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MEMORANDUM ON BEHALF OF THE CLAIMANT
COUNSELS
Sanya Kapoor
Riya Gupta
Arushi Sethi
Rupal Gupta
NINETEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT
2018
Guru Gobind Singh Indraprastha University, New Delhi, India
IN THE MATTER OF:
CERULEAN BEANS AND AROMAS LTD .… CLAIMANT
v.
DYNAMIC SHIPPING LLC. … RESPONDENT
TEAM 4
TEAM 4 MEMORANDUM FOR CLAIMANT
II
TABLE OF CONTENTS
ABBREVIATIONS IV
LIST OF AUTHORITIES V
STATEMENT OF FACTS 1
ARGUMENTS ON JURISDICTION 2
I. THAT THE TRIBUNAL HAS JURISDICTION TO DETERMINE THE CLAIMS
MADE BY THE CLAIMANT 2
A.The English law governs the arbitration agreement. 2
(i) The English law has the closest and most real connection to the
arbitration agreement. 2
(ii) The choice of London as the arbitral seat is testimony to this conclusion. 3
B. Pursuant to Clause 27 of the Charterparty, the dispute between the parties
had to be referred to arbitration 3
(i) Any dispute arising regarding existence or termination of the contract
to be referred to arbitration 3
(ii)The Respondents seek to delay the proceedings of the Hon’ble Tribunal 4
C. The Respondents seeks to delay the proceedings of the Hon’ble Tribunal 5
ARGUMENTS ON THE MERITS OF THE CLAIM 5
II. THAT THE RESPONDENTS ARE LIABLE FOR THE BREACH OF THE
CONTRACT 5
A. That deviation from the most direct route resulted in breach of the charterparty 5
B.That the Respondents breached the customary duty of seaworthiness 7
(i) The Respondents breached the duty of seaworthiness and due diligence. 8
(ii) The Vessel did not conform to the recent technological developments 9
C.That a bailor- bailee relationship exists between the Claimant and the Respondents 10
D. That the commercial purpose of the charterparty was frustrated by the Respondents 11
TEAM 4 MEMORANDUM FOR CLAIMANT
III
III. THAT THE CLAIMANT IS ENTILTED TO HOLD MARITIME EQUITABLE
LIEN OVER MADAM DRAGONFLY 11
A. Claimant holds maritime lien over the vessel 11
(i) Breach of charter party 12
(ii)Supply of necessaries 12
B. Claimant holds equitable lien over the vessel 13
IV. THAT THE RESPONDENTSARE LIABLE TOPAY THE CLAIMED
DAMAGES 15
A. The delivery took place on 31st July, 2017 15
B.That the Respondents are liable to pay on account of the damaged cargo 16
(i)Breach of contract of carriage 16
(ii) Claimant suffered loss of profit 17
(iii) Breach of duty as Bailee of goods 17
(iv) Respondents are not entitled to limit its liability 18
C. That the Respondents are liable to pay the replacement coffee payment. 18
D. That the Respondents are liable to pay the settlement payment. 19
(i) The Respondents are liable as per the Biggin Principles 20
(ii)The Respondents are liable under the Civil Liability (Contribution) Act 1978. 21
ARGUMENTS ON THE MERITS OF COUNTER CLAIM 21
V. THAT THE CLAIMANT IS NOT LIABLE TO PAY THE DAMAGES
CLAIMED BY THE RESPONDENTS 21
A. That the Claimant is not liable to pay freight 22
B. That the Claimant is not liable to pay the repairs to hull 22
C. That the Claimant is not liable to pay for demurrage 22
D. That the Claimant is not liable to pay for electronic access systems used 23
E. That the Claimant is not liable to pay the agency fee 24
REQUEST FOR RELIEF 25
TEAM 4 MEMORANDUM FOR CLAIMANT
IV
ABBREVIATIONS
Claimant Cerulean Beans and Aromas Ltd.
Respondents Dynamic Shipping LLC
WWD Weather Working Days
S. Section
p. Page
Para. Paragraph
LMAA London Maritime Arbitration Association
USD US Dollars
NSW New South Wales
HVR Hague Visby Rules by Brussels Protocol, 1968
UNCTAD United Nations Conference on Trade and
Development
ICC International Chamber of Commerce
Charterparty The Voyage Charterparty between Claimant and
Respondents.
Hon’ble Honourable
TEAM 4 MEMORANDUM FOR CLAIMANT
V
LIST OF AUTHORITIES
A/S D/S Heimdal v Questier Co. Ltd. (1949) 82 Ll.L.Rep 452
Akts. De Danske Sukkerfabrikker v. Bajamar Cia. (The Torenia), [1983] 2 Lloyd’s Rep. 210, at p. 216.
Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50, 61
Antclizo Shipping Corp. v. Food Corporation of India (The Antclizo) (No. 2) [1992] 1 Lloyd’s Rep. 558,
564.
Antwerp United Diamond BVBA v Air Europe [1996] Q.B. 317
Asfar v Blundell [1896] 1 QB 123.
Attorney General of the Republic of Ghana v Texaco Overseas Tankships Ltd – “Texaco Melbourne”
(1993) 1 Lloyd‟s Rep 471 (CA)
Balian& Sons v Joly Victoria Co. (1890) 6 TLR 345.
Banco de Portugal v. Waterlow, [1932] AC 452.
Bank Line Ltd v Arthur Capel & Co [1919] AC 435, 455
Barge B.A. 1401. (Hampton Roads Carriers, Inc. v. Allied Chemical Corp.), 329 F2d. 387, 1964
A.M.C. 2458 (4th. Cir. 1964)
Behn v Burness (1862) 1 B & S 877.
Bergerco v Vegoil [1984] 1 Lloyd's Rep. 440.
Bibb Broom Corn Co. v. Atchinson
Biggin & Co v Permanite [1951] 2 K.B. 314.
Black Clawson International Ltd v PapierwerkeWaldhof-Aschaffenburg [1981] 2 Lloyd’s Rep 446.
Bonython v Commonwealth (1950) 81 CLR 486, 498
Boudoin v. J. Ray McDermott & Co. 176 F.Supp. 900 (1959)
British Shipowners v. Grimond (1876) 3 Rett. 968, 972.
British Westinghouse Electric and Manufacturing Company, Limited v Underground Electric Railways
Company of London, Limited [1912] AC 673 (“British Westinghouse Electric”) at 689.
British Westinghouse Electric Co Ltd v Underground Electric Rlys [1912] AC 673, 689.
Budgett& Co. v Binnington& Co. [1891] 1 QB 35, 38
TEAM 4 MEMORANDUM FOR CLAIMANT
VI
Bulkhaul v. RhodiaOrganique Fine Ltd [2009] 1 Lloyd’s Rep. 353.
Bunge SA v Nidera BV (formerly NideraHandelscompagnie BV), [2015] UKSC 43
C. Tennant Sons & Co. v. Norddeutscher Lloyd, 220 F. Supp. 448 (E.D. La. 1963)
Canada (the Farrandoc [1967] 1 Lloyd's Rep 232
CfContigroup Companies, Inc. v Glencore A.G. [2005] 1 Lloyd's Rep. 241.
Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd. (HL) [1993] 1 Lloyd’s Rep 291.
Chartered Bank v. British India S.N. Co. [1909] A.C. 369, 375.
Cia Portorafti Commerciale SA v Ultramar Panama Inc (1990) 1 Lloyd’s Rep 310, 316 (CA)
Circle Finance Company v. Jessie L. Peacock and Sara A. Peacock 399 So. 2d 81 (1981).
Clayton v Simmonds (1741) 1 Burr 343.
Coast Lines Ltd v Hudig&Veder Chartering NV [1972] 2 WLR 280 (‘Coast Lines’), 286 ,289.
Coldman v Hill [1919] 1 KB 443 (CA) at 454.
Compania de Navegacion Porto Ronco, S.A. v. S.S. Am. Oriole, 474 F. Supp. 22 (E.D. La. 1976).
CompaniaNaviera Aeolus SA v Union of India [1964] AC 868 at 899 (Lord Guest), cited by Lord
Diplock in Dias CompaniaNaviera SA v Louis Dreyfus Corporation [1978] 1 WLR 261 at 263.
Compania Sud Americana de Vapores S.A. v. Sinochem Tianjin Import and Export Corp (The
Aconcagua) [2010] 1 Lloyd’s Rep. 1, paras 376–379.
Comyn Ching & Co (London) v Oriental Tube Co Ltd (1981) 17 BLR 47
Cott UK Ltd v FE Barber Ltd(1997) 3 All ER 540.
Dakin v Oxley (1864) 143 ER 938 p 946.
Dallah Real Estate and Tourism Co v Ministry of Religious Affairs of the Government of Pakistan
[2011] 1 AC 763, 830
Davis v Garrett (1830) 6 Bing 716.
Davis -v. Garrett, (1830) 6 Bing 716
DGM Commodities Corp v Sea Metropolitan S.A. (The Andra) [2012] EWHC 1984 (Comm); [2012] 2
Lloyd’s Rep 587
Dominion Mosaics v. Trafalgar Trucking [1990] 2 All E.R. 246 at 248.
Duthie v Hilton (1868) LR 4 CP 138; Asfar v Blundell [1896] 1 QB 123
TEAM 4 MEMORANDUM FOR CLAIMANT
VII
East Ham Corp v Bernard Sunley& Sons Ltd [1966] AC 406
East West Corp v DKBS 1912 and AKTS Svendborg[2003] EWCA Civ 83, [2003] QB 1509 at [24].
Encyclopedia Britannica v. S.S. Hong Kong Producer, 422 F.2d 7, 16-17 (2nd Cir. 1969).
Fibrosa v Fairbairn [1943] AC 32.
Fisher v. Val de Travers (1876) 45 L. J. (C. P.) 479; 35 L. T. 366
Gatliffe v. Bourne(1838) 4 Bing. N.C. 314, (1841) 3 M. & G. 643, (1844) 7 M. & G. 850, 11 Cl. & F.
45.
General Feeds Inc. Panama V. SlobodnaPlovidba Yugoslavia [1999] 1 Lloyd's Rep. 688.
General Foods Corp. v. The Troubador, 98 F. Supp. 207, 210 (S.D.N.Y. 1951).
Gibaud v Great Eastern Railway Co. [1921] 2 KB 426.
Gilroy, Sons & Co v W R Price & Co [1893] AC 56, 63
Glencore International AG v MSC Mediterranean Shipping Co SA[2017] EWCA Civ 365.
Glory Wealth Shipping Pte. v. Korea Line Corp. (The Wren) [2011] 2 Lloyd’s Rep. 370
Glynn and Others v Margetson& Co and Others [1893] A.C. 351 (H.L.).
Glynn v Margetson [1893] AC 351, HL.
Golden v. Woodward 15 So.3d 664, 669
Grain Growers Export Co. v. Canada Steamship Lines Ltd. (1918) 43 O.L.R.(Ont. S.C.App. Div.),
upheld (1919) 59 S.C.R. 643 (Supr. C. of Can.)
Great China Metal Industries Co. Ltd. v Malaysian International Shipping Corp. Bhd (The
BungaSeroja) [1999] 1 Lloyd's Rep. 512.
Grebert-Borgnis v. Nugent (1885) 15 Q. B. D. 85
Hadley v Baxendale (1854) 9 Exch. 341.
Hain SS Co –v- Tate & Lyle [1936] 2 All ER 597.
Hammond & Co. v. Bussey (1887) 20 Q. B. D. 79
Hardesty v. Larchmont Yacht Club, 1983 AMC 1059, 1064 (S.D.N.Y. 1982)
Hart v. Allen, 2 Watts (Pa.) 114.
Herrington v British Railways Board (1971) 2 QB 107 (CA)
Heskell v Continental Express [1950] 1 All ER 1033.
TEAM 4 MEMORANDUM FOR CLAIMANT
VIII
Hewett v Court (1983) 149 CLR 639
Hollins v. Fowler, (1872) L.R. 7 Q.B. 616, 632; The Houda, [1994] 2 Lloyd’s Rep. 541; The Rigoletto,
[2000] 2 Lloyd’s Rep.
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7.
Horabin v British Overseas Airways Corp (1952) 2 Ll LR 450, 459.
Horne v Midland Railway Company (1873) LR 8 CP 131.
In Re Ropner [1927] 1 KB 879
James Morrison & Co., Limited v Shaw, Savill, and Albion Company, Limited [1916] 2 K.B. 783.
Joseph Thorley Ltd v Orchris Steamship Co Ltd [1907] 1 KB 660.
Kopitoff v Wilson (1876) 1 QBD 377, 380
Kossian v. American National Ins. Co., 254Cal. App. 2d647, 62Cal. Rptr.225 (1967). Leigh and Sillavan Limited v Aliakmon Shipping Company Limited 1986 AC 785
Lilley v Doubleday (1881) 7 QBD 510.
Schofield, 198 [4.18], 200 [4.26]
Longley, 44; The Ciprya, 137 F.2d 326, 1946 A.M.C 947 (2nd Cir)
Monarch Steamship Co Ltd v KarlshamnsOljefabriker [1949] AC 196 at p 220.
Lyon v Mells (1804) 5 East 428
Martin v. Southwark (1903), 191 U.S. 1, 24 S.Ct. 1, 48 L.Ed. 65.
Maxine Footwear Co. Ltd. V. Can. Government Merchant Marine [1959] A.C. 589, [1959] 2 Lloyd’s
Rep. 105 (P.C.)
McFadden v Blue Star Line [1905] 1 KB 697 (KBD) at 700.
MDC Ltd. v. NV ZeevaartMaatschapijBeursstraat[1962] 1 Lloyd’s Rep. 180,at 186.
Mediterranean Freight Services Ltd. v BP Oil International Ltd (The Fiona) [1993] 1 Lloyd's Rep. 257,
[1994] 2 Lloyd's Rep. 506
Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366, 369.
Meredith Jones v. Vangemar Shipping (The Apostolis) (No. 2) [1999] 2 Lloyd’s Rep.
Millen v Brasch& Co. (1882-83) L.R. 10 Q.B.D. 142
Morris v CW Martin & Sons [1966] 1 QB 716, 726.
TEAM 4 MEMORANDUM FOR CLAIMANT
IX
Morrison v Peacock &Roslyndale Shipping Co Pty Ltd (2000) NSWCCA 452 (QL),[70]-[76]
Nabob Foods Ltd v Cape Corso [1954] 2 Lloyd's Rep 40)
Nissho v Livanos (1941) 69 Ll.L.Rep 125
Obestain Inc. v. National Mineral Development Corp. (The Sanix Ace) [1987] 1 Lloyd’s Rep. 465
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197, 217.
Otis Mcallister& Co v Skibs-A/S Marie Bakke [1959] 2 Lloyd's Rep 210)
Pacific Interlink SdnBhd v Owner of the Asia Star [2009] 2 Lloyd's Rep 387
Packard v. Taylor, 35 Ark. 402, 37; New Brunswick Steamboat, etc., Transp. Co. v. Tiers, 24 N. J. L.
697
Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd &Ors (1993) 43 FCR 439, 444.
Robinson v Harman (1848) 1 Ex 850 at p 855
QH Tours Ltd v Ship Design and Management (Aust) Pty Ltd (1991) 105 ALR 371, 384
R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 500, 529
Re United Railways of Havana and Regla Warehouses Ltd [1961] AC 1007, 1021
Reardon Smith Line v Black Sea and Baltic General Insurance (1939) AC 562 (HL).
Rodocanachi v Milburn (1886) 18 QBD 67, 78
Rothwells Ltd (in liq) v Connell (1993) 27 ATR 137, 143.
Royal Brompton Hospital NHS Trust v Hammond (No.1) [1999] B.L.R. 162.
Royal Brompton Hospital NHS Trust v Hammond [2002] 1 WLR 1397; Aer Lingus v. Gildacroft [2005]
EWHC 1556 (QB)
Sanborn, 7; Anderson, III, chap 6.
Saw-Mill Co Ltd v Nettleship 105 (1868) LR 3 CP 499
Scaramanga& Co v Stamp (1880) 5 C.P.D. 295.
Select Commodities Ltd v Valdo SA (The Florida) [2006] EWHC 1137 (Comm),[2007] 1 Lloyd’s Rep 1.
Sellers Fabrics Pty Ltd v Hapag- Lloyd AG [1998] NSWSC 646
Sevylor Shipping and Trading Corp v Altfadul Co for Foods, Fruits and Livestock [2018] EWHC 629
(Comm)
Shawinigan Ltd v Vokins& Co Ltd (1961) 3 All ER 396, 403 (QB)
TEAM 4 MEMORANDUM FOR CLAIMANT
X
Shearson Lehman Hutton Inc. v. Maclaine Watson & Co. Ltd (No. 2) [1990] 1 Lloyd’s Rep. 441
Shoe Co. v. Chicago [1905] 102 N. W. 709.
Simpson & Co. v. Thomson [1877] 3 Appeal Cases 279.
Smithers v Lokys (2001) 108 FCR 303 (WL), [15] (FCA);
St Vincent Shipping Co Ltd v Bock, Godeffroy& Co (The Helen Miller) [1980] 2 Lloyd’s Rep 95.
Steel v State Line Steamship Co (1877) 3 App Cas 72, 77, 84, 88
Stolt Tankers v Landmark Chemicals [2002] 1 Lloyd’s Rep 786
Sul America Cia Nacional De Seguros SA v EnesaEngenharia SA [2012] EWCA Civ 638.
Sze Hai Tong Bank v Rambler Cycle Co [1959] AC 576; The Houda [1994] 2 Lloyd's Rep 541.
T.A. Shipping v. Comet Shipping (The Agamemnon) [1998] 1 Lloyd’s Rep. 675.
T.J. Hooper Eastern Transp. Co. New England Coal & Coke Co. V. Northern Barge Corporation.
Hartwell & Son, Inc. 53 F.2d 107, 1931 A.M.C. 1764 (D.C.N.Y. 1931).
The Albazero [1977] Appeal Cases 774.
The Anastasia, 11 F. Supp. 314, 1935 A.M.C. 579(E.D.Va.).
The Aramis [1989] 1 Lloyd’s Rep 213
The Assunzione [1954] 2 WLR 234 (‘Assunzione’), 261
The Athenian Harmony [1998] 2 Lloyd’s Rep 410
R&W Paul Ltd v National Steamship Co Ltd (1937) 59 Ll L Rep 28.
The Baleares [1993] 1 Lloyd's Rep. 215 (C.A.)
The Bethulia , 200 F. 876 (D. Mass. 1912)
The British Columbia and Saw-Mill Co v Nettleship (1867-68) L.R. 3 C.P. 499.
The Caspian Sea [1980] 1 Lloyd’s Rep 91.
The Edwin I. Morrison, 153 U.S. 199, 215, 14 S. Ct. 823, 38 L.Ed. 688 (1894)
The Esso Providence, 112 F. Supp.631, 1953 A.M.C. 1317 (S.D.N.Y.).
The Eurasian Dream [2002] 1 Lloyd’s Rep. 719.
The Fontevivo [1975] 1 Lloyd’s Rep 339.
The Glenville, 1962 A.M.C. 2311 (S.D. Tex.)
The Gonzenheim, 36 F.2d 869, 1930 A.M.C. 122 (5th Cir)
TEAM 4 MEMORANDUM FOR CLAIMANT
XI
The John Michalos [1987] 2 Ll. Rep. 188
The Kapitan Sakharov [2000] 2 Lloyd’s Rep.255.
The Kriti Rex [1996] 2 Lloyd’s Rep 171, 194.
The LendoudisEvangelos[2001] 2 Lloyd’s Rep. 304.
The Maria, 15 F. Supp. 745, 1936 A.M.C. 1314(S.D.N.Y.)
The Maria, 91F.2d 819, 1937 A.M.C. 934 (4th. Cir.)
The Mary Lou [1981] 2 Lloyd’s Rep 272
The Mass Glory [2002] 2 Lloyd’s Rep 244.
The Nanfri [1979] AC 757.
The Oceano , 148 F. 131, 133 (S.D.N.Y. 1906).
The Pennsylvania (1873) 86 U.S. 125, 1998 A.M.C. 1506, 22 L.Ed. 148, 19 Wall. 125 (1873).
The Roseina, 1937 A.M.C. 359 (S.D.N.Y.)
The Schooner Freeman v. Buckingham, U.S. 182, 190 (1856).
The Silverway, 15 F.2d 648, 1926A.M.C. 1645 (5th Cir.)
The Silvia (1898) 19 S Ct 7, 8; Abbott (n 18) 180.
The Thomas Cook Group Ltd v Air Malta Co Ltd (1997) 2 Lloyd’s Rep 399, 408
The Union Amsterdam [1982] 2 Lloyd’s Rep 432
The W.W. Bruce, 94 F.2d 834, 1938 A.M.C. 232 (2d Cir.)
The Welsh Endeavour [1984] 1 Lloyd’s Rep 400.
The Winkfield (1900-3) All ER Rep 346
TheSouthwark 191 U.S. 1, 15, 24 S.Ct. 1, 48 L.Ed. 65 (1903)
Thyssen, Inc. v. S/S Eurounity, 21 F.3d 533, 1994 AMC 1638 (2d Cir. 1994)
Transfield Shipping Inc of Panama v Mercator Shipping Inc of Monrovia [2006] EWHC 3030 (Comm).
Transgrain Shipping v. Global TransporteOceanico (The Mexico I) [1990] 1 Lloyd’s Rep. 507
Trinidad Shipping Co. v. Frame Alston Co. 88 Fed. 528 (S.D.N.Y.1898)
U.S. v. Ultramar Shipping Co., Inc. 685 F. Supp. 887 (S.D.N.Y. 1988).
United States v. The Barge CBC 603, 233 F. Supp. p.85, 87-88.
TEAM 4 MEMORANDUM FOR CLAIMANT
XII
Virginia Carolina Chemical Co v Norfolk and North American Steam Shipping Co [1912] 1 KB 229,
243- 244.
Wehner v. Dene [1905] 2 K.B. 92, 99;
Williams Brothers v Agius Ltd [1914] A.C. 510, (H.L.)
Woodger v The Great Western Railway Company (1866-67) L.R. 2 C.P. 318
XL Insurance Ltd v Owens Corning [2000] 2 Lloyd’s Rep 500.
Zodiac Maritime Agencies v. Fortescue Metals Group Ltd (The Kildare) [2011] 2 Lloyd’s Rep. 360,
para. 56
BOOKS& JOURNALS REFERRED
A Treatise on the Jurisdiction and Practice of the English Courts in Admiralty Actions and Appeals ,
Gainsford Bruce, Esq, Q.C.
Arnaldez, Jean-Jacques et. Al (2003) Collection of ICC Arbitral Awards 1996-2000, Kluwer Law
International.
B. A. Garner and H. C. Black, Black's law dictionary, 9th edn.
Baughen, S (1991), Does Deviation Still Mater?Lloyd‟s Maritime and Commercial Law Quarterly.
Bernard Eder and others, (2015) Scrutton on Charterparties and Bills of Lading, 23rd edn, Sweet &
Maxwell.
Cooke on Voyage Charters, 4th ed (2014).
David Chong Gek Sian, ‘Revisiting the Safe Port’, (1992) Singapore Journal of Legal Studies.
Dockray, Cases and Materials on the Carriage of Goods by Sea, 3rd ed (2004), Cavendish.
Dyala Jimenez-Figueres, Multi-Tiered Dispute Resolution Clauses in ICC Arbitration, 14 ICC Bull. 71
(No. 1, 2003).
Fan Wei, Measurement of Damages in Carriage of Goods by Sea, 2008.
Fouchard, Gaillard, Goldman (1999) On International Commercial Arbitration, Kluwer Law
International.
Gary Born (2014) International Commercial Arbitration, Kluwer Law International, 2nd ed.
Harvey McGregor, McGregor on Damages (Thomson Reuters (Legal) Limited, 18th Ed, 2009).
John F.Wilson, Carriage of Goods by Sea.
TEAM 4 MEMORANDUM FOR CLAIMANT
XIII
Kent's Com. (13th ed.).
Lindey D. Clark, Law of Employment of Labour.
Longley, H.N (1967), Common Carriage of Cargo.
Paul S. Edelman & James E. Mercante, Of Hurricanes, Acts of God and Admiralty Jurisdiction, N. Y.
L. J., Oct. 28, 2005.
Redfern and Hunter (2015) International Arbitration, Oxford University Press, 6th ed.
Robert Force & A.N. Yiannopoulos, 2 Admiralty and Maritime Law 2-1 (2001).
Shipbroking and Chartering Practice (2004; LLP) p. 243.
Tetley, Interpretation and Construction.
Tetley, Marine Cargo Claims, Vol. 1.
Tulane Maritime Law Journal, 12 Tul. Mar. L.J. (1987).
Varady, Tibor, et.al (2012): International Commercial Arbitration, a Transnational Perspective, Fifth
Edition, American Casebooks.
STATUTES AND COVENTIONS
Arbitration Act, 1996 (UK)
Civil Liability (Contribution) Act 1978.
Hague-Visby Rules by the Brussels Protocol, 1968.
International Convention for the Safety of Life at Sea, 1974.
International Safety Management Code
United Nations Conference on Trade and Development, 1964.
UNCITRAL Model Law on International Commercial Arbitration, 1985
TEAM 4 MEMORANDUM FOR CLAIMANT
1
SUMMARY OF THE FACTS
I. AGREEMENT BETWEEN PARTIES
Cerulean Beans, serving as the Charterers and Dynamic Shipping, owner of the vessel named Madam
Dragonfly had entered into a voyage charterparty, dated 22 July, 2017 for the shipment of cargo entailing
high quality coffee beans. The shipment had to be delivered by 7 pm on 28 July, 2017 at Port Dillamond by
the most direct route, as there was a parallel contract running between the Charterer and a third party,
Coffees of the World.
II. PERFORMANCE OF THE CONTRACT
Madam Dragonfly deviated to Port Spectre during the voyage due to the hampering of the communication
and navigational systems for a period of 17 hours owing to the solar flares which the vessel was struck with.
Once the communication system was back on track, they started the journey towards Dillamond, however a
storm rolled in which led to the closure of the Ports for 12 hours.Before the arrival of the vessel at the port,
the Owners had mandated that they would deliver the goods via a barcode access if the Charterer is unable
to collect the same. After the arrival of the ship at the port on 29 July 2017, the goods were ready for
delivery by 8:42 pm the same day. Due to congestion on the port, agents of the Charterers were unable to
collect the goods until 31 July 2017, 3/4th of which were found to be damaged.
III. MARITIME EQUITABLE LIEN ON THE VESSEL
On 22 July 2017, the Charterer paid the amount of USD100,000 on account of wages which would become
payable to the crew of the Madam Dragonfly following the voyage into a special Bank account of the
Respondents established for that purpose. The Respondents did not pay the crew of the Madam Dragonfly
wages due for the voyage and has not repaid the US$100,000 to the Charterer, pursuant to which the
Charterer kept a maritime equitable lien on the vessel.
IV. DAMAGES CLAIMED BY BOTH THE PARTIES
Owing to such circumstances the Charterers referred the case to arbitration and both sides submit their
points of claim. The Charterer claims damages in the amount of USD30,200,000 while owner claims
damages in amount of USD 1,160,000.
TEAM 4 MEMORANDUM FOR CLAIMANT
2
ARGUMENTS ON JURISDICTION
I. THAT THE TRIBUNAL HAS JURISDICTION TO DETERMINE THE CLAIMS MADE BY THE
CLAIMANT
1. It is submitted that under the doctrine of competence-competence,1 the Tribunal has power to determine its
own jurisdiction2 by construing the arbitration agreement according to its governing law.3 The English law
governs the arbitration agreement (A). Pursuant to Clause 27 of the Charterparty, the dispute between the
parties had to be referred to arbitration (B). The Respondents seeks to delay the proceedings of the Hon’ble
Tribunal (C).
A. The English law governs the arbitration agreement.
2. The Parties have not expressly chosen a governing law for the arbitration agreement. In the absence of such
a choice, the system of law with the “closest and most real connection” to the arbitration agreement governs
that agreement.4
(i) The English law has the closest and most real connection to the arbitration agreement.
3. Both the Claimant and the Respondents, are based in Cerulean5which has adopted the laws of the United
Kingdom.6 Therefore, four additional factors indicate that the English law has the closest and most real
connection to the arbitration agreement. First, both Parties are located in states that apply the English law.7
Second, both Parties executed their counterparts of the Charterparty in states that apply English law.8 Third,
the subject matter9 of the arbitration agreement is “disputes arising under the Charterparty”, which is an
agreement for the voyage of a ship bound by English law. Fourth, the arbitration is regulated by LMAA,
1Fouchard, Gaillard, Goldman (1999) On International Commercial Arbitration, Kluwer Law International, p. 213. 2Redfern and Hunter (2015) International Arbitration, Oxford University Press, 6th ed., p.322, 345; QH Tours Ltd v Ship Design and Management (Aust) Pty Ltd (1991) 105 ALR 371, 384; Dallah Real Estate and Tourism Co v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763, 830; UNCITRAL Model Law on International Commercial Arbitration, Article 16(1). 3Gary Born (2014) International Commercial Arbitration, Kluwer Law International, 2nd ed., p.1405-6; Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd &Ors (1993) 43 FCR 439, 444. 4Bonython v Commonwealth (1950) 81 CLR 486, 498; Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50, 61; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197, 217. 5Procedural Order No. 2, Clause 1. 6Moot Scenario, 45. 7Rothwells Ltd (in liq) v Connell (1993) 27 ATR 137, 143. 8R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 500, 529; Re United Railways of Havana and Regla Warehouses Ltd [1961] AC 1007, 1021; Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366, 369. 9R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 500, 529; The Assunzione [1954] 2 WLR 234 (‘Assunzione’), 261; Coast Lines Ltd v Hudig&Veder Chartering NV [1972] 2 WLR 280 (‘Coast Lines’), 286 ,289.
TEAM 4 MEMORANDUM FOR CLAIMANT
3
which is an English set of institutional rules10 and involved preliminary activities such as appointing
arbitrators and exchanging points of claim, which took place in states that apply English law.
(ii) The choice of London as the arbitral seat is testimony to this conclusion.
4. Following the doctrine of separability established under S.7 of the Arbitration Act,11 it does not necessarily
follow that the law governing the main Charterparty should also govern the arbitration clause. The Court of
Appeal held in Sul America v EnesaEngenharia12 that “in principle the proper law of an arbitration
agreement which itself formed part of a substantive contract13 might differ from that of the contract as a
whole”.14 Indeed, the Court of Appeal held that the place chosen for the arbitration proceedings, and the
consequential lexarbitri, was an “important factor” which (where London was the ‘seat’) “tended to suggest
that the parties intended English law15 to govern all aspects of the arbitration agreement.”
5. It would be rare for the law of the arbitration agreement to be different from the law of the seat of the
arbitration.16 The reason is that an agreement to arbitrate will normally have a closer and more real
connection with the place where the parties have chosen to arbitrate17 than with the place of the law of the
underlying contract in cases where the parties have deliberately chosen to arbitrate in one place, disputes
which have arisen under a contract governed by the law of another place.18 Thus it is submitted that the
arbitration agreement is to be governed by the English law.
B. Pursuant to Clause 27 of the Charterparty, the dispute between the parties had to be referred to
arbitration
6. A perusal of Clause 27 of the Charterparty, as a whole makes it abundantly clear that the dispute between
the parties had to be referred to the jurisdiction of this Hon’ble Tribunal.
(i) Any dispute arising regarding existence or termination of the contract to be referred to arbitration
10Moot Scenario, 12. 11Section 7, Arbitration Act, 1996 (UK). 12Sul America Cia Nacional De Seguros SA v EnesaEngenharia SA [2012] EWCA Civ 638. 13Ibid, p. 679. 14Supra 11,p. 672. 15XL Insurance Ltd v Owens Corning [2000] 2 Lloyd’s Rep 500. 16Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd. (HL) [1993] 1 Lloyd’s Rep 291. 17Black Clawson International Ltd v PapierwerkeWaldhof-Aschaffenburg [1981] 2 Lloyd’s Rep 446. 18Ibid.
TEAM 4 MEMORANDUM FOR CLAIMANT
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7. A perusal of Clause 27(a) of the Record makes it evidently clear that the dispute between the parties
involved a question regarding the existence, validity or termination of the contract, therefore has to be
referred to the jurisdiction of this Hon’ble Tribunal.
8. Four additional factors indicate that there was an evident question pertaining to the breach of the contract by
the Respondents. First, the vessel’s route being the commercial purpose of a voyage charterparty,19Madam
Dragonfly had deviated from the prescribed route in the instant case.20 Second, the Respondents had the duty
to deliver a seaworthy ship,21 however the Respondents were negligent in not securing up-to date
technological communication and radio systems22 leading to humongous loss for the Claimant. Third, the
Respondents also had the duty of due diligence in using the most recent technological developments,23 yet
that too was breached. Fourth, ultimately, the Respondents delivered the goods at 1:55 pm on 31 July,
2017,24 two days after the agreed date.
9. These factors prove that the dispute between the parties had necessarily raised the question pertaining to the
existence, breach of the charterparty and in no way can the dispute be referred to as arising out of a technical
matter to be referred to the jurisdiction of a Master Mariner, as the claim is inapt for determination by an
expert; and thus, mandatorily needs to be referred to arbitration before the Hon’ble Tribunal.25
(ii) Pursuant to Clause 27(e) of the Record, the dispute could have been referred to arbitration
10.Even if the Respondents’ claim is to be considered pursuant to Clause 27(d) of the Record, Clause 27(e) has
to be read alongside it.
11.The word “may” indicates that the pre-arbitration mechanisms in the multi-tiered clause leading to
arbitration are non-mandatory26 so the Claimant has the right to submit the dispute directly to arbitration
19Baughen, S (1991), “Does Deviation Still Mater?”, Lloyd‟s Maritime and Commercial Law Quarterly, pt 1, 70-96; Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7. 20Moot Scenario, 18. 21Kopitoff v Wilson (1876) 1 QBD 377, 380; Steel v State Line Steamship Co (1877) 3 App Cas 72; Gilroy, Sons & Co v W R Price & Co [1893] AC 56, 63; Virginia Carolina Chemical Co v Norfolk and North American Steam Shipping Co [1912] 1 KB 229, 243- 244. 22Moot Scenario, 35. 23T.J. Hooper Eastern Transp. Co. New England Coal & Coke Co. V. Northern Barge Corporation. Hartwell & Son, Inc. 53 F.2d 107, 1931 A.M.C. 1764 (D.C.N.Y. 1931). 24Moot Scenario, 37. 25Cott UK Ltd v FE Barber Ltd(1997) 3 All ER 540. 26Dyala Jimenez-Figueres, Multi-Tiered Dispute Resolution Clauses in ICC Arbitration, 14 ICC Bull. 71 (No. 1, 2003), pp. 87-88.
TEAM 4 MEMORANDUM FOR CLAIMANT
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without using all the pre-arbitration mechanisms stipulated in the multi-tiered clause leading to arbitration,27
as it is only the Claimant’s right but notobligation.28
12.In the instant case, Clause 27(e) of the Record also uses the word “may” which indicates that the Claimant
was under no obligation of submitting the dispute to the Master Mariner and the Claimant had the right to
directly approach the jurisdiction of the Arbitral Tribunal, hence the claim.
C. The Respondents seeks to delay the proceedings of the Hon’ble Tribunal
13. Even if the plea of the Respondents, in reference with referring the matter to the Master Mariner, is
considered, the Tribunal had already appointed an expert specializing in maritime engineering29, the report
of whom has already been admitted by the Tribunal.30 Once the expert has been appointed and the report of
whom has been accepted by the Tribunal, it becomes evidently clear that the motive of the Respondents is to
delay the proceedings of the Tribunal and to protract the adjudication of the dispute.31 Such behaviour is
unbecoming of the Respondents, of which a strict view ought to be taken against the Respondents by this
Tribunal.
14.Thus, it is pleaded by the Claimant that this dispute falls within the jurisdiction of the Arbitral Tribunal and
it remains obligatory for the Tribunal to pass such an award.
ARGUMENTS ON THE MERITS OF THE CLAIM
II. THAT THE RESPONDENTS ARE LIABLE FOR THE BREACH OF THE CONTRACT
15.The Claimant submits that, Respondents are liable for the breach of charterparty due to deviation (A),
unseaworthiness (B), breach of duty of bailee (C), frustration of commercial purpose (D).
(A) That deviation from the most direct route resulted in breach of the charterparty
16.It is submitted that there is an implied undertaking on the part of a carrier or ship owner that there will be no
voluntary32 or unjustified departure by a vessel33 from its “proper course.”34The carrier had a legal
27Varady, Tibor, et.al: International Commercial Arbitration, a Transnational Perspective, Fifth Edition, 2012, American Casebooks, p. 14. 28Supra 25. 29Moot Scenario, 43. 30Moot Scenario, 45. 31Arnaldez, Jean-Jacques et. Al Collection of ICC Arbitral Awards 1996-2000, Kluwer Law International 2003, p. 331. 32Scaramanga& Co v Stamp(1880) 5 C.P.D. 295. 33Clayton v Simmonds (1741) 1 Burr 343.
TEAM 4 MEMORANDUM FOR CLAIMANT
6
obligation to carry the goods by the usual and customary route35 or to take the safe and direct geographical
route to the destination.36
17.Once there has been a deviation the ship owner is reduced to the status of a common carrier37 and thus the
only defences that remain are Act of God, Act of the King’s enemies, inherent vice and of course fault of the
consignor. Nevertheless, even these common law defences will be lost if the damage or loss occurred during
an unjustified deviation.38
18.Thus, in the instant case, it had been expressly mandated by the Claimant via mail propositions,39 to take the
“most direct geographical route possible” as the delivery was an urgent one and could not be subject to any
kind of delays.
19.Pursuant to the email confirmations, the goods had to be delivered latest by Friday, 28.07.2017 by 7:00 pm
which was in-turn confirmed by the Respondents. However, despite repeated instructions, the Respondents
deviated to the Port Spectre, claiming hampering of the communication and navigational systems, owing to
the usual and the foreseeable solar flares leading to delay in delivery.
20.Lord Atkin has expressly stated that “The true view is that the departure from the voyage contracted to be
made is a breach by the ship owner of the contract, a breach of such a serious character that, however slight
the deviation40, the other party to the contract is entitled to treat it as going to the root of the contract,41 and
to declare himself as no longer bound42 by any of the contract terms." 43
21.It is further submitted that “if you undertake to do a thing in a certain way, or to keep a thing in a certain
place, with certain conditions protecting it, and have broken the contract by not doing the thing contracted
for in the way contracted for44, you cannot rely on the conditions which were only intended to protect you if
you carried out the contract45 in the way which you had contracted to do it”.46
34Bergerco v Vegoil[1984] 1 Lloyd's Rep. 440. 35Davis v Garrett(1830) 6 Bing 716. 36Reardon Smith Line v Black Sea and Baltic General Insurance (1939) AC 562 (HL). 37Balian& Sons v Joly Victoria Co. (1890) 6 TLR 345. 38James Morrison & Co., Limited v Shaw, Savill, and Albion Company, Limited [1916] 2 K.B. 783. 39Moot Scenario, 2. 40John F.Wilson, Carriage of Goods by Sea p. 20-21. 41Longley H.N (1967), Common Carriage of Cargo at p.118; Tetley, Marine Cargo Claims, Vol. 1, 1839; Encyclopedia Britannica v. S.S. Hong Kong Producer, 422 F.2d 7, 16-17 (2nd Cir. 1969). 42Joseph Thorley Ltd v Orchris Steamship Co Ltd [1907] 1 KB 660. 43Hain SS Co –v- Tate & Lyle [1936] 2 All ER 597. 44Gibaud v Great Eastern Railway Co.[1921] 2 KB 426. 45Bernard Eder and others, (2015) Scrutton on Charterparties and Bills of Lading ; 23rd edn, Sweet & Maxwell; Lilley v Doubleday (1881) 7 QBD 510.
TEAM 4 MEMORANDUM FOR CLAIMANT
7
22.In voyage charterparties the stipulated route forms part of the subject matter of the contract of carriage.47 For
this reason any unlawful deviation will render the contract of carriage a fundamentally different thing from
what the parties had either agreed or contemplated.
23.It is further submitted that if a cargo is injured by a storm at sea, during a deviation, it has been maintained
that the deviation is a sufficiently proximate cause of the loss48 to enable the freighter to recover.49That a
carrier by water is not excused from liability50 from loss by an act of God51 operating upon an unseaworthy
vessel, nor would it avail him to show that the same loss might have occurred had the vessel been staunch
and sound.52
24.Owing to the above contentions and well settled law, it is evident that the Respondents have wrongly
claimed the defence of Force Majeure clauses as neither the storm, owing to the presence of the states in an
area with similar weather conditions to the Mediterranean area53, and solar flares were unforeseeable54 and
not preventable by reasonable, upgraded and back up technological measures.55 That thus the Respondents’
defence of Force Majeure stands negated.
25.Without prejudice to the above submissions, the Respondents deviation and stay at the Port Spectre was a
prolonged stay56, as even after the communication systems had restarted, the vessel remained at the Port for
an excessively long period of time. That the devious behaviour of the Respondents corresponds to a
repudiatory breach57 or an intentional breach of the charterparty.
26.That pursuant to the above-mentioned rulings, the Respondents are and should be held liable for a breach of
the voyage charterparty.
(B)That the Respondents breached the customary duty of seaworthiness
46Ibid. p. 435. 47Baughen, S (1991), “Does Deviation Still Mater?”, Lloyd‟s Maritime and Commercial Law Quarterly, part 1, 70-96; Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7. 48Thyssen, Inc. v. S/S Eurounity, 21 F.3d 533, 1994 AMC 1638 (2d Cir. 1994); United States v. The Barge CBC 603, 233 F. Supp. p.85, 87-88. 49Davis -v. Garrett, (1830) 6 Bing 716; Kent's Com. (13th ed.) p. 210. 50Bibb Broom Corn Co. v. Atchinson and Shoe Co. v. Chicago [1905] 102 N. W. 709. 51Hardesty v. Larchmont Yacht Club, 1983 AMC 1059, 1064 (S.D.N.Y. 1982); Compania de Navegacion Porto Ronco, S.A. v. S.S. Am. Oriole, 474 F. Supp. 22 (E.D. La. 1976). 52Packard v. Taylor, 35 Ark. 402, 37; New Brunswick Steamboat, etc., Transp. Co. v. Tiers, 24 N. J. L. 697; Hart v. Allen, 2 Watts (Pa.) 114. 53Procedural Order No. 2, Clause 2. 54Moot Scenario, 35. 55Moot Scenario, 35. 56Moot Scenario, 18,19. 57The Nanfri [1979] AC 757.
TEAM 4 MEMORANDUM FOR CLAIMANT
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27.It is submitted that the Respondents have evidently breached the customary duty of a shipowners. (i)The
Respondents breached the duty of seaworthiness and due diligence. (ii)The Vessel did not conform to the
recent technological development.
(i) The Respondents breached the duty of seaworthiness and due diligence
28.The accepted definition of seaworthiness is that the shipowner’s vessel should be ‘strong and staunch’58or
‘tight and fit’59 and must be ‘fit to meet and undergo the perils of sea and other incidental risks to which of
necessity she must be exposed in the course of a voyage’.60 This, thus corresponds to a situation of absolute
warranty61 which the Respondents breached by using old/faulty equipment.
29.The shipowner or carrier when preparing the vessel for voyage must consider the normal perils and
vicissitudes he may encounter62 during the sea adventure.63In the present case, the solar flares were very
much predictable, pursuant to the news headline “The Solar Flares Continue” which was published on
18.07.2017.64The voyage was undertaken on 24.07.2017, proposing to the fact that the Respondentsshould
have considered the warnings and rectified the faulty navigational equipment and upgraded it.
30.Article III, rule 1 of the HVR65 is an overriding obligation. In event of its non-fulfilment the immunities of
Articles IV cannot be relied on. This is the natural construction apart from the opening words of Article III,
Rule 2. The fact that that rule is made subject to the provisions of Article IV (1) makes the Claimant’s point
clear beyond argument.66
31.In the instant case, the Respondents have breached their duty of providing a seaworthy ship which was
incumbent upon them. This can be evidenced by the fact that the navigational equipment installed were
58Behn v Burness (1862) 1 B & S 877. 59Lyon v Mells (1804) 5 East 428; The Silvia (1898) 19 S Ct 7, 8; Abbott (n 18) 180. 60Kopitoff v Wilson (1876) 1 QBD 377, 380; Steel v State Line Steamship Co (1877) 3 App Cas 72, 77, 84, 88; Gilroy, Sons & Co v W R Price & Co [1893] AC 56, 63; Virginia Carolina Chemical Co v Norfolk and North American Steam Shipping Co [1912] 1 KB 229, 243- 244. 61McFadden v Blue Star Line [1905] 1 KB 697 (KBD) at 700. 62Boudoin v. J. Ray McDermott & Co. 176 F.Supp. 900 (1959); Paul S. Edelman & James E. Mercante, Of Hurricanes, Acts of God and Admiralty Jurisdiction, N. Y. L. J., Oct. 28, 2005, at p. 3. 63Longley, 44; The Ciprya, 137 F.2d 326, 1946 A.M.C 947 (2nd Cir); The Gonzenheim, 36 F.2d 869, 1930 A.M.C. 122 (5th Cir); Barge B.A. 1401. (Hampton Roads Carriers, Inc. v. Allied Chemical Corp.), 329 F2d. 387, 1964 A.M.C. 2458 (4th. Cir. 1964); The Roseina, 1937 A.M.C. 359 (S.D.N.Y.); The Anastasia, 11 F. Supp. 314, 1935 A.M.C. 579(E.D.Va.). 64Moot Scenario, 35. 65Hague Visby Rules by Brussels Protocol, 1968. 66Maxine Footwear Co. Ltd. V. Can. Government Merchant Marine [1959] A.C. 589, [1959] 2 Lloyd’s Rep. 105 (P.C.).; Mediterranean Freight Services Ltd. v BP Oil International Ltd (The Fiona) [1993] 1 Lloyd's Rep. 257, [1994] 2 Lloyd's Rep. 506; Great China Metal Industries Co. Ltd. v Malaysian International Shipping Corp. Bhd (The BungaSeroja) [1999] 1 Lloyd's Rep. 512.
TEAM 4 MEMORANDUM FOR CLAIMANT
9
old/faulty, which in turn led to them being affected by the predictable solar flares which thereto resulted in
deviation of the ship. Thus, the Respondents have breached their duty of seaworthiness.
32.The objective conditions of every ship to navigate properly and safely, and its capability to confront the
navigational risks and perils of the sea67 have been set by the statutory regulations in order to assure a
minimum of ship’s safety:
A) SOLAS 1974:68 That as per Regulation 19.2.1 of the Convention the mandatory shipborne navigational
equipment entails nautical charts and nautical publications to plan and display the ship’s route and their
specific back-up arrangements.
B) ISM Code: That as per Rule 10.3 of the said Code, specific measures aimed at promoting the reliability of
technical systems, doubled with regular testing of stand-by arrangements, should be undertaken.69
33.It is submitted that the Respondents were in absolute breach of the said statutory regulations70as, in spite of
being aware of the usual solar flares approaching, the Respondents did not attempt to upgrade the
communication and the navigational systems. Further, the Respondents lacked physical navigational charts
to the Port of Dillamond, which is a basic requirement while travelling on a voyage. That owing to the above
circumstances, the Respondents are liable for providing an unseaworthy ship for the voyage.
(ii)That the Vessel did not conform to the recent technological developments
34.Courts have raised the standard of care by installation of modern navigation equipment on board the vessel,
such as radio communications, as part of the obligation of practicing due diligence71 in making the ship
seaworthy.72 That proper equipment allowing the ship to navigate safely is doubtlessly a very important part
of its seaworthiness.73 That “charts, light lists, pilot books, list of radio beacons74and similar navigation data
are essential equipment for the safe navigation of a ship, that she is unseaworthy without them, and it is the
duty of her owner to supply them.”75
67Sanborn, 7; Anderson, III, chap 6. 68International Convention for the Safety of Life at Sea, 1974, Regulation 19.2. 69 International Safety Management Code, Rule 10.3. 70The Pennsylvania (1873) 86 U.S. 125, 1998 A.M.C. 1506, 22 L.Ed. 148, 19 Wall. 125 (1873). 71The LendoudisEvangelos[2001] 2 Lloyd’s Rep. 304. 72Tetley, Interpretation and Construction, p. 63-64. 73Longley, H.N (1967), Common Carriage of Cargo at p.50. 74Longley, H.N (1967), Common Carriage of Cargo at p.50, The W.W. Bruce, 94 F.2d 834, 1938 A.M.C. 232 (2d Cir.); The Maria, 91F.2d 819, 1937 A.M.C. 934 (4th. Cir.); The Maria, 15 F. Supp. 745, 1936 A.M.C. 1314(S.D.N.Y.); Trinidad Shipping Co. v. Frame Alston Co. 88 Fed. 528 (S.D.N.Y.1898); The Glenville, 1962 A.M.C. 2311 (S.D. Tex.); The Silverway, 15 F.2d 648, 1926A.M.C. 1645 (5th Cir.); U.S. v. Ultramar Shipping Co., Inc. 685 F. Supp. 887 (S.D.N.Y. 1988). 75MDC Ltd. v. NV ZeevaartMaatschapijBeursstraat[1962] 1 Lloyd’s Rep. 180,at 186.
TEAM 4 MEMORANDUM FOR CLAIMANT
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35.That ‘it can never be settled by positive rules of law how far this obligation of seaworthiness extends in any
particular case, for the reason that improvement and changes in the means and modes of navigation
frequently require new improvements, or new forms of old ones;76 and these though not necessary at first,
become so when there is an established usage that all ships of a certain quality, shall have them.’77
36.It is submitted that the Respondents used a ship for the voyage which lacked the recent technological
developments and was functioning with old and faulty equipment. Thus the Respondents are liable for
delivering an unseaworthy ship for the voyage.
37.That due diligence has been defined as “the diligence reasonably expected,78 from and ordinarily exercised
by a prudent shipowner79 or person who seeks to satisfy a legal requirement or to discharge an obligation.”80
That it has further been defined as to whether the carrier, its servants, agents and independent contractors
have exercised all reasonable skill and care81 to ensure that the vessel was seaworthy82 at the commencement
of its voyage, namely, reasonably fit to encounter the ordinary incidents of the voyage.83
38.That in the instant case the Respondents have further breached their duty of exercising reasonable care and
due diligence while handling the goods of the Claimant by avoiding to properly equip the ship with the
necessary charts and upgraded navigational equipment.
(C)That a bailor- bailee relationship exists between the Claimant and the Respondents
39.Like anybody else who voluntarily takes care of the property of someone else, a sea carrier becomes bailee
of that property.84 As such, he is under a duty to take reasonable care to keep the goods safe, to deliver them
in the condition in which he took them, or to show that any damage was not caused by his neglect or default.
It is further mandated that “If the goods are lost or damaged, whilst they are in [the bailee’s] possession, he
is liable unless he can show – and the burden is on him to show – that the loss or damage occurred without
76T.J. Hooper Eastern Transp. Co. New England Coal & Coke Co. V. Northern Barge Corporation. Hartwell & Son, Inc. 53 F.2d 107, 1931 A.M.C. 1764 (D.C.N.Y. 1931). 77Martin v. Southwark (1903), 191 U.S. 1, 24 S.Ct. 1, 48 L.Ed. 65. 78Grain Growers Export Co. v.Canada Steamship Lines Ltd. 43 O.L.R. 330, (Ont. S.C. App. Div.), (1919) 59 S.C.R. 643 (Supr. C. ofCan.). 79MDC Ltd. v. NV ZeevaartMaatschapijBeursstraat [1962] 1 Lloyd’s Rep. 180; M/V Tuxpan Lim. Procs. 765 F. Supp. 1150, 1179, (S.D.N.Y. 1991). General Foods Corp. v. The Troubador, 98 F. Supp. 207, 210 (S.D.N.Y. 1951). 80B. A. Garner and H. C. Black, Black's law dictionary, 9th edn. 81The Eurasian Dream [2002] 1 Lloyd’s Rep. 719. 82Tetley, Marine Cargo Claims, Vol. 1, 876. Grain GrowersExport Co. v. Canada Steamship Lines Ltd. (1918) 43 O.L.R.(Ont. S.C.App. Div.), upheld (1919) 59 S.C.R. 643 (Supr. C. of Can.); TheSouthwark191 U.S. 1, 15, 24 S.Ct. 1, 48 L.Ed. 65 (1903); The Edwin I. Morrison, 153U.S. 199, 215, 14 S. Ct. 823, 38 L.Ed. 688 (1894); The Esso Providence, 112 F. Supp.631, 1953 A.M.C. 1317 (S.D.N.Y.). 83Tetley, Marine Cargo Claims, Vol. 1, 876. The Kapitan Sakharov [2000] 2 Lloyd’s Rep.255. 84Dockray, Cases and Materials on the Carriage of Goods by Sea, 3rd ed (2004), Cavendish, ch. 2.
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any neglect or default or misconduct of himself.” He will also be liable for breach of bailment if he fails to
deliver the goods, or misdelivers them.85
40.There was a bailment of the Claimant’s Cargo to the Respondents when it was loaded onto the Claimant’s
Vessel. This constituted a voluntary assumption of possession by the Respondents of the Claimant’s
Cargo.86 That the Respondents as bailee of the Cargo had a duty to take reasonable care of the Cargo. 87 This
duty includes taking all proper measures for the protection of the Cargo, taking into account imminent risks
to the Cargo. 88 Further, in the instant case it is evident that the 3/4th Cargo was damaged while it was in the
custody of the Respondents and thus the Respondents breached its duty to take reasonable care of the goods
as the bailee of the goods.
(D) That the commercial purpose of the charterparty was frustrated by the Respondents
41.It is submitted that the doctrine of frustration is where the essential object does indeed exist, but its
condition has by some casualty been so changed as to be not available for the purposes of the contract.89
42.Although a contract would normally not be frustrated if there is an express provision dealing with the
alleged frustrating event, such provision should be construed narrowly.90The Claimant submits that the
parties were aware of the solar flares owing to the news reports91 however the fact that the solar flares would
result in deviation of the Vessel and thus lead to delays in delivery of the cargo which also essentially was
damaged, was not anticipated.
43.In a voyage charterparty the commercial purpose remains the route which is undertaken by the shipper.92
That in the instant case, there was unjustified deviation leading to delay in delivery of goods resulting in
severe monetary repercussions for the Claimant, thereby making the Respondents liable for frustrating the
commercial purpose of the voyage charterparty93
85Morris v CW Martin & Sons [1966] 1 QB 716, 726. 86East West Corp v DKBS 1912 and AKTS Svendborg [2003] EWCA Civ 83, [2003] QB 1509 at [24]. 87Coldman v Hill [1919] 1 KB 443 (CA) at 454. 88Ibid. 89Fibrosa v Fairbairn [1943] AC 32. 90Bank Line Ltd v Arthur Capel & Co [1919] AC 435, 455; Select Commodities Ltd v Valdo SA (The Florida) [2006] EWHC 1137 (Comm), [2007] 1 Lloyd’s Rep 1. 91Moot Scenario, 35. 92Baughen, S (1991), “Does Deviation Still Mater?”, Lloyd‟s Maritime and Commercial Law Quarterly, part 1, 70-96; Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7. 93Glynn v Margetson [1893] AC 351, HL.
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III. THAT THE CLAIMANT IS ENTILTED TO HOLD MARITIME EQUITABLE LIEN OVER
MADAM DRAGONFLY
44.It is advanced that the Claimant is entitled to hold lien over the vessel. Claimant holds maritime lien over
the vessel (A). Claimant holds equitable lien over the vessel (B).
(A) Claimant holds maritime lien over the vessel
45.It is submitted that the Claimant holds Maritime Lien over Madam Dragonfly. A maritime lien is said to be
a non-possessory security device that is created by operation of law.94
46.Claimant is entitled to hold maritime lien due to (i) Breach of Charterparty and (ii) Supply of Necessaries.
(i) Breach of charter party
47.It is submitted that there was a breach of charter party by the Respondents which leads to creation of a right
of Claimant to hold Maritime Lien over Madam Dragonfly.
48.The Hon’ble Court in the case The Schooner Freeman v. Buckingham95, held that law confers a lien on the
vessel for the performance of the charterparty. Furthermore, under the general maritime law, the charterer
has a lien on the vessel for any breach by the owner once performance of the charter has begun96. Since,
there were breached qua performance of the charterparty, the Claimant is entitled to hold maritime lien on
the vessel.
49.The Hon’ble Court in the case The Oceano97, stated that: “As soon as the performance of a charter party is
commenced a lien exists on the vessel in favour of the shipper or charterer, and a suit in rem may be
maintained for any liability of the master or owner arising therefore . . . Damages sustained by a Charterer
through breach of a charter contract constitute a lien on the vessel.”
50.Thus a lien on the vessel arises in the charterer’s favour for virtually any breach of charter committed by an
owner.98Hence, it is submitted that due to the breach of charter party by the Respondents, the Claimant
holds a maritime lien over Madam Dragonfly.
(ii)Supply of necessaries
94Robert Force & A.N. Yiannopoulos, 2 Admiralty and Maritime Law 2-1 (2001). 95The Schooner Freeman v. Buckingham, U.S. 182, 190 (1856). 96Julian Cooke and others, Voyage Charterers (4th edn, informa 2014) 97The Oceano, 148 F. 131, 133 (S.D.N.Y. 1906). 98Julian Cooke and others, Voyage Charterers (4th edn, informa 2014)
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51.It is submitted thatsupply of necessaries to the Respondents by the Claimant led to creation of a right of
Claimant to hold Maritime Lien. On or around 22 July 2017, the Claimant paid the amount of US$100,000
on account of wages which would become payable to the crew of the Madam Dragonfly following her
voyage from the Port of Cerulean to the Port of Dillamond into a special Bank account of the Respondents
established for that purpose. It was stated by the Respondents that the ship will not sail without payment of
such wages.99 At this point, it becomes abundantly clear that the Respondents saw crew as an essential part,
without which, they could not sail the ship. Hence, payment of wages to such crew becomes a necessary.
52. The persons who repair a ship, commonly called material men or supply her with necessaries, have
independently of any express contract in the nature of hypothecation, a maritime lien upon the ship 100
53.The term necessaries strictly applies to anchors, cables, rigging and matters of that description, but it has
been extended to include all things actually needed for the service of the ship.101In the term “actually needed
for service of the ship”, wages form an essential part.
54.Further in The Bethulia102, as cited in Tulane Maritime Law Journal103, money advanced for payment of
seamen’s wages is considered a necessary.
55.From the above, it becomes clear that as the Claimant supplied necessaries in the form of wages to the
Respondents which led to the creation of their right to hold maritime lien over Madame Dragonfly.
(B) Claimant holds equitable lien over the vessel
56.It is humbly submitted that the Claimant holds an Equitable Lien over Madam Dragonfly. It is hereby
submitted that on or around 22 July 2017, the Claimant paid the amount of US$100,000 on account of
wages which would become payable to the crew of the Madam Dragonfly. The Respondents, however, has
neither paid the crew of the Madam Dragonfly wages due for the voyage nor has it repaid the US$100,000
to the Claimant.104 The Claimant for the amount US$100,000, holds an equitable lien over Madam
Dragonfly.
99Moot scenario, 1. 100A Treatise on the Jurisdiction and Practice of the English Courts in Admiralty Actions and Appeals , Gainsford Bruce, Esq, Q.C. 101Ibid. 102The Bethulia , 200 F. 876 (D. Mass. 1912). 103Tulane Maritime Law Journal , 12 Tul. Mar. L.J. (1987). 104Page 38, para 11 and 12 of the Moot Scenario.
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57.In the case, Hewett v Court105, the Hon’ble Court while addressing what equitable lien is, stated that “An
equitable lien exists independently of possession and arises by operation of equity from the relationship of
the parties, rather than being created by the act of the parties as in the case of an equitable charge.”
58.In the matter at hand, even though the Claimant might not have retained the possession of the ship, it still
holds equitable lien under the Doctrine of Unjust Enrichment.
59.In the case Circle Finance Company v. Jessie L. Peacock and Sara A. Peacock106, the court acknowledged
that “There are three generally recognized remedies at equity by which a person who has been unjustly
deprived of his property may seek restitution: (1) by impressing a constructive trust, (2) by imposing an
equitable lien, and (3) by subrogating him to the rights of the obligee or lien holder.” That in accordance
with the same, the Claimant holds an equitable lien over Madam Dragonfly.
60.Doctrine of unjust enrichment is applicable in the instant case in accordance with essentials laid down in the
case in the case Golden v. Woodward107, where it has been stated that: “A claim based on unjust enrichment
must only set forth the required elements of an unjust enrichment claim: 1) plaintiff conferred a benefit on
defendant; 2) defendant has knowledge of the benefit; 3) defendant accepted the benefit; and 4) it would be
inequitable for defendant to retain the benefit without paying for it.”
61.It is submitted that the Claimant, while, paying the Respondents funds for the crew’s wages created a
benefit in favour of the Respondents. The payee of the wages must in general be the person rendering the
service (in this case, the Respondents) or his legal representative.108 Hence, in the first place itself, the
Claimant was not under any obligation to create a fund for the crew’s wages but it still did for the benefit of
the Respondents. The Respondents was also evidently in knowledge of such benefit and has retained the
same. The Respondents must, however, pay for the same and it would be inequitable for it to retain such
benefit without paying for the same. Hence, in accordance to the aforementioned essentials, the Claimant is
justified in claiming lien under the doctrine of unjust enrichment.
105Hewett v Court (1983) 149 CLR 639. 106Circle Finance Company v. Jessie L. Peacock and Sara A. Peacock 399 So. 2d 81 (1981). 107Golden v. Woodward 15 So.3d 664, 669. 108Lindey D. ClarkLaw of Employment of Labour.
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62.Unjust enrichment, or restitution, acknowledges an obligation which is imposed by law regardless of the
intent of the parties.109 It is a broad based concept, and, since the doctrine is not dependent upon the
existence of wrongdoing, a showing of fraud is not a necessary precondition to its application. 110
63.Further, the doctrine in question has been explained by stating that “The doctrine of unjust enrichment is a
recognition that a person is accountable to another on the ground that if the former were not required to do
so, he would unjustly benefit, or the other would unjustly suffer loss”111
64.In the instant case, the Respondents had acquired US$100,000 to pay the crew's wages into a separate Bank
account prior to the voyage as the crew will not sail before this occurs and it would be repaid to the
Claimant once the crew are paid their wages.112 However, as stated earlier, it neither paid the crew nor have
they repaid us the amount. In fact, the Respondents used these funds elsewhere.113 Hence, the Respondents
stands to unjustly gain from the whole scenario and the Claimant, unjustly lose.
65.It is also humbly submitted, to recover the huge amount given for the purpose of wages, the only option
available with the Claimant was to keep a lien on Madam Dragonfly.
IV. THAT THE RESPONDENTS ARE LIABLE TOPAY THE CLAIMED DAMAGES
66.It is submitted that the Respondents are liable to the Claimant to the amount of USD 30,200,000 as the
delivery took place on 31stJuly, 2017 (A). That the Respondents are further liable to pay USD15,750,000 on
account of the damaged Cargo (B): USD9,450,000 for the Replacement Coffee Payment (C),
USD5,000,000 on account of the Settlement Payment(D).
(A) The delivery took place on 31st July, 2017
67.It is submitted that the cargo was delivered on 31st July 2017 at approximately 1:55pm.
68.It has been said that delivery occurs when “the goods are so completely under the control of the consignee
that he may do what he likes with them”,114or when they are “placed under the absolute dominion and
control of the consignees”.115 In the instant case, goods were placed under the control of the Claimant only
109Kossian v. American National Ins. Co., 254Cal. App. 2d647, 62Cal. Rptr.225 (1967). 110Restatement of the Law, Restitution 1 (1937) by American Law Institute. 111Circle Finance Company v. Jessie L. Peacock and Sara A. Peacock 399 So. 2d 81 (1981). 112Moot scenario, 1. 113Procedural order 2. 114British Shipownersv. Grimond (1876) 3 Rett. 968, 972. 115Chartered Bank v. British India S.N. Co. [1909] A.C. 369, 375.
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on 31st July 2017 and that is when the delivery was constituted. Since delivery is a bilateral act, involving
the receipt of the goods by the consignee or his agent as well as the relinquishing of possession by the
carrier, it cannot be effected merely by discharging the goods over the ship’s side at the port of delivery.116
In the instant case, goods were merely discharged at the port on 29th July 2017, hence the claim of
Respondents regarding delivery on 29th July 2017 cannot be sustained.
69.It is submitted that the term "delivery" is not synonymous with "discharge". The former term denotes a two-
party transaction in which the consignee or an agent would have the opportunity to observe defects and the
latter term need involve only the shipper and there might or might not be opportunity for the consignee to
discover the damage at that point. Discharge and delivery need not occur at the same time and only at
delivery must there be opportunity for potential plaintiffs to discover damage.117 Therefore, owing to these
differences, delivery was not constituted when the goods were discharged.
70.Delivery usually means actual delivery, not delivery of a means of access, and nothing is spelt out in the
contract to the contrary.118Ergo,delivery of the access authority passwould not constitute delivery of the
cargo.
71.Furthermore, delivery without production of the bill of lading constitutes a breach of contract even when
made to the person entitled to possession.119
(B)That the Respondents are liable to pay on account of the damaged cargo
72.It is submitted that 75% of cargo delivered was completely water damaged for which the Respondents are
liable to the amount of $15,750,000 for breach of contract of carriage (i), loss of profit (ii) breach of duty as
bailee of goods (iii) and Respondents are not entitled to limit its liability (iv).
(i)Breach of contract of carriage
73.As soon as the goods are damaged, there is a breach of contract of carriage. Formerly he was the owner of
goods of full value and subsequently he is the owner of goods with only a reduced value. He has suffered a
loss.120Hence the Respondents are liable to pay for the damaged goods.
116Cooke on Voyage Charters, 4th ed (2014), para 10.4; Gatliffev. Bourne(1838) 4 Bing. N.C. 314, (1841) 3 M. & G. 643, (1844) 7 M. & G. 850, 11 Cl. & F. 45. 117C. Tennant Sons & Co. v. Norddeutscher Lloyd, 220 F. Supp. 448 (E.D. La. 1963) 118Glencore International AG v MSC Mediterranean Shipping CoSA[2017] EWCA Civ 365. 119Sze Hai Tong Bank v Rambler Cycle Co [1959] AC 576; The Houda [1994] 2 Lloyd's Rep 541. 120Obestain Inc v National Mineral Development Corporation Ltd [987] I LLR 465; Transfield Shipping Inc of Panama v Mercator Shipping Inc of Monrovia [2006] EWHC 3030 (Comm).
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74.A person who is the owner, or who has a right to possession, of the goods has a right to substantial damages
for loss of or damage to the goods, even where the loss falls upon another person.121 Ergo, in the instant
case, owner of the goods being the Claimant is entitled to claim damages for the damaged goods.
75.In the instance of cargo damage, the measurement is usually the difference between the market value122 of
sound and damaged cargo at the destination.123 The value of the damaged goods should be calculated as per
the market price or the “normal value of goods of the same kind and quality”.124 It is based on the
presumption of a substitute contract: that is, the Claimants are presumed by law to go into the market and
purchase the replacement at the present price125 provided the concerned goods are for immediate resale.126
76.In the present case the value of the damaged goods was nil as they were damaged to such an extent that they
had become useless with no willing buyer127 whereas the market value of the sound goods was USD
15,750,000 as the market price of the coffee was $300/kg.128 Since the present value is zero due to no
availability of market129, therefore the net value payable by the Respondents is USD 15,750,000.
(ii) Claimant suffered loss of profit
77.As the delivered cargo was damaged and hence it couldn’t be sold, the Claimant suffered loss of profit. The
goods owner has a right to recover substantial damages from the shipowner for the loss suffered by reason
of the damage to the goods. 130
78.If, by the negligence of a wrongdoer, goods are destroyed which the owner of them had bound himself by
contract to supply to a third person, this person as well as the owner has a right of action for any loss
inflicted on him by their destruction.131 In the instant case, goods were left by the Respondents at the port
121The Winkfield (1900-3) All ER Rep 346; Obestain Inc. v. National Mineral Development Corp. (The Sanix Ace) [1987] 1 Lloyd’s Rep. 465; Sevylor Shipping and Trading Corp v Altfadul Co for Foods, Fruits and Livestock [2018] EWHC 629 (Comm); The Aramis [1989] 1 Lloyd’s Rep 213, The Athenian Harmony [1998] 2 Lloyd’s Rep 410; R&W Paul Ltd v National Steamship Co Ltd (1937) 59 Ll L Rep 28. 122Bunge SA v Nidera BV (formerly NideraHandelscompagnie BV),[2015] UKSC 43 123Otis Mcallister& Co v Skibs-A/S Marie Bakke [1959] 2 Lloyd's Rep 210); Canada (the Farrandoc [1967] 1 Lloyd's Rep 232; Nabob Foods Ltd v Cape Corso [1954] 2 Lloyd's Rep 40); The Welsh Endeavour [1984] 1 Lloyd’s Rep 400. 124Fan Wei, Measurement of Damages in Carriage of Goods by Sea, 2008; Glynn and Others v Margetson& Co and Others [1893] A.C. 351 (H.L.). 125Williams Brothers v Agius Ltd [1914] A.C. 510, (H.L.) 126CfContigroup Companies, Inc. v Glencore A.G. [2005] 1 Lloyd's Rep. 241. 127Moot scenario, 27. 128Moot scenario, 2. 129Shearson Lehman Hutton Inc. v. Maclaine Watson & Co. Ltd (No. 2) [1990] 1 Lloyd’s Rep. 441; Zodiac Maritime Agencies v. Fortescue Metals Group Ltd (The Kildare) [2011] 2 Lloyd’s Rep. 360, para. 56; Glory Wealth Shipping Pte. v. Korea Line Corp. (The Wren) [2011] 2 Lloyd’s Rep. 370; Bulkhaul v. RhodiaOrganique Fine Ltd [2009] 1 Lloyd’s Rep. 353. 130The Baleares [1993] 1 Lloyd's Rep. 215 (C.A.); Leigh and Sillavan Limited v Aliakmon Shipping Company Limited 1986 AC 785; The Albazero [1977] Appeal Cases 774. 131Simpson & Co. v. Thomson [1877] 3 Appeal Cases 279.
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while it was raining and while they were aware that the sealant had expired as it was meant to last for 5days
only. 132Thus, the owner in equity is entitled to sue in tort for negligence anyone who by want of care
caused his property to be lost or damaged and as a result faces economic loss.133
(iii) Breach of duty as Bailee of goods
79.Where there is a delivery of possession of goods by a cargo owner to a carrier, there arises a bailment, and a
contract of carriage may and frequently will co-exist with the relationship of bailor and bailee.134
80.In principle, if a bailor proves delivery to the bailee of goods in a given condition, the mere failure by the
bailee to deliver them to the bailor or to his order either at all or in the same condition is a prima facie
breach of the bailment.135
81.Similarly in the present case there existed a relation of bailor and bailee between the charterer and owner
respectively, and failure on the part of the owner as bailee to deliver the goods in the same condition is
breach of duty to act as bailee for which the charterer i.e. the Claimant is entitled to receive damages.
(iv) Respondents are not entitled to limit its liability
82.The Respondents shall not be entitled to the benefit of the limitation of liabilityprovided in the Article IV of
Hague Visby Rules 136 for its acts or omission done in a reckless manner137 and with knowledge138 that
damage would probably result.139 This is confirmed by Sellers Fabrics Case, when Carrier has knowledge
about the risk that may be incurred and has been given information regarding its obligation, the Carrier will
lose its right to limit its liability. 140 In the present case, Respondents were well aware about the life of the
packaging materialas well as the cargo and their obligation to take the most direct route. Therefore, they do
not have a right to limit their liability.
(C) That the Respondents are liable to pay the replacement coffee payment.
132Moot scenario, 14. 133Leigh and Sillavan Limited v Aliakmon Shipping Company Limited1986 AC 785 134Akts. De Danske Sukkerfabrikker v. Bajamar Cia. (The Torenia), [1983] 2 Lloyd’s Rep. 210, at p. 216. 135Hollins Hollins v. Fowler, (1872) L.R. 7 Q.B. 616, 632; The Houda, [1994] 2 Lloyd’s Rep. 541; The Rigoletto, [2000] 2 Lloyd’s Rep. 136Hague-Visby Rules, Article 4(5)(e) 137Herrington v British Railways Board (1971) 2 QB 107 (CA); The Thomas Cook Group Ltd v Air Malta Co Ltd (1997) 2 Lloyd’s Rep 399, 408. 138Shawinigan Ltd v Vokins& Co Ltd (1961) 3 All ER 396, 403 (QB). 139Cia Portorafti Commerciale SA v Ultramar Panama Inc (1990) 1 Lloyd’s Rep 310, 316 (CA). Antwerp United Diamond BVBA v Air Europe [1996] Q.B. 317; Horabin v British Overseas Airways Corp (1952) 2 Ll LR 450, 459. 140Sellers Fabrics Pty Ltd v Hapag- Lloyd AG [1998] NSWSC 646; Morrison v Peacock &Roslyndale Shipping Co Pty Ltd (2000) NSWCCA 452 (QL),[70]-[76]; Smithers v Lokys (2001) 108 FCR 303 (WL), [15] (FCA).
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19
83.As the Cargo was required in order to satisfy the Claimant's contractual obligations with a third party, the
Claimant was required to urgently source alternative coffee at a cost of USD9,450,000. It is submitted that
such a replacement is justified and the Respondents are liable for the payment of replacement coffee.
84.The general underlying principle is that the party in breach is liable to pay such monetary compensation as
will place the injured party in the position it would have enjoyed had the contract been performed.141 In the
instant case, no need to purchase replacement coffee would have arisen had the contract been performed,
therefore, Respondents are liable to compensate the Claimant.
85.Indeed, the replacement cost of the goods in cases of damaged goods is an accepted measure of
damages.142Here, Respondents can reasonably assume that the cargo is used for further sales. Thus, sub-
transactions of the Claimant are not res inter alia actos. The replacement cost, i.e. USD 9,450,000 is
reasonable, and thus the Respondents is liable to that extent.
86.Where a breach of contract entails the inadequate performance of a contract, the damages recoverable will
usually, be the cost of putting the work right, by repair or replacement,143 this being normally treated as
representing the diminution in value in the case of a marketable chattel or right.144
87.In addition to the common claims for a loss of profits, the aggrieved party of a carriage contract may suffer
miscellaneous losses. Thus costs incurred in retrieving, searching for or replacing carried goods are
recoverable.145
88.Furthermore, the law is satisfied if the party placed in a difficult situation by reason of the breach of a duty
owed to him has acted reasonably in the adoption of remedial measures, he will not be held disentitled to
recover the cost of such measures merely because the party in breach can suggest that other measures less
burdensome to him might have been taken.146 In the present case, the Claimant has acted reasonably in
141Parke B in Robinson v Harman (1848) 1 Ex 850 at p 855; Lord Wright in Monarch Steamship Co Ltd v KarlshamnsOljefabriker [1949] AC 196 p 220. 142Attorney General of the Republic of Ghana v Texaco Overseas Tankships Ltd – “Texaco Melbourne” (1993) 1 Lloyd‟s Rep 471 (CA); Nissho v Livanos (1941) 69 Ll.L.Rep 125; A/S D/S Heimdal v Questier Co. Ltd. (1949) 82 Ll.L.Rep 452; Rodocanachi v Milburn (1886) 18 QBD 67, 78; The Kriti Rex [1996] 2 Lloyd’s Rep 171, 194. 143Meredith Jones v. Vangemar Shipping (The Apostolis) (No. 2) [1999] 2 Lloyd’s Rep. 144Dominion Mosaics v. Trafalgar Trucking [1990] 2 All E.R. 246 at 248. 145Heskell v Continental Express Ltd (1949-50) 83 Ll. L. Rep. 438; Woodger v The Great Western Railway Company (1866-67) L.R. 2 C.P. 318; Millen v Brasch& Co. (1882-83) L.R. 10 Q.B.D. 142; The British Columbia and Saw-Mill Co v Nettleship (1867-68) L.R. 3 C.P. 499. 146Banco de Portugal v. Waterlow, [1932] AC 452.
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expeditiously securing replacement coffee by discharging their duty to mitigate the loss consequent to the
breach without delay,147 he is thus entitled to recover the costs incurred.
(D) That the Respondents are liable to pay the settlement payment.
89.It is submitted that the third party with whom the Claimant had contracted for the supply of coffee suffered
loss and damage as a result of the Claimant's breach of contract. Thus, the third party and the Claimant
entered into a settlement agreement whereby the third party released the Claimant from all claims it may
have against it in relation to the Claimant's breach of contract in return for the Claimant paying the amount
of $5,000,000, due to which Claimant not only lost the profit that they should have made but were made to
pay this extra amount. Since the breach by Claimant was a direct result of breach by the Respondents, the
Respondents are liable to the amount of USD5,000,000 on account of the Settlement Payment.
90.Even if the Claimant is found on later analysis not to be liable to the third party, the settlement sum could
still be recoverable against the defendant whose breach caused the loss.148
(i) The Respondents are liable as per the Biggin Principles
91.The well-known legal principles formulated in the case of Biggin v Permanite149 ("Biggin Principles") are
applicable where a settlement concerns issues of liability as well as of quantum.150In essence, the Biggin
Principles provide that, in order for the Claimant to successfully recover sums reached in settlement with a
third party, the Claimant must show contemporaneous evidence to establish that both: (i) the Respondent's
breach caused the Claimant's liability to the third party ("Causation"); and (ii) that the settlement and the
settlement amount were reasonable in the circumstances ("Reasonableness").
(i.a) That the Respondent's breach caused the Claimant's liability to the third party
92.There was an effective causal link between the defendant's breach and the need for the Claimant to pay a
settlement sum to a third party. The Claimant entered into a contract with Coffees of The World to deliver
1,000 bags of rare, high - quality, specialty grade green coffee by 28 July 2017.151 In furtherance of this
contract, the Claimant entered into another contract with the Respondents under which Respondents were to
147East Ham Corp v Bernard Sunley& Sons Ltd [1966] AC 406; Pacific Interlink SdnBhd v Owner of the Asia Star [2009] 2 Lloyd's Rep 387; British Westinghouse Electric Co Ltd v Underground Electric Rlys [1912] AC 673, 689. 148Comyn Ching & Co (London) v Oriental Tube Co Ltd (1981) 17 BLR 47; General Feeds Inc. Panama V. SlobodnaPlovidba Yugoslavia [1999] 1 Lloyd's Rep. 688. 149Biggin& Co v Permanite [1951] 2 K.B. 314. 150Royal Brompton Hospital NHS Trust v Hammond (No.1) [1999] B.L.R. 162. 151Moot scenario, 29.
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discharge the cargo at the port of Dillamond by 7pm on 28 July 2017 and were made aware about the
imperativeness pertaining to the timely delivery.152 Not only did the Respondents fail to deliver the cargo by
28th July 2017 but 75% of cargo received later was completely water damaged and of no use. This breach of
contract by the Respondents caused Claimant to breach their contract of timely delivery with the third party
i.e. Coffees of The World which suffered losses.
(i.b) That the settlement and the quantum settlement amount were reasonable in the circumstances
93.it is submitted that Coffees of the World required 1,000 bags of rare, high - quality, speciality grade green
coffee for the opening of a coffee festival which was to be attended by over 350,000 people. 153 Considering
the large scale of this festival and their failure to uphold their commitments pertaining to such high quality
coffee, suffering losses was apparent. Ergo, the settlement was reasonable.
94.Had the contract been performed, coffee amounting to $21,000,000 would have been delivered to them
($300/kg being the market price154 and total weight of cargo being 70,000 kg155), however, out of the coffee
delivered, the coffee that was of expected quality amounted to only $5,250,000 as only 250 bagswere not
damaged, while the rest being low quality replacement coffee amounting to $9,450,000156. Therefore,
considering the difference between $21,000,000 and $5,250,000 and, taking into account the quality of
coffee that was promised and the quality that was delivered to the third party, $5,000,000 as settlement
amount stands reasonable.Thatif the Claimant called evidence which showed that the settlement was a
reasonable one, though it might not strictly prove every item of damage claimed, that settlement should be
accepted by the court as the measure of damage.157
(ii)The Respondents are liable under the Civil Liability (Contribution) Act 1978.
95.Contribution is sought pursuant to section 1 of the Civil Liability (Contribution) Act 1978. Section 1 of the
1978 Act158 provides that (subject to the provisions of the section) "any person liable in respect of any
damage suffered by another person may recover contribution from any person liable in respect of the same
152Moot scenario, 2. 153Moot scenario, 2. 154Moot scenario, 2. 155Moot scenario, 16. 156Moot scenario, 27. 157Hammond & Co. v. Bussey (1887) 20 Q. B. D. 79; Grebert-Borgnis v. Nugent (1885) 15 Q. B. D. 85; Fisher v. Val de Travers (1876) 45 L. J. (C. P.) 479; 35 L. T. 366; CompaniaSud Americana de Vapores S.A. v. Sinochem Tianjin Import and Export Corp (The Aconcagua) [2010] 1 Lloyd’s Rep. 1, paras 376–379. 158Civil Liability (Contribution) Act 1978.
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damage (whether jointly with him or otherwise)…". Recovery can be claimed under the Act whatever the
legal basis of the other person's liability, provided it is in respect of "the same damage"159In the present
case, breach by Respondents caused the same damage as breach by Claimant i.e. loss and damage to
Coffees of The World and therefore, Claimant is entitled to recover the amount of settlement payment from
the Respondents.
ARGUMENTS ON THE MERITS OF COUNTER CLAIM
V. THAT THE CLAIMANT IS NOT LIABLE TO PAY THE DAMAGES CLAIMED BY THE
RESPONDENTS
(A) That the Claimant is not liable to pay the freight
96.The true test of the right to freight is the question whether the service in respect of which the freight was
contracted to be paid has been substantially performed.160 In the present case, contract has not been
performed by the Respondents as has been proved earlier, ergo they are not entitled to claim freight.
97.Freight is not payable where the goods are so badly damaged on their arrival that they are unmerchantable
in the sense that they no longer answer their commercial description.161 If the cargo is so changed in its
nature by the perils of the sea as to become an unmerchantable thing, which no buyer would buy and no
honest seller would sell, then there is a total loss.162In the present case, coffee beans were so badly water
damaged that they could no longer be used and had no willing buyer.163 Therefore, it is held that that
Claimant is not liable to pay the freight.
(B) That the Claimant is not liable to pay for repairs to hull
98.It is mandated that the charterer is not responsible for damage, delay or loss which occurs to the vessel as a
result of abnormal occurrence, i.e. an occurrence which was not, in all human probability, expected to
occur.164In the present case, since the charterer could not have contemplated that the anchor might get
159Royal Brompton Hospital NHS Trust v Hammond [2002] 1 WLR 1397; Aer Lingus v. Gildacroft [2005] EWHC 1556 (QB). 160Dakin v Oxley (1864) 143 ER 938 at p 946. 161Duthie v Hilton (1868) LR 4 CP 138; Asfar v Blundell [1896] 1 QB 123; The Caspian Sea [1980] 1 Lloyd’s Rep 91. 162Asfar v Blundell [1896] 1 QB 123. 163Moot scenario, 27. 164The Mary Lou [1981] 2 Lloyd’s Rep 272; David Chong Gek Sian, ‘Revisiting the Safe Port’, (1992) Singapore Journal of Legal Studies, 88.
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tangled with the coral bed while the crew tried to lift it in the ocean, charterer cannot be held liable for such
loss.
99.Failure to achieve the requisite standard of care and good seamanship renders the master responsible for the
resulting damage and loss; responsibility cannot be attributed to the charterer.165In the present case, damage
to hull was in fact caused, or at least contributed to, by negligence on the part of the master and the ship’s
crew by dropping the anchor where the storm was worse.166This damage could have been avoided had the
Captain made proper enquiries regarding the safety of theplace and the position of the storm before
anchoring the ship, therefore, the Claimant is not liable to pay for repairs to the hull.
(C)That the Claimant is not liable to pay demurrage
100. It is submitted that no laytime was given and even if the demurrage clock has started, the risk of delay
can be shifted back to the owners by the presence of an event covered in a sufficiently worded exception
clause.167
101. In the instant case, Claimant is not liable to pay demurrage because delay was caused due to congestion
listed in Clause 8(e)168 interrupting laytime and demurrage and by reason of a Force Majeure Event listed in
Clause 17 (A)169 which excludes liability where a failure or delay in performance is caused by a Force
Majeure Event.
102. Demurrage is liquidated damages for exceeding the laytime.170A notice which does not indicate that the
vessel is ready at the time when it is given, but merely that the vessel will be ready at some time in the
future, is not a valid notice of readiness.171According to the strict legal view, laytime will not commence in
the absence of a valid notice of readiness with the result that, not only will the owners have no claim for
demurrage but they may also be obliged to pay the charterers despatch money for the whole of the agreed
165St Vincent Shipping Co Ltd v Bock, Godeffroy& Co (The Helen Miller) [1980] 2 Lloyd’s Rep 95. 166Moot scenario, 20. 167The John Michalos [1987] 2 Ll. Rep. 188; Shipbroking and Chartering Practice (2004; LLP) p. 243. 168Cl 8 (e) of the Voyage Charterparty. 169Cl 17 A of the Voyage Charterparty. 170CompaniaNaviera Aeolus SA v Union of India [1964] AC 868 at 899 (Lord Guest), cited by Lord Diplock in Dias CompaniaNaviera SA v Louis Dreyfus Corporation [1978] 1 WLR 261 at 263. 171Transgrain Shipping v. Global TransporteOceanico (The Mexico I) [1990] 1 Lloyd’s Rep. 507; T.A. Shipping v. Comet Shipping (The Agamemnon) [1998] 1 Lloyd’s Rep. 675.; Antclizo Shipping Corp. v. Food Corporation of India (The Antclizo) (No. 2) [1992] 1 Lloyd’s Rep. 558, 564.
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laytime.172In the present case, since no valid notice of readiness was given, laytime did not commence and
hence, demurrage is not accrued.
103. It is submitted that time does not run during the periods where cargo operations have been delayed bythe
shipowner’s faultor resulted from action taken by him for his own convenience.173 This derives from the
principle that nobody can benefit fromtheir own wrong. Since the ship was delayed due to the unjustifiable
deviation by the Respondents and reached at a time when the Claimant couldn’t discharge the cargo due to
congestion at the port at that time, demurrage cannot be accrued for this period.
(D) That the Claimant is not liable to pay for electronic access systems used
104.It is submitted that the Claimant never agreed for the use of electronic access systems at the port of
Dillamond.
105.As regards vessels on voyage charter, all port dues and other charges in respect of the vessel — whatever the basis
of their calculation - are generally paid for by the owner and included in the freight rates.174
Respondents cannot recover damages for any loss which it could have avoided but failed to avoid due to its own
unreasonable action or inaction 175 Had they not deviated the ship unjustifiably, delivery wouldn’t have gotten
delayed and the need for using electronic access systems wouldn’t arise. Therefore, the Claimant is not liable to
pay for electronic access systems used.
(E) That the Claimant is not liable to pay the agency fee
106.That the Respondents have erred in claiming the payment of agency fee from the Claimant.
(i) Agency fee at the Port of Spectre
107.It is submitted that contravening the provisions of the agreement, the Respondents deviated to the Port of
Spectre. That thus it is evident that the Claimant cannot be held liable, for the non-payment of the agency
fee for the Port of Spectre, as it falls outside the scope of the obligations of the Claimant.
108.Further, even if this erroneous claim is to be considered it is mandated that losses which are the
consequence of special facts not known to the party in default at the time the agreement was made are not 172The Mass Glory [2002] 2 Lloyd’s Rep 244. 173DGM Commodities Corp v Sea Metropolitan S.A. (The Andra) [2012] EWHC 1984 (Comm); [2012] 2Lloyd’s Rep 587; Schofield, 198 [4.18], 200 [4.26]; Budgett& Co. v Binnington& Co. [1891] 1 QB 35, 38; In Re Ropner [1927] 1 KB 879; The Union Amsterdam [1982] 2 Lloyd’s Rep 432; Stolt Tankers v Landmark Chemicals [2002] 1 Lloyd’s Rep 786; The Fontevivo [1975] 1 Lloyd’s Rep 339. 174Report by the UNCTAD Secretariat. 175Harvey McGregor, McGregor on Damages (Thomson Reuters (Legal) Limited, 18th Ed, 2009) at para 7-004 and British Westinghouse Electric and Manufacturing Company, Limited v Underground Electric Railways Company of London, Limited [1912] AC 673 (“British Westinghouse Electric”) p. 689.
TEAM 4 MEMORANDUM FOR CLAIMANT
25
covered176 and the party cannot be made liable for the same.177 It must be something which could have been
foreseen and reasonably expected,178 and to which they assented by entering into the contract.179
109.In the instant case, the deviation and hence the agency fee at the Port of Spectre, could not have been
contemplated while entering into the contract. That thus, even if the Tribunal considers the claim of the
Respondents, the Claimant cannot be made liable for the payment of the same.
(ii) Agency fee at the Port of Dillamond
110.It is mandated that the right and the duty of selecting and appointing agents to attend the ship at loading
and discharging ports is vested in the owners.180It is also submitted that notwithstanding the fact that the
charterers appoints the agent, it is nonetheless customary that the owners pays the agency fee.
111.In the instant case, it is clear that customarily, the Respondents are liable to pay the agency fees at the Port
of Dillamond and that even if it is considered, pursuant to Clause 12(a) of the Record, that the agents
appointed were infact of the Charterer’s, it is submitted that their services were not used by the Respondents
due to the delay caused in the delivery of goods by the Respondents,181 hence the submission.
REQUEST FOR RELIEF
For the reasons set out above, CLAIMANT requests that the Tribunal:
i. Declare that it has jurisdiction to determine the claims made by the Claimant
ii. Adjudge that the Respondents are liable for the breach of the charterparty
iii. Uphold that the Claimant is entitled to hold lien over Madam Dragonfly
iv. Uphold that the Claimant is entitled to claim damages equivalent to USD 30,200,000
Dated this 18th day of April 2018
Agents for the Claimant
Cerulean Beans and Aromas
176Hadley v Baxendale (1854) 9 Exch. 341. 177Horne v Midland Railway Company (1873) LR 8 CP 131. 178Heskell v Continental Express [1950] 1 All ER 1033. 179Saw-Mill Co Ltd v Nettleship105 (1868) LR 3 CP 499 180Wehnerv. Dene [1905] 2 K.B. 92, 99. 181Moot Scenario, 20.