20th INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2019 … · 2021. 1. 17. · 20th international...

20th INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2019

IN THE MATTER OF AN ARBITRATION UNDER THE ARBITRATION ACT 1996

BETWEEN

PANTHER SHIPPING INC

OMEGA CHARTERING

LIMITED

v.

CLAIMANT RESPONDENT

NATIONAL LAW UNIVERSITY, DELHI

Pundrikaksh Sharma

Ashima Sharma

Shreya Bhatnagar

MEMORANDUM SUBMITTED ON BEHALF OF RESPONDENT

TEAM CODE: 30

TABLE OF CONTENTS

MEMORANDUM FOR THE RESPONDENT I

TABLE OF CONTENTS

INDEX OF AUTHORITIES ............................................................................................. IV

STATEMENT OF FACTS ............................................................................................ VIII

ISSUES RAISED ............................................................................................................... XI

ARGUMENTS ADVANCED ............................................................................................. 1

I. THE CHARTERERS ARE NOT LIABLE FOR THE AMOUNTS CLAIMED BY OWNERS FOR HULL

CLEANING.......................................................................................................................... 1

A. The Charterers’ are not liable for the costs of cleaning under Clause 83 of the Charter

Party. ............................................................................................................................ 1

B. The Charterers are not liable for the payment of cleaning costs under the implied

indemnity of clause 4 ..................................................................................................... 2

C. In the event that the Charterers are held liable for hull cleaning costs, the computation

of damages is different from those done by the Owners. ................................................. 3

II. THAT THE CHARTERERS ARE ENTITLED TO RESTITUTION/DAMAGES FOR THE OFF-HIRE OF

THE VESSEL ........................................................................................................................ 3

A. The vessel is off hire under the off-hire clause of NYPE 2015 .................................... 3

i. The full working of the ship was prevented ............................................................. 4

a. The ship was prevented from performing the next immediate task. ..................... 4

b. Non-ordinary activities prevented the full working of the vessel. ....................... 5

c. The charterers lost use of the vessel against their will ......................................... 5

d. There is interference by third parties .................................................................. 5

TABLE OF CONTENTS

MEMORANDUM FOR THE RESPONDENT II

ii. The full working of the vessel was prevented by one of the causes listed in the off-

hire clause. ................................................................................................................ 6

a. The rule of ejusdem generis does not apply in the present situation. ................... 6

b. Associated external cause is responsible for off-hire .......................................... 6

iii. There must have been a loss of time due to the off hire event ................................ 7

a. The test for net loss of time is satisfied ............................................................... 7

b. There is a delay to the adventure ........................................................................ 7

c. Arguendo, even if there is no overall delay, there is immediate delay in the service

.............................................................................................................................. 8

d. In the present case, it is irrelevant that the event occurred before the beginning of

the C/P. .................................................................................................................. 8

B. Arguendo, the vessel is off hire as per Clause 44 of the C/P. ..................................... 8

i. The C/P has been amended to include Quarantine as an off-hire event. ................... 9

ii. Quarantine resulted in the loss of time ................................................................... 9

a. Loss of time under Shelltime 4 is a net loss of time under clause ........................ 9

b. Immediate service required of the vessel was prevented ..................................... 9

c. There was deprivation of the availability of the vessel ...................................... 10

III. THAT THE OWNERS ARE ENTITLED TO DAMAGES CALCULATED AS THE LOSS OF HIRE

UNDER THE NEXT FIXTURE DUE TO LATE RE-DELIVERY ..................................................... 10

A. Owners would only be entitled to damages calculated as the difference between the

C/P rate of hire and the market rate of hire for the period of overrun .......................... 10

B. Owners are not entitled to damages calculated as the loss of hire under the Next Fixture

.................................................................................................................................... 11

i. The loss of next fixture is not a loss that arises from the natural course of events. . 11

TABLE OF CONTENTS

MEMORANDUM FOR THE RESPONDENT III

a. The damages claimed by the owners for the loss of next fixture are remote in nature

............................................................................................................................ 11

b. The loss of next fixture was not reasonably foreseeable by the charterers ......... 12

ii. There is no assumption of responsibility by the charterers. .................................. 12

a. Loss of next fixture was a ‘completely unpredictable loss’ ............................... 13

b. The charterers had no knowledge of the existence or terms of the Next Fixture. 13

iii. No express term dealing with loss of damages .................................................... 14

iv. Arguendo, the charterers cannot be said to have special knowledge of the next fixture

and thus cannot be held liable. ................................................................................. 14

C. Alternatively, the relevant period of the Next Fixture for the calculation of damages

would be the minimum period of two years, not the maximum period of four years. ..... 15

D. Further, Owners must give credit for hire received under the Replacement Fixture. 16

IV. THAT THE CHARTERERS ARE ENTITLED TO BE INDEMNIFIED BY THE OWNERS IN RESPECT

OF THE CARGO CLAIM ....................................................................................................... 16

A. The cargo claim raised by the charterers was not time barred under the Inter-Club

Agreement ................................................................................................................... 16

B. The owners are liable to the charterers in respect of Cargo Claim under clause 8(b)

the ICA ........................................................................................................................ 18

C. Alternatively, Charterers can claim damages in like amount for Owners’ breach of

clauses 27 and 53 of the C/P........................................................................................ 19

C. In the further alternative, 50% of the Cargo Claim is for Owners’ account pursuant to

clause 8(b) of the ICA .................................................................................................. 20

PRAYERS ....................................................................................................................... XII

STATEMENT OF JURISDICTION

MEMORANDUM FOR THE RESPONDENT IV

INDEX OF AUTHORITIES

CASES

A B Marintrans v Comet Shipping Co Ltd [1985] 1 WLR 1270 .......................................... 20

Alma Shipping Corpn of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd's Rep 115..... 11

British Columbia, etc., Saw Mill Co Ltd v Nettleship (1868) L.R. 3 C.P 499 ....................... 14

Clyde Commercial Steamship Co. v. West India Steamship Co. 214 U.S. 523 (1909 ............. 7

Court Line v. Dant & Russell (1939) 44 Com. Cas. 345 ........................................................ 5

Czarnikow v Koufos (The “Heron II”) [1969] 1 AC 350 ..................................................... 11

D/S A/S Idaho v. Peninsular & Oriental Steam Navigation Co. (The Strathnewton) [1983] 1

LR 219 (C.A. 1982)......................................................................................................... 19

Dalwood Marine v Nordana Line A/S (the Elbrus) [2010] 2 Lloyd's Rep. 315. .................... 16

Elbinger Aktiengesellschaft v Armstrong (1874) L.R. 9 Q.B. 473 ....................................... 14

Forrest v. Glasser [2006] 2 Lloyd’s Rep 392 ....................................................................... 17

Golden Strait Corporation V Nippon Yusen Kubishka Kaisha (The “Golden Victory”) [2007]

2 Lloyd's Rep. 164........................................................................................................... 16

Gosse Millard v Canadian Government Merchant Marine [1929] AC 223 ........................... 19

H. Parsons (Livestock) Ltd v Uttley, Ingham & Co Ltd [1978] Q.B. 791, ............................ 12

Hadley v Baxendale, (1854) 9 Ex 341 ................................................................................... 3

Hogarth v. Miller [1891] A.C. 48 (H.L.) ................................................................................ 4

Horne v Midland Ry (1873) L.R. 8 C.P. 136 ....................................................................... 14

Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s

Rep 100 ........................................................................................................................... 11

Jackson v Bank of Scotland [2005] UKHL 3 ....................................................................... 11

John Grimes v. Gubbins [2013] EWCA Civ 37 (C.A.). ....................................................... 14


MEMORANDUM FOR THE RESPONDENT V

Laminates Acquisitions v BTR Australia Limited [2004] 1 All ER (Comm) 737 ................. 17

Leyland Shipping v Norwich Union (1918) A.C. 350 ............................................................ 2

London Arbitration 16/02, the Arbitrator ............................................................................. 17

Maori King v Hughes [1895] 2 Q.B. 550 ............................................................................. 18

Minerva Navigation Inc v Oceana Shipping AG (The “Athena”) [2013]................................ 7

Robophone Facilities Ltd v Blank [1966] 1 W.L.R. 1428 .................................................... 14

Rowson v. Atlantic Transport Co. [1903] 1 K.B. 114 .......................................................... 19

Royal Greek Government v Minister of Transport (1949) 83 LI Rep 228. ............................. 2

South Australia Asset Management v. York Montague [1997] A.C. 191 ............................. 12

Supershield v.Siemens Building Technologies [2010] 1 Lloyd’s Rep. 349 (C.A.) ................ 12

Sylvia Shipping Co Ltd v Progress Bulk Carriers Ltd (The Sylvia) [2010] 2 Lloyd’s Rep 81

........................................................................................................................................ 15

The Alexandros P [1986] 1 LP 421 ..................................................................................... 20

The Apollo [1978] 1 Lloyd’s Rep 200 ................................................................................... 6

The Apollonius [1978] 1 Lloyd’s Rep. 53 ............................................................................. 8

The Aquacharm [1980] 2 Lloyd’s Rep. 237 ........................................................................... 5

The Aquacharm [1982] 1 LR 7. ........................................................................................... 18

The Argonaut [1985] 2 LR 216. .......................................................................................... 20

The Arianna [1987] 2 LR 376 ............................................................................................. 18

The Benlawers [1989] 2 Ll Rep 51 ...................................................................................... 19

The Berge Sund [1993] 2 Lloyd’s Rep. 453 ........................................................................... 4

The Bridgestone Maru No. 3 [1985] 2 Lloyd’s Rep. 62 ......................................................... 9

The Clipper Sao Luis [2000] 1 Lloyd’s Rep. 645 ................................................................... 5

The Doric Pride [2006] 2 Lloyd’s Rep. 175 ........................................................................... 7

The Essex Envoy (1929) 35 Com. Cas. 61. ............................................................................ 8


MEMORANDUM FOR THE RESPONDENT VI

The Fu Ning Hai [2007] 2 Lloyd’s Rep. 223 ......................................................................... 5

The Glenochil [1896] P. 10 ................................................................................................. 19

The Global Santosh [2013] 1 Lloyd’s Rep. 455 ..................................................................... 7

The Greek Fighter [2006] 1 Lloyd’s Rep. Plus 99................................................................ 10

The Hermosa [1980] 1 Lloyd’s Rep. 638 ............................................................................... 4

The Ioanna [1985] 2 Lloyd’s Rep. 164 .................................................................................. 4

The Island Archon [1994] 2 LI Rep 227 ................................................................................ 2

The Laconian Confidence [1997] 1 Lloyd’s Rep. 139 ............................................................ 5

The Mareva A.S. [1977] 1 Lloyd’s Rep. 368 ......................................................................... 4

The Marion [1984] 2 Lloyd's Reports 1 ............................................................................... 19

The Mastro Giorgis [1983] 2 Lloyd’s Rep. 66 ....................................................................... 5

The Pythia [1982] 2 Lloyd’s Rep. 160 ................................................................................... 7

The Rodney [1900] P. 112................................................................................................... 18

The Saldanha [2011] 1 Lloyd’s Rep. 187............................................................................... 5

The TS Singapore [2009] 2 Lloyd’s Rep. 54.......................................................................... 4

Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2008] UKHL 48 ............ 10

Tynedale v. Anglo- Soviet (1936) 41 Com. Cas. 206 ............................................................. 4

Victoria Laundry (Windsor) Ltd v Newman Industries Ltd. [1949] 2 KB 528 ...................... 11

Vogemann v. Zanzibar (1901) 6 Com Cas 253 ...................................................................... 8

Watson Steamship Co v. Merryweather & Co (1913) 18 Com Cas 294 ............................... 11

STATUTES

UNIDROIT Principles of International Commercial Contracts .............................................. 3

Uniform Commercial Code ................................................................................................... 3

United States Carriage of Goods by Sea Act ........................................................................ 19


MEMORANDUM FOR THE RESPONDENT VII

BOOKS

Bernard Eder and others, SCRUTTON ON CHARTERPARTIES, 20th ed. (Sweet and Maxwell,

1996) ............................................................................................................................... 10

Christopher Hill, MARITIME LAW, 6th ed. (Informa Law from Routledge, 2003) .................... 7

Hugh Beale, CHITTY ON CONTRACTS, 32nd ed. (Sweet & Maxwell, 2015) ........................... 13

Michael Wilford, Terence Coghlin, John D. Kimbal, TIME CHARTERS (LLOYD'S SHIPPING

LAW LIBRARY), 5th ed. (LLP Professional Publishing, 2003)............................................. 7

Moira L. Mcconnell, “BALLAST AND BIOSECURITY” in Ocean Yearbook 17, Elisabeth Mann

Borgese, Aldo Chircop, And Moira L. Mcconnell, eds. (University of Chicago Press, 2003)

........................................................................................................................................ 18

Terence Coghlin, Andrew Baker, Julian Kenny, John Kimball, Thomas H. Belknap Jr, TIME

CHARTERS, 7th ed. (Informa Law from Routledge, 2014) ................................................... 9

Yvonne Baatz, MARITIME LAW (MARITIME AND TRANSPORT LAW LIBRARY), 3rd ed. (Informa

Law from Routledge, 2014). .............................................................................................. 9

STATEMENT OF FACTS

MEMORANDUM FOR THE RESPONDENT VIII

STATEMENT OF FACTS

A. THE CHARTERPARTY

On March 1, 2016 Panther shipping posted on their social media account that they were looking

for a fixture for a period of about 3-5 years for their vessel Thanos Quest. The owners, Panther

Shipping Inc, and the charterers, Omega Chartering Limited; entered into a time charterparty

[hereinafter, “C/P”] on March 18,2016 for a time charter trip of about 50-55 days from West

Coast to Wahanda at USD 7500 daily. The C/P incorporated NYPE 2015, BIMCO Hull fouling

clause and decided to settle all cargo claims through Inter-Club Agreement of NYPE. The

contract was to be construed as per English Law and the seat of arbitration in cases of dispute

was to be London.

B. SPREADING OF EBOLA VIRUS ON WEST COAST AND QUARANTINE

On April 18, 2016 the news of Ebola virus spreading in the West Coast area was reported along

with the possibility of restrictions being imposed. Subsequently the loading of the cargo was

completed for Thanos Quest by April 20, 2016 and the vessel left for the port of Wahanda. On

April 21, 2016 more number of Ebola cases surfaced and the city authorities made

arrangements for quarantine. The vessel arrived at Wahanda port on May 7, 2016 but was not

allowed to Berth due to an apprehension on part of the port authorities that one of the crew

members had Ebola. Due to taken by the port authorities, the Charterers on May 8, 2016

declared the vessel to be off-hire under Clause 17 of the NYPE. On May 11, 2016, Charterers

wrote to the owners that post an inspection of the vessel some of the members were reported

to have high fever and therefore the vessel was not allowed to berth for another 28 days in view

of which the charterers claimed the vessel to be off-hire under clause 27 of the NYPE to which

the owners replied by stating that this was not an event of off hire of the vessel. In addition to

this clause 44 of the C/P provides for off-hire resulting from quarantine of the vessel.

STATEMENT OF FACTS

MEMORANDUM FOR THE RESPONDENT IX

C. HULL FOULING AND IMPOSSIBILITY OF CLEANING AT PORT WAHANDA

The Charterers wrote to the port authorities seeking information regarding hull cleaning owing

to the vessel’s long stay at the port. On May 25, 2016, Wahanda port services intimated the

charterers that due to issues of current, charge and poor visibility it was not possible for the

port authorities to arrange for hull cleaning of the vessel and advised them to further inform

the same to the owners of the vessel and arrange for hull-cleaning at some other port. On June

8, 2016, Owners wrote to the charterers seeking information regarding the hull cleaning of the

vessel as per clause 83 of the C/P i.e. the BIMCO Hull Fouling Clause. Charterers reverted the

same day offering to pay $15,000 since hull cleaning was not possible at the Wahanda port.

The owners refused to settle for a price before inspection and the charterers agreed to pay

against original invoice.

D. HULL CLEANING AT SOUTH ISLAND

Owners informed the charterers that no hull cleaning could be performed at the East Coast and

therefore asked them of their intention of cleaning the vessel as per clause 83 of the C/P on

June 26, 2016. Charterers offered that they could arrange cleaning at North Titan port if Owners

were sailing north. Alternatively, Charterers offered to pay a lump sum of USD20,000 in lieu

of cleaning. Titan Shipbuilders, North Titan Port had given a quotation of USD 25,000 for

cleaning. On June 29, Owners asked the Charterers to arrange for the Vessel’s hull to be cleaned

at South Island following the completion of discharge at Wahanda. On June 30, charterers

stated that any voyage to South Island would be non-contractual and since no cleaning could

be performed at the Wahanda port they offered to pay $30,000.in lieu of cleaning. Owners

responded to charterers giving them one final opportunity to comply by clause 83 of the C/P.

Vessel’s hull cleaning was started in South Island on July 1, 2016 and cost the owners $41,000.

STATEMENT OF FACTS

MEMORANDUM FOR THE RESPONDENT X

E. LATE REDELIVERY OF THE VESSEL

The discharge of Cargo had started on June 27, when the vessel obtained free pratique and

ended on June 30, 2016 when the vessel was actually re-delivered. However, the Charterers

had already entered into another C/P with Chartering Corp. for a period of two years with the

laycan date of June 28, 2016. When Owners sought for an extension of the cancellation date to

June 30, 2016, the charterers of the Next Fixture refused and cancelled the C/P because the

vessel had missed the laycan date. Ultimately, they had to enter into a Replacement fixture with

Fairwind International at USD 11000.

F. DAMAGE TO CARGO

On June 27, 2016 Owners were informed that when the charterers opened the hatch for the

discharge of the cargo there had been a severe damage to the cargo due to ingress of water. In

anticipation of a substantial claim by the receivers of the cargo, charterers declared to hold the

owners liable for all the claims arising from the Cargo. The Charterers conducted a survey for

which a preliminary inspection report was submitted by Merkon Surveyors Inc. It was found

that during the course of the ballasting operation, a crew member opened the wrong valves. As

a result of this sea water was pumped into the hold, rather than into the ballast tanks, in error.

Substantial loss to the cargo was anticipated along with huge damages.

ISSUES RAISED

MEMORANDUM FOR THE RESPONDENT XI

ISSUES RAISED

I.

WHETHER THE OWNERS ARE ENTITLED TO CLAIM DAMAGES IN FULL FROM THE CHARTERERS IN

RESPECT OF FAILURE TO PERFORM HULL CLEANING

II.

WHETHER THE CHARTERERS ARE ENTITLED TO RESTITUTION/DAMAGES FOR THE OFF-HIRE OF

THE VESSEL

III.

WHETHER THE OWNERS ARE ENTITLED TO DAMAGES CALCULATED AS THE LOSS OF HIRE UNDER

THE NEXT FIXTURE DUE TO LATE RE-DELIVERY.

IV.

WHETHER THE OWNERS ARE LIABLE TO INDEMNIFY THE CARGO CLAIM RAISED BY THE

CHARTERERS.

ARGUMENTS ADVANCED

MEMORANDUM FOR THE RESPONDENT 1

ARGUMENTS ADVANCED

I. THE CHARTERERS ARE NOT LIABLE FOR THE AMOUNTS CLAIMED BY OWNERS FOR

HULL CLEANING.

1 Clause 83 of the Charter Party between the parties outlines that when a ship has to stay at port

for an extended period of stay, pursuant to the orders of the Charterers’, either party make call

for an inspection, and may consequently call for cleaning.1 The time, risk and expense of such

cleaning is put on the Charterers’, after consultation with the Owners.2 The cleaning of the

bottom must be carried out before redelivery of the ship, and if the charterer is prevented from

carrying out the same, the parties shall agree upon a lump sum payment to cover the costs the

cleaning.3 Any warranties of performance are suspended after cleaning is called for, and till the

same is carried out. 4

2 The Charterers’ submit that they are not liable for the expenses related to cleaning under Clause

83 after the Owners’ rejection of its offers (i), in any event, the Charterers’ are not liable under

the implied warranty present in Clause 4 of the NYPE Form (ii). Furthermore, even if the

Charterers are found liable for the costs associated with the hull cleaning, the Charterers submit

that the Charterers are not liable for the voyage costs associated with hull cleaning (iii).

A. The Charterers’ are not liable for the costs of cleaning under Clause 83 of the Charter

Party.

1 Clause 83(a), Rider Clauses, page 16 of the ‘International Maritime Law Arbitration Moot 2019 Moot Scenario’

accessed 25 March 2019 at http://www.murdoch.edu.au/School-of-Law/_document/IMLAM/IMLAM-

2019/IMLAM-2019-Moot-Scenario-FINAL-v3-01.04.19-page-numbers-corrected.pdf (“Moot Scenario”).

2 Id., Clause 83(b), Rider Clauses.

3 Id., Clause 83(c), Rider Clauses.

4 Id., Clause 83(a), Rider Clauses.

http://www.murdoch.edu.au/School-of-Law/_document/IMLAM/IMLAM-2019/IMLAM-2019-Moot-Scenario-FINAL-v3-01.04.19-page-numbers-corrected.pdf

http://www.murdoch.edu.au/School-of-Law/_document/IMLAM/IMLAM-2019/IMLAM-2019-Moot-Scenario-FINAL-v3-01.04.19-page-numbers-corrected.pdf

ARGUMENTS ADVANCED


3 The obligation under Clause 83 is to provide for cleaning of the hull, which the Charterers’

repeatedly sought the Owners’ approval for carrying out at North Titan Island,5 thus preventing

the Charterers’ from getting the cleaning done at their expense and risk.

4 In light of the same, the provisions of settlement under Clause 83 were triggered, and any

attempt by the Charterers’ to reach a settlement have been side-lined by the Owners, who

arbitrarily and unilaterally decided on an amount without any consultation with the Charterers.6

5 As such, the Owners cannot be allowed to unreasonably impose extraneous costs onto the

Charterers for the limited responsibility of Bottom Cleaning and only justified and reasonable

damages may be passed onto the Charterers.

B. The Charterers are not liable for the payment of cleaning costs under the implied

indemnity of clause 4.

6 While clause 4 of the NYPE does contain an implied indemnity, recovery of damages under

the same is not without its caveats. Damages sought to be recovered must have been caused by

the order of the Charterer, and cannot have merely arisen in course of compliance with the

same.7 Furthermore, recoverable damages can only be sought when there is no subsequent or

intervening act at play which causes the loss to the Owners.8 The loss should have been caused

by the orders of the Charterers’, and the same should not have merely been remotely connected

to the sequence of events leading up to the loss.9

7 In the present scenario, the extended stay causing bottom fouling occurred due to the quarantine

order passed by the Wahanda Port Authority,10 and occurred in course of compliance of the

5 Moot Scenario (n 1) at 39.

6 Id. at 44.

7 Royal Greek Government v Minister of Transport (1949) 83 LI Rep 228.

8 The Island Archon [1994] 2 LI Rep 227.

9 Leyland Shipping v Norwich Union (1918) A.C. 350.


ARGUMENTS ADVANCED


Charterers’ orders, rather than directly due to the same. Furthermore, the order of the Wahanda

Port Authority may be seen as the intervening act that caused the loss to the Owners’, coupled

with their rejection of cleaning at the North Titan Port.

8 Thus, it is submitted that the Owners are not entitled to any costs in relation to the bottom

fouling pursuant to the implied warranty under Clause 4 of the Charter Party.

C. In the event that the Charterers are held liable for hull cleaning costs, the computation

of damages is different from those done by the Owners.

9 The purpose of expectancy damages is to put the party in as good a position as it would have

been had the breach not occurred. The same are limited only to reasonable damages, and are

based on the conduct of the non-breaching party as well.11 The Owners had the option of the

nearby North Titan Port, but chose instead to go along with the South Titan Port for their own

commercial considerations, in disregard of the Charterers’ opinions.

10 Further, the Charterers could not have reasonably foreseen such damages at the time of the

conclusion of the contract.12 The increased costs are due to the Owners insistence to deny the

Charterers’ offers for cleaning in favour of cleaning at the South Titan Island.

11 As such, the Charterers submit that the Owners’ losses are too remote from the Charterers non-

compliance to make it liable for the additional claims made by the Owners in excess of the

USD 30,000 quoted at the North Titan Port.

II. THAT THE CHARTERERS ARE ENTITLED TO RESTITUTION/DAMAGES FOR THE OFF-HIRE OF

THE VESSEL

A. The vessel is off hire under the off-hire clause of NYPE 2015

11 §347, Uniform Commercial Code; Art 7.4.2, UNIDROIT Principles of International Commercial Contracts; §2-

715, Uniform Commercial Code.

12 Hadley v Baxendale, (1854) 9 Ex 341; Art. 7.4.4, UNIDROIT Principles of International Commercial Contracts.

ARGUMENTS ADVANCED


12 The vessel was not allowed to proceed to Berth after reaching Wahanda due to apprehension

on part of port authorities that some of the crew members was infected with Ebola virus, which

led to a delay in the subsequent procedures. It is submitted that the vessel is off hire under the

NYPE form because; the full working of the vessel is prevented [i], The full working of the

vessel was prevented by one of the causes listed in the off hire clause [ii], and The charterers

suffered a loss of time due to the off hire event [iii]13.

i. The full working of the ship was prevented

a. The ship was prevented from performing the next immediate task.

13 A ship is prevented from working when she is unable to perform the next or the immediate task

that is required of her14. The next immediate task is generally the last order of the charterers or

that which maybe deduced from the C/P terms, which in this case was that of unloading for

which the vessel was required to proceed to berth. The vessel arrived at Wahanada port on

07.05.2016 but was not allowed to proceed to Berth due to apprehension of the port authorities

that one of the crew members was affected with Ebola15 and was hence prevented from

performing the next immediate task.

14 Furthermore, the next immediate task is not what the charterers hoped or expected but is what

the C/P requires but what the charterer’s orders make necessary to perform16. In fact, in the

case of TS Singapore, it was held that merely because a vessel performs the order of the

charterers doesn’t mean that it is performing the next immediate task required of her, the terms

of the C/P and the intention of the parties need to be kept in mind17. Here, the vessel is not even

13 Cl. 17, NYPE 2015, accessed 10th February 2019 at http://www.asba.org/wp-

content/uploads/2015/10/NYPE_2015-sampleweb.pdf.

14 Hogarth v. Miller [1891] A.C. 48 (H.L.); The Berge Sund [1993] 2 Lloyd’s Rep. 453; The TS Singapore [2009]

2 Lloyd’s Rep. 54; The Hermosa [1980] 1 Lloyd’s Rep. 638; Tynedale v. Anglo- Soviet (1936) 41 Com. Cas. 206.


16 The Mareva A.S. [1977] 1 Lloyd’s Rep. 368; The Berge Sund (n 14); The Ioanna [1985] 2 Lloyd’s Rep. 164

17 The TS Singapore (n 14).

http://www.asba.org/wp-content/uploads/2015/10/NYPE_2015-sampleweb.pdf

http://www.asba.org/wp-content/uploads/2015/10/NYPE_2015-sampleweb.pdf

ARGUMENTS ADVANCED


performing the task which is ordered by the charterers and thus is conclusively not performing

the next immediate task required of her.

b. Non-ordinary activities prevented the full working of the vessel.

15 Generally, a ship is not prevented from working if in the process of performing the charterer’s

orders it is performing an ordinary activity18. An activity in an ordinary way required by the

Time charter19 does not prevent the full working of the vessel. After the port authorities

suspected the presence of Ebola amongst the crew members the vessel was quarantined which

was not an ordinary activity required by the vessel. If it is not an ordinary activity required of

the vessel then the vessel is said to be off hire as the full working of the vessel is prevented20.

c. The charterers lost use of the vessel against their will

16 The full working of the ship is prevented only where the charterers lose the use of her against

their will21. The vessel obtained free pratique only on June 26, 2016 and therefore was not at

the disposal of the charterers from June 7 to June 26, the charterers could not use her against

their will and the vessel can therefore be placed off hire.

d. There is interference by third parties

17 It has been recognised that the working of the ship may also be prevented by interference of

third parties such as legal or administrative machinery. “The qualifying phrase ‘preventing the

full working of the vessel’ does not require the vessel to be inefficient in herself. A vessel’s

working may be prevented by legal as well as physical means, and by outside as well as internal

causes22.” In the present situation too, while the vessel had no inherent defect that prevented its

18 The Aquacharm [1980] 2 Lloyd’s Rep. 237; The Berge Sund (n 14).

19 The Clipper Sao Luis [2000] 1 Lloyd’s Rep. 645; Court Line v. Dant & Russell (1939) 44 Com. Cas. 345.

20 The Aquacharm (n 18).

21 The Fu Ning Hai [2007] 2 Lloyd’s Rep. 223.

22 The Laconian Confidence [1997] 1 Lloyd’s Rep. 139; The Mastro Giorgis [1983] 2 Lloyd’s Rep. 66; The

Saldanha [2011] 1 Lloyd’s Rep. 187.

ARGUMENTS ADVANCED


working but the action of detention on part of port authorities can be concluded to mean that

the full working of the vessel was prevented.

ii. The full working of the vessel was prevented by one of the causes listed in the off-hire

clause.

a. The rule of ejusdem generis does not apply in the present situation.

18 When the working of the vessel is prevented by the action of the authorities the omission of

the word ‘whatsoever’ after the words ‘any other cause’ in clause 17 of NYPE 2015 does not

matter. “Where the authorities act properly or reasonably pursuant to the (suspected)

inefficiency or incapacity of the vessel, any time lost may well be off hire even in the absence

of the word ‘whatsoever’.23” Thus, even though ‘whatsoever’ is absent from the off-hire clause,

the rule of ejusdem generis will still not be applicable and hence the vessel’s off hire will not

be limited to the causes mentioned in the off hire clause of the C/P .

19 In the event the vessel is quarantined, the action of authorities does fall within the meaning of

‘Any other Cause”. “Indeed, it has also been suggested that even if the word "whatsoever" has

not been included, a vessel that has been quarantined because of a suspected communicable

disease onboard may still be considered not to be working fully within the meaning of the off-

hire clause”.24

b. Associated external cause is responsible for off-hire

20 The detention by the authorities was an associated external cause. There may be situations

where the external cause is not extraneous in nature and is in fact associated with either the

internal functioning or efficiency of the vessel25. No valid distinction was found “between a

vessel being arrested because of a claim by cargo against her owners and a vessel being

23 The Laconian Confidence (n 22).

24 The Apollo [1978] 1 Lloyd’s Rep 200.

25 Id.

ARGUMENTS ADVANCED


prevented from leaving port because, for example, her classification certificates are not in

order” in The Mastro Giorgis. Quarantine relating due to the illness of the crew members would

lead to an off-hire situation26 as the same would amount to an associated external cause which

prevents the full working of the vessel.

iii. There must have been a loss of time due to the off hire event

a. The test for net loss of time is satisfied

21 “The ship must render the service immediately required of her, in which event, hire is payable

continuously, but if she cannot or does not, hire is not payable for the time so lost27.”

Interruption or delay in the performance immediately required of the vessel causes a loss of

time28. The service immediately required of the vessel was that of Berthing which was delayed.

Instead of 07.05.2016, the vessel was finally allowed to Berth on June 26 causing a delay to

the charterers. Free pratique when not just a mere formality, results in a loss of time till the

vessel remains quarantined.29

b. There is a delay to the adventure

22 It was held in The Pythia that the effect of an off-hire clause and the words “payment of hire

shall cease for the time thereby lost”, was that the ship was off hire only to the extent that the

progress of the charter service had been delayed30. If the vessel was allowed to berth then the

26 Clyde Commercial Steamship Co. v. West India Steamship Co. 214 U.S. 523 (1909).

27 Michael Wilford, Terence Coghlin, John D. Kimbal, TIME CHARTERS (LLOYD'S SHIPPING LAW LIBRARY), 5th

ed. (LLP Professional Publishing, 2003) at ¶25.2.

28 The Doric Pride [2006] 2 Lloyd’s Rep. 175; The Global Santosh [2013] 1 Lloyd’s Rep. 455, Minerva Navigation

Inc v Oceana Shipping AG (The “Athena”) [2013].

29 Shipping Developments Corporation S.A. V. V/O Sojuzneftexport (The "Delian Spirit") [1971] 1 Lloyd's Rep.

506; Compania De Naviera Nedelka S.A. V. Tradax International S.A. (The "Tres Flores") [1973] 2 Lloyd's Rep.

247.

30 The Pythia [1982] 2 Lloyd’s Rep. 160 at p. 168; Christopher Hill, MARITIME LAW, 6th ed. (Informa Law from

Routledge, 2003).

ARGUMENTS ADVANCED


same would not have been stranded for long causing hull fouling and subsequent events which

caused an overall delay in the adventure.

c. Arguendo, even if there is no overall delay, there is immediate delay in the

service

23 It has been held in authorities like Hogarth v. Miller and The Athena that an off-hire clause in

terms of the NYPE is concerned with the service immediately required of the vessel and not

the ‘chartered service’ as a whole or the entire maritime adventure(s)31. An overall delay in the

adventure need not to be looked into if the vessel’s full functioning is prevented and it cannot

perform the next immediate task.

d. In the present case, it is irrelevant that the event occurred before the beginning

of the C/P.

24 While the owners may argue that since the news of Ebola spreading on West Coast came out

on April 18, 2016, repercussions of the same doesn’t qualify as an off-hire event, there is

authority to suggest that if time is lost during the charter period as a result of one of the named

causes mentioned in the C/P, it does not matter that the cause in question resulted from

something that occurred before the beginning of the charter period and thus the vessel will still

be considered off-hire32.

B. Arguendo, the vessel is off hire as per Clause 44 of the C/P.

25 It is submitted that the vessel is off hire as per Clause 44 of the C/P which deals with off-hire

of the vessel in situations of quarantine and mirrors Clause 21(a)(iv) of the Shelltime 4. It is

submitted that the vessel is off-hire under the C/P clause 44 because [i] The C/P has been

31 Hogarth v. Miller (n 14); Vogemann v. Zanzibar (1901) 6 Com Cas 253.

32 The Apollonius [1978] 1 Lloyd’s Rep. 53; The Essex Envoy (1929) 35 Com. Cas. 61.

ARGUMENTS ADVANCED


amended to include Quarantine as an off-hire event; and [ii] that the same resulted in a loss of

time to the charterers.

i. The C/P has been amended to include Quarantine as an off-hire event.

26 As a matter of general rule, a vessel under Quarantine is treated the same way that a vessel

detained by the port authorities under Laconian Confidence33 is, the physical efficiency of the

vessel is not prevented and the vessel is not under off hire, unless, there is an appropriate

amendment of the C/P.34 The NYPE form does not in itself deal with the off-hire event in cases

of quarantine, but that doesn’t prevent the charterers from claiming off hire because an

amendment of the C/P has been made to that effect. Article 44 of the C/P deals with the loss of

time suffered by the charterers in view of the vessel being placed under Quarantine.

ii. Quarantine resulted in the loss of time

a. Loss of time under Shelltime 4 is a net loss of time under clause

27 The loss of time under Shelltime 4 is a net loss of time clause.35 A net loss of time under

Shelltime 4 will be constructed the same way in which a net loss of time clause is constructed

under the NYPE form. The same stands proven under ¶20. Further, the off-hire clause under

Shelltime 3 was a period off-hire clause and therefore, the decision in The Bridgestone Maru

No. 3 stands distinguished.36

b. Immediate service required of the vessel was prevented

28 Clause 44 of the C/P resembles clause 21(a)(iv) of the Shelltime 4 form and thus interpretation

of the Shelltime 4 can be applied to the C/P to conclude whether or not the event claimed

33 Laconian Confidence (n 22).

34 Terence Coghlin, Andrew Baker, Julian Kenny, John Kimball, Thomas H. Belknap Jr, TIME CHARTERS, 7th ed.

(Informa Law from Routledge, 2014) [hereinafter, “Lloyd’s Time Charter”]; Yvonne Baatz, MARITIME LAW

(MARITIME AND TRANSPORT LAW LIBRARY), 3rd ed. (Informa Law from Routledge, 2014).

35 Lloyd’s Time Charter (n 34).

36 The Bridgestone Maru No. 3 [1985] 2 Lloyd’s Rep. 62.

ARGUMENTS ADVANCED


qualifies as an off-hire event. The “loss of time” required by the Shelltime 4 / Clause 44 of the

C/P has reference to the service immediately required of the ship when the off-hire clause

operates on her37. The vessel was prevented from carrying out the service immediately required

of her as proven in ¶¶12-13.

c. There was deprivation of the availability of the vessel

29 Loss of time under Clause 21(a)(iv) of the Shelltime 4 has been interpreted to mean the

“deprivation of availability of the vessel when it has been detained by the authorities in the

course of procedures involving enforcement of local laws or regulations”38. The vessel not

being available at the disposal of the charterers from May 7 to May 27 till free pratique was

granted satisfies the deprivation of availability of the vessel and the vessel was thus off hire.

III. THAT THE OWNERS ARE ENTITLED TO DAMAGES CALCULATED AS THE LOSS OF HIRE UNDER

THE NEXT FIXTURE DUE TO LATE RE-DELIVERY

A. Owners would only be entitled to damages calculated as the difference between the

C/P rate of hire and the market rate of hire for the period of overrun

30 It is settled law that damages for late redelivery are awarded in case of rising market and they

are assessed on the difference between current market and contract hire rates.39 These damages

are limited to the period of overrun, that is the period during which the owners were deprived

of the vessel.40


38 The Greek Fighter [2006] 1 Lloyd’s Rep. Plus 99.

39 See, Bernard Eder and others, SCRUTTON ON CHARTERPARTIES, 20th ed. (Sweet and Maxwell, 1996) at 348 and

349; Wilford, TIME CHARTERS (n ) at ¶4.20.

40 Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2008] UKHL 48.

ARGUMENTS ADVANCED


31 It is thus, argued that as per the conventional measure of loss being the difference between the

contract rate and the market rate41, the Owners are not entitled to losses for the period beyond

the overrun at a different rate.

B. Owners are not entitled to damages calculated as the loss of hire under the Next Fixture

i. The loss of next fixture is not a loss that arises from the natural course of events.

a. The damages claimed by the owners for the loss of next fixture are remote in

nature

32 The accepted test for remoteness is “whether the loss claimed was of a kind or type which it

would have been within the reasonable contemplation of the parties at the time that the contract

was made as being not unlikely to result”.42 It has been established that a result which, even

though foreseeable as a substantial possibility, would only happen in a small minority of cases

should not be regarded as having been in their contemplation43. It is submitted that the loss of

next fixture was not within the reasonable contemplation of the parties.

33 Further, the relevant date for the contemplation of the losses must be at the time of entering

into the C/P and not at some later point of time. “A preliminary point is that the question is

what was contemplated by the parties at the time at which the contract was made, not what they

may have contemplated at some later date such as the date of breach44.” At the time of entering

into the C/P with the owners, the charterers did not have in contemplation a loss of next fixture

caused by late redelivery of the vessel as by then the owners had not entered into any such

contract.

41 Watson Steamship Co v. Merryweather & Co (1913) 18 Com Cas 294; Alma Shipping Corpn of Monrovia v

Mantovani (The Dione) [1975] 1 Lloyd's Rep 115; Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd

(The Peonia) [1991] 1 Lloyd’s Rep 100.

42 Hadley v. Baxendale (n 12); Czarnikow v Koufos (The “Heron II”) [1969] 1 AC 350.

43 Hadley v. Baxendale (n 12).

44 Hadley v. Baxendale (n 12); Victoria Laundry (Windsor) Ltd v Newman Industries Ltd. [1949] 2 KB 528;

Jackson v Bank of Scotland [2005] UKHL 3 at ¶¶35-36.

ARGUMENTS ADVANCED


b. The loss of next fixture was not reasonably foreseeable by the charterers

34 What was at that time reasonably so foreseeable depends on the knowledge then possessed by

the parties or, at all events, by the party who later commits the breach For this purpose,

knowledge ‘possessed’ is of two kinds; one imputed, the other actual. Everyone, as a reasonable

person, is taken to know the ‘ordinary course of things’ and consequently what loss is liable to

result from a breach of contract in that ordinary course. But to this knowledge, which a contract-

breaker is assumed to possess whether he actually possesses it or not, there may have to be

added in a particular case knowledge which he actually possesses, of special circumstances

outside the ‘ordinary course of things,’ of such a kind that breach in those special circumstances

would be liable to cause more loss.”

ii. There is no assumption of responsibility by the charterers.

35 Lords Hoffmann and Hope in The Achilleas held that a party will not be liable for losses that

are “not unlikely” if it was not reasonable to assume that he was assuming responsibility for

the loss. The additional requirement that the party eventually in breach ought fairly to be taken

to have assumed responsibility for the relevant type of loss echoes the analysis of the scope of

a duty of care45. The phrase ‘not unlikely’ to occur has been explained by the help of other

phrases in a number of judgements. It has been used with ‘liable to result’46 as an alternative,

or as a ‘real danger’ or a ‘serious possibility’47.

36 It is submitted that the parties would not have considered that the charterers were assuming

responsibility for the loss of any follow-on charter or Next Fixture.

45 South Australia Asset Management v. York Montague [1997] A.C. 191; Supershield v.Siemens Building

Technologies [2010] 1 Lloyd’s Rep. 349 (C.A.).

46 Victoria Laundry (n 44).

47 H. Parsons (Livestock) Ltd v Uttley, Ingham & Co Ltd [1978] Q.B. 791, 802, 805, 807.

ARGUMENTS ADVANCED


a. Loss of next fixture was a ‘completely unpredictable loss’

37 If at the time the contract was made, the loss was completely unpredictable then the charterers

cannot be said to have assumed responsibility of the same48. In the Achilleas, the lordships had

explained the same as since at the time the contract was made the next fixture of the owners

was not into existence and in fact the next fixture was entered into shortly before the end of the

charter, the charterers could not be said to have assumed the responsibility of the same49.

38 In the current C/P as well neither did the charterers know about the next fixture at the time the

contract was entered into by them nor were they informed reasonably before the C/P ended

about the next fixture. The owners entered into another contract right towards the end of the

charter i.e. on May 7, 201650 and thus the charterers cannot be said to have assumed the

responsibility of the loss from a next fixture.

b. The charterers had no knowledge of the existence or terms of the Next Fixture.

39 In The Achilleas if, at the time when the original charter was being entered into, the owners

had drawn the charterers’ attention to an existing follow-on charter with a specific cancelling

date, then the charterers could be liable to pay damages for its loss if they failed to redeliver in

time to meet that cancelling date, at all events in the absence of anything to indicate that they

refused to accept such responsibility.51

40 The charterers would not have had any control over, or even knowledge of the terms of such a

charter, nor would they have been able to quantify the liability they were assuming because

they were informed of the next fixture only via emails.

48 Hugh Beale, CHITTY ON CONTRACTS, 32nd ed. (Sweet & Maxwell, 2015).

49 The Achilleas (n 40).

50 Moot Scenario (n 1).


ARGUMENTS ADVANCED


41 Further, the amount of loss, which is to be determined by the terms and length of the following

fixture, is something over which the charterers have no control.

iii. No express term dealing with loss of damages

42 If there is no express term dealing with what types of losses a party is accepting potential

liability for if he breaks the contract, then the law in effect implies a term to determine the

answer. Normally, there is an implied term accepting responsibility for the types of losses

which can reasonably be foreseen at the time of contract to be not unlikely to result if the

contract is broken52. There was no express or implied term in the C/P that can lead to a

conclusion that by delivering the vessel late the charterers assumed responsibility of the

damages from this late redelivery.

iv. Arguendo, the charterers cannot be said to have special knowledge of the next fixture and

thus cannot be held liable.

43 Damages for mere fact of knowledge cannot be awarded. There must be special knowledge of

the circumstances which should be communicated and known at the time of the contract so that

the party with whom the contract is entered into reasonably believes that he/she accepts the

contract with the special condition attached to it.53 Further, the party cannot be said to have

special knowledge merely because he had gained knowledge of the unusual risk in a purely

casual way.54

44 At the time of entering into the C/P with Panther Shipping Inc, the Owners had not

communicated to the Charterers that there will be another fixture at the discharge port after

redelivery. It cannot be assumed that the Charterers would be aware of the post on Owner’s

52 John Grimes v. Gubbins [2013] EWCA Civ 37 (C.A.).

53 British Columbia, etc., Saw Mill Co Ltd v Nettleship (1868) L.R. 3 C.P 499; Horne v Midland Ry (1873) L.R.

8 C.P. 136; Elbinger Aktiengesellschaft v Armstrong (1874) L.R. 9 Q.B. 473; Robophone Facilities Ltd v Blank

[1966] 1 W.L.R. 1428.

54 CHITTY ON CONTRACTS (n 48).

ARGUMENTS ADVANCED


Chatter account about the Next Fixture. The owners cannot be said to have communicated to

the charterers about the presence of Next fixture merely by posting on their social media

account, when there is a chance that the charterers may not even have seen it. Further, the post

on ‘Chatter’, their social media account, merely conveyed the possibility of the next fixture55

and the knowledge as to its terms, duration or rate was neither communicated to nor known by

the Charterers56.

C. Alternatively, the relevant period of the Next Fixture for the calculation of damages

would be the minimum period of two years, not the maximum period of four years.

45 Damages for loss of next fixture can be awarded if the “contract was reasonably expected” but

not for losses under an unexpected contract.57 The length of the subsequent fixture which could

last for years introduced an element of unpredictability making the potential liability

unquantifiable and disproportionate.58

46 The subsequent fixture with Champion Chartering Ltd. was for two years with a further

extension of two years at the option of the charterers.59 The length of this charter is way more

than the C/P which was breached. Further, the element of unpredictability is introduced when

the C/P can be extended at the discretion of a third party unknown to the Charterers. The

Charterers cannot be reasonably expected to pay damages for the entirety of four years as it is

commercially unacceptable.


56 Achilleas (n 48).

57 Victoria Laundry (n 44).

58 Sylvia Shipping Co Ltd v Progress Bulk Carriers Ltd (The Sylvia) [2010] 2 Lloyd’s Rep 81 at 73.


ARGUMENTS ADVANCED


D. Further, Owners must give credit for hire received under the Replacement Fixture.

47 The owners have a duty to mitigate the loss by finding alternative employment for the vessel.60

Applying the conventional principles of mitigation, if there is existence of a profitable

replacement fixture, then the loss of profit is calculated as the difference between the profit

they would have earned under the lost fixture less the profit they would have made from the

subsequent fixture.61 The daily rate of hire fixed for the Next Fixture, that is, the chartering of

the vessel to Champion Chartering Corp. was fixed at USD 10,500 per day.62 When the vessel

missed the laycan and Champion cancelled the next fixture63, the Owners were able to charter

the vessel to Fairwind International as Replacement fixture at a daily rate of hire of USD 11,000

per day.64

48 Applying the formula for calculation of loss of profit, the Charterers are entitled to credit for

hire of USD 500 per day as the hire earned in the Replacement fixture is more than that of Next

fixture. Thus, there was no loss of profit under the subsequent fixture and Owners must give

credit for hire received under the Replacement Fixture.

IV. THAT THE CHARTERERS ARE ENTITLED TO BE INDEMNIFIED BY THE OWNERS IN RESPECT OF

THE CARGO CLAIM

A. The cargo claim raised by the charterers was not time barred under the Inter-Club

Agreement

49 Under clause 6, a written notification of the cargo claim is to be provided by the Charterer to

the Owner. The idea of a notification is to give the receiving part the possibility to investigate

60 Golden Strait Corporation V Nippon Yusen Kubishka Kaisha (The “Golden Victory”) [2007] 2 Lloyd's Rep.

164.

61 Achilleas (n 48); Dalwood Marine v Nordana Line A/S (the Elbrus) [2010] 2 Lloyd's Rep. 315.




ARGUMENTS ADVANCED


the claim in hand and prepare their strategy of defence.65 Further, commercially, a notice to be

given to the parties so that financial provision can be made for it by the party.66

50 Every notification clause turns on its own wording.67 Under the clause, the words “if possible”

are used. These words denote that the details regarding nature and amount of claim are to be

provided if it is possible for the party to include.

51 In the correspondence dated 29th June 2016, the likelihood of claims being raised by the

Receivers of the cargo is almost certain. Further, the nature of the claim and the underlying

facts have been clearly outlined in the mail.68 The same mail has been referred to while bringing

the formal notice of claim against the Owners.69 The preliminary report of the survey attached

clearly mentions that Receivers will be bringing a claim against the Charterer and also the

underlying reasons for it. Further, it also mentions the likely quantum of damage.70 The exact

amount claimed by the Receivers was not communicated to the Charterers till as late as 23rd

November 2017, and the same could not have been ascertainable since the Receivers had not

even started any claims.71

52 Not only this, a purposive interpretation to the notice requirement must be adopted. The owners

were made aware of the damage to cargo as early as 27th June 2016. It was duly communicated

to the Owners that a substantial claim is anticipated from the Receivers of the cargo.

65 London Arbitration 16/02, the Arbitrator.

66 Laminates Acquisitions v BTR Australia Limited [2004] 1 All ER (Comm) 737.

67 Forrest v. Glasser [2006] 2 Lloyd’s Rep 392 at ¶24.


69 Id. at 45.

70 Id. at 46.

71 Id. at 57.

ARGUMENTS ADVANCED


53 Thus, the purpose behind serving a notice, that is, to enable the party to make financial

provisions for it and conduct their investigations in this respect, has been served. It is, thus,

submitted that the Charterers have dispensed the requirements of a written notification.

B. The owners are liable to the charterers in respect of Cargo Claim under clause 8(b)

the ICA

54 Seaworthiness entails that the ship is cargoworthy72, that is, cargo spaces must be fit for

receiving cargo and the machinery used for preservation of cargo must be fit for that purpose.73

Further, a ship is unseaworthy if there is something about it that endangers the cargo and may

cause damage or it makes the vessel practically impossible to unload cargo.74

55 Ballast management, entailing the process of ballast discharge and intake, keeps the vessel’s

superstructure balanced or stable, which is necessary for the ship’s safety.75 Under, clause 64

of the C/P, the Owners guarantee the safety of the vessel during ballasting operations and such

ballasting will be at the discretion of Master having due regard to stability and seaworthiness

of the vessel.

56 In the light of cl. 64 of C/P and the usage of seaworthiness in the cl. 8(a) of ICA, it is submitted

that the liability be apportioned under cl. 8(a).

57 Further, the phrase “faults or errors in the management of the vessel” include improper

handling of the ship, as a ship, which affects the safety of the cargo.76 The interpretation of

“management of the vessel” as laid down in ‘The Glenochil’ includes such acts which is

necessarily done in the proper handling of the vessel, though in the particular case the handling

72 The Aquacharm [1982] 1 LR 7.

73 Maori King v Hughes [1895] 2 Q.B. 550.

74 The Arianna [1987] 2 LR 376.

75 Moira L. Mcconnell, “BALLAST AND BIOSECURITY” in Ocean Yearbook 17, Elisabeth Mann Borgese, Aldo

Chircop, And Moira L. Mcconnell, eds. (University of Chicago Press, 2003), 235-236.

76 The Rodney [1900] P. 112.

ARGUMENTS ADVANCED


is not properly done, but is done for the safety of the ship herself, and is not primarily done at

all in connection with the cargo77 and may indirectly cause damage to the cargo.78 Shipowners

owe a duty to ensure the safe and efficient management of their vessels.79

58 It is argued that the handling of valves and its mismanagement amounts to mismanagement of

the vessel as ballasting operations is not only essential for discharge of cargo but is also

necessary to constitute the ship as seaworthy.80

C. Alternatively, Charterers can claim damages in like amount for Owners’ breach of

clauses 27 and 53 of the C/P

59 As per clause 53 of Rider Clauses, the Owners agreed to the apportionment of liability for cargo

claims under the terms of the ICA. Under clause 27 of NYPE, the settlement of cargo claims

is to be under ICA.

60 The Inter-club Agreement has been enforced as a contractual agreement between the parties

when it is incorporated in a charter.81 Further, ICA shall prevail over Hague Rules regime

notwithstanding Section 3(8) of U.S. COGSA82 and the Agreement will govern the relations

between the owners and the charterers.83 The ICA provides its own code which is independent

of the incorporation of the Hague Rules into the C/P.84

77 The Glenochil [1896] P. 10.

78 Gosse Millard v Canadian Government Merchant Marine [1929] AC 223.

79 The Marion [1984] 2 Lloyd's Reports 1 at 4 (per Lord Brandon).

80 Rowson v. Atlantic Transport Co. [1903] 1 K.B. 114.

81 Lloyd’s Time Charters (n 34).

82 §3(8), United States Carriage of Goods by Sea Act, [Title 46 U.S.C.].

83 D/S A/S Idaho v. Peninsular & Oriental Steam Navigation Co. (The Strathnewton) [1983] 1 LR 219 (C.A.

1982).

84 The Benlawers [1989] 2 Ll Rep 51.

ARGUMENTS ADVANCED


61 The ICA cuts across the liabilities and defences set out in the other terms of the C/P, including

the liabilities and defences of the Hague Rules when incorporated into the C/P.85 Therefore,

Owners are in breach of the provisions of the C/P relating to applicability of Inter-club

Agreement.

C. In the further alternative, 50% of the Cargo Claim is for Owners’ account pursuant

to clause 8(b) of the ICA

62 Under clause 8(b) of the ICA, 50% of the liability stands apportioned for Owners’ account if

the words “and responsibility” are added in cl. 8 of NYPE. This amendment makes the Master

responsible for handling cargo.

63 The words ‘and responsibility’ effects a prima facie transfer of the liability caused to cargo

during the discharge of cargo.86 These words cover the entire operation, both planning and

execution, from loading, discharging, stowing and trimming the cargo.87 This risk is assumed

by the owners even if the cause of negligence was the Charterer’s crew.88

64 The NYPE was amended by the parties to include the words ‘and responsibility’,89 thus,

making it evident that the liability with respect to 50% of the Cargo Claims lies with the

Owners.

85 The Strathnewton (n 83).

86 A B Marintrans v Comet Shipping Co Ltd [1985] 1 WLR 1270.

87 The Argonaut [1985] 2 LR 216.

88 The Alexandros P [1986] 1 LP 421.


PRAYERS

MEMORANDUM FOR THE RESPONDENT XII

PRAYERS

In light of the facts stated, issues raised, authorities cited and arguments advanced, the

Counsel for the RESPONDENT respectfully requests the Tribunal to adjudge and declare that,

1. That the Charterers did not fail to perform Hull cleaning prior to redelivery of the vessel

and the Owners are not entitled to claim damages in full from the charterers

2. That the Charterers did not fail to redeliver the vessel before the expiry of the maximum

period of the Charterparty and thus, the Owners are not entitled to damages calculated

as the loss of next fixture.

3. That the Owners are liable to indemnify the cargo claim raised by the charterers.

4. That the Owners are liable for restitution/damages for the alleged off-hire of the vessel.

Dated this 29th day of April 2019

Solicitors for RESPONDENT/CHARTERERS

Knight & Protector

20th INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2019 … · 2021. 1. 17. · 20th international...

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