19th ANNUAL INTERNATIONAL MARITIME LAW … · Achielle Lauro Fu Giacchino & C v Total Societa...

19th ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2018

MEMORANDUM OF TEAM 27

PARTIES:

CERULEAN BEANS AND AROMAS PTY LTD CLAIMANT

-AND-

DYNAMIC SHIPPING LLC

RESPONDENT -AND-

THE SHIP ‘MADAM DRAGONFLY’

-COUNSEL FOR RESPONDENT-

MELISSA ARSOV MATTHEW JAMES MCKIERNAN CELIL SAID KARDASLAR FIONA GARTON

MEMORANDA FOR RESPONDENT TEAM 27

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TABLE OF CONTENTS INDEX OF ABBREVIATIONS……………………………….……….….…. 3 INDEX OF AUTHORITIES………………………………………….…..…... 4

A CASES B LEGISLATION

C CONVENTIONS AND TREATIES D COMMENTARY SUMMARY………………………………………………………...……….... 7-8 PRELIMINARY ISSUES ....………………………………………………..... 9 A JURISDICTION ARGUMENT ON THE MERITS………………….......................................... 10 SUBMISSIONS ONE: THE CHARTER PARTY

I THE TRIBUNAL SHOULD FIND THAT THE RESPONDENT FIND THAT THE RESPONDENT DID NOT BREACH THE CHARTER PARTY II THE DEVIATION BY THE RESPONDENT TO THE PORT OF SPECTRE WAS JUSTIFIED UNDER CLAUSE 17 OF THE CHARTERPARTY AS A FORCE MAJEURE III IN THE ALTERNATIVE, THE DEVIATION WAS JUSTIFIED FOR THE PURPOSE OF SAVING PROPERTY

IV FURTHER, THE RESPONDENT DID NOT BREACH THE CHARTERPARTY AS THE DELAY WAS DUE TO FORCE MAJEURE

V THE RESPONDENT CANNOT BE HELD LIABLE FOR DAMAGE TO CARGO WHICH OCCURRED AFTER DELIVERY AT THE PORT OF DILLAMOND

VI IN THE ALTERNATIVE, IF ANY LIABILITY IS ATTRIBUTED TO THE RESPONDENT THEN IT IS SUBJECT TO LIMITATION UNDER INTERNATIONAL CONVENTION

SUBMISSIONS TWO: THE ISSUE OF LIEN OVER THE VESSEL I THE TRIBUNAL SHOULD DENY CLAIMANTS ASSERTION OF ENTITLEMENT OVER THE MARITIME LIEN OVER THE VESSEL

SUBMISSIONS THREE: COUNTERCLAIM

I THE TRIBUNAL SHOULD MAKE ORDERS FOR THE CLAIMANT TO BE HELD LIABLE FOR THE AMOUNT OWING UNDER THE CHARTERPARTY II THERE IS A VALID GENERAL AVERAGE CLAIM UNDER CHARTERPARTY

REQUEST FOR RELIEF


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INDEX OF ABBREVIATIONS

& And

B/L Bill of lading

CBA Cerulean Beans and Aromas Proprietary Limited

CISG Convention on the International Sale of Goods

Cl Clause

DS Dynamic Shipping LLP

FM Force Majeure

LMMA London Maritime Arbitrators Association

MLAANZ Maritime Law Association of Australia and New Zealand

Ltd Limited

Pty Proprietary

UNCITRAL United Nations Commission on International Trade Law

USD United States Dollar

MD Madame Dragonfly


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INDEX OF AUTHORITIES

A CASES

AUSTRALIA

Australian Coastal Shipping Case

Australian Coastal Shipping Commission v Green [1971] 1 QB 456, 483 (Lord Denning MR)

Bulk Chile Case Dry Bulk Handy Holding Inc. and another v. Fayette International Holdings Ltd and another (The Bulk Chile) [2012] EWHC 2107 (Comm)

Great China Metal Case

Hewett Case Hako Fortress Case

Sam Hawk Case

Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad ( 1998) 196 CLR 16 Hewett v Court (1983) 149 CLR 639 Programmed Total Marine Services Pty Ltd v The Ships Hako Fortress, Hako Endeavour, Hako Excel and Hako Esteem (2013) FCAFC 21 The Ship “Sam Hawk” v Reiter Petroleum Inc [2016] FCAFC 26

UNITED KINGDOM

Azioni Case

Halcyon Isle Case

Achielle Lauro Fu Giacchino & C v Total Societa Italiana Per Azioni [1968] 2 Lloyd's Rep 247 Bankers Trust International Ltd v Todd Shipyards Corporation [1981] AC 221 (PC), 232

Hong Kong Fir Case

Bijela Case

Trade Green Case

Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [ 1962] 2 QB 26 Marida Ltd v Oswal Steel (The Bijela) [1993] 1 Lloyd’s Rep 411 Trade Green Shipping Inc v Securitas Bremer Allgemeine Verischerungs AG [2000] 2 Lloyd’s Rep 451.

AQASIA Case

Makis Case

Vinnlustodin HF and another v Sea Tank Shipping AS [2016] EWHC 2514 (Comm) Vlassopoulos v British and Foreign Marine Insurance Co [1929] 1 KB 187


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UNITED STATES OF AMERICA Trojan Case

Cineraria Shipping Case

Peck & Hughes v American Smelting and Refining Co (1913) 210 Fed Rep 89 Royal Insurance Co of America v Cineraria Shipping Co 894 F Supp 1557 (1996)

B AUSTRALIAN LEGISLATION

Admirality Act 1988 (Cth) Limitation of Liability for Maritime Claims Act 1989 (Cth)

Navigation Act 1912 (Cth)

Sale of Goods (Vienna Convention) Act 1986 (NSW)

Trade Practices Act 1975 (Cth)

Carriage of Goods by Sea Act 1991 (Cth)

C CONVENTIONS AND TREATIES Convention on Limitation of Liability for Maritime Claims, opened for signature 19 November 1976, [1991] ATS 12 (entered into force 1 December 1986); see Limitation of Liability for Maritime Claims Act 1989 (Cth).

International Convention for the Safety of Life at Sea (SOLAS) 1974, Ch V Regulations; International Maritime Organisation, Annex 25 - Guidelines for Voyage Planning - IMO Resolution A.893(21) UNCITRAL Model Law on International Commercial Arbitration

United Nations Convention on Contracts for the International Sale of Goods, opened for signature 11 April 1980, 1489 UNTS 58 (entered into force I January 1988) York-Antwerp Rules 1994


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D SECONDARY MATERIAL

Girvin Girvin S, Carriage of Goods by Sea (Oxford University Press, 2nd ed, 2011)

Hudson

Sherman

Wilson

Hudson, Geoffrey, The York-Antwerp Rules: The Principles and Practice of General Average Adjustment in Accordance with the York-Antwerp Rules 1994 (LLP, London, 2nd ed, 1996) Sherman, Charles Phineas, Roman Law in the Modern World, vol 2 (Littleton, Colo. : F.B. Rothman, 1993) Wilson, John F, Carriage of Goods by Sea (Pearson, 7th ed, 2010)


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SUMMARY

The parties

Cerulean Beans and Aromas Pty Ltd, is an exporter of speciality coffee goods.

Dynamic Shipping LLC is a transportation and logistics company.

Voyage Charterparty Agreement

The parties entered into a Charterparty agreement (‘The Charterparty‘) for the

transportation and delivery of 35,000kg of specialty grade coffee suitable for

immediate sale. The goods were packaged in four containers, with no damage noted

by the carrier during loading. Under the initial agreement the goods were to be carried

on board the vessel, MADAME DRAGONFLY MD 737.

Jurisdiction

The agreement is governed by the law of New South Wales, Australia (Clause 28, the

Charterparty). Incorporating Clause Paramount: Owners to have benefit of Article

4(5). The lex mercatoria of both ports are UK law. Both Jurisdictions are CISG

signatories.


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According to Clause 27 a of the Charterparty, ‘any dispute arising out of or in

connection with its contract, including any question regarding its existence, validity or

termination, shall be referred to arbitration in London by...a tribunal of 3

arbitrators...in accordance with the Arbitration Laws of the London Maritime

Arbitrators Association (LMMA)’.

Port of Loading and Discharge

The initial receipt shows the goods were loaded at the Port of Cerulean. The

agreement stated the Port of Dillamond to be the point of discharge and the final

destination of the goods.

Current Position

The RESPONDENT has fulfilled all contractual obligations and rejects the claim put

forward by the claimant for damages and rejects any allegation of an equitable

maritime lien over the vessel ‘MADAME DRAGONFLY’.

The CLAIMANT has failed to pay for the costs associated with the voyage which for

goods were delivered in a merchantable condition. This has placed RESPONDENT in

a position where payments cannot be made essential to its operation and continuation

of its transportation business.

The CLAIMANT has commenced legal proceedings. The RESPONDENT seeks to

counterclaim for damages, demurrage and unpaid costs for the voyage and delivery of

goods.


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PRELIMINARY ISSUES

SUBMISSION ON THE ISSUE OF JURISDICTION

The RESPONDENT argues that this tribunal does not have jurisdiction to hear the

CLAIMANT’s Charterparty claim’s: (I) the tribunal has the power to rule on its own

jurisdiction; (II) the Arbitration Agreement is governed by the law of NSW, Australia;

(III) liability for damage to cargo cannot be determined at this stage.

A. Clause 28 of the Charterparty states that the law of New South Wales,

Australia shall govern the agreement. Incorporating Clause Paramount: Owners to

have benefit of Article 4(5) of the Hague-Visby Rules.

I THE ARBITRAL PANEL DOES NOT HAVE JURISDICTION TO HEAR

THE MATTER AS IT WAS NOT PROPERLY CONSTITUTED IN

ACCORDANCE WITH THE CHARTERPARTY

A. A determination on this matter by the tribunal would be inconsistent with

Clause 27 of the Agreement relating to Arbitration.1

[1] Clause 27 (d) of the Charterparty requires that any dispute related to ‘technical

matters’ arising out of or in connection with the contract to be referred to expert

determination by an independent Master Mariner.

1 The Record, p 12: Clause 27.


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[2] Clause 27 (g) identifies ‘technical matters’ as inclusive of the vessel’s route, loading

and unloading of cargo, storage conditions, and other matters which could be

reasonably considered within the expert technical knowledge of a Master Mariner.

[3] Clause 27 (e) states that arbitral proceeding cannot commence prior to the satisfaction

of Clause 27 (d).

[4] The expert opinion of Simon Webster, maritime engineer, does not satisfy the

requirements of Clause 27 (d) of the Charterparty and as such the arbitral panel has

not been properly constituted in accordance with the charter party requirements.

ARGUMENT ON THE MERITS

SUBMISSION ONE: THE RESPONDENT DID NOT BREACH THE

CHARTERPARTY.

[5] The RESPONDENT is not liable to pay damages because: (I) the deviation was

justified under Clause 17 of the Charterparty as a Force Majeure event; (II) the delay

in delivery was due to a Force Majeure event; Alternatively, if the Tribunal finds that

the RESPONDENT is liable: (IV) the RESPONDENT can rely on the Force Majeure

(FM) clause. Further, the RESPONDENT argues that it is not liable for damage to

cargo because: (V) the damage occurred after delivery and was due to the delayed

collection of the cargo by CLAIMANT. (IV) Any liability on the part of

RESPONDENT is limited under international convention.


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I THE DEVIATION BY THE RESPONDENT TO THE PORT OF SPECTRE WAS

JUSTIFIED UNDER CLAUSE 17 OF THE CHARTERPARTY AS A FORCE

MAJEURE EVENT

[6] The RESPONDENT agrees that stopping at the Port of Spectre was a deviation. This

deviation was permitted under Clause 17(b) and (c) of the Charterparty.

[7] The deviation by the RESPONDENT was justified under Clause 17 of the

Charterparty as a Force Majeure event.

[8] The RESPONDENT will be excused from liability for its deviation if it can show

that: Clause 17 of the Chaterparty was engaged; and the RESPONDENT followed the

procedure required during a Force Majeure event.

[9] A Force Majeure event can be established for the purpose of engaging Clause 17 of

the Charterparty if there was:

(i) ‘unforeseen weather events, acts of God, accidents, fire, explosions flood,

land slips, ice, frost or snow’;

(ii) ‘inability to obtain or delays in securing transportation facilities, stoppages

of the Shipper’s fuel supply, hindrances of whatsoever nature in mining,

processing, loading, shipping or discharging products occurring without

negligence of the Charterer’.

[10] The RESPONDENT followed the procedure required in the event of a Force Majeure

event. Access to the Port of Dillamond was suspended by Port Authorities, the

deviation of the vessel was justifiable and necessary.


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II IN THE ALTERNATIVE, THE DEVIATION WAS JUSTIFIED FOR THE

PURPOSE OF PROPERTY

[11] The RESPONDENT is entitled to deviate for the purpose of saving property,

including the ship, and will not be liable for such deviation under Clause 17 of the

Charterparty relating to Force Majeure.

[12] The Vessel was at liberty to deviate in order to ensure the safety of the vessel and its

cargo. Dangers to the vessel may result from natural causes, such as severe storms.

Where the dangers arise from natural causes they must be reasonably permanent, and

not merely inconvenient or occasional interruptions.

[13] At the time of the deviation it was unclear how long the severe weather would

continue, indeed any presumption of customary knowledge by the Master would have

been negated by the sudden occurrence of the weather.

[14] It was not viable for the Vessel to wait at sea, in dangerous weather conditions. The

RESPONDENT submits it would be dangerous to the ship for it to remain on its

chartered course, where severe wet weather conditions persisted and without

permission of the Port Authority to proceed to the Port of Dillamond. Therefore, the

RESPONDENT was permitted to avoid this danger to the property by deviating from

the usual course.

III FURTHER, THE RESPONDENT DID NOT BREACH THE CHARTERPARTY

AS THE DELAY TO DELIVERY WAS DUE TO A FORCE MAJEURE EVENT

[15] The RESPONDENT is not liable to pay damages because: (I) the deviation was

justified under Clause 17 of the Charterparty as a Force Majeure event; (II) the delay


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[15] in delivery was due to a Force Majeure event ; Alternatively, if the Tribunal finds

that the RESPONDENT is liable: (IV) the RESPONDENT can rely on the Force

Majeure clause. Further, the RESPONDENT argues that it is not liable for damage to

cargo because: (V) the damage occurred after delivery and was due to the heavy rain

during the period delayed collection of the cargo by CLAIMANT.

IV THE RESPONDENT CANNOT BE HELD LIABLE FOR DAMAGE TO

CARGO WHICH OCCURRED AFTER DELIVERY AT THE PORT OF

DILLAMOND

[16] The cargo was delivered to CLAIMANT at 8.42pm on 29 July 2017. The

RESPONDENT at this time had discharge its obligations, and liability for the cargo

was passed to the CLAIMANT.

[17] In reliance of the expert evidence of Simon Webster, the cargo was damaged during

the 24 hour period AFTER 4.30am on 30 July.

[18] Any damage that occurred to the cargo after delivery is not attributable to the

RESPONDENT as the liability had passed to the CLAIMANT and as such the

CLAIMANT bears the liability.

[19] The CLAIMANT may not rely on an event of Force Majeure to limit liability due to

the unprecedented rainfall. The failure to collect cargo after receiving notification of

delivery and failure to mitigate losses by collecting the cargo in a timely manner for

immediate use will prevent access to limitation of liability under the contract.


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VI IN THE ALTERNATIVE, IF ANY LIABILITY IS ATTRIBUTED TO THE

RESPONDENT THEN IT IS SUBJECT TO LIMITATION UNDER

INTERNATIONAL CONVENTION

[20] A If the RESPONDENT is liable for breach of contract then it will be entitled to limit

liability. Clause 28 of the Chaterparty will apply as ‘incorporating clause paramount:

owners to have benefit of Article 4(5) of the Hague-Visby Rules which provides:

‘(a) Unless the nature and value of such goods have been declared by the

shipper before shipment and inserted in the bill of lading, neither the carrier

nor the ship shall in any event be or become liable for any loss or damage to or

in connection with the goods in an amount exceeding 666.67 units of account

per package or unit or 2 units of account per kilogramme of gross weight of

the goods lost or damaged, whichever is the higher.

(b) The total amount recoverable shall be calculated by reference to the value

of such goods at the place and time at which the goods are discharged from the

ship in accordance with the contract or should have been so discharged.

The value of the goods shall be fixed according to the commodity exchange

price, or, if there be no such price, according to the current market price, or, if

there be no commodity exchange price or current market price, by reference to

the normal value of goods of the same kind and quality.


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(c) Where a container, pallet or similar article of transport is used to

consolidate goods, the number of packages or units enumerated in the bill of

lading as packed in such article of transport shall be deemed the number of

packages or units for the purpose of this paragraph as far as these packages or

units are concerned. Except as aforesaid such article of transport shall be

considered the package or unit.

(e) Neither the carrier nor the ship shall be entitled to the benefit of the

limitation of liability provided for in this paragraph if it is proved that the

damage resulted from an act or omission of the carrier done with intent to

cause damage, or recklessly and with knowledge that damage would probably

result.

(h) Neither the carrier nor the ship shall be responsible in any event for loss or

damage to, or in connection with, goods if the nature or value thereof has been

knowingly mis-stated by the shipper in the bill of lading.’

[21] In the alternative, if the RESPONDENT is liable in negligence to the CLAIMANT, it

may limit its liability pursuant to the Convention on the Limitation of Liability for

Maritime Claims.

[22] Art 2.1(b), the cost of transporting cargo falls within the Limitation Convention where

there is a ‘loss resulting from delay in the carriage by sea of cargo’. Due to the closure

of the port, delivery of the Claimant’s cargo was impossible until the port was open

sometime after delivery fell due. Consequently, the CLAIMANT incurred loss

resulting from delay.


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SUBMISSION TWO: LIEN OVER THE VESSEL

I THE TRIBUNAL SHOULD DENY CLAIMANTS ASSERTION OF

ENTITLEMENT TO MARITIME LIEN OVER THE VESSEL

A The tribunal does not have the jurisdiction to determine this matter

[23] The jurisdiction of Australia (and by default New South Wales) and England only

recognises four liens that are capable of conferring a maritime lien:

a. claims for damage done by the ship;

b. salvage claims;

c. bottomary and respondentia bonds (Masters dispersments); and

d. seaman’s wage claims.

[24] This unique maritime lien will be commenced as an action in rem against the ship or

property.2 This action in rem will amount to the arrest of the ship and the vessel

potentially being liquidated. This action is the exclusive jurisdiction of the Admiralty

Court.

[25] As this tribunal is not an Admiralty Court, as such it will not have the power to decide

or enforce the arrest of any vessel regarding any actions in rem. This tribunal

therefore lacks the jurisdiction to decide the alleged maritime lien over the

MADAME DRAGONFLY.

[26] Alternatively, if the tribunal decides has the jurisdiction to decide this issue, the

tribunal must find that the CLAIMANT has no claim of maritime lien over the

2 Admiralty Act 1988 (Cth) s 15(1).


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MADAM DARGONFLY in relation to a sum of $100,000 for wages it has paid to the

crew.

[27] The maritime lien for seaman’s wages is ‘a privileged claim’3 and a ‘personal right’4.

A proceeding of this maritime lien may be commenced in an action in reim against

the ship.5 This privileged and personal right is a unique right afforded to the master

and members of the crew alone. It cannot be transferred or subrogated. Once it is

extinguished it cannot be revived.

[28] As was found in the Hako Fortress6 decision, the court found that a third party was

not entitled to claim a maritime wages lien over the vessel for funds that were paid to

crew members. The court found that only persons entitled to arrest a ship for a

maritime lien for unpaid wages were the master and the crew where their wages

remained unpaid.

[29] This case indicates why the tribunal should find that no maritime lien for wages is

possible to be found for the CLAIMANT. As demonstrated in the Hako Fortress

decision, only the crew is able to enforce any possible maritime lien for wages against

MADAME DRAGONFLY. The CLAIMANT is without any grounds to claim such a

right as it is clearly not the master or member of the crew of the MADAME

DRAGONFLY.

B This Tribunal has no jurisdiction to decide on any equitable maritime lien

over the vessel MADAME DRAGONFLY.

3 Bankers Trust International Ltd v Todd Shipyards Corporation (The ‘Halcyon Isle”) [1981] AC 221 (PC), 232. 4 Programmed Total Marine Services Pty Ltd v The Ships Hako Fortress, Hako Endeavour, Hako Excel and Hako Esteem (2013) FCAFC 21. 5 Admiralty Act 1988 (Cth) s 15. 6 Ibid.


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[30] An equitable lien confers a power of sale and an appointment of a receiver through an

order of the court.7 A court must be the authority that decides if any equitable lien

exists over property and how that lien should be enforced.8

[31] This tribunal does not convey the powers of a court and as such it lacks the

jurisdiction to decide any alleged claim for an equitable lien of the MADAME

DRAGONFLY.

SUBMISSIONS THREE: COUNTERCLAIM

I THE TRIBUNAL SHOULD MAKE ORDERS FOR THE CLAIMANT TO BE

HELD LIABLE FOR THE AMOUNTS OWING UNDER THE CHARTER PARTY.

A The composition of the amount pleaded are as follows:

a. Freight;

[32] The parties have agreed that freight be paid by telegraphic transfer in United States

Dollars to the RESPONDENT’s account within two days of delivery of the cargo.9

[33] The parties have agreed that the freight for the voyage be in the amount of

$500,000.10

[34] Delivery of the cargo occurred 29 July 2017,11 as such payment of freight as agreed

by the parties was required to occur two after this date, that being 1 August 2017.

7 Charles Phineas Sherman, Roman Law in the Modern World (1917) vol 2, § 616. 8 Hewett v Court (1983) 149 CLR 639. 9 Voyage Charterparty Clause 22. 10 Voyage Charterparty Box 11. 11 The Record, p 24.


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[35] A follow up invoice was sent by the RESPONDENT along with an email regarding

the late payment of the freight for the voyage, 7 August 2017. The CLAIMANT

responded by refusing to pay the invoice the freight costs.12

[36] The CLAIMANT has claimed this refusal to pay is due to a breach of the Charterparty

as a result of delayed arrival of the MADAME DRAGONFLY at the Port of

Dillamond. As discussed above the delayed arrival of the MADAME DRAGONFLY

to the Port of Dillamond was a direct result of Force Majeure event.13

[37] This Force Majeure event Clause clearly states ‘The shipper…shall not be liable on

any basis whatsoever, without limitation, whether it be in contract, tort, or otherwise,

in damages or otherwise responsible for the failure or delay...in discharging if

prevented, delayed or obstructed by any Force Majeure Event.’14

[38] Due to this clause in the Charterparty, the CLAIMANT is without any basis for

refusing payment of freight to the RESPONDENT. It is clear the RESPONDENT has

delivered the cargo and the tribunal must find that the CLAIMANT is liable for the

freight as agreed upon by the parties in the Charterparty.

b. agency fees at the Port of Spectre, to which the Madame Dragonfly was

required to deviate during the voyage;

[39] The RESPONDENT is able to call upon the principle of General Agency. According

to Rule A of the York-Antwerp Rules 1994, there is a ‘General Average act when,

[40] and only when, any extraordinary sacrifice or expenditure is intentionally and

reasonably made or incurred for the common safety for the purpose of preserving 12 The Record, p 33. 13 Voyage Charterparty Clause 17(b). 14 Voyage Charterparty Clause 17 [4].


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from peril the property involved in a common maritime adventure’.15 The

RESPONDENT has satisfied the four conditions set out in Rule A, as such the

RESPONDENT is entitled to rely on the General Average adjustment.

[41] First, as the RESPONDENT was transporting the CLAIMANT’s cargo by sea, the

parties were clearly engaged in a joint enterprise appropriately required as a

‘common maritime adventure’.16 The MADAME DRAGONFLY, and by extension,

the CLAIMANT’s cargo on board, constituted the common property involved in

this maritime adventure.17

[42] Secondly, the expenditure incurred in relation to the MADAME DRAGONFLY

seeking an emergency berth at the Port of Spectre was extraordinary. It is out of the

ordinary for a ship’s guidance system to sustain damage during a voyage as a result of

solar flares damaging Global Positioning Satellites and consequently the need for the

emergency berth was ‘out of the ordinary’. The emergency berth therefore constitutes

expenditure beyond what was envisaged under the Charterparty and consequently the

CLAIMANT cannot expect the RESPONDENT to bear these extraordinary expenses

alone.18

[42] Thirdly, the expenditure was intentionally and reasonably incurred by the

RESPONDENT. The RESPONDENT deliberately deviated from the Charterparty

agreed course to seek and emergency berth in the Port of Spectre. Moreover,

[42] there was no ‘practicable alternative’19 available other than to deviate from the

agreed course to seek the emergency berth because the ship was unable to

continue on that voyage after the solar flares had damaged the navigation

15 York-‐Antwerp Rules 1994, Rule A. 16 Trade Green Shipping Inc v Securitas Bremer Allgemeine Verischerungs AG (The Trade Green) [2000] 2 Lloyd’s Rep 451. 17 Peck & Hughes v American Smelting and Refining Co (The Trojan) (1913) 210 Fed Rep 89. 18 Marida Ltd v Oswal Steel (The Bijela) [1993] 1 Lloyd’s Rep 411. 19 Australian Coastal Shipping Commission v Green [1971] 1 QB 456, 483 (Lord Denning MR).


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equipment on the MADAME DRAGONFLY.20 In the circumstances, the General

Average act was reasonable.

[43] Fourthly, by seeking the emergency ‘port of refuge’,21 the RESPONDENT not only

ensured the safety and viability of the vessel, but also, by extension, the safety of

the CLAIMANT’s cargo. Damage to the navigation equipment by the solar flares

removed the ability of the MADAME DRAGONFLY to complete the voyage safely22

and imperilled the vessel’s operations, which necessarily placed the cargo at risk.

The RESPONDENT’s actions were therefore vital to maintain common safety and

prevent harm not only to the ship itself, but also to the CLAIMANT’s cargo.

Agency berthing costs were therefore incurred ‘for the purpose of preserving

from peril’23 the property involved in the common maritime adventure.

[44] Specifically, the RESPONDENT is entitled to a contribution for agency berthing

costs pursuant to Rule X ‘Expenses at Port of Refuge’,24 which enabled the

‘adventure to be completed’. 25

[45] The claim for contribution in General Average is not precluded even if the

expenditure was incurred negligently. If the Tribunal finds that the event

which gave rise to the expenditure may have been ‘due to the fault of one of the

parties to the adventure’,26 rights to ‘contribution in General Average shall not be

affected’.27 Rule D of the York-‐Antwerp Rules 1994 states clearly that when a

General Average situation exists, the expenditure incurred shall be the subject of

20 The Record, p 17: Email dated 26 July 2017 at 2:32pm 21 York-Antwerp Rules 1994, Rule X. 22 Royal Insurance Co of America v Cineraria Shipping Co 894 FSupp 1557 (1996). 23 York-Antwerp Rules 1994, Rule A. 24 York-Antwerp Rules 1994, Rule X. 25 York-Antwerp Rules 1994, Rule XIV. 26 York-Antwerp Rules 1994, Rule D. 27 York-Antwerp Rules 1994, Rule D.


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an adjustment even though the General Average situation would not have arisen

but for the fault of the Respondent.28

[46] Where the tribunal applies the laws of New South Wales29 in determining the

General Average claim, the adjustment will be made in ‘accordance with the law

and practice of the United States of America’.30 RESPONDENT is able to rely on

the New Jason Clause in Clause 19 of the Charterparty, to claim the General

Average contribution ‘losses or expenses of a General Average nature’ resulting

from ‘any cause whatsoever, whether due to negligence or not’.31

[47] Therefore, if the tribunal finds that the reason for seeking the emergency berth

at the Port of Spectre was as a result of negligence or the RESPONDENT’s fault, it

will not result in the RESPONDENT’s inability to rely on the General Average

adjustment.

c. the cost of repairs to damage caused to the Madame Dragonfly when

avoiding dangerous weather conditions;

II THERE IS A VALID GENERAL AVERAGE CLAIM UNDER THE

CHARTERPARTY.

[48] The RESPONDENT is able to rely on Clause 19 of the Charterparty to claim a

contribution in General Average.

[49] As discussed above the RESPONDENT is able to rely on a claim of General Average

regarding the damage to the hull from actions taken by the crew that occurred during

the unexpected dangerous weather conditions.

28 Geoffrey Hudson, The York-Antwerp Rules: The Principles and Practice of General Average Adjustment in Accordance with the York-Antwerp Rules 1994 (LLP, 2nd ed, 1996) 58. 29 The Record, p 12: Clause 28. 30 The Record, p 10: Clause 19. 31 The Record, p 10: Clause 19 [2].


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[50] As mentioned above Rule A of the York-‐Antwerp Rules 1994 states, there is a

‘General Average act when, and only when, any extraordinary sacrifice or

expenditure is intentionally and reasonably made or incurred for the common

safety for the purpose of preserving from peril the property involved in a

common maritime adventure’.32 The four conditions set out in Rule A are

satisfied and thus, the Respondent is entitled to a General Average adjustment.

[51] Once again, firstly on the same voyage, the RESPONDENT was transporting the

CLAIMANT’s goods by sea, the parties were clearly engaged in a joint enterprise

appropriately described as a ‘common maritime adventure’.33 The MADAME

DRAGONFLY and by extension, the CLAIMANT’s cargo on board, constituted the

common property involved in this maritime adventure.34

[52] Secondly, the damage to the hull of the MADAME DRAGONFLY was

extraordinary.35 It is ‘out of the ordinary’ for a ship to have such extreme and

violent weather arrive so quickly and without warning.36 There is nothing to

indicate that the Respondent failed to fulfil its obligation to provide a seaworthy

ship at the commencement of the voyage, and consequently the damage to hull

from extreme sudden weather was ‘out of the ordinary’. Repair costs to the hull

therefore constitute expenditure beyond what was envisaged under the

Charterparty and consequently the CLAIMANT cannot expect the RESPONDENT

to bear these extraordinary expenses alone.37

32 York-‐Antwerp Rules 1994, Rule A. 33 Trade Green Shipping Inc v Securitas Bremer Allgemeine Verischerungs AG (The Trade Green) [2000] 2 Lloyd’s Rep 451. 34 York-Antwerp Rules 1994, Rule A. 35 Above, n 32. 36 The Record, p 20: Email dated 29 July 2017 a7 8:58 am; p 21: News report dated 29 July 2017. 37 Marida Ltd v Oswal Steel (The Bijela) [1993] 1 Lloyd’s Rep 411.


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[53] Thirdly, the decision to cut the anchor chain was intentionally and reasonably

incurred by the RESPONDENT. The RESPONDENT deliberately cut the anchor

chain, which caused the damage to the hull. Moreover, there was no ‘practicable

alternative’38 available other than to cut the anchor chain the caused the damage

to the hull because the ship would otherwise have suffered catastrophic damage

at the hands of the sudden, unexpected and extreme weather. In the

circumstances, the General Average act was reasonable.

[54] Fourthly, by cutting the anchor chain which caused the damage to the MADAME

DRAGONFLY’s hull, the RESPONDENT not only ensured the safety and viability of

the vessel, but also, by extension, the safety of the CLAIMANT’s cargo. Remaining

at anchor during such a violent storm could have left the vessel at the mercy of

the sea and imperilled the not only the vessel’s operations, which would

necessarily placed the cargo at risk, and resulted in even greater damage to the

vessel’s hull. It could also prevent the MADAME DRAGONFLY from having the

ability to complete the voyage.39 The RESPONDENT’s actions were therefore vital

to maintain common safety and prevent harm not only to the ship itself, but also

to the CLAIMANT’s cargo. Repair costs were therefore incurred ‘for the purpose

of preserving from peril’40 the property involved in the common maritime

adventure.41

38 Australian Coastal Shipping Commission v Green [1971] 1 QB 456, 483 (Lord Denning MR). 39 Royal Insurance Co of America v Cineraria Shipping Co 894 FSupp 1557 (1996). 40 York-‐Antwerp Rules 1994, Rule A. 41 Vlassopoulos v British and Foreign Marine Insurance Co (Makis) [1929] 1 KB 187.


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[55] Specifically, the RESPONDENT is entitled to the actual reasonable cost of

repairing or replacing such damage or loss, subject to deductions in accordance

with Rule XIII.42

[56] As previously discussed above, where the tribunal applies the laws of New South

Wales43 in determining the General Average claim, the adjustment will be made

in ‘accordance with the law and practice of the United States of America’.44

RESPONDENT is able to rely on the New Jason Clause in Clause 19 of the

Charterparty, to claim the General Average contribution ‘losses or expenses of a

General Average nature’ resulting from ‘any cause whatsoever, whether due to

negligence or not’.45

[57] Therefore, if the tribunal finds that the reason for damage to the vessel’s hull was

as a result of negligence or the RESPONDENT’s fault, it will not result in the

RESPONDENT’s inability to rely on the General Average adjustment.

d. Agency fees at the Port of Dillamond;

[58] The party’s have agreed that the any charges relating to wharfage ‘at load or

discharge port to be for Charters’ account.46 The party’s have also agreed that the

‘ship shall be consigned to the Charterer’s Agents at the port of discharge (Port of

Dillamond), paying all customary fees at each port, for attending to matters

concerning the cargo of the vessel.’47

42 York-‐Antwerp Rules 1994, Rule XVIII 43 The Record, p 12: Clause 28. 44 The Record, p 10: Clause 19. 45 The Record, p 10: Clause 19 [2]. 46 The Record, p 11: Clause 23. 47 The Record, p 7: Clause 12(a).


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[59] According to the Charterparty Clause 12(a), the CLAIMANT is responsible for the

payment of the Agency fees at the discharge port in accordance with the

RESPONDENTS guarantee to deliver always afloat as customary to nominated

discharge port.48 The Respondent has delivered the cargo in accordance with the

Charterparty agreement.

[60] The CLAIMANT is responsible under the Charterparty agreement for the payment of

the Agency fees at the Port of Dillamond.

e. Demurrage;

[61] The RESPONDENT advised the CLAIMANT of the arrival time as soon as it was

reasonably aware of such information in a series of emails over a period of twelve

hours.49 These emails detail the delivery of the CLAMAINT’s cargo in the Port of

Dillamond as per the Charterparty agreement of the party’s.

[62] The CLAIMANT chose not to respond to any communication from the

RESPONDENT in relation to the delivery time of the cargo, the CLAIMANT was

advised of the time of departure and of the Demurrage that would occur from the

time of arrival.50 This demurrage rate was known to both party’s as it was expressly

agreed upon by the party’s in the Charterparty Box 24.51

[63] The CLAIMANT accumulated five hours of Demurrage time while the

RESPONDENT awaited representatives of the CLAIMANT, totalling $100,00052

before the MADAME DRAGONFLY was required to leave the berth without the

CLAIMANT’s representatives appearing to take possession of the cargo. Any

48 The Record, p 8: Clause 14. 49 The Record, p 20: email date 29 July 2017 at 8:58 am; p 22: email dated 29 July 2017 at 4:28 pm; p 24: email date 29 July 2017 at 8:42pm. 50The Record, p 22: email dated 29 July 2017 at 4:28pm. 51 The Record, p 3: Box 24. 52 The Record, p 32: Invoice dated 29 July 2017 attached to email dated 7 August 2017.


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additional time at berth would cost the vessel financial penalty and additional

Demurrage charges to the CLAIMANT. In so doing, the RESPONDENT has in fact

saved the CLAIMANT additional fees and charges as the CLAIMANT’s

representatives failed to collect the cargo until two days later.53

f. Use of electronic access systems at the Port of Dillamond

[64] The party’s agreed in the Charterparty Clause 23 that Wharfage, if any, at load and

discharge port be for Charterer’s account.54 This express agreement by the party’s

acknowledges that ‘any’ wharfage fees are CLAIMANT.

[65] Second to this, the RESPONDENT has delivered the cargo as required under the

Charterparty in a condition that was stipulated by the agreement. The RESPONDENT

has fulfilled their obligations.

[66] The RESPONDENT advised the CLAIMANT of the arrival time as soon as it was

reasonably aware of such information in a series of emails over a period of twelve

hours.55 These emails detail the delivery of the CLAMAINT’s cargo in the Port of

Dillamond as per the Charterparty agreement of the party’s.

[67] The CLAIMANT has chosen not to respond to the RESPONDENT to advise of any

further requirements in regards to cargo. The RESPONDENT gave notice to the

CLAIMANT that the cargo would be safely stored and secured, as is industry best

practise in such situations, at the Port of Dillamond. The RESPONDENT has then

provided the CLAIMANT with an access barcode which allowed the CLAIMANT to

collect the cargo in due course, as well as advise that due to the CLAIMANT’s failure

53 The Record, p 24: email dated 31 July 2017 at 4:21pm. 54 The Record, p 11: Clause 23. 55 The Record, p 20: email date 29 July 2017 at 8:58 am; p 22: email dated 29 July 2017 at 4:28 pm; p 24: email date 29 July 2017 at 8:42pm.


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to take delivery of it’s cargo in the usual industry manner, the ‘delivery of the access

authority pass constitutes delivery of the cargo’.56

[68] The CLAIMANT waited two days57 before taking delivery of their cargo with the

complete knowledge of where their cargo was being stored and with the reasonable

knowledge that any company would, that the storage of and the electronic access

security protecting the cargo would be incurring cost.

[69] With the RESPONDENT’s obligations under the Charterparty completed with the

safe delivery of the cargo to the Port of Dillamond onto the dock, the liability for the

safe storage of the cargo for two days until the CLAIMANT decided to take delivery

rest completely with the CLAIMANT, and as such the cost of the electronic access

system at the Port of Dillamond. The tribunal should find that the RESPONDENT is

entitled to claim for this cost.

PRAYER FOR RELIEF For all the reasons submitted above, the RESPONDENT respectfully requests this arbitral panel to: DECLARE that this arbitral panel does not have jurisdiction to hear these proceedings; and in the alternative ADJUDGE that the RESPONDENT is not liable to the CLAIMANT for the following amounts

a) Damaged to cargo of USD15,750,00

b) Replacement of Coffee Payment of USD9,450,00

c) Settlement Payment to third party of USD5,000,000; and DECLARE that this tribunal does not have the jurisdiction to decide any alleged equitable maritime lien over the MADAME DRAGONFLY; and

56 The Record, p 23: Access authority pass delivery to the CLAIMANT. 57 The Record, p 24: email dated 31 July at 4:21pm.


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In the alternative ADJUDGE that there is no valid equitable maritime lien over the MADAME DRAGONFLY. further ADJUDGE that the CLAIMANT is liable to the RESPONDENT for the following amounts claimed:

a) Freight in the amount of USD500,000.

b) Demurrage charges at Port of Dillamond of USD100,000.

c) CLAIMANT’s use of electronic access systems at Port of Dillamond of USD10,000.

Further, ADJUDGE that the CLAIMANT is liable to the RESPONDENT in General Average for

a) Agency fees at Port of Spectre of USD75,000.

b) Repairs to hull of USD875,000.

19th ANNUAL INTERNATIONAL MARITIME LAW … · Achielle Lauro Fu Giacchino & C v Total Societa...

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Transcript of 19th ANNUAL INTERNATIONAL MARITIME LAW … · Achielle Lauro Fu Giacchino & C v Total Societa...