TWENTIETH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2019 IN THE MATTER OF AN ARBITRATION HELD IN LONDON Claimant Respondent Panther Shipping Inc Omega Chartering Limited MEMORANDUM FOR THE CLAIMANT TEAM NO. 4 Jessica Rapana Nicholas Troy Quinton Roberts Reuben Pemberton-Ovens
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TWENTIETH ANNUAL INTERNATIONAL MARITIME LAW
ARBITRATION MOOT COMPETITION 2019
IN THE MATTER OF AN ARBITRATION HELD IN LONDON
Claimant Respondent
Panther Shipping Inc Omega Chartering Limited
MEMORANDUM FOR THE CLAIMANT
TEAM NO. 4
Jessica Rapana
Nicholas Troy
Quinton Roberts
Reuben Pemberton-Ovens
i
TABLE OF CONTENTS
LIST OF AUTHORITIES ............................................................................................................. iii
LIST OF ABBREVIATIONS ....................................................................................................... xiii
STATEMENT OF FACTS .............................................................................................................. 1
PART ONE: HULL FOULING ...................................................................................................... 2
I THE RESPONDENT BREACHED THE CHARTERPARTY BY FAILING TO CLEAN
THE VESSEL’S HULL PRIOR TO REDELIVERY .............................................................. 2
The Respondent was obliged to clean the Vessel’s hull ........................................ 2
The Respondent was not prevented from cleaning the Vessel’s hull ..................... 3
(i) The Respondent was at liberty to call upon any port within Wahanda
range ............................................................................................................. 4
(ii) The quarantine only prevented the Vessel from berthing at Wahanda
port ................................................................................................................ 5
(iii) The Claimant did not prevent cleaning at North Titan or South Island ....... 5
II THE RESPONDENT CANNOT LIMIT ITS LIABILITY ........................................................ 6
All costs incurred travelling to South Island were reasonable ............................... 6
The Respondent’s lump sum offers do not alter its liability .................................. 7
PART TWO: REDELIVERY ......................................................................................................... 7
I THE RESPONDENT FAILED TO REDELIVER THE VESSEL WITH REASONABLE
Shindler v Northern Raincoat Co Ltd [1960] 1 WLR 1038, 1049 (Diplock J). 35 The Alexandros T [2014] 2 Lloyd’s Rep 579, 592 [58], 595 [72] (Flaux J); Re The Alexandros T [2014] 1 Lloyd’s
Rep 223, 253 [153]–[155] (Lord Mance). 36 BIMCO Special Circular No. 3 (24 June 2013), 3. 37 Procedural Order No. 2, [6]. 38 Moot Problem, 37, 52. 39 See Moot Problem, 69. 40 See Moot Problem, 40.
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the Vessel with reasonable diligence; and (II) the Respondent is liable for the loss flowing
from its delay in redelivery.
I The Respondent Failed to Redeliver the Vessel with Reasonable Diligence
28 The Claimant contends that the Respondent was obliged to exercise its best endeavours
to redeliver the Vessel. The Respondent breached this obligation by failing to ascertain
whether redelivery of the Vessel was possible at alternative ports within Wahanda range.
29 The Claimant accepts that the words ‘without guarantee’ in the Fixture Recap rendered
the charter time period of 50-55 days an estimate rather than a binding term.41
Notwithstanding that a time charter trip may lack a strict date for redelivery, a charterer
must still redeliver the vessel.42 Where there is no binding time stipulation, a charterer
remains obliged to use their best endeavours to perform redelivery.43 The exercise of best
endeavours requires a charterer to act with reasonable diligence.44
30 The Charterparty was for one time charter trip to Wahanda range.45 The Vessel was to
be redelivered at one safe port in Wahanda range, at the Respondent’s option.46 North
Titan, South Island and Wahanda are all ports within Wahanda range.47
31 The Charterparty did not stipulate a date for redelivering the Vessel. Accordingly, the
Respondent was obliged to exercise reasonable diligence in performing its redelivery
obligation. On 11 May 2016, the Vessel was quarantined and prevented from berthing at
41 The Lipa [2001] 2 Lloyd’s Rep 17, 19 (Smith J); Japy Freres & Co v RWJ Sutherland & Co (1921) 6 Ll L Rep
381, 382 (Bankes LJ); The Lendoudis Evangelos II [1997] 1 Lloyd’s Rep 404, 405–406 (Longmore J). 42 The Peonia [1991] 1 Lloyd’s Rep 100, 107 (Bingham LJ); The Rijn [1981] 2 Lloyd’s Rep 267, 270 (Mustill J). 43 See especially The Peonia [1991] 1 Lloyd’s Rep 100, 117 (Slade LJ), 117 (Balcombe LJ). See also HG Beale
(ed), Chitty on Contracts (Sweet & Maxwell, 33rd ed, 2018) 1587, 1602–1603 [21-021]; The Democritos [1976] 2
Co Ltd v Schiffahrts-Gesellschaft “Hansa Murcia” mbH & Co KG [2013] 1 Lloyd’s Rep 273, 279 [21] (Cooke J). 44 See generally The Peonia [1991] 1 Lloyd’s Rep 100, 117 (Slade LJ); The Democritos [1976] 2 Lloyd’s Rep 149,
152 (Lord Denning MR), 154 (Bridge LJ); Bank Line Ltd v Arthur Capel & Co [1919] AC 435, 460–461 (Lord
Wrenbury); Ford v Cotesworth (1868) LR 4 QB 127, 133–137 (Cockburn CJ, Blackburn and Lush LJJ); Castlegate
Steamship Company Ltd v Dempsey & Co [1891] 8 TLR 102, 102–103 (Wright J); Castlegate Steamship Company
Ltd v Dempsey & Co [1892] 7 Asp Mar Law Cas 186, 189 (Lopes LJ); York Air Conditioning & Refrigeration
Wahanda.48 The Respondent remained at liberty to order the Vessel to call North Titan
or South Island49 for discharge and subsequent redelivery.50 The Respondent did not
attempt to contact either of those ports to ascertain whether the Vessel could berth,
discharge, and be redelivered. Instead the Vessel remained idle at Wahanda anchorage
for 50 days.51 The Respondent breached its obligation to use reasonable diligence and,
in fact, made no attempt to redeliver the Vessel at the two available ports.
II The Respondent is Liable for the Loss Flowing from its Delay in Redelivery
32 The Claimant suffered USD 15,330,000 in lost hire payable under the Champion
Fixture.52 The Parties do not currently dispute the quantum of the Claimant’s damages.53
33 The Claimant argues that the Respondent is liable for the loss of the Champion Fixture
because: (A) the Respondent caused the loss of the Champion Fixture; (B) the loss of the
Champion Fixture was not too remote; and (C) the Claimant took all reasonable steps to
mitigate its loss. Further, (D) the Respondent is liable for the loss of the option to extend
the Champion Fixture.
The Respondent caused the loss of the Champion Fixture
34 A party is liable for damages where a causal link is established between a breach and the
loss suffered.54 To establish causation, an injured party must satisfy factual and legal
causation.55 Factual causation is satisfied where the loss is attributable to the actions of
48 Moot Problem, 24. 49 See above Memorandum for the Claimant, [15]–[21]. 50 Moot Problem, 3–4, 48. 51 See generally Moot Problem, 25; Procedural Order No. 2, [7]. 52 Moot Problem, 69. 53 Procedural Order No. 2, [14]. 54 Malik v Bank of Credit & Commerce International SA [1998] AC 20, 51 (Lord Steyn). 55 The Sivand [1998] 2 Lloyd’s Rep 97, 101 (Evans LJ); Royal Greek Government v Minister of Transport
(1950) 83 Ll L Rep 228, 236 (Devlin J).
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the party in breach as a matter of common sense.56 Legal causation is satisfied where a
breach of contract is an ‘effective’ or ‘dominant’ cause of the loss.57
35 The Respondent failed to inquire about, or attempt to perform, redelivery at North Titan
or South Island. This resulted in the Vessel remaining at anchorage for 50 days. As a
matter of common sense, the Respondent’s complete inaction during the quarantine
period prevented the Vessel from being ready for delivery into the Champion Fixture.
36 Further, the Respondent’s failure to make any inquiries regarding the ability to berth at
North Titan or South Island was the effective cause of the unreasonable delay in
redelivery. As such, the loss of the Champion Fixture was caused by the Respondent.
The loss of the Champion Fixture was not too remote
37 A loss is not too remote if, at the time of contracting, such loss was within the reasonable
contemplation of the parties as a not unlikely result of the breach.58 A loss is in the
reasonable contemplation of the parties if it occurs in the usual course of things.59 The
parties need only contemplate the type of loss, not its extent.60 A vessel’s next fixture
will ordinarily begin as soon as possible following the conclusion of its previous fixture.61
38 The Respondent ought to have known that, at the time of contracting, the Vessel was
likely to be chartered for a subsequent fixture. It is immaterial that the Respondent did
not know the duration or rate of hire of the Champion Fixture. The Charterparty was only
estimated to run for 50-55 days.62 The Respondent knew that the Claimant intended to
56 Galoo Ltd v Bright Grahame Murray (a firm) [1994] 1 WLR 1360, 1373–1374 (Glidewell LJ); March v E &
MH Stramare Pty Ltd (1991) 171 CLR 506, 515 (Mason CJ); Alexander v Cambridge Credit Corporation Ltd
(1987) 12 ACLR 202, 247–248 (McHugh JA); The Sivand [1998] 2 Lloyd’s Rep 97, 101 (Evans LJ). 57 Monarch Steamship Co Ltd v Karlshamns Oljefabriker AB [1949] AC 196, 227–228 (Lord Wright); Galoo Ltd
v Bright Grahame Murray (a firm) [1994] 1 WLR 1360, 1374 (Glidewell LJ). 58 Hadley v Baxendale (1854) 9 Exch 341, 354–355 (Baron Alderson); The Heron II [1969] 1 AC 350, 385 (Lord
Reid), 424 (Lord Upjohn); The Achilleas [2009] 1 AC 61, 78 [52] (Lord Rodger), 90–91 [93] (Baroness Hale). 59 The Achilleas [2009] 1 AC 61, 78 [52] (Lord Rodger), 90–91 [93] (Baroness Hale). 60 H Parsons (Livestock) Ltd v Uttley, Ingham & Co Ltd [1977] 3 WLR 990, 999–1000 (Lord Denning MR),
1006–1007 (Scarman LJ); Brown v KMR Services Ltd [1995] CLC 1418, 1437–1438 (Gibson LJ). 61 The Achilleas [2009] 1 AC 61, 89 [90] (Baroness Hale). 62 Moot Problem, 4.
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charter the Vessel for 3-5 years.63 As such, the Respondent ought to have known that the
Claimant would seek to charter the Vessel shortly after this estimated time period. If the
Respondent breached its obligation to exercise reasonable diligence in performing
redelivery, it was not unlikely that any delays thereby caused would result in the loss of
a subsequent fixture. Accordingly, the loss of the Champion Fixture arose in the ordinary
course of things and is not too remote from the Respondent’s breach.
The Claimant took all reasonable steps to mitigate its loss
39 An injured party has an ongoing obligation to take all reasonable steps to mitigate its
loss.64 The breaching party bears the onus of proving that an injured party did not take
all reasonable steps to mitigate.65 A commercial party is only obliged to act as it would
in the ‘ordinary course of business’ to mitigate its loss.66
40 Upon the cancellation of the Champion Fixture, the Claimant immediately chartered the
Vessel for a replacement fixture of 50-55 days (Fairwind Fixture).67 The daily hire rate
of the Fairwind Fixture was higher than that of the Champion Fixture.68 Obtaining the
Fairwind Fixture was plainly a reasonable and effective act of mitigation by the Claimant.
The Respondent is liable for the loss of the option to extend the Champion
Fixture
41 Damages may be awarded where a party’s breach causes the loss of a future chance.69
Where the opportunity to benefit from a chance relies on the actions of a third party there
63 Moot Problem, 1; Procedural Order No. 2, [3]. 64 British Westinghouse Electric & Manufacturing Company Ltd v Underground Electric Railways Company of
London Ltd [1912] AC 673, 689 (Haldane LC). 65 Edwards v Society of Graphical & Allied Trades [1971] Ch 354, 377 (Lord Denning MR); Pilkington v Wood
[1953] Ch 770, 775–776 (Harman J); British Westinghouse Electric & Manufacturing Company Ltd v
Underground Electric Railways Company of London Ltd [1912] AC 673, 688 (Haldane LC). 66 British Westinghouse Electric & Manufacturing Company Ltd v Underground Electric Railways Company of
London Ltd [1912] AC 673, 689 (Haldane LC); Dunkirk Colliery Company v Lever (1878) 9 Ch D 20, 25
(James LJ); The Asia Star [2009] 2 Lloyd’s Rep 387, 392 [26] (Prakash J). 67 Moot Problem, 55. 68 Moot Problem, 32, 55. 69 Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] 1 WLR 1602, 1611 (Stuart-Smith LJ); The
Golden Victory [2007] 2 AC 353, 376 (Lord Bingham); Commonwealth v Amann Aviation Pty Ltd (1991) 174
CLR 64, 119 (Deane J).
12
must be a real or substantial, not merely speculative, chance of obtaining that benefit.70
The correct approach was summarised by Lord Reid in Davies v Taylor:71
You can prove that a past event happened, but you cannot prove that a future event will happen and
I do not think that the law is so foolish as to suppose that you can. All that you can do is evaluate
the chance. Sometimes it is virtually 100 per cent: sometimes virtually nil. But often it is somewhere
in between.
42 The Champion Fixture was for a fixed term of two years and contained a charterer’s
option to extend for a further two years.72 There are no external facts or circumstances
which suggest that Champion would be very unlikely to decline its option. It follows that
the chance of the Claimant obtaining the benefit of Champion’s option was not merely
speculative. The Claimant has been deprived of a real or substantial chance of a benefit,
and therefore the Respondent is liable to compensate the Claimant for that loss.
PART THREE: OFF-HIRE
43 The Claimant argues that it does not owe the Respondent USD 375,000 for overpaid hire
because the Vessel was not off-hire. The purported off-hire event was the Quarantine
Event from 7 May 2016 to 26 June 2016.
44 In time charterparties, risks associated with delay are ordinarily borne by the charterers.73
Hire is continuously payable unless a charterer can bring itself squarely within the plain
meaning of an off-hire provision.74 Restitution is not available where a charterparty
contains a contractual remedy for the repayment of overpaid hire.75
70 Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] 1 WLR 1602, 1614 (Stuart-Smith LJ); McGill
v Sports & Entertainment Media Group [2017] 1 WLR 989, 1010 [60] (Henderson LJ); Wellesley Partners LLP v
Withers LLP [2016] Ch 529; Joyce v Bowman Law Ltd [2010] EWHC 251 [54] (Vos J); John v Lucasfilm Ltd
[2018] EWHC 624 [90]–[93] (Buehrlen J). 71 [1974] AC 207, 213. 72 Moot Problem, 31. 73 The Gregos [1995] 1 Lloyd’s Rep 1, 4 (Lord Mustill); The Doric Pride [2006] 2 Lloyd’s Rep 175, 179 (Rix LJ). 74 The Doric Pride [2006] 2 Lloyd’s Rep 175, 179 (Rix LJ); The Apollo [1978] 1 Lloyd’s Rep 200, 205 (Mocatta J);
Royal Greek Government v Minister of Transport (1949) 82 Ll L Rep 196, 199 (Bucknill LJ). 75 The Trident Beauty [1994] 1 WLR 161, 164–165 (Lord Goff); Stewart (CA) & Co v Phs Van Ommeren (London)
Ltd [1918] 2 KB 560, 562–563 (Bankes LJ).
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45 The Vessel was not off-hire because: (I) clause 44 makes exhaustive provision for off-
hire events arising out of quarantine; and (II) the Quarantine Event was not an off-hire
event within the meaning of clause 44. Alternatively, (III) the Quarantine Event did not
amount to an off-hire event under clause 17.
I Clause 44 Makes Exhaustive Provision for Off-Hire Events Arising out of
Quarantine
46 Clause 17 and clause 44 of the Charterparty both make provision for off-hire events, but
are inherently inconsistent. The Claimant argues that clause 44 is the relevant and
exhaustive provision dealing with off-hire events arising out of quarantine.
47 Where clauses incorporated by reference conflict with specifically negotiated clauses, the
specifically negotiated clauses must prevail.76 Terms are inconsistent where they cannot
operate compatibly.77
48 Clause 44 was specifically negotiated between the parties, and stipulates:78
Owners shall be liable for any delay in quarantine arising from the Master, Officers, or crew having
communication with the shore or any infected area without the written consent of Charterers or their
Agents… Any time lost by such causes may be deducted as off-hire.
49 Clause 17 is a standard NYPE term, and was incorporated into the Charterparty by
reference only.79 Clause 17 relevantly provides that any ‘detention by Port State control
Royal Greek Government v Minister of Transport (1949) 82 Ll L Rep 196, 199 (Bucknill LJ). 83 Moot Problem, 22–23; Procedural Order No. 2, [3]. 84 Moot Problem, 9. 85 Moot Problem, 3–4. 86 Moot Problem, 14.
15
Respondent plainly consented to the crew’s communication with the port of West Coast
by entering into the Charterparty. The Respondent cannot bring itself within clause 44
and the Vessel was not off-hire.
III The Quarantine Event did not Amount to an Off-Hire Event under Clause 17
53 A charterer cannot claim off-hire for an event which it caused.87 In the event that clause
17 applies, the Quarantine Event which is claimed as off-hire must not have been caused
by the Respondent.
54 The Respondent was obliged to exercise reasonable diligence in discharging the Cargo
and performing redelivery of the Vessel.88 The delay arising out of the Quarantine Event
was caused by the Respondent’s own lack of diligence.89 Accordingly, the Respondent
is not entitled to recover any hire paid during the 50 days it elected to have the Vessel
remain idle at Wahanda anchorage.
PART FOUR: CARGO CLAIM
55 The Cargo Claim is brought pursuant to the terms of the ICA. The Parties incorporated
the ICA into the Charterparty90 as a mechanism for apportioning liability arising out of
third party cargo claims. The Respondent contends that pursuant to clause 8(a) of the
ICA the Claimant is liable to indemnify, or otherwise pay damages to, the Respondent
for 100% of the Receiver’s Claim.91 Alternatively, the Respondent claims pursuant to
clause 8(b) of the ICA like relief for 50% of the Receiver’s Claim.92
56 The Claimant argues that it is not liable to indemnify, or otherwise pay damages to, the
Respondent under the Cargo Claim because: (I) the Cargo Claim is time barred; (II) the
87 The Rijn [1981] 2 Lloyd’s Rep 267, 272 (Mustill J). 88 See above Memorandum for the Claimant, [29]–[31]. 89 See above Memorandum for the Claimant, [31]. 90 Moot Problem, 10. 91 Moot Problem, 74. 92 Moot Problem, 74.
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Cargo Claim cannot be validly apportioned; and, in any event (III) the Claimant’s liability
should be apportioned in the amount of 50%.
I The Cargo Claim is Time Barred
57 Clause 6 of the ICA requires that a party seeking apportionment of a cargo claim must
notify any other contracting party of its claim within 24 months from the date of cargo
delivery (Notification Timeframe).93 The Cargo was discharged and delivered on 30
June 2016.94 The Notification Timeframe expired on 30 June 2018. Clause 6 further
provides that a party seeking apportionment shall, if possible, provide any other
contracting party with all relevant details of the contract of carriage.95
58 The Claimant argues that the Cargo Claim is time barred under clause 6 of the ICA
because: (A) the Parties did not extend the Notification Timeframe; and (B) the
Respondent failed to comply with the substantive requirement of clause 6 within time.
The Parties did not extend the Notification Timeframe
59 The Parties agree that the Respondent informed the Claimant of the existence of the Cargo
Claim on 7 July 2016.96 However, on 7 July 2016, the Respondent failed to provide the
required details of the contract of carriage and the Claimant did not extend the time for
complying with that requirement.
60 The Notification Timeframe applies with respect to notification of the relevant claim for
apportionment;97 a party making a claim for apportionment then has six years to
commence proceedings.98 The Notification Timeframe applies even if a charterparty
and John Kimball, Time Charters (Informa Law, 6th ed, 2008) 353, 373 [20.71]. 98 Terence Coghlin, Andrew Baker, Julian Kenny, and John Kimball, Time Charters (Informa Law, 6th ed, 2008)
353, 373 [20.71]; The Genius Star 1 [2012] 1 Lloyd’s Rep 222, 226 [19] (Teare J); Limitation Act 1980 (UK) s 5.
17
incorporates the Hague-Visby Rules time bar.99 A failure to comply with the Notification
Timeframe irrevocably waives, and absolutely bars, any claim for apportionment under
the ICA.100
61 The Parties proceeded on the mistaken belief that the Respondent was subject to a one
year time bar to commence proceedings, as exists under the Hague-Visby Rules. On 23
May 2017, the Respondent first requested an extension for the purpose of commencing
proceedings.101 This extension was requested immediately prior to the expiry of one year
since the delivery of the Cargo. All subsequent requests were similarly formulated as
extensions for the time in which to commence substantive proceedings.102 None of the
Respondent’s extension requests so much as mentioned the Notification Timeframe. As
such, the Claimant did not grant extensions for the Notification Timeframe.
The Respondent failed to comply with the substantive requirement of clause 6
within time
62 The word ‘shall’ in clause 6 imports an obligation to provide the required details in all
circumstances where it is factually possible to do so.103 If a party fails to provide such
details within 24 months its claim for apportionment is barred.104
63 The Respondent was required to provide the available details of the contract of carriage
within the Notification Timeframe, which elapsed on 30 June 2018. The draft booking
note and bill of lading are relevant details of the contract of carriage.105 The draft booking
99 The Genius Star 1 [2012] 1 Lloyd’s Rep 222, 228 [37] (Teare J); The Strathnewton [1983] 1 Lloyd’s Rep 219,
are ordinarily capable of storing ballast.149 Notwithstanding the crew member’s error, the
correct amount of ballast was taken on and the Vessel safely completed its voyage.150
85 A ballast pump is ordinarily used to ensure the safety of the vessel. The Vessel’s ballast
system has non-return valves which can be used to elect where ballast is stored.151 The
purpose of having non-return valves in this particular system is to enable the safe storage
of cargo by allowing ballast to only be pumped into empty cargo holds.152 The crew
member’s error was solely in opening the wrong valves resulting in ballast being stored
in the wrong location. Notwithstanding the crew member’s error, the immediate purpose
that the ballast system was being used for was ensuring that the Cargo was not damaged
by ballast being pumped into Cargo Hold No. 2.
86 The crew member’s error was not an error in the management of the Vessel because the
Vessel’s safety is maintained so long as the appropriate amount of ballast is taken on and
stored in a location ordinarily capable of holding ballast. The error was not connected
with the ballast system’s primary purpose of ensuring the Vessel’s safety, rather it was
solely a mistake affecting the integrity of the Cargo. Further, because the error had no
effect on the safety of the Vessel, the Vessel was not unseaworthy by reason of an error
in stowage of the Cargo.
87 In these circumstances, the crew’s operation of the ballast system failed to ensure the safe
stowage and storage of the Cargo. Accordingly, the damage to Cargo was factually
caused by an error in its stowage or storage, rather than an error in the management of the
Vessel. Therefore, under clause 8(b) of the ICA, the Claimant is only liable to indemnify
or otherwise pay damages to the Respondent for 50% of the Cargo Claim.
149 See generally Moot Problem, 12, 46. 150 Moot Problem, 46. 151 Moot Problem, 46. 152 Chris Spencer and Nic Paines, Bulk Cargoes – Hold Preparation and Cleaning (Charles Taylor & Co Ltd,
2011), 15.
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PART FIVE: PRAYER FOR RELIEF
For the reasons set out above, the Claimant respectfully requests this Tribunal to:
FIND that the Respondent is liable for breaches of contract under the Charterparty;
AWARD damages to the Claimant and interest on the amounts claimed;
FIND that the Vessel was not off-hire at any time during the charter period; and
DECLARE that this Tribunal cannot apportion the Cargo Claim, or that the Claimant’s liability