NINETEENTH INTERNATIONAL MARITIME LAW … · Cases A/S Hansen-Tangens ... Lombard North Central Plc...

NINETEENTH INTERNATIONAL MARITIME LAW ARBITRATION MOOT

BRISBANE, AUSTRALIA

29 JUNE, 2018 – 3 JULY, 2018

THE WEST BENGAL NATIONAL UNIVERSITY OF JURIDICAL SCIENCES,

KOLKATA, INDIA

TEAM NO. 05

MEMORANDUM FOR RESPONDENT

CLAIMANT RESPONDENT

CERULEAN BEANS AND

AROMAS LTD

DYNAMIC SHIPPING

LLC

TEAM

ABHINAV SANKARANARAYANAN | KABIR WALIA

PRUTHVI JASANI | UNNATI JHUNJHUNWALA

TEAM 05| MEMORANDUM FOR RESPONDENT

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TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................................................................ I

ABBREVIATIONS ............................................................................................................... IV

INDEX OF AUTHORITIES .................................................................................................. V

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

ISSUES IN CONTENTION .................................................................................................... 2

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

MERITS OF JURISDICTION ............................................................................................... 3

I. THIS TRIBUNAL DOES NOT HAVE THE REQUISITE JURISDICTION TO ADJUDICATE UPON

ALL THE CLAIMS PUT FORWARD BY CLAIMANT. .................................................................. 3

A. This Tribunal should uphold the dispute resolution process contemplated by the

Parties................................................................................................................................ 3

B. The Dispute Resolution process contemplated by the Parties is neither void nor

unenforceable ................................................................................................................... 4

C. The claims put forth by CLAIMANT emanate from technical matters as defined

under the CP ..................................................................................................................... 6

MERITS OF CLAIM .............................................................................................................. 6

II. RESPONDENT IS NOT LIABLE FOR ANY DAMAGES UNDER THE CP. .............................. 6

A. RESPONDENT contends that the delay was caused by the storm which is a force

majeure event. ................................................................................................................... 7

B. RESPONDENT is absolved of all liability as per the force majeure clause of the CP.

………………………………………………………………………………………8


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1. The benefits of the force majeure clause are not lost where a repudiatory

breach of the CP has been alleged. .............................................................................. 8

a) The deviation to Spectre was justified and did not amount to repudiation of the

CP. ………………………………………………………………………………………….8

b) Even if the breach were repudiatory, the CP was not repudiated by CLAIMANT.

………………………………………………………………………………………...10

c) Even if the CP were repudiated pursuant to a repudiatory breach, the benefit

of the force majeure clause cannot be denied to RESPONDENT. ............................... 11

2. The failure to carry the hardcopy maps does not defeat the defence of force

majeure. ....................................................................................................................... 12

C. RESPONDENT is not liable to pay damages worth USD 30,200,000. ................... 12

1. RESPONDENT is not liable for the damaged cargo worth USD 15,750,000. .... 13

2. RESPONDENT is not liable for the Replacement Coffee worth USD 9,450,000.

…………………………………………………………………………………14

3. RESPONDENT is not liable for the Settlement Payment worth USD 5,000,000 15

a) Chain of causation was broken by CLAIMANT. ............................................... 15

b) The Settlement Payment cannot be claimed for remoteness. ......................... 16

D. In any case, RESPONDENT has the right to limit its liability under International

Convention. ..................................................................................................................... 17

III. CLAIMANT DOES NOT EXERCISE AN EQUITABLE MARITIME LIEN OVER THE MADAM

DRAGONFLY......................................................................................................................... 18

MERITS OF COUNTERCLAIMS ...................................................................................... 19


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IV. CLAIMANT IS LIABLE TO PAY THE AMOUNT MENTIONED IN THE INVOICE DATED

AUGUST 1, 2017 RAISED UPON HER AS A COUNTERCLAIM.................................................. 19

A. CLAIMANT is liable to pay freight in full for all the containers of coffee. ......... 20

B. CLAIMANT is liable to pay the costs of repair for damages to the ship. ............ 20

C. CLAIMANT is liable to pay for the agency fees at the Port of Spectre and Port of

Dillamond........................................................................................................................ 22

D. CLAIMANT is liable to pay Demurrage worth USD 100,000. .............................. 23

E. CLAIMANT is liable to pay for use of electronic access systems at the Port of

Dillamond........................................................................................................................ 24

PRAYER ................................................................................................................................. 25


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ABBREVIATIONS

§ Section

AMSA Australian Maritime Safety Authority

Art. Article

Cl Clause

CLAIMANT Cerulean Beans and Aromas Limited.

COW Coffees of the World

CP Charterparty

FIO Free in and out

ISM Code International Safety Management Code

LLC Limited Liability Company

LLMC Convention on Limitation of Liability for Maritime Claims

LMAA Rules London Maritime Arbitrators Association Rules

Ltd. Limited

P Page

Parties Cerulean Beans and Aromas Limited & Dynamic Shipping

LLC

RESPONDENT Dynamic Shipping LLC

Sch. Schedule

SOLAS International Convention for the Safety of Life at Sea

UK United Kingdom

USD United States Dollar

WWD Weather Working Day


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INDEX OF AUTHORITIES

Cases

A/S Hansen-Tangens Rederi III v Total Transport Corporation (The Sagona) [1984] 1 Lloyd’s

Rep. 194 ............................................................................................................................... 22

Automatic Tube Co. v Adelaide SS. (The Beltana) [1967] 1 Lloyd’s Rep. 531 (Supreme Ct. of

Australia).............................................................................................................................. 13

Bacon v Cooper (Metals) Ltd 1982] 1 All E.R. 397 ................................................................ 14

Barclays Bank plc v Nylon Capital LLP [2011] EWCA CIV 826 ............................................. 4

Bourne v Gatliff 8 E.R. 1019 ................................................................................................... 24

British Shipowners v Grimond (1876) 3 Rett. 968, 972 .......................................................... 14

Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334 ....................... 4

Compania Naviera Termar SA v Tradax Export SA (The Ante Tropic) [1966] 1 Lloyd’s Rep

566 (HL)......................................................................................................................... 23, 24

Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd [2003] EWCA Civ 451 ................... 11

Davis v Garratt 130 ER 1456 .................................................................................................... 9

DGM Commodities Corp v Sea Metropolitan SA (The Andra) [2012] EWHC 1984 (Comm) 24

EL Oldendorff & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1974] AC 479 23

Exportadora De Sal SA De CV v Corretaje Maritimo Sud-Americano Inc [2018] EWHC 224

(Comm) .................................................................................................................................. 4

Federal Commerce & Navigation Co Ltd v Tradax Export SA (The Maratha Envoy) [1977] 2

Lloyd’s Rep 301 ................................................................................................................... 23

Fiona Trust and Holding Corporation v Privalov [2007] EWCA CIV 20................................ 4

Gamlen Chemical Co (Asia) Pty Ltd v Shipping Corporation of India Ltd 34 FLR 305 ........ 10

Golden Fleece Maritime Inc v ST Shipping & Transport Inc (The Elli and The Frixos) [2008]

1 Lloyds Rep. 262 ................................................................................................................ 12


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Goulandris v Goldman [1958] 1 Q.B. 74 ................................................................................ 21

Hadley v Baxendale (1854) 9 Exch. 341 ................................................................................. 16

Hain S.S. v Tate & Lyle (1936) 41 Com.Cas. 350 ................................................................... 11

Hobbs, Savill & Co Ltd v The Vasilia (Owners) Albaran Bay Corporation [1972] 1 Lloyd's

Rep 51 .................................................................................................................................. 19

J & E Kish v Charles Taylor [1912] AC 604............................................................................. 9

Joseph Thorley Ltd v Orchis Dteamship Co Ltd [1907] 1 KB 660 (CA) ................................ 11

Julian D.M. Lew and others (eds), Arbitration in England with chapters on Scotland and

Ireland (Wolters Kluwer 2013) ............................................................................................. 4

Kenya Railways v Antares Co Pty Ltd [1987] 1 Lloyd’s Rep. 424.......................................... 11

Knight v Fleming (1898) 25 Rett. 1070 ................................................................................... 13

Koch Marine v D’Amico Soc. Di Nav. (The Elena d’Amico) [1980] 1 Lloyd’s Rep. 75 ......... 15

Kostopoulos v G. E. Commercial Finance Australia Pty Ltd [2005] QCA 311 ...................... 10

Lombard North Central Plc and Another v GATX Corporation [2012] EWHC 1067 (Comm) 5

London Arbitration – LMLN 117, 26 April 1984.................................................................... 23

Monarch S.S. Co v Karlshamns [1949] A.C. 196 ...................................................................... 9

MSC Mediterranean Shipping Co SA v Delumar BVBA (The "MSC ROSA M") [2000] 2 Lloyd’s

Rep 399 ................................................................................................................................ 17

MSC Mediterranean Shipping Co. S.A. v Delumar BVBA (THE "MSC ROSA M") [2000] 2

Lloyd’s Rep 399 ................................................................................................................... 17

Nugent v Smith (1876) 1 C.P.D. 421 .......................................................................................... 7

Petroleum Company of Trinidad and Tobago v Samsung Engineering Trinidad Co. Ltd. [2017]

EWHC 3055 (TCC) ............................................................................................................... 4

Philip Goldman v Thai Airways International Ltd [1983] 1 WLR 1186 ................................. 17

Photo Production v Securicor Transport [1980] AC 827 ....................................................... 11


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Programmed Total Marine Services Pty Ltd v The Ship Hako Fortress [2012] FCA 805 ...... 18

Reardon Smith Line v Black Sea and Baltic General Insurance (1939) 64 Ll LR 229 ............. 9

Schiffahrtsgesellschaft MS Merkur Sky m.b.H. & Co K.G. v Ms Leerort Nth Schiffahrts

G.m.b.H. & Co K.G. (The Leerort) [2001] 2 Lloyd’s Rep 291 ........................................... 17

Schiffahrtsgesellschaft MS Merkur Sky m.b.H. & Co K.G. v Ms Leerort Nth

SchiffahrtsG.m.b.H. & Co. K.G. (The Leerort) [2001] 2 Lloyd’s Rep 291 ......................... 17

See Vinmar International v Theresa Navigation (The Atrice) [2001] 2 Lloyd’s Rep. 1 ......... 15

Shell International Petroleum Co v Seabridge Shipping (The Metulla) [1978] 2 Lloyd’s Rep. 5

.............................................................................................................................................. 20

Standard Chartered Bank v Pakistan National Shipping Co (No. 3) [1999] 1 Lloyd’s Rep. 747

.............................................................................................................................................. 15

Stinnes v Halcoussis (The Yanxilas) [1982] 2 Lloyd’s Rep. 445 ............................................. 16

Suisse Atalantique v NV Rotterdamsche [1967] 1 AC 361 ...................................................... 11

Supershield v Siemens Building Technologies [2010] 1 Lloyd’s Rep. 349 ............................. 16

Sylvia Shipping v Progress Bulk Carriers Ltd (The Sylvia) [2010] 1 Lloyd’s Rep. 81 ........... 16

Tele2 International Card Company SA and others v Post Office Limited [2009] EWCA Civ 9

.............................................................................................................................................. 10

The Asia Star [2010] 2 Lloyd’s Rep. 121 (Singapore Court of Appeal) ................................. 15

The Berostar [1970] 2 Lloyd's Rep 403 ................................................................................... 19

The Heart Research Institute Ltd v Psiron Ltd [2002] NSWSC 646 ......................................... 5

The Leoborg (No 2) [1964] 1 Lloyd's Rep 380 ........................................................................ 18

The Madeleine [1967] 2 Lloyds Rep. 224 ............................................................................... 12

The SS Aragon [1943] 3 DLR 178 ........................................................................................... 18

The World Star [1987] 1 Lloyd's Rep 452 ............................................................................... 19

Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2009] A.C. 61 ................. 16


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Transworld Oil v North Bay Shipping (The Rio Claro) [1987] 2 Lloyd’s Rep. 173 ............... 16

Triarno Pty Ltd v Triden Contractors Ltd [1992] 10 BCL 405 ................................................. 5

Wehner v Dene [1905] 2 K.B. 92 ............................................................................................. 22

Legislative Enactments

Arbitration Act, 1996 ................................................................................................................. 4

Carriage of Goods by Sea Act 1991 (Australia) ...................................................................... 17

Merchant Shipping Act 1995 ................................................................................................... 17

Books

H.G. Beale, Chitty on Contracts, vol 1 (32nd edn, Sweet and Maxwell 2015) ....................... 14

Ilias Bantekas, An Introduction to International Arbitration (Cambridge 2015) ...................... 5

John Schofield, Laytime and Demurrage (7th edn, Routledge 2016) ..................................... 23

Julian Cooke and others, Voyage Charters (4th edn, Routledge 2014) ..................................... 7

Michael Wilford and others, Time Charters (5th edn, LLP 2003) .......................................... 22

Peter R. Brodie, Commercial Shipping Handbook (3rd edn, CRC Press 2014) ...................... 22

Scrutton on Charterparties and Bills of Lading (22nd edn, Sweet & Maxwell 2011) ............ 22

Stephen Girvin, Carriage of Goods by Sea (OUP 2007) ..................................................... 9, 23

Stewart Boyd and others, Scrutton on Charterparties and Bills of Lading (21st edn, Sweet &

Maxwell 2008) ....................................................................................................................... 9

Articles

Leslie J. Buglass, Ground for Refusal to Contribute in General Average, Lloyd’s Maritime and

Commercial Law Quarterly, 1974 ....................................................................................... 21

Michael Ng, ‘The Protection of Seafarers’ Wages in Admiralty: A Critical Analysis in the

Context of Modern Shipping’ (2008) 22 A&NZ Mar LJ, 163 ............................................ 18


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William Tetley ‘Assignment and Transfer of Maritime Liens: Is There Subrogation of the

Privilege?’ (1984) 15 Journal of Maritime Law and Commerce ......................................... 19

Other Authorities

AMSA, Marine Notice 2014/17, available at https://www.amsa.gov.au/vessels-

operators/regulations-and-standards-vessels/marine-notices ............................................... 12

Association of Average Adjusters Report of General Meeting, 1973 ..................................... 21

Convention on Limitation of Liability for Maritime Claims 1976 .......................................... 17

Convention on Limitation of Liability for Maritime Claims, 1976 ......................................... 17

International Convention for the Safety of Life at Sea 1974 ................................................... 12

LMAA terms .............................................................................................................................. 3

Resolution A.817(19), Netherlands Regulatory Framework ................................................... 12


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STATEMENT OF FACTS

1. On July 22, 2017, Cerulean Beans and Aromas (CLAIMANT) entered into a voyage charter with

Dynamic Shipping LLC (RESPONDENT), owners of the Madam Dragonfly for the carriage of 4

containers of specialty grade green coffee from Cerulean to Dillamond. RESPONDENT agreed

to deliver the consignment by July 28, 2017.

2. The Madam Dragonfly set sail for Dillamond on July 24, 2017 and RESPONDENT dispatched

the cargo receipt.

3. Enroute, the communications and satellite systems of the Madam Dragonfly were rendered

inoperative by solar flares.

4. The resultant communications blackout lasted for seventeen hours during which the crew relied

upon old maps and proceeded towards the port of Spectre, which is situated to the west of

Dillamond. After the systems came back online, RESPONDENT changed direction and started

heading towards Dillamond.

5. On July 28, 2017, RESPONDENT was on track to successfully deliver the consignment when the

Madam Dragonfly was hit by a massive storm outside Dillamond.

6. Owing to the massive storm, the Madam Dragonfly was forced to drop anchor approximately

100 nm from Dillamond and the vessel reached Dillamond port only on July 29, 2017

7. Even though the Madam Dragonfly reached Dillamond port on July 29, 2017, CLAIMANT took

delivery only on July 31, 2017.

8. Subsequently, it was discovered on August 1, 2017 that three out of the four containers shipped

were water damaged and had been rendered completely unusable.

9. On August 1, CLAIMANT intimated RESPONDENT and sought damages under various heads.


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10. Subsequently, RESPONDENT denied all liability and sent an invoice for payment under the

voyage charter on August 7, 2017.

11. CLAIMANT refused to pay and claimed that these additional costs had arisen because of

RESPONDENT’S breach of the CP.

12. CLAIMANT issued RESPONDENT with a notice of arbitration on August 11, 2017 and nominated

its arbitrator. The matters were consolidated on February 16, 2018

ISSUES IN CONTENTION

1. Whether the Tribunal has the power to adjudicate upon the claims put forth by

CLAIMANT.

2. Whether CLAIMANT should be allowed to claim USD 30,200,000 as damages for the

following: (a) Damage to Cargo; (b) Replacement Coffee; (c) Settlement Payment.

3. Whether CLAIMANT is liable to pay RESPONDENT in lieu of the counterclaims raised.

4. Whether CLAIMANT exercises an equitable maritime lien over the Madam Dragonfly.


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ARGUMENTS ADVANCED

MERITS OF JURISDICTION

I. THIS TRIBUNAL DOES NOT HAVE THE REQUISITE JURISDICTION TO ADJUDICATE UPON

ALL THE CLAIMS PUT FORWARD BY CLAIMANT.

1. Under the CP, the Parties contemplated two distinct modes of dispute resolution. Disputes

concerning technical matters were to be resolved by means of expert determination and other

disputes were meant to be arbitrated. In the instant case, despite the fact that CLAIMANT’S

claims for damages emanate from technical matters and are to be determined by an expert,

CLAIMANT approached this tribunal, thereby contravening the dispute resolution process

contemplated by the Parties. In this regard, RESPONDENT agrees that this Tribunal is indeed

empowered to rule upon its own jurisdiction but submits that it is bound to honour the dispute

resolution process agreed by the Parties [A]. Then, RESPONDENT argues that the dispute

resolution process contemplated by the CP is neither void nor unenforceable [B]. Finally, that

the claims put forth by CLAIMANT emanate from technical matters and hence, must be

adjudicated upon in accordance with the expert determination provisions of the CP [C].

A. This Tribunal should uphold the dispute resolution process contemplated

by the Parties

2. The Parties agreed to arbitrate disputes concerning the CP in accordance with the LMAA

Rules.1 Since the Parties did not stipulate a particular lex arbitri, the law that governs the

arbitration agreement, it follows that Section 7 of the LMAA Rules will take effect and the

applicable law will be English.2 In accordance with well-established principles of English law,

1 Moot Scenario, p 12, Clause 27(a). 2 LMAA terms, §7.


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an arbitral Tribunal is empowered to rule upon the extent of its jurisdiction.3 Hence, it follows

that this Tribunal possesses the requisite power to adjudicate upon the extent of its substantive

jurisdiction and determine “what matters have been submitted to arbitration in accordance

with the arbitration agreement”.4

3. However, it is pertinent to note that this power of the Tribunal is not discretionary and it must

necessarily give effect to the mutual intention of the Parties, which is crystallised in the form

of the arbitration agreement.5

4. Hence, it is submitted that this Tribunal must construe and interpret the arbitration agreement

in light of the mutual intention of the Parties and determine the extent of its jurisdiction

accordingly.

B. The Dispute Resolution process contemplated by the Parties is neither void

nor unenforceable

5. In accordance with the provisions of the CP, the Parties created two distinct modes of dispute

resolution: arbitration under the LMAA Rules and expert determination by an independent

Master Mariner.6 Such a dispute resolution process, wherein certain types of disputes are to be

resolved by means of expert determination whilst others are to be adjudicated upon by a

different mode of dispute resolution, has been upheld by English Courts on multiple occasions.7

Moreover, expert determination is an informal party-centric process and has been regarded as

such by Courts, which have upheld the validity of expert determination clauses even when the

3 Arbitration Act, 1996, §30; Exportadora De Sal SA De CV v Corretaje Maritimo Sud-Americano Inc [2018]

EWHC 224 (Comm); Petroleum Company of Trinidad and Tobago v Samsung Engineering Trinidad Co. Ltd.

[2017] EWHC 3055 (TCC); Julian D.M. Lew and others (eds), Chapter 8: Maritime Arbitration, Arbitration in

England with chapters on Scotland and Ireland (Wolters Kluwer 2013) [8-23]. 4 Arbitration Act, 1996, §30. 5 Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334; Barclays Bank plc v Nylon Capital

LLP [2011] EWCA CIV 826; Fiona Trust and Holding Corporation v Privalov [2007] EWCA CIV 20. 6 Moot Scenario, p 12, Clause 27(a), (d). 7 Barclays Bank plc v Nylon Capital LLP [2011] EWCA CIV 826; Fiona Trust and Holding Corporation v

Privalov [2007] EWCA CIV 20.


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relevant agreement does not specify any procedure regarding the dispute resolution process.8

Accordingly, Courts have generally upheld the validity of such dispute resolution mechanisms,

unless they fall within a narrowly circumscribed list of circumstances, such as manifest

uncertainty.9

6. Under the CP, disputes concerning technical matters were to be resolved by means of expert

determination.10 The Parties defined the phrase technical matters and provided that the

determination made by the expert would be conclusive and binding in nature.11 Moreover,

clause 27(f) of the CP, which provides that the determination of the expert will be “conclusive

and binding on the parties” does not contravene clause 27(e), which provides that parties may

not commence legal proceedings unless the expert determination process has been complied

with first.12 This is because, to understand the true meaning of the clauses, it is essential to

undertake a conjunctive reading in light of the mutual intention of the Parties.13 The creation

of a two-tier dispute resolution process, wherein legal proceedings can be initiated once the

expert procedure is complied with, would defeat the purpose of incorporating a reference to

expert determination, which is renowned as a speedy mode of dispute resolution.14 Rather, it is

submitted that the Parties intended that disputes concerning technical matters be decided upon

first, following which other disputes could be adjudicated upon by an arbitral tribunal set up

under the LMAA Rules. Further, the determination made by the expert with regard to technical

matters would be conclusive and the arbitral tribunal would adjudicate upon the non-technical

issues independently using the findings of the expert as a fulcrum. Accordingly, RESPONDENT

submits that the dispute resolution process contemplated by the Parties under the CP is valid

8 Triarno Pty Ltd v Triden Contractors Ltd [1992] 10 BCL 405. 9 The Heart Research Institute Ltd v Psiron Ltd [2002] NSWSC 646. 10 Moot Scenario, p 12, Clause 27(g), (f). 11 Moot Scenario, p 12, Clause 27(g), (f). 12 Moot Scenario, p 12, Clause 27(e), (f). 13 Lombard North Central Plc and Another v GATX Corporation [2012] EWHC 1067 (Comm). 14 Ilias Bantekas, An Introduction to International Arbitration (Cambridge 2015) p 10.


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and enforceable.

C. The claims put forth by CLAIMANT emanate from technical matters as

defined under the CP

7. In the instant dispute, the Parties have defined ‘technical matters’, which are to be determined

by an expert as matters “surrounding the technical aspects of the performance of the CP, such

as the vessel's route, loading and unloading of cargo, storage conditions and other matters

which can […] be considered to be within the expert technical knowledge of a Master

Mariner.”15 Accordingly, if the claims put forth by CLAIMANT fall within the definition of the

phrase technical matters, then the dispute will have to be resolved by means of expert

determination. Presently, CLAIMANT seeks, inter alia, damages from RESPONDENT, on account

of (a) Damaged Cargo; (b) payment for the Replacement Coffee; and (c) Settlement Payment

made with the third party purchaser.16 These three claims directly emanate from firstly, the

allegedly delayed delivery made by RESPONDENT and secondly, the allegedly substandard

storage conditions accorded by RESPONDENT.17 The scope of the phrase technical matters, as

defined by the Parties includes storage conditions, loading and unloading of cargo, and vessels

route.18 Thereby, it can reasonably be inferred that the claims put forth by CLAIMANT emanate

from matters that fall within the definition of technical matters provided by the Parties.

Consequently, it is submitted that the claims emanate from matters which are to be determined

in accordance with the expert determination provisions of the CP.

MERITS OF CLAIM

II. RESPONDENT IS NOT LIABLE FOR ANY DAMAGES UNDER THE CP.

15 Moot Scenario, cl 27(g), p 12. 16 Moot Scenario, p 38. 17 Moot Scenario, p 38. 18 Moot Scenario, cl 27(g), p 12.


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8. RESPONDENT was directed to take the most direct route to Dillamond under the CP. However,

it was forced to deviate to the port of Spectre as its navigation systems went down due to a

solar flare. Further, it was obstructed by an unforeseeable storm which delayed the final

delivery of the goods. Thereby, RESPONDENT contends that the delay was caused by a storm

which is a force majeure event [A]. Hence, RESPONDENT is absolved from all liability as per

the force majeure clause under the CP [B]. Further, RESPONDENT is not liable to pay for the

damages amounting to USD 30,200,000 [C]. In any case, RESPONDENT has the right to limit its

liability under International Convention [D].

A. Respondent contends that the delay was caused by the storm which is a

force majeure event.

9. A force majeure event, under common law, is unforeseeable, beyond human agency and

irresistible in as much as it cannot be avoided or guarded against.19As defined under the CP, a

force majeure event includes “unforeseen weather events”.20 The Clause further specifies that

both the Parties shall be absolved from liability where delay, interruption or prevention in

performance of the contract is caused by such a force majeure event.21

10. Here, the delay in delivery of the goods is solely attributed to the storm. Admittedly, the ship

would have continued on its chartered path in spite of the solar flare if it had the correct maps

on-board. However, even with the correct maps, the ship would still have been at sea near

Dillamond at 4:30 pm,22 when the ship’s radar detected the storm. Post the storm, which lasted

for almost all of peak hour on July 28, 2017, the port was closed for 12 hours.23 Hence, the ship

19 Nugent v Smith (1876) 1 C.P.D. 421, pp 435-36; Julian Cooke and others, Voyage Charters (4th edn, Routledge

2014) [85.298]. 20 Moot Scenario, p 9, Clause 17. 21 Moot Scenario, p 9, Clause 17. 22 Procedural Order 2, Clause 7. 23 Moot Scenario, pp 21, 36.


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would have been forced to remain in her position until the port opened. Thus, it is established

that but for the storm, the ship would not have been delayed.

11. The storm was quite evidently an “unforeseen weather event” covered within the ambit of the

force majeure clause.24 It was described as a “once in a lifetime” which was picked up by radars

only 45 minutes, before it actually struck, rendering it impossible for the vessel to not be

affected by it.25 Hence, it is squarely established that the storm was a force majeure event,

under the CP.

B. Respondent is absolved of all liability as per the force majeure clause of the

CP.

12. RESPONDENT contends that it is absolved from all liability in accordance with the force majeure

clause under the CP. Consequently, the benefits of the force majeure clause are not lost where

a repudiatory breach of the CP has been alleged [1]. Further, the failure to carry hardcopy maps

for the contractual voyage does not defeat the application of the force majeure clause. [2].

1. The benefits of the force majeure clause are not lost where a

repudiatory breach of the CP has been alleged.

13. The deviation to the Port of Spectre was justified and hence did not amount to a repudiatory

breach of the CP [a]. Even if the breach were repudiatory, the CP was not repudiated by

CLAIMANT [b]. Further, if the CP were repudiated pursuant to a repudiatory breach, the benefit

of the force majeure clause could not be denied to RESPONDENT [c]. Consequently, the force

majeure clause is not extinguished as a result of the deviation.

a) The deviation to Spectre was justified and did not amount to

24 Moot Scenario, p 9, Clause 17. 25 Moot Scenario, p 35.


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repudiation of the CP.

14. Every ship-owner has an obligation under common law to “proceed without unnecessary

deviation in the usual and customary course.”26 RESPONDENT was required to take “the most

direct route” from Cerulean to Dillamond.27 This implies that the most direct route was

contemplated by the parties, as the usual route for the voyage. Now, the usual route between

two ports may vary considerably because of navigational reasons, like adverse weather

condition.28 Harmoniously interpreting their legal and contractual obligations, the Parties must

agree to take the most direct navigable route from Cerulean to Dillamond under the CP.

15. Here, RESPONDENT failed to ensure that hardcopy maps for the port of Dillamond were

onboard.29 The ship was left with no means of navigation once their systems were knocked out

by the solar flares.30 The only maps onboard were those for the Port of Spectre. Hence, the

most direct navigable route between Cerulean and Dillamond was the one through Spectre.

Therefore, RESPONDENT had not deviated from the route it was contractually bound to take.

16. Even if RESPONDENT failed to take the most direct route and deviated to the port of Spectre, it

is submitted that such a deviation is justified. A deviation is a deliberate and unjustified

departure from the contract route.31 Hence, a deviation is justified where it is necessary to

ensure the safety of the ship, cargo or human lives.32 In the case of Kish v Taylor,33 a vessel

was forced to deviate and take refuge in a port, for repairs to the damage sustained by the vessel

on account of it being overloaded and consequently, unseaworthy. Although it was the

26 Davis v Garratt 130 ER 1456, p 1460. 27 Moot Scenario, p 2. 28 Reardon Smith Line v Black Sea and Baltic General Insurance (1939) 64 Ll LR 229; Stephen Girvin, Carriage

of Goods by Sea (OUP 2007) [24.03]. 29 Moot Scenario, p 18. 30 Moot Scenario, p 17. 31 Ibid [24.03]. 32 Stewart Boyd and others, Scrutton on Charterparties and Bills of Lading (21st edn, Sweet & Maxwell 2008) p

238. Stephen Girvin, Carriage of Goods by Sea (OUP 2007) [24.06]. 33 J & E Kish v Charles Taylor [1912] AC 604; See Monarch S.S. Co v Karlshamns [1949] A.C. 196.


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shipowner’s own fault which caused the damage and consequent deviation, such a deviation

was held justifiable as it was done for ensuring the safety of the ship and cargo. The Court held

that it was not open for the charterers to put the contract to an end because of such a deviation.

This case has also been upheld in Australia.34

17. Here, the deviation was undertaken solely because the vessel had lost all means of navigation

apart from the maps for Spectre.35 Further, newspaper reports stated that in the absence of

navigation and communication systems, “travellers were left fearing for their lives.”36 The

situation was critical and life and property were at stake. Deviation was necessary and not

deliberate in nature. Consequently, CLAIMANT cannot rely upon deviation to claim that the

contract was brought to an end as soon as the deviation took place. Hence, RESPONDENT cannot

be disentitled from the benefits of the force majeure clause since the CP stands.

b) Even if the breach were repudiatory, the CP was not repudiated

by CLAIMANT.

18. An unjustified deviation is considered to be a fundamental breach of the contract.37 It vests

upon the charterer a right to elect in order to affirm or repudiate the contract.38 Such a right of

election can be reserved by a non-waiver clause.39 Hence, the charterer is not required to make

an immediate election as soon as the unjustified deviation takes place. However, both in UK40

and Australia41, courts have held a party can waive this right to reserve election if it affirms to

the contract by its conduct.

34 Gamlen Chemical Co (Asia) Pty Ltd v Shipping Corporation of India Ltd 34 FLR 305. 35 Moot Scenario, p 18. 36 Moot Scenario, p 35. 37 Stewart Boyd and others, Scrutton on Charterparties and Bills of Lading (21st edn, Sweet & Maxwell 2008) p

233. 38 Ibid p 233. 39 Tele2 International Card Company SA and others v Post Office Limited [2009] EWCA Civ 9. 40 Ibid. 41 Kostopoulos v G. E. Commercial Finance Australia Pty Ltd [2005] QCA 311.


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19. Here, CLAIMANT had the benefit of a non-waiver clause.42 However, such a right to reserve

election was waived by CLAIMANT by virtue of its conduct. On receiving the information of the

deviation to the Port Spectre, CLAIMANT insisted that RESPONDENT confirms that the cargo

would be available before 7:00 pm on July 28, 2017, as had been agreed under the CP.43 Hence,

CLAIMANT clearly wanted RESPONDENT to continue performing her contractual obligation of

ensuring that delivery is completed within time. This substantially proves that the contract was

affirmed and not repudiated by CLAIMANT.

c) Even if the CP were repudiated pursuant to a repudiatory

breach, the benefit of the force majeure clause cannot be denied to

RESPONDENT.

20. Deviation from the contractual route is a fundamental breach of and allows for repudiation of

the contract.44 When a contract is so repudiated, the shipowner is disentitled from claiming the

benefits of any exclusion clauses under the contract, including force majeure clauses.45

However, this is a special rule carved out only for cases of deviation.46 This rule has come

under considerable criticism and the alternative view of treating deviation as any other breach

is preferred. Therefore, the approach that the applicability of exclusion clauses will be upheld,

subject to their construction, even where the contract has been terminated, has received a wider

acceptance.47 Consequently, RESPONDENT has the benefit of the force majeure clause, even

where the CP was repudiated by CLAIMANT due to an unjustified deviation.

42 Moot Scenario, p 13, Clause 35. 43 Moot Scenario, p 18. 44 Stewart Boyd and others, Scrutton on Charterparties and Bills of Lading (21st edn, Sweet & Maxwell 2008) p

233. 45 Ibid p 234; Hain S.S. v Tate & Lyle (1936) 41 Com.Cas. 350; Joseph Thorley Ltd v Orchis Dteamship Co Ltd

[1907] 1 KB 660 (CA). 46 Photo Production v Securicor Transport [1980] AC 827; Suisse Atalantique v NV Rotterdamsche [1967] 1 AC

361. 47 Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd [2003] EWCA Civ 451; Kenya Railways v Antares Co

Pty Ltd [1987] 1 Lloyd’s Rep. 424; Stewart Boyd and others, Scrutton on Charterparties and Bills of Lading (21st

edn, Sweet & Maxwell 2008) p 235; Stephen Girvin, Carriage of Goods by Sea (OUP 2007) [24.28].


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2. The failure to carry the hardcopy maps does not defeat the defence of

force majeure.

21. The force majeure clause mentions that all exceptions available under the clause are subject to

RESPONDENT exercising due diligence to ensure seaworthiness of the ship.48 The obligation of

seaworthiness includes possession of documents in compliance with laws and regulations to

ensure that the vessel is legally fit.49 RESPONDENT was to ensure that the nautical charts and

publications to be carried on the vessel were in compliance with the Navigation Act, 2012 and

the ISM Code as per the provisions in the CP.50 The marine notices51 clarify the meaning of

“nautical charts and publications” by relying upon the SOLAS convention,52 which

specifically talks about electronic navigation systems. Provision 2.1.5 mentioned therein

provides that “paper nautical charts may be used as a back-up arrangement” to the electronic

navigation system.53 The word “may” clearly indicates that providing for paper charts is not

mandatory. Moreover, even Appendix 6 to resolution A.817(19) which further clarifies what

comprises back-up requirements, nowhere mentions the mandatory requirement of any sort of

hardcopy maps or paper charts.54

22. Hence, failure to carry hardcopy maps for the port of Dillamond can by no means render the

vessel unseaworthy. Consequently, RESPONDENT is entitled to the benefits of the force majeure

clause as it fulfilled its obligation to ensure that the ship is seaworthy.

C. RESPONDENT is not liable to pay damages worth USD 30,200,000.

48 Moot Scenario, p 9, Clause 17. 49 The Madeleine [1967] 2 Lloyds Rep. 224; Golden Fleece Maritime Inc v ST Shipping & Transport Inc (The Elli

and The Frixos) [2008] 1 Lloyds Rep. 262. 50 Moot Scenario, p 8, Clause 15. 51 AMSA, Marine Notice 2014/17, available at https://www.amsa.gov.au/vessels-operators/regulations-and-

standards-vessels/marine-notices. 52 International Convention for the Safety of Life at Sea 1974, Chapter V, Regulation 19, 2.1.5, available at

http://solasv.mcga.gov.uk/regulations/regulation19.htm. 53 Ibid. 54 See Resolution A.817(19), Netherlands Regulatory Framework – Maritime, Annexure 6, available at

https://puc.overheid.nl/nsi/doc/PUC_2433_14/3/.


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23. RESPONDENT is not liable to pay USD 15,750,000 in damages as he fulfilled his delivery

obligation and was not responsible for the damage to the cargo [1]. RESPONDENT is also not

liable for the cost of Replacement Coffee [2]. Moreover, RESPONDENT is not liable for the

Settlement Payment [3].

1. RESPONDENT is not liable for the damaged cargo worth USD

15,750,000.

24. According to the Statement of Expert Opinion of Simon Webster, the coffee was damaged in

the 24 hours from 4:30 am on July 30, 2017.55 RESPONDENT contends that the coffee was

delivered to CLAIMANT by 8:42 pm on July 29, 2017. Delivery leads to termination of bailment

and ends the carrier’s responsibility for safe custody.56 Automatic Tube Co. v Adelaide SS. (The

Beltana) held that delivery occurs once a consignee has been notified and has had an

opportunity to collect the goods.57 Actual collection by the consignee for the purpose of

delivery is, thus, unnecessary.58 Further, when the goods are carried on FIO terms, the

shipowner is relieved of responsibility and expense of the discharging operation.59 Here, the

stevedores (or warehouseman) act as agents of the consignee and delivery is complete when

the stevedores take the cargo from the ship’s holds.60

25. Here, the Clause on costs indicates that the loading and discharging were on FIO terms as the

cargo was to be handled at both the ports free of charge to the vessel.61 Moreover, even the

Time Counting sub-clause under the CP puts the onus of deciding when to load or unload on

the Charterer.62 RESPONDENT notified CLAIMANT when the ship was about to berth, in keeping

55 Moot Scenario, p 43. 56 Julian Cooke and others, Voyage Charters (4th edn, Routledge 2014) [10.4]. 57 Automatic Tube Co. v Adelaide SS. (The Beltana) [1967] 1 Lloyd’s Rep. 531 (Supreme Ct. of Australia). 58 Ibid. 59 Julian Cooke and others, Voyage Charters (4th edn, Routledge 2014) [10.5]. 60 Knight v Fleming (1898) 25 Rett. 1070. 61 Moot Scenario, p 5. 62 Moot Scenario, p 5.


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with his duty to notify the consignee.63 Further, on berthing RESPONDENT again sent a notice

to CLAIMANT declaring that the cargo was available for collection.64 Thus, reasonable

opportunity was given to CLAIMANT to collect the goods. After waiting for five hours for

CLAIMANT to collect the goods, RESPONDENT created an electronic access and warehoused the

goods at the port of delivery.65 Consequently, RESPONDENT ceased to be responsible for the

goods once they were taken from the ship’s holds.

26. Delivery occurs when the carrier ceases to have any control over the goods and the “goods are

so completely under the control of the consignee that he may do as he likes with them.”66 Here,

RESPONDENT warehoused the goods and gave CLAIMANT the electronic access to the

warehouse.67 They ceased to be in control of the goods once the warehousing was done at 12:02

am.68 Thus, the delivery obligation of the shipowner as bailee of the goods ended when the

goods were warehoused. Any damage caused subsequently is at the risk of CLAIMANT and

RESPONDENT is not liable.

2. RESPONDENT is not liable for the Replacement Coffee worth USD

9,450,000.

27. An injured party can recover the reasonable cost of repairing or replacing property damaged

by the defendant’s breach of contract.69 This includes the cost of substitute performance by

CLAIMANT.70 RESPONDENT has already shown how the damage to the cargo was not a result of

his breach of the contract.71 The claim for Replacement Coffee arises out of the claim for the

63 Moot Scenario, pp 20, 22. 64 Moot Scenario, p 24. 65 Moot Scenario, pp 22-23. 66 British Shipowners v Grimond (1876) 3 Rett. 968, 972. 67 Moot Scenario, p 22. 68 Moot Scenario, p 23. 69 Bacon v Cooper (Metals) Ltd 1982] 1 All E.R. 397; H.G. Beale, Chitty on Contracts, vol 1 (32nd edn, Sweet

and Maxwell 2015) [26-032]. 70 Ibid [26-032]. 71 Refer above [24-26].


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value of the damaged goods.72 Since the damage to the cargo was the responsibility of

CLAIMANT, the burden of paying for the Replacement Coffee payment also falls on him.

Therefore, RESPONDENT is not liable for the Replacement Coffee worth USD 9,450,000. C.3.

RESPONDENT is not liable for the consequential loss of the Settlement Payment worth USD

5,000,000.

3. RESPONDENT is not liable for the Settlement Payment worth USD

5,000,000

28. RESPONDENT is not liable for the consequential loss of the Settlement Payment worth USD

5,000,000 as the chain of causation was broken by an act of CLAIMANT [a]. Further, the

damages alleged cannot be claimed for remoteness [b].

a) Chain of causation was broken by CLAIMANT.

29. No loss can be recovered unless it is proved that it was caused by a breach of the contract.73

Further, it has been held that where the act of CLAIMANT is the effective cause of the loss then

the chain of causation is broken and damages can no longer be recovered.74 CLAIMANT had to

pay its client, Coffees of the World, USD 5,000,000 as Settlement Payment in return for which

they were discharged of all claims for delay in delivery and delivery of lower grade coffee.75

CLAIMANT has claimed this amount as damages arising out of a consequential loss of

RESPONDENT’S breach of the CP.76 However, RESPONDENT is not responsible for the damage

to the goods, but CLAIMANT is responsible for delay in receiving the goods from the warehouse.

Hence, there is no causal link to connect RESPONDENT to the loss from payment of the USD

72 It is a claim for substituted performance. See Vinmar International v Theresa Navigation (The Atrice) [2001] 2

Lloyd’s Rep. 1; The Asia Star [2010] 2 Lloyd’s Rep. 121 (Singapore Court of Appeal). 73 Koch Marine v D’Amico Soc. Di Nav. (The Elena d’Amico) [1980] 1 Lloyd’s Rep. 75. 74 Standard Chartered Bank v Pakistan National Shipping Co (No. 3) [1999] 1 Lloyd’s Rep. 747. 75 Moot Scenario, p 29. 76 Moot Scenario, p 30.


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5,000,000. RESPONDENT cannot be held liable for the Settlement Payment.

b) The Settlement Payment cannot be claimed for remoteness.

30. No loss may be recovered by way of damages if it is too remote a consequence of the breach.77

Historically, the test for remoteness has been whether the damage was reasonably within the

contemplation of the parties as on the date of the contract, as a probable result of the breach

which has in fact occurred.78 A third factor is whether a party in breach can fairly, as a matter

of construction of the contract in question, be said to have assumed the risk of the type of loss

claimed.79 This principle is especially applicable in cases where the orthodox principle of

remoteness would produce liability contrary to market understandings and expectations.80

Further, damages claimed with reference to specific contracts at prices not reflecting the market

price cannot be recovered as a consequential loss, even if foreseeable.81

31. In the present scenario, the Settlement Payment was made in pursuance of CLAIMANT’S specific

contract with Coffees of the World. It was too remote to be in contemplation of RESPONDENT.

Even though RESPONDENT was aware of the contract between Coffees of the World and

CLAIMANT, he cannot be said to have acquiesced to taking on the burden of making good

CLAIMANT’S loss of business relations in addition to indemnifying him against the loss of

goods. Additionally, such a Settlement Payment was not a liquidated amount and is not based

on any market value average. RESPONDENT has not consented to bearing such unquantifiable

and unpredictable risk. Therefore, RESPONDENT is not liable for the Settlement Payment worth

USD 5,000,000.

77 Julian Cooke and others, Voyage Charters (4th edn, Routledge 2014) [21.27]. 78 Ibid [21.28]; Stinnes v Halcoussis (The Yanxilas) [1982] 2 Lloyd’s Rep. 445, p 454; Hadley v Baxendale (1854)

9 Exch. 341, p 354. 79 Ibid [21.30]; Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2009] A.C. 61; Supershield v

Siemens Building Technologies [2010] 1 Lloyd’s Rep. 349. 80 Sylvia Shipping v Progress Bulk Carriers Ltd (The Sylvia) [2010] 1 Lloyd’s Rep. 81 [26-51]; Transworld Oil v

North Bay Shipping (The Rio Claro) [1987] 2 Lloyd’s Rep. 173. 81 Transworld Oil v North Bay Shipping (The Rio Claro) [1987] 2 Lloyd’s Rep. 173.


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D. In any case, RESPONDENT has the right to limit its liability under

International Convention.

32. Shipowners have a right to limit their liability for damage to goods and delay in delivery under

Article 2(a) and (b) of the LLMC 1976.82 This convention has the force of law in U.K.83

Moreover, Article 4(5) of the amended Hague Rules as given effect in the Carriage of Goods

Act, 199184 also provides for the right to limit liability and its quantification. This Article has

been incorporated by the parties as ‘Clause Paramount’ in Clause 28 of the CP.

33. The shipowner’s right to limit liability is lost when “the loss resulted from his personal act or

omission, committed with intent to cause such loss, or recklessly and with knowledge that such

loss would probably result.”85 Hence, both, reckless conduct and the knowledge that the

relevant loss would probably result are required to be proven by the person challenging the

right.86 It is not enough that the relevant loss is a remote consequence of the reckless conduct.87

Further, it is required that the shipowner have the foresight of the loss that ‘actually occurred’

and not merely the ‘type of the loss’.88

34. In the present scenario, CLAIMANT has sued RESPONDENT for damages for delayed delivery and

damage to the cargo. Damage to the goods was caused only after they were discharged and lay

with the Port authorities.89 Delay was caused solely because of a storm which was spotted on

the radars only 30 minutes before it actually struck.90 Consequently, it is impossible that

82 Convention on Limitation of Liability for Maritime Claims 1976, Article 2(a), (b). 83 Merchant Shipping Act 1995, Part I, Schedule 7. 84 Carriage of Goods by Sea Act 1991 (Aus), Article 4(5). 85Convention on Limitation of Liability for Maritime Claims, 1976, Article 4; Carriage of Goods by Sea Act 1991

(Aus), Article 4(5)(e); MSC Mediterranean Shipping Co SA v Delumar BVBA (The "MSC ROSA M") [2000] 2

Lloyd’s Rep 399; Schiffahrtsgesellschaft MS Merkur Sky m.b.H. & Co K.G. v Ms Leerort Nth SchiffahrtsG.m.b.H.

& Co. K.G. (The Leerort) [2001] 2 Lloyd’s Rep 291. 86 MSC Mediterranean Shipping Co. S.A. v Delumar BVBA (THE "MSC ROSA M") [2000] 2 Lloyd’s Rep 399. 87 Philip Goldman v Thai Airways International Ltd [1983] 1 WLR 1186. 88 Schiffahrtsgesellschaft MS Merkur Sky m.b.H. & Co K.G. v Ms Leerort Nth Schiffahrts G.m.b.H. & Co K.G.

(The Leerort) [2001] 2 Lloyd’s Rep 291. 89 Moot Scenario, p 43. 90 Moot Scenario, p 19.


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RESPONDENT has foresight or knowledge of the actual loss that resulted. RESPONDENT’S failure

to carry hardcopy maps was at best a negligent mistake and cannot be considered as a reckless

conduct inasmuch as it diverted to the nearest port so as to get the maps onboard and continue

on the voyage. Further, RESPONDENT could not have foreseen the actual loss arising out of its

failure to carry hardcopy maps for the voyage. The final delay and damage were mainly caused

by the storm which was completely unforeseeable. Consequently, RESPONDENT has not been

reckless. Further, the loss caused is disparate from her negligent conduct. Hence, RESPONDENT

cannot be divested of its right to limit liability and is eligible to do the same under international

convention.

III. CLAIMANT DOES NOT EXERCISE AN EQUITABLE MARITIME LIEN OVER THE MADAM

DRAGONFLY

35. On or around July 22, 2017, RESPONDENT received USD 100,000 from CLAIMANT for paying

the wages of the crew of the Madam Dragonfly.91 This amount was not dispensed for this

purpose and RESPONDENT agrees with CLAIMANT in this regard.92 However, this does not entitle

CLAIMANT to subrogate itself in the position of the crew members of the ship.

36. The doctrine of subrogation of lien has been extensively criticised and even rejected in most

Commonwealth jurisdictions.93 In the United Kingdom, for example, subrogation and

assignment of lien has been recognised only when the assignment was made with the leave of

the Court.94 Even in the United States of America, which has recognised the doctrine of

subrogation, it is necessary for the party seeking the transfer of lien to demonstrate that the

91 Moot Scenario, p 41. 92 Moot Scenario, p 41. 93 Michael Ng, ‘The Protection of Seafarers’ Wages in Admiralty: A Critical Analysis in the Context of Modern

Shipping’ (2008) 22 A&NZ Mar LJ, 163; The SS Aragon [1943] 3 DLR 178, 180; The Leoborg (No 2) [1964] 1

Lloyd's Rep 380, 383; Programmed Total Marine Services Pty Ltd v The Ship Hako Fortress [2012] FCA 805. 94 The World Star [1987] 1 Lloyd's Rep 452; The Berostar [1970] 2 Lloyd's Rep 403; Hobbs, Savill & Co Ltd v

The Vasilia (Owners) Albaran Bay Corporation [1972] 1 Lloyd's Rep 51.


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debtor actually used the money advanced to pay the seamen.95 If the party seeking the transfer

of lien fails to demonstrate that the money he paid was actually utilised to pay the wages of the

seamen, the Courts have refused to recognise a transfer of the wages lien.96

37. In the instant case, the amount of USD 100,000 paid by CLAIMANT was to pay for the wages of

the crewmen.97 However, this amount was not utilised for that purpose and the funds were

spent elsewhere by RESPONDENT.98 In fact, the crewmen remain unpaid for having undertaken

the voyage from Cerulean to Dillamond and are contemplating separate legal action against

RESPONDENT.99 Evidently, CLAIMANT did not seek the leave of the Court so it would not be

entitled to claim this relief under common law. Further, even if the principles of American law

were to apply to the instant dispute, CLAIMANT would not be entitled to claim a maritime lien

because the amount it paid to RESPONDENT was not used to pay the wages of the seamen.

Moreover, there exists no equitable basis upon which CLAIMANT can seek this relief because

the crew remain unpaid and it would be profoundly inequitable to substitute CLAIMANT with

the crewmen. Accordingly, RESPONDENT submits that there is no legal or equitable basis upon

which CLAIMANT can seek to exercise a maritime lien upon the Madam Dragonfly.

MERITS OF COUNTERCLAIMS

IV. CLAIMANT IS LIABLE TO PAY THE AMOUNT MENTIONED IN THE INVOICE DATED

AUGUST 1, 2017 RAISED UPON HER AS A COUNTERCLAIM.

38. As established above,100 CLAIMANT cannot rely upon the deviation to the Port of Spectre to

repudiate the CP. Hence, RESPONDENT retains her right of making counterclaims as they

95 William Tetley ‘Assignment and Transfer of Maritime Liens: Is There Subrogation of the Privilege?’ (1984) 15

Journal of Maritime Law and Commerce 393, 413. 96 Ibid. 97 Moot Scenario, p 41. 98 Procedural Order 2, ¶ 20. 99 Procedural Order 2, ¶ 20. 100 Refer above [13-22].


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accrued post the deviation. Hence, it is clearly established CLAIMANT shall be governed by the

obligations under the CP and liable to make the following payments to RESPONDENT under the

same.

A. CLAIMANT is liable to pay freight in full for all the containers of coffee.

39. Freight is usually payable on true and right delivery under common law.101 However, as has

been held in case The Metula102, where the contract provides for freight to be calculated on

intaken quantity, it is implied that freight is deemed to be earned on loading unless some

provision in the CP says something to the contrary.103 Where freight is so deemed to be earned,

it is inconsequential whether the cargo has been lost on voyage or not.104

40. In the present case, the CP clearly provides for the calculation of freight on the loading weight,

which means that the freight has already been earned, although the payment of the freight is to

be within 2 banking days after delivery.105 Where such freight has been deemed to be earned

on the entire loading weight i.e. four coffee containers, it is inconsequential that three of the

containers were completely water-damaged. The decision of The Metula106 directly applies to

this present case and hence, CLAIMANT is liable to pay freight, in full, to RESPONDENT as per

the provisions under the CP.

B. CLAIMANT is liable to pay the costs of repair for damages to the ship.

41. A shipowner is entitled to general average contributions from the charterer for a general

average act, wherein a sacrifice is made or expenditure is incurred for the safety of the ship and

cargo.107 The New Jason Clause, when incorporated in the CP makes it clear that, mere fault

101 Julian Cooke and others, Voyage Charters (4th edn, Routledge 2014) [13.2]. 102 Shell International Petroleum Co v Seabridge Shipping (The Metulla) [1978] 2 Lloyd’s Rep. 5. 103 Julian Cooke and others, Voyage Charters (4th edn, Routledge 2014) [13.7]. 104 Stephen Girvin, Carriage of Goods by Sea (OUP 2007) [21.22]. 105 Moot Scenario, p 22, Clause 11. 106 Shell International Petroleum Co v Seabridge Shipping (The Metulla) [1978] 2 Lloyd’s Rep. 5. 107 Ibid [35.33].


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of the shipowner is not enough to disentitle him from claiming a general average contribution,

unless the fault is actionable at the instance of the charterer.108Failure in exercising due

diligence to ensure seaworthiness is one such actionable fault based on which general average

contributions can be denied. However, it requires the charterer to establish that (1) the ship was

unseaworthy; (2) the unseaworthiness and the general average act are casually connected,109

and consequently the burden of proving “exercise of due diligence in ensuring seaworthiness”

falls on the charterer.110

42. Here, the ship was forced to drop the anchor to withstand the storm.111 Unfortunately, it was

stuck in the coral bed and the anchor had to be cut and there was damage to the hull.112 It is the

act of ensuring safety of the ship and cargo, which led to the damage. Hence, it is a general

average act for which damages can be recovered by general average contributions from

CLAIMANT.

43. Now, even if such damage is attributable to the negligence of the crew, general average

contribution shall be recoverable from CLAIMANT on the basis of the New Jason Clause.

CLAIMANT’S only defence lies in proving criteria (1) and (2) mentioned above. As far as

unseaworthiness of the vessel is concerned, RESPONDENT has already established above,113 that

the failure to carry hardcopy maps of Dillamond did not render the ship unseaworthy. Further,

it is evident from the chain of events that no damage would have ensued had there been no

storm, as it was only the storm which necessitated the act of dropping the anchor.114 There is

absolutely no connection between the failure to carry maps and the damage to the hull.

108 Goulandris v Goldman [1958] 1 Q.B. 74. 109Association of Average Adjusters Report of General Meeting, 1973, p 16. 110 Leslie J. Buglass, Ground for Refusal to Contribute in General Average, Lloyd’s Maritime and Commercial

Law Quarterly, 1974, pp 392,397. 111 Moot Scenario, p 20. 112 Moot Scenario, p 20. 113 Refer above [21-22]. 114 Moot Scenario, p 20.


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Moreover, as established above,115 the ship would have faced this storm even if it had ensured

that the hardcopy maps for Dillamond were onboard. Consequently, there is no actionable fault

of RESPONDENT on the basis of which CLAIMANT can defend a claim for general average

contribution to RESPONDENT. Hence, CLAIMANT is liable to pay the costs of repair for damage

to the ship.

C. CLAIMANT is liable to pay for the agency fees at the Port of Spectre and

Port of Dillamond.

44. The payment of agency fees under a voyage CP is the obligation of the shipowner as it is he,

who usually appoints the agent.116 However, where the agents are appointed by the charterer,

it is the charterer who is bound to remunerate the agent by paying the appropriate agency

fees.117 A provision as the latter is commonly found in time CPs where, the master or owner of

the ship is under the orders of the charterer as far as the employment of the agent is concerned

i.e. the shipowners are obliged to appoint the agent nominated by the charterer.118

Consequently, under a time CP, the charterer is obligated to pay the agency fees.119

45. Here, the clause under the CP explicitly mentions that the ship is to be consigned to

“Charterer’s Agents” who are to be paid customary fees.120 Further, in times of distress the

Charterer i.e. CLAIMANT has been given the power to nominate the agent and advise the master

accordingly, just like the provisions in a time CP.121 Further, the agent is appointed for loading

and discharging, both of which are CLAIMANT’s obligations under the CP.122 These squarely

115 Refer above [9-11]. 116 Julian Cooke and others, Voyage Charters (4th edn, Routledge 2014) [23.1]; Machitis and Thassitis SMA 1178

(1997). 117 Peter R. Brodie, Commercial Shipping Handbook (3rd edn, CRC Press 2014). 118 Wehner v Dene [1905] 2 K.B. 92, p 99; Scrutton on Charterparties and Bills of Lading (22nd edn, Sweet &

Maxwell 2011) [3-023]. 119 Michael Wilford and others, Time Charters (5th edn, LLP 2003) [12.23]; A/S Hansen-Tangens Rederi III v

Total Transport Corporation (The Sagona) [1984] 1 Lloyd’s Rep. 194. 120 Moot Scenario, p 20, Clause 12(a). 121 Moot Scenario, p 20, Clause 12(b). 122 Moot Scenario, p 20, Clause 8(a).


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indicate that the agents appointed were CLAIMANT’s agent and hence CLAIMANT is liable to

pay for agency fees at the Port of Spectre and the Port of Dillamond.

D. CLAIMANT is liable to pay Demurrage worth USD 100,000.

46. The present agreement between CLAIMANT and RESPONDENT is a port charter.123 In The

Johanna Oldendorff124 it was laid down that for the purpose of a port charter, “arrival at

discharge port” includes the whole area of the port in its commercial sense i.e., as understood

by shippers, charterers, and shipowners. It is not only that part of the port where a ship can be

loaded when a birth is available. The port will also include the area outside the legal and fiscal

limits of the port.125 The time spent waiting in the anchorage or any other part of the port for a

berth, due to congestion or any other reason is a part of laytime.126 This will hold true even

when the CP excludes laytime counting due to delays related to port congestion.127 In London

Arbitration 6/84,128 laytime was counted for the time spent waiting for a berth due to congestion

and bad weather.

47. Here, Clause 8(c)(ii) of the CP provides that laytime would commence when the ship arrives

at the discharge port.129 The ship arrived at the discharge port at 7:00 am on July 29, 2017 and

was instructed to wait outside the port due to congestion.130 Even though Clause 8(e) specifies

port congestion as interruption to laytime, only the time spent shifting ports or changing

positions is to be excluded.131 Thus, laytime commenced at 7:00 am on July 29, 2017. The

123 John Schofield, Laytime and Demurrage (7th edn, Routledge 2016) [3.52]. 124 EL Oldendorff & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1974] AC 479 endorsed in Federal

Commerce & Navigation Co Ltd v Tradax Export SA (The Maratha Envoy) [1977] 2 Lloyd’s Rep 301. 125 Stephen Girvin, Carriage of Goods by Sea (OUP 2007) [31.14]; John Schofield, Laytime and Demurrage (7th

edn, Routledge 2016) [3.55]. 126 Compania Naviera Termar SA v Tradax Export SA (The Ante Tropic) [1966] 1 Lloyd’s Rep 566 (HL); London

Arbitration – LMLN 117, 26 April 1984 (Laytime was counted for the time spent waiting for a berth due to

congestion and bad weather but not counted for the time spent waiting for certification by port authorities). 127 Ibid pp 570-71; John Schofield, Laytime and Demurrage (7th edn, Routledge 2016) [4.477-78]. 128 London Arbitration 6/84, LMLN 117, 26 April 1984. 129 Moot Scenario, p 6, Clause 8(c)(ii). 130 Moot Scenario, p 20. 131 Moot Scenario, p 7, Clause 8(e); Compania Naviera Termar SA v Tradax Export SA (The Ante Tropic) [1966]

1 Lloyd’s Rep 566 (HL).


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laytime provided for in the CP was .5WWD or 12 hours.132 These 12 hours got over at 7:00 pm

on July 29, 2017 and thus the Madam Dragonfly was already on demurrage when it berthed at

8:42 pm on July 29, 2017.133 Since the discharging operation was completed at 12:00 am on

July 30, 2017 by warehousing the goods, demurrage will accrue for 5 hours from 7:00 pm

onwards. The CP mentions the rate of demurrage,134 and RESPONDENT reiterated it in her email

to CLAIMANT as being USD 20,000/hour.135 Thus, CLAIMANT is liable to pay demurrage to the

amount of USD 100,000.

E. CLAIMANT is liable to pay for use of electronic access systems at the Port of

Dillamond.

48. The duty to take delivery of the goods is vested upon the consignee.136 Where the consignee

cannot take delivery of the goods in the usual manner, the shipowners can land and warehouse

the goods at the cost of the consignee137 after waiting for a reasonable period.138

49. In the instant situation, CLAIMANT was duty bound to take delivery of the goods. RESPONDENT

sent 3 emails from 8:58 am to 8:42 pm on July 29, 2017, notifying CLAIMANT that the ship was

going to reach Dillamond and informing them as to when the cargo would be available for

discharge. RESPONDENT sent the barcode access along with the emails, so that CLAIMANT could

collect the goods directly from the port. Moreover, RESPONDENT’s men waited until 12:00 am

before leaving the goods in the custody of the Port Authorities who maintained the electronic

access systems. This was a reasonable time to collect the goods considering the congestion at

the port in light of the storm. The aforementioned facts clearly indicate that CLAIMANT after

132 Moot Scenario, p 6, Clause 8(c)(ii). 133 Moot Scenario, p 24; DGM Commodities Corp v Sea Metropolitan SA (The Andra) [2012] EWHC 1984

(Comm). 134 Moot Scenario, p 3, Box 24. 135 Moot Scenario, p 22. 136 Julian Cooke and others, Voyage Charters (4th edn, Routledge 2014) [10.19]. 137 Stephen Girvin, Carriage of Goods by Sea (OUP 2007) [30.38]. 138 Bourne v Gatliff 8 E.R. 1019.


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being notified with 3 emails was given a reasonable time and opportunity to collect the goods.

It is CLAIMANT’s failure in being able to take the delivery in the usual manner which forced

RESPONDENT to keep the goods in the electronic access systems. Hence, the charges for these

electronic systems must be borne by CLAIMANT.

PRAYER

For the reasons set out above, RESPONDENT seeks the following reliefs:

a. An order upholding the dispute resolution process agreed upon by the Parties;

b. An order declaring all technical matters should go for expert determination as agreed

upon by the Parties;

c. A declaration that RESPONDENT is not liable to pay any damages for Damaged Cargo,

Replacement Coffee, and Settlement Payment

Alternatively, a declaration that RESPONDENT’S liability is limited pursuant to

International Convention;

d. An award for all the counter-claims RESPONDENT seeks from CLAIMANT;

e. An order dismissing CLAIMANT’S maritime lien over the Madam Dragonfly.

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