SIXTEENTH ANNUAL INTERNATIONAL MARITIME LAW … · Sandeman Coprimar SA v Transitos y Transportes Integrales SL [2003] EWCA Civ 113, [2003] QB 1270 Smith New Court Securities Ltd

i

SIXTEENTH ANNUAL INTERNATIONAL MARITIME LAW

ARBITRATION MOOT COMPETITION 2015

IN THE MATTER OF ARBITRATION

___________________________________________________________________________

Claimant Respondent

Western Tankers Inc Ldt Pte

___________________________________________________________________________

MEMORANDUM FOR THE RESPONDENT

TEAM NO. 23

Karolina Aksamitowska

Dan Anghelache

Sabrina Fischer

ii

TABLE OF CONTENTS

LIST OF AUTHORITIES iv

LIST OF ABBREVIATIONS x

STATEMENT OF FACTS 1

PART ONE: JURISDICTION 3

This Tribunal has no jurisdiction to rule on the matter 3

The phrase ‘disputes arising out of this charter’ does not extend to the tort of fraud 5

PART TWO: MERITS 7

I Breach of Charterparty

A The obligation to stem sufficient bunkers at Singapore was not on the charterers 7

B Breach of a provision regarding hire 8

Frustration of the charterparty 8

Offhire event 9

Breach of orders/neglect of duty 9

Piracy 9

Loss of time 9

The distinction between a condition and an innominate term 10

C The Claimant breached the charterparty in failing to comply with the piracy clause 11

D The Claimant breached the charterparty by providing a vessel that is not fit for services as

required by the charterparty 12

The incompetence of the master and the crew rendered the vessel unseaworthy and

contributed to the breach of the charterparty 13

E The charterers are not in breach of the safe ports warranty 14

II Tort of fraud 16

iii

A ASA2 are not the agents of the charterers 16

B ASA2 did not have the actual authority to act on behalf of the Respondent 17

C ASA2 acted outside of its scope of authority

D Representations made by the charterers were true at the time they were made 17

E The Respondent honestly believed the representations to be true 18

F To the extent that the representations were true and honestly made, they were intended to be

relied upon 18

G There was no reliance on behalf of the Claimant 19

H The Claimants did not suffer damage 20

III Bailment as a recognized course of action in English law 21

A The Claimant broke the obligation to take reasonable care to deliver the goods only to the

party entitled to them 21

B Attornment can be found in the present case 22

C Alternatively, the Claimant converted in respect of the cargo on the vessel 23

D The Claimant deviated from the terms of the bailment 24

IV Prayer for relief 24

iv

LIST OF AUTHORITIES: INTERNATIONAL CONVENTIONS, RULES AND

STATUTES

Hague-Visby Rules, The Hague Rules as Amended by The Brussels Protocol 1968

Arbitration Act 1996 (UK)

LIST OF AUTHORITIES: CASES AND ARBITRAL AWARDS

A

Alfred C. Toepfer Schffahrtsgesellschaft mbH v Tossa Marine Co Ltd (The Derby) [1985] 2

Lloyd’s Rep. 325

B

Bilta (UK) Ltd (In Liquidation) v Nazir & Ors [2010] EWHC 1086 (Ch)

Bunge Corp v Tradax Export SA [1981] 1 W.L.R. 711

C

C v D [2007] EWHC 1541

Carslogie S.S. Co Ltd v Royal Norwegian Government [1952] AC 292

Cia Portorafti Commerciale SA v. Ultramar Panama Inc (The Captain Gregos) (No 2) [1990]

2 Lloyd’s Rep 395

Coopers Payen Ltd v Southampton Container Terminal Ltd [2003] EWCA Civ 1223, [2003]

1 Lloyd’s Rep 331

D

Derry v Peek (1889) 14 App. Cas. 337

Dumford Trading v OAO Atlantrybflot [2005] 1 Lloyd’s Rep 289

E

East West Corp v DKBS 1912 [2003] EWCA Civ 83, [2003] QB 1509

Edwards v. West Herts Group Management Committee [1957] 1 W.L.R. 415

ENE Kos 1 Ltd v Petroleo Brasileiro SA (No 2) [2012] UKSC 17

F

Federal Commerce & Navigation Co Ltd v Molena Alpha Inc (The Nanfri) [1979] A.C. 757

Financings Ltd v Baldock [1963] 2 Q.B. 104

Fiona Trust & Holding Corporation & Ors v Yuri Privalov & Ors [2007] UKHL 40

Fiona Trust v Privalov [2008] 1LLR 254

Frans Maas (UK) Lts v Samsung Electronics [2004] EWHC 1502, [2004] 2 Lloyd’s Rep 251

H

Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL [2010] EWHC 29 (Comm)

Hamburg Houtimport B.V. v. Agrosin Pte Ltd (The Starsin) [2000] 1 Llooyd’s Rep. 85, 101-

102

Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26

v

K

Kapitoff v Wilson (1876) QBD 377

Karberg’s Case [1892] 3 Ch. 1

KH Enterprise (Owners of Cargo Lately Laden on Board The) v. Owners of The Pioneer

Container (The Pioneer Container) [1994] 2 AC 324; [1994] 1 Lloyd’s Rep 593

Kodros Shipping Corp v Empresa Cubana de Fletes (The Evia) (No. 2) [1983] 1 AC 736

Kuwait Airways Corp v. Iraqi Airways Corp (Nos 4 and 5) [2002] UKHL 19; [2002] 2 AC 88

Kuwait Rocks Co v AMN Bulkcarriers Inc [2013] EWHC 865 (Comm), [2013] 2 All E.R.

(Comm) 689 (The Astra)

L

Leeds Shipping Co ltd v Societe Francaise Bunge (The Eastern City) [1958] 2 Lloyd’s Rep

127

M

Marcq v Christie Manson & Woods Ltd (t/a Christie’s) [2003] EWCA Civ 731, [2004] QB

286

MCC Proceeds Inc v Lehman Bros International (Europe) [1998] 4 All ER 675

McFadden v Blue Star Line [1905] 1 KB 697

Mitchell v Ealing London Borough Council [1979] QB 1

Morris v CW Martin & Sons Ltd [1966] 1 QB 716, 738, CA

Motis Exports Ltd v. Dampskibsselskabet AF 1912 Aktieselskab, Aktieselskabet

Dampskibsselskabet Svenborg

Motor Oil Hellas (Corinth) Refineries S.A. v Shipping Corporation of India (The

Kanchenjunge”) [1990] 1 Lloyd’s Rep. 391

N

Naviera Amazonica Peruana SA v Cia International de Seguros del Peru [1988] 1 Lloyd's

Rep. 116

Niru Battery v. Milestone Trading Ltd. [2004] 2 Lloyd's Reports 319

Nittan (U.K.) Ltd. V Solent Steel Fabrication Ltd. Trading As Sargrove Automation And

Cornhill Insurance Co. Ltd. [1981] 1 Lloyd's Rep. 634

O

Official Assignee of Madras v. Mercantile Bank of India Ltd [1935] AC 53 (PC)

Osmium Shipping Corp v Cargill International SA [2012] EWHC 571 (Comm)

P

Pacific Basin IHX Ltd v Bulkhandling Handymax A/S (The Triton Lark) [2011] EWHC 2862

(Comm)

Papera Traders Co ltd v Hyundai Merchant Marine Co Ltd (The Eurasian Dream) [2002] 1

Lloyd’s Rep 719

Port Swettenham Authority v TW Wu & Co (M) Sdn Bhd [1979] AC 580, PC

Q

Queensland National Bank Ltd v Penisular and Oriental Steam Navigation Co [1898] 1 QB

567

vi

R

Reardon Smith Line v. Australian Wheat Board (The Houston City) (High Court of Australia)

[1954] 2 Lloyd’s Rep 148

Ruxley Electronics v. Forsyth [1996] A.C. 344 (H.L.)

S

Sandeman Coprimar SA v Transitos y Transportes Integrales SL [2003] EWCA Civ 113,

[2003] QB 1270

Smith New Court Securities Ltd. V. Scrimgeourvickers (Asset Management) Ltd. [1997] A.C.

254

Smith v Chadwick (1883-84) 9 App. Cas. 187

Spar Shipping AS v. Grand China Logistics Holding (Group) Co., Ltd [2015] EWHC 718

Sulamerica CIA Nacional de Seguros SA and others v Enesa Engenharia SA and others,

[2012] EWCA Civ 638

T

Tackey v McBain [1912] AC 186

Tenax Steamship Co v Owners of the Motor Vessel Brimnes (The Brimnes) [1973] 1 W.L.R.

386

The “Chemical Venture” [1993] 1 Lloyd’s Rep. 508

The “Eugenia” [1964] 2 QB 226

The “Puerto Buitrago” [1976] 1 Lloyds Rep 250

The Alecos M [1991] 1 Lloyd’s Rep. 120 (C.A.)

The Aliakmon [1986] AC 785; [1986] 2 Lloyd’s Rep 1

The Batis [1990] 1 Lloyd’s Rep 345

The Captain Diamantis [1977] 1 Lloyd’s Rep 362

The Captain Gregos (No 1) [1989] 2 Lloyd’s Rep 63

The Dagmar [1968] 2 Llyd’s Rep 563

The Glory Wealth [2013] 2 Lloyd’s Rep. 653

The Golden Victory [2005] 1 Lloyd’s Rep. 443 [2005] 2 Lloyd’s Rep. 747 (C.A.) and [2007] 2

Lloyd’s Rep. 164 (H.L.)

The Griparion (No. 2) [1994] 1 Lloyd’s Rep. 533

The Gudermes [1993] 1 Lloyd’s Rep 311 (CA)

The Hill Harmony [2001] 1 Lloyd’s Rep 147

The Houston City [1956] 1 Lloyd’s Rep 1

The Kanchenjunga [1987] 2 Lloyd’s Rep 509

The Maori King [1895] 2 QB 550

The Mary Lou [1981] 2 Lloyd’s Rep 272

The Mihalis Angelos [1970] 3 WLR 601

The North Sea [1999] 1 Lloyd’s Rep 21 (C.A.)

The Ocean Victory [2014] 1 Lloyd’s Rep 59

The Pamphilos [2002] 2 Lloyd’s Rep. 681

The Playa Larga [1983] 2 Lloyds Rep 171

The Polyglory [1977] 2 Lloyd’s Rep 353

The Rozel [1994] 2 Lloyd’s Rep. 161

The Starsin [2000] 1 Lloyd’s Rep 85, 101

The Stork [1954] 2 Lloyd’s Rep 397; [1955] 1 Lloyd’s Rep 349

The Teutonia (1871-73) LR 4 PC 171

Travers & Sons v Cooper [1915] 1 KB 73

vii

W

Whittam v. W. J. Daniel & Co. Ltd. [1962] 1 Q.B. 271

X

XL Insurance Ltd v Owens Corning [2001] 1 All E.R. (Comm) 530

Y

Yearworth v. North Bristol NHS Trust [2009] EWCA Civ 37; [2009] 3 WLR 118; [2010] QB

1

LIST OF AUTHORITIES: BOOKS

Bennett, The Law of Marine Insurance, 2nd

edn (Oxford, 2006)

Born, G B, International Commercial Arbitration (Kluwer Law International, 2009) vol 1

Bridge M, Personal Property Law, 3rd edn (2002)

Burrows A, English Private Law (OUP, 2013)

Coghlin T, Baker A, Kenny J, Kimball J D, Time Charters 6th

edn (Informa Law, 2008)

Coghlin T, Baker A, Kenny J, Kimball J D, Time Charters, 7th


Cooke J, Timothy Y, Taylor A, Voyage Charters, 3rd


Jones M, Professor Anthony Dugdale; Mark Simpson, QC, Clerk & Lindsell on Torts 21st edn

(Sweet & Maxwell, 2014)

McKendrick (eds), Interest in Goods, 2nd

edn (1998)

Palmer N E, Palmer on Bailment, 2nd

edn (Sweet and Maxwell, 1991)

Palmer N E, Palmer on Bailment, 3rd

edn (Sweet and Maxwell, 2009)

Todd P, Maritime Fraud and Piracy, 2nd


Tweeddale A, Tweeddale K, Arbitration of Commercial Disputes (OUP, reprinted 2010)

Watts P (ed.), Bowstead & Reynolds on Agency 20th

edn (Sweet & Maxwell, 2014)

Wilson J, Carriage of Goods by Sea, 6th

edn (Pearson, 2008)

viii

LIST OF AUTHORITIES: JOURNAL ARTICLES

Arzandeh A, ‘The Law Governing Arbitration Agreements in England’ (2013) LMCLQ, 31-

35

Baughen S, ‘Misdelivery and the boundaries of contract and tort’ (2010) LMCLQ 411-430

Bell A, ‘The Place of Bailment in the Modern Law of Obligations’ in N Palmer and E

Dempster H, ‘Clearing the Confusion Surrounding Bailment’ (2004) CLWR 33 295

Hill J, ‘Determining the seat of an international arbitration: party autonomy and the

interpretation of arbitration agreements’ (2014) IMCLQ, 63(3), 517-534

Kamal-Deen A, ‘The Anatomy of Gulf of Guinea Piracy’ (2015) Naval War College Review

68(1) 93

McBain G, ‘Modernising and Codifying the Law of Bailment’ (2008) JBL 1

McMeel G, ‘Bailment: fertility and the forms of actions (Yearworth v. North Bristol NHS

Trust)’ (2010) LMCLQ 22-27

McMeel G, ‘The Redundancy of Bailment’ (2003) LMCLQ 169-200

Tweeddale A, Tweeddale K, ‘Incorporation of arbitration clauses revisited Arbitration’ (2010)

76(4), 656-660

LIST OF AUTHORITIES: OTHER

Best Management Practices for Protection against Somalia Based Piracy (BMP4) Suggested

Planning and Operational Practices for Ship Operators and Masters of Ships Transiting the

High Risk Area (Witherby Publishing Goup Ltd, 2011)

BIMCO Special Circular No 1 (March 2009)

Burgess J, ‘Oil Piracy Moves to Angolan Coast with $8M Heist’

<http://oilprice.com/Energy/Energy-General/Oil-Piracy-Moves-to-Angolan-Coast-with-8M-

Heist.html> accessed 10 April 2015

ix

Johnson K, ‘Oil Pirates and the Mystery Ship’ Foreign Policy (29 January 2014)

Kashi D, ‘Nigerian Pirates Likely Hijacked Oil Tanker Off Angola's Coast, Expert Says’,

International Business Times (27 January 2014) <http://www.ibtimes.com/nigerian-pirates-

likely-hijacked-oil-tanker-angolas-coast-expert-says-1548738>

Reuters ‘UPDATE 1-Pirates hijacked tanker off Angola, stole cargo - owners’

<http://uk.reuters.com/article/2014/01/26/angola-piracy-idUKL5N0L00NM20140126>

Shelltime 4 Charter Party

United Nations Security Council, Letter Dated 18 January 2012 from the Secretary-General

addressed to the President of the Security Council S/2012/45

United Nations Security Council, Report of the United Nations Assessment Mission on Piracy

in the Gulf of Guinea, UNSC S/2012/45 (New York: 19 January 2012)

United Nations Security Council Resolution 2018, ‘Piracy and Security in Africa’ (31 October

2011)

United Nations Security Council Resolution 2039, ‘Peace Consolidation in West Africa’ (29

February 2012)

x

LIST OF ABBREVIATIONS

ASA Atlantic Services Agency

ASA2 Atlantic STS Agency Ltd (ASA Angola Ltd)

Cl. Clause

OPL Off port limit

WTI Western Tankers Inc

STS Ship to ship transfer

WD Western Dawn

1

STATEMENT OF FACTS

THE CHARTERPARTY

1 The Claimant is Western Tankers Inc, a long established company incorporated in the

British Virgin Islands. The Claimant owns, among other vessels, the Western Dawn.

The Respondent is LDT Pte, a company incorporated in Singapore.

2 On the 26 May 2014, Western Tankers Inc, the Claimant, and LDT Pte, the

Respondent, agreed on a time charter of Western Dawn (the Vessel) on an amended

Shelltime 4 charterparty. The charterparty included rider clauses and was for a period

of three months, plus or minus 30 days. The first voyage under this time charter trip

was from Singapore to OPL (Off Port Limit) Luanda, Angola, with re-delivery in the

Mediterranean area (Gibraltar-Trieste range).

THE VOYAGE

3 On 8 June 2014 the Vessel completed the loading of the cargo, bills of lading were

issued and the vessel was ordered to proceed to OPL Luanda for discharge. The ship

did not take additional bunkers at Durban contrary to the initial plan. It was agreed

that the next bunker supply would be on arrival of “STS Area 1”.

4 The charterers advised the Western Dawn to refer to their local discharge coordinator

on arrival, the Atlantic Services Agency, which never replied to any of the vessels

messages. After having received an email from the Atlantic STS Agency Ltd on 28

June 2014., in which the addresser identified himself as the Charterers local discharge

agency, the Master of the Western Dawn followed the instructions given in this

message and proceeded to an alternative discharge area, in international waters off the

Angolan Coast, close to the original discharge area. The Master informed the

charterers of this alternative discharge place at which the vessel would take new

2

bunkers via a ship to ship transfer with a vessel called The Antelope as well on 3 July

2014. The Charterers replied on the 4 July 2014 with an instruction to continue to

liaise with the vessels ship to ship coordinator. On arrival at the designated position on

4 July 2014 the Master of the vessel tendered a notice of readiness to the Charterers.

Later that day, the Western Dawn was approached by two fishing vessels which later

turned out to be pirates. The Western Dawn was hijacked. The Master was able to

regain control over the vessel only on 17 July 2014. As a result of the pirate attack,

several crewmembers were injured and the vessel was damaged. Additionally, about

28,500mt of Gasoil were stolen from the cargo and could not be recovered. Due to this

incident the Western Dawn was unable to meet the discharge target date at Luanda.

The vessel did not continue to the originally designated discharge area, but instead,

went to Cape Town to await further instructions from the charterers.

Hire

5 Furthermore the charterers failed to pay hire for July in advance. The owners sent a

notice of default of payment on 3 July 2014 to which the charterers never replied.

Instead, they sent a redelivery notice to the owners on 4 July 2014 and a few hours

later an off-hire notice. Due to no contact with the vessel, hire was not paid.

Arbitral Proceedings

6 A statement of claim was served to the defendant by the claimant on the 1 November

2014; a responding statement of defense with a counterclaim was served on 29

November 2014.

3

JURISDICITON

The Tribunal has no jurisdiction

7 International Commercial Arbitration proceedings arise out of arbitration agreements.

The tribunal has merely the authority that is transferred to it by the parties to the

agreement. Clause 46(a) of Shelltime 41 stipulates that English law is the substantial

law of the charterparty. However, the Respondent submits that London Arbitration is

not the proper seat for determining the present dispute.

8 The wording of the arbitration agreement is the decisive factor when it comes to

determining whether the tribunal has jurisdiction to hear the dispute.2 Shelltime 4

form, Clause 46 (“Law and Litigation”)3 is very clear in this regard. According to the

clause, the charter shall be construed according to English law and all disputes arising

out of this charter shall be referred to arbitration in London in accordance with the

currently effective version of the Arbitration Act 1996. According to the Arbitration

Act 1996, the tribunal has furthermore the power to rule on its own competency.4

9 Nevertheless, it is vital for the parties to decide unanimously on the seat of arbitration

in the event a dispute arises. In the present case, an agreement reached by the parties

has never been signed. The Respondent argues that the agreement is therefore invalid

and it is the correspondent between the parties which constitutes the source of

obligations.5 The correspondence between the Claimant and the Respondentrepresents

an agreement in writing according to cl. 5 (2) (b) of the Arbitration Act 1996.

10 When one analyses the communication between the Claimant and the Respondent, it

becomes clear that “an arbitration in London” according to the standard term in

1 Shelltime 4, cl.46 (a), line 775.

2 Tweeddale a, Tweeddale K Arbitration of Commercial Disputes (Oxford Univeristy Press) 165.

3 Clause 46(a) Shelltime 4.

4 Arbitration Act 1996 (UK) c 23, s 30; Gary B Born, International Commercial Arbitration

(Kluwer Law International, 2009) 856. 5 Coghlin T, A.W. Baker, J. Kenny, John D. Kimball Time Charters (6

th Edition,2008), [1.39].

4

Shelltime 4 was not the intention of the parties. In an email from 23 May 2014 the

defendant made clear that he did not agree to “an arbitration in London”.6

11 Where the parties did not expressly chose a law governing the arbitration procedures,

the identification of this procedural law must be based on an implied choice the parties

made and if an implied choice cannot be identified as well, than the law of the place

with the most real and substantial connection to the agreement should be applied,

according to the common law choice-of-law rules.7

12 Hence, the Respondent contends that this Tribunal has no jurisdiction in this matter

since the parties never agreed on London as seat of the Arbitration proceedings and

English law as proper law of the forum. Instead, the Respondent argues that it is the

Arbitration proceedings are to be held in Singapore according to Singaporean law as

evidence by the correspondence between the parties indicating a lack of agreement as

to the London Arbitration. Hence, the Respondent argues that the matter is outside the

jurisdiction of the Tribunal since London is not the proper seat of the Arbitration

proceedings and English law not the proper forum of law that was agreed upon

13 When it comes to determining the seat and the proper law of the forum, party

autonomy is the guiding principle.8 The seat is to be determined according to what the

parties agreed.9

14 The parties agreed on a Shelltime 4 charterparty with Rider clauses. The shipbroker

acted merely as “channel” for communication.10

15 Seat and procedural law of arbitration proceedings are linked closely, in general, the

choice of the law to govern the arbitration generally includes a choice of the seat.11

6 Moot Problem, 2.

7 Arzandeh A, ‘The Law Governing Arbitration Agreements in England’ (2013) LMCLQ, 31-35, 31.

8 Hill J, ‘Determining the seat of an international arbitration: party autonomy and the interpretation of arbitration

agreements’ (2014) ICLQ 63 (3), 517-534, 521. 9 Hill J, ‘Determining the seat of an international arbitration: party autonomy and the interpretation of arbitration

agreements’ (2014) ICLQ 63 (3), 517-534, 526. 10

Coghlin T, A.W. Baker, J. Kenny, John D. Kimball Time Charters (6th

Edition,2008) [2.22].

5

The Respondent equally argues that the explicit refusal of the London Arbitration

implicates the lack of agreement as to the English law being the procedural law in the

present case. The parties did not agree on a seat of arbitration nor a law governing the

Arbitration proceedings. Since there is neither express nor implied choice, the

governing law and the seat of the proceedings must be identified through determining

the law of the place with the most real and substantial connection to the matter.12

Since the respondent is a company incorporated in Singapore and the voyage that is

concerned in this matter commenced in Singapore, the Respondent submits that the

seat of Arbitration proceedings should also be in Singapore and that the proceedings

should be held according to Singaporean law. The fact that the Charterparty is

governed by English law according to Shelltime 4 cl. 46 (a) can, under the principle of

separability not influence the determination of the seat and the law of the forum.13

16 Even if the tribunal finds that it has jurisdiction over the merits of this dispute, the

Respondent argues that the phrase ‘disputes arising out of this charter’ does not extend

to the tort of fraud.

17 The Respondent submits that whilst it is accepted that Fiona Trust14

has purported to

widen the ambit of arbitration clauses, the extent to which such a phrase could extend

to tort claims is dependent on the degree to which the fraud is connected to the

contract. Adopting the words of Mustill J., the contractual and tortious disputes need

to be so closely knitted together on the facts, that the agreement to arbitrate on one can

properly be construed as covering the other.15

It is argued that the proximity

11

Hill J, ‘Determining the seat of an international arbitration: party autonomy and the interpretation of

arbitration agreements’ (2014) ICLQ 63 (3), 517-534, 524; Naviera Amazonica Peruana SA v Cia International

de Seguros del Peru [1988] 1 Lloyd's Rep 116. 12

Sulamerica CIA Nacional de Seguros SA and others v Enesa Engenharia SA and others, [2012] EWCA Civ

638. 13

XL Insurance Ltd v Owens Corning [2001] 1 All E.R. (Comm) 530; Fiona Trust v Privalov [2008] 1LLR 254;

C v D [2007] EWHC 1541. 14

Fiona Trust v Privalov [2008] 1LLR 254; C v D [2007] EWHC 1541. 15

The Playa Larga [1983] 2 Lloyds Rep 171, 183.

6

requirement is independent of the formulation of the clause in the Shelltime 4 and

cannot be ousted by its wording,16

as it is a sui generis requirement. Therefore, the

Respondent contends that the parties cannot be taken to have excluded the

requirement. In a case decided after Fiona Trust, the High Court of England decided

that because there is no sufficient connection between one of the claims and the main

contract of sale, the arbitration tribunal did not have jurisdiction to hear the claim in

question.17

Therefore, the courts have not ruled out proximity as a valid test in

deciding whether claims in tort are admissible in arbitration.

18 In the case of Playa Verde it was stated that reason why the judge found the existence

of a relevant connection was that the tort claim corresponded to the central duty of the

contract, that is, the delivery of cargo.18

Thus, the Respondent argues that it is

essential when seeking to establish sufficient connection that the tort claim is linked to

the formulation of the contractual obligations.

19 In our case, the claim relating to fraud appertains to the conduct of the parties during

the currency of the contract, rather than to the contractual obligations themselves.

Specifically, the Respondent argues that the claim relies on the existence of

representations made during the course of the contract performance.19

In the judge’s

terms, the contract is an item of past history leading up to the claim.20

Therefore, an

inextricable link between the contract and the claim relating to fraud cannot be shown

to exist.

16

Premium Nafta Products Ltd (20th Defendant) & Ors v. Fili Shipping Company Ltd & Ors [2007] UKHL 40,

[12]. 17

Bilta (UK) Ltd (In Liquidation) v Nazir & Ors [2010] EWHC 1086 (Ch), [19]. 18

The Playa Larga [1983] 2 Lloyds Rep 171, 183. 19

Moot Problem, 63. 20

The Playa Larga [1983] 2 Lloyds Rep 171, 183.

7

20 Since no relevant connection exists between the claim relating to fraud and the

charterparty, the Respondent urges the tribunal to find that the claim relating to fraud

is not admissible.

PART II MERITS

I Breach of the charterparty

A THE OBLIGATION TO STEM SUFFICIENT BUNKERS AT SINGAPORE WAS

NOT ON THE CHARTERERS

21 The fact that the ship may have less that the agreed quantity of bunkers does not imply

that the quantity of bunkers was not enough to deliver the cargo to the port of

destination. The Respondent argues that the deficiency of bunkers does not make the

vessel unfitted for the service within the meaning of Clause 1 Shelltime 4.21

Moreover,

the Respondent contends that the supply of bunkers was indeed sufficient as indicated

by the correspondence between the Master of the vessel and the charterers on 3rd

June

2014.22

The Respondent observes that the supply was sufficient to proceed to Angola

and, subsequently, even to Cape Town. On that basis, knowing that the consequence

of the quantity of the bunkers supply being “only enough to get to discharge area plus

bad weather reserve”, and that the nature of this obligation was not so grave as to

deprive the Claimant of the benefit of the contract, it could be concluded that the

bunkers obligation, if found by the tribunal, could not be a condition of the

charterparty. The Respondent argues, thus, that the Claimant could only be entitled to

damages, he has, however, no right to elect to terminate the contract for breach of an

innominate term.23

21

The North Sea [1999] 1 Lloyd’s Rep 21 (C.A.). 22


Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26; The Mihalis Angelos [1970] 3 WLR 601.

8

22 The Respondent contends that were the tribunal to rule that there is an obligation on

the Respondent, the provision to stem sufficient bunkers does not relieve the

shipowners from the obligation of seeing that the vessel is in a seaworthy condition in

respect of the supply of fuel.24

B BREACH OF A PROVISION REGARDING HIRE

23 It is submitted that no hire is due under the Charter party since the charter party was

frustrated.

C FRUSTRATION OF THE CHARTERPARTY

24 The Respondent submits that the charter party was frustrated no later than on 4 July

2014. A pirate attack can in principle be a frustrating event. Whether a piracy attack

frustrated a contract or not depends on the length of the pirate attack.25 In this matter

the pirate attack lasted 13 days. This length of time is sufficient to frustrate the

contract, even though frustration is not lightly inferred.26 The charterers expected to be

able to use the vessel for at least three months. A pirate attack that lasted 13 days,

therefore is a supervening event as defined by Lord Simon in the case National

Carriers Ltd. v Panalpina (Northern) Ltd27

.

IF TRIBUNAL DENIES THE FRUSTRATION OF THE CONTRACT: NO HIRE

DUE, DUE TO OFF-HIRE EVENT

25 Should the Tribunal decide that the contract was not frustrated, the Respondent argues

that no hire is due, since no was hire was earned28

as a result of two off-hire events.

Under the charterparty, hire has not been earned if an off-hire event occurred and if

there was a loss of time to the charterer as a consequence of this event. In principle, an

24

The Captain Diamantis [1977] 1 Lloyd’s Rep 362, 367, per Ackner J. 25

Todd P, Maritime Fraud and Piracy [1.138]. 26

Ibid., The Petro Ranger [2001] 2 Lloyd’s Rep 348. 27

National Carriers Ltd. v Panalpina (Northern) Ltd [1981] A.C. 675). 28

Ibid.

9

off-hire event must be fortuitous and not a natural result of the charterers’ orders29

and

not a result of a breach of contract on the part of the charterers.30

D OFF-HIRE EVENT: BREACH OF ORDERS / NEGLECT OF DUTY

26 It is submitted that the vessel was off-hire for a breach of orders and/or neglect of duty

on the part of the Master from 4 July 2014 according to Shelltime 4 cl.21 (a) (ii) until

the vessel was ready to resume service of its voyage from a position not less favorable

to charterers than that at which such loss of time commenced.31

The Respondent

argues that the master neglected his duties and breached his orders.32

In addition, the

Master failed to send a daily report on 4 July 2014 at noon as stipulated by the voyage

order.

E OFF-HIRE EVENT: PIRACY

27 Alternatively, should the Tribunal decide that the Charter party was not frustrated, it is

submitted that the vessel was off-hire as of 4 July 2015.

28 The Respondent argues that the pirate attack is an off-hire event according to

Shelltime 4 cl. 21 (a) (i) as amended. The clause stipulates inter alia that on every

occasion that there is an undisputed loss of time due to accidents or damages to the

vessel or due to any other similar cause preventing the efficient working of the vessel,

the vessel is off-hire. It is submitted that a pirate attack is a similar cause in that

sense.33

The hijacking fully prevents the efficient working of the vessel and is

comparable to an accident to the vessel.

F LOSS OF TIME

29 The two off-hire events have led to an undisputed delay. According to Shelltime 4

cl.21 (a), the vessel is to be considered off-hire from the commencement of such loss

29

The “Rijn” [1981] 2 Lloyd’s Rep. 267. 30

Lensen v Anglo-Soviet (1935) 52 L.I Rep. 141. 31

Moot problem, 68. 32

Ibid. 33

Osmium Shipping Corp v Cargill International SA [2012] EWHC 571 (Comm).

10

of time until she is again ready and in an efficient state to resume her service from a

position not less favorable to charterers than that at which such loss of time

commenced. Since the vessel returned to Cape Town after the hijacking, although it

was very close to the original discharge place, the vessel has been off-hire since the

off-hire lasts until the termination of the contract.

SHOULD THE TRIBUNAL FIND THAT OBLIGATION TO PAY HIRE IS STILL

DUE AND OWED

30 Alternatively, the Respondent submits that the failure to pay hire under a time charter

party is not a breach of a condition but merely a breach of an innominate term.

DISTINCTION BETWEEN CONDITION AND INNOMINATE TERM34

31 According to the most recent decision in Spar Shipping AS v. Grand China Logistics

Holding (Group) Co., Ltd [2015] EWHC 718 the obligation to pay hire under a time

charter party is an innominate term. The Respondent contends that this ruling is

applicable to the present case.

32 Firstly, the Respondent submits the fact that the owners are entitled to withdraw a

vessel according to the anti-technicality clause in Shelltime 4 does not indicate that a

breach of the duty to pay hire is a condition of the charter party. The withdrawal

clause merely gives the owners an option to withdraw the vessel from service. A

breach of the clause does not automatically constitute a justification to terminate the

contract. The withdrawal clause itself does not transform the term into a condition.

The owners can, therefore, not claim greater damages.35

34

Tenax Steamship Co v Owners of the Motor Vessel Brimnes (The Brimnes) [1973] 1 W.L.R. 386;

Kuwait Rocks Co v AMN Bulkcarriers Inc [2013] EWHC 865 (Comm), [2013] 2 All E.R. (Comm) 689 (The

Astra). 35

Spar Shipping AS v. Grand China Logistics Holding (Group) Co., Ltd [2015] EWHC 718 ;Financings Ltd v

Baldock [1963] 2 Q.B. 104.

11

33 The Respondent argues that due to the variation in the gravity of the nature of the

breaches, an innominate term is a better and a more reasonable option.36

DAMAGES IN CASE THE TRIBUNAL FINDS THAT THE RESPONDENT IS

LIABLE

34 The Respondent contends that the Claimant cannot claim future earnings as part of the

damages should the tribunal decide that the Respondent is liable.

THE CLAIMANT BREACHED THE CHARTERPARTY IN FAILING TO COMPLY

WITH THE PIRACY CLAUSE

35 The Respondent argues that the Claimant is in breach of the Charterparty dated 26

May 201437

by failing to comply with the piracy clause sub-clause (1) contained

therein. In the area through which the vessel proceeded, i.e. the Gulf of Guinea, there

is a current real risk of piracy.38

According to the Piracy Clause sub-clause (1) the

Respondent argues that the Claimant was aware that Western Africa is a “piracy threat

area”.39

The Claimant breached the piracy clause sub-clause (1), since he failed to

adhere at all times to the latest version of BMP, which requires inter alia, deploying

36

Spar Shipping AS v. Grand China Logistics Holding (Group) Co., Ltd [2015] EWHC 718 ;Bunge Corp v

Tradax Export SA [1981] 1 W.L.R. 711; Federal Commerce & Navigation Co Ltd v Molena Alpha Inc (The

Nanfri) [1979] A.C. 757. 37

Moot Problem, 8. 38

BIMCO Special Circular, No 1, March 2009, 2; Pacific Basin IHX Ltd v Bulkhandling Handymax A/S (The

Triton Lark) [2011] EWHC 2862 (Comm); United Nations Security Council , 19 January 2012, Letter Dated 18

January 2012 from the Secretary-General addressed to the President of the Security Council S/2012/45, 3; Keith

Johnson, ‘Oil Pirates and the Mystery Ship’ Foreign Policy, January 29, 2014; James Burgess, ‘Oil Piracy

Moves to Angolan Coast with $8M Heist’

< http://oilprice.com/Energy/Energy-General/Oil-Piracy-Moves-to-Angolan-Coast-with-8M-Heist.html>

accessed 10 April 2015; Reuters ‘UPDATE 1-Pirates hijacked tanker off Angola, stole cargo - owners’

<http://uk.reuters.com/article/2014/01/26/angola-piracy-idUKL5N0L00NM20140126>; David Kashi, ‘Nigerian

Pirates Likely Hijacked Oil Tanker Off Angola's Coast, Expert Says’, International Business Times (27 January

2014) <http://www.ibtimes.com/nigerian-pirates-likely-hijacked-oil-tanker-angolas-coast-expert-says-1548738>;

Ali Kamal-Deen, ‘The Anatomy of Gulf of Guinea Piracy’ (2015) Naval War College Review 68(1) United

Nations Security Council Resolution 2018, „Piracy and Security in Africa”, 31 October 2011; Resolution 2039,

„Peace Consolidation in West Africa” 29 February 2012; United Nations Security Council Report of the United

Nations Assessment Mission on Piracy in the Gulf of Guinea, UNSC S/2012/45 (New York: 19 January 2012). 39

Moot problem, 22.

12

razor wire.40

Hence, the Respondent argues that in this way, by not employing

sufficient protective measures,41

the Claimant is in breach of Piracy Clause sub-clause

(6) as he did not effectively protect the crew and the vessel.

THE CLAIMANT BREACHED THE CHARTERPARTY BY PROVIDING A VESSEL

THAT WAS NOT FIT FOR SERVICES AS REQUIRED BY THE CHARTERPARTY

36 The Respondent argues that the Claimant is in breach of the Shelltime 4 charterparty

clause 1 which requires “at the date of the delivery of the vessel under this charter and

throughout the charter period (c) she shall be in every way fit for the service”.42

The

Respondent argues that seaworthiness is not an absolute concept. It is relative to the

nature of the ship, to the particular voyage and to the particular stage of the voyage.43

The Respondent argues that the seaworthiness requirement extends to the vessel’s

tackle or equipment,44

to numbers and competence of the crew,45

and also to their

training.46

“Seaworthiness develops over time to reflect evolving knowledge and

standards of ship construction, and it varies according to demands of the particular

adventure”.47

The Respondent contends that seaworthiness must be judged by the

standards and practices of the industry at the relevant time, at least so long as those

standards and practices are reasonable.48

37 The Respondent argues that since it was known that the voyage will include areas at

high risk of piracy, the ship was unprepared for which, and that renders the ship

40

Best Management Practices for Protection against Somalia Based Piracy (BMP4) Suggested Planning and

Operational Practices for Ship Operators and Masters of Ships Transitting the High Risk Area, Version 4

(Witherby Publishing Goup Ltd, 2011) 28. 41

Moot Problem, 9. 42

Shelltime 4 Charter Party. 43

Kapitoff v Wilson (1876) QBD 377, 380 per Field J. 44

The Maori King [1895] 2 QB 550; Queensland National Bank Ltd v Penisular and Oriental Steam Navigation

Co [1898] 1 QB 567. 45

Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26; Alfred C. Toepfer

Schffahrtsgesellschaft mbH v Tossa Marine Co Ltd (The Derby) [1985] 2 Lloyd’s Rep. 325. 46

Papera Traders Co ltd v Hyundai Merchant Marine Co Ltd (The Eurasian Dream) [2002] 1 Lloyd’s Rep 719;

Paul Todd, Maritime Fraud and Piracy [1.115]. 47

Bennett, The Law of Marine Insurance, 2nd

edn (Oxford, 2006) [19.18]. 48

Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co. Ltd. and Another – The “Eurasian

Dream” [2002] 1 Lloyd’s Rep. 719.

13

unseaworthy. The Respondent contends that were the shipowners at the top of the

latest developments,49

the damage could be avoided. The Respondent, additionally,

refutes the Claimant’s contention that piracy is a peril of the sea,50

for which there

could be an exception. The Respondent is in breach of the seaworthiness obligation

due to the incompetence of the master and the crew.51

THE INCOMPETENCE OF THE MASTER AND CREW HAS RENDERED THE VESSEL

UNSEAWORTHY52

AND CONTRIBUTED TO THE BREACH OF THE CHARTERPARTY

38 Although clause 27 of the Shelltime Charter Party would normally exempt the

Claimant from liability for any loss or damage or delay or failure arising or resulting

from any act, neglect or default of the servants of the Claimant in the navigation or

management of the vessel, dangers and accidents of the sea,53

the Respondent argues

that this exception should be construed narrowly. Clause 27 provides the exception

“unless otherwise in this charter expressly provided”. Since the BIMCO Piracy Clause

is validly incorporated into this charterparty, and it expressly provides that it prevails

over other clauses in the event of conflict,54

the Respondent contends that the

Claimant is in breach of this provision, and, consequently, in breach of the

charterparty. The Respondent submits that the master failed to exercise a reasonable

judgment when it comes to the safety of the port. The master failed to observe the risk

and draw appropriate conclusions and actions, especially with regards to the two

fishing boats that were observed. No actions were taken to prevent a potential piracy

threat. Hence, the Claimant is in breach of the obligation inferred in BIMCO Piracy

49

Todd P, Maritime Fraud and Piracy [1.116]. 50

Todd P, Maritime Fraud and Piracy [1.124]; Paul Todd, Maritime Fraud and Piracy [1.119]. 51


Dream” [2002] 1 Lloyd’s Rep. 719. 52


Dream” [2002] 1 Lloyd’s Rep. 719. 53

Shelltime 4 Charter Party Clause 27 ‘Exceptions’. 54

Moot Problem, 12.

14

Clause for Time Charter Parties 2013 sub-clause (a).55

The Respondent contends that a

reasonably prudent owner, knowing the relevant facts and, the real risk of piracy,

would not have allowed the vessel to put to sea with this master and crew, with their

state of knowledge, training and instruction.56

The Respondent argues that the master

cannot enter ports that are obviously unsafe and then charge the charterers with

damage done.57

39 The Respondent argues that when the charterer is prepared at the time of taking the

charter to specify the place where the cargo will be available or the place at which he

desires it delivered, the shipowner must take the responsibility of ascertaining whether

he can safely berth his ship there or will take the risk of doing to. If he agrees upon the

place, his liability to have his ship there is definite.58

THE CHARTERERS ARE NOT IN BREACH OF THE SAFE PORTS WARRANTY

40 The Respondent argues that Shelltime 4 Clause 4 reduces the charterers’ safe port

obligation to one of due diligence only.59

Clause 4 of Shelltime 4 provides “Charterers

shall use due diligence to ensure that the vessel is only employed between and at safe

places… Charterers do not warrant the safety of any place to which they order the

vessel and shall be under no liability in respect thereof except for loss or damage

caused by their failure to exercise due diligence aforesaid”.60

41 Owners are not required to accept the nomination of a safe port, and charterers who

order a vessel to an unsafe port will be in breach of the charterparty. The shipowner

can refuse the nomination, and the charterers can also be liable for damages if he

55


McFadden v Blue Star Line [1905] 1 KB 697, 706 per Channel J.; Papera Traders Co. Ltd. and Others v.

Hyundai Merchant Marine Co. Ltd. and Another – The “Eurasian Dream” [2002] 1 Lloyd’s Rep. 719. 57

Time Charters, [10.60]. 58

Reardon Smith Line v. Australian Wheat Board (The Houston City) (High Court of Australia) [1954] 2

Lloyd’s Rep 148, 153, per Dixon, C.J.; ([1956] 1 Lloyd’s Rep 1) adopted by Devlin J., in The Stork [1954] 2

Lloyd’s Rep 397, 415 per Devlin J.; [1955] 1 Lloyd’s Rep 349, 365 per Singleton LJ 365; Time Charters,

[10.80]. 59


Shelltime 4 Clause 4.

15

proceeds, and loss is occasioned.61

The Respondent refutes that Claimant’s contention

that the Respondent directed the vessel to an unsafe port. The damage suffered by the

owners has been caused by or contributed to by the negligence of the master and crew

and mistakes in their judgment. The Respondent contends that the master should have

seen the danger for himself when he was approached by the fishing boats.62

The

Respondent concedes that it is the incompetence of the master or crew rather than the

charterers’ breach of the term as to safety that is the effective cause of damage.

Therefore there is no liability on the charterers. It is said that the claim of causation

from the breach by the charterers has been broken by the intervening act or default of

the master or crew.63

A safe port warranty, whereby the Charterer warrants at the time

of nominating a port that it will be safe during the vessel’s approach, call and

departure without being exposed to danger in the absence of an abnormal occurrence,

does not concern all the ports in the region of the Gulf of Guinea. Taking into account

the total large area of the Gulf of Guinea, this conclusion would be unreasonable and

thus, is inappropriate.

DAMAGES

42 The Respondent argues that the charter terminated on the same day when the ship

went missing as according to clause 20 of the Shelltime 4 Charter Party. The vessel

was unseaworthy, thus the Respondent contends that the Claimant is liable for

damages for the breach of the innominate term.64

The Respondent argues that were the

tribunal to hold the Respondent in breach, the Claimant could recover damages only

for the period up to 4 July 2014. The charterers’ repudiation had deprived the owners

of a contract that was always subject to termination upon an event, which event it had

61

Wilson J, Carriage of Goods by Sea, 6th edn (Pearson, 2008), 28-9. 62


Time Charters, [10.69]; The Dagmar [1968] 2 Llyd’s Rep 563, 571 per Mocatta J.; The Polyglory [1977] 2

Lloyd’s Rep 353; The Mary Lou [1981] 2 Lloyd’s Rep 272 per Mustill J. 64

ENE Kos 1 Ltd v Petroleo Brasileiro SA (No 2). [2012] UKSC 17.

16

been proved would have occurred. In assessing damages, the courts should not ignore

facts that had become known since the breach.65

43 The Respondent argues that the cost of repair is not recoverable where the repair

would be an unreasonable expense, judged from a commercial perspective.66

The

Claimant’s acceptance of the Respondent’s nomination has been held to constitute a

waiver of a claim for damages.67

III TORT OF FRAUD

A ASA2 IS NOT AN AGENT OF THE CHARTERERS, DUE TO THE FACT THAT

IT DID NOT HAVE ACTUAL AUTHORITY: ASA HAD ACTUAL AUTHORITY TO

ACT ON BEHALF OF THE RESPONDENT

44 No misnomer has occurred, therefore ASA2 and ASA are two different parties. Rix LJ

stated that it is unlikely that a misnomer has occurred if the contract can be construed

as binding the parties that were actually named in the contract.68

As per the voyage

orders, the Owners should have received instructions from ASA, as this was the

nominated agent. Instead, they have taken voyage instructions from the wrong party,

ASA2. It is immaterial to this point whether ASA had not responded before ASA2 did,

as the Claimant was never authorised to follow the instructions of ASA2 in any case.

Thus, a construction of the contract to the effect that ASA were the Respondent’s

agents was possible. For this reason, the Respondent argues that a misnomer has not

occurred.

65

The Golden Victory [2005] 1 Lloyd’s Rep. 443, [2005] 2 Lloyd’s Rep. 747 (C.A.) and [2007] 2 Lloyd’s Rep.

164 (H.L.). 66

The Rozel [1994] 2 Lloyd’s Rep. 161, per Phillips, J.; The Puerto Buitrago; The Alecos M [1991] 1 Lloyd’s

Rep. 120 (C.A.). The Alecos M, 168 per Phillips, J.; Ruxley Electronics v. Forsyth [1996] A.C. 344 (H.L.); The

Griparion (No. 2) [1994] 1 Lloyd’s Rep. 533. 67

The “Chemical Venture” [1993] 1 Lloyd’s Rep. 508. 68

Dumford Trading v OAO Atlantrybflot [2005] 1 Lloyd’s Rep 289, [32]-[35].

17

B ALTERNATIVELY, THE RESPONDENT ARGUES THAT THE CONTRACT

MUST BE CONSTRUED IN ACCORDANCE TO WHAT IT WOULD CONVEY TO

THE REASONABLE PERSON69

45 If a reasonable person would look at the contract it would not be apparent that ASA

should is the nominated agent. The voyage orders make reference to ASA as being the

nominated discharge port agent, rather than ASA2, on two occasions.70

Therefore,

using this specific wording was not a clerical error and cannot be construed as a

misnomer.71

C EVEN IF ASA2 HAD EXPRESS OR APPARENT AUTHORITY TO ACT ON

BEHALF OF THE RESPONDENT, THE RESPONDENT IS NOT BOUND BY ASA2’S

ACTIONS DUE TO THE FACT THAT ASA2 ACTED OUTSIDE ITS SCOPE OF

AUTHORITY72

46 The Respondent contends that it should be duly noted that there is no provision in the

contract that would have allowed the Respondents to change the location of the

discharge port, so the Respondent could not have delegated this right to ASA2.73

47 The bills of lading and the voyage orders indicated that the discharge port is OPL

Luanda.74

However, ASA2 instructed the Master to change the discharge location so

that the amended STS location was now changed to a location in the Republic of

Congo, rather than in Angolan waters. Because the Respondents could not have

lawfully delegated such right to ASA2, it follows that ASA2 acted ultra vires in

changing the initial coordinates. The Respondent submits that a reasonable master

would not have followed the changed coordinates that were sent by a third party.

69

Whittam v. W. J. Daniel & Co. Ltd. [1962] 1 Q.B. 271, 277; Nittan (U.K.) Ltd. V Solent Steel Fabrication Ltd.

Trading As Sargrove Automation And Cornhill Insurance Co. Ltd. [1981] 1 Lloyd's Rep. 634. 70

Moot Problem, 14-15. 71

Nittan (U.K.) Ltd. V Solent Steel Fabrication Ltd. Trading As Sargrove Automation And Cornhill Insurance

Co. Ltd. [1981] 1 Lloyd's Rep. 634, 639. 72

Bowstead & Reynolds, [8-065]. 73

Voyage Charters, [5.15]. 74

Moot Problem, 34.

18

D REPRESENTATIONS MADE BY CHARTERERS WERE TRUE AT THE TIME

THEY WERE MADE

48 A statement is only rendered untrue if the defendant says that he expects an event to

take place when he does not.75

On a proper construction of the message dated 3 June,

the Claimant expressed that bunkers are available either at Durban or Cape Town. The

formulation suggests that if there was no supply at Durban then the Claimant could

bunker at Cape Town. The Respondent contends that the representation was not

rendered untrue just because the Claimant did not bunker at Cape Town. The

Claimants need to prove the existence of an untrue representation to a high standard of

proof.76

There is nothing to demonstrate that they were not true at the time they were

made. Therefore the burden of proof is not discharged.

E THE RESPONDENT HONESTLY BELIEVED THE REPRESENTATIONS TO BE

TRUE

49 It is trite law that without the element of dishonesty the statement is not capable of

amounting to fraud.77

In Niru Battery a bank officer who tendered a letter of credit

was not aware of the fact that no payment was due under it, despite the fact that it was

obvious to any reasonable person. However casual or naïve he might have been, it was

decided that no claim lay in deceit.78

50 The test is therefore subjective and, the Respondent argues, that the tribunal must take

into account all relevant circumstances when determining whether the Respondent was

honest. The Respondent argues that the fact that the Respondent is a newcomer in the

ship chartering market is crucial in determining whether he acted honestly because his

75

Karberg’s Case [1892] 3 Ch. 1, 11. 76

Smith New Court Securities Ltd. V. Scrimgeourvickers (Asset Management) Ltd. [1997] A.C. 254, 274. 77

Derry v Peek (1889) 14 App. Cas. 337, 376. 78

Niru Battery v. Milestone Trading Ltd. [2004] 2 Lloyd's Reports 319.

19

knowledge of the relevant bunkering process is more limited.79

For this reason, they

were not aware beforehand that the agents would be late when arriving at the STS

area, because they had not sufficiently developed business relationships in order to

assess the professionalism of ASA. The Respondents argue that this was a

manifestation of the Respondent’s naivety and thus, cannot be construed as dishonest

attitude.

F THE RESPONDENT ARGUES THAT, TO THE EXTENT THAT

REPRESENTATIONS IN QUESTION WERE TRUE AND HONESTLY MADE,

THEY WERE INTENDED TO BE RELIED UPON

51 If the tribunal finds to the contrary, the Respondents argue that their intention was for

the Claimant to bunker and discharge the cargo and not to lead the Claimant into an

area where damage would be incurred.80

The conduct of ASA2 who was either not an

agent of the Respondent or, alternatively, was acting outside authority or without any

authority whatsoever, solely bears the fault for the damage.

G THE RESPONDENT ARGUES THAT THE CLAIMANT DID NOT RELY ON THE

STATEMENT OF THE RESPONDENT, TO THE EFFECT THAT SUFFICIENT

BUNKERS ‘WILL BE AVAILABLE PASSING DURBAN OR CAPE TOWN’

52 The tort of deceit is only complete when relied upon.81

A representation is deemed to

be repeated throughout the interval provided that it still relates to an existing state of

things.82

By proceeding towards STS Area 1 any reliance that had taken place up until

that point had ended.83

Therefore, the Respondent contends that because the Claimants

could not have acted upon a representation that was not effective at the time when it

79


Tackey v McBain [1912] AC 186. 81

Michael Jones; Professor Anthony Dugdale; Mark Simpson, QC, Clerk & Lindsell on Torts (Sweet &

Maxwell 21st ed. 2014) 1321.

82 Michael Jones; Professor Anthony Dugdale; Mark Simpson, QC, Clerk & Lindsell on Torts (Sweet &

Maxwell 21st ed. 2014) 1321.

83 Moot problem, 33.

20

could have been acted upon, the representation of the Charterers is ineffective for

establishing a claim in fraud.

H THE RESPONDENT ARGUES THAT THE CLAIMANT DID NOT RELY ON THE

REPRESENTATIONS MADE BY ASA2

53 There is no reliance if the Claimant would have done the same regardless of the

agents’ representations.84

54 The Respondent submits that but for the representations of ASA2, the master would

have followed the initial coordinates that he had at his disposal, with the result that he

would have arrived at a different location.85

However, the distance between the two

coordinates is negligible and can be ascribed under the general territorial appertaining

to international waters off the Angolan coast. Therefore, both areas hold similar piracy

risks, that is, the risks appertaining to the damage alleged by the Claimant.86

To this

extent, notwithstanding the representations by ASA2, Western Dawn would have

arrived at a materially identical area.

I THE RESPONDENT ARGUES THAT THE CLAIMANT DID NOT SUFFER

DAMAGE AS A CONSEQUENCE OF RELYING ON THE REPRESENTATIONS

55 Subject to finding that such representations have taken place and that damage had

indeed been suffered, the Respondent argues that there is no link between the damage

suffered and the representations on which the Claimant allegedly relied. Although the

master’s reliance on ASA2’s instructions was a ‘but for’ factual cause of the damage

incurred during the pirate attack, the reliance was merely part of the history of events

that placed the Western Dawn in that place at that time and cannot be considered a

legal ‘cause’ of the damage allegedly incurred.87

84

Smith v Chadwick (1883-84) 9 App. Cas. 187; Clerk & Lindsell, [18-34]. 85


Ali Kamal-Deen, ‘The Anatomy of Gulf of Guinea Piracy’ (2015) 68(1) Naval War College Review 93. 87

Clerk & Lindsell [2-99]; Carslogie S.S. Co Ltd v Royal Norwegian Government [1952] AC 292.

21

III BAILMENT

56 Bailment is a legal relationship that comes into existence whenever the bailee is

voluntarily in possession of goods which belong to the bailor.88

Bailment is a

recognised course of action in common law.89

It comes into existence after the

contract has been frustrated as in the present case. When the obligations under the

contract of carriage come to an end, the duty in bailment arises. The Respondent

concedes that the Claimant is liable in bailment for two reasons. Firstly, the Claimant

broke the obligation to take reasonable care to deliver the goods only to the party

entitled to them, even in the absence of the right to possession, and secondly, the

Claimant deviated from the bailment in respect of, part of the cargo on the Vessel.

Alternatively, the Claimants converted part of the cargo on the Vessel.

A BAILMENT IS A RECOGNISED COURSE OF ACTION IN COMMON LAW

57 The Respondent argues that bailment is a valid, common and useful course of action in

maritime claims.90

Almost every claim for damages issued in the Commercial Court in

London in respect of carriage of goods by sea pleads bailment as a cause of action.91

Therefore in the event that the Tribunal rules that the contract has been frutrated, the

Respondent refutes the Claimant’s claim, that there is no common law course of action

in bailment.92

A THE CLAIMANTS BROKE THE OBLIGATION TO TAKE REASONABLE CARE

TO DELIVER THE GOODS ONLY TO THE PARTY ENTITLED TO THEM

88

The Pioneer Container [1994] 2 AC 324, PC; East West Corp v DKBS 1912 [2003] EWCA Civ 83, [2003] QB

1509, Sandeman Coprimar SA v Transitos y Transportes Integrales SL [2003] EWCA Civ 113, [2003] QB 1270;

Marcq v Christie Manson & Woods Ltd (t/a Christie’s) [2003] EWCA Civ 731, [2004] QB 286. 89

Andrew Burrows, English Private Law (OUP, 2013) 883. 90

KH Enterprise (Owners of Cargo Lately Laden on Board The) v. Owners of The Pioneer Container (The

Pioneer Container) [1994] 2 AC 324; [1994] 1 Lloyd’s Rep 593, Yearworth v. North Bristol NHS Trust [2009]

EWCA Civ 37; [2009] 3 WLR 118. 91

Palmer on Bailment, 3rd edn (2009), [20.002]. 92

Yearworth v. North Bristol NHS Trust [2009] EWCA Civ 37; [2010] QB 1; East West Corp v. DKBS AF 1912

A/S [2003] EWCA Civ 83; [2003] QB 1509, [24-32].

22

58 The Respondent argues that they did not receive or take possession of the gasoil

removed from the Vessel between 4 July

and 17 July 2014. The Respondent concedes

further that the receivers named in the Bill of Lading did not receive or take

possession of the gasoil removed from the Vessel between 4 July

and 17 July 2014 in

breach of the bailee’s duty to take reasonable care of the goods.93

The Respondent

argues that there is a general duty of care on the part of the carrier to take reasonable

steps to deliver the goods only to the party entitled to them and this duty was

breached, as the Respondent’s cargo has not been taken proper care of by the Claimant

after the contract of carriage has been terminated.

B SINCE THE ATTORNMENT CAN BE FOUND IN THE PRESENT CASE THERE

IS NO NEED TO PROVE THE RIGHT TO POSSESSION

59 The Respondent contends that the right to possession is not the sine qua non for the

bailment claim. Even if the Respondent was not in immediate possession of the goods

in the present case and, if it is proven that he was not the lawful bill of lading holder, it

does not prejudice the bailment claim. The Respondent observes that the reason why

the bailment claims failed in The Aliakmon and The Starsin was because of lack of

attornment, thus the acknowledged transfer of the right, rather than the fact that the

plaintiff had no possessory or proprietary interest in the goods at the time of the

breach.94

The Respondent argues that in the present case, the attornment took place

when the Respondent transferred the cargo to the Claimant on 8 June 2014, the title

has been transferred and, hence bailment is a legitimate course of action.

93

Morris v CW Martin & Sons Ltd [1966] 1 QB 716, 738, CA, per Salmon LJ; East West Corp v DKBS 1912

[2003] EWCA Civ 83, [2003] QB 1509. 94

Simon Baughen, ‘Bailment or conversion? Misdelivery claims against non-contractual carriers’ (2010) C 411-

430, 416.

23

C ALETERNATIVELY, THE CLAIMANT CONVERTED IN RESPECT OF THE

CARGO ON THE VESSEL

60 In the event that attornment is not found by the court in the present case, the

Respondent argues that the Claimant converted in respect of the cargo on the vessel

thus was in breach of the bailee’s duty to take reasonable care of the goods and to

abstain from converting them.95

Conversion is defined as a ‘wrongful interference

with the right to possession of a chattel’.96

The immediate right to possession is

transferable by transfer of the bill of lading without the need for attornment97

unlike

the position where the claim is for the breach of the bailment.98

Thus, in the present

case the immediate right to possession of the cargo was transferred by transfer of the

bill of lading.

61 The Respondent argues that the Claimant’s breach satisfies the three elements of the

tort of conversion defined by Lord Nicholls of Birkenhead in Kuwait Airways Corp v.

Iraqi Airways Corp (Nos 4 and 5).99

The Respondent firstly contends, that the

Claimant’s conduct was inconsistent with the rights of the owner (or other person

entitled to possession), as the owner would take proper care of the goods. Secondly,

the conduct was deliberate, not accidental. In the present case, the master acted on the

basis of his own judgment in avoiding to follow the instructions of the charterers, thus

his actions were deliberate. Thirdly, the conduct was so extensive an encroachment on

the rights of the owner as to exclude him from use and possession of the goods.100

The

Respondent argues that the delivery of the part of cargo to a party that is not entitled to

95

Morris v CW Martin & Sons Ltd [1966] 1 QB 716, 738, CA, per Salmon LJ; East West Corp v DKBS 1912

[2003] EWCA Civ 83, [2003] QB 1509. 96

MCC Proceeds Inc v Lehman Bros International (Europe) [1998] 4 All ER 675. 97

Official Assignee of Madras v. Mercantile Bank of India Ltd [1935] AC 53 (PC). 98

Simon Baughen, “Bailment or conversion? Misdelivery claims against non-contractual carriers” (2010)

Michael Jones; Professor Anthony Dugdale; Mark Simpson, QC, Clerk & Lindsell on Torts (Sweet & Maxwell

21st ed. 2014) 411-430, 414.

99 [2002] UKHL 19; [2002] 2 AC 883, [39].

100 [2002] UKHL 19; [2002] 2 AC 883, [39].

24

possession thereof, satisfies all three of these elements.101

In the present case, the

claimants deliberately appropriated the cargo, and this was a tort for which any owner

of the goods could sue.102

D THE CLAIMANT FURTHER DEVIATED FROM THE TERMS OF THE

BAILMENT

62 The Respondent argues that about 28,000mt of gasoil was discharged from the Vessel

between 4 July and 17

July 2014 contrary to the terms of the contract of carriage which

provided for delivery at Luanda and redelivery in the Mediterranean. The Claimant

deviated from the terms of the bailment and thus became the insurer of the goods.103

The Respondent argues that the fact that the goods were lost is due to the Claimant’s

fault and thus he is liable.104

IV PRAYER FOR RELIEF

For the reasons set out above, the Respondent requests the Tribunal to:

DECLARE that this Tribunal has no jurisdiction to hear the merits of the dispute, especially

in respect to the tort of fraud; and

FIND that the Respondent is not liable for the breached of the Charterparty and the tortious

duty.

101

Simon Baughen, ‘Bailment or conversion? Misdelivery claims against non-contractual carriers’ (2010)

Lloyd’s Maritime and Commercial Law Quarterly 411-430, 412. 102

Cia Portorafti Commerciale SA v. Ultramar Panama Inc (The Captain Gregos) (No 2) [1990] 2 Lloyd’s Rep

395, 406. 103

Mitchell v Ealing London Borough Council [1979] QB 1. 104

Travers & Sons v Cooper [1915] 1 KB 73; Port Swettenham Authority v TW Wu & Co (M) Sdn Bhd [1979]

AC 580, PC; Frans Maas (UK) Lts v Samsung Electronics [2004] EWHC 1502, [2004] 2 Lloyd’s Rep 251;

Coopers Payen Ltd v Southampton Container Terminal Ltd [2003] EWCA Civ 1223, [2003] 1 Lloyd’s Rep 331.

Documents

SIXTEENTH ANNUAL INTERNATIONAL MARITIME LAW … · Sandeman Coprimar SA v Transitos y Transportes Integrales SL [2003] EWCA Civ 113, [2003] QB 1270 Smith New Court Securities Ltd