14TH INTERNATIONAL MARITIME LAW ARBITRATION
MOOT COMPETITION
2013
UNIVERSITAS PADJADJARAN
INDONESIA – TEAM 11
IN THE MATTER OF AN ARBITRATION HELD IN LONDON
MEMORANDUM FOR THE CLAIMANT
On Behalf Of:
Against:
Aardvark Limited Twilight Carriers Inc.
Claimant Respondent
TEAM ANNISA DAMAYANTI • FAWZAN IRCHAMSYAH
GALURA WIRAYUDANTO • MAHESA WONG ANABRANG NIDYA KARINA HARLIANI • SINATRYA S. PRIMANDHANA
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 ii
TABLE OF CONTENTS
TABLE OF CONTENTS ....................................................................................................... ii
LIST OF ABREVIATIONS ................................................................................................... iv
INDEX OF AUTHORITIES ................................................................................................... v
STATEMENT OF FACTS ...................................................................................................... 1
1. THE ARBITRAL TRIBUNAL HAS THE JURISDICTION TO HEAR THIS
MATTER .................................................................................................................................. 3
1.1. The Claimant As The Lawful Holder of The B/L Is Bound to Its Provisions .................. 3
1.1.1. The Claimant Has Fulfilled The Requirement to Become The Lawful Holder of The
B/L…….. ......................................................................................................................................... 4
1.1.2. The Claimant Has Exercised Good Faith In Acquiring The Possession of The B/L ......... 5
1.1.3. The Claimant Remains As The Lawful Holder of The B/L on The Grounds That The
Transfer of Rights Was Rescinded .................................................................................................. 5
1.2. The Arbitration Agreement In The Fixture Re-Cap Has Been Validly Incorporated to
The B/L Which Constitutes As A Valid Arbitration Agreement ................................................. 7
2. THE RESPONDENT HAS BREACHED ITS CONTRACT OF CARRIAGE
TOWARDS THE CLAIMANT .............................................................................................. 8
2.1. The Respondent Has Breached The Hague-Visby Rules Incorporated Within The
Provisions In The Contract of Carriage ......................................................................................... 8
2.1.1. The Hijacking Is Foreseeable ............................................................................................ 8
2.1.2. The Respondent Has Failed to Exercise Due Diligence to Provide A Seaworthy Vessel . 9
2.1.3. The Respondent Has Breached Its Obligation to Exercise Duty of Care ........................ 11
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 iii
2.1.4. The Respondent Cannot Rely on The Exceptions In The Hague-Visby Rules Nor In The
Charter Party ................................................................................................................................ 12
2.2. The Respondent Has Failed to Deliver The Cargo to The Contractual Port ................. 12
2.2.1. The Respondent Has Committed An Unreasonable Deviation ........................................ 13
2.3. The Respondent Has Committed A Misdelivery Without The Presentation of The
B/L….. .............................................................................................................................................. 15
2.3.1. Respondent Is Not Justified to Deliver The Cargo Without Presentation of The B/L ..... 15
3. THE RESPONDENT IS LIABLE UNDER THE TORT OF CONVERSION FOR
NOT DELIVERING THE CARGO TO THE CLAIMANT ............................................. 18
3.1. The Arbitral Tribunal Has The Competence to Hear The Dispute Regarding Tort…. 18
3.2. The Claimant As The Lawful Holder Has The Entitlement to Sue In Conversion ....... 19
3.3. The Respondent Has Committed Tort of Conversion ...................................................... 19
3.3.1. The Respondent’s Action Is Inconsistent With The Rights of The Claimant ................... 20
3.3.2. The Respondent Deliberately Committed The Act of Conversion ................................... 20
3.4. The Claimant Did Not Consent to The Act of The Respondent Which Resulted In
Conversion ....................................................................................................................................... 21
4. THE RESPONDENT IS LIABLE FOR ALL LOSSES SUFFERED BY THE
CLAIMANT….. ..................................................................................................................... 22
4.1. The Claimant Is Entitled For The Initial Value of The Cargo ........................................ 22
4.2. Alternatively, The Respondent Is Liable to Compensate The Claimant For The
Repurchase of The Cargo ............................................................................................................... 23
4.3. The Respondent Is Liable For The Court Fees From Penalty In Dutch Court ............. 24
PRAYER ................................................................................................................................. 25
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 iv
LIST OF ABREVIATIONS
Claimant Aardvark Limited
Respondent Twilight Carriers Inc.
Beatles Beatles Oils & Fats Limited
Vessel Twilight Trader
PFAD Palm Fatty Acid Distillate
Cargo 4,000 mt (±10%) of Palm Fatty Acid Distillate
B/L
LOI
Problem
Charter Party
FOSFA 81
The 25th October 2008 Bill of Lading
Letter of Indemnity
IMLAM Moot Problem, 2013
VEGOIL VOY Charter Party
The Federation of Oils, Seeds and Fats
Associations 81
Fixture Re-cap
Bill
The 12th September 2008 Fixture Re-Cap of The
Charter Party
Bill of Lading
The Hague-Visby Rules International Convention for The Unification of
Certain Rules of Law Relating to Bills of
Lading
UK Arbitration Act United Kingdom Arbitration Act 1996
COGSA United Kingdom Carriage of Goods by Sea Act
GoA
BMP2
Gulf of Aden
The Best Management Practices Version 2,
MSC.1/Circ.1334
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 v
INDEX OF AUTHORITIES
A. CASE LAW
COMMONWEALTH STATES
1. Ahmad v. Mitsui OSK Lines Ltd [2005] FCA 731………………………………………..5
2. BNP Paribas v. Bandung Shipping [2003] 3 SLR 611; [2003] SGHC 111………….....16
3. Carrington Slipways Pty Ltd. v. Petrick Operation Pty Ltd. [1991] 24 NSWLR 745…..19
4. Comalco Aluminium Ltd. v. Mogal Freight Services Pty Ltd. [1993] 113 ALR 677…...19
5. Furness v. Adrium Indutries Pty Ltd. [1966] 1 VR 668…………………………………23
6. Glencore International AG v. Owners of The Cherry (The Cherry) [2003] 1 SLR 471;
[2002] SGCA 49……………………………………………………………………...3, 16
7. Keppel Tatlee Bank Ltd v. Bandung Shipping Private Ltd [2003] 1 Lloyd’s Rep. 619….4
8. UCO Bank v. Golden Shore Transportation Pte Ltd [2006] 1 SLR 1; [2005] SGCA 42..3
UNITED KINGDOM
1. Actis Co. Ltd. v. The Sanko Steamship Co. Ltd (The Aquacharm) [1982] 1 Lloyd's Rep.
7…………………………………………………………………………………………...9
2. Aegean Sea Traders Corporation v. Repsol Petroleo S.A. and Another (The Aegean Sea)
[1998] 2 Lloyd's Rep. 39………………………………………...…………………..3, 4, 5
3. Astro Vencedor v. Mabanaft [1971] 2 All ER 1301…………………………………….19
4. Ashmore & Son v. C. S. Cox & Co. [1899] 1 QB 436……………………………………6
5. Ashington Piggeries v Hill [1972] AC 441…………………………………………….....6
6. Barclays Bank Ltd. v. Commissioners of Customs and Excise [1963] 1 Lloyd’s Rep.
81………………………………………………………………………………………...15
7. Bowater v. Rowley Regis Corp. [1944] KB 476 (CA)…………………………………..21
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 vi
8. Brandeis v. Goldschmidt & Co. v. Western Transport Ltd. [1981] QB 864……………23
9. British Sugar PLC v. NEI Power Projects Ltd. [1997] 87 BLR 42……………………..24
10. Carlberg v. Wemyss [1915] SC 616…………………………………………………18, 20
11. Caxton Publishing v. Sutherland Publishing [1938] 4 A11 ER 389……………………20
12. Cf Monarch v. Karlshamss [1949] AC 196……………………………………………..12
13. Cia Portorafti Commerciale SA v. Ultramar Panama Inc. (The Captain Gregos) (No. 2)
[1990] 2 Lloyd’s Rep. 395…………………………………………………………..19, 20
14. Clothing Management v. Beazley Solutions [2012] EWHC 727 QB……………………..6
15. Compania Sud American Vapores v. Ms ER Hamburg, Schiffahrtsgesellschaft MBH &
Co., KG [2006] EWHC 483 (Comm)…………………………………………………......8
16. Comptoir d’Achat et de Vente du Boerenbond Belge S.A. v. Luis de Ridder Limitada
(The Julia) [1949] AC 293………………………………………………………………..6
17. Cubazukar v. IANSA (The Playa Larga) [1983] 2 Lloyd’s Rep. 171 (CA)…….……….21
18. East West Corporation v. DKBS [2003] 1 Lloyd's Rep. 239…………...…….………3, 19
19. Enichem Anic SpA v. Ampelos Shipping Co Ltd (The Delfini) [1990] 1 Lloyd’s Rep.
252………………………………………………………………………………………...4
20. FC Bradley & Sons v. Federal Steam Navigation Co. [1926] 24 Lloyd’s Rep. 446……..9
21. Gatoil International Inc v. Tradax Petroleum Ltd v. Panatlantic Carriers Corporation
(The Rio Sun) [1985] 1 Lloyd's Rep. 350………………………………………….……11
22. Gill v. M.S. & L.R. [1873] Lloyd’s Rep. 8 QB 186……………………………………12
23. Glynn v. Margeston [1893] AC 351 [1907] 1 KB 660………………………………….14
24. Habas Sinai Ve Tibbi Gazlar Isthisal Endustri A.S. v. Sometal S.A.L (The Habas Sinai)
[2010] EWHC 29 (Comm)………………………………………………………………..7
25. Hadley v. Baxendale [1854] 9 Ex. 341……………………………………………...23, 24
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 vii
26. Hansen-Tangens Rederei III v. Team Transport Corporation (The Sagona) [1984] 1
Lloyd’s Rep. 194………………………………………………………………………...16
27. Hickox v. Adams [1876] 34 LT 404…...………………………………………………….6
28. Hobbs Padgett & Co (Reinsurance) Limited v. JC Kirkland Ltd [1969] Lloyd’s Rep.
547………………………………………………………………………………………...7
29. Homburg Houtimport B.V. v. Agrosin Private Ltd. and Others (The Starsin) [2003]
UKHL 12; [2003] 1 Lloyd’s Rep. 571………………………………………………...….4
30. Hong Kong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 QB 26……..9
31. Hotel Service Ltd. v. Hilton International Hotels (UK) Ltd. [2000] 1 All ER (Comm)
750……………………………………………………………………………………….24
32. Howard v. Pickford Tool Co [1951] 1 KB 417…………………………………………..6
33. IBL Ltd. v. Coussens [1991] 2 All ER 133……………………………………………...23
34. International Packers London Ltd. v. Ocean Steam Ship Co. Ltd. [1955] 2 Lloyd's Rep.
218……………………………………………………………………………………….11
35. James Morrison & Co. Ltd v. Shaw, Savill and Albion Co. Ltd. [1916] 2 KB 783…..…13
36. Johnson v. Taylor Bros [1920] AC 144………………………………………………….6
37. Kopitoff v. Wilson [1876] 1 QBD 377……………………………………………………9
38. Kum v. Wah Tat Bank Ltd. [1971] 1 Lloyd’s Rep. 439…………………………………..4
39. Kuwait Airways Corp v. Iraqi Airways Corp [2002] UKHL 19…………………….20, 23
40. Kuwait Petroleum Corp. v. I&D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Law
Rep. 541....……………………………………………………………4, 15, 16, 17, 18, 20
41. Kwei Tek Chao and Others v. British Traders and Shippers Ltd. N.V.
Handelsmaatschappij J. Smits Import-Export [1954] 2 QB 459; [1954] 1 Lloyd’s Rep.
16…………………………………………………………………………………………6
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 viii
42. La Fontana Novela v. E.G. Cornelius & Co. Ltd. (The Peace Venture) [1996] 2 Lloyd's
Rep. 66……………………………………………………………………………………9
43. Lecky & Co Ltd v. Oglivy, Gillanders & Co. [1897] 3. Com. Cas. 29……………….....12
44. Leduc v. Ward [1888] 20 QBD 475…………………………………………………14, 15
45. Leesh River Tea Co. v. British Indian Steam Navigation Co. [1966] 1 Lloyd's Rep.
450……………………………………………………………………………………….11
46. Letang v. Ottawa Electric Railway Company [1926] AC 725…..……………………...21
47. Lickbarrow v. Mason [1794] 5 Term Rep. 683…………………………………………..4
48. Manifest Shipping & Co. Ltd. v. Uni-Polaris Insurance Co. Ltd. and la Réunion
Europeene (The Star Sea) [1997] 1 Lloyd's Rep. 360…………………………………..10
49. Margetson v. Glynn [1892] 1 QB 337…………………………………………………..14
50. Marquis of Bute v. Barclays Bank [1955] 1 QB 202………………………………..19, 20
51. Maxine Footwear Co. Ltd. and Another v. Canadian Government Merchant Marine Ltd
[1959] AC 589………………………………………………………………………...9, 12
52. MB Pyramid Sound NV v. Briese Schiffahrts GmbH and Co. KG MS Sina and Latvian
Shipping Association Ltd (The Ines) [1995] 2 Lloyd’s Rep. 144…………………...14, 19
53. McFadden v. Blue Star Line [1905] 1 KB 697…………………………………………...8
54. Mediterranean Freight Services Ltd. v. BP Oil International Ltd. (The Fiona) [1994] 2
Lloyd's Rep. 506………………………………………………………………………...12
55. Michael v. Hart & Co. [1902] 1 KB 482…………………………………………………6
56. Minister of Food v. Reardon Line [1951] 2 Lloyd’s Rep. 265………………………….12
57. Mobile Shipping Co. v. Shell Eastern Petroleum Ltd (The Mobile Courage) [1987]
Lloyd’s Rep. 655…………………………………………………………………...……15
58. Moschi v. Lep Air Services Ltd [1972] 2 All ER 393………..…………………………..6
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 ix
59. Motis Exports v. Dampskibsellskabet AF 1912 (The Motis Case) [2000] 1 Lloyd’s Rep.
121………………………………………………………………………………...…16, 17
60. Nettleship v. Weston [1971] 2 QB 691 (CA)…………………………………………....21
61. Northern Shipping Co. v. Deutsche Seereederei GMBH and Others (The Kapitan
Sakharov) [2000] 2 Lloyd's Rep. 255………………………………………………...…12
62. Nugent v. Smith [1876] 1 CPD 423……………………………………………………...12
63. Osborne v. The London and North Western Railway Company [1926] A.C.
725……………………………………………………………………………………….21
64. Overseas Tankship (UK) Ltd. v. Morts Dock & Engineering (The Wagon Mound, No. 1)
[1961] AC 388…...…………………………………………………………………....8, 11
65. Pace Shipping Co Ltd v. Churchgate Nigeria Ltd (The Pace) [2009] EWHC 1975
(Comm); [2010] 1 Lloyd’s Rep. 183…………………...…………...…………………….3
66. Panchaud Freres SA v. Ets. General Grain Co [1970] 1 Lloyd's Rep. 53…………...…..6
67. Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co. Ltd. and Another
(The Eurasian Dream) [2002] 1 Lloyd’s Rep. 719……………………...………..9, 10, 12
68. Parsons Corporation and Others v. C.V. Scheepvaartonderneming Happy Ranger and
Others (The Happy Ranger) [2002] 2 Lloyd's Rep. 357………………………………...12
69. Pasific Basin IHX Ltd. v. Bulkhandling Handymax A.S. [2012] 1 Lloyd’s Rep. 457…….8
70. Pyrene Co. v. Scindia Steam Navigation [1954] 1 Lloyd’s Rep. 321…………….……..11
71. Re Hohenzollern Aktien & City of London CC [1886] 54 LT 596……………...………19
72. Rio Tinto Co v. Seed Shipping Co. [1926] 24 LILR 316……………………………..9, 13
73. Robin Hood Flour Mills, Ltd. v. N. M. Paterson & Sons, Ltd. (The Farrandoc) [1967] 1
Lloyd's Rep. 232………………………………………………………...…………..10, 12
74. Robinson v. Harman [1848] 1 Ex. 850………………………………………………….23
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 x
75. SA Sucre Export v. Northern Shipping Ltd (The Sormovsky 3068) [1994] 2 Lloyd's Rep.
266...…………………………………………………………………………………..4, 18
76. Sanders Bros v. Maclean and Co. [1883] 11 QBD 327………………………………....19
77. Senate Electrical Wholesalers Ltd. v. Alcatel Submarine Networks [1999] 2 Lloyd’s Rep.
423……………………………………………………………………………………….23
78. SIAT di del Ferro v. Tradax Overseas SA [1980] 1 Lloyd’s Rep. 53…………...………12
79. Singh v. Ali [1960] AC 167…………………………………………………………...…19
80. Siordet v. Hall [1828] 4 Bing 607……………………………………………………….12
81. Smith v. Charle Baker & Sons [1891] AC 325 (IHL)…………………………………...21
82. Stag Line v. Foscolo Mango & Co. Ltd. [1931] 41 Lloyd’s Rep. 165 [1932] AC
328…………………………………………………………………………………...13, 15
83. Steel Co Limited and Others v. Islamic Solidarity Shipping Company Jordan Inc. [2004]
UKHL 49………………………………………………………………………………….8
84. Sze Hai Tong Bank Ltd. v. Rambler Cycle Co. Ltd. [1959] 2 Lloyd’s Rep. 114..15, 18, 20
85. Tate & Lyle Ltd v. Hain Steamship Company Ltd [1936] 2 All ER 597 Lloyd’s Rep.
159……………………………………………………………………………………….16
86. The Aliakmon [1986] AC 785; [1986] 2 Lloyd’s Rep. 1………………………………...19
87. The Antwerpen [1994] 1 Lloyd’s Rep. 213……………………………………………...14
88. The Berge Sisar [2001] UKHL 17; 2 WLR 1118; [2001] 1 Lloyd’s Rep. 663…………..4
89. The Darrah [1977] AC 159……………………………………………………………...15
90. The Europa [1908] P. 84…………………………………………………………………9
91. The Future Express [1993] 2 Lloyd’s Rep. 542…………………………………………19
92. The Glenfruin [1885] QBD 103………………………………………………………9, 12
93. The Jag Shakti [1986] AC 337…………………………………………………………..15
94. The Paola D’Alesio [1994] 2 Lloyd’s Rep. 366……………………………………...…18
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 xi
95. The Schwan [1908] P. 356………………………………………………………..……..10
96. The Stettin [1889] 14 PD 142……………………………………………………………15
97. Thomas v. Quartermaine [1887] 18 QBD 685………………………………………….21
98. Trasimex Holding S.A. v. Addax B.V. (The Red Sea) [1999] 1 Lloyd’s Rep. 28 (CA)….6
99. Tritonia Shipping Inc v. South Nelson Forest Products Corporation [1966] Lloyd’s Rep.
114………………………………………………………………………………………...7
100. TTMI Sarl v. Statoil ASA (The Sibohelle) [2011] EWHC 1150 (Comm)………...…...7
101. Welex A.G. v. Rosa Maritime Ltd (The Epsilon Rosa) [2002] EWHC 762 (Comm);
[2003] EWCA Civ 938……………………………………………………………………7
102. White v. Blackmore [1972] 3 WLR 296…………………………………………...…21
103. Woolf v. Collis [1948] 1 KB 11……………………………………………………...19
104. Vencendor v. Mabanaft [1971] Lloyd's Rep. 502…………………………...……….19
105. Victoria Laundry v. Newman Industries Ltd. [1949] 2 KB 528……………………...23
UNITED STATES
1. Allied Chemical International Corp. v. Comphania de Navegacao Lloyd Brasiliero
[1986] AMC 826 (2d. Cir. 1985)………………………………………………………..16
B. STATUTES
1. International Convention for the Unification of Certain Rules relating to Bills of Lading,
1924 (Hague Rules) as amended by the Visby Protocol, 1968 (The Hague-Visby Rules).
2. The Rome II Regulation 2009.
3. UNCITRAL Model Law on International Commercial Arbitration, 1985.
4. United Kingdom, Arbitration Act 1996.
5. United Kingdom, Bills of Exchange Act 1882.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 xii
6. United Kingdom, Carriage of Goods Sea Act 1992.
7. United Kingdom, Sale of Goods Act 1979.
8. United Kingdom, Torts (Interference With Goods) Act 1977.
C. TREATISES & DIGESTS
1. Chorley and Giles, Shipping Law (5th edition) (London: Sir Isaac Pitman & Sons Ltd,
1963).
2. Filipo Lorenzon, C.I.F and F.O.B Contracts (London: Sweet and Maxell Publishing,
2012).
3. G. H. Treitel, Carver on Bills of Lading (London: Sweet & Maxwell , 2012) .
4. G. H. Treitel, The Law of Contract (11th edition) (London: Sweet & Maxwell, 2003).
5. Grant Gilmore and Charles L. Black, The Law of Admiralty (2nd edition) (London: The
Foundation Press. Inc, 1975).
6. International Maritime Organization, The Best Management Practices to Deter Piracy in
the Gulf of Aden and off the Coast of Somalia Version 2 (BMP2) dated August 09
MSC.1/Circ.1334.
7. John F. Wilson, Carriage of Goods by Sea (4th edition) (London: Longman, 2001).
8. John Murphy & Christian Witting, Street on Torts (13th edition) (United Kingdom:
Oxford University Press, 2012).
9. M. L. Hendrikse, N. H. Margetson, Aspects of Maritime Law: Claims Under Bills of
Lading (London: Kluwer Law International, 2008).
10. Martin Dockray, Cases & Materials on The Carriage of Goods by Sea (London:
Cavendish Publishing Limited, 2004).
11. McGregor H., McGregor on Damages (17th edition) (London: Sweet & Maxwell, 2003).
12. Nicholas Gaskell, Bills of Lading: Law of Contract (London: LLP, 2000).
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 xiii
13. P. W. D. Redmond, General Principles of English Law (4th edition) (London: Choucer
Press Ltd, 1974).
14. Paul Bugden, Goods in Transit and Freight Forwarding (2nd edition) (London: Sweet &
Maxwell, 2010).
15. Robert Force, Admiralty and Maritime Law (Washington D. C: Federal Judicial Center,
2004).
16. Security Council Resolution. Adopted by the Security Council at its 6019th meeting (20
November 2008) S/RES/1844.
17. Simon Baughen, Shipping Law (4th edition) (United Kingdom: T&F Books, 2009).
18. Stewart C. Boyd, Scrutton on Charterparties and Bill of Lading (Scrutton) (20th edition)
(London: Sweet & Maxwell, 1996).
19. United Nations Security Council, Report of the Secretary General Pursuant to Security
Council Resolution 1897 [2009] S/2010/556, 27 October 2010.
20. Yang, Liang-yi, Bills of Lading and other Shipping Documents (1st edition) (China:
Chinese University of Politics and Laws Press, 2001).
21. William Tetley, Marine Cargo Claims (3rd edition) (Montreal: International Shipping
Publication, 1988).
D. ARTICLES
1. Caslav Pejovic, Legal Issues Arising From delivery of goods without a Bill of lading
(2006).
2. C.H. Spurin, Substantive and Procedural Law: Arbitration Agreement (2008).
3. Conversion, Tort, and Restitution in Palmer and McKendrick (eds), Interests in Goods
(1998).
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 xiv
4. International Chamber Of Commerce, International Maritime Bureau, Annual Report:
Piracy And Armed Robbery Against Ships. 1 Jan–31 Dec. 2006 (2007).
5. International Chamber of Commerce, The Piracy & Armed Robbery Prone Areas and
Warnings, adopted on 2 December 2009 at the 26th Assembly Session of the
International Maritime Organization (IMO).
6. International Maritime Organization, Annex 2, Reports On Acts Of Piracy And Armed
Robbery Against Ships – Issued monthly – Acts reported during November 2009,
reported by Member States or International Organizations In Consultative Status
MSC.4/Circ.146 (14 December 2009).
7. Masood Ahmed, Arbitration Clauses: Fairness, Justice and Commercial Certainty in
William W. Park (ed.), ARBITRATION INTERNATIONAL 415 (2010).
8. Ocean Cargo Glossary - PMM Dept. - Version 3: February 2004.
9. Tettenborn, Damages in Conversion: The Exception or the Anomaly? [1993] CLJ 128.
10. UK P&I Club Circular 4/01: Bills of Lading – Delivery of Cargo: Std Form of Bill of
Lading; International Transport Intermediaries Club: Ten Golden Rules For Delivery of
Cargo.
E. OTHERS
1. Trevor Elliston, Bills of lading and Club Cover, can be accessed at
www.ukpandi.com/knowledge/article/bills-of-lading-and-club-cover-1158 (last accessed
on 20 April 2013)
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 1
STATEMENT OF FACTS
1. Aardvark Limited (the Claimant) is a company located in the High Street Bootle,
Merseyside, United Kingdom carrying a business of an oil trader and the buyer of the
4,000 mt of Palm Fatty Acid Distillate (the Cargo) from Beatles Oils & Fats (Beatles)
under the CIF contract of sale terms governed by FOSFA 81 to resell the Cargo.
2. Beatles chartered the Twilight Trader (the Vessel), a vessel owned by a company
carrying on a business of a ship owner, Twilight Carrier (the Respondent), under the
Voyage Charter Party dated 12 September 2009 (the Charter Party) with the standard
form of VEGOIL VOY Charter Party for delivering the Cargo to the Port of
Merseyside, United Kingdom under the amendment of the 23 September 2008 contract
of sale and the 25 October 2008 Bill of Lading signed by the agent of the master.
3. On 15 November 2008, Somali pirates hijacked the Vessel in the Gulf of Aden (GoA).
The Vessel was seized for three months until 13 February 2009. The quality of Cargo
on board the Vessel deteriorated from being a GMQ (Good Merchantable Quality) to a
non-GMQ cargo during the course of the hijack. Later it was discovered that there was
no heating applied to the Cargo from the hijacking until the delivery.
4. Between the periods of February until March there was a dispute between the Claimant
and Beatles regarding the entitlement to the Cargo and the termination of the contract
of sales. However, under the period of the dispute, the Claimant retains the possession
of the Bill of Lading at all times.
5. On 19 March 2009, Beatles issued a letter of indemnity to the Respondent ordering
them to deliver the Cargo to the port of Rotterdam without the presentation of the Bill
of Lading.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 2
6. On 20 March 2009, the Claimant wrote to the Respondent declaring themselves as the
lawful holder of the Bill of Lading and requested that the discharge of the Cargo should
be in compliance with the contract of carriage which is in Liverpool.
7. On 20 until 22 March 2009, notwithstanding the notification by the Claimant, the
Vessel was discharged at the Port of Rotterdam.
8. Later, the Cargo was arrested by Dutch Court as requested by Beatles on 23rd of March
2009. The Claimant is the defendant on these proceedings. Following the arrest of the
Cargo, the Claimant made an application to arrest the Vessel.
9. On 27 March 2009, the court ordered for the Respondent to provide USD 1.4 million to
lift the arrest, which was indemnified by Beatles on behalf of the Respondent on April
3rd, 2009.
10. On 23 May 2009, Beatles issued an application for an order for sale. Later on 24 July
2009, the court of Rotterdam upheld the arrest and granted an order for sale. In this
hearing, the Claimant made an appeal on 21 August 2009 to suspend the sale of the
Cargo which failed.
11. On 25 August 2009 Beatles sold the Cargo to AB Buyer based on the order for sale that
was granted by the court.
12. On 6 April 2010, the Claimant commences arbitral proceeding in accordance with the
Fixture Recap of the Charter Party against the Respondent claiming damages due to the
Respondent’s failure to deliver the Cargo to the contractual port and to the rightful
owner as well for the deterioration of the Cargo.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 3
1. THE ARBITRAL TRIBUNAL HAS THE JURISDICTION TO HEAR THIS
MATTER
This arbitral tribunal has the jurisdiction to hear this matter as first, the Claimant as the lawful
holder of the 25th October 2008 Bill of Lading (“B/L”) is bound to the provisions which are
incorporated with the B/L and secondly, the arbitration agreement in the Fixture Re-cap of
the Charter Party (“Fixture Re-cap”) has been validly incorporated by reference into the B/L
which constitutes as a valid arbitration agreement.
1.1. The Claimant As The Lawful Holder of The B/L Is Bound to Its Provisions
English law recognizes the doctrine of privity of a contract, which implies that a contract is a
private relationship between the parties involved, and no other person can acquire rights or
incur liabilities under it.1 However, by virtue of section 2(1) of the Carriage of Goods by Sea
Act 1992 (“COGSA”),2 despite having no contractual link between the claimant and the
carrier, the claimant can still proceed against the carrier based on the contract by showing that
the claimant is the lawful holder of bill3 and has thereby acquired statutory right of action
against the carrier ‘as if’ they had been the parties to that contract under the terms of the bill.
Thus, being the lawful holder of the bill overcomes the problem of privity.4
1 P. W. D. Redmond, General Principles of English Law (4th edition) (London: Choucer Press Ltd. 1974) p. 144. 2 COGSA, section 2 (1); Simon Baughen (Baughen), Shipping Law (4th edition) (United Kingdom: T&F Books,
2009), p. 19. 3 United Kingdom, Carriage of Goods Sea Act 1992 (COGSA), section 2 (1) (a); Martin Dockray (Martin
Dockray), Cases & Materials on The Carriage of Goods by Sea (London: Cavendish Publishing Limited, 2004), p. 116.
4 East West v. DKBS [2003] 1 Lloyd's Rep. 239; Pace Shipping Co Ltd v. Churchgate Nigeria Ltd (The Pace) [2009] EWHC 1975 (Comm); [2010] 1 Lloyd’s Rep. 183; Aegean Sea Traders Corporation v. Repsol Petroleo S.A. and Another (The Aegean Sea) [1998] 2 Lloyd's Rep. 39; Lickbarrow v. Mason [1794] 5 Term Rep. 683; UCO Bank v. Golden Shore Transportation Pte Ltd [2006] 1 SLR 1; [2005] SGCA 42; Glencore International AG v. Owners of The Cherry (The Cherry) [2003] 1 SLR 471; [2002] SGCA 49; Martin Dockray, p. 41; Nicholas Gaskel (Gaskel), Bills of Lading: Law of Contract (London: LLP, 2000) section 4.36, p. 131.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 4
1.1.1. The Claimant Has Fulfilled The Requirement to Become The Lawful Holder of The
B/L
The lawful holder is the person with possession of the order bill which has been endorsed and
delivered by the seller against payment of the price as a result of completion and transaction
between the parties,5 and as a consequence, the constructive possession of the cargo passes
from the sellers to him.6 Regarding the endorsement, in Lickbarrow v. Mason,7 where the
shipper writes his name on the back of an order bill, the order bill has been endorsed in
blank8 since endorsement of the bill in blank by the shipper may be filled up by the person to
whom they are so delivered or transmitted as aforesaid.9 Towards this matter, on mid-January
2009, the B/L was delivered to the Claimant as a result of transaction agreed by the Claimant
and Beatles.10 In an exchange of the possession of the B/L, the Claimant has made an
immediate payment with 99% Cash Against Document terms on 26 January 2009. 11
Furthermore, seeing that the shipper’s signature was found on the back of the order B/L,12 the
B/L has been endorsed to the Claimant in blank. Therefore, as the holder of the endorsed
5 COGSA, section 5 (2). 6 Kuwait Petroleum Corp. v. I&D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Law Rep. 541 [per Neil C. J.];
SA Sucre Export v. Northern Shipping Ltd (The Sormovsky 3068) [1994] 2 Lloyd's Rep. 266; Enichem Anic SpA v. Ampelos Shipping Co Ltd (The Delfini) [1990] 1 Lloyd’s Rep. 252, p. 268; The Berge Sisar [2001] UKHL 17, p. 18; 2 WLR 1118; [2001] 1 Lloyd’s Rep. 663; Homburg Houtimport B.V. v. Agrosin Private Ltd. and Others (The Starsin) [2003] UKHL 12; [2003] 1 Lloyd’s Rep. 571.
7 Lickbarrow v. Mason [1794] 5 Term Rep. 683. 8 Ibid; Kum v. Wah Tat Bank Ltd. [1971] 1 Lloyd’s Rep. 439, p. 446-449 [per Lord Devlin]; Baughen, p. 6;
Chorley and Giles, Shipping Law, (5th edition) (London: Sir Isaac Pitman & Sons Ltd. 1963) p. 157; M. L. Hendrikse, N. H. Margetson, Aspects of Maritime Law: Claims Under Bills of Lading (London: Kluwer Law International, 2008) p. 206; Martin Dockray, p. 112.
9 Lickbarrow v. Mason [1794] 5 Term Rep. 683, p. 685; Keppel Tatlee Bank Ltd v. Bandung Shipping Private Ltd [2003] 1 Lloyd’s Rep. 619, p. 622; The Aegean Sea [1998] 2 Lloyd's Rep. 39, p. 59–60; Stewart C. Boyd, Scrutton on Charterparties and Bill of Lading (Scrutton) (20th edition) (London: Sweet & Maxwell, 1996), p. 184.
10 Problem, p. 1-2. 11 Problem, p. 25. 12 Problem, p. 14-21.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 5
order B/L since mid-January 200913 and was in possession of the purchased B/L at all
times,14 the Claimant is the lawful holder of the B/L.
1.1.2. The Claimant Has Exercised Good Faith In Acquiring The Possession of The B/L
Possession of the bill in good faith gives the certainty that the person who holds the bill
acquires possession of the bill in “honest conduct”15 rather than possesion of the bill through
fraud or theft.16 In Ahmad v. Mitsui OSK Lines Ltd,17 the court held that the possession of the
bill in good faith was adversed since the holder has acquired possession of the bill from the
seller without complying with the conditions, typically as to payment that is required to be
performed under the contract of sales.18 Reffering to this present case, the good faith has been
shown by the fact that both Beatles as the seller and the Claimant as the buyer has
acknowledged and agreed to the transaction, seeing that the Claimant is the confirmed buyer
of the Cargo under the Broker confirmation letter.19 Furthermore, the Claimant has satisfied
the complying condition under the contract of sales through payment.20 For these reasons, the
Claimant acquires the B/L with honest conduct rather than through fraud or theft. Thus, the
Claimant as the lawful holder of the B/L has exercised good faith in acquiring the possession
of the B/L.
1.1.3. The Claimant Remains As The Lawful Holder of The B/L on The Grounds That
The Transfer of Rights Was Rescinded
The Respondent alleged that the Claimant is no longer the lawful holder of the B/L,21
nevertheless the Claimant submits otherwise. According to the CIF contract, the cargo
13 Problem, Claims Submission, p. 67, pp. 11. 14 Clarification, pp. 6. 15 The Aegean Sea [1998] 2 Lloyd's Rep. 39, p. 60; United Kingdom, Bills of Exchange Act 1882, section 90;
United Kingdom, Sale of Goods Act 1979 (SOGA), section 61 (3). 16 G. H. Treitel, Carver on Bills of Lading (London: Sweet & Maxwell , 2012) p. 231, pp. 5-025. 17 Ahmad v. Mitsui OSK Lines Ltd [2005] FCA 731. 18 Ibid, p. 68- 69; SOGA, section 28. 19 Problem, p. 1-2. 20 Claimant Memorandum, section 1.1.2. 21 Problem, Defence Submission, p. 73, pp. 10.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 6
shipped must conform to their description in the contract of sales otherwise the buyer may
reject them or, alternatively, claim for the repayment of the purchase price.22 In any event that
the cargo might be damaged, the seller has a duty to insure the cargo by providing the valued
insurance policy agreed under the contract of sales that shall protect the buyer, or the seller
would be in repudiatory breach.23 In Howard v. Pickford Tool Co.,24 an acceptance of the
breach can transfer the rights of the cargo. Consequently, all the obligations in the contract
come to an end and are replaced by operation of law by an obligation to pay money
damages.25 However, when the party refuses to accept the breach, the transfer of rights was
rescinded.26 In this present case, following the deterioration of the Cargo, Beatles was in
repudiatory breach by providing unvalued policy limited to its market value on departure27
when it should have been the valued policy agreed under the contract of sales incorporated
with FOSFA 8128 with no less than 5% of the invoice value.29 In order to conclude the
breach, the Claimant inquired Beatles for the repayment of the purchase price together with
interest, which Beatles refused to comply, thus there was no acceptance of the breach
concluded. Therefore, the transfer of rights was rescinded and the Claimant remains as the
lawful holder of the B/L.
22 SOGA, section 15; Panchaud Freres SA v. Ets. General Grain Co [1970] 1 Lloyd's Rep. 53; Kwei Tek Chao
and Others v. British Traders and Shippers Ltd. N.V. Handelsmaatschappij J. Smits Import-Export [1954] 2 QB 459; [1954] 1 Lloyd’s Rep. 16; Trasimex Holding S.A. v. Addax B.V. (The Red Sea) [1999] 1 Lloyd’s Rep. 28, p. 33 (C.A.); Ashmore & Son v. C. S. Cox & Co. [1899] 1 QB 436; Ashington Piggeries v. Hill [1972] AC 441.
23 Comptoir d’Achat et de Vente du Boerenbond Belge S.A. v. Luis de Ridder Limitada (The Julia) [1949] AC 293; Clothing Management v. Beazley Solutions [2012] EWHC 727 QB, p. 587, pp. 73; Johnson v. Taylor Bros [1920] AC 144, p. 145 [per Lord Atkinson]; Hickox v. Adams [1876] 34 LT 404.
24 Howard v. Pickford Tool Co [1951] 1 KB 417. 25 Moschi v. Lep Air Services Ltd [1972] 2 All ER 393, pp. 398-399 [per Lord Reid]. 26 Howard v. Pickford Tool Co [1951] 1 KB 417, p. 420; Michael v. Hart & Co [1902] 1 KB 482; Ocean Cargo
Glossary - PMM Dept. - Version 3: February 2004, p. 4. 27 Problem, p. 25. 28 Problem, p. 1-2. 29 FOSFA 81, cl. 6.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 7
1.2. The Arbitration Agreement In The Fixture Re-Cap Has Been Validly
Incorporated to The B/L Which Constitutes As A Valid Arbitration Agreement
An arbitration clause can be incorporated into a contract by reference to another contract such
as the incorporation of an arbitration clause into the bill, by referring to the charter party
agreement or to another document containing the relevant terms.30 A reference to a document
containing an arbitration clause constitutes a valid arbitration agreement if the clause is made
a part of the contract.31
The Claimant as the lawful holder based their claims on the B/L, accordingly bound to the
Charter Party since the B/L is incorporated to the Charter Party.32 A Charter Party agreement
can be evidenced by the existence of the Fixture Re-cap.33 Therefore, the Fixture Re-cap is an
integral and inseparable part from the Charter Party. Consequently, the provisions of the
Fixture Re-cap are therefore undoubtedly binding to the Claimant and the Respondent.
In Welex AG v. Rosa Maritime Ltd,34 seeing that the claimant was aware and had received the
fixture re-cap as the evidence of the charter party, the arbitration agreement in the fixture re-
cap incorporated into the bill is the valid arbitration agreement between the claimant and the
carrier.35 Further, the phrase ’settled by arbitration in London’ was enough to constitute a
valid arbitration agreement.36 Toward this matter, the Fixture Re-cap as an evidenced of the
Charter Party that was delivered to the Claimant states “LAW AND JURISDICTION:
ENGLISH LAW TO APPLY. LONDON ARBITRATION.” as the arbitration agreement.37 Since
the Fixture Re-Cap forms an integral and inseparable part with the Charter Party, the 30 Masood Ahmed, Arbitration Clauses: Fairness, Justice and Commercial Certainty in William W. Park (ed.),
ARBITRATION INTERNATIONAL 415 (2010), p. 413. 31 UK Arbitration Act 1996, section 6 (2); UNCITRAL Model Law 1985, art. 7 (6); Habas Sinai Ve Tibbi
Gazlar Isthisal Endustri A.S. v. Sometal S.A.L (The Habas Sinai) [2010] EWHC 29 (Comm). 32 Problem, p. 15. 33 TTMI Sarl v. Statoil ASA (The Sibohelle) [2011] EWHC 1150 (Comm) [Beatson, J] pp. 27. 34 Welex A.G. v. Rosa Maritime Ltd (The Epsilon Rosa) [2002] EWHC 762 (Comm); [2003] EWCA Civ 938. 35 Ibid, [per David Steel, J] p. 82. 36 Ibid; Tritonia Shipping Inc v. South Nelson Forest Products Corporation [1966] Lloyd’s Rep. 114; Hobbs
Padgett & Co (Reinsurance) Limited v. JC Kirkland Ltd [1969] Lloyd’s Rep. 547, p. 549. 37 Problem, p. 4.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 8
arbitration agreement found within is enough to constitute as a valid arbitration agreement,
thus, English law and London arbitration is the proper system of law and seat for this dispute.
2. THE RESPONDENT HAS BREACHED ITS CONTRACT OF CARRIAGE
TOWARDS THE CLAIMANT
2.1. The Respondent Has Breached The Hague-Visby Rules Incorporated Within The
Provisions In The Contract of Carriage
Article III of the Hague-Visby Rules, incorporated within the B/L and the Charter Party,
imposes a duty on the carrier to make the vessel seaworthy38 and to take proper and careful
care of the cargo.39 Such duty can be enforced only if there is a contractual term to that
effect.40 In this present case, such duties were stipulated in the contract of carriage,41 hence,
the Respondent has a duty to make the Vessel seaworthy and to take care the Cargo.
2.1.1. The Hijacking Is Foreseeable
In the case of The Wagon Mound No. 1,42 the respondent’s scope of liability extends to all
losses that arise from foreseeable events. If there is a substantial chance or risk of a particular
event happening, then the respondent must take all necessary steps to eliminate such risk.43
Towards this matter, the risk of an attack within the GoA, particularly from Somali pirates, is
well known44 through numerous highly publicized pirate attacks against a wide variety of
cargo ships.45 Accordingly, the Respondent has acknowledged that under the contract of
38 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (The Hague-
Visby Rules) and Protocol of Signature, signed in Brussels on 25 August 1924 (entry into force on 2 June 1931), art. III, r. 1.
39 The Hague-Visby Rules, art. III, r. 2. 40 Steel Co Limited and Others v. Islamic Solidarity Shipping Company Jordan Inc. [2004] UKHL 49;
Compania Sud American Vapores v. Ms ER Hamburg, Schiffahrtsgesellschaft MBH & Co., KG [2006] EWHC 483 (Comm).
41 Problem, Charter Party, Part II, Cl. 1 & Cl. 16. 42 Overseas Tankship (UK) Ltd. v. Morts Dock & Engineering (The Wagon Mound, No. 1) [1961] AC 388. 43 Ibid, p. 391. 44 Pasific Basin IHX Ltd. v. Bulkhandling Handymax A.S. [2012] 1 Lloyd’s Rep. 457; Security Council
Resolution. Adopted by the Security Council at its 6019th meeting (20 November 2008) S/RES/1844. 45 International Chamber Of Commerce, International Maritime Bureau, Annual Report: Piracy And Armed
Robbery Against Ships. 1 Jan–31 Dec. 2006 (2007) p. 5.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 9
carriage, the Vessel was en route via GoA,46 hence the hijacking was foreseeable since there
is a substantial chance or risk of a hijack by passing the GoA.
2.1.2. The Respondent Has Failed to Exercise Due Diligence to Provide A Seaworthy
Vessel
Under the Hague-Visby Rules, the carrier should provide seaworthiness of the vessel,47 which
indicates that the vessel is fit to meet and undergo the perils of the sea and other incidental
risks that by necessity she might be exposed to in the course of the voyage.48 On the
condition that the loss and damages were caused by unseaworthiness, the carrier would be
held liable.49
The standards of seaworthiness are relative to the nature of the ship, to the particular voyage
and even to the particular stage of the voyage,50 such as the vessel’s route.51 Presently, the
standard of the seaworthiness required is increased when the course of voyage was en route
through the high-risk area of piracy in the GoA.
Furthermore, seaworthiness extends to include the competence of the crew.52 Due diligence
and negligence of the carrier is shown through the degree of training and informedness of the
46 Problem, p. 41. 47 The Hague-Visby Rules, art. III r. 1; Grant Gilmore and Charles L. Black, The Law of Admiralty (2nd edition)
(London: The Foundation Press. Inc, 1975) p. 143. 48 Kopitoff v. Wilson [1876] 1 QBD 377, p. 380; Actis Co. Ltd. v. The Sanko Steamship Co. Ltd (The
Aquacharm) [1982] 1 Lloyd's Rep. 7, p. 9. 49 The Europa [1908] P. 84, p. 97-98; Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co.
Ltd. and Another (The Eurasian Dream) [2002] 1 Lloyd’s Rep. 719, p. 735 [per Cresswell, J]; The Glenfruin [1885] QBD 103, p. 103; Maxine Footwear Co. Ltd. and Another v. Canadian Government Merchant Marine Ltd [1959] AC 589.
50 FC Bradley & Sons v. Federal Steam Navigation Co. [1926] 24 Lloyd’s Rep. 446 [per Scrutton LJ]. 51 McFadden v. Blue Star Line [1905] 1 KB 697, p. 706. 52 Hong Kong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 QB 26; The Eurasian Dream
[2002] 1 Lloyd’s Rep. 719; Rio Tinto Co v. Seed Shipping Co. [1926] 24 LILR 316; La Fontana Novela v. E.G. Cornelius & Co. Ltd. (The Peace Venture) [1996] 2 Lloyd's Rep. 66; Paul Bugden, Goods in Transit and Freight Forwarding (2nd edition) (London: Sweet & Maxwell, 2010), p. 297.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 10
crew. Even if the crew had an extensive experience, their lack of specific training and
information could mean that they are incompetent to navigate the Vessel.53
It has been proven that by implementing the Best Management Practices (BMP2), many cases
of hijacking attempts in the GoA have been succesfully evaded due to evasive maneuvers and
effective anti piracy measures taken by the crew.54 In the event of an attempted hijacking of
“BBC THAMES” General Cargo ship in the GoA, the hijack was evaded due to the Master’s
action in raising the alarm, increasing the vessel speed, taking evasive maneuvers, and
informing warships for assistance, as well as sending an SSAS alert to ICC-IMB Piracy
reporting center.55 Facts have shown that increased vigilance and preparedness of crews
along with high profile measures taken in advance continues to be an effective deterrent
against hijacking. Towards this matter, according to the BMP2, the carrier should make every
effort to plan transit periods through the highest risk areas of the GoA for night passage since
there are very few successful attacks that have occurred at night.56 Contrary to the BMP2, the
Respondent entered the GoA at 0745 hours and the hijack occurred on 1250 hours at
daylight,57 which proves the incompetence of the crew through their lack of training and
informedness. Therefore, the Claimant submits that the Respondent has breached article III
Rule 1 of the Hague-Visby Rules by failing to provide a seaworthy Vessel through the
53 The Schwan [1908] P. 356; Manifest Shipping & Co. Ltd. v. Uni-Polaris Insurance Co. Ltd. and la Réunion
Europeene (The Star Sea) [1997] 1 Lloyd's Rep. 360; Robin Hood Flour Mills, Ltd. v. N. M. Paterson & Sons, Ltd. (The Farrandoc) [1967] 1 Lloyd's Rep. 232; The Eurasian Dream [2002] 1 Lloyd's Rep. 719.
54 IMO, Annex 2, Reports On Acts Of Piracy And Armed Robbery Against Ships – Issued monthly – Acts reported during November 2009 (Reports On Acts Of Piracy And Armed Robbery Against Ships November 2009) reported by Member States or International Organizations In Consultative Status, p. 1, MSC.4/Circ.146 (14 December 2009); ICC-IMB Piracy and Armed Robbery Against Ship Report – First Quarter 2011, p. 54; International Maritime Organization, The Best Management Practices to Deter Piracy in the Gulf of Aden and off the Coast of Somalia Version 2 (BMP2) dated August 09 MSC.1/Circ.1334 (BMP2); United Nations Security Council, Report of the Secretary General Pursuant to Security Council Resolution 1897 [2009] S/2010/556, 27 October 2010.
55 Ibid, Reports On Acts Of Piracy And Armed Robbery Against Ships November 2009, Annex 2; International Chamber of Commerce, The Piracy & Armed Robbery Prone Areas and Warnings adopted on 2 December 2009 at the 26th Assembly Session of the International Maritime Organization (IMO).
56 BMP2, pp. 3 (C)(V). 57 Problem, p. 41.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 11
incompetence of the crew to take all necessary steps to evade the hijacking before entering
the high-risk area.
2.1.3. The Respondent Has Breached Its Obligation to Exercise Duty of Care
Carrier has the obligation to care for the cargo according to article III Rule 2 of the Hague-
Visby Rules.58 A violation of the Hague-Visby Rules exists where carrier has failed to take
care of the cargo through the act of omission and accordingly the carrier is held liable for the
loss and damages.59 In The Rio Sun,60 the court stated that since there were no heating
instructions for the petroleum cargo ordered by the charterer, the failure of the carrier to
provide heating towards the cargo did not constitute as a breach.61 On the contrary, in this
present case, since the crew had received carrying instructions for heating of the Cargo
during the voyage,62 they have the obligation to properly and carefully care for the Cargo by
heating it during the voyage from Somali Coast to Fujairah, seeing that the Somali Pirates
have left the Vessel.63 Thus, the obligation of heating the Cargo to reduce the risk of
deterioration is still maintained since the crew was no longer exposed to danger.
Based on said facts, heating to the required temperature will affect the quality of the PFAD.64
Since there was no heating applied to the Cargo during the subsequent voyage to Fujairah, 65
the Respondent is responsible for the deterioration of the quality of the Cargo from GMQ to
non-GMQ, which can never be returned to its former condition.66 Therefore, by failing to
58 The Wagon Mound, No. 1 [1961] 2 WLR 126, p. 391; Pyrene Co. v. Scindia Steam Navigation [1954] 1
Lloyd’s Rep. 321; The Hague-Visby Rules, art. III, r. 2. 59 International Packers London Ltd. v. Ocean Steam Ship Co. Ltd. [1955] 2 Lloyd's Rep. 218, p. 236 [per
McNair J.]; Leesh River Tea Co. v. British Indian Steam Navigation Co. [1966] 1 Lloyd's Rep. 450, p. 457; Scrutton, p. 431.
60 Gatoil International Inc v. Tradax Petroleum Ltd v. Panatlantic Carriers Corporation (The Rio Sun) [1985] 1 Lloyd's Rep. 350
61 Ibid, p. 351. 62 Problem, p. 41. 63 Ibid. 64 Problem, p. 51. 65 Problem, p. 41. 66 Problem, p. 27.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 12
heat the Cargo, the Respondent has breached its obligation to care for the Cargo under article
III Rule 2 of the Hague-Visby Rules.
2.1.4. The Respondent Cannot Rely on The Exceptions In The Hague-Visby Rules Nor In
The Charter Party
The Claimant submits that all the exceptions provided for the benefits of a carrier are
precluded in this case as risk of the peril could have been avoided by the exercise of due
diligence and reasonable care on the part of the Respondent.67 As established in Siordet v.
Hall case, “no peril is ‘danger of the sea’ if its occurrence can be avoided by the exercise of
reasonable skill, diligence and care”.68 In this present dispute, the Respondent has failed to
exercise reasonable skill, diligence and care to avoid the hijack and deterioration of the
Cargo,69 as a consequence, the Respondent cannot rely on any of the exceptions contained in
the Hague-Visby Rules nor in the Charter Party and shall be held liable for loss and damages.
2.2. The Respondent Has Failed to Deliver The Cargo to The Contractual Port
Under Common law, contractual port of delivery is defined as the stated port under the
contract of sale70 or the bill,71 and the carrier will be in breach of contract by failing to deliver
to the contractual port of delivery.72 There are several exceptions to the aforesaid rules,
including the liberty and deviation clause that has been raised by the Respondent under their
67 The Eurasian Dream [2002] 1 Lloyd’s Rep. 719, p. 735 [per Cresswell, J]; The Glenfruin [1885] QBD 103, p.
103; Maxine Footwear Co. Ltd. and Another v. Canadian Government Merchant Marine Ltd; [1959] AC 589; The Farrandoc [1967] 2 Lloyd's Rep. 276; Mediterranean Freight Services Ltd. v. BP Oil International Ltd., (The Fiona), [1994] 2 Lloyd's Rep. 506; Northern Shipping Co. v. Deutsche Seereederei GMBH and Others (The Kapitan Sakharov) [2000] 2 Lloyd's Rep. 255; Parsons Corporation and Others v. C.V. Scheepvaartonderneming "Happy Ranger" and Others (The Happy Ranger) [2002] 2 Lloyd's Rep. 357; Minister of Food v. Reardon Line [1951] 2 Lloyd’s Rep. 265; Nugent v. Smith [1876] 1 CPD 423 [Per Cockburn, C. J.]; Gill v. M.S. & L.R. [1873] Lloyd’s Rep. 8 Q.B. 186 [per Lush, J.]; The Hague-Visby Rules, art. III, r. 8.
68 Siordet v. Hall [1828] 4 Bing 607. 69 Claimant Memorandum, section 2.1.2. and 2.1.3. 70 Lecky & Co Ltd v. Oglivy, Gillanders & Co [1897] 3. Com. Cas. 29. 71 SIAT di del Ferro v. Tradax Overseas SA [1980] 1 Lloyd’s Rep. 53; Filipo Lorenzon, C.I.F and F.O.B
Contracts (London: Sweet and Maxell Publishing, 2012) p. 144. 72 Gaskel, p. 169; Cf Monarch v. Karlshamss [1949] AC 196.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 13
defense submission.73 Nonetheless, the Claimant contends that the Respondent has failed to
deliver the Cargo to the contractual port of delivery based on following reasons.
2.2.1. The Respondent Has Committed An Unreasonable Deviation
When a carrier commits an act that is inconsistent with the agreed route of shipments under
the contract, it could be constructed as an act of deviation.74 Thus, by committing an act of
deviation, the carrier is liable for all losses and damages received by the cargo.75
Under the Hague-Visby Rules, article IV Rule 4, deviation could only be justified if made in
reason of saving life or property and any reasonable deviation.76 Further supported by Lord
Buckmaster’s judgment under the case of Stag Line v. Foscolo Mango,77 that “reasonable”
deviation in saving life and property must be strictly interpreted. Furthermore, in the case of
Rio Tinto Co v. Seed Shipping Co,78 the court held that a deviation needs to be committed
intentionally by the carrier in order to be constructed as an act of deviation, where a mere
accidental deviation will result in the exemption of carrier’s fault.
Relating to this case, after the Vessel was captured by Somali pirates, the Respondent has
comitted a deviation by directing the Vessel to Rotterdam,79 contrary to the fact that since
there are no addendum regarding the contractual port of delivery in the B/L80 and contract of
sale81 then it should have been delivered to Merseyside, Liverpool. Further, the Respondent
deliberately committed a deviation, not merely accidental, when he chose to deviate to
Rotterdam without any reasonable causes of deviation by either saving life or property,
seeing that there are no life threatening conditions or dangers to the Cargo that exists in the
73 Problem, p. 73. Respondent’s Defense Submission. 74 Gaskel, p. 179; Martin Dockray, p. 63. 75 James Morrison & Co. Ltd v. Shaw, Savill and Albion Co Ltd [1916] 2 KB 783; Robert Force, Admiralty and
Maritime Law (Washington D. C: Federal Judicial Center, 2004) p. 304. 76 The Hague Visby Rules, art. IV r. 4. 77 Stag Line v. Foscolo Mango & Co. Ltd. [1931] 41 Lloyd’s Rep. 165 [1932] AC 328. 78 Rio Tinto Co v. Seed Shipping Co. [1926] 24 LILR 316. 79 Problem, p. 48. 80 Problem, p. 14. 81 Problem, p. 13.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 14
time of deviation. Despite their actions, the Respondent had submitted that they are justified
to deviate under the liberty clause of the Charter Party. However, the Claimant takes a
different stance and submits that the Respondent is liable for the unreasonable deviation
regardless of the liberty clause and the Respondent cannot rely on the exception under the
Hague-Visby rules to justify the deviation.
a) The Liberty Clause Cannot Justify Unreasonable Deviation
Normally, Liberty clause is drafted in favor of the carrier and courts interpret them
restrictively82 and occasionally nullify the clause.83 Moreover, the majority of courts have
held that liberty clauses do not authorize the carrier to engage in conduct that would
otherwise be considered as an unreasonable deviation.84 The above practices has been
ascertained respectively under the case of Leduc v. Ward85 and Glynn v. Margeston & Co.86
In the judgment of Leduc v. Ward, the court ruled that deviation and liberty clause was too
wide as it had the same effect as if it was drafted ‘any port in the world’. Such construction
was held to be too wide and inconsistent with the mercantile object of the contract and held
that the liberty clause cannot exempt the carrier for the loss and damages occurred.87 While in
the judgment of Glynn v. Margeston & Co, the House of Lords held that liberty to deviate
must not be constructed so as to defeat the main object of the charter party, which was to
transport the cargo to the nominated port of discharge.88
82John F. Wilson, Carriage of Goods by Sea (4th edition) (London: Longman, 2001) p. 21. 83 Trevor, Elliston, Bills of lading and Club Cover, can be accessed at
www.ukpandi.com/knowledge/article/bills-of-lading-and-club-cover-1158 (last accessed on 20 April 2013) 84 MB Pyramid Sound NV v. Briese Schiffahrts GmbH and Co. KG MS Sina and Latvian Shipping Association
Ltd (The Ines) [1995] 2 Lloyd’s Rep. 144; The Antwerpen [1994] 1 Lloyd’s Rep. 213; Gaskel, section 14.27, p. 421-422; Yang, Liang-yi, Bills of Lading and other Shipping Documents (1st edition) (China: Chinese University of Politics and Laws Press, 2001) p. 139-141; William Tetley, Marine Cargo Claims (3rd edition) (Montreal: International Shipping Publication, 1988) p. 752-54.
85 Leduc v. Ward [1888] 20 QBD 475, p. 220. 86 Glynn v. Margeston [1893] AC 351 [1907] 1 KB 660. 87 Leduc v. Ward [1888] 20 QBD 475, p. 482; Margetson v. Glynn [1892] 1 QB 337, p. 340. 88 [1893] AC 351 [1907] 1 KB 660.
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Relating to this present case, the Respondent relies on the liberty clause of the Charter Party89
which particularly states “the vessel may proceed ... at any such port or place whatsoever as
the master or the owner may consider safe or advisable… or discharge the cargo at any such
port” the construction of this clause is too wide of an interpretation since it could give the
carrier rights to discharge at any port. Hereby, the Claimant submits that the construction of
the liberty clause cannot protect the Respondent from any liabilities arising from loss and
damages of the Cargo.
As explained above, the Respondent has failed to deliver the Cargo to the port of Liverpool,
instead, they unreasonably deviated to the port of Rotterdam without any intentions of saving
neither life nor property,90 also noting that the Respondent’s conduct did not benefit the
Claimant in any way.91 Therefore, the Claimant submits that the Respondent cannot rely on
the liberty clause to justify the deviation and should indemnify the Claimant for all the loss
and damages suffered.
2.3. The Respondent Has Committed A Misdelivery Without The Presentation of The
B/L
2.3.1. Respondent Is Not Justified to Deliver The Cargo Without Presentation of The B/L
Upon the delivery, the carrier is obliged to surrender the cargo to a party who presents the
bill.92 Failure to do so will expose the carrier to the risk of being sued in breach of contract,93
even if the cargo was delivered to the party entitled to receive them.94 In this present case, the
Claimant submits that the Respondent has breached the contract of carriage since the LOI
89 Problem, p. 11. 90 Claimant Memorandum, section 3.1. 91 Leduc v. Ward [1888] 20 QBD 475, p. 482, pp. 294; Stag Line v. Foscolo Mango & Co. Ltd. [1931] 41
Lloyd’s Rep. 165 [1932] AC 328; The Darrah [1977] AC 159, p. 157–165 [per Lord Diplock]. 92 Gaskel, p. 417; The Stettin [1889] 14 PD 142; The Jag Shakti [1986] AC 337. 93 Barclays Bank Ltd. v. Commissioners of Customs and Excise [1963] 1 Lloyd’s Rep. 81; Sze Hai Tong Bank
Ltd. v. Rambler Cycle Co. Ltd. [1959] 2 Lloyd’s Rep. 114; Mobile Shipping Co. v. Shell Eastern Petroleum Ltd (The Mobile Courage) [1987] Lloyd’s Rep. 655.
94 The Houda [1994] 2 Lloyd’s Law Rep. 541, p. 550-552, 556.
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cannot relieve the Respondent from liabilities. Additionally, there are no exceptions
whatsoever to justify Respondent’s action.
a) The letter of indemnity cannot relieve the Respondent from any liabilities
In the event of delivery without presentation of the bill, the requestor usually issues an LOI
for a guarantee to indemnify the carrier from any loss resulting from the delivery.95 However,
accepting an LOI will risk the carrier for breaching the contract of carriage,96 as LOI does not
relieve the carrier from the liability to the person who is entitled to the cargo.97 Accordingly,
if the person who is entitled to the cargo did not consent to the delivery against an LOI, the
carrier would be in breach of contract with them.98 In the case of Tate & Lyle Ltd v. Hain
Steamship Company Ltd. The court also ruled that charterer’s order to waive carrier liabilities
under the charter party is not binding to the holder of the bill.99
When a charterer requests the carrier to deliver the cargo without the presentation of bill, the
carrier has no obligation to comply with the order.100 On the contrary, the carrier has the right
to refuse the order if the charterer is not able to present the bill.101 In The Houda,102 the court
of appeal held that the charterer couldn’t insist the carrier to deliver the cargo without the
presentation of the bill.103 The carrier may in that event decline to deliver except to the holder
of the bill.104
95Gaskel, p. 425; Caslav Pejovic (Pejovic), Legal Issues Arising From delivery of goods without a Bill of lading,
p. 18. 96 Ibid, Pejovic. 97 UK P&I Club Circular 4/01: Bills of Lading – Delivery of Cargo: Std Form of Bill of Lading; International
Transport Intermediaries Club: Ten Golden Rules For Delivery of Cargo. 98 BNP Paribas v. Bandung Shipping [2003] 3 SLR 611; [2003] SGHC 111. 99 [1936] 2 All ER 597 Lloyd’s Rep. 159. 100 Hansen-Tangens Rederei III v. Team Transport Corporation (The Sagona) [1984] 1 Lloyd’s Rep. 194; Allied
Chemical International Corp. v. Comphania de Navegacao Lloyd Brasiliero [1986] AMC 826 (2d. Cir. 1985); The Cherry [2003] 1 SLR 471; [2002] SGCA 49; Motis Exports v. Dampskibsellskabet AF 1912 (The Motis Case) [2000] 1 Lloyd’s Rep. 121; Gaskel, p. 423.
101 Pejovic, p. 12. 102 The Houda [1994] 2 Lloyd’s Law Rep. 541. 103 The Houda, reversing Phillips J [1993] 1 Lloyd’s Rep. 333. 104 The Houda [1994] 2 Lloyd’s Law Rep. 541, p. 556; Gaskel, p. 425
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In this present case, Beatles as the charterer issued an LOI ordering the Respondent to deliver
the Cargo to Rotterdam without the presentation of the B/L.105 On the following day, the
Claimant sent a letter of 20 March 2009 informing the Respondent that the Claimant as the
lawful holder of B/L did not authorize Beatles’s order.106 However, the Respondent insisted
to discharge the Cargo to the port of Rotterdam107 and ignored the letter of 20 March 2009
despite the fact that it was opened immediately after being received.108 This action by the
Respondent results in breach of contract and Claimant’s loss of the Cargo. Therefore, the
Respondent should indemnify any loss suffered by Claimant as the lawful holder of the B/L,
which is entitled to the Cargo.
b) Additionally, there are no justifications that the Respondent can rely upon
A carrier has an obligation to deliver the cargo to the holder of a properly endorsed bill109 and
is not obliged to deliver the cargo without the presentation of the bill.110 Should they fail,
there are slight defense in which the carrier can rely on to justify their action. The decision
under The Houda111 held that a missing bill would not amount as a defense for a conduct of
delivery without presentation of the bill.112 This judgment was emphasized per Lord Rix J
under The Motis Case. 113 Further, the court held that carrier could not rely on their
contractual protection under the express clause in the bill to justify their actions.114 That
being said, it is clear that the rules relating to delivery without presentation of bill is a strict
one and courts tend to ignore any defense raised by the carrier if they deliver the cargo
105 Problem, p. 53. 106 Problem, p. 36. 107 Problem, p. 53. 108 Clarification, pp. 7. 109 Pejovic, p. 5. 110 The Motis Case [2000] 1 Lloyd’s Rep. 121; Gaskel, p. 423. 111 The Houda [1994] 2 Lloyd’s Law Rep. 541. 112 Ibid, p. 553. 113 The Motis Case [2000] 1 Lloyd’s Rep. 211, p. 841. 114 Ibid, p. 841.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 18
without presentation of the bill and to a party who is not entitled to delivery.115 Furthermore,
the carrier cannot be justified by submitting that they are not aware in regards to the
endorsement of the bill. Pursuant to The Sormovskiy 3068,116 the fact that the bill was issued
“to order” meant that they could be endorsed in favor of third parties and the carrier could not
claim that they did not know that the bill was endorsed.117
In the case at hand, the Respondent has delivered the Cargo without presentation of the B/L
to the port of Rotterdam118 and does so, without the authorization of the Claimant,119 who is
entitled to the Cargo.120 Therefore, the action of the Respondent cannot be justified by any
reason whatsoever, since it eliminates any justification to deliver the Cargo without
presentation of the B/L. Thus, the Respondent should be held liable for their actions and shall
be held fully responsible for any loss suffered by the Claimant resulting from their breach of
contact.
3. THE RESPONDENT IS LIABLE UNDER THE TORT OF CONVERSION FOR
NOT DELIVERING THE CARGO TO THE CLAIMANT
3.1. The Arbitral Tribunal Has The Competence to Hear The Dispute Regarding Tort
Tortious claims are regulated under the Torts (Interference of Goods) Act 1977, which
provides that the law applicable to a non-contractual obligation arising out of a tort shall be
the law of the country.121 These provisions clearly cover tortious claims as well as contract
claims.122 Moreover, as explained in Arbitration Act 1996,123 tortious claims are included in
115 Sze Hai Tong Bank Ltd. v. Rambler Cycle Co. Ltd., [1959] 2 Lloyd’s Rep. 114; [1959] AC 576, p. 120, col.
1, p. 586; The Houda [1994] 2 Lloyd’s Law Rep. 541, p. 556; The Sormovskiy 3068 [1994] 2 Lloyd's Rep. 266, p. 206; Carlberg v. Wemyss, [1915] SC 616, p. 624.
116 The Sormovskiy 3068 [1994] 2 Lloyd's Rep. 266. 117 Ibid, p. 206. 118 Problem, p. 53. 119 Problem, p. 36. 120 Claimant Memorandum, section 1.1.1. 121 United Kingdom, Torts (Interference with Goods) Act 1977, section 1; The Rome II Regulation, art. 4 (1). 122 UK Abitration Act 1996, section 6 (1); C.H. Spurin, Substantive and Procedural Law: Arbitration Agreement
(2008) p. 13. 123 The Paola D’Alesio [1994] 2 Lloyd’s Rep. 366; UK Arbitration Act 1996, art. 6 (1).
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the scope of the arbitration clause. It could be widely interpreted from particular phrases such
as, “any claim”, “any dispute”, “arising out of or/and in connection”.124 The case of Woolf v.
Collis established that a clause covering “all claims” or other similar phrases includes tort
claims.125 In this present case, seeing that the arbitration agreement under the Charter Party
uses the phrase “any dispute arising from”,126 thus the arbitration clause is widely interpreted
and covers tort claims. For the reasons submitted above, the arbitral tribunal has the
competence to hear any dispute regarding tort.
3.2. The Claimant As The Lawful Holder Has The Entitlement to Sue In Conversion
To be able to sue for conversion, a party has to qualify the immediate right to possession at
the time127 by being the lawful holder of the bill.128 Hence, the bill should be regarded as the
document of title that gives the holder immediate rights to possession.129 As established under
the case of East West v. DKBS, the bill gave the possessory title to the holder.130 Therefore,
as a lawful holder of the B/L,131 the Claimant has the possessory title to the Cargo and gives
the rights to sue in conversion.
3.3. The Respondent Has Committed Tort of Conversion
Conversion occurs when the carrier fails to deliver the cargo to the person entitled to the
possession of the cargo. 132 Elements of conversion as defined per Lord Nicholls of
124 Re Hohenzollern Aktien & City of London CC [1886] 54 LT 596; Vencendor v. Mabanaft [1971] Lloyd's
Rep. 502; Astro Vencedor v. Mabanaft [1971] 2 All ER 1301. 125 Woolf v. Collis [1948] 1 KB 11. 126 Problem, p. 11. 127 Marquis of Bute v. Barclays Bank [1955] 1 QB 202; Singh v. Ali [1960] AC 167; Cia Portorafti
Commerciale SA v. Ultramar Panama Inc. (The Captain Gregos) (No. 2) [1990] 2 Lloyd’s Rep. 395. 128 The Aliakmon [1986] AC 785; [1986] 2 Lloyd’s Rep. 1; The Future Express [1993] 2 Lloyd’s Rep. 542;
Sanders Bros v. Maclean and Co. [1883] 11 QBD 327 p. 341; Carrington Slipways Pty Ltd. v. Petrick Operation Pty Ltd. [1991] 24 NSWLR 745; Comalco Aluminium Ltd. v. Mogal Freight Services Pty Ltd. [1993] 113 ALR 677.
129 Sanders Bros v. Maclean and Co. [1883] 11 QBD 327, p. 341; Carrington Slipways Pty Ltd. v. Petrick Operation Pty Ltd. [1991] 24 NSWLR 745; Comalco Aluminium Ltd. v. Mogal Freight Services Pty Ltd. [1993] 113 ALR 677.
130 East West Corporation v. DKBS [2003] 1 Lloyd's Rep. 239. 131 Claimant Memorandum, section 1.1. 132 The Ines [1995] 2 Lloyd’s Rep. 144; Baughen, p. 63.
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Birkenhead, states that first, the Respondent’s conduct was inconsistent with the rights of the
owner or person entitled to possession and secondly, the conduct was deliberate, not
accidental.133
3.3.1. The Respondent’s Action Is Inconsistent With The Rights of The Claimant
Any claims regarding the matter of conversion will be asserted to the person who is entitled
in possession of the cargo134 through the possession of the bill at that time.135 Further, the
carrier has a duty to deliver the cargo to the possessor of the bill136 and therefore the carrier
shall decline any delivery other than to the lawful holder of the bill as established in the case
of Carlberg v. Wemyss.137
In the case at hand, the Claimant has the entitlement to the possession of the Cargo by being
the lawful holder of the B/L.138 Thus, the Respondent’s action by failing to deliver the Cargo
to the Claimant has satisfied the element of the tort of conversion.
3.3.2. The Respondent Deliberately Committed The Act of Conversion
Under section 2 (2) of the Torts (Interference With Goods) act 1997, conversion only occurs
if there is an intentional conduct resulting in an interference with the cargo of the claimant.139
According to the Caxton Publishing v. Sutherland Publishing case, Lord Porter stated that,
“If the respondent intends that dealing with the cargo which, in fact, interferes with the
control of the claimant, that act will be conversion”.140 Pursuant to the letter of 20 March
2009, the Claimant warned the Respondent not to comply with Beatles’ order to discharge the
133 Kuwait Airways Corp v. Iraqi Airways Corp [2002] UKHL 19. 134 Cia Portorafti Commerciale SA v. Ultramar Panama Inc. (The Captain Gregos) (No 2) [1990] 2 Lloyd’s
Rep. 395. 135 Marquis of Bute v. Barclays Bank [1955] 1 QB 202; Baughen, p. 63. 136 Sze Hai Tong Bank Ltd v. Rambler Cycle Co. Ltd [1959] 2 Lloyd’s Rep. 114. 137 Carlberg v. Wemyss [1915] SC 616, p. 624; The Houda [1994] 2 Lloyd’s Law Rep. 541, p. 556. 138 Claimant Memorandum, section 1.1. 139 Torts (Interference with Goods) Act, section 2 (2). 140 Caxton Publishing v. Sutherland Publishing [1938] 4 A11 ER 389, p. 404 [per Lord Porter].
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Cargo in Rotterdam, if not the Respondent will be in breach of contract.141 Notwithstanding
the Claimant’s letter, between 20 and 22 March 2009, the Respondent discharged the Cargo
in Rotterdam against the LOI provided by Beatles.142 It can be seen that the Respondent has
clearly conducted an intentional interference with the Cargo of the Claimant resulting in
conversion, and therefore the Respondent deliberately commits the act of conversion.
3.4. The Claimant Did Not Consent to The Act of The Respondent Which Resulted In
Conversion
Under English law, there would be no tort if the injured party voluntarily consents and agrees
to all risk and action towards them.143 However, mere knowledge of risk is not consent;144 the
claimant must have full knowledge of the circumstances145 and agrees to bear the risk.146
Moreover, as explained by Scott LJ, in the case of Bowater v. Rowley Regis Corp., “....a man
cannot be said to be trully ‘willing’ unless he is in a position to choose freely, and freedom of
choice predicates, not only full knowledge of the circumstances.”147 Moreover, Mustill J in
the case of Cubazukar v. IANSA analyzed that a conversion is a single wrongful act and the
cause of action accruing in the date of conversion.148 Thus, the consent of conversion must be
given at the time of conversion occurs. In this present case, the letter of 18 March 2009
indicates an acceptance by the Claimant to comply with Beatles’ intention to dispose the
Cargo in Rotterdam,149 however, it was only if Beatles has provided a repayment of the
141 Problem, p. 36. 142 Problem, p. 53. 143 White v. Blackmore [1972] 3 WLR 296; Smith v. Charle Baker & Sons [1891] AC 325 (IHL). 144 Ibid. 145 Thomas v. Quartermaine [1887] 18 QBD 685, p. 696; Letang v. Ottawa Electric Railway Company [1926]
AC 725, p. 731; Osborne v. The London and North Western Railway Company [1926] A.C. 725 [per Wills J.]; Redmond, p. 179; John Murphy & Christian Witting, Street on Torts (13th edition) (United Kingdom: Oxford University Press, 2012) p. 201;
146 Nettleship v. Weston [1971] 2 QB 691 (CA), p. 701. 147 Bowater v. Rowley Regis Corp. [1944] KB 476 (CA), p. 479. 148 Cubazukar v. IANSA (The Playa Larga) [1983] 2 Lloyd’s Rep. 171. (CA). 149 Problem, p. 31.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 22
purchase price to the Claimant.150 Since there was no repayment, the Claimant was not ready
to give the B/L and asserts the Respondent to deliver the Cargo to Liverpool to the Claimant
as the lawful holder of the B/L.151 Yet, the Respondent proceeded to discharge the Cargo to
Beatles, instead of the Claimant.152
Moreover, the LOI issued by Beatles containing an order to alter the course to Rotterdam was
beyond the Claimant’s assumption of the risk on the present circumstances. Hence, there was
no consent established by the Claimant regarding the act of the Respondent, which resulted in
conversion.
4. THE RESPONDENT IS LIABLE FOR ALL LOSSES SUFFERED BY THE
CLAIMANT
The Claimant has suffered both actual and consequential losses in relation to the
Respondent’s conduct.153 There is a clear causal link since these losses have arisen as a result
of a failure to properly care for and deliver the Cargo committed by the Respondent.
Applying the first limb of Hadley v. Baxendale154 the loss is clearly foreseeable from the
carrier’s perspective. Therefore, the Claimant submits that first, the Claimant is entitled for
the initial value of the Cargo, secondly, the Respondent is liable to compensate the Claimant
for the repurchase of the Cargo, and thirdly, the Respondent is liable for the court fees from
penalty in Dutch Court.
4.1. The Claimant Is Entitled For The Initial Value of The Cargo
There is a rule in common law regarding remedy to compensate the injured party of a breach
of contract, in which the conditions must be returned to as if the contract had been performed,
150 Problem, p. 33. 151 Problem, p. 36. 152 Problem, p. 53. 153 Problem, p. 70. 154 [1854] 9 Ex. 341.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 23
with respect to the damages,155 provided it is not to remote.156 As applied in the Ines case,157
the judgment placed the injured party to the position in which it would have been if there had
been no breach. In this present case, the Claimant suffered loss from the deterioration of the
Cargo quality by reason of the Respondent’s failure.158 This loss could not have been
mitigated except through the Respondent providing an equal value of the Cargo. Therefore,
the Claimant is entitled for the initial value of the Cargo in the amount of USD 747.50 per mt.
4.2. Alternatively, The Respondent Is Liable to Compensate The Claimant For The
Repurchase of The Cargo
As a replacement for the Cargo that has been converted by the Respondent, the Claimant
repurchased the Cargo and thus suffered economic loss in the amount of USD 552.50 per mt
to sell to their sub-buyers.159 Under the tort of conversion, the loss arising from this present
case is contributed by the Respondent through an act of conversion of the Cargo, which was
entitled to the Claimant.160 There is no specific standard on the damage assessment of
conversion, yet the principle of restitutio in integrum prevails in conversion cases. As
stipulated in the case of Kuwait Airways Corp v. Iraqi Airways Co, the main purpose of
assessing damage in conversion is to compensate any loss sustained by the injured party, as
long as the loss was due to the defaulter’s conduct.161 Relating to this present case, the loss
155 Robinson v. Harman [1848] 1 Ex. 850, p. 855; Senate Electrical Wholesalers Ltd. v. Alcatel Submarine
Networks [1999] 2 Lloyd’s Rep. 423, at 430; Victoria Laundry v. Newman Industries Ltd. [1949] 2 KB 528; G. H Treitel, The Law of Contract (11th edition) (London: Sweet & Maxwell, 2003) p. 944.
156 Hadley v. Baxendale [1854] 9 Ex. 341. 157 [1995] 2 Lloyd’s Rep. 144. 158 Problem, p. 69. 159 Problem, p. 46. 160Torts (Interference with Goods) Act, section 3(2) (c). The courts may also make an order for delivery up of
the chattel, section. 3 (2) (a); Tettenborn, Damages in Conversion: The Exception or the Anomaly? [1993] CLJ 128; Conversion, Tort, and Restitution in Palmer and McKendrick (eds), Interests in Goods (1998).
161 Kuwait Airways Corp. v. Iraqi Airways Co. (No. 4 and 5) [2002] UKHL 19; Furness v. Adrium Indutries Pty Ltd. [1966] 1 VR 668; Brandeis v. Goldschmidt & Co. v. Western Transport Ltd. [1981] QB 864; IBL Ltd. v. Coussens [1991] 2 All ER 133; McGregor H., McGregor on Damages (17th edition) (London: Sweet & Maxwell, 2003), p. 12.
14TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2013 24
suffered by the Claimant is a direct result of the Respondent’s action. Therefore, the
Respondent is liable to compensate the Claimant amounting to USD 522.50 per mt.
4.3. The Respondent Is Liable For The Court Fees From Penalty In Dutch Court
The consequential loss falls when a party who breaches a contract is generally liable to the
innocent party for the further harm from the extent of the respondent’s action as long as there
was no arbitration clause that limits the liability. 162 In Hotel Services Ltd v. Hilton
International Hotels (UK) Ltd,163 the consequential damages is limited by the clause within
the contract of carriage, as follows, “The Company will not in any circumstances be liable for
any consequential loss, damages or liability….”
Contrary to the case above, there is no clause that limits the consequential loss in the contract
of carriage.164 Thus, the Respondent shall reimburse any loss resulting from the extent of
their actions. In this present case, from the extent of the misdelivery conducted by the
Respondent, the Claimant has suffered an additional loss of USD 138,843.14 in court fees
coupled with USD 107,913.12 in legal fees in respect of the Court proceedings.165 Hence, the
Respondent is liable for the Claimant’s loss resulting of court fees.
162 The second limb of Hadley v Baxendale [1854] 9 Exch. 341; Hotel Service Ltd. v. Hilton International
Hotels (UK) Ltd. [2000] 1 All ER (Comm) 750; British Sugar PLC v NEI Power Projects Ltd. [1997] 87 BLR 42.
163 [2000] 1 All ER (Comm) 750. 164 Problem, p. 9; Problem, p. 17. 165 Problem, p. 55.
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PRAYER
In light of the above submission the Claimant requests this arbitral tribunal to:
DECLARE that this Tribunal has jurisdiction to hear the dispute.
ADJUDGE that the Respondent is liable
a) To the Claimant for breach of contract and/or tort;
b) To the Claimant for liabilities incurred due to the Respondent’s breach of contract
and/or tort; and
c) To compensate the Claimant in full for USD 3,236,756.26.
And the Respondent’s counter claim is not maintainable.
And therefore AWARD the Claimant
a) Damages of the initial value of the good amounting to USD 2,990,000
b) Alternatively, damages of the Claimant to repurchase the cargo amounting to
2,090,000
c) Legal fees in respect of the Court proceedings of USD 107,913.12
d) Compound interest pursuant to Arbitration Act 1996 (UK Arbitration Act 1996)
e) Costs