIJ SHARMA YASH SINHA

BANGALORE INDIA

TEAM NO. 13 MEMORIAL FOR CLAIMANT

i | P a g e

TABLE OF CONTENTS

TABLE OF ABBREVIATIONS ..................................................................................................... III

TABLE OF AUTHORITIES ...........................................................................................................V

STATEMENT OF FACTS .............................................................................................................. 1

ARGUMENTS ADVANCED ........................................................................................................... 3

I. The Arbitral Panel has the Jurisdiction to Determine the Claim for Damages made

by the Claimant .................................................................................................................... 3

A. The Expert Determination provisions of the Charter Party are unenforceable. ............ 3

1. The process of appointment of the expert is not provided. ........................................ 4

2. The process of determination of expert’s remuneration is not provided. .................. 4

3. The process to be followed by the expert is also not set out in the clause. ................ 5

B. In any case, the dispute is not suitable for determination by an Expert Master

Mariner. .............................................................................................................................. 6

II. The Claimant holds a valid maritime lien on the Madam Dragonfly ......................... 7

A. There exists a seamen’s wage lien in the present case. ................................................. 7

B. The lien is subrogated to the Claimant .......................................................................... 8

C. Possession is not an essential element for a valid maritime lien ................................... 9

III. Respondent is liable to pay the Damages of USD 14,450,000 for the Breach of

Charterparty ...................................................................................................................... 10

A. Respondent is liable for the unjustified deviation ....................................................... 11

1. Respondent failed to exercise due diligence to make the ship seaworthy ............... 11

2. The defence of necessity is not available to the Respondent ................................... 13

B. Respondent is liable for the delay in delivery ............................................................. 14

1. The Solar flares do not constitute a force majeure event. ........................................ 15

2. The storm is not the effective cause of the breach ................................................... 16

C. The damages are not too remote ................................................................................. 18


ii | P a g e

V. Respondent is liable to pay USD 15,750,000 as damages for water damage to the

cargo. ................................................................................................................................... 19

A. The damage to the cargo occurred before it was delivered to Claimant. .................... 19

B. Contrary to Respondent’s contention, Art. IV(5) of the Hague Rules is not applicable

.......................................................................................................................................... 22

VI. The Claimant is not liable to pay any demurrage. ................................................... 22

A. The delay was caused by the fault of the Respondent. ............................................... 23

B. The laytime was interrupted during the movement of ship from the waiting location

to the berth. ...................................................................................................................... 24

VII. Claimant is not liable to pay the agency fees at Spectre ......................................... 24

VIII. Claimant is not liable to pay the Electronic Tag Access Fee ................................ 25

PRAYER FOR RELIEF ............................................................................................................... 25


iii | P a g e

TABLE OF ABBREVIATIONS

Hag. Adm Haggard’s Admiralty Reports

Inc Incorporated

K.B. Law Reports, King’s Bench

LJQB Law Journal, Queen’s Bench

ABBREVIATION TERM

AC Appeal Cases

AIR All India Reporter

ALL ER All England Reporter

ALR Australian Law Reports

App cas Law Reports Appeal Cases

Art. Article

Asp. M.L.C. Aspinall’s Maritime Law Cases

B&S Best and Smith’s Reports

BCC British Company Law Cases

BLR Business Law Reports

C.Rob Christopher Robinson’s Reports

Charterparty The voyage charterparty between Claimant

and Respondent

Claimant Cerulean Beans & Aromas Ltd

CLC Company Law Cases

Comc.Cas Company Cases

CommArb Commercial Arbitration

Edn. Edition

EWCA Civ. Court of Appeal of England and Wales

Decisions (Civil Division)

EWHC High Court of England and Wales

F 2d Federal Reporter (Second Series)

F. Supp 2nd Federal Supplement (Second Series)

FCA Federal Court of Australia

FCR Federal Court Reports


iv | P a g e

LLC Limited Liability Company

Lloyd’s Rep. Lloyd’s Reporter

LMAA London Maritime Arbitrators Association

LMLN Lloyd’s Maritime Law Newsletter

Ltd. Limited

Lush Lushington’s Admiralty Reports

NM Nautical Miles

NSWCA New South Wales Court of Appeal

NSWLR New South Wales Law Reports

NZLR New Zealand Law Review

P Law Reports Probate

Para./Paras. Paragraph/Paragraphs

Pg./Pgs. Page/Pages

PO 2 Procedural Order 2

QB Queen’s Bench

QBD Queen’s Bench Division, Law Reports

Qd R Queensland Reports

Respondent Dynamic Shipping LLC

SC Session Cases, Decisions of the Court of

Sessions (Scotland)

SC (HL) Session Cases (House of Lords) (Scotland)

Sec. Section

SGCA Singapore Court of Appeal

Sing HC Singapore High Court

SWAB Swabey’s Admiralty Reports

UKHL UK House of Lords

UKPC United Kingdom Privy Council Cases

USD United States Dollars

VSC Supreme Court of Victoria

W. Rob William Robinson’s Admiralty Reports

WASCA Western Australia Court of Appeal

WLR Weekly Law Report

WWD Weather Working Day


v | P a g e

TABLE OF AUTHORITIES

CASES AND ARBITRAL AWARDS REFERRED TO AT PAGE:

Academy of Health and Fitness Pty Ltd v. Power, [1973] VR

254, 265.

22

Aiton Australia Pty Ltd v. Transfield Pty Ltd, [2000] ADRLJ

342.

3, 4

American Hoesch v. Aubade, [1971] 2 Lloyd’s Rep. 423. 19

Automatic Tube Co. v. Adelaide SS. (The Beltana), [1967] 1

Lloyd’s Rep. 531.

21

Badgin Nominees Pty Ltd v. Oneida Ltd, [1998] VSC 188. 7

Bank of New Orleans v. The Tracy Marie, 455 F. Supp. 78

(W.D. La. 1978). 

8, 9

Barings PLC v. Coopers & Lybrand, [2003] EWHC 1319 (Ch) 17

Beresford v. Royal Insurance Co. Ltd., [1938] A.C. 586 24

Bofinger v. Kingsway Group Limited, [2009] HCA 44. 8

Borrowman, Phillips & Co v. Wilson & Co., (1891) 7 TLR 416. 20

Boscawen v. Bajwa, [1996] 1 W.L.R. 328. 8

BP Refinery (Westernport) Pty Ltd v. Hastings Shire Council,

[1977] HCA 40.

5

British Shipowners v. Grimond, (1876) 3 Rett. 968, 972. 19

Catley v. Wintringham, (1792) Peake 150. 19

Avon SS Co. v. Leask & Co., 1890 18 R 280. 19

Browner International Ltd. v. Monarch Shipping Co. Ltd. (The

European Enterprise), [1989] 2 Lloyd’s Rep. 185

22

Budget & Co. v. Binnington & Co., [1891] 1 QB 35. 20, 22

Burston Finance Ltd v. Speirway Ltd, (1974) 3 All ER 735. 27

Cantiere Navale Triestina v. Soviet Naphtha Export Agency

(The Dora), 1925 2 KB 172.

22

Channel Tunnel Group Ltd v. Balfour Beatty Construction,

Ltd, [1993] AC 334.

3

Chartered Bank v. British India S.N. Co., [1909] A.C. 369, 375. 19

Cil & Ors v. First National Bank of Maryland 8

http://www.austlii.edu.au/au/cases/cth/HCA/2009/44.html


vi | P a g e

(‘The Turiddu’), [1999] C.L.C. 1737.

Citibank N.A. v. Hobbs Savill & Co. Ltd. (The Panglobal

Friendship), [1978] 1 Lloyd's Rep. 368

10

Clark v. Bowring & Company, 1908 SC 1168. 9

Codelfa Construction Pty Ltd v. State Rail Authority of NSW,

[1982] HCA 24.

5

Compania Naviera Termar v. Tradax Export S.A. (The Ante

Topic), [1966] 1 Lloyd’s Rep. 566.

24

Computershare Ltd v. Perpetual Registrars Ltd, [2000] VSC 233. 3, 4

Copeland v. Baskin Robbins USA, 96 Cal App 4th 1251. 3

Cott UK Ltd v. FE Barber Ltd., (1997) 3 All ER 540. 6

Courtney & Fairbairn Ltd v. Tolaini Bros (Hotels) Ltd, [1975] 1

WLR 297, 301–2T.

3

Daniel Harmer v. William Errington Bell (The

Bold Buccleugh), (1852) 7 Moo.P.C.267.

9, 10

Devonport Borough Council v. Robbins [1979] 1 NZLR 1 (CA). 3

Dick Bentley Productions Ltd v. Harold Smith (Motors) Ltd.,

[1965] 1 WLR 623, 628.

22

Elizabeth Bay Development Pty Limited v. Boral Building

Services Pty, [1997] ADRLJ 105.

3, 4

Ellul v. Oakes, (1972) 3 SASR 377, 381. 22

Eridania SpA v. Rudolf A. Oetker (The Fjord Wind), [1999] 1

Lloyd’s Rep. 307

11

Eriksen v. Barkworth, (1858) 3 H. & N. 601, 606. 2

Exall v. Patridge, (1799) 8 T.R. 208. 9

Filby v. Mortgage Express, [2004] EWCA Civ 759. 9

Fletcher Construction Australia Ltd v. MPN Group Pty

Ltd, (Unreported, Supreme Court of New South Wales, 14 July

1997).

4

Galoo v. Bright Grahame Murray, [1994] 1 W.L.R. 1360 16

Gatliffe v. Bourne, (1838) 4 Bing. N.C. 314 20

Gem Shipping Co of Monrovia v. Babanaft (The Fontevivo),

[1975] 1 Lloyds Rep 339.

22

https://login.westlawindia.com/maf/wlin/app/document?src=doc&linktype=ref&&context=161&crumb-action=replace&docguid=I87645D10E42711DA8FC2A0F0355337E9


http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281997%29%203%20All%20ER%20540


vii | P a g e

Glouchester Mut. Fishing Ins. Co. v. Hall, 210 Mass. 332, 96

N.E. 679 (1911).

19

Gorris v. Scott, (1874) L.R. 9 Ex. 125 12

Grange & Co. v. Taylor, (1904) 9 Asp. MLC 559. 20

Hartford Fire Insurance Co. v. OOCL Bravery, [2000] 1 Lloyd's

Rep. 394

22

Holloway v. Chancery Mead Ltd, [2007] ADR.L.R. 07/30. 3, 4, 5

Howard v. Shepherd, (1850) 9 CB 297. 21

In Re Welsh Irish Ferries Ltd. Chancery Division, [1986] Ch.

471.

10

Kish v. Taylor, [1912] A.C. 604 13

Langham SS Co. Ltd. v. Gallagher, [1911] 12 Asp MLC 109. 20

Leaf v. International Galleries, [1950] 2 KB 86, 89. 22

Leyland Shipping Co. v. Norwich Union Fire Insurance Society,

[1918] A.C. 350

16

Lord Napier and Ettrick v. Hunter, (1993) 1 All ER 385. 8

Meyerstein v. Barber, (1866) LR 2 CP 38. 21

Monarch S.S. Co. v. Karlshamns, [1949] A.C. 196 13

Morgan v. Castlegate Steamship Co, (1893) AC 38. 7

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

46.

21

Nea Agrex S.A. v. Baltic Shipping Co. Ltd (The Agios Lazarus),

[1976] Q.B. 933

22

New South Wales v. Banabelle Electrical Pty Ltd, [2002]

NSWSC 178.

4

Oliver v. Colven, (1879) 27 WR 822. 20

Pacific Milk Industries v. Koninklinjke Jaya (Royal Interocean

Lines) and Federal Shipping and Forwarding Agency, [1973] 3

Lloyd’s Rep 49.

20

Papera Traders Co. Ltd. v. Hyundai Merchant Marine Co. Ltd.

(The Eurasian Dream), [2002] 1 Lloyd’s Rep. 719

11

Petersen v. Freebody & Co., [1895] 2 QB 294. 20

Petrocochino v. Bott, (1874) LR 9 CP 355. 20


viii | P a g e

Postlewaith v. Freeland, 1880 5 App Cas 599. 22

Procter, Garrett, Marston v. Oakwin SS. Co., [1926] 1 K.B. 244. 21

Raskin v. Mediterranean Olives Estate Limited & Ors, [2017]

VSC 94.

3, 4, 5

Re Dawdy and Hartcup, (1885) 15 QBD 426. 6

Re Downer Enterprises Ltd, (1974) 2 All ER 1074. 8

Richie Co LLP v. Lyndon Ins Group Inc, 2001 WL 1640039. 3

Robinson v. Harman, (1848) 1 Ex. 850 18

Schoffman v. Cent States Diversified, Inc, 69 F3d 215, 221 (8th

Cir 1995).

3

Sig Bergesen v. Mobil Shipping and Transportation Co (The

Berge Sund), 1993 2 Lloyds Rep 453.

22

Strongman Ltd. v. Sincock, [1955] 2 Q.B. 525 24

The Arawa [1977] 2 Lloyd’s Rep. 416. 21

The Gonzenheim, 36 F.2d 869 12

The Louise, 58 F. Supp. 445 (D. Md. 1945). 14

The Ripon City, [1897] P 226. 10

The Roseina, 1937 A.M.C. 359 (S.D.N.Y.) 12

The Sormovskiy 3068, [1994] 2 Lloyd’s Rep. 266. 20

The St. Georg, 95 F. 172, 177 (D.S.C. 1899). 19

The Sydney Cove, (1815) 2 Dods 11. 8

The Tagus, [1903] P. 44. 9

The Toledo, [1995] 1 Lloyd’s Rep. 40 11

The Wildomino, (1927) 272 U.S. 718 13

The Petone, [1917] P. 198. 9

Total Transport Co of Panama v. Amoco Transport Co (The

Altus), 1985 1 Lloyds Rep. 423.

23

Triarno Pty Ltd v. Triden Contractors Ltd, (1992) 10 BCL 305 at

307.

4

Turner, Nott v. Bristol Corporation (1928) 31 Ll. L. Rep. 359. 21

Versloot Dredging BV v. HDI-Gerling Industrie Versicherung

AG (The DC Merwestone), [2013] 2 Lloyd’s Rep. 131

11

Wardell v. Mourillyan, (1798) 2 Esp 693. 20

https://login.westlawindia.com/maf/wlin/app/document?src=doc&linktype=ref&&context=32&crumb-action=replace&docguid=I1E4DA240E42811DA8FC2A0F0355337E9


ix | P a g e

William Alexander v. Akt Hansa, 1920 AC 88. 22

Yemgas FZCO v. Superior Pescadores S.A. (Superior

Pescadores), [2016] EWCA Civ 101

22

Zeke Services Pty Ltd v. Traffic Technologies Ltd, [2005] QSC 6, 7

BOOKS REFERRED TO AT PAGE:

ABBOTT’S LAW OF MERCHANT SHIPS AND SEAMEN (14th edn.). 19

CHITTY ON CONTRACTS (H.G. Beale et al eds., 31st edn., Sweet &

Maxwell, 2012).

18

E. Peel, TREITEL: THE LAW OF CONTRACT (14th edn., Sweet &

Maxwell, 2014).

17

G. Born, INTERNATIONAL COMMERCIAL ARBITRATION (2nd edn.,

Kluwer Arbitration, 2014).

3

HALSBURY’S LAWS OF ENGLAND, Vol. 43 (4th edn.,

Butterworths, 1983)

19

J. Cooke et al, VOYAGE CHARTERS (4th edn., Informa Law from

Routledge, 2014).

12, 13

J.F.Wilson, CARRIAGE OF GOODS BY SEA (7th edn. Pearson,

2010).

19

HALSBURY’S LAWS OF ENGLAND, Vol. 94 (5th edn.,

Butterworths, 2008).

10

P. Brodie, DICTIONARY OF SHIPPING TERMS (3rd edn., LLP,

1997).

6

P.K. Mukherjee & M. Brownrigg, FARTHING ON INTERNATIONAL

SHIPPING (4th edn. Springer, 2013)

12

REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION (6th

edn., Blackaby et al. eds., 2015) .

4

V.H. Chacón, THE DUE DILIGENCE IN MARITIME

TRANSPORTATION IN THE TECHNOLOGICAL ERA (Springer, 2017).

12, 13


x | P a g e

ARTICLES REFERRED TO AT PAGE:

A. Jolles, Consequences of Multi-tier Arbitration Clauses: Issues

of Enforcement, (2006) 72 Arbitration 329–338.

4

G. Born & M. Scekic, Pre-Arbitration Procedural Requirements

‘A Dismal Swamp’, (2015).

3

R. Hunt, The Law relating to Expert Determination, available at

http://www.roberthuntbarrister.com/ExpertDetLawApril2008.pdf

(2008).

6

F.G. McKean Jr., The Presumption of Legal Knowledge, 12(2)

ST. LOUIS LAW REVIEW (1927).

14

K. Grant, Expert Determination and the Enforceability of ADR

Generally, 12 (2010).

3

W. Tetley, Assignment and Transfer of Maritime Liens: Is There

Subrogation of the Privilege, 15 JOURNAL OF MARITIME LAW &

COMmerce (1984).

8

STATUTES REFERRED TO AT PAGE:

Merchant Shipping Act, 1995 (UK). 7

TREATIES AND CONVENTIONS

REFERRED TO AT PAGE:

Liens and Mortgages Convention, 1967. 8

International Convention for the Unification of Certain Rules of

Law relating to Bills of Lading, 1924 “Hague Rules”

22


xi | P a g e

QUESTIONS RAISED

I. Whether the Arbitral Tribunal has the Jurisdiction to Determine the Claim for Damages

made by the Claimant?

II. Whether the Claimant holds a valid maritime lien on the Madam Dragonfly?

III. Whether the Respondent is liable to pay the Damages of USD 14,450,000 for the Breach

of Charterparty?

V. Whether the Respondent is liable to pay USD 15,750,000 as damages for water damage to

the cargo?

VI. Whether the Claimant is liable to pay any demurrage?

VII. Whether the Claimant is liable to pay the agency fees at Spectre?

VIII. Whether the Claimant is liable to pay the Electronic Tag Access Fees?


1 | P a g e

STATEMENT OF FACTS

THE PARTIES AND THE CONTRACT OF AFFREIGHTMENT

1. Cerulean Beans and Aromas (Claimant) is a supplier of high grade coffee beans, based in

Cerulean. It contacted Dynamic Shipping LLC (Respondent), a charter company, also based

in the State of Cerulean. Claimant sought to use Respondent’s services for the transport of

rare, high quality, specialty green coffee beans from Cerulean to Dillamond.

PERFORMANCE OF THE CHARTERPARTY

2. On or about 22 July 2017, the Respondent as “Owner” and the Claimant as “Charterer”

negotiated a voyage charter (the “Charterparty”) for the services of the Madam Dragonfly

(the ship). On the request of the Respondent and supplementing the Charter, USD 100,000

was deposited by the Claimant in an account earmarked for the purposes of paying the crew’s

wages.

3. The said cargo was delivered to the Respondent by 24 July 2017, following which it was

loaded on the vessel after application of sealants. As per the Charterparty, the delivery of

cargo to the destination port was scheduled for 28 July 2017 by 7:00 PM. Respondent had

intimated Claimant that the expected time of arrival was 5 PM on the same day.

4. The scheduled delivery was negotiated upon considering the Claimant’s obligations

towards a third party that required the cargo for an event spanning from midday 29 July 2017

to 12 A.M., 31 July 2017.

5. The vessel made an unexpected deviation from the decided route, purportedly because of

disruption in communications by virtue of solar flares. Consequently, the arrival of the vessel


2 | P a g e

on the destination port was delayed. Its berthing was further delayed due to a torrential rain-

storm that compelled the port to close.

6. The berthing finally took place on 29 July 2017 but the delivery occurred on 31 July 2017

as the Claimant was unable to access the cargo left by the Respondent’s vessel. As per expert

opinion, the coffee beans in three of the containers were completely damaged. In furtherance

of discharging obligations to the third party, the Claimants incurred charges for procuring

replacements for the same. Furthermore, the vessel’s crew remained unpaid post completion

of the said voyage. The Charterparty contains an arbitration clause, which provides that any

dispute arising out of the same shall be referred to Arbitration in London in accordance with

the Arbitration Rules of the London Maritime Arbitrators Association.

THE NOTICE OF CLAIMS AND THE ARBITRATION PROCEEDINGS

8. On 11 August, 2017, the Claimant referred the dispute to arbitration as per the arbitration

clause in the Charterparty. The Claimant appointed an arbitrator under the first reference on

the same day.

THE CLAIMS

9. The Claimant contends that the Respondent is in breach of the charter due to the

unjustified deviation undertaken by them, failure to timely deliver the cargo and damage

caused to the same. Hence, the same is claimed as damages in addition to holding a lien on

the vessel for the security amount of USD 100,000. Additionally, all but the accepted

counter-claims of Respondent are denied.

The proceedings have been conjoined, and are being brought together for the tribunal’s

reference.


3 | P a g e

ARGUMENTS ON JURISDICTION OF THE TRIBUNAL

I. THE ARBITRAL PANEL HAS THE JURISDICTION TO DETERMINE THE CLAIM FOR

DAMAGES MADE BY THE CLAIMANT

1. The Voyage Charterparty provides that “any dispute arising out of or in connection with this

contract” shall be referred to Arbitration by a tribunal of 3 arbitrators in accordance of

LMAA Rules.1 On 7 September, 2017, the Arbitral Tribunal was constituted.2 The

Respondent has objected to the jurisdiction of the arbitral tribunal and claims that the disputes

should be referred to expert determination. However, it is submitted that the tribunal has

jurisdiction to decide the claim for damages. This is because the expert determination

provisions i.e Clause 27(d) and (e) of the Charterparty are void for uncertainty.[A] In any

case, the dispute is not suitable for determination by an expert master mariner.[B]

A. The Expert Determination provisions of the Charter Party are unenforceable.

2. A dispute resolution clause has to be sufficiently certain to give rise to any binding

obligation.3 It is a settled position of law that a clause needs to meet certain minimum

requirements to be sufficiently certain and enforceable.4 It is submitted that the expert

determination provisions of the Charterparty do not meet these minimum requirements and

thus, are void for uncertainty. This is because, first, the process of appointment of the expert

1 Moot Scenario, Pg. 12, Clause 27(a). 2 PO 2, Pg. 3, Para. 23. 3 G. Born & M. Scekic, Pre-Arbitration Procedural Requirements ‘A Dismal Swamp’, 12 (2015); G. Born,

INTERNATIONAL COMMERCIAL ARBITRATION, 70-93 (2nd edn., 2014); Channel Tunnel Group Ltd v. Balfour

Beatty Construction Ltd, [1993] AC 334 ; Schoffman v. Cent States Diversified, Inc, 69 F3d 215, 221 (8th Cir

1995); Richie Co LLP v. Lyndon Ins Group Inc, 2001 WL 1640039; Copeland v. Baskin Robbins USA, 96 Cal

App 4th 1251; Courtney & Fairbairn Ltd v. Tolaini Bros (Hotels) Ltd, [1975] 1 WLR 297, 301–2T; K. Grant,

Expert Determination and the Enforceability of ADR Generally, 12 (2010); Devonport Borough Council v.

Robbins [1979] 1 NZLR 1 (CA). 4 Holloway v. Chancery Mead Ltd, [2007] ADR.L.R. 07/30; Elizabeth Bay Development Pty Limited v. Boral

Building Services Pty [1997] ADRLJ 105; Aiton Australia Pty Ltd v. Transfield Pty Ltd, [2000] ADRLJ 342;

Computershare Ltd v. Perpetual Registrars Ltd, [2000] VSC 233; Raskin v. Mediterranean Olives Estate

Limited & Ors, [2017] VSC 94.


4 | P a g e

is not provided.[1] Second, the process of determination of his remuneration is not

provided.[2] Third, the process to be followed by the expert is also not set out.[3]

1. The process of appointment of the expert is not provided.

3. A dispute resolution clause in the form of an agreement to agree will be void for uncertainty.5

The first requirement for attaining certainty is that the dispute resolution clause should clearly

define the administrative process for selection of the third party to resolve the dispute.6 In a

case wherein the contract provided for the reference of disputes to expert determination but

failed to provide a mechanism for appointment of the expert in default of agreement between

the parties, the reference to expert determination was declared to be void for uncertainty.7 In

the instant case, the Charterparty provides for the reference of disputes to expert

determination but failed to provide a mechanism for appointment of the expert. Thus, it is

submitted that the process to which the parties committed themselves is unworkable and

unenforceable.

2. The process of determination of expert’s remuneration is not provided.

4. The second requirement for a clause to be sufficiently certain and enforceable is that a

dispute resolution clause should clearly define the process of determination of expert’s

remuneration.8 However, in the instant case, there are no provisions in the Charterparty

dealing with the remuneration of the expert. The lack of a provision setting out a mechanism

5 REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION, 100 (6th edn., Blackaby, et al. eds., 2015). 6 A. Jolles, Consequences of Multi-tier Arbitration Clauses: Issues of Enforcement, (2006) 72 ARBITRATION

329–338; Holloway v. Chancery Mead Ltd, [2007] ADR.L.R. 07/30; Elizabeth Bay Development Pty Limited v.

Boral Building Services Pty [1997] ADRLJ 105; Aiton Australia Pty Ltd v. Transfield Pty Ltd, [2000] ADRLJ

342; Computershare Ltd v. Perpetual Registrars Ltd, [2000] VSC 233; Raskin v. Mediterranean Olives Estate

Limited & Ors, [2017] VSC 94; New South Wales v. Banabelle Electrical Pty Ltd, [2002] NSWSC 178; Triarno

Pty Ltd v Triden Contractors Ltd, (1992) 10 BCL 305 at 307; Fletcher Construction Australia Ltd v. MPN

Group Pty Ltd (Unreported, Supreme Court of New South Wales, 14 July 1997). 7 New South Wales v. Banabelle Electrical Pty Ltd, [2002] NSWSC 178. 8 Holloway v. Chancery Mead Ltd, [2007] ADR.L.R. 07/30; Elizabeth Bay Development Pty Limited v. Boral

Building Services Pty [1997] ADRLJ 105; Aiton Australia Pty Ltd v. Transfield Pty Ltd, [2000] ADRLJ 342;

Computershare Ltd v. Perpetual Registrars Ltd, [2000] VSC 233; Raskin v. Mediterranean Olives Estate

Limited & Ors, [2017] VSC 94.


5 | P a g e

for apportionment of the expert’s costs will add to the uncertainty around the dispute

resolution clause. It may be argued that the term should be implied to the effect that the

parties would jointly share the reasonable remuneration of the expert. However, it is

submitted that such a term cannot be impliedly read into the Charterparty. This is because it

does not meet the conditions necessary to ground the implication of a term in a contract.

5. It is established that a term can be impliedly read into a contract only if it is necessary to give

business efficacy to the contract or it is so obvious that “it goes without saying”.9 In the

instant case, the term dealing with the equal sharing of the remuneration of the expert does

not meet any of the above mentioned conditions. This is because, first, the expert

determination provisions of the Charterparty are dispensable. Second, the clause is not so

obvious as there are multiple possible methods of apportionment that the parties can adopt.

3. The process to be followed by the expert is also not set out in the clause.

6. The third requirement for a clause to be enforceable is that a process or at least a model of the

process is set out so that the detail of the process is sufficiently certain.10 In the instant case,

the expert determination provisions of the Charterparty do not provide any details regarding

the procedure that needs to be followed by the expert. It merely provides that the expert

determination has to be done by an independent master mariner. The absence of procedural

rules is remarkable, especially, in the instant case as there are mixed questions of law and fact

involved in the dispute.11 It will cause uncertainties as to the powers conferred on the expert.

This will repeatedly cause problems during any attempt to resolve the dispute by this means.

9 Codelfa Construction Pty Ltd v. State Rail Authority of NSW, [1982] HCA 24; BP Refinery (Westernport) Pty

Ltd v. Hastings Shire Council, [1977] HCA 40. 10 Holloway v. Chancery Mead Ltd, [2007] ADR.L.R. 07/30; Raskin v. Mediterranean Olives Estate Limited &

Ors, [2017] VSC 94. 11 Raskin v. Mediterranean Olives Estate Limited & Ors, [2017] VSC 94.


6 | P a g e

7. Therefore, on the basis of the above mentioned submissions, it is submitted that the expert

determination provisions of the Charterparty should be declared void for uncertainty and

thus, unenforceable.

B. In any case, the dispute is not suitable for determination by an Expert Master

Mariner.

8. It has been held that disputes which are multifarious and involve mixed questions of law and

fact are less amenable to be resolved by expert determination.12 This is because expert applies

only his own store of knowledge, his expertise, to his observations of facts, which are of a

kind with which he is familiar.13 In the instant case, the dispute in question between the

parties involves mixed questions of fact and law. It is likely to involve the following

questions for determination: first, question of interpretation of Clause 17 of the Charterparty.

Second, when was the delivery deemed to be complete. Lastly, there is the question of the

quantum of damages and limitation of liability of shipowner.

9. In the instant case, Clause 27(d) provides that disputes shall be referred to an independent

master mariner for expert determination.14 “Master Mariner” means a seaman who is

certified to be competent to command a merchant ship.15 Thus, his area of expertise will be

limited to the matters relating to technicalities of operation of a ship. He is not properly

equipped to determine as an expert the above mentioned issues which involve fundamental

questions of law and interpretation of contracts.16 It could not have been the common

intention of the parties to refer such complex disputes involving mixed questions of fact and

12 Zeke Services Pty Ltd v. Traffic Technologies Ltd, [2005] QSC 135. 13 R. Hunt, The Law relating to Expert Determination, 12, available at

http://www.roberthuntbarrister.com/ExpertDetLawApril2008.pdf (2008) (Last visited at 17 April 2018); Re

Dawdy and Hartcup, (1885) 15 QBD 426. 14 Moot Scenario, Pg. 12, Clause 27(d). 15 P. Brodie, DICTIONARY OF SHIPPING TERMS, 123 (3rd edn., 1997). 16 Cott UK Ltd v. FE Barber Ltd (1997) 3 All ER 540.

http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281997%29%203%20All%20ER%20540


7 | P a g e

law to an untrained and inexperienced person in that field.17 Therefore, it is submitted that the

nature of disputes in the instant case are not suitable for determination by the master mariner

and should be determined by the Arbitral Tribunal.

ARGUMENTS ON THE MERITS OF THE CLAIM

II. THE CLAIMANT HOLDS A VALID MARITIME LIEN ON THE MADAM DRAGONFLY

10. The Claimant, on request of Respondent, deposited the crew’s wages in a separate bank

account prior to the voyage.18 However, the Respondent failed to pay the wages and has not

even repaid the Claimant.19 Therefore, it is submitted that the Claimant holds a valid

maritime lien over the Madam Dragonfly primarily due to non-payment of wages to the crew.

11. This is because, first, there exists a lien on the ship due to this being a seamen’s claim.[A]

Second, this lien was subrogated to the Claimant due to the advance payment of USD

100,000 as security for crew’s wages.[B] Lastly, the lien is valid since possession is not an

integral element of a maritime lien.[C]

A. There exists a seamen’s wage lien in the present case.

12. The unpaid wages of the crew give rise to a maritime lien in the present case.20 It has been

established that irrespective of any legislation in place, the wages that have been earned on

board the ship can subject it to a maritime lien.21 Hence, the contract with the crew is not the

basis of the lien in such cases. A seaman would include every person, employed or engaged

17 Per Gillard J, Badgin Nominees Pty Ltd v. Oneida Ltd, [1998] VSC 188; Zeke Services Pty Ltd v. Traffic

Technologies Ltd, [2005] QSC 135;. 18 Moot Scenario, Pg. 1. 19 Moot Scenario, Pg. 36. 20 Moot Scenario, Pg. 36. 21 Morgan v. Castlegate Steamship Co, (1893) AC 38.


8 | P a g e

in any capacity on board any ship.22 Therefore, the crew of the ship in the instant case

qualifies as such.

13. A seaman's entitlement to a lien over the ship on which he served for his unpaid wages is

very well recognised in common law.23 The lien is in the nature of a remedy, and the crew

members are entitled to a claim against the shipowners for the sums due to them, or

alternatively maintain a maritime lien over the ship.24 Once in existence, the lien continues to

co-exist with the ship.25 Hence, in the instant case, there exists a valid seaman’s lien.

B. The lien is subrogated to the Claimant

14. An equitable lien can be successfully created either by relationship of the parties or through

subrogation.26 The relationship between the Claimant and the crew was similar to an

insurance agreement. In the present case, the lien of crew for their unpaid wages was

subrogated to the Claimant. Subrogation implies that a payment made to satisfy the claims of

a debtor gives the payer a right in equity to enforce the creditor’s claims.27 Therefore,

consequent to the deposit of security in advance, 28 the Claimant has the same rights as held

by the crew. Subrogation is an equitable doctrine which affords a remedy which has its basis

in the redress of an unconscionable conduct.29 The said principle has been widely recognised

in common law with respect to maritime liens.30 It is a settled proposition of law that this

equitable right of subrogation can arise independently of any contract.31

22 Sec. 313, Merchant Shipping Act, 1995 (UK). 23 Cil & Ors v. First National Bank of Maryland (‘The Turiddu’), [1999] 2 Lloyd's Rep. 401. 24 Bank of New Orleans v. The Tracy Marie, 455 F. Supp. 78 (W.D. La. 1978). 25 The Sydney Cove, (1815) 2 Dods 11. 26 Lord Napier and Ettrick v. Hunter (1993) 1 All ER 385. 27 Burston Finance Ltd v. Speirway Ltd (1974) 3 All ER 735. 28 Moot Scenario, Pg. 31. 29 Bofinger v. Kingsway Group Limited, [2009] HCA 44. 30 Art. 9, Liens and Mortgages Convention, 1967; William Tetley, Assignment and Transfer of Maritime Liens:

Is There Subrogation of the Privilege, 15 J. MAR. L. & COM. 393, 401 (1984). 31 Re Downer Enterprises Ltd, (1974) 2 All ER 1074.

http://www.austlii.edu.au/au/cases/cth/HCA/2009/44.html


9 | P a g e

15. Even if the above contention is to be rejected, it is submitted that subrogation took place to

remedy unjust enrichment in the present case. It is established that subrogation operates in

equity so as to reverse unjust enrichment.32 This case is one of unjust enrichment, since the

security paid was to save an inevitable expense of the Respondent by enabling him (a debtor)

to pay his creditor (crew).33 However, the said obligation was not discharged and hence, the

Respondent has unjustly enriched from the security. Subrogation as a remedy operates

whenever a claimant advances a certain payment and this improves the financial position of a

defendant, relieving him of a financial burden thus, leading to unjust enrichment.34

16. It has been previously held in common law that the party whose disbursements were paid for

by the payer, transfers its rights to the payer with regard to the same.35 Therefore, a person

who advances monies to pay a crew's wages is entitled to a maritime lien of the same rank as

a wage claim, which outranks a preferred mortgage.36 Respondents might argue that the

prevailing position37 in common law is opposed to subrogation of wage liens. However, the

case Clark v. Bowring & Company38 states, The Petone39 is inapplicable since in that case

there had been no contractual or constructive assignment of the crew’s rights to the payer.40

However, in the instant case, there has been an agreement to the same effect.41 Therefore, it is

submitted that the subrogation in the present case is in accordance with common law.

C. Possession is not an essential element for a valid maritime lien

17. Respondent may argue that the Claimant lacks a lien claim due lack of possession on the

vessel. However, it has been established that a maritime lien is different from a common law

32 Boscawen v. Bajwa, [1996] 1 W.L.R. 328. 33 Exall v. Patridge, (1799) 8 T.R. 208. 34 Filby v. Mortgage Express, [2004] EWCA Civ 759. 35 The Tagus, [1903] P. 44. 36 Bank of New Orleans v. The Tracy Marie, 455 F. Supp. 78 (1978). 37 The Petone, [1917] P. 198. 38 Clark v. Bowring & Company, 1908 SC 1168. 39 The Petone, [1917] P 198. 40 The Petone, [1917] P 198. 41 Moot Scenario, Pgs. 1& 8.

https://login.westlawindia.com/maf/wlin/app/document?src=doc&linktype=ref&&context=32&crumb-action=replace&docguid=I1E4DA240E42811DA8FC2A0F0355337E9

http://www.austlii.edu.au/cgi-bin/LawCite?cit=%5b1917%5d%20P%20198?stem=0&synonyms=0&query=hako

http://www.austlii.edu.au/cgi-bin/LawCite?cit=%5b1917%5d%20P%20198?stem=0&synonyms=0&query=hako


10 | P a g e

possessory lien which depends on the right to retain chattel pending payment of an

outstanding obligation for services rendered.42 Maritime lien is a privileged claim upon a

thing in respect of a service done to it or injury caused by it, to be carried into effect by legal

process in rem.43 In other words, it enables the holder of the maritime lien to enforce the

judgment against the property in respect of which the claim is brought and disregard

possession.44

18. A maritime lien has never been considered to be a true possessory lien.45 It exists

independently of possession and gives rise to a charge, but it arises by operation of law, out

of the relationship between the parties and not out of an express contract.46 The essence of a

maritime lien was expressed concisely by the court in The Bold Buccleugh47 as a right, which

‘travels’ with the ship into whose possession it may go to subsequently and hence, it is not

possessory in nature. Therefore, the maritime lien cannot be invalidated on grounds of lack of

possession. In conclusion, on the basis of the abovementioned submissions, it is submitted

that the Claimant holds a valid maritime equitable lien on the Madam Dragonfly.

III. RESPONDENT IS LIABLE TO PAY THE DAMAGES OF USD 14,450,000 FOR THE BREACH

OF CHARTERPARTY

19. It is submitted that the Respondent is liable to pay USD 9,450,000 for replacement coffee

payment and USD 5,000,000 for the settlement payment. This is because the Respondent has

breached the Charterparty by the following acts: first, Respondent is liable for the unjustified

deviation from the agreed route.[A] Second, Respondent is liable for the delay in delivery.[B]

The establishment of even one of the above breach is sufficient to make the Respondent

42 Daniel Harmer v. William Errington Bell (The Bold Buccleugh), (1852) 7 Moo.P.C.267. 43 The Ripon City, [1897] P 226. 44 Lord Mackay of Clashfern, HALSBURY’S LAWS OF ENGLAND – SHIPPING AND MARITIME LAW, 425 (2017). 45 Citibank N.A. v. Hobbs Savill & Co. Ltd. (The Panglobal Friendship), [1978] 1 Lloyd's Rep. 368 46 In Re Welsh Irish Ferries Ltd. Chancery Division, [1986] Ch. 471. 47 Daniel Harmer v. William Errington Bell (The Bold Buccleugh), (1852) 7 Moo.P.C.267.



11 | P a g e

liable for the abovementioned damages. Further, the damages claimed by the Claimant are

not remote.[C]

A. Respondent is liable for the unjustified deviation

20. The Claimant required the Respondent to take the most direct route to Dillamond.48

Respondent had agreed to this condition.49 However, the Respondent breached its obligation

by deviating towards the port of Spectre.50 It is submitted that Respondent is liable to

Claimant for the deviation from the agreed route as Respondent failed to exercise due

diligence to make the ship seaworthy.[1] Furthermore, the defence of necessity is not

available to Respondent. [2]

1. Respondent failed to exercise due diligence to make the ship seaworthy

21. Due to solar flares, Madam Dragonfly’s communication and satellite navigation systems

became dysfunctional.51 Under these circumstances, the crew decided to deviate towards the

port of Spectre. As per the Charterparty, Madam Dragonfly can deviate for the purpose of

saving life or property (including the vessel). But, recourse to this exception is “conditional

on the exercise of due diligence to ensure the ship is seaworthy”.52

22. The standard of due diligence which is required for a particular voyage is “equivalent to the

exercise of reasonable care and skill”.53 The due diligence to be exercised depends upon the

particular circumstances of the voyage to be undertaken.54 The actions of other skilled men in

48 Moot Scenario, Pg. 2. 49 Moot Scenario, Pg. 14. 50 Moot Scenario, Pg. 18. 51 Moot Scenario, Pg. 17. 52 Moot Scenario, Pg. 9, Clause 17. 53 Papera Traders Co. Ltd. v. Hyundai Merchant Marine Co. Ltd. (The Eurasian Dream), [2002] 1 Lloyd’s Rep.

719; Versloot Dredging BV v. HDI-Gerling Industrie Versicherung AG (The DC Merwestone), [2013] 2

Lloyd’s Rep. 131. 54 Eridania SpA v. Rudolf A. Oetker (The Fjord Wind), [1999] 1 Lloyd’s Rep. 307.


12 | P a g e

similar circumstances is used as the determinative point to ascertain whether due diligence

has been exercised or not.55

23. First, the Respondent is a Cerulean based company56 and the journey was from Cerulean to

Dillamond. An alert had been issued by NASA, on 18 July 2017, for the Cerulean region that

heavy solar flare activity was to be expected over the next two weeks. NASA had further

suggested that back-up arrangements should be made by all those who rely on radio or

satellite communication systems.57 The journey which was undertaken by Madam Dragonfly

was within this two week period.

24. It is incumbent upon a shipowner while preparing the ship for a voyage to consider the sea

perils and vicissitudes he may encounter.58 Solar flares had been regularly causing

disruptions for the week prior to 18 July 2017 with the incident on 18 July being the 10th one

in this period.59 Hence, under these particular circumstances, a reasonable shipowner would

have made enquiries about the solar flares and would have made provisions to have physical

maps of the current journey placed on-board. Respondent did not make the provisions and

therefore, failed to exercise due diligence.

25. Secondly, the Respondent failed to observe statutory duty. Madam Dragonfly’s

communication and satellite systems were out of order for a period of 17 hours. As Madam

Dragonfly is a Cerulean flagged vessel,60 if its systems were in compliance with the current

Cerulean regulations, they would have re-connected as soon as the solar flares had stopped.61

Compliance with a statutory requirement which is for the safety of the ship is also an aspect

55 The Toledo, [1995] 1 Lloyd’s Rep. 40. 56 PO 2, Pg. 1, Para. 1. 57 Moot Scenario, Pg. 35. 58 The Gonzenheim, 36 F.2d 869; The Roseina, 1937 A.M.C. 359 (S.D.N.Y.). 59 Moot Scenario, Pg. 35. 60 Moot Scenario, Pg. 37. 61 Moot Scenario, Pg. 35.


13 | P a g e

of seaworthiness.62 Respondent’S failure to ensure that the Madam Dragonfly’s navigation

and communication systems are in compliance with the prescribed regulations again shows a

lack of due diligence on its part. In any event, proper equipment which allows the vessel to

navigate safely is a very important element of its seaworthiness.63 Practicing due diligence in

this regard should be taken to mean that equipment is in proper working condition with all of

its components present.64

26. As submitted above, the Respondent has failed to exercise due diligence to make the ship

seaworthy: first, by neglecting to provide backup hardcopy maps and, secondly, by not

providing proper navigation and communication equipment. Hence, it cannot rely on the

exception present in Clause 17 of the Charterparty. As a consequence, the deviation towards

the Port of Spectre was unjustified and Respondent is liable for the same.

2. The defence of necessity is not available to the Respondent

27. The Respondent might try to justify this deviation on the threshold of necessity. A shipowner

or carrier cannot be held liable for deviation which is necessary for the safety of the vessel or

cargo. Such a deviation will be justified even though the necessity for the same arises out of

initial unseaworthiness.65 However, this exception is not applicable if the shipowner’s had

actual knowledge of the defect.66

28. The Respondent might argue that it did not have actual knowledge of the defects but,

considering the peculiar circumstances involved, this defence should not be allowed to stand.

As submitted above, the deviation was a result of two elements of initial unseaworthiness. In

62 Gorris v. Scott, (1874) L.R. 9 Ex. 125; P.K. Mukherjee & M. Brownrigg, FARTHING ON INTERNATIONAL

SHIPPING, 226 (4th edn. Springer, 2013); J. Cooke et al, VOYAGE CHARTERS, 253 (4th edn., Informa Law from

Routledge, 2014). 63 V.H. Chacón, THE DUE DILIGENCE IN MARITIME TRANSPORTATION IN THE TECHNOLOGICAL ERA, 136

(Springer, 2017). 64 V.H. Chacón, THE DUE DILIGENCE IN MARITIME TRANSPORTATION IN THE TECHNOLOGICAL ERA, 136

(Springer, 2017). 65 J. Cooke et al, VOYAGE CHARTERS, 279 (4th edn., Routledge, 2014); Kish v. Taylor, [1912] A.C. 604. 66 Monarch S.S. Co. v. Karlshamns, [1949] A.C. 196; The Wildomino, (1927) 272 U.S. 718.


14 | P a g e

respect of the failure to carry hard copy maps, it is submitted that there was prior information

available about the solar flares.67 Thus, the Respondent cannot argue that it had no knowledge

about the need to carry hardcopy maps. As for the failure to maintain proper equipment, it is

submitted that the Respondent must have been aware of the requirements under the Cerulean

National Communication Agency Regulations. In any case, ignorance of law is no excuse,68

Hence, it is submitted that the Respondent cannot avail of the defence of necessity.

29. In any event, if the deviation is due to “flagrant unseaworthiness”, any reasonably careful

and prudent owner is assumed to have knowledge about the unseaworthiness.69 Thus, if the

unseaworthiness is due to a glaring error, the standard of actual knowledge is dispensed with.

In the instant case, Respondent has failed to have back-up maps on board even after proper

warnings were given and has failed to comply with statutory regulations. Thus, flagrant

unseaworthiness is present. Hence, Respondent cannot rely on necessity as a defence. Thus,

the deviation to Spectre is unjustified and Respondent is liable for the same.

B. Respondent is liable for the delay in delivery

30. Respondent had stated that Claimant should expect the delivery of the cargo by 5 PM on 28

July 2017.70 The delivery, as per the Charterparty, had to be completed by 7 PM on 28 July

2017.71 Thus, as per Respondent’s estimation, delivery would have been completed two hours

before the appointed time. However, the Respondent has breached its obligation under the

Charterparty as the cargo was finally delivered by 1:55 PM on 31 July 2017.72 It is submitted

that the Respondent is liable for the delay because, first, the solar flares do not constitute a

force majeure event. [1] Secondly, the storm is not the effective cause of the breach.[2]

67 Moot Scenario, Pg. 35. 68 F.G. McKean Jr., The Presumption of Legal Knowledge, 12(2) ST. LOUIS LAW REVIEW 96, 96 (1927). 69 The Louise, 58 F. Supp. 445 (D. Md. 1945). 70 Moot Scenario, Pg. 15. 71 Moot Scenario, Pg. 3. 72 Moot Scenario, Pg. 37.


15 | P a g e

1. The Solar flares do not constitute a force majeure event.

31. The Respondent has taken the defence that it is not liable for the delayed delivery of the cargo

as the delay was caused by two events of force majeure, namely the solar flares and the

storm.73 Under Clause 17 of the Charterparty, neither party can be held liable for any failure,

delay or hindrance in performing its obligations where such failure, delay or hindrance is due

to a force majeure event.74 The first alleged force majeure event, i.e. the solar flare

explosions, occurred at 9:30 PM on 24 July, 2017.75 As per the Force Majeure clause in the

Charterparty, only ‘unforeseen weather events’ are covered by this clause.76 ‘Unforeseen’ has

been defined as something which is not anticipatable or predictable.77 There is no need to

have actual knowledge. As there were ample warnings in the newspaper about further solar

flare explosions, it cannot be said to be an ‘unforeseen weather event’.78

32. Even if Respondent argues that the standard of unforeseeability is lack of actual knowledge

and hence, solar flares should be considered as a force majeure event, it is submitted that for

the force majeure defence to succeed, it must be proven that the negligence of the contracting

party was not responsible for the default.79 As stated above,80 Respondent had a duty to

enquire about the perils of the impending journey. If he would have done so, he would have

known about the warning and thus, would have been able to take adequate precautions.

Hence, the solar flare explosions do not constitute a force majeure event.

73 Moot Scenario, Pg. 40. 74 Moot Scenario, Pg. 9, Clause 17. 75 Moot Scenario, Pg. 35. 76 Moot Scenario, Pg. 9, Clause 17. 77 Oxford Online Dictionary available at https://en.oxforddictionaries.com/definition/unforeseen (Last visited on

17 April 2018). 78 Moot Scenario, Pg. 35. 79 W. Swadling, The Judicial Construction of Force Majeure Clauses in FORCE MAJEURE AND FRUSTRATION OF

CONTRACT, 8 (E. McKendrick ed., 2nd edn., Informa Law from Routledge, 2013). 80 Memorandum, Para. 24.


16 | P a g e

2. The storm is not the effective cause of the breach

33. The storm hit Dillamond during the peak hours on 28 July 2017.81 Admittedly, the storm was

a force majeure event. Respondent might contend that due to the storm, the force majeure

exception present in the Charterparty is applicable to it and it cannot be held liable. However,

Respondent’S contention is incorrect as the failure to deliver the cargo by the appointed time

was due to the solar flares and Respondent’s negligence in carrying hardcopy maps.82 It is

submitted that the solar flares were the effective or dominant cause of the breach.[i] Secondly,

the storm did not act as a novus actus interveniens to break the chain of causation.[ii] Thirdly,

Respondent cannot argue that Claimant would have suffered the same loss even if there had

been no breach.[iii]

i. Solar flares were the effective or dominant cause of the breach

34. It is submitted that due to the delay caused by the solar flares, the Respondent was unable to

deliver the cargo on time. The test is whether the concerned breach was an ‘effective’ or

‘dominant’83 cause of the loss and not whether it was more immediate in time.84 The mere

fact of the storm will not excuse the Respondent as it was not the effective cause of the

breach. Due to Respondent’s negligence,85 the ship had to deviate to the port of Spectre.86

This caused a delay of 17 hours. As submitted above,87 the deviation towards Spectre is

unjustified and is one of the delays which led to the breach.

35. Further, there was another unexplained delay of 17 hours. Through an email dated 26 July

2017 at 2:32 PM, Respondent informed Claimant that due to solar flares, Madam Dragonfly

had been without communication or satellite systems for the past 17 hours. It assured the

81 Moot Scenario, Pg. 21. 82 Moot Scenario, Pg. 19. 83 Galoo v. Bright Grahame Murray, [1994] 1 W.L.R. 1360. 84 Leyland Shipping Co. v. Norwich Union Fire Insurance Society, [1918] A.C. 350. 85 Memorandum, Paras. 21- 26. 86 Moot Scenario, Pg. 17. 87 Memorandum, Para. 29.


17 | P a g e

Claimant that “the vessel is safe and en route to Dillamond.”88 In its next email on 27 July

2017 at 7:17 AM, it informed Claimant that the vessel had deviated towards the Port of

Spectre. The Respondent then informed the Claimant that the vessel will leave the Port of

Spectre shortly for Dillamond. As the communication and satellite systems were operational

again at 2:30 PM on 26 July 2017,89 the vessel should have immediately recommenced its

journey to Dillamond. But, the ship did not depart Spectre, at least, until 7:17 A.M. on 27

July 2017. Hence, there was an unexplained delay of approximately 17 hours. Thus, it is

submitted these two delays are the effective cause of the breach.

ii. The storm did not act as novus actus interveniens and breach the chain of causation

36. The Respondent might argue that the storm was an intervening act which broke the chain of

causation, i.e., the doctrine of novus actus interveniens is applicable. The question whether

there has been a break in the chain of causation is fact sensitive.90 There has already been a

combined delay of 34 hours. Even if the tribunal holds the deviation to be justifiable, there is

still an unexplained delay of 17 hours. Thus, it would have been impossible for Respondent to

deliver the cargo by 7 P.M. as there was only a two hour difference between the contractually

stipulated time and the originally estimated time of arrival. It would not have been possible

for the Madam Dragonfly to cover up a minimum 17 hours delay in two hours. Thus, the

storm was immaterial in causing the breach of the Charterparty.

iii. Claimant would have suffered the same loss even if there had been no breach

37. The Respondent might contend that the Claimant would have suffered the same loss even if

there had been no breach.91 If there would have been no solar flares then the vessel would

88 Moot Scenario, Pg. 17. 89 Moot Scenario, Pg. 18. 90 Barings PLC v. Coopers & Lybrand, [2003] EWHC 1319 (Ch). 91 E. Peel, TREITEL: THE LAW OF CONTRACT, 1170 (14 edn., Sweet & Maxwell, 2014).


18 | P a g e

have reached the port of Dillamond by 5 PM.92 Since, the storm even at 4:58 P.M. was

“about to hit Dillamond”,93 the ship would have already reached the port and would not have

been affected by the storm. Hence, the Respondent has breached the Charterparty and as

damages for the breach, is liable to Claimant for USD 5,000,000 (settlement payment) and

USD 9,450,000 (replacement coffee payment).

C. The damages are not too remote

38. Damages are compensatory in nature. The intended effect of damages is to put the claimant

back in the same position it would have been had the contract been properly performed.94

Respondent knew that the coffee beans were urgently needed for a coffee festival in

Dillamond. Claimant had explained to Respondent the importance of delivering on time and

also the need to take the most direct route to Dillamond.95 Due to Respondent’s deviation

from the agreed route and failure to deliver the coffee on time, Claimant had to buy

replacement coffee and make a settlement payment to Coffees of the World. As both of these

loses would be in reasonable contemplation of a party that knew that the coffee beans were

extremely rare in nature96 and were urgently required for a festival where they would be

displayed and utilised by over 350,000 people, Respondent should be liable for both the

replacement coffee payment, i.e. USD 9,450,000, and the settlement payment, i.e. USD

5,000,000.

92 Moot Scenario, Pg. 2. 93 Moot Scenario, Pg. 18. 94 Robinson v. Harman, (1848) 1 Ex. 850; CHITTY ON CONTRACTS, 1758 (H.G. Beale et al eds., 31st edn., Sweet

& Maxwell, 2012). 95 Moot Scenario, Pg. 2. 96 Moot Scenario, Pg. 2.


19 | P a g e

V. RESPONDENT IS LIABLE TO PAY USD 15,750,000 AS DAMAGES FOR WATER DAMAGE TO

THE CARGO.

39. The Respondent was responsible for the shipment of coffee in completely waterproof

containers.97 The Claimant had specifically informed them about the high risk of moisture

damage to the coffee.98 However, upon unpacking, Claimant discovered that the coffee inside

three out of the four containers was completely damaged by water and thus, unusable.99 The

surveyors also arrived at the same conclusion in their final inspection report.100 Further, the

Tribunal appointed an expert who opined that the cargo was damaged within 24 hours from

4:30 AM on 30 July 2017.101 It is submitted that Respondent is liable to pay damages of

USD 15,750,000 for the water damage to the cargo. This is because, first, the damage to the

cargo occurred before it was delivered to Claimant.[A] Second, Contrary to Respondent’s

submission, Art. IV(5) of the Hague Rules is not applicable.[B]

A. The damage to the cargo occurred before it was delivered to Claimant.

40. It is an established proposition of law that the shipowner remains liable for the goods under

his contract until he has made delivery to a person entitled to it.102 It has been held that

delivery occurs when “the goods are so completely under the control of the consignee that he

may do what he likes with them” 103 or when they are “placed under the absolute dominion

and control of the consignees”.104 As set out in the Statement of Defence, the Respondent has

contended that the cargo was delivered to the Claimant at 8:42 PM on 29 July 2017.105

97 Moot Scenario, Pg. 2. 98 Moot Scenario, Pg. 2. 99 Moot Scenario, Pg. 27. 100 Moot Scenario, Pg. 44. 101 Moot Scenario, Pg. 43. 102 J.F.Wilson, CARRIAGE OF GOODS BY SEA, 81 (7th edn.); ABBOTT’S LAW OF MERCHANT SHIPS AND SEAMEN,

564 (14th edn.); British Shipowners v. Grimond, (1876) 3 Rett. 968, 972; Catley v. Wintringham, (1792) Peake

150; Avon SS Co. v. Leask & Co., 1890 18 R 280. 103 British Shipowners v. Grimond, (1876) 3 Rett. 968, 972. 104 Chartered Bank v. British India S.N. Co. [1909] A.C. 369, 375. 105 Moot Scenario, Pg. 40.


20 | P a g e

However, this contention is without any merit because it has been held that mere discharge of

the cargo from the ship is not delivery.106 Delivery is a bilateral act, involving the receipt of

the goods by the consignee or his agent as well as the relinquishing of possession by the

carrier.107

41. In the instant case, none of these obligations were fulfilled before 1:55 PM on 31 July 2017.

The Respondent tendered the notice of readiness to Claimant at 8:42 PM.108 However, the

goods were still under the possession and control of Respondent. These goods were not

offloaded from the ship until midnight on 30 July 2017.109 Therefore, it is submitted that the

Respondent failed to complete the delivery of goods by 8:42 PM on 29 July 2017.

42. Admittedly, Respondent offloaded the cargo from the ship at 12:02 AM on 30 July 2017 and

left it in the custody of the Dillamond Port Authority.110 However, this is not sufficient to

effect delivery of the cargo. It has been held that delivery cannot be effected merely by

discharging the goods over the ship’s side at the port of delivery.111 Further, delivery cannot

be effected by merely putting the goods into the custody of a wharfinger or a port

authority,112 unless the contract provides for such delivery or there is a custom to that effect

at the discharge port.113

43. In the instant case, the contract does not contain any special provision that allows delivery by

such mode. Moreover, there is no evidence of any custom at the discharge port which allows

delivery of the cargo to the port authority. Therefore, the port authority was holding the

106 American Hoesch v. Aubade [1971] 2 Lloyd’s Rep. 423; The St. Georg, 95 F. 172, 177 (D.S.C. 1899);

Glouchester Mut. Fishing Ins. Co. v. Hall, 210 Mass. 332, 96 N.E. 679 (1911). 107 HALSBURY’S LAWS OF ENGLAND, Vol. 43, para. 660 ( 4th edn., 1983); Petersen v. Freebody & Co., [1895] 2

QB 294; Langham SS Co. Ltd. v. Gallagher, [1911] 12 Asp MLC 109; Budget & Co. v. Binnington & Co.,

[1891] 1 QB 35. 108 Moot Scenario, Pg. 24. 109 Moot Scenario, Pg. 23. 110 Moot Scenario, Pg. 23. 111 Gatliffe v. Bourne, (1838) 4 Bing. N.C. 314; The Sormovskiy 3068, [1994] 2 Lloyd’s Rep. 266. 112 Wardell v. Mourillyan, (1798) 2 Esp 693; Gatliffe v. Bourne, (1838) 4 Bing. N.C. 314 113 Oliver v. Colven, (1879) 27 WR 822; Borrowman, Phillips & Co v. Wilson & Co., (1891) 7 TLR 416;

Pacific Milk Industries v. Koninklinjke Jaya (Royal Interocean Lines) and Federal Shipping and Forwarding

Agency, [1973] 3 Lloyd’s Rep 492; Petrocochino v. Bott, (1874) LR 9 CP 355; Grange & Co. v. Taylor (1904)

9 Asp. MLC 559.


21 | P a g e

goods in the capacity of the agent of the Respondent as the electronic tag access fee was also

paid by the Respondent. The Claimant gained the complete control and dominion over the

goods only after they picked the cargo from the port at 1:55 PM on 31 July 2017.114

Therefore, it is submitted that the delivery of the cargo was effected at approx. 1:55 PM on

31 July 2017.

44. Admittedly, the delivery can be effected without an actual handing over of the goods into the

custody of the consignee, if the consignee fails to take delivery of the goods. However, it has

been established that the shipowner must wait for a reasonable time before landing the goods

to allow the consignee to claim them, since a consignee who is ready to receive his goods

within a reasonable time is entitled to delivery directly from the ship.115

45. It is submitted that the Respondent failed to wait for reasonable time after the arrival of the

ship before discharging the goods. This is because they discharged the goods even before the

completion of laytime permitted for discharging under the Charterparty. The ship arrived at

the discharge port at 8:42 PM on 29 July 2018. This started the counting of laytime. Thus,

the permitted laytime for discharge would extend atleast until 8:42 AM on 29 July 2018.

46. In the instant case, the delay in taking the delivery was due to the congestion at the port

following the storm.116 Even after being aware of these state of affairs at the port, the

Respondent waited for merely 3 hours before landing the goods. This did not provide the

Claimant a fair opportunity to take delivery of the goods. Therefore, this discharge of cargo

by the Respondent will not complete the delivery of cargo. In conclusion, it is submitted that

the Respondent is liable for the water damage to the cargo as the damage occurred before the

delivery of the cargo on 1:55 PM on 31 July 2017.

114 Moot Scenario, Pg. 24. 115 Howard v. Shepherd, (1850) 9 CB 297; Meyerstein v. Barber (1866) LR 2 CP 38; Eriksen v. Barkworth

(1858) 3 H. & N. 601, 606; Procter, Garrett, Marston v. Oakwin SS. Co. [1926] 1 K.B. 244; Turner, Nott v.

Bristol Corporation (1928) 31 Ll. L. Rep. 359; The Arawa [1977] 2 Lloyd’s Rep. 416; Automatic Tube Co. v.

Adelaide SS. (The Beltana), [1967] 1 Lloyd’s Rep. 531; National Packaging Corp. v. N.Y.K. Line, [1973] 1

Lloyd’s Rep. 46. 116 Moot Scenario, Pg. 24-25.


22 | P a g e

B. Contrary to Respondent’s contention, Art. IV(5) of the Hague Rules is not applicable

47. The parties have incorporated Clause Paramount in the Charterparty.117 The term ‘Clause

Paramount’ results in the Charterparty being governed by the Hague Rules.118 There has only

been partial incorporation of the Hague Rules, specifically of Art. IV(5).119 As the Hague

Rules are contractually applicable, partial incorporation is allowed.120 Since the parties have

decided not to incorporate Art. II of the Hague Rules, the period of application of Art. IV(5)

of the Rules will be decided as per the Charterparty.121

48. The damage to the good occurred after they had been discharged122 and were kept in shipping

containers at the Port of Dillamond.123 The Charterparty has not provided that the package

limitation under Art. IV(5) of the Hague Rules has been extended to cover this period.

Without an express extension,124 the package limitation rules cannot still limit liability two

days after the cargo has been discharged.125

ARGUMENTS ON THE MERITS OF THE COUNTER CLAIM

It is submitted that the Respondent contends the Respondent’s claim for Demurrage, Spectre

Port Fees and the Electronic Tag Access Fees. Claimant admits the rest of the counter-claims.

117 Moot Scenario, Pg. 8, Clause 28. 118 Nea Agrex S.A. v. Baltic Shipping Co. Ltd (The Agios Lazarus), [1976] Q.B. 933; Yemgas FZCO v.

Superior Pescadores S.A. (Superior Pescadores) [2016] EWCA Civ 101. 119 Moot Scenario, Pg. 8, Clause 28. 120 Browner International Ltd. v. Monarch Shipping Co. Ltd. (The European Enterprise), [1989] 2 Lloyd’s Rep.

185. 121 Hartford Fire Insurance Co. v. OOCL Bravery, [2000] 1 Lloyd's Rep. 394. 122 Moot Scenario, Pg. 43. 123 PO 2, Pg. 3, Para. 17. 124 Hartford Fire Insurance Co. v. OOCL Bravery, [2000] 1 Lloyd's Rep. 394. 125 Moot Scenario, Pg. 43.


23 | P a g e

VI. THE CLAIMANT IS NOT LIABLE TO PAY ANY DEMURRAGE.

49. Demurrage only accrues upon expiration of the permitted laytime.126 It is submitted that the

Claimant is not liable to pay any demurrage to the Respondent. The general rule applicable to

contracts of demurrage is that laytime stops running if an interruption has been excepted for

by the parties, or if there is fault of the shipowner.127 In the instant case, both of these

conditions are satisfied. First, the delay was caused by the fault of the Respondent.[A]

Second, the laytime was interrupted during the movement of ship from the waiting area to the

berth.[B]

A. The delay was caused by the fault of the Respondent.

50. The Claimant was under an obligation to deliver the cargo by 7:00 PM on 28 July 2017 as per

the Charterparty.128 The Claimant had their staff ready to take delivery of the cargo since 4:30

PM itself on 28 July 2017 at the port of Dillamond to avoid any unnecessary delay in

discharging.129 However, the Respondent failed to fulfill their contractual obligation to reach

the discharge port by the required time. As already established, this delay was due to the fault

of the Respondent as they deviated from the agreed route of the voyage.130

51. The Claimant’s staff waited all night for the ship before leaving the port. However, there was

no word from the Claimant regarding the location of the ship. The Respondent did not reply

to any mails of the Claimant till approx. 9:00 AM on 30 July 2017. The Claimant then, had to

call its staff back and hence, the delay in taking the delivery of the cargo when it finally

126 Leaf v. International Galleries, [1950] 2 KB 86, 89; Dick Bentley Productions Ltd. v. Harold Smith (Motors)

Ltd, [1965] 1 WLR 623, 628; Ellul v. Oakes, (1972) 3 SASR 377, 381; Academy of Health and Fitness Pty Ltd

v. Power [1973] VR 254, 265. 127 Cantiere Navale Triestina v. Soviet Naphtha Export Agency (The Dora) 1925 2 KB 172; Gem Shipping Co

of Monrovia v. Babanaft (The Fontevivo) 1975 1 Lloyds Rep 339; Postlewaith v. Freeland 1880 5 App Cas 599;

Budgett v. Binnington, 1891 1 QB 35; William Alexander v. Akt Hansa 1920 AC 88; Sig Bergesen v. Mobil

Shipping and Transportation Co (The Berge Sund) 1993 2 Lloyds Rep 453; Total Transport Co of Panama v.

Amoco Transport Co (The Altus), 1985 1 Lloyds Rep 423. 128 Moot Scenario, Pg. 3 129 Moot Scenario, Pg. 19-20. 130 Memorandum, Para. 29.


24 | P a g e

arrived. Therefore, it is submitted that the delay in collection of cargo by the Claimant is due

to the fault of the Respondent.

B. The laytime was interrupted during the movement of ship from the waiting location

to the berth.

52. In any case, even if it is assumed that the ship has arrived at 7:00 AM on 29 July 2017. The

permitted laytime of 0.5 WWD will not end before 7:00 PM on 29 July 2017 even in the

absence of any interruption to laytime.131 Clause 8(e) of the Charterparty provides the

exceptions under which the laytime is suspended. It provides that the time occupied in

shifting ports or berths or changing positions will not count as laytime and demurrage will

not accrue in such time.132 In the instant case, the ship’s journey from the waiting area to the

berth took 8 hours.133 This time will not be counted as laytime as per Clause 8(e) as it is the

time that the ship took in changing position.134 Hence, the permitted laytime will be extended

atleast until 3:00 AM on 31 July 2017. Therefore, it is submitted that the Claimant is not

liable to pay any demurrage.

VII. CLAIMANT IS NOT LIABLE TO PAY THE AGENCY FEES AT SPECTRE

53. It is submitted that as this fees arises from an unjustifiable deviation.135 The Respondent

cannot be allowed to benefit from its own mistake136 and should bear the fees itself.

Additionally, as per Clause 23 of the Charterparty, owners are to pay any and all charges.137.

Therefore, the Claimant is not liable to pay the agency fees at the port of Spectre.

131 Moot Scenario, Pg. 6. 132 Moot Scenario, Pg. 6, Clause 8(e). 133 Moot Scenario, Pg. 20-22. 134 Compania Naviera Termar v. Tradax Export S.A. (The Ante Topic), [1966] 1 Lloyd’s Rep. 566. 135 Memorandum, Para. 29. 136 Beresford v. Royal Insurance Co. Ltd., [1938] A.C. 586; Strongman Ltd. v. Sincock, [1955] 2 Q.B. 525. 137 Moot Scenario, Pg. 11, Clause 23.


25 | P a g e

VIII. CLAIMANT IS NOT LIABLE TO PAY THE ELECTRONIC TAG ACCESS FEE

54. It is submitted that as this fees arises from the improper discharge of cargo by Respondent’s

failure to wait for reasonable time.138 The Respondent, in the instant case, cannot be allowed

to benefit from its own mistake139 and should bear the fees itself. This is because the

Respondent bought the electronic tag access before arriving at the port of delivery.140

However, the Respondent was required to deliver the cargo afloat as per the Charterparty.

Additionally, as per Clause 23 of the Charterparty, owners are to pay any and all charges.141.

Therefore, it is submitted that the Claimant is not liable to pay the electronic tag access fee.

PRAYER FOR RELIEF

For the reasons set out above, Claimant seeks the following orders and declarations:

1. A declaration that the Tribunal has the jurisdiction to determine the claim for damages.

2. An award of damages in the amount of USD $30,200,000 that comprises of:

i) USD $ 15,750,000 on account of the damaged Cargo;

ii) USD $ 9,450,000 for the Replacement Coffee Payment;

iii) USD $5,000,000 on account of the Settlement Payment;

3. A declaration that the Claimant validly holds a maritime equitable lien over the Madam

Dragonfly;

4. Award any other costs or relief as the Tribunal considers fit.

138 Memorandum, Para. 29. 139 Beresford v. Royal Insurance Co. Ltd., [1938] A.C. 586; Strongman Ltd. v. Sincock, [1955] 2 Q.B. 525. 140 Moot Scenario, Pg. 11, Clause 23. 141 Moot Scenario, Pg. 11, Clause 23.

Memorandum for CLAIMANT - Murdoch University€¦ · TEAM NO. 13 MEMORANDUM FOR CLAIMANT Nineteenth...

Documents

Transcript of Memorandum for CLAIMANT - Murdoch University€¦ · TEAM NO. 13 MEMORANDUM FOR CLAIMANT Nineteenth...