in the matter of an arbitration the 16th annual ......team number: 7 1 in the matter of an...
TRANSCRIPT
TEAM NUMBER: 7
1
IN THE MATTER OF AN ARBITRATION
THE 16TH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2015
WESTERN TANKERS INC
CLAIMANT
V
LESS DEPENDABLE TRADERS PTE
RESPONDENT
MEMORANDUM FOR THE CLAIMANT
Jessica Duncan | Zackary George | Leo Rees-Murphy | Georgia Williams
TEAM NUMBER: 7
2
TABLE OF CONTENTS
REFERENCE LIST 3
SUMMARY OF FACTS 7
SUMMARY OF ARGUMENT 8
SUBMISSIONS 9
(1) THE ARBITRAL TRIBUNAL HAS JURISDICTION TO HEAR THIS MATTER
(A) The parties have provided for England and English law to be the seat and forum of
the arbitration
(B) This construction is not altered by anything in the recapitulation or previous
correspondence
(2) THE RESPONDENT IS LIABLE TO PAY HIRE WHICH WAS DUE AND PAYABLE
UNDER THE CHARTERPARTY 10
(A) Hire was due and payable under the Charterparty on 3 July 2014
(B) The Charterparty was not frustrated
(C) The Vessel was not off-hire
(3) THE RESPONDENT AND/OR PERSONS ACTING AS ITS AGENTS COMMITTED
THE TORT OF FRAUD 15
(A) The fraud claim is admissible in this arbitration
(B) Representations were made by ASA2 as agent of the Respondent
(C) The elements of the tort of fraud are satisfied
(4) THE VESSEL WAS FIT FOR SERVICE 21
(A) Claims in respect of the loss of cargo
(B) Non-cargo claims for the loss of fixture
(5) THE CLAIMANT DID NOT CONVERT OR BREACH THEIR DUTY AS BAILEE IN
RESPECT OF PART OF THE CARGO ON BOARD 26
(A) The Claimant has not breached its duties as a bailee
(B) The Claimant did not convert part of the cargo
(6) THE CLAIMANT SHOULD BE AWARDED COMPOUND INTEREST 29
RELIEF SOUGHT 30
TEAM NUMBER: 7
3
REFERENCE LIST
CASES
A & J Inglis v John Buttery & Co (1877) 5 R 58
Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd (“The Saxon Star”) [1959] AC
133
Andrews v Mockford [1896] 1 QB 372
The Antigoni [1991] 1 Lloyd’s Rep. 209
The Atlantic Glory (1969) AMC 2318
Armagas Ltd v Mumdogas SA (The Ocean Frost) [1986] AC 717
Bank Line Limited v Arthur Capel & Co [1919] AC 435
Blackfriars Lighterage & Cartage Co Ltd v R L Hobbs (“The Landeer”) [1955] 2 Lloyd’s
Rep 554
Borgship Tankers Inc v Product Transport Corporation Ltd (“The Casco”) [2005] EWHC
273
Briess v Woolley [1954] AC 333
Caltex Oil (Aust) Pty Ltd v Alderton [1964–65] NSWR 456
Cargill International S.A. v Cpn Tankers (Bermuda) Ltd (The "Ot Sonja") [1993] 2 Lloyd’s
Rep. 435
Capital Trust Investment Ltd v Radio Design AB [2002] EWCA Civ 135
Chartbrook Homes Ltd v Perismmon Homes Ltd [2009] 1 AC 1101
Christopher Brown v Genossenschaft Osterreichlischer Waldbesitzer GmbH [1954] 1 QB 8
Colonial Bank v Cady and Williams (1890) 15 App Cas 267
Copping v ANZ McCaughan Ltd (1997) SASR 525
Countess of Warwick Steamship Company v Le Nickel Societe Anonyme; Anglo-Northern
Trading Company Ltd v Emlyn Jones & Williams [1918] 1 KB 372
Davis Contractors Ltd v Fareham Urban DC [1956] AC 696
Derry v Peek (1889) 14 App Cas 337
East West Corporation v DKBS 1912 & Ors [2003] QB 1509
Edgington v Fitzmaurice (1885) 29 Ch D 459
The Europa [1908] P. 84
Eridania SpA v Rudolf A Oetker (“The Fjord Wind”) [1999] 1 Lloyd’s Rep. 307
Eridania SpA v Rudolf A Oetker (“The Fjord Wind”) [2000] 2 Lloyd’s Rep. 191
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32
TEAM NUMBER: 7
4
Fiona Trust & Holding Corp v Privalov [2008] 1 Lloyd’s Rep. 254
Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480
Glynn v Margetson [1893] AC 351
Gosse Millerd v. Canadian Government Merchant Marine [1929] AC 223
Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation
Berhad (The Bunga Seroja) (1998) 196 CLR 161
Henderson v Merrett Syndicates Ltd [1995] 2 AC 145
Homburg Houtimport BV v Egrosin Private Ltd (“The Starsin”) [2004] 1 AC 715
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (“The Hongkong Fir”) [1961] 2
Lloyd’s Rep. 478
International Fina Services AG v Katrina Shipping Ltd (“The Fina Samco”) [1994] 1 Lloyd’s
Rep 153
Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896
Kemp v Tolland [1956] 2 Lloyd’s Rep. 681
Kuwait Airways Corporation v Iraqi Airways Company and Others [2002] 2 AC 883
Liberty Shipping LIM. Procs 1973 AMC 2241
Lesotho Highlands Development Authority v Impregilo Spa [2006] 1 AC 221
Liverpool City Council v Walton Group Plc [2002] 1 EGLR 149
Mair v Rio Grande Rubber Estates Ltd [1913] AC 853
Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd (“The Star Sea”) [1997] 1 Lloyd’s
Rep. 360
Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (“The Mihalis Angelos”)
[1971] 1 QB 164
Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959] AC 589
Minister of Food v Reardon Smith Line [1951] 2 Lloyd’s Rep. 265
Midland Bank Trust Co limited v Hett, Stubs & Kemp [1979] Ch 384
Midland Silicones v Scruttons [1962] AC 446
National Bank of Greece SA v Pinios Shipping Co (no. 1) and George Dionysios Tsitsilianis
(The “Maria”) (No.3) [1990] 1 Lloyd’s Rep. 225
National Carriers v Panalpina (Northern) Ltd [1981] AC 675
Navigazione Alta Italia S.P.A. v Concordia Maritime Chartering A.B. (The “Stena Pacifica”)
[1990] 2 Lloyd’s Rep 234
The North Hills, 1973 AMC 2318 (Arb. at N.Y. 1972).
Ocean Tramp Tankers Corp v V/O Sovfracht (“The Eugenia”) [1964] 2 QB 226
Ove Skou v Rudolf A Oetker (“The Arctic Skou”) [1985] 2 Lloyd’s Rep 478
TEAM NUMBER: 7
5
The Pacglory, SMA 2737 (Arb. at N.Y. 1990)
Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501
Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd (“The Eurasian Dream”) [2002]
1 Lloyd’s Rep. 719
Peek v Gurney (1873) LR 6 HR 377
Pickering v Barkley (1648) 82 ER 587
“The Pioneer Container” [1994] 2 AC 324
Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) (No.2) [1982] AC 724
Prenn v Simmonds [1971] 1 WLR 1381
Re London and provincial electric lighting and power generating Co Ltd (1886) 55 LT 670
Republic of Bolivia v Indemnity Mutual Marine Insurance [1909] 1 KB 785
The Roberta (Indemnity) (1938) 60 Lloyd’s Rep. 84
Russell v Niemann [1864] 144 ER 66
Smith New Court Securities Ltd v Citibank NA [1997] AC 254
Sonatrach Petroleum Corp. (BVI) v Ferrell Int’l Ltd [2002] 1 All ER (Comm) 627
Standard Oil Co of New York v Clan Line Steamers Ltd [1924] AC 100
Stargas S.P.A v Petredec Ltd (The "Sargasso") [1994] Lloyd's Rep 412
The Stena Pacifica [1990] 2 Lloyd’s Rep 234
Sulamérica Cia Nacional de Seguros SA v Ensa Engenharia SA [2012] 1 Lloyd's Rep. 671
Svenska Petroleum Exploration AB v Government of the Republic of Lithuania [2006] 1
Lloyd's Rep. 181
Taylor v Caldwell (1863) 122 ER 309
Trafigura Beheer BV v Navigazione Montanari Spa (The "Valle Di Cordoba") [2015] 1
Lloyd’s Rep. Plus 26
Ulysses Compania Naviera S.A. v Huntingdon Petroleum Services Ltd and Others (“The
Ermoupolis") [1990] 1 Lloyd’s Rep 160
W. J. Tatem, Limited v Gamboa [1939] 1 KB 132
Westvilla Properties Limited v Dow Properties Limited [2010] EWHC 30 (Ch)
Whistler International v. Kawasaki Kisen Kaisha (The Hill Harmony) [2001] 1 AC 638
XL Insurance Ltd v Owens Corning [2000] 2 Lloyd’s Rep. 500
Yarm Road Ltd v Hewden Tower Cranes Ltd (2003) 90 Con LR 1
TEAM NUMBER: 7
6
BOOKS
Ambrose, Clare, and Karen Maxwell, London Maritime Arbitration (Informa, 3rd ed, 2009)
Born, G, International Commercial Arbitration (Kluwer, 2nd Ed, 2014)
Cartwright, John, Misrepresentation, Mistake and Non Disclosure, (Sweet & Maxwell, 3rd ed,
2012
Coghlin et al, Time Charters (Informa, 7th ed, 2014)
Davies, Martin, and Anothony Dickey, Shipping Law (Lawbook Co, 3rd ed, 2004)
Gorton, Lars, Shipbroking and Chartering Practice (Business of Shipping Series, 7th ed,
2009)
Handley, KR, Spencer Bower & Handley Actionable Misrepresentation (2014, 5th Ed,
LexisNexis)
Jones, Michael (ed), Clerk & Lindsell on Torts (2010, 20th ed, Sweet & Maxwell)
Karan, Hakan, The Carrier’s Liability under International Maritime Conventions the Hague,
Hague-Visby, and Hamburg Rules (The Edwin Mellen Press, 2004)
Richardson, John, A Guide to the Hague and Hague-Visby Rules (Lloyd’s of London Press
Ltd, 3rd ed, 1994)
Tweeddale, A, and K Tweeddale, Arbitration of Commercial Disputes: International English
Law and Practice (2005, Oxford University Press)
Todd, Paul, Maritime Fraud and Piracy (Lloyd’s List, 2nd ed, 2010)
Watts, Peter, and F.M.B. Reynolds, Bowstead & Reynolds on Agency (2010, 19th Ed, Sweet &
Maxwell) 372
LEGISLATION
Arbitration Act 1996 (UK)
Journal Articles
Hunter, Grant, ‘Revised Piracy Clauses’ (Special Circular No 7, BIMCO, 19 July 2013) 2
White, Roger, ‘Human Unseaworthniess’ [1995] 1 Lloyd’s Maritime and Commercial Law
Quarterly 221
OTHER
The travaux préparatoires of the International Convention for the Unification of Certain
Rules of Law relating to bills of lading of 25 August 1924, The Hague Rules and of the
protocols of 23 February 1968 and 21 December 1979, The Hague-Visby Rules, 408
UK P&I Club, “Piracy: A Change of Tactics - West Africa” (Bulletin 763 - 05/11, UK P&I
Club, 13 May 2011)
TEAM NUMBER: 7
7
STATEMENT OF FACTS
THE PARTIES AND THE CHARTER AGREEMENT
Western Tankers Inc (“the Claimant”) are the owners of the Western Dawn (“the Vessel”)
which was chartered to Less Dependable Traders Pte (“the Respondent”) on an amended
Shelltime 4 pro-forma with rider clauses (“the Charterparty”). Subjects were lifted on 26
May 2014. The Vessel was ordered by the Charterers to undertake a voyage from Singapore
to OPL Luanda, where oil cargo would be discharged at a Ship to Ship transfer (“STS”)
location. As a result of the events outlined, the Claimant seeks an award for the payment of
hire under the Charterparty and damages in respect of the material damage to the Vessel
during a piracy attack.
THE EVENTS THROUGHOUT THE VOYAGE
Under the Charterparty the Respondent was to provide and pay for all fuel. In response to
repeated concerns raised by the Master about the supply of bunkers, the Respondent and
ASA2 (an entity that the Claimant submits acted as the Respondent’s agent) gave multiple
assurances representing that bunkers would be available at later locations throughout the
voyage. Bunkers were not provided.
While approaching OPL Luanda, the Master was directed by ASA2 to a revised STS location
for the provision of bunkers and discharge of cargo. On 4 July 2014, while awaiting ASA2’s
instruction at the given coordinates, the Vessel was seized by pirates. Later that day, the
Respondent refused to pay the second instalment of hire. The Vessel was detained for 13 days
until the Master made contact with the Claimant and the Respondent on 17 July 2014. The
Master reported that between 4 and 17 July 2014 an unknown quantity of the cargo on board
was discharged, crew members were injured and the Vessel was materially damaged.
TEAM NUMBER: 7
8
SUMMARY OF ARGUMENT
DETERMINATION OF THESE MATTERS BY THE TRIBUNAL
The Claimant submits to the jurisdiction of this Tribunal to determine the disputes outlined, as
conferred by the Charterparty.
THE CLAIMANT’S CONTENTIONS
The Claimant is owed unpaid hire, which became payable under the Charterparty on 3 July
2014. Moreover the Vessel was not off-hire and nor was the Charterparty frustrated at this
time, meaning the obligation to pay hire remained on foot. The Claimant also seeks damages
for the physical damage inflicted on the Vessel during the piracy attack, on the basis that it
was caused by fraud perpetrated by the Respondent and its agents.
RESPONSE TO THE COUNTERCLAIM
Further, on the true construction of the Charterparty, the Claimant did not breach its
obligations as to the Vessel’s fitness or its duties under the express piracy clauses, so cannot
be responsible for the piracy attack. The Claimant also did not breach its duties as a bailee or
convert the cargo.
TEAM NUMBER: 7
9
SUBMISSIONS
(1) THE ARBITRAL TRIBUNAL HAS JURISDICTION TO HEAR THIS MATTER
(A) The parties have provided for England and English law to be the seat and forum of
the arbitration
1. Clause 46(b) of the Shelltime 4 form (“the Arbitration Clause”) provides that “all
disputes arising out of this charter shall be referred to Arbitration in London in
accordance with the Arbitration Act 1996”.
2. It is a recognised principle of intentional commercial arbitration that an arbitral tribunal
has the power to rule on its own jurisdiction.1
3. An arbitration agreement is considered separable and independent from the main
contract,2 and is governed by the “proper” law of that agreement.3 Here the proper law
of the arbitration agreement is English law.4
4. The Arbitration Clause should be given the meaning that it would convey “to a
reasonable person having all the background knowledge which would reasonably have
been available to the parties in the situation in which they were at the time of the
contract”.5 The Arbitration Clause clearly and unambiguously states that “disputes shall
be referred to Arbitration in London” and the Tribunal should give effect to this
intention.
1 Christopher Brown v Genossenschaft Osterreichlischer Waldbesitzer GmbH [1954] 1 QB 8, 12-13; see also
Arbitration Act 1996 (UK) c 23, s 30. 2 Fiona Trust & Holding Corp v Privalov [2008] 1 Lloyd’s Rep. 254; Lesotho Highlands Development Authority
v Impregilo Spa [2006] 1 AC 221, 232; Arbitration Act 1996 (UK) c 24, s 7. 3 Clare Ambrose and Karen Maxwell, London Maritime Arbitration (Informa, 3rd ed, 2009) 68. 4 On establishing the proper law of the arbitration agreement, see for example: Sulamérica Cia Nacional de
Seguros SA v Ensa Engenharia SA [2012] 1 Lloyd's Rep. 671, 679; XL Insurance Ltd v Owens Corning [2000] 2
Lloyd’s Rep. 500, 508; Svenska Petroleum Exploration AB v Government of the Republic of Lithuania [2006] 1
Lloyd's Rep. 181, 204; G Born, International Commercial Arbitration (Kluwer, 2nd ed, 2014) 580-835, 589-94. 5 Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896, 912.
TEAM NUMBER: 7
10
(B) This construction is not altered by anything in the recapitulation or previous
correspondence
5. Although the recap email dated 26 May 2014 (“the Recap”) includes the words “LAW
AND LITIGATION:”, the blank space following these words indicates that the parties
did not stipulate an amendment to the Arbitration Clause in the Shelltime 4 form and
therefore intended that clause to apply.6 On the objective approach to contractual
interpretation,7 the blank space following “LAW AND LITIGATION:” should be read
in conjunction with the Shelltime 4 form as referring to “England and London
Arbitration”.
6. Alternatively, “LAW AND LITIGATION:” should be considered meaningless as one
cannot with ‘reasonable certainty’8 fill the blank space with any other law or forum of
dispute resolution. Nothing on the facts supports the Respondent’s contention that
“Singapore and Singapore Arbitration” should be inferred.
7. In previous correspondence dated 23 May 2014, the Respondent asserted that it was not
“keen on London Arbitration”.9 The Claimant submits that evidence of prior
negotiations and declarations of subjective intention prior to the contract are neither
relevant nor admissible.10 This statement therefore cannot be used to interpret the rest of
the arbitration agreement.
6 Facts, p 6. 7 Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896, 913. 8 Liverpool City Council v Walton Group Plc [2002] 1 EGLR 149 [46], cited with approval in form Westvilla
Properties Limited v Dow Properties Limited [2010] EWHC 30 (Ch) [40] citing A & J Inglis v John Buttery &
Co (1877) 5 R 58, 69-70. 9 Facts, p 2. 10 Prenn v Simmonds [1971] 1 WLR 1381, 1384; Chartbrook Homes Ltd v Persimmon Homes Ltd [2009] 1 AC
1101.
TEAM NUMBER: 7
11
(2) THE RESPONDENT IS LIABLE TO PAY HIRE WHICH WAS DUE AND
PAYABLE UNDER THE CHARTERPARTY
(A) Hire was due and payable under the Charterparty on 3 July 2014
8. Clause 8 of the Charterparty provides that hire is to be paid “from the time and date of
[the Vessel’s] delivery (local time)”,11 and under clause 9 is payable “per calendar
month in advance”.12 The Respondent failed to pay for the second hire period13 which
the Claimant submits on two alternative grounds was payable on 3 July 2014.
9. First, the words “local time” in clause 8 should be interpreted as meaning the time
“local” to the transaction as a whole. References to “local time” are ambiguous, as it is
unclear whether the words refer to the time “local” at the Vessel’s location, to the
transaction as a whole or even particular events occurring in performance. Where
alternative constructions are available, the construction adopted should give effect to the
sensible commercial approach to calculating hire which would be objectively intended
by the parties.14
10. The parties likely intended that “local time” refer to one consistent time zone such that
hire is paid for the total elapsed period, otherwise the computation of hire depends on
the direction of travel.15 Additionally, “calendar month” is an expression of lapsed time
and therefore supports a construction that hire should be calculated on the basis of
elapsed time.16 Therefore, “local time” should be read as referring to the “local time” of
the transaction as a whole. This is English time, having regard to the location of the
bank,17 the seat of the Arbitration and choice of law under the Charterparty.18 Delivery
11 Shelltime 4, cl 8. 12 Shelltime 4, cl 9. 13 Facts, pp 39, 41. 14 Ove Skou v Rudolf A Oetker (“The Arctic Skou”) [1985] 2 Lloyd’s Rep. 478, 480. 15 The North Hills, 1973 AMC 2318 (Arb. at N.Y. 1972). 16 The Pacglory, SMA 2737 (Arb. at N.Y. 1990) citing The Atlantic Glory, SMA 76 (Arb. at N.Y. 1962). 17 Facts, p 5. 18 Shelltime 4, cl 46(b).
TEAM NUMBER: 7
12
occurred at 00:01 (UTC+8) on 4 June 2014,19 so the obligation to pay hire arose in the
first instance at 16:01 (GMT) on 3 June 2014. From this point hire was therefore
payable one calendar month later on the third day of July.
11. Alternatively, the Claimant submits that the preferable construction of the words “per
calendar month in advance” is that payment is to be made prior to each calendar month
commencing.20 As the Vessel was delivered on 4 June 2014, the next “calendar month”
would begin on 4 July 2014. Accordingly, payment was due “in advance” of that period,
meaning the date payable was 3 July 2014.
(B) The Charterparty was not frustrated
12. The Respondent bears the onus of showing that “without default of either party, a
contractual obligation has become incapable of being performed because the
circumstances in which performance is called for would render it a thing radically
different from that which was undertaken by the contract”.21
13. The Claimant submits that the Charterparty is not frustrated on the basis of either
impossibility of performance, or the delay occasioned by the piracy attack and the
consequent damage to the Vessel.
(i) The allegedly frustrating event is contemplated by express provision in the contract
14. The doctrine of frustration cannot be invoked where the express terms of the contract
make complete provision for the situation that has arisen.22 The parties have allocated
risks in respect of piracy by including in Recap the BIMCO Piracy clause for Time
19 Facts, p 28. 20 In support for this construction see the discussion of a similar clause in the NYPE 93 form: Coghlin et al, Time
Charters (Informa, 7th ed, 2014) [16.5]. 21 National Carriers v Panalpina (Northern) Ltd [1981] AC 675, 700 restating the test in Davis Contractors Ltd
v Fareham Urban DC [1956] AC 696. 22 Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32, 40; Bank Line v Capel [1919]
AC 435, 441-443.
TEAM NUMBER: 7
13
Charter Parties 2013 (“the BIMCO Piracy Clause”)23 and the Special Provision Piracy
Clause24 to be riders to their agreement.
15. The facts fall within the ambit of these piracy clauses. The meaning of the word
“piracy” in a document used “by business men for business purposes… [is] the meaning
that would be given to it by ordinary persons.”25 On an ordinary meaning a piracy attack
involves a violent theft or seizure of a vessel for ransom for private, rather than public,
purposes.26 which applies on the facts.27
16. The BIMCO Piracy Clause states that if the Vessel is attacked by pirates the time lost
shall “be for the account of the Charterers and the Vessel shall remain on hire.”28 The
clause also holds the charterers liable for hire both during a seizure by pirates and for
any time lost in making good any damage and deterioration resulting from the seizure.29
This clause both contemplates and provides for the seizure itself and the consequent
damage to the main deck hose and systems.30
(ii) Nothing on the facts amounts to a “frustrating event”
Impossibility
17. Despite the damage to the Vessel the contract may still be performed. Discharge of only
part of the cargo does not amount to total destruction of the subject matter of the
Charterparty which might otherwise suffice to frustrate that agreement.31
23 Facts, p 11. 24 Facts, p 8. 25 Republic of Bolivia v Indemnity Mutual Marine Insurance [1909] 1 KB 785, 790; note “piracy” is undefined in
the Charterparty. 26 Paul Todd, Maritime Fraud and Piracy (Lloyd’s List, 2nd ed, 2010) 11-13. 27 Facts, p 42 see also p 46. 28 Facts, p 12 sub-clause (e). 29 Facts, p 12 subclause (f); note that the 2009 BIMCO Piracy Clause was specifically amended to achieve this
outcome: Grant Hunter, ‘Revised Piracy Clauses’ (Special Circular No 7, BIMCO, 19 July 2013) 2. 30 Facts p 42. 31 Taylor v Caldwell (1863) 122 ER 309; W. J. Tatem, Limited v Gamboa [1939] 1 KB 132, 138.
TEAM NUMBER: 7
14
18. A mere increase in onerousness or expense in performing the contract is insufficient to
bring about a frustrating event.32 Once the Vessel is repaired at Cape Town, the contract
may still be partially performed.
Delay
19. In a time charterparty, a critical factor in assessing whether the delay is likely to be so
inordinate as to frustrate the contract is to compare the probable length of the delay with
the total period of the charterparty.33 The probable length of the interruption must be
reasonably assessed at the time the event occurs.34
20. The Claimant submits that at the time the Vessel was seized by pirates, it was unlikely
that the service would be interrupted for a particularly substantial period given the
practice of pirates operating in the area, which may involve capture for only a number
of days.35 The charter period was to run for a period of two months as the Respondent
had already chosen to exercise its option to redeliver early.36 In the context of a two
month charter period, the relatively insubstantial probable delay does not amount to a
frustrating event.
(C) The Vessel was not off-hire
(i) The Vessel remained on-hire under the BIMCO Piracy Clause
21. The Charterparty explicitly provides that the Vessel is to remain on hire in the event of
a piracy attack. The BIMCO Piracy Clause states that “if the Vessel is attacked by
pirates any time lost shall be for the account of the Charterers and the Vessel shall
remain on hire.”37 Under sub-clause (f) the Vessel “shall remain on hire throughout the
seizure and the Charterers’ obligations shall remain unaffected, except that hire
32 Ocean Tramp Tankers Corp v V/O Sovfracht (“The Eugenia”) [1964] 2 QB 226, 239. 33 Ibid. 34 Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) (No.2) [1982] AC 724; Anglo-Northern v Jones [1917] 2
KB 78, 85. 35 UK P&I Club, “Piracy: A Change of Tactics - West Africa” (Bulletin 763 - 05/11, UK P&I Club, 13 May
2011) 1. 36 Facts, pp 39-40. 37 Facts, p 12 sub-clause (e).
TEAM NUMBER: 7
15
payments shall cease as of the ninety-first (91st) day after the seizure until release”.38
The “piracy attack” reported by the Master on 17 July 2014 falls within the ambit of this
clause,39 so the clear, unambiguous words expressly provide that the Vessel remained
on hire throughout this period.
(ii) The BIMCO Piracy Clause prevails over all other “off-hire” provisions in the Charterparty
22. In accordance with the rule of construction that specific clauses prevail over general
clauses in contracts,40 the specific BIMCO Piracy Clause prevails over the standard off-
hire provision, clause 21 in the Shelltime 4 form. As a special rider, under general
principles of construction the BIMCO Piracy Clause takes priority over a clause in the
standard form.41
23. Further, to the extent that there is any conflict between the BIMCO Piracy Clause and
the Special Piracy Clause, the former should prevail in accordance with sub-clause (g)
which states: “[i]n the event of a conflict between the provisions of this Clause and any
implied or express provision of the Charterparty, this Clause shall prevail.”42
(iii) Alternatively, if the BIMCO Piracy Clause does not prevail, the Vessel was not off-hire
for breach of orders or neglect of duty
24. The Respondent cannot rely on the Master following the orders of ASA2 as a breach of
orders or neglect of duty because the instructions by ASA2 were issued on the
Respondent’s behalf. This is discussed below at [28] – [35].
25. The Respondent cannot invoke clause 21(a)(ii) of the Shelltime 4 form. The words “due
to” in clause 21(a)(ii) require a causal link between the breach of order or neglect of
38 Facts, p 12. 39 For the reasons stated at [15] above; Facts pp 41-42. 40 Glynn v Margetson [1893] AC 351, 355. 41 Homburg Houtimport BV v Egrosin Private Ltd (“The Starsin”) [2004] 1 AC 715, 737; Lars Gorton,
Shipbroking and Chartering Practice (Business of Shipping Series, 7th ed, 2009) 192. 42 Facts, p 11.
TEAM NUMBER: 7
16
duty, and the loss of time.43 In the circumstances there is no causal link between any
alleged breach of orders or neglect of duty by the Master and a loss of time as required
under that clause.
(3) THE RESPONDENT AND/OR PERSONS ACTING AS ITS AGENTS
COMMITTED THE TORT OF FRAUD
(A) The fraud claim is admissible in this arbitration
26. Since The Fiona Trust44 Arbitration agreements are construed in accordance with the
presumption that the parties intended that any dispute arising out of their contractual
relationship is to be decided by the same tribunal, unless the language makes clear that
certain questions were intended to be excluded from the tribunal’s jurisdiction.45 There
is no language in the Arbitration Clause to exclude tort claims that arise in the course of
performing the Charterparty. Therefore, as a matter of construction, the clause is apt to
cover the fraud dispute. It would defeat the commercial purpose of an arbitration clause
to attribute an intention to the parties that there be two sets of proceedings in different
jurisdictions arising out of the same facts.46
27. The Claimant further submits that the same result would be reached even if the Fiona
Trust is not followed and the earlier, now abandoned,47 approach of English Courts is
adopted. The words “arising out of” are sufficiently broad to cover the fraud allegation.48
The contractual and tortious disputes are so closely knitted together on the facts, as the
43 International Fina Services AG v Katrina Shipping Ltd (“The Fina Samco”) [1994] 1 Lloyd’s Rep. 153, 161;
Stargas S.p.A v Petredec Ltd (“The Sargasso") [1994] 1 Lloyd's Rep. 412, 427. 44 Fiona Trust & Holding Corp v Privalov [2008] 1 Lloyd’s Rep. 254. 45 Ibid, 257. 46 Ibid, 256; Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488, 517. 47 Clare Ambrose and Karen Maxwell, London Maritime Arbitration (Informa, 3rd ed, 2009) 56. 48 Capital Trust Investment Ltd v Radio Design AB [2002] EWCA Civ 135; see generally A Tweeddale and K
Tweeddale, Arbitration of Commercial Disputes: International English Law and Practice (Oxford University
Press, 2005).
TEAM NUMBER: 7
17
fraud was perpetrated in the course of performing the Charterparty, therefore “an
agreement to arbitrate on one can properly be construed as covering the other”.49
(B) Representations were made by ASA2 as agent of the Respondent
28. ASA2 is considered to have acted on behalf of the Respondent on the basis of apparent
authority.50
29. A principal is estopped from denying a legal relationship of apparent authority where
there has been a manifestation made by the principal, through words or conduct, that the
agent had authority to act, and the manifestation was relied upon by a third party in
circumstances where it was reasonable to do so.51
(i) The Respondent manifested that ASA2 had authority to act as their agent
30. On 4 July 2015 the Respondent made a statement that the Master should “continue to
liaise with [his] STS coordinator” (emphasis added).52
31. This statement was made in the following context:
a. The Respondent failed to ensure its discharge port agent coordinated the STS transfer
as the Vessel approached the STS location;53
b. On 28 June 2014, ASA2 contacted the Master purporting to be the STS coordinator,
stating an STS transfer would be performed with the “Antelope”;54
c. On 30 June 2014 the Respondent was copied in on an email from the Master to
Captain Anya from ASA2;55 and
49 Ulysses Compania Naviera S.A. v Huntingdon Petroleum Services Ltd and Others (“The Ermoupolis") [1990]
1 Lloyd’s Rep. 160, 164. 50 Peter Watts and F.M.B. Reynolds, Bowstead & Reynolds on Agency (Sweet & Maxwell, 19th ed, 2010) 364-
73; see also 65-99 on principles of ‘ratification’ which would lead to a similar result on the facts. 51 Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, 498. 52 Facts, p 40. 53 Facts, p 14; see also on creating the circumstances in which a person may appear authorised: Colonial Bank v
Cady and Williams (1890) 15 App Cas 267, 273; Armagas Ltd v Mumdogas SA (“The Ocean Frost”) [1986] AC
717, 777. 54 Facts, p 35. 55 Facts, p 41.
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18
d. On 3 July 2014 the Master informed the Respondent that the Vessel was to undertake
an STS transfer and receive bunkers from the “Antelope”.56
32. The Claimant submits that this statement on 4 July, in the context of the Respondent’s
knowledge, was a manifestation as to ASA2’s authority.
(ii) The manifestation was reasonably relied upon by the Claimant
33. The Master relied on the agency of ASA2 by proceeding to the coordinates stated in the
correspondence from ASA2.57
34. This reliance was reasonable given the appropriate timing of ASA2’s contact, the lack
of contact from any other coordinator and instruction by the Respondent to continue
liaising with this coordinator. No evidence suggests that the Master actually lacked
belief in the authority of ASA2 and he was not on notice as to ASA2’s actual lack of
authority.
(C) The elements of the tort of fraud are satisfied
35. The tort of fraud requires the following elements listed at (i)-(v) below.58 Whilst the
difficulty of sustaining an allegation of fraud is acknowledged, the Tribunal is invited to
conclude that the elements are satisfied for the reasons below.
(i) A false representation
36. The Respondent made three false representations:
a. On 3 June 2014, the Charterers represented that a sufficient supply of bunkers would
be “available passing Durban or Cape Town”59 (“the First Statement”);
b. Twice on 28 June 2014, the Charterers represented that a sufficient supply of bunkers
would be available “on arrival STS Area 1”60 (“the Second Statement”); and
56 Facts, p 38. 57 Facts, p 35. 58 Michael Jones (ed), Clerk & Lindsell on Torts (Sweet & Maxwell, 20th ed, 2010) 1191-1222. 59 Facts, p 26. 60 Facts, pp 33-34.
TEAM NUMBER: 7
19
c. On 28 June 2014, ASA2, on behalf of Charterers, instructed the Vessel that she was
under the “control” of ASA2 as the Charterers’ “agency” and “local instruction”, that
she would “discharge 72,000mts gasoil / balance of cargo TBN” at a nominated STS
location, and that she would receive “300MT IFO bunkers”61 (“the Third
Statement”);
d. Taken together (“the Statements”).
37. These connected Statements must be considered as a whole and read together as a series
of representations.62 Together they are a “continuous fraud” that the Respondent would
in future provide bunkers to the Claimant.63
38. The Respondent lacked reasonable grounds for making the Statements, which renders
the Statements false.64 In respect of the First Statement, the Respondent had an
insufficient credit line to provide sufficient bunkers for the itinerary required under the
Charterparty,65 which the Master stated was 1500MT.66 On 27 May 2014 the
Respondent requested a “credit line to the order of US$750,000 to US$1 million”67 but
Equator Bunkers only approved a line of US$650,000.68 On the purchase option
selected69 the full 1500MT required would have cost US$945,375, exceeding the
Respondent’s approved credit line.
39. There is no correspondence to show the Respondent requested an extension to the credit
line or tried to obtain bunkers at all.
(ii) The representations were made fraudulently
61 Facts, p 35. 62 Mair v Rio Grande Rubber Estates Ltd [1913] AC 853, 863. 63 See for example Andrews v Mockford [1896] 1 QB 372; Briess v Woolley [1954] AC 333, 349; on statements
of intention see Edgington v Fitzmaurice (1885) 29 Ch D 459. 64 John Cartwright, Misrepresentation, Mistake and Non Disclosure, (Sweet & Maxwell, 3rd ed, 2012) 85 citing
Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (“The Mihalis Angelos”) [1971] 1 QB 164. 65 Shelltime 4, cl 7(a). 66 Facts, p 20. 67 Facts, p 20. 68 Facts, p 21. 69 Facts, pp 21-23.
TEAM NUMBER: 7
20
40. The Claimant submits that the Statements were made fraudulently as the Respondent
lacked honest belief in their truth.70 The Claimant accepts that the evidence is not strong
on this issue. However the Tribunal is invited to infer that the Respondent could not
have believed it could fulfil its promise of providing bunkers given the insufficient
credit line explained above and inaction in extending it.71 Therefore the Respondent
made the continuous representation without belief in its truth or recklessly, careless as
to whether it be true or false.
(iii) The representations were made with the intention that they be acted upon
41. The Respondent made the Statements with the intention that they be relied and acted
upon by the Claimant.72
(iv) The representations induced the Claimant to act
42. Whether the Claimant was induced by the Statements is a question of fact.73 In the case
of a complex representation, the representee need not rely on every representation
specifically, only on the effect of the representations as a whole; if he has been
influenced by each a defence to one would be no answer to the others.74
43. The correspondence discloses a series of concerns raised by the Master about the supply
of bunkers75 that were allayed by the Statements, such that the Master continued the
Voyage despite his concerns and protest. Particularly in reliance on the Third Statement,
the Master confirmed receipt of the advice and directed the ship to the new STS location
on the promise that there would be bunkers available on arrival. From 29 June 2014 to
70 Derry v Peek (1889) 14 App Cas 337, 374. 71 Edgington v Fitzmaurice (1885) 29 Ch D 459. 72 Peek v Gurney (1873) LR 6 HR 377, 411-412; Facts, p 68. 73 Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501, 540-542. 74 KR Handley, Spencer Bower & Handley Actionable Misrepresentation (LexisNexis, 5th ed, 2014) 80. 75 Facts, pp 25-34.
TEAM NUMBER: 7
21
the 03 July 2014 the Master repeatedly confirmed the Vessel would be “taking bunkers
on arrival”.76
44. The Tribunal should therefore find that the Master relied upon the Statements.
(v) Reliance on the representations resulted in loss to the Claimant
45. While waiting at the STS coordinates provided by ASA2, the Vessel was attacked by
pirates and as a result sustained material damage, including to navigational and radio
equipment and the main deck hose crane which was rendered unserviceable.77
46. The starting point for the measure of damages for fraud is that the loss need not have
been foreseeable.78 The test for causation has been articulated as follows: “[it is]
orthodox and settled rule that the plaintiff is entitled to all losses directly flowing from
the transaction caused by the deceit”.79
47. Applying this broad approach, the piracy attack occurred while the Vessel was waiting
at the STS coordinates provided by ASA2, to which the Master had been induced to go
by the promise of bunkers.
(4) THE VESSEL WAS FIT FOR SERVICE
48. There are two allegations concerning the fitness of the Vessel: the alleged incompetence
of the Master and the alleged failure to take piracy precautions.
49. In respect of these breaches, the Respondent seeks to recover (A) The loss of the follow
on fixture from Bonny to Augusta as a consequence of the Vessel’s detention by pirates
and (B) the loss of cargo that was discharged by pirates. Different provisions under the
Charterparty are enlivened for these two types of losses, so each loss is addressed
separately below.
76 Facts, pp 36-38. 77 Facts, p 42. 78 Smith New Court Securities v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254, 266-267. 79 Ibid, 283.
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22
(A) Claims in respect of the loss of cargo
(i) The cargo claims are subject to the HV Rules
50. Clause 27(c)(ii) of the Shelltime 4 form stipulates that the Hague-Visby Rules (“the HV
Rules”) apply to any claims “arising out of any loss of or damage to or in connection
with cargo”. The effect of this provision is to incorporate the HV Rules into the
Charterparty. The HV Rules apply to cargo claims to the extent that the obligations
under the Charterparty are co-extensive with the obligations under the HV Rules.80 The
Claimant submits that all cargo claims are subject to the HV Rules under the
Charterparty, and the HV Rules prevail over any inconsistent special piracy provision.
51. The effect of incorporating the HV Rules is to replace the absolute obligations to
properly man the ship,81 and ensure that the vessel is ‘fitted for the service’,82 with an
obligation to exercise due diligence to make the ship seaworthy at the beginning of the
voyage within the meaning of Art III r 1.83
52. The onus of proving unseaworthiness under the HV Rules lies on the party alleging it.84
The Master was not incompetent
53. The Claimant was required to exercise due diligence at the beginning of the voyage to
ensure that the Master was competent.
54. The test for the seaworthiness of the Master and crew85 is whether “a reasonably prudent
owner, knowing the relevant facts, [would] have allowed this vessel to be put to sea
with this Master and crew, with their state of knowledge, training and instruction”.86
80 Navigazione Alta Italia S.P.A. v Concordia Maritime Chartering A.B. (“The Stena Pacifica”) [1990] 2
Lloyd’s Rep. 234, 237. 81 Shelltime 4, cl 2(a). 82 Shelltime 4, cl 1(c). 83 HV Rules Art III r 1(a); HV Rules Art III r 1(b) has been held to import the common law standard of
seaworthiness, and apply it throughout the charter period: Navigazione Alta Italia S.P.A. v Concordia Maritime
Chartering A.B. (“The Stena Pacifica”) [1990] 2 Lloyd’s Rep. 234. 84 HV Rules Art IV r 1; Hong Kong Fir Shipping v Kawasaki [1962] 2 QB 26. 85 Hong Kong Fir Shipping v Kawasaki [1962] 2 QB 26; The Roberta (1938) 60 Ll.L.Rep 84. 86 Ibid, 34.
TEAM NUMBER: 7
23
55. The threshold for incompetence on the part of the Master is "a disabling want of skill"
or a "disabling lack of knowledge".87 The Respondent cannot discharge the onus of
meeting this threshold on the facts.
56. A crew member is competent if they have the requisite training to perform the job with
the skill to be reasonably expected of an ordinary seaman of that individual’s rank.88
There is no evidence, including in the Q88,89 that the Master lacked any relevant
training or professional qualifications. It would be an unreasonably high burden to
require an owner to employ a master who has not only the expected qualifications, but
has also been specifically trained to anticipate, detect and investigate potentially
deceptive or fraudulent orders.
57. Further, the Claimant submits that there is no evidence on the facts for the tribunal to
draw an inference that the Master was incompetent.
58. When following orders from ASA2, it was reasonable for the Master to believe ASA2
was acting for the Respondent given that ASA2 had a similar name to the Respondent’s
genuine agents, ASA,90 and he had received no other direction from an STS coordinator
as the Vessel approached the STS location.91
59. Even if the Tribunal considers that the Master was negligent, one occasion of
negligence does not necessarily support an inference that the Master was incompetent.92
87 Papera Traders Co Ltd and Others v Hyundai Merchant Marine Co Ltd and Another (“The Eurasian
Dream”) [2002] 1 Lloyd’s Rep 719, 736; Standard Oil Co of New York v Clan Line Steamers Ltd [1924] AC
100, 121.
Roger White, ‘Human Unseaworthniess’ [1995] 1 Lloyd’s Maritime and Commerical Law Quarterly 221, 226;
Liberty Shipping LIM. Procs 1973 AMC 2241. 89 Facts, p 47. 90 Facts, p 35. 91 Facts, p 33-41. 92 Roger White, ‘Human Unseaworthniess’ [1995] 1 Lloyd’s Maritime and Commerical Law Quarterly 221, 224;
Blackfriars Lighterage & Cartage Co Ltd v R L Hobbs (“The Landeer”) [1955] 2 Lloyd’s Rep. 554, 561;
Manifest Shipping & Co Ltd v Uni-Polaris Insurance Co Ltd and La Réunion Européene (“The Star Sea”)
[1997] 1 Lloyd’s Rep. 360, 374.
TEAM NUMBER: 7
24
The Claimant is excepted from liability for an act of negligence by the Master in the
navigation or management of the ship.93
60. Further, the Claimant submits that whichever aspect of incompetence is alleged, it did
not cause the loss.
The Vessel was not unseaworthy for failing to take piracy precautions
61. The Claimant was required to exercise due diligence at the beginning of the voyage to
ensure that the Vessel was seaworthy.
62. The ship must have that degree of fitness which an ordinary careful owner would
require his or her Vessel to have at the commencement of her voyage having regard to
all the probable circumstances of it.94 Seaworthiness is not an absolute concept but it is
relative to the nature of the ship, the particular voyage and the particular stage of the
voyage.95
63. The Claimant was aware that the fixture included West Africa, a known piracy area, so
exercised due diligence in engaging Captain Evasion from the Safety and Security
Department to undertake an assessment of the Vessel.96 Importantly, the Claimant
submits that at the beginning of the voyage, it was anticipated that the Vessel was to call
at Durban for bunkers. Therefore the “probable circumstances” at the outset of the
“particular voyage” contemplated did not involve piracy as the Vessel was only to travel
to Durban before entering a risk area.
64. Captain Evasion recommended a number of safety items, including razor wire, but
noted late delivery might be rescheduled for Durban.97
93 HV Rules, Art IV r 2(a). 94 Eridania S.P.A. and Others v Rudolf A. Oetker and Others (“The Fjord Wind") [1999] 1 Lloyd’s Rep. 307,
315; approved on appeal by Lord Justice Clarke at [2000] 2 Lloyd’s Rep. 191, 197. 95 Ibid. 96 Facts, p 22. 97 Facts p 27.
TEAM NUMBER: 7
25
65. Therefore, undertaking this assessment and arranging for equipment to be provided at
Durban, where the Claimant contemplated the Vessel would next call at port, satisfies
due diligence was exercised at the beginning of the voyage.
66. Further, even if the Vessel was unseaworthy the onus is on the Respondent to prove that
the lack of the razor wire caused the loss.98
(B) Non-cargo claims for the loss of fixture
67. The Claimant accepts the difficulty of applying the HV Rules to this loss of fixture
claim given the authorities of The Casco99 and The Stena Pacifica.100 Therefore the
Claimant proceeds on the basis that the HV Rules do not apply to this type of loss and
therefore other terms in the Shelltime apply to impose the standard of seaworthiness.
(i) The Master was not incompetent
68. Clause 2(a)(i) imposes an absolute obligation regarding the Master’s competence both
at the date of delivery and throughout the voyage. For the reasons stated above at [53] to
[60], the Master was not incompetent at any time.
(ii) The Claimant is not liable for any breach of the express piracy provisions
69. The Charterparty contains express piracy provisions relating to piracy, being the Special
Piracy Provision101 and the BIMCO Piracy Clause.102 The Claimant submits that the
general obligation for the Vessel to be “fit for the service” under clause 1(c) has been
modified by these clauses. As the obligation of seaworthiness is relative to particular
voyage and the dangers likely to be encountered, the Claimant submits that the piracy
clause was intended to create independent obligations dealing with this particular risk
that effectively provide the standard of seaworthiness.
98 Minister of Food v Reardon Smith Line [1951] 2 Lloyd’s Rep. 265, 270. 99 Borgship Tankers Inc v Product Transport Corp Ltd (“The Casco”) [2005] 1 Lloyd's Rep. 565 100 Navigazione Alta Italia S.p.A. v Concordia Maritime Chartering A.B. (“The Stena Pacifica”) [1990] 2
Lloyd’s Rep. 234. 101 Facts, p 8. 102 Facts, p 11.
TEAM NUMBER: 7
26
70. On its true construction, adherence to the Special Piracy Clause was not required at
every moment throughout the voyage. The preferable construction of sub-clause 1 is the
construction that gives effect to the objective intentions of the parties and commercial
sensibility.103 This construction is that adherence to the BMP4 is only needed if the
vessel was at risk of a piracy attack. The clause should be construed as follows:
Proceeding “to” meaning ‘about to enter’, or;
proceeding “through” meaning ‘having entered’,
an area at risk of piracy.
71. This construction should be preferred over one that requires absolute compliance which
demands that even a vessel traveling through a safe zone with no risk of piracy must
carry all necessary equipment if they intend on entering a risk area much later in the
voyage.
72. When the Vessel left Singapore for what the Master reasonably anticipated would be its
next call at Durban, the Vessel was not proceeding “to” or “through” an area at risk of
piracy within the true meaning of the clause stated above. Therefore, there was no
breach of the clause in not having the razor wire on board at this particular time as the
clause did not apply.
73. It was only when the Vessel approached the West Africa region that it could be
considered as proceeding “to” an area at risk of piracy. However, the Claimant should
not be liable for this breach. The Claimant had arranged to freight the equipment
required under the BMP4 to Durban after the Respondent had indicated that bunkers
would be provided at that port.104 It was therefore the Respondent’s failure to allow the
Vessel to stop at that location which rendered the Master unable to comply with the
BMP4. Therefore the Claimant should not be held liable for any breach.
103 Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896. 104 Facts, p 36.
TEAM NUMBER: 7
27
(5) THE CLAIMANT DID NOT CONVERT OR BREACH THEIR DUTY AS BAILEE
IN RESPECT OF PART OF THE CARGO ON BOARD
(A) The Claimant has not breached its duties as a bailee
74. The obligations under a bailment of goods are modified by the contract of carriage
between shipowner and charterer.105 Those contractual terms take precedence over any
common law duty or obligation.106
75. Under the Charterparty, any claim that is “arising out of any loss of or damage to or in
connection with cargo” is subject to the HV Rules.107
76. While it is conceded that the partial discharge of the cargo is in breach of the Claimant’s
obligation under the HV Rules,108 the Claimant relies on the defences in Art IV r 2109 so
bears the onus of proof in establishing one of these defences.110
77. The English Court of Appeal recently considered that piracy falls into one of the Art IV
r 2 exceptions of the HV Rules,111 and the Claimant submits it so falls into sub-rules (c)
“perils of the sea, dangers and accidents of the sea”, (f) “acts of public enemies”, or (q)
which is known as “the last resort of the rogue”.
78. Piracy has been held to be a “peril of the sea”112 and the Claimant therefore relies on r
2(c) to exclude its liability. Whether the peril can be foreseen or guarded against for the
105 East West Corporation v DKBS 1912 & Ors [2003] QB 1509, 1519; Midland Silicones v Scruttons [1962] AC
446, 487; Norman Palmer, Palmer on Bailment (Sweet and Maxwell, 3rd ed, 2009) 1107 [20-016]. 106 “The Pioneer Container” [1994] 2 AC 324. 107 Shelltime 4, cl 27(c)(ii); on the incorporation of the HV Rules into charterparties see Adamastos Shipping Co
Ltd v Anglo-Saxon Petroleum Co Ltd (“The Saxon Star”) [1959] AC 133, 154. 108 HV Rules Art III r 2 109 The Antigoni [1991] 1 Lloyd’s Rep. 209, 212; these defences are available because, as discussed above, the
Vessel was seaworthy: see e.g. Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959]
AC 589, 602-3. 110 Whistler International v Kawasaki Kisen Kaisha (“The Hill Harmony”) [2001] 1 AC 638, 658; Gosse Millerd
v Canadian Government Merchant Marine [1929] AC 223, 234. 111 Trafigura Beheer BV v Navigazione Montanari Spa (“The Valle Di Cordoba") [2015] 1 Lloyd’s Rep. Plus 26
[24], [33], [37]. 112 Pickering v Barkley (1648) 82 ER 587 cited in Russell v Niemann [1864] 144 ER 66, 70-72 and Great China
Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (“The Bunga Seroja”) (1998)
196 CLR 161.
TEAM NUMBER: 7
28
purposes of the HV Rules is not the critical question, provided it does not occur with the
actual fault or privity of the carrier.113
79. Alternatively, while the precise scope of “public enemies” in r 2(f) is uncertain it is
generally assumed to cover piracy.114 This view is justifiable in light of the facts that
pirates are enemies of the human race.115 The Claimant submits that the defence under r
2(f) can be raised.116
80. Alternatively, the events fall within r 2(q) which relieves liability for “any other cause
arising without the actual fault or privity of the carrier”.
(B) The Claimant did not convert part of the cargo
81. The Claimant accepts that the Respondent has title to bring an action in the tort of
conversion.117
82. However, a claim in conversion must fail as the conduct was accidental, and not
deliberate.118 The discharge of the cargo to pirates was not a deliberate action given that
the seizure by external agents was beyond the Claimant’s control.
83. Alternatively, a claim in conversion fails because the same exclusions of liability
explained above119 also apply to this claim. The HV Rules state that the “defences and
limits of liability provided… shall apply in any action against the carrier in respect of
loss or damage to goods covered by a contract of carriage whether the action be founded
in contract or in tort”. Though plaintiffs may bring the most advantageous action
113 Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (“The Bunga
Seroja”) (1998) 196 CLR 161, 181 198-204, 218. 114 John Richardson, A Guide to the Hague and Hague-Visby Rules (Lloyd’s of London Press Ltd, 3rd ed, 1994)
50; this view accords with the that expressed by the framers of the HV Rules, who agreed that an act of public
enemies may mean pirates: The travaux préparatoires of the International Convention for the Unification of
Certain Rules of Law relating to bills of lading of 25 August 1924, The Hague Rules and of the protocols of 23
February 1968 and 21 December 1979, The Hague-Visby Rules, 408. 115 Trafigura Beheer BV v Navigazione Montanari Spa (The "Valle Di Cordoba") [2015] 1 Lloyd’s Rep. Plus 26,
[2]. 116 See also Hakan Karan, The Carrier’s Liability under International Maritime Conventions: the Hague, Hague-
Visby, and Hamburg Rules (The Edwin Mellen Press, 2004) 304. 117 Procedural Order no. 2 [22]. 118 Kuwait Airways Corporation v Iraqi Airways Company and Others [2002] 2 AC 883 [38]. 119 See above [75]-[80].
TEAM NUMBER: 7
29
available in tort or contract, “concurrent or alternative liability will not be admitted if its
effect would be to permit the plaintiff to circumvent or escape a contractual exclusion or
limitation of liability for the act or omission that would constitute the tort.”120
(6) THE CLAIMANT SHOULD BE AWARDED COMPOUND INTEREST
84. Procedural Order no 1 suggests the quantification of damages will be particularised in a
later phase of the arbitration. The Claimant advances a preliminary submission that
interest should be awarded on whatever sum is particularised on that date.
85. The interest rate on unpaid hire is dictated by clause 9(b) of the Shelltime 4 form,121
under which interest on any amount due, but not paid, shall accrue at a compounding
rate. This Tribunal should give effect to this clause.122
86. Compound interest should, in the interests of justice, also be awarded on any damages
for the fraud claim in accordance with the Arbitration Act 1996 (UK) s 49. This power
should be exercised to compensate the Claimant for being kept out of its money123 by
the Respondent’s fraud.
120 Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, 191 citing with approval Midland Bank Trust Co
limited v Hett, Stubs & Kemp [1979] Ch 384, 522. 121 See also Arbitration Act 1996 (UK) s 49(1). 122 Arbitration Act 1996 (UK) s 49(6); LCIA Arbitration Rules October 2014, Article 26.4; National Bank of
Greece SA v Pinios Shipping Co (no. 1) and George Dionysios Tsitsilianis (“The Maria”) (No.3) [1990] 1
Lloyd’s Rep. 225. 123 Kemp v Tolland [1956] 2 Lloyd’s Rep. 681, 691; Clare Ambrose and Karen Maxwell, London Maritime
Arbitration (Informa, 3rd ed, 2009) 296-297.
TEAM NUMBER: 7
30
RELIEF SOUGHT
For the reasons submitted above, the Claimant respectfully requests the Tribunal to:
DECLARE that the Tribunal has jurisdiction to hear this dispute; and
DECLARE that, although Procedural Order 1 suggests the quantification of damages will be
particularised a later date in the arbitration, the Claimant is entitled to the following:
a) Hire due and owing under the Charterparty or damages in the same amount;
b) Damages for the material damage to the vessel; and
c) An award of compound interest of any sum found owing, in accordance with section
49 of the Arbitration Act 1996 (UK).