THE TWENTIETH ANNUAL INTERNATIONAL MARITIME LAW …€¦ · Satef-Huttenes Albertus SpA v Paloma...

THE TWENTIETH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

UNIVERSITAS PADJADJARAN

TEAM 24

MEMORANDUM FOR RESPONDENT

v

COUNSEL

AGAINST

Panther Shipping Inc.

ON BEHALF OF

Omega Chartering Limited

SAMUEL

SIMARMATA

LUE

ESTHERINA

TRAVIS TIO

WALUYO

CLARA PUSPA

JELITA

MEMORANDUM FOR RESPONDENT TEAM 24

i

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ......................................................................................................... iii

LIST OF AUTHORITIES ................................................................................................................ v

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

I. RESPONDENT HAS NOT BREACHED CLAUSE 83 OF RIDER CLAUSES ............ 4

A. RESPONDENT is prevented under clause 83(d) of Rider Clauses ......................................... 4

B. CLAIMANT’s unreasonable rejection exempts RESPONDENT’s obligation to pay lump

sum ............................................................................................................................................... 5

II. RESPONDENT IS ONLY LIABLE FOR REASONABLE AMOUNT OF LOSS AND

DAMAGES .......................................................................................................................... 6

A. RESPONDENT is only liable for minimum costs of hull cleaning ......................................... 6

i. RESPONDENT is not liable for damages for any cleaning costs .......................................... 7

ii. Consequently, RESPONDENT is not liable for any voyage costs in relation to cleaning

................................................................................................................................................. 7

iii. Alternatively, RESPONDENT is only liable for lump sum of USD 30,000 ..................... 8

iv. In the further alternative, RESPONDENT is not liable for more than USD 33,000 ........ 8

B. RESPONDENT shall have limited liability over late redelivery .............................................. 9

i. RESPONDENT is not liable for loss of Next Fixture hire ................................................. 10

a.The loss of Next Fixture is too remote from the breach of contract..........................10

b.The incorporation of the word ‘WOG’ in the CHARTERPARTY excludes all

liability............................................................................................................................11

ii. In any event, RESPONDENT is only liable for damages of market rate adjustments

following claims from CLAIMANT .................................................................................... 12

iii. In the alternative, RESPONDENT is only liable for two years of the Next Fixture hire

reduced by value of Replacement Fixture ....................................................................... 12

III. INTEREST SHALL NOT ACCRUE ON ANY CLAIMS ABOVE ............................. 13

A. There is no principal liability for the interest to accrue on ................................................. 13

B. In the alternative, it is unreasonable to grant interest on any damages since claims for it

were unjustly delayed .............................................................................................................. 14

IV. RESPONDENT IS ENTITLED TO INDEMNITY & RESTITUTION ...................... 14

A. RESPONDENT is entitled to indemnity for Cargo Claims ..................................................... 15

i. RESPONDENT’s Cargo Claim were valid and made within allocated time bar ............ 15

ii. RESPONDENT is entitled to 100% indemnity for Cargo Claim ...................................... 16

a. CLAIMANT shall fully apportion the Cargo Claim under clause 8(a) of ICA.........16

b. Alternatively, CLAIMANT shall fully apportion the Cargo Claim under clause 8(b)

of ICA .............................................................................................................................. 17


ii

c. In the further alternative, RESPONDENT is entitled to damages of like amount ..... 18

d. In the further alternative, Parties shall equally apportion the Cargo Claim under

clause 8(b) of ICA ......................................................................................................... 18

B. RESPONDENT is entitled to restitution of overpaid hire during the Vessel’s detainment 19

i. The full working of the Vessel had been prevented ....................................................... 19

ii. In any event, the detention shall amount to off-hire ...................................................... 20

iii. The detainment of the Vessel was not due to the fault of RESPONDENT...................... 20

iv. Alternatively, RESPONDENT is entitled to damages for off-hire in like amount ......... 20

C. Interest shall apply to all RESPONDENT’s counterclaims .................................................... 21

i. The Tribunal shall grant compound interest.................................................................... 21

ii. Calculations of interest ....................................................................................................... 22

REQUEST FOR RELIEF .............................................................................................................. 24


iii

LIST OF ABBREVIATIONS

ABBREVIATION TERM

ABT About

BIMCO Baltic and International Maritime Council

Brokers Clark Kent & Sons

Cargo English Breakfast Tea

Champion Champion Chartering Corp.

CHARTERPARTY The Time Charter

CLAIMANT Panther Shipping Inc.

ICA Inter-club New York Produce Exchange Agreement

1996 (as amended September 2011)

LIBOR London Inter-bank Offered Rate

LMAA London Maritime Arbitrators Association

Managers Hulk Hulls

Master M/V Thanos Quest’s Shipmaster

Next Fixture Time Charter between Owners and Champion

Chartering Corp.

North Titan The Port of North Titan

NYPE New York Produce Exchange Form 2015

Parties Owners and Charterers

Port State Control Wahanda Port State Control

Receivers Hawkeye Import and Export Pty


iv

Record International Maritime Law Arbitration Moot 2019

Moot Scenario

Replacement Fixture Time Charter between Owners and Fairwind

International

RESPONDENT Omega Chartering Limited

Rider Clauses Omega Chartering Rider Clauses

South Island The Port of South Island

Vessel M/V Thanos Quest

Wahanda The Port of Wahanda

West Coast The Port of West Coast

WOG Without Guarantee


v

LIST OF AUTHORITIES

A. CASES

A.B. Marintrans v. Comet Shipping Co. Ltd. (‘The Shinjitsu Maru No. 5’) [1985] 1

Lloyd’s Rep 568

Abrahams and Another v. Herbert Reiach Ltd [1922] 1 K.B. 477

Agile Holdings Corpn v. Essar Shipping Ltd [2018] EWHC 1055

Alexandros Shipping Co of Piraeus v Mediterranean Shipping Co SA (‘The Alexandros

P’) [1986] 1 Lloyd’s Rep 421

Alma Shipping Corpn. of Monrovia v Mantovani [1975] 1 Lloyd’s Rep 115

Andre & Cie S.A. v. Orient Shipping (Rotterdam) B.V. (‘Laconian Confidence’) [1997]

1 Lloyd’s Rep 139

Anglo-Saxon Petroleum v. Adamentos [1957] 2 Q.B. 233

Arta Shipping Co Ltd. v Thai Europe Tapioca Service Ltd [1977] 2 Lloyd’s Rep 1

AXL Resourses Ltd v Antares Underwriting Services Ltd & another [2010] EWHC 3244

(Comm)

B.P. Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 845

Banque Keyser Ullman SA v Skandia UK Insurance Co Ltd and ors (unreported, 11

December 1987)

Beach v Reed Corrugated Cases [1956] 1 W.L.R. 807

Birkett v Hayes [1982] 1 WLR 816

Bremer Handelsgesellschaft mbH v Continental Grain Co [1983] 1 Lloyd’s Rep 269

Bremer Handelsgesellschaft mbH v C. Mackprang Jr [1981] 1 Lloyd’s Rep 292

Bremer Handelsgesellschaft mbH v Westzucker GmbH [1981] 1 Lloyd’s Rep 207

British Columbia Saw Mill Co Ltd v. Nettleship (1868) LR 3 CP 499

British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric

Railways Co of London Ltd [1912] AC 673

Bunge Corp, New York v Tradax SA Panama [1981] 1 W.L.R. 711 HL

Bunge SA v Kruse [1979] 1 Lloyd’s Rep 279 (affirmed [1980] 2 Lloyd’s Rep 142)


vi

Bunge SA v Nidera BV [2013] EWCA Civ 1628, [2014] 1 C.L.C. 27

Butler Machine Tool v Ex-Cell-O Corporation [1979] 1 WLR 401CA

C Czarnikow Ltd v Koufos [1969] 1 AC 350

Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256

Ceroilfood Shandong Cereals and Oils (2) Jose A Y Gerardo E Zuluaga Limited v.

Toledo Shipping Corporation [2006] EWHC 2054 (Comm)

Claymore Services Ltd v Nautilus Properties Ltd [2007] BLR 452

Continental Pacific Shipping Ltd v Deemand Shipping Co. Ltd. [1997] 1 Lloyd's Rep 404

Cook Industries Inc v Meunerie Liegeois SA [1981] 1 Lloyd’s Rep 359

Cory v Thames Ironworks Co (1868) LR 3 QB 181

Derby Resources AG v Blue Corinth Marine Co Ltd (No 2) (‘The Athenian Harmony’)

[1998] 2 Lloyd’s Rep 425

Deverill v. Burnell L. R. 8 C. P. 475

Didymi Corporation v Atlantic Lines and Navigation Inc [1987] 2 Lloyd’s Rep 166

Elbinger Aktiengesellschaft v. Armstrong (1874) LR 9 QB 473

F J Chalke Limited, A C Barnes (Wokingham) Limited v. The Commissioners for Her

Majesty's Revenue & Customs [2009] EWHC 952 (Ch) 2009 WL 1246904

Fiona Trust & Holding Corporation and others v Yuri Privalov and others [2011]

EWHC 664 (Comm)

Gosse Millerd Ltd v Canadian Govt Merchant Marine Ltd. (‘The Canadian Highlander’)

[1929] AC 223

Hadley v Baxendale [1854] 9 Exch 341

Horne v. Midland Ry (1872) LR 7 CP 583 ; (1873) LR 8 CP 131

Hyundai Merchant Marine Co Ltd. v Gesuri Chartering Co Ltd. [1991] 1 Lloyd’s Rep

100

Japy Frères v. Sutherland (1921) 26 Com. Cas. 227 (C.A.)

Johnson Matthey Banking v State Trading Corp of India [1984] 1 Lloyd’s Rep 427

Kinetics Technology v Cross Seas Shipping (‘The Mosconici’) [2001] 2 Lloyd’s Reports

313


vii

Kuwait Airways v Kuwait Insurance [2000] 1 AER (Comm) 972

Lesotho Highlands Development Authority v Imreglio SpA [2002] EWHC 2435 (Comm)

Lesotho Highlands Development Authority v Imreglio SpA [2006] 1 AC 221

LG&E Energy Corp, LG&E Capital Corp, and LG&E International Inc v The Argentine

Republic (Award, ICSID Case No ARB/02/1; IIC 295, 25 July 2007)

Losinjska Plovidba Brodarstovo DB v Valracht Maritime Co Ltd [2001] 2 Lloyd’s Rep

17

Louis Dreyfus Commodities Suisse SA v MT Maritime Management BV (‘The MTM Hong

Kong’) [2015] EWHC 2505 (Comm)

M.H. Progress Lines SA v Orient Shipping Rotterdam BV (‘The Genius Star 1’) 1 Lloyd’s

Rep 222

Mamidoil-Jetoil Greek Petroleum Company SA v Okta Crude Oil Refinery, AD [2003] 1

Lloyd's Rep 42

Man Nutzfahrzeuge AG v Freightliner Ltd [2005] EWHC 2347 (Comm)

Manifest Shipping & Co. Ltd. v. Uni-Polaris Insurance Co. Ltd. and la Réunion

Europeene, (‘The Star Sea’) [1997] 1 Lloyd's Rep 360

Mediterranean Shipping Co SA v Alianca Bay Shipping Co (‘The Argonaut’) [1985] 2

Lloyd’s Rep 216

Minerva Navigation Inc. v. Oceana Shipping AG v. Transatlantica Commodities S.A.

[2012] EWHC 3608 (Comm), [2013] 1 Lloyd’s Rep 145

Moore v. Lunn (1923) 15 Ll.L.Rep 155

Myer Stores Ltd v Soo [1991] 2 VR 597

Nitrate Corp of Chile Ltd v Pansuiza Compania de Navegacion SA [1980] 1 Lloyd’s Rep

638

Papera Traders Co. Ltd. v Hyundai Merchant Marine Co. Ltd. (‘Eurasian Dream’)

[2002] EWHC 118

Paula Lee v Robert Zehill & Co Ltd [1983] 2 All E.R. 390

Petrobras v FPSO Construction Inc. [2007] EWHC 1357 (Comm)

Re Thornett, Fehr and Yuills [1921] 1 K.B. 219

Robin Hood Flour Mills, Ltd. v. N. M. Paterson & Sons, Ltd. (‘The Farrandoc’) [1967]

1 Lloyd's Rep 232


viii

Robophone Facilities Ltd v. Blank [1966] 1 WLR 1428

Rowson v. Atlantic transport Company, Limited [1903] 2 K.B. 666

Santa Martha Baay Scheepvaart & Handelsmaatschappij N.V. v Scanbulk A/S (‘The

Rijn’) [1981] 2 Lloyd’s Rep 267

Satef-Huttenes Albertus SpA v Paloma Tercera Shipping CO SA [1981] Lloyd’s Rep 175

Sempra Metals Limited (formerly Metallgesellschaft Limited) v. Her Majesty's

Commissioners of Inland Revenue and another [2007] UKHL 34 WL 2025760

Sidermar SA v Apollo Corporation (‘Apollo’) [1978] 1 Lloyd's Rep 200

Siemens AG v The Argentine Republic (Award, ICSID Case No ARB/02/8; IIC 227, 6

February 2007)

Stephen v Scottish Boatowners Mutual Insurance Association (‘The Talisman’) [1989] 1

Lloyd's Rep 535

Stover v Manchester City Council [1974] 1 WLR 1403

Symes v Mahon [1922] SASR 447

Tate and Lyle Food and Distribution Ltd v GLC [1982] 1 WLR 149

Ted Baker PLC and Another v. AXA Insurance UK PLC and Others [2017] EWCA Civ

4097 Lloyd's Rep IR 699

Teekay Tankers v STX Offshore & Shipbuilding [2017] EWHC 253 (Comm)

Thai Airways International Plc v KL Holdings Co Ltd [2015] EWHC 1250 (Comm)

The Ferro [1893]

The Garden City [1982] 2 Lloyd’s Rep 382

The Glenochill [1896]

The Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (‘The Hongkong Fir’)

[1961] 1 Lloyd’s Rep 159

The Lendoudis Evangelos II ‘(No.1)’ (1988, unreported)

The Lendoudis Evangelos II ‘(No.2)’ [1997] 1 Lloyd’s Rep 404

The Makedonia [1962] 1 Lloyd’s Rep 316

The Patraikos 2 [2002] 4 SLR 232


ix

The Roberta (1938) 60 Ll L Rep 84

The Schwan [1908]

The Strathnewton [1983] 1 Lloyd’s Rep 296

Tradax Export SA v Andre & CIE SA [1983] 1 Lloyd’s Rep 254

Transfield Shipping Inc v Mercator Shipping Inc (‘The Achilleas’) [2008] UKHL 48

Withers v General Theatre Corp [1933] 2 K.B. 536

B. ARTICLES / BOOKS

Andrew Burrows, The Law of Restitution, (3rd Edition, Oxford University Press, 2011)

Barış Professor Soyer & Andrew Tettenborn, Charterparties: Law, Practice and

Emerging Legal Issues, (2017)

Benjamin’s Sale of Goods, (9th Edition, 2014)

Black’s Law Dictionary (10th Edition, 2014)

Bohm-Bawerk E., Capital and Interest: A Critical History of Economic Theory

(London, Macmillan, 1890)

Chartered Institute of Arbitrators Practice Guidelines, Guideline 13

Michael Howard, Foreign Currency: Claims, Judgments, and Damages (Informa Law

from Routledge, 2016)

H. McGregor, McGregor on Damages, (17th Edition, 2002)

Hugh Beale, Chitty on Contracts, (29th Edition, 2004), vol. 1

John F. Wilson, Carriage of Goods By Sea, (7th Edition, Pearson, England, 2010)

Joseph Chitty, Chitty on Contract, (Vol. I, 31st Edition, Sweet & Maxwell U.K, 2012)

JW Carter, Carter’s Breach of Contract, (2nd Hart Edition, 1999)

Lloyd’s Maritime and Commercial Law Quarterly, What Obligation Does “Without

Guarantee” In A Charterparty Included?, [1997]

London Maritime Arbitration Associations Publications, LMAA Committee Report

(2013)


x

Martin Dockray, Cases & Materials on the Carriage of Goods by Sea, (3rd Edition,

2004)

Matthew Secomb, Interest in International Arbitration, (1st Edition, Oxford University

Press, 2009)

Nigel Blackaby et al, Redfern and Hunter on International Arbitration, (5th Edition,

Oxford University Press, 2009)

Peter Ashford, Handbook on International Commercial Arbitration, (2nd Edition, Juris

Publishing, Inc., 2014), 342

Sir Thomas Edward Scrutton, Scrutton on Charterparties, (20th Edition, 1996)

Terence Coghlin et al., Time Charters, (7th Edition, 2014)

Wilford and others Time Charters, (5th Edition, 2003)

Yvonne Baatz. Maritime Law, (3rd Edition, 2014)

C. LEGISLATIONS

Arbitration Act 1996

Inter-Club New York Produce Exchange Agreement 1996 (as amended September

2011)

New York Produce Exchange Form (NYPE) 2015


1

STATEMENT OF FACTS

General Facts

1. On 18 March 2016, Panther Shipping Inc. (CLAIMANT) and Omega Chartering Limited

(RESPONDENT) entered a time charterparty (CHARTERPARTY) of M/V Thanos Quest

(Vessel) for about 50-55 days from West Coast to Wahanda.1 The CHARTERPARTY consisted

of the details of the fixture (Fixture Details) and Omega Chartering Rider Clauses (Rider

Clauses) and incorporated the New York Produce Exchange Form 20151 (NYPE). The

Vessel was delivered to RESPONDENT on 29 March 2016.2 Despite a serious Ebola outbreak

reported on 18 April 2016,3 the Vessel sailed to Wahanda 2 days later upon completing the

loading process.4

Facts Relating to Off-Hire

2. The Vessel arrived at the Wahanda on 7 May 2016. However, she was unable to immediately

berth and instead was held at anchorage due to speculation of Ebola contamination of the

Vessel’s crew.5 On 11 May 2016, the Port State Control attended the Vessel and found crew

with high-fevers.6 As a result, the Vessel was detained for 50 days and prevented from

berthing and discharging cargo until 26 June 2016.7

Facts Relating to Cleaning

3. During the detainment period, the Vessel’s hull became fouled and required cleaning.8

RESPONDENT consulted Port Services to arrange cleaning at Wahanda according to their

obligations, but it was not possible due to dirty water and absence of any cleaning services.9

1 Record, 2: Email of 18 March 2016, Details of Fixture. 2 Record, 66: Claim Submissions, ¶3. 3 Record, 22: West Coast Daily Echo’s News of 18 April 2016. 4 Record, 66: Claim Submissions, ¶3. 5 Record, 25: Email of 7 May 2016. 6 Record, 24: First Email of 11 May 2016. 7 Record, 25: Email of 7 May 2016; Record, 81: Procedural Order No.2 ¶7. 8 Record, 81: Procedural Order No. 2 ¶5; Record, 84: Picture of Vessel’s fouled hull. 9 Record, 26: First Email of 25 May 2016.


2

Following this, RESPONDENT offered a lump-sum of USD 15,000.00 to replace their

performance of cleaning.10 CLAIMANT declined and requested inspection and cleaning be

performed at the next convenient port.11

4. RESPONDENT proposed to arrange cleaning at North Titan for USD 33,000.00 or pay a lump

sum of USD 20,000.00.12 CLAIMANT again declined, instead announcing they would

perform cleaning at South Island which would cost 41,000.00.13 RESPONDENT did not agree

and raised their lump sum offer to USD 30,000.00.14 CLAIMANT then unilaterally brought

the Vessel to South Island for cleaning on 30 June 2016.15

Facts Relating to Redelivery

5. On 15 June 2016, CLAIMANT entered into a following time charterparty (Next Fixture) with

Champion Chartering Corp. (Champion) for 2 years with 2-year extension in Next

Charterers’ option,16 at a daily hire rate of USD 10,500.00.17 Delivery under the Next Fixture

was to be DLSOP Wahanda with a laycan of 22-28 June 2016.18

6. As the Vessel was detained by Port State Control, she was prevented from redelivering

according to their estimated dates and only redelivered on 30 June 2016.19 In the absence of

the Vessel, the Next Fixture was unfortunately cancelled on 28 June 2016.20

7. To mitigate the loss of Next Fixture, the CLAIMANT entered into a time charterparty

(Replacement Fixture) on 4 July 2016 with Fairwind International (Fairwind) for a period

10 Record, 29: Second Email of 8 June 2016. 11 Record, 28: First and Second Email of 9 June 2016. 12 Record, 39: Third Email of 27 June 2016. 13 Record, 43: Second Email of 29 June 2016; Record, 50-51: Cleaning Invoice from South Island; Record, 52:

Final Hire Statement. 14 Record, 42-43: First Email of 30 June 2016. 15 Record, 52: Final Hire Statement. 16 Record, 30: Email of 15 June 2016, Details of Next Fixture. 17 Record, 32: Email of 15 June 2016, Details of Next Fixture. 18 Record, 31: Email of 15 June 2016, Details of Next Fixture. 19 Record, 68: Claim Submissions ¶21(2); Record, 70: Defence and Counterclaim Submissions ¶10(2). 20 Record, 40: Email of 28 June 2016.


3

of 50-55 days,21 at USD 11,000.00.22 Delivery under the Replacement Fixture was to be

DLSOP South Island with a laycan of 4-6 July.23

Facts Relating to Cargo Claims

8. In a Bill of Lading between RESPONDENT and Hawkeye Import and Export Pty (Receivers),

RESPONDENT was established as the carrier of shipment English Breakfast Tea (Cargo)

valued at USD 100,000,000.00.24 Upon discharging, the cargo was discovered damaged

caused by the crew’s mistake in ballasting.25 The Bill of Lading incorporated Hague Rules

which requires parties to either raise lawsuit within a 1-year time bar from cargo delivery or

agree to extend said time bar. The CHARTERPARTY incorporates the Inter-club New York

Produce Agreement (ICA) to settle cargo claim disputes between CLAIMANT and

RESPONDENT.26

9. RESPONDENT agreed to granted 3 back-to-back 3-month time extension to the Receivers.27

On 4 July 2016, RESPONDENT gave notification of Cargo Claim against CLAIMANT to

indemnify the Receiver’s claims against RESPONDENT.28

Facts Relating to Arbitration and Claims

10. CLAIMANT referred the dispute to arbitration on 15 October 2018, claiming damages for loss

of Next Fixture and cleaning costs.29 RESPONDENT, denied full liability for the claims and

counterclaimed for indemnity of Cargo Claim and restitution of off-hire.30 CLAIMANT

subsequently denied full liability. 31 The Parties assert interest on their claims. 32

21 Record, 53: Email of 4 July 2016, Details of Replacement Fixture. 22 Record, 55: Email of 4 July 2016, Details of Replacement Fixture. 23 Record, 54: Email of 4 July 2016, Details of Replacement Fixture. 24 Record, 47: Bill of Lading. 25 Record, 38: First Email of 27 June 2016. 26 Record, 10: Rider Clauses, cl. 53; New York Produce Exchange Form 2015 (NYPE), cl. 27. 27 Record, 57-58: Emails of 23 May 2017, 29 May 2017, 23 August 2017, 28 August 2017, 23 November 2017. 28 Record, 45: Email of 7 July 2016. 29 Record, 69: Claim Submissions ¶22. 30 Record, 73-74: Defence and Counterclaim Submissions ¶11,15. 31 Record, 77: Reply and Defence to Counterclaim Submissions ¶8. 32 Record, 69: Claim Submissions ¶23; Record, 74: Defence and Counterclaim Submissions ¶16.


4

SUBMISSIONS ON THE MERITS

I. RESPONDENT HAS NOT BREACHED CLAUSE 83 OF RIDER CLAUSES

1. Pursuant to clause 83 of Rider Clauses, RESPONDENT has one of two obligations; either to

perform cleaning or to pay an agreed lump sum when they are prevented to clean.33 Here,

RESPONDENT cannot be said to have breached clause 83 of Rider Clauses even though

RESPONDENT did not perform cleaning since they are exempted (A) by prevention of

cleaning. (B) Moreover, CLAIMANT unreasonably rejected RESPONDENT’s offers.

A. RESPONDENT is prevented under clause 83(d) of Rider Clauses

2. Clause 83(d) of Rider Clauses provides that when a party is prevented from performing

cleaning, their obligation to clean is exempted and replaced by the duty to pay a lump

sum.34 Although its ordinary meaning ‘prevented’ means ‘to be hindered or impeded’,35

interpretation of a prevention clause must be considered in light of the whole contract.36

3. In the event a defendant cannot perform their obligation in their intended method of

performance, but is able to perform in an alternative albeit more difficult manner, it is a

question of construction of the clause and of fact whether the performance has been

effectively prevented.37 Case law asserts that a defendant will succeed in proving

prevention such alternative methods of performing obligation are impractical and

33 Record, 16: Rider Clauses, cl. 83. 34 Record, 16: Rider Clauses, cl. 83(d). 35 Black’s Law Dictionary (10th Edition, 2014), 1307. 36 Tradax Export SA v Andre & CIE SA [1983] 1 Lloyd’s Rep 254 37Bunge SA v Kruse [1979] 1 Lloyd’s Rep 279 (affirmed [1980] 2 Lloyd’s Rep 142); Bremer Handelsgesellschaft

mbH v Westzucker GmbH [1981] 1 Lloyd’s Rep 207; Bremer Handelsgesellschaft mbH v C. Mackprang Jr [1981]

1 Lloyd’s Rep 292; Cook Industries Inc v Meunerie Liegeois SA [1981] 1 Lloyd’s Rep 359 (Mr. Justice Mustill);

Bremer Handelsgesellschaft mbH v Continental Grain Co [1983] 1 Lloyd’s Rep 269; Tradax Export SA v Andre

& CIE SA [1983] 1 Lloyd’s Rep 254; Bunge SA v Nidera BV [2013] EWCA Civ 1628, [2014] 1 C.L.C. 27.


5

commercially unreasonable38 as long as they have made reasonable efforts to fulfill the

prevented obligation.39

4. What must be considered here is RESPONDENT’s obligation to, in the best of their ability,

redeliver as close to its estimated arrival as possible.40 RESPONDENT might have postponed

redelivery and left Wahanda to perform cleaning elsewhere, before returning afterwards

to redeliver.41 However, it must be considered that the Vessel was already 36 days into

overrun42 and if the Vessel were to do as above they would be in deliberate breach of their

obligation to redelivery as promptly as possible.

5. Furthermore, sub-clause (d) is designed to serve efficient behaviour to the benefit of both

Parties and thus it would be far more practical to pay a lump sum under prevention than to

perform cleaning elsewhere prior to redelivery.43 In conclusion, due to the impracticality

of cleaning before redelivery, RESPONDENT is still materially prevented from performing

cleaning and therefore exempted from said obligation.

B. CLAIMANT’s unreasonable rejection exempts RESPONDENT’s obligation to pay lump

sum

6. A contract provision may leave an essential matter, such as the determination of a price,

to be agreed upon by the parties at a later date.44 However, if said provision does not

regulate a default alternative then in the event the parties fail to come to agreement, the

38 Tradax Export SA v Andre et Cie [1976] 1 Lloyd’s Rep 416, 423; Benjamin’s Sale of Goods, (9th Edition, 2014),

¶18-393. 39 Joseph Chitty, Chitty on Contract, (Vol. I, 31st Edition, Sweet & Maxwell U.K, 2012), ¶2-158. 40 Record, 4: Email of 18 March 2016, Details of Fixture. 41 Record, 37: Titan Shipbuilders, North Titan Port Quotation; Record, 43: Second Email of 29 June 2016. 42 Record, 68: Claim Submissions ¶21(2); Record, 70: Defence and Counterclaim Submissions ¶10(2). 43 Record, 16: Rider Clauses, cl. 83(d). 44 Teekay Tankers v STX Offshore & Shipbuilding [2017] EWHC 253 (Comm).


6

clause will be unenforceable.45 Consequently, the parties will not be bound by any

obligation when they cannot agree upon the matter.46

7. It follows the above that when a prevented party is obliged to pay a lump sum under clause

83(d) of Rider Clauses, the Parties must agree upon an amount in order for the obligation

to be enforceable.47 Here, the Parties could not come to an agreement and RESPONDENT’s

obligation to pay a lump sum is unenforceable. The failure to come to agreement is a result

of CLAIMANT’s failure to negotiate an agreeable price. RESPONDENT attempted to fulfill

their obligation by making several offers regarding the lump sum amount,48 in contrast,

CLAIMANT rejected all the above offers,49 while refusing to make their own suggestions to

a more agreeable amount. For these reasons, RESPONDENT is exempted from their

obligation to pay lump sum.

II. RESPONDENT IS ONLY LIABLE FOR REASONABLE AMOUNT OF LOSS AND

DAMAGES

8. In this current dispute, RESPONDENT is (A) only liable for minimum costs of hull cleaning

and (B) shall only have minimum liability for the loss of Next Fixture.

A. RESPONDENT is only liable for minimum costs of hull cleaning

9. RESPONDENT is only liable for minimum costs of hull cleaning since (i) RESPONDENT is

not liable for damages of any cleaning costs nor (ii) any voyage costs in relation to

cleaning. (iii) Alternatively, RESPONDENT is only liable for lump sum of USD 30,000. (iv)

In the further alternative, RESPONDENT is not liable for more than USD 33,000.

45 Didymi Corporation v Atlantic Lines and Navigation Inc [1987] 2 Lloyd’s Rep 166 (Hobhouse J). 46 Teekay Tankers v STX Offshore & Shipbuilding [2017] EWHC 253 (Comm). 47 Record, 16: Rider Clauses, cl. 83(d). 48 Record, 29: Second Email of 8 June 2016; Record, 39: Third Email of 27 June 2016; Record, 42-43: First Email

of 30 June 2016. 49 Record, 28: First Email of 9 June 2016; Record, 43: Second Email of 29 June 2016; Record, 42: Second

Email of 30 June 2016.


7

i. RESPONDENT is not liable for damages for any cleaning costs

10. As mentioned above, if RESPONDENT is prevented from cleaning and subsequently the

Parties fail to agree upon a lump sum then clause 83 of Rider Clauses will become

uncertain and unenforceable. It follows that no claim of damages upon such uncertain and

unenforceable clause shall be granted.50 In this present case, both of the above criterion

have been met and therefore RESPONDENT can no longer be expected to be liable for

cleaning costs under sub-clause (c) nor for a lump sum under sub-clause (d). In conclusion,

RESPONDENT cannot be held liable for any costs incurred by CLAIMANT in relation to

cleaning.

ii. Consequently, RESPONDENT is not liable for any voyage costs in relation to cleaning

11. In the present CHARTERPARTY, charterers are only responsible for bunkering between

delivery and redelivery of the vessel, and outside said period, owners shall pay for all

bunkering of the vessel.51 Separately, charterers cannot be held liable for the hire and

bunkering of a voyage contrary to their directions and such costs must be on owners’

account.52

12. Presently, CLAIMANT sailed to South Island after the Vessel’s redelivery,53 thus

RESPONDENT is no longer liable for the hire and bunker arising from the voyage.

Furthermore, the voyage to South Island was not contractual and performed without the

consent of RESPONDENT. Thus, in any event, RESPONDENT cannot be charged for the

voyage costs of USD 55,567.42 arising from the voyage to South Island.

50 Didymi Corporation v Atlantic Lines and Navigation Inc [1987] 2 Lloyd’s Rep 166 (Hobhouse J); Teekay

Tankers v STX Offshore & Shipbuilding [2017] EWHC 253 (Comm). 51 New York Produce Exchange Form 2015 (NYPE), cl. 9. 52 NYPE, cl. 17. 53 Record, 52: Final Hire Statement.


8

iii. Alternatively, RESPONDENT is only liable for lump sum of USD 30,000

13. In the event RESPONDENT is liable under clause 83 of the Rider Clauses, the prevention

from performing cleaning still limits RESPONDENT’s liability to a lump sum which must

be agreed prior to redelivery.54 Generally speaking, an agreement is reached when one

party accepts an offer made by the another party.55 An offer is an expression of willingness

to contract on specified terms, made with the intention to be binding once accepted by the

person to whom it is addressed.56 Although parties are free to disagree, both must continue

to make offers towards an agreeable price and failure to do so will limit a party’s

entitlement.57

14. RESPONDENT has fulfilled the above obligation by making several offers to an amount in

good faith,58 where their highest offer amounted to USD 30,000. This expresses their

intention to be bound to the above amount. Meanwhile, CLAIMANT only rejected the above

offers without proposing a potentially more agreeable counter-offer.59 As consequence,

RESPONDENT cannot be expected to an amount higher than what they’ve expressly offered

to be bound and CLAIMANT’s own failure to make a better offer regarding the lump-sum

limits the amount to no more than USD 30,000.

iv. In the further alternative, RESPONDENT is not liable for more than USD 33,000

15. In the event the Tribunal decides that RESPONDENT is liable for cleaning costs instead of

lump sum, RESPONDENT would not be liable for any more than USD 33,000. In a case

where a liable party could have fulfilled their obligation through several alternative

54 Record, 16: Rider Clauses, cl. 83(d). 55 Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256. 56 Stover v Manchester City Council [1974] 1 WLR 1403. 57 Teekay Tankers v STX Offshore & Shipbuilding [2017] EWHC 253 (Comm). 58 Record, 29: Second Email of 8 June 2016; Record, 39: Third Email of 27 June 2016; Record, 42-43: First

Email of 30 June 2016. 59 Record, 28: First Email of 9 June 2016; Record, 43: Second Email of 29 June 2016; Record, 42: Second

Email of 30 June 2016.


9

methods of performance, said party can only be liable for a method least detrimental to

them60 and not what would be more beneficial to the plaintiff.61 A defendant cannot be

liable more than they would have suffered if they themselves acted reasonably.62

16. If the RESPONDENT were to performed cleaning prior to redelivery, they would have had

at least two options: first, to clean at North Titan;63 or second, to clean at South Island.64

Between the two, North Titan would have been the alternative less detrimental to

RESPONDENT.65 Not only was cleaning at North Titan cheaper, at the time of discussion

the cost had already been surveyed. On the other hand, cleaning at South Island was more

expensive and the Parties had no information regarding the cost of cleaning there when

negotiating.66 Although the cleaning was actually performed at South Island, RESPONDENT

cannot be liable for more than the cheaper costs of cleaning at North Titan or no more than

USD 33,000.

B. RESPONDENT shall have limited liability over late redelivery

17. CLAIMANT asserts RESPONDENT is fully liable for the loss of Next Fixture as a cause of

late redelivery. We submit otherwise because RESPONDENT shall have, if any, limited

liability for the loss of Next Fixture hire. RESPONDENT is not liable (i) for the loss of Next

Fixture hire. (ii) In the alternative, RESPONDENT is only liable for damages of market rate

60Re Thornett, Fehr and Yuills [1921] 1 K.B. 219; Abrahams and Another v. Herbert Reiach Ltd [1922] 1 K.B.

477; Withers v General Theatre Corp [1933] 2 K.B. 536; Beach v Reed Corrugated Cases [1956] 1 W.L.R. 807,

816-817 ; Bunge Corp, New York v Tradax SA Panama [1981] 1 W.L.R. 711 HL; Johnson Matthey Banking v

State Trading Corp of India [1984] 1 Lloyd’s Rep 427; Paula Lee v Robert Zehill & Co Ltd [1983] 2 All E.R.

390; Peter Ashford, Handbook on International Commercial Arbitration, (2nd Edition, Juris Publishing Inc.,

2014), 342; 61 Santa Martha Baay Scheepvaart & Handelsmaatschappij N.V. v Scanbulk A/S (‘The Rijn’) [1981] 2 Lloyd’s

Rep 267. 62 Deverill v. Burnell L. R. 8 C. P. 475, 481. (Bovill C.J); Peter Ashford, Handbook on International

Commercial Arbitration, (Second Edition, Juris Publishing, Inc., 2014), 342. 63 Record, 35: Email of 23 June 2016. 64 Record, 43: Second Email of 29 June 2016. 65 Record, 35: Email of 23 June 2016. 66 Record, 50-51: Cleaning Invoice from South Island; Record, 52: Final Hire Statement.


10

adjustment following claims from owner or (iii) in the further alternative is only liable for

two years of the Next Fixture hire.

i. RESPONDENT is not liable for loss of Next Fixture hire

18. RESPONDENT cannot be liable for the loss of the Next Fixture because (a) the loss of Next

Fixture is too remote from breach of contract and (b) the incorporation of the term ‘WOG’

in the CHARTERPARTY excludes all of RESPONDENT’s liability.

a. The loss of Next Fixture is too remote from the breach of contract

19. Damages resulting from a breach of contract cannot be recovered when the damages are

too remote from the breach of contract.67 Damages are not too remote when they are in the

contemplation of the parties prior to the formation of a contract,68 as well as can be

controlled and quantified by the alleged party.69 First, the contemplation of the parties is

evidenced by the existence of provisions to regulate those potential damages as a result of

one party’s concern of an unusual risk.70 Second, the ability to control and quantify appears

when the alleged party is given sufficient knowledge about the potential damages in

advanced.71

20. The facts of the case do not pass the above test. Firstly, the lack of contemplation is proved

by the non-existence of a clause regulating the potential loss of a Next Fixture. Secondly,

RESPONDENT had no knowledge regarding the existence of the Next Fixture and were only

informed about it 11 days after its formation. Consequently, RESPONDENT’s lack of

67 Hadley v Baxendale [1854] 9 Ex 341. 68 Hadley v Baxendale [1854] 9 Ex 341. 69 Transfield Shipping Inc v Mercator Shipping Inc (‘The Achilleas’) [2008] UKHL 48. 70 British Columbia Saw Mill Co Ltd v. Nettleship (1868) LR 3 CP 499, 509 (Willes J); Horne v. Midland Ry

(1872) LR 7 CP 583, 591–592 (Willes and Keating JJ); Elbinger Aktiengesellschaft v. Armstrong (1874) LR 9

QB 473, 478–479 (Blackburn J); Robophone Facilities Ltd v. Blank [1966] 1 WLR 1428, 1448 (Diplock LJ); C

Czarnikow Ltd v Koufos [1969] 1 AC 350, 386; (1873) LR 8 CP 131, 139 (Martin B), 145 (Lush J); Hugh Beale,

Chitty on Contracts, (Vol. 1, 29th Edition, 2004), ¶26-044,26-005; H. McGregor, McGregor on Damages, (17th

Edition, 2002), ¶6-175; Sir Thomas Edward Scrutton, Scrutton on Charterparties (20th Edition, 1996), 347. 71 Cory v Thames Ironworks Co (1868) LR 3 QB 181, 190-191; Satef-Huttenes Albertus SpA v Paloma Tercera

Shipping CO SA [1981] Lloyd’s Rep 175, 183.


11

knowledge made it impossible to control the formation and details of the Next Fixture in

any way and quantify any potential damage. Thus, for the reasons above, RESPONDENT

cannot be liable for the loss of Next Fixture.

b. The incorporation of the word ‘WOG’ in the CHARTERPARTY excludes all liability

21. The incorporation of ‘WOG’ within a charterparty exempts charterer’s liability if they

redeliver outside their estimation of arrival. Rather, ‘WOG’ creates three new obligations

for the charterers. First, they must exercise reasonable care to calculate the estimation,72

second, give the estimation in good faith, and third, attempt to meet the estimation to the

best of their abilities by trying to mitigate potential circumstances that they might meet.73

A charterer is seldom liable for the first two obligations, since a poor estimation made in

bad faith is usually accused by owners during the formation of contract and can be quickly

remedied.74 Separately, a charterer’s compliance with the third obligation is measured by

their conduct during the time charter and whether or not they took care to avoid foreseeable

issues that would cause them to be late.

22. In this present case, the absence of allegation from CLAIMANT regarding an unreasonable

estimation or an estimation made in bad faith proves that RESPONDENT had fulfilled the

first two obligations.75 Furthermore, RESPONDENT took care to arrive at Wahanda within

the estimation they had given. They were only late due to the unforeseeable matter of the

Ebola outbreak and subsequent detainment of the Vessel. Although inevitably they

redelivered 36 days late past their estimated dates, they have still upheld the three

72 NYPE, cl. 4; Japy Frères v. Sutherland (1921) 26 Com. Cas. 227 (C.A.); Continental Pacific Shipping Ltd v

Deemand Shipping Co. Ltd. [1997] 1 Lloyd’s Rep 404; Losinjska Plovidba Brodarstovo DB v Valracht Maritime

Co Ltd [2001] 2 Lloyd’s Rep 17; JW Carter, Carter’s Breach of Contract, (2nd Hart Edition, 1999), 30; Terence

Coghlin et al., Time Charters, (7th Edition, 2014), 68&96; Yvonne Baatz, Maritime Law, (3rd Edition, 2014), 147. 73 Lloyd’s Maritime and Commercial Law Quarterly, What Obligation Does ‘Without Guarantee’ In A

Charterparty Include? [1997], 360. 74 Continental Pacific Shipping Ltd v Deemand Shipping Co. Ltd. [1997] 1 Lloyd’s Rep 404. 75 Record, 65-69: Claim Submissions.


12

obligations set by the incorporation of ‘WOG’ and consequently cannot be liable for any

late redelivery.

ii. In any event, RESPONDENT is only liable for damages of market rate adjustments

following claims from CLAIMANT

23. In the event a charterer has breached the contract by redelivering late, the correct liability

for said charterer is limited to the difference between market rate and charter rate for the

period of overrun and not the full payment of the value of a lost following fixture.76

Accordingly, if RESPONDENT is liable for its overrun then the correct liability would not

be the cost of the Next Fixture but rather the difference between market rate and current

charter rate for the period of overrun. Said liability would be calculated at the difference

between a proposed market rate and USD 7,500/day for the period of overrun. However,

in the absence of any plea from CLAIMANT as to the applicable market rate, no admissions

are made in respect of the same77 and the above calculation cannot be made.

iii. In the alternative, RESPONDENT is only liable for two years of the Next Fixture hire

reduced by value of Replacement Fixture

24. In the event the Tribunal decides that RESPONDENT is liable for the loss of the Next Fixture,

such liability must be limited to certain and measurable damages78 after being deducted by

amounts of the damages that have been mitigated.79 The Next Fixture between CLAIMANT

76 Shipping Corpn. of Monrovia v Mantovani [1975] 1 Lloyd’s Rep 115, 117-118 (Lord Denning MR); Arta

Shipping Co Ltd. v Thai Europe Tapioca Service Ltd [1977] 2 Lloyd’s Rep 1, 2 (Lord Denning MR); Hyundai

Merchant Marine Co Ltd. v Gesuri Chartering Co Ltd. [1991] 1 Lloyd’s Rep 100, 118 (Bingham LJ); The

Achilleas [2008] UKHL 48, 6 (Lord Hoffman); Louis Dreyfus Commodities Suisse SA v MT Maritime

Management BV (‘The MTM Hong Kong’) [2015] EWHC 2505 (Comm); Sir Thomas Edward Scrutton, Scrutton

on Charterparties (20th Edition, 1996), 348-349; Terence Coghlin et al, Time Charters (5th Edition, 2003), ¶4.20. 77 Record, 65-69: Claim Submissions. 78 Alma Shipping Corpn. of Monrovia v Mantovani [1975] 1 Lloyd’s Rep 115, 117-118 (Lord Denning MR);

Arta Shipping Co Ltd. v Thai Europe Tapioca Service Ltd [1977] 2 Lloyd’s Rep 1, 2 (Lord Denning MR);

Hyundai Merchant Marine Co Ltd. v Gesuri Chartering Co Ltd. [1991] 1 Lloyd’s Rep 100; The Achilleas

[2008] UKHL 48, 6 (Lord Hoffman). 79 British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd

[1912] AC 673; Thai Airways International Plc v KL Holdings Co Ltd [2015] EWHC 1250 (Comm).


13

and Next Charterers would have ran for 2 years with another 2 years in Next Charterers’

option.80 First, only the first two years can be enforced, since there is no certain way to

measure whether or not Next Charterers would choose to extend to 4 years.81 Secondly, if

RESPONDENT is liable for the Next Fixture, credit must be given to the mitigation value of

the Replacement Fixture.82 The CLAIMANT had successfully fixed the Replacement Fixture

to mitigate the loss of the Next Fixture, consequently minimizing their actual losses.83 In

conclusion, the liability for RESPONDENT, if any, should amount to the value of the hire of

Next Fixture after it had been deducted by the value for the Replacement Fixture, which

is equal to USD 7,060,000.00.84

III. INTEREST SHALL NOT ACCRUE ON ANY CLAIMS ABOVE

25. Interest is the ‘compensation fixed by agreement or allowed by law for the use or detention

of money, or for the loss of money by one who is entitled to its use’,85 and is granted to

compensate the deprivation of a plaintiff’s money.86Although the Tribunal has jurisdiction

to grant interest,87 CLAIMANT was not deprived of use of their money and therefore not

entitled to interest since (A) there is no principal liability for the interest to accrue on and

(B) in the alternative, they have unjustly delayed their claims.

A. There is no principal liability for the interest to accrue on

26. Interest is awarded as damages by applying a certain rate to a principal amount of damages

over a determined period of time.88 In any logical event, in order for interest to accrue, a

80 Record, 32: Email of 15 June 2016, Details of Next Fixture. 81 Teekay Tankers v STX Offshore & Shipbuilding [2017] EWHC 253 (Comm). 82 Thai Airways International Plc v KL Holdings Co Ltd [2015] EWHC 1250 (Comm). 83 Record, 53-55: Email of 4 July 2016, Details of Replacement Fixture. 84 Liability = (Period of Next Fixture x Rate of Next Fixture) - (Period of Replacement Fixture x Rate of

Replacement Fixture) = (730 x USD 10,500) - (55 x USD 11,000) = USD 7,060,000. 85 Black’s Law Dictionary (10th Edition, 2014), 935; Matthew Secomb, Interest in International Arbitration, (1st

Edition, Oxford University Press, 2009), 19-20. 86 B.P. Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783, ¶ 845. 87 Arbitration Act 1996, s. 49. 88 Bohm-Bawerk E., Capital and Interest: A Critical History of Economic Theory (Macmillan, London, 1890)


14

principal sum must be present for said interest to accrue on. In the case at hand, as proved

above,89 there is no principal liability for said interest to accrue on.

B. In the alternative, it is unreasonable to grant interest on any damages since claims

for it were unjustly delayed

27. If a plaintiff delays in pursuing a claim of interest, interest is reduced or disallowed

completely.90 As interest is granted to compensate loss of use, when parties fail to

prosecute in a timely manner, they have become the cause of their own loss of use.91 This

behaviour also unlawfully lulls a defendant into a position of false security, furthering

disallowance of interest to a plaintiff.92

28. In casu, CLAIMANT had not promptly made their claims against CLAIMANT. Instead of

moving swiftly to pursue lawsuit, RESPONDENT waited 2 years before referring their claims

to arbitration despite not being materially prevented from pursuing their claims at an earlier

time.93 It follows that any loss of money use was due to the CLAIMANT’s own lack of action

and thus they should not be entitled to interest.

IV. RESPONDENT IS ENTITLED TO INDEMNITY & RESTITUTION

29. RESPONDENT is entitled to: (A) indemnities against Receivers’ cargo claim; and (B)

overpaid hire in the amount of USD 375,000.00 due to off-hire during the Vessel’s

detention; and (C) interest to apply to the above.

89 Supra Submission II, ¶8-24. 90 Birkett v Hayes [1982] 1 WLR 816, Derby Resources AG v Blue Corinth Marine Co Ltd (No 2) (‘The Athenian

Harmony’) [1998] 2 Lloyd’s Rep 425; Claymore Services Ltd v Nautilus Properties Ltd [2007] BLR 452. 91 The Athenian Harmony [1998] 2 Lloyd’s Rep 425, 427. 92 The Athenian Harmony [1998] 2 Lloyd’s Rep 425, 426-427. 93 Record, 61: Second Email of 16 October 2018; Record, 65-69: Claim Submissions.


15

A. RESPONDENT is entitled to indemnity for Cargo Claims

30. During the period of the CHARTERPARTY, the cargo was water damaged by the crew’s

improper use of the ballasting system.94 Subsequently, RESPONDENT is entitled to

indemnity for cargo claims since: (i) RESPONDENT’s Cargo Claim were valid and not

barred, and (ii) CLAIMANT shall fully apportion the Cargo Claim.

i. RESPONDENT’s Cargo Claim were valid and made within allocated time bar

31. When parties incorporate the ICA in their charterparty, they agree to clause 6 of ICA which

provides a 2 year time-bar to apply to the fullest extent for cargo claims between said

parties.95 Measured from the date of cargo delivery, a party will be barred if it does not

promptly give notification of cargo claims before the time bar expires.96 Under the same

clause, such notification shall include the details of the contract of carriage, the nature of

the claim and the amount claimed when it’s possible for plaintiff to provide them.97

32. Regardless of the time extensions and correspondence between RESPONDENT and

CLAIMANT or Receivers, RESPONDENT had given prompt notification of their projected

Cargo Claim as soon as 7 days after cargo delivery.98 In addition to this, they had also

attached the nature of the claims and the contract of carriage to the written notification.99

Although RESPONDENT did not provide an exact amount at the time of notification, they

are justified since the Receivers had not yet determined and informed RESPONDENT of the

quantum of their claims at the time of notification. Consequently, the RESPONDENT has

94 Record, 46: Preliminary Survey Report of 30 June 2016. 95 Inter-Club New York Produce Exchange Agreement 1996 (ICA), cl. 6; The Strathnewton [1983] 1 Lloyd’s Rep

296, 225, 228; M.H. Progress Lines SA v Orient Shipping Rotterdam BV (‘The Genius Star 1’) 1 Lloyd’s Rep 222

(Teare. J.); Terence Coghlin, et al., Time Charters, (7th Edition, 2014), 374, ¶20.74. 96 ICA, cl. 6. 97 ICA, cl. 6. 98 Record, 45: Email of 7 July 2016. 99 Record, 46: Preliminary Survey Report of 30 June 2016; Record, 47-49: Bill of Lading.


16

fulfilled their obligations under clause 6 of ICA and are not barred from making their valid

claims.

ii. RESPONDENT is entitled to 100% indemnity for Cargo Claim

33. Under the CHARTERPARTY, ICA governs the procedure of the liability of cargo claims

between the Parties.100 Since the cargo damage was caused by improper use of the

ballasting system,101 CLAIMANT shall apportion Cargo Claim under (a) clause 8(a) or (b)

alternatively, clause 8(b) of the ICA. (c) In the further alternative, RESPONDENT is entitled

for damages in like amount. (d) In any event, Parties shall equally apportion the Cargo

Claim.

a. CLAIMANT shall fully apportion the Cargo Claim under clause 8(a) of ICA

34. Clause 8(a) of ICA stipulates that owners shall be liable for 100% of cargo claims arising

out of unseaworthiness and/of error in management of the vessel.102 Here, both elements

are satisfied; Firstly, the Vessel was unseaworthy due to the incompetence of the Master.

A shipowner is liable for unseaworthiness of the vessel upon failure to provide a competent

Master and crew.103 The master and crew are responsible for a vessel’s performance,

stability, and to act prudently in discovering and resolving a problem on board,104 including

ballasting and deballasting.105

35. In casu, the Master has failed to supervise the performance of the ballasting by the crew.

Whilst ballasting, the crew opened the wrong valve, resulting in the seawater to enter into

100 Record, 10: Rider Clauses, cl. 53; NYPE, cl. 27. 101 Record, 46: Preliminary Survey Report of 30 June 2016. 102 ICA, cl. 8(a). 103 NYPE, cl. 2(b). 104 The Roberta (1938) 60 Ll. L. Rep 84, p. 86; The Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd

(‘The Hongkong Fir’) [1961] 1 Lloyd’s Rep 159, at p. 168; Nitrate Corp of Chile Ltd v Pansuiza Compania de

Navegacion SA [1980] 1 Lloyd’s Rep 638; The Garden City [1982] 2 Lloyd’s Rep 382; Stephen v. Scottish

Boatowners Mutual Insurance Association (‘The Talisman’) [1989] 1 Lloyd’s Rep 535, at p. 539; Hugh Beale,

Chitty on Contract, (32nd Edition, Sweet & Maxwell U.K., 2017), ¶13-035. 105 Record, 44: Rider Clauses, cl. 64.


17

the cargo hold.106 Following this, the Master and the crew also did not take any measures

to mitigate the damage of the cargo as proven by the fact that such was found to be

floating.107 In light of this fact, the Vessel must be deemed unseaworthy as the presence of

seawater in the cargo hold and further with the fact that the Master did not take to take any

measures to mitigate the damage of the cargo108 are clear indications that the Master was

incompetent.109

36. Secondly, the cargo damage was also caused by error in management of the Vessel. Error

in management of the vessel may occur when an act of taking care of the vessel indirectly

affecting the cargo.110 Here, the improper performance of the ballasting of the Vessel has

resulted in the damage of the cargo, indicating that the Master has failed to manage the

Vessel properly. As all of the elements are proven, CLAIMANT must be liable for 100% of

the Cargo Claim.

b. Alternatively, CLAIMANT shall fully apportion the Cargo Claim under clause 8(b) of

ICA

37. In accordance with clause 8(b) of ICA, owners may also be held fully liable for the cargo

claims when an amendment of the charterparty assigns responsibility for all cargo handling

to the master of the ship and charterers can prove that a vessel’s unseaworthiness resulted

106 Record, 46: Preliminary Survey Report of 30 June 2016. 107 Ibid. 108 Record, 44: First Email of 29 June 2016. 109 The Schwan, [1908] P. 356; Moore v. Lunn (1923) 15 Ll. L. Rep 155; The Roberta (1938) 60 Ll. L. Rep 84;

Anglo-Saxon Petroleum v. Adamentos [1957] 2 Q.B. 233; The Makedonia [1962] 1 Lloyd’s Rep 316; Robin Hood

Flour Mills, Ltd. v. N. M. Paterson & Sons, Ltd. (‘The Farrandoc’) [1967] 1 Lloyd's Rep 232; Manifest Shipping

& Co. Ltd. v. Uni-Polaris Insurance Co. Ltd. and la Réunion Europeene (‘The Star Sea’) [1997] 1 Lloyd’s Rep

360; Papera Traders Co. Ltd. v Hyundai Merchant Marine Co. Ltd. (‘The Eurasian Dream’) [2002] EWHC 118

(Justice Creswell) 1 Lloyd’s Rep 719; The Patraikos 2 [2002] 4 SLR 232; Ceroilfood Shandong Cereals and Oils

(2) Jose A Y Gerardo E Zuluaga Limited v. Toledo Shipping Corporation [2006] EWHC 2054 (Comm); John

Wilson, Carriage of Goods by Sea, (5th Edition), 13. 110 The Ferro [1893] p. 38; The Glenochill [1896] p.10; Rowson v. Atlantic transport Company, Limited, [1903]

2 K.B. 666; Gosse Millerd Ltd v Canadian Govt Merchant Marine Ltd [1929] AC 223.


18

in failure to manage the cargo properly.111 Presently, an amendment was made to clause 8

of NYPE,112 resulting the Master responsible for all cargo handling. Further, as proven

earlier,113 the Master’s incompetence has led to the Vessel’s unseaworthiness and error in

management. Thus, CLAIMANT must fully apportion the Cargo Claim under Clause 8(b) of

the ICA.

c. In the further alternative, RESPONDENT is entitled to damages of like amount

38. Clause 27 of NYPE and clause 53 of Rider Clauses provide that liability for cargo claims

between owners and charterers is to be governed by the ICA.114 If the CLAIMANT’s fault

resulted in cargo damage, then failure to comply with the ICA, specifically clause 8 of the

ICA, will result in breach of the CHARTERPARTY and the loss of money on RESPONDENT’s

account. Alternative to the previous arguments, as CLAIMANT has been proven to be

responsible under the ICA for the cargo damage115 but has failed to apportion the Cargo

Claim, they are in breach of the CHARTERPARTY and RESPONDENT is entitled to damages

of like amount.

d. In the further alternative, Parties shall equally apportion the Cargo Claim under

clause 8(b) of ICA

39. Even if the Tribunal finds the Vessel to be seaworthy, CLAIMANT is still not completely

exempted from apportionment of the Cargo Claim. Under clause 8(b) of ICA, parties shall

equally apportioned cargo claims when the charterparty is amended to assign cargo

111 ICA, cl. 8(b); A.B. Marintrans v. Comet Shipping Co. Ltd. (‘The Shinjitsu Maru No. 5’) [1985] 1 Lloyd’s Rep

568; Mediterranean Shipping Co SA v Alianca Bay Shipping Co (‘The Argonaut’) [1985] 2 Lloyd’s Rep 216, 224;

Alexandros Shipping Co of Piraeus v Mediterranean Shipping Co SA (‘The Alexandros P’) [1986] 1 Lloyd’s Rep

421. 112 Record, 5: Email of 18 March 2016. 113 Supra Submission IV(A)(2)(a), ¶34-36. 114 Record, 10: Rider Clauses, cl. 53; NYPE, cl. 27. 115 Supra Submission IV(A)(2), ¶34-37.


19

handling responsibility to the Master of a seaworthy ship.116 Such an amendment was made

in this case117 and therefore, should the Tribunal denies the above reasons, the Parties must

equally apportion the Cargo Claim.118

B. RESPONDENT is entitled to restitution of overpaid hire during the Vessel’s detainment

40. Upon her arrival at Wahanda, the Vessel was detained by Port State Control from 7 May

2016 - 26 June 2016, resulting in RESPONDENT to pay excess hire of 43 days.119 Here,

RESPONDENT has overpaid the hire in the amount of USD 375,000.00 for that period of

detainment.120 A party is not liable for any payment of hire if the vessel was considered

off-hire.121 During the detainment, the Vessel must be considered off-hire since: (i) the full

working of the vessel had been prevented; (ii) the detention was within the off-hire clause;

and (iii) the detainment was not due to the fault of RESPONDENT.

i. The full working of the Vessel had been prevented

41. A vessel is off-hire when she is prevented from conducting the service immediately

required of her.122 This prevention does not require the vessel to be inefficient in herself

as it may arise from legal or physical means and external or internal causes.123 In casu, the

Vessel was detained by Port State Control due to suspicion of Ebola infection.124 As a

result, despite the absence of the Vessel’s physical deficiencies, the Vessel’s service was

legally prevented as it was unable to proceed to berth to immediately discharge the

116 The Shinjitsu Maru No. 5 [1985] 1 Lloyd’s Rep 568; The Argonaut [1985] 2 Lloyd’s Rep 216, 224; The

Alexandros P [1986] 1 Lloyd’s Rep 421; ICA, cl. 8(b); Barış Professor Soyer & Andrew Tettenborn,

Charterparties: Law, Practice and Emerging Legal Issues, (2017), 106-107. 117 Record, 5: Email of 18 March 2016, Details of Fixture. 118 ICA, cl. 8(b). 119 Record, 25: Email of 7 May 2016; Record, 81: Procedural Order No.2 ¶7. 120 Andrew Burrows, The Law of Restitution, (3rd Edition, Oxford University Press, 2011), 585; Black’s Law

Dictionary (10th Edition, 2014), 33. 121NYPE, cl. 17. 122 Andre & Cie S.A. v. Orient Shipping (Rotterdam) B.V. (‘The Laconian Confidence’) [1997] 1 Lloyd’s Rep 139;

Barış Professor Soyer & Andrew Tettenborn, Charterparties: Law, Practice and Emerging Legal Issues, (2017),

82. 123 The Laconian Confidence [1997] 1 Lloyd’s Rep 139. 124 Record, 25: Email of 7 May 2016.


20

cargo.125 In conclusion, the detention fulfils the element of prevention and therefore, the

vessel was off-hire.

ii. In any event, the detention shall amount to off-hire

42. When the authorities act properly or reasonably pursuant to the suspected incapacity or

inefficiency of the vessel, all time lost may as well be off-hire notwithstanding the off-hire

clause.126 In The Apollo,127 since port authorities had good cause to suspect a health hazard,

detainment of the Vessel in order to test and disinfect the vessel did amount to off-hire. In

casu, the Vessel’s detainment must be regarded in the same manner. The Port State Control

had good cause to detained the Vessel as she had departed from West Coast Port, where a

recent outbreak of Ebola had occurred.128 Therefore, in any event, the detainment shall

amount to off-hire.

iii. The detainment of the Vessel was not due to the fault of RESPONDENT

43. Clause 17 of NYPE stipulates that off-hire cannot occur when it is induced by the

charterers.129 In any event, the CLAIMANT cannot rely on the above since RESPONDENT did

not control nor influence the detainment of the Vessel in any way.130 Conclusively, all the

above arguments cannot be invalidated and RESPONDENT remains entitled to the USD

375,000.00 of restitution.

iv. Alternatively, RESPONDENT is entitled to damages for off-hire in like amount

44. Alternatively, RESPONDENT is still entitled to damages for the Vessel’s off-hire in the

amount of USD 375,000.00. When an event has prevented the vessel causing loss of time,

125 Ibid. 126 Martin Dockray, Cases & Materials on the Carriage of Goods by Sea, p. 330. 127 Sidermar SA v Apollo Corporation (‘The Apollo’) [1978] 1 Lloyd’s Rep 200. 128 Record, 22: News from West Coast Daily Echo of 18 April 2016. 129 NYPE, cl. 17. 130 Record, 25: Email of 7 May 2016.


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payment of hire and overtime shall cease for time thereby lost.131 Here, RESPONDENT has

suffered loss of time as the Vessel was prevented to immediately discharge the cargo since

it was delayed due to detention by Port State Control.132 As a result, the RESPONDENT has

overpaid hire in the amount of USD 375,000.00 and alternatively, entitled to damages in

like amount.

C. Interest shall apply to all RESPONDENT’s counterclaims

45. As the Tribunal has the jurisdiction to grant interest ex aequo et bono,133 in addition to the

damage above, RESPONDENT submits they are also entitled to interest since (i) the Tribunal

shall grant compound interest (ii) as calculated as below:

i. The Tribunal shall grant compound interest

46. Courts and tribunals should award interest simply because the plaintiff has been deprived

of the use of money which was due to him, including money lost due to a defendant’s

breach of contract.134 A plaintiff might have invested or made use of said money, thus the

defendant’s deprivation of such opportunity results in ‘a massive interest-free loan’ when

un-remedied.135 Consequently, said plaintiff is entitled to interest he proves as actual

losses.136 It follows that the Tribunal should award compound interest because it more

131 Minerva Navigation Inc. v. Oceana Shipping AG v. Transatlantica Commodities S.A. (‘The Athena’) [2012]

EWHC 3608 (Comm), [2013] 1 Lloyd’s Rep 145 (Walker J); NYPE, cl. 17. 132 Record, 25: Email of 7 May 2016. 133 Arbitration Act 1996, s. 49. 134 B.P. Exploration Co. (Libya) Ltd. v. Hunt (No. 2) [1979] 1 W.L.R. 783, ¶845; Banque Keyser Ullman SA v

Skandia UK Insurance Co Ltd and ors (unreported, 11 December 1987) (Steyn J.); Tate and Lyle Food and

Distribution Ltd v GLC [1982] 1 WLR 149, 154; Kuwait Airways v Kuwait Insurance [2000] 1 AER (Comm)

972, 991F. 135 Sempra Metals Limited (formerly Metallgesellschaft Limited) v. Her Majesty’s Commissioners of Inland

Revenue and another [2007] UKHL 34 WL 2025760, 19 (Lord Nicholls); Matthew Secomb, Interest in

International Arbitration, (1st Edition, Oxford University Press, 2009), 132-135 ¶3.342-3.357 136 Sempra Metals Limited (formerly Metallgesellschaft Limited) v. Her Majesty’s Commissioners of Inland

Revenue and another [2007] UKHL 34 WL 2025760, 21 (Lord Nicholls); F J Chalke Limited, A C Barnes

(Wokingham) Limited v. The Commissioners for Her Majesty’s Revenue & Customs [2009] EWHC 952 (Ch) 2009

WL 1246904, 27, 39 (Mr. Justice Henderson); Matthew Secomb, Interest in International Arbitration, (1st Edition,

Oxford University Press, 2009), 126 ¶3.301-3.302; 128, ¶3.312-3.313.


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adequately compensates a wronged party and is a closer, more realistic remedy to actual

modern business practice in comparison to simple interest.137

47. The principles set out above can be applied to accrue interest on both the debt of cleaning

costs and the debt from the damages from loss of Next Fixture. As elaborated above,

CLAIMANT is guilty of wrongfully withholding, first, a USD 100,000,000.00 Cargo Claim

indemnity,138 and second, an amount of USD 375,000.00 relating to wrongfully paid

hire.139 Both resulted in an unlawful loss against RESPONDENT in need of remedy. Had

CLAIMANT not conducted a breach of contract, RESPONDENT would not have been deprived

of the usage of said amount and any potential profit it might have turned from it; at the

very least they could have received compound interest at a bank rate. In conclusion, in

order for the CLAIMANT to be correctly remedied, they must be granted compound interest.

ii. Calculations of interest

48. In calculating awards of interest, the tribunal must consider the rate and period on which

the interest should accrue on. In the past it has been conventional to award interest upon

US Dollar awards according US Prime Rate.140 However, the present practice in London

Maritime Arbitration Associations tribunals and other international arbitration is that

unless parties in a dispute propose a more appropriate rate, the interest upon US Dollar

maritime claims shall apply at the LIBOR rate raised by 2.5% and compounded every

137 Sempra Metals Limited (formerly Metallgesellschaft Limited) v. Her Majesty’s Commissioners of Inland

Revenue and another [2007] UKHL 34 WL 2025760 (Lord Nicholls). 138 Supra Submission IV(A), ¶29-39. 139 Supra Submission IV(B), ¶40-44. 140 Kinetics Technology v Cross Seas Shipping (‘The Mosconici’) [2001] 2 Lloyds Reports 313, 316 (David Steel

J); Mamidoil-Jetoil Greek Petroleum Company SA v Okta Crude Oil Refinery, AD [2003] 1 Lloyd’s Rep 42 ¶16

(Aikens J); AXL Resourses Ltd v Antares Underwriting Services Ltd & another [2010] EWHC 3244 (Comm)

(Gloster J).


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three-months.141 The period shall accrue both pre-judgement, from the point date of cause

of action,142 and post judgement, to the date of judgement.143

49. Pursuant to the above, Interest shall accrue on amounts relating to both Cargo Claim and

the restitution of off-hire. First, in relation to Cargo Claim, interest shall begin to accrue

no later than 30 March 2017 which is the latest date the original claims could be settled

on.144 It would accrue until the payment date of said interest, at 4.807%145 and compounded

at three-month intervals. Second, in relation to the off-hire, interest shall begin to accrue 1

August 2016, the date the Final Hire Statement was delivered,146 at 4.547%147 and

compounded at three-month intervals.

141 Petrobras v FPSO Construction Inc. [2007] EWHC 1357 (Comm) ¶ 287 (Cresswell J); Fiona Trust & Holding

Corporation and others v Yuri Privalov and others [2011] EWHC 664 (Comm) (Mr. Justice Andrew Smith);

London Maritime Arbitration Associations Publications, LMAA Committee Report (2013); Chartered Institute of

Arbitrators Practice Guidelines, Guideline 13; H. McGregor, McGregor on Damages (18th Edition, London, Sweet

& Maxwell, 2014) ¶15-116. 142 Arbitration Act 1996, s. 49(3)(a); Lesotho Highlands Development Authority v Imreglio SpA [2002] EWHC

2435 (Comm) (Mr. Justice Morrison); Lesotho Highlands Development Authority v Imreglio SpA [2006] 1 AC

221 ¶50 (Lord Phillips); Michael Howard, Foreign Currency: Claims, Judgments, and Damages (Informa Law

from Routledge, 2016), 273, ¶12.40-12.41; 275-276, ¶12.50-12.51; H. McGregor, McGregor on Damages (19th

Edition, London, Sweet & Maxwell, 2014), ¶19.073-19.074, ¶19.078. 143 Arbitration Act 1996, s. 49(3)(b); Michael Howard, Foreign Currency: Claims, Judgments, and Damages

(Informa Law from Routledge, 2016), 276, ¶12.52-12.53. 144 Date of delivery + 21 Months = 30 June 2016 + 21 Months = 30 March 2017; Record, 57-58: Emails of 23

May 2017, 29 May 2017, 23 August 2017, 28 August 2017, 23 November 2017; Record, 82: Procedural Order

No.2 ¶10. 145 (Average LIBOR Interest Rate 2017-2019) + 2.5% ≈ 2.307% + 2.5% ≈ 4.807% 146 Record, 52: Final Hire Statement. 147 (Average LIBOR Interest Rate 2016-2019) + 2.5% ≈ 2.047% + 2.5% ≈ 4.547%


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REQUEST FOR RELIEF

For the reasons set out above, RESPONDENT requests that the Tribunal:

a. Declare that RESPONDENT has not breached the CHARTERPARTY;

b. Declare that RESPONDENT is only liable for minimum costs of hull cleaning and

loss of Next Fixture;

c. Declare that interest shall not accrue upon any CLAIMANT’s claim;

d. Declare that CLAIMANT is liable for:

i. USD 100,000,000.00 as indemnity for Cargo Claim,

ii. USD 375,000.00 as restitution of off-hire,

iii. Interest on the above;

e. Award further or other relief as the Tribunal considers fit.

THE TWENTIETH ANNUAL INTERNATIONAL MARITIME LAW …€¦ · Satef-Huttenes Albertus SpA v Paloma...

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