t 19th international maritime law arbitration · 2021. 2. 8. · the 19th international maritime...
Post on 19-Feb-2021
10 Views
Preview:
TRANSCRIPT
-
THE 19TH INTERNATIONAL MARITIME LAW ARBITRATION
MOOT, 2018
NATIONAL LAW UNIVERSITY, JODHPUR
TEAM NO 8
MEMORANDUM FOR THE RESPONDENTS
ON BEHALF OF
DYNAMIC SHIPPING LLC
RESPONDENT
AGAINST
CERULEAN BEANS AND AROMAS
CLAIMANT
TEAM
DIVYAKSHI JAIN SAHER FATIMA
SHAGUNTAPARIA
-
ii
TABLE OF CONTENTS
List of Abbreviations .............................................................................................................. iv
Index of Authorities ................................................................................................................. v
Summary of Arguments .......................................................................................................... 2
Arguments Advanced .............................................................................................................. 3
I. THIS TRIBUNAL does not HAve the JURISDICTION TO HEAR THE
MATTER .............................................................................................................................. 3
A. The Tribunal has the power to decide its own Jurisdiction ....................................... 3
B. the Charterparty contains a valid arbitration agreement, which specifies London as
the seat ............................................................................................................................... 3
C. The claimant has failed to comply with pre-arbitration procedures .......................... 4
II. The Respondent was Entitled to Deviate to Spectre. ................................................ 6
A. Valid Force Majeure Event arose due to the emergence of solar flares .................... 6
B. The presence of electronic charts on the vessel complied with the current
regulations .......................................................................................................................... 7
III. The Respondent Has not Breached Its Duty to Provide A Seaworthy Ship. ...... 8
A. The requirement of exercising due diligence has been complied with. ..................... 8
B. The duty of seaworthiness has a relative nature. ....................................................... 9
IV. The Respondent Should Not Be Held Liable for the Damages Accruing as A
Result of the Water Damage. ............................................................................................ 10
A. The liability of the goods passed with the discharge of the goods .......................... 11
B. Alternatively, even if The Charterparty contemplates delivery to the agents, there
were conditions which would negate this clause. ............................................................ 12
-
iii
V. The Respondent is not liable to pay the amounts claimed by the Claimant. ........ 13
A. The Claimant is not entitled to the amount on account of damaged cargo .............. 13
B. The Claimant is not liable to get payment of the replacement coffee ..................... 14
C. The Claimant is not liable to get the amount paid for settlement of disputes. ......... 14
VI. The Respondent is liable to claim for the amounts mentioned in the invoice. . 14
A. The Respondent is liable to receive the freight claimed in the invoice. .................. 15
B. The Claimant is liable to pay the General Average Claims made by the Respondent
in the invoice. ................................................................................................................... 16
VII. The Claimant is Liable for the Demurrage Accrued Under the Charterparty 18
VIII. The Respondent is entitled to limit Their liability .............................................. 19
A. The Respondents are liable to limit their liability under The Convention on
Limitation for Liability of Maritime Claims, 1976 .......................................................... 19
B. Alternatively, the Respondent is entitled to limit its liability under Article IV Rule 5
of the Hague-Visby Rules. ............................................................................................... 20
IX. THE CLAIMANT Cannot Exercise Maritime Lien Over Madam Dragonfly
On Account Of Unpaid Crew Wages ............................................................................... 20
A. The English Law is applicable to the claim ............................................................. 21
B. The present matter is not a Maritime Claim ............................................................ 21
C. claim does not give rise to a Maritime Lien ............................................................ 22
X. The claimant does not have Maritime Equitable Lien over Vessel ....................... 23
PRAYER FOR RELIEF ....................................................................................................... 24
-
iv
LIST OF ABBREVIATIONS
Abbreviations Full Form
Arbitration Agreement
Charterparty
Claimant
COTW
Co.
ECDIS
Expert evidence
GRT
IMO
LLMC
Master Mariner
NOR
Parties
Respondent/ Shipowner
SDR
SOLAS
Tribunal
USD
Vessel
Voyage Charterparty
The Clause 27 of the Voyage Charterparty
The Voyage Charterparty between Claimant and Respondent
Cerulean Beans And Aromas
Coffees of the World
Corporation
Electronic Chart Display and Information System
Statement of Expert Opinion of Mr. Simon Webster
Gross Registered Tonnage
International Maritime Organization
Convention on Limitation of Liability for Maritime Claims, 1976
Mr. Simon Webster, appointed by the Tribunal to provide Expert
Evidence
Notice of Readiness
Claimant and Respondent
Dynamic Shipping Co. Ltd.
Special Drawing Rights
International Convention for the Safety of Life at Sea, 2002
The Arbitral tribunal appointed on September 7, 2017
United States Dollars
The Madame Dragonfly
The Voyage Charterparty between Claimant and Respondent
-
v
INDEX OF AUTHORITIES
Cases
Albacora S.R.L. v. Westcott &Laurance Line, Ltd. (The “Maltasian”), [1966] 2 Ll. L. Rep.
53, pp. 58 and 62. ................................................................................................................. 13
Aries Tanker Corporation v. Total Transport Ltd. (1977) 1 Weekly Law Reports. ................ 17
Asfar v. Blundell [1896] 1 QB 123. ......................................................................................... 16
Bank of Boston Connecticut v. European Grain & Shipping Ltd.(The Dominique), [1989] 1
Lloyd’s Rep. 431 (HL) ......................................................................................................... 17
Bourne v. Gatliffe(1844) 11 Cl. & Fin. 45 ............................................................................... 13
Brian Glasgow (the bankruptcy trustee of Harlequin Property SVG Limited) v ELS Law
Limited, [2017] EWHC 3004 (Ch) ...................................................................................... 25
Brook v. Wentworth, 3 Anstruther 881 .................................................................................... 25
Cable& Wireless plc v. IBM United Kingdom Ltd, [2002] 2 All ER (Comm) 1041 ................. 6
Cargo ex Galam (1863, P. C.) B. & L.167. ............................................................................. 16
Christopher Brown Ltd v. Genossenschaft Oesterreichischer GmbH, [1954] 1 QB 8 .............. 4
Compania De Vapores Ins. Co., SA v. Mo-Pac R.R. Co., 232 F.2d 657 (5th Cir. 1985). .......... 9
Dakin v. Oxley 143 E.R. 938:(1864) 15 C.B. N.S. 646. .......................................................... 16
Demby Hamilton Co. Ltd. v. Barden, [1949] 1 All E.R. 435. .................................................. 12
Duthie v. Hilton (1868) L.R. 4 C.P. 138 .................................................................................. 16
Falke v. Scottish Imperial Insurance Company, (1996) 34 Ch. D 234 .................................... 25
G. H. Renton & Co., Ltd. v. Palmyra Trading Corporation of Panama (The “Caspiana”)
[1956] 2 Ll. L. Rep. 379. ..................................................................................................... 12
Gaudet Geipel and Others v Brown (The Ex Cargo Argos) 1873] UKPC 15: (1873-74) LR 5
PC 134 .................................................................................................................................. 16
Grant v. Poillon, 20 How. 162. ................................................................................................ 23
-
vi
Great China Metal Industries Co. Ltd. v. Malaysian International Shipping Cooperation
Berhad (The “Bunga Seroja”),[1999] 1 Ll. L. Rep. 512, point 34. .................................... 12
Harbour Assurance Co (UK) v. Kansa General International Insurance Co Ltd, (1993) QB
701.......................................................................................................................................... 4
he Velox v. Werke, 21 Fed. 479 ................................................................................................ 22
Heart Research Institute Ltd v. Esiron Ltd, (2002) N..S.W.S.C 646 ......................................... 7
HIH Casualty and General Insurance Ltd v. Chase Manhattan Bank, [2003] UKHL 6 .......... 7
Hooper Bailie Assoc Ltd v. Natcon Group Pty Ltd, [1992] 28 NSWLR 194, 211 (NSW SCt) 6
Horne Coupar v. Velletta& Company, 2010 BCSC 483 ........................................................... 7
ICC Case No 6276 ..................................................................................................................... 6
ICC Case No 9812, Final Award (2009) 20(2) ICC Ct Bull 69, 73. ......................................... 6
In Re S.S. Winged Arrow, 425 F.2d 991 (5th Cir. 1970). .......................................................... 8
J.W. Stone Oil Dist., LLC v. Bollinger Shipyard, 2007 WL 2710809 (E.D. La. 2007). ............ 8
Kirchner v. Venus (1859) 12 Moore P.C. 361. ........................................................................ 16
L'ArenaManwaring, Bee199. ................................................................................................... 23
Laurie v. Douglas, (1846) 15 M. & W. 746. ........................................................................... 14
Luke v. Lyde(1759) 2 Burr. 883. .............................................................................................. 16
Melhuish v. Garrett (1858) 4 Jur.(N.S.) 943 ............................................................................ 17
Menetone v. Gibbons, 3 T. R. 269 ........................................................................................... 22
Monarch Airlines Ltd. v. London Luton Airport, (1997) CLC 698 ........................................... 7
Navalmar UK Ltd v Kale MadenHammaddelerSanayiveTicaret AS (The Arundel Castle)
[2017] EWHC 116 (Comm). ................................................................................................ 19
Oldendorff (E L) & Co GmvH v Tradax Export SA (The Joanna Oldendorff) (HL) [1973] 2
Lloyd’s Rep 285; [1974] AC 479. ....................................................................................... 19
-
vii
Papera Traders Co. Ltd. v Hyundai Merchant Marine Co. Ltd. (The “Eurasian Dream”),
[2002] 1 Ll. L. Rep. 719. ..................................................................................................... 11
Parsons Corporation v. CV Scheepvaartonderneming Happy Ranger, [2006] 1 Ll. L. Rep.
649........................................................................................................................................ 10
Proctor, Garratt, Marston v. Oakwin S.S. Co. [1926] 1 K.B. 244 .......................................... 13
Scott v. Chaffe, 2 Fed. Rep. 401 ............................................................................................... 23
Sea Tank Shipping v. Vinnlstodin HF Vatryggingafelag Islands FH [2018] EWCA Civ 276.
.............................................................................................................................................. 21
Shields v. Davis (1815) 6 Taunt. 65 ......................................................................................... 17
Smith, Hogg & Co., Ltd. v. Black Sea & Baltic General Insurance Company, Ltd. (The
“Librum”), [1940] 67 Ll. L. Rep. 253, p. 258. .................................................................... 11
SOS Maritime Brokers v. The Ship Dana Star, (1996) 2 NZLR 482 ....................................... 22
St. John Shipping Co. v. Rank [1957] 1 Q.B. 267; The Brede [1974] Q.B. 233 ...................... 17
Swiss Bank Corporation v. Novorissiysk Shipping Co,[1995] 1 Lloyd’s Rep 202. ................... 5
Tamil Nadu Electricity Board v. ST-CMS Electric Company Private Limited, (2007) EWHC
713 (Comm.). ......................................................................................................................... 5
The Angela Maria, 35 Fed. 430 ............................................................................................... 22
The Aramis [1987] 2 Lloyd's Rep 58. ...................................................................................... 21
The Bowbelle, [1990] 1 WLR 1330. ........................................................................................ 20
The cape Bari, [2016] UKPC 20 .............................................................................................. 20
The General Sheridan, 2 Id. 294 .............................................................................................. 23
The Halcyon Isle, (1981) AC 221 ............................................................................................ 22
The Kiersage, 2 Curtis C.C. 421 .............................................................................................. 24
The Leerort, [2001] 2 Lloyd's Rep 291. .................................................................................. 20
The Louisa, (1848) 3 W. Rob. 99 ............................................................................................ 24
-
viii
The Lyons, (1887) 6 Asp. M.L.C. 199 ..................................................................................... 24
The Maud Carter, 29 Fed. I56 ................................................................................................. 22
The Neptune,(1834) 3 Hagg. Adm. 129 ................................................................................... 24
The New Eagle, (1846) 4 Notes of Cases, 426 ........................................................................ 24
The Olgla, 32 Fed. 329 ............................................................................................................ 22
The Petone, [1917] P. 198 ........................................................................................................ 24
The Scotia, 35 Fed. 907 ............................................................................................................ 23
The Sparti, (2000) 2 Lloyd’s Rep 618 ..................................................................................... 24
The Thames, 10 Fed. Rep. 848;................................................................................................ 22
The Two Ellens, L.R. 4 P.C. 161; ............................................................................................ 23
The William Fletcher, 8 Benedict 537 ..................................................................................... 23
The Young Mechanic, 2 Curtis C.C. 404 ................................................................................. 24
Turner, Nott & Co. v. Lord Mayor, etc. of Bristol (1928) 31 LI.L.R. 359. ............................. 13
Union of India v. McDonnell Douglas Corp (1993) Lloyd’s Rep 48. ....................................... 5
Vandewater v. Mills, 15 L.Ed. 554 .......................................................................................... 24
Vlassopoulos v. British & Foreign Marine Insurance Co., [1929] 1 KB 187 ......................... 18
Statutes
Sale of Goods Act, 1923 Section 25 (NSW). ........................................................................... 12
Sale of Goods Act, 1923 Section 36 (NSW). ........................................................................... 12
Sale of Goods Act, 1923 Section 47 (NSW). ........................................................................... 12
Section 39, Merchant Shipping Act, 1995 (England). ............................................................. 24
Senior Courts Act, 1981, Section 20(2)(e) (England). ............................................................. 23
Senior Courts Act, 1981, Section 20(2)(j) (England) .............................................................. 23
Senior Courts Act, 1981, Section 20(2)(o) (England). ............................................................ 23
Senior Courts Act, 1981, Section 20(2)(o) and (p) (England). ................................................ 23
-
ix
Senior Courts Act, 1981, Section 20(2)(r) (England). ............................................................. 23
Other Authorities
William Tetley, Stevedores And Maritime Liens, The Maritime Lawyer,Vol.8, p 270 ........... 22
Treatises
A Von Ziegler, C Debbatista, ABK Plegat, J Windahl (eds), Transfer of ownership in
International Trade, 2ndedn (The Netherlands, 2011), at 134 and ff. .................................. 12
Ahmad Hussam Kassem, The Legal Aspects of Seaworthiness: Current Law and
Development, 2006, pp-20. .................................................................................................. 10
AlekaMandaraka-Sheppard, Modern Maritime Law, Vol. 1, 3rd ed., p. 196-198. ................... 24
Clare Ambrose and Karen Maxwell, London Maritime Arbitration, 3rded., p 31. .................... 5
Gary B Born, International Commercial Arbitration, vol 1, 853. ............................................. 4
Gary B Born, International Commercial Arbitration, Vol. 1, p 978 ......................................... 5
Julian Cooke et al., Voyage Charters, 2014 (4thedn., Informa Law). ...................................... 13
Nigel Blackaby et al, Redfern and Hunter on International Arbitration, p 346. ................... 4, 5
Robert Force, A comparison of the Hague, Hague-Visby, and Hamburg rules: Much Ado
About, Tulane Law Review, vol-70,1996,pp.2063. ............................................................. 10
Wharton, Conflict of Laws, 3 ed., P 322, 358 .......................................................................... 22
Wilson, J.F. (2010) Carriage of Goods by Sea (7th ed). Longman, p. 191. ............................ 12
Yvonne Baatz et al., Maritime Law, 2014 at Pg. 218 (2nd edn., Sweet & Maxwell). ............... 14
Regulations
Australian Maritime Safety Authority Marine Notice 06/ 2013. ............................................... 8
The Merchant Shipping (Safety of Navigation) Regulations 2002, SOLAS chapter V
(regulation 19). ....................................................................................................................... 8
-
x
The Merchant Shipping (Safety of Navigation) Regulations 2002, SOLAS chapter V
(regulation 27). ....................................................................................................................... 8
International Conventions
Convention on Limitation of Liability for Maritime Claims, 1976 Art. 2(b). ......................... 20
International Institute for the Unification of Private Law Principles, 2010 Art.7.1.7". ............ 7
York-Antwerp Rules 1994, Rule A. ........................................................................................ 18
York-Antwerp Rules, r.A.1. ..................................................................................................... 17
-
1
STATEMENT OF FACTS
1. The Claimant contracted with the Respondent to use the Respondent’s Vessel, the
Madam Dragonfly by Charterparty dated 22 July, 2017. The Charterparty required the
Respondent to transport 70,000 Kg of Coffee from Cerulean to Dillamond.
2. On 24 July 2017, the Vessel proceeded to Dillamffond. On 26 July, the Vessel
experienced an unprecedented degree of solar flares. The force majeure event knocked down
all the communicating systems. As a result the Vessel moved to the Port of Spectre.
3. On 29 July 2011, the Port of Dillamond experienced extreme weather conditions such
as high levels of rainfall and flooding. The Port of Dillamond was closed for 12 hours.
Subsequently, due to the congestion on the port the Vessel had to wait 100 nautical miles
outside the Port. The Vessel’s anchor had to be cut and damage occurred to the hull because
of the coral bed.
4. By email dated 29 July 2017 at 4:28 pm, the Respondent informed about the readiness
of Vessel. As the Claimant’s failed to take delivery on the same day, the Respondent
delivered the coffee at the warehouse for its safe keeping. The same was informed to the
Claimant.
5. The Claimant took the cargo only on 31st July 2017.The Claimant on 22 July 2017
asserted that the Respondent had breached the Charterparty as the Vessel had deviated and
the cargo had been damaged.
6. By email dated 1 August 2017, the Claimant sought USD$3.2 million from the
Respondent for losses associated with the Madam Dragonfly’s deviation to Spectre and the
damage to the cargo with other associated losses.
7. By email dated 2 August 2017, all liability had been denied by the Respondent. On 8
August, claimant denied payments with respect to the shipment, the demurrage and use of
other additional services.
-
2
8. By email dated 11 August 2017, the Claimant referred the dispute to arbitration,
appointing Mr. David Friedman as its arbitrator.
SUMMARY OF ARGUMENTS
The Respondent is being sued by the Claimant for damage to the consignment of coffee. This
tribunal does have the prerequisite jurisdiction to hear the matter as the Claimant has not
failed to comply with the Pre-Arbitral Procedures and in case, such failure does not bar the
jurisdiction of the Tribunal.
The present claim is pursuant to the discharge of a maritime obligation. Even if it is
considered a Maritime Claim, it still does not give rise to a Maritime Lien as the principle has
been restricted under English law. Further, Seafarer’s Lien is not assignable and there is also
a statutory bar on such assignment.
The deviation to Port of Spectre was due to the occurrence of force majeure event. As a result
the exclusion clause of the Charterparty gets engaged. Moreover the duty of due diligence
had been complied with. Additionally the electronic map system complies with the nautical
chart requirements. This in turn relieves Respondent of its liability.
The Respondent is not liable for the water damage as the risk inherent in the goods had
already passed when the goods were placed in the warehouse. Also, the Respondent is not
liable for the damages that are being claimed by the Claimant. Further, they are liable to
receive the amounts mentioned that they had put in the invoice. Lastly, their liability is
limited under various International conventions.
-
3
ARGUMENTS ADVANCED
I. THIS TRIBUNAL DOES NOT HAVE THE JURISDICTION TO HEAR THE
MATTER
The Respondent submits that this Tribunal does not have the requisite jurisdiction to hear the
present matter as [A.], it has the power to decide its own jurisdiction,[B.]the Charterparty
provides for London as the seat of arbitration. Additionally, [C.] the Claimant has failed to
comply with the Pre-Arbitral Procedures.
A. THE TRIBUNAL HAS THE POWER TO DECIDE ITS OWN JURISDICTION
The Claimant argues that this Tribunal has the competence to rule on its own jurisdiction.
This is because it is a well-established principle of Kompetenz-Kompetenz.1 The principle
encapsulates that the tribunal has an inherent power to rule on its own jurisdiction, including
questions as to the validity of the arbitration agreement.2Hence, this Tribunal is entitled to
rule on its substantive jurisdiction to hear the merits of these claims.3
B. THE CHARTERPARTY CONTAINS A VALID ARBITRATION AGREEMENT, WHICH
SPECIFIES LONDON AS THE SEAT
The law applicable to the arbitration in the present case is English law as (i) the Arbitration
Clause is valid, and (ii) the parties have expressly agreed to arbitrate in London for all
disputes.
1Nigel Blackaby et al, Redfern and Hunter on International Arbitration, p 346.
2 Gary B Born, International Commercial Arbitration, Vol. 1, 853.
3Christopher Brown Ltd v. Genossenschaft Oesterreichischer GmbH, [1954] 1 QB 8; Harbour Assurance Co
(UK) v. Kansa General International Insurance Co Ltd, (1993) QB 701
-
4
i. The Arbitration Clause is valid
An arbitration agreement is valid where it contains the requisite degree of certainty4.
Charterparties often contain abbreviated arbitration clauses.5 The English courts have held
that an abbreviated arbitration clause will contain the requisite degree of certainty where it
can give effect to the parties’ presumed intentions.6 Therefore, the words ‘Arbitration in
London’7 used in the Charterparty are sufficiently certain to give effect to the parties’
intention. The Clause is therefore valid and capable of being enforced.
ii. The parties have agreed to arbitrate in London for all disputes
Parties to an arbitration agreement may choose which law governs the validity of that
agreement.8 In the present case, there is no evidence to suggest that the Parties have impliedly
chosen for the substantive law of the Charterparty (the law of New South Wales, Australia) to
govern the arbitration agreement9. Hence, the words ‘Arbitration in London’ signify that the
parties intended to refer disputes to arbitration applying English rules10.
C. THE CLAIMANT HAS FAILED TO COMPLY WITH PRE-ARBITRATION PROCEDURES
Failure to comply with the necessary procedural requirements of the arbitration agreement
constitutes a jurisdictional defect.11 If dispute resolution clauses unequivocally provide that
negotiations or other procedural steps are a mandatory obligation, then that must be 4Clare Ambrose and Karen Maxwell, London Maritime Arbitration, 3rded., p 31.
5Id.
6Supra, Note 4.
7Charterparty, Clause 27.
8 Nigel Blackaby et al, Redfern And Hunter on International Arbitration, p 167; Union of India v. McDonnell
Douglas Corp (1993) Lloyd’s Rep 48.
9Tamil Nadu Electricity Board v. ST-CMS Electric Company Private Limited, (2007) EWHC 713 (Comm.).
10Swiss Bank Corporation v. Novorissiysk Shipping Co,[1995] 1 Lloyd’s Rep 202.
11 Gary B Born, International Commercial Arbitration, Vol. 1, p 978
-
5
objectively complied with, in order to proceed with arbitration12.It has been held that
particular pre-arbitration procedural requirements are mandatory obligations and, are
jurisdictional requirements whose violation requires dismissal of arbitral proceedings13.
An Expert Determination was a necessary pre-condition for commencing arbitral proceedings
in the present Arbitration Clause.
Under sub-clause (g) of the Arbitration Clause14 ‘any dispute as to technical matters arising
out of or in connection with this contract shall be referred to Expert determination by an
independent Master Mariner’. The use of the word ‘shall’ exhibits the intention of the parties
to mandatorily refer the dispute to an Expert determination.
Under sub-clause (d) of the Arbitration Clause15, the present dispute is Technical Matter.
Technical Matter has been defined as matters surrounding the technical aspects of the
performance of the Charterparty, such as the vessel's route, loading and unloading of cargo,
storage conditions and other matters which can reasonably be considered to be within the
Expert technical knowledge of a Master Mariner16.
It is submitted that the present dispute is a Technical Matter as per the Section (g) of the
Arbitration Clause. Hence, the dispute necessarily had to be sent to a Master Mariner and is
not within the scope of the arbitration.
Sub-clause (e) of the Arbitration Clause17, clearly states that the Claimant could not have
initiated arbitral proceedings until sub-clause (d) has been satisfied first. Therefore, the
12 ICC Case No 6276; ICC Case No 9812, Final Award (2009) 20(2) ICC Ct Bull 69, 73.
13Cable& Wireless plc v. IBM United Kingdom Ltd, [2002] 2 All ER (Comm) 1041; Hooper Bailie Assoc Ltd v.
Natcon Group Pty Ltd, [1992] 28 NSWLR 194, 211 (NSW SCt)
14Charterparty, Clause 27.
15Charterparty, Clause 27.
16Charterparty, Clause 27.
17Charterparty, Clause 27.
-
6
Arbitration Clause expressly provides for an Expert determination before the commencement
of the Arbitral Proceeding, a step the Claimant has not complied with. Further, sub-clause
(f)of the Arbitration Clause18 clearly states the intention of the parties for the Expert
determination to be conclusive and binding upon the parties19.
The Claimant had an obligation to abide by the conditions of the Clause. Additionally, as
Charterparty is the Claimant’s standard form of contract, in case of an ambiguity, it must be
construed against the Claimant as encapsulated in the doctrine if Contra Proferentem20. The
Claimant has failed to comply with the pre-arbitration process and hence the jurisdiction of
the tribunal is defective.
II. THE RESPONDENT WAS ENTITLED TO DEVIATE TO SPECTRE.
The occurrences of solar flares led the Respondent to deviate the Vessel to the only viable
option i.e. Spectre. Respondent was not negligent in its conduct. [A.] The exclusion clause
under the Charterparty is engaged as a valid force majeure event had occurred. [B.]
Moreover, the presence of electronic charts on board was in compliance with the current
regulations.
A. VALID FORCE MAJEURE EVENT AROSE DUE TO THE EMERGENCE OF SOLAR FLARES
When non-performance is due to an impediment beyond control, that it could not reasonably
be expected to be taken into account at the time of the conclusion of the contract or to have
avoided or overcome it or its consequences, performances is exempted.21 Clause 17 of the
18Charterparty, Clause 27.
19Heart Research Institute Ltd v. Esiron Ltd, (2002) N..S.W.S.C 646
20Horne Coupar v. Velletta& Company, 2010 BCSC 483; HIH Casualty and General Insurance Ltd v. Chase
Manhattan Bank, [2003] UKHL 6; Monarch Airlines Ltd. v. London Luton Airport, (1997) CLC 698
21International Institute for the Unification of Private Law Principles, 2010 Art.7.1.7".
-
7
Charterparty provides for the Act of God as an exception.22 The defense of Act of God
applies where first, the accident was due exclusively to abnormal natural events without
human interest, and second, there was no intervening negligent behavior by the Vessel
owner.23In re S.S. Winged Arrow24, affirmed that where a vessel had been sufficiently moored
based upon the anticipated path of Hurricane Betsy, the Act of God defense applied to relieve
its owner of tort damages resulting from its breakaway.
The event of solar flares is an Act of God and it leads to unintentional interference causing
partial or total loss of the received signal, slower signal acquisition or other adverse effects,
without any human interference.25The solar flares that obstructed the navigation system in the
present case were not under the control of Respondent. Moreover, the Respondent has not
been negligent in his conduct. The degree of solar flares was unforeseeable in nature, such
that it created an international emergency. Thus, it was a force majeure event, relieving the
Respondents from their liability.
B. THE PRESENCE OF ELECTRONIC CHARTS ON THE VESSEL COMPLIED WITH THE
CURRENT REGULATIONS
The International Maritime Organization requires that all vessels engaged in international
voyages shall carry nautical charts on board.26The ship-owners can choose to rely either on
paper charts, or on electronic charts to fulfill the nautical chart carriage requirement.27
22Charterparty, Clause 17(b).
23J.W. Stone Oil Dist., LLC v. Bollinger Shipyard, 2007 WL 2710809 (E.D. La. 2007).
24425 F.2d 991 (5th Cir. 1970).
25Australian Maritime Safety Authority Marine Notice 06/ 2013.
26The Merchant Shipping (Safety of Navigation) Regulations 2002, SOLAS chapter V (regulation 27).
27The Merchant Shipping (Safety of Navigation) Regulations 2002, SOLAS chapter V (regulation 19).
-
8
The news article on July 25 specified that according to the Cerulean National
Communications Agency the delay can only be attributed to old/faulty equipment.28 It also
stated that any Navigation or satellite communication systems which comply with the current
regulations would have re-connected to the system. Any problems in re-connection with the
navigation system after the solar flares can only be attributed to old or faulty systems
installed in the vessel. The Navigation system of Dynamic Shipping was not faulty as the
system connected without any repair.29
III. THE RESPONDENT HAS NOT BREACHED ITS DUTY TO PROVIDE A
SEAWORTHY SHIP.
The preconditions of the defense of Act of God are that there is absence of human agency,
neglect and that the vessel is seaworthy.30 Clause 17 of the Charterparty also makes the
operation of the exemptions given with respect to force majeure events conditional to this
duty.31[A.] The Respondent did not breach its duty of providing a seaworthy ship as the
requirement of due diligence had been complied with. [B.] Moreover, the duty of due
diligence is relative in nature.
A. THE REQUIREMENT OF EXERCISING DUE DILIGENCE HAS BEEN COMPLIED WITH.
The Charterparty combines the condition of seaworthiness with the requirement of due
diligence.32 Liability of the carrier for cargo damage caused by unseaworthiness arises only
when before and at the commencement of a voyage it due diligence was not exercised to
28Moot Problem p. 35.
29Moot Problem p. 19.
30Compania De Vapores Ins. Co., SA v. Mo-Pac R.R. Co., 232 F.2d 657 (5th Cir. 1985).
31Charterparty, Clause 17.
32Charterparty, Clause 17.
-
9
discover and rectify all the unseaworthy conditions.33 The standard of due diligence is
determined by considering the facts of the case and is affected by changes in the level of
knowledge as well as the technology used.34
In the present case, Clause 17 of the Charterparty limits the obligations of the carrier on
failure or delay in performance under the events of force majeure.35 These exceptions are
conditioned to the duty of exercising due diligence.36The newspaper clippings on 18th July
indicated the possibility of solar flares being strong enough to disrupt the connection.
However, the solar flares on the 24th of July37 were unprecedented and the degree was
unforeseeable. The Respondent did not fail in its diligence, as electronic map system was not
faulty and immediately reconnected after the flares were over, without any repair needed.38
Therefore, the Respondent fulfilled its obligation of due diligence.
B. THE DUTY OF SEAWORTHINESS HAS A RELATIVE NATURE.
Seaworthiness must be judged by the standards and practices of the industry at the relevant
time, at least so long as those standards and practices are reasonable.39Eurasian Dream,
provided benchmarks for negligence of the master and crew, being an inherent lack of ability;
a lack of adequate training or instructions, a lack of knowledge about a particular vessel
and/or its systems; a disinclination to perform the job properly or even a physical or mental
33 Robert Force, A comparison of the Hague, Hague-Visby, and Hamburg rules: Much Ado About, Tulane Law
Review, vol-70,1996,pp.2063.
34 Ahmad Hussam Kassem, The Legal Aspects of Seaworthiness: Current Law and Development, 2006, pp-20.
35Charterparty, Clause 17.
36Charterparty, Clause 17.
37Moot Problem p. 35.
38Moot Problem p. 19.
39Parsons Corporation v. CV Scheepvaartonderneming Happy Ranger, [2006] 1 Ll. L. Rep. 649.
-
10
disability orincapacity.40 Failure to fulfill the seaworthiness obligation does not affect the
carrier’s liability as long as unseaworthiness is not a cause for the loss or damage.41
In the present matter there has been no stance of incompetence by either the master or crew
which can tantamount to unseaworthiness. The Expert Evidence specifies that the cargo had
been delivered in the warehouse at the time when it was damaged and out of the carrier’s
tackle.42 As agents of the Claimant were absent at the time delivery, the cargo was delivered
to the warehouse, after intimating the Claimant.43 Thus, even if the Vessel is considered
unseaworthy, the damage did not take place when the goods were on board.
Thus, the Respondent was prudent in attempting to avoid the impact of the overwhelming and
unexpected natural event and took reasonable precautions under the circumstances.
IV. THE RESPONDENT SHOULD NOT BE HELD LIABLE FOR THE
DAMAGES ACCRUING AS A RESULT OF THE WATER DAMAGE.
The water damage occurred on 30th July at around 1 a.m. when the goods were in the
warehouse. Thus, in order to establish that despite the transfer of the goods, the liability
remained with the Respondent the Claimant is endeavouring to establish that [A.] the liability
of the goods passed with the discharge of the goods. [B.] Alternatively, even if the
Charterparty contemplates delivery to the agents, there were conditions which would negate
this clause.
40Papera Traders Co. Ltd. v Hyundai Merchant Marine Co. Ltd. (The “Eurasian Dream”), [2002] 1 Ll. L. Rep.
719.
41Smith, Hogg & Co., Ltd. v. Black Sea & Baltic General Insurance Company, Ltd. (The “Librum”), [1940] 67
Ll. L. Rep. 253, p. 258.
42Moot Problem p. 43.
43Moot Problem p. 22.
-
11
A. THE LIABILITY OF THE GOODS PASSED WITH THE DISCHARGE OF THE GOODS
The default position is that property passes at such time as the parties intended it to be
transferred44 which is ascertained on the basis of the terms of the contract, the conduct of the
parties and the circumstances of the case.45 In Demby Hamilton Co. Ltd. v. Barden46, it was
established that where the delivery has been delayed as a result of the fault of either the buyer
or the seller, the risk for any loss which might not have occurred, but for such fault, is on the
party in fault.
Delivery under a contract with carrier is limited to the goods course of transit.47 Goods are
deemed to be in course of transit from the time when they are delivered to a carrier by water,
until the buyer, or the buyer’s agent takes delivery of them from the carrier.48 A master is
always under a duty to use reasonable care to ensure the success of the voyage, by protecting
his ship and cargo from avoidable risks.49 The standard of care varies in accordance with the
type of the voyage and the particular conditions that may occur throughout the journey.50
Master must take reasonable care,51 in accordance with a sound system52 and does not take
into account all weaknesses and idiosyncrasies pertaining to a particular cargo.53
44 Sale of Goods Act, 1923 Section 25 (NSW).
45 A Von Ziegler, C Debbatista, ABK Plegat, J Windahl (eds), Transfer of ownership in International Trade,
2ndedn (The Netherlands, 2011), at 134 and ff.
46[1949] 1 All E.R. 435.
47Sale of Goods Act, 1923 Section 36 (NSW).
48 Sale of Goods Act, 1923 Section 47 (NSW).
49Great China Metal Industries Co. Ltd. v. Malaysian International Shipping Cooperation Berhad (The “Bunga
Seroja”),[1999] 1 Ll. L. Rep. 512, point 34.
50Id.
51Wilson, J.F. (2010) Carriage of Goods by Sea (7th ed). Longman, p. 191.
52G. H. Renton & Co., Ltd. v. Palmyra Trading Corporation of Panama (The “Caspiana”) [1956] 2 Ll. L. Rep.
379.
-
12
In the present matter, the delay in delivery was caused due the failure of the Claimant to be
present at the port and receive the shipment on July 29, when the respondent was ready to
unload the shipment. According to the Expert Evidence, the water damage took place
sometime on July 30.54 Therefore at the time of damage, the goods had already been kept at
the warehouse by the Respondent and the delivery was complete as per the terms of the
Charterparty. Therefore the Respondent cannot be held liable for any damage that happened
after the coffee was delivered to the warehouse.55
B. ALTERNATIVELY, EVEN IF THE CHARTERPARTY CONTEMPLATES DELIVERY TO THE
AGENTS, THERE WERE CONDITIONS WHICH WOULD NEGATE THIS CLAUSE.
Clause 12(a) of the Charterparty provides that the delivery has to be done by handing over the
goods to the agent present at the loading place.56 However, this condition is subject to the
reasonability of the time period for which the Respondent is supposed to keep the goods.57
After the expiry of such time, the ship owner is entitled to do what is reasonable to prevent
delay to his ship and to maintain any lien.58 He may land and warehouse the
goods.59Furthermore, there were force majeure conditions due to the flooding caused by the
storm, the Respondent placed the goods in the warehouse in order to avoid any damage by
the flood water.60 This indicates the reasonability of placing the goods in the warehouse, as
53Albacora S.R.L. v. Westcott &Laurance Line, Ltd. (The “Maltasian”), [1966] 2 Ll. L. Rep. 53, pp. 58 and 62.
54Moot Problem p. 44.
55Moot Problem p. 46.
56Charterparty, Clause 12(a).
57Bourne v. Gatliffe(1844) 11 Cl. & Fin. 45; Proctor, Garratt, Marston v. Oakwin S.S. Co. [1926] 1 K.B. 244;
Turner, Nott & Co. v. Lord Mayor, etc. of Bristol (1928) 31 LI.L.R. 359.
58 Julian Cooke et al., Voyage Charters, 2014 (4thedn., Informa Law).
59Id.
60Moot Problem p. 36.
-
13
the Respondent was worried that the goods might get damaged as a result of exposure to the
elements during the flood.
For the claimant to succeed in his application for breach by the carrier, it needs to prove that
its loss was the direct result of a breach by the carrier of the contract.61Thus, since the
Respondent had already waited for two days for the agents to take delivery, their placing of
the goods in the warehouse was appropriate and cannot be challenged on the ground that it
does not count as delivery.
V. THE RESPONDENT IS NOT LIABLE TO PAY THE AMOUNTS CLAIMED
BY THE CLAIMANT.
The Claimant has addressed several payments which must be made by the Respondent in
order to restore the damage done to them as a result of the perceived negligence of the
Respondent. [A.] The Claimant is not entitled to amounts on account of the damaged Cargo
[B.] USD 9,450,000 for the Replacement Coffee Payment [C.] and USD 5,000,000 on
account of the Settlement Payment.
A. THE CLAIMANT IS NOT ENTITLED TO THE AMOUNT ON ACCOUNT OF DAMAGED
CARGO
The Shipowner is bound to take the same care of goods as a person would of his own goods
i.e. an ordinary and reasonable care.62 The test of reasonable care is that of how a prudent
man would take care of his own goods. The Respondent had delivered the goods as soon as it
was unloaded from the ship and placed in the warehouse on July 30, 2017 at around 12:02
a.m., thereby completing the transaction.63 However, according to Expert Report, the damage
61 Yvonne Baatz et al., Maritime Law, 2014 at Pg. 218 (2nd edn., Sweet & Maxwell).
62Laurie v. Douglas, (1846) 15 M. & W. 746.
63Moot Problem p. 23.
-
14
to the cargo took place at July 30.64 Therefore, the Respondent does not have the liability to
pay for damages.
B. THE CLAIMANT IS NOT LIABLE TO GET PAYMENT OF THE REPLACEMENT COFFEE
The agreement between COTW and the Claimant for the delivery of coffee on an assigned
date is a separate transaction from the contract of carriage between Claimant and Respondent.
One transaction cannot overlay the other and should not be allowed to. Thus, the Respondent
should not be held liable for a liability emerging from a separate contract altogether.
C. THE CLAIMANT IS NOT LIABLE TO GET THE AMOUNT PAID FOR SETTLEMENT OF
DISPUTES.
The amount paid for settlement of dispute and in order to avoid legal liability to COTW was
paid by CBA in order to protect themselves from any legal action instituted by COTW.65
However, the Respondent did not have any role in the transaction and the contract between
COTW and CBA. The Respondent cannot be made liable to pay the settlement amount
arising out of an exclusive transaction between COTW and the Claimant. Furthermore, it was
an economic loss which was reasonably foreseeable and thus the Claimant should have put in
an express clause to protect themselves against any such liability.
VI. THE RESPONDENT IS LIABLE TO CLAIM FOR THE AMOUNTS
MENTIONED IN THE INVOICE.
The Respondent has claimed certain amounts in an invoice sent to the Claimant which
included all those payments which were payable to the Respondent by the Claimant. The
Claimant is liable to pay the [A.] amount of freight as claimed by the Respondent in the
Invoice, and [B.] the General average claims made by the Respondent in the invoice.
64Moot Problem p. 43.
65Moot Problem p. 38.
-
15
A. THE RESPONDENT IS LIABLE TO RECEIVE THE FREIGHT CLAIMED IN THE INVOICE.
The Respondent has claimed for certain freight in the invoice. They are liable to receive the
same because (i) the Respondent is entitled to the freight because he completed his part of the
contract (ii) Alternatively, even if the Respondent was unable to complete his part of the
contract, the claim for freight cannot be set-off against the loss in cargo.
i. The Respondent is entitled to the freight because he completed his part of the
contract.
Freight, in the ordinary mercantile sense, is the reward payable to the carrier for the carriage
and arrival of the goods in a merchantable condition,66 ready to be delivered to the
merchant.67 The true test of the right to freight is the question whether the service in respect
of which the freight was contracted to be paid has been substantially performed,68 or, if not,
whether the performance has been prevented by the act of the cargo-owner.69 The Shipowner
is entitled to full freight when he delivers the goods in a merchantable condition, at the port
of destination or is ready to deliver them, but the consignee does not take delivery within a
reasonable time.70
The freight payable in the present Charterparty was in respect to the delivery of the goods
which would have been done on time if the representatives of the Claimant had been
available at the port to receive the delivery.71
66Asfar v. Blundell [1896] 1 QB 123.
67Kirchner v. Venus (1859) 12 Moore P.C. 361.
68Dakin v. Oxley 143 E.R. 938:(1864) 15 C.B. N.S. 646.
69Gaudet Geipel and Others v Brown (The Ex Cargo Argos) 1873] UKPC 15: (1873-74) LR 5 PC 134; Cargo ex
Galam (1863, P. C.) B. & L.167.
70Duthie v. Hilton (1868) L.R. 4 C.P. 138; Luke v. Lyde(1759) 2 Burr. 883.
71 Issue V.
-
16
ii. Even if the contract was not completed a claim against cargo cannot result in
deduction of freight.
A claim against cargo cannot be held to avoid the basis of avoidance of freight payment.72
Freight is a right of the carrier, and no deductions are to be made separately. Such deductions
are allowed only as a separate cause of action or counterclaim for the damage.73 There will
only be a right to make such deductions if the charterparty expressly permits deductions.74
The Charterparty in the present case does not provide for any deductions or set-off. Thus,
these deductions in freight claimed by the Claimant are not possible to be claimed against the
Respondent.
B. THE CLAIMANT IS LIABLE TO PAY THE GENERAL AVERAGE CLAIMS MADE BY THE
RESPONDENT IN THE INVOICE.
Under the General Average Act when, and only when, any extraordinary sacrifice or
expenditure is intentionally and reasonably made or incurred for the common safety for the
purpose of preserving from peril the property involved in the common maritime
adventure.75General Average act and the Charterparty provides that the owners shall pay any
dues or charges levied on the ship by reason of cargo being on board and all other dues or
charges whatsoever.76
The Respondent is liable to receive compensation for the agency fees at Spectre, the repairs
to the hull, the agency fees at Dillamond and the use of electronic access system. The agency 72Aries Tanker Corporation v. Total Transport Ltd. (1977) 1 Weekly Law Reports.
73Melhuish v. Garrett (1858) 4 Jur.(N.S.) 943; Shields v. Davis (1815) 6 Taunt. 65; St. John Shipping Co. v.
Rank [1957] 1 Q.B. 267; The Brede [1974] Q.B. 233.
74Bank of Boston Connecticut v. European Grain & Shipping Ltd.(The Dominique), [1989] 1 Lloyd’s Rep. 431
(HL).
75 York-Antwerp Rules, r.A.1.
76Charterparty Clause 23.
-
17
fees is payable when the Respondent has to appoint agents at the port in order to get the
goods transported. As iterated above, the agency fees would be valid as the agents were not
present.77 The agency fees at Dillamond is the right of the Respondent as they had required
assistance and the agents of the Claimant were not present at the port to provide the required
assistance. Thus the Respondent is liable to receive the agency fees at Spectre and at
Dillamond.
The expenditure incurred for repairs to the ship’s hull gives rise to an entitlement for
contribution in General Average as these expenses were in direct consequence of a “General
Average act”.78 In the case of Vlassopoulos v British and Foreign Marine Insurance Co79,
applying to the port for these repairs to the vessel was held to be covered under the General
Average clause.
Further, the Charterparty also provides that the ship will not be answerable for losses through
explosion, bursting of boilers, breakage of shafts, or any latent defect in the machinery or
Hull not resulting from want of due diligence by the Owners of the ship.80 The damage to the
hull in the present case did not arise from the above reasons, but was a result of trying to save
the cargo from being damaged by the storm. The Respondent used the electronic access
system to help the delivery of the cargo of the Claimant. Thus, this amount was a necessary
link in the sending of the goods to COTW.
77SupraNote 64.
78 York-Antwerp Rules 1994, Rule A.
79[1929] 1 KB 187.
80Charterparty, Clause 17.
-
18
VII. THE CLAIMANT IS LIABLE FOR THE DEMURRAGE ACCRUED UNDER
THE CHARTERPARTY
A valid NOR can only be tendered when the vessel has reached the agreed place and is ready
physically and legally.81 The vessel is physically and legally ready when the ship is prepared
to commence cargo operations without delay and to comply with charterers’ orders whenever
they are given. These conditions are necessary for laytime to start.82
The test for an arrived ship under a port Charterparty is that she must have reached a position
under the customary waiting area. The vessel must be at the immediate and effective
disposition of the charterers.83 A vessel, that could not immediately proceed to berth due to
congestion and was directed to anchor outside port limits by the port authority, is not an
arrived ship for the purposes of tendering NOR, if it cannot be proved that the vessel was in
the port limits.84
In the present case delay happened only due to port congestion and not the lack of readiness.
At the time of tendering the NOR, i.e. at 8:58A.M.and 4:32 P.M on 29th July, the ship was
ready to berth. The email sent at 4:32 P.M. was the valid NOR as it specified the time
remaining to berth. The ship was ready to berth at the time of issue of NOR. Further, since
the Charterparty states that the place of destination is Port of Dillamond, it amounts to a port
charter, the requirement the vessel being berthed for tendering a valid NOR is also
eliminated. Thus the notice was a valid. Therefore, there is no demurrage payable.
81Navalmar UK Ltd v Kale MadenHammaddelerSanayiveTicaret AS (The Arundel Castle) [2017] EWHC 116
(Comm).
82Id.
83Oldendorff (E L) & Co GmvH v Tradax Export SA (The Joanna Oldendorff) (HL) [1973] 2 Lloyd’s Rep 285;
[1974] AC 479.
84Supra Note 111.
-
19
VIII. THE RESPONDENT IS ENTITLED TO LIMIT THEIR LIABILITY
The Respondent has been made liable for the damages to the tune of USD 30,200,000.
However, they are not liable to pay the same. [A.] They are liable to limit their liability under
The Convention on Limitation for Liability of Maritime Claims, 1976. [B.] and Article IV
Rule 5.
A. THE RESPONDENTS ARE LIABLE TO LIMIT THEIR LIABILITY UNDER THE
CONVENTION ON LIMITATION FOR LIABILITY OF MARITIME CLAIMS, 1976
LLMC provides for limitation of liability in cases relating to loss resulting from delay in the
delivery of cargo.85 It further lays down the limit of liability for property claims for ships not
exceeding 2,000 GRT is 1.51 million SDR.86
The burden of limiting of liability of the Shipowner as a result of the personal act or omission
was described in The Bowbelle87 as a heavy burden, which description has been approved by
the Court of Appeal in The Leerort88 and by the Privy Council in The Cape Bari89. This
burden entails a need for proving any such personal act or omission which would be subject
to judicial discretion.
The Claimant has not been able to establish that the liability of USD 30,200,000 is justified
against the Respondent due to any personal act or omission. Also the Claimant’s claim
against the Respondents to the tune of USD 30,200,000 is not warranted because the Vessel
is a ship having not more than 2000 GRT which is limited under the LLMC.
85 Convention on Limitation of Liability for Maritime Claims, 1976 Art. 2(b).
86 http://www.imo.org/en/About/Conventions/ListOfConventions/Pages/Convention-on-Limitation-of-Liability-
for-Maritime-Claims-(LLMC).aspx
87[1990] 1 WLR 1330.
88[2001] 2 Lloyd's Rep 291.
89[2016] UKPC 20.
-
20
B. ALTERNATIVELY, THE RESPONDENT IS ENTITLED TO LIMIT ITS LIABILITY UNDER
ARTICLE IV RULE 5 OF THE HAGUE-VISBY RULES.
The Charterparty laid down that the Claimant as entitled to get the benefit of Article IV Rule
5.90 It is accepted that the words "per package" in Article IV r. 5 cannot apply to a bulk
cargo.91 The context in which the word was used in the phrase "per package or unit" in
Article IV rule 5 referred to a physical item or composite of items rather than a unit of
measurement. Because a "package" is unquestionably a physical item, the use of the words
together point to their both being concerned with physical items rather than vague units of
measurement, acting on the principle of noscitur a sociis.92Furthermore, in an email between
parties it was made clear by the Respondents that they had made changes to the Charterparty
which were necessary which involved the changing of the use of the term “bags” to
“containers” which was signed by them93, and were not objected to by the Claimant which
indicates an implied consent. Thus, the Respondent is entitled to limit his liability as per the
Article IV Rule 5 of the Hague-Visby Rules.
IX. THE CLAIMANT CANNOT EXERCISE MARITIME LIEN OVER MADAM
DRAGONFLY ON ACCOUNT OF UNPAID CREW WAGES
The Respondent submits that the Claimant does not have a Maritime Lien over the Vessel as,
applying [A.] English Law, the [B.] present matter is not a Maritime Claim, and even if it is,
it [C.] does not give rise to a Maritime Lien.
90Charterparty, Clause 28.
91The Aramis [1987] 2 Lloyd's Rep 58.
92Sea Tank Shipping v. Vinnlstodin HF Vatryggingafelag Islands FH [2018] EWCA Civ 276.
93Moot Problem p. 14.
-
21
A. THE ENGLISH LAW IS APPLICABLE TO THE CLAIM
It is submitted by the Respondent that the governing law of the Maritime Lien Claim is
English Law. It is clear that the creation of a lien must be governed by the law of the place
where the vessel is situated when the services are rendered94. Further, the creation of liens for
services on the high seas, as for seamen's wages, is on the same theory governed by the law
of the ship's flag95.
The Madam Dragonfly is a commercial cargo ship vessel flagged in Cerulean96, the vessel is
presently situated in Dillamond and the owners and Charterers conduct business in Cerulean.
Both countries have adopted the laws of England and thus, the same is the law governing the
Claim.
B. THE PRESENT MATTER IS NOT A MARITIME CLAIM
A traditional Maritime Lien is a means of securing rights and is peculiar to maritime law97. If
the subject matter of the agreement concerns navigation, only then it is considered maritime
claim.98Preliminary services leading to a maritime contract are in no part towards to the ship
or the cargo and are not rendered in the discharge of a maritime obligation.
In Plummer v. Webb99, Story J. observed that when there is a contract of mixed nature, it is
not a sufficient foundation for admiralty jurisdiction that some ingredients of a maritime
nature are involved. The whole contract must be maritime, if this be regarded a maritime
94The Maud Carter, 29 Fed. I56 ; The Halcyon Isle, (1981) AC 221; Wharton, Conflict of Laws, 3 ed., P 322,
358
95The Olgla, 32 Fed. 329; The Velox v. Werke, 21 Fed. 479; The Angela Maria, 35 Fed. 430
96 Moot Problem p. 37
97 William Tetley, Stevedores And Maritime Liens, The Maritime Lawyer,Vol.8, p 270
98Menetone v. Gibbons, 3 T. R. 269; SOS Maritime Brokers v. The Ship Dana Star, (1996) 2 NZLR 482
99The Thames, 10 Fed. Rep. 848;
-
22
contract at all, it is certainly only partly so the object100. Therefore, the whole contract was
not of a maritime nature, and does not fall under maritime jurisdiction101.Further, the breach
must also be maritime102.
In the present matter, the money transferred by the Claimant was to be used as security by the
crew, and was not in its essence, a maritime contract. Even if a part of it is deemed to be
maritime in nature, as the purpose of the security of the seafarer’s wages, even then the
contract as a whole is not maritime, the mere circumstance that certain stipulations contained
therein are not strictly maritime, will still be considered.
C. CLAIM DOES NOT GIVE RISE TO A MARITIME LIEN
The Respondent submits that (i) The principle of Maritime Lien is restricted in England, (ii)
the Seafarer’s Lien is not assignable, and (iii) there is a Statutory Bar on Assignment
i. The principle of Maritime Lien is restricted in England
The principle of Maritime Lien is restricted in England103to only certain claims are
recognized to constitute Maritime Lien at common law. These are Damage caused by a
ship104, Salvage105, Seamen’s wages106, Master’s wages and disbursements107, Bottomry and
Respondentia108. A maritime lien is considered to be a strict right, and cannot be extended by
100L'ArenaManwaring, Bee199.
101Grant v. Poillon, 20 How. 162.
102The William Fletcher, 8 Benedict 537; The General Sheridan, 2 Id. 294; Scott v. Chaffe, 2 Fed. Rep. 401.
103The Two Ellens, L.R. 4 P.C. 161; The Scotia, 35 Fed. 907
104 Senior Courts Act, 1981, Section 20(2)(e) (England).
105 Senior Courts Act, 1981, Section 20(2)(j) (England).
106 Senior Courts Act, 1981, Section 20(2)(o) (England).
107 Senior Courts Act, 1981, Section 20(2)(o) and (p) (England).
108 Senior Courts Act, 1981, Section 20(2)(r) (England).
-
23
construction, analogy, or inference109. Therefore, even if the present claim qualifies as a
Maritime Claim, it still does not fall under any of the categories of Maritime Lien.
ii. Seafarer’s Lien is not assignable
Under Common Law, Maritime Liens are either transferrable or not110. Lien is regarded as a
personal privilege for the sole benefit of the lien holder111. This personal right of maritime
lien is not capable of being transferred, even by express contract112. In The Petone113, it was
held by J. Hill that a person who pays off a privileged claimant does not get assigned the
right, in general, as well as in claims for wages. Therefore, the crew’s right to sue for lien
cannot be transferred to the Claimant114.
iii. Statutory Bar on Assignment
A seaman’s lien and his remedies for the recovery of his wages are not capable of being
renounced by any agreement115. Therefore, there is a clear statutory prohibition from
allowing the Seafarer’s to transfer or assign their right to the Claimants.
X. THE CLAIMANT DOES NOT HAVE MARITIME EQUITABLE LIEN OVER
VESSEL
Under English law, work and labour done or money expended by one man to preserve or
benefit the property of another do not create any lien upon the property saved or benefitted,
109Vandewater v. Mills, 15 L.Ed. 554; The Young Mechanic, 2 Curtis C.C. 404; The Kiersage, 2 Curtis C.C. 421
110AlekaMandaraka-Sheppard, Modern Maritime Law, Vol. 1, 3rd ed., p. 196-198.
111The New Eagle, (1846) 4 Notes of Cases, 426; The Neptune,(1834) 3 Hagg. Adm. 129
112The Sparti, (2000) 2 Lloyd’s Rep 618
113 [1917] P. 198
114The Lyons, (1887) 6 Asp. M.L.C. 199; The Louisa, (1848) 3 W. Rob. 99
115 Section 39, Merchant Shipping Act, 1995 (England).
-
24
nor create any obligation to repay the expenditure.116A lien can only arise if there is an
express or implied contract to that effect.117In maritime equitable lien, unlike a common-law
lien, the person claiming the lien is not usually in possession or occupation of the
property.118Further, there must be certain liability in relation of which the lien is exercised. In
the present matter, it has already been established that the Claimant does not have any
justifiable legal claims against the Respondent.119 In the absence of any legal claim, there is
no way in which an equitable lien can be exercised.
PRAYER FOR RELIEF
For all the reasons submitted above, the Respondent respectfully requests this tribunal to:
DECLARE that this arbitral panel does not have jurisdiction to hear the disputes arising out
of the Charterparty; and further
ADJUDGE that the Claimant is liable to the Respondent for the claims made by the
Respondent in its Statement of Defence against the Claimant further
ADJUDGE that the Claimant cannot hold a maritime lien over Madam Dragonfly, further
ADJUDGE that the Respondent is not liable to the Claimant for the following amounts
claimed:
a) Cost of the water damaged cargo of USD15,750,000
b) Cost of the Replacement Coffee Payment of USD9,450,000
116Falke v. Scottish Imperial Insurance Company, (1996) 34 Ch. D 234
117 Brian Glasgow (the bankruptcy trustee of Harlequin Property SVG Limited) v ELS Law Limited, [2017]
EWHC 3004 (Ch)
118Brook v. Wentworth, 3 Anstruther 881.
119 Issue V.
-
25
c) Loss on account of the Settlement Payment of USD5,000,000.
top related