16TH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION

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16TH

ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION

MOOT, 2015

MEMORANDUM FOR THE CLAIMANTS/OWNERS

NATIONAL LAW SCHOOL OF INDIA UNIVERSITY (BANGALORE, INDIA)

IN THE MATTER OF AN ARBITRATION

BETWEEN:

WESTERN TANKERS INC …CLAIMANTS/OWNERS

AND

LDT PTE …DEFENDANTS/CHARTERERS

TEAM NUMBER 5

BHUVANYAA VIJAY

GARGI ROHI

RADHIKA GOYAL

SHRADDHA GOME

TEAM 5, MEMORANDUM FOR THE CLAIMANTS/OWNERS

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TABLE OF CONTENTS

QUESTIONS PRESENTED/ISSUES RAISED ............................................................................................. iv

LIST OF ABBREVIATIONS ....................................................................................................................... v

INDEX OF AUTHORITIES....................................................................................................................... vii

CASES .................................................................................................................................................. vii

STATUTES AND CONVENTIONS .............................................................................................................. x

BOOKS .................................................................................................................................................. xi

ARTICLES ............................................................................................................................................ xii

MISCELLANEOUS ................................................................................................................................. xii

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

THE PARTIES, THE CHARTER PARTY AND THE BILL OF LADING ........................................................... 1

THE PROVISION OF BUNKERS ................................................................................................................ 1

THE SAFETY EQUIPMENT....................................................................................................................... 1

THE ALTERNATIVE DISCHARGE LOCATION ........................................................................................... 1

THE NON-PAYMENT OF HIRE AND SUBSEQUENT OFF-HIRE .................................................................. 2

PIRACY AND CARGO THEFT ................................................................................................................... 2

THE CLAIMS .......................................................................................................................................... 2

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

I. THE TRIBUNAL HAS JURISDICTION TO HEAR THE PRESENT DISPUTE .............................................. 3

A. The Fully Fixed Recap which Incorporates C/P was Intended to be Binding on Parties ............ 3

B. The Arbitration Agreement Clearly and Without Ambiguity gives Jurisdiction to this Tribunal 4

C. The Pre-Contractual Negotiations do not Overrule Arbitration Clause Contained in C/P .......... 4

D. The Jurisdiction of this Tribunal Ought not to be Vacated in Favour of Singapore ................... 6

II. THE TORT OF FRAUD IS ADMISSIBLE BEFORE THIS TRIBUNAL ....................................................... 7

A. The Term “Disputes Arising out of this Charter” is to be Given a Broad Interpretation ............ 7


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B. The Parties Intended to Include the Tort of Fraud in the Arbitration Proceedings Before the

Tribunal ............................................................................................................................................. 8

III. ASA2 IS THE AGENT OF CHARTERERS............................................................................................ 9

A. Charterers are Responsible under the Doctrine of Apparent Authority ..................................... 9

B. Charterers are Bound by the Doctrine of Estoppel by Negligence .......................................... 11

IV. TORT OF FRAUD WAS COMMITTED BY DEFENDANT ..................................................................... 12

A. Charterers Intended Owners to Rely on their False Representation ......................................... 13

B. Charterers had no Genuine Belief in the Truth of their Representation ................................... 13

C. The Owners Relied on such Representation and Suffered Damages ....................................... 14

V. CHARTERERS BREACHED C/P DUE TO NON-PAYMENT OF HIRE DUE ........................................... 15

A. Charterers Breached Cl 9, C/P ............................................................................................... 15

B. There Exist No Valid Grounds for not Paying Hire Due and Owing ....................................... 16

VI. OWNERS ARE NOT LIABLE FOR ANY LOSS ARISING FROM VESSEL ALLEGEDLY BEING NOT “FIT

FOR SERVICE” ...................................................................................................................................... 17

A. The HVR have been Incorporated into C/P ............................................................................ 17

B. Owners Provided a Vessel “Fit for the Service” ..................................................................... 18

C. In Any Event, Owners rely on Exceptions under C/P and HVR .............................................. 21

VII. OWNERS ARE NOT LIABLE TO CHARTERERS IN CONVERSION OR BAILMENT ............................... 22

A. Charterers have no Title to Sue .............................................................................................. 22

B. The Necessary Criterion of Demand and Refusal has not been Met ....................................... 24

C. There was no Breach of Duty of Care by Bailees ................................................................... 24

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

ANNEXURES ............................................................................................................................................. a

ANNEXURE A: DISTANCE BETWEEN THE RELEVANT CO-ORDINATES ..................................................... a

ANNEXURE B: PROVISION OF BUNKER SUPPLY (CALCULATIONS) ......................................................... d


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QUESTIONS PRESENTED/ISSUES RAISED

I. Does the Arbitral Tribunal have jurisdiction to hear the present dispute?

II. Is Tort of Fraud admissible before this Tribunal?

III. Whether ASA2 is the agent of the Charterers?

IV. Are Charterers liable for the Tort of Fraud?

V. Are Charterers in breach of Charterparty due to non-payment of hire due and owing?

VI. Did Owners provide a Vessel fit for the service?

VII. Are Owners liable to Charterers in bailment?

VIII. Are Owners liable to Charterers under Tort of Conversion?


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LIST OF ABBREVIATIONS

ADL Alternative Discharge Location

AEI Angola Energy Imports (Consignees)

Art. Article

B/L Bill of Lading

BMP4 Best Management Practices: Version 4, 2011

BVI British Virgin Islands

C/P Shelltime-4 Charterparty (Issued Dec. 1984 amended Dec. 2003)

Cl Clause

CSO Company Security Officer

FO Fuel Oil

GO Gas Oil

HVR Hague-Visby Rules, 1968

IMB International Maritime Bureau

LDTP Less Dependable Traders Pte (Charterers/Defendant)

Med. Mediterranean region

Moot Scenario IMLAM Moot Scenario, 2015

MT Metric Tonnes

OPL Off/Outer Port Limits

ROB Remaining on Board

S. Section

SIRE Ship Inspection Report

V/C Voyage Correspondence in Moot Scenario


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WAF West Africa

WTI Western Tankers Inc. (Owners/Claimant)


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INDEX OF AUTHORITIES

CASES

Abuja International Hotels Ltd. v. Meridien Sas, [2012] EWHC 87 (Comm) ........................................ 7

Actis Co. v. Sanko Steamship Co. (‘The Aquacharm’), [1982] 1 Lloyd’s Rep 7 ................................... 18

Adamastos Shipping Co Ltd v. Anglo Saxon Petroleum Co Ltd (‘The Saxon Star’), [1958] 1 Lloyd’s

Rep. 73 ................................................................................................................................................ 17

Aggeliki Charis Compania Maritima SA v. Pagnan SpA (‘The Angelic Grace’), [1995] 1 Lloyd's Rep

87 .......................................................................................................................................................... 7

Albacruz (Cargo Owners) v. Albazero (‘The Albazero’), [1977] AC 774 ............................................. 24

Alfred C Toepfer v. Tossa Marine Co. Ltd. (‘The Derby’), [1985] 2 Lloyd's Rep. 325......................... 18

Aliakmon Maritime Corp v. Trans Ocean Continental Shipping (‘The Aliakmon Progress’), [1978] 2

Lloyd’s Rep. 499 ................................................................................................................................ 17

Armagas Ltd v. Mundogas Ltd (‘The Ocean Frost’), [1986] AC 717 ................................................... 10

Atapattu, R. v. The Secretary of State for the Home Department, [2011] EWHC 1388 (Admin) ......... 23

Ben Line Steamers Ltd. v. Pacific Steam Navigation Co (‘The Benlawers’), [1989] 2 Lloyd's Rep. 51 18

Board of Trade v. Temberly, [1927] 27 Ll.L.Rep. 230 .......................................................................... 16

Chartbrook and Anr v. Persimmon Homes Ltd and Others, [2009] UKHL 38 ....................................... 5

Cheikh Boutros Selim El-Khoury v. Ceylon Shipping Lines (‘The Madeleine’), [1967] 2 Lloyd’s Rep.

224 ...................................................................................................................................................... 18

David Bennett and Bennett & Bennett Construction, Inc.v. Barbara Skinner and Leotes Skinner, 2012

WL 2161641 (Ala. June 15, 2012) ....................................................................................................... 8

Derry v. Peek, (1889) 14 App Cas 337 .................................................................................................. 12

Dole Food Co. v. Watts, 303 F.3d 1104 (9th

Cir. 2002) ........................................................................... 6

East West Corporation v. DKBS 1912 and AKTS Svenborg, [2003] QB 1509. .................................... 23

Egyptian International Foreign Trade Co v. Soplex Wholesale Supplies Ltd, 1985 WL 310866 ......... 10


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Empresa Cubana Importadora de Alimentos Alimport v. Iasmos Shipping Co. SA (‘The Good Friend’),

[1984] 2 Lloyd’s Rep 586 .................................................................................................................. 18

Empresa Exportadora de Azucar v. Industria Azucera Nacional SA (‘The Playa Larga’), [1983] 2

Lloyd's Rep. 171 ................................................................................................................................... 7

Eridania SpA v. Oetker (‘The Fjord Wind’), [1999] 1 Lloyd’s Rep. 307 ........................................ 17, 18

FC Bradley & Sons Ltd v. Federal Steam Navigation Co, (1926) 24 Ll. L. Rep. 446 .................... 18, 19

Fiona Trust and Holding Corp v. Yuri Pavalov and Ors., [2007] UKHL 40 ...................................... 8, 9

Freeman and Lockyer v. Buckhurst Park Properties Ltd, [1964] 2 QB 480 ..................................... 9, 11

Freeman v. Cooke, (1848) 2 Exch. 654 ................................................................................................. 11

George Whitechurch Ltd. v. Cavanagh, [1902] A.C. 117 ...................................................................... 11

Glencore International AG v. Owners of the "Cherry", the "Epic" and the "Addax" (‘The Cherry’),

[2003] 1 SLR 471 ............................................................................................................................... 20

Gosse Millard Ltd v. Canadian Government Merchant Marine Ltd (‘The Canadian Highlander’),

[1928] 1 K.B. 717 ............................................................................................................................... 22

Great China Metal Industries Co Limited v. Malaysian International Shipping Corporation Berhad

(‘The Bunga Seroja’), (1998) 72 ALJR 1592 ..................................................................................... 21

Great Circle Lines Ltd. v. Matheson & Co. Ltd., 681 F.2d 121 ............................................................... 6

Gregory v. Electro Mechanical Corp., 83 F.3d 382 (11th Cir. 1996) ..................................................... 8

Gurtner v. Beaton, [1993] 2 Lloyd’s Rep 369 ....................................................................................... 10

Helen Griggs v. Luke Evans et al., Court of Special Appeals of Maryland, No. 2596 (Md. App. May 2,

2012) ..................................................................................................................................................... 8

Hongkong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd (‘The Hongkong Fir’), [1961] 1 Lloyd's

Rep. 159 .............................................................................................................................................. 18

HSBC Rail UK Ltd v. Network Transports Ltd, EWCA Civ 1437 [2005] ............................................. 23

ING Re (UK) Ltd v. R & V Versicherung AG, [2006] EWHC 1544 (Comm) ................................... 9, 10


ix

International Air & Sea Cargo GmbH v. Pakistan National Shipping Co (‘The Chitral’), [2000] 1

Lloyds’ Rep. 529 .......................................................................................................................... 22, 23

International Fina Services AG v. Katrina Shipping Ltd (‘The Fina Samco’), [1994] 1 Lloyd’s Rep.

153 ...................................................................................................................................................... 17

Investors Compensation Scheme Ltd v. West Bromwich, [1997] UKHL 28 ............................................ 5

Iran v. Barakat Galleries Ltd., [2007] EWCA Civ 1374 ....................................................................... 22

K/S Penta Shipping A/S v. Ethiopian Shipping Lines Corp, (‘The Saga Cob’) [1992] 2 Lloyd's Rep.

545 ...................................................................................................................................................... 20

Kaverit Steel & Crane Ltd v. Kone Corp., XIX Y.B. Comm. Arb. 643 (Alberta Ct. App. 1992) (1994) 8

Kopitoff v. Wilson, (1876) 1 QBD 377 ................................................................................................... 19

Lloyd v. Grace Smith & Co., [1912] A.C. 716 ....................................................................................... 10

Lord v. Price, L. R. 9 Ex. 54 (1874) ...................................................................................................... 23

Lourie v. Douglas, (1846) 15 Meeson and Welsby 746 ........................................................................ 22

McFadden v. Blue Star Line, [1905] 1 K.B. 697 ................................................................................... 18

Mercantile Credit Co Ltd v. Hamblin, [1965] 2 QB 242 ................................................................. 11, 12

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) .................................. 7

Moorgate Mercantile Co Ltd v. Twitchings, [1977] AC 890 ................................................................. 11

Morse v. Slue (1671) 1 Vent 190 ........................................................................................................... 21

Obestain Inc v. National Mineral Development Corp Ltd (‘The Sanix Ace’), [1987] 1 Lloyd's Rep 465

............................................................................................................................................................ 23

Otis Elevator Co. v. Midland Red Oak Realty Inc., 483 F.3d 1095 (10th Cir.2007) ............................... 4

Papera Traders Co Ltd v. Hyundai Merchant Marine Co Ltd (‘The Eurasian Dream No.1’), [2002] 1

Lloyd’s Rep. 719. ............................................................................................................................... 18

Pickering v. Barclay, (1672) Style 132 .................................................................................................. 21

Prenn v. Simmonds, [1971] W.L.R. 526 .................................................................................................. 5

President of India v. West Coast Steamship Co. (‘The Portland Trader’) [1963] 2 Lloyd's Rep. 278 . 19


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R. E. Jones Ltd. v. Waring & Gillow Ltd., (1863) 2 H. & C. 175 .......................................................... 11

Rama Corporation Ltd v. Proved Tin and General Investments Ltd., [1952] 2 Q.B. 147 ................. 9, 11

Reardon Smith Line v. Hansen-Tangen, [1976] 1 W.L.R. 989 ................................................................ 5

Rogers v. Kennay, 115 E.R. 1401(1846) ................................................................................................ 23

Ryan v. American Natural Energy Corp, 557 F.3d 1152 (10th Cir. 2009) .............................................. 4

Schwarzchild v. Harrods, EWCH 528 [2008] ....................................................................................... 24

Spiliada Maritime Corp v. Cansulex Ltd, [1987] AC 460 ................................................................... 6, 7

St. Pierre v. Chriscan Enterprises Ltd, 2011 BCCA 97 .......................................................................... 5

Stena Line Ltd v. Merchant Navy Ratings Pension Fund Trustees Ltd, [2010] EWHC 1805 ................. 5

Sulamerica v. Enesa Engenharia, [2012] EWCA Civ 638 .................................................................. 4, 7

The Cressington, [1891] P. 152 .............................................................................................................. 22

The Danica White (Danish High Court, 3 October 2010), reported at: UfR 2011.354 H (‘Danica

White’) ................................................................................................................................................ 20

The Rafaela S, [2003] 2 Lloyd's Rep. 113 .............................................................................................. 22

The Satya Kailash, [1982] 2 Lloyd’s Rep. 465 ...................................................................................... 22

The Stolt Royalty, [1993] 2 Lloyd’s Rep. 281 ........................................................................................ 10

Tradax Export SA v. Dorada Compania Niveria SA (‘The Lutetian’), [1982] 2 Llyod’s Rep. 140 ...... 15

U.S. Titan, Inc. v. Zhi Guangzhou Zhen Hua Shipping Co. Ltd., 241 F.3d 135 ...................................... 3

Union of India v. NV Reederij Amsterdam, [1963] 2 Lloyd's Rep. 223 ................................................. 18

USG Interiors Inc v. Commercial and Architectural Products Inc, 609 N.E.2d 811 (1993) .................. 5

Wilson and Meeson v. Pickering, [1946] 1 K.B. 422 ....................................................................... 11, 12

Woodley & Co v. Michell & Co, (1883) 11 QBD 47 ............................................................................. 21

STATUTES AND CONVENTIONS

The International Convention for the Unification of Certain Rules of Law relating to Bills of Lading

(Hague-Visby Rules, 1968) ................................................................................................................ 17


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The U.K. Arbitration Act, 1996 ............................................................................................................... 3

The U.K. Carriage of Goods by Sea Act, 1992 ...................................................................................... 22

The U.K. Torts (Interference with Goods) Act, 1977 ............................................................................ 22

BOOKS

Alan Redfern, LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION (4th

edn., 2005) .... 8

ASPECTS OF MARITIME LAW: CLAIMS UNDER BILLS OF LADING (M.L.Hendriksen, H.N.Margetson and

N.J. Margeston eds., 2008) ........................................................................................................... 18, 21

Benjamin’s Sale of Goods (8th

edn., 2010) ....................................................................................... 22, 23

Bowstead and Reynolds on Agency (17th

edn., 2001) ......................................................................... 9, 10

Clerk & Lindsell on Torts (20th

edn., 2010) ...................................................................................... 22, 23

Gary Born, INTERNATIONAL ARBITRATION AND FORUM SELECTION AGREEMENTS: DRAFTING AND

ENFORCING (4th

edn., 2013) ................................................................................................................... 6

Gary Born, INTERNATIONAL COMMERCIAL ARBITRATION: COMMENTARY AND MATERIALS (2nd

edn.,

2001) ................................................................................................................................................. 7, 8

Halsbury’s Laws of England, Vol. 3(1) (4th

edn., 2005) ............................................................. 22, 23, 24

Halsbury’s Laws of England, Vol. 7 (5th

edn., 2008) ................................................................. 17, 18, 21

Indira Carr, INTERNATIONAL TRADE LAW (4th

edn., 2010) ............................................................... 18, 21

Kim Lewison, THE INTERPRETATION OF CONTRACTS (2nd

edn., 1997) ..................................................... 5

N.Palmer, PALMER ON BAILMENT (3rd

edn., 2009) ........................................................................... 23, 24

Norman J. Lopez and J. Bes, BES’ CHARTERING AND SHIPPING TERMS (11th

edn., 1992) ....................... 3

Paul Todd, MARITIME FRAUD AND PIRACY (2nd

edn., 2010) .................................................................. 17

Richard A. Rosen, SETTLEMENT AGREEMENTS IN COMMERCIAL DISPUTES: NEGOTIATING, DRAFTING &

ENFORCEMENT (2014) .......................................................................................................................... 4

Russell on Arbitration (21st edn., 1997) ............................................................................................... 6, 9

Simon Baughen, SHIPPING LAW (4th

edn., 2009) .................................................................................... 17


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Steward C. Boyd, SCRUTTON ON CHARTERPARTIES AND BILLS OF LADING (21st edn, 2008) ........... 21, 22

Terence Coghlin et al, TIME CHARTERS (6th

edn., 2008) ........................................ 3, 6, 15, 16, 17, 18, 21

W.V.H. Rogers, WINFIELD AND JOLOWICZ ON TORT (18th

edn., 2010) ................................................... 22

ARTICLES

A. Tettenborn, Reversionary Damage to Chattels, 53(2) CAMBRIDGE LAW REVIEW 326 (1994) .......... 23

Aref Fakhry, ‘Piracy Across Maritime Law: Is there a problem of Definition?’ in THE

REGULATION OF INTERNATIONAL SHIPPING: INTERNATIONAL AND COMPARATIVE PERSPECTIVES:

ESSAYS IN HONOR OF EDGAR GOLD (2012) ........................................................................................ 21

C. Hawes, Tortious Interference with Goods: Title to Sue, 17(2) CANTERBURY LAW REVIEW 331

(2011) ................................................................................................................................................. 23

C. Pejovic, Delivery of Goods without a Bill of Lading: Revival of an Old Problem in the Far East,

JOURNAL OF INTERNATIONAL MARITIME LAW, 448 (2003) ................................................................ 23

Chen Liang, Seaworthiness in Charter Parties, JOURNAL OF BUSINESS LAW 1 (2000) ......................... 17

D.J. Bentley, A New Found Halliday: The Eighteenth Report of the Law Reform Committee

(Conversion and Detinue), Vol. 35(2), THE MODERN LAW REVIEW, 171 (1972) .............................. 22

S. Girvin, Bills of Lading and Straigh Bills of Lading: Principles and Practice, JOURNAL OF BUSINESS

LAW, (2006) ........................................................................................................................................ 23

Simon Gault, Charterparty-Construction of Clause 3(ii) of Shelltime 4, 2(8) INTERNATIONAL

MARITIME LAW 196 (1995) ................................................................................................................ 17

MISCELLANEOUS

95th

Report of the Law Reform Committee of South Australia to The Attorney General, Law of

Detinue, Conversion and Tresspass of Goods, 1987. ......................................................................... 24

Best Management Practices for Protection against Somali Based Piracy (Version 4, 2011) ................ 21

Christine Mungai, How East African Piracy Ended and Lessons West Africa Can Learn to End Crime

on Its Waters, MAIL AND GUARDIAN AFRICA (Feb. 22 2015) ............................................................ 20


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Comite Maritime International, The Travaux Préparatoires of the Hague Rules and the Hague-Visby

Rules ................................................................................................................................................... 21

IMB Warns of West Africa Piracy Threat, ICC COMMERCIAL CRIME SERVICES (Mar. 7 2014) ............ 20

Law Com. No.196, Scot. Law Com. No.130, Right of Suit in Respect of Contracts for the Goods by

Sea (1991) ........................................................................................................................................... 22

Mary Harper, Danger zone: Chasing West Africa’s pirates, BBC NEWS (Nov. 13, 2014) ................... 20

The ungoverned seas: The waters around Somalia are calmer, but piracy in west Africa is rising, THE

ECONOMIST (Nov. 29 2014) ............................................................................................................... 20

The United Nations Institute for Training and Research, UNOSAT Global Report on Maritime Piracy-

A Geospatial Analysis 1995-2013 (2014) .......................................................................................... 20

Updated Revised West Africa High Risk Area and Voluntary Reporting Area, Ship Security Advisory

No. 31-14, Dec. 22 2014 .................................................................................................................... 20


1

STATEMENT OF FACTS

THE PARTIES, THE CHARTER PARTY AND THE BILL OF LADING

Less Dependable Traders Pte (the Defendants), a company incorporated in Singapore, entered into a

time charterparty (Shelltime-4) with Western Tankers Inc. (the Claimants), incorporated in the BVI.

Western Dawn (Vessel) was chartered to carry the oil cargo (comprising 30,000MT JET A1 and

72,199MT GO) from Singapore to OPL Luanda with redelivery at Med. The Master was Captain

Stelios Smith. The Bill of Lading named LDTP as both the consignor/shipper and the carrier and

Angola Energy Imports as the Consignee.

THE PROVISION OF BUNKERS

According to C/P and Voyage Order, the Vessel was to depart for the trip fully bunkered requiring

1500MT FO apart from the 490 MT FO ROB. LDTP only provided 950MT FO in Singapore. Upon

the Master’s protest, Charterers dishonestly and repeatedly represented that remaining bunkers would

be provided en-route OPL Luanda. However, no bunkers were provided, causing shortage of FO

supply. Further, on June 28, ASA2 (Charterers’ ostensible agent) represented that 300MT FO would

be made available at the Alternative Discharge Location (ADL). This obligation too was not

discharged.

THE SAFETY EQUIPMENT

Exercising due-diligence, Owners arranged for the CSO to review safety requirements of Vessel.

Consequently, safety equipment was made available at Durban, though “not received” by Vessel.

Notwithstanding this and despite speed decreasing due to inadequate bunkers, the Master ensured that

Vessel did “best to comply with BMP4.”

THE ALTERNATIVE DISCHARGE LOCATION

As per Master’s information, the coordinates of STS location / “OPL Area 1” were 900S and

1130E. On June 28, Captain William Anya from ASA2, sent an email to the Master changing the

coordinates to 600S and 810E, in breach of C/P and without authorisation of Owners. It was


2

mentioned that STS Operations were to be conducted by Vessel Antelope. Upon the Master seeking

confirmation from Charterers with regard to these instructions, Charterers replied “continue to liaise

with your STS coordinator.”

THE NON-PAYMENT OF HIRE AND SUBSEQUENT OFF-HIRE

On July 03, Owners sent a notice of default to Charterers who had not paid hire by COB, London that

day. Hire was therefore due to Owners. Charterers did not respond to this notice. Further on July 04,

Charterers intimated the Master that Vessel had gone off-hire due to “no contact with the

receiver/chrtr,” a ground not mentioned in C/P.

PIRACY AND CARGO THEFT

Following instructions of ASA2 and thus, upon reaching ADL, Vessel went missing. She faced pirate

attack and cargo diversion from July 04 to 17. Consequently, 28190MT GO was discharged, Vessel

suffered serious material damage and certain crew members experienced casualties. As a result, Vessel

failed to meet her discharge target date and was unable to discharge full cargo in accordance with B/L.

THE CLAIMS

Owners commenced arbitration proceedings in London on November 01 2014 claiming the following:

Hire, as due and owing under C/P, or alternatively damages for Charterers’ failure to pay the

same.

Loss and Damages arising out of the Tort of Fraud committed by Charterers who had no

intention of supplying bunkers either at Durban or at STS Area 1.


3

ARGUMENTS ADVANCED

I. THE TRIBUNAL HAS JURISDICTION TO HEAR THE PRESENT DISPUTE

1. The Tribunal has the power to rule on its jurisdiction as provided for by S. 30(1) of the U.K.’s

Arbitration Act, 1996.

2. There exists a valid and binding arbitration agreement between the parties under which they agreed

to bring all disputes arising out of the agreement under the jurisdiction of this Tribunal.

3. Owners submit that the arbitration agreement was made binding on the parties by the Fully Fixed

Recap [A] which clearly and without ambiguity gives jurisdiction to this Tribunal [B]. Further, the

pre-contractual negotiations of Charterers do not overrule contents of the arbitration clause in the

present case [C]. Finally, the jurisdiction of this Tribunal ought not to be vacated in favour of

Singapore [D].

A. THE FULLY FIXED RECAP WHICH INCORPORATES C/P WAS INTENDED TO BE BINDING ON

THE PARTIES

4. The Fully Fixed Recap is binding on parties as is evidenced by use of the terms “fully fixed”1 and

the lifting of subjects by Charterers.2 It is a common practice to use these terms to indicate that the

negotiations have ceased and the parties have reached an agreement.3

5. Charterers had lifted their management subjects implying they had been given the necessary

approval to make the fixture binding.4 No other subjects were mentioned in the correspondence,

which suggests that all subjects had been lifted. Therefore, Charterers are bound by the Recap-

terms which they unequivocally agreed to by their conduct.

1 Moot Scenario, Page 5, Fully Fixed Recap, Email dated May 26 2014 17:09 (UTC+1).

2 Procedural Order No. 2, ¶20.

3 Terence Coghlin et al, TIME CHARTERS, 29, ¶1.35 (6

th edn., 2008): “It is common to find that parties indicate that a

binding agreement has been reached by saying the ship is fully fixed or that all subs are lifted.”; U.S. Titan, Inc. v. Zhi

Guangzhou Zhen Hua Shipping Co. Ltd., 241 F.3d 135, 147; Norman J. Lopez and J. Bes, BES’ CHARTERING AND SHIPPING

TERMS, 66 (11th

edn., 1992) defines fixture in the following terms: “ ‘Fixture’ is the word that indicates the contract has

been made and the negotiations to charter the ship have been concluded.” 4 Procedural Order No. 2, ¶20.


4

B. THE ARBITRATION AGREEMENT CLEARLY AND WITHOUT AMBIGUITY GIVES JURISDICTION

TO THIS TRIBUNAL

6. The Fully Fixed Recap incorporated the Shelltime-4 C/P.5 Cl 46(c) of C/P clearly states that “All

disputes arising out of this charter shall be referred to Arbitration in London in accordance with the

Arbitration Act 1996.”6 Thus, it is evident that London was chosen as the seat of arbitration.

Moreover, the substantive law and the law of the Arbitration Agreement being English law, is a

strong indication that the parties intended for the seat to be London.7

7. Further, the parties had several opportunities to make and they did in fact make several

amendments to C/P but they did not delete or amend the arbitration clause. The mere fact that the

Law & Litigation section was left blank does not mean that there exists any ambiguity with regard

to the arbitration agreement. This is because an ambiguity does not arise just because one of the

parties later disagrees over the interpretation of a provision,8 as Charterers currently are doing.

C. THE PRE-CONTRACTUAL NEGOTIATIONS DO NOT OVERRULE ARBITRATION CLAUSE

CONTAINED IN C/P

8. It has been contended by Charterers that according to the “contemporaneous correspondence”9

between them and the common broker, the intention of the parties was not to have a London-seated

arbitration. This correspondence had occurred before the final contract had been concluded by the

Fully Fixed Recap sent out by the Broker and hence was a pre-contractual negotiation.10

5 Moot Scenario, Page 5, Fully Fixed Recap, Email dated May 26 2014 17:09 (UTC+1).

6 C/P, Cl 46(b), Lines 777-778.

7 Sulamerica v. Enesa Engenharia, [2012] EWCA Civ 638 stated that the seat would be determined according to the law of

the arbitration agreement. 8 Ryan v. American Natural Energy Corp, 557 F.3d 1152 (10th Cir. 2009); Otis Elevator Co. v. Midland Red Oak Realty

Inc., 483 F.3d 1095, 1101 (10th Cir. 2007); Richard A. Rosen, SETTLEMENT AGREEMENTS IN COMMERCIAL DISPUTES:

NEGOTIATING, DRAFTING & ENFORCEMENT, 17-15 (2014). 9 Moot Scenario, Page 66, Statement of Defence, ¶3.a.

10 Moot Scenario, Page 2, Charterer’s Correspondence, May 23 2014 12:30 (UTC+8).


5

9. Pre-contractual negotiations do not always reflect the true intention of the parties as the parties’

positions keep evolving till the final contract is drawn.11

It is submitted that here the pre-

contractual negotiation between Broker and Charterers in which the latter state that they are “not

too keen”12

on a London-seated arbitration, was an isolated incident, which is not sufficient to

overrule the contractual agreement between the parties.

10. Pre-contractual negotiations are helpful in evincing parties’ intentions when an ambiguity is

present in the contract, leading to a doubt as to the true intention of the parties. 13

In case of the

absence of any ambiguities in the contract, a strict interpretation of contract is to be preferred.14

11. It is Owners’ contention that no such ambiguity was present. The source of the alleged ambiguity

seems to be the space beside Law & Litigation section being left blank. However, this in itself

cannot amount to an ambiguity, especially in the light of the other contents of the contract. First,

there is no proof to show that the space beside the Law & Litigation section has been left blank

deliberately or that leaving it blank amounts to a lack of agreement with regard to arbitration. This

is because “Charterers lifted [their] management subjects,” were “pleased to include fully fixed

recap” and there was no mention of subjects with regard to arbitration clause.15

Further, the

arbitration clause has not been deleted as has been done for several other lines in C/P.16

12. In any case, the subsequent conduct of the parties is another indication that Charterers’ true

intention was not against having a London-seated arbitration. There is no evidence to show that

Charterers disagreed with the contents of the arbitration clause post the formation of the final

contract. Additionally, there is no record of any communication made subsequent to the Fully

11

Prenn v. Simmonds, [1971] W.L.R. 526; Chartbrook and Anr v. Persimmon Homes Ltd and Others, [2009] UKHL 38;

Stena Line Ltd v. Merchant Navy Ratings Pension Fund Trustees Ltd, [2010] EWHC 1805; Kim Lewison, THE

INTERPRETATION OF CONTRACTS, 37, ¶2.05 (2nd

edn., 1997). 12

Moot Scenario, Page 2, Charterer’s Correspondence, May 23 2014 12:30 (UTC+8). 13

Investors Compensation Scheme Ltd v. West Bromwich, [1997] UKHL 28. 14

Lewison supra note 11, at 3, ¶1.02; USG Interiors Inc v. Commercial and Architectural Products Inc, 609 N.E.2d 811

(1993); Reardon Smith Line v. Hansen-Tangen, [1976] 1 W.L.R. 989; St. Pierre v. Chriscan Enterprises Ltd, 2011 BCCA

97. 15

Procedural Order No. 2, ¶20. 16

Moot Scenario, Page 5, Fully Fixed Recap, Email dated May 26 2014 17:09 (UTC+1).


6

Fixed Recap showing a disagreement with regard to the arbitration clause. Hence, it is reasonable

to assume that it was not their intention to change London as the selected seat of arbitration.

13. In any case, the pre-contractual negotiations and the blank Law & Litigation section would only

prove that the negotiations with regard to the arbitration clause may have been continuing.

However, such continuing negotiations would not affect the validity or binding nature of the Fully

Fixed Recap as they are not a ‘condition subsequent’ to C/P.17

Only if the parties had reached a

conclusion as to these negotiations would the Fixture Recap be altered which is not the case here.

Therefore, the arbitration clause as stated in C/P will prevail.

D. THE JURISDICTION OF THIS TRIBUNAL OUGHT NOT TO BE VACATED IN FAVOUR OF

SINGAPORE

14. Even if the Tribunal rules in favour of an ambiguity in the Fully Fixed Recap and looks to

Charterers’ pre-contractual negotiations to resolve the said ambiguity, it is submitted that the

Tribunal’s jurisdiction ought not to be vacated in favour of Singapore.

15. Arbitration is a creature of consent and hence, should only occur at a mutually decided seat.18

Therefore, the seat cannot be changed on a unilateral suggestion by Charterers on a concluded

contract19

which unambiguously stated London to be the seat of arbitration.

16. Charterers may argue that according to the doctrine of forum non conveniens, Singapore-seated

arbitration would have been better-suited. However, to succeed in such a motion, exceptional

circumstances have to be proved by showing that a better forum exists in another seat and the

balance of interest would lie in favour of dismissal of the dispute from the present forum.20

This is

not the case presently, as Owners have their principal place of business in BVI, a British territory;

Vessel has also been registered in BVI and sails under the BVI flag apart from having a Master

17

Great Circle Lines Ltd. v. Matheson & Co. Ltd., 681 F.2d 121; Russell on Arbitration, 32, ¶2-007 (21st edn., 1997).

18 Gary Born, INTERNATIONAL ARBITRATION AND FORUM SELECTION AGREEMENTS: DRAFTING AND ENFORCING, 29

(4th

edn., 2013). 19

Great Circle Lines Ltd. v. Matheson & Co. Ltd., 681 F.2d 121; Coghlin supra note 3, at 38, ¶1.77. 20

Spiliada Maritime Corp v. Cansulex Ltd [1987] AC 460; Dole Food Co. v. Watts, 303 F.3d, 1104, 1118-1120 (9th

Cir.

2002).


7

who is also from the United Kingdom.21

In addition, the lex causae of the dispute, a very important

factor in deciding whether the doctrine can be applied, is also English.22

Singapore, on the other

hand, only has ties with Charterers who are based there.23

Therefore, as per forum non conveniens,

such a motion would not be satisfied as balance of favour lies with London which has the closest

and most real connection24

with the dispute. This is also in accordance with the expressed intention

of the parties. Thus, this Tribunal is an adequate forum and has jurisdiction over the present

dispute.

II. THE TORT OF FRAUD IS ADMISSIBLE BEFORE THIS TRIBUNAL

17. Charterers committed the Tort of Fraud when they made false representations of providing bunkers

and as a consequence, caused damage to Owners.25

Charterers contend that the Tort of Fraud is not

admissible for arbitration under C/P. However, it is submitted that the term “disputes arising out of

the charter” is to be interpreted broadly [A] and was intended to include the Tort of Fraud [B].

A. THE TERM “DISPUTES ARISING OUT OF THIS CHARTER” IS TO BE GIVEN A BROAD

INTERPRETATION

18. It has been held conclusively that the term “disputes arising out of this charter” is to be given a

broad interpretation and would include non-contractual claims like torts.26

In several jurisdictions it

has been held that a pro-arbitration stance has to be extended to common law claims of tort as

well.27

In addition, a liberal approach would be taken in favour of arbitration, thus conferring full

21

Moot Scenario, Page 47; Moot Scenario, Page 5, Fully Fixed Recap, Email dated May 26 2014, 17:09 (UTC+1); Moot

Scenario, Page 51. 22

C/P, Cl 4; Spiliada Maritime Corp v. Cansulex Ltd, [1987] AC 460. 23

Procedural Order No. 2, Dramatis Personae. 24

Sulamerica v. Enesa Engenharia, [2012] EWCA Civ 638; Abuja International Hotels Ltd. v. Meridien Sas, [2012]

EWHC 87 (Comm). 25

Refer to Issue IV in this Memorandum. 26

Gary Born, INTERNATIONAL COMMERCIAL ARBITRATION: COMMENTARY AND MATERIALS, 320 (2nd

edn., 2001); Empresa

Exportadora de Azuca v. Industria Azucera Nacional SA (‘The Playa Larga’), [1983] 2 Lloyd's Rep.171; Aggeliki Charis

Compania Maritima SA v. Pagnan SpA (‘The Angelic Grace’), [1995] 1 Lloyd's Rep 87. 27

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985); Born supra note 26, at 317.


8

jurisdiction to Arbitral Tribunals28

which are better-suited to commercial contracts as they provide

greater efficiency and convenience than courts.29

19. According to the well-established significant relationship test, if the party, in order to prove the

dispute or claim being made, places reliance on the terms of the contract which contains the

arbitration clause, then such claim or dispute can be submitted to arbitration.30

Thus, if a tortious

claim is arising out of the contractual obligations of the parties, then such tortious claims, due to

their significant relation with the contract, would be admissible for arbitration even if the

arbitration agreement does not specifically address them.31

20. In the instant case, the Tort of Fraud stems from Charterers’ breach of the promise to supply

bunkers. Since this obligation was imposed by C/P,32

the claim of tort arises out of C/P. The

tortious claim would not have arisen had the terms of C/P been honoured by Charterers and hence,

Tort of Fraud would fall within the scope of the arbitration agreement.33

B. THE PARTIES INTENDED TO INCLUDE THE TORT OF FRAUD IN THE ARBITRATION

PROCEEDINGS BEFORE THE TRIBUNAL

21. The facts of the instant case bear similarities to Fiona Trust v. Privalov,34

where it was held that in

commercial contracts, it is to be assumed that if the parties wish to exclude a certain kind of claim,

they would explicitly mention so or else it would be assumed that they intended to make such

claims subject to arbitration. Nothing contained in C/P, Fully Fixed Recap, Voyage Order or any

correspondence between the parties seems to suggest that it was the intention of the parties to not

include the Tort of Fraud in the arbitration proceedings.

28

Born supra note 26, at 304, 305. 29

Alan Redfern, LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION, 22-23, ¶1.41-1.44 (4th

edn., 2005). 30

Kaverit Steel & Crane Ltd v. Kone Corp., XIX Y.B. Comm. Arb. 643, 648 (Alberta Ct. App. 1992) (1994); Helen Griggs

v. Luke Evans et al., Court of Special Appeals of Maryland, No. 2596 (Md. App. May 2, 2012). 31

David Bennett and Bennett & Bennett Construction, Inc.v. Barbara Skinner and Leotes Skinner, 2012 WL 2161641 (Ala.

June 15, 2012). 32

C/P, Cl 7(a), Cl 15. 33

Gregory v. Electro Mechanical Corp., 83 F.3d 382 (11th Cir. 1996). 34

Fiona Trust and Holding Corp v. Yuri Pavalov and Ors., [2007] UKHL 40.

http://www.kluwerarbitration.com/CommonUI/document.aspx?id=KLI-KA-Born-2014-Ch09#184


9

22. Further, in determining the scope of arbitration agreements, it is assumed that reasonable and

especially commercially-minded parties would intend to adjudicate all claims arising from a

dispute in one forum for the sake of efficiency and convenience.35

Since all other disputes of the

parties arising out of C/P are being heard before this Tribunal, it is reasonable to assume that the

parties would intend to include the Tort of Fraud as well, unless stated otherwise.

III. ASA2 IS THE AGENT OF CHARTERERS

23. ASA2 directed Owners to ADL for conducting STS on the false representation of supplying

bunkers. Owners submit that ASA2 is an agent of Charterers. Hence, Charterers are liable for the

acts of ASA2. This is submitted on two grounds. First, Charterers are responsible for ASA2’s

actions under the Doctrine of Apparent/Ostensible Authority [A]. Second, Charterers are prevented

from denying this responsibility by virtue of the Doctrine of Estoppel by Negligence [B].

A. CHARTERERS ARE RESPONSIBLE UNDER THE DOCTRINE OF APPARENT AUTHORITY

24. Under the Doctrine of Apparent Agency, “where a person represents, by words or conduct, that

another is his agent, he will not be permitted to deny the agency of that person with respect to

anyone dealing, on the faith of such representation, even if the relationship of principal and agent

does not exist.”36

Owners submit that in the instant case, all the pre-requisites37

of an apparent

agency are satisfied as Charterers represented ASA2 as their agent (i). Further, Owners relied on

this representation (ii) and consequently, Owners suffered detriment due to their reliance (iii).

35

Fiona Trust and Holding Corp v. Yuri Pavalov and Ors., [2007] UKHL 40; Russell supra note 17, at 34, ¶2-011. 36

Bowstead and Reynolds on Agency, 86, ¶2-099 (17th

edn., 2001); ING Re (UK) Ltd v. R & V Versicherung AG, [2006]

EWHC 1544 (Comm). 37

Rama Corporation Ltd v. Proved Tin and General Investments Ltd., [1952] 2 Q.B. 147; Freeman and Lockyer v.

Buckhurst Park Properties Ltd, [1964] 2 QB 480.


10

i. Charterers represented ASA2 as their agent

25. It is a well-settled principle that the representation which creates apparent authority may be very

general.38

It is thus submitted that Charterers’ representation to Owners is sufficient to create

ASA2’s apparent authority.

26. Admittedly, there is no known relationship between ASA (Charterers’ Discharge Port Agent)39

and

Vessel Antelope which ASA2 purports to control.40

However, when Owners referred to Antelope

and “bunkers on arrival supply” in their email,41

Charterers paid no attention and responded

“(P)lease continue to liaise with your STS coordinator.”42

It may be contended by Charterers that

such oversight on their part cannot amount to representation as to the authority of ASA2. However,

if ASA2 was not their agent and neither Charterers nor their actual agent (ASA) had issued any

direction, Charterers ought to have enquired as to who directed Vessel to proceed to the new co-

ordinates i.e., “new OPL discharge” and sanctioned “300MT IFO bunkers.”43

Further, both

Charterers and ASA failed to contact the Master at any point after that. Thus, Charterers’

negligence44

clothed ASA2 with an appearance of being their agent.45

27. ASA2’s assurance of bunker-supply was a promise that had been made by Charterers on several

occasions and was yet to be fulfilled. These circumstances, together with the careless conduct and

inaction46

on Charterers’ part to follow-up on the discrepancy led Owners to reasonably47

construe

that ASA2 was the agent of Charterers.

38

Bowstead supra note 36, at 315, ¶8-029; ING Re (UK) Ltd v. R & V Versicherung AG, [2006] EWHC 1544 (Comm). 39

Procedural Order No. 2, Dramatis Personae. 40

Procedural Order No. 2, ¶13. 41

Moot Scenario, Page 38, V/C dated July 03 2014 16:28 (UTC+1). 42


Id. 44

Gurtner v. Beaton, [1993] 2 Lloyd’s Rep 369. 45

Lloyd v. Grace Smith & Co., [1912] A.C. 716; Armagas Ltd v. Mundogas Ltd (‘The Ocean Frost’), [1986] AC 717. 46

Bowstead supra note 36, at 317, ¶8-030; The Stolt Royalty [1993] 2 Lloyd’s Rep. 281. 47

Egyptian International Foreign Trade Co v. Soplex Wholesale Supplies Ltd, 1985 WL 310866.


11

ii. Owners relied on Charterer’s representation that ASA2 is their agent

28. Owners, relying on representation made by Charterers, followed instructions given by ASA2 and

directed Vessel to “new OPL,” (ADL)48

thus, meeting the requirement that the third party

(Owners) should have relied on the representation of the principal.49

iii. Owners suffered detriment due to their reliance

29. The third pre-requisite for proving apparent agency is the alteration of position by the third party

(Owners)50

to its detriment.51

This condition is satisfied as Owners suffered damage as a

consequence of relying on Charterers’ representation directing Vessel to proceed to ADL.52

It was

at ADL that Vessel faced pirate-attack, thereby causing huge loss to her, the cargo and injury to the

crew.53

Hence, based on such reliance, Owners’ position was altered to their detriment.

B. CHARTERERS ARE BOUND BY THE DOCTRINE OF ESTOPPEL BY NEGLIGENCE

30. Owners submit that inability on the part of Charterers to recognise the name of Vessel Antelope,

which ASA2 purports to control, amounts to negligence and therefore they are bound under the

common law Doctrine of Estoppel by Negligence.54

Charterers are bound by this doctrine as their

negligence amounted to a breach of the duty of care that they owed to Owners (i)55

and their

negligent conduct was the proximate cause of the loss (ii).

i. Charterers’ negligence amounted to a breach of their duty of care

31. A duty of care arises only when the parties are put in such a position that each of them can be

expected to rely on the exercise of care by the other.56

Here, Charterers are in such a position by

48


Freeman and Lockyer v. Buckhurst Park Properties Ltd, [1964] 2 QB 480. 50

Freeman and Lockyer v. Buckhurst Park Properties Ltd, [1964] 2 QB 480; Rama Corporation Ltd v. Proved Tin and

General Investments Ltd, [1952] 2 QB 147. 51

George Whitechurch Ltd. v. Cavanagh, [1902] A.C. 117. 52

Moot Scenario, Page 64, Statement of Claim, ¶20-21; Moot Scenario, Page 35, V/C dated June 28 2014 19:50 (UTC+2);



Moorgate Mercantile Co Ltd v. Twitchings, [1977] AC 890; Freeman v. Cooke, (1848) 2 Exch. 654, 657, per Parke B. 55

Wilson and Meeson v. Pickering, [1946] 1 K.B. 422; R. E. Jones Ltd. v. Waring & Gillow Ltd., (1863) 2 H. & C. 175. 56

Mercantile Credit Co Ltd v. Hamblin, [1965] 2 QB 242.


12

virtue of being in a contractual relationship with Owners.57

Therefore it is submitted that

Charterers’ breached this duty when they negligently represented ASA2 as their agent.58

ii. Charterers negligent conduct was the proximate cause of the loss

32. It is a well-settled rule that there cannot be an estoppel unless it is a proximate cause,59

which is the

most effective among all the competing causes for the loss.60

Here, Charterers’ negligence is the

proximate cause of the loss which was caused to Owners by the actions of ASA2. The test in

relation to negligence and its effect is foreseeability61

which is fulfilled in the present case. Had

Charterers not represented ASA2 as their agent through their negligent conduct, ASA2 would not

have been able to perpetrate the fraud, thus rendering their negligence as the proximate cause.

33. Hence, Charterers cannot deny that ASA2 is their agent as they are bound both under the Doctrine

of Apparent Agency and Estoppel by Negligence. Further, it was their negligence that effectively

led Vessel to ADL where pirate-attack occurred.

IV. TORT OF FRAUD WAS COMMITTED BY DEFENDANT

34. As per C/P, Charterers are obliged to provide and pay for all required bunkers for Vessel at the

Port of Loading.62

Pursuant to this, they made promises to Owners to fulfil this obligation on

several occasions which, however, was not discharged. It is thus submitted that Defendants

committed the Tort of Fraud63

for which Owners should be compensated. First, Charterers and/or

their agents made false representations, intending for Owners to rely on them [A]. Second,

Charterers had no genuine belief in the truth of their representation [B]. Third, Owners relied on

such representation and suffered damages as a consequence [C].

57

Mercantile Credit Co Ltd v. Hamblin, [1965] 2 QB 242; Moot Scenario, Page 5, Fully Fixed Recap, Email dated May 26

2014 17:09 (UTC+1). 58

Refer to Issue III.A. in this Memorandum. 59

Wilson and Meeson v. Pickering, [1946] 1 K.B. 422. 60

Mercantile Credit Co Ltd v. Hamblin, [1965] 2 QB 242. 61

Id. 62

C/P, Cl 7(a) & Cl 15; Moot Scenario, Page 5, Fully Fixed Recap, Email dated May 26 2014 17:09 (UTC+1); Moot

Scenario, Page 14, Voyage Order. 63

Derry v. Peek, (1889) 14 App Cas 337.


13

A. CHARTERERS INTENDED OWNERS TO RELY ON THEIR FALSE REPRESENTATION

35. Owners instructed Charterers to provide 1500MT FO at Singapore64

which was disregarded by

Charterers who only made 950MT FO available, an amount which was insufficient for completing

the journey as evidenced by the protest of the Master.65

Charterers acknowledged this and

reassured Owners on several occasions that the remaining bunkers (550 MT FO) would be supplied

during the course of the voyage.66

First, Charterers assured them that bunkers would be made

available at Durban and then, upon the non-realisation of this promise, at STS Area 1.67

Later,

ASA2, Charterers’ agent,68

instructed Vessel to move to ADL where they were to receive 300MT

FO,69

an amount that would still not have sufficed. Yet again, no such supply was made.70

Further

it was reasonable that Owners would rely upon such representations as they were made by

Charterers in pursuance of their contractual obligations.71

B. CHARTERERS HAD NO GENUINE BELIEF IN THE TRUTH OF THEIR REPRESENTATION

36. It is submitted that Charterers from the very beginning had no intention of providing the entire

amount of 1500MT FO. Charterers agreed to the credit line of US$ 650,000 which at the rate of

US$ 630.2572

is sufficient to buy only 1031MT FO, falling far short of the required 1500MT FO.73

Moreover, Charterers placed an order of only 990MT FO which was further reduced to 950MT

FO, an amount which was deficient by 550MT FO.74

This proves that Charterers had never

intended to buy the requisite 1500MT FO.

64

Moot Scenario, Page 21, V/C dated May 27 2014 12:27 (UTC+8). 65

Moot Scenario, Page 25, V/C dated June 03 2014 12:17 (UTC+8). 66

Moot Scenario, Page 26, V/C dated June 03 2014 17:21 (UTC+8); Moot Scenario, Page 33, V/C dated June 28 2014

16:27 (UTC+8); Moot Scenario, Page 35, V/C dated June 28 2014 18:02 (UTC+1). 67

Moot Scenario, Page 26, V/C dated June 03 2014 17:21 (UTC+8); Moot Scenario, Page 34, V/C dated June 28 2014

18:43 (UTC+8); Moot Scenario, Page 33, V/C dated June 28 2014 16:27 (UTC+8). 68

Refer to Issue III in this Memorandum. 69



C/P, Cl 7(a), Line 160. 72

Moot Scenario, Page 21, V/C dated May 27 2014 14:10 (UTC+8); Moot Scenario, Page 22, V/C dated May 28 2014

09:17 (UTC+8); Moot Scenario, Page 23, V/C dated May 28 2014 10:10 (UTC+8). 73

Refer to Annexure B, ¶1 in this Memorandum. 74

Moot Scenario, Page 22, V/C dated May 28 2014 09:17 (UTC+8); Moot Scenario, Page 24, V/C dated May 13 2014

15:27 (UTC+8).


14

37. Charterers may justify this insufficient credit line by stating that they would have taken the credit

for the remaining bunkers at a later date. However, there is no evidence to show any request by

them for further credit once Vessel was near Durban or about them intimating Master about such

availability of the bunkers. Further, no valid grounds have been provided for non-supply of

bunkers at Durban.

38. Additionally, instead of providing bunkers at OPL Luanda after the failure to do so in Durban,

Charterers’ negligence allowed ASA275

to lead Vessel astray to ADL.76

However, bunkers were

not provided at ADL either. On the contrary, Charterers declared Vessel as being off-hire.77

Hence,

it is submitted that the above mentioned incidents are a clear manifestation of Charterers’ belief in

the falsity of their representations.

C. THE OWNERS RELIED ON SUCH REPRESENTATION AND SUFFERED DAMAGES

39. Owners suffered damages as a result of the reliance placed on the false representations made by

Charterers. Relying on the repeated assurances made by Charterers, Master continued the voyage

without the requisite amount of bunkers thus forcing Vessel to move at an economical speed of

11.9 knots instead of 14-13 knots as contractually agreed upon.78

Such reduction in speed hindered

Master from deploying “high-speed” BMP4 measure79

near ADL, facilitating pirate-attack, damage

to Vessel and injury to Crew.80

40. Further, under the instructions of ASA2,81

which were later confirmed by Charterers,82

Vessel was

directed to proceed to ADL where the remaining bunker supply was promised. However, upon

75




Moot Scenario, Page 36, V/C dated June 29 2014 12:29 (UTC+1); Moot Scenario, Page 6, Fully Fixed Recap, Email

dated May 26 2014, 17:09 (UTC +1). 79

Refer to Issue VI in this Memorandum. 80

Moot Scenario, Page 28, V/C dated June 03 2014 20:02 (UTC+8): “Please note master and owners will not be

responsible for time, deviation, cost, additional fuel needed to bunker on laden passage”; Moot Scenario, Page 32, V/C

dated June 25 2014 11:02 (UTC+3): “Master/Owners not responsible this change in speed and for any delays caused by

charterers not supplying fuel in good time”. 81


Moot Scenario, Page 40, V/C dated July 04 2014, 09:52 (UTC+8).


15

reaching ADL, neither Charterers nor their agents were present to supply bunkers or conduct STS

operations.83

It was here that Vessel faced pirate-attack causing injury to Crew, loss of cargo and

damage to Vessel and her equipment.84

V. CHARTERERS BREACHED C/P DUE TO NON-PAYMENT OF HIRE DUE

41. It is a well-settled rule that Charterers’ most basic obligation under a time charter is to make “full

and punctual payment of hire.”85

It is submitted that by not paying hire, which was due on July 03

2014, Charterers breached their duty contained in Cl 9, C/P [A]. Further, they cannot rely on

Vessel being off-hire or C/P being allegedly terminated as grounds for not paying hire due and

owing [B].

A. CHARTERERS BREACHED CL 9, C/P

42. Charterers breached Cl 9, C/P by not paying hire by COB London on July 03 2014.86

They may

contend that if on the due-date Vessel was off-hire, they are not obliged to pay hire.87

However,

this rule is inapplicable in the instant case as even if Vessel went off-hire, it was only so on July 04

2014 while the due-date was a day earlier. Moreover, while the presence of an anti-technicality

clause under Cl 9(a), C/P gives a grace period88

of “three banking days,” Owners submit that the

extended date cannot be treated as the due-date. This is because anti-technicality clause can only be

relied upon as an exception89

to excuse Charterers’ minor delays and not intentional omissions to

pay. Here, Charterers did not intend to pay the amount due which is evidenced by the lack of

response to the notice of non-payment given by Owners on the due-date.90

Thus, Cl 9, C/P was

breached and hire is due and owing.

83



Coghlin supra note 3, at 29, ¶I.45. 86


Tradax Export SA v. Dorada Compania Niveria SA (‘The Lutetian’), [1982] 2 Llyod’s Rep. 140 as cited in Coghlin

supra note 3, at 282, ¶16.2. 88

Coghlin supra note 3, at 29, ¶16.91. 89

Coghlin supra note 3, at 29, ¶16.89, 16.91. 90

Moot Scenario, Page 39, V/C dated July 03 2014 18:01 (UTC+1).


16

B. THERE EXIST NO VALID GROUNDS FOR NOT PAYING HIRE DUE AND OWING

43. It is submitted that the alleged frustration of C/P under Cl 20, is not a valid ground for not paying

hire as, if at all frustration occurred, it was only at noon on July 04 when Vessel went missing.91

Therefore, Vessel was on hire at all times on July 03 which was the due-date and thus, Charterers

had no valid ground for non-payment of hire.

44. In any event, it is submitted that as Vessel went missing due to pirate-attack, as per sub-clauses (e)

& (f) of BIMCO Piracy Clause92

in C/P, Vessel will remain on hire throughout such seizure. Thus

it follows that C/P was not terminated.

45. Further, it is submitted that there existed no valid grounds for Charterers to go off-hire. “No

contact with receiver/chartr,” as alleged by Charterers in the correspondence declaring Vessel off-

hire, is an extra-contractual ground that does not find mention in C/P. Even if this was to be taken

as a valid ground, first “no contact” cannot be alleged as Master was in fact in constant touch with

Charterers’ agents, i.e., ASA2, with whom he was advised to “continue to liaise” by Charterers

themselves.93

Second, even if assuming but not conceding the existence of “no contact,” the same

happened only due to Charterers’ negligence.94

It is a well-established principle that in such

circumstances “charterers are not entitled to treat the ship as off-hire.”95

46. Further, as subsequently submitted, the Master was competent96

and there was no “breach of orders

and/or neglect of duty on the part of the Master,” rendering this too as an invalid ground for off-

hire. Hence, Owners claim hire which is due and owing under C/P.

91


Moot Scenario, Page 11, BIMCO Piracy Clause, sub clause (e) and (f). 93

Moot Scenario, Page 40 , V/C dated July 04 2014 09:52 (UTC+8). 94

Refer to Issue III.B. in this Memorandum. 95

Board of Trade v. Temberly, [1927] 27 Ll.L.Rep. 230, as cited in Coghlin supra note 3, at 29, ¶25.45. 96

Refer to Issue VI.B. in this Memorandum.


17

VI. OWNERS ARE NOT LIABLE FOR ANY LOSS ARISING FROM VESSEL ALLEGEDLY

BEING NOT “FIT FOR SERVICE”

47. In response to Charterers’ Counterclaim that Owners provided a Vessel “not fit for service,”97

it is

submitted that the HVR98

have been incorporated into C/P by Cl 38 [A]. Consequently, Owners’

absolute obligation under Cl 1(c), C/P to provide, at the date of delivery,99

a Vessel that is “in

every way fit for the service” is reduced to an undertaking to exercise due-diligence towards that

end.100

Owners have not breached C/P as such due-diligence was exercised to provide a vessel fit

for the service [B]. In any event, Owners rely on exceptions under Art.4(2)(c) & (f) of HVR and/or

Cl 27 of C/P and thus, must not be held liable [C].

A. THE HVR HAVE BEEN INCORPORATED INTO C/P

48. It is submitted that HVR have been incorporated into C/P as evidenced by the intention of the

parties. In the present case, such intention is adequately expressed as the Paramount Clause101

has

been included in C/P, thereby seeking to govern Owners and Charterers (the parties to C/P) rather

than just the parties to B/L (where Owner is neither Shipper nor Carrier). Only such a construction

would give true effect to the Paramount Clause. The Saxon Star102

upheld such intention by reading

the words “this Bill of Lading” as “this charter-party” in the Paramount Clause. Thus, HVR applies

to C/P and binds the parties.

97

Moot Scenario, Page 69, Statement of Defence, ¶20. 98

The International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (Hague-Visby

Rules, 1968). 99

Coghlin supra note 3, at 810, 812, 816, 820, ¶38.5, 38.11, 38.12, 38.18, 38.24; International Fina Services AG v. Katrina

Shipping Ltd (‘The Fina Samco’), [1994] 1 Lloyd’s Rep. 153; Simon Gault, Charterparty-Construction of Clause 3(ii) of

Shelltime 4, 2(8) INTERNATIONAL MARITIME LAW 196, 197 (1995); Paul Todd, MARITIME FRAUD AND PIRACY (2nd

edn.,

2010); Simon Baughen, SHIPPING LAW (4th

edn., 2009). 100

Halsbury’s Laws of England, ¶371, 376, 464, Vol. 7 (5th

edn., 2008); Coghlin, supra note 3, at 880, ¶38.143; Adamastos

Shipping Co Ltd v. Anglo Saxon Petroleum Co Ltd (‘The Saxon Star’), [1958] 1 Lloyd’s Rep. 73, Eridania SpA v. Oetker

(‘The Fjord Wind’), [1999] 1 Lloyd’s Rep. 307; Chen Liang, Seaworthiness in Charter Parties, JOURNAL OF BUSINESS

LAW 1, 15 (2000). 101

C/P, Cl 38. 102

The Saxon Star, [1958] 1 Lloyd’s Rep. 73; See also, Aliakmon Maritime Corp v. Trans Ocean Continental Shipping

(‘The Aliakmon Progress’), [1978] 2 Lloyd’s Rep. 499.


18

49. Further, it is a settled principle that on such incorporation, all the provisions of HVR are to be

given effect only to the extent that they can be harmoniously constructed with C/P terms.103

As a

result of such incorporation, an express absolute obligation of seaworthiness upon Owners under

C/P is reduced to an undertaking to exercise due-diligence, as mentioned above.104

B. OWNERS PROVIDED A VESSEL “FIT FOR THE SERVICE”

50. “Fit for the service” implies that not only must Vessel be seaworthy105

but it must also be suitable

for the given voyage to be undertaken.106

Thus, Owners are required to exercise due-diligence to

ensure that Vessel is suitable to encounter the ordinary, foreseeable perils of the contemplated

voyage (i)107

and has a competent Master and Crew (ii).108

It is further submitted that piracy was

not a foreseeable peril in the area of Vessel’s discharge location (iii) and no amount of due-

diligence could have prevented the incident from occurring (iv).

i. Vessel was fit to encounter ordinary, foreseeable perils

51. Under Piracy Clause of C/P, the “safety and protection of…Vessel” is Owners’ obligation and “it

is for Owners to determine the level of threat and the measures considered appropriate to discharge

that obligation.”109

Owners are required to exercise due-diligence for which they must carry out

any inspections or other preparations which a skilled and prudent owner would carry out with

reasonable care and competence.110

103

Coghlin, supra note 3, at 705, 710, ¶34.5(3), 34.17; Actis Co. v. Sanko Steamship Co. (‘The Aquacharm’), [1982] 1

Lloyd’s Rep 7. 104

Supra note 100. 105

Hongkong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd (‘The Hongkong Fir’), [1961] 1 Lloyd's Rep. 159; Cheikh

Boutros Selim El-Khoury v. Ceylon Shipping Lines (‘The Madeleine’), [1967] 2 Lloyd’s Rep. 224; Alfred C Toepfer

v. Tossa Marine Co. Ltd. (‘The Derby’), [1985] 2 Lloyd's Rep. 325. 106

Halsbury supra note 100, ¶465; The Fjord Wind, [1999] 1 Lloyd’s Rep. 307; Empresa Cubana Importadora de

Alimentos Alimport v. Iasmos Shipping Co. SA (‘The Good Friend’), [1984] 2 Lloyd’s Rep 586; Ben Line Steamers Ltd. v.

Pacific Steam Navigation Co (‘The Benlawers’), [1989] 2 Lloyd's Rep. 51. 107

McFadden v. Blue Star Line, [1905] 1 K.B. 697; The Good Friend, [1984] 2 Lloyd’s Rep 586; Indira Carr,

INTERNATIONAL TRADE LAW, 208 (4th

edn., 2010); ASPECTS OF MARITIME LAW: CLAIMS UNDER BILLS OF LADING 72

(M.L.Hendriksen, H.N.Margetson and N.J. Margeston eds., 2008). 108

FC Bradley & Sons Ltd v. Federal Steam Navigation Co, (1926) 24 Ll. L. Rep. 446; The Hongkong Fir, [1961] 1

Lloyd's Rep. 159, Papera Traders Co Ltd v. Hyundai Merchant Marine Co Ltd (‘The Eurasian Dream No.1’), [2002] 1

Lloyd’s Rep. 719. 109

Moot Scenario, Page 9, Special Provisions to ST4 Proforma, Piracy Clause, Sub-Cl (6). 110

Union of India v. NV Reederij Amsterdam, [1963] 2 Lloyd's Rep. 223.


19

52. Here, these requirements are met as SIRE inspections were conducted as recently as April 29

2014111

(in satisfaction of Cl 1(m), C/P). Further, liaisoning was facilitated with Owners’ CSO

with arrangements to “plan and upgrade the systems and equipment” of Vessel for the intended

voyage.112

Even when supply of safety-items was delayed at Singapore, due diligence was

exercised to ensure that they were made available at Durban.113

This discharges the burden of

proving the exercise of due-diligence.

ii. Vessel had a competent Master

53. Charterers claim that Master was incompetent when he followed instructions other than those

given to Vessel by Charterer.114

Owners submit that Master was indeed competent when he

followed ASA2’s orders as they were Charterers’ agent115

and not a third party. Further, Charterers

claim that pursuant to Cl 12, C/P, Master was incompetent as he was to follow instructions given

only by Charterers and not their agents. It is however submitted that, in effect, Master did in fact

follow Charterers’ instructions who directed him to “continue to liaise with STS Coordinators

(ASA2).”116

By such conduct, Master also complied with Cl 2(b)(iii), C/P under which Owners

guarantee to “load and discharge cargo…when required by Charterers or their agents to do so”.

ii. Piracy was not a foreseeable peril in the area of Vessel’s discharge location

54. The requirement to exercise due-diligence extends to protect against only foreseeable hazards.117

It

is submitted that piracy off Angolan waters is not foreseeable. Owners could only be expected to

follow standard industry practice118

relating to WAF as was prevailing at the time of the incident

and not at the time of the trial.119

It was only post the occurrence of the current incident (in July

111

Moot Scenario, Page 59, ‘Vetting’: Intertanko’s Q88. 112

Moot Scenario, Page 22, 26, 27, V/C dated May 27 2014 16:59 (UTC+1), June 03 2014 16:59 (UTC+8), June 03 2014

17:51 (UTC+8); Procedural Order No. 2, ¶17. 113

Procedural Order No 2, ¶17. 114

Moot Scenario, Page 69, Statement of Defence, ¶20(a). 115



President of India v. West Coast Steamship Co. (‘The Portland Trader’), [1963]2 Lloyd's Rep. 278. 118

Kopitoff v. Wilson, (1876) 1 QBD 377. 119

FC Bradley & Sons Ltd v. Federal Steam Navigation Co, (1926) 24 Ll. L. Rep. 446; The Portland Trader, [1963] 2

Lloyd's Rep. 278.


20

2014)120

that the industry-level awareness and responses to the emerging threat of pirates off

Angolan waters began to credibly manifest.121

Prior to this, attacks in WAF were widespread in the

Gulf of Guinea region122

and not in the area of the Vessel’s discharge location. There was only one

reported attack in Angolan waters where too the IMB123

reported that “because pirates have never

attacked so far south, it is likely that vessels in the area are not aware of the danger.”124

Such an

attack was at best ‘sporadic’ and ‘abnormal’,125

rather than a foreseeable peril in the area. This

clearly establishes how Owners cannot be held to a higher standard and could not be reasonably

expected to foresee such an incident in their contemplated voyage.

iii. No amount of due-diligence could have prevented the incident from occurring

55. As per IMB, BMP4 must be followed particularly “while transiting high risk areas of Somali

piracy.”126

It is tougher to counter the more violent127

WAF piracy than that in Somalia particularly

when there is lack of any WAF Customised Anti-piracy measures. This makes it clear that the

incident would have occurred in any event notwithstanding that the Owners followed the BMP4

practices,128

as even the taking of comprehensive anti-piracy measures would not have prevented

the incident129

in WAF area.

120


Updated Revised West Africa High Risk Area and Voluntary Reporting Area, Ship Security Advisory No. 31-14, Dec.

22 2014, available at https://www.register-iri.com/forms/upload/SSAdvisory_31-14.pdf and https://www.register-

iri.com/index.cfm?action=page&page=244 [Accessed on Apr. 01 2015]; The ungoverned seas: The waters around Somalia

are calmer, but piracy in west Africa is rising, THE ECONOMIST (Nov. 29 2014), available at

http://www.economist.com/news/middle-east-and-africa/21635049-waters-around-somalia-are-calmer-piracy-west-africa-

rising [Accessed on Apr. 01 2015]; See Also Mary Harper, Danger zone: Chasing West Africa’s pirates, BBC NEWS (Nov.

13, 2014) available at http://www.bbc.com/news/world-africa-30024009 [Accessed on Mar. 26 2015]. 122

The United Nations Institute for Training and Research, UNOSAT Global Report on Maritime Piracy-A Geospatial

Analysis 1995-2013 (2014) available at https://www.unitar.org/unosat/piracy [Accessed on Mar. 02 2015]. 123

See Moot Scenario, Page 11, BIMCO Piracy Clause, sub-cl. (c)(iv). 124

IMB Warns of West Africa Piracy Threat, ICC COMMERCIAL CRIME SERVICES (Mar. 7 2014) available at https://icc-

ccs.org/news/911-imb-warns-of-west-africa-piracy-threat [Accessed on Feb. 12 2015]. 125

K/S Penta Shipping A/S v. Ethiopian Shipping Lines Corp (‘The Saga Cob’), [1992] 2 Lloyd's Rep. 545. 126

IMB supra note 124. 127

The Economist supra note 121; Christine Mungai, How East African Piracy Ended and Lessons West Africa Can Learn

to End Crime on Its Waters, MAIL AND GUARDIAN AFRICA (Feb. 22 2015) available at http://mgafrica.com/article/2015-02-

20-how-somali-piracy-was-ended-unusual-military-collaborations-and-5-very-ingenious-inventions[Accessed on Mar. 3

2015]. 128

Glencore International AG v. Owners of the "Cherry", the "Epic" and the "Addax" (‘The Cherry’), [2003] 1 SLR 471. 129

The Danica White (Danish High Court, 3 October 2010), reported at: UfR 2011.354 H (‘Danica White’).

https://www.register-iri.com/forms/upload/SSAdvisory_31-14.pdf

https://www.register-iri.com/index.cfm?action=page&page=244

https://www.register-iri.com/index.cfm?action=page&page=244

http://mgafrica.com/article/2015-02-20-how-somali-piracy-was-ended-unusual-military-collaborations-and-5-very-ingenious-inventions

http://mgafrica.com/article/2015-02-20-how-somali-piracy-was-ended-unusual-military-collaborations-and-5-very-ingenious-inventions


21

56. In any event, even the latest BMP4 practices (such as high speed, evasive manoeuvres and fire

hoses)130

are essentially improvisations of the existing capabilities of vessels. It is submitted that

these are the existing capabilities of any vessel and hence, “Vessel doing best to comply with

BMP4”131

is adequate to meet the due-diligence standard.

C. IN ANY EVENT, OWNERS RELY ON EXCEPTIONS UNDER C/P AND/OR HVR

i. Owners are exempted under Art. 4(2)(c)& (f) of the HVR

57. Owners are exempted from liability under the “Perils of the sea” exception of Art. 4(2)(c),HVR,

which includes piracy.132

Further, the unforeseeable and extraordinary nature of piracy

satisfactorily brings it under this exception.133

Thereby, any loss or damage alleged to arise out of

piracy cannot make Owners liable when they have discharged required due-diligence obligation.

58. Further, Owners are also exempted under Art. 4(2)(f), HVR, where piracy is an “Act of public

enemies” as their actions are considered hostes humanis generis (“enemy of mankind”).134

ii. Owners also rely upon Cl 27(a) C/P to exempt them from liability

59. In any event, under Cl 27(a), C/P, Owners are not liable for “any loss or damage…arising or

resulting from any act, neglect or default of the master…in the navigation or the management of

the vessel,” as long as this is not contributed to by any breach of Cl 1 or 2, C/P, which is not the

case here as Owners exercised due-diligence.

60. Proper handling of Vessel for her own safety comprises “management” and the ship is in the

process of being navigated till the cargo is discharged.135

It is submitted that though the “stores and

130

Best Management Practices for Protection against Somali Based Piracy (Version 4, 2011), Page 7, 35, 32, ¶3.4, 8.8, 8.6. 131


Pickering v. Barclay, (1672) Style 132; Morse v. Slue, (1671) 1 Vent 190; Woodley & Co v. Michell & Co, (1883) 11

QBD 47; Great China Metal Industries Co Limited v. Malaysian International Shipping Corporation Berhad (‘The Bunga

Seroja’), (1998) 72 ALJR 1592. 133

The Bunga Seroja, (1998) 72 ALJR 1592; Margetson supra note 107, at 171. 134

Steward C. Boyd, SCRUTTON ON CHARTERPARTIES AND BILLS OF LADING, Art. 114 (21st edn, 2008); Aref Fakhry,

‘Piracy Across Maritime Law: Is there a problem of Definition?’ in THE REGULATION OF INTERNATIONAL

SHIPPING: INTERNATIONAL AND COMPARATIVE PERSPECTIVES: ESSAYS IN HONOR OF EDGAR GOLD 116 (2012); Halsbury

supra note 100, ¶276; Coghlin supra note 3, ¶27.8; Carr supra note 107, at 251; Comite Maritime International, The

Travaux Préparatoires of the Hague Rules and the Hague-Visby Rules, 408, available at

http://www.comitemaritime.org/Uploads/Publications/Travaux%20Preparatoires%20of%20the%20Hague%20Rules%20an

d%20of%20the%20Hague-Visby%20Rules.pdf [Accessed on Mar 5, 2015].

http://www.comitemaritime.org/Uploads/Publications/Travaux%20Preparatoires%20of%20the%20Hague%20Rules%20and%20of%20the%20Hague-Visby%20Rules.pdf

http://www.comitemaritime.org/Uploads/Publications/Travaux%20Preparatoires%20of%20the%20Hague%20Rules%20and%20of%20the%20Hague-Visby%20Rules.pdf


22

spares” were made “available for delivery” in Durban by Owners,136

they were “not received” by

the Master.137

Thus, the Master not receiving the safety-items comprises a want of care on his part

in dealing with Vessel’s safety and this occurred before cargo was discharged, bringing Master’s

act under the ambit of navigation and management.138

Hence, Owners are not liable.

VII. OWNERS ARE NOT LIABLE TO CHARTERERS IN CONVERSION OR BAILMENT

61. According to S.2(2) of U.K.’s Tort (Interference with Goods) Act,139

a bailee who allowed the loss

and destruction of goods “to happen in breach of his duty” can be made liable in conversion.

Owners contend their liability under this ‘statutory conversion’ on three grounds. Charterers do not

have title to sue [A]. The necessary criterion of demand and refusal has not been met [B]. The loss

of cargo was not due to the negligence of the bailees [C].

A. CHARTERERS HAVE NO TITLE TO SUE

62. At the outset, it is submitted that the rule that a bailee cannot question the title of his bailor has

been suitably abrogated.140

Owners submit that Charterers have no possession or immediate right

to possession, which is essential to sue in conversion.141

It is argued that B/L issued by Charterers

is a straight consigned B/L,142

which for the purposes of COGSA, 1992143

is alternatively a seaway

bill.144

Under this bill the right to immediate possession (entitlement to delivery), passes to the

135

Lourie v. Douglas, (1846) 15 Meeson and Welsby 746; Scrutton supra note 134, Art. 118. 136

Procedural Order No. 2,¶17. 137


Gosse Millard Ltd v. Canadian Government Merchant Marine Ltd (‘The Canadian Highlander’), [1928] 1 K.B. 717;

The Cressington, [1891] P. 152; The Satya Kailash, [1982] 2 Lloyd’s Rep. 465 and [1984] 1 Lloyd’s Rep. 588 (C.A.). 139

Sec. 2(2), Torts (Interference with Goods) Act, 1977 applicable as per C/P, Cl 46. 140

Halsbury’s Laws of England, ¶82, Vol. 3(1), (4th

edn., 2005); S.8 of Tort (Interference with Goods) Act, 1977 applicable

as per clause 46 of C/P. 141

W.V.H. Rogers, WINFIELD AND JOLOWICZ ON TORT, 834 (18th

edn., 2010); Clerk & Lindsell on Torts, 17-43 (20th

edn.,

2010); Iran v. Barakat Galleries Ltd., [2007] EWCA Civ 1374; D.J. Bentley, A New Found Halliday: The Eighteenth

Report of the Law Reform Committee (Conversion and Detinue), Vol. 35(2), THE MODERN LAW REVIEW, 171 (1972). 142

International Air & Sea Cargo GmbH v. Pakistan National Shipping Co (‘The Chitral’), [2000] 1 Lloyds’ Rep. 529 as

cited in Benjamin’s Sale of Goods, ¶18-025 (8th

edn., 2010); The Rafaela S, [2003]2 Lloyd's Rep. 113. 143

The Carriage of Goods by Sea Act, 1992. 144

International Air & Sea Cargo GmbH v. Pakistan National Shipping Co (‘The Chitral’), [2000] 1 Lloyds’ Rep. 529 as

cited in Benjamin, supra note 142, ¶18-025, 18-093, 18-246; Law Com. No.196, Scot. Law Com. No.130, Right of Suit in

Respect of Contracts for the Goods by Sea (1991).


23

named consignee, irrespective of whether they hold the B/L.145

Thus AEI, being the named

consignees under B/L, have an immediate right to possess.

63. In any event, by virtue of Cl 26, it is established that Owners had a lien over the goods from July

03 onwards, due to non-payment of hire146

by Charterers. It is a well-established principle that

when goods are subject to a lien, the cargo owner does not have an immediate right to possess

them.147

Thus, Charterers have no possessory title necessary to bring a claim in conversion.

64. The fact that the property had not passed,148

from Charterers to AEI by virtue of title not

passing,149

is not material, under statutory conversion150

ownership is not sufficient.151

Thus, it is

submitted that when conversion allegedly occurred. Charterers only had a bare propriety title152

to

goods, which is not sufficient to sue under conversion.

65. Furthermore, Charterers cannot sue based on their reversionary interest, as Cargo Owners when

devoid of possessory title, because there is no substantial damage accruing to them.153

As

Charterers had already been paid for the cargo,154

they have not suffered any damage that is

necessary to sue. The court in HSBC Rail UK Ltd v. Network Transports Ltd.155

held that

reversionary interest holders could not sue as real damage was not borne by them. In this case,

Consignees (AEI) had already fully paid Charterers for the cargo, which is why Charterers cannot

sue for lack of damage sustained.

145

Benjamin, supra note 142, ¶5-008, 18-034, 18-029, 19-095; S. 2(1)(b), Carriage of Goods by Sea Act, 1992; S. Girvin,

Bills of Lading and Straigh Bills of Lading: Principles and Practice, JOURNAL OF BUSINESS LAW, (2006); International Air

& Sea Cargo GmbH v. Pakistan National Shipping Co (‘The Chitral’), [2000] 1 Lloyds’ Rep. 529 as cited in C. Pejovic,

Delivery of Goods without a Bill of Lading: Revival of an Old Problem in the Far East, JOURNAL OF INTERNATIONAL

MARITIME LAW, 448 (2003). 146

Refer to Issue V in this Memorandum. 147

Rogers v. Kennay, 115 E.R. 1401(1846); Benjamin, supra note 142, ¶18-189; Lord v. Price, L. R. 9 Ex. 54 (1874); A.

Tettenborn, Reversionary Damage to Chattels, 53(2) CAMBRIDGE LAW REVIEW 326 (1994). 148

Benjamin, supra note 142, ¶18-283; N.Palmer, PALMER ON BAILMENT, ¶3-046, 242 (3rd

edn.,2009). 149

Procedural Order No.2, ¶22. 150

C. Hawes, Tortious Interference with Goods: Title to Sue, 17(2) CANTERBURY LAW REVIEW 331, 332 (2011); Atapattu,

R. v. The Secretary of State for the Home Department, [2011] EWHC 1388 (Admin). 151

Benjamin, supra note 142, ¶5-010; Lindsell supra note 141, at ¶17-43; East West Corporation v. DKBS 1912 and AKTS

Svenborg, [2003] QB 1509. 152

Obestain Inc v. National Mineral Development Corp Ltd (‘The Sanix Ace’), [1987] 1 Lloyd's Rep 465; C. Hawes supra

note 150, at 344. A. Tettenborn, supra note 147. 153

Halsbury supra note 140, at ¶340; C. Hawes, supra note 150, at 343. 154


HSBC Rail UK Ltd v. Network Transports Ltd, EWCA Civ 1437 [2005].


24

66. Further it is argued that only when the party suffering damage (AEI) has no right to sue156

can

Cargo Owners (Charterers) who do not suffer damages, sue on behalf of them. Here AEI had a

sufficient title to sue, being the named consignees in a straight B/L. Therefore allowing Charterers

to sue based on their reversionary interest would be against the common law principle that

damages are compensatory.157

Therefore it follows that Charterers do not have title to sue in

conversion even by virtue of reversionary interest.

B. THE NECESSARY CRITERION OF DEMAND AND REFUSAL HAS NOT BEEN MET

67. Charterers submit that statutory conversion requires a demand to be made for the goods by the

bailor, followed by an unequivocal refusal to comply by the bailee.158

In this case, neither did

Charterers (as bailors) demand the goods, nor was there an “unequivocal refusal” by Owners (as

bailees) as to attract liability under statutory conversion. Charterers may contend that the loss of

goods constituted a refusal, but it has been suggested that awareness that the bailee has lost the

goods does not “repair the absence of an unequivocal refusal.”159

Moreover an implicit refusal is

not sufficient to constitute refusal, which necessarily must be unequivocal.160

Hence there can be

no liability for statutory conversion, as all elements have not been fulfilled.

C. THERE WAS NO BREACH OF DUTY OF CARE BY BAILEES

68. Between July 04-17, 28500MT GO was lost due to cargo theft.161

Owners submit that no liability

will arise either independently in bailment or in conversion for the loss of cargo as they fulfilled

their duty of reasonable care. It is argued that the enquiry of standard of care is fact-specific.162

As

156

Halsbury supra note 140, at ¶86. 157

Albacruz (Cargo Owners) v. Albazero (‘The Albazero’), [1977] AC 774. 158

Schwarzchild v. Harrods, EWCH 528 [2008]; See Also, Palmer supra note 149, at 71, 83; 95th

Report of the Law

Reform Committee of South Australia to The Attorney General, Law of Detinue, Conversion and Tresspass of Goods,

1987. 159

Palmer supra note 149, at 73; Schwarzchild v. Harrods, EWCH 528 [2008],“even if assuming that the bailor was aware

that the goods had been destroyed or lost that fact by itself would not constitute the ingredients for statutory conversion

which necessarily requires demand and refusal.” 160

Palmer, supra note 149, at 73. 161

Moot Correspondence, Page 42, V/C dated July 17 2014 23:25 (UTC+1). 162

Palmer supra note 149, at 550.


25

submitted previously,163

piracy was not a foreseeable peril in the area where the incident occurred.

It follows that the bailees exercised sufficient and reasonable care as the Master “was doing best to

comply with BMP4”164

and a fit Vessel was provided.165

In any event, there was no proximate

cause between the actions of the bailee and the loss of cargo as argued earlier.166

Thus Owners

have not breached their duty as bailees and hence cannot be made liable for conversion or

bailment.

PRAYER

In light of the above submissions, the Owners request the Tribunal to:

DECLARE that this Tribunal has jurisdiction to hear the present dispute.

ADJUDGE that

A. ASA2 is the agent of Charterers

B. Charterers are liable

1. For material damage to Vessel and injury to Crew and for Cargo Theft

2. Under Tort of Fraud

3. To pay hire due and owing or alternatively, damages for their failure to pay the same

C. Owners provided a Vessel fit for the service

D. Owners are not liable

1. Under Tort of Conversion

2. Under Bailment

E. Owners are entitled to damages, interest or costs

F. Charterers are not entitled to damages, interest or costs

163

Refer to Issue VI.B. in this Memorandum. 164

Moot Scenario, Page 36,V/C dated June 29 2014 11:59 (UTC+1). 165

Refer to Issue VI.B. in this Memorandum. 166

Refer to Issue III.B.iii in this Memorandum.


a

ANNEXURES

ANNEXURE A: DISTANCE BETWEEN THE RELEVANT CO-ORDINATES

1. Distance between Singapore (Port of Loading) and OPL Luanda (Discharge Port): 10, 280 Km

2. Distance between OPL Luanda (Discharge Port) and Gibraltar ( Redelivery) : 5319 Km


b

3. Distance between OPL Luanda and Alternative Discharge Location : 496 Km

4. Distance between Luanda and OPL Luanda: 191 Km


c

5. Distance between Luanda and Alternative Discharge Location : 641 Km


d

ANNEXURE B: PROVISION OF BUNKER SUPPLY (CALCULATIONS)

1. Credit line of US$ 650,000 sufficient to buy = Credit Line Gained

Cost of Fuel Provided =

650000

630.25 =1031.33MT FO

2. Credit line of US$ 1,000,000 sufficient to buy= Credit Line asked for

Cost of Fuel Provided =

1000000

630.25 =1586.67MT FO

3. Approximate Distance between Singapore (Port of Loading) and OPL Luanda (Discharge

Port)= 10280 Km [MAP 1]

4. Approximate Distance between Gibraltar (Place of Redelivery) from OPL Luanda (Discharge

Port) =5319 Km [MAP 2]

5. Estimated Fuel required to go from OPL Luanda to Gibraltar (Place of Redelivery)=

Approximate Distance between Singapore and OPL Luanda: Fuel required :: Approximate

Distance between OPL Luanda and Gibralter: Fuel required (x)= 10280: (490+950) :: 5319: x

x=745.07MT FO

16TH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION

Documents