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19th Annual International Maritime Law Arbitration Moot
In the matter of an arbitration under the LMAA Arbitration Rules
SINGAPORE MANAGEMENT UNIVERSITY
MEMORANDUM FOR
RESPONDENT
CLAIMANT RESPONDENT
Cerulean Beans & Aromas Ltd
v
Dynamic Shipping LLC
945 Moccasin Road 23 Fuchsia Crescent
Cerulean Cerulean
TEAM 22
COUNSEL
Berwin CHUA | FOUNG Han Peow | Isaiah ZHAO | Sean LEE | Terence YEO | Theodore TOH
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TABLE OF CONTENTS
LIST OF AUTHORITIES ....................................................................................................... 4
I. Articles and Books ............................................................................................................ 4
II. Cases ................................................................................................................................... 4
III. Legislation.......................................................................................................................... 5
STATEMENT OF FACTS ...................................................................................................... 7
PRELIMINARY MATTERS .................................................................................................. 9
I. The Tribunal has no jurisdiction to determine the Claimant’s claim for damages ... 9
A. The damages sought by the Claimant falls within the ambit of “technical matters”
9
B. The opinion of an independent Master Mariner has not been sought ................... 10
SUBMISSIONS ON THE ISSUE OF MARITIME LIEN ................................................. 11
SUBMISSIONS ON THE CLAIMANT’S CLAIMS .......................................................... 12
I. The Respondent is not liable for the Claimant’s claims as the Force Majeure
(“FM”) clause applies ..................................................................................................... 12
A. The Solar Flares were an “act of God” within the meaning of the FM clause ..... 12
B. The Storm was an “unforeseen weather event” within the meaning of the FM
clause ......................................................................................................................... 13
C. The Respondent has complied with the procedural requirements of the FM clause
13
II. The Claimant is not entitled to claim the value of the damaged goods and the cost of
replacement ..................................................................................................................... 14
III. The Respondent's liability is limited by the Hague-Visby Rules ................................ 16
A. Liability can be limited because the value and nature of the goods were not
appropriately declared .............................................................................................. 16
B. An unreasonable deviation does not preclude the limitation of liability ................ 16
C. As the Hague-Visby Rules were incorporated into the Charterparty, the
Respondent’s liability is limited to a sum less than the claims ............................... 17
D. Even if the Hague Rules apply, the Respondent’s liability is limited to a sum less
than the claims .......................................................................................................... 17
SUBMISSIONS ON THE RESPONDENT’S COUNTERCLAIMS ................................. 19
I. The Claimant is liable for freight of the delivered cargo ............................................ 19
A. The Charterparty stipulates that 90% of freight is payable within two banking days
of the delivery of cargo ............................................................................................. 19
B. Freight is payable regardless if cargo was damaged ............................................... 19
C. Freight is an exception to the general rule of set-off .............................................. 20
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II. The Claimant is liable for the agency fees at Spectre .................................................. 21
A. The agency fees were reasonably incurred .............................................................. 21
B. The Claimant could not have nominated its agents at Spectre ............................... 21
III. The Claimant is liable for the agency fees at Dillamond ............................................. 22
IV. The Claimant is liable for the cost of repairs to the Ship ............................................ 22
A. The Claimant nominated an unsafe port ................................................................. 23
B. The Respondent was not negligent either in anchoring the Ship or in the way it
anchored .................................................................................................................... 24
C. The damage was not caused by the Respondent’s negligence when cutting the
anchor........................................................................................................................ 24
V. The Claimant is liable for demurrage ........................................................................... 25
A. Laytime commenced when the vessel arrived at waiting area ................................ 25
B. The exceptions to laytime as stipulated in Clause 8(e) do not apply....................... 26
C. Calculation of laytime and demurrage .................................................................... 27
VI. The Claimant is liable for the use of electronic access systems at Dillamond ........... 27
PRAYER FOR RELIEF........................................................................................................ 28
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LIST OF AUTHORITIES
I. Articles and Books
G.H. Treitel, Frustration and Force Majeure (Sweet & Maxwell, 3rd Ed, 2014)
Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014)
John Schofield, Laytime and Demurrage (6th Ed., 2011)
Sir Bernard Eder, Howard Bennett, Steven Berry, David Foxton and Christopher F Smith,
Scrutton on Charterparties (22nd Edition, Sweet & Maxwell, 2011)
II. Cases
Aldebaran Compania Maritima SA v Aussenhandel AG (The Darrah) [1977] AC 157
Anglia Television v Reed [1972] 1 Q.B. 60
Bim Kemi AB v Blackburn Chemicals [2001] 2 Lloyd’s Rep. 93
Blanchet v Powell’s Llantivit Collieries [1874] L.R. 9 Ex. 74
Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (The Nadezhda Krupskaya) [1989] 1
Lloyd's Rep. 518
Bunge SA v Kyla Shipping Co. Ltd [2013] EWCA Civ 734 at [70];
Daewoo Heavy Industries v Klipriver Shipping (The Kapitan Petko Voivoda) [2003] 2 Lloyd’s
Rep. 1
Elena Shipping v Aidenfield Ltd [1986] 1 Lloyd's Rep. 425
Freedom Maritime Corporation v International Bulk Carriers SA and another (The Khian
Captain) [1985] 2 Lloyd’s Rep 212
ISS Machinery Services v Aeolian Shipping [2001] 2 Lloyd’s Rep. 641
Kodros Shipping Inc. v Empresa Cubana de Fletes (No. 2) [1983] 1 A.C. 736
Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc [2009] EWCA Civ
531
Merchant Shipping v Armitage [1873] L.R. 9 Q.B. 99
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Nugent v Smith [1876] 1 C.P.D. 421
Oldendorff (EL) & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1973] 2 Lloyd’s
Rep 285
Pust v Dowie [1864] 5 B. & S. 20
Rankin v The Ship, Eliza Fisher [1895] 4 Ex CR 461
Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] 1 Lloyd’s Rep.
12
Ships “Hako Endeavour”, “Hako Excel”, “Hako Esteem” and “Hako Fortress” v
Programmed Total Marine Services Pty Ltd [2013] FCAFC 21
The Berostar [1970] 2 Lloyd’s Rep 403
The Elena [1986] 1 Lloyd’s Rep 425
The Mogileff [1921] P 236
The Owners of the Norway v Ashburner (The Norway) (No. 2) (1865) 3 Moo. P.C. 254
The Rosa S [1989] Q.B. 419
The Superior Pescadores Syemgas Fzco and others v Superior Pescadores SA [2016] EWCA
Civ 101
The Thekos SMA 2405 [1987]
The Vasilia [1972] 1 Lloyd’s Rep 51
The World Star [1987] 1 Lloyd’s Rep 452
III. Legislation
Carriage of Goods by Sea Act 1991 (Act No. 160/1991) (Australia)
Coinage Act (Cap 10, 1870)
Coinage Act (Cap 24, 1971)
International Convention for the Unification of Certain Rules of Law relating to Bills of Lading
(“The Hague Rules”) (1924)
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Protocol to Amend the International Convention for the Unification of Certain Rules of Law
Relating to Bills of Lading (“The Hague-Visby Rules”) (1968)
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STATEMENT OF FACTS
1. On 22 July 2017, Cerulean Beans and Aromas Ltd (the “Claimant”) entered into a voyage
charterparty (the “Charterparty”) with Dynamic Shipping LLC (the “Respondent”),
owners of the Madam Dragonfly (“the Ship”). The cargo to be shipped was 1000 bags of
high-grade coffee each weighing 70kg, placed in four large containers. It was agreed that
the cargo is to be discharged by 7pm on Friday, 28 July 2017.
2. On or around 22 July 2017, the Claimant paid the amount of US$100,000 on account of
wages which would become payable to the crew of the Ship following the voyage into a
special Bank account of the Respondent established for that purpose. The Respondent has
not paid the crew of the Madam Dragonfly wages due for the voyage and has not repaid
the US$100,000 to the Claimant.
3. On 26 July 2017, the Respondent informed the Claimant that the Ship’s communication
and satellite systems were knocked out by solar flares (“Solar Flares”) for 17 hours. The
Solar Flare was reported to be an “unprecedented international emergency” which
knocked out radio and satellite communications systems “around the world”. During the
period where its systems were down, the Ship made a detour to the port of Spectre
(“Spectre”) as it only had the charts to Spectre.
4. The Ship arrived at the waiting area outside Dillamond at 7am on 29 July 2017. The Ship
could not enter the port as a “once in a lifetime” storm (“Storm”) caused delays in the port.
The Ship berthed in Dillamond at approximately 5pm on 29 July 2017. The cargo was then
discharged and placed in a warehouse at Dillamond at 12.02am on 30 July 2017. The
Claimant took delivery of the cargo at 1.17pm on 31 July 2017.
5. Three of the containers were completely water damaged. The value of the damaged cargo
was US$15,750,000 (“the Damaged Cargo Claim”).
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6. On 1 August 2017, the Claimant entered into a settlement agreement with Coffees of the
World Ltd, whom the former was contractually obliged to supply coffee. The Claimant
and Coffees of the World agreed that the Claimant would source for replacement coffee at
a price of US$9,450,000 (“the Replacement Coffee Payment”) in addition to a settlement
payment of US$5,000,000 (“the Settlement Payment”).
7. The Claimant served notices of arbitration to the Respondent on 11 August 2017 in
accordance with Clause 27 of the Charterparty. The Respondent’s counter-claims include
freight, agency fees at Spectre and Dillamond, cost of repairs to the Ship, demurrage and
use of electronic access systems at Dillamond.
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PRELIMINARY MATTERS
I. The Tribunal has no jurisdiction to determine the Claimant’s claim for damages
8. The Tribunal has no jurisdiction to determine the Claimant’s claim for damages as the
claims arise from “technical matters” which the Charterparty provides should be
determined by an “independent Master Mariner”.1 Clause 27(e) states that arbitral
proceedings cannot be commenced unless disputes relating to technical matters have been
referred to expert determination by an independent Master Mariner.2 The Respondent
submits that (A) the damages sought by the Claimant falls under the ambit of “technical
matters” as defined in Clause 27(g) and (B) the opinion of an independent Master Mariner
has not been sought.
A. The damages sought by the Claimant falls within the ambit of “technical matters”
9. The claim for damages falls within the definition of “technical matters” under Clause
27(g).3 Clause 27(g) states that “technical matters” refer to matters surrounding technical
aspects of the performance of the Charterparty, such as the vessel's route, storage
conditions and matters which can reasonably be considered within the expert technical
knowledge of a Master Mariner.4 Here, the dispute arose over a breach in the Charterparty,
triggered by the route taken by the Ship and its seaworthiness. The route taken by the Ship
falls squarely within the ambit of the clause and seaworthiness is a technical matter which
can reasonably be considered within the expert technical knowledge of a Master Mariner.
Hence, the clause applies to the damages claimed sought by the Claimant, and the Claimant
cannot validly commence arbitration until the dispute on technical matters underlying the
damages has been determined by an independent Master Mariner.
1 The Charterparty, Cl 27(d). 2 The Charterparty, Cl 27(e). 3 The Charterparty, Cl 27(g). 4 The Charterparty, Cl 27(g).
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B. The opinion of an independent Master Mariner has not been sought
10. Clause 27(d) requires disputes on “technical matters” to be referred to expert
determination by an independent Master Mariner.5 As the damages claimed are being
disputed on technical matters, the Claimant’s claim for damages falls within Clause 27(d).
The expert report that was referred to was from a maritime engineer, not an “independent
Master Mariner”. Hence, Clause 27(d) has not been satisfied.6
11. Given the above, the Respondent submits that Clause 27(e) applies to bar arbitral
proceedings and hence the Tribunal has no jurisdiction to determine the Claimant’s claim
for damages.
5 Moot Scenario, p 12. 6 Moot Scenario, p 43.
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SUBMISSIONS ON THE ISSUE OF MARITIME LIEN
12. The Claimant’s claim to a maritime lien over the Ship can only arise by way of subrogation
to the crew’s wage lien. However, in the present case, the requirements for the Claimant
to be subrogated to the rights under the wage lien have not been satisfied.
13. The UK admiralty courts have consistently insisted on the requirement of prior court
approval. Strict enforcement of this particular requirement has been observed in various
cases such as The Mogileff,7 The Berostar,8 The Vasilia9 and The Worldstar10. This
requirement should similarly be strictly enforced under Australian law.11
14. Requirement of prior court approval provides an essential safeguard for the seamen’s
interests and ensures that they are not taken advantage of by lower ranking creditors whose
only interest is the protection of their own commercial interest which may be at the expense
of the ship’s crew.12 Thus, judicial scrutiny acts as an important balance between the
commercial interests of other creditors and the protection of seafarer’s wages.
15. In the present case, the Claimant had not obtained prior leave of court for the payment of
crew’s wages or its subrogation to the crew’s maritime lien. Hence, the wage lien was
effectively extinguished when the US$100,000 was used to satisfy the crew’s wages.
16. Therefore, the Claimant is not entitled to any kind of maritime lien over the Ship.
7 The Mogileff [1921] P 236. 8 The Berostar [1970] 2 Lloyd’s Rep 403. 9 The Vasilia [1972] 1 Lloyd’s Rep 51. 10 The World Star [1987] 1 Lloyd’s Rep 452. 11 Ships “Hako Endeavour”, “Hako Excel”, “Hako Esteem” and “Hako Fortress” v Programmed Total Marine
Services Pty Ltd [2013] FCAFC 21 at [99]. 12 Rankin v The Ship, Eliza Fisher [1895] 4 Ex CR 461 at 469.
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SUBMISSIONS ON THE CLAIMANT’S CLAIMS
I. The Respondent is not liable for the Claimant’s claims as the Force Majeure (“FM”)
clause applies
17. FM would serve as a defence to what would have otherwise been a breach of the
Charterparty. This would concurrently defeat the Claimant’s claim for the Replacement
Coffee Payment, the Damaged Cargo Claim and the Settlement Payment which are losses
flowing from the alleged breach of the Charterparty. In this regard, the Respondent submits
that: (A) the Solar Flares which disrupted the communication systems on 25 July 2017
constituted an “act of God” event;13 (B) the Storm occurring on 28 July 2017 was an
“unforeseen weather event” within the meaning of the FM clause and;14 (C) the
Respondent has complied with the procedural requirements of the FM clause.
A. The Solar Flares were an “act of God” within the meaning of the FM clause
18. In determining whether an event falls within the ambit of an FM clause, the inquiry is
“whether on its true construction, the contract under consideration provides for the
event … [that] has occurred”.15 This requires a careful consideration of the terms within
the Charterparty.
19. Clause 17 explicitly defines FM events as including an “act of God”.16 An “act of God”
refers to an irresistible event which the shipowner can neither avoid nor guard against.17
The Respondents would thus have to show that there was no reasonable precaution under
all circumstances that could have prevented the delay.18 The Respondent respectfully
13 The Charterparty, Cl 17. 14 The Charterparty, Cl 17. 15 Bunge SA v Kyla Shipping Co. Ltd [2013] EWCA Civ 734 at [70]; Sir Bernard Eder, Howard Bennett, Steven
Berry, David Foxton and Christopher F Smith, Scrutton on Charterparties (22nd Edition, Sweet & Maxwell,
2011) at 1-089. 16 The Charterparty, Cl 17. 17 Nugent v Smith [1876] 1 C.P.D. 421, at 437. 18 Nugent v Smith [1876] 1 C.P.D. 421, at 437.
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submits that no precaution could have been taken since it was not aware of the impending
Solar Flares. There is no indication as to the Respondent’s awareness of Cerulean news
reports on the impending Solar Flares.19
20. Therefore, the Respondent can rely on the FM clause.
B. The Storm was an “unforeseen weather event” within the meaning of the FM clause
21. The Charterparty makes express provision for “unforeseen weather events”.20 The
Respondent submits that the Storm which occurred on 28 July 2017 falls within the
aforementioned definition. In its email correspondence with the Claimant, the Respondent
has described it as “roll[ing] in very suddenly” and that the crew “…[did not] see it on
the radar until about 30 min[utes] ago”.21 Furthermore, the Storm was described by a
news agency as a “once in a lifetime” storm event.22 Cumulatively, these facts lead to the
conclusion that the Storm was unforeseen.
22. Therefore, the Storm falls within the ambit of the FM clause and the Respondent is entitled
to rely on Clause 17 to excuse its delayed performance.
C. The Respondent has complied with the procedural requirements of the FM clause
23. The central issue here is whether the procedural requirements in the FM clause have been
breached by the Respondent, thereby precluding the Respondent from relying on the FM
clause.23 To this end, the Respondent submits that prompt written notice was given by the
Respondent
24. In the Charterparty, the word “prompt” is used to denote the prescribed notice period.24
19 Procedural Order No. 2, Cl 7 & 8. 20 The Charterparty, Cl 17. 21 Moot Scenario, p 19. 22 Moot Scenario, p 21. 23 G.H. Treitel, Frustration and Force Majeure (Sweet & Maxwell, 3rd Ed, 2014) at 12-048. 24 The Charterparty, Cl 17.
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25. With respect to the Solar Flares incident, the Respondent submits that such notice has been
given since the Claimant was informed of the delay as soon as the communications with
the Ship have been restored.25 The Respondent has given such notice as practicably as it
could in the circumstances, after it has established the status and whereabouts of the Ship.26
In the same vein, the Respondent was not aware that a delay has resulted from the Solar
Flares.27
26. With respect to the Storm, the Respondent has notified the Claimant within 30 minutes of
the crew detecting the Storm. This, it is submitted, constitutes prompt written notice.
27. Therefore, the Respondent has not breached this requirement of the FM clause in respect
of both FM events.
II. The Claimant is not entitled to claim the value of the damaged goods and the cost of
replacement
28. Even if the Respondent is found by the Tribunal to be liable to the Claimant for the breach
of the Charterparty, the Respondent submits the Claimant would be barred from recovering
all heads of claims. This is due to the issue of double recovery.
29. It is trite law that a plaintiff claiming damages for breach of contract has to elect between
claiming for loss of profits or for incurred expenditures.28 Loss of profits is defined as the
pecuniary loss suffered by a contracting party due to non-delivery of property.29 Such loss
of profits may be due to a loss of a specific sale to a third party.30 Here, the value of the
damaged cargo includes the margin of profits that the Claimant would have received by
selling the cargo to Coffees of the World. On the other hand, incurred expenditures refer
25 Moot Scenario, p 17. 26 Moot Scenario, p 17. 27 Moot Scenario, p 17. 28 Anglia Television v Reed [1972] 1 Q.B. 60. 29 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 4-018. 30 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 4-018.
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to the expenses incurred by a plaintiff in searching for replacement goods due to non-
delivery under a contract of carriage.31 Expenses incurred by way of settlement with a third
party are also considered as incurred expenditure.32 Applying these principles to the
present case, the Replacement Coffee Payment and Settlement Payment can be classified
as incurred expenditures.
30. An allowance for both loss of profits and incurred expenditure would result in double
recovery.33 This is because a claim for loss of profits also encompasses expenses which
were necessarily incurred to fulfil contractual obligations.34 Applying this to the present
case, the coffee cargo and the replacement coffee are alternative ways in which the
Claimant could fulfil its contractual obligations with Coffees of the World. Since the
purpose of contractual damages is to put a plaintiff in the position as he would have been
in had the contract been performed,35 the Claimant should only be allowed to claim either
the value of the damaged cargo or a combination of the Replacement Coffee Payment and
the Settlement Payment, but not both.
31. In light of the foregoing, the Respondent submits that even if the Tribunal finds that
liability is established, the Claimant is only entitled to either the damaged cargo claim or
the combination of the Replacement Coffee Payment and the Settlement Payment.
However, given that the Respondent’s liability is limited by the Hague-Visby Rules, the
Claimant’s claims should not be allowed in full.
31 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 4-022. 32 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 4-023. 33 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 4-024. 34 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 4-024. 35 Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 19th Ed, 2014) at 2-003.
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III. The Respondent's liability is limited by the Hague-Visby Rules
32. The Claimant submits that the Hague-Visby Rules were incorporated into the Charterparty
instead of the Hague Rules (“HR”). Whether the Clause Paramount36 incorporates the
HVR or the HR depends on the applicable law. Where the specific state has already
incorporated the HVR, the Clause Paramount will also incorporate the particular
legislation.37 Since the Charterparty is governed by the laws of New South Wales, and
Australia’s Carriage of Goods by Sea Act 199138 enacts the HVR, the HVR were
incorporated into the Charterparty and provide the relevant limitation of the Respondent’s
liability in this case.
A. Liability can be limited because the value and nature of the goods were not appropriately
declared
33. Unless the Claimant has appropriately declared the value and nature of the goods shipped,
the Respondent can limit its liability under both the HVR and the HR.39 The declaration
of value by the Claimant in this case was not included in the Charterparty itself40 and
therefore is not binding on the Respondent. The Claimant is not entitled to recover in
excess of the limit provided by the HR through a declaration of value before shipment.
Accordingly, the Respondent is entitled to limit its liability under the HVR.
B. An unreasonable deviation does not preclude the limitation of liability
34. The Claimant cannot argue that an unreasonable deviation disentitles the Respondent from
limiting its liability under the HVR and the HR. Article IV rule 5 of both the HVR and the
HR, which uses the term “in any event”, may still provide the carrier with a defence of
package limitation even in the case of an unreasonable deviation.41 Therefore, the Claimant
36 The Charterparty, Cl 28. 37 The Superior Pescadores Syemgas Fzco and others v Superior Pescadores SA [2016] EWCA Civ 101. 38 Carriage of Goods by Sea Act 1991 (Act No. 160/1991) (Australia). 39 Article IV Rule 5 of the Hague Rules and Hague-Visby Rules. 40 Moot Scenario, p 2. 41 Daewoo Heavy Industries v. Klipriver Shipping (The Kapitan Petko Voivoda) [2003] 2 Lloyd’s Rep. 1.
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cannot argue that an unreasonable deviation renders the defence of package limitation
irrelevant.
C. As the Hague-Visby Rules were incorporated into the Charterparty, the Respondent’s
liability is limited to a sum less than the claims
35. Pursuant to the HVR, the Respondent is not liable for any damage or loss exceeding the
equivalent of 666.67 units of account per package or unit or 2 units of account per kilo of
gross weight of the goods lost or damaged, whichever is the higher.
36. The Respondent submits that the relevant packages were the “four containers” as this was
what was listed in the dock receipt. Even though this was amended by the Respondent,
the Claimant raised no objections to that, signifying their agreement to contract on the
amended terms. The higher limit would thus be based on the gross weight of the goods
damaged and the Respondent’s liability is limited at only 140,000 SDR (1,000 x 70 x 2).
37. If the Tribunal finds that the relevant package or unit is each bag of coffee, the higher limit
would be 666, 670 SDR (1000 x 666.67). This amount is still less than what is sought by
the Claimant.
D. Even if the Hague Rules apply, the Respondent’s liability is limited to a sum less than
the claims
38. If the Tribunal finds that the Clause Paramount42 had the effect of incorporating the HR
and not the HVR, the applicable limitation of liability is £100 sterling gold value per
package or unit. The value of £100 sterling would be considered by reference to the
quantity of gold equivalent to £100 sterling in 1924.43 The gold content of £100 sterling
was in 1924 defined as a matter of English law by the Coinage Act 1870,44 and was at the
date of the Charterparty, defined by the Coinage Act 1971,45 as being 798.805 grammes
42 The Charterparty, Cl 28. 43 The Rosa S [1989] Q.B. 419. 44 Coinage Act (Cap 10, 1870). 45 Coinage Act (Cap 24, 1971).
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of gold at a millesimal fineness 916.66, which is the same as 732.238 grammes of fine
gold. Taking the relevant date of the assessment of the Respondent’s liability as being the
date of delivery of the goods,46 which is 31 July 2017, this gives a gold value of £100
sterling as US$32,790.57.47 The Respondent submits that the relevant packages were the
“four containers” as this was what was listed in the dock receipt. Even though this was
amended by the Respondent, the Claimant raised no objections to that, signifying their
agreement to contract on the amended terms. The Respondent would thus not be liable for
an amount exceeding US$131,162.28 (32,790.57 x 4), which is significantly less than what
was sought by the Claimant.
39. If the Tribunal finds that the “packages” were the 1000 bags, the limit of liability would
be US$32,790,570 (32,790.57 x 1000).
46 The Rosa S [1989] Q.B. 419. Endorsed in Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (The
Nadezhda Krupskaya) [1989] 1 Lloyd's Rep. 518. 47 The price per ounce of fine gold on 31 July 2017 is estimated at USD 1269.55.
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SUBMISSIONS ON THE RESPONDENT’S COUNTERCLAIMS
I. The Claimant is liable for freight of the delivered cargo
40. The Respondent is claiming for the freight of US$500,000 for the following reasons: (A)
Clause 22 of the Charterparty states that 90% of the freight is payable within two banking
days of the delivery of cargo; (B) freight is payable regardless if the cargo was damaged
and (C) freight is a general exception to set-off.
A. The Charterparty stipulates that 90% of freight is payable within two banking days of
the delivery of cargo
41. Freight is the remuneration payable for carriage of the cargo. The freight rate is contracted
to be a lumpsum of US$500,000 for four containers of coffee beans.48 Clauses 11 and 22
of the Charterparty stipulates that 90% of the freight has to be paid within two banking
days of cargo delivery.49 Therefore, since the Claimant has acknowledged delivery,50 it is
liable for the payment of freight.
B. Freight is payable regardless if cargo was damaged
42. The Respondent submits that the Claimant is liable for the payment of freight as long as
the cargo was delivered. This is so even if the cargo was damaged.
43. Where the charterparty provides for a lump sum freight, payable on delivery, the entire
freight is payable even if part of the cargo is lost by excepted perils.51 Applying this
principle to the present case, the Claimant is liable for the payment of freight even if it
contends that the cargo was damaged. Therefore, since the Claimant has acknowledged
delivery,52 it is liable for the payment of freight regardless of the damage to the cargo.
48 Moot Scenario, p 3. 49 Moot Scenario, p 7 & 11. 50 Moot Scenario, p 24. 51 The Owners of the Norway v Ashburner (The Norway) (No. 2) [1865] 3 Moo. P.C. 254. See also Merchant
Shipping v Armitage [1873] L.R. 9 Q.B. 99. 52 Moot Scenario, p 24.
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C. Freight is an exception to the general rule of set-off
44. Even though the cargo delivered was damaged, the Claimant is not entitled to set-off the
claim for breach of contract against the freight.
45. Freight is an exception to the general rule that claims for breach of contract can be set off
in diminution or extinction of a different claim for a sum due under the same contract.53 It
is also trite law that where freight is due and payable under the terms of the charter, and a
claim under a possible breach of contract for damages arises, both the owner and the
charterer are required to pursue their claims independently as they cannot be set off against
each other.54 Applying these principles to the present case, the Claimant cannot set off
freight against the claims it is pursuing for the damaged cargo. Freight is payable by the
Claimant independent of the claims it seeks to recover from the losses arising from the
damaged cargo.
46. Furthermore, the Respondent submits that there is no basis for apportioning lump sum
freight even when part of the cargo is not delivered. This is due to the rule that freight is
either fully recoverable or non-recoverable.55 In the present case, all four containers of
coffee beans were delivered.56 As such, it is unreasonable for the Claimant to contend that
it is not liable for freight.
47. Given the above, the Respondent respectfully submits that the full lump sum freight is still
payable by the Claimant, and a claim for damages can be raised independently of the
freight by the Claimant instead.57
53 Bim Kemi AB v Blackburn Chemicals [2001] 2 Lloyd’s Rep. 93; ISS Machinery Services v Aeolian Shipping
[2001] 2 Lloyd’s Rep. 641. 54 Elena Shipping v Aidenfield Ltd [1986] 1 Lloyd's Rep. 425. 55 Merchant Shipping v Armitage [1873] L.R. 9 Q.B. 99 at 110 – 111. As to the non-apportionability of
lumpsum freight see also Pust v. Dowie [1864] 5 B. & S. 20; Blanchet v. Powell’s Llantivit Collieries [1874]
L.R. 9 Ex. 74. 56 Moot Scenario, p 24. 57 The Elena [1986] 1 Lloyd’s Rep 425.
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II. The Claimant is liable for the agency fees at Spectre
48. The Respondent is claiming US$75,000 for the agency fees at Spectre as (A) these fees
were reasonably incurred and (B) the Claimant could not have nominated its agents.
A. The agency fees were reasonably incurred
49. The Respondent submits that the agency fees were reasonably incurred. This is because
the Respondent did not breach its obligation to ensure the seaworthiness of the Ship.
50. It is submitted that the failure of the Ship’s communication and navigation systems was
not due to any fault in the equipment, but the severity of the Solar Flares. It was reported
in the Cerulean newspaper that the Solar Flare was an “unprecedented international
emergency” and that satellites systems “around the world” were knocked out.58 The report
also suggests that only delays of 20 hours or more in reconnection could be attributed to
old or faulty equipment.59
51. The Ship’s communications systems were up within a short time frame of 17 hours.60 The
Respondent submits that this time frame is acceptable and does not indicate
unseaworthiness because it was consistent with other systems based on a report published
in the Cerulean newspaper dated 25 July 2017.61 As such, the Ship was forced to detour to
Spectre due to the severity of the Solar Flares, and not due to a breach of the Respondent’s
obligation to ensure the seaworthiness of the Ship. It is therefore reasonable for the
Claimant to reimburse the Respondent for the agency fees incurred at Spectre.
B. The Claimant could not have nominated its agents at Spectre
52. The Respondent further submits that the Claimant could not have possibly nominated its
agents at Spectre. This is because the Ship’s navigation and communication systems were
58 Moot Scenario, p 35. 59 Moot Scenario, p 35. 60 Moot Scenario, p 17. 61 Moot Scenario, p 35.
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down due to the Solar Flares.62 As such, it was impossible for the Ship to have contacted
the Claimant for the latter to nominate its agents at Spectre. Furthermore, there was no
obligation on the Respondent to communicate this deviation to the Claimant beforehand,
since such an obligation only arises if the Ship calls at a port for cargo purposes.63
Therefore, it was reasonable for the Respondent to have nominated its own agents at
Spectre. The Claimant should thus reimburse the Respondent for these fees.
III. The Claimant is liable for the agency fees at Dillamond
53. The Respondent is claiming US$50,000 as the agency fees at Dillamond since the
Charterparty specifies that this cost is to be borne by the Claimant.
54. Clause 12(a) of the Charterparty stipulates that the Ship shall be consigned to the
charterer’s agents at the discharge port.64 The clause also states that the charterer shall pay
all customary fees at the discharge port.65 On a plain reading of the clause, this means that
the Ship is consigned to the Claimant at Dillamond, and the Claimant is to pay all
customary fees at Dillamond. Since agency fees can be considered as a form of customary
fees, the Respondent submits that it is fair and reasonable for the Claimant to be liable for
this head of claim.
IV. The Claimant is liable for the cost of repairs to the Ship
55. The Respondent is claiming USD$875,000 for the cost of repairs to the Ship. This is
because the damage to the Ship was suffered due to (A) the nomination of an unsafe port
by the Claimant. The Respondent also submits that (B) it was not negligent either in
anchoring the Ship or in the way it anchored, and (C) the damage was not caused by the
62 Moot Scenario, p 17. 63 The Charterparty, Cl 12(b). 64 The Charterparty, Cl 12(a). 65 The Charterparty, Cl 12(a).
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Respondent’s negligence when cutting the anchor after it was tangled in the coral bed
outside Dillamond.66
A. The Claimant nominated an unsafe port
56. The Claimant breached the implied warranty of port safety when it nominated an unsafe
port. The Respondent submits that this was the proximate cause of the damage to the Ship.
The Claimant is liable for the cost of repairs as there is no break in the chain of causation
resulting from any negligence on the part of the Respondent's as the safety of a port must
be warranted throughout the entire voyage.
57. It is trite law that where a charterparty provides for the nomination of a port, but is silent
as to its safety, a warranty that the port is safe will be implied.67 The obligation to nominate
a safe port extends from the time of nomination to the period of the vessel's likely visit,
hence prospective safety of the port must be taken into consideration.68 Applying these
principles to the present case, although there is no express warranty by the Claimant as to
the safety of Dillamond, such a warranty must necessarily be implied into the Charterparty.
Such implication is necessary from the terms of the Charterparty as the Claimant did not
offer the Respondent any alternative port of discharge. The Claimant by requiring the
cargo to be delivered directly and only to Dillamond,69 must have implied that the port is
safe for the Ship to berth and for the cargo to be unloaded.
58. A storm which passes through a port after nomination can render it unsafe, and this is a
breach of the safe port warranty by the charterer.70 The shipowner will be entitled to
recover the cost of repairs to the vessel from the charterer.71 In present case, the Storm
66 Moot Scenario, p 20. 67 Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc [2009] EWCA Civ 531. 68 Kodros Shipping Inc. v Empresa Cubana de Fletes (No. 2) [1983] 1 A.C. 736. 69 The Charterparty, Cl 1. 70 The Thekos SMA 2405 (1987) (van Gelder, Boulalas, Mavriks, Nelson, Nichols). 71 The Thekos SMA 2405 (1987) (van Gelder, Boulalas, Mavriks, Nelson, Nichols).
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rendered Dillamond unsafe,72 resulting in the eventual damage suffered by the Ship when
it had to anchor outside Dillamond. As such, the Respondent submits that the Claimant
breached its implied warranty to nominate a safe port.
59. Given that safety includes the prospective safety of the port, and not just during the period
of nomination, the Claimant breached its implied warranty to nominate a safe port, and is
thus liable for the damage suffered by the Ship.
B. The Respondent was not negligent either in anchoring the Ship or in the way it anchored
60. The Respondent was not negligent in anchoring the Ship when waiting, or in the way it
anchored. The chain of causation was not broken, and the Claimant's breach in nominating
an unsafe port remains the proximate cause of the damage suffered by the Ship.
61. The Respondent was instructed to wait at the area outside the port, along with other ships,
while Dillamond was closed due to the Storm.73 It was reasonable for the Respondent to
anchor the ship to avoid the Storm as the crew did not expect the Storm to reach them
where they anchored.74 Therefore, the facts and sequence of events suggested that the
Respondent has exercised all reasonable care in the circumstances, and was not negligent
in anchoring the Ship. The act and place of anchoring were well considered by the
Respondent to be safe.
62. Therefore, the Respondent was not negligent in anchoring the Ship, and it did not break
the chain of causation.
C. The damage was not caused by the Respondent’s negligence when cutting the anchor
63. The Respondent also submits that the eventual damage suffered by the ship was not due to
the negligence of the Respondent when removing the anchor.
72 Moot Scenario, p 21. 73 Moot Scenario, p 20. 74 Moot Scenario, p 20.
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64. The Storm reached the Ship while it was anchored, and the Storm was much heavier than
it was at land.75 The crew had to cut the anchor to minimise damage to the hull. The facts
strongly indicated that the crew were constrained to act the way they did due to the Storm
and conditions that were unexpected and beyond their control. Therefore, the damage to
the Ship was not due to any inadvertence or negligence of the Respondent.
65. Given the above, the Respondent is not liable for the damage to the Ship. The damage
suffered by the Ship was due to the necessary act of anchoring outside the unsafe port
nominated by the Claimant. The Respondent was not negligent either in anchoring the Ship
or in the way it anchored. The Claimant is thus liable for the damage to the Ship as the
nomination of the unsafe port was the proximate cause of damage to the Ship.
V. The Claimant is liable for demurrage
66. The Respondent is claiming US$100,000 in demurrage as (A) the laytime commenced
when the vessel arrived at the waiting area and (B) laytime exceptions as stipulated in
Clause 8(e) do not apply.
A. Laytime commenced when the vessel arrived at waiting area
(1) Vessel arrived at writing area at 7am on 29 July 2017
67. Clause 8(c)(ii) of Charterparty states that laytime is calculated from when the Ship arrives
at the discharge port until all cargo has been discharged.76 The Ship arrived at the waiting
area at 7am on 29 July 2017.77 It is trite law that the waiting area is considered as part of
the port. It is trite law that the port area includes the usual places where ships wait for their
turn to berth.78 In the present case, the Ship was instructed by the port to wait at the waiting
75 Moot Scenario, p 20. 76 The Charterparty, Cl 8(c)(ii). 77 Moot Scenario, p 20. 78 Oldendorff (EL) & Co GmbH v. Tradax Export SA (The Johanna Oldendorff) [1973] 2 Lloyd’s Rep 285, at p
291. See also Charterparty Laytime Definitions 1980 in John Schofield, Laytime and Demurrage (6th Ed.,
2011).
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area, along with the other ships waiting for a berth.79 As such, the Ship should be
considered as an “arrived ship” when it reached the waiting area.
(2) “WWD” includes Saturdays
68. A WWD is defined as a type of working day which the weather allows the particular ship
in question to load or discharge the cargo.80 Although 29 July 2017 is a Saturday, it is well-
established that WWD includes Saturdays provided that the weather permits work.81 In the
present case, the storm only lasted throughout Friday night and the weather was clear on
Saturday.82 This is obvious from the fact that (i) the discharging operation occurred on
Saturday and (ii) many other vessels conducted their operations at the port as well.83 29
July 2017 should thus be considered as a WWD under clause 8(c)(ii) of the Charterparty.
B. The exceptions to laytime as stipulated in Clause 8(e) do not apply
69. The Respondent submits that the exceptions to laytime as stated in Clause 8(e) do not apply
to the facts of the present case. This is because, on a literal interpretation of the clause, it
is only applicable to exempt “time occupied in shifting ports or berths” from being
calculated within laytime.84 In the present case, the laytime ran whilst the Ship was waiting
for its turn outside the port, which does not fall within the exception. As such, Clause 8(e)
cannot be invoked in the present case.
70. Furthermore, Clause 8(e) only exempts the period of delay caused by the Storm from being
counted as laytime.85 The Ship’s travelling time from the waiting area to the berth is thus
not exempted by Clause 8(e). In the present case, the Ship started to make its way into the
79 Moot Scenario, p 20. 80 Aldebaran Compania Maritima SA v Aussenhandel AG (The Darrah) [1977] AC 157 (HL). See also Freedom
Maritime Corporation v International Bulk Carriers SA and another (The Khian Captain) [1985] 2 Lloyd’s Rep
212. 81 Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] 1 Lloyd’s Rep. 12, at p. 32. 82 Moot Scenario, p 21. 83 Moot Scenario, p 25. 84 The Charterparty, Cl 8(e). 85 The Charterparty, Cl 8(e).
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berth at around 7am on 29 July 2017.86 Laytime should have thus started to accrue from
that moment onwards.
C. Calculation of laytime and demurrage
71. Clause 8(c)(ii) of the Charterparty provided for the laytime to be 0.5 WWD.87 Since
laytime commenced at 7am on 29 July 2017, laytime would expire 12 hours later, at 7pm
on 29 July 2017. The cargo was only discharged at 12.02am on 30 July 2017.88 As such,
laytime was exceeded by 5 hours. Since the agreed demurrage rate was US$20,000/hour89,
the total demurrage is US$100,000.
VI. The Claimant is liable for the use of electronic access systems at Dillamond
72. The Claimant is liable to compensate the Respondent USD$10,000 for the use of electronic
access systems (“EAS”) at Dillamond because the Claimant failed to take delivery of the
cargo upon discharge.90 Clause 11 of the Charterparty allows the Respondent to discharge
at a usual berth in Dillamond should the Claimant’s agents fail to take delivery.91 Since
the Claimant’s agents were not available, the only reasonable cause of action for the
Respondent was to offload the cargo and store it in the port’s warehouses. As the port uses
an EAS for its warehouses, the incurrence of such a cost was inevitable and hence
reasonable.92
86 Moot Scenario, p 20. 87 The Charterparty, Cl 8(c)(ii). 88 Moot Scenario, p 23. 89 The Charterparty, Cl 9. 90 Moot Scenario, p 24. 91 The Charterparty, Cl 11. 92 Moot Scenario, p 23.
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PRAYER FOR RELIEF
For the reasons set out above, the Respondent seeks the following orders and declarations:
a. A declaration that the Tribunal has no jurisdiction to determine the Claimant’s claim
for damages;
b. A declaration that the Claimant is not entitled to any maritime lien over the Ship
c. A declaration that the Respondent is not liable for the Claimant’s claims due to the
application of the Force Majeure clause;
d. An order that the Claimant pays the Respondent freight in the amount of USD$500,000;
e. An order that the Claimant pays the Respondent the agency fees at Spectre in the
amount of USD$75,000;
f. An order that the Claimant pays the Respondent the agency fees at Dillamond in the
amount of USD$50,000;
g. An order that the Claimant pays the Respondent the cost of repairs to the Ship in the
amount of USD$875,000;
h. An order that the Claimant pays the Respondent demurrage in the amount of
USD$100,000;
i. An order that the Claimant pays the Respondent the fees for the use of electronic access
systems in Dillamond in the amount of USD$10,000; and
j. An order for costs.