international maritime law arbitration …...fourteenth edition international maritime law...
TRANSCRIPT
Fourteenth Edition
INTERNATIONAL MARITIME LAW ARBITRATION MOOT
8 to 12 July 2013
VERSAILLES SAINT-QUENTIN UNIVERSITY
IN THE MATTER OF AN ARBITRATION HELD AT LONDON
MEMORANDUM FOR THE RESPONDENT
ON BEHALF OF: AGAINST:
AARDVARK LTD TWILIGHT CARRIER
« CLAIMANT » « RESPONDENT »
TEAM NUMBER 3
LAURE BOULLENGER - NATACHA CONSTANTIN – RAPHAELLE BRIOTTET - CHLOE GIRARD – ELLIOTT GRESSARD – ALEXANDRE YACINE SOULEYE
Memorandum for the Respondent ii
INTERNATIONAL MARITIME LAW ARBITRATION MOOT
2013
MEMORANDUM FOR THE RESPONDENT
TEAM NUMBER 3
Memorandum for the Respondent iii
TABLE OF CONTENTS
Table of Contents ...................................................................................................................... iii Index of Abbreviations .............................................................................................................. iv
List of Authorities ...................................................................................................................... v Statement of Facts ...................................................................................................................... 1
Questions Presented ................................................................................................................... 3 Arguments Presented .................................................................................................................. 4
A. THE RESPONDENT IS NOT LIABLE FOR ANY DETERIORATION IN THE QUALITY OF GOODS ....... 4
1. The Respondent is not liable for damage arising from piracy pursuant to Article IV r. 2 of the Hague-‐Visby Rules .................................................................................................................... 4
1.1 The Respondent is entitled to rely on exceptions under Article IV r. 2 ........... 4 i. First, the Respondent is not liable pursuant to Article IV r. 2 (f) ........................ 5 ii. Secondly, the Respondent is not liable pursuant to Article IV r. 2 (q) .............. 5 iii. Thirdly, the Respondent is not liable pursuant to Article IV r. 2 (e) ................. 6
1.2 The hijacking of the Vessel could not have been avoided by reasonable care and diligence on the part of the Respondent ........................................................................... 7 1.3 Unseaworthiness does not bar the Respondent from relying on the exceptions under Article IV r. 2 ..................................................................................................... 8
2. The Respondent is not liable for damage arising from piracy pursuant to the general exceptions clause of the Charterparty ............................................................................................ 9
3. In the further alternative, there is no significant deterioration in the cargo quality ............ 9
B. THE RESPONDENT WAS ENTITLED TO DELIVER THE CARGO OTHER THAN AS AGAINST PRESENTATION OF THE BILLS OF LADING ......................................................................................... 10
1. The Respondent complied with the Charterer’s orders ...................................................... 10
1.1. Under English law ................................................................................................................. 11 1.2. Under comparative law ...................................................................................................... 12
2. The Claimant abandoned its rights over the cargo and so any action in conversion against the Respondent ............................................................................................................................. 14
3. The Respondent’s obligation to deliver the goods against presentation of the Bills of Lading does not fall within the scope of the Hague-‐Visby Rules ................................................... 15
4. Alternatively, no damages shall be recoverable because of the Respondent’s breach of Contract ........................................................................................................................................ 16
C. THE RESPONDENT WAS ENTITLED TO CHANGE THE DISCHARGE PORT ................................... 16
D. ALTERNATIVELY, THE RESPONDENT IS ENTITLED TO LIMIT ITS LIABILITY ................................ 20
Prayer for relief ........................................................................................................................ 22
Memorandum for the Respondent
iv
INDEX OF ABBREVIATIONS
Bills of Lading Used in combination with the Charterparty and
concluded by and between the Respondent and
the Charterer the: 25th of October 2008
Charterparty Tanker Voyage Charterparty “VEGOIL VOY
1/27/50” concluded by and between the Carrier,
the Vessel and the Charterer, the 12th of
September 2008
Contract of carriage Contractual relationship between the Claimant
and the Respondent
Sale contract Concluded by the Claimant and the Charterer
the 2nd of the December 2008
The Charterer Beatles Oils & Fats Limited Ltd
The Claimant Aardvark Limited Ltd
The Respondent Twilight Carriers
The Vessel The description and the position of the Vessel is
provided in the Part I – A of the Charterparty
(Moot Problem: p. 5)
Memorandum for the Respondent
v
LIST OF AUTHORITIES
CASES
Republic of Bolivia v. Indemnity Mutual Marine Assn. Ltd (1909) 1KB 785;
Bradley (FC) & Son Ltd v Federal Steam Navigation Co. Ltd, (1927) 27 LI L Rep 395;
Re Piracy Jure gentium (1934) A.C. 586;
Leesh River Tea Co. Ltd. v. British India S.N. Co. Ltd, (1967) 2 Q.B.
The Andreas Lemos (1983) QB 647;
Interfoto Picture Library v. Stiletto Visual Programmes, (1989) QB 433, 445 (CA);
The Houda Kuwait Petroleum Corp. v. I&D Oil Carriers Ltd, (1994);
MB Pyramid Sound NV v. Briese Schiffahrts GMBH and Co, KG MS “Sina” and Latvian
Shipping Association Ltd (The Ines) (1995) 2 Lloyd’s Rep 144.
Kuwait Petroleum Corp. v. I&D Ouil Carriers Ltd, (1999) 1 Lloyd’s Rep. 837;
Director General of Fair Trading v. First National Bank, (2001) UKHL 52;
French Cour de Cassation, Cass. Com. 19 June 2007, n° 05-19646.
STATUTES
Carriage of goods by Sea Act, 1971 (UK);
Carriage of goods by Sea Act, 1992 (UK).
Memorandum for the Respondent
vi
TREATIES
Convention for the Carriage of Goods by Sea: Rotterdam Rules, 2008;
United Nations Convention on the Law of the Sea, 1982;
International Convention For The Unification Of Certain Rules Of Law Relating To Bills of
Lading, Hague-Visby-Rules, 1968;
A/CN.9/WG.III/WP.101 – Transport Law: Draft convention on the carriage of goods (wholly
or partly) (by sea).
SECONDARY MATERIAL
Charterparties and Bills of Lading, 21st ed., London, Sweet and Maxwell, 2008;
International Carriage of Goods by Road: CMR, Malcolm A Clarke, 5th Edition, 2009;
Droit Maritime et Droit Fluvial, Smeesters and Winkelmolen, II, Bruxelles, Larcier, 1933, nr.
694, with a cross-reference to the Rapport de la Conférence de La Haye, 1921;
Universality of Jurisdiction over War Crimes, Cowles, California Law Review 33 (1945);
Deviation: a Doctrine All at Sea? Martin Dockray, (2000) LMCLQ 76;
IMB Piracy and Armed Robbery against Ships Annual Report for 2008;
IMB Piracy and Armed Robbery against Ships Annual Report for 2007;
Supreme Court of China, Judicial interpretation text, 16 February 2009.
Memorandum for the Respondent
1
STATEMENT OF FACTS [1] On 23 May 2008, Aardvark Ltd (the “Claimant”) concluded two contracts of sales (the
“Sale contract”) with Beatles Oils & Fat Limited (the “Charterer”). Its subject was the
purshase of 4000mt of Palm Fatty Acid Distillate, for a price of USD 2,986,671,38.
[2] On 12 September 2011, the Charterer concluded a charterparty (the “Charterparty”) with
Twilight Carriers (the “Respondent”). All of the Bills of Lading provided for loading at
Pasir Gudang, Malaysia and discharging at Liverpool, Merseyside UK.
[3] The Charterparty contained four Bills of Lading (the “Bills of Lading”) on the congen
form, providing all terms and conditions liberties and exceptions of the Charterparty. It
also refers to the Hague/Visby Rules.
[4] While the vessel (the “Vessel”) was en route to Merseyside, she was held off Somalia by
Somali pirates between 15 November and 13 February 2009.
[5] As the shipping documents appeared to be in compliance with the contractual
requirements, the purchase price was paid to Charterer in 26 January 2009 and the Bills of
Lading were endorsed to the Claimant. After receiving Charterer insurance policy on 6
March 2009, the Claimant advised the Charterer that they were in repudiatory breach of
the Sale contract in failing to insure the cargo under the agreed terms. The Claimant
demanded that the Charterer repay the purchase price.
[6] Following series of messages, the Claimant and the Respondent disagreed with to whom
the cargo shall be resell and where the cargo is to be discharged, Rotterdam or Liverpool.
The Claimant wanted to discharge at Liverpool where he had potential buyers for the
cargo whereas the Respondent intended to unload at Rotterdam.
[7] On or about 20-22 March 2009, the Respondent discharged the cargo at Rotterdam to the
Charterer against a letter of indemnity.
Memorandum for the Respondent
2
[8] On 23 March 2009, the Charterer brought a petition to garnish property before judgement
as well as to attach moveable goods.
[9] The same day, the Dutch Court decided to arrest the Vessel, after an application brought
by the Claimant.
[10] On 27 March 2009, the Rotterdam Court ordered that the arrest could be lifted in return
for the Respondent providing security of USD 1,4 millions.
[11] On 15 July 2009 a hearing took place before the District Court of Rotterdam and by a
judgement handed down on or about 24 July 2009 the Court upheld the arrest and granted
an order for sale.
[12] By a contract of sale dated 25 August 2009, the Charterer sold the cargo for USD
1,695,752.38.
[13] The Claimant initiated arbitration proceedings in London and served its claim on the
Respondent on 6 April 2010. And the Respondent submitted its defence submission on 16
June 2010.
Memorandum for the Respondent
3
QUESTIONS PRESENTED
A. Whether the Respondent is liable for any deterioration in the quality of goods.
B. Whether the Respondent is entitled to deliver the cargo other than as against surrender
of the Bills of Lading.
C. Whether the Respondent is entitled to change the discharge port.
D. Whether the Respondent is entitled to limit its liability.
Memorandum for the Respondent
4
ARGUMENTS PRESENTED
A. THE RESPONDENT IS NOT LIABLE FOR ANY DETERIORATION IN THE
QUALITY OF GOODS
1. The Respondent denies liability for any deterioration in the quality of goods by reason of
piracy under the Hague-Visby Rules (1) and under the Charterparty (2). Alternatively,
there is no significant deterioration in the quality of the goods (3).
1. The Respondent is not liable for damage arising from piracy pursuant to Article IV
r. 2 of the Hague-Visby Rules
2. The Respondent is entitled to rely on exceptions under Article IV r. 2 (1.1) since the
hijacking of the Vessel could not have been avoided by reasonable care and diligence on
the part of the Respondent (1.2) and due diligence has been exercised to make the Vessel
seaworthy (1.3).
1.1 The Respondent is entitled to rely on exceptions under Article IV r. 2
3. The contract of carriage contained in or evidenced by the Bills of Lading incorporated the
HVR1. The Respondent herein relies on exceptions (e) and/or (f) and/or (q) under Article
IV r. 2, which provides that:
4. ”Neither the carrier nor the ship shall be responsible for loss or damage arising or
resulting from:
(e) Act of war.
(f) Act of public enemies.
(q) any other cause arising without the actual fault and privity of the carrier, or without
the fault or neglect of the agents or servants of the carrier.”
1 Moot Problem, p.4: email of 12 September 2008.
Memorandum for the Respondent
5
i. First, the Respondent is not liable pursuant to Article IV r. 2 (f)
5. The Respondent is entitled to rely on exception in Article IV r. 2 (f), which exempts
liability for damage arising from acts of public enemies. On 15 November 2008, “the
vessel was boarded by Somali pirates”.2 Pirates have long been considered as public
enemies under English law3. They are hostis humanis generis, enemy of mankind4,
attacking vessels at sea for private gain5; Discussion between Lord Phillimore and Sir
Norman Hill during the drafting work of the Brussels Convention indicates that the notion
of “public enemies” means pirates.6 Consequently, piracy falls within the scope of Article
IV r. 2 (f).
6. The Respondent argues that it was prevented from heating up the goods by reason of
piracy, which caused damage to the goods.7 It is ascertained that the Respondent was
instructed by the Claimant to heat up the cargo “during the voyage” and “in the last week
prior to arrival”8. It is also ascertained that “the product was heated and cooled down for
several time”9. Therefore, the Respondent carried out its obligation until the Vessel and
her crew have been taken over by Somali pirates.10 The entire crew was “confined all 24
hours per day to the bridge” and “no maintenance or inspections on deck were allowed
whatsoever”11 .By reason of piracy, the Respondent could not take measures to heat up the
goods during captivity. Consequently, the product cooled down and its quality
deteriorated. A public enemies act caused damage to the goods.
ii. Secondly, the Respondent is not liable pursuant to Article IV r. 2 (q)
7. The Respondent is also entitled to rely on Article IV r. 2 (q), which excludes liability for
damage resulting from no actual fault of the carrier and no negligence of the servants.
Firstly, since the Master is the agent of the Respondent, the acts of his servants fall within 2 Moot Problem, p. 41: investigation of 19 March 2009. 3 Scrutton, Scrutton on Charterparties and Bills of Lading, 21st ed., London, Sweet and Maxwell, 2008, Art. 109. 4 Re Piracy Jure gentium (1934) A.C. 586. 5 Republic of Bolivia v Indemnity Mutual Marine Assn. Ltd (1909) 1KB 785; The Andreas Lemos (1983) QB 647. 6 Smeesters and Winkelmolen, Droit Maritime et Droit Fluvial, II, Bruxelles, Larcier, 1933, nr. 694, with a cross-‐reference to the Rapport de la Conférence de La Haye, 1921, pp. 153-‐154. 7 Moot Problem, p. 51: Dutch survey. 8 Moot Problem, p. 41: investigation of 19 March 2009. 9 Moot Problem, p. 51: Dutch survey. 10 Moot Problem, p. 42: investigation of 19 March 2009. 11 Moot Problem, p. 42: investigation of 19 March 2009.
Memorandum for the Respondent
6
the scope of Article IV r. 2 (q). Secondly, damage was caused by arsenic found in tanks 3
P&S and 7 P&S.12 The Claimant claims that damage was also caused by product rancidity
due to light and oxygen exposure.13 In both cases, tank opening did not result from the
Respondent’s fault or negligence. In The Chyebassa, 14 it was held that the carrier was not
liable for theft by stevedoreʹs servants where the theft did not arise in the course of the
servantʹs employment. By analogy, the Respondent is not liable for arsenic being
introduced into the tanks by Somali pirates. Pirates were not acting on behalf of the
Respondent and cannot be regarded as its servants. The same reasoning applies for any
damage arising from the tank opening by third parties on the Vessel.15
8. Prior to loading, all tanks on the Vessel were passivated with nitric acid with the same
process. It should have removed any arsenic that may have been present.16 However,
arsenic was found after the Vessel was released. This means that the tanks were opened
during the period of captivity. As said above, the crew was held hostage. On the contrary,
pirates were free to access the tanks. Consequently, pirates introduced arsenic (or material
containing arsenic) into the tanks, which contaminated the goods.
9. Moreover, though the crew was confined to the bridge under extreme conditions (poor
hygiene, not allowed to stand or to look outside), they were observing the tank opening
from their prison. 17 They did not observe unauthorized access to the cargo. However, the
number of pirates on board was undetermined.18 Then, any pirate could have opened the
tanks during the period of captivity off Somalia. Whether the cause was seen or not by the
Respondent, damage would have happened. Under these circumstances, damage was not
caused by the Respondent’s fault or negligence.
iii. Thirdly, the Respondent is not liable pursuant to Article IV r. 2 (e)
10. In the alternative, the Respondent is entitled to rely on exception in Article IV r. 2 (e),
12 Moot Problem, p. 38: sampling analysis of 18 March 2009. 13 Moot Problem, p.50: Dutch survey. 14 Leesh River Tea Co. Ltd. v. British India S.N. Co. Ltd. (1967) 2 Q.B. 15 As said above, the Claimant contends that damage was caused by rancidity of the product due to oxygen and light exposure. This means that the tanks have been opened. 16 Moot Problem, p. 38: sampling analysis of 18 March 2009. 17 Moot Problem, p. 42: investigation of 19 March 2009. 18 Moot Problem, p. 42: investigation of 19 March 2009.
Memorandum for the Respondent
7
which exempts liability for damage arising from acts of war. Under international law,
every State may seize a pirate ship or aircraft and arrest the persons on board.19 The crime
of piracy is the longest recognized crime to be subject to universal jurisdiction.20
Therefore, pirates are deemed to be at war with every State and individual. The
Respondent argues that the hijacking of the Vessel on 15 November 2008 is an act of war
purported by enemies of mankind,21 regardless of any nationality. Thus, the hijacking of
the Vessel falls within the scope of Article IV r. 2 (e) and caused above-mentioned
damage to the goods.
1.2 The hijacking of the Vessel could not have been avoided by reasonable
care and diligence on the part of the Respondent
11. In order to rely on exceptions under Article IV r. 2, the Respondent must prove that the
hijacking of the Vessel does not result from its negligence. Firstly, such an event was
unforeseeable. Somali pirates in the Gulf of Aden boarded the Vessel on 15 November
2008. According to the International Maritime Bureau (IMB) Annual Piracy Report for
2008, 111 incidents were reported for the east coast of Somalia and the Gulf of Aden in
2008.22 This is an increase of nearly 200% compared to 2007. However, the report was
issued in January 2009. On 15 November 2008, the IMB Annual Piracy Report for 2007
had authority in piracy issues. Therefore, neither the IMB nor the Respondent was
expecting the peak of pirate attacks in this area when the contract of carriage was
concluded.
12. Moreover, regarding the locations of actual and attempted attacks in 2007, 44 were
reported in Somalia against 52 in Indonesia and Malaysia.23 Thus, when the Vessel loaded
the goods at Pasir Gudang as provided by the Bills of Lading, the Claimant accepted
piracy risks in the first place. The unexpected hijacking of the Vessel in the Gulf of Aden
was a risk the Claimant “always took”. 24Consequently, it was an unfortunate and
unforeseeable event.
19 Article 105 of the United Nations Convention on the Law of the Sea (1982). 20 Cowles, « Universality of Jurisdiction over War Crimes », California Law Review 33 (1945), pp. 181-‐194. 21 Re Piracy Jure gentium (1934) A.C. 586. 22 IMB Piracy and Armed Robbery against Ships Annual Report for 2008. This report is an analysis of worldwide reported incidents of piracy and armed robbery against ships from 1 January to 30 September 2008. 23 IMB Piracy and Armed Robbery against Ships Annual Report for 2007. 24 Moot Problem, p. 26: email of 15 March 2009.
Memorandum for the Respondent
8
13. Secondly, the Respondent has exercised diligence in order to reduce piracy risks. The
crew “commenced anti-pirate watch” as soon as the Vessel entered the Gulf of Aden at
7.42 a.m. on 14 November 2008.25 Although the Respondent was being vigilant during the
night and the day after, Somali pirates boarded the Vessel at 12.50 a.m. on 15 November
2008. Therefore, the Respondent was careful in order to avoid the boarding. Furthermore,
as said above, the IMB Annual Piracy Report for 2007 had authority to deal with piracy
risks. The Respondent followed the advice within this report not to call to ports in
Somalia and the Vessel did not slow down her speed. Nonetheless, from 2007 to 2008,
recommendations were strengthened as regards to the navigation in this area. 26
Consequently, any possibility of hijacking while entering the Gulf of Aden could not have
been absolutely eliminated by the Respondent. Precaution measures were taken and piracy
was beyond the Respondent’s control.
1.3 Unseaworthiness does not bar the Respondent from relying on the
exceptions under Article IV r. 2
14. The Respondent claims that it has not breached Article III r. 1 of the Hague-Visby Rules.
A Master Mariner with tanker experience performed the inspection of the cargo.27 Yet
there is no evidence within the report that there has been a breach of a warranty of
seaworthiness. Then, the Claimant cannot prove the Respondent has not exercised due
diligence to provide a seaworthy ship at the commencement of the voyage.
15. Additionally, since the Vessel is classed NKK,28 the Respondent denies all alleged failures
to provide safety equipment at the commencement of the voyage.
16. Moreover, neither seaworthiness nor due diligence is absolute. Both are relative to the
state of knowledge and the standards prevailing at the material time.29 In this respect, it
was ascertained above that the Respondent could not reasonably expect the Vessel to be
taken over by pirates off Somalia. Thus, the Respondent had a prudent attitude.
25 Moot Problem, p. 42: investigation of 19 March 2009. 26 Notably, the recommended distance for vessels sailing off the Somali coast passed from 200 to 250 nautical miles. 27 Moot Problem, p. 41: investigation of 19 March 2009. 28 Moot Problem, p. 3: email of 12 September 2008 29 Bradley (FC) & Son Ltd v Federal Steam Navigation Co. Ltd (1927) 27 LI L Rep 395.
Memorandum for the Respondent
9
17. For these reasons, the Respondent is entitled to rely on exceptions under Article IV r. 2
and is not liable for any damage by reason of piracy.
2. The Respondent is not liable for damage arising from piracy pursuant to the general
exceptions clause of the Charterparty
18. The Contract of carriage contained in or evidenced by the Bills of Lading provided at
clause 17 that neither the vessel nor her owner shall be responsible for any loss or damage
arising or resulting from “pirates”.
19. Neither the Claimant nor the Respondent denies that the hijacking of the Vessel on 15
November 2008 is piracy.30 By reason of piracy, damage was caused to the goods.
20. The Respondent contends that it is entitled to rely on the general exceptions clause for any
damages arising from pirates. Hence, the Respondent cannot be held liable.
3. In the further alternative, there is no significant deterioration in the cargo quality
21. In the alternative, the Respondent argues that the cargo remains of good merchantable
quality. Firstly, the analysis of the cargo conducted on 6 March 2009 proves that there is
no indication of significant contamination or deterioration in the cargo quality.31 The
arsenic levels found in tanks 3 P&S and 7 P&S are “below the UK maximum legal limits
for foodstuff”. As a result, the cargo remains suitable for use in the human chain since no
other apparent evidence of organic contaminated the cargo. Therefore, the Claimant
cannot prove that the product quality was depreciated by reason of contamination.
22. Secondly, the survey performed after the discharge of the goods indicates that it cannot be
ascertained to what extend the product has suffered from being exposed to fluctuating
temperatures.32 Though the Respondent was instructed by the Claimant to heat up the
product, no recommended temperatures to be maintained were given. The “slip melting
point” and the “viscosity” of the product mentioned in the Bills of Lading only refer to its
30 Moot Problem, p.25: email of 6 March 2009. 31 Moot Problem, p. 38: sampling analysis of 18 March 2009. 32 Moot Problem, p. 51: Dutch survey.
Memorandum for the Respondent
10
characteristic changes. As there is no evidence that the absence of heating amounted to
damage the goods, the Respondent is entitled to rely on the Clause 16 (a) of the Charter
Party33. Hence, the Respondent denies any deterioration of the goods, and consequently
any liability for damage due to a lack of heating.
23. Thirdly, the survey also indicates that the quality of the product was not depreciated by
reason of its rancidity due to oxygen exposure. The product is stowed in a shoretank at
Rotterdam since March 2009 “in unheated condition” and “with air above the product”34.
However, these conditions of stowage are slowing the oxidation reactions, which get the
product more rancid. Then, there is no evidence that the quality of the product was
deteriorated neither by oxygen exposure nor, as seen above, a lack of heating.
24. For these reasons, the Respondent claims that it cannot be proved that the cargo went from
being GMQ cargo to non-GMQ cargo. The goods remain of good merchantable quality.
B. THE RESPONDENT WAS ENTITLED TO DELIVER THE CARGO OTHER
THAN AS AGAINST PRESENTATION OF THE BILLS OF LADING
25. The Respondent cannot be held liable for misdelivery since it complies with the
Charterer’s orders (1) and the Claimant abandoned its rights on the cargo (2). The
Respondent’s obligation to deliver the goods against presentation of the Bills of Lading
does not fall within the scope of the Hague-Visby Rules (3). Alternatively, the Claimant is
not entitled to seek damages (4).
1. The Respondent complied with the Charterer’s orders
26. In maritime law, there is a well-established rule that the carrier can deliver the goods at
the destination only against the production of a bill of lading by the consignee. However,
as it is often the case, the practice differs from the rules: the carrier often delivers the
goods without obtaining a bill of lading. Delivery of the goods without presentation of the
33 Moot Problem, p. 9: Charter Party. 34 Moot Problem, p. 50: Dutch survey.
Memorandum for the Respondent
11
bill of lading is one of the most common problems in the carriage of goods by sea. This
issue will be interpreted in the light of English law (1.1) and comparative law (1.2).
1.1. Under English law
27. First, the Respondent was ordered by the Charterer to deliver the goods without
presentation of the Bills of Lading but against a letter of indemnity issued by the latter to
it. Secondly, the Claimant sent to the Respondent an email, which indicates that following
the Charterer’s instructions would constitute a breach of the Contract of carriage.35
Therefore, the Respondent was placed under an extremely difficult position. Regarding
the Charterer’s orders, the Respondent had to determine if the cargo was going to be
delivered to the person entitled to its possession. This goes against the well-established
principle by which a carrier is not bound to investigate who is entitled to possession of the
goods.
28. When the Respondent arrived at the discharge port, the Claimant was not there to take
delivery of the goods and present the Bills of Lading. Moreover, the Respondent could not
be ensured that the person willing to take delivery of the cargo in the email was the lawful
holder of the Bills of Lading. Therefore, the Respondent only had two options: the first
one was to refuse the Charterer’s order to deliver the goods without the surrender of the
Bills of Lading. This would have meant to leave the cargo in the Vessel or to abandon it at
the port of discharge. The second one was to deliver the goods against a letter of
indemnity and to comply with the orders of the Charterer, to whom the Respondent was
bound under the Contract of carriage. Thus, the Respondent discharged the cargo pursuant
to the Charterer’s orders in exchange for a letter of indemnity.
29. In Otis Export Ltd. V. Dampskibsselkabet AF 1912 Aktiesekkab, it was held that in
absence of an express term under the contract, the master must only deliver the goods to
the holder of the bill of lading. This rule was consistent with The Houda.36 As a matter of
fact, Rix J. said that: “In my judgment a true owner cannot in absence of some special
arrangement oblige a shipowner to deliver his goods to him without presenting his bill of
lading […]. In practice, a suitable indemnity will be likely to satisfy the shipowner, all the
35 Moot problem p. 36 : email of 20 March 2009. 36 Kuwait Petroleum Corp. V. I&D Ouil Carriers Ltd. (1999) 1 Lloyd’s Rep. 837.
Memorandum for the Respondent
12
more so where the goods owner has a reasonable explanation for the absence of his bill of
lading”. Hence, in absence of Bills of Lading, the Carrier is entitled to deliver the cargo
against a letter of indemnity.
30. Rix J. also said that it was not necessary to imply the terms to allow delivery without a bill
of lading, largely because of the widespread use and acceptability of the letter of
indemnity. The widespread use of the letter of indemnity grew up because it was
necessary for the bill of lading contracts to be efficient. Therefore Rix J suggests that the
shipowner is obliged to deliver against either the bill of lading or a contractual indemnity.
In the case at hand, the Claimant was not at the port of discharge to present the Bills of
Lading and receive the cargo. The Respondent could not rely on the email as it could have
been sent by anyone. This is why the Respondent decided to deliver the cargo to the
Charterer who provides it a letter of indemnity. As a matter of fact, the Carrier is not
required to enquire the person claiming the goods is indeed entitled to receive them.37
1.2. Under comparative law
31. Although the obligation of the carrier to deliver the cargo against surrender of a bill of
lading is interpreted strictly by the English courts, such an interpretation is weakened
under comparative law.
32. In French law, the Supreme Court held that the agreement of the Charterer could allow the
Carrier to deliver the cargo without presentation of the bill of lading.38 In this case, the
French Court reminds the rule of delivery against bills of lading. In the meantime, the
Court reserves the case of the freedom of contract, which should leave to the parties the
right not to present the bill of lading on delivery if they agreed on it.
33. In China, the Supreme Court has adopted a judicial interpretation text39 in 2009 dealing
with delivery without bill of lading. Article 9 of this text provides that the Carrier, upon
demand of the Charterer, can deliver the goods other than to the cargo receiver.40
37 The Houda (1994) 2 Lloyd’s Rep. 541, 552 (col. 2), per Neill L.J.; 556 (col. 2), per Millett L.J. Similar reasoning was extended to straight Bills of Lading in The Rafaela S, in para. 7.122ff. 38 Cass. Com. 19 June 2007, n° 05-‐19646. 39 Supreme Court of China, Judicial interpretation text, 16 February 2009, art. 9. 40 Chinese’s Courts apply judicial interpretations the same way as statutes.
Memorandum for the Respondent
13
34. Also, on 3 July 2008 the United Nations Commission on International Trade Law
(UNCIRAL) approved the draft Convention on Contracts for the International Carriage of
Goods Wholly or Partly by Sea, which was adopted by the Legal Committee of the
General Assembly on 14 November 2008 also known as the Rotterdam Rules.41 The
Rotterdam Rules are now opened for signing but will enter into force as soon as it will be
ratified by twenty countries. Despite the fact that they are not yet enforceable, these rules
provide interesting provisions. They cannot be ignored as the aim of this convention is to
extend and modernize international rules already in existence and achieve uniformity of
admiralty law in the field of maritime carriage, updating and/or replacing many provisions
in the Hague Rules, Hague-Visby Rules and Hamburg Rules.
35. Article 46 (c) of the Rotterdam Rules provides that “The carrier that delivers the goods
upon instruction of the shipper or the documentary shipper … is discharged from its
obligation to deliver the goods under the contract of carriage, irrespective of whether the
non-negotiable transport document has been surrendered to it”. This Article gives then
the right for the Carrier to deliver the goods without the presentation of the bill of lading
when the Charterer gave him instructions to do so.
36. Again, Article 53 of the Rotterdam Rules provides that “The right of control may be
exercised only by the controlling party and is limited to: … c) The right to replace the
consignee by any other person including the controlling party”,42 pursuant to the Article
54 the controlling party is “when a non-negotiable transport document ... that it shall be
surrendered in order to obtain delivery of the goods: (a) The shipper is the
controlling party”. This provision shows that the Charterer can replace the cargo receiver
by itself as controlling party despite the fact that a bill of lading has been issued. Hence,
the Respondent could legitimately deliver the cargo to the Charterer as controlling party.
37. All this comparative law highlights that the obligation for the Carrier to deliver the goods
only against presentation of a bill of lading is not absolute. An exception to the principle
is found when the Charterer demands expressively that he cargo is to be deliver to itself.
41 A/CN.9/WG.III/WP.101 – Transport Law: Draft convention on the carriage of goods (wholly or partly) (by sea). 42 A/CN.9/WG.III/WP.101 – Transport Law: Draft convention on the carriage of goods (wholly or partly) (by sea), Art 53 1) c).
Memorandum for the Respondent
14
38. The Respondent argues that it is not liable for wrongful delivery of the cargo, as it was
acting under the Charterer’s orders.
2. The Claimant abandoned its rights on the cargo, and consequently any action in
conversion against the Respondent
39. On 6 March 2009, the Claimant informed the Seller, also the Charterer, of its intention to
terminate the Contract of Sell because of the Seller’s breach. Then, the Claimant
“require[s] immediate repayment of the contract price”.43 The behaviour of the Claimant
shows that it was not interested in the cargo anymore. Therefore, the Claimant has waived
its rights on the cargo and could not pretend to be its owner anymore; despite the fact that
the Claimant was in possession of the bill of lading. However, the Claimant pretends to
bring an action in bailment for the tort of conversion,44 this action shall be inadmissible.
40. It is fundamental to mention that the bill of lading is a document of title. Also, the
transferee of a bill might have an independent contractual or possessory right to the
delivery of the goods. The bill of lading itself does not give him such a right. Indeed, the
transfer of the bill does not always transfer the symbolic possession of the goods, the
latter being dependent upon the intention of the parties.
41. Furthermore, the mere holder of the bill of lading is not entitled to bring a claim for non-
delivery/conversion against the carrier. Indeed, it is possible for the property to become
separated from the bill of lading. In the case at stake here, property of the goods passed
from the Claimant to the Respondent during shipment, when the Claimant decided to
terminate the Contract of Sell.
42. Moreover, the Claimant cannot ignore that the Claimant brought a petition to garnish
property of the goods45 and that the Court of Appeal of Rotterdam upheld the judgment of
43 Moot problem p. 25: email of 6 March 2009. 44 Moot problem p. 69: Claim Submissions. 45 Moot problem p. 53: Statement of facts.
Memorandum for the Respondent
15
the District Court of Rotterdam that granted an order for sale.46 This means that the
Respondent is the true owner of the goods.
43. Therefore, conversion action can only be brought against the person to whom the goods
have been delivered, that is to say the Charterer.
3. The Respondent’s obligation to deliver the goods against presentation of the Bills of
Lading does not fall within the scope of the Hague-Visby Rules
44. The Claimant argues that delivery without presentation of the Bills of Lading is a breach
of the Hague-Visby Rules.
45. Delivery is not mentioned as one of the carrier‘s obligations as set out in Article II and
Article III rule 2 of the Hague-Visby Rules. Moreover, misdelivery claims shall be
excluded from the scope of the Rules because cargo is delivered outside the temporal limit
of the rules. Indeed, the “tackle to tackle” rule contained in Article I (e) provides that
“carriages of goods covers the period from the time when the goods are loaded on to the
time they are discharged from the ship”. For these reasons, it is generally assumed that
misdelivery claims fall outside the ambit of the Rules. In Nikolay Malakhov Shipping Co
Ltd v SEAS Sapfor Ltd, the New South Wales Court of Appeal held that Article III rule 2
imposed no obligation on the carrier in respect of its appointment of independent
contractors to perform services under the contract of carriage outside the “tackle to tackle”
period.
46. Therefore, the Respondent did not breach its obligation under the Hague-Visby Rule when
the Respondent delivered the goods without Bills of Lading.
46 Moot problem p. 54: Statement of facts.
Memorandum for the Respondent
16
4. Alternatively, no damages shall be recoverable because of the Respondent’s breach
of Contract
47. If the Tribunal states that the Respondent is in breach of the Contract of carriage because
the Respondent delivered the cargo without presentation of the Bills of Lading, the
Claimant cannot seek damages.
48. In The Ines, Clarke J held that in such circumstances no damages should be recoverable,
as no losses have been sustained.47 Indeed, the cargo has been delivered to the Carrier,
which is entitled to possession unlike the Claimant.
49. Therefore, the Claimant shall not seek damages since the cargo has been delivered to the
person entitled to possess the goods.
C. THE RESPONDENT WAS ENTITLED TO CHANGE THE DISCHARGE
PORT
50. The Claimant argued that “In breach of the contract of carriage the Owners delivered the
cargo at Rotterdam and not Liverpool”.48 Between the 20 and the 22 March 2009, the
Respondent discharged the cargo at Rotterdam against a letter of indemnity.
51. In all contracts of carriage, the carrier must deliver the goods at the agreed port of
destination. However, exceptions may entitle the carrier to change the port of destination.
The Respondent claims that it was entitled to discharge the cargo at Rotterdam because
the Claimant had abandoned the cargo, and consequently its rights on it (1). Moreover,
there was an agreement from the Claimant to change the port of destination (2). Finally,
the liberty clause under the Charterparty authorizes the Respondent to discharge the cargo
at Rotterdam (3).
47 MB Pyramid Sound NV v Briese Schiffahrts GMBH and Co KG MS (The Sina) and Latvian Shipping Association Ltd (The Ines) (1995) 2 Lloyd’s Rep 144. 48 Moot Problem, p. 69: Claim Submission.
Memorandum for the Respondent
17
1. The Claimant had abandoned the cargo, and consequently its rights on it
52. As seen above49, the Respondent contends that the Claimant was purported to have
abandoned the cargo to Beatles. Therefore, the Claimant had no more rights on the goods
and the Respondent could not be instructed to go to a specific place. The Claimant did not
own the cargo anymore, and consequently it had no power to choose where it should go.
53. Moreover, the Respondent was told by the Claimant not to discharge the cargo on 20
March 2009.50 There was no communication between the Respondent and the Claimant
before this date. The Respondent was already at Rotterdam when it received this email
because the Respondent had clear instructions to go there from Beatles. Moreover, there is
no evidence within this email that the Claimant wanted the Respondent to call and
discharge the cargo at another port. Therefore, the Respondent was allowed to stay at
Rotterdam.
54. For these two reasons, the Claimant had no more rights on the merchandise and cannot
claims breach of contract. It was no more part to this contract. Therefore, the Respondent
was entitled to go to Rotterdam instead of Liverpool.
2. The Claimant agreed to change the port of destination
55. On 16 March 2009, the Claimant sent an email to Beatles, in which it specifically
mentioned that the Respondent could go wherever it wanted to with the cargo: “We have
made it clear from the outset, whilst reserving our rights, that we did not consider that the
cargo should be sent to Liverpool where it would have no value. We have also made it
clear however that this is a decision for you as cargo owners and charterers to make”.51
This is explicit: it was agreed that the Respondent could choose the port of destination.
56. Moreover, two days later, the Claimant shown that it agreed for the Vessel to go to
Rotterdam by saying “we have couriered the bills to Johnson & Johnson in Rotterdam for
49 See above, §39 -‐ §43. 50 Moot Problem, p. 36: email of 20 March 2009. 51 Moot Problem, p. 27: email of 16 March 2009.
Memorandum for the Respondent
18
them to make available when the vessel arrives”.52 The Claimant agreed for the change of
port by sending the Bills of Lading to Rotterdam.
57. In these two emails, the Claimant accepted the change of port. First of all, in the first
email, it agreed for the Respondent to decide where the Vessel should go. In the second
email, it is implicit that the Claimant authorized the Vessel to go to the port of Rotterdam.
Indeed, sending someone in this port necessarily implies that they had agreed to that.
58. Therefore, the Claimant is acting in bad faith by assessing that the change of port
constitutes a breach of contract. Good faith is a rule of classical contract law. The English
courts have developed it in commercial cases, notably litigation arising out of the carriage
of goods by sea. In Director General of Fair Trading v. First National Bank, Lord
Bingham said that the “requirement of good faith in this context is one of fair and open
dealing”.53 He was talking about the duty of good faith imposed by the Unfair Terms in
Consumer Contracts Regulations 1994. Regarding the good faith principle, the Claimant
failed to its duty.
59. As a result, the Claimant agreed to change the port of destination and was acting in bad
faith. Consequently, the Respondent is not liable for any change of destination.
3. The Respondent was entitled to discharge the cargo at Rotterdam pursuant to the
liberty clause of the Charterparty
60. In Davis v. Garrett,54 it was established that the absence of any contractual provision
allowing the carrier to deviate implies “a duty in the owner of a vessel, whether a general
ship or hired for the special purpose of the voyage, to proceed without unnecessary
deviation in the usual and customary course”. Deviation has been defined as an intentional
and unreasonable change in the geographical route of the contracted voyage.55 However,
52 Moot Problem, p. 33: email of 18 March 2009. 53 Director General of Fair Trading v. First National Bank (2001) UKHL 52, (2001) 3 WLR 1297, (2002) 1 Lloyd’s Rep 489, para 17. 54 Davis v. Garrett (1830) 6 Bing. 716, 725 per Tindal C.J. 55 Martin Dockray, “Deviation: a Doctrine All at Sea?” (2000) LMCLQ 76.
Memorandum for the Respondent
19
in the present case, a contractual provision gives specific rights to the Respondent to
deviate, and consequently to change the port of destination.
61. The contract of carriage contained in or evidenced by the Bills of Lading materially
provided as follows:
“29. Liberty clause (a) In any situation whatsoever and wheresoever occurring ... which
in the judgment of the Owner or Master is likely to give rise to risk of ... delay or
disadvantage to ... the Vessel or any part of her cargo, or to make it unsafe, imprudent or
unlawful for any reason to commence or proceed on or continue the voyage or to enter or
discharge the cargo at the port of discharge... the Owner or Master may discharge ... the
cargo ... The Owner may, when practicable, have the Vessel call and discharge the cargo
at another or substitute port declared or requested by the Charterers.” 56
62. First, the Respondent was requested by Beatles to call and discharge at another port. As a
matter of fact, the letter of indemnity provided that Beatles requested the Respondent to
deliver the cargo at Rotterdam.57
63. Secondly, the Respondent claims that there was a disadvantage for the Vessel or the cargo
to go to Liverpool. The survey provides that “as a supposed result of the hijack and fear of
deterioration of the product(s) the initial buyer in Liverpool, UK rejected the
consignments”.58 This means that the goods could not have been sold in Liverpool
whereas there was a potential buyer in Rotterdam.59 It was ascertained that “there was
only GMQ PFAD available on the open market” in Liverpool.60 Therefore, the decision
not to go to Liverpool was justified since the cargo may not have been sold regarding its
quality.
64. Moreover, the single joint expert report indicates that the cost to go to Liverpool is very
expensive. “Freight indication on 25th March for vessels was et Euro 37.50 per mt loading
2nd to 5th April in Rotterdam (approx USD 50per mt). There would be insurance at
56 Moot Problem, p.11: Charter Party. 57 Moot Problem, p. 53: Claim Submission. 58 Moot Problem, p.48: Single Joint Report. 59 Moot Problem, p.30: email of 17 March 2009. 60 Moot Problem, p.58: Single Joint Report.
Memorandum for the Respondent
20
approximately USD 1,3 per met to bring the cargo from Rotterdam to Liverpool”.61
Consequently, going to Liverpool would have broadly increased the price of freight and
the loss would have been subsequent. The Respondent argues that such a loss of money is
an economic risk and a disadvantage for the cargo. As a result, the Respondent was
entitled to go to Rotterdam pursuant to the liberty clause.
65. Alternatively, the Respondent claims that it is also entitled to deviate under the Hague-
Visby Rules. Pursuant to Article IV (4), “any deviation in saving or attempting to save life
or property at sea, or any reasonable deviation, should not be deemed to be an
infringement or breach of these rules or of the contract of carriage.” As said above, going
to Liverpool would have been a risk and a disadvantage for the cargo. Under these
circumstances, proceeding by the normal route can be regarded as a reasonable deviation.
Therefore, the Respondent did not breach the contract of carriage by changing the port of
destination.
66. For these reasons, the Respondent was entitled to call and discharge the cargo at another
port, and consequently did not breach the contract of carriage.
D. ALTERNATIVELY, THE RESPONDENT IS ENTITLED TO LIMIT ITS
LIABILITY
67. In the alternative, if the Tribunal finds that the Respondent is liable for any deterioration
in the quality of the goods, it is still entitled to limit its liability under the Hague-Visby
Rules.
68. Pursuant to Article IV r. 5 (a), “neither the carrier nor the ship shall in any event be or
become liable for any loss or damage to or in connection with the goods in an amount
exceeding the equivalent of 666.67 units of account per package or unit or units of
account per kilo of gross weight of the goods lost or damaged, whichever is the higher”.62
67. According to this rule, the price cannot exceed 666.67 units of account per package. The
Bills of Lading issued by the Respondent mentioned 4 packages amounting to a gross
61 Moot Problem, p.59: Single Joint Report. 62 Art IV.5(a), Hague-‐Visby Rules. 1968.
Memorandum for the Respondent
21
quantity of 4000 m.t. of palm fatty acid distillate. Therefore, the maximum amount that
the Respondent may have to pay cannot exceed USD 2,666,680 (4000 x 666.67 =
2,666,680).
68. However, Article IV r. 5 (e) provides that neither the Respondent nor the Vessel “shall be
entitled to the benefit of the limitation of liability … if it is proved that the damage
resulted from an act or omission of the carrier done with intent to cause damage, or
recklessly and with knowledge that damage would probably result.”63
69. The hijacking of the Vessel is not an act or omission intended by the Respondent to cause
damage. Somali pirates held the entire crew captive from 15 November 2008 to 13
February 2009 under extreme conditions. The Respondent strictly denies being involved
in any case in the hijacking. As a matter of fact, the Respondent was the first victim who
suffered from piracy and there is absolutely no evidence to prove its involvement.
70. Moreover, it was said above that the hijacking of the Vessel was a wholly unexpected
event. 64 It does not result from any act or omission of the Respondent regarding its
knowledge that damage would happen at the time of the attack.
71. As a result, damage was not caused by the Respondent’s act or omission, and
consequently it is entitled to limit its liability pursuant to Article IV r. 5.
63 Article IV r. 5 (e) of the Hague-‐Visby Rules. 64 See above, §11 -‐ §13.
Memorandum for the Respondent
22
PRAYER FOR RELIEF For all the reasons submitted above, the Respondent respectfully requests this arbitral panel
to:
ADJUDGE that the Respondent is not liable to the Claimant for the following amounts
claimed:
a) The difference between the price paid for the cargo and its value at Liverpool plus its
value at Liverpool the 30 March 2009:
USD 747.50 per.mt x 4,000 mt = USD 2,990,000
b) The price paid to buy goods in to sell to their sub-buyers in Liverpool:
USD 522.50 per.mt x 4,000 mt = USD 2,090,000
c) The Dutch Courts costs:
USD 138,843.14 + USD 107,913.12 = USD 246,756.26
In the alternative
DECLARE that any liability of the Respondent is limited to USD 2,666,680.
further
ADJUDGE that the Respondent has to pay:
a) The price paid in Rotterdam for the goods the 19 March 2009:
USD 350 per.mt x 4,000mt = 1,400,000 USD
further and/or alternatively
b) The market value of the cargo in Liverpool, which is the price of the market in
Rotterdam plus the fret:
USD 380 per.met x 4,000mt = 1,520,000 USD
in the further alternative
ADJUGE:
a) that the Claimant is not entitled to the costs of the Dutch proceedings according to the
costs ordered made by the Dutch Courts:
EUR 262 + EUR 816 = EUR 1078 (USD 1403.70)
b) the cost of the unsuccessful appeal should not be allowed because it should never have
been brought