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transcript
SEVENTEENTH ANNUAL
INTERNATIONAL MARITIME LAW ARBITRATION MOOT
2017
YOGI BRATAJAYA DENI MULYANA M IRFAN DIMASYQI FADEL AROZI
MEMORANDUM FOR CLAIMANT
UNIVERSITAS PADJADJARAN
TEAM 20
ON BEHALF OF
FURNACE TRADING PTE LTD
CLAIMANT
AGAINST
INFERNO RESOURCES SDN BHD
RESPONDENT
COUNSEL
TEAM 20 MEMORANDUM FOR CLAIMANT
I
LIST OF ABBREVIATIONS III
LIST OF AUTHORITIES IV
STATEMENT OF FACTS 1
ARGUMENTS ON JURISDICTION 2
I. THIS TRIBUNAL HAS JURISDICTION TO GRANT LIBERTY AND/OR POWER
TO THE CLAIMANT TO SELL THE CARGO ON BOARD THE VESSEL
PENDENTE-LITE
2
A. This Tribunal has Jurisdiction to Order the Sale of CARGO 2
B. CLAIMANT’S Request for an Interim Award Must be Granted 3
i. This Tribunal has Jurisdiction to Grant Interim Awards under the IAA and other
Applicable Laws
3
ii. The Sale of CARGO Meets all the Requirements Provided by the UNCITRAL Model Law 4
a. CLAIMANT will likely suffer irreparable harm if the interim award is not granted 4
b. CLAIMANT’S potential harm substantially outweighs the harm suffered by
RESPONDENT
5
c. There is a reasonable possibility that CLAIMANT will succeed on the merits 6
TABLE OF CONTENTS
TEAM 20 MEMORANDUM FOR CLAIMANT
II
II. CLAIMANT IS AT LIBERTY TO APPRAISE AND SELL THE CARGO 7
A. Sale of the CARGO is Necessary in Order to Protect the Safety and Wellbeing of the
Crew
7
B. Sale of CARGO is Necessary in Fear that the Sums Due would Exceed the Value of the
Cargo
8
C. The Sale is Necessary as the VESSEL is Facing Dangerous Weather 9
D. Keeping the CARGO on board is Dangerous 10
ARGUMENTS ON THE MERITS OF THE CLAIM 11
III. RESPONDENT IS LIABLE TO PAY FOR DAMAGES FOR DETENTION 11
A. RESPONDENT Failed to Nominate a Discharge Port 11
B. The Nomination to the Port of Busan is not Eligible 12
i. CLAIMANT’S Refusal of Nomination to Busan was Justified since the Port was Unsafe 12
ii. The Nomination to the Port of Busan is not within the CHARTERPARTY 13
C. RESPONDENT Cannot Rely on Clause 24 of the CHARTERPARTY to Excuse Paying for
Damages
13
D. The Delay was not at Fault of the SHIPMASTER’s Negligence 15
i. RESPONDENT has consented to the risk of delay 15
TEAM 20 MEMORANDUM FOR CLAIMANT
III
ii. RESPONDENT contributed in the SHIPMASTER’s decision to stay within Singapore’s OPL 16
E. RESPONDENT is Liable for Damages as a Result of its Conduct 17
IV. CLAIMANT’S EXERCISE OF LIEN IS LAWFUL 17
A. CLAIMANT’S Lien was Properly Conducted Pursuant to the Lien Clause within the
CHARTERPARTY
17
i. RESPONDENT is liable to pay freight under the terms of the CHARTERPARTY 18
ii. The CHARTERPARTY was incorporated into the B/L 19
B. CLAIMANT’S Location of Lien is Lawful 21
i. There was a risk that exercising the lien at the discharge port would waiver CLAIMANT’S
right to lien
21
ii. Exercising the lien on board the VESSEL is commercially safest 21
V. CLAIMANT WAS ENTITLED TO TERMINATE THE CHARTERPARTY 22
A. RESPONDENT’S has Commited a Fundamental Breach 23
i. The contract has been breached in a serious manner going to the root of CLAIMANT’S
contractual expectations
23
ii. RESPONDENT has shown a clear unwillingness to perform the CHARTERPARTY 23
B. The Lack of a Termination Clause does not Deny CLAIMANT’S Right to Terminate the
CHARTERPARTY
24
TEAM 20 MEMORANDUM FOR CLAIMANT
IV
C. CLAIMANT is still Entitled to Claim for Freight and Other Damages Even if the
CHARTERPARTY was Terminated
25
LIST OF ABBREVIATIONS
CLAIMANT Furnace Trading Pte Ltd
RESPONDENT Inferno Resources Sdn Bhd
CHARTERPARTY The Voyage Charterparty between CLAIMANT and
RESPONDENT
Clean Fixture Recap Clean Fixture Recap of the CHARTERPARTY
SUB-CHARTERPARTY The Voyage Charterpary between RESPONDENT
and THIRD-PARTY
CARGO 84,000.052MT of Australian Steam Coal in Bulk on
board the M.V. TARDY TESSA
Parties Koyala Global Resources Ltd
Record 2017 International Maritime Law Arbitration
Record
VESSEL M.V. TARDY TESSA, Singapore
SCMA Singapore Chamber Maritime Arbitration
Sub-Charterers Idoncare Berjaya Utama Pty. Ltd.
Charterer Inferno Resources Sdn. Bhd.
Disponent-Owner Furnace Trading Pte. Ltd.
Head-Owner Imlam Consignorist GmbH
Sub-freight US$771,120.48
OPL Outside Port Limit
SPSB Safe Port Safe Berth
SHIPMASTER Captain Tan Xiao Ming
TEAM 20 MEMORANDUM FOR CLAIMANT
V
IAA International Arbitration Act (1994) Cap 143A
B/L Bill of Lading
B/L Act Bill of Lading Act 1992 Singapore
UNCITRAL Model Law UNCITRAL Model Law on International
Commercial Arbitration 1985
LIST OF AUTHORITIES
TABLE OF CASES
Allen v Emmerson [1944] 1 All ER 344 14
Allison v Bristol Marine Insurance [1875] AC 209 18
Ampurius Nu Homes Holdings Ltd v. Telford Homes (“Creekside”) Ltd [2013]
EWCA Civ 577; [2013] 4 All ER 377, at [70].
24
Astro Valiente Compania Naviera SA v The Government of Pakistan Ministry of
Food and Agriculture (The “Emmanuel Colocotronis” (No. 2)) [1982] 1 WLR
1096; [1982] 1 Lloyd's Rep 286.
19
Badger v Ministry of Defence [2006] 3 All ER 173
Baldwin’s Ltd. v. Halifax Corporation [1916] 85 L.J.K.B. 1769 14
Barrett v Ministry of Defence [1995] 3 All ER 86 16
Blake v Galloway [2004] 3 All ER 315 16
Blue Anchor Line Ltd. v Alfred C. Toepfer International (The “Union
Amsterdam”) [1982] 2 Lloyd’s Rep. 432.
15
Blyth v Birmingham Waterworks [1856] 11 Ex R781 15
Bowater v Rowley Regis Corp [1944] KB 476 16
TEAM 20 MEMORANDUM FOR CLAIMANT
VI
Butterfield v Forrester [1809] 11 East 60 16
Capital and Suburban Properties Ltd v Swycher [1976] 1 Ch 319 25
Cetelem SA v Roust Holdings Ltd [2005] 1 WLR 3555 8
Compania Naviera General S.A. v Kerametal Ltd., (The “Lorna I”) [1983] 1
Lloyd’s Rep. 373
18
Condon v Basi [1985] 2 All ER 453 16
Court of First Instance (Fifth Chamber) Esedra Sprl v. Comm. of the EC T-
169/00R.
6
Davies v Mann [1842] 10 M&W 546 16
Davies v Swan Motor Co (Swansea) Ltd [1949] 2 KB 291 16
De Silvale v Kendall (1815) 4 M & S 37
Driefontein Consolidated Gold Mines Ltd. v Janson [1900] 2 Q.B. 339 14
Emilia Shipping Inc. v State Enterprise for Pulp and Paper Industries (“Emilia
Shipping”) [1991] 1 SLR(R) 411;
8,11
Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SGHC 311 7,8,11
Froom v Butcher [1976] QB 286; 16
Fulton Shipping Inc of Panama v Globalia Business Travel S.A.U. (The “New
Flamenco”) [21.12.15]
9
Gard Marine & Energy v China National Chartering (The “Ocean Victory”)
[2015] EWCA Civ 16.
12
Gregory v Fearn [1953] 2 All ER 559 14
TEAM 20 MEMORANDUM FOR CLAIMANT
VII
Hammonds and Another, Executors of Blight, v Barclay and Others, Assignees of
Fentham a Bankrupt [1802] EngR 107, (1802) 2 East 227
18
Hillel v Christoforides [1991] 63 P&CR 301 (ChD) 25
Hurst v Byrk [2000] UKHL 19 25
ICI Ltd v Shatwell [1965] AC 656 16
International Bulk Carriers (Beirut) S.A.R.L. v Evlogia Shipping Co. S.A., and
Marathon Shipping Co. Ltd. (The “Mihalios Xilas”) [1978] 2 Lloyd’s Rep.186
18
Jaggard v Sawyer [1994] EWCA Civ 1 25
Johnson v Agnew [1980] AC 367 25
Jones v Livox Quarries Ltd [1952] 2 QB 608 16
K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The “Saga Cob”)
[1922] 2 Lloyd’s Rep 545, CA.
12
Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes, (The “Evia”)
(No 2) [1983] 1 AC 736
13
Kuwait Rocks Co v AMN Bulkcarriers Inc (The “Astra”) [2013] EWHC 865
(Comm)
23
Leeds Shipping Co Ltd v Societé Francaise Bunge (The “Eastern City”) [1958] 2
Lloyd’s Rep 127
12
London Arbitration 13/87 LMLN 205 22
McKew v Holland & Hannen & Cubbitts [1969] 3 All ER 1621 17
Molthes Rederi Akt v Ellerman’s Wilson Line Ltd [1927] 1 KB 710 18
Morris v Murray [1990] 3 All ER 801 16
TEAM 20 MEMORANDUM FOR CLAIMANT
VIII
Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India, (The
“Kanchenjunga”) [1990] Lloyd’s Rep 391, HL
13
Nesbitt v. Lushington (1792) 4 T.R. 783 15
Occidental Petroleum Corporation, Occidental Exploration and Production
Company v Republic of Ecuador, ICSID Case No. ARB/06/11.
5
Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania
Naviera SA (The “San Nicholas”) [1976] 1 Lloyd’s Rep 8.
20
Perenco Ecuador Ltd. v Republic of Ecuador and Empresa Estatal Petróleos del
Ecuador (“Petroecuador”), ICSID Case No. ARB/08/6
4
Pitts v Hunt [1990] 3 All ER 344 16
Portsmouth Steamship Co v Liverpool Salvage Co [1929] 34 LIL Rep 459. 13
Powell v Kempton Park [1897] 2 QB 242 14
Quiborax S.A., Non Metallic Minerals S.A. y Allan Fosk Kaplún v Plurinational
State of Bolivia, ICSID Case ARB/06/2
4
R. v Cleworth, 4B. & S.927 14
Safe Kids in Daily Supervision Limited v. McNeill, High Court, Auckland, New
Zealand, 14 April 2010, [2010] NZHC 605).
6
Sandiman v Breach, 7B. & C.96 14
Santiren Shipping Ltd. v Unimarine S. A. (The “Chrysovalandou Dyo”) [1981] 1
Lloyd’s Rep. 159
22
Scriven Brothers & Co v Hindley & Co [1913] 3 KB 564 15
Somes v British Empire Shipping Co (1858) El. Bl. & El. 353 (QB) 18
Staffordshire Area Health Authority v. South Staffordshire Waterworks Co [1978] 3 All ER 769 24
TEAM 20 MEMORANDUM FOR CLAIMANT
IX
Stapley v Gypsum Mines Ltd [1953] AC 663 17
The “Myrto” [1977] 2 Lloyd’s Rep. 243 8
The Athanasia Comminos [1968] 2 Lloyd’s Rep. 57 10
The Dominique [1987] 1 Lllyd’s Rep 239 18
The Whippingham [1934] 48 LIL Rep. 49 10
Thompson v Gillespy (1855) 5 E & B 209 18
Transco plc v Stockport Metropolitan Borough Council [2003] UKHL 61 14
Tyne Tugs v Owner of the MV Aldora (The “Aldora”) [1975] QB 748. 10
United Kingdom Aegean Sea Traders Corp. v Repsol Oil International Ltd. and
Repsol Petroleo, (The “Aegean Sea”) [1998] 1 Lloyd’s Rep 39
13
Vagres Compania Maritima SA v Nissho-Iwai American Corpn, (The “Karin
Vatis”) [1988] 2 Lloyd’s Rep 330
18,19
Wooldridge v Sumner [1963] 2 QB 43 16
BOOKS
Ali Yesilirmak, Provisional Measures in International Commercial Arbitration,
Kluwer Law International, 2005, p. 205.
6
Colin R. Ward, Coal Geology and Coal Technology, Melbourne: Blackwell
Scientific Publications, 1984,
10
Dr. L. L. Sloss, Assessing and Managing Spontaneous Combustion of Coal,
London : IEA Clean Coal Centre, 2015, p. 10.
5
TEAM 20 MEMORANDUM FOR CLAIMANT
X
Ewan McKendrick, Force Majeure and Frustration of Contract, Abingdon:
Informa Law from Routledge, 2013, p. 153
14
Gary B. Born, International Arbitration: Law and Practice. The Netherlands:
Kluwer Law International, 2012, p. 66
4
Gary B. Born, International Commercial Arbitration (Second Edition), Kluwer
Law International, 2014, p. 2479
6
John F. Wilson, Carriage of Goods by Sea: Seventh Edition, Essex: Pearson
Education Limited, 2010
15,21,25
Margaret L. Moses, The Principles and Practice of International Commercial
Arbitration, New York: Cambridge University Press, 2008, p. 186.
5
Meltem Deniz Guner-Ozbek, The Carriage of Dangerous Goods by Sea, Istanbul:
Springer-Verlag Berlin Heidelberg, 2008, p. 262
10
Simon Baughen, The Shipping Law (Fourth Edition), New York: Routledge &
Cavendish, 2009, p. 84
19
Sir Bernard Eder et al, Scrutton on Charterparties and Bills of Lading, 22nd ed,
:Sweet & Maxwell, 2011,p. 1; p. 95
19
Sir Guenter Treitel and F M B Reynolds, Carver on Bills of Lading, :Sweet &
Maxwell, 2001, p. 61.
19
TEAM 20 MEMORANDUM FOR CLAIMANT
XI
JOURNALS
Meteorological Service Singapore Online Report of the Climate of Singapore 9
STATUTES
UNCITRAL Model Law on International Commercial Arbitration, Art. 16(1); Art.
17(2); Art. 17(1); Art. 17(A)
2,3,4
INTERNATIONAL ARBITRATION ACT (1994), Cap 143A, Art. 12; Art. 12(1)(d); Art.
21(1)(i); Art. 2(1);
2,3
Singapore Chamber of Maritime Arbitration Rules, Rule 36.2. 4
Maritime Labour Convention 2014, Art. 13(a); Art. 13(c); Art. 13(d) 8
TEAM 20 MEMORANDUM FOR CLAIMANT
1
STATEMENT OF FACTS
1. February 15th 2016, Inferno Resources Sdn Bhd (RESPONDENT), signed into a Voyage Charterparty
dated 1 September 2016 (CHARTERPARTY) with Furnace Trading Pte Ltd (CLAIMANT), the
disponent owners of a Singapore flagged vessel the MV Tardy Tessa. The vessel was subsequently
sub Voyage Chartered by RESPONDENT to Idoncare.On October 4th 2016, a B/L was issued by the
SHIPMASTER at the port of loading. Clause (1) of the B/L incorporates all “terms and conditions,
liberties and exceptions of the Charterparty,” but the Charterparty has not been specified.
2. On 10th of October 2016, the VESSEL arrived at Singapore for bunkering and left at the 11th of
October. RESPONDENT has failed to nominate a legitimate discharge port as per CHARTERPARTY,
1 SPSB in China [Dalian, Jinzhou, Yingkou, Yantai, Qingdao, Shanghai, Tianjin, Ningbo], despite
numerous requests from CLAIMANT. To remedy the situation, RESPONDENT redirects the VESSEL
to the Port of Busan which was rejected by CLAIMANT due to rumours of zombies on board a train
to Busan making the port unsafe.
3. On October 20th 2016, CLAIMANT issued a notice of lien towards RESPONDENT for freight over
CARGO on board the VESSEL, and simultaneously a Lien for Sub-Freight was issued to Idoncare
demanding that sub-freight be paid directly to CLAIMANT.
4. On October 22nd 2016, CLAIMANT issued a Notice of Termination towards RESPONDENT for their
repudiatory breach in the form of failure to pay freight as per CHARTERPARTY.
5. CLAIMANT commenced arbitral proceedings with RESPONDENT on 11th December 2016 for the
liberty to appraise and sell the CARGO on board the VESSEL pendente lite.
TEAM 20 MEMORANDUM FOR CLAIMANT
2
ARGUMENTS ON JURISDICTION
I.THIS TRIBUNAL HAS JURISDICTION TO GRANT LIBERTY AND/OR POWER TO
THE CLAIMANT TO SELL THE CARGO ON BOARD THE VESSEL PENDENTE-LITE
1. The principle of Kompetenz-Kompetenz provides the arbitral tribunal power to determine its own
jurisdiction.1 This arbitral tribunal has jurisdiction (A) to grant CLAIMANT liberty to sell the CARGO
(B) in the form of an interim award.
2. As a preliminary matter, Singapore law shall govern this arbitration as per SCMA Rules. Clause
26(c) of the CHARTERPARTY grants the liberty to the parties to decide on the law which governs
the contract, as well as the law and place of the arbitration.2 Point 29 of the Clean Fixture Recap
regarding Law and Dispute Resolution explicitly states that “Singapore law and arbitration as per
SCMA Rules.”3
A. This Tribunal has Jurisdiction to Order the Sale of CARGO
3. This tribunal has jurisdiction to order the sale of CARGO pursuant to the provisions of the IAA. As
mentioned previously, Singapore law governs this arbitration4 and thus Statutes, Acts, and other
products of law ratified by the Government of Singapore shall be binding.
4. Clause 12 of the IAA provides the arbitral tribunal with powers to make orders and give directions.5
More specifically, clause 12(1)(d) grants the arbitral tribunal power for the preservation, interim
custody or sale of any property which is or forms part of the subject-matter of the dispute.6
Therefore, this arbitral tribunal has jurisdiction to grant CLAIMANT’S request for the sale of CARGO.
1 UNCITRAL Model Law on International Commercial Arbitration, Article 16(1). 2 Record, p. 32 CHARTERPARTY, Clause 26(c) 3 Record, p. 23 Clean Fixture Recap, point 29 4 Record, p. 23 Clean Fixture Recap, point 29 5 IAA (Singapore), s 12 6 IAA (Singapore), s 12(1)(d)
TEAM 20 MEMORANDUM FOR CLAIMANT
3
B. CLAIMANT’S Request for an Interim Award Must be Granted
5. CLAIMANT submits that CLAIMANT’s request for the order of sale of the CARGO pendente lite shall
be construed as a request for an interim award. An interim award is any award issued by the
tribunal pending the issuance of the award by which the dispute is decided.7 This tribunal has such
jurisdiction to grant interim awards pursuant to the provisions of the (i) IAA, the SCMA Rules and
other model laws applicable in this arbitration, and that (ii) the sale of CARGO meets all the
requirements provided by the UNCITRAL Model Law.
i. This Tribunal has Jurisdiction to Grant Interim Awards under the IAA and other
Applicable Laws
6. Firstly, this tribunal has jurisdiction pursuant to the provisions of the IAA. Clause 12 of the IAA
provides that an arbitral tribunal governed by the law of Singapore has the power to make orders
or give directions to any part for an interim injunction or any other interim measures.8
7. Secondly, both parties have mutually agreed that Singapore Law shall govern this arbitration.9
Therefore, provisions within the UNCITRAL Model are applicable. Article 17(1) of the UNCITRAL
Model Law states that, “Unless otherwise agreed by the parties, the arbitral tribunal may, at the
request of a party, grant interim measures.”10 There is no statement within the arbitration
agreement to exclude the arbitral tribunal from granting interim measures.
8. Lastly, this arbitration is conducted pursuant to SCMA Rules11, as explicitly stated in the arbitration
clause and the arbitration agreement.12 Rule 36.2. of the SCMA Rules grants the arbitral tribunal
7 UNCITRAL Model Law on International Commercial Arbitration, Article 17(2) 8 IAA (Singapore), s 21(1)(i) 9 Record, p. 23 Clean Fixture Recap, point 29 10 UNCITRAL Model Law on International Commercial Arbitration, Article 17(1) 11 Born B., Gary. 2012. International Arbitration: Law and Practice. The Netherlands: Kluwer Law International.
Page 66 12 Record, p. 23, Clean Fixture Recap, point 29; p. 72, 78, 84
TEAM 20 MEMORANDUM FOR CLAIMANT
4
power to make any interim awards or separate awards on different issues at different times.13 From
both the arbitration law and the arbitration rules applied to this arbitration, this tribunal has
jurisdiction to grant interim awards.
ii. The Sale of CARGO Meets all the Requirements Provided by the UNCITRAL Model Law
9. Article 17(A) of the UNCITRAL Model Law laid out two requirements that must be satisfied by a
party intending to be granted an interim award.14 Namely, (a) the requesting party will likely to
suffer irreparable harm if the interim award is not granted, (b) the potential harm to the requesting
party substantially outweighs the harm suffered by the other party, and (c) that the requesting party
has a reasonable possibility to succeed on merits. CLAIMANT submits that these requirements are
met.
d. CLAIMANT will likely suffer irreparable harm if the interim award is not granted
10. CLAIMANT’S application for an interim award should be granted since CLAIMANT will potentially
suffer irreparable harms in the event that the interim award regarding the order for the sale of
CARGO is not granted. The limitation of irreparable harm was well defined in the case of Quiborax
S.A., Non Metallic Minerals S.A. y Allan Fosk Kaplún v Plurinational State of Bolivia. 15 The case
defined irreparable harm as harm not adequately reparable by an award of damages, inter alia, an injury not
monetarily compensable.16
11. In the present case, the VESSEL has been drifting at Singapore’s OPL for more than two weeks,
and the CARGO on board of the VESSEL has shown signs of overheating.17 These circumstances are
13 SCMA Rules, Rule 36.2. 14 UNCITRAL Model Law, Sec. 17(A) 15Quiborax S.A., Non Metallic Minerals S.A. y Allan Fosk Kaplún v Plurinational State of Bolivia, ICSID Case
ARB/06/2 16 Perenco Ecuador Ltd. v Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador), ICSID
Case No. ARB/08/6 17 Record, p. 37.
TEAM 20 MEMORANDUM FOR CLAIMANT
5
excerbated by the fact that Australian Steam Coal is classified as subbituminous coals,18 and such
coals are notorious of its high propensity to self-heat which can cause dangerous and expensive
accidents.19 Thus, if this situation is prolonged, CLAIMANT contends that it shall endanger the lives
of the SHIPMASTER and his crew, since there is high risk that the CARGO will spontaneously
combust.
12. The loss of life of the Shipmaster and his crew shall be categorized as irreparable harm, since it is
not compensable either monetarily or by an award of damages. It is acknowledged that the main
purpose of monetary relief is that it will put the non-breaching party back in the position it would
have been if the breach had not occurred.20 CLAIMANT asserts that the loss of life should
unquestionably not be considered reparable by an award of monetary damages, since the lives of
human beings cannot be restituted simply either by an award of damages or monetary
compensation.
13. Thus, it is urgent for CLAIMANT to seek an order for the sale of CARGO in order to prevent the
irreparable harm that CLAIMANT shall likely suffer. Therefore, CLAIMANT’ submission in regards
to an order for an interim award must be made when it has been concluded that it is necessary and
urgent to avoid imminent and irreparable harm.21
e. CLAIMANT’S potential harm substantially outweighs the harm suffered by RESPONDENT
14. Under the doctrine of proportionality, an enquiry must be conducted in order to make any
immediate adverse effects of disrupting the status quo, while maintaining the balance between the
parties’ interests.22 In other words, this requirement is essential to assess the balance of
18 Record, p. 99. 19 Dr L L Sloss, Assessing and Managing Spontaneous Combustion of Coal, London : IEA Clean Coal Centre, 2015,
p. 10. 20 Margaret L. Moses, The Princiles and Practice of International Commercial Arbitration, p. 186. 21 Occidental Petroleum Corporation, Occidental Exploration and Production Company v Republic of Ecuador,
ICSID Case No. ARB/06/11. 22 Ali Yesiliirmak, Provisional measures in International Commercial Arbitration, 2005, p. 205.
TEAM 20 MEMORANDUM FOR CLAIMANT
6
convenience.23 In the present case, CLAIMANT denies that any loss or damages suffered by
RESPONDENT shall be irreparable by an award of damages.
15. In regards to RESPONDENT’S argument regarding the damage to the company’s reputation, such
harm shall be considered reparable by an award of damages. It was held in the case of Court of
First Instance (Fifth Chamber) Esedra Sprl v. Comm. of the EC, a fall of reputation would not be
fatal to the future of company and thus is not considered as an irreparable harm.24 In light of the
above, CLAIMANT’S potential damages far outweigh RESPONDENT’S if the interim award is not
granted.
f. There is a reasonable possibility that CLAIMANT will succeed on the merits
16. The third requirement that must be fulfilled is that CLAIMANT must have a reasonable possibility
that it will succeed on the merits of the claim. This inquiry into the merits of the parties’ claims
and defences is solely on a prima facie basis.25
17. Firstly, CLAIMANT submits that it intends to sell the CARGO on the basis that they have suffered
substantial losses from damages for detention and RESPONDENT’S failure to pay freight. Based on
this evidence it is apparent that RESPONDENT is liable for the damages and other losses suffered by
CLAIMANT.
18. Secondly, based on the evidence provided by the SHIPMASTER and the Parties’ Joint Expert Report
there is a clear element of urgency for the sale of CARGO. CLAIMANT requests that this tribunal
refer to Submission II of this written memorandum for further elaboration.
23 Safe Kids in Daily Supervision Limited v. McNeill, High Court, Auckland, New Zealand, 14 April 2010, [2010]
NZHC 605). 24 Court of First Instance (Fifth Chamber) Esedra Sprl v. Comm. of the EC T-169/00R. 25 Gary B. Born, International Commercial Arbitration (Second Edition), Biggleswade: Kluwer Law International,
2014, p. 2481
TEAM 20 MEMORANDUM FOR CLAIMANT
7
II. CLAIMANT IS AT LIBERTY TO APPRAISE AND SELL THE CARGO
19. The VESSEL has been stranded drifting outside of Singapore’s OPL for over 20 days due to
RESPONDENT’S failure to nominate a discharge port.26 As a result of this delay the VESSEL as well
as the CARGO onboard has suffered immensely.27
20. In the case of Five Ocean Shipping Corporation v Cingler Ship Pte Ltd, the court granted an order
for the sale of cargo if and when there is a clear urgency that constitutes it necessary for the sale
of cargo.28 CLAIMANT submits that such urgency for the sale of CARGO is present since (A) the
wellbeing and health of the crew were dire, (B) the sale is necessary in order to preserve the value
of the CARGO and (C) prevent damage to the VESSEL from weather, and to (D) prevent the CARGO
from self-combustion.
A. Sale of the CARGO is Necessary in Order to Protect the Safety and Wellbeing of the Crew
21. On 30th November 2016, CLAIMANT received a report from the SHIPMASTER describing the
conditions of the crew on board the VESSEL after having been stranded for over 20 days.29 In the
report, the SHIPMASTER stated that crew morale is very low and that there is a lack of essential
supplies such as fresh food and water.30 To add to the severity of the situation, the VESSEL has also
run out of crucial medicine which is fatal since the first officer suffers from diabetes.31 The
SHIPMASTER is also facing en masse resignations and has asked that, “urgent measures be
undertaken immediately before it is too late”.32
26 Record, p. 37 27 Record, p. 37 28 Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources,intervener) [2015] SGHC
311 29 Record, p. 37 30 Record, p. 37 31 Record, p. 37 32 Record, p. 37
TEAM 20 MEMORANDUM FOR CLAIMANT
8
22. Under the Merchant Shipping (Maritime Labour Convention) Act 2014, a ship-owner has the
obligation to provide its crew members a safe and secure workplace with decent working and
living conditions.33 This includes an obligation to protect the health of seafarers and ensure their
prompt access to medical care onboard ship and ashore.34 These conditions are one of the major
factors that demonstrate the urgency and necessity for the sale of CARGO.35 CLAIMANT’S request
for an interim award is an attempt of adherence of this stipulation.
23. It is not ethical to hold the crew onboard the VESSEL under these dire conditions. Furthermore,
CLAIMANT does not want to risk incurring more charges from maintaining the crews’ wages,
supply of food and water, and also incurring charges from the ITF.36 By selling the CARGO as
quickly as possible CLAIMANT is protecting the safety and wellbeing of the crew and making sure
not to incur more fees and charges. Claimant requests this tribunal to share the same concern in
regards to the wellbeing of the crew.
B. Sale of CARGO is Necessary in Fear that the Sums Due would Exceed the Value of the
Cargo
24. CLAIMANT has the right to sell the CARGO since the CARGO on board the VESSEL will deteriorate
in terms of its value. In The Cetelem,37 it was held that the sale of cargo for the purpose of
preserving assets is necessary. It was further elaborated that the necessity of assets preservation
applied when there is a probability of the assets diminishing in value.
25. In the present case, CLAIMANT’S objective to sell the CARGO is to preserve the assets in a way to
prevent any further loss in term of its value. In accordance to the Joint Parties’ Expert Report it is
33 Merchant Shipping (Maritime Labour Convention) Act 2014, Article 13 34 Merchant Shipping (Maritime Labour Convention) Act 2014, Regulation 4.1 35 Emilia Shipping [1991] 1 SLR(R) 411; Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities &
Energy Resources, intervener) [2015] SGHC311 36 Mitsui v Garnac (The “Myrtos”) [1984] 2 Lloyd’s Rep 449 37 Cetelem SA v Roust Holdings Ltd [2005] 1 WLR 3555 ("Cetelemâ€)
TEAM 20 MEMORANDUM FOR CLAIMANT
9
estimated that the value of the CARGO will decrease from US$3.1m to US$2.5m.38 Thus,
CLAIMANT urges to sell the CARGO pendente lite, in order to recover the sums due to CLAIMANT
by RESPONDENT.
26. Presently, the sums due to CLAIMANT is in total at US$771,120.48, with damages mounting daily.
The estimated value of the CARGO is US$2.5m.39 The gap between the CARGO value and the sums
due to CLAIMANT, while still considerable, is reducing daily. CLAIMANT urges this tribunal not to
wait until the gap no longer exists.
27. In The New Flamenco,40 The High Court granted the claim for the sale of asset, regardless of the
US$15m gap from the value of the VESSEL itself with the sums that the charterer owed to the ship-
owner. In light of this, the order for the sale of CARGO shall be granted regardless of the gap
between CARGO value and the sums due.
C. The Sale is Necessary as the VESSEL is Facing Dangerous Weather
28. The SHIPMASTER has reported being at the mercy of strong winds and swell owing to the monsoon
season.41 The VESSEL and her CARGO on board are at high risk of being damaged or lost.42 The
months of October-November during the year are the inter-monsoon period for Singapore.43 This
period consists of constant thunderstorms, which are at times severe,44 as evident in the
SHIPMASTER’s report.45 Such weathers pose danger to the VESSEL which inevitably the VESSEL
would need to be saved by salvage, which would incur more costs.46 Selling the CARGO on board
immediately saves the VESSEL from having to stay drifting facing such dangerous weather.
38 Record, p. 101-102. 39 Record, p. 101-102. 40 Fulton Shipping Inc of Panama v Globalia Business Travel S.A.U. (The New Flamenco) [21.12.15] 41 Record, p. 37 42 Record, p. 37 43 Meteorological Service Singapore Online Report of the Climate of Singapore 44 Meteorological Service Singapore Online Report of the Climate of Singapore 45 Record, p. 37 46 The Whippingham [1934] 48 LIL Rep. 49; The Aldora [1975] QB 748.
TEAM 20 MEMORANDUM FOR CLAIMANT
10
D. Keeping the CARGO on board is Dangerous
29. As stated within B/L, the VESSEL is carrying on board 84,000.052 MT of Australian Steam Coal
in Bulk.47 Coal is considered as an inherently dangerous material hazardous in bulk48 and can cause
serious accidents resulting not only in the loss of the ship, but also in loss of life.49 The SHIPMASTER
has reported noticed signs of overheating and the crew is extremely concerned that the CARGO
may self-ignite and explode.50
30. The coal specific to this case has volatile matter of 40.30%.51 Volatile matter is the substance in
coal that determines the ease of ignition of the coal, the higher the percentage, the more likely it is
to spontaneously combust.52 The needs of holding the temperature of the CARGO so that it does
not decrease in value are important. What’s also important is giving the coal ventilation so that the
temperature does not rise too high and combust by opening the CARGO holder at certain intervals.53
31. The current situation of the VESSEL prevents the crew from opening the CARGO holder because of
fear heavy rain will ruin the value of the CARGO. CLAIMANT is currently facing a “loss-loss”
situation since allowing ventilation would ruin the CARGO while holding the CARGO in an enclosed
space will risk combustion and result in loss of the VESSEL and human life. Thus, the best option
here is to sell the CARGO to prevent impending losses that may arise.54
47 Record, p. 41 48 Guner-Ozbek Deniz, Meltem. The Carriage of Dangerous Goods by Sea. 2008. Istanbul: Springer-Verlag Berlin
Heidelberg, p. 51 49 The Athanasia Comminos [1968] 2 Lloyd’s Rep. 57 50 Record, p. 37 51 Record, p. 99. 52 Ward, Colin R. 1984. Coal Geology and Coal Technology. Melbourne: Blackwell Scientific Publications, p. 45 53 Captain J Isbester FNI MRIN. Bulk Carrier Practice. 1993 p. 34 54 Emilia Shipping [1991] 1 SLR(R) 411; Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities &
Energy Resources, intervener) [2015] SGHC311
TEAM 20 MEMORANDUM FOR CLAIMANT
11
ARGUMENTS ON THE MERITS OF THE CLAIM
III. RESPONDENT IS LIABLE TO PAY FOR DAMAGES FOR DETENTION
32. On the 1st of September 2016, both parties agreed to enter into a CHARTERPARTY and hence must
fulfil their obligations to the said CHARTERPARTY.55 However, RESPONDENT failed to fulfill a
crucial obligation to nominate a discharge port as agreed in the Clean Fixture Recap.56 As a result
the VESSEL was stranded drifting at OPL Singapore for more than a month.57
33. RESPONDENT is liable to compensate for damages for detention because the delay that occurred
due to (A) the failure to nominate a discharge port at the specified time, (B) the nomination for the
Port of Busan was not eligible, (C) RESPONDENT’S reliance on the Force Majeure clause is invalid
and (D) that the delay was not at fault of the SHIPMASTER’s negligence, (E) RESPONDENT is liable
for damages caused by its conduct.
A. RESPONDENT Failed to Nominate a Discharge Port
34. From the Clean Fixture Recap, both parties have agreed that the discharge port would be 1 SPSB
in China (Dalian, Jinzhou, Yingkou, Yantai, Qingdao, Shanghai, Tianjin, Ningbo) chosen by
RESPONDENT.58 RESPONDENT was obligated to declare the discharge port when the VESSEL passes
Singapore for bunkering.59 When it was time for the RESPONDENT to fulfil their obligation they
failed to nominated a discharge port. This lasted for 10 days and despite numerous requests
RESPONDENT was still yet to nominate a discharge port, thus the VESSEL was left drifting without
orders.60
B. The Nomination to the Port of Busan is not Eligible
55 Record, p. 20 56 Record, p. 68 57 Record, p. 37 58 Record, p. 21 Clean Fixture Recap, point 16 59 Record, p. 21 Clean Fixture Recap, point 16 60 Record, p. 37
TEAM 20 MEMORANDUM FOR CLAIMANT
12
35. 16 October 2016, RESPONDENT advises the VESSEL to divert to a port in Busan, after having failed
to originally nominate a port in China.61 CLAIMANT declares that the diversion to Busan is not
eligible since the port is not safe (i) and that it is a substantial deviation from the CHARTERPARTY
(ii).
i. CLAIMANT’ Refusal of Nomination to Busan was Justified since the Port was Unsafe
36. There have been rumours of zombies arriving from Seoul onboard a train to Busan upon the
nomination of Busan as a port. 62 CLAIMANT contends that the event made the port unsafe. The
most widely accepted definition for an unsafe port comes from the Eastern City which established
that, “a port will not be safe unless, in the relevant period of time, the particular ship can reach it,
use it and return from it without, in the absence of some abnormal occurrence, being exposed to
danger which cannot be avoided by good navigation and seamanship”.63
37. Although the port was considered safe at the time of the nomination,64 the ‘prospective safety’ did
not guarantee ‘absolute safety’ of the port.65 That an abnormal occurrence would not suddenly
appear causing harm to VESSEL and the CARGO.66 The abnormal occurrence in this case being the
zombies onboard a train to Busan.67 The prospective safety of the port at the time of the nomination
was not enough to guarantee that the VESSEL would not face any danger.68 Hence it would have
been reasonable for any party to deem the port as “prospectively unsafe,” with the knowledge that
zombies were arriving and thus CLAIMANT was justified in refusing the order to the Port of Busan.
61 Record, p. 57 62 Record, p. 58. 63 Leeds Shipping Co Ltd v Societé Francaise Bunge, The Eastern City [1958] 2 Lloyd’s Rep 127 64 Problem, p. 60. 65 K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp, The Saga Cob [1922] 2 Lloyd’s Rep 545, CA. 66 The Ocean Victory [2015] EWCA Civ 16. 67 Problem, p. 58. 68 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes, The Evia (No 2) [1983] 1 AC 736; Motor Oil
Hellas (Corinth) Refineries SA v Shipping Corp of India, The Kanchenjunga [1990] Lloyd’s Rep 391, HL;
Portsmouth Steamship Co v Liverpool Salvage Co [1929] 34 LIL Rep 459.
TEAM 20 MEMORANDUM FOR CLAIMANT
13
ii. The Nomination to the Port of Busan is not within the CHARTERPARTY.
38. It was agreed upon by both parties that the discharging port would be 1 SPSB in China (Dalian,
Jinzhou, Yingkou, Yantai, Qingdao, Shanghai, Tianjin, Ningbo) charterer’s option.69 If there is a
range of loading or discharging ports named, once the voyage charterer has selected the contractual
port or ports of loading or discharge, the voyage charter-party usually operates as if that port or
those ports had originally been written into the charter-party, and the charterer then has no further
right of nomination or renomination.70 Thus RESPONDENT has no right to renominate the discharge
port to Busan since it is not one of the available options within the CHARTERPARTY.
C. RESPONDENT Cannot Rely on Clause 24 of the CHARTERPARTY to Excuse Paying for
Damages
39. Clause 24 of the CHARTERPARTY excludes liability where a failure or delay in performance is
caused by a Force Majeure Event.71 RESPONDENT cannot rely on Clause 24 to excuse its failure to
pay for damages for detention. In particular, RESPONDENT cannot incorporate port congestion at
China into the scope of the Force Majeure Clause due to the ejusdem generis rule.
40. The ejusdem generis rule is a doctrine in interpreting clauses meaning thereby when general words
in a statutory text are flanked by restrictive words, the meaning of the general words are taken to
be restricted by implication with the meaning of restricted words.72 Clause 24 of the
CHARTERPARTY provides an enumeration of Force Majeure Events followed by a general
statement. 73
69 Record, p. 21 Clean Fixture Recap, point 16 70 The Aegean Sea [1998] 1 Lloyd’s Rep 39; Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes, The
Evia (No 2) [1983] 1 AC 736 71 Record, p. 32, CHARTERPARTY, Clause 24 72 Gregory v Fearn [1953] 2 All ER 559; Powell v Kempton Park [1897] 2 QB 242; Allen v Emmerson [1944] 1 All
ER 344; Sandiman v Breach, 7B. & C.96; R. v Cleworth, 4B. & S.927 73 Record, p. 32 CHARTERPARTY, Clause 24
TEAM 20 MEMORANDUM FOR CLAIMANT
14
41. The first part of the Force Majeure clause exempts liability for damages resulting from an “Act of
God”.74 An Act of God has been defined in English law as an unforeseeable natural phenomenon
involves no human agency, which is not realistically possible to guard against, which is due
directly and exclusively to natural causes, and which could not have been prevented by any amount
of foresight, plans, and care.75 Port congestion does not fit into any of these requirements and thus
it should be excluded from the Force Majeure clause.
42. Secondly, the delay was not caused by “war, terrorism, or civil commotion”.76 Said terms fall
under the umbrella for the definition of “war”.77 Neither Singapore nor China was in a state of war
when the delay occurred. There was no use of force or any acts of violence that would be
considered a breach of the peace.78 Therefore, the delay was not caused by war, terrorism or civil
commotion.
43. Thirdly, CLAIMANT argues that the congestion cannot be categorized as any acts and restraints of
princes and rulers. It is defined that “acts and restraints of princes and rulers” have reference to the
forcible interference of a state or of the government of a country taking possession of the goods.79
The above passage shows that the exception of “restraint of princes, rulers or people” covers any
forcible interference with the goods or the voyage by persons acting with governmental or quasi-
governmental authority backed by force. As will be seen below, it is enough that there is simply
the threat of force, whether explicit or implicit, or the potential for the use of force. It has long
74 Record, p. 32 CHARTERPARTY, Clause 24 75 Baldwin’s Ltd. v. Halifax Corporation [1916] 85 L.J.K.B. 1769; Transco plc v Stockport Metropolitan Borough
Council [2003] UKHL 61 76 Record, P. 32 CHARTERPARTY, Clause 24 77 McKendrick, Ewan. Force Majeure and Frustration of Contract. 2013. Abingdon: Informa Law from Routledge
Page 153 78 Driefontein Consolidated Gold Mines Ltd. v Janson [1900] 2 Q.B. 339 79 Wilson, F. John. Carriage of Goods by Sea: Seventh Edition. 2010. Essex: Pearson Education Limited, p. 268
TEAM 20 MEMORANDUM FOR CLAIMANT
15
been held that the exception does not apply to the acts of persons not purporting to act legally or
with governmental authority.80
44. In light of the reasons above, the congestion which occurred at the Chinese ports cannot be
categorized as an acts and restraints of princes and rulers since the congestion at the Chinese ports
was not an act caused by any governmental or quasi-governmental authority. Therefore, clause 24
of the CHARTERPARTY which provides that neither party shall be responsible for any loss or
damage or delay for “any other event whatsoever,” shall be read ejusdem generis and does not
cover RESPONDENT’S failure to nominate a discharge port.
D. The Delay was not at Fault of the SHIPMASTER’s Negligence
45. RESPONDENT intends to avoid liability for damages by accusing the SHIPMASTER of negligence as
the cause of the VESSEL’s delay. Negligence is the omission to do something which a reasonable
man, guided upon those considerations which normally regulate the conduct of human affairs,
would do, or doing something which a prudent and reasonable man would not do.81 The
SHIPMASTER did not act negligently when faced with the circumstances that caused the delay since
(i) RESPONDENT consented to the risk of delay and (ii) that RESPONDENT contributed to the
Shipmaster’s conduct.
i. RESPONDENT has consented to the risk of delay
46. Under the doctrine of volenti non fit injuria, a party shall not be held liable for damages due to
negligence if it is proved that the innocent party agreed to undertake the legal risk of harm at his
own expense.82 There are certain requirements that must be fulfilled in order for volenti non fit
80 Nesbitt v. Lushington (1792) 4 T.R. 783, involving a “tumultuous mob” which did not come within the word
“people”, which term meant the governing power of the country. 81 Blyth v Birmingham Waterworks [1856] 11 Ex R781; Scriven Brothers & Co v Hindley & Co [1913] 3 KB 564;
Blue Anchor Line Ltd. v Alfred C. Toepfer International (The Union Amsterdam) [1982] 2 Lloyd’s Rep. 432. 82 Wooldridge v Sumner [1963] 2 QB 43; Condon v Basi [1985] 2 All ER 453; Blake v Galloway [2004] 3 All ER
315
TEAM 20 MEMORANDUM FOR CLAIMANT
16
injuria to apply. The requirements being; the innocent party acted voluntarily; there was an explicit
agreement to the risks; and whether the innocent party had knowledge of the risks.
47. Firstly, RESPONDENT was given the option within the CHARTERPARTY to choose from seven
discharge ports in China.83 RESPONDENT had a genuine freedom of choice and that he had
voluntarily undertaken to run the risk of delay when they did not nominate a discharge port and
thus the SHIPMASTER should not be held responsible in causing the delay.84
48. Secondly, where the parties have reached an express agreement that the RESPONDENT will
voluntarily assume the risk of harm and this agreement is made before the negligent act, then
volenti non fit injuria will operate.85 RESPONDENT has agreed to the terms of the CHARTERPARTY
and thus was aware and had knowledge of the risks and consequences when certain obligations
provided within the CHARTERPARTY are not fulfilled. RESPONDENT actions prior to the delay
should be considered volenti non fit injuria and thus the SHIPMASTER should not be held
accountable for causing the delay.
ii. RESPONDENT contributed in the SHIPMASTER’s decision to stay within Singapore’s OPL
49. In the defense of the SHIPMASTER, RESPONDENT failed to take reasonable care of the VESSEL and
the CARGO’s safety and that this delay was caused by the RESPONDENT.86 RESPONDENT’S failure
to nominate a discharge port was the main cause of the delay,87 since the SHIPMASTER did not
receive further instructions and thus was forced to stay drifting in Singapore’s OPL.88 From this
83 Record, p. 21 Clean Fixture Recap, point 16 84 Bowater v Rowley Regis Corp [1944] KB 476; ICI Ltd v Shatwell [1965] AC 656; Barrett v Ministry of Defence
[1995] 3 All ER 86 85 Morris v Murray [1990] 3 All ER 801; Pitts v Hunt [1990] 3 All ER 344 86 Butterfield v Forrester [1809] 11 East 60; Davies v Mann [1842] 10 M&W 546; Jones v Livox Quarries Ltd
[1952] 2 QB 608; Badger v Ministry of Defence [2006] 3 All ER 173; Davies v Swan Motor Co (Swansea) Ltd
[1949] 2 KB 291; Froom v Butcher [1976] QB 286; 87 Refer to Memorandum paragraph 34 88 Record, p. 67
TEAM 20 MEMORANDUM FOR CLAIMANT
17
cause, RESPONDENT should be wholly to blame for damages for detention and not the
SHIPMASTER.89
E. RESPONDENT is Liable for Damages as a Result of its Conduct
50. The detention of the VESSEL caused by the conduct of RESPONDENT has resulted in USD10,000
per day worth of damages from the 12th of October 2016.90 Until the date of the Notice of
Arbitration the sums have reached USD451,666.67. CLAIMANT submits that RESPONDENT shall be
held liable to compensate for these sums resulting from its conduct.
IV. CLAIMANT’S EXERCISE OF LIEN IS LAWFUL
51. On the 20th October 2016, CLAIMANT issued a Notice of Lien towards RESPONDENT for the CARGO
on board the VESSEL. CLAIMANT’S lien is valid and lawful on the basis that (A) such conduct is in
accordance with lien clause provided by the CHARTERPARTY, (B) the CHARTERPARTY was
incorporated into the B/L and (C) that the location of lien is lawful.
A. CLAIMANT’S Lien was Properly Conducted Pursuant to the Lien Clause within the
CHARTERPARTY
52. It is expressly stipulated within lien clause of the CHARTERPARTY that “the owners shall have a
lien on the cargo for freight, deadfreight, demurrage and general average contribution due to
them under this Charterparty”.91 Pursuant to this Clause, CLAIMANT is entitled to exercise the lien
over CARGO for unpaid freight from RESPONDENT.
89 McKew v Holland & Hannen & Cubbitts [1969] 3 All ER 1621; Stapley v Gypsum Mines Ltd [1953] AC 663 90 Record, p. 52 91 Record, p. 31 CHARTERPARTY, Cl. 19
TEAM 20 MEMORANDUM FOR CLAIMANT
18
53. It is aknowledged that the very nature of a lien is that one party is entitled by common law or by
contract to retain possession of goods belonging to another until he is paid what he is owed.92 In
this case CLAIMANT has right over possession over the CARGO since freight has not yet been paid
by RESPONDENT. CLAIMANT submits that (i) RESPONDENT is liable to pay freight under the terms
of the CHARTERPARTY and (ii) the rightful termination of the CHARTERPARTY (iii) does not excuse
RESPONDENT from its liability to pay freight.
iii. RESPONDENT is Liable to Pay Freight Under the Terms of the CHARTERPARTY
54. Point 19 of the Clean Fixture Recap stipulates that total freight be paid within 5 banking days after
completion of loading and signing of B/L.93 This classifies the payment of freight as advance
freight. Advance freight does not require the voyage to be completed for the payment to be due by
the RESPONDENT as long as there are provisions within the CHARTERPARTY.
55. Freight is to be deemed earned once CLAIMANT has fulfilled their obligations set out by the
CHARTERPARTY.94 Since the CHARTERPARTY uses advance freight stipulation, these obligations
only include providing a seaworthy ship, loading the CARGO, and proceeding to Singapore for
bunkering.
56. Loading had been completed alongside the signing of the B/L by the SHIPMASTER.95 At this time,
the timeframe for the payment of the freight has started as the VESSEL has started to sail towards
its destination.96 The freight was due on the 10th of November 2016 when the VESSEL had left
92 The Chrysovalandou Dyo [1981] 1 Lloyd’s Rep. 159; The Mihalios Xilas [1978] 2 Lloyd’s Rep.186; Molthes
Rederi Akt v Ellerman’s Wilson Line Ltd [1927] 1 KB 710; Somes v British Empire Shipping Co (1858) El. Bl. & El.
353 (QB); Hammonds and Another, Executors of Blight, against Barclay and Others, Assignees of Fentham a
Bankrupt [1802] EngR 107, (1802) 2 East 227; 93 Record, p. 22 Clean Fixture Recap point 19 94 Thompson v Gillespy (1855) 5 E & B 209; Allison v Bristol Marine Insurance [1875] AC 209; Compania Naviera
General S.A. v Kerametal Ltd., (The Lorna I) [1983] 1 Lloyd’s Rep. 373; The Dominique [1987] 1 Lllyd’s Rep 239;
Vagres Compania Maritima SA v Nissho-Iwai American Corpn, The Karin Vatis [1988] 2 Lloyd’s Rep 330 95 Record, p. 41, 47. 96 Vagres Compania Maritima SA v Nissho-Iwai American Corpn, The Karin Vatis [1988] 2 Lloyd’s Rep 330
TEAM 20 MEMORANDUM FOR CLAIMANT
19
Singapore after bunkering.97 CLAIMANT has requested numerous times and sent an invoice in the
sum of USD 771,120.48 for the payment of freight from RESPONDENT yet still has not received
it.98 RESPONDENT’S failure to pay freight serves as a viable justification for CLAIMANT to exercise
lien over the CARGO.
ii. The CHARTERPARTY was Incorporated into the B/L
57. An exercise of a contractual lien can be enforceable against a party to the contract of carriage.99 If
the lien is to be exercised to a third-party shipper it is necessary that the lien clause was
incorporated by an appropriate term in the B/L issued to the third-party.100
58. A B/L can evidence a contract of carriage.101 The B/L may contain express contractual terms that
will usually be found on the reverse.102 Where a B/L purports to include the terms of a charterparty,
the general terms of the charterparty are incorporated into the contract of carriage.103 However, it
has to be established first which charterparty was incorporated into the B/L, and then decide
whether any specifically relevant clause of the charterparty is also included in the B/L.104
59. In the present case, the B/L refers on its face to “Freight payable as per Charterparty dated” but
no charterparty has been identified.105 These circumstances arise a question of which charterparty
had been incorporated. The determination of which charterparty had been incorporated was
97 Record, p. 51 98 Record. p. 49 99 Carriage of Goods by Sea 7th Edition halaman 305 100 The Chrysovalandou Dyo [1981] 1 Lloyd’s Rep 159 101 Sir Bernard Eder et al, Scrutton on Charterparties and Bills of Lading (Sweet & Maxwell, 22nd ed, 2011)p. 1;
Sir Guenter Treitel and F M B Reynolds, Carver on Bills of Lading (Sweet & Maxwell, 2001), p. 61. 102 Simon Baughen, The Shipping Law (Routledge & Cavendish, 4th ed, 2009), p. 84. 103 Sir Bernard Eder et al, Scrutton on Charterparties and Bills of Lading (Sweet & Maxwell, 22nd ed, 2011) p. 95;
Sir Guenter Treitel and F M B Reynolds, Carver on Bills of Lading (Sweet & Maxwell, 2001) p. 71. 104 Astro Valiente Compania Naviera SA v The Government of Pakistan Ministry of Food and Agriculture (The
Emmanuel Colocotronis (No. 2)) [1982] 1 WLR 1096; [1982] 1 Lloyd's Rep 286. 105, Record, p. 73 Statement of Claim
TEAM 20 MEMORANDUM FOR CLAIMANT
20
therefore indecisive. In this stance, CLAIMANT contends that it is the Head Voyage Charter between
CLAIMANT and RESPONDENT that had been incorporated into the B/L.
60. In The SLS Everest,106 it was held where a bill of lading is issued in such circumstances and is
silent as to the identity of the charterparty whose terms are to be incorporated, an unidentified
charterparty in an incorporation clause refers to the voyage and not the time charterparty. It has to
be emphasised, however, that the word ‘freight’ could, in fact, only have referred to a voyage and
not to a time Charterparty because ‘freight’ is an expression normally not used in time
charterparties. Moreover, in a strict sense freight means B/L freight and freights earned under a
voyage Charterparty.107 Applying this to the present case, it shall leave two voyage charterparties
to be an option as the incorporated charterparty into B/L. One is the voyage charter that concluded
between Imlam Consignorist and CLAIMANT, and another voyage charter was concluded between
RESPONDENT and Idoncare.
61. In the case of The San Nicholas,108 in a situation where the B/L is silent to what the incorporated
Charterparty was when faced with a chain of Voyage Charterparties, the Court of Appeal held that
the terms of the Head Charterparty were incorporated. In light of the reasons above, it is our
submission that the incorporated Charterparty in B/L is the CHARTERPARTY between CLAIMANT
and RESPONDENT.
62. Since the terms of the CHARTERPARTY, including the lien clause, has been incorporated into B/L
where Idoncare as a third-party shipper is a party, lien is exercisable to the CARGO owned by
Idoncare.
106 Bangladesh Chemical Industries Corporation v Henry Stephens Shipping Co Ltd and Tex Dilan Shipping Co Ltd
(The SLS Everest) [1981] 2 Lloyd's Rep 389. 107 Bangladesh Chemical Industries Corporation v Henry Stephens Shipping Co Ltd and Tex Dilan Shipping Co Ltd
(The SLS Everest) [1981] 2 Lloyd's Rep 389. 108 Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania Naviera SA (The San
Nicholas) [1976] 1 Lloyd’s Rep 8.
TEAM 20 MEMORANDUM FOR CLAIMANT
21
B. CLAIMANT’S Location of Lien is Lawful
63. CLAIMANT exercised lien over the CARGO on board the VESSEL in its current state, drifting in
Singapore’s OPL.109 The location of the lien is one that is valid and lawful since (i) there is a risk
that exercising the lien at the discharge port would waiver CLAIMANT’S right to lien, and (ii) that
exercising the lien ashore would be commercially impractical and inadvisable.
i. There was a risk that exercising the lien at the discharge port would waiver CLAIMANT’S
right to lien
64. CLAIMANT’S location for the exercise of lien in Singapore’s OPL is lawful since CLAIMANT
would lose their exercise of lien if they were to exercise it at the port of discharge in China. The
essence of a lien is that it is possessory thus he must not give up possession of the cargo to a
consignee or waive his right of lien.110 When a shipowner retains possession, he may do so either
on board or on land, as long as he retains exclusive control against the person claiming
possession.111
65. There is a high risk that where CLAIMANT would exercise their lien ashore at the discharge port,
he would lose possession of the CARGO to the B/L holder, thus losing his entitlement to the lien
over CARGO.112
ii. Exercising the lien on board the VESSEL is commercially safest
66. Alternatively, CLAIMANT’S exercise of lien onboard the VESSEL is still lawful since exercising the
lien off the discharge port or at another port would be commercially inadvisable.113 It would have
been impossible for CLAIMANT to exercise the lien off the discharge port in China since the
109 Record, p. 65 110 Tamvaco v. Simpson (1866) L.R. 1 C.P. 363 111 Mors-Le Blanch v. Wilson (1873) L.R. 8 C.P. 227 112 John F. Wilson, 7th Edition Carriage of Goods by Sea, Essex: Pearson Education Limited, 2010. P. 305 113 Santiren Shipping Ltd. v Unimarine S.A. (The Chrysovalandou Dyo) [1981] 1 Lloyd’s Rep. 159; International
Bulk Carriers (Beirut) S.A.R.L. v Evlogia Shipping Co. S.A., and Marathon Shipping Co. Ltd. (The Mihalios Xias)
[1978] 2 Lloyd’s Rep. 186; London Arbitration 13/87 LMLN 205;
TEAM 20 MEMORANDUM FOR CLAIMANT
22
discharge has not yet been nominated at the time of issuing the Notice of Lien. The VESSEL had
already been delayed for 10 days at the time114 and waiting for RESPONDENT to finally nominate
an eligible discharge port in order to continue the voyage would cause even more delay and
charges. 115
67. Proceeding to another port would also be commercially impractical since doing so would incur
more charges in the form of shifting costs. Proceeding to another port would be impractical since
it would require the issuance of another Notice of Readiness, the nomination of a safe port and
hiring agents at that port.116 By exercising the lien onboard the VESSEL, CLAIMANT is avoiding
additional unnecessary costs and obligations.
V. CLAIMANT WAS ENTITLED TO TERMINATE THE CHARTERPARTY
68. On the 22nd of October 2016, CLAIMANT issued a Notice of Termination towards RESPONDENT for
their failure to pay freight. CLAIMANT was entitled to terminate the CHARTERPARTY since (A)
RESPONDENT has commited a fundamental breach of the CHARTERPARTY, and that (B) CLAIMANT
has delivered a notice of termination to the RESPONDENT. (C) The termination of the
CHARTERPARTY does not deprive CLAIMANT’S right to claim for freight and other damages.
A. RESPONDENT has Commited a Fundamental Breach
i. The contract has been breached in a serious manner going to the root of CLAIMANT’S
contractual expectations
69. It is clear that CLAIMANT’S intention to enter into the CHARTERPARTY with RESPONDENT was
concerning its commercial advantages, since the expectation of CLAIMANT to perform the
114 Record, p. 65 115 International Bulk Carriers (Beirut) S.A.R.L. v Evlogia Shipping Co. S.A., and Marathon Shipping Co. Ltd. (The
Mihalios Xias) [1978] 2 Lloyd’s Rep. 186; 116 London Arbitration 13/87 LMLN 205.
TEAM 20 MEMORANDUM FOR CLAIMANT
23
CHARTERPARTY is to be paid monetarily. In the case of The Astra, following several delays in
payment of the freight, the Owner was obliged to send the Charterer an anti-technicality notice
asking the charterer to fulfil those obligations assumed under the charterparty, and therefore to pay
the freight within 48 hours. The Court specified that failure to pay freight will entitle the owner to
terminate the contract.117
70. In the instant case, RESPONDENT has breached the contract in a manner that denies CLAIMANT’S
contractual expectations. RESPONDENT has failed to pay freight pursuant to Point 19 of the Clean
Fixture Recap, which stated that “100 % freight to be paid within five (5) banking days after
completion of loading and signing/releasing B/L’s marked ‘freight payable as per charter”.118
71. The facts stated that the B/L was issued on Tuesday 4th October 2016,119 and the VESSEL had left
the loading port at the same day,120 hence RESPONDENT was liable to pay the full freight at 10th
October 2016. However, it has appeared that RESPONDENT failed to pay for the freight on the
agreed time. Therefore, CLAIMANT is entitled to terminate the CHARTERPARTY since RESPONDENT
has failed to pay freight which is CLAIMANT’S commercial expectation of the CHARTERPARTY.
ii. RESPONDENT has shown a clear unwillingness to perform the CHARTERPARTY
72. RESPONDENT’S conduct to deny the performance of the CHARTERPARTY is widely construed as a
renunciation of the contract. RESPONDENT’S renunciation of CHARTERPARTY was evident through
the actions that lead to the conclusion that RESPONDENT no longer intends to be bound by its
provisions.121 RESPONDENT’S failure to make the payment of freight within the agreed time shall
be construed as RESPONDENT’S renunciation of the CHARTERPARTY.
117 Kuwait Rocks Co v AMN Bulkcarriers Inc (The Astra) [2013] EWHC 865 (Comm) 118 Record, p. 22 Clean Fixture Recap, point 19 119 B/L, Record, p. 41,43,45. 120 Record, p. 50. 121 Ampurius Nu Homes Holdings Ltd v. Telford Homes (Creekside) Ltd [2013] EWCA Civ 577; [2013] 4 All ER 377, at [70].
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73. In good faith, CLAIMANT has issued a “reminder-notice” towards RESPONDENT regarding the
payment of freight 4 days after the payment was due.122 Regrettably, RESPONDENT was still unable
to make the payment of freight within 48 hours after the notice was sent. RESPONDENT’S failure to
pay freight despite having received an extension of time serves as evidence that RESPONDENT was
no longer willing to carry out the CHARTERPARTY. CLAIMANT therefore is entitled to terminate the
CHARTERPARTY on this basis.
B. The Lack of a Termination Clause does not Deny CLAIMANT’S Right to Terminate the
CHARTERPARTY
74. Despite the lack of a termination provision within CHARTERPARTY, CLAIMANT’S conduct to
terminate the CHARTERPARTY stands lawful. In Staffordshire Area Health Authority v. South
Staffordshire Waterworks Co,123 it was held that there is an implied term that either party can
terminate the contract by giving the other reasonable notice.
75. In the present case, CLAIMANT sent the “Notice of Termination” to RESPONDENT through the
broker.124 It was responded afterwards by the broker stipulated that the “Notice of Termination”
had been sent to RESPONDENT.125 Furthermore, the “Notice of Termination” was also sent in an
“electronic-writing” form pursuant to Clause 28.126 In light of the reasons above, CLAIMANT as an
injured party shall have the right to terminate the voyage charter since the “Notice of Termination”
was delivered to RESPONDENT.
C. CLAIMANT is still Entitled to Claim for Freight and Other Damages Even if the
CHARTERPARTY was Terminated
122 Record, p. 51. 123 Staffordshire Area Health Authority v. South Staffordshire Waterworks Co [1978] 3 All ER 769 124 Record, p. 68. 125 Record, p. 68. 126, Record, p.33 CHARTERPARTY, Clause 28
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76. Though the termination of contract relieves both parties from performing their obligations within
the contract any further, it does not exempt the innocent party from claiming for damages or other
sums due to him.127 In the landmark contract law case of Johnson v Agnew, the repudiation of the
contract still left both parties’ accrued rights intact.128 Therefore, in the event that the
CHARTERPARTY was terminated,129 CLAIMANT is still entitled to claim for freight and other
damages towards RESPONDENT.
REQUEST FOR RELIEF
For the reasons set out above, CLAIMANT requests that the tribunal:
a) Declare that it has jurisdiction and/or power to grant liberty to CLAIMANT sell the CARGO on
board the VESSEL pendent lite;
b) grant the CLAIMANT liberty to sell the CARGO on board the VESSEL;
c) award CLAIMANT damages for detention in the sum of USD451,666.67;
d) declare that Claimant has a valid and lawful lien over the CARGO;
e) declare that the termination of the CHARTERPARTY was lawful;
f) and award further or other relief as the Tribunal considers fit
127 Johnson v Agnew [1980] AC 367; Hillel v Christoforides [1991] 63 P&CR 301 (ChD); Jaggard v Sawyer [1994]
EWCA Civ 1; Hurst v Byrk [2000] UKHL 19; Capital and Suburban Properties Ltd v Swycher [1976] 1 Ch 319 128 Johnson v Agnew [1980] AC 367 129 Record, p. 68