THE 16TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT, 2015
NATIONAL LAW UNIVERSITY, JODHPUR
TEAM NO 21
MEMORANDUM FOR THE CLAIMANTS
ON BEHALF OF
WESTERN TANKERS INC.
CLAIMANTS
AGAINST
LESS DEPENDABLE TRADERS PTE
RESPONDENTS
TEAM
ASHLESHA MITTAL
LAKSHANACV
MADHAVTAMPI M
RAJ SURANA
2
2
3
3
4
4
TABLE OF CONTENTS
List of Abbreviations 5
Index of Authorities 7
Issues for Consideration 16
I. Whether London is the juridicial seat of the arbitration? 16
II. Whether the tort of fraud is admissible in this arbitration? 16
III. Whether or not asa2 was an agent of the respondents? 16
IV. Whether the respondents are estopped from denying liability for the representations
made by asa2? 16
VII. Whether the Claimants are liable under the Tort of Conversion? 16
Statement of Facts 17
Arguments Advanced 18
i. The arbitration in the first reference has been validly commenced. 18
ii. Arguendo, the general wording of a standard form contract will suffice. 20
iii. Tort of fraud is a contractual claim that is within the scope of this agreement. 21
I. All representations by ASA2 were made with the knowledge of the respondents. 28
II. Arguendo: Subsequent acknowledgement of ASA2’s actions amounts to ratification. 29
II. The Respondents are estopped from denying liability for the actions of ASA2 .
30
i. Respondents made a representation to the claimants 30
ii. Claimants relied and acted upon the representations made. 31
iii. Claimants incurred damage because of relying on the representations 32
5
5
Issue IV: Whether the Respondents have committed the tort of fraud and are liable to pay
damages ? 32
I. The Respondent made fraudulent representations to the claimant. 32
II. The Respondent made the fraudulent representations recklessly. 33
III. The Respondent made the fraudulent representations with the intent that the claimant
should act on it. 34
IV. The claimant, acting on the fraudulent representations suffered damage. 34
Issue V1 : Whether The Claimant Is Not Liable Under Bailment? 35
I. The vicarious immunity doctrine absolves the claimant from liability under bailment. 36
VI. Arguendo, the claimant has not breached their duty as a bailee. 37
Issue VI : Whether or not the Claimants are not liable under the Tort of Conversion?
38
I. There was no voluntary act done by the claimants to constitute conversion. 39
Prayer …………………..40
LIST OF ABBREVIATIONS
s. Section
¶ Paragraph
Art Article
ASA2 Atlantic STS Agency
B/L Bill of Lading
BIMCO Baltic and International Maritime Council
BMP4 Best Management Practices for protection
6
6
against Somalia Based Piracy , Version 4
Bundle IMLAM Moot Scenario, 2015
Charterers Less Dependable Traders PTE (LDTP).
Cl. Clause
Claimants Western Tankers Inc
HVR/Rules Protocol to Amend the International
Convention for the Unification of Certain
Rules of Law Relating to Bills of Lading
(Hague-Visby Rules)(Brussels 1968)
LDTP Less Dependable Traders Pte.
Lloyd’s Rep. Lloyd‟s Law Reports.
MT Metric Tonnes
OPL Off Port Limit
Owner Western Tankers Inc
P. Page
PDPR Per Day Pro Rata
Respondents Less Dependable Traders PTE (LDTP)
STS Ship to Ship
USD United States Dollars
WTI Western Tankers Inc.
7
7
INDEX OF AUTHORITIES
Cases
A/S Dan Bunkering Ltd. v F G Hawkes (Western) Ltd. [2009] EWHC 3141 (Comm) .... 28
A/S Tankexpress v. CompagnieFinanciereBelge des Petroles S/A [1948] 82 Lloyd’s Rep.
43................................................................................................................................... 21
Amalgamated Investment and Property Co Ltd v Texas Commerce Int’l bank Ltd [1982]
QB 84 ............................................................................................................................ 30
Amherst v James Walker Goldsmith & Silversmith Ltd [1983] Ch 305 CA .................... 30
Anderson v. General American Life Ins. Co., 141 F.2d 898 (6th Cir. Ky. 1944) ............. 31
Arnison v. Smith (1889) 41 Ch D 348 .............................................................................. 35
Bank Melli Iran v Barklays Bank [1951] 2 Lloyd’s Rep 367 ........................................... 29
Bolton Partners v Lambert (1888) 41 Ch D 295 .............................................................. 30
Bradfod Building Society v. Borders [1941] 2 All E.R. 205............................................. 34
Braganza v BP Shipping Ltd. &anr. [2015] UKSC 17 .................................................... 28
Bries v. Woolley [1954] A.C. 333 ..................................................................................... 34
Brink's Global Services Incv Igrox Ltd [2009] EWHC 1817 (Comm) ............................. 40
British Road Services Ltd v. Arthur V Crutchley& Co Ltd [1968] 1 All ER 811 ............. 38
Brownlie v. Campbell (1880) 5 AC 925 ........................................................................... 34
Celthene Pty Ltd v WKJ Hauliers Pty Ltd [1981] 1 N.S.W.L.R. 606............................... 30
Chapman v. Hearse (1961) 106 CLR 112 ........................................................................ 36
Cheshire v. Bailey [1905] 1 K.B. 237 ............................................................................... 38
China National Foreign Trade Transportation Corporation v. Evlogia Shipping Co. S.A.
[1979] 2 Lloyd’s Rep. 303 ............................................................................................ 23
8
8
Clough v. The London And North Western Railway Company (1871) LR 7 Exch 26 ..... 33
Clydesdale Bank v. Paton [1896] AC 381 ........................................................................ 33
D.P.P v. Ray [1974] A.C. 370, H.L .................................................................................. 34
Dadourian Group International Inc v Simms [2009] EWCA Civ 169 ............................. 34
David Harris & Others v The Society of Lloyd's [2008] EWHC 1433 (Comm) .............. 33
Derry v. Peek (1889) All ER 1.......................................................................................... 34
Diamond v. Bank of London & Montreal [1979] Q.B. 333 .............................................. 34
Downs v. Chappell [1997] 1 W.L.R 426 .......................................................................... 34
Doyle v. Olby (Irommongers) Ltd &Ors [1969] 2 Q.B. 158............................................. 35
Elder Dempster and Co. v. Paterson, Zochonis and Co. [1924] A.C. 522 ....................... 38
Elena Baturina v. Alexander Chistyakov[2014] EWCA Civ 1134 ................................... 35
Et Plus SA v Welter [2005] EWHC 2115.......................................................................... 20
Ethiopian Oilseeds & Pulses Export Corp v Rio Del Mar Foods Inc [1990] 1 Lloyd’s
Rep. 86 .......................................................................................................................... 19
Extrudakerb (Maltby Engineering) Ltd v Whitemountain Quarries Ltd [1996] N.I. 567. 18
Fiona Trust & Holding Corp. v Yuri Privalov, [2007] EWCA Civ 20. ........................... 19
Freeman v Cooke [1848] 2 Ex 654 ................................................................................... 30
G Bosman (Transport) Ltd v. LKW Walter International Transportorganisation AG
[2002] EWCA Civ 850 ................................................................................................. 38
Hackwood Ltd v Areen Design Services Ltd (2006) 22 Const. L.J. 68. ............................ 18
Hamburg Houtimport B.V. v. Agrosin Private Ltd (The Starsin) [2003] 1 Lloyd’s Rep.
571................................................................................................................................. 36
9
9
Hammersmith and Fulham London Borough Council v Top Shop Centres Ltd [1990] Ch
237................................................................................................................................. 30
Harrison v. Huddersfield Steamship Company (Limited) 1903 19 T.L.R 386 ................. 37
Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549 ......................................................... 29
Hollingsworth v. American Finance Corp., 86 Wis. 2d 172 (Wis. 1978) ........................ 31
Home office v. Dorset Yacht Co. Ltd [1970] AC 1004 ..................................................... 36
Hongkong Fir Shopping Co. Ltd v. Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 ........... 32
Hughes v Metropolitan Railway Co. (1876–77) LR 2 App Cas 439 UKHL 1 ................. 32
Isabella Shipowner SA v Shagang Shipping Co Ltd [2012] 2 Lloyd’s Rep. 61................ 22
J.E.B. Fasteners Ltd v. Marks Bloom & Co [1983] 1 All ER 583 .................................... 34
JJ Coughlin Ltd v Ruparelia [2004] PNLR 4……………………………………………29
Jones v. Dumbrell [1981] V.R. 199 .................................................................................. 34
Kettlewell v. Refugee Assurance Co. [1908] 1 KB 545. ................................................... 33
Kuwait Airways Corp v Iraqi Airways Co. [2002] UKHL 19 .......................................... 39
Kuwait Rocks Co v AMN BulkcarriersInc [2013] 2 Lloyd’s Rep. 69 ............................... 23
Laing v Lefone [1887] 19 QBD 68 (CA) .......................................................................... 30
Lensen v. Anglo Soviet (1935) 52 Ll L Rep 141 ............................................................... 24
Lewis Trusts v Bambers Stores Ltd [1983] FSR 453 ........................................................ 39
Lindsay v. O’Loughnane [2010] EWHC 529 (QB) .......................................................... 34
Lyell v Kennedy (1889) 14 App. Cas. 437 ........................................................................ 29
M.B. Pyramid Sound N.V. v. BrieseSchiffahrts GmbH and Co. KG. M.S. “Sina”and
Latvian Shipping Association Ltd. (The “Ines”), [1995] 2 Lloyd’s Rep. 144. ............. 38
10
10
Maple Leaf Macro Volatility Master Fund, Astin Capital Management Limited v. Jacques
Rouvroy, KrzystofTrylinski[2009] EWHC 257 (Comm) .............................................. 35
Mardof Peach & Co. Ltd. v. Attica Sea Carriers Corporation of Liberia [1977] 1 Lloyd’s
Rep. ............................................................................................................................... 23
MCC Proceeds Incv. Lehman Bros International (Europe)[1998] 4 All ER 675 ............ 39
Mccarthy v. Wellington City [1966] NZLR 481 ............................................................... 36
Metal Distributors (UK) Ltd. v ZCCM Investment Holdings Plc[2005] APP.L.R. 01/14 18
Modern Building Wales v Limmer and Trinidad Co [1975] 2 Lloyd’s Rep. 318 ............. 18
Motis Exports Ltd vDampskibsselskabet AF 1912, Aktieselskab&Anor [1999] C.L.C. 914
....................................................................................................................................... 40
Norfolk County Counsilv Secretary of State for the Environment [1973] 3 All ER 673 .. 30
Nourse v. Elder Dempster (1922) 13 Ll L Rep 197 .......................................................... 24
OMV Petrom SA v Glencore International AG [2015] EWHC 666 (Comm)................... 33
Orion Finance Ltd. v JD Williams and Co. Ltd. [1997] EWCA Civ 1 ............................ 32
Overseas Union Insurers Ltd v. AA Mutual International Insurance Co Ltd, [1988] 2
Lloyd’s Rep. 63 ............................................................................................................. 19
Pickard v Sears (1837) 6 Ad & El 469 ............................................................................. 30
Port Swettenham Authority v. T W Wu & Co (M) SdnBhd [1979] AC 580 ...................... 38
Premium Nafta Products Ltd. v Fili Shipping Co Ltd [2007] UKHL 40 .......................... 19
Re Eastgate [1905] 1 K.B. 465. ........................................................................................ 33
Re Shackleton (1875) L.R. 10 Ch. 446 ............................................................................. 33
Rhodian River Shipping Co SA vHalla Maritime Corp [1984] 1 Lloyds Rep 373........... 29
Samuel & Co. v. West Hartlepool Steam Navigation & Co. (1906) 11 CommCas 115 ... 36
11
11
Scandinavian Trading Tanker Co. A.B. v. FlotaPetroleraEcuatoriana [1983] 2 Lloyd’s
Rep. 253 ........................................................................................................................ 21
Seagate shipping Ltd v Glencore Int’l AG [2008] EWHC 1904 (comm)......................... 31
Shannon Odone v Hawarden Services Ltd [2014] EWHC 1694 (QB) ............................. 40
SocieteCommerciale de Reassurance v ERAS (Internationale) Ltd. ................................ 19
Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd [2015] EWHC 718
(Comm) ......................................................................................................................... 28
Standard Chartered Bank v. Pakistan National Shipping Corp’n(No.2) [2000] 1 LR.218,
224................................................................................................................................. 34
Stretford v Football Association Ltd [2006] EWHC 479 ................................................. 18
Sunrise Maritime Inc. v Uvisco Ltd (The Hector) [1998] 2 Lloyd’s Rep 287. (QB) ........ 36
Swiss Air Transport Co Ltd v Palmer [1976] 2 Lloyd’s Rep 604 .................................... 29
Swiss Bank Corporation v Novrissiysk Shipping [1995] 1 Lloyd's Rep 202. ................... 17
Telfair Shipping Corpn v Athos Shipping Co SA (‘The Athos’) [1983] 1 Lloyd’s Rep 127
CA ................................................................................................................................. 30
The Aquafaith [2012] 2 Lloyd's Rep. 61 ........................................................................... 22
The Astra [2013] EWHC 865 (Comm). ............................................................................ 23
The Berge Sund [1993] 2 Lloyd's Rep.453 ....................................................................... 24
The Fjord Wind [2000] 2 Lloyd’s Rep. 191 ..................................................................... 39
The Ira [1995] 1 Lloyd’s Rep. 103 ................................................................................... 24
The Jalagouri [2000] 1 Lloyd’s Rep 515 ......................................................................... 24
The Kanchenjunga [1990] 1 Lloyd’s Rep 391 HL ........................................................... 30
The Petrofina [1948] 2 All ER 939................................................................................... 23
12
12
The Rewia [1991] 1 Lloyd's Rep 69 (Rix J.) ..................................................................... 36
The Rijn [1981] 2 Lloyd’s Rep. 267 ................................................................................. 24
The SubroValour [1995] 1 Lloyd’s Rep. 509 ................................................................... 39
The Venezuela [1980] 1 Lloyd’s Rep 393 (QB) ............................................................... 37
The YayeMaru 274 F. 195 (4thCir.), cert. denied, 257 U.S. 638 (1921) .......................... 24
Thomas Witter Ltd v. TBP Industries Ltd [1996] 2 All ER 573 ....................................... 33
TorvaldKlaveness A/S v. Arni Maritime Corporation [1995] 1 Lloyd’s Rep. 1 ............... 22
Trane (UK) Ltd v Provident Mutual Life Assurance [1995] EGLR 33 ............................ 30
United Bank of KuwaitHammond [1988] 1 WLR 1051.................................................... 29
Watteau v Fenwick [1893] 1 QB 346 ............................................................................... 29
Watts v. Spence [1976] Ch. 165 at 176, (C.A.). ................................................................ 34
Western Sealanes Corp v Unimarine[1982] 2 Lloyd’s Rep. 160 ..................................... 31
Whiting v Halverson [2003] EWCA Civ 403. .................................................................. 18
Wilson v Tumman(1843) 6 M&G 236 .............................................................................. 29
WJ Alan & Co Ltd v El Nasr Export and Import Co [1972] 2 QB 189 ............................ 30
Statutes
Halsbury’s Laws (4thedn), Vol.31 ..................................................................................... 34
Other Authorities
Braden Vandeventer, ‘Analysis of Basic Provisions of Voyage and Time Charter Parties’.
(1974-1975). 49 Tulane law Review 806 ..................................................................... 26
C.f. Park, “The Lex Loci Arbitri and International Commercial Arbitration” (1983) 32
I.C.L.Q. 21. ................................................................................................................... 17
C.f. Reymond “Where is an Arbitral Award made?” (1992) 108 L.Q.R. 1 at 3............... 17
13
13
Charles Trowbridge, ‘The History, Development and Characteristics of the Charter
Concept’ in Admiralty Law Institute: Symposium on Charter Parties. (1974-1975). 49
Tulane Law Review 743 ............................................................................................... 25
Clarke, Time and the essence of mercantile contracts: the law loses its way, 50
Cambridge L.J 14 1991 ................................................................................................. 23
Danny Busch, Laura J. Macgrego, The Unauthorised Agent: Perspectives from European
and Comparative Law 200 (Cambridge University Press, 2009) ................................. 29
Francis O’Brien, ‘Freight and Charter Hire’ (1974-1975) 49 Tulane Law Review 956. 21
Gorton, L., ‘Breach and Remedies in Chartering in the Swedish Maritime Code of 1994
Chartering and the Law of Obligations – Some Aspects from a Swedish Angle’ (1999)
38 Scandinavian Stud. L. 472., p. 279. ......................................................................... 24
Guidelines for Owners, Operators and Masters for Protection against Piracy in the Gulf of
Guinea Region, available at
<http://www.imo.org/OurWork/Security/WestAfrica/Documents/Guidelines_for_prote
ction_against_Piracy_in_the_Gulf_of_Guinea_Region.pdf> ....................................... 32
ICC-IMB Piracy and Armed Robbery against Ships Report 2014 ................................... 36
Treatises
A M Dugdale and M A Jones (eds) Clerk and Lindsell on Torts (Sweet and Maxwell,
19thedn, 2006). .............................................................................................................. 33
Andrews et al., Contractual Duties: Performance, Breach, Termination and Remedies,
(London: Sweet & Maxwell, 2011) .............................................................................. 23
Black's Law Dictionary (9th ed. 2009) .............................................................................. 28
Carriage and Carriers, Vol 7, (2008) .............................................................................. 38
14
14
Chitty, Chitty on Contracts, 31st ed., (London: Sweet & Maxwell, 2012). ..................... 21
Clare Ambrose and Karen Maxwell, London Maritime Arbitration (3rdedn, Informa,
London 2009) . .............................................................................................................. 17
David St. John Sutton, Judith Gill and Matthew Gearing, Russell on Arbitration (23rdedn,
Sweet & Maxwell 2007) . ............................................................................................. 20
J Fleming ,The Law of Torts (The Law Book Co. of Australasia Pty Ltd, 2ndedn, 1903) .
....................................................................................................................................... 36
Jervis, Reeds, Marine Insurance, (Adlard Coles, 2005) ................................................... 27
Lars Gorton, Patrick Hillenius, Rolf Ihre et al. Shipbroking and Chartering Practice 6th
edn (2004) 273 .............................................................................................................. 23
Legal Issues Relating to Time Charterparties, Rhidian Thomas, Essential Maritime and
Transport Law Series, London, Informa Law,2008. ..................................................... 23
M Bigelow, Law of Torts (Cambridge University Press,2ndedn, 1903) ............................ 36
Margaret Brazier and John Murphy, Street on Torts (Butterworths: 10thedn, 1999) ........ 34
McMeel, The Construction of Contracts Interpretation, Implication and Rectification, 2
nd ed., (New York: Oxford University Press, 2011) .................................................... 21
Norman Lopez, (1992) Bes Chartering and Shipping Terms. 11 Ed., Barker & Howard
ltd, London .................................................................................................................... 21
Norman Lopez, (1992) Bes Chartering and Shipping Terms. 11 Ed., Barker & Howard
ltd, London .................................................................................................................... 22
Paul Todd, Maritime Fraud and Piracy (2nd edn, Informa Publishing, 2010) ................ 27
Redfern, Hunter, et al. Redfern & Hunter on International Arbitration (5th edn, 2009) .. 17
15
15
SEAN WILKEN, KARIMGHALY THE LAW OF WAIVER, VARIATION AND ESTOPPEL, 136
(Oxford University Press, 2012). .................................................................................. 31
Shipping Law & Admiralty Jurisdiction in South Africa, Hare J, 2 ed, Juta& Co, 2009 .. 21
Simon Baughen, Shipping Law, (Cavendish Publishing Limited, 2ndedn, 2001) ............. 37
Sir Bernard Eder, Scrutton on Charterparties and Bills of Lading (22nd ed. Sweet &
Maxwell, 2011) ............................................................................................................. 31
Sir GuenterTreitel and F.M.B. Reynolds, Carver on Bills of Lading, (Sweet & Maxwell,
3rdedn, 2011) ................................................................................................................. 38
Sir Jack Beatson, Anson’s Law of Contract (29th ed. Oxford university press, 2010) ..... 30
Sir John William Salmond,Salmond’s Law Of Torts, (Sweet & Maxwell, 1945) ............ 39
Terence Coghlin et al, “Time Charters”, Informa Law from Routledge, Oxon, 6th
edition, 2008,. ............................................................................................................... 21
Thomas, Time charterparty hire: issues relating to contractual remedies for default and
off-hire clauses, in Legal issues relating to time charter parties, (London: Informa,
2008) ............................................................................................................................. 22
W.V.H. Rogers, Winfield &Jolowicz on Tort (Sweet and Maxwell, 18th edn, 2010). ..... 33
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ISSUES FOR CONSIDERATION
I. WHETHER LONDON IS THE JURIDICIAL SEAT OF THE ARBITRATION?
II. WHETHER THE TORT OF FRAUD IS ADMISSIBLE IN THIS
ARBITRATION?
III. WHETHER OR NOT ASA2 WAS AN AGENT OF THE RESPONDENTS?
IV. WHETHER THE RESPONDENTS ARE ESTOPPED FROM DENYING
LIABILITY FOR THE REPRESENTATIONS MADE BY ASA2?
V. WHETHER THE RESPONDENTS ARE LIABLE FOR THE TORT OF FRAUD?
VI. WHETHER THE CLAIMANT IS LIABLE UNDER BAILMENT?
VII. WHETHER THE CLAIMANTS ARE LIABLE UNDER THE TORT OF
CONVERSION?
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STATEMENT OF FACTS
1. Less Dependable Traders PTE (hereinafter, charterers/ respondents), agreed to charter
the Vessel ‘Western Dawn’ (hereinafter, the ‘vessel’) from Western tankers Inc.
(hereinafter, owners/ claimants) by way of an amended Shelltime 4 standard form
charterparty. The charterparty included the rider clauses dated 26th May 2014 and the
BIMCO piracy clause. The charterparty provided that the Vessel was to depart from PBT
Singapore (the Loadport) on the 8thof June and finally arrive at OPL Luanda (hereinafter,
the disport). It would carry a cargo of ‘30,000mt MIN/MAX Jet A1 PLUS 70,000mt +/-
10% Moloo Gasoil’ (hereinafter, the cargo).
2. In accordance with clause 7 of the Shelltime 4, the charterers were liable to provide
fuel at all stages of the voyage except domestic services, towage and pilotage. In blatant
disregard of the Master’s request for 1500 mt of bunkers, the charterers provided an
insufficient amount of 950 mt and promised to deliver the balance at Capetown.
However, the vessel received no bunkers at Capetown and was told to proceed to an
alternate discharge location where refueling would be done through an STS transfer.
3. The vessel set sail from PBT Singapore on the 8th June. On its way to Cape Town, , the
Master was forced to slow down to a speed of 12.0 knots as opposed to a designated
speed of 13.0 knots, thereby violating the Charterparty. This was owing to insufficient
bunker supply by the respondents.
4. Following failure on part of the charterers to supply bunkers in South Africa, the vessel
deviated and set off on an alternate course for a certain STS area 1 as instructed by the
charterers. The charterers opted for the alternate course despite knowledge of a
higherpiracy threat that the alternate route posed. The Master of the vessel intimated the
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charterers about the directions received from ASA 2 and the charterers consequently
acknowledged ASA 2’s authority.
5. The vessel went off the radar for a period of two weeks from 4th to 17th July.
Communication between the master of the vessel and the owners broke down absolutely
for the period. Pirates off the Angolan coast attacked the vessel and 4 of the crew
suffered minor injuries along with damage to the vessel and cargo being stolen. The
Master was forced to economise on fuel even in such a precarious position as the
charterers failed to provide bunkers.
6. The owners initiated arbitral proceedings against the Charterers through the reference
to the tribunal. The ‘Law and Litigation Clause’ referred ‘all disputed arising out of this
Charter’ to be referred to ‘ arbitration in London’.
ARGUMENTS ADVANCED
________________________________________________________________________
ISSUE I: WHETHER LONDON IS THE JURIDICAL SEAT OF THE ARBITRATION?
i. The arbitration in the first reference has been validly commenced.
The geographical location of London is the strongest factual connecting factor between
that arbitration law and the arbitration proper, London must be the correct forum and seat
for this particular arbitration proceeding. Arguendo, subsequent to the adoption of a set of
standard form terms, the parties can be reasonably expected to be familiar with the
standard terms, inclusive of the arbitration clause.
ii. The arbitration agreement is subject to English law.
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It is well established that an arbitration must be governed by the law of the place in which
it is held and that this is the ‘seat’ or ‘forum’ or ‘locus arbitri’ of the arbitration.1 The
geographical place of arbitration is the factual connecting factor between that arbitration
law and the arbitration proper, and therefore, must be considered as the nexus of
contractual and procedural rights and obligations between the parties and the arbitrators.2
Also,a clause referring to “arbitration in London” has been held to denote English law as
the pertinent applicable law.3 Similarly, in the present matter, where the parties referred
to ‘arbitration in London’ 4 they are automatically under an imperative duty to adopt
English law as the curial law or the lex arbitri unless an express reference to the contrary
was made. Therefore, the respondents’ claim as to Singapore being the correct seat and
forum does not hold ground.
iii. The parties demonstrated a clear intent to be bound by the agreement.
It has been firmly established that like any other contract, arbitration is subject to basic
contractual principles.5 Therefore, all general principles of contract law, including the
‘intent to be bound’ govern the validity and effect of an arbitration agreement. Therefore,
an arbitration agreement shall be governed by the will of the parties. Challenges to the
initial existence of a host contract may be founded upon lack of consensus ad idem.
In the present matter, Charterers claim lack of consensus ad idem and yet, admittedly
adopted the amended Shelltime 4 Charterparty on the 26th of May, 2014. 6 Once the
1Redfern, Hunter, et al., Redfern & Hunter on International Arbitration (5th edn, 2009) ¶2-08; C.f. Park, “The Lex Loci Arbitri and International Commercial Arbitration” (1983) 32 I.C.L.Q. 21. 2 Supra note 1 at ¶ 2-08.2; C.f. Reymond “Where is an Arbitral Award made?” (1992) 108 L.Q.R. 1 at 3. 3Swiss Bank Corporation v Novrissiysk Shipping [1995] 1 Lloyd's Rep 202. 4 Clause 46 (b), Shelltime 4. 5 Clare Ambrose and Karen Maxwell, London Maritime Arbitration (3rdedn, Informa, London 2009) p. 43. 6 ¶ 5, Statement of Defence, p. 67 of bundle.
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parties have admitted to adopting the Charterparty, it constitutes concrete evidence to
pursue contractual regardless of any prior contemporaneous correspondence. Where
nothing more than discussion ensues and a proposal put forward by one party is was not
subsequently formalized, it cannot lead to the inception of a legally binding
agreement.7Similarly, in the present matter, a message by the respondents cannot amount
to a formal agreement, let alone a binding contract. Therefore, lack of consensus ad idem
cannot be a ground to reject London as the appropriate seat and forum.
iv. Arguendo, the general wording of a standard form contract will suffice.
Where the document is a standard form of terms and conditions, that general words of
incorporation will suffice.8 This is because the parties are expected to be more familiar
with those standard terms, including the arbitration clause.9 In the present instance, the
standard form Shelltime 4 Charterparty has been adopted. Hence, it can safely be
assumed that the parties were well versed with the terms of the agreement including the
terms markedly including the arbitration agreement and unambiguously laying London as
the seat and forum of the arbitration proceedings. Therefore, the defendants’ counter-
claim that the correct seat and forum is Singapore cannot be upheld.
________________________________________________________________________
ISSUE II: WHETHER THE ‘TORT OF FRAUD’ IS ADMISSIBLE IN THIS ARBITRATION?
I. The tort is admissible as it is covered within the scope of the arbitration agreement.
7Metal Distributors (UK) Ltd. v. ZCCM Investment Holdings Plc [2005] APP.L.R. 01/14 8Stretford v Football Association Ltd [2006] EWHC 479; Whiting v Halverson [2003] EWCA Civ 403. 9Modern Building Wales v. Limmer and Trinidad Co [1975] 2 Lloyd’s Rep. 318; Extrudakerb (Maltby Engineering) Ltd v. Whitemountain Quarries Ltd [1996] N.I. 567; Hackwood Ltd v. Areen Design Services Ltd (2006) 22 Const. L.J. 68.
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The respondents that the dispute is inadmissible,10 as the phrase “disputes arising out of
this charter” was never intended to extend to the tort of fraud.11 Claimants submit that the
tort of fraud is admissible as it is a contractual claim under the ambit of this arbitration
agreement. Arguendo, the alleged fraud is a non-contractual claim with sufficient
proximity to the performance of this contract.
i. Tort of fraud is a contractual claim that is within the scope of this agreement.
It is firmly established that minute semantic distinctions should be avoided in
determining the scope of an arbitration agreement12 and that the impugned agreement
should be given its natural meaning.13 The Court of Appeal has specifically considered
the phrase “disputes arising out of”14 and concluded that the term should cover every
contractual dispute except a dispute as to whether there was a contract at all.15 In the
present matter Claimants submit that first, it is clear from the wording of the arbitration
agreement that “all disputes arising out of the Charterparty” would be subject to
arbitration. As the present claim relates to the respondent’s obligation to provide bunkers
under Clause 6 of the Charterparty, arises out of the Charterparty it must be rendered
admissible.16 Second, The arbitration agreement when given its natural meaning would
necessarily cover a contractual obligation to provide bunkers, as the availability of
bunkers is an essential requirement for the voyage to materialize in the first place.
10¶ 4a, Statement of Defence, p. 67 of bundle. 11Ibid. 12Overseas Union Insurers Ltd v. AA Mutual International Insurance Co Ltd, [1988] 2 Lloyd’s Rep. 63 at 67. 13SocieteCommerciale de Reassurance v. ERAS (Internationale) Ltd. 14Fiona Trust & Holding Corp. v. Yuri Privalov, [2007] EWCA Civ 20. 15Ethiopian Oilseeds & Pulses Export Corp v. Rio Del Mar Foods Inc [1990] 1 Lloyd’s Rep. 86.; affirmed by the House of Lords in Premium Nafta Products Ltd. v. Fili Shipping Co Ltd [2007] UKHL 40. 16Clause 7, Shelltime 4 charterparty.
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ii. Arguendo, the alleged fraud is closely connected with the performance of the
contract.
Where a related claim based on the same facts as other contractual claims with the
arbitration agreement, 17 it falls within the tribunal’s jurisdiction.18 Where the resolution
of the contractual claims cannot be sensibly or practically divorced from the non-
contractual claims, the tribunal has the jurisdiction to deal with the matter in entirety.19 In
the performance of the contract was contingent on the provision of bunkers. Therefore, a
tort of fraud that is related to the performance of the contract should be rendered
admissible.
________________________________________________________________________
ISSUE III: WHETHER OR NOT THE CHARTERERS ARE LIABLE TO PAY THE OWNERS THE HIRE
OWED FOR THE LEASE OF “WESTERN DAWN”?
________________________________________________________________________
I. Hire is always payed in advance should have been paid on the 3rd July 2014.
i. Provisions concerning time constitute contractual obligations in Time
Charterparties.
The provisions of a contract are generally divided into two – The principle Contractual
terms and other intermediate terms. A Contractual condition is one which relates to
provisions constituting the essence of the contract.20
The distinctive feature of a time charter as compared to other charters is that it constitutes
17Et Plus SA v. Welter [2005] EWHC 2115. 18David St. John Sutton, Judith Gill and Matthew Gearing, Russell on Arbitration (23rdedn, Sweet & Maxwell 2007) p. 73. 19Ibid at 30. 20 Chitty, Chitty on Contracts, (London: Sweet & Maxwell, 31st edn, 2012) §12-019.
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a contract of services where all provisions of the Charterparty must be interpreted in the
context of time being the essence of the contract.21 This is because stipulations related to
time are the expression of the very basis of the contractual relationship between the
parties.22 In the present case, as a Time Charterparty was concluded for the charter of the
vessel “Western Dawn”, its provisions as regards the time periods, durations and
obligations must strictly interpreted and any delay or lapse relating to these terms would
amount to a breach of an “absolute obligation” under the Charterparty.
ii. Payment of hire is an absolute and continuous obligation.
Time chartered vessels are chartered either for a stated time period or for one or more
consecutive voyages between particular geographical areas. 23 The basic form of
compensation in a time Charterparty is hire, 24 which operates as consideration given by
the charterers to the ship owners for the services of a ship and her crew made available.25
Time charters specifically, have an absolute liability to pay hire in advance for every
minute that the ship is within its disposal from her delivery until redelivery.26 This is
explained by the very nature of time Charterparty,27 and in this respect, the obligation to
21 Scandinavian Trading Tanker Co. A.B. v. FlotaPetroleraEcuatoriana (The Scaptrade) [1983] 2 Lloyd’s Rep. 253,256,259 (Lord Diplock); Mard of Peach & Co. Ltd. v. Attica Sea Carriers Corporation of Liberia(The Laconia) [1977] 1 Lloyd’s Rep. 319 (Lord Wilberforce.) Shipping Law & Admiralty Jurisdiction in South Africa, Hare J, 2 ed, Juta& Co, 2009, 773-8; Terence Coghlin et al, “Time Charters”, (Informa Law from Routledge, Oxon, 6th edition, 2008) § I.6. 22 Supra note 20 at §12-025–12-027; McMeel, The Construction of Contracts Interpretation, Implication and Rectification, 2nd ed., (New York: Oxford University Press, 2011) §20.01–20.07. 23 Norman Lopez, (1992) Bes Chartering & Shipping Terms.11 Ed., Barker & Howard ltd, London, p 152 24 Francis O’Brien, ‘Freight and Charter Hire’ (1974-1975) 49 Tulane Law Review 956, p. 956 25 A/S Tankexpress v. CompagnieFinanciereBelge des Petroles S/A [1948] 82 Lloyd’s Rep. 43. 26 Supra note 23 at 152. 27TorvaldKlaveness A/S v. Arni Maritime Corporation (The Gregos) [1995] 1 Lloyd’s Rep 1 at 4 (Lord Mustill); Isabella Shipowner SA v Shagang Shipping Co Ltd [2012] 2 Lloyd’s Rep. 61; The Aquafaith [2012] 2 Lloyd's Rep. 61,68 (Cooke J.)
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pay hire is often characterized as continuous and unconditional.28 Further, the obligation
to pay hire is that it is an absolute obligation. 29 Therefore, in case of a default, a breach
of the Charterparty occurs irrespective of fault.30
In the present case, the hire was specified to be USD$19,950 PDPR.31 As, such an
obligation time Charterparties is absolute, continuous and unconditional, the clause
enshrines a non derogable obligation that is the essence of the contact.
iii. The obligation to pay hire punctually is of the essence of the Charterparty
Where a contract that pre specifies time periods and warrants a complementary
provisions for action, the obligation extends to both performance and punctual
performance of the contract.32 The threshold rule33 dictates that, time runs against the
charterer34 who assumes responsibility for paying hire continuously from delivery to the
vessel’s re-delivery. Therefore, the extent of the obligation imposed by a provision
detailing the payment of hire, is not merely one of payment but also one payment on
time.35: In the present case, the payment for the Second hire period was due on the 3rd of
28 Thomas, Time charterparty hire: issues relating to contractual remedies for default and off-hire clauses, in Legal issues relating to time charter parties, (London: Informa, 2008), §7.5. 29 Terrence Coghlin et al., Time Charters,(London: Informa, 6th edn, 2008)§I.45. ; Norman Lopez, (1992) Bes Chartering and Shipping Terms. 11 Ed., Barker & Howard ltd, London, p. 152; Scandinavian Trading Tanker Co. A.B. v. FlotaPetroleraEcuatoriana (The Scaptrade) [1983] 2 Lloyd’s Rep. 253,257-258 (Lord Diplock). 30 Supra note 28 at §16.73. 31Line 25 of the RECAP, Page 5 of the bundle. 32Clarke, Time And The Essence Of Mercantile Contracts: The Law Loses Its Way, 50 Cambridge L.J 14 1991, p.31 ; Andrews et al., Contractual Duties: Performance, Breach, Termination and Remedies, (London: Sweet & Maxwell, 2011), §§10-031–10-046. 33 Lars Gorton, Patrick Hillenius, Rolf Ihre et al., Shipbroking and Chartering Practice 6th edn (2004) 273 (‘Lars Gorton’). 57 John Hare 768. 34 Supra note 33; Legal Issues Relating to Time Charterparties, Rhidian Thomas, Essential Maritime and Transport Law Series, London, Informa Law, 2008, 378p.; Infra note 38 at 956; Kuwait Rocks Co v AMN BulkcarriersInc (The Astra), [2013] 2 Lloyd’s Rep. 69,95( Flaux J.). 35 A/S Tankexpress v. CompagnieFinanciereBelge des Petroles S/A (The Tankexpress) [1948] 82 Lloyd’s Rep. 43,51 (Lord Porter),53 (Lord Wright),56 (Lord Uthwatt); Mardof Peach & Co. Ltd. v. Attica Sea
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July, 2014. An email notice of hire due was sent to the defendants to which no
acknowledgment was received, and hire was not paid before midnight on the 3rd as
required under the terms of the Charterparty.36 The non-payment of hire before midnight,
3rd July therefore, constitutes a clear breach of the obligations under the Charterparty and
entitles the Claimants to payment the hire owed along with interest.
II. The vessel cannot be considered to be off- hire.
If the charterer is prevented from making full use of the vessel, then the obligation to pay
hire ceases. 37 This period is known as off hire.38 Further, Two conditions must be met in
order for the payment of hire to not cease in case of off hire. First, the hire cannot cease
where the loss of time was caused by anything for which the Charterparty pre specified
the Charterers as the responsible party.39 Second, the Charterers have breached clauses of
the Charterparty that relate to the events causing a loss of time.
i. Clause 7 (a) entrust the fuelling of the ship as the responsibility of the Charterer.
Where the off hire event is related to anything that is the responsibility of the Charterer,
the vessel remains on hire. 40 In the present case Clause 7(a), of the Shelltime4
Charterparty explicitly provides that bunkers and all fuel consumed for the voyage shall
Carriers Corporation of Liberia (The Laconia) [1977] 1 Lloyd’s Rep. 315, 317–318 (Lord Wilberforce); China National Foreign Trade Transportation Corporation v. Evlogia Shipping Co. S.A. (The MihaliosXilas) [1979] 2 Lloyd’s Rep. 303,312–313 (Lord Scarman); The Petrofina [1948] 2 All ER 939 at 946.reiterated in, Scandinavian Trading Tanker Co AB v FlotaPetroleraEcuatoriana (The Scaptrade) [1983] 2 All ER 767. 36 Page 39 of the Bundle. 37 The YayeMaru, 274 F. 195 (4thCir.), cert. denied, 257 U.S. 638 (1921). ; Norman Lopez, Bes Chartering and Shipping Terms,( Barker & Howard ltd, 11th edn, 1992) 110. 38 Francis O’Brien, ‘Freight and Charter Hire’ (1974-1975) 49 Tulane Law Review 956, 966. 39 The Berge Sund [1993] 2 Lloyd's Rep.453, 462; The Ira [1995] 1 Lloyd’s Rep. 103; The Rijn [1981] 2 Lloyd’s Rep. 267; Nourse v. Elder Dempster (1922) 13 Ll L Rep 197; Lensen v. Anglo Soviet (1935) 52 Ll L Rep 141; 40The Jalagouri [2000] 1 Lloyd’s Rep515, 520.; Supra note 28 at ¶ 7.76 p. 137; Gorton, L., ‘Breach and Remedies in Chartering in the Swedish Maritime Code of 1994 Chartering and the Law of Obligations – Some Aspects from a Swedish Angle’ (1999) 38 Scandinavian Stud. L. 472., p. 279.
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be provided and paid for by the Charterers. 41 The claim for off hire is based on the lack
of communication once the Master had entered STS Area. The need for immediate
refuelling was the only reason the Master entered STS area 1. Therefore, as the causa
proxima relates to the Charterers’ responsibilities under Clause 7(1), the vessel stays on
hire till the end of the voyage.
ii. The Charterers have breached their responsibilities under the Charterparty.
In case of Time Charters there is a clear dissection of operational responsibility between
the owner and the charterer.42 In the present case, lists out the responsibilities of the
Owner and the Charterer under Clauses 7 and 8 respectively.43
a. The Charterers have breached Clause 15 of the Charterparty.
Clause 15 provides that at the time of redelivery the vessel must have sufficient bunkers
to reach the nearest main bunkering port. For the voyage from Singapore to Luanda, there
is a shortage of fuel. After the voyage route was extended, as the vessel did not possess
sufficient fuel to reach the nearest port of redelivery, Clause 15 has been violated.
b. The Charterers have breached Clause 12 of the Charterparty.
In case of Time charters, the Charterer has full control over the commercial usage of the
vessel.44 As under Clause 12 of the Charterparty, the Master is under the direct orders
and direction of the charterer.45 However, the Charterers chose to entrust the navigation
of the ship to William, the local area coordinator at Luanda without monitoring the orders 41 Page 6 of the Bundle 42 Charles Trowbridge, ‘The History, Development and Characteristics of the Charter Concept’ in Admiralty Law Institute: Symposium on Charter Parties. (1974-1975). 49 Tulane Law Review 743, p.806; Stewart Boyd, (2008),Scrutton on Charterparties and Bills of Lading.2nd Edition, (pp. 311-331) London. ¶ A3, p. 27. 43Clauses 7 and 8, Shelltime 4 amended version. 44 Braden Vandeventer, ‘Analysis of Basic Provisions of Voyage and Time Charter Parties’. (1974-1975). 49 Tulane law Review 806, p. 806.; Charles Trowbridge, Supra note 42 at p. 749. 45 Ibid at p. 809 ; Terence Coughlin, et.al, Time Charters, 6th edn, 441(2008), ¶ 25.
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given, thereby breaching the obligations under Clause 12 of the Charterparty.
Further, the Master was explicitly authorized to “continue liaising with the local area
coordinator.” This communication was acknowledged in a subsequent email from the
Charterers implying This acknowledgement implies that the Charterer’s wilfully allowed
a third party to direct the vessel. Therefore, there can be no charge of incompetency on
grounds of unauthorized communication with third parties. Further, the causa proxima,
of the vessel’s entry into STS Area 1 where it was attacked was the promise of bunkers.
The Master of the ship was left with no choice but to proceed to the area as he was only
left with 282 metric tons of fuel. Therefore, no charge of incompetency can be brought on
the grounds of wilful entry into a known piracy area.
c. The Charterparty provides that the vessel shall remain on hire in cases of pirate
attacks.
Where off hire periods are to be determined, the wordings of the relevant clauses
Charterparty form the primary and only statement of intention of the parties.46 In the
present case, The Charterparty includes the General Piracy Clause 47 as well as the
BIMCO Pro Forma Clause on Piracy.48 Further, it should be noted that Clause (g) of the
BIMCO Piracy Clause clearly provides that it shall prevail over any other conflicting
provisions in the Charterparty.49
Sub clauses (4) and (5) of the Piracy clause state that the vessel shall remain on hire in
case of a piracy attack where the Charterers have not exercised their option to intimate
the owners to purchase off hire insurance though the vessel was required to proceed 46Jervis, Reeds Marine Insurance, (Adlard Coles, 2005). Page 57, 46 Stewart Boyd, (2008). Scrutton on Charterparties and Bills of Lading.2nd Edition, (pp. 311-331) London. ¶ A3, p. 3. 47Piracy Clause, Pages 8 and 9 of the Bundle 48BIMCO Piracy Clause for Time Charter Parties, 2013, Pages 11 and 12 of the Bundle 49Clause (9), BIMCO Piracy Clause for Time Charter Parties, 2013, Page 12 of the Bundle
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through areas with a known piracy risk.50 Claimants submit that the causa proxima of the
piracy attack was the non-provision of bunkers, a pre stipulated responsibility of the
Charterers. 51 Further, the Charterers have not intimated the claimants of the need to
purchase off hire insurance though the vessel was to proceed through the West African
Frontier- an area with a well-known risk of piracy.52 Further, Clause (e) of the BIMCO
Piracy Clause for Time Charter Parties 2013 read along with Sub clause (g) of the same
clause,53 makes it clear that it is evident that the Charterparty does not envision piracy as
an event that automatically places the vessel off hire. Therefore, the hire owed must be
payed at a 100% of the agreed rate.
________________________________________________________________________
ISSUE IV: WHETHER ASA2 WAS AN AGENT OF THE RESPONDENTS?
________________________________________________________________________
An ‘agent’ is defined as one who represents and acts for another (principal) under the
contract or relation of agency. 54 Claimants submit that ASA2 was an agent of the
Respondents as all representations made by ASA2 were made with the knowledge of the
respondents. Arguendo, the subsequent ratification by the respondents made ASA2 their
agents.
I. All representations by ASA2 were made with the knowledge of the respondents.
Representation is a presentation of fact, either by words or by conduct, made to induce
someone to act, and the manifestation to another that a fact and a state of mind, exists.55
50Subclauses (4) and (5) of the Piracy Clause, pages 8 and 9 of the Bundle. 51Clause 6, Amended Shelltime 4 Charterparty 52 Paul Todd, Maritime Fraud and Piracy (2nd edn, Informa Publishing, 2010) , page 17. 53 Clause (e), (g) BIMCO Piracy Clause for Time Charter Parties, 2013, Page 12 of the Bundle 54Black's Law Dictionary (9th ed. 2009),‘agent’ 55Black's Law Dictionary (9th ed. 2009),‘representation’
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Emails sent by parties are used as evidence to show the existence of a representation in
maritime transactions. 56 Eleven emails have been exchanged making a reference to
ASA2. On 28th June, the Respondents instructed the Master to proceed to STS Area 157,
followed by ASA2 sending specific directions on instructions of the Respondents58. The
Master also communicated the instructions of ASA2 to the Respondents59, which was
duly acknowledged by them60. Therefore, the directions given by ASA2 where at all
times intended to further the purpose of the respondents. Further, the respondents
conduct acknowledged and affirmed the directions of ASA2 in their emails by making
references to the content of ASA2’s instructions or clarifying them.61 Hence, ASA2 must
be taken to be acting as an agent on behalf of the Respondents.
II. Arguendo: Subsequent acknowledgement of ASA2’s actions amounts to ratification.
Ratification is a person's binding adoption by express words, silence62 of an act originally
done without authority or done by a third party having at the time no authority to act as
the person's agent.63 Ratification makes the act valid64 from the moment it was done and
56 A/S Dan Bunkering Ltd. v. F G Hawkes (Western) Ltd. [2009] EWHC 3141 (Comm), Spar Shipping AS v. Grand China Logistics Holding (Group) Co Ltd [2015] EWHC 718 (Comm), Braganza v. BP Shipping Ltd. &anr. [2015] UKSC 17 57 P. 34 of the bundle (E-mail sent by Charterers to The Master on 28thJune at 16:27(UTC+8)). 58P. 35, bundle (e-mail from ASA 2 to the Master on 28th June at 18:06(UTC+1)). 59P. 35, bundle (e-mail from the Master to the Respondents on 03 July 16:28 (UTC+1)). 60P. 35, bundle (e-mail sent by ASA2 to The Master on 04 July 09:52 (UTC+8)). 61CHITTY ON CONTRACTS, VOL II, 31-025 (13THed. Sweet & Maxwell, 2008); Swiss Air Transport Co Ltd v. Palmer [1976] 2 Lloyd’s Rep 604; Hely-Hutchinson v. Brayhead Ltd [1968] 1 QB 549 62Bank Melli Iran v. Barklays Bank [1951] 2 Lloyd’s Rep 367; Lyell v Kennedy (1889) 14 App. Cas. 437 63 Black's Law Dictionary (9th ed. 2009),‘ratification’, DANNY BUSCH, LAURA J. MACGREGO, THE UNAUTHORISED AGENT: PERSPECTIVES FROM EUROPEAN AND
COMPARATIVE LAW 200 (Cambridge University Press, 2009) 64Spar Shipping [2015] EWHC 718 (Comm), Wilson v. Tumman(1843) 6 M&G 236
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also implies grant of authority for future transactions of a similar nature. 65 The
Respondents acknowledged the representations when informed to them66 and expressly
asked the Claimants to continue liaison with the STS coordinator.67 Later, an email68 was
addressed to both the Respondents as well as ASA2, giving information to the
Respondents about ASA2. Claimants submit that the Respondents’ confirmation of
ASA2’s instructions amounted to express ratification69 and made ASA2 in the position of
an authorized agent retrospectively at the time when the representation was made70.
III. The Respondents are estopped from denying liability for the actions of ASA2 .
According to the principle of estoppel, a person making a statement, promise or
assurance is estopped from denying or going back on it, if another to the detriment71 of
that another person acts 72 upon that reliance and if it was reasonable to rely on the
representation73.
i. Respondents made a representation to the claimants
65Watteau v Fenwick [1893] 1 QB 346, Rhodian River Shipping Co SA v. Halla Maritime Corp [1984] 1 Lloyds Rep 373, Bolton Partners v. lambert (1889) 41 Ch.D 295, United Bank of KuwaitHammond [1988] 1 WLR 1051, JJ Coughlin Ltd v Ruparelia[2004] PNLR 4 66P. 38, bundle (e-mail sent by the Master to Charterers on 3rd July at 16:28(UTC+1)). 67P. 40, bundle (e-mail sent by Charterers to the Master on 4th July at 09:52(UTC+8)). 68 P. 40-41, bundle (E-mail from the Master to Charterers and ASA2 on 04 July 05:22 (UTC+1)) 69SIR JACK BEATSON, ANSON’S LAW OF CONTRACT 691 (29th ed. Oxford university press, 2010) ; Celthene Pty Ltd v WKJ Hauliers Pty Ltd [1981] 1 N.S.W.L.R. 606 70CHITTY ON CONTRACTS, VOL II, 31-026 (13THed. Sweet & Maxwell, 2008); Bolton Partners v Lambert (1888) 41 Ch D 295 71Norfolk County Counsilv Secretary of State for the Environment [1973] 3 All ER 673, Hammersmith and Fulham London Borough Council v. Top Shop Centres Ltd [1990] Ch 237 72Amalgamated Investment and Property Co Ltd v. Texas Commerce Int’l bank Ltd [1982] QB 84; WJ Alan & Co Ltd v. El Nasr Export and Import Co [1972] 2 QB 189 CA at 213; Telfair Shipping Corpn v Athos Shipping Co SA (‘The Athos’) [1983] 1 Lloyd’s Rep 127 CA at 136; The Kanchenjunga [1990] 1 Lloyd’s Rep 391 HL at 399; Amherst v. James Walker Goldsmith & Silversmith Ltd [1983] Ch 305 CA at 320. 73Pickard v. Sears (1837) 6 Ad & El 469; Freeman v Cooke [1848] 2 Ex 654; Laing v Lefone [1887] 19 QBD 68 CA at 73; Trane (UK) Ltd v Provident Mutual Life Assurance [1995] EGLR 33 per Judge Cooke at 39b.
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Promissory representation is a representation about what one will do in the future.74 It
was apparent from the initial negotiations for the lease of the ship that the Respondents
and the Claimants, both were keen on entering into business with each other. 75 The
charterer in a time charter has the authority to issue orders covering all situations arising
during the commercial use of the ship.76 In furtherance of the contract, during the course
of the voyage, ASA2 directed the vessel to an alternate discharge location (STS Area 1)
and promised of supply of bunkers and discharge of cargo77 with the intention that the
Claimants will act accordingly. The Respondents are thus bound by these representations
and cannot deny liability that arises from a detrimental reliance placed thereupon.78
ii. Claimants relied and acted upon the representations made.
The Claimants acted upon the order of the Respondents, and proceeded towards the
alternate discharge port, for refueling and discharge of cargo.79 The instructions were sent
by an email id similar to that of the agents’ as mentioned in the voyage order80 and was
preceded by an email from the Respondents, stating intention to discharge at an alternate
discharge port. The Master had been reducing speed of the vessel due to shortage of fuel
and STS Area 1 was his only source of bunkers. 81 Claimants submit that in absence of
74Black's Law Dictionary (9th ed. 2009),‘promissory representation’. 75 P. 1 of the bundle 76 ,Seagate Shipping Ltd v Glencore Int’l AG [2008] EWHC 1904 (comm), Western Sealanes Corp v Unimarine[1982] 2 Lloyd’s Rep. 160 , SIR BERNARD EDER, SCRUTTON ON CHARTERPARTIES AND BILLS OF LADING 361 (22nd ed. Sweet & Maxwell, 2011) 77P. 35, bundle (e-mail sent by ASA2 to The Master on 28th June at 18:06(UTC+1)). 78Spar Shipping [2015] EWHC 718 (Comm); Braganza v BP Shipping Ltd. and another [2015] UKSC 17; Sean Wilken, KarimGhaly The Law of Waiver, Variation and Estoppel, 136 (Oxford University Press, 2012).; Anderson v. General American Life Ins. Co., 141 F.2d 898 (6th Cir. Ky. 1944); Hollingsworth v. American Finance Corp., 86 Wis. 2d 172 (Wis. 1978). 79P. 35, bundle (E-mail sent by The Master to ASA2 on 28th June at 19:50 (UTC+2)). 80 P. 15, bundle (clause 4.0 of the voyage order) 81 P. 32, bundle (E-mail sent by The Master to the Respondents on 25 th June at 11:02 (UTC+3)).
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any instructions to the contrary82, and in the compelling circumstances it was reasonable
for the Master to rely on the instructions given by ASA2.
iii. Claimants incurred damage because of relying on the representations
Estoppel is invoked where the representation left the promisee in a worse off position,
than it would have been in, had the promise never been made.83 As the Respondents
failed to send Antelope, the service vessel,84 pirates attacked the vessel.85 Secondly, the
Respondents’ failure to provide bunkers led the vessel to slow down and stay adrift for a
long time, increasing the risk of an attack86. Therefore the Respondents are estopped
from going back on their promise; post the Claimants acting by placing reliance on that
promise, and damage occurring because of their non-fulfillment of promise.87
ISSUE V: WHETHER THE RESPONDENTS HAVE COMMITTED THE TORT OF FRAUD AND ARE
LIABLE TO PAY DAMAGES ?
I. The Respondent made fraudulent representations to the claimant.
82Bank Melli Iran v Barklays Bank [1951] 2 Lloyd’s Rep 367. 83Sean Wilken, KarimGhaly, The Law of Waiver, Variation and Estoppel, 95 (Oxford University Press, 2012); Orion Finance Ltd. v JD Williams and Co. Ltd. [1997] EWCA Civ 1; Hughes v Metropolitan Railway Co. (1876–77) LR 2 App Cas 439 UKHL 1. 84 P. 41, bundle (e-mail sent by the Master to Respondents and ASA2 on 04 July 05:22 (UTC+1)) 85 P. 42, bundle (E-mail sent by The Master to Charterers on 17t h July, at 23:25 (UTC+1)). 86Guidelines for Owners, Operators and Masters for Protection against Piracy in the Gulf of Guinea Region, available at <http://www.imo.org/OurWork/Security/WestAfrica/Documents/Guidelines_for_protection_against_Piracy_in_the_Gulf_of_Guinea_Region.pdf> 87Hongkong Fir Shopping Co. Ltd v. Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26; Sean Wilken, KarimGhaly, The Law of Waiver, Variation and Estoppel , 98 (Oxford University Press, 2012).
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A statement of fact with regard to the promisor’s intention to perform his
promise88amounts to a representation.89 The Respondent assured90 that bunkers would be
provided at Cape Town or Durban. 91Every promisor impliedly intends to fulfil their
promise; if not, then there is deceit.92 In the present case, the Respondent and their agent
made representations to provide bunkers at “STS Area 1”93 and failed to act upon them.
Therefore fraudulent representations were made to the Claimant.
II. The Respondent made the fraudulent representations recklessly.
Failure to correct an earlier misrepresentation with the knowledge that it would not be
fulfilled amounts to recklessness.94The statement should be false when it was acted upon,
not when it was made.95If the representor, whose true statement becomes false to his
knowledge before it is acted upon, then he will be liable for deceit if he does not correct
it.96Here, bunkers were not provided at Cape Town or Durban.97 After being informed of
the Claimant’s arrival at the specified co-ordinates, 98 the Respondent and their agent
88Re Shackleton (1875) L.R. 10 Ch. 446; Re Eastgate [1905] 1 K.B. 465. 89David Harris & Others v The Society of Lloyd's [2008] EWHC 1433 (Comm) (Steel J). Clydesdale Bank v. Paton [1896] AC 381 p.384; Kettlewell v. Refugee Assurance Co. [1908] 1 KB 545. 90 P. 29, bundle (e-mail from charterers to the Master of the vessel on 3rd June 2014 at 20:15(UTC+8)). 91 P. 26, bundle (e-mail from Charterers to the Master of the vessel on 3rd June, 2014 at 17:21 (UTC+8)). 92Clough v. The London And North Western Railway Company (1871) LR 7 Exch 26; W.V.H. Rogers, Winfield &Jolowicz on Tort (Sweet and Maxwell, 18th edn, 2010) 526. 93P. 33,bundle (e-mail from Charterers to the Master of the vessel on 28th June, 2014 at 16:27 (UTC+8)); P. 35, bundle (e-mail sent by ASA2 to Master of the vessel on 28th June, 2014 at 18:02 (UTC+1)). 94Thomas Witter Ltd v. TBP Industries Ltd [1996] 2 All ER 573, 585-87. 95OMV Petrom SA v Glencore International AG [2015] EWHC 666 (Comm) (Flaux J); A M Dugdale and M A Jones (eds) Clerk and Lindsell on Torts (Sweet and Maxwell, 19thedn, 2006) 725. 96Bradfod Building Society v. Borders [1941] 2 All E.R. 205 at 220; Jones v. Dumbrell [1981] V.R. 199.;Bries v. Woolley [1954] A.C. 333 at 353-354; Halsbury’s Laws (4thedn), Vol.31, p.642, ¶1056; D.P.P v. Ray [1974] A.C. 370, H.L; Brownlie v. Campbell (1880) 5 AC 925, 950 per Lord Blackburn; W.V.H. Rogers,Winfield &Jolowicz on Tort (Sweet and Maxwell, 18th edn, 2010) 528. 97 P. 32, bundle (e-mail from Master of the vessel to the Charterers on 25th June at 11:02(UTC+8)). 98 P. 38, bundle (e-mail from Master of the vessel to the Charterers on 3rd July, 2014 at 16:28 (UTC+1) and Captain Anya on 3rd July, 2014 at 12:30 (UTC+1)).
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failed to execute their promises. 99 Once the legal requirement of showing the
representor’s recklessness is fulfilled, the motive is immaterial. 100 Therefore, the
Respondent made the fraudulent representations recklessly.
III. The Respondent made the fraudulent representations with the intent that the
claimant should act on it.
The Respondent’s conduct is intentional, when the natural consequence of the
misrepresentation is to induce the Claimant to act on it.101 The misrepresentation must
have a real and substantial effect on the Claimant’s decision.102ASA2 gave directions to
the Master of the vessel103 intending it to be followed.104ASA2’s instructions, on behalf
of Respondent, constantly referred to the supply of bunkers 105 to ensure the Master
followed the directions. When one acts on the representation, it is prima facie evidence
that one relied on it.106Therefore the fraudulent representations were made with the intent
that the Claimant should act on it.
IV. The claimant, acting on the fraudulent representations suffered damage.
99 P. 41, bundle (e-mail from Master to the Charterers and Captain Anya 4th July 05:22 (UTC+1)). 100 Derry v. Peek (1889) All ER 1, 17; Standard Chartered Bank v. Pakistan National Shipping Corp’n(No.2) [2000] 1 LR.218, 224 (Evans L.J.); Bradford Building Society v. Borders [1941] 2 All ER 205 at 211 (Lord Viscount Maugham); Watts v. Spence [1976] Ch. 165 at 176, (C.A.). 101 Downs v. Chappell [1997] 1 W.L.R 426 at 433 (Hobhouse L.J.); Briess v. Woolley [1954] A.C. 33; Lindsay v. O’Loughnane [2010] EWHC 529 (QB); Bradford Building Societyv.Borders [1941] 2 All ER 205 at 211; W.H.V. Rogers, Winfield &Jolowicz on Tort (Sweet and Maxwell, 18th edn, 2010) 531; Margaret Brazier and John Murphy, Street on Torts (Butterworths: 10thedn, 1999) 120. 102Dadourian Group International Inc v Simms [2009] EWCA Civ 169 (Arden L.J.); J.E.B. Fasteners Ltd v. Marks Bloom & Co [1983] 1 All ER 583 at 589 (Stephenson L.J.). 103 P. 35, bundle (e-mail from ASA2 to Master of the vessel on 28th June, 2014 at 18:02 (UTC+1)). 104 P. 34, bundle (e-mail from Charterers to Master of the vessel on 28th June 2014 at 18:43 (UTC+8)). 105P. 34, bundle (e-mail from Charterers to Master of the vessel on 28th June 2014 at 18:43 (UTC+8)); P. 35, bundle (e-mail from ASA2 to Master at Western Dawn on 28th June, 2014 at 18:02 (UTC+1)). 106Arnison v. Smith (1889) 41 Ch D 348 at 369 (Lord Halsbury LC); Margaret Brazier and John Murphy, Street on Torts (Butterworths: 10thedn, 1999) 121.
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The damage suffered must be a natural consequence of the misrepresentation that was
made.107 The Claimant was at “STS Area 1” on the instructions of the Respondent and
their agent.108 On following the Respondent and their agent’s representation the vessel
and its crew suffered damage and lost 28190MT gasoil.109Moreover, the act of piracy
does not severe the chain of causation The test of reasonable foreseeability for novus
actus interveniens extends to any harm produced by an intervening event which the
Respondent could reasonably have expected to anticipate. 110 It is not necessary that the
Respondent should have foreseen the precise sequence of events; it is sufficient enough
to whether a consequence of the same general character as which followed was
reasonably foreseeable111 and ‘more likely’.112 Here, the threat of a pirate attack was very
likely; the discharge location being a piracy prone area. 113 . Notwithstanding, the
Respondent and their agent directed the vessel to these co-ordinates resulting in loss of
cargo and damage to Vessel and crew114. Therefore the Respondent is liable for the tort
of fraud and a civil action for damages to the Vessel lies.
ISSUE VI : WHETHER THE CLAIMANT IS NOT LIABLE UNDER BAILMENT?
107 Elena Baturina v. Alexander Chistyakov[2014] EWCA Civ 1134 (Lord Justice Christopher Clarke);Maple Leaf Macro Volatility Master Fund, Astin Capital Management Limited v. Jacques Rouvroy, KrzystofTrylinski[2009] EWHC 257 (Comm) (Smith J); Doyle v. Olby (Irommongers) Ltd &Ors [1969] 2 Q.B. 158. 108P. 35,bundle (e-mail from Charterers’ agent to the Master on 28th June, 2014); P. 40, bundle (e-mail sent by Charterers to Master of Western Dawn on 4th July, 2014). 109 P. 42, bundle (e-mail from Master of the vessel to Charterers on 17th July, 2014 at 23:25 (UTC+1)). 110 J Fleming ,The Law of Torts (The Law Book Co. of Australasia Pty Ltd, 2ndedn, 1903) 376; M Bigelow, Law of Torts (Cambridge University Press,2ndedn, 1903) 376 111Chapman v. Hearse (1961) 106 CLR 112; Mccarthy v. Wellington City [1966] NZLR 481. 112Home office v. Dorset Yacht Co. Ltd [1970] AC 1004 (HL) (Lord Reid). 113 ICC-IMB Piracy and Armed Robbery against Ships Report 2014. 114 P. 42, bundle (e-mail from Master of the vessel to Charterers on 17th July, 2014 at 23:25 (UTC+1)).
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I. The vicarious immunity doctrine absolves the claimant from liability under bailment.
i. The Respondent is the contractual carrier.
The identity of the carrier is determined by the relevant documents and the circumstances
applicable to each case.115
ii. The carrier is identified as the Respondent on the face of the bill of lading.
Where there is a plain identification of the Charterers’ as the carrier on the front of the
bill of lading then, the Charterers will be the carrier. 116 This will be conclusive
irrespective of who signs the B/L. 117 In the present case, the Respondent’s name is
displayed under the shipper, carrier columns and the B/L number.118Also, the factsheet
states that the Respondent is the shipper, carrier and the disponent owner.119
iii. The bill of lading is signed by the Respondent ‘on behalf’ of the carrier.
The Charterer was held to be the carrier when the bill of lading was signed "for and on
behalf of" the carrier.120 In the present case, the Bill of Lading clearly states that the agent
of the carrier signs for and on behalf of the Master and the carrier.
iv. The charter party gives the Respondent dominant control over the Master of the
vessel.
The charter party states that the Master (although appointed by Owners) shall be under
the orders and direction of the Respondent and shall sign the Bill of Lading as directed by
115Samuel & Co. v. West Hartlepool Steam Navigation & Co. (1906) 11 CommCas 115. 116 Hamburg Houtimport B.V. v. Agrosin Private Ltd (The Starsin) [2003] 1 Lloyd’s Rep. 571.Sunrise Maritime Inc. v Uvisco Ltd (The Hector) [1998] 2 Lloyd’s Rep 287. (QB) noted [1999] Lloyd’s MCLQ; The Rewia [1991] 1 Lloyd's Rep 69 (Rix J.) 117The Venezuela [1980] 1 Lloyd’s Rep 393 (QB); Simon Baughen, Shipping Law, (Cavendish Publishing Limited, 2ndedn, 2001) 32. 118 P. 44,bundle. 119 Point 1 of Procedural Order No: 2 (2015). 120 Harrison v. Huddersfield Steamship Company (Limited) 1903 19 T.L.R 386.
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them.121 Further, they are indemnified for any liability arising from complying with the
Respondent’s orders122 and any irregularities in papers supplied by the Respondent or
their agents.123
v. The circumstances and the commercial background of the case clearly indicate the
Respondent to be the carrier.
In the present case, the Respondent had possession of cargo until the vessel arrived. The
goods were placed on board by agents appointed by the Claimant but nominated by the
Respondent. 124 Therefore, taking a holistic view of the documents and the
circumstances,125 the Respondent is the contractual carrier.
Thus, the Claimant is not vicariously liable 126 under bailment since the master took
possession of cargo, acting as the agent of the Respondent. Also, the Claimant being the
performing or the actual carrier can only be held liable in tort.127
I. Arguendo, the claimant has not breached their duty as a bailee.
i. The Claimant is not liable for loss of cargo under Article III Rule 2 of HVR.
The duties under Article III Rule 2 of the HVR to keep, care for, and discharge the cargo
properly and carefully has not been breached by the Claimant. Cargo tanks were dried
after Tank Washing and FW Wash before loading of cargo and the cargo was stored in
suitable tanks as per standard specifications.128Thus, reasonable care was taken to store129
121Clause 13(a) of the SHELLTIME 4 Charter Party. 122Clause 13(a) (i) of the SHELLTIME 4 Charter Party. 123Clause 13(a) (ii) of the SHELLTIME 4 Charter Party. 124 P. 15, bundle. 125M.B. Pyramid Sound N.V. v. BrieseSchiffahrts GmbH and Co. KG. M.S. “Sina”and Latvian Shipping Association Ltd. (The “Ines”), [1995] 2 Lloyd’s Rep. 144. (Clarke J.) 126Elder Dempster and Co. v. Paterson, Zochonis and Co. [1924] A.C. 522. 127 Sir GuenterTreitel and F.M.B. Reynolds, Carver on Bills of Lading, (Sweet & Maxwell, 3rdedn, 2011) 644, ¶ 9-101. 128 P. 36, bundle (e-mail from Master of the vessel to Charterers on 27th May 2014 at 12:27 (UTC+8)).
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the cargo properly. Moreover, the theft which occurred without lack of care by the master
will not make him and the Claimant responsible.130
ii. The Claimant can rely on the exceptions mentioned under the Article IV of the
Hague-Visby Rules.
Claimants submit that ‘due diligence’ was exercised to make the Vessel seaworthy under
Article III Rule 1 of the HVR.Due diligence refers to proper care being taken 131 to
prevent the loss from occurring. It also includes considering what procedures should be
reasonably followed, the state of knowledge of the time and the standards laid down
world maritime organisations.132The noncompliance with BMP4 practices is due to the
fault of the Respondent. All items were available at Durban.133 Notwithstanding this, all
efforts were being made by the Claimant to comply with BMP4 practices.134 Therefore,
the Claimant exercised due diligence to make the Vessel seaworthy.
ISSUE VI : WHETHER OR NOT THE CLAIMANTS ARE NOT LIABLE UNDER THE TORT OF
CONVERSION?
_______________________________________________________________________
The wrong of conversion consists in any act of willful interference with a chattel, done
129British Road Services Ltd v. Arthur V Crutchley& Co Ltd [1968] 1 All ER 811. 130 Cheshire v. Bailey [1905] 1 K.B. 237; G Bosman (Transport) Ltd v. LKW Walter International Transportorganisation AG [2002] EWCA Civ 850; Port Swettenham Authority v. T W Wu & Co (M) SdnBhd [1979] AC 580; Carriage and Carriers, Vol 7, (2008) ¶ 59. 131The SubroValour [1995] 1 Lloyd’s Rep. 509 at 517 (Clarke J); The Fjord Wind [2000] 2 Lloyd’s Rep. 191 at 203. 132 Sir GuenterTreitel and F.M.B. Reynolds, Carver on Bills of Lading, (Sweet & Maxwell, 3rdedn, 2011) 667, ¶ 9-138. 133 Point 17 of Procedural Order No: 2 (2015). 134 P. 36, bundle (e-mail from the Master to Oliver at WTI Commercial on 29th June at 11:59 (UTC+1)).
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without lawful justification, whereby any person entitled thereto is deprived of the use
and possession of it.135
I. There was no voluntary act done by the claimants to constitute conversion.
In order to constitute conversion there must be some deliberate136 or voluntary act137
depriving the Respondent of right to possession of cargo. Nowhere in the factsheet has it
been indicated that the Claimant has committed such deliberate or voluntary act. Also,
the Claimant has followed all instructions given by the Respondent and their agent in lieu
of their duty to deliver the cargo to the buyer named in the B/L.138
I. The claimant is not responsible for theft of goods as a result of the pirate attack
Theft of goods from one’s custody by another person does not amount to conversion, as
long as there is no negligence on their behalf.139The Claimant followed the Respondent’s
and their agent’s instruction140 and proceeded to STS Area 1. At STS Area 1, the vessel
was left stranded in a high-risk piracy zone141despite the Respondent, having knowledge
that the vessel was low on bunker fuel. Subsequently, pirates attacked and stole
135Sir John William Salmond, Salmond’s law of Torts, 279 (Sweet & Maxwell, 1945), Kuwait Airways Corp v Iraqi Airways Co. [2002] UKHL 19, Lewis Trusts v Bambers Stores Ltd [1983] FSR 453, 459, MCC Proceeds Incv. Lehman Bros International (Europe)[1998] 4 All ER 675 136W.V.H. Rogers, Winfield & Jolowicz on Tort (Sweet and Maxwell, 18th edn, 2010) 823. 137A M Dugdale and M A Jones (eds) Clerk and Lindsell on Torts (Sweet and Maxwell, 19th edn, 2006) 642. 138 P. 41, bundle (email from Master of the vessel to the Charterers on 4th July 2014 at 5:22 (UTC+1)). 139 W.V.H. Rogers, Winfield &Jolowicz on Tort (Sweet and Maxwell, 18th edn, 2010) 827; Brink's Global Services Incv Igrox Ltd [2009] EWHC 1817 (Comm), Shannon Odone v Hawarden Services Ltd [2014] EWHC 1694 (QB), Motis Exports Ltd vDampskibsselskabet AF 1912, Aktieselskab&Anor [1999] C.L.C. 914 140 P. 35, bundle (e-mail from ASA2 to Master of the vessel on 28th June 2014 at 18:06(UTC+1)), Page 35-38 of the bundle (E-mails sent by Master of Western Dawn to ASA2 from 28 June 2014 19:50 (UTC+2) till 03 July 2014 12:30 (UTC+1)) 141Guidelines for Owners, Operators and Masters for Protection against Piracy in the Gulf of Guinea Region, available at: <http://www.imo.org/OurWork/Security/WestAfrica/Documents/Guidelines_for_protection_against_Piracy_in_the_Gulf_of_Guinea_Region.pdf>
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28,190MT of gasoil. Thus the cause of action for tort of conversion does not arise against
the Claimant.
PRAYER
In light of the above submissions, the Claimants request the Tribunal to declare:
1. That it has jurisdiction to decide the present dispute.
2. That the tort of fraud falls within the ambit of the arbitration agreement.
3. That the hire owed for the lease of the vessel “Western Dawn” must be payed at
100% of the agreed hire rate.
4. That ASA2 is an authorized agent of the Respondents.
5. That the Respondents are estopped from denying liability for the damage caused
to the vessel and the loss of cargo.
6. That the Respondents are liable for the tort of fraud.
7. That the Claimants are not liable for the loss of goods under bailment.
8. That the Claimants are not liable for the tort of conversion
