MEMORANDUM FOR THE RESPONDENTS - Murdoch … · LIVERPOOL CONTRACT HAD BEEN ESTABLISHED ... Act of...
Transcript of MEMORANDUM FOR THE RESPONDENTS - Murdoch … · LIVERPOOL CONTRACT HAD BEEN ESTABLISHED ... Act of...
FOURTEENTH ANNUAL INTERNATIONAL MARITIME LAW
ARBITRATION MOOT COMPETITION 2013
In The Matter Of An Arbitration Held At Southampton
MEMORANDUM FOR THE RESPONDENTS
ON BEHALF OF:
Twilight Carriers Inc
RESPONDENTS
AGAINST:
Aardvark Ltd
Aardvark House
The High Street
Bootle
Merseyside
CLAIMANTS
Team Number 24
Cederic Van Eccelpoel, Véronique Beeckx
Content
A. LIST OF ABBREVIATIONS .............................................................................................. iii
B. LIST OF AUTHORITIES .................................................................................................... iii
C. TABLE OF EXHIBITS ........................................................................................................ vi
D. SUMMARY OF THE FACTS .............................................................................................. 1
ARGUMENTS PRESENTED ................................................................................................... 4
1. THE ARBITRAL TRIBUNAL HAS JURISDICTION .................................................... 4
1.1. CLAIMANTS IMPLICITLY AGREED TO THE ARBITRATION BY BRINGING
THEIR CLAIMS BEFORE THE TRIBUNAL ...................................................................... 4
1.2. THE BILLS OF LADING PG1 TO PG4 CONTAIN AN EXPRESS REFERENCE TO
AN ARBITRATION CLAUSE ............................................................................................. 4
2. APPLICABLE LAW ............................................................................................................ 6
2.1. ENGLISH LAW APPLIES ............................................................................................. 6
2.2. HAGUE-VISBY RULES APPLY .................................................................................. 6
2.3. ALL TERMS AND CONDITIONS, LIBERTIES AND EXCEPTIONS OF THE
CHARTER PARTY ARE INCORPORATED INTO THE BILLS OF LADING ................ 7
3. THE CLAIMS ARE INADMISSIBLE .............................................................................. 7
3.1 CLAIMANTS HAVE NO RIGHT OF SUIT, THERE THEY CAN NOT BE
CONSIDERED THE LAWFUL HOLDERS OF THE BILLS OF LADING ....................... 7
3.2 NO BRANDT v. LIVERPOOL CONTRACT HAD BEEN ESTABLISHED
BETWEEN CLAIMANTS AND RESPONDENTS .............................................................. 9
3.3 NO CLAIM IN TORT CAN BE MADE BY CLAIMANTS ...................................... 10
4. IF, WHICH IS DENIED, THE CLAIMS ARE ADMISSIBLE, THESE ARE THE
SUBSTANTIAL ISSUES ....................................................................................................... 11
4.1 THERE IS NO PRESUMPTION OF LIABILITY ........................................................ 11
4.2. RESPONDENTS WIL NOT BE RESPONSIBLE FOR LOSS OR DAMAGE
ARISING OR RESULTING FROM THE PIRACY TAKEOVER ..................................... 12
4.2.1 Art iv, r2 of the Hague Visby rules excludes the respondents for liability arising
from piracy ....................................................................................................................... 12
4.2.2 The charter party excludes liability arising from piracy, Act of war, and public
enemies in section 17, the General Exceptions Clause .................................................... 14
ii
4.2.3 The deviation of the Twilight Trader does not affect the validity of the exoneration
clauses stipulated in the Charterparty ............................................................................. 14
4.3. RESPONDENTS HAVE TAKEN ALL NECESSARY MEASURES TO AVOID
BEING HIJACKED ............................................................................................................. 15
4.4.RESPONDENTS HAVE TAKEN EVERY MEASURE POSSIBLE TO SECURE THE
CARGO DURING THE HIJACK ....................................................................................... 16
4.5.THERE IS NO TORT OF NEGLIGENCE .................................................................... 16
4.6. RESPONDENTS HAD THE RIGHT TO DISCHARGE AT ROTTERDAM ............ 17
4.6.1 Claimants were not entitled to delivery ................................................................... 17
4.6.2 Respondents had the right to discharge the cargo in Rotterdam due to a liberty
clause ................................................................................................................................ 19
4.6.3 Claimants agreed delivery at Rotterdam ................................................................ 19
4.6.4 There is no tort of conversion ................................................................................. 20
5. IF WHICH IS DENIED, THE RESPONDENTS ARE LIABLE TO CLAIMANTS
FOR DELIVERING THE CARGO TO BEATLES: .......................................................... 21
5.1 THE CALCULATION OF THE DAMAGES IS THE CARGO VALUE AT
ROTTERDAM ..................................................................................................................... 21
5.1.1 The market value of the cargo ................................................................................. 22
5.1.2 The alleged consequential damages were not reasonably foreseeable ................... 24
5.2 THE DUTCH COURT COSTS SHOULD NOT BE REVISITED ............................... 24
iii
A. LIST OF ABBREVIATIONS
Beatles Beatles Oils & Fats Ltd
Charterparty Charterparty dated 12 september 2008
Claimants Aardvark Ltd
COGSA 1971 Carriage of Goods by Sea Act 1971
COGSA 1992 Carriage of Goods Act by Sea 1992
Owners Twilight Carriers Inc
PFAD Palm Fatty Acid Distillate
Respondents Twilight Carriers Inc
Bills of Lading Bills of Lading PG1 to PG4
Vessel Twilight Trader
B. LIST OF AUTHORITIES
Cases
Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep. 39
at p.60
Astro Valiente Compania Naviera s.a. v. the Government of Pakistan Ministry of Food and
Agriculture (the "Emmanuel Colocotronis"), [1982] 1 Lloyd's Rep. 286
A/S Hansen-Tangens Rederi III v Total Transport Corporation (The Sagona) [1984] 1
Lloyd’s Rep 194
Athel Viscount, (1934) 48 Ll. Rep 164
Bangladesh Chemical Industries v Tex-Dilan Shipping Co (The S.L.S. Everest) [1981] 2
Lloyd’s Rep. 389
Brandt v Liverpool, Brazil & River Plate Steam Navigation Co Ltd [1924] 1 K.B. 575
Caparo Industries plc v Dickman [1990] UKHL 2
Cia Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos) (No. 2) [1990]
2 Lloyd’s Rep. 395
Daval Aciers D’Usinor Et De Sacilor and Others (The Nerano) (1994) 2 Lloyd’s Rep 50
iv
Debs v Sibec Developments Ltd (1990) R.T.R. 91.
Hadley v Baxendale [1854] EWHC Exch J70
Hamilton v Pandorf (1887) App Cas 518
Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) (2003) 1 Lloyd’s Rep. 571
Ilyssia Cia. Naviera SA v Bamaodah (The Elli 2) [1985] 1 Lloyd’s Rep. 107
J. I. MacWilliam Co. Inc v Mediterranean Shipping Co. SA (The Rafaela S) [2005] 1 Lloyd’s
Rep. 347 at p. 357
Kallang Shipping SA Panama v. Axa Assurances Senegal and another (“The "Kallang" (No
2)). [2009] 1 Lloyd's Rep. 124
Keppel Tatlee Bank Ltd v Bandung Shipping Private Ltd [2003] 1 Lloyd's Rep. 619 at p. 622
Koufos v C Czarnikow Ltd (The Heron II) [1967] 3 All ER 686
Kuwait Petroleum Corp v. I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541
Leigh & Sillivan Ltd v Aliakmon Shipping Co Ltd, (The Aliakmon), (1986) AC 785
Masefield AG v Amlin Corporate Member Ltd & Anor [2011] EWCA Civ 24 26/01/2011
Miramar Maritime Corp v Holburn Oil Trading Ltd (1984) 2 Lloyd’s Rep 129
Mitsui & Co Ltd v Novorossiysk Shipping Co (The Gudermes) [1993] 1 Lloyd’s Rep. 311
More v Slue (1671) 1 vent 190
Pacific Molasses Co and United Molasses Trading Co v Entre Rios Compania Naviera SA
(The San Nicholas) [1976] 1 Lloyd's Rep. 8
Pickering v Barkley (1648) Style 132
Profindo Pte ltd v Abani Trading Pte ltd (the mv “Athens”) [2013] Lloyd's Rep. Plus 8
Roe v Minister of Health (1954) 2 AER 131
Siemens AG/BKMI Industrieanlagen GmbH v. Dutco Construction Company, XVII YBCA
140 (1993) (Cour de Cassation, Paris)
Strathlorne Steamship Company, Ltd. v. Andrew Weir & Co., (1934) 50 Ll.L.Rep. 185
Sylvia Shipping Co Limited v Progress Bulk Carriers Limited [2010] EWHC 542
Sze Hai Tong Bank Ltd v. Rambler Cycle Co. Ltd (1959) 2 LLR at 120
v
The Aramis [1989] 1 Lloyd’s Rep. 213
The Nai Matteini (1988) 1 Lloyd’s Rep 452
The National Navigation Co v. Endesa Generacion SA (The "Wadi Sudr"). [2009] 1 Lloyd's
Rep. 666
The Rewia [1991] 2 Lloyd's Rep 325
The Stettin (1889) 14 P.D. 142
Transfield Shipping Inc v Mercator Shipping Inc (The 'Achilleas') [2008] 3 WLR 345
Welex A.G. v Rosa Maritime Ltd (The Epsilon Rosa) [2003] 2 Lloyd’s Rep. 509
Statutes
Carriage of Goods by Sea Act 1971
Carriage of Goods by Sea Act 1992
Sale of Goods Act 1979
UK Arbitration Act 1996
Treaties, Rules
Hague – Visby Rules 1968
Salvage Convention 1989
Other Authorities
A. G. Guest, Benjamin’s Sale of Goods, (seventh edition, London, Sweet & Maxwell)
Alan Redfern and Martin Hunter, Law and Practice of International Commercial Arbitration
(Sweet and Maxwell, 2003)
Biswas, Shrideep. “Costal Insecurity.” South Asia Intelligence Review. 3 October 2001. Web.
9 November 2011.
Comite Maritime International, The travaux préparatoires of the Hague Rules and of the
Hague-Visby rules
C. Debattista, Sale of goods carried by sea, (London, Butterworths, 1990)
Emmanual Gaillard and John Savage (eds), Fouchard Gaillard Goldman on International
Commercial Arbitration (Kluwer Law International, 1999)
vi
I. Carr, P. Stone, International Trade Law, (4e Edition, Abingdon, Routledge-Cavendish,
2010)
M. Bridge, Benjamin’s Sale of Goods, (eight edition, London, Sweet & Maxwell, 2010)
M. Dockray, K. Reece, Cases and Materials on the Carriage of Goods by Sea, (London,
Cavendish Publishing Limited, 2004)
R. Burnett, V. Bath, Law of the international Business of Australasia, (Sydney, The
federation press, 2009)
Scrutton on Charterparties and Bills of Lading (Twenty-second Edition, Sweet and Maxwell,
2011)
C. TABLE OF EXHIBITS
1. Email from Tom Williams to Paul Taylor, dated 23 May 2008, PFAD contract 1234
[page 1 Moot Problem]
2. Email from Tom Williams to Paul Taylor, dated 23 May 2008, PFAD contract 1235
[page 2 Moot Problem]
3. Charter Party (fixture re-cap, standard VEGOIL voy form. “VEGOILVOY 1/27/50”)
[page 3 – 12 Moot Problem]
4. Email from Tom Williams to Paul Taylor, dated 23 September 2008, Amended PFAD
contracts 1234 & 1235
[page 13 Moot Problem]
5. Bill of Lading, CONGENBILL 2007, PG1
[page 14-15 Moot Problem]
6. Bill of Lading, CONGENBILL 2007, PG2
[page 16-17 Moot Problem]
7. Bill of Lading, CONGENBILL 2007, PG3
[page 18-19 Moot Problem]
8. Bill of Lading, CONGENBILL 2007, PG4
[page 20-21Moot Problem]
vii
9. Sales contract between Aardvark Limited and Delta Limited, No. 54028, 2 December
2008
[page 22 Moot Problem]
10. Sales contract between Aardvark Limited and Caspian BV, No. 01206, 20 January
2009
[page 23 Moot Problem]
11. Email from Chris Smith to Ben Thompson, dated 25 February 2009 (02:32), PFAD
[page 24 Moot Problem]
12. Email from Paul Taylor to Mark Wiggins, dated 6 March 2009 (14:00), PFAD
contracts
[page 25 Moot Problem]
13. Email from Mark Wiggins to Paul Taylor, dated 15 March 2009 (21:00), PFAD
contracts
[page 26 Moot Problem]
14. Email from Paul Taylor to Mark Wiggins, dated 16 March 2009 (15:20), PFAD
contracts
[page 27 Moot Problem]
15. Email from Mark Wiggins to Paul Taylor, dated 16 March 2009 (18:19), PFAD
contracts
[page 28 Moot Problem]
16. Email from Paul Taylor to Mark Wiggins, dated 17 March 2009 (14:22), PFAD
contracts
[page 29 Moot Problem]
17. Email from Mark Wiggins to Paul Taylor, dated 17 March 2009 (18:30), PFAD
contracts
[page 30 Moot Problem]
18. Email from Paul Taylor to Mark Wiggins, dated 18 March 2009 (11:00), PFAD
contracts
[page 31 Moot Problem]
19. Email from Mark Wiggins to Paul Taylor, dated 18 March 2009 (15:19), PFAD
viii
contracts
[page 32 Moot Problem]
20. Email from Paul Taylor to Mark Wiggins, dated 18 March 2009 (16:01), PFAD
contracts
[page 33 Moot Problem]
21. Email from Mark Wiggins to Paul Taylor, dated 20 March 2009 (12:30), PFAD
contracts
[page 34 Moot Problem]
22. Email from Paul Taylor to Mark Wiggins, dated 20 March 2009 (16:01), PFAD
contracts
[page 35 Moot Problem]
23. Message from Aardvark Limited to Owners of the Twilight Trader, dated 20 March
2009, Twilight Trader - Top Urgent, Bills of Lading PG1 to PG4
[page 36 Moot Problem]
24. Fax from Thomas, Cropper & Benedict to Charterers Inc, dated 18 March 2009, mv
TWILIGHT TRADER – Analysis
[page 37-39 Moot Problem]
25. Experts report Aspinall Lewis International, 19 March 2009, Inspection of the Cargo of
Palm Oil After Hijacking at Somalia November 2008 - February 2009, MT
TWILIGHT TRADER
[page 40-43 Moot Problem]
26. Message from Paradox Bank to Aardvark Ltd, dated 3 April 2009, bank guarantee No.
478 in favour of Aardvark Ltd for USD 1,400,000, Rotterdam Guarantee Form 2008,
guarantee No. 478, dated 3 April 2009
[page 44-45 Moot Problem]
27. Sales note between D&F Brokers Ltd and Aardvark Ltd, No. 0164, dated 16 April
2009
[page 46 Moot Problem]
28. Sales note between D&F Brokers Ltd and Aardvark Ltd, No. 0178, dated 7 May 2009
[page 47 Moot Problem]
29. Report of Surveys Inc, dated 9 June 2009
ix
[page 48-49 Moot Problem]
30. Experts report of Dutch Surveyors BV, Inquiries regarding the value of Palm Fatty
Acid Distillate (PFAD) and regarding the quality of the product during transport/
storage under various conditions
[page 50-52 Moot Problem]
31. Agreed statement of facts for the arbitration: the Dutch proceedings and sale of the
cargo
[page 53-55 Moot Problem]
32. Single joint expert report of Kevin Ackroyd, dated 29 October 2012
[page 56-59 Moot Problem]
33. Message from Horatio Brigden (Caspian BV) to Paul Taylor (Aardvark Ltd), dated 23
November 2009, PFAD ex TWILIGHT TRADER after release from piracy
[page 60 Moot Problem]
34. Message from Geronimo McKegney (Delta Limited) to Paul Taylor (Aardvark Ltd),
dated 25 November 2009, PFAD ex TWILIGHT TRADER after release from piracy
[page 61 Moot Problem]
35. Message from Mark Wiggins to Twilight Carriers, Freight rates and PFAD prices
[page 62-64 Moot Problem]
36. FOSFA 79 contract
37. FOSFA 81 contract
38. FOSFA 91 contract
39. FOSFA Rules of arbitration and appeal
D. SUMMARY OF THE FACTS
1. Claimants, Aardvark Ltd, are the buyers and receivers of a cargo of 4,000 mt of Palm Fatty
Acid Distillate (PFAD) carried on board the Vessel TWILIGHT TRADER under the PG1 to
PG 4 Bills of Lading.
2. Respondents are the Disponent owners of the Vessel. The Owners sub chartered the Vessel
to Beatles Oils & Fats Ltd by way of a Charterparty dated 12 September 2008.
3. The Bills of Lading were all signed by Agents for and on behalf of the Master. All the Bills
of Lading provided for discharge in Liverpool, Merseyside.
4. The contracts of carriage contained in or evidenced by the Bills of Lading incorporates the
Hague-Visby Rules, and the Bills of Lading provide that all terms and conditions, liberties
and exceptions of the Charterparty dated 12 September 2008, including the Law and
Arbitration Clause are herewith incorporated.
5. The cargo carried under the Bills of Lading was sold to Aardvark by Beatles on CIF
Liverpool terms.
6. A separate cargo of about 14,500 mt of Crude Palm Oil and PFAD (which is not the subject
of these proceedings) was sold by Beatles to another purchaser Ecclestone Oils and also
carried on board the Vessel under different bills of lading.
7. While the Vessel was en route to Merseyside it was held off Somalia by Somali pirates
between 15 November 2008 and 13 February 2009.
2
8. Beatles presented the shipping documents for the cargo to Aardvark in or about mid
January 2009. The shipping documents appeared to be in compliance with the contractual
requirements and so the purchase price was paid to Beatles and the Bills of Lading were
endorsed to the Claimants.
9. After receiving Beatles’ insurance policy, on 6 March 2009, Aardvark claimed that Beatles
was in repudiatory breach of the sale contract by failing to insure the cargo under the agreed
terms. Beatles could not relate to this claim.
10. Following a series of messages it became apparent that Claimants had abandoned the
cargo by bringing the sale contract to an end.
11. Beatles, being the legal owner of the cargo after the ending of the sales contract, asks
Claimants on 17 March 2009 to send them the bills of lading. As a consequence of their
dispute, Claimants were not prepared to release the bills of lading.
12. Respondents had no primary knowledge of the contractual arrangements between
Claimants and Beatles, or the correspondence between them which is mentioned above.
13. On 19 March 2009 Beatles issued a Letter of Indemnity to Respondents asking them to
deliver the cargo to them (i.e. Beatles) at Rotterdam without production of the bills of lading.
14. On 20 March 2009 Claimants wrote to Respondents claiming that they were the lawful
holders of the Bills of Lading. Notwithstanding that notification Respondents discharged the
3
cargo on or about 20-22 March 2009 to Beatles. The cargo was put in storage at Rotterdam
port.
15. On or about 23 March 2009 Beatles arrested the cargo as security for their claims against
Aardvark. Aardvark tried to set aside the arrest of the Cargo in the Rotterdam Courts, but
failed at first instance. Beatles then obtained permission from the Dutch Court for the Cargo
to be sold. This sale has now taken place and, as ordered, by the Dutch Court, the proceeds
are held in the Dutch Court account, pending a decision in the present arbitration.
16. The Court of Rotterdam rejected Aardvark’s appeal to set aside the arrest of the cargo.
On 23 March 2009 Aardvark arrested the Vessel in Rotterdam as security for their claims for
damages against Respondents for delivery of the cargo in Rotterdam without production of
the Bills of Lading. The Vessel was released against security provided by Beatles on behalf of
Respondents.
4
ARGUMENTS PRESENTED
1. THE ARBITRAL TRIBUNAL HAS JURISDICTION
1. If Claimants dispute competence of the arbitration, it is submitted (1) they implicitly agreed
by bringing this arbitration before the Tribunal and (2) the bills of lading PG1 to PG4 contain
a valid arbitration clause.
1.1. CLAIMANTS IMPLICITLY AGREED TO THE ARBITRATION BY BRINGING THEIR CLAIMS BEFORE
THE TRIBUNAL
2. Party autonomy is a key aspect for arbitration.1 The arbitration parties are free to determine
how the proceedings are to be conducted, subject only to minimum safeguards. Claimants
agreed to the arbitration by bringing their claims before this tribunal. If they were to be
opposed by the arbitration, they should have sought the appropriate court for their claims in
their natural jurisdiction.
1.2. THE BILLS OF LADING PG1 TO PG4 CONTAIN AN EXPRESS REFERENCE TO AN ARBITRATION
CLAUSE
3. The incorporation of an arbitration clause into a bill of lading requires (1) an express
reference to an arbitration clause on the bill of lading, and (2) an identifiable charterparty.
4. The Bills of Lading state that, “All terms and conditions, liberties and exceptions of the
Charterparty, dated as overleaf, including the Law and Arbitration Clause/Dispute
Resolution Clause, are herewith incorporated.” This constitutes an express reference to the
arbitration clause, which is to be found in the Charterparty. The charterparty is not identified.
1 Siemens AG/BKMI Industrieanlagen GmbH v. Dutco Construction Company, XVII YBCA 140 (1993) (Cour
de Cassation, Paris); Alan Redfern and Martin Hunter, Law and Practice of International Commercial
Arbitration, Sweet and Maxwell, 267 (2003); Emmanual Gaillard and John Savage (eds), Fouchard Gaillard
Goldman on International Commercial Arbitration, Kluwer Law International, 1421 (1999).
5
The mere fact that on the Bills of Lading there is a lack of date or parties’ names in relation to
the Charterparty does not affect validity of the arbitration contract.2 I explain.
5. The Vessel Twilight Trader is chartered by Respondents as ‘disponent owner’ and
subchartererd to Beatles. These two charterparties apply to the carriage performed under bills
of lading n° PG1 to PG4 because the bills of lading are issued on the 25th
of October while the
subcharter is a voyage charter concluded on 12 September 2008 for a voyage from Pasir
Gudang, Malaysia to Liverpool, Merseyside, United Kingdom.
6. The presence of two charterparties can create doubts as to which charterparty the bills of
lading refer to. In ‘The Kallang’ the court ruled that when there is more than one charterparty
and one of the charter parties is voyage charter, the voyage charter will prevail.3 In casu, the
subcharter is a voyage charter and most closely connected to the bill of lading. Remark : a
headcharter concluded by a disponent owner is often agreed for financial and fiscal reasons.
This is known in the shipping industry. A charterparty agreed for financial reason cannot
reasonably be considered as a charterparty to which the carrier and the shipper wish to
incorporate.4 Last remark, the Bills of Lading stipulate they are “ To be used with charter
parties”.5 It should be noted that where it is clearly stated in the bill of lading that the
consignee should look at the charter party the consignee is obliged to do so.6 It might have
been expected from Claimants that they had asked the previous bills of lading holder a copy
2 Scrutton on charterparties and bills of lading, Twenty-second Edition, Sweet and Maxwell, 2011, page 98;
Pacific Molasses Co and United Molasses Trading Co v Entre Rios Compania Naviera SA (The San Nicholas)
[1976] 1 Lloyd's Rep. 8; Bangladesh Chemical Industries v Tex-Dilan Shipping Co (The S.L.S. Everest) [1981] 2
Lloyd’s Rep. 389;Welex A.G. v Rosa Maritime Ltd (The Epsilon Rosa) [2003] 2 Lloyd’s Rep. 509. 3 Kallang Shipping SA Panama v. Axa Assurances Senegal and another (“The "Kallang" (No 2)). [2009] 1
Lloyd's Rep. 124; The National Navigation Co v. Endesa Generacion SA (The "Wadi Sudr"). [2009] 1 Lloyd's
Rep. 666; Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania Naviera SA (The
San Nicholas) [1976] 1 Lloyd's Rep 8. 4 The Rewia [1991] 2 Lloyd's Rep 325.
5 See exhibits 5 to 8
6 Astro Valiente Compania Naviera s.a. v. the Government of Pakistan Ministry of Food and Agriculture (the
"Emmanuel Colocotronis"), [1982] 1 Lloyd's Rep. 286
6
of the charterparty. In casu Beatles could not have refused to deliver a copy of the
charterparty to the Claimants as they had a contractual obligation hereto under section 13 of
the FOSFA sales contract.7
7. In addition, an email8 from John Walker to Claimants sent on 12 September 2008 contains
the following sentence: “We have pleasure in confirming the following fixture concluded
today in accordance with your authority, all subjects lifted and fixture reconfirmed by
owners.” This proves that Claimants had knowledge of the Charterparty, and were in fact
aware of its content.
2. APPLICABLE LAW
2.1. ENGLISH LAW APPLIES
8. On the same grounds as the arbitration clause, namely a valid incorporation by explicit
reference into the bills of lading, the applicable law in the present case is English Law.
2.2. HAGUE-VISBY RULES APPLY
9. The Hague – Visby Rules - incorporated under English law as the COGSA 1971 - apply to the claim
as matter of contract (viz. General Paramount Clause9). This notwithstanding a, at first sight, battle of
the forms between the General Paramount Clause and section 1 of the Bills of Lading. Since the
country of shipment, Malaysia, only is party to the 1924 Hague Rules, the clause foresees that the
Hague-Visby Rules as enacted in the country of destination, the United Kingdom, will apply. As such,
the General Paramount Clause and section 1 of the Bills of Lading comply.
7 See exhibit 37
8 See exhibit 3
9 See Section 2 of the PG1 to PG4 Bills of Lading, exhibits 5 to 8
7
10. The Hague – Visby Rules also apply as a matter of statute law (viz. carriage of goods under a bill
of lading to a port located in a Contracting party).
2.3. ALL TERMS AND CONDITIONS, LIBERTIES AND EXCEPTIONS OF THE CHARTER PARTY ARE
INCORPORATED INTO THE BILLS OF LADING
11. All terms and conditions of the Charterparty are validly incorporated into the Bills of
Lading by general reference.10
The use of wide clauses can be effective in including al the
terms of a Charterparty into a Bill of Lading.11
In The Miramar12
for instance, the phrase “all
terms of the charterparty” was considered as sufficiently descriptive to incorporate all the
terms of the Charterparty.
3. THE CLAIMS ARE INADMISSIBLE
3.1 CLAIMANTS HAVE NO RIGHT OF SUIT, THERE THEY CAN NOT BE CONSIDERED THE LAWFUL
HOLDERS OF THE BILLS OF LADING
12. On the 6th
of March 2009, Claimants abandoned the cargo on board of the Vessel towards
Beatles by bringing the underlying sales contract to an end, due to their dispute with Beatles.13
They only received the Bills of Lading on or about 17 March 2009.14
As ownership of the
cargo is determined by the underlying sales contract, the Bills of Lading only give a
possessory title. The abandoning of the cargo therefore ensured that Beatles remained the
legal owner of the goods, and should have received the Bills of Lading from the Claimants.
10
See Section 1 of the PG1 to PG4 Bills of Lading, exhibits 5 to 8 11
I. Carr, P. Stone, International Trade Law, 4e Edition, Abingdon, Routledge-Cavendish, 2010, 274.
12 Miramar Maritime Corp v Holburn Oil Trading Ltd (1984) 2 Lloyd’s Rep 129. See also The Nai Matteini
(1988) 1 Lloyd’s Rep 452; Daval Aciers D’Usinor Et De Sacilor and Others (The Nerano) (1994) 2 Lloyd’s Rep
50. 13
See exhibit 12 14
See exhibit 16
8
13. Notwithstanding multiple requests by Beatles15
, Claimants did not deliver the Bills of
Lading to them. Instead they presented themselves to Respondents as the lawful holders of the
Bills of Lading. The term “holder” denotes either a person with possession of the bill of
lading who is identified in the bill of lading as the consignee of the goods, or a person who
comes into possession as a result of negotiation of the bill of lading by delivery or by
endorsement and delivery.16
The Bills of Lading are expressly made to be “to order”.17
They
are not consigned to a named party. The Bills of Lading are endorsed in blank by the shipper,
Vegetable Oils.18
Where a bill of lading has been endorsed in blank, it becomes similar to a
bearer Bill of Lading which can be transferred simply by delivering the bill to the intended
transferee without any further endorsement.19
In casu no endorsement was necessary for
Claimants to obtain the Bills of Lading, yet, possession in good faith still is mandatory for
being considered lawful holder of the Bills.
14. In this regard, Claimants also are estopped from asserting any title to the goods. If which
is denied, Claimants ought to have had any proprietary rights to the goods, estoppel by
representation makes that the true owner of goods, by words or conduct, voluntarily20
represents or permits it to be represented that another person is the owner of the goods.21
Seeing Claimants abandoned the cargo, they furthermore explicitly stated “…however that is
a decision for you as cargo owners and charterers to make.” in an e-mail towards Beatles.22
Hereby they admitted that Beatles were, and still are, the legal cargo owners.
15
See exhibits 17, 19, and 21 16
COGSA 1992 s.5(2)(a), (b). 17
See exhibits 5 to 8. 18
The back of the Bills of Lading only contains the shipper’s name and signature. See exhibit 5, 6, 7 and 8. 19
Keppel Tatlee Bank Ltd v Bandung Shipping Private Ltd [2003] 1 Lloyd's Rep. 619 at p. 622. 20
Debs v Sibec Developments Ltd (1990) R.T.R. 91. 21
M. Bridge, Benjamin’s Sale of Goods, eight edition, London, Sweet & Maxwell, 2010, 349. 22
See exhibit 14
9
15. As Claimants neither accepted the Bills in good faith due to their abandoning, nor can
have possession of the Bills in good faith because they no longer were the legal owners of the
cargo when receiving the Bills of Lading, they can not be considered the lawful holders of the
Bills of Lading.23
16. Section 2(1) of the COGSA 1992 provides that the “lawful holder” shall, by virtue of
becoming the holder of the bill, have transferred to and vested in him all rights of suit under
the contract of carriage as if he had been a party to that contract. The transfer of rights of suit
therefore depends on the fact whether a party can be qualified as a lawful holder of the bill.24
As such, Claimants do not have any right of suit against Respondents.
3.2 NO BRANDT v. LIVERPOOL25 CONTRACT HAD BEEN ESTABLISHED BETWEEN CLAIMANTS AND
RESPONDENTS
17. Cargo interests who are neither original parties to the contract of carriage nor within the
provisions of the COGSA 1992, can have an implied contract between them and the carrier.26
This depends on the facts. Respondents never delivered the cargo to Claimants, nor did they
accede to the request of Claimants to do so. In these circumstances no such implied contract
can originate, as it clearly not has been Respondents intention to do so.27
An implied contract
23
Scrutton on charterparties and bills of lading, page 44; Aegean Sea Traders Corp v Repsol Petroleo SA (The
Aegean Sea) [1998] 2 Lloyd’s Rep. 39 at p.60. 24
Scrutton on charterparties and bills of lading, page 43. 25
Brandt v Liverpool, Brazil & River Plate Steam Navigation Co Ltd [1924] 1 K.B. 575. 26
Scrutton on charterparties and bills of lading, page 50; R. Burnett, V. Bath, Law of the international Business
of Australasia, Sydney, The federation press, 2009, 170; C. Debattista, Sale of goods carried by sea, London,
Butterworths, 1990, 54. 27
Scrutton on charterparties and bills of lading, page 51; Ilyssia Cia. Naviera SA v Bamaodah (The Elli 2) [1985]
1 Lloyd’s Rep. 107; The Aramis [1989] 1 Lloyd’s Rep. 213; Cia Portorafti Commerciale SA v Ultramar Panama
Inc (The Captain Gregos) (No. 2) [1990] 2 Lloyd’s Rep. 395; Mitsui & Co Ltd v Novorossiysk Shipping Co (The
Gudermes) [1993] 1 Lloyd’s Rep. 311. The reasoning in The Aramis is particularly important in holding that
there was no Brandt v Liverpool contract made out.; R. Burnett, V. Bath, Law of the international Business of
Australasia, Sydney, The federation press, 2009, 170
10
can also not have originated from a business reality, since there are no enforceable obligations
between Claimants and Respondents.28
3.3 NO CLAIM IN TORT CAN BE MADE BY CLAIMANTS
18. Where there is no contract between parties, which is already made clear in the sections 3.2
and 3.3 of this memorandum, a party might have the right to put forward a claim in tort except
if the party can not obtain locus standi.29
In “The Aliakmon”:30
In casu it was settled that a
plaintiff cannot sue in tort, unless he can prove he has property interest in the goods. This
property interest can either be a form of ownership, or the right to delivery of the goods on
discharge.31
19. Two things should weigh in mind.
First, Claimants lost their property interest when they abandoned the cargo. This is already
duly mentioned in previous sections, and will therefore not be repeated here.
20. Second, if the abandoning of the cargo is not retained, it should be noticed that the goods
shipped were portion of a bulk cargo. According to section 16 of the Sale of Goods Act 1979
(Which applies since the FOSFA conditions apply to the sales contract, and make English law
applicable)32
, property in goods shipped in bulk can only pass on ascertainment, which
happens on discharge. Section 20A of the Sale of Goods Act 1979 does not apply since the
28
C. Debattista, Sale of goods carried by sea, London, Butterworths, 1990, 55. 29
C. Debattista, Sale of goods carried by sea, London, Butterworths, 1990, 55; R. Burnett, V. Bath, Law of the
international Business of Australasia, Sydney, The federation press, 2009, 171 30
Leigh & Sillivan Ltd v Aliakmon Shipping Co Ltd, (The Aliakmon), (1986) AC 785. Reiterated by the House
of Lords in Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) (2003) 1 Lloyd’s Rep. 571. 31
C. Debattista, Sale of goods carried by sea, London, Butterworths, 1990, 60; R. Burnett, V. Bath, Law of the
international Business of Australasia, Sydney, The federation press, 2009, 171 32
See exhibit 37
11
bulk from which the goods are to come is not identified in the sales contract33
between
Claimants and Beatles.34
With discharge taking place between 20-22 March, the alleged tort
act (either negligence or conversion) had already occurred.35
The Bills of Lading only
represent a portion of the total cargo carried by the Vessel, which also carried on board a
separate cargo of about 14,500 MT of Crude Palm Oil and PFAD belonging to Ecclestone
Oils under different Bills of Lading. Claimants being the holders of Bills of Lading relating to
a portion of bulk cargo which has not yet been delivered, do not have the necessary interest to
put forward a claim in tort.36
Claimants contractual right to acquire property in the future does
not suffice to allow them to sue.37
4. IF, WHICH IS DENIED, THE CLAIMS ARE ADMISSIBLE, THESE ARE THE
SUBSTANTIAL ISSUES
4.1 THERE IS NO PRESUMPTION OF LIABILITY
21. The Bills of Lading provide that the cargo is shipped at the port of loading in apparent
good order and condition. As there is a difference between “condition”38
and “quality” of the
goods, the master’s duty is merely to record the “condition” of the goods on shipment. It is
perfectly possible that the goods already had been contaminated on shipment, as the
deficiency would not have been “apparent” to the ship’s crew on loading since it was pumped
directly from the shore tanks into dark ship’s tanks. In addition, the master is not to have the
same expertise as a chemist and he is only bound by way of what would be “apparent” to a
reasonable man with reasonable eyesight at the time of loading.39
In this regard, the Bills of
33
See exhibits 1 and 2 34
A. G. Guest, Benjamin’s Sale of Goods, seventh edition, London, Sweet & Maxwell, 263. 35
C. Debattista, Sale of goods carried by sea, London, Butterworths, 1990, 61-62. 36
R. Burnett, V. Bath, Law of the international Business of Australasia, Sydney, The federation press, 2009, 171 37
Leigh & Sillivan Ltd v Aliakmon Shipping Co Ltd, (The Aliakmon), (1986) AC 785. 38
Condition relates to the subsequent state of fitness of the goods. 39
Athel Viscount, (1934) 48 Ll. Rep 164.
12
Lading also provide that condition was unknown. It can not be proven that the contamination
occurred during the voyage.
4.2. RESPONDENTS WIL NOT BE RESPONSIBLE FOR LOSS OR DAMAGE ARISING OR RESULTING
FROM THE PIRACY TAKEOVER
4.2.1 ART IV, R2 OF THE HAGUE VISBY RULES EXCLUDES THE RESPONDENTS FOR LIABILITY ARISING FROM
PIRACY
22. Article IV, r.2 of the Hague-Visby rules provides that “Neither the carrier nor the ship
shall be responsible for loss or damage arising or resulting from
(c) perils, dangers and accidents of the sea or other navigable waters;
…
(e) act of war;
(f) act of public enemies;
…
(q) any other cause arising without the actual fault and privity of the carrier, or without the
fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the
person claiming the benefit of this exception to show that neither the actual fault or privity of
the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the
loss or damage.”
23. A peril of the sea is defined as something which is fortuitous and unexpected, not
something due to ordinary wear and tear, nor to the operation of any cause ordinarily
13
incidental to the voyage and therefore to be contemplated.40
Piracy as such, has long been
regarded as a peril of the sea.41
24. Piracy as we know it today in Somalia can be brought under the scope of the provisions on
act of war, public enemies, and any other cause arising without the actual fault and privity of
the carrier.42
This is founded on the fact that the modus operandi of pirates has significantly
changed over the years. Modern piracy is characterized by the use of small high-speed boats,
heavy machine guns, and other high-tech devices such as radars and satellite communication.
They have a preference for hostages and kidnapping because they seek to use their targets as a
mechanism to maximize profit, as in the case of ransom.43
25. Mostly, they are well organized and connected to other similar groups, some important
persons they work for, or even with the authorities. Their goals are not just looting of the
small ships. They attack for fulfilling their part of the business. Well-established analysts
institutions are concerned that pirates, mainly those from Somalia, are linked to jihadist
terrorist groups, such as Al-Qaeda.44
Although not directly proven, it appears the organization
is at least profiting monetarily from piracy activities, and many suspect some pirates are
working with the motivation of raising funds for terrorist groups. The line between acts of
maritime piracy and terrorism is hazy, and with some governments playing a part in it,
modern piracy can not be regarded other than as an act of public enemies or even an act of
war.
40
Hamilton v Pandorf (1887) App Cas 518, p 530, per Lord Herschell; M. Dockray, K. Reece, Cases and
Materials on the Carriage of Goods by Sea, London, Cavendish Publishing Limited, 2004, 29. 41
Pickering v Barkley (1648) Style 132; More v Slue (1671) 1 vent 190. 42
I. Carr, P. Stone, International Trade Law, 4e Edition, Abingdon, Routledge-Cavendish, 2010, 251; Comite
Maritime International, The travaux préparatoires of the Hague Rules and of the Hague-Visby rules, 408. 43
Masefield AG v Amlin Corporate Member Ltd & Anor [2011] EWCA Civ 24 26/01/2011 44
Biswas, Shrideep. “Costal Insecurity.” South Asia Intelligence Review. 3 October 2001. Web. 9 November
2011.
14
26. Considering this, it is clear that Respondents can not be held liable for any damage
resulting, directly or indirectly, from the pirate hijack between 15 November 2008 and 13
February 2009.
4.2.2 THE CHARTER PARTY EXCLUDES LIABILITY ARISING FROM PIRACY, ACT OF WAR, AND PUBLIC ENEMIES
IN SECTION 17, THE GENERAL EXCEPTIONS CLAUSE
27. Section 17 of the Charterparty provides that “neither the Vessel, her Master or Owner,
nor the Charterer shall, unless otherwise in this Charter expressly provided, be responsible
for any loss or damage or delay to or failure to discharge or deliver the cargo arising or
resulting from:-- Act of God; act of war; act of public enemies, pirates or assailing
thieves,…”
28. Since Respondents can fully rely on all provisions of the Charterparty, they deny their
liability.45
4.2.3 THE DEVIATION OF THE TWILIGHT TRADER DOES NOT AFFECT THE VALIDITY OF THE EXONERATION
CLAUSES STIPULATED IN THE CHARTERPARTY
29. The fact that the Vessel deviated from its intended route towards the Somali coast region
does not make the provisions of the Charterparty invalid.46
30. First, section 21 of het Charterparty for sees in a Deviation Clause. This clause gives
Respondents a wide liberty to deviate the Vessel. For instance, it mentions that “The Vessel
45
See section 2.3 of this memorandum 46
See section 1.2.2 of the Aspinall Lewis International inspection, exhibit 25.
15
shall have liberty … to deviate for the purpose of saving life of property…” It is to be noticed
that a resembling provision is to be found in the Salvage Convention 1989.47
However, the
aim of the Salvage Convention is to oblige the master of a ship to render assistance to third
persons in difficulty at sea. The text of the Charterparty-clause can be elucidated in a much
broader way, and so rely to the situation where a master deviates for the purpose of saving life
or cargo on board of his own ship. Deviation for the safety of the crew falls within the scope
of this provision. Taking the circumstances in consideration, one should ascertain that in the
present case Respondents can not be held liable for deviating from its intended course after
the hijack.
31. Secondly, Respondents can not be held responsible for the deviation, as of the moment of
the hijack they no longer had control over the Vessel. It has been established that on 15
November 2008 control of the Vessel was taken over by Somali pirates, and that the Vessel’s
crew was held hostage until released on 12 February 2009.48
4.3. RESPONDENTS HAVE TAKEN ALL NECESSARY MEASURES TO AVOID BEING HIJACKED
32. To the contrary of what Claimants allege, no breach of Article III, r.2 of the Hague-Visby
rules has occurred. Respondents have made proper preparations and took appropriate
precautions to minimise the risk of being hijacked. In this respect, they commenced a pirate
watch when entering the Gulf of Aden on 14 November 2008. Despite their best efforts,
Somali pirates boarded the Vessel on 15 November 2008.49
47
Article 10 of the convention 48
See section 1.2.2 of the Aspinall Lewis International inspection, exhibit 25. 49
See section 1.2.2 of the Aspinall Lewis International inspection, exhibit 25.
16
4.4.RESPONDENTS HAVE TAKEN EVERY MEASURE POSSIBLE TO SECURE THE CARGO DURING THE
HIJACK
33. Since it is proven that the entire crew of 23 men was held hostage 24 hours a day at the
bridge of the Vessel, there was not much that could be done to secure the cargo. Despite this,
they managed to observe the deck area once every hour. The Master and Chief Officer stated
that they did not observe any broaching of the cargo tanks during the period of captivity.50
As
for any other measures, for example in connection with the cargo temperature, it is clear that
Respondents can rely on Force Majeure to exclude them from any possible liability. Specific
for the heating issue, section 16 of the Charterparty provides that “…the Owner shall not be
responsible if such temperatures are not maintained by reason of any cause beyond Owners
control…” Accordingly, Respondents can not be held liable for breaching article III r. 2 of the
Hague-Visby rules on this matter.
4.5.THERE IS NO TORT OF NEGLIGENCE
34. A tort of negligence requires four elements:
Duty of care51
Breach of duty
Causation
Damages
All four elements need to be proven for a claim to succeed.
35. Having established that Respondents had a duty of care, Claimants must prove that the
Respondents failed to do what the reasonable person would have done in the same situation.
Only if Respondents fail to come up to the standard, there will be a breach of the duty of care.
50
See section 1.2.4 of the Aspinall Lewis International inspection, exhibit 25. 51
Caparo Industries plc v Dickman [1990] UKHL 2.
17
In Roe v Minister of Health52
it was said the defendant will only be liable if a reasonable
person would have foreseen the loss or damage in the circumstances prevailing at the time of
the alleged breach of duty. As mentioned under sections 4.2 and 4.3 of this memorandum,
Respondents did everything in their power to prevent the Vessel from being hijacked by
pirates, and to secure the cargo in the best possible way. Respondents in every manner
exercised the care that a reasonably person would exercise in like circumstances. As a result
hereof there is no breach of duty, which is one of the necessary elements for a tort claim to
succeed.
4.6. RESPONDENTS HAD THE RIGHT TO DISCHARGE AT ROTTERDAM
4.6.1 CLAIMANTS WERE NOT ENTITLED TO DELIVERY
36. Notwithstanding the existence of Bills of Lading, the carrier always retains the
responsibility of ensuring that he delivers cargo to the true owner. It is a fact that the law has
recognised that Bills of Lading are the best evidence of a cargo owner’s title to the goods53
and that possession of them is the best evidence of the holder’s title to the goods.54
As
Claimants have proven though, this is no absolute truth. Having abandoned the cargo they had
no title of ownership on the goods. Nevertheless, they remained holders of the Bills of
Lading.
37. Not complying to the general rule, Respondents discharged the cargo at Rotterdam
between the 20th
and the 22nd
of March 2009, delivering it to Beatles without production of
the Bills of Lading. In this regard it should be noticed that a carrier can deliver without
52
Roe v Minister of Health (1954) 2 AER 131. 53
J. I. MacWilliam Co. Inc v Mediterranean Shipping Co. SA (The Rafaela S) [2005] 1 Lloyd’s Rep. 347 at p.
357. 54
The Stettin (1889) 14 P.D. 142.
18
production of the Bills of Lading, but does so at his own risk.55
Respondents decided to
deliver the cargo to Beatles without production of the Bills of Lading after they received a
Letter of Indemnity from Beatles on the 19th
March 2009.56
38. Two things need to be considered when judging Respondents actions.
First, it is established in “The Sagona”57
and “The Houda”58
that there is a practice in the oil
cargo trade for cargoes to be delivered against a letter of indemnity. Especially when the
vessel is chartered, the shipowner is entitled to rely on the indemnity if he complies with the
charterers instructions, and does so in a way that the “act is not apparently illegal in itself, but
is done honestly and bonna fide in compliance with the directions…” . 59
In casu,
Respondents did not only receive a distinct Letter of Indemnity from Beatles (The
Charterers), they can also rely on the provisions of the Charterparty as clause 24 of the
Charterparty contains the following provision: “The Charterer shall indemnify the Owner, the
Master, and the Vessel from all consequences or liabilities that may arise ... or from
complying with any orders of the Charterer or its agents.” Taking into account that the Bills
of Lading60
also designated Beatles to be the notifying party, Respondents actions were as
such not uncustomary.
39. Second, Respondents had no knowledge of the correspondence between Claimants and
Beatles. They based their decision completely on the letters they received from respectively
Beatles and the Claimants on 19 and 20 March 2009. As it turns out, they made the correct
decision by delivering the cargo to Beatles, them being shown the true owner at the moment.
55
Per, Lord Denning in Sze Hai Tong Bank Ltd v. Rambler Cycle Co. Ltd (1959) 2 LLR at 120. 56
See exhibit 31 57
A/S Hansen-Tangens Rederi III v Total Transport Corporation (The Sagona) [1984] 1 Lloyd’s Rep 194. 58
Kuwait Petroleum Corp v. I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541. 59
Strathlorne Steamship Company, Ltd. v. Andrew Weir & Co., (1934) 50 Ll.L.Rep. 185. 60
See exhibit 5 to 8
19
Claimants claims are ill-founded as they have no rights to the goods itself, being merely
holders of the Bills of Lading.
4.6.2 RESPONDENTS HAD THE RIGHT TO DISCHARGE THE CARGO IN ROTTERDAM DUE TO A LIBERTY
CLAUSE
40. The Charterparty provides in section 29 that “…The owner may, when practicable, have
the Vessel call and discharge the cargo at another or substitute port declared or requested by
the charterer. The owner or the Master is not required to give notice of discharge of the
cargo, or the forwarding thereof as herein provided…”61
41. Respondents can rely on all provisions of the Charterparty since it is duly incorporated
into the Bills of Lading. In this regard they had a contractual right to discharge the goods in
Rotterdam on charterers request. Respondents are in no way liable to Claimants for this
action.
4.6.3 CLAIMANTS AGREED DELIVERY AT ROTTERDAM
42. If which is denied, Claimants are the legal owners of the cargo, they agreed for the cargo
to be delivered at Rotterdam. For this we refer to the correspondence between Claimants and
Beatles. In the 16 March 2009 15:20 email Claimants stated they “did not consider that the
cargo should be sent to Liverpool…” The 18th
of March 2009 16:01 email provides that
Claimants had “…couriered the bills to Johnson & Johnson in Rotterdam for them to make
available when the vessel arrives…”. This evidences that Claimants were in agreement with
Beatles for the cargo to be delivered at Rotterdam. Beatles merely acted in accordance with
61
See exhibit 3
20
this agreement by instruction Respondents to discharge the cargo at Rotterdam. The fax62
sent
by Claimants to Respondents on the 20th
of March 2009 provided that Claimants had not
authorised Beatles to ask for discharge at Rotterdam. However, the fax was sent to late as
discharge had already began the 20th
of March 2009. Knowing this, the fax sent by Claimants
can only be considered an attempt to artificially create a breach of contract by Respondents.
4.6.4 THERE IS NO TORT OF CONVERSION
43. A conversion requires three elements:
the plaintiff has clear legal ownership or right to possession of the property at the time
of the conversion;
the defendant's conversion by a wrongful act or disposition of plaintiff's property
rights;
there are damages resulting from the conversion.
44. All three of these elements must be fulfilled for a conversion claim to succeed. Claimants
do not meet the first and last requirement.
45. Claimants abandoned the cargo on the 6th
of March 2009. When the cargo was delivered
to Beatles between 20 and 22 March 2009, Claimants did not have legal ownership of the
cargo, nor did they have a right to possession of the cargo. As Claimants had no right to
possession of the cargo, they neither could have suffered any damage. Due to this, no
conversion occurred.
62
Exhibit 23
21
46. There is a lack of identity of property. Since the cargo was shipped in bulk, property of the
goods could only pass on ascertainment.63
Claimants had no existing property rights on the
goods when the alleged conversion occurred. If, which is denied, Claimants did have existing
property rights, they are estopped from them by representation of their own actions.64
Their
claim is ill-founded.
5. IF WHICH IS DENIED, THE RESPONDENTS ARE LIABLE TO CLAIMANTS
FOR DELIVERING THE CARGO TO BEATLES:
5.1 THE CALCULATION OF THE DAMAGES IS THE CARGO VALUE AT ROTTERDAM
47. Since “Hadley v Baxendale”65
damages are recoverable under two limbs66
:
1) Damages which may fairly and reasonably be considered as arising naturally
from the breach;
2) Damages which may reasonably be supposed to have been in the contemplation
of the parties, as liable to result from the breach, at the time of the contract.
48. The 2009 case of the "Achilleas" added a further requirement to those of “Hadley v.
Baxendale”, namely that the loss claimed be a type of loss for which the guilty party can
reasonably be assumed to have assumed responsibility.67
Although the case of the “Sylvia”68
tempered the effect of the “Achilleas” in a way that the orthodox approach would remain the
general test of remoteness applicable in the great majority of cases, there still may be
63
See section 3.3 of this memorandum 64
See section 3.1 of thus memorandum 65
Hadley v Baxendale [1854] EWHC Exch J70; (1854) 9 Exch 341 at page 354. 66
Profindo Pte ltd v Abani Trading Pte ltd (the mv “Athens”) [2013] Lloyd's Rep. Plus 8; Koufos v C Czarnikow
Ltd (The Heron II) [1967] 3 All ER 686. 67
Transfield Shipping Inc v Mercator Shipping Inc (The 'Achilleas') [2008] 3 WLR 345. 68
Sylvia Shipping Co Limited v Progress Bulk Carriers Limited [2010] EWHC 542.
22
"unusual" cases, in which the context, surrounding circumstances or general understanding of
the market make it necessary to consider whether there was an assumption of responsibility.
49. Respondents are not liable to Claimants for any deterioration in value of the cargo due to
the pirate hijack. Claimants can only prescribe to a compensation for the damages they
incurred as a result of the misdelivery to Beatles by Respondents. These damages fall under
the first limb of the “Hadley v Baxendale” rule, and are therefore recoverable.
5.1.1 THE MARKET VALUE OF THE CARGO
50. The calculation of the damages has to be in accordance with article IV, 5 (b) of the
Hague-Visby rules, which provides that: “The total amount recoverable shall be calculated
by reference to the value of such goods at the place and time at which the goods are
discharged from the ship in accordance with the contract or should have been so
discharged.”
51. In accordance with the liberty clause provided in the Charterparty, and subsequent, the
agreement by Claimants, the goods were properly discharged at Rotterdam on 20 – 22 March
2009. The value of the goods therefore is the market value at Rotterdam. This value is best
evidenced by the price paid in Rotterdam on 19 March 2009 in respect of the other parcel
non-GMQ PFAD on board on the Vessel Twilight Trader, which was sold by Beatles at USD
350 per MT C&F Rotterdam. The value of the damages incurred by Claimants amounts, 4,000
x USD 350, which brings the total to USD 1.4 million.
52. If which is denied, the cargo should have been delivered in Liverpool, the calculation of
the damages is the price paid in Rotterdam on 19 March 2009 plus the freight costs from
23
Rotterdam to Liverpool. The total amount of the damages would than be USD 350 per MT +
USD 30 per MT freight costs, being USD 380 per MT, USD 1.52 million.69
53. In order to obtain this number we did not ignore the Kevin Ackroyd Single Joint Expert
Report70
, however, we doubt its plausibility. First, all prices given in the report, as well the
PFAD prices as the freight rates, diverge seriously from the prices given by the Beatles
consultant Mark Wiggins.71
Each PFAD price given by Kevin Ackroyd is significantly higher
than the prices provided by Mark Wiggins, which can be proven on the basis of the attached
chart.72
The freight rates provided by Kevin Ackroyd are also considerably higher than those
provided by Mark Wiggins, who can prove his numbers in much more detail.73
Second, the
words used by Kevin Ackroyd render the report untrustworthy in our opinion. An expert
judging facts by saying “As far as I can remember…”74
is not adequate to stand by in a legal
dispute. In addition, he only speaks in general terms and provides no controllable sources on
which he bases his opinion, or from whom he acquires his information. For these reasons we
consider the entire report unreliable, and do not take it into account for the calculation of the
damages. On the ground of article 37,1,(b) of the UK Arbitration Act 1996 we ask the tribunal
to do the same thing, and not take the report into account.
54. Furthermore, the fact that the individual buyers of Claimants would have accepted to take
the non-GMQ PFAD for the same price as GMQ PFAD75
does not prove that the market
value of non-GMQ PFAD in Liverpool is equal to GMQ PFAD. It is to short-sighted to
extrapolate an individual case to the general market value of the goods.
69
See exhibit 35 70
See exhibit 32 71
See exhibit 35 72
See Chart in exhibit 35 73
See exhibit 35 74
See exhibit 32 Section F 75
See exhibits 33 and 34
24
5.1.2 THE ALLEGED CONSEQUENTIAL DAMAGES WERE NOT REASONABLY FORESEEABLE
55. The price of USD 522.50 per MT paid by Claimants to buy in goods to sell to their sub-
buyers in Liverpool is no consequential damages that Respondents are liable for towards
Claimants. On the moment the contract of carriage originated it was not reasonably
foreseeable for Respondents, nor in contemplation of the parties, that Respondents could be
held liable for obligations by Claimants towards third parties. Respondents also never
recognised an assumption of this responsibility. It was in no way predictable for Respondents
that Claimants already would have sold goods that yet had to be delivered to them. As a result
hereof the alleged damages do not fall under either the first, nor the second limb of the
“Hadley v Baxendale” rule. The alleged damages are not recoverable.
5.2 THE DUTCH COURT COSTS SHOULD NOT BE REVISITED
56. The Dutch Court ordered that Claimants should pay the costs of this procedure since their
claim was rejected. The costs were Euro 262 for disbursements and Euro 816 for legal fees.76
These costs should not be revisited.
76
See exhibit 31