team 19 - maastricht university - respondent
TRANSCRIPT
INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION
2014 Hong Kong
MEMORANDUM for
RESPONDENT
MAASTRICHT UNIVERSITY
TOM DOPSTADT – ANA PETROVA – MARIYA PELOVSKA – KATARZYNA KAMINSKA
TEAM 19
ON BEHALF OF RESPONDENT
Super Charters Inc.
AGAINST CLAIMANT
Reliable Holdings Inc.
ii
TABLE OF CONTENTS
Table of Contents ..................................................................................................................... ii Table of Authorities ............................................................................................................... iii List of Abbreviations .............................................................................................................. ix Statement of Facts .................................................................................................................... 1 Questions Presented ................................................................................................................. 2 ARGUMENTS ON THE PROCEEDINGS ........................................................................... 3
I. Reliable Tankers have not commenced arbitration with the 1st reference ................. 3 II. Arbitration has been properly commenced by Super Charters with the 2nd reference ................................................................................................................................ 5
II.1. The Charter Party contains a valid arbitration agreement .......................................... 5 II.2. Arbitration has been commenced in accordance with Section 14 of the Arbitration Act 1996 ............................................................................................................................. 5 II.3. Reliable Holdings Inc. are time-barred to bring a counterclaim in the 2nd Reference 6
III. Consolidation of the two references ............................................................................. 8 ARGUMENTS ON THE MERITS ........................................................................................ 9
IV. The first Recap is the Contract concluded by the Parties ......................................... 9 V. Reliable Tankers breached the contract ..................................................................... 10
V.1 Reliable Tankers renounced the contract .................................................................. 10 V.2 Additionally and or alternatively, Reliable Tankers have, by their own acts, disabled themselves from performing their contractual obligations .............................................. 11 V.3 Additionally and or alternatively, Reliable Tankers have committed other repudiatory breaches of contract by failing to provide ETAs and by failing to proceed with convenient dispatch .................................................................................................. 12
VI. The Contract between the Parties was terminated under general law ................... 13 VII. The legal effect of termination ...................................................................................... 15
VII.1 The Parties are released from performing their primary obligations ..................... 15 VII.2 Super Charters are entitled to damages under general law resulting from Reliable Holdings' breaches of Contract ........................................................................................ 15 VII.3 Alternatively, even if the Contract is terminated under the Cancellation Clause (which is denied), Super Charters are still entitled to damages ....................................... 17
VIII. Super Charters lived up to their duty to mitigate by choosing the more favourable offer ......................................................................................................................................... 17 IX. Reliable Holding is not entitled to freight ..................................................................... 19
IX.1. The Freight Clause has to be interpreted strictly .................................................... 19 IX.2. The freight clause shall be interpreted in accordance with the contra proferentem rule ................................................................................................................................... 20 IX.3. The freight was a loan ............................................................................................. 21 IX.4. Alternatively, even if, the freight is deemed earned, the non-delivery of the vessel amounted to a breach of a condition precedent to freight ................................................ 21
X. Request for Relief .............................................................................................................. 22
iii
TABLE OF AUTHORITIES
Books and Articles
Cited as
Jack Beatson et al., Anson’s Law of Contract, 29th edition, Oxford University Press, 2010
Anson
Yvonne Baatz (ed.), Maritime Law, 2nd edition, Sweet & Maxwell, 2011
Baatz
Huge Beale (ed.), Chitty on Contracts, 31st edition, Sweet & Maxwell, 2012
Chitty
Randall Erickson, Changes Resulting From Ambiguous Specifications, in: Michael T. Callahan (ed.), Construction Change Order Claims, 2nd edition, Aspen Publisher, 2005
Erickson
Julian D. M. Lew, Loukas A. Mistelis, Stefan Kröll, Comparative International Commercial Arbitration, Kluwer Law International, 2003
Lew et al.
Anthony May et al., Keating on Building Contracts, 6th edition, Sweet & Maxwell, 1995
May
Edwin Peel, The Termination Paradox, Lloyd’s Maritime and Commercial law Quarterly, pp. 519-543, 2013
Peel
Prof. Dr. Michael Pryles (Melbourne, Australia), Multiple Claims in Arbitrations Between the Same Parties, 14 ICCA Congress Series 437-499, 2008
Pryles
Bernard Eder, Scrutton on Charterparties and Bills of Lading, 22nd edition, Sweet & Maxwell, 2011
Scrutton
Richard Stone, The Modern Law of Contract, 10th edition, Routledge 2013
Stone
Edwin Peel, Treitel on the Law of Contract, 12th edition, Sweet & Maxwell, 2011
Treitel
iv
Case law Cited as
Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep. 215
The Baleares
Alfred C Toepfer International GmbH v Itex Itagrani Export SA [1993] 1 Lloyd’s Rep. 360
Alfred C Toepfer
AMB Generali Holding AG v SEB Trygg Liv Holding [2006] 1 Lloyd’s Rep. 318
AMB Generali Holding
Banco de Portugal v Waterlow & Sons Ltd [1932] A.C. 452; [1932] All E.R. Rep. 181
Banco de Portugal
Behn v Burness [1863] 122 E.R. 281
Behn
Bloomer v Bernstein (1874) L.R. 9 C.P. 588
Bloomer
Boyo v Lambeth LBC [1994] I.C.R. 727
Boyo
British Westinghouse Electric Co Ltd v Underground Electric [1912] A.C. 673
British Westinghouse
Railways Co of London Ltd [1912] A.C. 673 Electric
BSkyB Ltd v HP Enterprise Services UK Ltd. [2010] EWHC 86 (TCC) 129 Con. L. R. 147
BSkyB
C & P Haulage v Middleton, [1983] 1 W.L.R. 1461
C & P Haulage
Canada Steamship Lines Ltd v King [1952] 1 Lloyd's Rep. 1
Canada Steamship Lines
Charles Rickards v Oppenheim [1950] 1 KB 616
Charles Rickards
Universal Cargo Carriers Corp v Citati (No.2) [1958] 2 Q.B. 401
Citati
Cunard Steamship Co Ltd v Buerger [1927] A.C. 1
Cunard Steamship
Curtis v Chemical Cleaning v Dyeing Co Ltd [1951] 1 KB 805
Curtis
Dakin v Oxley 143 E.R. 938; (1864) 15 C.B. N.S. 646
Dakin
Dalkia Utilities Services Plc v Celtech International Ltd [2006] EWHC 63 (Comm)
Dalkia Utilities
Darbishire v Warran [1963] 1 W.L.R. 1067
Darbishire
Dunkirk Colliery Co v Lever (1878) 9 Ch. D. 20
Dunkirk Colliery
v
East Ham Corp v Bernard Sunley & Sons Ltd [1966] AC 406
East Ham Corp
Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1979] A.C. 757
Federal Commerce&Navigatio
n Finmoon Limited and OOO Megafruit v Baltic Reefers Management Ltd and ors [2012] EWHC 920 (Comm)
Finmoon
Freeman v Taylor (8 Bing. 124)
Freeman
Stocznia Gdynia SA v Gearbulk Holdings Ltd [2009] EWCA Civ 75, [2009] 1 Lloyd’s Rep. 461
Gearbulk
Gebrüder Metelmann GmbH & CO v NBR (London) Ltd [1984] 1 Lloyd’s Rep. 614
Gebruder Metelmann
Glaholm v Hays, Irvine, and Anderson 133 E.R. 743 Glaholm
Glynn v Margetson & Co [1893] AC 351
Glynn
Graves v Legg 157 E.R. 88
Graves
Hadley and Another v Baxendale and Others (1854) 156 E.R. 145 Hadley v Baxendale
Harbour & General Works Ltd v Environment Agency [2000] 1 W.L.R. 950
Harbour & General Works
Harrison v Northwest Holt Group Administration [1985] I.C.R. 668
Harrison
Heyman v Darwins Ltd [1942] A.C. 356, 361
Heyman
Hochster v De La Tour [1853] 118 E.R. 922
Hochster
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26
Hongkong Fir Shipping
Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd. [1989] Q.B. 433
Interfoto Picture Library
Investors Compensation Scheme v West Bromwich Building Society [1998] 1 W.L.R. 896
Investors Compensation Scheme
Johnson v Agnew [1980] AC 367
Johnson
Jones v Herxheimer [1950] 2 KB 106
Jones
Robinson v Knight s (1873) 8 CP 456
Knight
Kuwait Rocks Co v AMN Bulkcarriers Inc [2013] EWHC 865 (Comm)
Kuwait Rocks
vi
Stocznia Gdanska SA v Latvian Shipping Co (No.2) [2002] 2 Lloyd’s Rep. 436
Latvian Shipping Co (No.2)
Liberian Shipping Corp v A King & Sons Ltd (The Pegasus) [1967] 2 Q.B. 86
Liberian Shipping
Lockland Builders Ltd v Rickwood 77 B.L.R. 38
Lockland Builders
London and North Western Railway Co v Neilson [1922] 2 AC 263 London and North Western Railway
Louis Dreyfus&Co. Ltd v Lauro [1938] 60 Lloyd’s Rep. 94
Louis Dreyfus&Co.
Lovell & Christmas Ltd v Wall (1911) 104 LT85
Lovell
R. v Commissioner of Patents, ex parte Martin [1953] 89 CLR 381
Martin
McGeown v Direct Travel Insurance [2003] EWCA Civ 1696
McGeown
Re v Meres Application [1962] RPC 182
Meres Application
Metalfer Corporation v Pan Ocean Shipping [1997] CLC 1547
Metalfer
Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos)[1971] 1 Q.B. 164
Mihalis Angelos
Mitsui OSK Lines v Garnac Grain Co Inc (The Myrtos) [1984] 2 Lloyd’s Rep. 449
The Myrtos
Monroe Brothers Ltd v Ryan [1935] 2 KB 28
Monroe Brothers
Morgan v Bain (1874) L.R. 10 C.P. 15
Morgan
Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd [2007] EWHC 447 (TCC)
Multiplex Constructions
Newland Shipping and Forwarding Limited v Toba Trading FZC [2014] EWHC 661 (Comm)
Newland Shipping
Nissho Co Ltd v NG Livanos (1941) 69 Lloyd’s Rep. 125
Nissho
Oliver v Fielden 154 E.R. 1155
Oliver
Ollive v Booker 154 E.R. 177
Ollive
Parson (Livestock) Ltd v Uttley Ingham & Co. Ltd [1978] Q.B. 791, CA; S.&T. 604
Parson (Livestock)
Photo Production Ltd v Securicor Transport Ltd [1980] A.C. 827
Photo Production
Pilkington UK Ltd v CGU Ins Plc [2004] EWCA Civ 23
Pilkington UK
vii
Rainy Sky SA and Others v Kookmin Bank [2011] UKSC 50
Rainy Sky
Robinson v Harman, 154 E.R. 363; (1848) 1 Ex. 850
Robinson
Ross T. Smuth & Co v Bailey, Son & Co [1940] 3 All E.R. 60, 71
Ross T. Smuth
Seadrill Management Services Ltd v OAO Gazprom [2009] EWHC 1530 Comm), [2010] 1 Lloyd’s Rep. 543
Seadrill Management Services Ltd
Seeger v Duthie (1860) 8 CBNS 45
Seeger
SK Shipping Pte Ltd v Petroexport Ltd [2009] EWHC 2974 (Comm)
SK Shipping
Sookraj v Samaroo [2004] UKPC 50 Sookraj
Tarrabochia v Hickie 156 E.R. 1168
Tarrabochia
Pacific Interlink Sdn Bhd v Owner of the Asia Star [2009] SGHC 91; [2009] 2 Lloyd’s Rep. 387
The Asia Star
Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep. 215
The Baleares
Easybiz Investments v Sinograin & Chinatex (the Biz) [2010] EWHC 2565
The Biz
Golden Strait Corporation v Nippon Yusen Kubishka Kaisha (The Golden Victory) [2007] UKHL 12; [2007] 2 Lloyd’s Rep. 164
The Golden Victory
Chilean Nitrate Sales Corp v Marine Transportation Co Ltd (The Hermosa) [1982] 1 Lloyd’s Rep. 570
The Hermosa
Compania Naviera General S.A. v Kerametal Ltd [1981] 2 Lloyd's Rep. 559
The Lorna I
China National Foreign Trade Transportation Corp v Evlogia Shipping Co SA of Panama (The Mihalios Xilas) [1979] 1 W.L.R. 1018
The Mihalios Xilas
GE Frankona Reinsurance Ltd v CMM Trust No.1400 (The Newfoundland Explorer) [2006] Lloyd's Rep. I.R. 704
The Newfoundland Explorer
Evera S.A. Commercial v North Shipping Co. Ltd. (The North Anglia) [1956] 2 Lloyd’s Rep. 367
The North Anglia
Lakeport Navigation Co Panama SA v Anonima Petroli Italiana SpA (The Olympic Brilliance)[1982] 2 Lloyd’s Rep. 205
The Olympic Brilliance
Owners of the Sardinia Sulcis v Owners of the al Tawwab [1991] 1 Lloyd’s Rep 201
The Sardinia Sulcis
viii
Argo Company of Canada Ltd v Richmond Shipping Ltd (The Simonburn) [1973] 1 Lloyd's Rep. 392
The Simonburn
Sotiros Shipping Inc v Sameiet (The Solholt) [1983] 1 Lloyd's Rep. 605
The Solholt
Bulk & Metal Transport (UK) LLP v Voc Bulk Ultra Handymax Pool LLC (The Voc Gallant) [2009] EWHC 288 (Comm)
The Voc Gallant
Unisys v Eastern Counties [1991] 1 Lloyd’s Rep. 538
Unisys
United Scientific Holdings Ltd v Burnley BC [1977] 2 All ER 62
United Scientific Holdings
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 K.B. 528, CA; S.&T. 592
Victoria Laundry (Windsor)
Wholecrop Marketing Ltd v Wolds Produce Ltd, [2013] EWHC 2079
Wholecrop Marketing
Wilson v United Counties Bank Ltd [1920] A.C. 102
Wilson
X v Y [2011] EWHC 152
X v Y
ix
LIST OF ABBREVIATIONS
Charterers
Super Charters Inc.
Charterparty
The charterparty concluded by both parties on 19 Nov.
Contract
The totality of all contractual terms agreed upon by the Parties on 19 Nov.
Owners
Reliable Tankers Inc.
Reliable Tankers
Reliable Tankers Inc.
Reliable Holdings
Reliable Holdings Inc.
Ship
The Reliable Butterfly as specified in the Charterparty
Super Charters
Super Charters Inc.
The Parties
Super Charters and Reliable Holdings
Oct. October 2011
Nov. November 2011
Dec. December 2011
Jan. January 2012
Feb. February 2012
Inc.
Incorporated
1
STATEMENT OF FACTS
1. On 10 Oct. 2011 Reliable Tankers Inc., owners of the ship Reliable Butterfly and Super
Charters Inc., entered into negotiations for the conclusion of a voyage Charterparty with its
subject the Reliable Butterfly in order to carry 900, 000 BLS NHC (+/-) 5 % from BlueLand
(port of loading) to IndigoLand (port of discharge).
2. After long negotiations, on 17 Nov. 2011 the parties concluded a contract consisting of
Fixture Recap, a standard form Charterparty ASBATANKVOY 1977, followed by the
Standard Terms of business of both parties.
3. In Nov., the Charterers were informed by back channels that the Ship was arrested at the
bunker port as a result of the Owner’s improper behaviour. They did not pay for fuel, neither
did they provide a security in order to release the Ship. The Owners were fully aware that the
Ship’s punctual arrival at the loadport and respectively at the discharge port, was of essence
for Super Charters. Consequently, on 25 Nov. 2011 Reliable Tankers informed the Charterers
that the Ship will miss her laycan. Moreover, putting Super Charters in complete uncertainty,
they declared that were unable to provide a new laycan.
4. Due to the aforementioned events, Super Charters were left with no choice but to send a
notice of cancellation of the Charterparty to Reliable Tankers. Due to the latter’s breaches of
contract, the Charterers incurred damages consisting of finding alternative vessels to carry the
goods on time and higher freight under the new Charterparty.
2
QUESTIONS PRESENTED
I. Was the arbitration properly commenced by Reliable Tankers?
II. Was the arbitration properly commenced by Super Charters?
III. Were the two references consolidated?
IV. What was the contract concluded between the Parties?
V. What were the breaches committed by Reliable Tankers?
VI. Was the contract terminated under general law?
VII. What are the consequences of termination?
VIII. Did Super Charters adhere to their duty to mitigate?
IX. Are Reliable Holdings entitled to freight?
3
ARGUMENTS ON THE PROCEEDINGS
I. Reliable Tankers have not commenced arbitration with the 1st reference
5. Super Charters hereby argue that the first reference, purported to have validly commenced
arbitration proceedings by the Claimant - Reliable Tankers is a nullity. The notice for
commencement of arbitration, served by Reliable Tankers through the e-mail dated 28 Jan., is
invalid. Reliable Tankers was no longer an existing entity when the e-mail was sent. The
Charterers believe that this was not a matter of a technical or a clerical mistake, as alleged by
the Claimant, which could easily be corrected.
6. The term ‘clerical mistake’ was explained in English case law with regards to Order 63, Rule
1(15) of the Rules of the Superior Courts, which provides that the Court may make ‘an order
for the correction of clerical errors or errors in the names of parties in any proceeding,
whether on consent or not, but subject to re-service when not on consent’. It was stated in the
Australian Martin case that ‘the characteristic of a clerical error is not that it is in itself trivial
or unimportant, but that it arises in the mechanical process of writing or transcribing’ [Martin,
p.406]. In the subsequent decision in Re Meres Application, it was said that “the words
‘clerical error’ must, be taken to mean a mistake made in the course of a mechanical process
such as writing or copying as distinct from an order arising, e.g. from lack of knowledge, or
wrong information, in the intellectual process of drafting language to express intentions”
[Meres Application].
7. Super Charters contend that the mistake in the notice for commencement of arbitration
proceedings was certainly not a mistake made in the course of a mechanical process of writing
or copying. Rather, it was a substantive mistake as to which legal entity was entitled to start
proceedings, possibly arising from Reliable Tankers’ failure to ascribe any significance to its
merger. At the very least, it cannot be said that a misidentification of parties such as in the
present case, is simply an error of writing or copying.
4
8. Furthermore, it should be noted that English courts take rather robust attitude to mistakes such
as the one made by claimants. What is known as the Sardinia Sulcis test permits the
substitution of wrong party only where it is possible to identify the correct party from the
claim [Sardinia Sulcis]. The issue of wrongly named claimant has been examined in further
English case law. The relevant test has been stated by Buxton LJ, Court of Appeal in AMB
Generali Holding to be ‘who would reasonably have been understood by the party against
whom the claim was asserted to be the entity bringing the claim’ [AMB Generali Holding, p.
319]. The aim is to ascertain the objective intention of the claimant as it would be understood
by a reasonable respondent. In that regard, the actual intentions and understandings of the
parties are not relevant [Unisys, p.559]. A similar test was also applied by Mr. Justice
Hamblen in The Biz where he pointed out that in viewing whether the requirements of Section
14 of the Arbitration Act 1996 are met one should consider how a reasonable person would
have understood the notice, its terms and the context in which it was written [The Biz ¶ 11].
The question that should therefore be answered is whether the true identity of the person
intending to sue and the person intended to be sued was apparent to the latter although the
wrong name had been used.
9. The application of the these tests in the present case would certainly lead to the conclusion
that Super Charters could not reasonably have considered Reliable Holdings Inc. to have been
the claimant. The notice only refers to ‘Reliable Tankers’ and ‘Owners’ of the ship as the
party to commence proceedings. Moreover, information of the merger was actively concealed
by Reliable Holdings [Moot Problem, p. 100] and hence was not widely known. Any
reasonable responder could only have concluded that Reliable Tankers was in fact the party
that commenced arbitration.
10. By the time of serving the notice Reliable Tankers was no longer existing legal entity.
Therefore, Super Charters request the present tribunal to declare the arbitration proceedings
purported to be commenced by Reliable Tankers (the 1st reference) not valid and to proceed
5
directly with the review of Super Charters’ claim submissions (the 2nd reference).
Notwithstanding the above, in case the tribunal finds that arbitration has been validly
commenced by the Claimant with the 1st Reference, with the present, Super Charters submit
defence and counterclaims submission on the merits of the dispute.
II. Arbitration has been properly commenced by Super Charters with the
2nd reference
11. Super Charters have properly commenced arbitration proceedings because the Charter Party
contains a valid arbitration agreement (II.1); the commencement is in accordance with
Section 14 of the Arbitration Act 1996 (II.2); and Reliable Holdings Inc. are time-barred both
in their claim and counterclaim (II.3).
II.1. The Charter Party contains a valid arbitration agreement
12. It is Super Charters’ submission that the arbitration clause, incorporated in the Charter Party,
is valid. The parties concluded the Charterparty pro forma ASBATANKVOY 1977. This is
illustrated by the Fixture Recap, all subjects lifted as per 19 Nov. 2011. Pursuant to Art. 24 of
the Charterparty (the Arbitration clause), modified by the Recap, London, England is the
designated seat of arbitration and English law is the applicable law. According to
Amendment 61, attached in ASBATANKVOY Part 2, the Standard Terms of both the parties
have been fully incorporated into the agreement.
II.2. Arbitration has been commenced in accordance with Section 14 of the Arbitration
Act 1996
13. Super Charters submit that the procedural requirements for proper commencement of
arbitration proceedings, set forth in the Arbitration Act 1996, are fulfilled.
14. Section 14 (4) of the Arbitration Act 1996 states that arbitral proceedings are considered to be
commenced when a written notice is served by one of the parties to the other. A valid notice
6
implies that the differences that have arisen are to be submitted to arbitration, in accordance
with the agreement between the parties.
15. Hamblen J. decided in The Biz that Section 14 (4) of the Arbitration Act 1996 should not be
interpreted in a strictly technical manner [The Biz ¶ 11]. He emphasized the fact that
substance is more essential than form. The intention of referring the differences to arbitration
proceedings should be unambiguous. This is acknowledged by the Court in Finmoon where
Eder J. emphasized the importance of flexibility when interpreting notices for commencement
of arbitration proceedings [Finmoon ¶ 55]. It was also stated that it is substance that must be
objectively unambiguous. Eder J. reiterated the judgment in The Voc Gallant and clarified
that as long as the intention of a party to refer the matters to arbitration is sufficiently clear,
the formalities regarding the notice are considered to be fulfilled [The Voc Gallant ¶ 10].
16. It is evident from the communication dated 12 Feb. that Super Charters acknowledge the
disputes and differences that have arisen. Furthermore, an arbitrator is appointed. There can
be no doubt that the intention of Super Charters to refer the matters to arbitration is clearly
communicated. This intention is further reflected in the 2nd Reference that Super Charters
submit. In para. 22-24 of the claim against Reliable Holdings Inc. the disputed matters are
unambiguously identified. Therefore, it can be concluded that the 2nd Reference fulfils all the
procedural requirements for commencement of arbitral proceedings as laid down in Section
14 (4) of the Arbitration Act 1996.
II.3. Reliable Holdings Inc. are time-barred to bring a counterclaim in the 2nd Reference
17. By analogy to the judgment in Wholecrop Marketing, a contractual time limit for
commencing arbitration is to be regarded as an absolute time bar for claims [Wholecrop
Marketing]. Its consequence is illustrated by Metalfer, where Longmore J. concluded that a
time-bar clause bars not only the claim itself but also the remedy of arbitration [Metalfer, p.
1577]. Recently, the English High Court in Multiplex Construction endorsed the view that
time-bar clauses are valid and should be upheld [Multiplex Construction]. Therefore, in
7
ordinary circumstances they cannot be circumvented. The Parties reached an agreement as to
the terms and conditions of their contract. Hence, it is a valid clause if the Parties agree that,
before arbitration proceedings are commenced, certain steps should be taken by certain dates.
As Waller L.J. stated in Harbour & General Works this is just the application of the principle
of party autonomy [Harbour & General Works, p. 12]. If the claimant fails to take these steps
within the contractual time limit and there are no justifications for the delay, their inactivity
will result in failure of the application [Liberian Shipping].
18. Super Charters’ Standard Terms of Business contain a contractual time limit. According to
Section 4, all claims against the entity must be notified within 10 days of final discharge or
when it would have happened. Additional 10 days are awarded for the commencement of
proceedings against Super Charters.
19. The meaning of ‘final discharge’ has been clarified by case law [X v Y]. The Court reiterated
the judgment in The Simonburn and defined ‘final discharge’ as the discharge of the cargo on
the voyage in respect of which the claim arises [The Simonburn]. By analogy to The
Simonburn, there is no clause in Super Charters’ Standard Terms that would suggest that the
time-bar runs from the termination of the Charterparty.
20. As a matter of interpretation, it was held in Investors Compensation Scheme that the meaning
of a document is to be found in the text of the document itself [Investors Compensation
Scheme]. The ‘reasonable’ person test is applied in such situations. It aims to establish the
objective meaning of the contractual language used from the point of a reasonable person in
the circumstances of the parties to the contract. The Court will always seek to interpret a
clause in a way that is commercially reasonable, as it would not have been the parties’ intent
to achieve an uncommercial result [Rainy Sky].
21. It becomes clear that it was the intention of the parties to time-bar the claims against Super
Charters. Section 4 of the Standard Terms of Business of Super Charters refers to the final
discharge as a point from which time starts running. Undoubtedly, a reasonable person would
8
have interpreted the clause in the same manner. Final discharge should have been completed
by the 10 Jan. Pursuant to the Standard Terms of business, any outstanding claims should
have been notified by the 20 Jan. and a suit should have been commenced by the 30 Jan.
Reliable Tankers failed to notify Super Charters of their claim within the time limits set in
Section 4. Their first attempt to communicate it is dated 28 Jan. and it is by the non-existent
entity Reliable Tankers. Neither a notification of a claim, nor a notice for commencement of
arbitration proceedings has been given according to the procedural requirements set forth in
Section 4 of the Standard Terms of business.
22. Reliable Tankers do not have a justification for non-compliance with the time-bar provision
and therefore they would be deprived of their claim and the remedy of arbitration in respect of
it. Hence, Reliable Holdings would be barred from submitting a counterclaim to the second
reference by Super Charters.
III. Consolidation of the two references
23. In the interest of proportionality and efficiency of the arbitration proceedings Super Charters
decided to combine their Defence and Counterclaim Submissions (1st Reference) with their
Claim Submissions (2nd Reference). Consolidation of arbitrations is usually an issue when it
comes to multi-party disputes where problems, related with confidentiality, appointment of
arbitrators, allocation of arbitral fees and other costs may arise [Lew et al. ¶ 16-87]. Pursuant
to Section 35 (2) of the Arbitration Act 1996 in such cases consent of all parties involved is
required. However, the present situation relates to disputes that have emerged from the exact
same contract – the Charterparty evidenced by Fixture Recap, all subjects lifted as per 19
Nov. 2011 and between the Owners of Reliable Butterfly and the Charterers. Therefore, in the
present dispute there is no conceivable rationale against consolidation of the present
proceedings. It is, in fact, in the interest of both parties. With regards to the appointment of
arbitrators, it should be noted that in both references the same two arbitrators were elected
9
[Moot Problem, p. 101/102 and p.103/104]. Consequently, Super Charters are of the opinion
that explicit consent for joinder of both references is not needed.
24. Alternatively, Super Charters argue that for the purpose of efficiency, there is an implied
intent of the parties to the contract for arbitration proceedings to be consolidated. As
supported by the doctrine, parties can be presumed to want an efficient resolution of
meritorious disputes from the outset [Pryles p. 56]. Disputes in the shipping business usually
involve big material interest. Therefore, fast and efficient dispute resolution is implied to be
the intent of the parties to the transaction. Hence, Super Charters believe that the
interpretation of the Charterparty should be in the sense that the Parties agreed to use the most
efficient procedural means in order to obtain a prompt resolution of disputes which may arise
between them, consolidation of arbitration proceedings being such procedural instrument.
ARGUMENTS ON THE MERITS
IV. The first Recap is the Contract concluded by the Parties
25. It is a general principle of English law that a contract only arises upon agreement by the
parties. To reach an agreement a ‘meeting of the minds’ between the parties is needed. [Stone
p.33]. There are no specific requirements of form, there must only be some consideration
[Chitty ¶¶ 3-001].
26. In casu, on 17 Nov. Reliable Tankers sent an e-mail containing the first Recap with an
amended cancellation clause in their Standard Terms, removing the phrase 'to either party
whatsoever'. This is what the Parties explicitly intended to do: ‘They have asked to delete the
words ‘to either party whatsoever’ (…) I recommend that we just agree …’ as shown by the
Owners' internal report on 14 Nov. [Moot Problem pp. 3, 8]. By way of the e-mail of 19 Nov.,
Super Charters agreed to conclude a contract on the basis of the first Recap. This agreement is
evidentiary of the meeting of the minds. At that moment in time the contract between Reliable
Tankers and Super Charters was concluded on the basis of the first Recap.
10
V. Reliable Tankers breached the contract
27. Reliable Tankers breached the contract, (V.1) by renunciation; and, or (V.2) by disabling
themselves from performing their obligations; and, or (V.3) by other breaches of the contract.
All these breaches, taken together or separately, entitle Super Charters to termination of the
contract and damages.
V.1 Reliable Tankers renounced the contract
28. 'Renunciation of a contract occurs when one party by words or conduct evinces an intention
not to perform, or expressly declares that they are or will be unable to perform their
obligations under the contract in some essential respect’ [Chitty ¶ 24-018]. When the
renunciation occurs before the time fixed for performance, it amounts to an anticipatory
breach [Since Hochster]. The renunciation may be implicit and can be inferred from the
actions of the counterparty by which a reasonable person could conclude that the party no
longer intends to be bound by the contract or is unable to perform it [Chitty ¶ 24-018; Citati;
Morgan; Bloomer; The Hermosa; Seadrill Management Services Ltd]. To ascertain whether
particular words or conduct amount to renunciation of the charterparty all the circumstances
and history of the commercial relationship up to the point of termination should be taken into
account [Hermosa; SK Shipping; Kuwait Rocks; Hongkong Fir Shipping]. If a party intends
to fulfil its obligations, but in a manner substantially inconsistent with the contract, it will still
amount to renunciation [Chitty ¶ 24-018; Ross T. Smuth; Federal Commerce & Navigation].
29. It was essential that the Reliable Butterfly should sail from the loadport on 25 Nov. in order to
meet the laycan narrowed down by Super Charters to 5 Dec. by the e-mail dated 22 Nov. Any
delay would result in disastrous consequences at the loadport and discharge port. By its e-mail
of 25 Nov. Reliable Tankers admitted that they were not capable of giving a revised ETA,
even stating that this would be pointless until they knew when the arrest of the vessel would
be lifted. Hereby, any reasonable man would conclude that Reliable Tankers had no intention
11
to perform, or at least were unable to perform their primary obligation under the contract,
which was to deliver the Reliable Butterfly at the loadport in a timely fashion. Even though
Reliable Tankers did try to fulfil their obligation to bring a vessel by offering a substitute one,
the new vessel would not meet the laycan and thus not reach the discharge port on time. This
means that the possible performance would be substantially different from the one envisaged
by the contract. Hence, the aforementioned actions amounted to renunciation by Reliable
Tankers.
V.2 Additionally and or alternatively, Reliable Tankers have, by their own acts, disabled
themselves from performing their contractual obligations
30. It is Super Charters' submission that Reliable Tankers were in fact unable to perform the
contract. To establish repudiation by inability to perform one has to show, on the balance of
probabilities, that the other cannot perform their obligations [Alfred C Toepfer]. According to
Devlin J. in Citati ‘[a] party is deemed to have incapacitated himself from performing his side
of the contract (…) when by his own act or default circumstances arise which render him
unable to perform his side of the contract or some essential part thereof’ [Citati p.441].
31. In order to perform their obligations under the contract, Reliable Tankers had to arrange for
the vessel to sail by the 25 Nov., which was also acknowledged by Reliable Tankers
themselves in the internal report and the e-mail of 23 Nov. From the report it becomes clear
that Reliable Tankers were not willing to put forward security in order to lift the arrest of the
vessel. By the e-mail of 25 Nov. Reliable Tankers admitted that they had not succeeded in
lifting the arrest. Reliable Tankers chose not to provide security and as a result they disabled
themselves from having the vessel sail in time to meet the laycan. Hence, Reliable Tankers
failed to perform their contractual obligations.
12
V.3 Additionally and or alternatively, Reliable Tankers have committed other
repudiatory breaches of contract by failing to provide ETAs and by failing to proceed
with convenient dispatch
32. The ETA provisions amount to a contractual assurance that at the date of the fixing of the
vessel the owner honestly and on reasonable grounds believes that the ship will be ready at
the expected date [The Baleares]. The convenient dispatch obligation involves a promise by
the owner that the vessel will proceed in such a manner so as to be reasonably certain of
arriving on or about the expected ready date [The Baleares; The North Anglia]. In The
Baleares, Neill LJ held that failure to provide honest, reasonable and realistic ETAs is a
breach of a condition of the ASBATANKVOY charter, which in itself entitles the charterer to
terminate the contract [The Baleares]. Taken together, the ETA obligation and the obligation
to proceed with convenient dispatch amount to an absolute obligation to start for the loading
port in sufficient time to meet the ETA [The Baleares; see also: Scrutton p. 147; The North
Anglia; Monroe Brothers; Louis Dreyfus&Co.;The Myrtos].
33. Pursuant to Clause 1 of the Charterparty, Reliable Tankers were under the obligation to
proceed with ‘convenient dispatch’ to the loading port. Reliable Tankers provided an ETA for
the loadport on 3 Dec. as evidenced by the second Recap [Moot Problem, p. 47]. Pursuant to
Clause 27 of the Riders and Clause 1 of the Owners’ Standard Terms, Reliable Tankers were
under the obligation to report ETA on a daily basis and advise of any change that would affect
Vessel’s ETA by 6 hours or more [Moot Problem p. 67].
34. By a message of 23 Nov. Reliable Tankers advised that the vessel would still make her
laycan. However, from the internal report of that very same day it appears that Reliable
Tankers already knew this to be unrealistic. Instead of giving an ETA on reasonable and
honest grounds, Reliable Tankers elected to deceive Super Charters in order to keep their
‘options open’. Moreover, between 23 and 25 Nov. no information on the vessel's ETA was
given at all and in its message of 25 Nov. Reliable Tankers even refused to give a revised
13
ETA. Surely, such conduct amounts to a failure to give reasonable, honest and realistic ETAs
and, hence, to a breach of a condition of the contract, which entitles Super Charters to
termination in itself.
On top of its failure to give reasonable ETAs, Reliable Tankers failed to start for the loading
port in sufficient time to meet the ETA. Reliable Tankers could not proceed to the loadport in
sufficient time as the vessel was arrested at the bunker port.
35. On the basis of Clause 19 Part II of the Charterparty the Owners are responsible for a seizure
under a legal process unless bond is promptly furnished. Reliable Tankers had no intention to
give security for the vessel as stated in the internal report of 23 Nov. Hence, Reliable Tankers
are responsible for their failure to proceed to the loadport in sufficient time. It is contended
that this failure goes to the root of the contract and had the effect of substantially depriving
Super Charters from the whole benefit of the contract [Photo Production].After all, it was
absolutely vital for the Reliable Butterfly to arrive at the loading port on time in order to be
able to discharge the cargo before the refinery shut down. Failing to discharge before the
refinery shut down would have resulted in ‘disastrous consequences’ [Moot problem, p. 92].
Therefore, Reliable Tankers’ failure to proceed to loadport in sufficient time is a breach going
to the root of the contract, which entitles Super Charters to termination of the contract.
VI. The Contract between the Parties was terminated under general law
36. On the basis of the aforementioned breaches of contract, individually or taken together, Super
Charters were entitled to terminate the contract.
37. A contract can be terminated under a cancellation clause or under general law [Peel, p. 522;
Behn; The Mihalis Angelos]. However, presence of a cancellation clause in a contract does
not indicate that if a contract is cancelled, it will be done under the clause. Above all, such a
clause does not abrogate Charterer's right to cancel the contract under general law unless
expressly stated therein [Gearbulk; Newland Shipping; Lockland Builders; Dalkia Utilities].
14
It may be stipulated in a contract when the right to terminate arises. However, the cancellation
clause does not always apply or is not always used [Mihalis Angelos, Newland Shipping].
38. In the case at hand, the clause does not contain any phrase depriving Super Charters of the
possibility to terminate under general law. Super Charters, due to the introduction of the
cancellation clause, were given two possibilities to terminate. The clause only lays down the
circumstances in which it shall be used. In order for the clause, encompassed in the Standard
Terms of Reliable Tankers, to be triggered two conditions must be fulfilled. Firstly, when it
becomes evident that the ship will miss her laycan, the Owners shall give a revised ETA and
laycan. Secondly, the Charterers shall either confirm or decline the revised ETA.
39. By the e-mail of 25 Nov. Reliable Tankers expressed their inability to give a revised ETA.
Prima facie a revised ETA was not given, Therefore, the first condition of the cancellation
clause was not fulfilled. The situation presented does not fall under the scope of the clause,
which made it inapplicable. Therefore, Super Charters had to choose termination under
general law.
40. In a situation of a repudiatory breach the innocent party is entitled to either press for
performance of the contract or accept the breach [Chitty ¶ 24-002; Peel p. 525; Treitel
¶ 17-07; Latvian Shipping Co (No.2)]. In order to be discharged from further obligations, the
innocent party shall accept the repudiation [Chitty 24-013; Heyman]. The innocent party shall
clearly and unequivocally, by words or conduct, convey to the other party that he is treating
the contract as to an end [Harrison; Boyo; Sookraj; BSkyB]. In Newland Shipping, Leggatt J
held ‘in cases where the consequences of exercising the two rights are different, but not
inconsistent, it is necessary to make it clear which right is being exercised or that both rights
are being exercised; otherwise there will not be the certainty required for an effective
termination’ [Newland Shipping, p.54].
41. The contract was terminated under general law. Super Charters decided to accept the
repudiation and to terminate the contract by sending an e-mail on 27 Nov. By naming their e-
15
mail of 27 Nov. 'Notice of cancellation', Super Charters did not indicate the way the contract
will be cancelled as they chose a neutral term [Newland Shipping]. Moreover, the e-mail
itself did not mention the relevant cancellation clause. The e-mail stated that the rights in
relation to the Charterparty, including but not limited to claim for losses resulting from the
breaches of the Charterparty by Reliable Tankers, shall be reserved. The Charterers expressed
in the e-mail their intention to claim damages for the substitute vessel. The rights to claim this
kind of damages were certainly excluded by the cancellation clause stating 'without recourse
to either party whatsoever'. By reserving its rights to claim those damages, the Charterers
distanced themselves from the cancellation clause, accepted repudiation and cancelled the
contract under general law.
VII. THE LEGAL EFFECT OF TERMINATION
42. Super Charters are released from performing their primary obligations because the contract
was terminated (VII.1) and they can claim damages (VII.2) even if, arguendo, the contract
was cancelled under the cancellation clause (VII3).
VII.1 The Parties are released from performing their primary obligations
43. Cancellation has the same consequences as termination concerning primary obligations
[Gearbulk; Newland Shipping]. Both parties to a contract are discharged from their primary
obligations [Treitel ¶ 18-068; Johnson]. Therefore, Super Charters as well as Reliable
Tankers were released from their primary obligations to perform.
VII.2 Super Charters are entitled to damages under general law resulting from Reliable
Holdings' breaches of Contract
44. A contract after its termination is not put out of existence entirely [Heyman]. It survives
solely to measure the claims arising out of the breach [Heyman].The defaulting party will be
liable for damages resulting both from any earlier breaches as well as from the breach leading
16
to the discharge of the contract [Treitel ¶ 18-068; Johnson; Photo Production]. Robinson v
Harman stated that the general rule of common law is that where a party sustains a loss by
reason of breach of contract, he is, so far as money can do it, to be placed in the same
situation, with respect to damages, as if the contract had been performed.[Chitty ¶ 26-001;The
Golden Victory; Robinson]. On the basis of C & P Haulage a party can claim expectation
interest including the loss of bargain [C & P Haulage]. The assessment of the claimant’s loss
of bargain will be the difference in value between the performance received and that promised
in the contract, namely the difference in value [Jones; East Ham Corp]. However, damages
may be assessed on the basis of what it has cost or will cost the claimant to have the contract
performed by a third part, namely the cost of cure [Gebrüder Metelmann, Jones; East Ham
Corp; Nissho]. Moreover, following the leading case of Hadley v Baxendale, concerning the
consequential damages from a breach of contract, the defendant should foresee the damage
[Hadley v Baxendale pp. 147-148; followed, amongst others, by Windsor; Parson
(Livestock)].
45. The Owners will be liable for any breaches that they committed before the discharge of the
contract and it will be used to measure the losses of Super Charters. Due to the above
established breaches of Reliable Tankers, the Charterers had to arrange substitute vessels
from a third party to perform the voyage on time. The difference between the freight, namely
the cost of cure, under the Charterparty and under the new contract amounted to $824,000.
The damages were a foreseeable consequence of the breaches - had Reliable Tankers
performed their obligation to provide the vessel, the Charterers would not incur (1) additional
costs of finding substitute vessels, (2) the difference in freight plus interest, (3) sums due and
payable to the loadport terminal/sellers and discharge terminal/buyers for delayed arrival.
46. Therefore, Super Charters claim: the costs of arranging the new vessels Star Light and Ever
Light, the cost of cure amounting to US$824,000, plus interest, US$100,000 payable to the
17
loadport terminal/sellers, US$300,000 payable to the discharge port terminal/buyers [Moot
Problem, p.112].
47. Further or alternatively and if (which is denied) freight is due and owing to the Owners, the
amount of such freight, being US$4,935,369.75, is claimed.
VII.3 Alternatively, even if the Contract is terminated under the Cancellation Clause
(which is denied), Super Charters are still entitled to damages
48. Even if the Contract has been terminated under the Cancellation Clause, Super Charters can
still claim damages. The legal effect of the Cancellation Clause has no influence on breaches
that occurred before termination. Termination does not make the contract invalid from the
beginning but only from the time of termination [Treitel ¶ 18.101, Anson p. 525; Burrows
¶ 8-424; Photo Production]. Therefore, all the breaches Reliable Holdings committed before
termination give rise to damages.
VIII. SUPER CHARTERS LIVED UP TO THEIR DUTY TO MITIGATE BY
CHOOSING THE MORE FAVOURABLE OFFER
49. A duty to mitigate is not a real duty as a party is perfectly within its rights to choose not to
mitigate the loss [Darbishire; The Solholt]. However, in order to recover the expenses, a
party shall live up to the duty [British Westinghouse Electric]. In a recent Singaporean case,
The Asia Star, it was held that, firstly, the party intending to mitigate shall inform the other
party of their actions [The Asia Star]. When a party chooses to minimize the loss then
reasonable steps must be taken to mitigate the extent of the damage caused by the breach
[British Westinghouse Electric]. In deciding whether the claimant has taken reasonable steps,
the court will take into account that he may have been placed in a tight spot by the wrongful
conduct of the defendant, so the court will be reluctant to allow a wrongdoing defendant to
say that the victim of breach should have acted differently [Banco de Portugal]. Hence, the
burden of proof is on the defendant to show that the other party failed to mitigate the loss.
18
Furthermore, the claimant can recover any expenses incurred while making reasonable efforts
to reduce the loss that he will suffer, even if these efforts are not successful [Wilson]. This
question of reasonableness is a question of facts. Moreover, the innocent party is under no
obligation to do anything contrary to the 'ordinary course of business' [As per James LJ in
Dunkirk Colliery]. Furthermore, in Gebrüder Metelmann Browne -Wilkinson LJ said 'If there
are two methods of mitigating damage, both of which are practicable and reasonable in the
circumstances (...), it is not possible to say that the innocent party acted unreasonably in
selecting one of these methods just because, in the light of later events, it turns out that the
loss would have been less had the other method been adopted' [Gebrüder Metelmann].
50. Firstly, the burden of proof is on the Owners to prove that the Charterers did not fulfil the
duty. Super Charters by the e-mail on 27 Nov., informed the Owners of their intention to seek
for substitute vessels. Subsequently, the Charterers chose the two vessels: Star Light and Ever
Light over the offer of Reliable Tankers as depicted in the internal report on 29 Nov. Super
Charters should seek certainty, acting in the 'ordinary course of business', for their
commercial purpose of reaching the discharge port before 15 Jan. Star Light and Ever Light
would reach the discharge port before 15 Jan., opposed to the Owners' vessel that would not.
The Charterers cannot be asked to choose for a vessel, even if provided for by the original
contractor, which would not perform the contract in accordance with the terms. Should the
Charterers be obliged to do so, Reliable Tankers could provide for any date, utterly
inconvenient for the Charterers to which they would have to agree. Such an arrangement
would lead to a commercially unreasonable result. The Charterers chose the ships that would
perform the voyage as desired by them. Moreover, Super Charters cannot be held to have
acted unreasonably even if accepting the offer of Reliable Tankers would result in smaller
losses. The Charterers shall not be punished for their attempt to mitigate. Super Charters lived
up to their duty to mitigate by choosing an option that would be more commercially
reasonable.
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IX. RELIABLE HOLDING IS NOT ENTITLED TO FREIGHT
51. As a general rule, under English law, freight is paid at the end of the journey [Baatz, p. 177;
Dakin; Knight]. However, the parties can agree differently. In the case at hand, according to
Clause 2 part II of the Charterparty, the Parties agreed that the payment of the freight would
be done without discount upon delivery of the cargo at the destination port. However,
Reliable Tankers’ Standard Terms, incorporated in the contract, are in conflict with the
aforementioned provision. Clause 4 of the Standard Terms states that ‘freight is deemed
earned in full discountless non-returnable and 95% of minimum freight payable upon lifting
subject, where the remaining 5% is payable on completion of discharge and disconnection of
hoses’.
52. This clause has to be interpreted strictly (IX.1), using the contra proferentem rule (IX.2).
Reading the clause in accordance with the aforementioned rules leads to the conclusion that
the 95% of freight payable upon lifting subjects was, in fact, a loan (IX.3). Moreover, it may
be concluded that the delivery of the vessel was a condition precedent to freight (IX.4).
IX.1. The Freight Clause has to be interpreted strictly
53. The meaning of the freight clause is of primary importance, especially in commercial
transactions [The Mihalios Xilas; The Lorna I]. The intentions of the parties should be read
'according to the ordinary grammatical meaning of the words used therein.' Trying to find the
natural meaning of the contract [Lovell; BCCI; The Newfoundland Explorer; West Bromwich
Building Society]. In the Photo Production case Lord Diplock explained the construction
approach, deemed to be the proper approach: 'the obligations implied by law in a commercial
contract are those which (...) have been regarded as obligations which a reasonable
businessman would realise that he was accepting when he entered into a contract of a
particular kind' [Photo Production ¶¶ 850G/851A]. Furthermore, whenever the words - in
their natural meaning - would give rise to an unreasonable result, the judges either rejected
20
them as repugnant to the main purpose of the contract, or else cut them down to size in order
to produce a reasonable result [Glynn; London and North Western Railway; Cunard
Steamship; Canada Steamship Lines].
54. One shall take into account the first part of the clause, which is of interest to the parties. Even
though the freight is deemed earned in full discountless non-returnable, it does not specify the
date on which it is earned. The clause only specifies that a certain amount is payable upon
lifting subjects. A reasonable person, referred to by Lord Diplock, could therefore read the
clause in two different ways. Should the clause be read in favour of the Owners, the freight is
deemed earned upon lifting subjects, which is rather unusual as advance freight is usually
deemed earned on loading, during the voyage to the discharge port or upon discharge.
55. In casu, should the clause be seen as advance freight it would put the Super Charters at risk
from the very beginning. The more reasonable explanation of the clause is, therefore, that the
freight was not deemed earned, but only payable, upon lifting subjects.
IX.2. The freight clause shall be interpreted in accordance with the contra proferentem
rule
56. The Courts use further rules of interpretation to assist them in construing the parties'
intentions [West Bromwich Building Society]. The contra proferentem rule is used when an
ambiguity exists and all other rules of interpretation failed to solve the problem [The
Newfoundland Explorer]. A provision shall be interpreted against the profens i.e. party who
drafted the provision [May, p. 43]. It is a rule of “last resort and can only apply if a document,
properly interpreted, admits of doubt” [Treitel ¶ 7-015; The Olympic Brilliance ¶ 208;
McGeown; Pilkington UK]. Moreover, it applies to clauses not negotiatied upon [Erickson p.
220].
57. In casu, the clause is very ambiguous and open to interpretation. The freight clause, even
using different methods of interpretation, including the construction approach, still leaves
doubts to the reader. Moreover, the clause itself was not negotiated upon. Hence, it can be
21
concluded that the contra proferentem doctrine is applicable. The freight clause should be
read against the drafter of the clause, namely Reliable Tankers.
IX.3. The freight was a loan
58. Reading the clause in accordance with the plain meaning of the clause, as a reasonable man
would do, and/or in accordance with the contra proferentem rule, the freight became payable
upon lifting subjects on 17 Nov. It became payable, not earned, and therefore, it must have
been a loan on the part of Super Charters. However, as the contract was terminated, the
obligation to pay freight was terminated as well. Reliable Holdings are not entitled to freight.
IX.4. Alternatively, even if, the freight is deemed earned, the non-delivery of the vessel
amounted to a breach of a condition precedent to freight
59. Should the clause be understood as an advanced freight provision (which is denied), it shall
be read in line with case Seeger v Duthie [Seeger; discussed also in more recent cases:
Mihalis Angelos; Hong Kong Fir Shipping]. The rule is that the owners’ breach of the Charter
Party may preclude them from claiming advance freight if the broken term is a condition
precedent to their right to freight [Seeger, p.45]. Moreover, Tarrabochia stated that where the
Charter Party provides that the vessel shall sail on a particular day, that is a condition
precedent [Tarrabochia, p. 1170; Freeman; Graves; Glaholm]. Where a particular day is
named, it is obviously the intention of the parties that the vessel shall sail on that day. Where
a date is specified when the ship shall be ready to load, it is of the essence of the contract
[Glaholm; Ollive; Oliver]. The House of Lords stated that time is of the essence of the
contract if such is the genuine intention of the parties, and such intention may be expressly
provided for or inferred from the nature of the subject matter or the surrounding
circumstances [Charles Rickards; United Scientific Holdings].
60. In casu, time was of the essence to the contract as Super Charters relied upon the closing date
of the refinery. Reliable Tankers were informed about the urgency and promised to adhere to
22
the specified date in an e-mail on 19 Nov. Moreover, the contract between Super Charters and
Reliable Tankers did mention specific dates 5-6 Dec. for the laycan, narrowed down to 5 Dec.
This means that the right of Super Charters to have the vessel delivered on a specific date is a
condition precedent to Reliable Tankers' right to freight. Hence, Reliable Tankers are not
entitled to freight.
X. REQUEST FOR RELIEF
For the aforementioned reasons, Super Charter respectfully requests that the Tribunal:
a) Declare the 1st Reference of Reliable Tankers a nullity;
b) Declare admissible the consolidation of the arbitration proceedings;
c) Declare Reliable Holdings’ counterclaim in the 2nd Reference time-barred;
d) Find that the Contract has been terminated under general law;
e) Find that Owners have breached the contract;
f) Find that Super Charters are entitled to damages, as aforesaid;
g) Award Super Charters full compensation for the costs of arbitration including the cost
of legal representation.
Respectfully signed and submitted by counsels