16TH INTERNATIONAL MARITIME LAW …...TEAM 10: MEMORANDUM FOR THE DEFENDANT Page|7!!! 20. Sea Trade...

16TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT,

2015

IN THE MATTER BETWEEN

WESTERN TANKERS INC……………………………CLAIMANT

AND

LDT PTE…………………………….……………….DEFENDANT

MEMORANDUM FOR THE DEFENDANT

TEAM 10

JAIDRATH ZAVERI • SAI SARANYA HARIHARAN • SHILPA NAIR • SURABHI SABOO

TEAM 10: MEMORANDUM FOR THE DEFENDANT

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TABLE OF CONTENTS

LIST OF ABBREVIATIONS…………………………………………………………………...…3

INDEX OF AUTHORITIES………………………………………………………………………5

STATEMENT OF FACTS…………………………………………………………………….......9

ARGUMENTS ADVANCED…………………………………………………………………….12

1. THIS ARBITRAL TRIBUNAL DOES NOT HAVE JURISDICTION TO DEAL WITH THIS

MATTER........................................................................................................................12

A. THERE WAS NO AGREEMENT TO ARBITRATE......................................................12

B. EFFECT OF AN AMBIGUITY REGARDING THE CONTRACTUAL

CLAUSE..............................................................................................................15

C. TORT OF FRAUD IS NOT ADMISSIBLE IN THIS ARBITRATION.............................17

2. THE OWNERS HAVE FAILED TO PERFORM THEIR DUTY AS A BAILEE……………….......17

3. RELATING TO HIRE……........………………………………………………………....20

A. NO HIRE WAS DUE OR OWING BY THE CHARTERERS UNDER THE CHARTERPARTY

ON 03 JULY 2014……………………………………………………………...20

B. THE CHARTER PARTY WAS FRUSTRATED BY NO LATER THAN 04 JULY 2014…20

C. VESSEL WAS OFF-HIRE FROM 04 JULY 2014 UNTIL THE VESSEL WAS READY TO

RESUME SERVICE OF VOYAGE FROM A POSITION NOT LESS FAVOURABLE TO

CHARTERERS THAN THAT AT WHICH SUCH LOSS OF TIME COMMENCED………22

4. PERFORMANCE OF THE CHARTERPARTY……………........................................………25

A. ASA2 IS NOT, AND HAS NEVER BEEN THE CHARTERERS AGENT……....………25

B. NO MISREPRESENTATION WAS MADE ABOUT THE SUPPLY OF BUNKERS………26

C. THE MASTER OF THE VESSEL FAILED TO FOLLOW ANTI-PIRACY

PRECAUTIONS....................................................................................................27

PRAYER........................................................................................................................32


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LIST OF ABBREVIATIONS

&.............................................................................................................................................and

A.C....................................................................................................... Appeal Cases (England)

App.Cas..................................................................................................................Appeal Cases

Art.....................................................................................................................................Article

ASA.....................................................................................................Atlantic Services Agency

ASA2...................................................................................................Atlantic STS Agency Ltd

B. & S...................................................................................................Best and Smith's Reports

BIMCO......................................................................Baltic and International Maritime Council

BMP4............................................................................................Best Management Practices 4

BVI..............................................................................................................British Virgin Island

C.B.......................................................................................Common Bench Reports (England)

CC...........................................................................................................................Carbon Copy

Ch...................................................................................................................Chancery Division

CHOPT...........................................................................................................Charterers’ Option

Cl.......................................................................................................................................Clause

Co..................................................................................................................................Company

Comm........................................................................................................Commercial Division

ed.......................................................................................................................................edition

e-mail....................................................................................................................electronic mail

ETA....................................................................................................Estimated Time of Arrival

EWHC...............................................................................England and Wales High Court (UK)

FO...................................................................................................................................Fuel Oil

GO..................................................................................................................................... Gasoil


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i.e...................................................................................................................................... That is

Inc............................................................................................................................Incorporated

K.B.........................................................................................................................King’s Bench

LDT......................................................................................................Less Dependable Traders

Lloyd’s Rep..................................................................................................Lloyd’s Law Report

Ltd....................................................................................................................................Limited

MT........................................................................................................................Metric Tonnes

PTE...................................................................................................................................Private

QB........................................................................................................................Queen’s Bench

ROB................................................................................................Remaining onboard bunker

SPMs...................................................................................................Ship Protection Measures

ST4.............................................................................................................................Shelltime 4

STS...............................................................................................................Ship to ship transfer

UTC................................................................................................Coordinated Universal Time

v..........................................................................................................................................versus


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INDEX OF AUTHORITIES

ARTICLES REFERRED TO

1. Haylin Low, Shipowners' Liabilities: Elder Dempster Revisited.

BOOKS REFERRED TO

1. BLACK’S LAW DICTIONARY (10th ed., Thomson Reuters).

2. CHITTY ON CONTRACTS SPECIFIC CONTRACTS (30th ed., Volume II, Sweet & Maxwell

2008).

3. CLARE AMBROSE & KAREN MAXWELL, LONDON MARITIME ARBITRATION ( LLP

1996).

4. CRAVER, CRAVER ON BILLS OF LADING (2nd ed. Sweet & Maxwell 2005).

5. DROBNIG, INTERNATIONAL ENCYCLOPEDIA OF COMPARATIVE LAW, 4-98 (Instalment

12, Martinus Nijhoff Publishers 1981).

6. JOHN F WILSON, CARRIAGE OF GOODS BY SEA (4th ed., Longman 2001).

7. NIGEL BLACKABY, CONSTANTINE PARTASIDES, ALAN REDFERN & MARTIN HUNTER,

REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION (5th ed., Oxford).

8. SIR JACK BEATSON, ANDREW BURROWS, JOHN CARTWRIGHT, ANSON’S LAW OF

CONTRACT (29th ed., OXFORD).

9. STEWART C. BOYD, STEVEN BERRY, ANDREW S. BURROWS, BERNARD EDER, DAVID

FOXTON & CHRISTOPHER SMITH, SCRUTTON ON CHARTERPARTIES AND BILLS OF

LADING (Sweet & Maxwell, 21st ed. 2008).

10. TERENCE COGHLIN, ANDREW W. BAKER, JULIAN KENNY & JOHN D. KIMBALL, TIME

CHARTERS (6th ed. 2008).


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CASES REFERRED TO

1. Australian Bank of Commerce v. Perel, [1926] AC 737

2. Charrington & Co. v. Wooder, [1914] AC 71.

3. Coast Line Ltd. v. Hudig, [1972] 2 QB 34.

4. Davidson v. Gwynne, 12 East 380.

5. Elder, Demspter & Co and Others v. Zochonis & Co [1924] 1 A.C. 522.

6. Federal Bulk Carriers Inc v. C Itoh & Co Ltd (The Federal Bulker), [1989] 1 Lloyd’s

Rep. 103. .

7. Freeman v. Reed, (1863) 4 B. & S. 174.

8. Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v. Sometal SAL, [2010] EWHC 29

(Comm).

9. Hispanica De Petroleos S.A. v. Vencedora Oceanica Navegasion S.A. (The Kapetan

Markos) (No. 2), [1987] 2 Lloyd’s Rep. 321.

10. Homburg Houtimport BV v. Agrosin Private Ltd. (The Starsin), [2004] 1 A.C. 715.

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

12. Jackson v. The Union Marine Insurance Co Ltd, (1874-75) LR 10 CP 125.

13. Jacobs v. Morris, [1902] 1 Ch 816.

14. Minerva Navigation Inc c. Oceana Shipping AG v. Transatlantica Commodities SA

Athena, [2013] 2 Lloyd's Rep. 673.

15. Nugent v. Smith, (1876) 1 C.P.D. 423.

16. Postlethwaite v. Freelan, (1880) 5 App. Cas 599.

17. President of India v. Metcafe Shipping Company ltd. (The Dunelmia), [1970] 1 Q.B.

289 (308)

18. River wear commissioners v. Adamson, (1877) 2 App.Cas. 743.

19. Scrutton Ltd. v. Midland Silicons Ltd., [1962] A.C. 466.


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20. Sea Trade Maritime Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd

(The Athena) [2006] EWHC 2530 (Comm); [2007] 1 Lloyd’s Rep. 280.

21. Smith v. Thompson, (1849) 8 C.B. 44.

22. Tatem v. Gamboa, [1939] 1 K.B. 132.

23. The Athinoula, [1980] 2 Lloyd’s Rep. 481.

24. The Delos, [1999] 2 Lloyd’s Rep. 685.

25. The Ioanna, [1985] 2 Lloyd’s Rep. 164.

26. Thomas v. Portsea, [1912] A.C. 1.

INTERNET DOCUMENTS REFERRED TO

1. Ahmed Taleb, Piracy in West Africa Targets the Region’s Oil Industry,

<http://www.internationalpolicydigest.org/2014/12/30/piracy-west-africa-targets-

regions-oil-industry/>.

2. Guidelines for Owners, Operators and Masters Protection against Piracy in the Gulf

of Guinea Region,

<https://www.bimco.org/Security/Piracy/Piracy_regions/~/media/Security/Piracy/Gul

f_of_Guinea/2012-12-20_RT_agreed_GoG_anti-piracy_guidance.ashx>.

3. Jeremy Byellin, Tackling The Most Important Topics of law School, Part 7B,

Exceptions to Parol Evidence Rule, <http://blog.legalsolutions.thomsonreuters.com/>.

4. Mary Harper, Danger Zone: Chasing West Africa’s pirates,

<http://www.bbc.com/news/world-africa-30024009>.

5. The ungoverned seas, <http://www.economist.com/news/middle-east-and-

africa/21635049-waters-around-somalia-are-calmer-piracy-west-africa-rising>.


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MISCELLANEOUS

1. Best Management Practices 4, 2013

2. Parol Evidence Rule

3. UNCITRAL Model Law

.


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STATEMENT OF FACTS

THE PARTIES AND THE CHARTERPARTY

1. The Defendant LDT PTE, hereinafter referred to as “Charterers”, is a company

incorporated in Singapore. The Claimant is Western Tankers Inc, hereinafter referred

to as the “Owners”, is a company incorporated in the BVI.

2. The Charterers agreed to hire and the Owners agreed to let hire, the Vessel Western

Dawn, hereinafter referred to as the “Vessel” on an amended Shelltime 4 with rider

clauses dated 26 May 2014 for a period of 3 months +/- 30 days CHOPT. The

Charterpart was for a time charter trip to include a voyage from Singapore to OPL

Luanda, West Africa and redelivery in the Mediterranean area.

3. During the negotiations with the Bill at IMWMB, who was the common agent of the

Owners and the Charterers, the Charterers had clearly conveyed their intention of not

wanting to go under London Arbitration.In the final recap, the Law and Litigation had

been left blank.

IMPORTANT PROVISIONS UNDER THE CHARTERPARTY

4. Among other provisions, hire was due per calendar month in advance; the Vessel is

off-hire when there is loss of time because of breach of orders and/or neglect of duty

on the part of the Master, if the Vessel deviates due to any cause or purpose

mentioned in Clause 21(a), she would have been off-hire from the commencement of

such deviation; the Owners, will adhere to BMP4 in an area where there is current risk

of piracy.


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VOYAGE ORDERS

5. As per the voyage orders dated 27 May 2014 sent by the Charterers to the Master,

among other things, the agents at the discharge port were Atlantic Services Agency –

Pic William, the Master was to disregard any voyage-related instructions received

from third parties and immediately refer such instructions to Charterer for handling

and the Master was to send noon reports to the Charterers and Agents to provide daily

ETA updates.

THE VOYAGE

6. The Vessel was on hire from 04 July 2014. She required about 1500 MT from the port

of delivery to port of redelivery. The bunkers ROB were about 570MT. The

Charterers provided 950 MT of bunkers. They were to provide the remaining bunkers

as asked for by the Master, at STS Area 1.On 25 June 2014, the Master reduced the

speed to 12 knots to conserve fuel.

7. She was proceeding through a known piracy threat area. The Owners promised to

supply a list of items to upgrade the systems and equipment at Singapore with any late

delivery scheduled for Durban. The same were not supplied.

8. The Master failed to send noon reports to the Charterers and their agents from 28 June

2014. The Vessel went to a discharge place different from the one mentioned in the

voyage orders. The Charterers and/or their agents, at no point, directed the Vessel to

this discharge place.

9. While at this discharge place, the radar showed what looked like 2 small fishing boats.

At that point of time, the Vessel was stationary. Thereafter, there was a piracy attack.

About 28,500 MT of Gasoil was removed from the Vessel between 4and 17 July

2014. The Charterers did not receive or take possession of the said Gasoil.


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THE CLAIMS

10. The Owners have approached this Tribunal under London Arbitration. The Charterers

contend that Singapore Arbitration is the correct forum and seat.

11. The Owners contend that the Charterers breached the Charterparty. The same in

denied by the Charterers.

12. The Charterers deny that they committed tort of fraud.

13. The Charterers contend that the Charterparty was frustrated by no later that 04 July

2014. They also contend that the Owners breached the Charterparty by not providing

a Vessel that was fir for service. Further, the Owners breached their duty as a bailee.


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ARGUMENTS ADVANCED

I. THIS ARBITRAL TRIBUNAL DOES NOT HAVE JURISDICTION TO DEAL WITH THIS

MATTER.

Before this Tribunal, it is contended that it does not have the jurisdiction to deal with this

matter as there was no agreement to arbitrate itself between the parties as is evident from the

amendments to the contract and the fact that no correspondence took place. Also just by the

virtue of an arbitration agreement being a separate contract, it will not be incorporated by a

general reference in another contract. Without contending the aforesaid, there is also the case

of an ambiguity in the agreed contract coupled with "the connection test”, establishing

Singapore as the right forum for arbitration. Further, even if London Arbitration applies, the

arbitration clause wasn’t drafted as to widely interpret it to cover the disputes relating to tort

of fraud.

A. THERE WAS NO AGREEMENT TO ARBITRATE.

1. It is contended before this Tribunal that there was no consensus ad idem as to arbitrate. In

Homburg Houtimport BV v. Agrosin Private Ltd. (The Starsin)1, it was said that,

“it is common sense that greater weight should attach to terms which the

particular contracting parties have chosen to include in the contract than to

pre – printed terms probably devised to cover very many situations to which

the particular contracting parties have never addressed their minds.”

It is therefore implied that whenever there are some terms to which the party agree over

and above the standard terms from a contract, those terms will be given precedence over

the pre – printed terms of the standard contract to the extent of conflict between the two.

1[2004] 1 A.C. 715.


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2. Also, there is a very well known principle recognized and used while interpreting

contracts signifies that typed terms incorporated by the parties in any contract will

override the printed terms in that contract.2 And it is a well known maxim of construction

that written, stamped or typed words which are inconsistent with the printed terms usually

take effect by superseding the latter.3

3. In the present case, attention must be drawn to the final, fully fixed recap sent by the

shipbroker via e-mail dated 26 May 2014 at 17:09 (UTC +1)4 to both the Charterers and

the Owners. This recap is in fact the accepted Charterparty (which includes ST4, rider

clauses and BIMCO clauses) by both the parties. There is a heading of the clause in the

recap sent by the shipbroker, called “LAW AND LITIGATION:”5, which is specifically a

typed term in the contract relating to the clause regarding the law applicable and recourse

in case of disputes between the parties. It was supposed to be added in the Charterparty

but was left blank in the final Charterparty.

4. Moreover, after the email of 23 June 2014 at 12:30 (UTC+8)6 where the charterers

unequivocally conveyed to the Shipbroker that they are not willing to arbitrate according

to the Laws of England and the Arbitration Act of 1996, i.e. they don’t want London

Arbitration, clearly stating the reason as a negative experience, no conversation or

exchanges took place between the parties directly or through the common agent, the

shipbroker, as to any point relating to law.

5. It is urged that an interpretation be drawn based on the above stated principle of

interpretation that the typed term “LAW AND LITIGATION:”will override the printed

clause of the standard, pre – printed contract - ST4, which with the agreement of the

parties was to apply with the additions and amendments to it. 2The Athinoula, [1980] 2 Lloyd’s Rep. 481. 3The Delos, [1999] 2 Lloyd’s Rep. 685. 4Bundle of Documents, page 5. 5Bundle of Documents, page 6. 6Bundle of Documents, page 2.


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6. The essentials of an arbitration agreement that the agreement should be in writing,7 and

that the parties must consent to it, have not been complied with since after the intimation

of their intention to the charterer, the clause relating to law was left blank and there was

no communication regarding that at any point later. Thus making the arbitration

agreement in the ST4 invalid.

7. Further, an arbitration agreement is a separate contract. It is an accepted rule that because

it is capable of standing on its own and can be differentiated from the main contract, an

arbitration agreement via an arbitration clause has to be incorporated into a contract

through a specific reference and a general reference will not suffice. An express reference

is needed because of the ancillary nature of arbitration clauses.8

8. Clake, J. has also suggested that the parties must have a clear intention to incorporate an

arbitration clause and this should be made clear by general words of incorporation.9 When

they don’t have a notice, the general words will not be sufficient.10 In the matter at hand,

there was no discussion between both the parties on any point of law.

9. When the shipbroker sent the fully fixed recap, it was mentioned that a standard form of

contract ST4, was to be the contract with certain amendments to it. Thus there was no

specific reference and only a general reference to the clause was made. It wasn’t

specifically mentioned and referred to, which will not suffice. Also, in The Athena (No.

2)11 it was held that when there are two contract cases, a general reference is not

sufficient to incorporate an arbitration clause. A bill of lading is a two contract case and

7 NIGEL BLACKABY, CONSTANTINE PARTASIDES, ALAN REDFERN & MARTIN HUNTER, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION, 89 (5th ed., Oxford). 8 The Delos, [1999] 2 Lloyd’s Rep. 685. 9 Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v. Sometal SAL, [2010] EWHC 29 (Comm). 10Thomas v. Portsea, [1912] A.C. 1; Federal Bulk Carriers Inc v. C Itoh & Co Ltd (The Federal Bulker), [1989] 1 Lloyd’s Rep. 103. 11Sea Trade Maritime Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Athena) [2006] EWHC 2530 (Comm); [2007] 1 Lloyd’s Rep. 280.


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thus by virtue of that, it does not have the arbitration clause which had a general

reference, incorporated in it.

10. This clearly points out to the fact that there was no agreement to arbitrate at all between

the parties to the Charterparty pursuant to which the bill of lading is required.

B. EFFECT OF AN AMBIGUITY REGARDING THE CONTRACTUAL CLAUSE.

11. Without prejudice to the aforementioned that there is no agreement to arbitrate, even if an

intention to arbitrate can be drawn upon it is stated that London Arbitration will not

apply. Since the term “Law and Litigation:” was left blank in the recap, it creates an

ambiguity and more than one interpretation is possible for the present contract.

12. According to the “Parol Evidence Rule” any extrinsic evidence is inadmissible while

interpreting a contract and only the contract as it is should be taken into consideration.

But this rule is not absolute. There are various exceptions to this rule, one of them being

ambiguity created by the words of the contract.12 When it is shown by extrinsic evidence

that the terms of the contract are ambiguous, evidence is admissible to explain and

resolve the ambiguity.13

13. In all cases of interpretation of a contract, it is essential to see the intention of the parties,

which is rendered difficult due to imperfection of the language. When this happens, it

warrants a further inquiry as to the circumstances with reference to which the particular

words are used. The meaning of the words varies according to the circumstances it is used

in.14

14. The clause was left blank by the shipbroker, who was a common agent, when he sent the

email as he was already aware of the Charterers’ intention of not wanting and reluctance

12Jeremy Byellin, Tackling The Most Important Topics of law School, Part 7B, Exceptions to Parol Evidence Rule, http://blog.legalsolutions.thomsonreuters.com/ (last accessed date 14 April 2015). 13Smith v. Thompson, (1849) 8 C.B. 44. 14River wear commissioners v. Adamson, (1877) 2 App.Cas. 743.


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of going for London Arbitration.15 On the contrary there was no discussion by the Owners

about the law and litigation part either with the broker or with the Charterers. Also the

fact that in the recap that clause was left blank indicates that there was no intention to be

bound by the standard term relating to law and litigation.

15. As a result of the above stated ambiguity regarding undecided provisions concerning law

and litigation, it is to be decided on the basis of the facts of the present case by the present

Tribunal. In international arbitration it is a well established principle that it is an inherent

power of the arbitral Tribunal to rule on its own jurisdiction and it also includes the

questions relating to the validity of the arbitration agreement itself. It can do so by going

into the merits of the case as well.16

16. So, in the absence of a pre decided applicable law, the appropriate recourse would be to

apply the ‘connection test’ i.e. which country has the closest connection out of the two.

The application of this test can be seen in Coast Line Ltd. v. Hudig17, where it was said

that no single factor is to be treated as providing a prima facie answer to the question of

applicable law but all must be taken into consideration. The loading port is Singapore.

Also the Bills of Lading were issued at Singapore. This is also to be seen with the fact

that the respondent is a company incorporated in Singapore. On the contrary London is

neither the principal place of business of the Owners nor is it the discharge port.

Moreover, the ship is also not registered in London. Thus we see that Singapore fulfils the

“connection test”. Also, where the contract of carriage contains no choice of forum clause

a claimant will normally seek to institute proceedings in the forum where the defendant

15Bundle of Documents, page 2, voyage correspondence dated 23 June 2014 at 12:30 (UTC+8). 16Christopher Brown Ltd v Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte GmbH [1954] 1 QB 8, 12-3 17[1972] 2 QB 34.


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resides or carries on business.18 Thus if there was an arbitration to be conducted, the

proper forum for arbitration would be Singapore Arbitration.

C. TORT OF FRAUD IS NOT ADMISSIBLE IN THIS ARBITRATION.

17. Again, without contrary to anything aforementioned, if London Arbitration is to apply,

the tort of fraud is inadmissible under this Arbitration as the wording of the arbitration

clause is not wide enough to include such disputes.

18. It is out rightly denied that any fraud took place from the Charterers’ side and any

representations made by the Charterers directly or through ASA were untrue. Any

disputes relating to any tort not being between the two parties to the charter will not arise

out of the charter and thus is not admissible under this arbitration. Also, an issue relating

to tort based on allegation of misrepresentation by the Charterers can stand as a separate

dispute. It is not necessary to resolve any of the contractual disputes for a decision on

such tortious claims. So the two are separate and thus cannot be taken up together under

the scope of this charter.

19. The phrase “all disputes arising out of this charter” is not wide enough to include a claim

regarding tort of fraud that is not connected to both the parties. It is not necessary to

resolve the contractual issue for a resolution of tortious disputes. Thus the issues relating

to tort of fraud are not admissible.

II. THE OWNERS HAVE FAILED TO PERFORM THEIR DUTY AS A BAILEE.

20. It is submitted that the duties of a bailee have been breached by the conduct of the owners

when they failed to exercise reasonable care and skill.

21. Bailment takes place when “possession of the goods is handed over to another person

who is not their owner and that person (“the bailee”) is subject to certain obligations in 18JOHN F WILSON, CARRIAGE OF GOODS BY SEA (4th ed., Longman 2001).


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relation to the goods which obligations are owed to their owner (“the bailor”)19.

Bailment implies adding of value and in case of carriage of goods; the value is added by

transporting the goods where they have a specific purpose.

22. It has also been said that the Charterparty is the contract of hire (and transportation)

between the parties.20

23. The cargo was delivered and loaded on the ship with the intention (as set out in the

Charterparty), to transport them to the discharge port. Hence there is a contract of

transportation. It was a service rendered by the owner through his Master and crew, of

carrying goods.21 The Owners were also responsible for operation and management of the

ship.22 The possession of the goods was delivered by the Charterers which belonged to

the Charterers themselves. Moreover, there is a lien clause in Charterparty, ST4.23 It has

been said in the clause that the owners shall exercise lien on cargo. A lien can be

exercised only if one had possession. Thus if the owners could exercise lien, it means that

they had possession.

24. All these facts point out towards bailment and further go to show that the Owners were

acting as a bailee of the Charterers’ goods. When the carrier is not the owner but the Bills

of Lading is signed on his behalf and the possession of the goods is given to the Owners

by the Charterers, an implied contract of bailment is made between the Charterers and the

Ship-owners.24 It has also been said that under a time Charterparty, when the captain

takes possession of the goods he acts as an employee of the ship-owner.25 In the present

case, the bills of lading were signed on behalf of the Captain of the Vessel, and the

19CHITTY ON CONTRACTS SPECIFIC CONTRACTS, 195 (30th ed., Volume II, Sweet & Maxwell 2008). 20President of India v. Metcafe Shipping Company ltd. (The Dunelmia), [1970] 1 Q.B. 289 (308). 21DROBNIG, INTERNATIONAL ENCYCLOPEDIA OF COMPARATIVE LAW, 4-98 (Instalment 12, Martinus Nijhoff Publishers 1981). 22Bundle of Documents, pages 8-9. 23Clause 26, ST4. 24Haylin Low, Shipowners' Liabilities: Elder Dempster Revisited. 25 CRAVER, CRAVER ON BILLS OF LADING, 352 (2nd ed., Sweet & Maxwell 2005).


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Owners were not mentioned as a carrier. Thus, the implied bailment theory26 applies over

here. This explanation of the Elder Dempster27 case has been approved in Scrutton Ltd. v.

Midland Silicons Ltd.28 and in Hispanica De Petroleos S.A. v. Vencedora Oceanica

Navegasion S.A. (The Kapetan Markos) (No. 2)29. 30

25. Thus the Owners are to exercise reasonable care and skill of a person who is qualified to

perform the duties of bailment.31 Here the duty pertained to transportation of the goods

via sea and thus reasonable care and skill would be to exercise caution against known

risks. West Africa, the area in which the Vessel was sailing, is a known piracy risk area.

The Master of the vessel failed to take reasonable measures to safeguard the Vessel and

the cargo onboard against such a known threat. As a result, there was loss of cargo from

the possession of the Owner. Also, it is an obligation to return the goods under bailment

to the owner or dispose of the goods in the manner provided by the owner, and the

transfer of possession is not permanent. Since reasonable care was not exercised, some of

the goods were stolen by the pirates and thus taken from the possession of the Owners.

This in turn rendered the discharge of cargo to the receivers named in the Bills of Lading

impossible.

26. Thus by virtue of this, the duty of a bailee has been breached by the Owners.

27. Due to this breach of duty as a bailee, the ultimate purpose of the contract of

transportation of goods to the discharge port was rendered impossible. Even if the Owners

were to discharge the cargo at the designated discharge port after the piracy attack, they

would not have been able to deliver the full cargo.

26 Elder, Demspter & Co and Others v. Zochonis & Co [1924] 1 A.C. 522. 27 [1924] 1 A.C. 522. 28 [1962] A.C. 466. 29 [1987] 2 Lloyd’s Rep. 321. 30 CRAVER, CRAVER ON BILLS OF LADING, 352 (2nd ed., Sweet & Maxwell 2005). 31 Nugent v. Smith, (1876) 1 C.P.D. 423.


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III. RELATING TO HIRE.

28. There has been no breach of Charterparty by the Charterers due to the non-payment of

hire as alleged by the Owners.

A. NO HIRE WAS DUE OR OWING BY THE CHARTERERS UNDER THE CHARTERPARTY ON

03 JULY 2014.

29. The parties have agreed, by way of Clause 9 of the Charterparty, ST4, that payment of

hire shall be made per calendar month, in advance. In Freeman v. Reed32, it has been

stated that, “the calendar month is complete when, starting from the given day in the first

month; you come to the corresponding day in the succeeding month whatever be the

length of either.”

30. The Vessel was on hire from 04 June 2014. Therefore, hire was payable from 04 June

2014. Therefore, the next hire would be payable of 04 July 2014 and on no date before

that. The Owners in their voyage correspondence dated 03 July 2014 at 18:01 (UTC+1)

have said to the Charterers that the second hire payment was then due.33 However, in light

of the terms of the Charterparty, the given fact scenario and what has been stated in

Freeman vs. Reed, the calendar month for the payment of second hire would not begin on

03 July 2014. Thus, the second hire would not be due before 04 July 2014.

B. THE CHARTER PARTY WAS FRUSTRATED BY NO LATER THAN 04 JULY 2014.

31. It is submitted that the Owners’ inability to comply with the obligations under the charter

entitled the Charterers to treat it as at an end, since the breach went to the root of the

contract,34and it frustrated the commercial purpose of the contract.35

32 (1863) 4 B. & S. 174. 33Bundle of documents, page 39. 34Hongkong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd, [1962] 2 QB 26; Davidson v. Gwynne, 12 East 380.


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32. The Vessel was chartered under the Charterparty for a period of 3 months +/- 30 days

CHOPT for the purpose of transfer of cargo comprising Jet A1 fuel and GO, to a

particular discharge place.

33. As per the voyage orders, the Master was to provide the ETA in the noon reports which

were to be sent to the Charterers on a daily basis.36 The ETA would thus help to construe

the reasonable amount of time required to reach the discharge place. The Charterers

intimated Angola Energy Imports, the buyer of the said cargo, about the ETA, on the

basis of the information received from the Master via voyage correspondences dated 08

June 2014 at 11:02 (UTC+8) and at 12:19 (UTC+8).

34. As has been stated in Postlethwaite v. Freelan37, where a party to a contract undertakes to

do an act, the performance of which depends entirely on himself, and the contract is silent

as to the time of performance (or merely uses indefinite words such as “with all

dispatch”), the law implies an obligation to perform the act within a reasonable time

having regard to all circumstances of the case.

35. Due to deviation and redirection of the Vessel, and the subsequent loss of cargo due to the

piracy attack, which took place on 04th July, it became impossible to discharge the cargo

within a reasonable time. Also, the loss of cargo resulted in the destruction of the

foundation of the contract. This amounted to frustration of the Charterparty.

36. Further, it may be noted that in Tatem v. Gamboa38, the Charterparty, which was for a

short duration, a specific purpose and for specific geographical limits, was held to be

frustrated although the event leading to the destruction of the foundation of the contract

was foreseeable. Thus, though piracy was a known risk in the West African region, the

35Jackson v. The Union Marine Insurance Co Ltd, (1874-75) LR 10 CP 125. 36Bundle of documents, page 15. 37(1880) 5 App. Cas 599. 38[1939] 1 K.B. 132.


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Charterparty was frustrated no later than 04 July 2014 because of the destruction of the

foundation of the contract.

C. VESSEL WAS OFF-HIRE FROM 04 JULY 2014 UNTIL THE VESSEL WAS READY TO

RESUME SERVICE OF VOYAGE FROM A POSITION NOT LESS FAVOURABLE TO

CHARTERERS THAN THAT AT WHICH SUCH LOSS OF TIME COMMENCED.

36. According to Clause 21(a) of the Charterparty, ST4, the Vessel will be off-hire due to

loss of time (whether by way of interruption in the vessel’s service or, from reduction

in the vessel’s performance, or in any other manner) if such a loss is caused by the

breach of orders or neglect of duty on the part of the Master. Further, Clause 21(c)

states that in the event of the Vessel deviating for any cause or purpose mentioned in

clause 21(a), the Vessel shall be off-hire from the commencement of such deviation.

37. In Minerva Navigation Inc c. Oceana Shipping AG v. Transatlantica Commodities SA

Athena,39 the Charterers had appealed on the point of computation of time lost so as to

calculate the net loss of time in order to make deductions from the hire payable. It had

been ascertained during the arbitration proceedings and was reiterated by the Queen’s

Bench and the Court of Appeal that the said loss of time was because of the Master’s

non-compliance with the instructions given by the Charterers, thereby resulting in the

default of Master.

38. There was non-compliance with the orders and instructions given by the Charterers to

the Master of WESTERN DAWN. The Charterers submit the following points to

ascertain the same:

a. Vide voyage orders dated 27 May 2014, the Master was to disregard any voyage

related information from third parties and immediately refer such instructions to

39[2013] 2 Lloyd's Rep. 673.


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the Charterers.40 The Master received instructions concerning the discharge of

cargo from a third party via a voyage correspondence sent by the latter on 28 June

2014 at 18:02 (UTC+1).41 The Master failed to refer the same to the Charterers.

b. The Master was instructed to give daily ETA updates to the Charterers and Agents

at noon.42 After 28 June 2014, the Master failed to send any noon reports to the

Charterers and their agents, ASA. The noon reports thereafter were sent to a third

party as is evident from the bundle of documents. There was no communication

concerning the daily updates of the Vessel between the Master and the Charterers

on and from 28 June 2014.

c. The Master directed the Vessel to a discharge place different from that which had

been intimated to them by the Charterers. In doing so, the Vessel did not complete

its main obligation under the Charterparty, that is, discharge of cargo at a

particular place, as desired by the Charterers. This resulted in loss of time to the

Charterers.

d. Due to this deviation of the Vessel, the Charterers went off-hire under clause 21(c)

read with clause 21(a)(ii) of the ST4, by no later than 04 July 2014.

39. Further, as has been stated earlier, the Vessel was sailing through a known piracy risk

area. As a result, the Owners would have to, at all times, adhere to the provisions of

BMP4.43 It has been stated in BMP4 that it is the Master’s duty to ensure that all the

BMP measures are in place. The Master failed to ensure that all the items listed in the

voyage correspondence sent by Rich Evasion CSO at WTI Safety and Security to

40Bundle of documents, page 13. 41Bundle of documents, page 35. 42Bundle of documents, page 15. 43Bundle of documents, page 08.


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Lucius at Purchasing WTI dated 03 June 2014 sent at 17:51 (UTC+8)44, as were ready

to be delivered at Durban, were in place on the Vessel.

40. The Charterers thus submit that the Vessel was off-hire and will remain off-hire until

the Vessel is ready to resume service of its voyage from a position not less favourable

to the Charterers than that at which such loss of time commenced.45

41. Further, the Owners, in the Statement of Claim, have stated that the non-payment of

hire amounted to breach of Charterparty.46 In The Ioanna,47 it has been said by

Staugton, J., that “Off-hire events are not necessarily a breach of contract at all.” The

Owners further stated in the Statement of Claim that the Charterers have refused to

pay the hire or any part thereof.48 However, in the voyage correspondence dated 04

July 2014 at 12:24 (UTC+8), it has been said by the Charterers to the Owners that

they consider payment of second hire not due until the Vessel is back on-hire.

Moreover, in the Statement of Defence, the Charterers have stated that the Vessel was

off-hire until she was ready to resume service of its voyage from a position not less

favourable to Charterers than that at which such loss of time commenced.49 This is in

line with Clause 21(a) of the Charterparty, ST4. This clearly shows that the Charterers

would have continued timely payment of hire once she would have been back on-hire.

Thus, non-payment of second hire did not amount to breach of Charterparty, as

alleged by the Owners

.

44Bundle of documents, page 27. 45Clause 21(a), ST4. 46Bundle of documents, page 62. 47[1985] 2 Lloyd’s Rep. 164. 48Bundle of documents, page62. 49Bundle of documents, page 68.


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IV. PERFORMANCE OF THE CHARTERPARTY.

No misrepresentations were made by the Charterers. The Owners breached the

Charterparty by providing a Vessel, which was not fit for the voyage.

A. ASA2 IS NOT, AND HAS NEVER BEEN THE CHARTERERS AGENT.

42. The Charterers clearly specified their agents with respect to the discharge port as

Atlantic Services Agency (ASA)50 in the voyage orders. According to the terms of the

voyage orders, the Owners had to appoint agents nominated by the Charterers. The

Charterers had nominated two agents, JR BARR AGENCY PTE at the load port and

ATLANTIC SERVICES AGENCY at the discharge port.51 There was no

acknowledgement or mention of any other agency. The Charterers had not

communicated the appointment of any other agency to the Owners. Further, the

Charterers explicitly stated that the “Master shall disregard any voyage-related

instructions received from third parties and immediately refer such instructions to

Charterers for handling.”52

43. The Owners claim that an agency called Atlantic STS Agency (ASA2), on 28 June

2014 at 18:02 (UTC+1),53 represented that they were acting on behalf of the

Charterers, with respect to control of the Vessel. The Charterers do not admit to the

existence and content of the said representation. The Owners did not convey the

communication of ASA2 with them, to the Charterers, as was mandated by the

voyage orders54, although they had corresponded with the Charterers on two

subsequent instances. If a party had an opportunity to ascertain the authority or lack of

it of an apparent agent but did not do so, the party cannot hold the party on whose

50 Bundle of documents, page 14. 51 Bundle of documents, clause 4.0, page 15. 52Bundle of documents, Page 13. 53Bundle of documents, page 35. 54 Bundle of documents, page 13, voyage orders as sent on 27 May 2014 at 09:27 (UTC+8).


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behalf such representation was made, liable for the acts of such an apparent agent.55

There existed no principal - agent relationship between the Charterers and ASA2 as

the Charterers did not have any interaction with an agency named ASA2.

44. The Owners did not send the daily updates, by means of the noon reports, to the

Charterers and to the Charterers agent, ASA, as was required by the voyage orders,56

after 28 June 2014, that is, since the date of the receipt of the supposed voyage

correspondence from the alleged agents, ASA2. The alleged agents made the

representation, on behalf of the Charterers, in a voyage correspondence addressed

only to the Master, on 28 June 2014 at 18:02 (UTC+1). A copy of the same was not

sent to the Charterers or their agent (ASA) Further, the Charterers were not copied on

the voyage correspondences sent by the Master, to ASA2 on the 28th57 and 29th of

June 2014 either.58 Hence there was no possibility of the Charterers being aware of

the correspondence between the Master and the third party.

B. NO MISREPRESENTATION WAS MADE ABOUT THE SUPPLY OF BUNKERS.

45. The Owners claim that the Charterers made a misrepresentation, that a sufficient

supply of bunkers would be made available at Durban or Cape Town. A fraudulent

misrepresentation is a knowing misrepresentation or knowing concealment of material

fact made to induce another to act to his or her detriment.59 It is essential that a false

statement be made, for one to prove fraudulent misrepresentation.60 The Charterers

did not make false statements. All the statements, made by the Charterers regarding

the supply of bunkers were statements of intention. The Charterers did not have nay

55Jacobs v. Morris, [1902] 1 Ch 816; Australian Bank of Commerce v. Perel, [1926] AC 737. 56Bundle of documents, clause 3.2, page 15. 57Bundle of documents, page 35, voyage correspondence at 18:02 (UTC+1). 58Bundle of documents, page 36, voyage correspondence at 12:29 (UTC+1) ). 59 BLACK’S LAW DICTIONARY, 775 (10th ed., Thomson Reuters). 60 Derry v. Peek, (1889) 14 App. Cas. 337.


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malafide intent and had every intention to provide the bunker supply. The Charterers

were unable to provide the bunkers at Durban but were instead going to be provided

at STS Area 1, as identified by the Master on 28 June 2014.61

46. The required quantity of bunkers, as requested by the Master for the entire voyage, i.e.

from the delivery at Singapore to the redelivery at Gibraltar, was 1500 MT, excluding

the quantity of bunkers already on board. As given in clause 15 of ST4 Charterparty,

all the bunkers on board the vessel shall be the property of the Charterers. As

confirmed by the Master,62 the Charterers had supplied 950 MT of bunkers at the start

of the voyage in addition to the 570 MT already on board. That made the quantity of

bunkers, on board the vessel 1520 MT FO. The remainder would be 550MT that

would be required for redelivery. The same was to be provided at the next main

bunkering port, i.e. STS Area 1, the coordinates of which were identified by the

Master.63 This proves that there was no misrepresentation, made with respect to the

supply of bunkers, by the Charterers as they had every intention of supplying the

same at the next bunkering port, STS Area 1.

C. THE MASTER OF THE VESSEL FAILED TO FOLLOW ANTI-PIRACY PRECAUTIONS

47. The Charterers submit that the Master failed to follow anti-piracy precautions, as

required by the Charterparty and the industry practice relating to West Africa. The

Owners were bound by the STS Piracy Clause of the Charterparty and were to adhere

to the requirements laid out in the Best Management Practices 4, 2013(“BMP4”).

BIMCO also laid down interim guidelines for Owners, Operators and Masters for

protection against piracy in the Gulf of Guinea region. It is a fundamental requirement

61Bundle of documents, pages 33-34, voyage correspondence at 11:42 (UTC+2), 62Bundle of documents, page 25, voyage correspondence on 03 June 2014, 12:17 (UTC+8), 63Bundle of documents, pages 33-34, voyage correspondence at 11:42 (UTC+2).


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of BMP4 to implement Ship Protection Measures (SPMs) as laid out in Section 8.64

“The ship protection measures described in Section 8 of BMP4 also apply in the Gulf

of Guinea. When STS operations are expected to be conducted, extra attention should

be paid to the use of physical protection measures.”65 It is an essential requirement

under Sub-clause 8.566 that necessary physical barriers be installed, to make it as

difficult as possible to board and hence gain access to the Vessel. Installation of Razor

Wire along the periphery of the Vessel is listed as an essential requirement under the

said sub-clause.

48. The lack of Razor Wire and hence a need for it was noted by the Owners’ Safety and

Security Department and the same was conveyed to the Purchasing Department of the

Owners company. Among other requirements, razor wire, of considerable length, was

demanded at Singapore anchorage prior to commencement of the voyage on 03 June

2014.67 The Purchasing Department responded by stating that the required items

would be provided at Durban instead. On 29 June 2014,68 the Master reminded the

Safety and Security Department about the said order, stating that the Singapore order

had not been received. It is hence inferred that razor wire had not been installed at the

time of the piracy attack.

49. “In January 2014, the product tanker MT Kerala was hijacked by Nigerian pirates

hundreds of kilometres to the south of the Gulf of Guinea, precisely off the coast of

Luanda in Angolan waters. The ship was held for eight days during which the cargo

on-board was illegally transferred in a ship-to-ship operation along the West African

coast. Not only did this operation show how far the pirates reach, but it also

64Best Management Practices 4, Section 8, 2013. 65Guidelines for Owners, Operators and Masters for Protection against Piracy in the Gulf of Guinea Region, https://www.bimco.org/Security/Piracy/Piracy_regions/~/media/Security/Piracy/Gulf_of_Guinea/2012-12-20_RT_agreed_GoG_anti-piracy_guidance.ashx (last accessed date April 14, 2015). 66 Best Management Practices 4, Sub section 8.5, 2013. 67Bundle of documents, page 27, voyage correspondence as on 03 June 2014 at 17:51 (UTC+8). 68 Bundle of documents, page 36 on 29 June 2014 at 11:59 (UTC+1).


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highlighted their increasing efficiency in unloading cargo and shipping it back to the

coast.”69 The piracy attack, in the present case, occurred off the Angolan Coast in

West Africa, which is a known piracy risk zone as inferred from the above incident,

which was of a recent nature. The Owners as well as the Master, in the present case,

were well aware of that fact.70

50. “Cargo theft is the predominant threat in West Africa. When pirates hijack an oil

tanker, they take her to a quiet place, bring another ship alongside and siphon off the

oil. In most cases of West African piracy, the pirates want the cargo, not the crew.”71

“The operations conducted by West African pirates have largely targeted the oil

tankers, which they drain of oil in what is known as oil bunkering.”72 The existence of

these recent reports should have compelled the Owners to take appropriate steps to

make sure that the BMP4 measures were in place on the Vessel before proceeding

into this region. Failure on behalf of the Owners to install the above mentioned

measures resulted in the loss of about 28,190 MT Gasoil during a piracy attack on

WESTERN DAWN.73

51. According to the BIMCO Piracy clause of the Charterparty, the Vessel was not

obligated to proceed to an area that, in the reasonable judgment of the Master could be

dangerous to the Vessel due to an actual threat or reported acts of piracy. “In the Gulf

of Guinea in the west, attackers are more intent on stealing cash and cargoes of fuel,

69Ahmed Taleb, Piracy in West Africa Targets the Region’s Oil Industry, http://www.internationalpolicydigest.org/2014/12/30/piracy-west-africa-targets-regions-oil-industry/(last accessed date April 12, 2015). 70Bundle of documents, pages 21-22, voyage correspondence as on 27 May 2014 at 16:59 (UTC+1). 71Mary Harper, Danger Zone: Chasing West Africa’s pirates, http://www.bbc.com/news/world-africa-30024009 (last accessed date April 12, 2015). 72Ahmed Taleb, Piracy in West Africa Targets the Region’s Oil Industry, http://www.internationalpolicydigest.org/2014/12/30/piracy-west-africa-targets-regions-oil-industry/(last accessed date April 12, 2015). 73 Bundle of documents, pages 41 and 42, voyage correspondences dated 17 July 2014 sent at 23:20 (UTC+1) from the Master to Oliver and Chris, and that at 23:25 (UTC+1) on the same date.


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such as diesel, from ships coming in to port. Crews are sometimes kidnapped.”74 It

can be reasonably inferred from the use of the terms “another tanker” and “the latest

tanker” in the newspaper article dated 07 July 201475 that the occurrence of the pirate

attack in question was not an isolated incident. Undeterred by this knowledge, the

Vessel proceeded into the region.

52. As has been stated in the provisions of BMP4, commonly, two small high-speed (up

to 25 knots) open boats or ‘skiffs’ are used in attacks. It is pertinent to note here that

on 04 July 2014, as has been stated in the mail sent by the Master to the Owner dated

04 July 2014 at 05:20 (UTC+1), the radar showed what looked like 2 small fishing

boats. At that point of time, the Vessel was stationary. This showed negligence on the

part of the Master since it is a known fact that pirates generally attack using two small

open boats and it is thus reasonable to anticipate such an attack, accordingly, the

Master should have taken precautionary measures.

53. This shows that there was neglect of duty on the part of the Master. As a result of this

neglect, the Vessel met with a piracy attack. Due to the said attack, material damage

was caused to the Vessel, which affected the future performance of the Vessel.

54. Further, sub-clause (4) of the Piracy Clause76 would not apply, as there was no due

diligence exercised on the part of the Owner. The Master, a servant of the Owner,

acted in a negligent manner.

55. It is therefore submitted that the Owners did not take the mandatory protections

prescribed under BMP4 and that the occurrence of the subsequent piracy attack was a

consequence of this negligence.

74The ungoverned seas, http://www.economist.com/news/middle-east-and-africa/21635049-waters-around-somalia-are-calmer-piracy-west-africa-rising (last accessed date April 12, 2015). 75Bundle of documents, page 46. 76Bundle of documents, page 8


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56. The above contentions further prove that the Owners breached the Charterparty. They

did not provide the Charterers with a vessel, which was fit for the voyage. The Master

was incompetent and negligent in his actions and did not comply with the provisions

of the ST4 pro-forma.


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PRAYER

In the light of the above submissions, the Charterers request the Tribunal to declare:

1. That Singapore is the proper forum of arbitration.

Alternatively,

1. That the Charterers are not liable for breach of Charterparty

2. That the Charterparty was frustrated by no later than 04 July 2014.

3. That there was no fraud committed by the Charterers.

4. That the Owners breached the Charterparty by providing a Vessel not fit for service

5. That the Owners converted and/or breached their duty as a bailee in respect of the

cargo on the Vessel.

Therefore, the following reliefs are prayed for:

1. Loss and damage resulting from the Owner’s breach

2. Interest

3. Costs

4. Further or other reliefs as the Tribunal considers fit.

16TH INTERNATIONAL MARITIME LAW …...TEAM 10: MEMORANDUM FOR THE DEFENDANT Page|7!!! 20. Sea Trade...

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