INTERNATIONAL MARITIME LAW ARBITRATION MOOT … · INTERNATIONAL MARITIME LAW ARBITRATION –...
Transcript of INTERNATIONAL MARITIME LAW ARBITRATION MOOT … · INTERNATIONAL MARITIME LAW ARBITRATION –...
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
I
INTERNATIONAL MARITIME LAW ARBITRATION MOOT
EDITION 2015
MURDOCH UNIVERSITY
MELBOURNE
In the matter of an arbitration
BETWEEN
WESTERN TANKERS INC
Claimant
-and-
LDT PTE
Respondent
MEMORANDUM FOR THE CLAIMANT
Counsel for the Claimant:
University of Versailles, France
Team No. 6
Pierre CAPELLE
Pierre-Baptiste CHIPAULT
Arthur DAIN
Carole POMES-BORDEDEBAT
Rodolphe RUFFIE
Myriam SNOUSSI
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
II
TABLE OF CONTENTS
LIST OF ABBREVIATIONS ...................................................................................................... IV
INDEX OF AUTHORITIES .......................................................................................................... V
STATEMENT OF FACTS .............................................................................................................. 1
PART I – JURISDICTION .............................................................................................................. 2
I. The Tribunal has the power to rule on its own jurisdiction ................................................... 2
II. The Parties expressly agreed to submit the Dispute to arbitration ....................................... 2
III. The “Law and Litigation” Clause specifies London as the proper seat of arbitration
IV. All the claims brought in the present case are arbitrable .................................................... 4
V. All the claims brought in the present case fall within the scope of the arbitration Clause .. 4
PART II – MERITS ......................................................................................................................... 5
I. Preliminary issue: laws of England govern the Contract ...................................................... 5
II. Breach of the Contract .......................................................................................................... 5
A. The Respondent’s failure to pay hire for the second period ............................................. 6
1. The Respondent failed to pay hire for the second period .............................................. 6
2. The Respondent's obligation to payment is not challenged by unexpected occurences .
...................................................................................................................................... 7
B. The Respondent’s failure to perform other obligations .................................................. 11
1. The Respondent breached Clause 4. (c) of the pro-forma Shelltime 4 ....................... 11
2. The Respondent directed the Vessel to proceed to an alternative discharge place
without the required authorisation of the Claimant ........................................................... 12
3. The Respondent is liable for the discharge of the Cargo without the authorisation of
the Claimant ......................................................................................................................... 1
4. The Respondent breached the BIMCO STS Clause of the Contract ............................ 1
5. The Respondent cannot rely on the BIMCO Piracy Clause to exclude its liability .... 14
6. The Respondent breached the Contract by failing to give the Vessel voyage orders . 14
7. The Respondent’s breaches of the contract caused the Claimant’s loss ..................... 15
III. The Respondent committed maritime fraud ..................................................................... 15
A. ASA2 acts in the name of and for the account of the Respondent ................................. 15
B. The Respondent is civilly liable for the tort of deceit .................................................... 17
IV. The Respondent and ASA2 acting on its behalf are liable for negligent misrepresentation .
...................................................................................................................................................... 22
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
III
PART III – PRAYER FOR RELIEF ............................................................................................. 25
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
IV
LIST OF ABBREVIATIONS
§
Arbitration Act 1996
Co.
Corp.
Ct.
Ct. App.
Ed.
Etc.
ICC
Ibid.
Id.
Ltd
op. cit.
p.
pp.
v.
Paragraph
Arbitration Act 1996 (UK) c 23
Company
Corporation
Court
Court of Appeal
Edition
Et cætera
International Chamber of Commerce, Paris
Ibidem
Idem
Limited Company
Opus citandum
Page
Page to page
Versus
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
V
INDEX OF AUTHORITIES
(in alphabetical order)
Type of
document
Document title Page
number
Domestic
cases
AES Ust-Kamenogorsk Hydropower Plant LLP v. Ust-Kamenogorsk Hydropower Plant JSC [2011] EWCA Civ 647, §78-83 (English Ct. App.)
2
Amoco Overseas Co. v. ST Averger [1975] AMC 782, 789 (SD NY, 1975) 12
Anglo Northern v. Jones [1917] 2 KB 78 8
Armitage v. Nurse [1998] Ch 241, 250 19
Bank Line v. Capel 1918 [1919] AC 435 8
Bilta (UK) Ltd v. Muhammad Nazir [2010] All ER (D) 146 (May) 4
Bradford Third Benefit BS v. Borders [1941] 2 All ER 205 19
Clef Aquitaine SARL v. Laporte Materials (Barrow) Ltd [2000] 2 All ER 493 22
Christopher Brown Ltd v. Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte GmbH [1954] 1 QB 8, 12-3
2
Dallah Real Estate v. Government of Pakistan [2010] UKSC 46, (U.K. S.Ct.) 2
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
VI
Davis Contractors Limited v. Fareham UDC [1956] AC 696 7
Derry v. Peek [1889] 14 App Cas 337 17
Discount Records Ltd v. Barclays Bank Ltd [1975] 1 WLR 315 18
Doyle v. Olby (Ironmongers) Ltd [1969] EWCA Civ 2 at p. 167, 2 QB 158 22
Eco 3 Capital Ltd and others v. Ludsin Overseas Ltd [2013] EWCA Civ 413 18
Edgington v. Fitzmaurice [1884] 29 Ch D 459, 481 21
Fiona Trust v. Privalov [2007] All ER (D) 233 4
Freeman v. Reed [1863] 4 B. & S. 174, 184 17
Fulham Football Club Ltd v. Richards [2011] EWCA Civ 855 4
Harbour Assurance Co. (UK) Ltd v. Kansa General International Insurance Co. Ltd [1993] Lloyd’s Rep 455 2
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
VII
Howard Marine and Dredging Co. Ltd v. A. Ogden & Sons (Excavations) Ltd [1977] EWCA Civ 3 23
Huyton SA v. Peter Cremer GmbH & Co. [1999] 1 Lloyd’s Rep 620, 624 13
Homburg Houltimport BV and others v. Agrosin Private Ltd and others (The Starsin) [2003] 1 Lloyd’s Rep 571, 577-8
12
J. Lauritzen AS v Wijmuller B.V. (The Super Servant Two) [1990] 1 Lloyd’s Rep. 1 9
Joseph Constantine S.S. Line Ltd v. Imperial Smelting Corp. Ltd [1942] A.C 154, 163 8
Larkden Pty Limited v. Lloyd Energy Systems Pty Limited [2011] NSWSC 268 4
L’Estrange v. F Graucob Ltd [1934] 2 KB 394, 403 12
Lloyd v. Grace Smith & Co. [1912] AC 716 16
Lonrho Ltd v. Shell Petroleum Co. Ltd [1978] IV Y.B. Comm. Arbitrage. 320-22 (High Ct.) 5
Ludsin Overseas Ltd v. Eco3 Capital Ltd [2012] EWHC (Ch) 18
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
VIII
Mareva Navigation Co. v. Canaria Armadora SA (The “Mareva A.S.”) [1977] 1 Lloyd’s Rep 368 11
Mead v. Bebington [2007] EWCA Civ 518 21
Metall Market OOO v. Vitorio Shipping Co. Ltd (The Lehmann Timber) [2012] 2 Lloyd’s Rep 73
13
Mediterranean Shipping Company SA v. Trafigura Beheer BV (The MSC Amsterdam) [2007] 2 Lloyd’s Rep 622
13
National Carriers Ltd v. Panalpina (Northern) Ltd [1981] AC 675 8
Nomihold Sec. Inc. v. Mobile Telesys. Fin. SA [2012] EWHC 130, §59 (Comm) (English High Ct.) 2
Peekay Intermark Ltd v. Australia & New Zealand Banking Group Ltd [2006] 2 Lloyd’s Rep 511, 520
12
Per Lord Wright in A/S Tankerexpress v. Compagnie Financière Belge des Pétroles SA (Petrofina) [1948] 2 All ER 939, p. 946
7
Polhill v. Walter [1832] 3 B&Ad 114 19
Premium Nafta Products Ltd v. Fili Shipping Compagny Ltd [2007] UKLH40 4
Royscot Trust v. Rogerson [1991] 2 QB 297 22
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
IX
Smith New Court Securities Ltd v. Scrimgeour Vickers (Asset Management) Ltd [1996] UKHL 3 [1997] AC 254 (21 November 1996)
22
Spice Girls Ltd v. Aprilia World Service Bv [2002] EWCA Civ 15 23
Standard Chartered Bank v. Pakistan National Shipping Corp. (No. 2) [2003] 1 AC 959 Court of Appeal
18
The Sea Angel 2007 Edwinton Commercial Corporation & Anor v Tsavliris Russ Ltd [2007] EWHC Civ 547
8
Awards Engineering Company v. Engineering Company, Producer [1994] Final Award, ICC Case Nos. 6515 and 6516 2
Books G. Berlingieri, Time Charter, 7th Ed. 2014 2
H. Beale, Chitty on Contracts, 31st Ed., Sweet & Maxwell, 2014 Chitty on Contracts, 30th Ed., Sweet & Maxwell, 2008 9
Ph. Fouchard, E. Gaillard, B. Goldman, International Commercial Arbitration, Litec, 1996 2
B. A. Garner, Black’s Law Dictionary, 5th Ed., West Publishing Company, 1979 17
P. Todd, Chapter 2 – Introduction to Maritime Fraud: Issues Particular to Maritime Fraud”, Marine Fraud & Piracy, 2nd Ed., 2010
16
Articles R. Fentem & L. Walker, “Civil fraud – Back to basics”, Guildhall Chambers, November 2012 21
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
X
E. Wong, “Procedural issues resulting from a fraud claim in international commercial arbitration: an English law perspective”, Kluwer Law Arbitration, January 2014
4
Statutes Arbitration Act 1996 (UK) c 23 2
Law Reform (Frustrated Contract) Act 1943 9
Other International Commerce Chamber International Maritime Bureau, Piracy annual report
13
Guide to Prevention of Maritime Fraud, ICC Publication No. 370 (1980)
17
Practice note, Fraudulent misrepresentation, Practical Law Dispute Resolution
17
The Draft Hague Principles on Choice of Law in International Commercial Contracts
5
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
1
STATEMENT OF FACTS
1. On 26 May 2014, an amended Shelltime 4 charterparty with rider clauses (hereinafter the
“Contract”) was entered into between the ship-owner Western Tankers Inc., a company
incorporated in the British Virgin Islands (hereinafter the “Claimant”), and the charterer
LTD Pte, a company incorporated in Singapore (hereinafter the “Respondent”). The
Claimant and the Respondent are hereinafter referred to collectively as the “Parties” and
individually as the “Party.” The purpose of the Contract was to provide the Respondent
with a vessel (hereinafter the “Vessel”) for the carriage of petroleum products (hereinafter
the “Cargo”) from Singapore to Luanda, Angola, for a period of three months. In
particular, the Contract required the Respondent to supply the Claimant with sufficient
bunkers and to pay a monthly rent in advance. Furthermore, the Contract included an
arbitration Clause.
2. On 27 May 2014, the Master of the Vessel (hereinafter the “Master”) recommended filling
the tank with 1,500 metric tons of IFO in order to accomplish the prospected voyage.
3. On 30 May 2014, the Respondent required a credit line of 950 metric tons of IFO to fill the
fuel tank of the Vessel. On 3 June 2014, the Respondent asserted to the Master that there
would be a sufficient fuel supply off Durban or off Cape Town.
4. By 8 June 2014, the Respondent had entered into a sales contract with the company Angola
Energy Imports relating to the Cargo.
5. On 8 June 2014, two bills of lading were issued upon the loading of the Cargo (hereinafter
the “Bills of Lading”). The Vessel was ordered to proceed towards the city of Luanda.
6. On 25 June 2014, the Master had to slow down the speed of the Vessel from 13 knots to 12
knots in order to save fuel. The Respondent had not supplied the Vessel with fuel as stated.
7. On 28 June 2014, the Respondent and the Atlantic Services Agency Ltd (hereinafter
“ASA2”) both instructed the Vessel to proceed towards an alternative discharge place in
international waters off the Angolan coast. ASA2 was presented as the ship-to-ship
coordinator and was to assist the Vessel in discharging the Cargo and providing fuel
supply.
8. Between 4 and 17 July, a group of pirates hijacked the Vessel. During this period, a
quantity of the Cargo was discharged and the Vessel suffered material damage.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
2
PART I – JURISDICTION
9. The Claimant argues that this arbitral Tribunal (hereinafter the “Tribunal”) has jurisdiction
over the merits of this dispute (hereinafter the “Dispute”) because: (I) the Tribunal has the
power to rule on its own jurisdiction; (II) the Parties expressly agreed to submit the
Dispute to arbitration; (III) the arbitration Clause specifies London as the proper seat of
arbitration; (IV) all the claims brought in the case at hand are arbitrable; (V) all the claims
brought in the case fall within the scope of the arbitration Clause.
I. The Tribunal has the power to rule on its own jurisdiction
10. The Claimant contends that the Tribunal has jurisdiction over its own jurisdiction.
The competence-competence1 principle is the cornerstone of international arbitration,
according to which an arbitral tribunal has power to rule on its own jurisdiction.2 This
international standard3 of arbitration includes questions as the validity of the arbitration
clause.4
Therefore, this Tribunal has the power to rule on its own jurisdiction.
II. The Parties expressly agreed to submit the Dispute to arbitration
11. The Claimant argues that the Parties agreed to submit the Dispute to arbitration.
The present Contract is valid. A charterparty does not need to meet a particular form
requirement to be valid. In practice, it is common for parties to conclude a contract, a
“fixture,” by an exchange of correspondence.5 The general rule is that parties are bound to
an agreement when they have agreed all the terms6 and therefore intend to make a binding
contract.
1 Arbitration Act 1996. Section 30. See Fouchard, E. Gaillard, Goldman on International Commercial Arbitration, Kluwer Law International, 1999, pp. 381–416. 2 Dallah Real Estate v. Government of Pakistan [2010] UKSC 46, §§96, 103, 104 (U.K. S.Ct.); AES Ust-Kamenogorsk Hydropower Plant LLP v. Ust-Kamenogorsk Hydropower Plant JSC [2011] EWCA Civ 647, §§78-83 (English Ct. App.); Nomihold Sec. Inc. v. Mobile Telesys. Fin. SA [2012] EWHC 130, §59 (Comm.) (English High Ct.). 3 Harbour Assurance Co. (UK) Ltd v. Kansa General International Insurance Co. Ltd [1993] Lloyd’s Rep 455. See, e.g. Engineering Company v. Engineering Company, Producer, Final Award, ICC Case Nos. 6515 and 6516, 1994. 4 Christopher Brown Ltd v. Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte GmbH [1954] 1 QB 8, 12-3. 5 Francesco Berlingieri, Time Charters, Lloyd’s Shipping Law Library, 2008, 6th edition. See e.g. Welex A.G v. Rosa Maritime [2002] 2 Lloyd’s Rep. 509 (CA): “the recap is often referred to as ‘the Charterparty’.” 6 Rossiter v. Miller [1878] 3 App. Cas 1124, said, at p. 1151: “If some particulars essential to the agreement still remain to be settled afterwards, there is no contract.”
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
3
The Contract contains a valid arbitration agreement. Indeed, a “Law and Litigation” Clause
is specifically included at Clause 46. (b) and provides that:
“(b) All disputes arising out of this charter shall be referred to Arbitration in
London in accordance with the Arbitration Act 1996 (…).”
The shipbroker sent a “fully fixed recap” of the Contract negotiations. 7 The recap
mentioned “Law and Litigation:” which was deliberately left blank by the shipbroker8 in
order to respect the intention of the Parties to apply the original draft of Clause 46. (a).
Therefore, this Tribunal should acknowledge that the Parties are bound by the “Law and
Litigation” Clause contained in the valid Contract and by its terms therein.
III. The “Law and Litigation” Clause specifies London as the proper seat of
arbitration
12. The Claimant contends that the seat of arbitration is London.
The seat of arbitration is London in accordance with the Arbitration Act 1996. Clause 46.
(b) of the Contract provides that the seat of arbitration shall be London in accordance with
the abovementioned Arbitration Act. The Respondent wrongly alleges within its statement
of defence that the appropriate seat of arbitration is Singapore.
During the negotiations, the Respondent stated it was “not keen on London arbitration.”9
However, such statement cannot have any influence on the location of the seat of
arbitration. Firstly, stating “not keen” does not exclude London as the seat of arbitration.
At most, it only shows an opinion from the Respondent. Secondly, no alternative seat of
arbitration was ever suggested by the Respondent during the negotiations of the Contract.
Lastly, the Respondent made a number of amendments to the Contract. Thus, the
Respondent had the opportunity to change the location of the seat of arbitration. Yet, The
Respondent did not and seemed careless to know whether the seat of arbitration would be
London or any other city. Any representation to the contrary would show a disruptive will
to slow down the procedure and a proof of dishonesty.
Therefore, the seat of arbitration can only be London.
7 Moot problem: email sent on the 26 May 2014 at 17:09 (UTC+1) from Bill at IMWB to Charles at LDTP and to Oliver at WTI, p.5. 8 Id. 9 Moot problem: message sent on the 23 May 2014 at 12:30 (UTC+8) from Charles at LDTP and Bill at IMWMB, p. 2.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
4
IV. All the claims brought in the present case are arbitrable
13. The Claimant contends that all claims brought in the present case are arbitrable.
Under English law, there is no legal certainty regarding arbitrability.10 However, all
matters falling within the principle of party autonomy shall be arbitrable.11 The general
rule is that any matter, which may be the subject of an enforcement award, may be settled
by arbitration. 12 Nevertheless, if some disputes relating to public interest are not
susceptible to be settled by arbitration, fraud is not a public interest matter. There is no
public policy requiring issues of fraud to be decided by the courts. Hence, accusations of
fraud are capable of falling within the scope of an arbitration clause.13 English law position
is now clear: arbitrators can deal with fraud allegations.14
Therefore, all claims regarding breach of contract and tort of fraud can be settled by
arbitration.
V. All the claims brought in the present case fall within the scope of the arbitration
Clause
14. The Claimant contends that all the claims brought in the present Dispute fall within
the scope of the arbitration Clause. As per the terms of the arbitration Clause, “all
disputes arising out of this charter shall be referred to Arbitration.”
Under English law, there is no longer15 a difference between the terms “arising out” and
“arising under” as set out in the arbitration clause.16 The Tribunal has jurisdiction to rule
on any dispute arising from the contract.
On the one hand, the Claimant alleges that any breach of contract falls within the scope of
the arbitration Clause. In Lonrho v. Shell Petroleum Co. Ltd, 17 English courts implied that
“an arbitration clause is no doubt designed primarily to cover claims for breach of
10 Fulham Football Club Ltd v. Richards [2011] EWCA Civ 855, ‘[T]he limitation which the contractual basis of arbitration necessarily imposes on the power of the arbitrator to make orders affecting non-parties is not necessarily determinative of whether the subject matter of the dispute is itself arbitrable.’ See also Mustill & Boyd, 149 – 150. 11 Julian D. M. Lew and Oliver Marsden, Chapter 19: Arbitrability in Julian D. M. Lew, Harris Bor, et al. (eds), Arbitration in England, with chapters on Scotland and Ireland, (Kluwer Law International 2013) pp. 399-412, §19.01. 12 Larkden Pty Limited v. Lloyd Energy Systems Pty Limited [2011] NSWSC 268. 13 E. Wong, “Procedural issues resulting from a fraud claim in international commercial arbitration: an English law perspective”, Kluwer Law Arbitration, January 2014. 14 Fiona Trust v. Privalov [2007] All ER (D) 233 (Oct), and Bilta (UK) Ltd v. Muhammad Nazir [2010] All ER (D) 146 (May). 15 Premium Nafta Products Ltd v. Fili Shipping Compagny Ltd, [2007] UKLH40. 16 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 46. (b). 17 IV Y.B. Comm. Arb. 320, 321-22 [1978] (English High Ct. (Ch)) (1979).
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
5
contracts.” Therefore, breach of the Contract claims fall undoubtedly within the scope of
the “Law and Litigation” Clause. On the other hand, as the Claimant understands from the
Respondent’s statement of defence, the Respondent alleges that the “Law and Litigation”
Clause does not extend to the tort of fraud. Then, the Tribunal shall widely interpret the
scope of the arbitration Clause and consider that all disputes arising from the Contract,
including non-contractual claims, shall be settled by arbitration.
Therefore, this Tribunal has jurisdiction over all merits of the present Dispute.
PART II – MERITS
15. Firstly, the Claimant contends that (I) laws of England are applicable to the merits of the
Dispute. Secondly, the Claimant argues that: (II) the Respondent breached the Contract;
(II) the Respondent is liable to pay damages to the Claimant for the tort of fraud; (III) the
Respondent is liable to pay damages to the Claimant for the tort of negligent
misrepresentation.
I. Preliminary issue: laws of England govern the Contract
16. The choice-of-law Clause contained in the Contract provides that:
“This charter shall be construed and the relations between the parties
determined in accordance with the laws of England.”18
As the Claimant understands from the Respondent’s statement of defence, the Respondent
alleges that Singaporean law governs the Contract. The law chosen by the Parties governs
their contract.19 Choice-of-law clauses are standard features in international contracts.
In this case, the Contract designates laws of England as applicable, and therefore are the
governing law, if any dispute was to occur. As mentioned above, no amendment to the pro-
forma Shelltime 4 was made regarding the governing law. No intention to change Clause
46. (a) of the Contract in favour of laws of Singapore was ever initiated.
Therefore, only laws of England are applicable to the Dispute
II. Breach of Contract
17. The Claimant argues that the Respondent breached the Contract because (A) the
Respondent failed to pay the hire of the Vessel and (B) failed to perform several other
18 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 46. (a). 19 See e.g. The Draft Hague Principles on Choice of Law in International Commercial Contracts.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
6
obligations. Therefore, (C) the Claimant suffered losses for which (D) it is rightly entitled
to claim damages.
A. The Respondent failed to pay hire
18. The Claimant argues that the Respondent breached its obligation to pay hire under the
terms of the Contract. (1) The Respondent failed to pay the second-period hire; (2) the
Respondent is not discharged of its obligation to pay hire in the absence of an off-hire or
frustrating event.
1. The Respondent failed to pay hire for the second period
19. The Claimant argues that the Respondent failed to pay the second-period hire which
payment was owed and due on 3 July 2014.
Clause 8. of the Contract states that the Respondent “shall pay for the use and hire of the
vessel (…), from the time and the date of her delivery (local time) to Charterers.”20 Clause
9. of the Contract provides that: “(…) payment of hire shall be made (…) per calendar
month in advance.”21The Claimant acknowledged that the Vessel was delivered to the
Respondent on 4 June 2014.22
Clause 8. of the Contract provides for the computation of hire, and Clause 9. provides for
the mechanics of payment.23 In Kawasaki v. Batham Steamship, it was held that the
obligation to pay hire in advance probably applies on the first instalment of hire just as it
applies on the other instalment.24 Accordingly, “month in advance” must be construed as
payment for each and every month in advance. Therefore, each monthly instalment is to be
paid before midnight on the day before each period begins.25
20. Furthermore, the Contract expressly refers to “per calendar” month. The Parties intended
to refer to the “corresponding day” rule evidenced by Cockburn, C.J, in Freeman v. Reed.26
Consequently, the first instalment of hire was due and owed to the Respondent on 3 June
2014, and in application of the “corresponding day” rule the second period of hire was due
20 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 8. 21 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 9. 22 Moot problem: email sent on 4 June 2014 at 00:01 (UTC+8) from the Master to Chris at LDTP, p. 28. 23 Francesco Berlingieri, Time Charter, Chapter 16, 7th Ed. 2014, 16.1, the above development is based on Clause 5 of the New York Produce form. 24 Kawasaki v. Bantham Steamship [1938] 60 Ll.L.Rep. 70 25 Francesco Berlingieri, Time Charter, 7th, op. cit., 16.5. 26 Freeman v. Reed [1863] 4 B. & S. 174, 184.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
7
to the Respondent on 3 July 2014, as notified by the Claimant to the Respondent.27
Payment of hire is a primary, absolute obligation of the Respondent under the terms of the
Contract and may not be excused by any accident or inadvertence.28
The Claimant argues that it is entitled to claim for interests pursuant to Clause 9. (a)
of the Contract, which reads as follows:
“Interest on any amount due but not paid on the due date shall accrue from that
day up to and including the day when the payment is made (…).”
Accordingly, interest shall apply to the payment of the second period of hire due as of 3
July 2014.
21. Alternatively, if the Tribunal considers that such payment is due and owed on a
subsequent date, it will ascertain that no payment for the second-period hire was
made by the Respondent. Such a failure constitutes a breach of the Contract
22. The Tribunal will order the Respondent to pay for hire and interests on the amount due. In
the alternative, the Tribunal will award damages to the Claimant on the ground of a breach
of Contract by the Respondent.
2. The Respondent’s obligation to payment is not challenged by unexpected
occurrences
23. The Claimant argues that the Respondent is not entitled to rely on any frustration of
the Contract in order to be discharged of its obligation to pay hire.
Firstly, the Claimant argues that there was no frustration of the Contract on 4 July or on
any other subsequent date.
In Davis Contractors Limited v. Fareham,29 the House of Lords established that the test for
frustration was whether or not the circumstances in which an obligation is to be performed
have rendered such obligation radically different from that which was undertaken in the
contract. Lord Reid considered that the key question was whether or not the scope of the
contract was wide enough to cover its application under the new circumstances. The House
of Lords further confirmed this test in National Carriers Ltd v. Panalpina (Northern) Ltd,30
and held that frustration required a frustrating event occurring in the absence of default by
27 Moot problem: email sent on 3 July 2014 at 18:01 (UTC+1) from Oliver at WTI to Chris at LTDP, p. 39. 28 Per Lord Wright in A/S Tankerexpress v. Compagnie Financière Belge des Pétroles SA (Petrofina) [1948] 2 All ER 939, p. 946. 29 Davis Contractors Limited v. Fareham, UDC [1956] AC 696. 30 National Carriers Ltd v. Panalpina (Northern) Ltd [1981] AC 675.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
8
any of the parties. Hence there shall be frustration only where a supervening event, an
external event or extraneous change of situation, radically changed a party’s obligations.
In the present case, the Claimant contends that there is no frustration resulting from delays
induced by the pirates’ attack of the Vessel.
24. The Anglo Northern-Jones 31 case evidenced the proportionality test. This authority
suggested that the main consideration lied in the total length of deprivation of use of the
vessel as compared with the unexpired portion of the contract. In Bank Line v. Capel, 32
Lord Summer added that: “(…), though it may not be the main and certainly is not the only
matter to be considered.” The relevant condition that must be taken into account is that the
alleged frustrating event should be both supervening and unforeseen at the time when the
parties entered into the contract. Accordingly, if an express provision in the contract
“intended to deal with the event which has occurred,” it “will normally preclude the
application of the doctrine of frustration.”33 In The Sea Angel,34 the court applied a multi-
factorial approach to determine whether a pro-forma Shelltime 4 charterparty concluded
for a twenty-day period and for the employment of a vessel for salvage operations was to
be found frustrated by the occurrence of a three-month delay. Such delay was caused by
the detention of the vessel by the Karachi Port Authority. The court held that the
contractual risk of delay lay on the charterer, and that the general risk of delay was
foreseeable by the salvage industry, as provided in the additional Clauses of the contract.
25. In circumstances comparable to the abovementioned case, the seizure of the Vessel by
pirates during thirteen days constituted a foreseeable risk for the Parties involved in the
maritime industry, under a three-month period charter concluded for a voyage to Western-
Africa. The Parties, by including additional piracy Clauses in the Contract, which
expressly provide that in such event, the Vessel shall remain on hire,35 had foreseen the
possibility of such attack. Furthermore, according to IMB Piracy Reporting Centre, Angola
and Congo are piracy zones well known of maritime industry operators.
Therefore, the Tribunal will find that the Contract was not frustrated as from 4 July 2014,
as piracy events may not be qualified as unforeseen events under the Contract.
26. Alternatively, the Claimant argues that the alleged frustration is a consequence of the
Respondent’s default and, accordingly, a self-induced frustration.
31 Anglo Northern-Jones 1917 2 K.B. 78, Bailhache, J., p. 84. 32 Bank Line v. Capel 1918 [1919] AC 435. 33 Joseph Constantine S.S. Line Ltd v. Imperial Smelting Corp. Ltd [1942] A.C 154, 163. 34 Edwinton Commercial Corporation & Anor v. Tsavliris Russ Ltd, [2007] EWHC Civ 547. 35 Moot problem: Contract, ST4 and BIMCO Piracy Clauses, pp. 8-11.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
9
In Super Servant Two,36 the court held that frustration must take place without the fault or
blame of either party, and frustration of a venture may not result from any act or election of
the party seeking to rely on it.
As further developed below, the piracy attack on the Vessel shall be regarded as resulting
from several breaches on the part of the Respondent, including but not limited to: the
failure to bunker the Vessel as required by the Contract; or the failure to obtain the
Claimant’s consent when instructing the Vessel to proceed to an alternative discharge
place.
Consequently, the Tribunal will find that the Contract was not frustrated on 4 July 2014 or
any other subsequent date. Alternatively, the Tribunal will decide the frustration as self-
induced by the Respondent.
27. The Claimant contends that hire is recoverable by the Claimant under the Law
Reform (Frustrated Contracts) Act 1943 (the “Act”).
The Act, which applies to time charters (Section 2 (5), a)) governed by English Law
(Section 1 (1)), provides in its Section 1 (2) that:
“All sums paid or payable to any party in pursuance of the contract before the
time when the parties were so discharged shall, in the case of sums so paid, be
recoverable from him as money received by him for the use of the party by whom
the sums were paid, and, in the case of sums so payable, cease to be so
payable.”
This provision is to be construed as allowing the payee to recover sums due by the payer
before the time of discharge by the frustrating event.37 The Claimant has previously
demonstrated that hire was due and owed on 3 July 2014, while the Respondent alleged
frustration of the Contract by no later than 4 July 2014.
Therefore, the Tribunal will find that the Contract was not frustrated, and accordingly
order the Respondent to pay the second period of hire.
Alternatively, if the Tribunal decides that the Contract was frustrated on 4 July 2014, the
Tribunal will order the Respondent to pay the second-period hire, in application of the Act
which requires the payment of hire due before frustration of the Contract.
28. The Claimant argues that the Respondent is not entitled to rely on the Clause 21. (a)
of the Contract in order to preclude its obligation to pay hire.
36 J. Lauritzen AS v. Wijmuller B.V. (The Super Servant Two) [1990] 1 Lloyd’s Rep. 1. 37 H. Beale, The Chitty on Contract, Sweet & Maxwell, 31st Ed., 23-078.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
10
Firstly, the Claimant contends that Clause 21. (a) of the Contract is not applicable in the
present case. The application of such Clause is precluded by application of the BIMCO
Piracy Clause for time charterparty,38 which was inserted in the Contract and clearly
stipulates that in the occurrence of pirates attack “any time lost shall be for the account of
the Charterers and the Vessel shall remain on hire.” Such Clause further adds at point (g)
that “in the event of a conflict between the provisions of this and any implied or express
provision of the Charterparty, this Clause shall prevail.”
Besides, a supplementary provision specific to piracy was added to pro-forma Shelltime 4
(hereinafter the “ST4 Piracy Clause”), which provides for captured of the Vessel by
pirates. Such Clause provides that:
“If the vessel is captured by pirates, hire shall be payable at 100% of the hire
rate for the duration of any such capture.”39
29. The Claimant contends that the application of the BIMCO Piracy Clause is in conflict with
Clause 21. (a) of the Contract. In this case and according to point g) of the BIMCO Piracy
Clause, such Clause shall apply and prevail over any other provision. The BIMCO Piracy
Clause and the ST4 Piracy Clause providing for the same events are not in conflict. As
such, the ST4 Piracy Clause clearly stipulates that the hire remains payable at 100% of the
hire rate during the capture by pirates.
The Vessel remained on hire during the period of seizure ranging from 4 July, on which
the Claimant received an off-hire notification,40 to 17 July 2014, when an incident report
was communicated to the Parties. 41 Consequently, the Tribunal will find that the
abovementioned Piracy Clauses here apply and prevail over Clause 21. (a). And
accordingly, the Tribunal will conclude that the hire was payable during the hijack, at
100% of the hire rate during this period.
30. The Respondent, who may contend that the Vessel was off-hire under Clause 21. (a)
of the Contract on 4 July 2014, has to properly prove that the alleged fact falls within
the scope of the off-hire provisions.
38 Moot problem: Contract, BIMCO Piracy Clause, p 11. 39 Moot problem: Contract, ST4 Piracy Clause, p. 8. 40 Moot problem: email sent on 4 July 2014 at 11:24 (UTC+8) from Chris at LDTP to Oliver at WTI, p. 41. 41 Moot problem: email sent on 17 July 2014 at 23:25 (UTC+1) from the Master to Chris at LDTP, p. 42.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
11
Kerr, J., in the Mareveva A.S.42 comments on the New York Produce Exchange form: “(…)
that it is for the charterers to bring themselves clearly within an off-hire clause if they
contend that hire ceases.”43
The Claimant denies any neglect of duty or breach of orders on the part of the Master, and
the Respondent is to bring clear evidence of its allegations.
Therefore, the arbitral Tribunal will find that payment of hire was due and owed on 3 July
2014, and accordingly order the Respondent to pay the second period of hire, as the
Contract was never frustrated and the off-hire provision is not applicable.
B. The Respondent failed to perform other obligations
31. The Claimant contends that the Respondent breached many other obligations of the
Contract because: (1) the Respondent breached the Clause 4 (c) of the pro-forma Shelltime
4; (2) the Respondent directed the Vessel to proceed to an alternative discharge place
without the authorisation of the Claimant as required; (3) the Respondent is liable for the
discharge of the Cargo without the authorisation of the Claimant; and (4) further, the
Respondent breached the BIMCO STS Clause of the Contract. The Respondent is liable to
pay damages to the Claimant for the above breaches of the Contract because: (5) the
Respondent cannot rely on the BIMCO Piracy Clause to exclude its liability; (6) the
Respondent breached the pro-forma Shelltime 4 by failing to give Voyage orders to the
Vessel; and (7) the Respondent’s breaches of the Contract caused the Claimant’s loss.
1. The Respondent breached Clause 4. (c) of the pro-forma Shelltime 4
32. The Respondent breached its obligation of due diligence under the Contract by
disregarding the Master’s recommendations. It did not perform the Contract with due
diligence pursuant to the Contract.44 Indeed, the Respondent did not listen to the Master’s
recommendations. The Master sent multiple emails explaining to the Respondent the need
to bunker the Vessel sufficiently.
Thus, the Master sent on 27 May 2014 an email stating the bunkers required. It gave an
amount of “about 1,500 metric tons.” The Respondent only provided 950 metric tons of
fuel. The Master reacted immediately by stating in an email that it was “disappointed to
42 Mareva Navigation Co. v. Canaria Armadora SA (The Mareva AS) [1977] 1 Lloyd’s Rep. 368 per Kerr J. at pp. 381-382. 43 Id. 44 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 4. (c).
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
12
see the stem [was] not for the full quantity [the Claimant] requested.” The Master also
asked the Respondent “to advise [their] intentions for supplying [the Claimant] with
proper bunker stem / supply to meet the required itinerary.” Furthermore, filling the tank
with 950 metric tons of fuel was “only enough to get the Vessel to discharge area plus the
bad weather reserve.”45 The Master repeatedly advised the Respondent that the Vessel
could not meet the required itinerary without a new bunker supply.46 As such, the
Respondent did not re-bunker the Vessel off Durban despite the Master’s
recommendations to do so.47
Consequently, the Tribunal will find that the Respondent breached its obligation of due
diligence despite the Master’s recommendations.
2. The Respondent directed the Vessel to proceed to an alternative
discharge place without the required authorisation of the Claimant
33. The Claimant contends that the Respondent directed the Vessel to proceed to an
alternative discharge place without the required authorisation. Luanda was the
contracted port of discharge, as evidenced in the Bills of Lading.
A bill of lading is interpreted by using ordinary methods of contractual interpretation.48
The party that signs a written contract is bound by its terms.49 In the present case, the Bills
of Lading clearly provide that the agreed port of discharge was Luanda.50 This express
designation of the port of discharge is conclusive evidence that the Claimant and the
Respondent agreed to discharge the Cargo at Luanda. The Claimant therefore argues that
Luanda was the agreed port of discharge.
The Respondent indicated through its disport agent51 an alternative discharge place in
international waters off the Angolan coast.52 Thus, the Respondent breached the Contract.
Therefore, the Claimant argues that the Respondent breached the Contract by directing the
Vessel to proceed to a port other than the agreed port of discharge
45 Moot problem: email sent on the 3 June 2014 at 12:27 (UTC+8) from the Master to Chris at LDTP, p. 25. 46 Id. 47 Moot problem: email sent on the 20 June 2014 at 11:02 (UTC+4) from the Master to Chris at LDTP, p. 31. 48 Homburg Houltimport BV and others v. Agrosin Private Ltd and others (The Starsin) [2003] 1 Lloyd’s Rep 571, 577-8; Amoco Overseas Co. v. ST Averger, 1975 AMC 782, 789 (SD NY, 1975). 49 Peekay Intermark Ltd v. Australia & New Zealand Banking Group Ltd [2006] 2 Lloyd’s Rep 511, 520; L’Estrange v. F Graucob Ltd [1934] 2 KB 394, 403; A. G. Guest, ‘Exemption Clauses’ in H. G. Beale et al (eds), Chitty on Contracts (Sweet & Maxwell, 30th ed, 2008) vol 1, 909, 978. 50 Moot problem: Bill of Lading, pp. 43-44. 51 See infra. ASA2 acts in the name and for the account of the Respondent. 52 Moot problem: email sent on 28 June 2014 at 18:43 (UTC+8) from Chris at LDTP to the Master, p. 34.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
13
3. The Respondent is liable for the discharge of the Cargo without the
authorisation of the Claimant
34. While the Vessel was at the alternative discharge place, a quantity of the Cargo was
discharged, in breach of the Contract, without the authorisation of the Claimant. As
mentioned above, the agreed port of discharge was Luanda.53 Though, the Respondent
indicated another port.54 Further, goods are discharged when they are offloaded into
warehousing or storage.55 The Claimant and the Respondent agreed that the discharge
occurred when the Cargo was offloaded during a ship-to-ship transfer.56
Therefore, the Claimant argues that the Respondent discharged the Cargo at a port other
than the agreed port of discharge.
4. The Respondent breached the BIMCO STS Clause of the Contract
35. The Respondent’s failure led to a piracy attack as it brought the Vessel into an unsafe
zone. The Contract provides that if the Claimant agrees to let the Vessel go through
excluded areas, “[the Respondent] shall use due diligence to ensure that the Vessel in only
employed between and at safe places [as well as for] ship-to-ship transfer.”57 In addition,
the Contract also provides, according to the rider Clause, a right to conduct ship-to-ship
cargo operations in safe areas only.58
Though, the Master had to slow the Vessel’s speed down in order to continue the itinerary
as planned.59 As this slowdown was not sufficient, the Vessel had to stop in an alternative
discharge place.60 The maritime coordinates given by the Respondent directed the Vessel
to an alternative discharge place off the Congolese coast. The Respondent could not
reasonably ignore that ICC International Bureau registered the Congolese coast as an
unsafe zone.61
53 See supra, The Respondent directed the Vessel to proceed to an alternative discharge place without the Claimant’s authorisation as required in the Charterparty. 54 Moot problem: email sent on 28 June 2014 at 18:43 (UTC+8) from Chris at LDTP to the Master, p. 34. 55 See generally Mediterranean Shipping Company SA v. Trafigura Beheer BV (The MSC Amsterdam) [2007] 2 Lloyd’s Rep 622; Huyton SA v. Peter Cremer GmbH & Co. [1999] 1 Lloyd's Rep 620, 624; The Metall Market OOO v. Vitorio Shipping Co. Ltd (The Lehmann Timber) [2012] 2 Lloyd’s Rep 73. 56 Moot problem: email sent on 28 June 2014 at 18:43 (UTC+8) from Chris at LDTP to the Master, p. 34 57 Moot problem: Contract, amended pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 4. (a) and (c). 58 Moot problem: Contract, BIMCO STS Clause (a) and (b), p. 10. 59 Moot problem: email sent on the 25 June 2014 at 11:02 (UTC+3) from the Master to Chris at LDTP, p. 32. 60 Moot problem: email sent on the 28 June 2014 at 18:43 (UTC+8) from Chris at LDTP to the Master, p. 34. 61 ICC International Maritime Bureau, Piracy annual report, 2014.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
14
The Master did not approve to stop at an alternative discharge place but had no choice to
lay-up as the Vessel was running out of fuel. In this regard, the possibility to laying-up has
been deleted from the pro-forma Shelltime 4. It was then not possible to ask for laying-up.
Therefore, the Claimant argues that the Respondent breached the Contract by leading the
Vessel to an unsafe zone.
5. The Respondent cannot rely on the BIMCO Piracy Clause to exclude its
liability
36. The Claimant provided a ship in conformity with the Contract. Therefore, the
Respondent cannot argue on the BIMCO Piracy Clause to exclude its liability. There
is a rider Clause providing as follows: “the owner shall have the liberty” to take preventive
measures.62 As such, it was not mandatory for the Claimant to take preventive measures.
The Claimant provided a ship fit for service according to the Questionnaire 88.63
The Claimant contends that it exercised the requisite degree of due diligence to make the
Vessel seaworthy, properly manned and equipped. As such, the Claimant argues that it did
not breach the Contract.
Therefore, the Claimant argues that the Vessel was fit for service. The Respondent cannot
rely on the non-mandatory the BIMCO Piracy Clause to exclude its liability.
6. The Respondent breached the Contract by failing to give the Vessel
voyage orders
37. The Respondent breached the Contract by failing to give the Vessel voyage orders
after the attack. After the attack, the Vessel returned to Cape Town for assistance and
further orders. Though, the Respondent failed to give the Vessel voyage orders after the
attack despite its obligation to do so pursuant to the Contract.64 The Contract provides that:
“[The Respondent] shall from time to time give the master all requisite
instructions and sailing directions.”
It also provides that:
“The master shall be under the orders and direction of [the Respondent] as
regards employment of the vessel (…).”
62 Moot problem: Contract, BIMCO Piracy Clause (c), p. 11. 63 Moot problem: Intertanko's standard tanker chartering questionnaire 88, pp. 49-59. 64 Moot problem: Contract, amended pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 12. and 13. (a).
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
15
The Respondent did not give voyage orders at any point following the Cargo transfer at the
alternative discharge place. The Master stated that “due to no instruction from [the
Respondent]” the Vessel proceeded in direction of Cape Town for assistance.65 The
Respondent should have given orders to the Master in order to give it the right instructions
for assistance.
Therefore, the Claimant claims that the Respondent breached its obligation to give the
Vessel voyage orders after the Cargo transfer at the alternative discharge place.
7. The Respondent’s breaches of the Contract caused the Claimant’s loss
38. The Respondent is liable for the damages caused to the Vessel during the attack. The
Vessel was damaged after the attack according to the last email sent by the Master, in
which the latter stated that: “Vessel damage includes navigating and radio equipment in
wheelhouse, main deck hose crane unserviceable, starboard-side accommodation ladder
buckled.”66
The Respondent’s failures have belated the Vessel and modified the itinerary of the latter.67
The Respondent breaches led to a piracy attack, which caused multiple damages to the
Vessel. The Respondent is directly liable for the Claimant’s loss.
The Claimant therefore argues that the Respondent’s behaviour abovementioned led to the
damages observed by the Master after the attack
III. The Respondent committed maritime fraud
39. (B) The Tribunal will find the Respondent civilly liable for the tort of deceit. In such case,
the Claimant is rightly entitled to claim for damages. (A) By way of preliminary comment,
the Tribunal must acknowledge the existence of an agency relationship between the
Respondent and the Atlantic STS Agency Ltd an agency relationship which makes the
principal liable for the torts committed by its agent.
A. ASA2 acts in the name of and for the account of the Respondent
40. The Claimant argues that ASA2 acted, and still acts, as the agent of the Respondent
and that the latter is liable for the torts committed by the former. Maritime fraud can
65 Moot problem: email sent on 17 July 2014 at 23:20 (UTC+1) from the Master to Chris at LDTP, p. 41. 66 Moot problem: email sent on 17 July 2014 at 23:20 (UTC+1) from the Master to Oliver at WTI, p. 42. 67 See supra, The Respondent breached the BIMCO STS Clause of the contract.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
16
be made by a contracting party as well as by the agent of any of them.68 In maritime fraud,
the offending statements are not always made directly by the co-contracting party.69 The
employer can be liable for the torts committed by its agent in the course of their agency.70
Therefore, the principal may be liable for the fraudulent misrepresentation committed by
any of its agents.
ASA2 made representations in the name and for the account of the Respondent. In the
voyage order document, the disport agent designated is “Atlantic Services Agency”
(hereinafter “ASA1”). In practice, the true disport agent is nevertheless ASA2. Two types
of proofs can be advanced in establishing this.
41. Firstly, some proofs are inherent to the agent’s behaviour. ASA2 introduced itself as an
agent in its email of the 28th of June 2014 addressed to the Master.71 Indeed, ASA2
presented itself as an “agency” who has been given the “control” of the Vessel and as the
“vessel coordinator.” Also, information that the latter had are illustrative. ASA2 was thus
aware that the Parties entered a time charterparty, that the Vessel proceeded towards the
city of Luanda, that it had 72,000 metric tons of gasoil on board and that it needed to be
refuelled. In other words, ASA2 had knowledge of facts that a third party could never
have. Lastly, ASA2 is the only one who contacted the Master concerning the ship-to-ship
operation. ASA1 never did so thus far.
42. Secondly, some proofs are inherent to the Respondent’s behaviour. Firstly, the affiliate of
LDTP “Traders Inc. BVI” was included in copy of the email sent on 30 June 2014 by the
Master to ASA2.72 The Respondent was therefore quickly aware of the contact established
between the Master and ASA2 and did not challenge it.
Then, the Respondent requested from the Master to “keep” liaising with its ship-to-ship
coordinator in an e-mail sent on 4 July 2014.73 This statement is unequivocal. It clearly
confirms that the Respondent was aware of the contact established between the Master and
ASA2. Lastly, the Respondent declared in its e-mail of 4 July 2014 addressed to the
Claimant that it considered the Vessel as off-hire due to “no contact with receiver.” This
constitutes the last evidence that the Respondent had contact with ASA2, its agent.
68 See. infra, The Respondent and its agent committed maritime fraud. 69 Paul Todd, “Chapter 2 Introduction to Maritime Fraud: Issues Particular to Maritime Fraud”, Marine Fraud & Piracy, 2nd Edition 2010, §2.138. 70 Lloyd v. Grace Smith & Co. [1912] AC 716. Paul Todd, “Chapter 2 Introduction to Maritime Fraud: Issues Particular to Maritime Fraud”, op. cit., §2.143. 71 Moot problem: email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35. 72 Moot problem: email sent on 30 June 2014 at 12:29 (UTC+1) from the Master to ASA2, p. 37. 73 Moot problem: email sent on 4 July 2014 at 09:52 (UTC+8) from Chris at LDTP to the Master, p. 40.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
17
Indeed, the Respondent affirmed that the Vessel had “no contact” with the receiver. Yet,
the Master only stated that the ship-to-ship vessel did not arrive. The Respondent could not
possibly know that the Master had no contact with the ship-to-ship operator when it had
only been told that this operator had not arrived.
There was a clear communication of information and a trade link between the Respondent
and ASA2. The agency relationship between them may not be challenged.
Therefore, the Tribunal will ascertain the Respondent is vicariously liable for the false
representations made by its agent.
B. The Respondent is civilly liable for the tort of deceit
43. The Claimant argues that both the Respondent and ASA2 acting on its behalf
committed maritime fraud. Hence, the Tribunal is requested to award damages to the
Claimant for the loss suffered due to the maritime fraud. The International Maritime
Bureau has defined maritime fraud as follows:
“An international trade transaction involves several parties – buyer, seller, ship-
owner, charterer, ship’s master or crew, insurer, banker, broker or agent.
Maritime fraud occurs when one of these parties succeeds, unjustly or illegally,
in obtaining money or goods from another party to whom, on the face of it, he
has undertaken specific trade, transport and financial obligations.”74
The fraudulent misrepresentation is one variation of maritime fraud. The action for
fraudulent misrepresentation is based on the tort of deceit,75 which can be defined as:
“A fraudulent and deceptive misrepresentation, artifice, or device, used by one
or more persons to deceive and trick another, who is ignorant of the true facts,
to the prejudice and damage of the party imposed upon.”76
To bring the claim in the tort of deceit, five conditions must be met. As seen in the Derry v.
Peek case in which the House of Lords defined the tort of deceit:77
- the Respondent must have made a false statement of fact;
- the Respondent must have known that the representation is false or must have been
reckless as to whether it is true or false;
- the Respondent must have intended the Claimant to rely upon the statement;
- the Claimant must have in fact relied upon the statement; and 74 ICC Publication No. 370, Guide to Prevention of Maritime Fraud, 1980. 75 PLC Practice note, “Misrepresentation”, Practical Law Dispute Resolution Fraudulent misrepresentation. 76 Black’s Law Dictionary, Fifth Edition, West Publishing Company, 1979. 77 Derry v. Peek [1889] 14 App. Cas 337.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
18
- the Claimant must thereby have suffered financial loss.78
44. Both the Respondent and ASA2 acting on its behalf have made false representations.
By way of preliminary comment, it must be noted that the Master warned the Respondent
that the fuel supply ordered at the loading port was not sufficient to go beyond the
discharge area.79 The Respondent made both explicit and implied false statements.
The Respondent made explicit false statements on two occasions.
! The Respondent asserted in its e-mail sent to the Master on 3 June 2014 that it will
“revert” later on to the bunker supply in Durban or Cape Town issue. The
Respondent did not do so and had no intention to. Yet, the Master asked the
Respondent twice to do so.80 Hence, the Vessel could not refuel and had to slow
down its speed in order to save fuel.
! The Respondent stated in its e-mail sent to the Master on 28 June 2014 that bunkers
would be available “on arrival STS Area 1.”81 However, there was no bunker supply
present at the place indicated by the ship-to-ship coordinator when the Vessel
arrived.82 Yet the Vessel arrived both at the agreed place and at the estimated time of
arrival, as communicated to the ship-to-ship coordinator already five days before.83
Furthermore, an express statement may imply a representation.84 The Respondent made
implied false statements on two occasions.
! The Respondent asserted in its e-mail sent to the Master on 3 June 2014 that they
“have alternative bunker supply available passing Durban or Cape Town.”85 In the
context of the conversation established between the Respondent and the Master, it
means an intention to supply the Vessel with fuel off Durban or off Cape Town. The
abovementioned e-mail is in fact a response to the e-mail sent before by the Master
to the Respondent in which the first one asked the second to specify its “intentions”
to supply the Vessel with fuel. However, the Respondent did not provide any fuel
supply off Durban or off Cape Town.86
78 Standard Chartered Bank v. Pakistan National Shipping Corp. (No. 2), [2003] 1 AC 959; Court of Appeal, Eco 3 Capital Ltd and others v. Ludsin Overseas Ltd [2013] EWCA Civ 413. 79 Moot problem: email sent on 3 June 2014 at 12:17 (UTC+8) from the Master to Chris at LDTP, p. 25. 80 Moot problem: email sent on 8 June 2014 at 11:02 (UTC+8) from the Master to Chris at LDTP, p. 29; email sent on 20 June 2014 at 11:02 (UTC+4) from the Master to Chris at LDTP, p. 31. 81 Moot problem: email sent on 28 June 2014 at 16:27 (UTC+8) from Chris at LDTP to the Master, p. 33. 82 Moot problem: email sent on 4 July at 05:22 (UTC+1) from the Master to Chris at LDTP, p. 40. 83 Moot problem: email sent on 28 June 2014 at 19:50 (UTC+2) from the Master to ASA2, p. 35. 84 Discount Records Ltd v. Barclays Bank Ltd [1975] 1 WLR 315. 85 Moot problem: email sent on 3 June 2014 at 17:21 (UTC+8) from Chris at LDTP to the Master, p. 26. 86 Moot problem: email sent on 25 June 2014 at 11:02 (UTC+3) from the Master to Chris at LDTP, p. 32 and following.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
19
! Concerning the fuel supply, the Respondent affirmed to the Master that “everything
is under control”87 and to the Claimant that “all is going well.”88 In other words, the
Respondent had hinted that the Vessel was proceeding normally without any fuel
supply difficulty, which is inaccurate.
45. ASA2 acting on behalf of the Respondent made false representations. In its e-mail sent to
the Master on 28 June 2014 at 18:02 (UTC+1), the agent stated that its own vessel was in
charge of unloading the Vessel and supplying it with fuel at the coordinates 06°00’00’’S –
08°10’00’’E. Nevertheless, there was no bunker supply present at the designated place as
discussed above.89 This statement was incorrect.
Therefore, the Tribunal will ascertain that the statements made by the Respondent as well
as by ASA2 on its behalf were substantially false.
46. The states of mind of both the Respondent and ASA2 acting on its behalf were
dishonest. Dishonesty implies that a false representation is made knowingly or
recklessly.90 Indeed, Lord Herschell stated in the Derry v. Peek case that:
“(…) Fraud is proved when it is shown that a false representation has been
made (i) knowingly, (ii) without belief in its truth, or (iii) recklessly, careless
whether it be true or false.”91
Also, the motive of the fraudster in making the representation is irrelevant.92
47. The state of mind of the Respondent was dishonest. Firstly, the Respondent disregarded the
Master’s advice to fill the Vessel with 1500 metric tons of fuel,93 and chose to fill the tank
with only 950 metric tons of fuel instead.94 Then, the Respondent disregarded the protest
from the Master to fill the Vessel with more fuel; and asked the Master to “protest for any
short supply.”95 The latter did so96 but the former chose to ignore it and stated that there
was an “alternative bunker supply” off Durban or off Cape Town.97 Furthermore, the
Respondent disregarded the requests from the Master, as it did not respond to any message 87 Moot problem: email sent on 3 June 2014 at 20:15 (UTC+8) from Chris at LDTP to the Master, p. 28. 88 Moot problem: email sent on 4 July 2014 at 09:37 (UTC+8) from Chris at LDTP to Oliver at WTI, p. 39. 89 See supra, False representation. 90 Paul Todd, “Chapter 2 Introduction to Maritime Fraud: Issues Particular to Maritime Fraud”, op. cit., §2.122. 91 Derry v. Peek, op., cit. 92 Bradford Third Benefit BS v. Borders (1941) 2 All ER 205, followed in Ludsin Overseas Ltd v. Eco3 Capital Ltd [2012] EWHC 1980 (Ch); Armitage v. Nurse [1998] Ch 241, 250; In Polhill v. Walter [1832] 3 B&Ad 114, “a laudable motive is no defence if the constituent mental element is proved: the Defendant endorsed a bill of exchange in an attempt to be helpful; held: that was no defence.” 93 Moot problem: email sent on 27 May 2014 at 12:27 (UTC+8) from the Master to Chris at LDTP, p.20. 94 Moot problem: email sent on 30 May 2014 at 15:27 (UTC+8) from Chris at LDTP to David Ng at Equator Bunkers, p.24. 95 Moot problem: email sent on 3 June 2014 at 09:27 (UTC+8) from Chris at LDTP to the Master, p.25. 96 Moot problem: email sent on 3 June 2014 at 12:17 (UTC+8) from the Master to Chris at LDTP, p.25. 97 Moot problem: email sent on 3 June 2014 at 17:21 (UTC+8) from Chris at LDTP to the Master, p.26.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
20
coming from the Master from 3 June to 28 June 2014. Yet the latter wrote to the
Respondent three times: the first time to confirm the ship-to-ship operation coordinates,98
the second time to ask the Respondent to “urgently” advise its intention to fill the Vessel
off Durban99 and the third time to say that it “must” have bunker supply.100
48. In contrast, the Respondent did not fail to write to the Claimant, in the meantime, to
surprisingly tell it that all was going on well.101 The Respondent did read its e-mails and
deliberately ignored the Master’s solicitations. Lastly, the Respondent did nothing that
might suggest it had the intention to provide a fuel supply. For instance, the Respondent
never even asked the Master to report its estimated time of arrival off Durban in order to
anticipate any ship-to-ship operation.
The Master vainly warned the Respondent many times. Hence, the false statement that
there was an alternative bunker supply off Durban or off Cape Town could only be made in
full knowledge of facts.
Therefore, the Tribunal will ascertain that the Respondent made a false representation
knowingly.
49. The state of mind of ASA2 acting on behalf of the Respondent was dishonest. In its single
e-mail addressed to the Master sent on 28 June 2014, ASA2 stated that the hired Vessel
could discharge and benefit from a fuel supply in connection with a ship-to-ship operation
at the coordinates 06°00’00’’S – 08°10’00’’E.102 The agent of the Respondent then leaved
unanswered five e-mails sent by the Master.103 Yet the latter each time asked ASA2 to
confirm that it had those connections and fender supply for the ship-to-ship operation. The
Vessel arrived to the located place in accordance with the estimated time of arrival and
with the abovementioned coordinates. However, there was “no bunker supply” there, as the
Master affirms in its e-mail sent on 17 July 2014 to the Respondent and to the Claimant.104
The ship-to-ship coordinator had no intention to provide fuel supply or to discharge the
Vessel. If it did so, it would have come to the agreed place and would obviously have
98 Moot problem: email sent on 8 June 2014 at 11:02 (UTC+8) from the Master to Chris at LDTP, p.29. 99 Moot problem: email sent on 20 June 2014 at 11:02 (UTC+4) from the Master to Chris at LDTP, p. 31. 100 Moot problem: email sent on 25 June 2014 at 11:02 (UTC+3) from the Master to Chris at LDTP, p. 32. 101 Moot problem: email sent on 20 June 2014 at 11:52 (UTC+8) from Chris at LDTP to Oliver at WTI, p. 31. 102 Moot problem: email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35. 103 Moot problem: email sent on 28 June 2014 at 19:50 (UTC+2) from the Master to ASA2, p. 35; email sent on 29 June 2014 at 12:29 (UTC+1) from the Master to ASA2, p. 36; email sent on 1 July 2014 at 12:29 (UTC+1) from the Master to ASA2, p. 37; email sent on 2 July 2014 at 12:27 (UTC+1) from the Master to ASA2, p. 37; email sent on 3 July 2014 at 12:30 (UTC+1) from the Master to ASA2, p. 38. 104 Moot problem: email sent on 17 July 2014 at 23:20 (UTC+1) from the Master to Chris at LDTP and Oliver at WTI, p. 41.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
21
answered to the Master’s requests, which is no less than what could reasonably be
expected from a worthy ship-to-ship coordinator.
Therefore, the Tribunal will ascertain that ASA2 acting on behalf of the Respondent
knowingly made a false representation.
50. The Respondent and its agent obviously intended the Claimant to rely upon the
abovementioned statement. To bring a claim in the tort of deceit, there must indeed exist
an intention that the victim of fraud should rely on the false representation.105
In the case at hand, such intent does exist. Firstly, both the Respondent and its agent
instructed the Vessel to proceed towards off Luanda.106 Secondly, the Respondent asserted
that a supply of bunkers would be available off Durban or off Cape Town107 and the agent
asserted that a supply of bunkers would be available at the ship-to-ship area one.108 By
doing so, they both wanted to ensure that the Master would adhere to the given directions.
Therefore, the Tribunal will ascertain that the Respondent and ASA2 acting on its behalf
intended the Claimant to rely upon the statement.
51. The Claimant did in fact rely upon the Respondent’s statement. The claim relating to
the tort of deceit must establish that the Claimant knew the statement and was influenced
to act by it.109 Moreover, the Edgington v. Fitzmaurice case provides that “[i]t is not
necessary to show that the (deceitful) misstatement was the sole cause of acting as [the
plaintiff] did.”110
The Master did in fact rely upon two false statements.
! The Master relied on the false statement made by the Respondent that there is an
alternative bunker supply off Durban or off Cape Town. Indeed, the Master
spontaneously sent to the Respondent on 25 June its estimated time of arrival off
Durban.111
! The Master relied on the false statement made by the Respondent and its agent that
there is a bunker supply at the ship-to-ship area one.112 In each of the e-mails sent to
105 Mead v. Bebington [2007] EWCA Civ 518. 106 Moot problem: voyage order attached to the email sent on 27 May 2014 at 09:27 from Chris at LDTP to the Master, p. 20; email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35. 107 Moot problem: email sent on 3 June 2014 at 17:21 (UTC+8) from Chris at LDTP to the Master, p. 26. 108 Moot problem: email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35. 109 Ross Fentem & Lucy Walker, “Civil fraud – Back to basics”, Guildhall Chambers, November 2012. 110 Edgington v. Fitzmaurice [1884] 29 Ch D 459, 481. The effect of this rule was that the plaintiff could recover the whole of his loss, even though he was himself partly responsible for it. 111 Moot problem: email sent on 25 June 2014 at 11 :02 (UTC+3) from the Master to Chris at LDTP, p. 32. 112 Moot problem: email sent on 28 June 2014 at 18:43 (UTC+8) from Chris at LDTP to the Master, p. 34; email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
22
ASA2, the Master stated that it would be “taking bunkers on arrival” and requested
the receiver to confirm it has “hose connections and fender supply.”
Therefore, the Tribunal will ascertain that the Claimant did in fact rely upon the false
statements made by the Respondent and persons acting on its behalf.
52. The Claimant was thereby caused financial loss. Due to the false representations made
by the Respondent and ASA2 acting on its behalf outlined above, the Vessel arrived at a
location where pirates attacked it. This hijack caused the Vessel serious damages that
require repairs and prevent any further hire for a certain period of time. Thus, it is
undisputable that the Claimant suffered financial loss.
Therefore, the Tribunal will ascertain that the Claimant has suffered a financial loss due to
the false representations made by the Respondent and its agent.
53. The Claimant is rightly entitled to claim damages for the tort of deceit. In principle,
the Respondent is liable for all losses flowing from the tort.113 The Claimant, victim of the
fraud, must therefore be put in the position it would have been if the false representations
had not been made.114
Therefore, the Tribunal will award damages for all losses suffered by the Claimant due to
the maritime fraud committed by the Respondent.
IV. The Respondent and ASA2 acting on its behalf are liable for negligent
misrepresentation
54. If not made with fraudulent intent, the aforementioned false statements otherwise
demonstrate the Respondent’s negligence in representing that it would provide a
sufficient supply of bunkers to the Claimant. Under the Misrepresentation Act 1967, the
Claimant is entitled to claim damages for the Respondent’s negligent misrepresentation, as
if the misrepresentation were made fraudulently.115 Section 2 (1) of the Act provides that:
“Where a person has entered into a contract after a misrepresentation has been
made to him by another party thereto and as a result thereof he has suffered
loss, then, if the person making the misrepresentation would be liable to
damages in respect thereof had the misrepresentation been made fraudulently,
that person shall be so liable notwithstanding that the misrepresentation was not
made fraudulently, unless he proves that he had reasonable ground to believe 113 Smith New Court Securities Ltd v. Scrimgeour Vickers (Asset Management) Ltd [1996] UKHL 3, [1997] AC 254 (21 November 1996); Clef Aquitaine SARL v. Laporte Materials (Barrow) Ltd [2000] 2 All ER 493. 114 Doyle v. Olby (Ironmongers) Ltd [1969] EWCA Civ 2 at p. 167, [1969] 2 QB 158 (31 January 1969). 115 Royscot Trust v. Rogerson [1991] 2 QB 297.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
23
and did believe up to the time the contract was made the facts represented were
true.”
55. The Claimant and the Respondent based the Contract on a standard pro-forma Shelltime 4,
which was amended by the terms negotiated between the Parties. As reflected in the
recap,116 the Respondent requested several amendments to be made to the pro-forma
Shelltime 4, but did not request Clause 7. (a) of the Contract to be amended. In Spice Girls
Ltd,117 the Court of Appeal found the claimants liable under the Misrepresentation Act for
an implied misrepresentation they made by conduct to the Respondent. By not expressing
any intention to amend Clause 7. (a) of the Contract, which provides that “Charterer shall
provide and pay for all fuel,” the Respondent made by the implied representation that it
was commercially capable of supplying, and would therefore supply, all necessary bunkers
to the Claimant. Contrary to what the Respondent contends,118 the Respondent’s failure to
provide a sufficient supply of bunker to the Vessel in Singapore prior to its departure and
the subsequent false statements repeatedly made by the Respondent regarding bunkering at
various stages of the voyage prove that the Respondent’s implied representation was
untrue. The Claimant refers this Tribunal to paragraphs above119 and contends that such
misrepresentation, if fraudulent, would entitle the Claimant to damages.
56. If the representee proves a misrepresentation under the Act, which, if fraudulent, would
have sounded in damages, the onus passes immediately to the representor to prove that it
had reasonable ground to believe the facts represented.120 While the Respondent contends
that all representations made by it were honest and all beliefs in aid of such representations
were honest beliefs,121 the Respondent had no reasonable ground to believe and did not
believe that it would be able to provide and pay for all bunkers. The Respondent’s
correspondence with Singapore bunker suppliers Equator Bunkers demonstrates that the
Respondent knew it never had any means to provide a sufficient supply of bunkers to the
Vessel as soon as the day after the commencement date of the Contract. In the e-mail sent
to Equator Bunkers on 27 may 2014,122 the Respondent states that it is “developing a new
trade from the Singapore / Malaysia area to Atlantic area” and therefore requires “a 30
116 Moot problem: email sent on 26 May 2014 at 17:09 (UTC+1) from Bill to Charles at LDTP and Oliver at WTI, p. 5. 117 Spice Girls Ltd v. Aprilia World Service Bv [2002] EWCA Civ 15. 118 Moot problem: Statement of defence, §15, a, p. 68. 119 See supra, The tort of deceit. 120 Howard Marine and Dredging Co. Ltd v. A. Ogden & Sons (Excavations) Ltd. [1977] EWCA Civ 3. 121 Moot problem: Statement of defence, §15, b, p. 68. 122 Moot problem: email sent on 27 may 2014 at 12:00 (UTC+ 8) from Chris at LDTP to David at Equator Bunkers, p. 20.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
24
day credit line to the order of US$750,000 to US$1million for the purchase of residual
fuel.” Further e-mail sent by the Respondent to David Ng at Equator Bunkers on 28 May
2014 shows that the Respondent accepted a $650,000 credit line and only intended to
purchase 990metric tons of fuel,123 when the Master already informed the Respondent that
1500 metric tons of fuel were required for the whole voyage.124 The quote given by
Equator Bunkers regarding the cost of fuel in its e-mail to the Respondent on 28 May 2014
proves that the credit line initially required and eventually accepted by the Respondent was
insufficient to purchase the full quantity of fuel necessary for the whole voyage.125
57. This Tribunal will therefore find that the Respondent had no reasonable ground to believe
and did not believe the implied representation it made regarding its ability to provide and
pay for a sufficient supply of bunkers to the Claimant.
Therefore, the Claimant is rightly entitled to claim damages for negligent
misrepresentation under section 2 (1) of the Misrepresentation Act 1967 and the
Respondent is liable to same damages as if it made such representation fraudulently.
123 Moot problem: email sent on 28 May 2014 at 09:17 (UTC +8) by Chris at LDTP to David at Equator Bunkers, p. 22. 124 Moot problem: email sent on 27 May 2014 at 12:27 (UTC+8) from the Master to Chris at LDTP, p. 21. 125 Moot problem: email sent on 28 May 2014 at 10:10 (UTC +8) from David at Equator Bunkers to Chris at LDTP, p. 23.
INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6
25
PART III – PRAYER FOR RELIEF
In light of the foregoing submissions, the Claimant respectfully requests this Tribunal to:
DECLARE that it has jurisdiction over the merits of the present claims; and
FIND that the Respondent is liable for the breaches of the Contract, the tort of fraud and the
negligent misrepresentation; and
AWARD to the Claimant damages and interest on the amounts claimed; and
ORDER the Respondent to pay all legal and other costs that may incur arising out of or in
relation to the present arbitration.