eighteenth annual international maritime law arbitration

EIGHTEENTH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2017

MEMORANDUM FOR RESPONDENT

THE UNIVERSITY OF SYDNEY

TEAM 10

ON BEHALF OF:

INFERNO RESOURCES SDN BHD

AND

IDONCARE BERJAYA UTAMA PTY LTD

RESPONDENTS

AGAINST:

FURNACE TRADING PTE LTD

CLAIMANT

COUNSEL

Margery Harry Declan Haiqiu Ai Godber Noble Zhu

TEAM 10 MEMORANDUM FOR RESPONDENTS

I

TABLE OF CONTENTS

ABBREVIATIONS ......................................................................................................................... III

LIST OF AUTHORITIES ................................................................................................................ V

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

APPLICABLE LAW ......................................................................................................................... 2

I. SINGAPOREAN LAW APPLIES TO ALL ASPECTS OF THE DISPUTE ................................................. 2

A. Singaporean law governs the procedure of the arbitration ....................................................... 2

B. Singaporean law is the substantive law applying to FURNACE and INFERNO’s dispute ........... 2

C. Singaporean law is also the substantive law applying to FURNACE and IDONCARE’s

dispute ...................................................................................................................................... 3

1. The Time Charterparty is incorporated by the Bill of Lading .......................................... 3

2. The Time Charterparty is governed by the substantive law of Singapore ........................ 5

ARGUMENTS ON THE INTERIM APPLICATION FOR SALE OF CARGO ......................... 5

II. FURNACE’S LIEN OVER THE CARGO IS NOT VALID OR ENFORCEABLE ........................................ 5

A. No right of lien arises under the Voyage Charterparty ............................................................ 6

B. No right of lien arises under the Bill of Lading ....................................................................... 7

C. INFERNO does not owe freight under the Voyage Charterparty ............................................... 7

D. The lien over the cargo was not properly exercised ................................................................. 9

III. THE TRIBUNAL CANNOT AND SHOULD NOT ORDER AN INTERIM SALE OF THE CARGO ............ 10

A. The Tribunal does not have the power to order a sale of the cargo ....................................... 10

B. In any case, the Tribunal should not exercise its discretion to order a sale of the cargo ....... 12


II

ARGUMENTS ON THE MERITS OF THE CLAIM ................................................................... 13

IV. INFERNO DID NOT BREACH THE TERMS OF THE VOYAGE CHARTERPARTY CONCERNING

NOMINATION OF A PORT OF DISCHARGE .................................................................................... 13

A. A term should be implied allowing nomination of an alternative reasonable port ................ 13

1. The parties did not contemplate the gap ......................................................................... 14

2. An implied term allowing nomination of a reasonable port is necessary to achieve

business efficacy and can be formulated according to the officious bystander test ....... 14

B. The eight Chinese ports were impossible at the time of nomination ..................................... 15

C. Nomination complied with the time stipulation in the Nomination Clause ........................... 16

V. IN THE ALTERNATIVE, THE VOYAGE CHARTERPARTY WAS FRUSTRATED BEFORE THE

ALLEGED BREACHES ................................................................................................................... 18

VI. IDONCARE IS NOT LIABLE TO PAY SUB-FREIGHT FURNACE ...................................................... 19

A. FURNACE has no contractual right to sub-freight ................................................................... 19

B. FURNACE does not possess a valid lien over sub-freight ....................................................... 20

VII. FURNACE’S TERMINATION OF THE VOYAGE CHARTERPARTY WAS WRONGFUL ..................... 19

A. INFERNO did not repudiate the agreement by words or conduct……………………………21

B. INFERNO did not repudiate the agreement by failing to comply with FURNACE’s notice…...22

1. FURNACE was not entitled to give notice to perform…………………………………..22

2. The time stipulated for performance by the notice was unreasonable.………………...23

VIII. EVEN IF INFERNO BREACHED THE VOYAGE CHARTERPARTY, IT IS NOT LIABLE IN

DAMAGES ................................................................................................................................ 23

A. FURNACE’s costs prior to termination are offset by the costs it would have incurred if the

Voyage Charterparty had been performed.…………………………………………………24

B. INFERNO is not liable for damages after termination of the Voyage Charterparty.…………24

C. FURNACE cannot recover the costs of exercising a lien on cargo…………………………..25

REQUEST FOR RELIEF…………………………………………………………………………25


III

ABBREVIATIONS

art Article

BBB Before Breaking Bulk

Bill of Lading Bill no. IMOBL11223344X, dated 4 October, in the custom form of Imlam Consignorist GmbH, between Imlam and IDONCARE

Cargo 80,000 Mt 10% MOLOO Australian Steam Coal

COAL-OREVOY “COAL-OREVOY” Standard Coal and Ore Charter Party

Clarification 2017 International Maritime Law Arbitration Moot Scenario Clarifications

Fixture Recap Email recounting concluded terms of charterparty between FURNACE and INFERNO, from Eric Yan to Gordon Grill, dated 1 September 2016

Freight Clause Clause 19 of the Fixture Recap

FURNACE Furnace Trading Pte Ltd

IAA International Arbitration Act (Singapore, cap 143A, 2002 rev ed)

IDONCARE Idoncare Berjaya Utama Pty Ltd

Imlam Imlam Consignorist GmbH

INFERNO Inferno Resources Sdn Bhd

Lien Clause Clause 19(a) of the “COAL-OREVOY” Standard Coal and Ore Charter Party

LT Local Time

Master Tan Xiao Ming

Model Law UNCITRAL Model Law on International Arbitration 1985

Nomination Clause Clause 16 of the Fixture Recap


IV

Parties FURNACE, INFERNO and IDONCARE

Record 2017 International Maritime Law Arbitration Moot Scenario

s Section

sch Schedule

SCMA Rules Singapore Chamber of Maritime Arbitration Rules (2015, 3rd ed)

Sub-Voyage Charterparty Voyage Charterparty, between INFERNO and IDONCARE, date

unknown

Tardy Tessa M.V. Tardy Tessa

Time Charterparty Time Charterparty, between Imlam and FURNACE, dated 15 February 2016

Voyage Charterparty

Fixture Recap and “COAL-OREVOY” Standard Coal and Ore Charter Party, between FURNACE and INFERNO, dated 1 September 2016


V

LIST OF AUTHORITIES

CASES AND ARBITRAL AWARDS Referred to at page:

Aegean Sea Traders Corporation v Repsol Petroleo SA (‘The Aegean Sea’) [1998] 2 Lloyd’s Rep 39

15, 19, 23

Aegnoussiotis Shipping Corporation v AS Kristian Jebsons Rederi of Bergen (‘The Aegnoussiotis’) [1977] 1 Lloyd’s Rep 268

6

Aktieselskabet Olivebank v Dansk Svorlsyre Fabrik [1919] 2 KB 162

15, 19

Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR(R) 855

16

Allison v Bristol Marine Insurance Co (1876) 1 App Cas 209

5

American Cyanamid Co v Ethicon Ltd [1975] AC 396

13

Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45

20

Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte Ltd [2005] 1 SLR(R) 661

23

“Asia Star”, The [2010] 2 SLR 1154

25

Atlantic Maritime Co Inc v Gibbon [1954] 1 QB 88

18

Attorney-General v Ting Choon Meng [2017] SGCA 06 (16 January 2017)

11

Bank of Boston Connecticut v European Grain and Shipping Ltd (‘The Dominique’) [1989] AC 1056

8, 9

Behzadi v Shaftesbury Hotels Ltd [1992] Ch 1

22, 23

Brani Readymixed Pte Ltd v Yee Hong Pte Ltd [1994] 3 SLR(R) 1004

21

“Bridge”, The [1998] 2 SLR(R) 185

6

Britestone Pte Ltd v Smith & Associates Far East Ltd [2007] 4 SLR(R) 855

24

British Movietonews Ltd v London and District Cinemas Ltd [1952] AC 166

18


VI

British Westinghouse Electric & Manufacturing Co v Underground Electric Railways Co [1912] AC 673

25

Bulk Shipping v Ipco Trading (‘The Jasmine B’) [1992] 1 Lloyd’s Rep 39

18

Cascade Shipping Inc v Eka Jaya Agencies (S) Pte Ltd [1993] 1 SLR(R) 187

20

Care Shipping Corporation v Itex Itagarni SA (‘The Cebu’) (No 2) [1993] QB 1

20

Chai Chung Ching Chester v Diversey (Far East) Pte Ltd [1991] 1 SLR(R) 757

9

Challenger Technologies Pte Ltd v Public Prosecutor [1994] SLR(R) 849

11

China Pacific SA v Food Corporation of India (‘The Winson’) [1982] AC 939

25

Chua June Ching Michelle v Chai Hoi Tong [2011] 4 SLR 418

10

Chua Keng Mong v Hong Realty Pte Ltd [1993] 1 SLR 317

25

Chuan Hong Petrol Station Pte Ltd v Shell Singapore (Pte) Ltd [1992] 2 SLR(R) 1

13

Compania Naviera General SA v Kerametal Ltd (‘The Lorna I’) [1983] 1 Lloyd’s Rep 373

9

D Amico Shipping Italia SP v Endofa DMCC [2016] EWHC 2223 (Comm) (24 June 2016)

8

Dakin v Oxley (1864) 15 CB(NS) 647

9

Dallah Real Estate and Tourism Holding Co v The Minister of Religious Affairs, Government of Pakistan [2010] 2 Lloyd's Rep 691

2

Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696

18

Denny, Mott & Dickson Ltd v James B Fraser & Co Ltd [1944] AC 265

18

Donmar Productions Ltd v Bart [1967] 2 All ER 338

11

Dorsey James Michael v World Sport Group Pte Ltd [2013] 3 SLR 354

11


VII

“Dwima 1”, The [1996] 1 SLR(R) 927

10

Edison, The [1932] P 52

24

Euroil Ltd v Cameroon Offshore Petroleum SARL [2014] EWHC 52 (Comm) (14 January 2014)

12

Ex parte Nyholm; Re Child (1873) 29 LT 634

5

Faith Maritime Co Ltd v Feoso (Singapore) Pte Ltd [2002] 2 SLR(R) 1088

12

Federal Commerce and Navigation Ltd v Molena Alpha Inc (‘The Nanfri’) [1979] 1 Lloyd’s Rep 201

20

Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SLR 1159

7, 12

Gardner v Trechmann (1884) 15 QBD 154

5

GIB Automation Pte Ltd v Deluge Fire Protection (SEA) Pte Ltd [2007] 2 SLR(R) 918

21

Guobena Sdn Bhd v New Civilbuild Pte Ltd [2002] 2 SLR(R) 784

24

Hammonds v Barclay (1802) 2 East 227

5

Heinrich Hanno v Fairlight Shipping (‘The Kostas K’) [1985] 1 Lloyds Rep 231

18

Holiday Inns Inc v Hotel Enterprises Ltd [1974–1976] SLR(R) 362

11

Johs Thode v VDA De Gimeno Y CIA (‘The Steendiek’) [1961] 2 Lloyds Rep 138

18

Jones v Pacaya Rubber & Produce Co [1911] 1 KB 455

11

Kirchner v Venus (1859) 12 Moo PC 361

5, 21

K/S A/S Seateam & Co v Iraq National Oil Co (‘The Sevonia Team’) [1983] 2 Lloyd’s Rep 640

3, 4

Lee Hung Khoon v Yeo Tang Mui [1990] 1 SLR(R) 459

11

Lim Kim Som v Sheriffa Taibah bte Abdul Rahman [1994] 1 SLR(R) 233

18

London & Overseas Freighters Ltd v Timber Shipping Co SA (‘The London Explorer’) [1972] AC 1

10


VIII

Macrae v H G Swindells [1954] 1 WLR 597

25

Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 449

11, 12, 13

Manchester Trust Ltd v Furness Withy & Co [1895] 2 QB 539

4

Mersey Steel and Iron Co v Naylor, Benzon and Co (1884) LR 9 App Cas 434

21

Miramar Shipping v Holborn Oil (‘The Miramar’) [1984] 2 Lloyd’s Rep 129

5

Molthes Rederi Aktieselskabet v Ellerman’s Wilson Line Ltd [1927] 1 KB 710

20

National Navigation Co v Endesa Generacion SA (‘The Wadi Sudr’) [2009] 1 Lloyd's Rep 666

3

Navigazione Alta Italia SpA v Svenska Petroleum AB (‘The Nai Matteini’) [1988] 1 Lloyd’s Rep 452

4

Ocean Projects Inc v Ultratech Pte Ltd [1994] 2 SLR(R) 245

9, 12

Overseas Union Bank Ltd v Lew Keh Lam [1998] 3 SLR(R) 219

8

Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania Naviera SA (‘The San Nicholas’) [1976] 1 Lloyd’s Rep 8

3, 4

“Pacific Vigorous”, The [2006] 3 SLR(R) 374

24

Pan-United Shipyard Pte Ltd v The Chase Manhattan Bank (National Association) [1999] 1 SLR(R) 703

10

Port Line v Ben Line [1958] 1 Lloyd’s Rep 290

10

PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] 4 SLR 364

11

Public Prosecutor v Low Kok Heng [2007] 4 SLR 183

11

“Rainbow Star”, The [2011] 3 SLR 1

25

RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR(R) 413

21

Re Welsh Irish Ferries Ltd (‘The Ugland Trailer’) [1985] 2 Lloyd’s Rep 372

20

Reardon Smith Line v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42

14, 15, 16, 18, 19, 23


IX

Richards (Charles) Ltd v Oppenhaim [1950] 1 KB 616

23

San International Pte Ltd v Keppel Engineering Pte Ltd [1998] 3 SLR(R) 447

22

Sandeman v Scurr (1866) LR 2 QB 86

4

Santiren Shipping Ltd v Unimarine SA (‘The Chrysovalandou Dyo’) [1981] 1 Lloyd’s Rep 159

5

Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193

8, 14, 15

SIB International SRL v Metallgesellschaft Corp (‘The Noel Bay’) [1989] 1 Lloyd’s Rep 361

24, 25

Siti v Lee Kay Li [1996] 2 SLR(R) 934

22, 23

Somes v British Empire Shipping Co [1860] 11 ER 459

25

Soon Peng Yam v Maimon bte Ahmad [1995] 1 SLR(R) 279

10

SS Matheos v Louis Dreyfus [1925] 1 AC 654

15

Steelwood Carriers Inc of Monrovia v Evimeria Compania Naviera SA (‘The Agios Giorgis’) [1976] 2 Lloyd's Rep 192

6

Stickney v Keeble [1915] AC 386

23

T W Thomas & Co Ltd v Portsea Shipping Co Ltd [1912] AC 1

5

Tamvaco v Simpson (1866) LR 1 CP 363

5

Tappenden v Artus [1964] 2 QB 185

10

Tee Soon Kay v Attorney-General [2006] 4 SLR(R) 385

11

Thai Kenaf Co Ltd v Keck Seng (S) Pte Ltd [1992] 3 SLR(R) 194

19

The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2014] 4 SLR 806

15

The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2015] 3 SLR 695

14

Tiananmen KTV (2013) Pte Ltd and others v Furama Pte Ltd [2015] 3 SLR 433

12

Tradigrain SA v King Diamond Shipping SA (‘The Spiros C’) [2000] 2 Lloyd’s Rep 319

20

14


X

Turf Club Auto Emporeium Pte Ltd v Yeo Boong Hua [2017] SGCA 21 (22 March 2017)

14

Turner v Haji Goolam [1904] AC 826

6

TYC Investment Pte Ltd v Tay Yun Chwan Henry [2014] 4 SLR 1149

14, 15

United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904

23

Vagres Compania Maritima SA v Nissho-Iwai American Corporation (‘The Karin Vatis’) [1988] 2 Lloyd’s Rep 330

9

Wai Wing Properties Pte Ltd v Lim, Ganesh & Liu [1994] 1 SLR(R) 1004

23

Wehner v Dene Steam Shipping Co [1905] 2 KB 92

4, 7, 19

Weir v Girvin [1900] 1 QB 45

9

West Tankers Inc v Allianz SpA [2009] AC 1138

2

Whistler International Ltd v Kawasaki Kisen Kaisha Ltd (‘The Hill Harmony’) [2001] AC 638

10

Xu Ren Li v Nakano Singapore (Pte) Ltd [2012] 1 SLR 729

11

ZIM Integrated Shipping Services Ltd v. European Containers KS [2013] 2 CLC 800

12

Zim Israel v Tradex (‘The Timna’) [1971] 2 Lloyd’s Rep 91

24

Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029

8, 9

BOOKS

Referred to at page: Blackaby, Nigel and Constantine Partasides with Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration (Oxford University Press, 6th ed, 2015)

2, 11, 12

Chitty, Joseph and H G Beale, Chitty on Contracts (Sweet & Maxwell, 29th ed, 2004)

21

Cooke, Julian et al, Voyage Charters (Informa Law, 3rd ed, 2007) 433

21


XI

Halsbury’s Laws of Singapore (LexisNexis, 3rd ed, 2009)

12

Treitel, Guenter and F M B Reynolds, Carver on Bills of Lading (Sweet & Maxwell, 3rd ed, 2001)

3, 4

STATUTE

Referred to at page:

Arbitration Act 1996 (UK)

2

Contracts (Rights of Third Parties) Act (Singapore, cap 53B, 2002)

19

International Arbitration Act (Singapore, cap 143A, 2002 rev ed)

2, 3, 10, 11

Interpretation Act (Cap 1, 2002 rev ed)

11

Merchant Shipping Act (Singapore, cap 179, 1996)

6, 12

Singapore Chamber of Maritime Arbitration Rules (2015, 3rd ed)

2, 3

UNCITRAL Model Law on International Commercial Arbitration 1985

2, 3, 10, 11


1

STATEMENT OF FACTS

1. The Claimant, Furnace Trading Pte Ltd (‘FURNACE’) entered into a time charterparty dated 15

February 2016 – the Head Charterparty in this dispute – with the registered owner of the M.V.

Tardy Tessa (‘Tardy Tessa’), Imlam Consignorist GmbH (‘Imlam’).

2. On 1 September 2016, FURNACE and one of the two respondents, Inferno Resources Sdn Bhd

(‘INFERNO’), entered into a voyage charterparty for the carriage of Australian coal from Newcastle,

Australia to a port to be nominated during the voyage. INFERNO then sub-voyage chartered the

Tardy Tessa to the other respondent, Idoncare Berjaya Utama Pty Ltd (‘IDONCARE’).

3. The vessel presented at the port of loading in Newcastle on 1 October, and Bills of Lading were

signed and released on 4 October. Clause 1 in the Conditions of Carriage incorporated ‘all terms

and conditions, liberties and exceptions of the Charter Party’ but did not identify a specific

charterparty. FURNACE drew up a freight invoice, dated 9 October.

4. The vessel arrived at Singapore for bunkering at 1515 local time (‘LT’) on 10 October and reached

Singapore’s outside port limits at 0800LT on 11 October. Between 11 and 16 October, FURNACE

requested that INFERNO nominate a discharge port and pay freight. INFERNO explained that it was

waiting for freight and for disport nomination from its sub-charterer, IDONCARE. Citing congestion

at Chinese ports, INFERNO attempted to nominate Busan, South Korea, on 16 and 17 October, but

FURNACE did not accept these. On 21 October, INFERNO requested nomination of Ningbo, China.

5. On 19 October, FURNACE sent notice to perform to INFERNO regarding its freight and disport

obligations. On 20 October, it sent notice of lien on cargo to INFERNO and notice of lien on sub-

freight to IDONCARE. Then, on 22 October, FURNACE sent notice of termination to INFERNO alleging

failure to make payment of freight in accordance with Charterparty terms.

6. FURNACE commenced arbitral proceedings on 25 November 2016, and made an urgent application

to sell the cargo on board on 1 December. A joint expert, Caleb Coleman, was then appointed to

value the cargo. The parties confirmed that, to the best of their belief, the vessel remains adrift at its

last reported location.


2

APPLICABLE LAW

I. SINGAPOREAN LAW APPLIES TO ALL ASPECTS OF THE DISPUTE

7. The Tribunal has the power to determine its own jurisdiction under the Kompetenz-Kompetenz

doctrine.1 Since the parties have selected Singapore as the seat, Singaporean law governs the

procedure of the arbitration (A). The substantive law applying to the disputes between FURNACE

and INFERNO (B) and between FURNACE and IDONCARE (C) is also Singaporean.

A. Singaporean law governs the procedure of the arbitration

8. FURNACE has stated,2 and INFERNO and IDONCARE have agreed,3 that they consent to the arbitration

and to the rules of the Singapore Chamber of Maritime Arbitration (‘SCMA Rules’). It follows that,

absent any express nomination to the contrary, the juridical seat – the legal rather than geographical

seat – is Singapore, and the International Arbitration Act (‘IAA’)4 applies.5 The SCMA Rules

provide that where Singapore is the juridical seat, the lex arbitri is that of Singapore. 6

Consequently, all rules applying to the procedure of the arbitration, including the selection of the

tribunal and the rules of evidence, are Singaporean.

B. Singaporean law is the substantive law applying to FURNACE and INFERNO’s dispute

9. The Voyage Charterparty governs the relationship between FURNACE and INFERNO.7 In that

charterparty, FURNACE and INFERNO agree to ‘Singapore law and arbitration as per SCMA Rules’.8

The designation ‘Singapore law’ is to be construed ‘as directly referring to the substantive law’ of

Singapore, in accordance with art 28 of the UNCITRAL Model Law on International Commercial

1 UNCITRAL Model Law on International Commercial Arbitration 1985 s 2 art 16(1); International Arbitration Act (Singapore, cap 143A, 2002 rev ed) sch 1; Arbitration Act 1996 (UK) s 30(1); West Tankers Inc v Allianz SpA [2009] AC 1138, 1150 [57] (Advocate General Kokott); Dallah Real Estate and Tourism Holding Co v The Minister of Religious Affairs, Government of Pakistan [2010] 2 Lloyd's Rep 691, 715 [95] (Lord Collins); Nigel Blackaby and Constantine Partasides with Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration (Oxford University Press, 6th ed, 2015) (‘Redfern and Hunter’) 340–1 [5.105–9]. 2 Record 72 [6] and Record 78 [6]. 3 Record 84 [7], 87–8 [6]–[8]. 4 (Singapore, cap 143A, 2002 rev ed). 5 Singapore Chamber of Maritime Arbitration Rules 22.1; Redfern and Hunter 173 [3.56]. 6 SCMA Rule 22.1. 7 Record 20. 8 Record 23 [29].


3

Arbitration 1985 (‘Model Law’),9 which has force of law in this dispute.10 The SCMA Rules

confirm the application of this designation ‘to the substance of the dispute’. 11 The parties have

therefore selected the substantive law of Singapore.

C. Singaporean law is the substantive law applying to FURNACE and IDONCARE’s dispute

10. IDONCARE is bound by the terms of the Time Charterparty, as incorporated by the Bill of Lading

(1). The substantive law of the Time Charterparty is that of Singapore (2).

1. The Time Charterparty is incorporated by the Bill of Lading

11. The Bill of Lading issued to IDONCARE and dated 4 October 2016 provides that:

All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf,

including the Law and Arbitration Clause/Dispute Resolution Clause, are herewith

incorporated.12

12. Neither the Time Charterparty of 15 February 201613 nor the Voyage Charterparty of 1 September

201614 – the two charterparties in evidence – are dated 4 October 2016. However, in the interest of

giving commercial effect to the agreement, one of these should be said to have been incorporated.15

The Time Charterparty is the only contract that could have been incorporated into the Bill of

Lading. This is for three reasons: the form of the Bill of Lading is not the form required by the

Voyage Charterparty; the Time Charterparty is not one of demise; and the Time Charterparty, as the

head charterparty in this dispute, is to be incorporated by convention.

13. First, the specific formal requirements of the Voyage Charterparty barred its incorporation. The

Voyage Charterparty required that ‘Bills of Lading shall be presented and signed by the Master as

9 UNCITRAL Model Law on International Commercial Arbitration 1985 s 2 art 28; IAA sch 1. 10 IAA s 3(1). 11 SCMA Rule 21. 12 Record 42 [1]. 13 Record 1. 14 Record 20. 15 Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania Naviera SA (‘The San Nicholas’) [1976] 1 Lloyd’s Rep 8, 11 (Lord Denning); K/S A/S Seateam & Co v Iraq National Oil Co (‘The Sevonia Team’) [1983] 2 Lloyd’s Rep 640, 644 (Lloyd J); National Navigation Co v Endesa Generacion SA (‘The Wadi Sudr’) [2009] 1 Lloyd's Rep 666, 697 (Gloster J); Guenter Treitel and FMB Reynolds, Carver on Bills of Lading (Sweet & Maxwell, 2001) 82 [3–023].


4

per the “COAL-OREVOYBILL” Bill of Lading form’.16 The Bill of Lading was not presented in

the COAL-OREVOYBILL form, but in the custom form of Imlam, the shipowner.17 Imlam is a

party to the Time Charterparty but not the Voyage Charterparty.18 It is also the signatory of the Bill

of Lading through its Master, Tan Xiao Ming. It is convention – and, indeed, the commercially

sensible outcome – that a bill of lading incorporates a charterparty that concerns one of its parties

instead of one that does not;19 and that convention holds particular weight in this case where the Bill

is presented in the custom form of that party.

14. Secondly, the terms of the Time Charterparty supported its incorporation by the Bill of Lading. The

Time Charterparty is not one of demise, and so possession of the vessel remains at all times with

Imlam.20 Where a charterparty is not one of demise, there is a common law presumption that any

bills of lading arising in relation to that charterparty do not create a contractual relationship with the

charterer.21 In this instance, absent any conditions rebutting this presumption, the Bill of Lading

does not evidence a contractual relationship involving the parties to the Voyage Charterparty –

FURNACE or INFERNO – but rather evidences a relationship between Imlam and IDONCARE, as

shipowner and shipper. It would not, therefore, make commercial sense for the Bill of Lading to

incorporate an agreement that did not bind either of the two parties to the Bill of Lading.

15. Thirdly, it is convention that the head charterparty be incorporated, particularly in cases where the

balance of evidence negatives a compelling case for the incorporation of other charterparties.22 The

16 Record 22 [25]. 17 Record 41. 18 Record 1; Record 20. 19 Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania Naviera SA (‘The San Nicholas’) [1976] 1 Lloyd’s Rep 8, 11 (Lord Denning). 20 Record 10 [26]. 21 Sandeman v Scurr (1866) LR 2 QB 86, 97 (Cockurn CJ); Manchester Trust Ltd v Furness Withy & Co [1895] 2 QB 539, 546 (Lindley LJ); Wehner v Dene Steam Shipping Co [1905] 2 KB 92, 98 (Channell LJ); Guenter Treitel and FMB Reynolds, Carver on Bills of Lading (Sweet & Maxwell, 2001) 126–30 [4–030]–[4–032]. 22 Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania Naviera SA (‘The San Nicholas’) [1976] 1 Lloyd’s Rep 8, 11 (Lord Denning); K/S A/S Seateam & Co v Iraq National Oil Co (‘The Sevonia Team’) [1983] 2 Lloyd’s Rep 640, 644 (Lloyd J); Navigazione Alta Italia SpA v Svenska Petroleum AB (‘The Nai Matteini’) [1988] 1 Lloyd’s Rep 452, 459 (Gatehouse J).


5

evidence in this case is clearly in favour of the incorporation of the Time Charterparty; the Bill of

Lading must therefore be read as incorporating all of its relevant terms.23

2. The Time Charterparty is governed by the substantive law of Singapore

16. The substantive law of the Time Charterparty is Singaporean, as clause 50 states that ‘[t]his Charter

Party shall be governed by and construed in accordance with the laws of Singapore, excluding the

conflicts of laws rules’ – and therefore including the substantive law.24 As that charterparty is

incorporated by the Bill of Lading, signed by the Master on behalf of Imlam,25 all of its terms bind

the Bill’s holder, IDONCARE, with respect to any dispute arising ‘in any way out of or in connection

with this Charter Party’, including this dispute with FURNACE.26 Therefore, Singaporean law is the

substantive law applying to FURNACE and IDONCARE’s relationship.

ARGUMENTS ON THE INTERIM APPLICATION FOR SALE OF CARGO

17. FURNACE seeks to give effect to an alleged lien over the cargo through a sale pendente lite. No sale

of the cargo should be made. First, FURNACE does not have a valid or enforceable lien on the cargo,

to which a sale would give effect (II). Secondly, even if it did, the Tribunal cannot and should not

order the sale of the cargo (III).

II. FURNACE’S LIEN OVER CARGO IS NOT VALID OR ENFORCEABLE

18. A lien on cargo entitles a party to retain possession of goods belonging to another party, but only

where certain amounts owing to the claiming party are outstanding.27 This right may arise at

common law, by statute, or private agreement. Common law liens exist only where the payment of

freight is contemporaneous with delivery of goods, and not where freight is payable in advance.28

23 T W Thomas & Co Ltd v Portsea Shipping Co Ltd [1912] AC 1, 6 (Lord Loreburn LC and Lord Atkinson); Miramar Shipping v Holborn Oil (‘The Miramar’) [1984] 2 Lloyd’s Rep 129, 131 (Lord Diplock). 24 Record 18 [50]. 25 Record 3 [8(a)]. 26 Record 42 [1]. 27 Hammonds v Barclay (1802) 2 East 227, 235 (Grose J); Santiren Shipping Ltd v Unimarine SA (‘The Chrysovalandou Dyo’) [1981] 1 Lloyd’s Rep 159, 164 (Mocatta J). 28 Kirchner v Venus (1859) 12 Moo PC 361, 390 (Lord Kingsdown); Tamvaco v Simpson (1866) LR 1 CP 363, 372 (Blackburn J); Ex parte Nyholm; Re Child (1873) 29 LT 634, 635 (James LJ); Allison v Bristol Marine Insurance Co (1876) 1 App Cas 209, 225 (Brett J); Gardner v Trechmann (1884) 15 QBD 154, 159 (Lindley LJ).


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As the Voyage Charterparty between FURNACE and INFERNO required advance freight, FURNACE

has no lien at common law.29 Nor can FURNACE claim a statutory lien, for no statute confers that

right. No reference to a lien in the Merchant Shipping Act assists FURNACE, as the statute merely

regulates the operation of liens already existing.30 Therefore, to prove a valid lien, FURNACE must

identify a contractual source of that lien. No right to lien arises under the Voyage Charterparty (A)

or under the Bill of Lading (B). In any event, INFERNO did not owe a debt to FURNACE, for which a

lien could be exercised (C). However, even if it did, the lien was not properly exercised (D).

A. No right of lien arises under the Voyage Charterparty

19. For FURNACE to possess a contractual lien, the right to that lien must arise under a contract with the

owner of the cargo over which the lien is exercised.31 FURNACE relies on the Voyage Charterparty

in asserting its right to lien.32 Clause 19(a) of the ‘COAL-OREVOY’ in the Voyage Charterparty

(‘the Lien Clause’) is the only clause which might confer such a right. This clause provides that

FURNACE ‘shall have a lien on the cargo for freight … due to them under this Charter Party.’33

However, the owner of the cargo was not party to the Voyage Charterparty, which only bound

FURNACE and INFERNO. Therefore, the Lien Clause could not confer a right of lien over goods

owned by IDONCARE, who is owner of the cargo by virtue of the fact that it is identified as ‘shipper’

on the Bill of Lading, and holds all three copies of the Bill.34

20. Even if a lien could be exercised over goods that are owned by a party with whom the lienor has no

contract, that could only be where the owner, a third party, consents to the lien.35 However, here,

IDONCARE has indicated that it disputes FURNACE’s right to lien.36

29 Record 22. 30 Merchant Shipping Act (Singapore, cap 179, 1996) ss 127–8. 31 Turner v Haji Goolam [1904] AC 826, 837 (Lord Lindley); Steelwood Carriers Inc of Monrovia v Evimeria Compania Naviera SA (‘The Agios Giorgis’) [1976] 2 Lloyd's Rep 192, 203 (Mocatta J); The “Bridge” [1998] 2 SLR(R) 185, 187 [11] (Christopher Lau JC). 32 Record 80 [17]. 33 Record 31. 34 Record 41–6; Clarification 2(1). 35 Aegnoussiotis Shipping Corporation v AS Kristian Jebsons Rederi of Bergen (‘The Aegnoussiotis’) [1977] 1 Lloyd’s Rep 268, 276 (Donaldson J). 36 Record 83 [3].


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B. No right of lien arises under the Bill of Lading

21. Further, FURNACE cannot rely on the Bill of Lading in asserting a contractual lien, as it is not party

to the Bill. This is because, where the Time Charterparty is not one of demise,37 ‘the contract

contained in the bill of lading is made, not with the charterer [FURNACE], but with the owner

[Imlam]’.38 Consequently, Imlam, not FURNACE, is the only party that can assert a contractual lien

under the Bill of Lading.

22. Nor could FURNACE claim that Imlam has a lien on cargo, which it may enforce as trustee for

FURNACE’s benefit.39 As the charterparty incorporated in the Bill of Lading, the Time Charterparty

governs the contractual lien.40 According to the Time Charterparty, ‘[t]he Owners shall have a lien

upon all cargoes … for any amounts due under this Charter Party’.41 However, as Furnace only

claims freight under the Voyage Charterparty, and no amounts are owed under the Time

Charterparty, no right of lien can arise.

23. In the alternative, should the Tribunal find the Voyage Charterparty to have been incorporated into

the Bill of Lading, FURNACE still may not benefit from a lien. The Lien Clause states that ‘[t]he

Owners shall have a lien on the cargo for freight … due to them under this Charter Party’.42 On the

words of the clause, the right of lien could only arise where amounts for which the lien was

purportedly exercised were amounts due to Imlam, the owner – and thus the party contractually

entitled to exercise the lien. In this instance, the amount for which the lien was sought was owed not

to Imlam, but to FURNACE. Therefore, no right of lien could arise under the Bill of Lading.

C. INFERNO does not owe freight under the Voyage Charterparty

37 Above [14]; Record 10. 38 Wehner v Dene Steam Shipping Co [1905] 2 KB 92, 98 (Channell J). 39 Cf Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SLR 1159, 1068 [25], 1172 [36] (Belinda Ang Saw Ean J). 40 Above [11]–[15]. 41 Record 10 (emphasis added). 42 Record 31 (emphasis added).


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24. Even if a right of lien did exist, it could only be exercised when amounts became outstanding from

INFERNO. In this case, contrary to FURNACE’s submission, no freight was outstanding from INFERNO

because the conditions precedent to the obligation to pay freight never occurred.

25. Clause 19 of the Fixture Recap (‘the Freight Clause’) states that freight is ‘to be paid within five (5)

banking days after completion of loading and signing/releasing B/Ls marked “freight payable as per

charterparty” and rcpt of owners’ FRT INV, but in any case BBB’43 (‘before breaking bulk’, which

occurs after delivery and upon discharge of the cargo).44 These three events constitute ‘conditions

precedent to the payment of freight’.45 While loading was completed on 4 October,46 and bills of

lading were signed and released on the same date,47 there is no evidence that the freight invoice was

received. Although the freight invoice in evidence is dated 9 October, this does not evidence receipt

by INFERNO. In his email at 1921LT on 10 October, FURNACE’s representative Gordon Grill

stipulates only that ‘freight is to be paid within five (5) ba[n]king days after completion of loading

and signing / release of bills of lading’.48 The omission of any reference to receipt of the freight

invoice, the third condition precedent, indicates that FURNACE failed to ensure INFERNO received the

invoice. This means that the obligation to pay freight did not arise.

26. But on the assumption that the conditions precedent had been fulfilled, FURNACE also contends that,

under the Freight Clause, freight was due within five banking days of the stipulated events. This

interpretation is wrong. On the natural and ordinary meaning of the words,49 the Freight Clause

gives rise to an ambiguity by providing for payment not only ‘within five banking days’ but also ‘in

any case BBB’. This ambiguity should be resolved in favour of the latter alternative, as this is the

43 Record 22. 44 D Amico Shipping Italia SP v Endofa DMCC [2016] EWHC 2223 (Comm) (24 June 2016) [11] (Mr David Foxton QC sitting as a Deputy Judge of the High Court). 45 Bank of Boston Connecticut v European Grain and Shipping Ltd (‘The Dominique’) [1989] AC 1056, 1066 (Mustill LJ). 46 Record 47. 47 Record 41–6. 48 Record 51. 49 Overseas Union Bank Ltd v Lew Keh Lam [1998] 3 SLR(R) 219, 225 [18] (Yong Pung How CJ, M Karthigesu and L P Thean JJA); Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029, 1057–8 [56] (Chan Sek Keong CJ, Andrew Phang Boon Leong and V K Rajah JJA); Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2014] SLR 193, 209 [28] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J).


9

only commercially reasonable reading.50 Under FURNACE’S interpretation of the Freight Clause –

that freight here was due within five days of the stipulated events – the only way in which the

countervailing phrase ‘in any case BBB’ is given meaning would be for the voyage to have been

shorter than five days, in which case freight must be paid before breaking bulk. However, as no

voyage contemplated under the Charterparty would have been shorter than five banking days,51

FURNACE’s interpretation fails to give any meaning to that clause.

27. Further, it is unreasonable to interpret the Freight Clause restrictively to require substantially

advanced payment, as FURNACE’s right to freight only accrues upon delivery of the cargo. This is

because the words ‘in any case BBB’ contemplate the obligation to pay freight arising immediately

before the correlative right to receive it. At common law, freight is earned by the carriage and

arrival of the goods.52 The time when freight is earned can only be advanced if the Voyage

Charterparty expressly provides so.53 The Charterparty contains no such stipulation.

28. Therefore, though the Freight Clause provides for payment within five days and before breaking

bulk, only once the latter has passed will INFERNO be in breach. Since the Voyage Charterparty was

terminated before bulk was broken, thereby releasing both parties from further performance under

the contract, 54 INFERNO therefore has no obligation to pay freight to FURNACE.

D. The lien over the cargo was not properly exercised

50 Chai Chung Ching Chester v Diversey (Far East) Pte Ltd [1991] 1 SLR(R) 757, 766–7 [31]–[32] (Goh Phai Cheng JC); Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029, 1095 [131] (Chan Sek Keong CJ, Andrew Phang Boon Leong and V K Rajah JJA). 51 The voyage from the Newcastle to Singapore was completed in six days: Record 50. 52 Dakin v Oxley (1864) 15 CB(NS) 647, 665 (Willes J); Ocean Projects Inc v Ultratech Pte Ltd [1994] 2 SLR(R) 245, 261 [37] (Yong Pung How CJ, M Karthigesu and L P Thean JJA). 53 See Vagres Compania Maritima SA v Nissho-Iwai American Corporation (‘The Karin Vatis’) [1988] 2 Lloyd’s Rep 330, 332 (Lloyd J) where ‘the provision that freight is deemed to be earned as cargo loaded is … the paramount or controlling provision’. See also Weir v Girvin [1900] 1 QB 45, 52–3 (Vaughan Wiliams LJ) where freight deemed respectively ‘earned on signing bills of lading’, ‘non-returnable cargo and/or vessel lost or not lost’ and ‘due … ship lost or not lost’ was, on account only of those stipulations, considered earned in advance; Compania Naviera General SA v Kerametal Ltd (‘The Lorna I’) [1983] 1 Lloyd’s Rep 373, 374 (Sir Donaldson MR); Bank of Boston Connecticut v European Grain and Shipping Ltd (‘The Dominique’) [1989] AC 1056, 1063 (Mustill LJ). 54 Bank of Boston Connecticut v European Grain and Shipping Ltd (‘The Dominique’) [1989] AC 1056, 1108 (Lord Oakbrook).


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29. A lien can only be properly exercised if the lienor has lawful and uninterrupted possession of the

property.55 Here, there is no evidence that either FURNACE or Imlam, as trustee of FURNACE’s

benefit, retained possession of the cargo. As the Time Charterparty was not one of demise,56

possession of the vessel and its cargo was never assigned to FURNACE, but remained at all times

with Imlam.57 Moreover, in the absence of any definitive evidence concerning the location and

condition of the vessel and cargo,58 it cannot be said that Imlam retained the capacity to exercise the

degree of ‘physical custody and control’ required to demonstrate possession of the cargo.59

III. THE TRIBUNAL CANNOT AND SHOULD NOT ORDER AN INTERIM SALE OF THE CARGO

30. The Tribunal does not have the power under s 12(1)(d) of the IAA to order a sale of cargo on board

the vessel (A). Even if it did, the Tribunal should not exercise its discretion here to order a sale (B).

A. The Tribunal does not have the power to order a sale of the cargo

31. The Tribunal lacks the authority to grant interim relief in the form of a sale of the cargo pendente

lite under Singaporean statute. Section 12(1) of the IAA relevantly provides:

an arbitral tribunal shall have powers to make orders or give directions to any party for

(d) the preservation, interim custody or sale of any property which is or forms part of the

subject-matter of the dispute.

32. Section 12(1)(d) is without prejudice to art 17 of the Model Law, which states that the Tribunal may

make any necessary ‘interim measure of protection … in respect of the subject-matter of the

55 Tappenden v Artus [1964] 2 QB 185, 195 (Diplock LJ); The “Dwima 1” [1996] 1 SLR(R) 927, 934 [19] (S Rajendran J); Pan-United Shipyard Pte Ltd v The Chase Manhattan Bank (National Association) [1999] 1 SLR(R) 703, 709 [15] (M Karthigesu JA, Lai Kew Chai and Goh Joon Seng JJ). 56 Above [14]; Record 10. 57 Port Line v Ben Line [1958] 1 Lloyd’s Rep 290, 299 (Diplock J); London & Overseas Freighters Ltd v Timber Shipping Co SA (‘The London Explorer’) [1972] AC 1, 13 (Lord Reid); Whistler International Ltd v Kawasaki Kisen Kaisha Ltd (‘The Hill Harmony’) [2001] AC 638, 641 (Lord Birmingham). 58 Clarification [5]. 59 Soon Peng Yam v Maimon bte Ahmad [1995] 1 SLR(R) 279, 284 [11] (Goh Joon Seng J); Chua June Ching Michelle v Chai Hoi Tong [2011] 4 SLR 418, 423 [11] (Choo Han Teck J).


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dispute’.60 Therefore, to have power to grant the interim sale of the cargo, two conditions must be

met: the cargo must form part of the subject-matter of the dispute; and the sale must be necessary.61

33. First, the cargo does not constitute part of the subject-matter of the dispute. This subject-matter is

defined by the Claimant in its Notice of Arbitration, under the heading, ‘Brief Statement of the

Nature and Circumstances of the Dispute’.62 The Notice makes clear that there are two issues that

comprise the subject-matter of the dispute:

(1) the failure to pay freight;63 and

(2) the failure to nominate a legitimate discharge port on time.64

34. However, in the alternative, in giving meaning to the phrase ‘subject-matter’ in the statute, the

Tribunal must take a ‘purposive interpretation’.65 The Tribunal’s purpose in making an interim

award is to maintain the status quo pending the outcome of the arbitration:66 to keep ‘property in its

actual condition until the legal title can be established’.67 The cargo cannot be considered ‘subject-

matter’ as it is not property on which the dispute rests; it is merely property that FURNACE wishes to

sell were it to succeed in this dispute.

35. Furthermore, any argument that a lien on the cargo – rather than the cargo itself – is the subject-

matter requiring preservation must fail. Such a lien is not a right that may be preserved by means of

an interim order in Singapore. Contractual rights may only be preserved where damages would be

60 IAA s 3; Model Law art 17. See, eg, PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] 4 SLR 364, 468 [221] (Sundaresh Menon CJ, Chan Sek Keong SJ and Quentin Loh J). 61 Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 449, 468 [52] (Sundaresh Menon CJ, Andrew Phang Boon Leong JA and Woo Bih Li J). 62 Record 78. 63 Record 79 [15(1)]. 64 Record 79 [15(2)]. 65 Interpretation Act (Cap 1, 2002 rev ed) ss 9A(1)–(4); Challenger Technologies Pte Ltd v Public Prosecutor [1994] SLR(R) 849, 857 [35] (Lai Kew Chai J); Tee Soon Kay v Attorney-General [2006] 4 SLR(R) 385, 391 [15] (Tan Lee Meng J); Public Prosecutor v Low Kok Heng [2007] 4 SLR 183, 196 [41] (V K Rajah JA); Xu Ren Li v Nakano Singapore (Pte) Ltd [2012] 1 SLR 729, 734 [16] (Chan Sek Keong CJ); Dorsey James Michael v World Sport Group Pte Ltd [2013] 3 SLR 354, 360–1 [18]–[20] (Sundaresh Menon CJ, Chao Hick Tin and V K Rajah JJA); Attorney-General v Ting Choon Meng [2017] SGCA 06 (16 January 2017) [18] (Andrew Phang Boon Leong and Chao Hick Tin JJA). 66 Jones v Pacaya Rubber & Produce Co [1911] 1 KB 455, 457 (Buckley LJ); Donmar Productions Ltd v Bart [1967] 2 All ER 338, 339 (Ungoed-Thomas J); Holiday Inns Inc v Hotel Enterprises Ltd [1974–1976] SLR(R) 362, 369–70 [20]–[24] (F A Chua J); Lee Hung Khoon v Yeo Tang Mui [1990] 1 SLR(R) 459, 464 [14] (L P Thean J); Redfern and Hunter 421 [7.14]. 67 Holiday Inns Inc v Hotel Enterprises Ltd [1974–1976] SLR(R) 362, 370 [24] (F A Chua J).


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an inadequate remedy,68 a principle more narrowly applied in Singapore than in other common law

jurisdictions.69 The lien over the cargo has a clear compensable value: that of the cargo itself.70

36. Secondly, a sale is not necessary in the circumstances. A measure is necessary if, without it, that

‘which is sought to be preserved would be lost’.71 An order for a sale is sought on the premise of

preserving the asset. There is insufficient evidence that the cargo is depreciating at a rate that would

necessitate the sale of cargo owned by IDONCARE, who has no contractual relation with FURNACE.72

37. Even if the cargo needs to be preserved, where there are reasonably available alternatives for

preserving the asset – as there are here – the order for sale is unnecessary.73 Principally, the Tardy

Tessa may dock at the nearest port and unload the cargo into a warehouse for storage. There is no

reason why the cargo should remain on board and at sea. Furthermore, there is no evidence that

local authorities would seize the assets or, were the court to find a valid lien, that the lien would not

be preserved upon docking, or would not be enforceable by the court. 74 To the contrary,

Singaporean courts recognise a right to lien.75 Therefore, a sale of the cargo is unnecessary.

B. In any case, the Tribunal should not exercise its discretion to order a sale of the cargo

38. Even if the Tribunal had the power to order a sale, it should not exercise that power, as the outcome

would be unjust. 76 For the Tribunal to grant interim relief, consistently with the authority

interpreting the analogous provision applying to courts, FURNACE must show that the desired order

68 Maldives Airports Co Ltd and another v GMR Malé International Airport Pte Ltd [2013] 2 SLR 449, 464–7 [40]–[48] (Sundaresh Menon CJ, Andrew Phang Boon Leong JA and Woo Bih Li J); ZIM Integrated Shipping Services Ltd v. European Containers KS [2013] 2 CLC 800, 807 [28] (Males J); Tiananmen KTV (2013) Pte Ltd and others v Furama Pte Ltd [2015] 3 SLR 433, 444–5 [41]–[49] (Lee Seiu Kin J); Redfern and Hunter 432 [7.45]–[7.50]. 69 Euroil Ltd v Cameroon Offshore Petroleum SARL [2014] EWHC 52 (Comm) (14 January 2014) [19] (Males J); Halsbury’s Laws of Singapore vol 18 (LexisNexis, 3rd ed, 2009) [240.422]. 70 Record 102. 71 Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 449, 465 [44] (Sundaresh Menon CJ). 72 Record 100. Cf Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SLR 1159, 1181 [62] (Belinda Ang Saw Ean J). 73 Maldives Airport Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 449, 465 [44] (Sundaresh Menon CJ, Andrew Phang Boon Leong JA and Woo Bih Li J). 74 Merchant Shipping Act (Singapore, cap 179, 1995), ss 127–8. Cf Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SLR 1159, 1180 [61] (Belinda Ang Saw Ean J). 75 Merchant Shipping Act (Singapore, cap 179, 1995). See also Ocean Projects Inc v Ultratech [1994] 2 SLR(R) 245; Faith Maritime Co Ltd v Feoso (Singapore) Pte Ltd [2002] 2 SLR(R) 1088, 1116 [135] (Woo Bih Li JC). 76 Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 449, 468 [53] (Sundaresh Menon CJ).


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passes the ‘balance of convenience’ test.77 This requires them to ‘take whichever course appears to

carry the lower risk of injustice if it should turn out to have been wrong at trial in the sense of

granting relief to a party who fails to establish his rights at the trial, or of failing to grant relief to a

party who succeeds at the trial’.78

39. Concerning the first possibility, if FURNACE fails on the merits, IDONCARE will lose the opportunity

to sell its cargo at market rate. Furthermore, both INFERNO and IDONCARE will be exposed to

liability in respect of any other agreements of which the cargo is the subject-matter. Concerning the

second possibility, if the Tribunal does not order the sale yet FURNACE succeeds at trial, there is no

evidence that either INFERNO or IDONCARE would be unable to meet its obligations in damages.

ARGUMENTS ON THE MERITS OF THE CLAIM

IV. INFERNO DID NOT BREACH THE TERMS OF THE VOYAGE CHARTERPARTY CONCERNING

NOMINATION OF A PORT OF DISCHARGE

40. Clause 16 of the Fixture Recap of the Voyage Charterparty (‘the Nomination Clause’) stipulates:

1 spsb China (Dalian, Jinzhou, Yingkou, Yantai, Qingdao, Shanghai, Tianjin, Ningbo) CHOPT

CHTRS to declare discharge port when vessel passes Singapore for bunkering.79

41. It therefore obligated INFERNO to nominate a port of discharge, which it fulfilled by nominating

Busan on 16 and 17 October 2016, or, alternatively, by nominating Ningbo on 21 October 2016.

Though Busan was not a port named by the Nomination Clause, the Tribunal ought to imply a term

allowing nomination of reasonable ports, such as Busan, in circumstances where all the named ports

were impossible (A). Here, all the named ports were impossible (B). Further, the nominations of

Busan and Ningbo complied with the time stipulation in the Nomination Clause (C).

A. A term should be implied allowing nomination of an alternative reasonable port

77 American Cyanamid Co v Ethicon Ltd [1975] AC 396, 405 (Lord Diplock); Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 449, 468 [53] (Sundaresh Menon CJ). 78 Chuan Hong Petrol Station Pte Ltd v Shell Singapore (Pte) Ltd [1992] 2 SLR(R) 1, 18 [88] (Warren L H Khoo J); Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 449, 468 [53] (Sundaresh Menon CJ). 79 Record 21.


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42. Though Busan was not an express option under the Nomination Clause,80 its nomination constituted

performance of the obligation to nominate. This is because a term should be implied allowing

nomination of another reasonable port where all named ports are impossible, that is, where delay at

these ports would frustrate the commercial object of the venture.81 This term meets the requirements

for implication in fact under Singaporean law,82 because it does not seek to fill a gap which the

parties had contemplated but did not address (1), and because it is a term necessary for the business

efficacy of the contract, expressible in a form which passes the ‘officious bystander test’ (2).

1. The parties did not contemplate the gap

43. There is no indication that the parties contemplated the sort of situation which eventually befell

them. No express term dealt with circumstances in which all the named ports were severely

congested or with the processes to be followed thereon.83 The problem which did arise in respect of

congestion was a ‘very different problem’84 to any contemplated under the Nomination Clause.

Instead, the clause was only concerned with the nature of the port to be chosen, the timing of

nomination, and arrival at the discharge port. It was not concerned with the procedure for

addressing serious obstacles to performance of the obligation created by the clause.

2. An implied term allowing nomination of a reasonable port is necessary to achieve business

efficacy and can be formulated according to the officious bystander test

44. The problem presented by a situation in which all named ports are severely congested is one for

which an implied term is necessary, because without the implied term here sought, the contract

would be rendered commercially inoperable. The commercial object of the Voyage Charterparty

80 Record 21. 81 See, eg, Reardon Smith Line v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42, 112–3 (Wilmer LJ). 82 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193, 234 [101] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J); The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2015] 3 SLR 695, 705 [28] (Sundaresh Menon CJ, Chao Hick Tin and Andrew Phang Boon Leong JJA); Turf Club Auto Emporeium Pte Ltd v Yeo Boong Hua [2017] SGCA 21 (22 March 2017) [129] (Sundaresh Menon CJ, Chao Hick Tin and Judith Prakash JJA). 83 The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2015] 3 SLR 695, 705 [31] (Sundaresh Menon CJ, Chao Hick Tin and Andrew Phang Boon Leong JJA); Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua [2017] SGCA 21 (22 March 2017) [130] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J). 84 TYC Investment Pte Ltd v Tay Yun Chwan Henry [2014] 4 SLR 1149, 1182 [166] (Lee Kim Shin JC).


15

was the carriage of goods to the discharge port. This is because, at the discharge port, FURNACE

would have earned its freight, and INFERNO would have either profited from the sale of the cargo or

earned its freight from its sub-charterer.

45. In the absence of the implied term, the vessel could not have proceeded to a port and discharged its

cargo. This is because nomination of an impossible port does not amount to a valid exercise of the

charterer’s option to nominate.85 If all named ports were impossible, no valid nomination could be

made, and the vessel could not proceed to and therefore unload at a nominated port. Even if an

invalid nomination were accepted and the vessel were to proceed to a congested port, the unloading

of goods would have been considerably delayed, defeating the commercial object of the voyage.

The implied term here sought would address this gap, by allowing INFERNO to make a valid

nomination, and by ensuring the goods would be delivered. Accordingly, because there was no

other measure by which this gap could have been addressed, the term is necessary.86

46. The term must also be able to take a form to which the parties ‘would have responded “Oh, of

course!”’ had it been put to them during negotiation.87 Here, for the reasons above, that form would

be something akin to: where all named ports are impossible, the obligation to nominate may be

fulfilled by nomination of another reasonable port. No problem of expression or specificity would

here mean the term could not be implied.88 Accordingly, the term in question should be implied.

B. The eight Chinese ports were impossible at the time of nomination

47. Whether or not a port is impossible is a question of commercial, not physical possibility.89 Delay

will render a port ‘impossible’ when it frustrates the commercial object of the venture, so that the

85 Aktieselskabet Olivebank v Dansk Svorlsyre Fabrik [1919] 2 KB 162, 169 (Duke LJ); Reardon Smith Line v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42, 110 (Wilmer LJ); Aegean Sea Traders Corporation v Repsol Petroleo SA (‘The Aegean Sea’) [1998] 2 Lloyd’s Rep 39, 67 (Thomas J). 86 TYC Investment Pte Ltd v Tay Yun Chwan Henry [2014] 4 SLR 1149, 1182 [184] (Lee Kim Shin JC). 87 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193, 234 [101] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J). 88 The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2014] 4 SLR 806, 819 [62] (Edmund Leow JC). 89 Aktieselskabet Olivebank v Dansk Svorlsyre Fabrik [1919] 2 KB 162, 169 (Duke LJ); SS Matheos v Louis Dreyfus [1925] 1 AC 654, 662 (Lord Dunedin).


16

voyage would have been something different to that contracted for.90 Importantly, the Tribunal’s

finding in this regard ‘must depend on the reasonable foresight of the parties at the time’.91

48. In the present case, at the time of nomination, the parties knew there was congestion at the eight

named Chinese ports. That INFERNO sought several times to divert to Busan is an indication that this

congestion was of a serious kind.92 The diversion constituted an inherent disadvantage for INFERNO,

which explained that it was ‘ready to amend [freight] rate on open book [basis]’, 93 a concession that

would not have been made lightly. For it would have been no loss to INFERNO to nominate a

congested port had the delay been merely ordinary. The loss would have fallen instead on

FURNACE, which would have been deprived of time under which it could profit from another

voyage charter. The reasonable inference, therefore, is that the delay was serious.

49. Delay of this kind entailed that the voyage would have been something different from that

contracted for, because it constituted a realisation of the scenario given above, where all eight ports

were impossible.94 For FURNACE, the prevention of the arrival of the vessel meant that it could not

earn its freight and that it would suffer a significant loss in being deprived of the opportunity to

profit from other voyage charters. For INFERNO, it meant it would not earn freight in respect of its

sub-voyage charterparty. With evidence as to the seriousness of the delay, and without FURNACE

having led evidence to the contrary, FURNACE has not discharged its onus of showing breach,95

which here requires showing the named ports were not impossible.

C. Nomination complied with the time stipulation in the Nomination Clause

50. Both the nomination of Busan on 16 October,96 and the nomination of Ningbo on 21 October,97

90 Reardon Smith Line v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42, 112–3 (Wilmer LJ). 91 Reardon Smith Line v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42, 113 (Wilmer LJ) (emphasis added). 92 Record 57, 58, 60. 93 Record 58. 94 Above [45]. 95 Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR(R) 855, 889 [112]–[113] (Chan Sek Keong CJ, Andrew Phang Boon Leong and V K Rajah JJA). 96 Record 57. 97 Record 67.


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were made in accordance with the time stipulation in the Nomination Clause. The clause required

nomination to be made ‘when vessel passes Singapore for bunkering’.98 When INFERNO made its

nominations of Busan and Ningbo, the Tardy Tessa had not yet passed Singapore. The first

indication of this is that, at both instances of nomination, the vessel remained in Singapore’s outside

port limits (‘OPL’).99 In the correspondence between Gordon Grill and Peter Girvin, reference is

made to ‘OPL Singapore’, that is ‘Singapore’s OPL’, indicating that the OPL in which the Tardy

Tessa was drifting was still deemed Singapore.100

51. Secondly, FURNACE’s own itinerary records the vessel as not having departed Singapore before the

dates on which nomination was made. Significantly, the departure time remained recorded as an

estimate.101 Given that upon arrival at Singapore, the records listed an actual arrival time, whereas

in respect of China the time remained an unknown estimate, it is clear that upon arrival or

departure, it was the parties’ practice to list the actual time of the event in the itinerary. The absence

of an actual departure time in the itineraries indicates the vessel had therefore not departed

Singapore. This conclusion is further supported by FURNACE’s representations in its

communications that it was ‘NOT ABLE TO INSTRUCT VSL TO PROCEED’.102

52. Thirdly, to construe ‘when vessel passes Singapore’ as satisfied once the vessel has reached OPL

would lead to absurdity in situations where a risk to the commercial success of the contract arose in

the time between arrival at Singapore and arrival at OPL. For it would mean that INFERNO was still

bound to nominate a port before FURNACE sailed the vessel OPL, despite the obvious commercial

sense of waiting to obtain further information about that risk. This would be commercially absurd,

because it would compel INFERNO to nominate before determining the extent of the risk. This could

cause delays at the discharge port far greater than a delay of merely several days at Singapore. Nor

could INFERNO change its nomination if this occurred, because once nomination is made, the

98 Record 21. 99 Record 52–5, 57, 59, 61, 63, 65, 67. 100 Record 34. 101 Record 52–5, 57, 59, 61, 63, 65, 67. 102 Record 52–5, 57, 59, 61, 63, 65, 67.


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contract is treated as expressly stipulating the nominated port as the sole discharge port.103

Thereafter, the charterers are not permitted to name another port of discharge, save in exceptional

circumstances.104 In similar situations, courts have avoided constructions which allow hasty orders

by an owner to deprive the charterers of the right to nominate.105 Here, therefore, ‘when vessel

passes Singapore’ should not be read as FURNACE contends.

V. IN THE ALTERNATIVE, THE VOYAGE CHARTERPARTY WAS FRUSTRATED BEFORE THE

ALLEGED BREACHES

53. A contract is frustrated if there has been such a change as to render an obligation ‘radically

different’ to that which the contract contemplated.106 Here, if a term cannot be implied that would

have made the situation commercially workable, then it must be held that the congestion meant the

contract was ‘a different thing from that contracted for.’107 As explained above, the commercial

object of the voyage was no longer attainable because of the delay occasioned by the congestion.108

Where, at the time frustration is alleged to have occurred,109 it was reasonable to consider the delay

indefinite, a contract will be held frustrated.110 Since so many Chinese ports were congested, and

given INFERNO’s conduct, the reasonable inference is that the delay was indefinite.

54. As well as in respect of the delay, the congestion also frustrated the contract by giving rise to a

situation to which the contract could not apply.111 This is because no valid nomination could be

made, both because the contract only provided for nomination of one of the eight named ports, and

103 Heinrich Hanno v Fairlight Shipping (‘The Kostas K’) [1985] 1 Lloyds Rep 231, 234 (Hobhouse J). 104 Reardon Smith Line v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42, 90 (Sellers LJ); Bulk Shipping v Ipco Trading (‘The Jasmine B’) [1992] 1 Lloyd’s Rep 39, 42 (Judge Diamond QC). 105 Johs Thode v VDA De Gimeno Y CIA (‘The Steendiek’) [1961] 2 Lloyds Rep 138, 145 (Holroyd Pearce LJ). 106 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 728–9 (Lord Radcliffe); Lim Kim Som v Sheriffa Taibah bte Abdul Rahman [1994] 1 SLR(R) 233, 245–6 [27]–[29] (M Karthigesu and L P Thean JJA and Warren L H Khoo J). 107 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 729 (Lord Radcliffe); Lim Kim Som v Sheriffa Taibah bte Abdul Rahman [1994] 1 SLR(R) 233, 246 [28] (M Karthigesu, L P Thean JJA and Warren L H Khoo J). 108 Above [49]. 109 Atlantic Maritime Co Inc v Gibbon [1954] 1 QB 88, 130 (Jenkins LJ). 110 Denny, Mott & Dickson Ltd v James B Fraser & Co Ltd [1944] AC 265, 278 (Lord Wright). 111 British Movietonews Ltd v London and District Cinemas Ltd [1952] AC 166, 185 (Lord Simon); Lim Kim Som v Sheriffa Taibah bte Abdul Rahman [1994] 1 SLR(R) 233, 245 [26] (M Karthigesu and L P Thean JJA and Warren L H Khoo J).


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because all eight ports were impossible. 112 Absent an implied term therefore, the Voyage

Charterparty was frustrated.

VI. IDONCARE IS NOT LIABLE TO PAY SUB-FREIGHT TO FURNACE

55. FURNACE cannot enforce payment of sub-freight by IDONCARE. Since FURNACE has no privity of

contract with IDONCARE, FURNACE has no contractual right to sub-freight (A). Additionally, absent

a contractual right, FURNACE also does not possess a valid lien over sub-freight (B).

A. FURNACE has no contractual right to sub-freight

56. FURNACE has no privity of contract with IDONCARE by which it could enforce payment of sub-

freight. IDONCARE is party to two contracts: the Sub-Voyage Charterparty and the contract of

carriage evidenced in the Bill of Lading. Yet IDONCARE’s obligation to pay sub-freight is governed

only by the Sub-Voyage Charterparty with INFERNO. This is because Bill of Lading freight is

payable ‘as per [the Head] charter party’,113 which does not provide for freight. At any rate

however, FURNACE is not party to either the Sub-Voyage Charterparty or the Bill of Lading and

does not have the right to enforce any obligations contained therein.114 This is for two reasons. First,

the Bill of Lading contractually binds INFERNO to Imlam, not FURNACE.115 More importantly,

FURNACE is not party to the Sub-Voyage Charterparty, the contract under which IDONCARE is

obligated to pay sub-freight, as this contract was made with INFERNO.

57. Any claim by FURNACE that statute entitles it to circumvent the doctrine of privity would be

unfounded. While the Contracts (Rights of Third Parties) Act provides that ‘a person who is not

party to a contract … may, in his own right, enforce a term of the contract’, this right only arises

where that term ‘purports to confer a benefit on him’.116 Here this right does not arise. Sub-freight is

112 Aktieselskabet Olivebank v Dansk Svorlsyre Fabrik [1919] 2 KB 162, 169 (Duke LJ); Reardon Smith Line v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42, 110 (Wilmer LJ); Aegean Sea Traders Corporation v Repsol Petroleo SA (‘The Aegean Sea’) [1998] 2 Lloyd’s Rep 39, 67 (Thomas J). 113 Above [11]–[15]. 114 Thai Kenaf Co Ltd v Keck Seng (S) Pte Ltd [1992] 3 SLR(R) 194, 214 [60] (K S Rajah JC). 115 Above [14]. See also Wehner v Dene Steam Shipping Co [1905] 2 KB 92, 98 (Channell J). 116 Contracts (Rights of Third Parties) Act (Singapore, cap 53B, 2002) s 2.


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the remuneration payable by IDONCARE for performance of the Sub-Voyage Charterparty.117 It is a

payment intended to benefit INFERNO, the party undertaking such performance, not FURNACE.

IDONCARE’s obligation to pay sub-freight is therefore enforceable exclusively by INFERNO, as the

party with which IDONCARE has contracted, and not FURNACE.

B. FURNACE does not possess a valid lien over sub-freight

58. A lien on sub-freight would entitle FURNACE to intercept sub-freight otherwise payable to another

party, where that party owes a debt to FURNACE.118 However, FURNACE can only validly exercise a

lien on sub-freight if two conditions are fulfilled. First, it must have been assigned the right to

collect IDONCARE’s sub-freight by INFERNO, the party contractually entitled to that sub-freight under

the Sub-Voyage Charterparty.119 Secondly, freight must be outstanding from INFERNO before

FURNACE can exercise its lien by way of notice to IDONCARE.120 On this second ground, FURNACE

could not have validly exercised a lien in the absence of default by INFERNO.121

59. However, FURNACE was not assigned a right of lien on sub-freight which it could have exercised in

the first place. FURNACE must have acquired its right of lien by way of an equitable assignment

made to it by INFERNO, the party contractually entitled to sub-freight.122 The assignment conveying

the lien can only exist as the ‘creature of an express contract’.123 A clause acknowledging a lien on

sub-freight must be present in the Voyage Charterparty.124 Yet no such clause exists.

117 Care Shipping Corporation v Itex Itagarni SA (‘The Cebu’) (No 2) [1993] QB 1, 12 (Steyn J). 118 Federal Commerce and Navigation Ltd v Molena Alpha Inc (‘The Nanfri’) [1979] 1 Lloyd’s Rep 201, 210 (Lord Russell); Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45, 48–9 (Saville J); Cascade Shipping Inc v Eka Jaya Agencies (S) Pte Ltd [1993] 1 SLR(R) 187, 192 [12] (L P Thean, S Rajendran and M Karthigesu JJ). 119 Molthes Rederi Aktieselskabet v Ellerman’s Wilson Line Ltd [1927] 1 KB 710, 717 (Greer J); Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45, 49 (Saville J). 120 Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45, 48 (Saville J); Cascade Shipping Inc v Eka Jaya Agencies (S) Pte Ltd [1993] 1 SLR(R) 187, 197 [22] (L P Thean, S Rajendran and M Karthigesu JJ). 121 Above [24]–[28]. 122 Re Welsh Irish Ferries Ltd (‘The Ugland Trailer’) [1985] 2 Lloyd’s Rep 372, 374 (Nourse J); Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45, 49 (Saville J); Tradigrain SA v King Diamond Shipping SA (‘The Spiros C’) [2000] 2 Lloyd’s Rep 319, 323 [11] (Rix LJ). 123 Re Welsh Irish Ferries Ltd (‘The Ugland Trailer’) [1985] 2 Lloyd’s Rep 372, 374 (Nourse J). 124 Molthes Rederi Aktieselskabet v Ellerman’s Wilson Line Ltd [1927] 1 KB 710, 717 (Greer J).


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60. The Lien Clause only provides that FURNACE ‘shall have a lien on the cargo for freight’.125

Conspicuously missing from this clause is the assignment of the right to a lien on sub-freight.

FURNACE cannot claim that the reference to freight in the provision entitles it to claim sub-freight,

as the words ‘for freight’ only identify the purpose for which FURNACE may exercise a lien, and not

the property liened.126 No right of lien on sub-freight has been assigned to FURNACE; where the

Voyage Charterparty fails to provide such a right, ‘a court of law will not supply one by

implication’.127 Without this right of lien, FURNACE cannot claim sub-freight from IDONCARE.

VII. FURNACE’S TERMINATION OF THE VOYAGE CHARTERPARTY WAS WRONGFUL

61. FURNACE contends that INFERNO repudiated the Voyage Charterparty.128 Neither by words nor

conduct (A), nor by failing to comply with FURNACE’s notice (B), did INFERNO repudiate the

agreement. However, if the Tribunal finds that the Voyage Charterparty was frustrated in

accordance with the alternative argument above,129 the issue of termination does not arise.

A. INFERNO did not repudiate the agreement by words or conduct

62. The threshold at which words or conduct are deemed repudiatory is a high one.130 It is met where

repudiation has been ‘made quite plain’,131 and where conduct can be said to ‘clearly convey’ that

the party ‘will not perform its contractual obligations at all’.132 INFERNO’s alleged delay in paying

freight did not meet this threshold. Mere failure or delay in making payment does not amount to

repudiation.133 INFERNO repeatedly acknowledged its obligation to pay freight once they received

sub-freight from IDONCARE.134 At any rate, INFERNO’s conduct was not repudiatory as it did not

125 Record 31. 126 Julian Cooke et al, Voyage Charters (Informa Law, 3rd ed, 2007) 433. 127 Kirchner v Venus (1859) 12 Moo PC 361, 398 (Lord Kingsdown). 128 Record 73 [15]; Record 79 [15]. 129 Above [53]–[54]. 130 RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR(R) 413, 444–5 [93] (Andrew Phang Boon Leong JA, Chan Sek Keong CJ, V K Rajah JA). 131 GIB Automation Pte Ltd v Deluge Fire Protection (SEA) Pte Ltd [2007] 2 SLR(R) 918, 922 [7] (Sundaresh Menon JC); Joseph Chitty and H G Beale, Chitty on Contracts (Sweet & Maxwell, 29th ed, 2004) 24–019. 132 RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR(R) 413, 444–5 [93] (Chan Sek Keong CJ, Andrew Phang Boon Leong and V K Rajah JJA). 133 Brani Readymixed Pte Ltd v Yee Hong Pte Ltd [1994] 3 SLR(R) 1004, 1011 [18] (M Karthigesu and LP Thean JJA and Chao Hick Tin J). See also Mersey Steel and Iron Co v Naylor, Benzon and Co (1884) LR 9 App Cas 434. 134 Record 56, 62.


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suggest that FURNACE would be deprived of substantially the whole benefit of the contract.135 This

is because INFERNO’s delay in paying freight would merely have forestalled the time at which

FURNACE would receive its benefit under the Charterparty, without depriving it of that benefit.

63. INFERNO’s first communication about the discharge port issue on 15 October did not indicate that

INFERNO did not consider itself bound to fulfil its obligation, but, on the contrary, that it was

attempting to do so. 136 INFERNO’s later requests to divert to Busan, were merely attempts to make

the contract more workable in light of congestion.137 That INFERNO’s communication on 19 October

asked specifically for patience indicates that performance, though not immediate, would be

forthcoming.138 These communications cannot be said to make plain an intention not to be bound.

B. INFERNO did not repudiate the agreement by failing to comply with FURNACE’s notice

64. Where a party is in breach of an agreement, the wronged party is entitled to give notice to the

defaulting party, stipulating a reasonable time by which the defaulting party must perform.139 If this

is not done, the wronged party is entitled to terminate.140 FURNACE was not entitled to give notice

on 19 October 2016 (1). Even if it was, the notice’s time stipulation was unreasonable (2).

1. FURNACE was not entitled to give notice to perform

65. Notice to perform an obligation can only be given upon breach of an express time stipulation

attached to that obligation.141 The notice to pay freight and to nominate a discharge port given by

FURNACE to INFERNO on 19 October was not validly issued, because at the time INFERNO was not in

breach of either obligation: freight was not due until before breaking bulk,142 and a legitimate port

was nominated in time.143 Accordingly, FURNACE did not have the right to issue a notice to perform.

135 San International Pte Ltd v Keppel Engineering Pte Ltd [1998] 3 SLR(R) 447, 460 [25] (Yong Pung How CJ, M Karthigesu and L P Thean JJA). 136 Record 555–6. 137 Record 57, 58, 60. 138 Record 62. 139 Siti v Lee Kay Li [1996] 2 SLR(R) 934, 950 [44] (M Karthigesu and L P Thean JJA and Lai Kew Chai J). 140 Siti v Lee Kay Li [1996] 2 SLR(R) 934, 950 [44] (M Karthigesu and L P Thean JJA and Lai Kew Chai J). 141 Behzadi v Shaftesbury Hotels Ltd [1992] Ch 1, 15 (Nourse LJ). 142 Above [24]–[28]. 143 Above [40]–[52].


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2. The time stipulated for performance by the notice was unreasonable

66. Even if the notice was validly issued, the time stipulated for performance of the obligations to pay

freight and to nominate a discharge port was not reasonable, as is necessary to constitute effective

notice.144 Reasonableness here rests on what remains to be done at the date of the notice.145

FURNACE’s notice was given by email at 1320LT on 19 October 2016.146 The notice stipulated

performance by 1200LT 20 October 2016. It therefore required INFERNO to make payment of the

entire sum of freight, amounting to at least $771,120.48, in less than a day. Payment of such a large

amount could not reasonably be effected at such short notice, as standard bank processing times

would prevent freight from being remitted to FURNACE by the stipulated time.

67. Nor was the period of less than a day reasonable in respect of the obligation to nominate a discharge

port. Time was not originally of the essence, and the original stipulation to nominate ‘when vessel

passes Singapore’ was non-specific in character. It cannot therefore be said that there was enough

urgency in the original obligation to justify such short notice.147 Further, the decision was an

important one: first because of the prospect of delay at discharge ports, and secondly, because of

INFERNO’s obligation not to nominate an impossible port.148 Accordingly, a period of less than a day

was not a reasonable time in which to make a decision of such importance to both parties.

VIII. EVEN IF INFERNO BREACHED THE VOYAGE CHARTERPARTY, IT IS NOT LIABLE IN DAMAGES

68. Assuming here that INFERNO breached the Voyage Charterparty, INFERNO will only be liable to

FURNACE for damage that FURNACE suffered, where such loss was caused by INFERNO’s alleged

breach, and where damages are not too remote to be recoverable.149 To the extent that these

144 Stickney v Keeble [1915] AC 386, 418 (Lord Parker); Richards (Charles) Ltd v Oppenhaim [1950] 1 KB 616, 624 (Denning LJ); Siti v Lee Kay Li [1996] 2 SLR(R) 934, 950 [44] (M Karthigesu, L P Thean JJA and Lai Kew Chai J). 145 Stickney v Keeble [1915] AC 386, 419 (Lord Parker); United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904, 934 (Lord Diplock); Behzadi v Shaftesbury Hotels Ltd [1992] Ch 1, 15 (Nourse LJ). 146 Record 63. 147 Stickney v Keeble [1915] AC 386, 398 (Loreburn LJ); Richards (Charles) Ltd v Oppenhaim [1950] 1 KB 616, 624–5 (Denning LJ). 148 Reardon Smith Line v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42, 110 (Wilmer LJ); Aegean Sea Traders Corporation v Repsol Petroleo SA (‘The Aegean Sea’) [1998] 2 Lloyd’s Rep 39, 67 (Thomas J). 149 Wai Wing Properties Pte Ltd v Lim, Ganesh & Liu [1994] 1 SLR(R) 1004, 1023 [69] (Chao Hick Tin J); Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte Ltd [2005] 1 SLR(R) 661, 709 [144] (Chao Hick Tin JA and


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conditions are satisfied, FURNACE will only receive damages necessary to restore it to ‘the same

position, financially, as [it] would have enjoyed if the contract had not been broken’.150 Though

FURNACE may have incurred detention costs prior to termination, these losses would have been

offset by the expenses FURNACE would have incurred in the case of performance (A). FURNACE also

cannot claim damages for costs incurred after termination as FURNACE failed to take reasonable

steps to mitigate its loss (B). Lastly, FURNACE cannot recover the costs of exercising a lien (C).

A. FURNACE’s costs prior to termination are offset by the costs it would have incurred if the

Voyage Charterparty had been performed

69. FURNACE may claim that INFERNO is liable for the detention costs incurred prior to termination due

to INFERNO’s alleged failure to nominate a discharge port. However, these damages will be

substantially offset by the costs FURNACE would have incurred due to the congestion at the Chinese

ports. To determine the actual loss resulting from breach of contract, consideration must be given to

circumstances that would have existed had the contract been performed.151 Congestion would have

detained the vessel, entailing daily expenses consisting of hire and bunker costs. These expenses

would have been borne by FURNACE. This is because the Charterparty provided that INFERNO would

bear the risk of delay only after the vessel reached the arrival pilot station, and laytime

commenced.152 Congestion would have prevented this. As FURNACE would have therefore incurred

detention costs even if the Voyage Charterpary had been performed, the damages actually arising

from INFERNO’s breach, and for which it is liable to pay, are substantially reduced.

B. INFERNO is not liable for damages after termination of the Voyage Charterparty

70. Upon termination of the Voyage Charterparty, FURNACE was under a duty to take ‘all reasonable

steps to mitigate the loss consequent on the breach’ and cannot claim damage ‘due to [its] neglect to Judith Prakash J); The “Pacific Vigorous” [2006] 3 SLR(R) 374, 378 [6] (Belinda Ang Saw Ean J); Britestone Pte Ltd v Smith & Associates Far East Ltd [2007] 4 SLR(R) 855, 870 [28] (Chan Sek Keong CJ, Andrew Phang Boon Leong and V K Rajah JJA). 150 SIB International SRL v Metallgesellschaft Corp (‘The Noel Bay’) [1989] 1 Lloyd’s Rep 361, 363 (Staughton LJ). See also, The Edison [1932] P 52, 63 (Scrutton LJ); Guobena Sdn Bhd v New Civilbuild Pte Ltd [2002] 2 SLR(R) 784, 787 [11], 788 [13] (Yong Pung How CJ, Chao Hick Tin JA and Tan Lee Meng J). 151 Zim Israel v Tradex (‘The Timna’) [1971] 2 Lloyd’s Rep 91, 95 (Megaw LJ). 152 Record 21, 27.


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take such steps.’153 FURNACE had the capacity to substantially mitigate the costs which it now

claims ‘are continuing to accrue on a daily basis’,154 since upon termination, FURNACE regained

control of the Tardy Tessa. Had FURNACE acted reasonably by entering into a substitute charter, it

would not only have avoided the daily costs it now claims, but also have generated profits which

would be ‘set off again the profits lost on the original voyage’.155 However, for over eight months

from when the Charterparty was terminated, FURNACE has not merely neglected its duty to mitigate

loss, but has behaved unreasonably at the expense of RESPONDENTS, in light of the total lack of

evidence that it has taken any step to secure a substitute charter.156 For that reason, FURNACE should

not be permitted to recover any losses after termination of the Voyage Charterparty.

C. FURNACE cannot recover the costs of exercising a lien on cargo

71. Although FURNACE seeks relief for ‘costs of exercising the lien to recover the freight’157 no such

award can be made. Because FURNACE retained possession of the cargo purely for its own benefit of

maintaining a lien, and against the interests of the cargo owner IDONCARE, FURNACE is forbidden at

common law from recovering any expenses incurred through the exercise of its lien.158

REQUEST FOR RELIEF

For the reasons set out above, RESPONDENTS request this Tribunal to:

a) refuse FURNACE’s sale application;

b) declare that INFERNO is not liable in relation to FURNACE’s claim;

c) declare that the liens over sub-freight and cargo were not validly and lawfully exercised; and

d) award further or other relief as the Tribunal considers fit.

153 British Westinghouse Electric & Manufacturing Co v Underground Electric Railways Co [1912] AC 673, 689 (Lord Haldane); Macrae v H G Swindells [1954] 1 WLR 597, 598 (Barry J); Chua Keng Mong v Hong Realty Pte Ltd [1993] 1 SLR 317, 331 [38] (Goh Joon Seng J). See also, The “Asia Star” [2010] 2 SLR 1154, 1165 [24] (Chan Sek Keong CJ, Andrew Phang Boon Leong and V K Rajah JJA); The “Rainbow Star” [2011] 3 SLR 1, 24 [55] (Judith Prakash J). 154 Record 80. 155 SIB International SRL v Metallgesellschaft Corp (‘The Noel Bay’) [1989] 1 Lloyd’s Rep 361, 363 (Staughton LJ). 156 The “Asia Star” [2010] 2 SLR 1154, 1168 [32] (Chan Sek Keong CJ, Andrew Phang Boon Leong and V K Rajah JJA). 157 Record 80. 158 Somes v British Empire Shipping Co [1860] 11 ER 459, 461 (Lord Cranworth); China Pacific SA v Food Corporation of India (‘The Winson’) [1982] AC 939, 962 (Lord Diplock).

eighteenth annual international maritime law arbitration

Documents