THE UNIVERSITY OF HONG KONG TEAM 5 MEMORANDUM FOR THE CLAIMANT€¦ · THE UNIVERSITY OF HONG KONG TEAM 5 MEMORANDUM FOR THE CLAIMANT HUEN KA KI ... Calculation of laytime and demurrage

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INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2016

THE UNIVERSITY OF HONG KONG

TEAM 5

MEMORANDUM FOR THE CLAIMANT

HUEN KA KI

LEE KA YEE

NG CHUN WAI JONATHAN

WONG KRISTY

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TABLE OF CONTENT

I. SUMMARY OF FACTS

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II. SUMMARY OF ISSUES

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III. THIS TRIBUNAL HAS JURISDICTION TO CONSIDER THE CLAIMS (1) Principles of contractual interpretation (2) Principles of construction for arbitration clauses (3) The construction of the Arbitration Clause

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IV. THE CLAIMANT DENIES ANY FRUSTRATION (1) The Claimant’s submissions on the Respondent’s defence (2) Principles of frustration (3) The Force Majeure Clause is a full and complete provision for the Alleged

Frustrating Event, and hence precludes the operation of frustration (4) The doctrine of frustration does not apply

(i) The Alleged Frustrating Event is reasonably foreseeable (ii) The commercial purpose has not been radically changed (iii) The date of frustration, if any, ought to be 30 April 2015

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7 7 8 10 10 11 13

V. THE RESPONDENT IS LIABLE FOR DEMURRAGE (1) Laytime commenced on 3 October 2014 (2) Laytime continued to run until 6 October 2015

(i) Laytime ends at the Vessel’s departure of the Port (ii) Definition of a port

(3) The Respondent is liable for demurrage for 358 days (i) Calculation of laytime and demurrage (ii) The Respondent is liable for demurrage in respect of the entire 358

days (a) The delay was not caused by the fault of the Claimant (b) Further or alternatively, the delay was caused by the

Respondent’s fault (c) No exception to laytime applies to interrupt the laytime

(4) Further or alternatively, the Claimant claims for detention at demurrage rate

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VI. CLAIM FOR SALVAGE REWARD

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VII. CONCLUSION 25

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Authorities

Acorn Consolidated Pty Ltd v Hawkslade Investment Pty Ltd (1999) 21 W.A.R. 425

Admiral Shipping Co Ltd v Weidner Hopkins & Co [1916] 1 K.B. 429

Ambatielos v Anton Jurgens [1923] A.C. 175

Bank Line v Arthur Capel & Co [1919] A.C. 435

British Movietonews Ltd v London District Cinemas [1952] A.C. 166

Brown (Christopher) Ltd v Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe

Registrierte GmbH [1954] 1 Q.B. 8

Chandris v Isbrandtsen-Moller Co Inc [1951] 1 K.B. 240

Chartbrook Ltd v Persimmon Homes Ltd [2009] U.K.H.L. 38

Chung Chi Cheung v. The King, [1938] W.N. 395

Clark v University of Melbourne (No 2) [1979] V.R. 6

Codelfa Construction Pty v State Rail Authority of New South Wales (1982) 149 C.L.R. 337

Commercial Steamship Co v Boulton (1875) L.R. 10 Q.B. 346

Cricklewood Investments Trust Ltd v Leighton’s Investment Trust Ltd [1945] A.C. 221

Dairy Containers Ltd v Tasman Orient Line CV [2004] U.K.P.C. 22

Davis Contractors Ltd v Fareham U.D.C. [1956] A.C. 696

E. L. Oldendorff & Co. G.M.B.H. v Tradax Export S.A. (The Johanna Oldendorf) [1974] A.C. 479

Edwinton Commercial Corp & Another v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The

Sea Angel) [2007] E.W.C.A. Civ. 547

Euphoric Pty Ltd v Ryledar Pty Ltd [2006] N.S.W.S.C. 2

FC of T v Bank of Western Australia Ltd; FC of T v Statement of New South Wales Ltd 96 A.T.C.

4009, (1995) 133 A.L.R. 599

Finelvet A.G. v Vinava Shipping Co. Ltd. (The Chrysalis) [1983] 1 W.L.R. 1469

4

Fiona Trust v Privalov [2007] U.K.H.L. 40

Gem Shipping Co of Monrovia v Babanaft (Lebanon) SARL (The Fontevivo) [1975] 1 Lloyd’s Rep

339

Government of the Republic of Spain v National Bank of Scotland 1939 S.C. 413

Griffiths v Smith [1941] A.C. 170

Heyman v Darwins [1942] A.C. 356

Larsen v Sylvester & Co (1908) A.C. 295

Lauritzen v Larsen 345 U.S. 571 (1953)

Marc Rich & Co. v. Tourloti Compania Naviera (The Kalliopi A) [1988] 2 Llyod’s Rep 101

Marley v Rawlings [2014] U.K.S.C. 2

Mitchell Cotts v Steel [1916] 2 K.B. 610

Nicholson v Williams (1871) LR 6 Q.B. 632

Ocean Tramp Tankers Corp v V/O Sovfracht (The Eugenia) [1964] 2 Q.B. 226

Photo Production Ltd v Securicor Transport Ltd [1980] 2 W.L.R. 283

Pioneer Shipping Ltd v B.T.P. Tioxide Ltd (The Nema) [1982] A.C. 724

President of India v Olympia Sauna Shipping Co SA (The Ypatia Halcoussi) [1984] 2 Lloyd’s Rep

455

Rashtriya Chemicals & Fertilizers Ltd v Huddart Parker Industries Ltd [1988] 1 Lloyd’s Rep 342

Sailing-Ship Garston Co v Hickie & Co (1855) 15 Q.B.D. 580

Select Commodities Ltd v Valdo SA (The Florida) [2006] E.W.H.C. 1137 (Comm)

Tam Wing Chuen v Bank of Credit and Commence Hong Kong Ltd [1996] U.K.P.C. 69

Tennants (Lancashire) Ltd v CS Wilson & Co [1917] A.C. 495

The Calyx (1910) 27 T.L.R. 166

The Charlotte (1848) 3 Wm Rob 68

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The Darya Radhe [2009] E.W.H.C. 845

The Hans Leonhardt S.M.A. 2820 (1991)

The Investors Compensation Scheme v West Bromwich Building Society [1998] 1 W.L.R. 896 (HL)

The Lusitania, 251 F. 715 (S.D.N.Y. 1918)

The Mecca [1895] C.A. 95

The Nema [1981] 2 Lloyd’s Rep 239 (HL)

The Philotaxe (1873) 2 Asp. M.L.C. 141

The Port Victor (Cargo ex) [1901] P. 243

The Sarpedon (Cargo ex) (1877) 3 P.D. 28, 3 Asp. M.L.C. 509

The Sarpen [1916] 306, 13 Asp. M.L.C. 370 (CA)

The Teutonia (1872) L.R. 4 P.C. 171

The Wilhelmine (1842) 1 Notes of Cases 376

Tronson v Dent (1853) 8 Moo P.C.C. 419

United Geophysical Co., 231 F.2d 816 (5th Cir. 1956)

William Alexander v Akt. Hansa [1920] A.C. 88

Zim Israel Navigation Co Ltd v Tradax Export SA (The Timma) [1970] 2 Lloyd’s Rep. 409

Others

Commonwealth of Australia Navigation Act 2012

The International Convention on Salvage 1989

The United Nations Convention on the Law of the Sea (UNCLOS 1982)

United Nations Recommendations on the Transport of Dangerous Goods Model Regulations,

Volume 1 (17th revised Edition)

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Guenter Treitel, Frustration and Force Majeure (3rd Edition)

Halsbury’s Laws of England, Volume 94 (2008)

John AC Cartner, Richard P Fiske and Tara L Leiter, The International Law of the Shipmaster

John Schofield, Laytime and Demurrage (6th Edition)

Julian Cooke and others, Voyage Charters (4th Edition)

Simon Baughen, Summerskill on Laytime (5th Edition)

Economist (2013, February 02), Frack to the future. Retrieved April 14, 2016, from

http://www.economist.com/news/business/21571171-extracting-europes-shale-gas-and-oil-will-be-

slow-and-difficult-business-frack-future

Palmer, D (2013, January 31), US ban on LNG exports would violate WTO rules. Retrieved March

30, 2016, from http://www.reuters.com/article/usa-trade-lng-idUSL1N0AZMTU20130131

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I. Summary of Facts

(1) The Parties

1. The Claimant, Zeus Shipping and Trading Company, is the owner of the Athena (“Vessel”), a

vessel flying the flag of Hades and one of the newest vessels for the safe transport of Liquefied

Natural Gas (“LNG”) produced from Hades Shale Gas (“HLNG”). The Respondent, Hestia

Industries, is a company based in Hades and produces HLNG.

(2) The Charterparty

2. On 1 July 2014, the Respondent invited the Claimant to submit terms of a voyage charter for the

proposed voyage from Hades to Poseidon to transport HLNG. On 14 July 2014, the Claimant

offered to charter the Vessel to the Respondent on the terms contained in a draft charterparty

(“Draft Charterparty”). Clause 30 of the Draft Charterparty provides that “[a]ny dispute

arising out of or in connection with this contract, including any question regarding its existence,

validity, or termination, shall be referred to arbitration” (“Draft Arbitration Clause”).

3. On 16 July 2014, the Respondent indicated acceptance of the terms of the Draft Charterparty

saved the Draft Arbitration Clause, stating that it was only prepared “to arbitrate disputes in

London which arise out of the provisions of the charterparty such as a dispute about

demurrage…” On 22 July 2014, the parties entered into a voyage charterparty (“Charterparty”)

(as amended from the Draft Charterparty), containing, inter alia, the following clauses:

a. Clause 9(c) provides that “[t]ime permitted for loading (calculated from when NOR is

tendered until the vessel leaving the Loading Place) is 10 WWD SHINC”; and “Loading

Place” is defined in Box 5 as “1 safe port, Hades” (“Loading Place”).

b. Clause 9(e) provides that laytime is not to be counted during the period of such delay or

hindrance, and demurrage not to accrue even if the vessel is already on demurrage “...in the

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event of any delay or hindrance in procuring, preparing, carrying, loading, stowing,

shipping or discharging the particular cargo intended for shipment or the cargo actually

shipped by reason of…inability or inefficiency of the ship to load or discharge”.

c. Clause 10 and Box 24 provide that demurrage over and above the lay-days is calculated at

the rate of US$50,000 per day.

d. Clause 19 provides that neither party shall be liable for any failure to perform or delay in

performing its obligations under the Charterparty, where the party is being delayed,

interrupted or prevented from doing so by reasons of any force majeure event (“Force

Majeure Event”) as defined under sub-paragraphs (a) to (d) (“Force Majeure Clause”).

e. Clause 30(a) provides that “[a]ny dispute arising under [the Charterparty] shall be referred

to arbitration in London…” (“Arbitration Clause”).

f. Clause 31 provides for the governing law to be the laws of the State of Western Australia.

(3) Performance of the Charterparty

4. On 3 October 2014 at 0915, Captain Marcus Yi (“Master”) of the Vessel tendered a Notice of

Readiness (“NOR”). On 7 October 2014, the Master tendered a statement indicating that the

Vessel left the Port of Hades (“Port”) and sailed from Hades on 7 October 2014 at 0900

(“Statement of Facts”). On the same day, a coup broke out and Jacqueline Simmons, the

Opposition Leader of Hades, seized control of the parliament. Immediately upon becoming the

President of Hades, Simmons (“President Simmons”) ordered the Hades coast guard (“Coast

Guard”) to intercept the Vessel and escort it back to the Port.

5. On 7 October 2014, the Coast Guard successfully intercepted the Vessel and, at a location near

the boundary of the territorial waters of Hades, directed it back to the Port. It was said that the

Master complied with the demand only after the Coast Guard reminded him that the Vessel

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carried the Hades flag. On 15 October 2014, the Claimant notified the Respondent that the

Vessel was detained and that laytime continued to run and demurrage would accrue after

exhaustion of laytime. On 22 October 2014, the Respondent urged the Claimant to take all

necessary steps to secure the release of the Vessel and further denied that laytime would run or

that demurrage might accrue.

6. On 15 April 2015, the Claimant sent an invoice to the Respondent, setting out its liability for

demurrage up to that date. On 30 April 2015, the Respondent denied liability for demurrage and

alleged that the Charterparty was frustrated as the 6-month delay had rendered the contemplated

adventure radically different. On the same day, the Respondent attempted to arrange for an

alternative vessel to undertake the same voyage but was unsuccessful.

7. On 30 September 2015, President Simmons resigned. On 5 October 2015, the Vessel was

released. On 6 October 2015, the Claimant notified the Respondent that the Vessel had been

released and further claimed for demurrage of US$17.9 million.

8. After towlines were released from the Vessel, both propeller shafts of the Vessel broke. The

Respondent’s tug company then offered assistance to the Vessel.

9. On 16 November 2015, the Claimant notified the Respondent that it had referred the dispute to

arbitration pursuant to the Arbitration Clause. On 23 November 2015, the Respondent indicated

its opposition to referring the dispute to arbitration and, without prejudice to that,

counterclaimed for reward with respect to an alleged salvage operation.

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II. Summary of Issues

10. The issues in this case are: (1) whether this Tribunal has jurisdiction to hear the present dispute;

(2) whether the Charterparty is frustrated by the delay; (3) whether the Respondent is liable for

demurrage; and (4) whether the Respondent is entitled to salvage reward.

III. Jurisdiction

11. This Tribunal has power to rule on its own jurisdiction pursuant to the Kompetenz-Kompetenz

principle.1 In order to resolve the jurisdictional issue, this Tribunal has to consider the precise

nature of the dispute here and decide whether on a proper construction of the Arbitration Clause,

a claim of frustration falls within the jurisdiction of this Tribunal. The Claimant submits that this

Tribunal has the jurisdiction to hear the Respondent’s alleged defence of frustration.

(1) Principles of contractual interpretation

12. When interpreting a contract, the court will ascertain the meaning which it would convey to a

reasonable person having all the background knowledge which would reasonably have been

available to the parties at the time of the contract.2 The court is concerned to ascertain

objectively the intention of the parties by identifying the meaning of the relevant words: (1) in

the light of (a) the natural and ordinary meaning of those words, (b) the overall purpose of the

document, (c) any other provisions of the document, (d) the facts known or assumed by the

parties at the time that the document was executed, and (e) common sense; but (2) ignoring

subjective evidence of any party’s intentions.3

1 Brown (Christopher) Ltd v Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte GmbH 2 The Investors Compensation Scheme v West Bromwich Building Society [1998] 1 W.L.R. 896 (HL) at 912. 3 Marley v Rawlings [2014] U.K.S.C. 2 [2015] A.C. 129 at [19] (per Lord Neuberger). The Australia position is different from the English position on admissibility of extrinsic evidence. In the leading authority Codelfa Construction Pty v State Rail Authority of New South Wales (1982) 149 C.L.R. 337 at 352 (per Mason J), it was held that matters extrinsic to the text of the contract was not admissible to aid in the interpretation of the contract unless the text of the contract was first found to be ambiguous. The Claimant submits that the Arbitration Clause is not ambiguous, and hence evidence of surrounding circumstances is inadmissible.

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13. The parol evidence rule excludes previous negotiation of the parties and their declarations of

subjective intention, which are superseded by the contract subsequently entered into by the

parties.4 It is also clear that draft agreements which do not represent the final consensus between

the parties are generally inadmissible in interpreting the concluded agreement, except in an

action for rectification.5 The court may consider deleted words as part of the admissible

background.6 However, the background has limited relevance if a contract is in standard form.7

It cannot be used to introduce by a sidewind evidence of the subjective intention of the parties.8

Further, it is not permissible to construct from the background a meaning that the words do not

legitimately bear.9 Lastly, the contra proferentem principle may apply against a party who puts

forward or insists on the inclusion of a particular term.10

(2) Principles of construction for arbitration clauses

14. Fiona Trust v Privalov represents a fresh start towards the construction of arbitration clauses.11

First, the court would presume that parties intend all disputes arising from a transaction to be

dealt with by the same tribunal (One-stop Shop Presumption). The court would need to find very

clear language in a clause before deciding that parties must have had such an intention that some

disputes are to be submitted to arbitration and others are to be decided by courts.12 Second, an

arbitration clause is to be broadly and liberally construed.13

4 The Investors Compensation Scheme v West Bromwich Building Society [1998] 1 W.L.R. 896 (HL) at 912-913 and Chartbrook Ltd v Persimmon Homes Ltd [2009] U.K.H.L. 38, [2009] 2 A.C. 1101 at [28]. 5 Chartbrook Ltd v Persimmon Homes Ltd [2009] U.K.H.L. 38, [2009] 2 A.C. 1101 at [42]. 6 Under the Australian law, evidence of surrounding circumstances is not admissible to contradict the language of the contract when it has a plain meaning. See Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 C.L.R. 337 at 352 (per Mason J). 7 Dairy Containers Ltd v Tasman Orient Line CV [2004] U.K.P.C. 22, [2005] 1 W.L.R. 215 at [12]. 8 Acorn Consolidated Pty Ltd v Hawkslade Investment Pty Ltd (1999) 21 W.A.R. 425 at 436. 9 Euphoric Pty Ltd v Ryledar Pty Ltd [2006] N.S.W.S.C. 2 at [31]-[33]. 10 Tam Wing Chuen v Bank of Credit and Commence Hong Kong Ltd [1996] U.K.P.C. 69, [1996] 2 B.C.L.C. 69 at 77 (per Lord Mustill). 11 [2007] U.K.H.L. 40, [2008] 1 Lloyd’s Rep 254 at [12] and [17]. 12 Ibid at [6]-[7] and [28]. 13 Ibid at [26].

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15. Thus in Fiona Trust, the court put aside linguistic niceties and “fussy” distinction between the

phrases “arising under”, “arising out of”, “in connection with” and “in relation with”. 14 The

phrase “all disputes arising under this contract” was held to cover all disputes except dispute as

to the existence of the contract.15 In Heyman v Darwins,16 the House of Lords held that a claim

of frustration fell within an arbitration clause which provided that “any dispute that arises in

respect of this agreement or any of the provision herein contained or anything arising hereout

the same”, since a claim of frustration was not concerned with the validity of a contract.17

(3) The construction of the Arbitration Clause

16. In this case, it is clear that the parties have entered into a binding contract which incorporated a

valid arbitration clause. The Arbitration Clause adopted the common phrase, “any disputes

arising under the contract”, which as submitted above, covers a claim of frustration.18 Absent

any express language in the Arbitration Clause to exclude such a claim, this Tribunal should

have jurisdiction to hear a claim of frustration as much as the other claims. Furthermore, the

parties’ correspondences between 14 and 22 July 2014 (“Negotiation Emails”) and the Draft

Charterparty fall within the parol evidence rule, and are thus inadmissible towards the

interpretation of the Charterparty. In any event, there is no claim for rectification here.

17. Further and alternatively, should this Tribunal rule that the claim of frustration fall outside the

Arbitration Clause, this would lead to the undesirable consequence that the claim and the

defence arising under the same contract would be heard in two distinct forums, thereby incurring

additional time and costs in resolving the disputes. This Tribunal should not allow the

14 Ibid at [37]. 15 Ibid at [12]-[13]. 16 [1942] A.C. 356. 17 Ibid at 360. 18 See Fiona Trust and Heyman v Darwins.

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Respondent to shop the forum simply by raising the defence of frustration, which, as submitted

below, is unmeritorious.

IV. Frustration

(1) The Claimant’s submissions on the Respondent’s defence

18. As a defence to the demurrage claim, the Respondent alleges that the detention of the Vessel by

the Coast Guard constituted a frustrating event (“Alleged Frustrating Event”). In response, the

Claimant has three submissions: (1) frustration is precluded because the parties made full and

complete provision for the Alleged Frustrating Event under the Force Majeure Clause; (2)

further or alternatively, the commercial purpose of the Charterparty did not change

fundamentally; and (3) alternatively, frustration did not occur until 30 April 2015.

(2) Principles of frustration

19. Frustration takes place where, without default of either party, there is a supervening event not

reasonably foreseeable by the parties that renders the performance of a contractual obligation

radically different from that undertaken by the contract.19 Where a charterparty has been

frustrated, both parties are excused from further performance but the contract remains valid and

effective up to the moment when frustration occurs.20

(i) When would force majeure clause preclude frustration

20. Force majeure clause precludes frustration if the provision for the event is full and complete.21

The test is multi-factorial. The court will take into account relevant factors such as the terms of

19 Davis Contractors Ltd v Fareham U.D.C. [1956] A.C. 696 at 729 (per Lord Radcliffe). 20 Julian Cooke and others, Voyage Charters (4th Edition) at [22.34]. 21 Select Commodities Ltd v Valdo SA (The Florida) [2006] E.W.H.C. 1137 (Comm), [2007] 1 Lloyd’s Rep. 1 at [4].

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the contract, its matrix or context, the parties’ knowledge and contemplations of risk as at the

time of the contract and the nature of the supervening event.22

21. The principles of construction as set out in paragraphs 12-13 above are also applicable in

interpreting the Force Majeure Clause.

22. In addition, general words in a charterparty are prima facie to be considered as bearing their

natural and larger meaning and are not to be interpreted in a restricted manner under the

principle of ejusdem generis.23 For the ejusdem generis principle to apply, one needs to establish

a “genus”, meaning a general category which unites the enumerated instances.24 However, the

court should not restrict the meaning of the general words contrary to the parties’ intention. Thus,

in Larsen v Sylvester & Co,25 the use of sweeping words such as hindrance of “what kind

soever” was held to oust the ejusdem generis principle and the word “hindrance” should be

given its full and absolute meaning.

23. Further, once a particular clause, phrase or word has received an authoritative interpretation

from the courts, that interpretation should be followed in subsequent cases as parties are

presumed to adopt the approach laid down by the court when concluding their bargains.26

(3) The Force Majeure Clause is a full and complete provision for the Alleged Frustrating

Event, and hence precludes the operation of frustration

24. Applying the multi-factorial test in The Sea Angel, it is first submitted that the ejusdem generis

principle does not apply to the construction of Clause 19(c) since the sweeping words “of

whatsoever nature” are used, so that “hindrances” should be given its full and absolute meaning 22 Edwinton Commercial Corp & Another v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The Sea Angel) [2007] E.W.C.A. Civ. 547, [2007] 2 Lloyd’s Rep 517 at [111]-[112]. 23 Chandris v Isbrandtsen-Moller Co Inc [1951] 1 K.B. 240 at 244. 24 Ambatielos v Anton Jurgens [1923] A.C. 175 at 183. 25 (1908) A.C. 295 at 295. 26 Marc Rich & Co. v. Tourloti Compania Naviera (The Kalliopi A) [1988] 2 Llyod’s Rep 101 at 105.

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as obstacles which would be really difficult to overcome.27 The delay in the voyage as a result of

the Alleged Frustrating Event was an obstacle during the stage of shipping which the parties had

fully and completely provided for under the Force Majeure Clause.28 Indeed, Clause 19(ii)

provides for an option to cancel if delivery is suspended for more than 30 days. It shows that the

parties have contemplated not only minor delay but also any prolonged or abnormal delay

exceeding 30 days. Further grounds on the Alleged Frustrating Event being reasonably

foreseeable are set out in paragraphs 28-30 hereinbelow.

25. Further and alternatively, the ejusdem generis principle is inapplicable to the construction of

Clause 19(d) since there is no genus which can comprise all the enumerated instances. Hence,

the general words “other similar cause” must not be read narrowly with the last event on the list,

i.e. “robbers by land or sea”, but must be read generally to cover other causes which are similar

to any of the events therein.

26. The Claimant submits that the intervention by the Coast Guard, as a public authority, was a

cause similar to the “intervention of sanitary or customs authorities” such that it fell within

Clause 19(d). A public authority is an entity established to perform some public or governmental

functions29 and has “exceptional power or authority” to act on behalf of the government.30 The

Coast Guard performs governmental function of administration and regulation of shipping

activities at the Port and affects the activities of members of the public within the territorial

27 Tennants (Lancashire) Ltd v CS Wilson & Co [1917] A.C. 495 at 510. 28 “Shipping” means: (1) the loading voyage from its location at the date of the charterparty to the loading port; and (2) the carrying voyage from the loading port to the port of discharge. See E. L. Oldendorff & Co. G.M.B.H. v Tradax Export S.A. (The Johanna Oldendorf) [1974] A.C. 479 at 556 (per Lord Diplock). 29 Griffiths v Smith [1941] A.C. 170 at 205-206 (per Lord Porter). “Public or governmental functions” means governmental function of administration or of other kinds affecting activities of members of the public. The court may ask whether the entity is an “agent or instrument” of government or has coercive powers or control power or command for the public advantage. See Clark v University of Melbourne (No 2) [1979] V.R. 66 at 72-73. 30 “Exceptional power or authority” must not only be unavailable to an ordinary private person, but also have some level of public significance. See FC of T v Bank of Western Australia Ltd; FC of T v Statement of New South Wales Ltd 96 A.T.C. 4009, (1995) 133 A.L.R. 599.

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waters of Hades. As such, the Coast Guard acted as an “agent or instrument” of the government

when it was instructed by the President of Hades to have it return to the Port.31 The Coast Guard

exercised control power or command for the public advantage when intercepting and directing

the Vessel to return to the Port.

27. Since Clauses 19(c) and/or 19(d) completely provide for the Alleged Frustrating Event, the

Force Majeure Clause precludes the operation of the doctrine of frustration.

(4) The doctrine of frustration does not apply

(i) The Alleged Frustrating Event is reasonably foreseeable

28. Even if the Force Majeure Clause does not preclude the doctrine, there was no frustration in the

present case. Frustration must involve the occurrence of an intervening event that is “entirely

beyond what was contemplated by the parties when they entered into the agreement”.32 If the

parties, knowing the risk, choose to contract on terms which do not reflect that risk, it would be

regarded as an imprudent bargain.33 A paradigm case is Davis Contractors Ltd v Fareham

U.D.C., 34 where the construction work was delayed for 14 months due to shortage of skilled

labour. The House of Lords held that frustration did not apply as the cause of the delay was not

any state of things which the parties could not reasonably have foreseen.35

29. It is submitted that the risk of the detention of the Vessel was foreseeable, if not foreseen, by the

parties. An environmental group leader publicly pledged to stop the export of HLNG two days

before the execution of the Charterparty.36 Likewise, Hades citizens and the Opposition Party

31 Moot Scenario at 55. 32 Cricklewood Investments Trust Ltd v Leighton’s Investment Trust Ltd [1945] A.C. 221 at 228 (per Lord Simon). 33 Guenter Treitel, Frustration and Force Majeure (3rd Edition) at [13.001]. 34 [1956] A.C. 696. 35 Ibid at 731 (per Lord Radcliffe). 36 Moot Scenario at 26.

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maintained a strong stance against the export.37 Such strong and widespread opposition must

have accumulated for a long period. In any event, the export of LNG produced from shale gas is

a politically heated issue around the world, where there are examples of governments banning

LNG extraction or export.38

30. While a coup may not be reasonably foreseeable, it is not necessary to foresee the exact course

of events leading to government intervention. In light of all the circumstances, having assessed

the nature of the Respondent’s business properly, a prudent businessman ought to have

contemplated the risk of government intervention.

(ii) The commercial purpose has not been radically changed

31. Delay, albeit a lengthy one, does not necessarily frustrate a charterparty. Frustration only occurs

if the objects of the contract could not be accomplished.39 This burden of proving frustration

becomes even heavier when there are express provisions, e.g. force majeure clause, covering the

general risk of delay, where it is said to require “something special to frustrate the charter

through mere delay”.40

32. Courts have been reluctant to relieve contracting parties of the “normal consequences of

imprudent bargains”. 41 Therefore, when the owner in Davis Contractors had drawn up

conditions in relation to delay and the contractor made his tender in light of these conditions, the

37 Moot Scenario at 52. 38 Palmer, D. (2013, January 31), US ban on LNG exports would violate WTO rules. Retrieved March 30, 2016, from http://www.reuters.com/article/usa-trade-lng-idUSL1N0AZMTU20130131. See also Economist (2013, February 02), Frack to the future. Retrieved April 14, 2016, from http://www.economist.com/news/business/21571171-extracting-europes-shale-gas-and-oil-will-be-slow-and-difficult-business-frack-future. 39 Admiral Shipping Co Ltd v Weidner Hopkins & Co [1916] 1 K.B. 429 at 436-437. 40 Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The Sea Angel) [2007] E.W.C.A. Civ. 547, [2007] 2 Lloyd’s Rep 517 at [131]. 41 Pioneer Shipping Ltd v B.T.P. Tioxide Ltd (The Nema) [1982] A.C. 724 at 752 (per Lord Roskill). See also British Movietonews Ltd v London District Cinemas [1952] A.C. 166 at 185 (per Lord Simon), where it was held that even a wholly abnormal rise or fall in prices did not of itself affect the bargain they had made.

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court held that it was merely an imprudent bargain.42 Similarly in The Eugenia, Lord Denning

held that the blocking of the customary route did not make the voyage radically different as the

cargo was iron and steel goods which would not be adversely affected by the longer voyage and

the increase in cost.43

33. It is submitted that despite what had happened, the purpose of the Charterparty had not been

radically altered. The purpose had always been to transport HLNG to Poseidon and this could

still be achieved after the Vessel was released. This is amply demonstrated by the Respondent’s

conducts: (1) they made no objection after being informed that the Vessel had restarted its

voyage to Poseidon in performance of the Charterparty on 6 October 2015;44 otherwise, they

ought to have informed the Claimant immediately that the cargo should not be shipped; and (2)

the cargo of HLNG had not been unloaded throughout the detention period. If shipment were no

longer necessary, it is difficult to understand why the HLNG had been stored on board for the

whole detention period. This conclusion is further fortified by the fact that the HLNG is non-

perishable.

34. The only change from the Respondent’s perspective is that it is now liable for demurrage. This

fact alone however cannot constitute frustration as the performance of the Charterparty has

merely become more expensive and onerous as in The Eugenia.

35. Indeed, it is submitted that this is a case of imprudent bargain as in Davis Contractors. Clause 9

of the Charterparty protects the Claimant by providing for delay during the period between the

tendering of the NOR and the departure from the Loading Place, whereas Clause 9(e) is included

to protect the Respondent where there are any interruptions to laytime. The Force Majeure

42 Davis Contractors Ltd v. Fareham Urban District Council [1956] A.C. 696 at 731 (per Lord Radcliffe). 43 Ocean Tramp Tankers Corp v V/O Sovfracht (The Eugenia) [1964] 2 Q.B. 226 at 240. 44 Moot Scenario at 68.

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Clause also provides for the risk involved in hindrance in shipping of products and intervention

of customs authorities. Although the risk of government intervention was reasonably foreseeable

as aforementioned, the Respondent did not opt to insert specific clauses to cover such risk. The

Respondent accepted the terms after arm’s length negotiation, and should not now be allowed to

escape from the bargain.

(iii) The date of frustration, if any, ought to be 30 April 2015

36. Even if this Tribunal finds that the delay constitutes a frustration, it is submitted that frustration

only occurred on 30 April 2015, and thus the Respondent would still be liable for demurrage

until then.

37. Lord Roskill in The Nema observed that “where the effect of that event is to cause delay in the

performance of contractual obligations, it is often necessary to wait upon events in order to see

whether the delay already suffered, and the prospects of further delay from that cause” would

make the relevant contractual obligations radically different.45 In The Chrysalis, frustration only

occurred until two months after the outbreak of the war when it became clear that the conflict

would be protracted.46

38. Although the test of frustration is objective, the House of Lords in Bank Line emphasised the

importance of taking into account the views of the parties in understanding whether the

interruption was sufficiently serious.47 The assessment of the situation by the parties was

particularly relevant in The Eugenia, where Donovan L.J. noted the conclusion of a new charter

45 The Nema [1981] 2 Lloyd’s Rep 239 (HL) at 253-254. 46 Finelvet A.G. v Vinava Shipping Co. Ltd. (The Chrysalis) [1983] 1 W.L.R. 1469. 47 [1919] A.C. 435 at 460. Lord Sumner expressed that the parties “must have known more about it than I do [and] there is no reason why I should not think so.”

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to fulfill the same purpose demonstrated that the blockage of the Suez Canal did not lead to a

fundamental change in the parties’ contractual obligation but merely an increase in cost.48

39. Similar to The Chrysalis, it is submitted that one should adopt a wait-and-see approach as the

prospect of future delay was uncertain immediately after the coup: (1) the occurrence of the

coup was abrupt and it was premature to assess its impact; it was unknown whether President

Simmons would suddenly resign like what happened on 30 September 2015;49 and (2) the

Respondent, acting like any reasonable businessmen, did not seek to discharge the Charterparty

instantly; instead, they urged the Claimant to secure the release of the Vessel on 22 October

2014;50 likewise, they did not see fit to invoke the option to cancel under the Force Majeure

Clause.

40. It was only until 30 April 2015 that the Respondent alleged frustration and attempted to arrange

for an alternative vessel to ship the same cargo to Poseidon. This act has two implications: (1)

the Respondent had just formed the view that the detention of the Vessel could be infinite given

the lack of progress achieved after 6 months; and (2) the Respondent maintained the view that

the original commercial purpose could be achieved by way of an alternative vessel – the position

being analogous to The Eugenia.

41. This Tribunal ought to take into account the parties’ assessment and ought not to displace it

without compelling reasons as in Bank Line. What is critical here is the assessment of the

political landscape in Hades. The Respondent must possess the most adept understanding as it

48 Ocean Tramp Tankers Corp v V/O Sovfracht (The Eugenia) [1964] 2 Q.B. 226 at 248. 49 Moot Scenario at 67. 50 Moot Scenario at 61.

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has been traditionally based in Hades.51 Therefore, frustration only occurred on 30 April 2015

where it became more certain that the delay could be substantial.

V. Laytime and demurrage

42. It is the Claimant’s case that since laytime continuously ran from 3 October 2014 to 6 October

2015, pursuant to Clause 9(c)(i) of the Charterparty, the Respondent is liable for demurrage in

the sum of US$17.9 million in respect of 358 days over and above laydays allowed under the

Charterparty.

(1) Laytime commenced on 3 October 2014

43. Before laytime is allowed to run and a charterer is required to start loading, three conditions

must be met: (1) the vessel must have arrived at the destination specified in the charter; (2) the

vessel must be ready and in a fit condition to receive her cargo; and (3) when required, notice of

her readiness must have been given to the charterer.52 When these conditions have been met, the

vessel is an arrived ship and laytime begins to run.

44. It is submitted that the three conditions were clearly satisfied on 3 October 2014. Firstly, the

Vessel arrived at the Port on 3 October 2014 at 0915, which was the loading destination

specified in Box 5 of the Charterparty.53 Secondly, the Vessel was ready and fit to receive her

cargo, and had indeed commenced loading on the same day at 1430. Thirdly, the NOR, which

was required under Clause 9(c)(i) of the Charterparty, was duly issued by the Master on the

same day indicating that the Vessel was ready and fit to receive her cargo. Accordingly, the

Vessel became an arrived ship and laytime started to run on 3 October 2014.

51 Moot Scenario at 26. 52 John Schofield, Laytime and Demurrage (6th Edition) at [3.1] and Simon Baughen, Summerskill on Laytime (5th Edition) at [4.01]. 53 Moot Scenario at 29.

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(2) Laytime continued to run until 6 October 2015

(i) Laytime ends at the Vessel’s departure of the Port

45. According to Clause 9(c)(i) of the Charterparty, time permitted for loading, which was 10 WWD

SHINC, was calculated from the time when the NOR was tendered “until the vessel left the

Loading Place”.54 Box 5 of the Charterparty designated the Loading Place as “1 safe port,

Hades”.55 Whether the Vessel has left the Loading Place therefore depends on whether the

Vessel has left the Port, which in turn depends on what constitutes a “port” under the

Charterparty.

(ii) Definition of a port

46. It is first submitted that the geographical distance of a vessel from where it loads its cargo is not

determinative of the question of whether the vessel is still within the “port”.56 The court would

look at the commercial meaning of the term,57 which involves the consideration of the views of

the business people using the loading and discharging facilities and the extent of the activities of

various port authorities, whether exercised by virtue of a specific law or regulation, and whether

acknowledged by port users or not.58 It was held that when: (1) “port authorities” were

exercising authority over ships within a certain space of water, and that (2) shipowners and

shippers who had ships within that space of water were submitting to the jurisdiction claimed by

those authorities, whether legally or not, whether according to an Act of Parliament or not, that

was “the strongest possible evidence that shipowners, the shippers and the port authorities have

54 Moot Scenario at 34. 55 Moot Scenario at 29. 56 A distinction between the legal and geographical definitions of a port was emphasised by Lush J in Nicholson v Williams (1871) LR 6 Q.B. 632 at 641, who made clear that ports were “not merely geographical expression”, but which were “necessarily defined by the authority which creates them”. 57 Simon Bauchen, Summerskill on Laytime (5th Edition) at [4.13]. 58 Ibid. Sailing-Ship Garston Co v Hickie & Co (1855) 15 Q.B.D. 580 at 588 (per Brett MR). This principle was applied by Hirst J in President of India v Olympia Sauna Shipping Co SA (The Ypatia Halcoussi) [1984] 2 Lloyd’s Rep 455 at 457.

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all come to the conclusion to accept that space of water in which the authority is so exercised as

‘the port’ of the place”.59

47. As to what kind of power qualifies as a power exercised by a port authority within the area of a

port, it was held that what ought to be considered was the limits within which that power was

exercised for purposes connected with the loading and unloading, the arrival and departure of

ships.60 Lord Reid similarly held in The Johanna Oldendorff that “those [powers] which regulate

the movements and conducts of ships would seem to afford a good indication.”61

48. Applying these principles, it is submitted that the Vessel was still within the Port when it was

intercepted by the Coast Guard on 8 October 2014. When Captain Jim Payne of the Coast Guard

issued direction to the Master to return to Hades, he was exercising power over the Vessel as a

“port authority” since such power was exercised in connection with the departure of the Vessel.

The Master, by complying with the direction, was submitting to the jurisdiction claimed by the

Coast Guard. It is irrelevant whether the direction by the Coast Guard was legal or not, although

it would be submitted in paragraph 59 below that in any event such direction was legal.

(3) The Respondent is liable for demurrage for 358 days

(i) Calculation of laytime and demurrage

49. According to Clause 9(c)(i) of the Charterparty, time permitted for loading was 10 WWD

SHINC. It is not disputed that the 358 days are WWD.

59 Sailing-Ship Garston Co v Hickie & Co (1855) 15 Q.B.D. 580 at 589 (per Brett MR). See also John Schofield, Laytime and Demurrage (6th Edition) at [3.61]. 60 Sailing-Ship Garston Co v Hickie & Co (1855) 15 Q.B.D. 580 at 589. 61 [1974] A.C. 479 at 535.

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50. Furthermore, unless the Charterparty provides for portions of a day, then prima facie the

Claimant is entitled to a whole day’s demurrage if any time is used.62 Laytime commenced on 3

October 2014 as submitted in paragraph 44 above. Since the Vessel was prevented from leaving

the Port by the Coast Guard on 8 October 2014, it had not left the Loading Place and laytime

continued to run. The allowable laytime under the Charterparty ended on 12 October 2014.

Demurrage started to accrue from 13 October 2014 onwards at the rate of US$50,000/day until 6

October 2015, when the Vessel eventually left the Loading Place, totalling 358 days.

Accordingly, demurrage claimed amounts to US$17.9 million.63

(ii) The Respondent is liable for demurrage in respect of the entire 358 days

51. Liability for demurrage is absolute and is not dependent upon the fault of the Respondent.64

Once laytime has begun, it runs continuously unless express words in the Charterparty to the

contrary, or that the shipowners remove the ship for their own purposes or to suit their

convenience, or that the delays have been caused by the fault of the shipowner.65 The Claimant

submits that the delay here was not caused by the fault of the Claimant and no express words in

the Charterparty relieved the Respondent from demurrage liability.

(a) The delay was not caused by the fault of the Claimant

52. The Respondent bears the burden to prove that the delay was caused by the fault of the Claimant

as the shipowner.66 It is nevertheless submitted that the delay was not caused by any fault of the

Claimant.

62 John Schofield, Laytime and Demurrage (6th Edition) at [6.22], citing Commercial Steamship Co v Boulton (1875) L.R. 10 Q.B. 346 at 349 (per Lush J), who remarked that “there is no ground for saying that in the case of demurrage there can be any division of a day, without express stipulation to that effect.” 63 Calculation: US$50,000/day*358 days (from 13 October 2014 to 6 October 2015). See Moot Scenario at 70. 64 Julian Cooke and others, Voyage Charters (4th Edition) at [16.2]. 65 Viscount Finlay in William Alexander v Akt. Hansa [1920] A.C. 88 at 94. Simon Baughen, Summerskill on Laytime (5th Edition) at [8.01] and [10.42]. 66 Julian Cooke and others, Voyage Charters (4th Edition) at [15A.140].

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53. It was held in Gem Shipping Co of Monrovia v Babanaft (Lebanon) SARL (The Fontevivo) that

the mere fact that the shipowner, by some acts of his own, prevented the ship from loading or

discharging was not enough to prove fault on the part of the shipowner. 67 It is accepted that a

master is a shipowner’s agent,68 whose acts and omissions can sometimes be attributed to the

shipowner. It is however submitted that neither the Claimant nor the Master was at fault which

interrupted the running of laydays. The mere fact that the Master returned to the Port under the

direction of the Coast Guard was not sufficient to interrupt the laytime because: (1) the Master

was entitled to return given his duties and rights; (2) it was a necessary deviation in the

circumstances; (3) the interruption was an extraneous event without the fault of any party; and/or

(4) the Master was required to return under Hades law.

(1) The Master was entitled to return given his duties and rights

54. A master enjoys the greatest and widest latitude in professional judgment so long as he is acting

in good faith.69 A master has the ultimate duties and rights to judge on the spot the situations of

the ship and cargo and to decide the proper safety measures.70

55. It is submitted that the Master’s decision to return to the Port was a proper exercise of his

discretion. The Vessel was subject to a sudden and unexpected interruption and the Master had

to exercise his judgment on the spot. The Coast Guard ordered the Master to return on the basis

that he was the Master of a Hades flagged vessel, which was on its face a valid instruction to

comply with (see paragraph 59 below). It would be undesirable and destructive to the proper

67 [1975] 1 Lloyd’s Rep 339 at 342 (per Donaldson J). 68 Tronson v Dent (1853) 8 Moo P.C.C. 419 at 499. 69 United Geophysical Co., 231 F.2d 816, 819 (5th Cir. 1956), cited in John AC Cartner, Richard P Fiske and Tara L Leiter, The International Law of the Shipmaster at [4.9]. It was said that a master’s judgment is given great deference because “commanding officer must be left free to exercise his own judgment. Safe navigation denies the proposition that the judgment and sound discretion of the captain of a vessel must be confined in a mental strait-jacket.” See The Lusitania, 251 F. 715 (S.D.N.Y. 1918), cited in John AC Cartner, Richard P Fiske and Tara L Leiter, The International Law of the Shipmaster at [4.9]. 70 John AC Cartner, Richard P Fiske and Tara L Leiter, The International Law of the Shipmaster at [10.1].

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exercise of discretion by a Master if such a prudent act of safety should nonetheless be seen as a

fault. Accordingly, there was no fault to be attributed to the Claimant which justified an

interruption to the laytime.

(2) It was a necessary deviation by the Master in the circumstances

56. Further or alternatively, where a master’s refusal to sail was reasonable, laytime continued to

count.71 A master has the power to delay or deviate course when the ship or cargo will be

exposed to some imminent peril;72 he may indeed be obliged to do so in fulfilment of his implied

duty to take reasonable care of the cargo.73 He must follow the safest seamanlike route to his

destination.74

57. It is submitted that the Master acted reasonably when the Vessel was being intercepted by the

Coast Guard. It was not sufficiently clear whether the Vessel was within or outside the territorial

waters of Hades.75 In light of the probable enforcement of the Coast Guard’s direction as well as

the strong opposition by the Hades Government at that time, it was reasonable and prudent for

the Master to comply with the direction in order to avoid a hostile capture and to protect the

safety of the crew members on board. It was held in The Teutonia that where the master properly

exercises his necessity authority to delay or deviate, the shipowner is entitled to full payment of

the freight even if the charterers obtain the goods short of the port of destination.76 By analogy,

it is submitted that the Claimant is entitled to full payment of demurrage since the Master

exercised his authority to deviate reasonably.

71 The Hans Leonhardt S.M.A. 2820 (1991). 72 John AC Cartner, Richard P Fiske and Tara L Leiter, The International Law of the Shipmaster at [9.8]. 73 Julian Cooke and others, Voyage Charters (4th Edition) at [12.10], citing The Teutonia (1872) L.R. 4 P.C. 171. 74 John AC Cartner, Richard P Fiske and Tara L Leiter, The International Law of the Shipmaster at [10.2]. 75 Moot Scenario at 74. 76 (1872) L.R. 4 P.C. 171.

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(3) The interruption was an extraneous event that was not the result of fault of any party

58. Further or alternatively, where some extraneous event effectively delayed both the charterer and

the shipowner from performing their respective parts in loading, because of the nature of fixed

laytime, demurrage would still be payable by the charterer if the time allowed was exceeded.77 It

is submitted that the ultimate cause of the interception and the subsequent delay was the change

in government control, which was an extraneous event not within the control of the parties, and

thus demurrage would still be payable by the Respondent.

(4) The Master was required to return under Hades law

59. Further or alternatively, the order by the President amounted to a presidential decree and

therefore had the force of law within Hades. It was enforceable by an officer of the Hades

government, including the Coast Guard, anywhere in the lands and territories of Hades. Since

the Vessel carried the Hades flag, and the law of the flag governs all matters of discipline on a

ship and all things done on board which affect the ship and those belonging to her,78 a

presidential decree could be enforced on board the Vessel. In addition, Article 92 of The United

Nations Convention on the Law of the Sea (“The UNCLOS 1982”)79 provides that save in

exceptional cases expressly provided for in an international treaty or in the UNCLOS 1982, ships

shall be subject to the exclusive jurisdiction of the flag state on the high seas.

60. It is accordingly submitted that in this case, since the Vessel bore the flag of Hades, the Coast

Guard, on behalf of the Hades government, had exclusive jurisdiction over the Vessel, regardless 77 John Schofield, Laytime and Demurrage (6th Edition) at [4.51]. 78 Lauritzen v Larsen 345 U.S. 571 (1953) at 584-586. See also The Mecca [1895] C.A. 95 at 107, where Lindley L.J. commented that Admiralty had no jurisdiction over any causes of action arising in foreign countries beyond the seas, but not on the high seas. See also Government of the Republic of Spain v National Bank of Scotland 1939 S.C. 413 at 421-422 in which Lord Jamieson, citing Lord Atkin’s judgment of the Judicial Committee of the Privy Council in Chung Chi Cheung v. The King, [1938] W. N. 395, pointed out that “every state has jurisdiction over ships flying its flag on the high seas, and may apply its law, civil and criminal, to all on board, the justification of the rule being that some law must prevail, not that the ships are to be regarded as floating portions of the state's territory.” 79 The UNCLOS 1982 defines the rights and responsibilities of states in the use of the ocean. It has entered into force in Australia on 15 November 1994.

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of whether the Vessel was within Hades water or on the high seas at the time of interception.

The Master was legally obliged under the law of Hades to return to the Port as ordered by the

Coast Guard, and was hence not at fault by his act of compliance.

(b) Further or alternatively, the delay was caused by the Respondent’s fault

61. The law imposes an implied obligation on a shipper not to ship dangerous cargo without giving

notice to the carrier so as to enable the carrier to take suitable precautions accordingly.80

Liquefied gases amount to dangerous goods under the UN Recommendations on the Transport

of Dangerous Goods.81 Further, a cargo would fall within the implied term if it is unlawful and

likely to subject the ship to delay, detention or seizure.82 The duty to give notice is an absolute

contractual duty, and not merely one to give notice of any dangerous characteristics of which the

shipper was or ought to have been aware.83 A shipper undertakes not to ship dangerous goods

unless communicated to the owner of such risks.84

62. The Claimant had no knowledge as to the risks of HLNG, and no communication was made by

the Respondent to the Claimant as to the risks of government intervention due to its

controversial nature. The delay was thus caused by the Respondent’s breach of his implied duty

in shipping the HLNG when there was an obvious risk that the Vessel would be prohibited from

departing by the Hades government.

80 Julian Cooke and others, Voyage Charters (4th Edition) at [6.49]. 81 United Nations Recommendations on the Transport of Dangerous Goods Model Regulations Volume 1 (17th revised Edition) at [2.2]. 82 Julian Cooke and others, Voyage Charters (4th Edition) at [6.49]-[6.50], [6.53]-[6.58]. 83 Julian Cooke and others, Voyage Charters (4th Edition) at [6.49]. See also Mitchell Cotts v Steel [1916] 2 K.B. 610 at 614; The Darya Radhe [2009] E.W.H.C. 845 at [27]-[31], [2009] 2 Lloyd’s Rep 175; and Julian Cooke and others, Voyage Charters (4th Edition) at [6.58]. 84 Mitchell Cotts v Steel [1916] 2 K.B. 610 at 614.

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(c) No exception to laytime applies to interrupt the laytime

63. It is first submitted that the Respondent bears the burden of proving that any exceptions in the

Charterparty apply in this case.85 Exception clauses are construed contra proferentem.86 In this

case, the Respondent alleges that the delay was by reason of “inability or inefficiency of the ship

to load” within the meaning of Clause 9(e) of the Charterparty which justified an interruption to

laytime. It is submitted that there was no such inability to load as the Vessel had already

completed loading on 6 October 2014 at 2350.87 The exception therefore did not apply in this

case to interrupt the laytime, and the Respondent remained liable for the demurrage.

(4) Further or alternatively, the Claimant claims for detention at demurrage rate

64. In the event that this Tribunal finds that the Vessel left the Port on 7 October 2014 and no

demurrage was accrued, the Claimant claims damages in detention. A shipowner is entitled to

claim damages in detention where a vessel is delayed by default of the charterer, including

delays after the completion of cargo operations.88 Damages for detention is frequently assessed

in demurrage rate since it represents an estimate by the parties of the daily value of the ship.89

As submitted in paragraphs 61-62 above, the Respondent was at fault. Therefore, the Claimant

claims damages in detention at the demurrage rate in respect of 363 days (8 October 2014 to 6

October 2015), in the sum of US$18.15 million.

85 Julian Cooke and others, Voyage Charters (4th Edition) at [15A.152], [15A.156] and [15A.157]. The Respondent has to prove, for example, that that the alleged event causing the delay was an excepted event within the meaning of the exception clause and the event was the proximate cause of the delay, and that the charterer exercised due diligence to avoid the consequences of the excepted event. 86 Photo Production Ltd v Securicor Transport Ltd [1980] 2 W.L.R. 283 at 292. 87 Moot Scenario at 54. 88 John Schofield, Laytime and Demurrage (6th Edition) at [8.1]. 89 Zim Israel Navigation Co Ltd v Tradax Export SA (The Timma) [1970] 2 Lloyd’s Rep. 409; Rashtriya Chemicals & Fertilizers Ltd v Huddart Parker Industries Ltd [1988] 1 Lloyd’s Rep 342.

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VI. Claim for Salvage Reward

65. In relation to the Respondent’s claim for salvage, since there is no clause under the Charterparty

governing salvage operation, common law principles should apply and the Respondent bears the

burden to prove that three conditions are satisfied before it is entitled to salvage reward: (1) the

vessel was in peril at sea or in navigable waters when salvage services were rendered;90 (2) the

services were rendered “voluntarily” in the sense of being rendered without a legal obligation to

do so on the part of the salvor;91 and (3) the salvage operation, complete or partial, was

successful with a contribution to that success being made to the salvor.92

66. The Claimant’s case is that since the first requirement is not satisfied, the Respondent is not

entitled to salvage reward. The requisite degree of peril or danger is a real and appreciable

danger.93 The sole test is whether the towing vessel was rescuing the vessel from danger or

anticipated danger. It is submitted that in this case, there was no immediate or apprehended

physical danger to the cargo or the Vessel since the Vessel was only immobilised and was

otherwise physically safe at the sea. Once the Vessel is in safety one cannot even start a salvage

service at all. In The Philotaxe,94 it was similarly remarked that there is no general rule that,

where a ship is without motive power, she and her cargo are in danger until she is repaired.

67. The Vessel lost momentum immediately after it was released in open sea. It is likely that the

location was not far from the Port and many other boats or tug operators were available for

assistance nearby. Further, the fact that the proximity of the Vessel and the Port allowed the

90 The Wilhelmine (1842) 1 Notes of Cases 376 at 378; The Calyx (1910) 27 T.L.R. 166. 91 The Sarpen [1916] 306, 13 Asp. M.L.C. 370 (CA). 92 The Sarpedon (Cargo ex) (1877) 3 P.D. 28, 3 Asp M.L.C. 509; The Port Victor (Cargo ex) [1901] P. 243 at 255-256, 9 Asp M.L.C 182 at 184 (CA). Similarly Article 12(1) of the International Convention on Salvage (1989), which has force of law in Australia pursuant to paragraph 241 of the Commonwealth of Australia Navigation Act 2012 and Section 17 of the Navigation Regulation 2013, stipulates that salvage operations which have had a useful result give right to a reward. 93 Halsbury’s Law of England, Volume 94 (2008) at [928], citing The Charlotte (1848) 3 Wm Rob 68 at 71 (per Dr Lushington). 94 (1873) 2 Asp. M.L.C. 141 at [830].

25

Master to call for help from Port authorities, and that towage services were readily available,

means that the Respondent’s rescue was not necessary at all. It is further submitted that the

services rendered were merely towage and not salvage given the minor nature of the assistance.

68. In any event, even if this Tribunal is of the view that both the Vessel and the cargo were being

salved by the Respondent’s towing vessel, it is submitted that the Respondent, being the cargo

owner, is liable for payment of the reward representing its share in the salvage in respect of the

value of the cargo salved.

VII. Conclusion

69. In light of the analysis above, it is submitted that this Tribunal should allow the Claimant’s

claim for demurrage and dismiss the Respondent’s counterclaim for salvage reward.