20th ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT
In the matter of an arbitration under the Arbitration Act 1996
Between
PANTHER SHIPPING INC
CLAIMANT / Owners
- and -
OMEGA CHARTERING LIMITED
RESPONDENT / Charterers
MEMORANDUM FOR CLAIMANT
Counsel for CLAIMANT
TEAM 02
UNIVERSITY OF VERSAILLES · PARIS SACLAY
Houda NAJI · Nicoleta IFTODI · Eyram APETOGBOR · Leonte READ
MEMORANDUM FOR CLAIMANT
II
TABLE OF CONTENT
INDEX OF ABBREVIATIONS ........................................................................................................................ IV
INDEX OF AUTHORITIES ............................................................................................................................... V
STATEMENT OF FACTS .................................................................................................................................. 1
I. THE ARBITRAL TRIBUNAL HAS JURISDICTION TO RULE OVER THE CLAIMS ................... 3
A. The applicable law to the arbitral proceedings ...................................................................................... 3
1. English law applies to the Charterparty................................................................................................ 3
2. The Arbitration Act 1996 and the London Maritime Arbitration Association Terms 2017 govern
the arbitral proceedings according to the Charterparty ............................................................................... 4
B. The Arbitral Tribunal is competent pursuant to Clause 80 of the Charterparty ............................... 5
1. The Arbitral Tribunal is competent over the claims ............................................................................. 5
2. The Arbitral Tribunal is regularly constituted ..................................................................................... 5
C. The Arbitral Tribunal does not have jurisdiction to hear the Cargo Claim under the Bill of Lading
6
D. Cargo Claim is time-barred ..................................................................................................................... 6
1. Inter-Club NYPE Agreement 1996 governs the Cargo Claim between the Parties ............................ 6
2. Cargo damage allegation is time-barred pursuant to the ICA ............................................................. 7
II. ALTERNATIVELY, RESPONDENT IS NOT LIABLE FOR THE DAMAGE CAUSED TO THE
CARGO ................................................................................................................................................................. 8
A. Cargo Claim does not arise out of unseaworthiness and/or error or fault in navigation or
management of the vessel ................................................................................................................................. 8
1. The vessel was seaworthy ...................................................................................................................... 9
2. Cargo damage was not caused by error or fault in the navigation or management of the Vessel ... 10
B. Cargo damage would fall under Clause 8(b) of the ICA ................................................................. 11
MEMORANDUM FOR CLAIMANT
III
III. RESPONDENT FAILED TO PERFORM HULL CLEANING PRIOR TO RE-DELIVERY ....... 12
A. The right to attempt a lump sum offer is granted upon RESPONDENT being prevented to carry
Hull Cleaning .................................................................................................................................................. 12
B. The quotation of North Titan does not relieve RESPONDENT from its obligation to perform Hull
Cleaning ........................................................................................................................................................... 13
1. CLAIMANT did not reject RESPONDENT’s offer to have the Vessel’s hull cleaned at North Titan
14
2. The quotation of North Titan is not accurate ..................................................................................... 15
C. RESPONDENT is liable for all direct and indirect costs as a result of the Vessel’s defouling after
late re-delivery ................................................................................................................................................ 16
1. RESPONDENT was aware of the consequences of re-delivering the Vessel dirty ........................... 16
2. RESPONDENT cannot limit their liability for the cleaning cost to USD33,000 .............................. 17
D. RESPONDENT was never relieved from its obligation to perform Hull Cleaning .......................... 18
1. Evidence of the Parties’ intention or willingness to make a new binding contract upon Hull
Cleaning ....................................................................................................................................................... 18
2. CLAIMANT withdrew their acceptance upon new agreement as respondent did not arrange
inspection ..................................................................................................................................................... 19
IV. CLAIMANT IS ENTITLED TO CLAIM DAMAGES FOR LATE RE-DELIVERY AND LOSS
OF HIRE ............................................................................................................................................................. 19
A. RESPONDENT failed to comply with its obligation of re-delivery under the Charterparty .......... 20
1. RESPONDENT failed to re-deliver the Vessel prior to the expiry of the maximum period of the
Charterparty ................................................................................................................................................. 20
2. Alternatively, RESPONDENT cannot trigger the off-hire clause ..................................................... 22
B. CLAIMANT is entitled to claim loss of hire ........................................................................................ 24
PRAYER FOR RELIEF .................................................................................................................................... 25
MEMORANDUM FOR CLAIMANT
IV
INDEX OF ABBREVIATIONS
BIMCO Baltic and International Maritime Council
Cargo A cargo of 1720 x 5mt of English breakfast tea in bags on board of
the Vessel
Charterparty The time Charterparty between CLAIMANT and RESPONDENT
CLAIMANT Panther Shipping Inc
Comm Commercial Court
EWHC England and Wales High Court (or, High Court of Justice in
England)
FHS Final Hire Settlement
Ibid. Ibidem
ICA Inter-Club NYPE Agreement (1996)
LMAA Terms London Maritime Arbitration Association Terms (2017)
Next Fixture Charterparty between Panther Shipping Inc and Champion
Chartering Corp
NYPE 2015 New York Produce Exchange (2015)
Parties CLAIMANT and RESPONDENT
p. / pp. Page / pages
RESPONDENT Omega Chartering Limited
Vessel M/V Thanos Quest
MEMORANDUM FOR CLAIMANT
V
INDEX OF AUTHORITIES
CASE LAW
Case Law Quoted on page:
A.
Adamastos Shipping v Anglo Saxon Petroleum, [1959] A.C. 133 13
Africa Express Line Ltd v Socofi S.A., [2009] EWHC 3223 (Comm) 6
Arnold v Britton, [2015] UKSC 36 23
Astra Trust Ltd v Adams and Williams, [1969] 1 Lloyd’s Rep. 81 19
Asty Maritime Co Ltd and Panagiotis Stravelakis v Rocco Giuseppe & Figli,
S.N.C. And Others (the “Astyanax”), [1985] 2 Lloyd’s Rep. 109
19
B.
Bank Line Ltd v Arthur Capel and Co, [1919] A.C. 435 23
C.
Cable & Wireless plc v IBM United Kingdom Ltd, [2002] EWHC 2059 14
Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, 1 A.C. 1101 23
Comptoir Commercial Anversois v Power Son and Co, [1920] 1 K.B. 868 13
D.
Davis Contractors Ltd v Fareham Urban District Council, [1956] UKHL 3 23
Delaware North Marine Experience Pty Ltd v The ship “eye-spy”, [2017]
FCA 708
21
G.
Golden Ocean v Salgaocar Mining, [2012] 1 Lloyd’s Rep. (C.A.) 542 16
Golden Strait Corp v Nippon Yusen Kaisha (the “Golden Victory”), [2005] 2
Lloyd’s Rep. 23
17
MEMORANDUM FOR CLAIMANT
VI
H.
Habton Farms v Nimmo, [2004] QB 1 19
Hackney Borough Council v Dore, [1922] 1 K.B. 431 22
Hussey v Horne-Payne HL, [1879] 4 App Cas 311 19
Hyundai Merchant Marine Co Ltd v Karander Maritime Inc (the “Niizuru”),
[1996] 2 Lloyd’s Rep. 66
21
Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd, [2006] 236
ALR 115
8
I.
IMT Shipping and Chartering GmbH v Changsung Shipping Company Limited
(the “Zenovia”), [2009] EWHC 739 (Comm)
21, 25
Ipsos SA v Dentsu Aegis Network Ltd (formerly Aegis Group Plc), [2015]
EWHC 1726 (Comm)
7
Italian State Railways v Mavrogordatos, [1919] 2 K.B. 305 21
J.
J. Lauritzen A.S. v Wijsmuller B.V. (the “Super Servant Two”), [1990] 1 Lloyd’s
Rep. 1
24
K.
Koufos v C. Czarnikow Ltd (the “Heron II”), [1969] 1 A.C. 350 16
L.
Laminates Acquisitions v BTR Australia Limited, [2004] 1 All ER (Comm) 7
Lidgett v Williams, [1845] 14 L.J. Ch. 459 18
M.
MEMORANDUM FOR CLAIMANT
VII
Maestro Bulk Ltd v Cosco Bulk Carrier Ltd (the “Great Creation”), [2014]
EWHC 3978 (Comm)
21
Martrade Shipping & Transport GmbH v United Entreprises Corporation (the
“Wisdom C”), [2014] EWHC 1884 (Comm)
20
Matsoukis v Priestman & Co, [1915] 1 K.B. 681 22
McFadden v Blue Star Line, [1905] 1 K.B. 697 10
Mercantile and General Reinsurance Co plc v London Assurance, 3 November
1989, unreported
6
Miramar Maritime Corp v Holborn Oil, [1984] A.C. 676 13
Morrison Steamship Co Ltd v Greystoke Castle, [1947] A.C. 265 24
N.
National Carriers Ltd v Panalpina (Northern) Ltd, [1981] A.C. 675 23
O.
Ocean Tramp Tankers Corporation v V/O Sovfracht (the “Eugenia”), [1964] 2
QB 226
20
P.
Pagnan SpA v Feed Products, [1987] 2 Lloyd’s Rep. 601 19
Petromec Inc Petro-Deep Societa Armamento Navi Appoggio Spa v Petroleo
Brasileiro SA, [2006] 1 Lloyd’s Rep. 121
14
R.
Reardon Smith Line Ltd v Yngvar Hansen-Tangen and Sanko SS & Co Ltd (the
“Diana Prosperity”), [1976] 1 WLR 989
23
Rodocanachi v Milburn, [1886] 17 QBD 316 6
MEMORANDUM FOR CLAIMANT
VIII
Rossiter v Miller, [1873] 3 App Cas 1124 19
Royal Greek Government v Minister of Transport (the “Ilissos”), [1948] 82
Lloyd’s Rep. 196
22
S.
SBT Star Bulk & Tankers (Germany) GmbH & Co KG v Cosmotrade SA (the
“Wehr Trave”), [2016] EWHC 583 (Comm)
20
Silver Dry Bulk Co Ltd v Homer Hulbert Maritime Co Ltd, [2017] EWHC 44
(Comm)
5
Sim Chay Koon v NTUC Income Insurance Cooperative Ltd, [2016] 2 SLR 5
Shagang South-Asia (Hong Kong) Trading Co Ltd v Daewoo Logistics (the
“Shagang”) [2015] EWHC 194 (Comm)
3
SHV Gas Supply & Trading SAS v Naftomar Shipping & Trading Co Ltd Inc
(the “Azur Gaz”), [2006] 1 Lloyd’s Rep. 163
8
Stewart v Van Ommeren, [1918] 2 K.B. 560 21
Storer v Manchester City Council, [1974] 1 W.L.R. 18
Sulamerica CIA Nacional de Seguros SA and others v Enesa Engenharia SA and
others [2012] EWCA Civ 638
4
T.
The Clarence, [1850] 3 W Rob 283 24
The Concadoro, [1916] 2 A.C. 199 13
The Lady Gwendolen, [1965] 1 Lloyd’s Rep. 335 11
W.
Walford v Miles, [1992] 2 A.C. 128 14
MEMORANDUM FOR CLAIMANT
IX
LEGISLATION
Legal Sources Full citation Quoted on page:
Arbitration Act 1996 Arbitration Act 1996 (of England), CHAPTER 23
[17th June 1996]
2, 3, 4, 5
Hague-Visby Rules The Hague Rules as Amended by the Brussels
Protocol 1968
9
ICA Inter-Club Agreement (as amended 1 September
2011) - UK P&I
2, 3, 4, 6, 7, 8, 9,
10, 11, 12
LMAA Terms London Maritime Arbitration Association Terms
2017
4, 5
NYPE 2015 Form New York Produce Exchange Form
Time Charter
6th November 1913
Amended 20th October 1921; 6th August 1931; 3rd
October 1946;
Revised 12th June 1981; 14th September 1993; 3rd
June 2015
3, 4, 16, 21, 22
MEMORANDUM FOR CLAIMANT
X
DOCTRINE
Doctrine Cited as: Quoted on page:
ANWARI, NABIL
Seaworthiness in the context of the ISPS
Code and the relevant amendments to
SOLAS Convention 1974
World Maritime University, 2005
N. Anwari, Seaworthiness in the
context of the ISPS Code and the
relevant amendments to SOLAS
Convention 1974
9
BAUGHEN, SIMON
Shipping Law
6th Edition
Routledge, 2015
S. Baughen, Shipping Law 21
BLACKABY, NIGEL
PARTASIDES, CONSTANTINE
REDFERN, ALAN
HUNTER, MARTIN
Redfern and Hunter on International
Arbitration
6th Edition
Oxford University Press, 2015
N. Blackaby, C. Partasides, A.
Redfern, M. Hunter, Redfern and
Hunter on International Arbitration
3
BORN, GARY
International Arbitration: Law and
Practice
2nd Edition
Kluwer Law International, 2015
G. Born, International Arbitration 3
CHORLEY, ROBERT S
ET AL
Chorley & Giles’ Shipping Law
8th Edition
London: Financial Times/Pitman
Publishing, 1987
R. S. Chorley, Chorley & Giles’
Shipping Law
9
MEMORANDUM FOR CLAIMANT
XI
COGHLIN, TERENCE
BAKER, ANDREW
KENNY, JULIAN
KIMBALL, JOHN
Time Charters
6th Edition
Informa Law from Routledge, 2008
T. Coghlin, A. Baker, J. Kenny, J.
Kimball, Time Charters
21
KENDALL-MARSDEN, SAM
GREEN, JAMIE
A review of off-hire clauses. Part one:
the NYPE form
Standard Club Review, June 2018
S. Kendall-Marsden, J. Green,
A review of off-hire clauses
21, 22
MACNEIL, IAIN
Uncertainty in commercial law
Edinburgh Law Review, 13 (1), 2009
I. MacNeil, Uncertainty in
commercial law
16
MANDARAKA-SHEPPARD,
ALEKA
Modern Maritime Law, Volume 2:
Managing Risks and Liabilities
3rd Edition
Informa Law from Routledge, 2013
A. Mandaraka-Sheppard, Modern
Maritime Law
23
MCKENDRICK, EWAN
Force Majeure and frustration of
contract
2th Edition
Informa Law from Routledge, 2013
E. McKendrick, Force Majeure and
frustration of contract
22
MEMORANDUM FOR CLAIMANT
XII
SCHMITTHOFF, CLIVE M.
ADAM, JOHN
Schmitthoff’s Export Trade: The Law
and Practice of International Trade
9th Edition
London Steven & Sons, 1990
C. M. Schmitthoff, J. Adam, The Law
and Practice of International Trade
23
SCRUTTON, THOMAS EDWARD
MOCATTA, ALAN ABRAHAM
MUSTILL, MICHAEL J
BOYD, STEWART C
Scrutton on charterparties and bills of
lading
18th Edition
London: Sweet & Maxwell, 1978
T. E. Scrutton, Scrutton on
charterparties and bills of lading
9
VAN DEN BERG, ALBERT JAN
Yearbook Commercial Arbitration
Volume XXI
Kluwer, 1996
A.J. Van Den Berg, Yearbook
Commercial Arbitration
6
MEMORANDUM FOR CLAIMANT
1
STATEMENT OF FACTS
A. The Parties and the Charterparty
1. Panther Shipping Inc (“CLAIMANT”), a Liberian company, is the owner of the M/V “THANOS
QUEST” (“Vessel”). The Vessel is registered under Antigua and Barbuda Flag. Omega Chartering
Limited (“RESPONDENT”) is a company based in Liechtenstein.
2. On 18 March 2016, CLAIMANT entered into a time charter trip (“Charterparty”) with
RESPONDENT, for a period of 50-55 days. Accordingly, RESPONDENT had to carry out a cargo of
1720 x 5mt of English breakfast tea bags (“Cargo”). On 29 March 2016, the Vessel was delivered
to RESPONDENT. On 20 April 2016, the Vessel departed West Coast and arrived at Wahanda
on 7 May 2016.
B. The Hull Cleaning
3. Under the Charterparty, RESPONDENT had a duty to arrange the Hull Cleaning of the Vessel prior
re-delivery. On 8 June 2016, RESPONDENT informed CLAIMANT that cleaning was not allowed by
Wahanda government, despite confirmation from Wahanda Port Services that several companies had
previously done Hull Cleaning.
4. After several emails, on 9 June 2016, the Parties agreed, contrary to the Charterparty, that CLAIMANT
will organize Vessel’s bottom cleaning. In return, RESPONDENT agreed to arrange inspection prior
to re-delivery and to take in charge the costs arising from such cleaning, against an original invoice.
5. On 18 June 2016, RESPONDENT announced that the Vessel would be re-delivered dirty and instead
offered to pay a lump sum as full and final settlement for Hull Cleaning. However, since there had
been no inspection, CLAIMANT rejected the amount offered and reminded RESPONDENT that Hull
Cleaning shall always be carried out prior to re-delivery, in respect of Clause 83(d). After that,
RESPONDENT maintained that it had no obligation to arrange neither inspection nor bottom cleaning
prior to re-delivery.
MEMORANDUM FOR CLAIMANT
2
6. Finally, the Vessel’s hull was inspected and cleaned at South Island between 1st July 2016 and 3rd
July 2016, at a total cost of USD96,567.42. On 1st August 2016, CLAIMANT presented its Final Hire
Statement (“FHS”) to RESPONDENT who paid all amounts under the FHS, except the costs of
cleaning.
C. The late re-delivery and the loss of hire
7. Simultaneously, on 15 June 2016, CLAIMANT concluded an agreement with another charterer,
Champion Chartering Corp (“Champion”), for a duration of 4 years (“Next Fixture”), with a laycan
of 22-28 June 2016. The daily rate of hire was USD10,500. Due to the late re-delivery, the Vessel
missed the laycan and Champion cancelled the Next Fixture. Thus, CLAIMANT suffered damages for
loss of hire on an amount of USD15,330,000.00.
8. On 30 June 2016, the Vessel was re-delivered to CLAIMANT, namely 39 days exceeding the duration
of the Charterparty. Without any evidence, RESPONDENT claims that Wahanda Port Authority would
have quarantined the Vessel for at least 28 days, due to an alleged case of Ebola at the edge of the
Vessel. Contrary to what RESPONDENT contends, the Vessel was on-hire until the effective date
of re-delivery.
D. The Cargo Claim
9. On 27 June 2016, upon discharge of the Cargo at Wahanda, RESPONDENT alleged that part of the
Cargo was damaged. Nonetheless, Cargo Claim is time-barred as RESPONDENT failed to give written
notification of the Claim in accordance with clause 6 of the ICA. Alternatively, CLAIMANT denies
the application of clause 8(a) of the ICA, since the damage was not caused by unseaworthiness.
E. The arbitral proceedings
10. All these events left CLAIMANT with no choice but to file a Request for Arbitration, on 16 October
2018, in accordance with clause 80 of the Charterparty. On 30 October 2018, the Tribunal was
constituted pursuant to Arbitration Act 1996. The Parties have never objected the regularity of the
constitution of the Tribunal.
MEMORANDUM FOR CLAIMANT
3
I. THE ARBITRAL TRIBUNAL HAS JURISDICTION TO RULE OVER THE CLAIMS
11. In accordance with the principle competence-competence, the Tribunal has power to determine its
own jurisdiction1 by construing the arbitration agreement according to its governing law2. Pursuant
to the laws governing the arbitral proceedings (A.), the claim raised by the CLAIMANT falls within
the scope of the Arbitral Tribunal’s jurisdiction (B.). However, the Tribunal does not have jurisdiction
to rule over the Cargo Claim (C.). In any case, this counterclaim is time-barred (D.).
A. The applicable law to the arbitral proceedings
1. English law applies to the Charterparty
12. In order to determine the applicable law to the arbitral procedure, parties may specify in their
agreement the seat of arbitration. Indeed, in the Shagang3 case, a presumption in favour of the
geographical location being the “seat” of arbitration was confirmed by the Court. In its decision, the
Court outlined: “the words ‘arbitration to be held in Hong Kong’ carried with it an implied choice of
Hong Kong as the seat of arbitration and, therefore, the curial law, given the close link which exists
between the place of arbitration and the procedure governing it”4. The designation of the seat of
arbitration is an implicit reference to the laws of that venue that will apply to the proceedings.
13. Moreover, the same criterion is retained by the NYPE 2015 Form5. Clause 54 designates the
applicable law to the proceedings according to the seat of arbitration chosen by the parties.
14. In the case at hand, the NYPE 2015 Form applies to the Charterparty6. Clause 80 of this Charterparty
provides: “Should any dispute arise between Owners and Charterers, the matter in dispute shall be
referred to three persons at London (…) English law to apply (…) The Contact (sic) to be construed
in accordance with English Law. Arbitration to be in London” 7. Thus, Parties have expressly chosen
1 Silver Dry Bulk Co Ltd v Homer Hulbert Maritime Co Ltd, [2017] EWHC 44 (Comm); N. Blackaby, C. Partasides, A.
Redfern, M. Hunter, Redfern and Hunter on International Arbitration, pp. 322, 345; Arbitration Act 1996, Section 30. 2 G. Born, International Arbitration, p.48. 3 Shagang South-Asia (Hong Kong) Trading Co Ltd v Daewoo Logistics (the “Shagang”), [2015] EWHC 194 (Comm). 4 Ibid.
5 NYPE 2015 Form, Clause 54. 6 IMLAM Problem Scenario V2, Charterparty, p.5.
7 IMLAM Problem Scenario V2, Charterparty, Article 80, p.15.
MEMORANDUM FOR CLAIMANT
4
English law to apply to their agreement and specified London as the seat of arbitration. Therefore,
both arbitral procedure and the merits of the dispute are governed by English law.
2. The Arbitration Act 1996 and the London Maritime Arbitration Association
Terms 2017 govern the arbitral proceedings according to the Charterparty
15. The applicable law to an arbitration agreement may be determined by express reference within the
arbitration agreement itself8. In their Charterparty, Parties refer to the NYPE 2015 Form9. This Form
determines the applicable law to the arbitral proceedings regarding the seat of arbitration. Clause 54
provides: “(…) any dispute arising out of or in connection with this Charterparty shall be referred to
arbitration in London in accordance with the Arbitration act (…)”10.
16. In addition, this clause provides arbitration shall be conducted in accordance with the London
Maritime Arbitration Association Terms (“LMAA Terms”) current at the time when the arbitration
proceedings are commenced. Thus, generally, the Arbitration Act 1996 is the applicable law of the
arbitration in England, however the LMAA Terms are suitable to maritime disputes.
17. Indeed, according to LMAA Terms: “the arbitral proceedings and the rights and obligations of the
parties in connection therewith shall be in all respects governed by the [1996] Act save to the extent
that the provisions of the Act are varied, modified or supplemented by these Terms”11. The LMAA
Terms are whereof designed to apply in conjunction with the English Arbitration Act 1996.
18. In the present case, the seat of arbitration is in London and the lex arbitri is English law12. According
to clause 54 of NYPE 2015 Form, two regulations are applicable to the arbitral proceedings between
Parties: the Arbitration Act 1996 and the LMAA Terms. Moreover, the Parties’ choice of the
settlement procedure for small disputes according to the LMAA Terms proves that the both acts apply
in a complementary way13.
8 Sulamerica Cia Nacional De Seguros S.A. & Ors v Enesa Engenharia SA & Ors, [2012] EWCA Civ 638. 9 IMLAM Problem Scenario V2, Recap Fixture, p.5.
10 NYPE 2015 Form, Clause 54(b).
11 LMAA Terms, Paragraph 7(a). 12 IMLAM Problem Scenario V2, Charterparty, Article 80, p.15. 13 IMLAM Problem Scenario V2, Charterparty, Clause 102, p.18.
MEMORANDUM FOR CLAIMANT
5
B. The Arbitral Tribunal is competent pursuant to Clause 80 of the Charterparty
1. The Arbitral Tribunal is competent over the claims
19. The general principle of competence-competence found that an arbitral tribunal has jurisdiction to
rule on its own jurisdiction, including any objections with respect to the existence or validity of the
arbitration agreement14.
20. In the case, Parties had already agreed to entrust any future dispute before an arbitral tribunal
according to Clause 80 of the Charterparty. Hence, the arbitration agreement gives prima facie
jurisdiction to the Arbitral Tribunal. In case of doubts or disputes, the Tribunal remains competent
to assess its own jurisdiction.
2. The Arbitral Tribunal is regularly constituted
21. According to LMAA Terms, a tribunal includes a sole arbitrator, a tribunal of two or more arbitrators,
and an umpire15. Section 15 of Arbitration Act 1996 provides that “unless otherwise agreed by the
parties, an agreement that the number of arbitrators shall be two or any other even number shall be
understood as requiring the appointment of an additional arbitrator as chairman of the tribunal”16.
Indeed, it is possible to compose an arbitral tribunal with only two arbitrators under the joint scheme
of the two regulations. It is also expected that the choice of a third arbitrator may be deferred in time.
22. In the case, under the terms of the Arbitration Clause 80, the dispute shall be referred to three persons
at London. CLAIMANT appointed Madam Mary Walker from Armada Street Arbitration Chambers17.
RESPONDENT appointed Captain Eric Masterson18. Therefore, on 30 October 2018, the Tribunal was
constituted by two arbitrators19. Though, the Arbitral Tribunal was constituted only by two arbitrators,
it does not impede the validity of its constitution. On 8 March 2019, the Tribunal indicated in its
Directions Order that: “before the hearing the Tribunal shall appoint a third arbitrator who shall be
14 Silver Dry Bulk Co Ltd v Homer Hulbert Maritime Co Ltd, [2017] EWHC 44 (Comm); Sim Chay Koon v NTUC Income
Insurance Cooperative Ltd, [2016] 2 SLR. 15 LMAA Terms, Paragraph 2(c). 16 Arbitration Act 1996, Section 15. 17 IMLAM Problem Scenario V2, p.59-60. 18 Ibid., p.62. 19 Ibid., p.63.
MEMORANDUM FOR CLAIMANT
6
the chairman unless the parties shall agree otherwise”20. The Tribunal is therefore regularly
constituted, and the two arbitrators shall choose the third arbitrator during the pleadings.
C. The Arbitral Tribunal does not have jurisdiction to hear the Cargo Claim under the Bill
of Lading
23. The carrying of the goods in the case is governed by the Bill of Lading21. This act also regulates the
settlement of disputes between their parties. According to clause 3 of Bill of Lading “any dispute
arising under this Bill of Lading shall be decided in the country where the carrier has his principal
place of business, and the law of such country shall apply (…)”22.
24. The Charterparty and the Bill of Lading are two distinct documents which bind different parties:
owners (CLAIMANT) and Charterers (RESPONDENT) on the one hand, and Carrier (RESPONDENT)
and Merchant (Hawkeye Import & Export Pty) on the other hand. These contracts have a different
legal nature23. Unless the Bill of Lading refers to the arbitration clause, disputes arising from the
application of the Bill of Lading cannot be settled by a clause in the Charterparty24. Generally, an
arbitrator has no jurisdiction over a dispute between one or both of the parties and a third party25.
25. In the case at hand, the designated carrier on the Bill of Lading is RESPONDENT, which had the
commercial management of the vessel. There is no reference to the Charterparty in the Bill of Lading.
Therefore, the Arbitral Tribunal does not have jurisdiction to rule over Cargo Claim.
D. Cargo Claim is time-barred
1. Inter-Club NYPE Agreement 1996 governs the Cargo Claim between the Parties
26. The relationship between CLAIMANT and RESPONDENT is governed by the terms of the
Charterparty26. Under Clause 27 of the Charterparty and the Rider Clause 53, the Cargo Claim shall
be settled in accordance with the Inter-Club NYPE Agreement 1996 (“ICA”), as amended
20 IMLAM Problem Scenario V2, Directions Order from 8 March 2019, §6, p.2. 21 IMLAM Problem Scenario V2, Bill of Lading, p.47-49. 22 Ibid., Clause 3, p.48. 23 A.J. Van Den Berg, Yearbook Commercial Arbitration. 24 Africa Express Line Ltd v Socofi S.A., [2009] EWHC 3223 (Comm). 25 Mercantile and General Reinsurance Co plc v London Assurance, 3 November 1989, unreported. 26 Rodocanachi v Milburn, [1886] 17 QBD 316.
MEMORANDUM FOR CLAIMANT
7
on 1st September 201127. The applicability of the ICA was also confirmed by the RESPONDENT in
its counterclaim submission28. Consequently, the Cargo damage allegations shall be settled in
accordance with the ICA.
2. Cargo damage allegation is time-barred pursuant to the ICA
27. Article 6 of the ICA provides that: “Recovery…by an owner or charterer shall be deemed to be waived
and absolutely bar red unless written notification of the cargo claim has been given to the other party
to the Charterparty within 24 months of the date of delivery (…) or the date the cargo should have
been delivered (…)”.
28. As stated above, written notification must be given to CLAIMANT as a condition precedent to the
admissibility of the Cargo Claim. The information about the Cargo damages delivered in several
emails (first one received on 27 June 2016)29, do by no means constitute the “written notification”
required by Clause 6 of the ICA. In the first emails CLAIMANT stated that the cargo was apparently
damaged and that a survey was scheduled. In the following emails, CLAIMANT even asked for several
extensions in order to formally notify the Cargo Claim30.
29. There is a clear difference between a simple notice (as the one emailed by the CLAIMANT) which
establishes damages and states the possibility of a claim being made, and a claim notice which
specifies the claim that is actually being made. The later document calls for an indication of the
underlying facts, events, circumstances, nature of the claim and amount claimed, as confirmed in the
Laminates Acquisitions31 case. English Court determined that purchaser had failed to give adequate
notice of claim.
30. Furthermore, in the Ipsos v. Aegis32 case, the claimant had 6 months to notify its claim to the other
party. Even though two “notification” letters were sent the Court held that they did not constitute a
claim notice since they lacked relevant information related to the claim being initiated. This case is a
27 IMLAM Problem Scenario V2, Charterparty, Clause 53, p.10. 28 Ibid., Defence and counterclaim submissions, p.71. 29 Ibid., p.38. 30 Ibid., p.57-58. 31 Laminates Acquisitions v BTR Australia Limited, [2004] 1 All ER (Comm). 32 Ipsos SA v Dentsu Aegis Network Ltd (formerly Aegis Group Plc), [2015] EWHC 1726 (Comm).
MEMORANDUM FOR CLAIMANT
8
reminder of the importance of ensuring that notices, such as those under the ICA, are given in writing,
and are clear and unambiguous as a matter of best practice.
31. The provision of written notice is an essential condition precedent to the Cargo Claim submission and
must be demonstrated33.
32. In this case, two extensions were granted, however CLAIMANT failed to deliver a notification of
Cargo Claim. The mere fact that CLAIMANT asked for these extensions in order to notify the Cargo
Claim and that it did not undertake actions should be sufficient to prove it waived its right to claim
for Cargo damages. As a result, the Cargo allegations shall be deemed to be waived and absolutely
barred in accordance with article 6 of the ICA.
33. For Cargo Claim to prosper, CLAIMANT needs to prove its a loss, the basic reason for the claim, and
the essence of the request needs to be proven. If the CLAIMANT is saying that this party is responsible
for the Cargo damage, this damage must be correctly determined. The evidential force of a
notification of the cargo claim is consequently of great significance, the effect that article 6 of ICA
wants to give is precisely that of a descriptive notification of the Claim, not of the possibility of
initiating a Cargo Claim.
II. ALTERNATIVELY, RESPONDENT IS NOT LIABLE FOR THE DAMAGE CAUSED
TO THE CARGO
34. Alternatively, shall the Tribunal consider the Claim admissible, CLAIMANT failed to establish either
unseaworthiness or error under article 8(a) of the ICA (A.). Additionally, the alleged damage was not
correctly determined, CLAIMANT is responsible for Cargo damage (B.).
A. Cargo Claim does not arise out of unseaworthiness and/or error or fault in navigation
or management of the vessel
33 Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd, [2006] 236 ALR 115; SHV Gas Supply & Trading
SAS v Naftomar Shipping & Trading Co Ltd Inc (the “Azur Gaz”), [2006] 1 Lloyd’s Rep 163.
MEMORANDUM FOR CLAIMANT
9
35. Article 8(a) of the ICA indicates that Cargo Claim “(…) shall be apportioned as follows: (a) Claims
in fact arising out of unseaworthiness and/or error or fault in navigation or management of the vessel:
100% Owners (…)”.
36. Neither unseaworthiness, error nor fault in navigation were configured nor proved by the
CLAIMANT, moreover there is not enough evidence and documentation to determine the amount of
the cargo that was damaged and the amount claimed by the receiver of the cargo.
1. The vessel was seaworthy
37. In the present case, the vessel was hired for a time charter trip to Bao Kingdom. Consequently, the
Hague-Visby Rules (“HVR”), as amended by the Brussels Protocol 1968, are applicable thus Bao
Kingdom closely resemble the laws of the Hong Kong34, which incorporated them.
38. Additionally, the Bill of Lading issued by the RESPONDENT incorporates the HVR by reference35.
Moreover, ICA indicates in its article 10 that the governing law is the English law. In this context,
HVR are also applicable.
39. In article 4 of the HVR is indicated that “neither the carrier nor the ship shall be liable for loss or
damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part
of the carrier to make the ship seaworthy”.
40. The seaworthiness is a standard to which the condition of a ship has to be measured, particularly,
before the beginning of a voyage36. English law defines seaworthiness regarding its fitness to
encounter the perils of the intended voyage and its ability to receive the type of cargo provided by the
charterers37. Under these circumstances, unseaworthiness cannot be configured. Thus, the due
diligence, a constitutive part of seaworthiness, was assured by the RESPONDENT38, as the alleged
incident occurred at the end of the voyage.
34 IMLAM Problem Scenario V2, Procedural Order No. 2, p.2. 35 Ibid., Bill of Lading, Clause 2, p.48. 36 Hague-Visby Rules, Article 3. 37 N. Anwari, Seaworthiness in the context of the ISPS Code and the relevant amendments to SOLAS Convention 1974, p.7;
R. S. Chorley, Chorley & Giles’ Shipping Law, pp.187-188. 38 See, T. E. Scrutton, Scrutton on charterparties and bills of lading.
MEMORANDUM FOR CLAIMANT
10
41. This can be illustrated by McFadden v Blue Star Line39 case where the Tribunal established that “a
vessel must have that degree of fitness which an ordinary careful and prudent owner would require
his vessel to have at the commencement of her voyage having regard to all the probable circumstances
of it… If he would, the ship was not seaworthy…”.
42. The damage or the event which rendered the Vessel unseaworthy must have occurred during or before
the commencement of the voyage to be considered as that the unseaworthiness of the Vessel is a cause
of the damages to the cargo. Otherwise, it might not compromise the RESPONDENT’s liability.
43. This was confirmed as well in the McFadden v Blue Star Line40 case, in which the vessel’s ballast
tank was being filled with seawater and the crew attempted to close the seacock, but did not do so
effectively, the cargo was thus damaged. The damages took place after the goods were on board, so
they fell in the interval between the loading and sailing stages and did not therefore constitute a breach
of the warranty of seaworthiness.
44. As previously stated in the counterclaim submissions, the allegation is that the cargo was damaged
“(...) prior to leaving the berth at West Coast”41. Therefore, similar to what happened in McFadden
v. Blue Star Line, under these circumstances the Cargo damage cannot constitute a breach of the
warranty of seaworthiness.
2. Cargo damage was not caused by error or fault in the navigation or management
of the Vessel
45. HVR provides in its article 4 that “neither the carrier nor the ship shall be responsible for loss or
damage arising or resulting from: (a) Act, neglect, or default of the master, mariner, pilot, or the
servants of the carrier in the navigation or in the management of the ship”.
46. Additionally, there is no solid proof that Cargo damage was caused by error or fault in the navigation
or management of the Vessel, as stated under article 8(a) of the ICA. The only documentation
provided was a preliminary survey report that should be considered as inconclusive and unprecise.
39 McFadden v Blue Star Line, [1905] 1 KB 697. 40 McFadden v Blue Star Line, [1905] 1 KB 697. 41 IMLAM Problem Scenario V2, Defence and counterclaim submissions, p.72.
MEMORANDUM FOR CLAIMANT
11
RESPONDENT failed to present the full documentation in support for its allegations and the
Preliminary Survey submitted to this Tribunal is irregular.
47. On 30 June 2016, a Preliminary Survey was performed. However, the surveyor stated that it was
“only a preliminary report” and that it was “too early to say the likely quantum of the damage”42. The
Bill of Lading was not even provided to the surveyor, so it was not possible for the surveyor to know
the particularities of the Cargo43.
48. Alternatively, the acts of a master or its crew do not constitute a personal act of an shipowner, this
can be confirmed with The Lady Gwendolen44 case, where the master’s dangerous command of the
ship was insufficient to constitute a personal act of the shipowner. There is no evidence that either
the RESPONDENT, nor the master had knowledge of the supposed actions of the crew member in
regards to the opening of the valve.
49. Therefore, according to article 4 of the HVR this party may limit its liability. In case the Arbitral
Tribunal will consider otherwise, there is not enough evidence to proof that CLAIMANT acted out of
neglect, error or fault in the management of the Vessel.
B. Cargo damage would fall under Clause 8(b) of the ICA
50. As indicated by the CLAIMANT in its Counterclaim Submissions, Clause 8(b) of the ICA could be
applicable, this Clause provides that: “Claims arising out of the loading, stowage, lashing, discharge,
storage or other handling of cargo: 100% Charterers”.
51. In a London Arbitration45 case where the charter was on a NYPE form for a time charter trip and
clause 8 of NYPE was amended and read inter alia: “Charter are to load, stow and discharge the
cargo at their risk and expense but always understood these operations remain under the supervision
and direction and responsibility of the Captain.” The Tribunal considered that the reference to “risk”
in clause 8 meant that liability for loss or damage arising out of cargo operations would rest with the
42 IMLAM Problem Scenario V2, Preliminary Survey report, p.46. 43 Ibid., Procedural Order No.2, Point 9, p.2. 44 The Lady Gwendolen, [1965] 1 Lloyd’s Rep. 335. 45 London Arbitration 17/84 (LMLN 128).
MEMORANDUM FOR CLAIMANT
12
charterers, and the reference to the supervision, direction and responsibility of the master was simply
to confirm the master’s right to supervise, direct and be responsible for cargo operations. Indeed, the
words “risk” and “responsibility” cancelled each other out and therefore the charterer was
responsible.
52. If the alleged damages occurred prior leaving the berth at West Coast, it means that it was during the
discharging stage. In such case, clause 8(b) of the ICA allocates 100% of the responsibility on
CLAIMANT. Even if we can find the word “responsibility” added to clause 8, there is a contradiction
though the word “risk” wasn’t amended and is used in the same sentence; consequently, CLAIMANT
is responsible for the Cargo damages.
III. RESPONDENT FAILED TO PERFORM HULL CLEANING PRIOR TO RE-
DELIVERY
53. Pursuant to Clause 83(d) of the Charterparty, Hull Cleaning shall always be carried out prior to
re-delivery by RESPONDENT46. Further, the Charterparty indicates that if RESPONDENT is
prevented, CLAIMANT and RESPONDENT shall agree on a lump sum prior to, but latest on re-
delivery. In this case, RESPONDENT failed to perform Hull Cleaning without being prevented from
it and offered to make a lump sum payment47(A.). Simultaneously, CLAIMANT did not reject the
quotation of North Titan, but only considered the lump sum amount not generous (B.). Consequently,
RESPONDENT is liable for all costs resulting from defouling after re-delivery (C.).
A. The right to attempt a lump sum offer is granted upon RESPONDENT being prevented
to carry Hull Cleaning
54. Clause 83(d) of the Charterparty indicates that cleaning should be carried out prior to re-delivery and
“if nevertheless, Charterers are prevented”, parties shall agree on a lump sum payment48.
46 IMLAM Problem Scenario V2, Charterparty, Clause 83 (c), p.16. 47 Ibid., Email 9 June 2016, p.28. 48 Ibid., BIMCO Clause 83(d), p.16.
MEMORANDUM FOR CLAIMANT
13
55. As a matter of fact, when the parties incorporate standard clauses into their charter, it is presumed
that they intend these standard terms to receive the same interpretation as in any other case and with
accordance with business common sense49.
56. In Comptoir Commercial Anversois50 case, the Court of Appeal held that “prevention” meant either
physical or legal event preventing obligation performance. This principle was framed restrictively in
The Concadoro51 case. In that matter, the Court of Appeal held that a ship’s Master was not restrained
by circumstances, when he was unable to leave port because he had not been provided with sufficient
funds to do so.
57. In this case, RESPONDENT claims it was prevented from arranging Hull Cleaning because the
government of Wahanda did not allow underwater cleaning jobs due to the dirty water52. Whereas
valid information from Wahanda port services confirm that “companies did this work before”53.
RESPONDENT did not try to reach out to all the companies who performed Hull Cleaning at
Wahanda54. In addition, RESPONDENT was aware that cleaning arrangements prior to re-delivery
was possible at North Titan, but chose to re-deliver the Vessel dirty55.
58. No other indications of any interposing obstacles that would make arranging Hull Cleaning difficult
to overcome prior to re-delivery are present in this case. In fact, RESPONDENT barely tried to arrange
Hull Cleaning prior to re-delivery. Therefore, it shall not be considered as prevented from arranging
Hull Cleaning at Wahanda. Consequently, RESPONDENT was not eligible to the option of offering a
lump sum payment in full and final settlement, according to Clause 83 (d).
B. The quotation of North Titan does not relieve RESPONDENT from its obligation to
perform Hull Cleaning
49 Miramar Maritime Corp v Holborn Oil, [1984] A.C. 676; Adamastos Shipping v Anglo Saxon Petroleum, [1959] AC
133. 50 Comptoir Commercial Anversois v Power Son and Co, [1920] 1 K.B. 868. 51 The Concadoro, [1916] 2 A.C. 199. 52 IMLAM Problem Scenario V2, Email 8 June 2016, from Brokers to Managers, p.29. 53 Ibid., First email 25 May 2016, from Wahanda Port Services to Omega Chartering, p.26. 54 Ibid., Second email 25 May 2016, from Wahanda Port Services to Omega Chartering, p.26. 55 Ibid., Email 30 June 2016, from Brokers to RESPONDENT, p.42.
MEMORANDUM FOR CLAIMANT
14
1. CLAIMANT did not reject RESPONDENT’s offer to have the Vessel’s hull cleaned
at North Titan
59. Clause 83 of the Charterparty indicates that cleaning should take place on RESPONDENT expenses
prior to re-delivery56.
60. In the Walford v Miles57 case, the House of Lords held that an agreement to negotiate in good faith
was not generally enforceable under English law. Recently this approach was softened by the Court
of Appeal in the Petromec v Petroleo58 judgement. The tribunal would have been inclined to find the
obligation enforceable, if the three objections usually raised about enforceability were found to be
true: (i) the possibility to establish clearly what the additional costs would be; (ii) the Tribunal should
examine if the withdraw from negotiations was due to bad faith, based on the fact, (iii) the possibility
to establish what loss would have been. The same inclination is reflected in the Cable & Wireless59
case. In fact, a party would be in breach of its obligation only if it refused to participate in the
prescribed procedure.
61. In this case, RESPONDENT offered a lump sum for the Hull Cleaning in full and final settlement.
However, the amount of lump sum was based on a quotation from Titan Shipbuilder60. RESPONDENT
refused to arrange inspection after CLAIMANT’s several requests even that “from evidence available
as to the extent of fouling both above and below water line”61. CLAIMANT also rejected the lump
sum amount because the cost of cleaning varies according to the extent of fouling62. In the absence
of an inspection the cost would be predictable.
62. By an email dated 26 June 2016, CLAIMANT notified to RESPONDENT the Vessel’s next voyage “to
load East Coast range” 63. One day later, RESPONDENT informed CLAIMANT that Hull Cleaning
56 Ibid., Charterparty, Clause 83(d), p.16. 57 Walford v Miles, [1992] 2 A.C. 128. 58 Petromec Inc Petro-Deep Societa Armamento Navi Appoggio Spa v Petroleo Brasileiro SA, [2006] 1 Lloyd’s Rep. 121. 59 Cable & Wireless plc v IBM United Kingdom Ltd, [2002] EWHC 2059. 60 IMLAM Problem Scenario V2, Email 22 June 2016, from RESPONDENT to Titan Shipbuilders, p.36; Email 27 June
2016, from Brokers to Brokers, p.39; In addition, Quotation from Titan Shipbuilders, p.37. 61 Ibid., Email 29 June 2016, from Brokers to RESPONDENT, p.43. 62 Ibid., Email 9 June 2016, from Brokers to Brokers, p.28. 63 Ibid., Email 27 June 2016, from Brokers to RESPONDENT, p.39.
MEMORANDUM FOR CLAIMANT
15
was possible at North Titan and CLAIMANT should arrange it there. Then, RESPONDENT offered a
lump sum for the Hull Cleaning in full and final settlement based on a quotation from Titan
Shipbuilders64. It is noteworthy that the quotation is based only on the Vessel’s description and does
not take in consideration the extent of the fouling65.
63. For that very reason, RESPONDENT cannot order CLAIMANT to perform Hull Cleaning at North
Titan while the Vessel is still under RESPONDENT’s hire. RESPONDENT promised “if Owners are
sailing north we can arrange cleaning at North Titan port”66. Therefore, it cannot create any new
obligations on CLAIMANT under the existent Charterparty.
64. In conclusion CLAIMANT did not reject the suggestion of cleaning the Vessel at North Titan but only
rejected the lump sum amount offer “Chtrs offer is not generous”67. In overall, CLAIMANT was not
entitled to the RESPONDENT offer to have the Vessel’s hull cleaned at North Titan port.
2. The quotation of North Titan is not accurate
65. The two quotations, from South Island Port Agency and Titan Shipbuilders, concern Vessel bottom
cleaning and the polishing of the propellers. The estimate quotation by Titan Shipbuilders at North
Titan port indicates the cost of USD25,000.00 for the realization of the work quoted above but only
in working days. Other fees are added for pilotage, tuggage and agency fees, all at the cost of
USD8,000.00.
66. Considering the Master’s note about the Vessel being heavily fouled, Titan Shipbuilders should have
been invited to clarify the job related to cleaning of bootoping above water level 4m68. It should be
noted that the Vessel’s fouling condition was severally aggravated as time passed by69.
67. The quotation delivered from South Island port Agency, indicates the cost of USD41,000.00. This
amount was meant to cover the realization of a similar work as Titan Shipbuilders would provide,
64 Ibid., Email 27 June 2016, from Brokers to Brokers, p.39. 65 Ibid., Email 22 June 2016, from RESPONDENT to Titan Shipbuilders, p.36. 66 Ibid., Email 26 June 2016, from Brokers to RESPONDENT, p.34; Email 23 June 2016, from Titan Shipbuilders to
RESPONDENT, p.35. 67 Ibid. 68 IMLAM Problem Scenario V2, Titan Shipbuilders Quotation, p.37. 69 Ibid., Email 26 June 2016, from Brokers to RESPONDENT, p.34.
MEMORANDUM FOR CLAIMANT
16
together with the cleaning of the raised portion of the hull which is 4 meters above the water level of
the line of fouling along the entire length of the ship on both sides. In addition, the South Island port
Agency will carry the work during the weekend too70.
68. In fact, the invoice provided by South Island port estimated USD30,000.00 as the cost of defouling
the Vessel at first. But later, it was joined by a statement of the Vessel disbursement adding
USD11,000.00 to the original cost for all the extrawork the defouling required. The Titan Shipbuilders
based their quotation on abstract descriptions of the Vessel’s ignoring the situation of the Vessel and
how bad the fouling was. The estimation of the work required for defouling is not accurate71.
C. RESPONDENT is liable for all direct and indirect costs as a result of the Vessel’s
defouling after late re-delivery
69. Clause 1(d), paragraph 2, of the NYPE 2015 form, indicates that Charterers shall indemnify the
Owners “for any loss, damage, costs, expenses or loss of time, including any underwater inspection
required by class, caused as a consequence of the Vessel lying aground at the Charterers’ request”.
In addition, clause 4(a) of the same text states that “the vessel shall be re-delivered to the Owners in
like good orders and condition ...”.
1. RESPONDENT was aware of the consequences of re-delivering the Vessel dirty
70. In the Heron II72 case, it was set that under a charterparty the parties have the opportunity to anticipate
certain breaches and can estimate in advance the damage that they will cause. However, this advance
planning is not possible under some circumstances such as negligence.
71. The importance of certainty and predictability in commercial transactions is without any doubt
crucial73. Lord Bingham set, in the Golden Victory74 case, that if the party breaching the contract was
aware of the consequences, she would have promptly honoured her obligation to pay damages.
70 Ibid., Invoice by South Island Port Agency, p.50; See also, Statement of Vessel Disbursemen, p.51. 71 Ibid., Invoice by South Island Port Agency, p.50. 72 Koufos v C. Czarnikow, Ltd (the “Heron II”), [1969] 1 AC 350. 73 I. MacNeil, Uncertainty in commercial law, pp. 68-99. 74 Golden Strait Corp v Nippon Yusen Kaisha (the “Golden Victory”), [2005] 2 Lloyd’s Rep. 23.
MEMORANDUM FOR CLAIMANT
17
72. Hull fouling is a well-known problem affecting vessels trading. The build-up of fouling on hulls
induced much larger propulsion costs as a result of the loss of speed and the increase of consumption
in fuel. In this case, at the time the charter was concluded, CLAIMANT and RESPONDENT set their
minds to solve this issue if it may happen in the future by Clause 83 of Charterparty.
73. In an email dated 8 June 2016, RESPONDENT sent pictures to CLAIMANT expressing the aggravated
state of the fouling75. In addition, on 26 June 2016, Master reported that the Vessel had been heavily
fouled after her prolonged stay at Wahanda and attached pictures to show the aggravated extent of
the fouling76. Based on those various exchanges, it is safe to say RESPONDENT was aware that
prolonged stay at Wahanda not only caused the fouling but also made it worse as time passed by.
74. CLAIMANT was aware, under the Charterparty, of the importance of certainty and predictability in
commercial transactions. Hence, it reminded RESPONDENT that arranging inspections was crucial
since the cost of cleaning may vary depending on the place and the extent of the fouling77. In fact, the
breach of the delivery obligation on time contributed to the aggravation of the fouling affecting the
ship’s performance during the voyage to South Island.
2. RESPONDENT cannot limit their liability for the cleaning cost to USD33,000
75. The purpose of allocating damages for a breach of contract is to place the innocent party in position
it would have been in had the contract been performed with respect to damages78. I don’t think that
your title is correct. The limitation of liability and full compensation for the damage suffered due to
the non-performance of the contract are two different things.
76. On 1st March 2016, CLAIMANT took delivery of the Vessel which was then delivered new to
RESPONDENT79. On 18 June 2016, CLAIMANT was informed about RESPONDENT intention to re-
deliver the Vessel dirty80.
75 IMLAM Problem Scenario V2, Email 8 June 2016, p.29. 76 IMLAM Problem Scenario V2, Email 26 June 2016, p.34. 77 IMLAM Problem Scenario V2, Email 9 June 2016, p.28. 78 Golden Strait Corp v Nippon Yusen Kaisha (the “Golden Victory”), [2005] 2 Lloyd’s Rep. 23. 79 IMLAM Problem Scenario V2, p.1. 80 Ibid., Email 18 June 2016, p.34.
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18
77. If RESPONDENT had arranged cleaning prior to re-delivery, CLAIMANT would not have had to incur
the direct (USD41,000.00 for cleaning at South Island) and indirect costs (USD55,567.42 for voyage
to South Island) of the defouling. CLAIMANT is entitled to all damages as a result of RESPONDENT
re-delivering the Vessel’s dirty.
D. RESPONDENT was never relieved from its obligation to perform Hull Cleaning
78. It may appear from the Parties exchanges that a new agreement concerning Hull Cleaning issue was
being negotiated, however it relied on an inspection obligation.
1. Evidence of the Parties’ intention or willingness to make a new binding contract
upon Hull Cleaning
79. In Lidgett v Williams81 case was stated a charter does not have to be made on a formal basis. It can
be made through exchanges between the Parties. If proven, it is considered to binding. In fact, in
practice, it is common for parties to conclude a fixture, by an exchange of emails, as confirmed by
the Golden Ocean v Salgaocar Mining82 case.
80. In this case, as highlighted by the email dated 9 June 2016, RESPONDENT implied a new arrangement
“as per Owners should arrange underwater cleaning, Charterers will pay the cost against original
invoice” 83.
81. By an email dated the same day, CLAIMANT accepted the RESPONDENT’s new arrangement under
the condition of RESPONDENT arranging an inspection: “Owners will arrange vessel’s bottom
cleaning at convenient port…. however there has been no inspection in order to find the extent of the
fouling”84. Further, on 18 July 2016, CLAIMANT received the notice: “...Chrtrs will re-deliver the
vessel dirty” 85.
82. Upon the consideration of an objective appraisal of the words communicated between RESPONDENT
and CLAIMANT, it shall be noted that they intended to introduce an additional requirement that
81 Lidgett v Williams, [1845] 14 L.J. Ch. 459; Storer v Manchester City Council, [1974] 1 W.L.R. 82 Golden Ocean v Salgaocar Mining, [2012] 1 Lloyd’s Rep. (C.A.) 542. 83 IMLAM Problem Scenario V2, Email 9 June 2016, p.28. 84 Ibid., Email 9 June 2016, p.28. 85 Ibid., Email 18 July 2016, p.34.
MEMORANDUM FOR CLAIMANT
19
should be born by RESPONDENT to hold an inspection of the fouling of the Vessel before the
Charterparty expires.
2. CLAIMANT withdrew their acceptance upon new agreement as respondent did not
arrange inspection
83. As stated in Pagnan v. Feed Products86case, in order to conclude that a contract has been made
“… the Court must consider all exchanges in context and not seize upon one episode”. The general
rule is that parties are not bound by an agreement until they have agreed all the terms that they regard
as essential to the contract. As Lord Blackburn confirms, in Rossiter v Miller87 case: “If some
particulars essential to the agreement still remain to be settled afterwards, there is no contract”.
Furthermore, Megaw J. held that an agreement to purchase a yacht “subject to a satisfactory survey”
was not intended to be legally binding, since those words indicated that the purchaser was not
prepared to commit himself to a deal until he had seen a survey report88.
84. Consequently, CLAIMANT withdrew its acceptance to the new arrangement concerning Hull
Cleaning because RESPONDENT did not arrange inspection prior to re-delivery.
IV. CLAIMANT IS ENTITLED TO CLAIM DAMAGES FOR LATE RE-DELIVERY AND
LOSS OF HIRE
85. The Vessel was delivered into the time Charterparty on 29 March 2016, for a period of about 50-55
days. That being so, the deadline for the re-delivery has started to flow from that day. RESPONDENT
had to re-deliver the Vessel prior to the expiry of the maximum period of the Charterparty, otherwise
before 22 May 2016. However, the Vessel was re-delivered on 30 June 2016, namely 39 days later.
Because of that, CLAIMANT lost its Next Fixture.
86 Pagnan SpA v Feed Products, [1987] 2 Lloyd’s Rep. 601; See also, Asty Maritime Co Ltd and Panagiotis Stravelakis v
Rocco Giuseppe & Figli, S.N.C. And Others (the “Astyanax”), [1985] 2 Lloyd’s Rep. 109; Hussey v Horne-Payne HL,
[1879] 4 App Cas 311. 87 Rossiter v Miller, [1873] 3 App Cas 1124. 88 Astra Trust Ltd v Adams and Williams, [1969] 1 Lloyd’s Rep. 81; See also, Habton Farms v Nimmo, [2004] QB 1.
MEMORANDUM FOR CLAIMANT
20
86. Since RESPONDENT breached the Charterparty (A.), CLAIMANT is entitled to claim loss of hire
because of the late re-delivery (B.).
A. RESPONDENT failed to comply with its obligation of re-delivery under the Charterparty
1. RESPONDENT failed to re-deliver the Vessel prior to the expiry of the maximum
period of the Charterparty
87. A time charter trip, where the charter period is defined by a trip within a geographical range, is
qualified as a time charterparty. On this wise, in the Wehr Trave89 case, the Commercial Court
considered the meaning of a time charter trip90 and concluded: “time charters could be divided into
term time charters (where the charter period was agreed in advance) and trip time charters (where the
charter period was defined by a trip within a geographical range). In both cases, the defining
characteristic of the charter was that the vessel was under the directions and orders of the charterer as
regards her employment for the charter period”. The specific terms agreed upon by the parties shall
be taken into consideration as a reference to apply such qualification91.
88. In the case at hand, the Charterparty concluded by the Parties meets all the conditions in order to be
qualified as a time charterparty. This agreement was a common hybrid, with attributes of both time
and voyage charters: (i) Parties entered into a “time charter trip” 92, (ii) the contract was for a duration
of 50-55 days, (iii) the daily rate of hire was USD750093, (iv) the charter period was defined by a trip
within a geographical range94.
89. As Parties were bound by a time Charterparty, starting 29 March 2016 the Vessel was under the
directions and orders of the RESPONDENT as regards her employment for the charter period. Hire
had to be paid starting from the same day. Thus, CLAIMANT had no liability for its Vessel for the
whole duration of the Charterparty.
89 SBT Star Bulk & Tankers (Germany) GmbH & Co KG v Cosmotrade SA (the “Wehr Trave”), [2016] EWHC 583 (Comm). 90 See also, Martrade Shipping & Transport GmbH v United Entreprises Corporation (the “Wisdom C”), [2014] EWHC
1884 (Comm); Ocean Tramp Tankers Corporation v V/O Sovfracht (the “Eugenia”), [1964] 2 QB 226. 91 Martrade Shipping & Transport GmbH v United Entreprises Corporation (the “Wisdom C”), [2014] EWHC 1884
(Comm). 92 IMLAM Problem Scenario V2, Charterparty, p.3. 93 Id., p.4. 94 Id., p.3-4.
MEMORANDUM FOR CLAIMANT
21
90. Further, the ship shall be re-delivered at the end of the charter and shall be put on the disposal of the
owners95. In accordance with the NYPE 2015 Form, the charterers have three duties in relation to the
re-delivery: (i) the ship shall be re-delivered at the place stipulated in the charter, (ii) charterers must
serve notice of the expected time and port of re-delivery, (iii) they must procure that the ship is re-
delivered in the same good order and condition as she was in at delivery96.
91. As regards the third duty, under Lines 56 and 57 of the NYPE 2015 Form and Clause 31 of the
Charterparty, RESPONDENT had to send a re-delivery notice to CLAIMANT, in a reasonable time.
The purpose of a notice of re-delivery is to enable the owner to have enough time to fix the ship for
her next employment97. It is considered that failure to comply with this obligation constitutes a breach
of charter on the date that the ship is re-delivered98. Any re-delivery within a shorter time frame than
the defined period will give rise to damages to owners99. The damages shall be measured by putting
owners in the position in which they would have been in, if notice had been properly tendered100.
92. The time charterer agrees to pay hire for every minute that the ship is at the charterer’s disposal from
her delivery until re-delivery. The hire is usually stipulated at a daily rate and payable in advance101.
It is of great importance to the owner in financing the operation of its ship to receive the hire on time
and for the right amount. The charterer is obliged to pay hire continuously unless it can show that the
wording of the off-hire clause applies to the event which has occurred102.
93. In the present case, RESPONDENT failed to comply with all its obligations in relation to the re-
delivery. Even if the Vessel was re-delivered to the discharge port provided by the Charterparty
(Wahanda) and apparently in the same conditions as she was in at delivery, RESPONDENT re-
delivered it on 28 June 2018103, that is to say 39 days later than the final deadline. On top of that,
95 Italian State Railways v Mavrogordatos, [1919] 2 K.B. 305. 96 NYPE 2015 Form, Clause 2, Lines 56-57. 97 Delaware North Marine experience pty ltd v The ship “eye-spy”, [2017] FCA 708. 98 T. Coghlin, A. Baker, J. Kenny, J. Kimball, Time Charters, p.269-270. 99 Hyundai Merchant Marine Co Ltd v Karander Maritime Inc (the “Niizuru”), [1996] 2 Lloyd’s Rep. 66; IMT Shipping
and Chartering GmbH v Changsung Shipping Company Limited (the “Zenovia”), [2009] EWHC 739 (Comm). 100 Maestro Bulk Ltd v Cosco Bulk Carrier Ltd (the “Great Creation”), [2014] EWHC 3978 (Comm). 101 S. Baughen, Shipping Law, p.189. 102 S. Kendall-Marsden, J. Green, A review of off-hire clauses, p.1; Stewart v Van Ommeren, [1918] 2 K.B. 560. 103 IMLAM Problem Scenario V2, p.44.
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RESPONDENT failed to send a re-delivery notice to CLAIMANT, in a reasonable time. He sent a re-
delivery notice on 29 June 2016, one day before the effective date of re-delivery. Or, this is not a
reasonable and good enough period for CLAIMANT to fix the Vessel for her next employment.
94. Furthermore, even in case of late re-delivery, the hire is due for the whole period of the trip, USD7500
daily inclot. This means that RESPONDENT was also required to pay hire between 7 May and 30
June, the actual date of re-delivery. That’s the equivalent of USD412,500. Since RESPONDENT has
already paid this amount, the Arbitral Tribunal must reject his claim for restitution of that sum.
2. Alternatively, RESPONDENT cannot trigger the off-hire clause
95. The right to put a ship off-hire is strictly contractual. The onus is on the charterer to bring itself within
the off-hire clause in order to make a legitimate deduction from hire104. In order to trigger the NYPE
2015 Form off-hire clause105, three necessary conditions must first be met: (i) the full working of the
ship has been prevented, (ii) caused by an off-hire event, (iii) which led to a loss of time.
96. It was submitted that crew members were carrying the Ebola virus and because of that the Vessel was
quarantined and the full working of the ship has been prevented. The first question to be answered is
whether Ebola constitutes an off-hire event. The Courts have narrowly interpreted the meaning of the
phrase “deficiency of men”106.
97. Even if RESPONDENT raised the assumption of a force majeure event, under English law, such
event “…constitutes a legal or physical restraint on the performance of the contract (whether or not
occurring through human intervention, although it must not be caused by the act, negligence, omission
or default of the contracting party) which is both unforeseen and irresistible”107. Thereby, force
majeure clauses provide for cancellation of the contract in the event that performance is prevented by
circumstances comprehended within the term force majeure108. They can contain a list of excusing
104 S. Kendall-Marsden, J. Green, A review of off-hire clauses, p.1. 105 NYPE 2015 Form, Clause 17. 106 NYPE 2015 Form, Clause 17; See also, Royal Greek Government v Minister of Transport (the “Ilissos”), [1948] 82
Lloyd’s Rep. 196. 107 E. McKendrick, Force Majeure and frustration of contract, p.8. 108 Hackney Borough Council v Doré, [1922] 1 K.B. 431; Matsoukis v Priestman & Co, [1915] 1 K.B. 681.
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23
events, provisions for notices to be issued to the promise and detailing the consequences of the force
majeure event109.
98. If the relevant event, preventing the performance of the contract, does not fall within the scope of the
force majeure clause, it will constitute a breach of contract110. The burden of proof is upon the
charterers to show that such an event occurred and that it falls within the clause.
99. In the case, RESPONDENT argues that few crew members were carrying the Ebola Virus and
consequently the Port Authority did not allow Vessel to berth. Nevertheless, the Parties only provided
in their Charterparty a Zika Virus Protection Clause111. They never conceded that Clause 112 could
be extended to Ebola cases or to other possible diseases112. In addition, RESPONDENT failed to
provide any certificate from Port Authority that could confirm reasonable Ebola suspicions. Thus, in
the absence of a force majeure clause providing for Ebola, RESPONDENT is prevented from relying
on this argument.
100. In any case, Ebola appeared because of the RESPONDENT’s negligence to diligently check his crew.
This event which was triggered by RESPONDENT’s intervention cannot be constitutive of a force
majeure event. Hence, the force majeure exception cannot prevent RESPONDENT from any liability
regarding the late re-delivery and must therefore be rejected.
101. As for the hypothesis of a possible frustration event, in the Davis Contractors113 case, lord Radcliffe
concurred with the result that: “… frustration occurs whenever the law recognises that, without the
default of either party, a contractual obligation has become incapable of being performed because the
circumstance in which performance is called for would render it a thing radically different from that
which was undertaken by the contract”. Whether the delay is sufficient to frustrate the contract
depends on the time when the event that gave rise to the delay occurred114.
109 C. M. Schmitthoff, J. Adam, The Law and Practice of International Trade, p.199. 110 A. Mandaraka-Sheppard, Modern Maritime Law, p.261. 111 IMLAM Problem Scenario V2, Charterparty, Clause 112, p.20. 112 Chartbrook Ltd v Persimmon Homes Ltd, [2009] UKHL 38, 1 AC 1101; Arnold v Britton, [2015] UKSC 36; Reardon
Smith Line Ltd v Yngvar Hansen-Tangen and Sanko SS & Co Ltd (the “Diana Prosperity”), [1976] 1 WLR 989. 113 Davis Contractors Ltd v Fareham Urban District Council, [1956] UKHL 3; See also, National Carriers Ltd v Panalpina
(Northern) Ltd, [1981] A.C. 675. 114 Bank Line Ltd v Arthur Capel and Co, [1919] AC 435.
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102. To retain the argument based on frustration, several conditions have been listed in The Super Servant
Two115case: (i) a significant change in circumstances, (ii) very narrow limits and ought not to be
extended, (iii) frustration should not be due to the act or election of the party seeking to rely on it.
103. In this case, the delay of the re-delivery was due to RESPONDENT’s fault. Though the newspaper
West Coast Daily Echo published two articles on 18 and on 21 April 2016 regarding the outbreak of
Ebola virus in the City of West Coast, RESPONDENT has never raised any claims on health of the
crew members. Anyhow, the Vessel was delivered to RESPONDENT on March 29, before the
outbreak of Ebola. It decided itself to carry out the loading in almost a month and to depart to
Wahanda on 20 April 2016. Thus, the late re-delivery is due to the RESPONDENT’s acts. In addition,
the delay of 39 days would not be considered as a significant change in circumstances. Therefore,
frustration cannot be accepted in this case.
104. Alternatively, even if the Tribunal would accept the qualification of frustration, maritime practice
shall be taken into consideration. There is a risk that a vessel could be placed off-hire if it is
quarantined prior to being allowed entry to a port. In this case, the Vessel was quarantined after the
entry to the discharge port. Therefore, she could not be placed off-hire.
B. CLAIMANT is entitled to claim loss of hire
105. The party who has sustained a damage is entitled to be put, as far as practicable, in the same condition
it would have been in had the injury not been suffered116. Hence, the suffering party is entitled to be
placed in the expected position the correct performance of the contract would lead to117. English case
law specified that for the purposes of damage evaluation the loss taken into consideration shall be the
one a reasonable man would anticipate as a result of a wrongful act118.
106. A time charterer will only be able to fix firm employment for a vessel once acknowledging when the
vessel will be at his disposal. Similarly, the owner of a Vessel will only be able to fix a follow-on
115 J. Lauritzen A.S. v Wijsmuller B.V. (the “Super Servant Two”), [1990] 1 Lloyd’s Rep. 1. 116 The Clarence, [1850] 3 W Rob 283. 117 Golden Strait Corp v Nippon Yusen Kaisha (the “Golden Victory”), [2005] 2 Lloyd’s Rep 23. 118 Morrison Steamship Co Ltd v Greystoke Castle, [1947] AC 265.
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charter with a minimum of downtime between fixtures once acknowledging when his ship will be
returned119.
107. In the case at hand, CLAIMANT chartered the Vessel, for 4 years, to Champion Chartering Corp with
a laycan of 22-28 June 2016. The daily rate of hire was USD10,500. CLAIMANT lost the Next fixture
because of the late re-delivery of the Vessel, on 30 June 2016. Therefore, RESPONDENT must repair
the damage and CLAIMANT is entitled to claim loss of hire. The value of the damage for loss of hire
is estimated at USD15,330,000.00 (calculated as 4 years at USD10,500 per day).
PRAYER FOR RELIEF
For the reasons set out above, the CLAIMANT requests the Tribunal to:
(I) DECLARE that the Tribunal does not have jurisdiction to hear counterclaims under the Bill
of Lading;
(II) DECLARE that RESPONDENT is not liable for cargo damages;
(III) AWARD CLAIMANT damages for Hull Cleaning in the amount of USD96,567.42;
(IV) AWARD CLAIMANT damages for late re-delivery in the amount of USD15,330,000.00 (loss
of hire under the Next Fixture);
(V) AWARD CLAIMANT interests as particularised above;
(VI) ORDER RESPONDENT to pay arbitration costs and other expenses incurred due to these
arbitration proceedings.
Dated this 29th day of April 2019
Counsel for CLAIMANT
PANTHER SHIPPING INC
119 IMT Shipping and Chartering GmbH v Changsung Shipping Company Limited (the “Zenovia”), [2009] EWHC 739
(Comm).