THE EIGHTEENTH ANNUAL
INTERNATIONAL MARITIME LAW ARBITRATION MOOT
NATIONAL UNIVERSITY OF SINGAPORE, SINGAPORE
IN A MATTER OF AN ARBITRATION
MEMORANDUM FOR THE RESPONDENT
ON BEHALF OF
INFERNO RESOURCES SDN BHD
(RESPONDENT)
IDONCARE BERJAYA UTAMA PTY.
LTD
(RESPONDENT)
AGAINST
FURNACE TRADING PTE LTD
(CLAIMANT)
TEAM NO. 21
ALBERTUS SUKARDI – JEVON HOLLY
TRYSA ARIFIN – URSULLA PANGARIBUAN
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
i
MEMORANDUM FOR
THE RESPONDENT
TEAM NO. 21
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
ii
TABLE OF CONTENTS
TABLE OF CONTENTS ....................................................................................................... II
LIST OF ABBREVIATIONS .............................................................................................. IV
LIST OF AUTHORITIES .................................................................................................... VI
STATEMENT OF FACTS ...................................................................................................... 1
ARGUMENTS PRESENTED................................................................................................. 3
I. THE TRIBUNAL MAY ORDER THE ARBITRATION PROCEEDINGS
TO BE CONSOLIDATED .................................................................................... 3
II. THE TRIBUNAL SHALL NOT ORDER LIBERTY TO SELL AND
APPRAISE THE CARGO PENDENTE LITE PURSUANT TO S. 12.1.D OF
THE IAA ................................................................................................................. 3
A. Granting the Order to Sell and Appraise the Cargo Pendente Lite Exceeds
the Tribunal’s Authority under S.12.1.d of the IAA .................................... 3
B. It Is Not Necessary to Sell the Cargo Pendente Lite ...................................... 5
i. The Claimant failed to meet the requisite test of serious question to be
tried .............................................................................................................5
ii. In any event, the balance of convenience lies in favour of not granting
the order of sale and appraisal ...................................................................5
a. Sale is not the only option available to preserve the Cargo .................. 6
b. The Claimant failed to prove that the Cargo value is deteriorating...... 7
c. The value of the Cargo will remain adequate as a security for the
outstanding Freight ...................................................................................... 7
III. THE CLAIMANT IS NOT ENTITLED TO DIRECT IMLAM TO
EXERCISE LIEN OVER THE CARGO ............................................................ 8
A. The Unconventional Method in Exercising Lien Proposed by the
Claimant is Not an Established Rule .............................................................. 9
B. Alternatively, the B/L Does Not Incorporate the OREVOY C/P .............. 10
i. The Presumption to incorporate the head voyage charterparty is not
absolute and shall not apply in this case ....................................................10
ii. The voyage charterparty between INFERNO and IDC Is More Apposite
to the B/L than the OREVOY C/P ...............................................................12
IV. THE CLAIMANT COULD NOT DIRECT IMLAM TO RECOVER B/L
FREIGHT FROM IDC FOR THE CLAIMANT’S BENEFIT ....................... 13
A. IMLAM’s Right to Make a Direct Claim for the B/L Freight is Not
Triggered as There is No Default in the Hire Payment under the Time
C/P ................................................................................................................... 14
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
iii
B. The Concept of Equitable Duty Between a Head Owner and a Time
Charterer in Respect of The Cause of Action for the Unpaid Freight is
Not an Established Rule ................................................................................ 15
V. THE CLAIMANT’S TERMINATION OF THE OREVOY C/P IS
WRONGFUL........................................................................................................ 16
VI. THE CLAIMANT IS NOT ENTITLED TO DAMAGES FOR DETENTION
IN THE FULL AMOUNT FOR ITS FAILURE TO ACT REASONABLY
UPON INFERNO’S BREACH ........................................................................... 18
A. The Claimant Is Not Entitled to Damages for Detention from 11 October
until 17 October 2016 Due to Its Failure to Mitigate the Loss by Staying
Idle in Singapore OPL ................................................................................... 19
B. In any Event, the Claimant Is Not Entitled to Damages for Detention after
16 October 2016 Due to Its Failure to Mitigate by Refusing the
Amendment for the Discharge Port ............................................................. 21
PRAYER FOR RELIEF........................................................................................................ 24
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
iv
LIST OF ABBREVIATIONS
AC UK Law Reports, Appeal Cases
Amendment INFERNO’s offer for Tardy Tessa to Discharge at Busan
Port on an Open Book Basis
Art
S.
Article
Section
B/L Bills of Lading between IMLAM and IDC dated 4 October
2016
Cargo 84,000.052 MT Australian Steam Coal
CLC Commercial Law Cases
EWHC (Comm) English and Wales High Court (Commercial Division)
Freight Clause Clause 19 of the Fixture Recap
IAA International Arbitration Act (CAP 143A, REV ED 2002)
IDC
INFERNO
Idoncare Berjaya Utama Pty Ltd
Inferno Resources Sdn Bhd
IMLAM Imlam Consignorist GmbH
KB King’s Bench
Lloyd’s Rep Lloyd’s Law Reports
Model Law UNCITRAL Model Law 1985 enacted in the International
Arbitration Act (CAP 143A, REV ED 2002)
Moot Scenario International Maritime Law Arbitration Moot 2017 Problem
OREVOY C/P Voyage Charterparty between Claimant and INFERNO
dated 1 September 2016
Parties Claimant and INFERNO
Pendente Lite Pending the Final Award
QB Queen’s Bench
S. Section
SCMA Rules Singapore Chamber of Maritime Arbitration Rules
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
v
LIST OF ABBREVIATIONS
SG LT Singapore Local Time
SG OPL Singapore Outter Port Limit
SGCA Singapore Court of Appeal
SGHC Singapore High Court
SLR Singapore Law Reports
SLR(R) Singapore Law Report (Reissue)
STL Scots Law Times
Sub-Voyage C/P Unidentified Charterparty between INFERNO and IDC
Tardy Tessa MV Tardy Tessa
The Claimant Furnace Trading Pte Ltd
The Master
Time C/P
Tan Xiao Ming, Master of MV Tardy Tessa
Time Charterparty concluded between IMLAM and the
Claimant dated 15 February 2016
Three Pre-Conditions Completion of Loading; Signing/Releasing B/L; Receipt of
Owners’ Freight Invoice
UKHL United Kingdom House of Lords
UNCITRAL United Nations Commission on International Trade Law
WLR The Weekly Law Reports
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
vi
LIST OF AUTHORITIES
Cases Aktieselskabet Ocean v B Harding & Sons Ltd [1928] 2 KB 371 (1928)................................ 10
Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R) 602 ... 14,
15, 16
Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R) 602. ... 14
American Cyanamid v Ethicon [1975] 2 WLR 316 ................................................................... 3
Antariksa Logistics Pte Ltd and Others v McTrans Cargo (S) Pte Ltd [2012] SGHC 154 ....... 7
Antariksa Logistics Pte Ltd and Others v McTrans Cargo (S) Pte Ltd [2012] SGHC 154. ...... 7
Banco de Portugal v Waterlow and Sons, Limited (Banco de Portugal) [1932] AC 452. ...... 17
Bangladesh Chemical Industries Corporation v Henry Stephens Shipping Company
LimitedTex-Dilan Shipping Company Limited (The SLS Everest) [1981] WL 187858....... 10
BNP Paribas v Bandung Shipping Pte Ltd. [2003] SGHC 111. ................................................ 9
Bowmaker Ltd v Wycombe Motors Ltd [1946] KB 505. ............................................................ 7
Brani Readymixed Pte Ltd v Yee Hong Pte Ltd [1994] 3 SLR(R) 1004 .................................. 14
Camellia Tanker SA v International Transport Workers [1976] I.C.R. 274 (1976). ................. 4
Care Shipping Corporation v. Latin American Shipping Corporation (The Cebu (No 1)) [1983] 2 WLR 829 ............................................................................................................... 11
Cascade Shipping Inc, v. Eka Jaya Agencies (Pte.) Ltd. [1993] 1 SLR 980 ..................... 12, 13
Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334. ...................... 2
Cho Yang Shipping Co Ltd v. Coral (UK) Ltd. [1997] CLC 1100. ......................................... 10
Chua Tian Chu and another v Chin Bay Ching and another [2011] SGHC 126. ................... 14
Chuan Hong Petrol Station Pte Ltd v Shell Singapore (Pte) Ltd [1992] 2 SLR 729 ................ 4
Cosemar SA v Marimarna Shipping Co Ltd (The Matthew) [1990] 2 Ll Rep 323. ................... 8
Dry Bulk Handy Holding Inc. v. Fayette International Holdings Ltd (The Bulk Chile) [2013]
2 Lloyd’s Rep. 47. .......................................................................................................... 13, 14
Dry Bulk Handy Holding Inc. v. Fayette International Holdings Ltd (The Bulk Chile) [2013]
2 Lloyd’s Rep.47. ................................................................................................................. 12
Dunkirk Colliery Company v Lever (1878) 9 Ch D 20. ..................................................... 17, 19
Empresa Cubana de Fletes v Lagonisti Shipping Co Ltd (The Georgios C) [1971] 1 QB 488
.............................................................................................................................................. 14
Federal Bulk Carriers Inc v C. Itoh & Co. Ltd [1989] 1 Lloyd’s Rep 103 ............................... 9
Fellowes v Fisher [1975] 3 WLR 184 ....................................................................................... 3
Feoso (Singapore) Pte Ltd v Faith Maritime Co Ltd [2003] SGCA 34 .................................... 6
Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources,
intervener) [2015] SGHC 311. .......................................................................................... 2, 4
Freeman v Taylor [1831] 8 Bing 124 ...................................................................................... 15
Gardner & Sons v. Trechmann [1884] 15 QBD 154 ........................................................... 8, 10
Glencore International AG v MSC Mediterranean Shipping Co SA [2015] EWHC 1989
(Comm) .................................................................................................................................. 9
Hansen v Harrold Brothers [1894] 1 QB 612 (1894)................................................................ 8
Hirtenstein V Hill Dickinson LLP [2014] EWHC 2711 ............................................................ 5
Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715 ..................... 9
Hong Kong Vegetable Oil Co Ltd v Wicker and Other (1977-1978) SLR(R) 65. ..................... 3
Hongkong Fir Shipping v. Kawasaki Kisen Kaisha [1962] 2 Q.B. 26, 60, 65 ........................ 15
India Steamship Co v. Louis Dreyfus Sugar Ltd (The Indian Reliance) [1997] 1 Lloyd's Rep
52............................................................................................................................................ 9
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
vii
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 ...................................... 6
Jia Min Building Construction Pte Ltd v Ann Lee Pte Ltd (Jia Min Building Construction)
[2004] 3 SLR(R) 288 ........................................................................................................... 17
Lansing Linde Ltd v Kerr [1991] 1 WLR 251 ........................................................................... 4
Limited v Underground Electric Railways Company of London, Limited (British
Westinghouse Electric) [1912] AC 673 ............................................................................... 17
MacAndrew v Chapple [1865] 18 CB (NS) 759 ...................................................................... 15
Maldives Airports Co Ltd v GMR Male International Airport (2013) SGCA 16 ...................... 4
Mansel Oil Ltd & Anor v Troon Storage Tankers SA [2008] EWHC 1269 (Comm). ............. 17
Maredelanto Compania Naviera S.A. v. Bergbau-Handel G.M.B.H. (The Mihalis Angelos)
[1970] 3 WLR 601. .............................................................................................................. 16
Maythorn v Palmer [1864] 11 LT 261. ...................................................................................... 3
Miramar Maritime Corp v Holborn Oil Trading (The Miramar) [1984] 3 WLR 1. ................. 9
Molthes Rederi AB v Ellermans Wilson Line Ltd [1927] 1 KB 710 (1926). ........................... 12
MP-Bilt Pte Ltd v Oey Widarto [1999] 1 SLR(R) 908 ............................................................ 17
National Jaya (Pte) Ltd v Hong Tat Marine Shipping Pte Ltd [1978–1979] SLR 416 ............. 9
Navigazione Alta Italia SpA v Svenska Petroleum AB (The Nai Matteini) [1988] 1 Lloyd’s
Rep 452 .................................................................................................................................. 9
NCC International AB v Alliance Concrete Singapore (2008) SGCA 5 ................................... 2
Norwest Holdingste Ltd (in liquidation) v Newport Mining Ltd [2010] SGHC 144. ................ 5
OCBC Securities Pte Ltd v Phang Yul Cher Yeow [1997] 3 SLR(R). ..................................... 19
Ogle v Comboyuro Investments Pty Ltd [1976] HCA 21. ................................................. 15, 16
Partenreederei M/S Heidberg v Grosvenor Grain and Feed Co Ltd (The Heidberg) [1994] 2
Lloyd’s Rep. 287 .................................................................................................................... 9
Payzu, Limited v Saunders [1919] 2 KB 581; OCBC Securities Pte Ltd v Phang Yul Cher
Yeow [1997] 3 SLR(R)......................................................................................................... 19
Photo Production v. Securicor [1980] A.C. 827, 849 ............................................................. 15
Potters-Ballotini v Weston-Baker, [1977] RPC 202 (1976) ...................................................... 4
Regina v Secretary of State for Transport, Ex parte Factortame Ltd and Others (No 2) [1991]
1 AC 603 ................................................................................................................................ 4
Rice v Great Yarmouth BC [2003] T.C.L.R 1.......................................................................... 15
Samsun Logix Corporation v. Oceantrade Corporation [2007] EWHC 2372 (Comm). .......... 6
Santiren Shipping Ltd v. Unimarine S.A. (The Chrysovalandou Dyo) [1981] 1 Lloyd’s Rep.
159.......................................................................................................................................... 6
Singapore Press Holdings Ltd v Brown Noel Trading Pte Ltd [1994] 3 SLR 151 .................... 4
Smailes and Son v Hans Dessen and Co (1906) 94 LT 492 at 493. ........................................ 19
South Oxfordshire D v SITA UK Ltd [2006] EWHC 2459 (Comm)........................................ 15
Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 All ER 883 ........................................ 17
The Asia Star [2010] SGCA 12 ................................................................................... 17, 19, 21
The Atticka Hope [1988] 1 Lloyd's Rep. 439 ........................................................................... 11
The Dolphina [2011] SGHC 273 ............................................................................................... 9
The Epic [2000] 3 SLR 735 ......................................................................................... 6, 7, 8, 10
The Hansa Nord [1975] 2 Lloyd’s Rep. 445 ........................................................................... 15
The London Explorer [1971] 1 Lloyd’s Rep., p. 526................................................................. 6
The Madeleine [1967] 2 Lloyd’s Rep., p. 238. .......................................................................... 6
The Star Quest [2016] 3 SGHC 100 .......................................................................................... 9
The Trade Resolve [1999] 4 SLR 424, [1999] SGHC 109 ........................................................ 6
The Ugland Trailer [1985] 2 Lloyd's Rep. 372 ....................................................................... 11
Tradigrain SA v King Diamond Marine Ltd (The Spiros C) [2000] WL 77762 (2000) .......... 12
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
viii
Turner and Another v. Haji Goolam Mahomed Azam [1904] AC 826. ............................... 7, 10
Welex AG v Rosa Maritime Ltd (The Epsilon Rosa) (No.2) [2003] 2 CLC 207 (2003) ............ 9
Western Bulk Shipowning III A/S v Carbofer Maritime Trading ApS & Ors., (The Western
Moscow) [2012] EWHC 1224 (Comm) ............................................................................... 11
White and Carter (Councils) Ltd v McGregor [1962] AC 413, HL at 445 ............................. 17
Other Authorities Analytical Commentary on draft text of a model law on international commercial arbitration:
Report of the Secretary-General” UNCITRAL, 18thSess, UNDocA/CN.9/264 (1985),
reprinted in [1985] 16YB UNCITRAL 104 (“the Model Law Commentary”) ..................... 2
Fifth Working Group Report, A/CN.9/246 ................................................................................ 2
First Working Group Report, A/CN.9/216 ................................................................................ 2
Fourth Working Group Report, A/CN.9/245 ............................................................................. 2
http://ports.com/sea-route/ adjust port variable from Singapore to: Ningbo; Yantai; Tianjin;
Dalian; Jinzhou; Qingdao; Yingkou. ; GPS Coordinates Of Hangzhou Bay (“Hangzhou
Bay Coordinate”), China 30°17'6.72" N 120°55'26.40" E. ................................................. 21
https://www.marinetraffic.com/en/voyage-planner, adjust destination variable from Singapore
to Hangzhou Bay Coordinates. ............................................................................................ 21
Man Diesel & Turbo, Propulsion Trends in Bulk Carriers: Two-stroke Engines, p. 14, Fig. 9:
Average design ship speed of bulk carriers. ........................................................................ 21
Seventh Secretariat Note, A/CN.9/264, Art. 18, para. 3, p. 543. ............................................... 2
Books Andrew Burrows, Remedies for Torts and Breach of Contract, 3
rd Ed., (Oxford: University
Press, 2004) .......................................................................................................................... 22
Guenter Treitel and Francis Reynolds, Carver on Bills of Lading, 3rd
Ed., (Sweet & Maxwell,
2011) .................................................................................................................................... 11
John F. Wilson, Carriage of Goods by Sea, 7th
Ed, (Harlow: Pearson, 2010). ....................... 17
S.C. Boyd, A. Burrows, and D. Foxton, Scrutton on Charterparties, 20th
Ed., (London: Sweet
& Maxwell) .......................................................................................................................... 10
Sir Bernard Eder, et al, Scrutton on Charterparties and Bills of Lading, 23rd
Ed., (London:
Sweet & Maxwell, 2015) ..................................................................................................... 11
Regulations International Arbitration Act (CAP 143A.) ........................................................................... 3, 5
Singapore Chamber of Maritima Arbitration Rules .................................................................. 3
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
1
STATEMENT OF FACTS
I. CHAIN OF CHARTERPARTIES
1. On 15 February 2016, IMLAM Consignorist GmbH (“IMLAM”), the owner of the MV
TARDY TESSA (“Tardy Tessa”) and Furnace Trading Pte Ltd (the “Claimant”) entered
into a time charterparty for a period of 2 years. The Claimant voyage-chartered the Tardy
Tessa to Inferno Resources Sdn Bhd (“INFERNO”) to ship 84,000.052 MT of Australian
Coal (the “Cargo”) from Newcastle, Australia to one of the eight discharge ports in
China. This voyage charterparty was concluded on a clean Fixture Recap based on the
COAL-OREVOY Standard Form charterparty (the “OREVOY C/P”). INFERNO later
sub-voyage chartered the Vessel to Idoncare Berjaya Utama Pty Ltd (“IDC”), the shipper
of the Cargo1 and the holder of the B/L.
2
II. THE PERFORMANCE OF THE VOYAGE
2. Under the Freight Clause of the OREVOY C/P, INFERNO is obliged to pay the freight to
the Claimant within five banking days after loading being completed, the B/L has been
signed, and receipt of the freight invoice. Further, INFERNO is obliged to nominate a
discharge port when the Tardy Tessa passes Singapore for bunkering.
3. On 15 October 2016 INFERNO informed the Claimant that it was unable to nominate the
discharge port and make payment of freight as INFERNO was yet to receive the same
from its sub-charterer. Subsequently, on 16 October 2016, INFERNO requested the
Claimant to divert to Busan port, South Korea instead because of the congestion at
Chinese ports and that INFERNO is prepared to amend the freight rate on open book
basis. (the “Amendment of the Discharge Port”). The Claimant rejected the
Amendment of the Discharge Port on the ground that Busan was unsafe at that time due
1 Moot Scenario, p. 41,43,45.
2 Procedural Order No. 3, para. 2(2).
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
2
to the rumor of zombies outbreak. Neither parties has any information and/or details
regarding the zombies outbreak.
4. On its email dated 19 October 2016, the Claimant sent notice to INFERNO, stating that if
INFERNO does not nominate a discharge port and pay freight by 12.00 SG LT on 20
October 2016, the Claimant will treat such conduct as repudiatory breach of the C/P and
serve its right to terminate the C/P. On 21 October 2016 that INFERNO finally nominated
Port of Ningbo and promised the Claimant that the payment of Freight will be made after
the cargo discharge as his sub-charterer has not paid the freight to him.
5. On 22 October 2016, the Claimant terminated the OREVOY C/P on the basis of
renunciation and repudiatory breach of the OREVOY C/P.
III. The Arbitration
6. On 25 November 2016, the Claimant sent notices of arbitration to both INFERNO and
IDC. Both INFERNO and IDC have no objection to the jurisdiction of the Tribunal.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
3
ARGUMENTS PRESENTED
I. THE TRIBUNAL MAY ORDER THE ARBITRATION PROCEEDINGS TO
BE CONSOLIDATED
1. On 1 December 2016, the Claimant applied for the consolidation of the two arbitration
proceedings between the Claimant and INFERNO and between the Claimant and IDC.3
INFERNO acknowledges that Rule 33.3 of the SCMA Rules provides that the Tribunal
has the power to direct two or more arbitration proceedings that concern common issues
of fact or law to be consolidated.4 Neither IDC nor INFERNO contest such power
5 and
leave it to the Tribunal to decide in the oral hearing.
II. THE TRIBUNAL SHALL NOT ORDER LIBERTY TO SELL AND APPRAISE
THE CARGO PENDENTE LITE PURSUANT TO S. 12.1.D OF THE IAA
2. INFERNO requests the Tribunal not to order the sale and appraisal of the Cargo pendente
lite, because granting an order to sell and appraise the Cargo pendente lite (A) exceeds the
Tribunal’s authority under S.12.1.d of the IAA, and (B) it is not necessary.
A. Granting the Order to Sell and Appraise the Cargo Pendente Lite Exceeds the
Tribunal’s Authority under S.12.1.d of the IAA
3. S. 12.1.d of the IAA and Art. 17 of the Model Law give the Tribunal the power to order
or direct, if necessary, any party to sell any property that is or forms part of the subject-
matter of a dispute, as an interim measure.6 Under S. 2 of the IAA, the term “party” is
defined as a party to the arbitration agreement, or party to the arbitration.7
4. Working Group Report, a binding source in interpreting the Model Law,8 states that Art.
17 of the Model Law explicitly limits a tribunal’s authority to give orders only to parties
3 Moot Scenario, p. 90.
4 SCMA Rules, Rule 33.3.
5 Moot Scenario, p.95.
6 IAA, S.12.1.d; Art. 17 of the Model Law.
7 IAA, S. 2.
8 IAA, S. 4.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
4
within the arbitration proceedings, and does not confer the tribunal the authority to make
an order which is directed at or impacts third parties.9
This restriction is recognized under
Singapore law,10
hence the additional procedures required for the court’s assistance in aid
of arbitration.
5. In this case, the Tribunal can only grant an interim measure for the sale and appraisal of
the Cargo to the Claimant, which is a party to this arbitration proceeding. However, the
possession of the Cargo lies in IMLAM. The Tribunal would thus exceed its conferred
authority by giving an order to sell and appraise the Cargo, because such order would
impact IMLAM, which is not a party to this arbitration proceeding. Moreover, such an
order may not be effective as IMLAM is not a party to this proceeding and is in no way
obliged to comply with the Tribunal’s order.
6. INFERNO acknowledges that in the case Five Ocean Corporation v Cingler Ship Pte
Ltd,11
the judge allowed a sales application by a party that did not possess the cargo.
However, it must be noted that such case was decided in court, which by its nature has a
different authority than that of an arbitration tribunal. Further, in that case the judge
considered the fact that the head owner, as the party holding possession of the cargo, had
already consented to support and be bound by the order of sale of the court by submitting
an affidavit. In contrast, in the present case, IMLAM is not present in the current
proceeding, and has never consented to be bound by an order of sale.12
9 First Working Group Report, A/CN.9/216, para. 66, p. 534; Fourth Working Group Report, A/CN.9/245, para.
71, p. 539.; Fifth Working Group Report, A/CN.9/246.; Seventh Secretariat Note, A/CN.9/264, Art. 18, para. 3,
p. 543. 10
NCC International AB v Alliance Concrete Singapore (2008) SGCA 5, at [1],[46],[53]; Analytical
Commentary on draft text of a model law on international commercial arbitration: Report of the Secretary-
General” UNCITRAL, 18thSess, UNDocA/CN.9/264 (1985), reprinted in [1985] 16YB UNCITRAL 104 (“the
Model Law Commentary”); Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334. 11
Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources, intervener) [2015]
SGHC 311. 12
Moot Scenario, p. 36.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
5
7. Given the reasons above, the Tribunal should not grant the order to sell and appraise the
Cargo pendente lite as doing so exceeds the Tribunal’s authority under S.12.1.d of the
IAA.
B. It Is Not Necessary to Sell the Cargo Pendente Lite
8. INFERNO submits that it is not necessary for the Tribunal to sell the Cargo pendente lite,
on two grounds: (i) the Claimant failed to meet the requisite test of serious question to be
tried; and (ii) the balance of convenience lies in favour of not granting the order of sale
and appraisal.
i. The Claimant failed to meet the requisite test of serious question to be tried
9. A P Rajah J, in Hong Kong Vegetable Oil Co Ltd v Wicker and others13
, expounded that
it must first be decided whether there is in fact and in law a serious question to be tried.
Failing this test will render the motion dismissed.14
The question to be answered is
whether the action is properly conceived and whether all the proper, necessary and/or
interested parties are before the trial so that any order by the tribunal can be properly and
effectively implemented.15
IMLAM is an interested party because the assessment affects
its obligation under the B/L to deliver the Cargo. INFERNO submits that the test of
serious question to be tried is not met as IMLAM is not present in this arbitration
proceeding. Therefore, as this element is not fulfilled by the Claimant, the motion shall be
dismissed and the Tribunal shall not order such interim measure.
ii. In any event, the balance of convenience lies in favour of not granting the
order of sale and appraisal
10. In assessing the balance of convenience test, the Tribunal shall determine which course
appears to do less harm: (a) granting an injunction that subsequently turns out to be
13
Hong Kong Vegetable Oil Co Ltd v Wicker and Other (1977-1978) SLR(R) 65. 14
Hong Kong Vegetable Oil Co Ltd v Wicker and Other (1977-1978) SLR(R) 65. 15
Hong Kong Vegetable Oil Co Ltd v Wicker and Other (1977-1978) SLR(R) 65, at [15]; Fellowes v Fisher
[1975] 3 WLR 184; American Cyanamid v Ethicon [1975] 2 WLR 316; Maythorn v Palmer [1864] 11 LT 261.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
6
unjustified, or (b) refusing one if it subsequently turns out that an injunction should have
been granted.16
In the case at hand, the balance of convenience lies in favour of not
granting the order of sale and appraisal as (a) sale is not the only option available to
preserve the Cargo; (b) the Claimant failed to prove that the value of the Cargo is
deteriorating; and (c) the value of the Cargo will remain adequate to act as a security for
the outstanding Freight.
a. Sale is not the only option available to preserve the Cargo
11. The Claimant argued that the sale of Cargo, as an interim measure, is necessary to
preserve the value of the security for the claim.17
As established in Maldives Airports Co
Ltd v GMR Male International Airport Pte Ltd,18
what constitutes “necessary” in ordering
an interim measure is when there are no other reasonable available alternatives in
preserving the concerned property.
12. In the present case, the sale of the Cargo pendente lite is not the only alternative to
preserve the Cargo. One reasonable available alternative is to store the Cargo in a
warehouse at the nearest available port. Storing the Cargo in a warehouse would preserve
its value and would also increase the possibility of obtaining a better price and better
terms for the Cargo, compared to selling the Cargo pendente lite. This is because selling
the Cargo pendente lite would subject the Cargo to “as is where is” basis which is a state
when an object being purchased is deemed to have been purchased in its existing
16
Chuan Hong Petrol Station Pte Ltd v Shell Singapore (Pte) Ltd [1992] 2 SLR 729; Singapore Press Holdings
Ltd v Brown Noel Trading Pte Ltd [1994] 3 SLR 151; Lansing Linde Ltd v Kerr [1991] 1 WLR 251; Regina v
Secretary of State for Transport, Ex parte Factortame Ltd and Others (No 2) [1991] 1 AC 603; Potters-Ballotini
v Weston-Baker, [1977] RPC 202 (1976); Camellia Tanker SA v International Transport Workers [1976] I.C.R.
274 (1976). 17
Memorandum of the Claimant, para. 18. 18
Maldives Airports Co Ltd v GMR Male International Airport (2013) SGCA 16 ; Five Ocean Corporation v
Cingler Ship Pte Ltd (PT Commodities & Energy Resources, intervener) [2015] SGHC 311.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
7
condition, be that good or bad,19
whereas storing the Cargo in a warehouse would allow
for sufficient time to negotiate a better price and better terms for the Cargo.
b. The Claimant failed to prove that the Cargo value is deteriorating
13. The Claimant argued that the sale of the Cargo pendente lite is for the benefit of both
parties because the Cargo’s value is deteriorating and thus must be locked in at the
current value.20
14. INFERNO contends that there is no factual proof that the value of the Cargo is
deteriorating. The factual basis relied on by the Claimant as to the condition of the Cargo
is the Joint Experts’ Report,21
which was based solely on the Cargo’s condition during
loading. The Claimant failed to provide any evidence as to the current condition of the
Cargo. In the absence of such evidence, one cannot assume that the value of the Cargo is
deteriorating.
c. The value of the Cargo will remain adequate as a security for the
outstanding Freight
15. The Claimant contends that selling the Cargo pendente lite will preserve the value of the
Cargo so it will be sufficient as security for the Freight. The Claimant’s reasoning is that
selling the Cargo at a later point in time will result in a decrease in its value due to the
distressed nature of the Cargo. However, this argument should be rejected because, even
in the worst-case scenario, the value of the Cargo will not be diminished to the extent that
it will not be sufficient to cover the Freight due to the Claimant.22
16. In conclusion, the balance of convenience lies in not granting the interim measure of sale
of the Cargo pendente lite, as granting such interim measure based on less-than
substantiated grounds will pose greater harm. Refusing such interim measure does not
19
Moot Scenario, p. 90.; Hirtenstein V Hill Dickinson LLP [2014] EWHC 2711; Norwest Holdingste Ltd (in
liquidation) v Newport Mining Ltd [2010] SGHC 144. 20
Memorandum of the Claimant, para. 18. 21
Moot Scenario, Joint Parties’ Expert Report, p. 97. 22
Moot Scenario, p. 49, p. 101-102.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
8
prejudice the Claimant’s interests and the exercise other alternative options can still
address the Claimant’s concerns regarding the value of the security for the Freight. On the
other hand, granting such interim measures, which if subsequently turned out to be
unjustified, would be prejudicial to the interests of INFERNO and IDC.
III. THE CLAIMANT IS NOT ENTITLED TO DIRECT IMLAM TO EXERCISE
LIEN OVER THE CARGO
17. By the notice sent to INFERNO on 20 October 2016,23
the Claimant purported to exercise
lien over the Cargo for the alleged Freight due under the OREVOY C/P. It is INFERNO’s
position that the Claimant is not entitled to exercise lien over the Cargo.
18. A lien over cargo is contractual and dependent on the continued possession of the cargo.24
Once a shipowner loses possession of the cargo, the shipowner loses contractual lien for
good.25
In the present case, the Claimant is merely a time-charterer under non-demise
Time C/P26
and has no control or possession over the vessel or the Cargo.27
Furthermore,
the Claimant does not have a contractual relationship with IDC, the current B/L holder28
and the shipper of the Cargo,29
because the Claimant is not a party to the B/L.
19. Despite its incapacity, the Claimant purported that it can exercise lien over the Cargo in
an unconventional manner, by asking IMLAM to exercise lien over IDC’s Cargo under
the B/L contract for the Claimant’s interest.30
However, INFERNO submits otherwise.
(A) The unconventional method to exercise Lien proposed by the Claimant is not an
23
Moot Scenario, p. 65. 24
Feoso (Singapore) Pte Ltd v Faith Maritime Co Ltd [2003] SGCA 34; Santiren Shipping Ltd v. Unimarine
S.A. (The Chrysovalandou Dyo) [1981] 1 Lloyd’s Rep. 159, at p. 165; The Trade Resolve [1999] 4 SLR 424,
[1999] SGHC 109; The Epic [2000] 3 SLR 735; Samsun Logix Corporation v. Oceantrade Corporation [2007]
EWHC 2372 (Comm). 25
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; Feoso (Singapore) Pte Ltd v Faith Maritime Co Ltd [2003]
SGCA 34. 26
Moot Scenario, p. 1. 27
The Madeleine [1967] 2 Lloyd’s Rep., p. 238.; The London Explorer [1971] 1 Lloyd’s Rep., p. 526. 28
Procedural Order No. 3, para. 2(1). 29
Moot Scenario, p. 41,43,45. 30
Memorandum of the Claimant, para. 28.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
9
established rule, and (B) alternatively, IMLAM is not entitled to exercise lien over the
Cargo because the B/L does not incorporate the OREVOY C/P.
A. The Unconventional Method in Exercising Lien Proposed by the Claimant is Not
an Established Rule
20. The Claimant relies on Five Ocean Corporation v. Cingler Ship Pte Ltd. (“Five Ocean”),
a case assessing the rule on the exercise of lien over the cargo under English law, in an
attempt to establish that a time-charterer with no contractual lien and physical possession
of cargo can exercise lien over the cargo in an unconventional manner. It argues that it
can order/direct IMLAM to exercise lien over the Cargo and the Claimant shall have an
equitable right derived from IMLAM’s exercise of its Lien.
21. Without clear grounds for the right to lien, an exercise of lien may amount to a wrongful
detention, which may render the party exercising the lien liable.31
In order to grant the
Claimant’s lien assertion, this Tribunal must be satisfied that the invoked grounds for lien
are clearly and distinctly established; otherwise the retention of the cargo would be a
wrongful detention.32
It must be borne in mind that a right to seize one party’s goods for
another party’s debt must be clearly and distinctly conferred before a court or a tribunal
can be expected to recognize it.33
22. The Respondent contends that the unconventional method set forth in the Five Ocean case
is not an established one and is not applicable to our present case, which is governed by
Singaporean law. The judge in Five Ocean acknowledged such proposition as a fact
regarding the position under the English law, but it is not established that it is a matter of
law in Singapore. Further, the Tribunal should note that in coming to her conclusion, the
31
The Epic [2000] 3 SLR 735; Antariksa Logistics Pte Ltd and Others v McTrans Cargo (S) Pte Ltd [2012]
SGHC 154. 32
Antariksa Logistics Pte Ltd and Others v McTrans Cargo (S) Pte Ltd [2012] SGHC 154; Bowmaker Ltd v
Wycombe Motors Ltd [1946] KB 505. 33
Turner and Another v. Haji Goolam Mahomed Azam [1904] AC 826.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
10
academic opinions are heavily relied. Therefore, the Respondent submits that the Tribunal
shall not grant the Claimant’s request that the exercise of lien be declared lawful.
B. Alternatively, the B/L Does Not Incorporate the OREVOY C/P
23. A shipowner’s right of lien on the cargo as provided in a charterparty can only be
enforced against the holder of a bill of lading, if the relevant lien provision has been
incorporated into the bill of lading.34
The Claimant contends that the OREVOY C/P is
incorporated into the B/L, rendering the lien enforceable against the Cargo, which is
owned by IDC, as the holder of the bill of lading. The Respondent submits that the Cargo
cannot be subjected to the lien as the B/L does not incorporate the OREVOY C/P.
24. INFERNO submits that the B/L does not incorporate the terms of the OREVOY C/P;
instead, they incorporate the voyage C/P between INFERNO and IDC. This is because (i)
the presumption to incorporate the head voyage charterparty is not absolute and shall not
apply here, as IDC would want to incorporate terms of carriage that it negotiated and had
knowledge of. Additionally, (ii) the voyage charterparty between INFERNO and IDC is
more apposite to the B/L than the OREVOY C/P.
i. The Presumption to incorporate the head voyage charterparty is not
absolute and shall not apply in this case
25. The Claimant argued that the OREVOY C/P is the charterparty incorporated into the B/L
by virtue of the presumption to incorporate the head voyage charterparty.35
However,
such presumption is not applicable in the present case. This presumption is not applicable
if, based on the examination of facts,36
a charterparty other than the head voyage charter
34
The Epic [2000] 3 SLR 735; Turner and Another v. Haji Goolam Mahomed Azam [1904] AC 826; Hansen v
Harrold Brothers [1894] 1 QB 612 (1894); Gardner & Sons v. Trechmann [1884] 15 QBD 154; Cosemar SA v
Marimarna Shipping Co Ltd (The Matthew) [1990] 2 Ll Rep 323. 35
Memorandum of the Claimant, paras. 36-38 36
The Epic [2000] 3 SLR 735; S.C. Boyd, A. Burrows, and D. Foxton, Scrutton on Charterparties, 20th
Ed.,
(London: Sweet & Maxwell), Art. 38, at p. 76.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
11
is the one intended by parties to be incorporated into the bill of lading.37
In determining
which C/P is to be incorporated, each case should be determined on a case-per-case
basis.38
26. A bill of lading is a contract between a shipper and a shipowner.39
In the construction of
the bill of lading and which charterparty incorporated, the court has to construe the
parties’ intentions objectively, taking into account the full commercial background in
which the contract was made,40
including the intention of the parties to such B/L.41
Weight should be given to the presumed intention of the master who signed and issued
the bill of lading, equal weight must be given to the intention of the shipper who normally
draws up the bill lading and presents it to the master for signature.42
27. Here, IDC, as the shipper, would have intended for the voyage charterparty between
INFERNO and IDC to be the one incorporated into the B/L. IDC would not have intended
for the B/L to incorporate the OREVOY C/P, to which it is not a party. Further, the
phrase “freight payable as per charterparty” in the bill of lading means that the mode of
payment, amount and the recipient of the freight payable by the shipper is as per the
charterparty.43
In the absence of some other considerations, a shipper is liable for the
37
Partenreederei M/S Heidberg v Grosvenor Grain and Feed Co Ltd (The Heidberg) [1994] 2 Lloyd’s Rep.
287. 38
Federal Bulk Carriers Inc v C. Itoh & Co. Ltd [1989] 1 Lloyd’s Rep 103; Navigazione Alta Italia SpA v
Svenska Petroleum AB (The Nai Matteini) [1988] 1 Lloyd’s Rep 452; Partenreederei M/S Heidberg v
Grosvenor Grain and Feed Co Ltd (The Heidberg) [1994] 2 Lloyd’s Rep. 287; Welex AG v Rosa Maritime Ltd
(The Epsilon Rosa) (No.2) [2003] 2 CLC 207 (2003); The Dolphina [2011] SGHC 273; Miramar Maritime
Corp v Holborn Oil Trading (The Miramar) [1984] 3 WLR 1. 39
National Jaya (Pte) Ltd v Hong Tat Marine Shipping Pte Ltd [1978–1979] SLR 416 at 419; BNP Paribas v
Bandung Shipping Pte Ltd. [2003] SGHC 111. 40
Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715 ; Glencore International AG v
MSC Mediterranean Shipping Co SA [2015] EWHC 1989 (Comm) at [22]; The Star Quest [2016] 3 SGHC 100;
Sir Bernard Eder, et al, Scrutton on Charterparties and Bills of Lading, 23rd
Ed., (London: Sweet & Maxwell,
2015), para 2-047; Guenter Treitel and Francis Reynolds, Carver on Bills of Lading, 3rd
Ed., (Sweet & Maxwell,
3rd Ed., 2011), para 3-012. 41
Partenreederei M/S Heidberg v Grosvenor Grain and Feed Co Ltd (The Heidberg) [1994] 2 Lloyd’s Rep.
287. 42
Partenreederei M/S Heidberg v Grosvenor Grain and Feed Co Ltd (The Heidberg) [1994] 2 Lloyd’s Rep.
287. 43
India Steamship Co v. Louis Dreyfus Sugar Ltd (The Indian Reliance) [1997] 1 Lloyd's Rep 52.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
12
payment of freight under the bill of lading;44
hence, it would want to know which
charterparty he is bound to. IDC would have intended to incorporate the charterparty
between INFERNO and it would be familiar with the terms and such terms have been
negotiated by it.
28. One of the implications of incorporation of a charterparty into a bill of lading is that the
cargo under the bill of lading is subjected to lien under that charterparty.45
Surely, as a
cargo owner, the shipper would not want to be subjected to a lien provision that he was
not even aware of. At the case at bar, the Cargo, which belongs to IDC, is allegedly
subjected to a lien under the OREVOY C/P, to which IDC is not even aware of.
ii. The voyage charterparty between INFERNO and IDC Is More Apposite to
the B/L than the OREVOY C/P
29. The appositeness is assessed from whether or not the terms of the charterparty will be
congruent in the context of a carriage under the bill of lading.46
The Claimant relied on
the case of The SLS Everest to argue that since the term used in the B/L is “freight,”
therefore a voyage charterparty, specifically the OREVOY C/P, is incorporated.
30. INFERNO submits that the Claimant failed to note the distinguishing fact between The
SLS Everest and our present case. The SLS Everest deals only with a question of which of
two charterparties is incorporated into the bill of lading: a time charterparty or a voyage
charterparty. The bill of lading in The SLS Everets used the term “freight” and the court
held that the voyage charterparty was incorporated for reasons of appositeness.
31. In the present case, the B/L uses the term “freight,” therefore, applying The SLS Everest,
a voyage charterparty is to be incorporated into the B/L. However, there are two voyage
44
Cho Yang Shipping Co Ltd v. Coral (UK) Ltd. [1997] CLC 1100. 45
The Epic [2000] 3 SLR 735; Aktieselskabet Ocean v B Harding & Sons Ltd [1928] 2 KB 371 (1928); Turner
and Another v. Haji Goolam Mahomed Azam [1904] AC 826; Gardner & Sons v. Trechmann [1884] 15 QBD
154. 46
Bangladesh Chemical Industries Corporation v Henry Stephens Shipping Company LimitedTex-Dilan
Shipping Company Limited (The SLS Everest) [1981] WL 187858.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
13
charterparties in the present case, i.e. the OREVOY C/P and the voyage charterparty
between INFERNO and IDC. Thus, the crux of the issue is which voyage charterparty is
to be incorporated. The SLS Everest fails to provide any meaningful bearing for this such
issue, therefore it is not applicable to the case at hand.
32. Moreover, Clause 25 of the OREVOY C/P Part II stipulates that the bills of lading issued
shall be as per the “COAL-OREVOYBILL” bill of lading form.47
Therefore, bills of
lading incorporating the OREVOY C/P would certainly be in the “COAL-
OREVOYBILL” bill of lading form. In the present case, the B/L issued was in the form
of IMLAM-Consignorists letterhead, without any indication or any printed letters on
COAL-OREVOY. Therefore, the B/L is not congruent to the OREVOY C/P terms. In
conclusion, for the abovementioned reasons, the OREVOY C/P is not incorporated into
the B/L.
IV. THE CLAIMANT COULD NOT DIRECT IMLAM TO RECOVER B/L
FREIGHT FROM IDC FOR THE CLAIMANT’S BENEFIT
33. It is an established rule that lien over sub-freight is only available under express
contractual term. In the absence of such clause, such as in this case, there is no right on
the part of the shipowner to exercise lien over sub-freight.48
The Claimant argued that it
can direct IMLAM, as a carrier under the B/L, to recover B/L Freight from IDC, as the
shipper, for the Claimant’s benefit under equitable duty.49
Such contention by the
Claimant should be rejected because (A) IMLAM’s right to make a direct claim for the
B/L Freight is not triggered as there is no default in the hire payment under the Time C/P.
47
Moot Scenario, OREVOY C/P, Cl. 25, p. 32. 48
Western Bulk Shipowning III A/S v Carbofer Maritime Trading ApS & Ors., (The Western Moscow) [2012]
EWHC 1224 (Comm); The Atticka Hope [1988] 1 Lloyd's Rep. 439; The Ugland Trailer [1985] 2 Lloyd's Rep.
372, at p.374; Care Shipping Corporation v. Latin American Shipping Corporation (The Cebu (No 1)) [1983] 2
WLR 829. 49
Memorandum of the Claimant, paras. 44-46.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
14
Moreover, (B) the concept of equitable duty between a head owner and a time charterer in
respect of the cause of action for the unpaid freight is not an established rule.
A. IMLAM’s Right to Make a Direct Claim for the B/L Freight is Not Triggered as
There is No Default in the Hire Payment under the Time C/P
34. The provision of “freight payable as per charterparty” under a bill of lading expresses
that a shipowner has delegated authority to the time charterer to collect freight in a
manner agreeable to the time charterer and sub-charterer.50
Although the freight is the
shipowner’s right, it is directed to be paid to a nominated recipient or third party.51
Courts, both in English and Singaporean jurisdictions, acknowledge that there is an
implicit understanding that a head shipowner will not exercise its legal right under the bill
of lading until and unless the time-charterer is in default of his obligation to pay the
charter hire under the time charterparty.52
Put differently, the head shipowner’s right to
make a direct claim under the bill of lading is only triggered when there is a default in
hire payment by a time-charterer.
35. Here, pursuant to the “freight payable as per charter party” terms under the B/L, IMLAM
had delegated to the Claimant the authority to collect the freight in a manner agreeable to
the Claimant and its sub-charterers. Although the B/L Freight is IMLAM’s right, it is
directed to be paid to a nominated recipient under the applicable charterparty. There is an
implicit understanding that IMLAM will not exercise its legal right under the B/L until
and unless the Claimant is in default of its obligation to pay the charter hire under the
Time C/P. IMLAM’s right to make a direct claim under the B/L is only triggered when
there is a default in the charter hire by the Claimant, which is not the case here.
50
Tradigrain SA v King Diamond Marine Ltd (The Spiros C) [2000] WL 877762 (2000); Dry Bulk Handy
Holding Inc. v. Fayette International Holdings Ltd (The Bulk Chile) [2013] 2 Lloyd’s Rep.47. 51
Dry Bulk Handy Holding Inc. v. Fayette International Holdings Ltd (The Bulk Chile) [2013] 2 Lloyd’s
Rep.47. 52
Cascade Shipping Inc, v. Eka Jaya Agencies (Pte.) Ltd. [1993] 1 SLR 980, para. 37; Molthes Rederi AB v
Ellermans Wilson Line Ltd [1927] 1 KB 710 (1926).
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
15
Therefore, IMLAM’s right to make a direct claim for the B/L Freight is not triggered in
the present case. Accordingly, IMLAM cannot make a direct claim for the B/L Freight on
IDC.
B. The Concept of Equitable Duty Between a Head Owner and a Time Charterer in
Respect of The Cause of Action for the Unpaid Freight is Not an Established
Rule
36. The Claimant argues that, on the basis of equitable duty between a head owner and a time
charterer, IMLAM may make a direct claim for the B/L Freight.53
However, such
equitable duty is not an established rule; therefore it cannot be invoked in the present
case.
37. The Claimant relied solely on limited academic opinions in an attempt to establish an
equitable duty between the Claimant and IMLAM as a basis for the cause of action for
IMLAM claims of B/L Freight.54
Such equitable duty has never been applied in any case
law. This absence is understandable as there are various business reasons, acknowledged
by English and Singaporean judges, which do not support this concept.
38. Firstly, a head shipowner would not be expected to act in any manner which would
damage its commercial reputation.55
There is no reason for a head shipowner to be
concerned with the freights to be collected under the B/L as it is only entitled to hire
charges as provided in its time C/P.56
The head shipowner executes the carriage of cargo
in exchange of the hire paid by the time charterer and not because of the bill of lading
freight paid by the shipper.57
53
Memorandum of the Claimant, para. 44. 54
Memorandum of the Claimant, para. 45. 55
Dry Bulk Handy Holding Inc. v. Fayette International Holdings Ltd (The Bulk Chile) [2013] 2 Lloyd’s Rep.
47. 56
Cascade Shipping Inc, v. Eka Jaya Agencies (Pte.) Ltd. [1993] 1 SLR 980. 57
Cascade Shipping Inc, v. Eka Jaya Agencies (Pte.) Ltd. [1993] 1 SLR 980.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
16
39. Secondly, such a direct claim could be seen as an interference with the authority that has
been delegated by the head shipowner to the time charterer. Such interference may be
regarded as repudiatory in regard to the time charterparty.58
40. As a conclusion, IMLAM’s right to make a direct claim for the B/L Freight is not
triggered by and the Claimant cannot rely on the concept of equitable duty; therefore the
Claimant cannot direct IMLAM to recover the B/L Freight from IDC for the Claimant’s
benefit.
V. THE CLAIMANT’S TERMINATION OF THE OREVOY C/P IS WRONGFUL
41. The Claimant argued that INFERNO committed a breach of the Freight Clause and such
action constitutes a repudiatory breach entitling the Claimant to terminate the OREVOY
C/P.59
However, this Tribunal must reject this contention because the alleged breach is
not a repudiatory breach; hence, the Claimant’s termination is unlawful.
42. Although a freight clause may provide a time stipulation, the effect of such stipulation
always depends on the true construction of the contract.60
A default in payment obligation
per se does not automatically give the innocent party a right to terminate the contract.61
It
only does so if there is an express provision giving the right to do so or if the non-
payment is such as to amount to a repudiation of the contract.62
58
Dry Bulk Handy Holding Inc. v. Fayette International Holdings Ltd (The Bulk Chile) [2013] 2 Lloyd’s Rep.
47. 59
Memorandum of the Claimant, para. 47, Moot Scenario, p. 68. 60
Chua Tian Chu and another v Chin Bay Ching and another [2011] SGHC 126.; Empresa Cubana de Fletes v
Lagonisti Shipping Co Ltd (The Georgios C) [1971] 1 QB 488; Brani Readymixed Pte Ltd v Yee Hong Pte Ltd
[1994] 3 SLR(R) 1004; Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R)
602. 61
Chua Tian Chu and another v Chin Bay Ching and another [2011] SGHC 126.; Empresa Cubana de Fletes v
Lagonisti Shipping Co Ltd (“The Georgios C”) [1971] 1 QB 488; Brani Readymixed Pte Ltd v Yee Hong Pte
Ltd [1994] 3 SLR(R) 1004; Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R)
602. 62
Chua Tian Chu and another v Chin Bay Ching and another [2011] SGHC 126.; Empresa Cubana de Fletes v
Lagonisti Shipping Co Ltd (“The Georgios C”) [1971] 1 QB 488; Brani Readymixed Pte Ltd v Yee Hong Pte
Ltd [1994] 3 SLR(R) 1004; Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R)
602.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
17
43. In the present case there is no express provision in the OREVOY C/P that entitles the
Claimant to terminate the contract once the freight payment was not received within five
banking days after the three pre-conditions as mentioned in the Freight Clause:
completion of loading; signing/releasing B/L; receipt of owners’ freight invoice.63
44. Further, the late payment does not amount to a repudiatory breach. In order to constitute a
repudiation, the breach must be such as to deprive the innocent party of the substantially
whole benefit of the contract to which it is entitled under the contract.64
Thus, the
important question is whether the alleged breach concerns a provision that constitutes
substantially the whole benefit of the contract.
45. To assess whether the timing obligation of the Freight Clause constitutes the substantially
whole benefit, we must consider the parties’ intention objectively ascertained. This can be
done through assessing the formulation of the Freight Clause and also the circumstances
of the voyage. During the conclusion of the OREVOY C/P, the Parties already knew that
the payment should have been made prior to the discharge. By taking into account that the
Parties did not incorporate a provision in the OREVOY C/P entitling termination in case
of non-payment of Freight before the discharge, it can be inferred that the timing
obligation does not constitute the substantially whole benefit of the contract. Therefore,
INFERNO’s breach of the timing obligation in the Freight Clause is not a repudiatory
breach and the Claimant is not entitled to terminate the OREVOY C/P on that basis.
46. When a party terminates a contract without any legal justification or valid ground, such
termination is wrongful.65
In such case, the terminating party is in repudiatory breach
63
Moot Scenario, p. 22. 64
Hongkong Fir Shipping v. Kawasaki Kisen Kaisha [1962] 2 Q.B. 26, 60, 65; Rice v Great Yarmouth BC
[2003] T.C.L.R 1; South Oxfordshire D v SITA UK Ltd [2006] EWHC 2459 (Comm); Photo Production v.
Securicor [1980] A.C. 827, 849; The Hansa Nord [1975] 2 Lloyd’s Rep. 445; Freeman v Taylor [1831] 8 Bing
124; MacAndrew v Chapple [1865] 18 CB (NS) 759; John F. Wilson, Carriage of Goods by Sea, 7th
Ed,
(Harlow: Pearson, 2010). 65
Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R) 602; Ogle v Comboyuro
Investments Pty Ltd [1976] HCA 21.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
18
itself and the other party would be entitled to the damages thereof.66
In this case, the
Claimant, lacking any legal ground, wrongfully terminated the OREVOY C/P, as
explained above.67
Thus, the Claimant is in repudiatory breach itself and INFERNO is
entitled to seek damages thereof.
VI. THE CLAIMANT IS NOT ENTITLED TO DAMAGES FOR DETENTION IN
THE FULL AMOUNT FOR ITS FAILURE TO ACT REASONABLY UPON
INFERNO’S BREACH
47. The Claimant argued that INFERNO breached its obligation to nominate a discharge port
on time as per the Discharge Port Clause, i.e. before 11 October 2016 at 08.00 Singapore
Local Time (“SGLT”). Subsequently, the Claimant seeks damages for detention for the
alleged loss due to the delay caused by the breach.68
The innocent party is entitled to
recover by way of damages the true value of the contractual rights that he has thereby
lost, subject to his duty to mitigate.69
INFERNO admits its failure to nominate a discharge
port on time as per Discharge Port Clause.70
However, INFERNO submits that (A) the
Claimant is not entitled to damages for detention from 11 October until 17 October 2016
due to its failure to mitigate the loss by staying idle in SG OPL; alternatively, (B) the
Claimant is not entitled to damages for detention after 16 October 2016 due to its failure
to mitigate by refusing INFERNO’s offer for the Amendment of the Discharge Port to be
Busan port.
66
Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R) 602; Ogle v Comboyuro
Investments Pty Ltd [1976] HCA 21. 67
Moot Scenario p. 68. 68
Memorandum of the Claimant, para. 55. 69
Maredelanto Compania Naviera S.A. v. Bergbau-Handel G.M.B.H. (The Mihalis Angelos) [1970] 3 WLR
601. 70
Moot Scenario, p. 21.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
19
A. The Claimant Is Not Entitled to Damages for Detention from 11 October until 17
October 2016 Due to Its Failure to Mitigate the Loss by Staying Idle in Singapore
OPL
48. Under principles of mitigation, an innocent party is required to take all reasonable steps to
mitigate the loss caused by a defaulting party’s breach.71
Such principle boils down to a
central question of whether the innocent party had acted reasonably to mitigate the loss.72
Failure to act reasonably to mitigate the loss disentitles the innocent party to recover
damages for the avoidable loss.73
49. In this present case, the Claimant argues that it could not proceed from Singapore because
INFERNO had not nominated the discharge port, rendering the Tardy Tessa to stay idle at
the Singapore OPL.74
However, INFERNO submits that the Claimant’s inaction by
staying idle in Singapore OPL was unreasonable, and thus disentitles the Claimant for the
damages of detention that it could have avoided.
50. In assessing whether the Claimant’s conduct was reasonable, the standard of
reasonableness is what a prudent and reasonable shipowner, in the same position as the
Claimant, would have done.75
In Mansel Oil Ltd & Anor v Troon Storage Tankers SA76
it
was acknowledged that in the absence of port nomination, it is usual for a shipowner to
co-operate with its charterer to minimize delay by proceeding to a deviation point and
demanding the nomination on the way. A deviation point is an intersection in a course of
voyage at which a vessel must choose which route it should take in order to arrive at one
71
The Asia Star [2010] SGCA 12; MP-Bilt Pte Ltd v Oey Widarto [1999] 1 SLR(R) 908; [1999] SGHC 70;
White and Carter (Councils) Ltd v McGregor [1962] AC 413, HL at 445; Stocznia Gdanska SA v Latvian
Shipping Co [1998] 1 All ER 883; Jia Min Building Construction Pte Ltd v Ann Lee Pte Ltd (Jia Min Building
Construction) [2004] 3 SLR(R) 288; Banco de Portugal v Waterlow and Sons, Limited (Banco de Portugal)
[1932] AC 452. 72
The Asia Star [2010] SGCA 12. 73
The Asia Star [2010] SGCA 12; Jia Min Building Construction Pte Ltd v Ann Lee Pte Ltd (Jia Min Building
Construction) [2004] 3 SLR(R) 288; Limited v Underground Electric Railways Company of London, Limited
(British Westinghouse Electric) [1912] AC 673. 74
Moot Scenario, p. 52-67. 75
The Asia Star [2010] SGCA 12; Dunkirk Colliery Company v Lever (1878) 9 Ch D 20. 76
Mansel Oil Ltd & Anor v Troon Storage Tankers SA [2008] EWHC 1269 (Comm).
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
20
of a stipulated range of ports. Before the vessel reaches the deviation point the owners
can, without a nomination, do all that they need to in complying with the charterparty,
and without loss to themselves.77
51. The port options prescribed in the OREVOY C/P are eight ports in China. To proceed to
any of those ports from Singapore, the Tardy Tessa had only one option, which was to
sail via South China Sea, and subsequently meet the deviation point on Hangzhou Bay.78
Hangzhou Bay is the intersection of every route to the stipulated ports under the
OREVOY C/P. Therefore, given the absence of port nomination at that time, the Claimant
should have cooperated with INFERNO to minimize delay by proceeding to Hangzhou
Bay, as the deviation point in this voyage. The Claimant could have reached the deviation
point without loss to itself, rather than waiting in Singapore OPL.
52. Further, had the Claimant proceeded to Hangzhou Bay, as the deviation point, the
Claimant would have been able to avoid six days lost in waiting for the nomination. The
Tardy Tessa is a bulk carrier with a deadweight of 76,822.00 metric tonnes,79
categorized
as a panamax bulk-carrier, with an average speed of 14.5 knots.80
The distance from
Singapore to Hangzhou Bay is approximately 2,172 nautical miles.81
Proceeding to
Hangzhou Bay at the average speed of the Tardy Tessa would have taken approximately
six days, and the Tardy Tessa would have arrived at Hangzhou Bay on 17 October 2016.
Therefore, the time period where the Tardy Tessa would have been waiting idle could
have been reduced by six days, i.e., from 11 October 2016 to 17 October 2016.
77
Mansel Oil Ltd & Anor v Troon Storage Tankers SA [2008] EWHC 1269 (Comm). 78
http://ports.com/sea-route/ adjust port variable from Singapore to: Ningbo; Yantai; Tianjin; Dalian; Jinzhou;
Qingdao; Yingkou. ; GPS Coordinates Of Hangzhou Bay (“Hangzhou Bay Coordinate”), China 30°17'6.72" N
120°55'26.40" E. 79
Moot Scenario, p. 21. 80
Man Diesel & Turbo, Propulsion Trends in Bulk Carriers: Two-stroke Engines, p. 14, Fig. 9: Average design
ship speed of bulk carriers. 81
https://www.marinetraffic.com/en/voyage-planner, adjust destination variable from Singapore to Hangzhou
Bay Coordinates.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
21
B. In any Event, the Claimant Is Not Entitled to Damages for Detention after 16
October 2016 Due to Its Failure to Mitigate by Refusing the Amendment for the
Discharge Port
53. It is established that in the commercial context, the test of reasonableness in principles of
mitigation is a question of fact; it must reflect commercial and fact-sensitive fairness
having regard to all circumstances existing.82
The test of reasonableness is what a
reasonable and prudent businessman would have done in the ordinary course of his
business had he been in the aggrieved party’s shoes.83
54. The innocent party should be encouraged to be self-reliant or proactive in attempting to
reduce its loss by taking reasonable steps, instead of pinning all its loss on the defaulting
party.84
In the realm of commercial contract, it is reasonable for a prudent and reasonable
businessman, as an aggrieved party, to engage alternative performance to mitigate the loss
resulting from the breach.85
Failure to engage with the reasonable alternative performance
is deemed as unreasonable inaction.86
55. In acting reasonably, the innocent party must act with both its own interests and the
interests of the defaulting party.87
In the case of The Asia Star, a charterer ordered a
vessel from a shipowner to be delivered to the nominated loading port for a carriage of
palm oil. However, the shipowner failed to deliver the vessel at the designated time.
When the vessel eventually arrived, it turned out that loading was impossible as the vessel
was not fit to load all the palm oil. Consequently, the charterer incurred loss from the
accrual of warehouse costs and third- party claims caused by the inability to load. At that
82
The Asia Star [2010] SGCA 12. 83
The Asia Star [2010] SGCA 12; Dunkirk Colliery Company v Lever (1878) 9 Ch D 20. 84
The Asia Star [2010] SGCA 12; Andrew Burrows, Remedies for Torts and Breach of Contract, 3rd
Ed,
(Oxford: University Press, 2004), p. 122. 85
The Asia Star [2010] SGCA 12; Payzu, Limited v Saunders [1919] 2 KB 581; OCBC Securities Pte Ltd v
Phang Yul Cher Yeow [1997] 3 SLR(R). 86
The Asia Star [2010] SGCA 12; OCBC Securities Pte Ltd v Phang Yul Cher Yeow [1997] 3 SLR(R). 87
Smailes and Son v Hans Dessen and Co (1906) 94 LT 492 at 493.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
22
time, the charterer had an option to engage an alternative vessel at a slightly higher rate,
but chose not to do so. In that case it was held that if a substitute vessel was available on
reasonable terms, the charterer ought to have mitigated its loss by engaging that vessel. If
a charterer cannot get the same vessel of the same size as it originally chartered, it should
take the next best reasonable option that is available, which may include chartering a
larger vessel, if a failure to do so will cause greater loss to the defaulting party. The judge
held that the charterer’s refusal to engage the alternative vessel was unreasonable, and
therefore the charterer failed to mitigate its losses, and was thus not entitled to the
corresponding loss he could have avoided by taking the alternative engagement.
56. Here, given the circumstances of port congestions in the prescribed Chinese ports on 16
October 2016,88
INFERNO nominated Busan as the alternative discharge port, along with
an offer to amend the freight on an open-book basis.89
However, the Claimant
unreasonably rejected such amendment with the sole reason of a rumor of a zombie
outbreak, the validity of which information is questionable.90
57. Applying the same rationale applied in The Asia Star as explained in paragraph 55, Busan
was available as a substitute arrangement and it was offered on reasonable terms of
freight; therefore, the Claimant ought to have mitigated its loss by accepting such
amendment. Given the circumstances at that time, the Chinese ports were not available,
therefore the Claimant ought to have taken the next best reasonable option, which was
Busan. The Claimant should have been proactive in attempting to reduce its loss, which
could have been done by accepting the alternative arrangement, instead of pinning all its
loss on INFERNO. The Claimant’s refusal to accept the alternative arrangement was
unreasonable inaction; and therefore the Claimant had failed to mitigate and is not
88
Moot Scenario, p. 57. 89
Moot Scenario, p. 58. 90
Procedural Order No. 3, para. 6.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
23
entitled to damages for detention it could have avoided, i.e. the damages for detention
accruing from the date such offer was made on 16 October 2016.
58. Further, as a matter of reasonableness, the judge in The Asia Star held that the aggrieved
party must encourage communication with the defaulting party concerning possible
mitigation steps.91
However, the Claimant does not show any cooperation to resolve the
unfortunate circumstances. Not only did the Claimant reject INFERNO’s proposal of an
alternative discharge port, based on unfounded rumors, it failed to suggest any suitable
alternative arrangements, for example, negotiating hire rates or requesting a guarantee.
59. In conclusion, the Claimant failed to act reasonably to mitigate the loss incurred due to
INFERNO’s breach. Therefore, the loss, if any, shall not be assessed in full but only upon
the unavoidable period. Had the Claimant proceeded to Hangzhou Bay, any loss incurred
from 11 October 2016 to 17 of October 2016 could have been avoided. Therefore, the
loss shall only be assessed for four days, i.e. 17 October 2016 until 21 October 2016. In
any event, had the Claimant accepted the amendment to Busan, there would have been no
loss incurred after 16 October 2016, and therefore, the assessment shall be limited to 11
until 16 October 2016 only.
91
The Asia Star [2010] SGCA 12.
TEAM NO. 21 – MEMORANDUM FOR THE RESPONDENT
24
PRAYER FOR RELIEF
For the reasons set out above, INFERNO AND IDC request the Tribunal to:
(a) ORDER for the two arbitration proceedings to be consolidated;
and further to:
(b) FIND that the Tribunal shall not order a liberty to sell and appraise the Cargo pendente
lite;
and further to:
(c) DECLARE that the Claimant’s exercise of lien over the Cargo is unlawful;
(d) DECLARE that the Claimant could not direct IMLAM to recover the B/L Freight from
IDC for the Claimant’s benefit;
(e) DECLARE that the Claimant’s termination of the OREVOY C/P is wrongful;
(f) FIND that the Claimant is not entitled for the full amount of damages for detention; and
(g) AWARD other reliefs as the Tribunal deems fit.