CLAIMANT’S MEMORANDUM - Murdoch University · CLAIMANT’S MEMORANDUM ... M Smith, The Law of...

18TH ANNUAL INTERNATIONAL MARITIME LAW

ARBITRATION MOOT COMPETITION 2017

IN THE MATTER OF AN ARBITRATION HELD IN SINGAPORE

CLAIMANT’S MEMORANDUM

Claimant: Respondent:

Furnace Trading PTE LTD Inferno Resources SDN BHD

Team 27

Amanda Lee Jing Min

Gabrielle Nicholas Rohan

Khoo Sher Rynn

Lee Suan Cui

Nurul Syafinas binti Ibrahim

TABLE OF CONTENTS

INDEX OF AUTHORITIES................................................................................................................. I

ABBREVIATIONS ........................................................................................................................... IV

SUMMARY OF FACTS .................................................................................................................... V

SUMMARY OF ISSUES .................................................................................................................. VI

I. THIS TRIBUNAL HAS JURISDICTION AND POWER TO ORDER THE SALE OF CARGO ON BOARD M.V. TARDY TESSA PENDENTE LITE ................................................................... 1

A. The Arbitration Clause in the Voyage Charterparty confers jurisdiction to this Tribunal to

hear this application over the Cargo ................................................................................................ 1

(a) This Cargo Dispute constitutes a dispute arising out of the Voyage Charterparty............ 1

(b) This Tribunal has jurisdiction over dispute arising out of or in connection with the B/L. 3

B. The International Arbitration Act explicitly confers power to this Tribunal to grant an order for sale of the Cargo ............................................................................................................... 4

(a) This Tribunal can grant an interim order for sale of the cargo under Section 12(1)(d) of

the IAA......................................................................................................................................... 4

(b) This Tribunal can grant an interim order for sale of the cargo under Section 12(1)(g) or (i) of the IAA................................................................................................................................ 5

C. This Tribunal is the proper forum to hear this application.................................................... 5

(a) The function of court-ordered interim measure is supportive in nature ............................ 5

(b) This application does not affect the rights of third parties ................................................ 6

(c) Initiating a proceeding in court for this application will amount to an abuse of power ......... 7

II. THE CLAIMANT IS ENTITLED TO EXERCISE A LIEN OVER THE CARGO ...................... 7

A. Under common law a ship owner is entitled to exercise a possessory lien for unpaid

freights ............................................................................................................................................. 7

B. The Claimant has an express contractual lien over the cargo ............................................... 8

(a) The debt in question is one which is presently due and payable ....................................... 9

(b) The B/L is between Claimant and Idoncare ...................................................................... 9

(c) The B/L incorporates the Voyage Charterparty............................................................... 10

(d) The lien clause in the Voyage Charterparty is incorporated into the B/L ....................... 10

(e) The Claimant has continuous possession of the Cargo, and entitled to exercise the lien

before and without arriving at any port of discharge ................................................................. 11

C. Alternatively, even if Claimant is not a party to the B/L, Claimant has the authority to exercise lien.................................................................................................................................... 12

(a) IMLAM had an implied obligation to confer Claimant rights to exercise lien ............... 12

(b) IMLAM had assigned their right through equitable assignment ..................................... 12

(c) Claimant has independent rights to exercise lien ............................................................ 13

D. An equitable lien may be imposed irrespective of possession. ................................................. 14

III. IT IS NECESSARY AND JUST FOR THE CARGO TO BE SOLD PENDENTE LITE ......... 14

A. The Claimant has a prima facie case against the respondent .............................................. 14

(a) The Respondent’s failure to pay freight amounts to a repudiatory breach ...................... 14

(b) The Respondent’s failure to nominate a legitimate discharge port on time is a repudiatory breach...................................................................................................................... 15

(c) There is a valid acceptance of repudiation by the Respondent........................................ 15

(d) Port congestion does not fall under the scope of “any other event whatsoever which

cannot be avoided or guarded against” under clause 24 ............................................................ 16

B. There is substantial risk of harm necessitating the sale of the Cargo ................................. 17

(a) The Cargo endangers the crew of the M.V. Tardy Tessa ................................................ 17

(b) The value of the cargo is depreciating ............................................................................. 18

C. There is urgency necessitating the sale of the Cargo .......................................................... 18

(a) The costs accrued are more than the value of the cargo .................................................. 18

(b) The Claimant has no other reliable alternatives .............................................................. 19

PRAYER OF RELIEF ....................................................................................................................... 21

I

INDEX OF AUTHORITIES

Cases

Alan Auld Associates Ltd v Rick Pollard Associates [2008] EWCA Ciy 655 ................................... 14

Albemarle Supply Co. Ltd v Hind & Co [1928] 1 K.B. 307, 318 .................................................... 8, 9

AT&T Technologies Inc v Communications Workers of America, 475 US 643 (1986) ...................... 2

Bentsen v. Taylor [1893] 2 Q.B. 274 ................................................................................................. 15

Bunge Corporation (New York) v Tradax Export SA (Panama) [1981] APP.L.R. 02/25 ................. 15

Caresse Navigation Ltd v Zurich Assurances MAROC & Ors [2014] EWCA Civ 1366 .................. 10

Central Insurance Co Ltd v Seacalf Shipping Corpn (The Aiolos) [1983] 2 Lloyd’s Rep 25 (CA).. 13

Comptoir Commercial Anversois v. Power [1920] 1 K.B. 868 ......................................................... 15

Connaught Restaurants Ltd v Indoor Leisure Ltd [1994] 1 LWR 501 .............................................. 16

Coulter v Chief Constable of Dorset Police [2004] 1 WLR 1425 ..................................................... 12

Damayanti Kantilal Doshi v Indian Bank [1998] 3 SLR(R) 851 ...................................................... 12

E.D.& F. Man Sugar Ltd v Unicargo Transportgesellschaft mbH (The “Ladytramp”) [2012]

EWHC 2879 ................................................................................................................................... 16

Emilia Shipping Inc v State Enterprise, For Pulp and Paper Industries [1991] 2 MLJ 379, 384 .. 4, 5

Enimont Overseas A.G. v Ro Jugatanker Zadar (‘’The Olib’’) (1991) 2 Ll.L. Rep. 108............ 17, 18

Federal Commerce & Navigation Co Ltd v Molena Alpha Inc. (The Nanfri) [1979] 1 Lloyd’s Rep.

207,................................................................................................................................................. 14

Federal Commerce and Navigation Ltd. v. Molena Alpha Inc. SAME v. Molena Beta Inc. SAME v.

Molena Gamma Inc. (The “Nanfri”, “Benfri”, and “Lorfri”) [1978] 1 Llyod’s Rep. 581 ........ 3, 6

Fiona Trust and Holding Corporation and Others v Yuri Privalov and Others [2007] UKHL 40 1, 2

Fiumana Societa Di Navigazione v Bunge & Co. Ltd (1930) 36 Ll.L.Rep. 171 ............................... 17

Five Ocean Corporation v Cingler Ship Pte Ltd 2015 SGHC 211.......................................... 5, 10, 20

Gorringe v Irwell India Rubber Works (1886) 34 Ch D 128............................................................ 13

Heyman v Darwins Ltd [1942] AC 356 ............................................................................................. 16

Hong Kong Fir Shipping Co. Ltd. v Kawasaki Kisen Kaisha Ltd. [1962] 2 Q.B. 26 ........................ 14

IM Skaugen SE v MAN Diesel & Turbo SE [2016] SGHCR ............................................................. 12

In The Bulk Chile [2013] 2 Lloyd’s Rep. 38...................................................................................... 12

Itex Itagrani Export SA v Care Shipping Corporation and others (The "Cebu) (No 2) [1990] 2

Lloyds Rep 316, 321 ...................................................................................................................... 10

Kallang Shipping SA Panama v Axa Assurance Senegal and Another (The “Kallang” (No.2))

[2008] EWHC 2761 ......................................................................................................................... 3

II

Knutsofrd v Tillmans [1908] A.C. 406 .............................................................................................. 16

Larsen Oil and Gas Pte Ltd v Petroprod Ltd [2011] SGCA 21 .......................................................... 1

Management & Tech. Consultants v. Parsons-Jurden, 820 F. 2d 1531 (1987) .................................. 2

Mihalios Xilas [1978] 2 Lloyd's Rep 186 .......................................................................................... 11

Miramar Maritime Corporation v Holborn Oil Trading Ltd [1983] 2 Llyod’s Rep. 319, 324 ......... 11

Mors-Le Blanch v Wilson (1873) L.R. 8 C.P. 227 ............................................................................... 8

National Westminster Bank plc v Kapoor [2011] EWCA Civ 1083 ................................................. 13

NCC International AB v Alliance Concrete Singapore Pte Ltd [2008] 2 SLR(R) 565 ....................... 6

Plama Consortium Limited v Republic of Bulgaria (ICSID Case No. ARB/03/24) ......................... 17

Rals International Pte Ltd v Cassa di Risparmio di Parma e Piacenza SpA [2016] SGCA 53 .......... 1

Roberts v Gill & Co [2010] UKSC 22; [2011] 1 AC 240.................................................................. 13

Ross T. Smyth & Co. Ltd. v T. D. Bailey, Son & Co [1940] 3 AII E.R. 60........................................ 14

Sang Stone Hamoon Jonoub Co Ltd v Bayue Shipping Co Ltd (“The Ba Yue”) [2015] EWHC 28819

Santiren Shippind Ltd v Unimarine S.A. (The Chrysovalandou Dyo) [1981] 1 Lloyd’s Rep. 159 8, 19

Santiren Shipping Ltd v Unimarine S.A. (1981) 1 Ll. L. Rep. 159 .................................................... 19

Seeley International Pty Ltd v Electra Air Conditioning BV [2008] FCA 29 ..................................... 2

Spar Shipping AS v Grand China Logistics Holding [2016] EWCA CIV 982 ................................. 14

Stapley v Towing Masters Pty Ltd (trading as Dynamic Towing) [2009] NSWSC 139...................... 7

Tandrin Aviation Holdings Ltd v Aero Toy Store LLC [2010] EWHC 40......................................... 16

The "Epic" [2000] SGCA 28.............................................................................................................. 10

The Nanfri [1978] 1 Lloyd’s Rep. 287, 392....................................................................................... 10

The Rena K [1978] 1 Lloyd's Rep 545, 551 ......................................................................................... 4

The Rewia [1991] 2 Lloyd’s Rep. 325 ................................................................................................. 9

The SLS Everest [1981] 2 Lloyd’s Rep. 389 ...................................................................................... 10

The’ Trade Resolve” [1999] SGHC 109 ............................................................................................ 11

Tillmanns & Co. v ss. Knutsford Ltd [1908] 1 K.B. 185 ................................................................... 16

Tjong Very Sumito vs Antig Investments Pte Ltd [2009] SGCA 41..................................................... 5

Tokios Tokelės v. Ukraine Case No. ARB/02/18 Order No. 3 ......................................................... 17

Transgrain Shipping (Singapore) Pte Ltd V Yangtze Navigation (Hong Kong) Co Ltd. [2016]

EWHC 3132 ................................................................................................................................... 19

Vertex Data Science Limited v Powergen Retail Limited [2006] EWHC 1340 .................................. 2

VK Holdings (HK) Ltd v Panasonic Eco Solutions (Hong Kong) Company Ltd HCCT 19/2014 ....... 2

III

Statutes

Article 26 (1) of the UNCITRAL Arbitration Rule ........................................................................... 17

International Arbitration Act (Chapter 143A) ..................................................................................... 5

Maritime Code Of The People’s Republic Of China ......................................................................... 11

Merchant Shipping Act (Chapter 179) (Original Enactment: Act 19 Of 1995). ............................... 20

Books

Gary Born, International Commercial Arbitration (Kluwer Law Internatifonal, 2nd ed, 2014) .. 1, 17

Halsbury’s Law of Singapore Vol 2 (LexisNexis 2003 Reissue) ........................................................ 6

M Smith, The Law of Assignment (2nd edn 2013)............................................................................. 13

Raoul Colinvaux, Carver's Carriage By Sea (13th edn, Stevens & Sons 1982) ................................. 7

Ship Arrest In India And Admiralty Laws Of India, by Shrikant Pareshnath Hathi (Dr) .................... 7

Sir Bernard Eder, Scrutton on Charterparties and Bill of Lading (Sweet & Maxwell, 19th ed, 1984) 3

Online Resources

China : Port Congestion Report as of 14th March 2017,

http://www.benlineagencies.com/congestion_china_pdf.php ....................................................... 16

Loh, W.Y. Ince & Co International Law Firm: “Shipping owners’ liens on cargo for unpaid freight

in china”, retrieve from https://www.skuld.com/Documents/Topics/Legal_Defence/InceCo ...... 11

World Seaport: Sea Route & Distance, http://ports.com/sea-route/port-of-

singapore,singapore/mawei-

port,china/#/?a=0&b=0&c=Port%20of%20Singapore,%20Singapore&d=ningbo%20Port,%20Ch

ina................................................................................................................................................... 15

IV

ABBREVIATIONS

Claimant Furnace Trading Pte Ltd

Parties Claimant and Respondent

Respondent Inferno Resources Ltd

The Vessel M.V. Tardy Tessa Time Charterer Imlam Consignorist GmbH

Time Charterparty The Time Charterparty between

Claimant and the Time Charterer Voyage Charterparty The Voyage Charterparty between

Claimant and Respondent

V

SUMMARY OF FACTS

A. THE CHARTERPARTIES

1. On 15 February 2016, Imlam Consignorist GmbH (“the Owner”) the owner of M.V. Tardy

Tessa (“the Vessel”) entered into a time charterparty (“Time Charterparty”) with Furnace

Trading Pte Ltd (“Claimant”) which later became the disponent owner of the Vessel.

2. The Claimant then entered into a voyage charterparty (“Voyage Charterparty”) with Inferno

Resources Ltd (“Respondent”) evidenced by a clean fixture recap (“the Fixture Recap”).

B. PERFORMANCE OF THE CHARTERPARTY

3. The Claimant voyage chartered the Vessel to the Respondent for the carriage of 80,000 mt 10%

MOLOO Australian Steam Coal from Newcastle to a China.

4. On 4 October 2016, a bill of lading (“B/L”) was issued by the Owner to Idoncare Berjaya Utama

Pty. Ltd (“Idoncare”) as the shipper, cosigned to order.

5. Pursuant to the Voyage Charterparty, the Respondent is to nominate a discharge port listed in the

Fixture Recap when the Vessel passes Singapore for bunkering, and make full payment of freight

within 5 banking days after completion of loading and singing/releasing of the B/L.

Nomination of discharge port

6. From 10 October 2016 to 15 October 2016, the Claimant requested for nomination of disport

from the Respondent in numerous occasions. The Respondent, however, failed to nominate a port

until the 16 October 2016 where they nominated Busan, a port not provided in the Voyage

Charterparty or B/L.

Payment of freight

VI

7. The Respondent failed to pay freight that was due since 14 October 2016 despite the Claimant’s

daily request from the 12 October to 21 October 2016.

8. As of 21 October 2016, the loss incurred by the Claimant as the Vessel drifted outside Singapore

OPL amounted to USD 101, 666.67.

9. On 20 October 2016, the Claimant issue a notice of lien to the Respondent for the substantial

losses, costs, expenses and damages incurred by the Claimant as a result of the Respondent’s breach

of Voyage Charterparty for the failure to fulfil the two obligations. A notice of lien on sub-freight

was also issued to Idoncare.

10. On 22 October 2016, the Claimant issued a notice of termination to the Respondent. Upon

receiving the notice, the Respondent denies Claimant’s allegation and considered Claimant’s action

a breach of the Voyage Charterparty.

11. On 25 November 2016, the Claimant issued two notices of arbitration to the Claimant and

Idoncare respectively pursuant to Clause 29 in the Fixture Recap (“Arbitration Clause”). On 1

December 2016, the Claimant filed an urgent application (“this application”) to consolidate both

the arbitration and for the liberty to sell the cargo (“Cargo”) on board the Vessel pendente lite.

10. The Respondent declines to make any written and oral submissions and submits to the

jurisdiction of the Arbitral Tribunal (“this Tribunal”).

SUMMARY OF ISSUES

1. The following issues arise for determination for Tribunal:

a. Whether the Tribunal has the jurisdiction and/or power to grant liberty to the Claimant to

sell the cargo on board the Vessel pendente lite.

b. Whether the Respondent is liable to the Claimant for detention and/or other damages

under the Voyage Charterparty.

c. Whether the Claimant is entitled to exercise any lien over the cargo.

d. Whether it is necessary nor just for the cargo on board the Vessel to be sold pendente

lite.

1

I. THIS TRIBUNAL HAS JURISDICTION AND POWER TO ORDER THE SALE OF

CARGO ON BOARD M.V. TARDY TESSA PENDENTE LITE

A. The Arbitration Clause in the Voyage Charterparty confers jurisdiction to this

Tribunal to hear this application over the Cargo

1. Arbitration is a creature of contract and the jurisdiction of an arbitral tribunal encompasses

matters to the extent mutually agreed by the parties.1 Clause 26(c) of the Voyage Charterparty

confers jurisdiction to this Tribunal to hear “any dispute arising out of or in connection with the

Charterparty”, which ought to include any hearing on the sale of the cargo (“Cargo Dispute”).2

(a) This Cargo Dispute constitutes a dispute arising out of the Voyage

Charterparty

i. Singapore Law is the law governing the arbitration clause

2. Clause 26(c) the Voyage Charterparty provides for Singapore law and arbitration as per the

SCMA Rules. Therefore, it is undisputed that Singapore law is the law governing the arbitration

agreement and it should be applied in the construction of the present arbitration clause.

ii. The arbitration clause should be broadly construed to reflect

parties’ intentions

3. According to the case of Fiona Trust,3 the Singapore jurisdiction adopts a modern generous

approach in construing an arbitration agreement. The ratio is such that all manner of claims,

whether common law or statutory, should be regarded as falling within the agreement’s scope

unless there is good reason to conclude otherwise.4 The phrase “any dispute arising out of or in

1 Gary Born, International Commercial Arbitration (Kluwer Law Internatifonal, 2nd

ed, 2014), 1060.

2 Moot Scenario pg 32, Clause 26(c) of Voyage Charterparty.

3 Fiona Trust and Holding Corporation and Others v Yuri Privalov and Others [2007] UKHL 40

4 Rals International Pte Ltd v Cassa di Risparmio di Parma e Piacenza SpA [2016] SGCA 53 [30]; Larsen Oil and Gas

Pte Ltd v Petroprod Ltd [2011] SGCA 21 [19].

2

connection with this Charterparty”5 is without express qualification and exceptions, hence should

include all disputes.6

4. A broad interpretation of the scope of arbitration agreements also serves to advance the parties’

commercial intention. In Fiona Trust, the court highlighted a one-stop arbitration presumption that

the parties, as rational business people, are likely to have intended any dispute arising out of their

relationship to be decided by the same tribunal.7

5. With the increasing power of national courts in many jurisdictions to grant interim measures in

aid of foreign and local arbitration, parties can and often do carve out certain, if not all, procedural

remedies from the tribunal’s jurisdiction. 8 The fact that the Claimant and Respondent did not

exercise their autonomy to do so indicates their unequivocal intention to confer this Tribunal with

the jurisdiction to hear an application for an interim sale of the Cargo. As rational businessmen in

the shipping industry, the parties would have known that the sale of the cargo shipped under the

Voyage Charterparty is, at the very least, a consequence naturally flowing from any dispute9 arising

from the Voyage Charterparty. In mutually agreeing to Singapore (whose law provides for such

interim measure) as the seat of arbitration, it is fair to assume that parties intended to favour a one-

stop arbitration process.

6. Further, words of broad import, such as “in connection with this contract”, are to be given their

natural meaning in their context and are capable of meaning any dispute other than one which was

“entirely unrelated to the transaction covered by the contract”.10 A voyage charterparty is essentially

5 Moot Scenario pg 32.

6 Fiona Trust and Holding Corporation and Others v Yuri Privalov and Others [2007] UKHL 40[31], AT&T

Technologies Inc v Communications Workers of America, 475 US 643 (1986), 650. 7 Fiona Trust and Holding Corporation and Others v Yuri Privalov and Others [2007] UKHL 40 [13].

8 Cases where interim measure has been explicitly craved out from the arbitration clause : Seeley International Pty Ltd v

Electra Air Conditioning BV [2008] FCA 29; Vertex Data Science Limited v Powergen Retail Limited [2006] EWHC

1340. 9 Management & Tech. Consultants v. Parsons-Jurden, 820 F. 2d 1531 (1987), 1535.

10 VK Holdings (HK) Ltd v Panasonic Eco Solutions (Hong Kong) Company Ltd HCCT 19/2014 [31].

3

a contract to carry specified goods on a defined voyage.11 A dispute over the Cargo, of which a lien

can be imposed pursuant to the charterparty, cannot in any way be regarded as a dispute entirely

unrelated to the transaction covered by the same charterparty.

(b) This Tribunal has jurisdiction over dispute arising out of or in

connection with the B/L

i. The B/L incorporated a dispute resolution clause from the

Voyage Charterparty and not the Time Charterparty

7. The general presumption of incorporating the head charterparty when the incorporated

charterparty is unidentified in a bill of lading does not apply in the present case. This presumption

will not extend to cases where the head charter is a time charter but where there is also a voyage

charter.12 Time charterparty are not contracts for the voyage to which the bills of lading relate, and

the shipowners' remuneration is not freight but periodic hire.13 The B/L provides that freight is

payable as per the charterparty. That is naturally a reference to the voyage charter under which

freight, as opposed to hire, is payable. Further the terms of the voyage charter are more naturally

germane to a bill of lading.14 It is clear that the intention was to incorporate the terms of the voyage

charter into the bill of lading contracts.15

8. The incorporation of the Voyage Charterparty in the B/L is undoubtedly accompanied by the

incorporation of the Arbitration Clause from the Voyage Charterparty. Clause 1 of the Condition of

Carriage 16 contain an explicit reference to incorporate the “Law and Arbitration Clause/Dispute

11

Sir Bernard Eder, Scrutton on Charterparties and Bill of Lading (Sweet & Maxwell, 19th

ed, 1984), 51. 12

Federal Commerce and Navigation Ltd. v. Molena Alpha Inc. SAME v. Molena Beta Inc. SAME v. Molena Gamma

Inc. (The “Nanfri”, “Benfri”, and “Lorfri”) [1978] 1 Llyod’s Rep. 581 [591]. 13

“Federal Commerce and Navigation Ltd. v. Molena Alpha Inc. SAME v. Molena Beta Inc. SAME v. Molena Gamma

Inc. (The “Nanfri”, “Benfri”, and “Lorfri”) [1978] 1 Llyod’s Rep. 581 [591]. 14

Kallang Shipping SA Panama v Axa Assurance Senegal and Another (The “Kallang” (No.2)) [2008] EWHC 2761

[64]. 15

Kallang Shipping (n 14). 16

Moot Scenario pg 42.

4

Resolution Clause” from the charterparty incorporated in the B/L. The special reference to the

arbitration clause was sufficient to incorporated such clause into the B/L.17

ii. This Tribunal’s jurisdiction extends to disputes under the B/L

upon incorporation

9. Where there is an incorporation of charterparty with a special reference made to the arbitration

clause, the wordings of the arbitration clause should manipulated and adapted so as to make it

applicable to disputes arising under the B/L.18 Upon incorporation, the arbitration clause is to be

read as and apply to any disputes arising out of or in connection with “this B/L” is stead of “this

Charterparty”. Such manipulation and adaptation is necessary to give effect to the intentions of the

parties to the B/L.19 Hence, this Tribunal has jurisdiction to hear any disputes over the Cargo

pursuant the to arbitration clause incorporated in the B/L from the Voyage Charterparty.

B. The International Arbitration Act explicitly confers power to this Tribunal to

grant an order for sale of the Cargo

10. Even though the Claimant’s right to lien over the Cargo does not confer a right to sale, the lien

clause is sufficient to invoke this Tribunal’s statutory power to grant an order for sale.20 Despite the

contractual nature of arbitration, this Tribunal is statutorily vested with wide power to grant interim

measures as conferred automatically by operation of law. Such power does not require specific

reference in the arbitration agreement or the main contract.

(a) This Tribunal can grant an interim order for sale of the cargo under

Section 12(1)(d) of the IAA

11. Arbitral tribunals in Singapore are empowered with wide power to grant interim measures, even

before the 2006 amendment to Article 17 of the UNCITRAL Model Law. The courts have also

17

The Rena K [1978] 1 Lloyd's Rep 545, 551. 18

The Rena K (n 17). 19

The Rena K (n 17). 20

Emilia Shipping Inc v State Enterprise, For Pulp and Paper Industries [1991] 2 MLJ 379, 384.

5

recognised that “an unequivocal judicial policy of facilitating and promoting arbitration has firmly

taken root in Singapore”.21 Thus, a pro-arbitration approach should be adopted in interpreting the

powers of arbitral tribunal in such way to reflect the drafter’s intention.

12. Section 12 of the IAA provides explicit power to the arbitral tribunal to make order for interim

measures including “the interim sale of any property which is or forms part of the subject-matter of

the dispute.”22 In the recent case of Five Ocean Corporation v Cingler Ship Pte Ltd23, which bears

close resemblance to the facts of the present case, the Singapore High Court recognised that the

cargo was the subject matter of the proceedings as it formed the subject-matter of the claims for

freight.24 Similarly, this Tribunal has clear power under Section 12(1)(d) of the IAA to order the

interim sale of Cargo in pursuance of the Claimant’s claim for unpaid freight.

(b) This Tribunal can grant an interim order for sale of the cargo under

Section 12(1)(g) or (i) of the IAA

13. Alternatively, this Tribunal is vested with the broad power under paragraph (g) and (i) of the

same sub-section to make “order for securing the amount in dispute” and “any other interim

measure” respectively. Hence, Section 12(1) of the IAA provides this Tribunal with wide powers to

grant interim measures including the sale of Cargo in the present application.

C. This Tribunal is the proper forum to hear this application

(a) The function of court-ordered interim measure is supportive in nature

14. Although international arbitral tribunals and national court have concurrent jurisdiction in

granting interim measures, the courts play only a supportive and limited supervisory functions over

21

Tjong Very Sumito vs Antig Investments Pte Ltd [2009] SGCA 41 [29] (“The role of the court is now to support, and

not to displace, the arbitral process.”). 22

International Arbitration Act (Chapter 143A) (Singapore), Section 12(1)(d). 23

2015 SGHC 211. 24

Five Ocean Corporation v Cingler Ship Pte Ltd 2015 SGHC 211 [54], Emilia Shipping Inc v State Enterprise, For

Pulp and Paper Industries [1991] 2 MLJ 379 at 384.

6

international arbitrations held in Singapore.25 In NCC International AB26, the Singapore Court of

Appeal established that the courts would only intervene in arbitrations where, inter alia, third

parties over whom the arbitral tribunal had no jurisdiction were involved.27

(b) This application does not affect the rights of third parties

15. This application does not affect any third parties’ right over whom this Tribunal has no

jurisdiction. This Tribunal has jurisdiction over parties to both the Voyage Charterparty and B/L.

IDONCARE, the holder of the B/L28 and presumptive owner of the Cargo, has already submitted to

this Tribunal’s jurisdiction29, and raises no opposition to the hearing of this application30.

16. The non-joinder of the carrier, IMLAM, is immaterial. The lien clause in the Time Charterparty

provides for their right of lien upon, inter alia, all cargoes, sub-freight, sub-hire due to the charterers

for any amount due under that charterparty.31 However, as of to date, there is no claim of unpaid

hire due from IMLAM. Hence, IMLAM’s rights will not be affected nor prejudiced in any manner.

It is unnecessary for this Tribunal or the court to go as far as to protect the shipowners' non-existent

interest concerning unpaid hire.32

17. Further, in Five Ocean, the application was not held to prejudice the rights of the carrier where

the plaintiff, in similar position with the present Claimant, has the full support of the carrier.

Pursuant to an email sent from the carrier to the Claimant dated 20 October 2016,33 the carrier

expressed willingness to assist the Claimant in exercising lien over the Cargo. It is safe to believe

that Claimant has the support of the carrier in this application that resulted from the exercise of lien.

25

Halsbury’s Law of Singapore Vol 2 (LexisNexis 2003 Reissue) at para 20.088. 26

NCC International AB v Alliance Concrete Singapore Pte Ltd [2008] 2 SLR(R) 565. 27

NCC International AB v Alliance Concrete Singapore Pte Ltd [2008] 2 SLR(R) 565 [53]. 28

Procedural Order No. 3, Clause 2(1). 29

Procedural Order No. 3, Clause 2(2). 30

Procedural Order No. 3, Clause 2(2), Moot Scenario, pg 93 31

Moot Scenario pg 10, Time Charterparty Clause 23 32

Federal Commerce and Navigation Ltd. v. Molena Alpha Inc. SAME v. Molena Beta Inc. SAME v. Molena Gamma

Inc. (The “Nanfri”, “Benfri”, and “Lorfri”) [1978] 1 Llyod’s Rep. 581 [591]. 33 Moot Scenario pg 36, Sent : Thursday 20 October, 2016 20:12 PM.

7

(c) Initiating a proceeding in court for this application will amount to an abuse

of power

18. In any event, the Claimant should and must sought an interim measure from this Tribunal and

not the national courts because opting for the latter is in contrary to the arbitration clause which

would amount to an abuse of process. In NCC International AB, the conduct of the appellant was

held to be an abuse of process because they sought an interim mandatory injunction from the court

despite having no genuine intention to commence arbitration.

19. The position taken in the case of NCC International AB imposed a reasonable obligation on the

parties to an arbitration agreement to commence arbitration in the event of dispute, pursuant to the

arbitration agreement or, at the very least, show genuine intention of doing so. The absence of such

conduct or intention amounts to an abuse of process where “process of court is not being fairly or

honestly used but is employed instead for some ulterior or improper purpose.” Hence, even though

this Tribunal and Singapore courts have concurrent jurisdictions in granting interim orders, this

Tribunal is the proper forum to hear this application before any such application is can be brought

before the courts.

II. THE CLAIMANT IS ENTITLED TO EXERCISE A LIEN OVER THE CARGO

A. Under common law a ship owner is entitled to exercise a possessory lien for

unpaid freights

20. In pursuant to common law, a carrier has a particular lien for freight.34 It is a possessory lien

permitting the carrier to retain goods until freight is paid 35 The carrier may retain them until his

charges are settled.36 Although, once he parts with either actual or constructive possession of the

34

Stapley v Towing Masters Pty Ltd (trading as Dynamic Towing) [2009] NSWSC 139. 35

Raoul Colinvaux, Carver's Carriage By Sea (13th edn, Stevens & Sons 1982). 36

Ship Arrest In India And Admiralty Laws Of India, by Shrikant Pareshnath Hathi (Dr) at chapter 44.

8

goods his right of lien is lost.37 There are two basic requirements for the exercise of a lien: first the

demand of the amount in respect of which it is to be exercised and second the retention of

continuous possession by the lienor. Although the sum of the demand must be made known, it was

illustrated in the authority of Albemarle Supply that a person claiming a lien must either claim it for

a definite amount or give the owners particulars from which he himself can claim the amount for

which the lien is due.38 In regards to the retention of continuous possession by the lienor the lienor

may retain possession either on board or on land as long as he retains exclusive control. 39 The

owner may do anything reasonable to maintain his lien and this has been held to include standing of

discharge port40

21. In the present case, the cargo is still on board the vessel and freight is yet to be paid, (as per VC

freight clause Cl.19 of the Fixture Recap). Respondent failed to pay freight which was due since 9

October 2016, despite the continuous reminder for freight. Due to failure of Respondent to pay

freight, a Notice of Lien was served on him on 20 October 2016.

B. The Claimant has an express contractual lien over the cargo

22. Under the Voyage Charterparty between the Claimant and Respondent, clause 19(a) stipulates

that “the owners shall have a lien on the cargo for freight, deadfreight, demurrage and general

average contribution due to them under this charterparty” 41 On the weight of this clause and the

foregoing reasons, the Claimant was legally entitled to exercise the lien over the Cargo.

37

Ibid at chapter 44 para 7. 38

Albemarle Supply Co. Ltd v Hind & Co [1928] 1 K.B. 307, 318. 39

Mors-Le Blanch v Wilson (1873) L.R. 8 C.P. 227. 40

Santiren Shippind Ltd v Unimarine S.A. (The Chrysovalandou Dyo) [1981] 1 Lloyd’s Rep. 159. 41


9

(a) The debt in question is one which is presently due and payable

23. The freight was due be paid to the Claimant within “five (5) banking days after completion of

loading and signing/releasing B/Ls marked ‘freight payable as per charterparty’ and rcpt of owners’

FRT INV” under clause 19 of the Voyage Charterparty. 42

24. B/L was signed on 4 October 2016.43 The Claimant served an invoice on the Respondent on 9

October 2016.44 The payment of freight was therefore due on 14 October 2016. Respondent also

failed to nominate a legitimate discharge port on 11th October 201645 when the vessel passes

Singapore for bunkering46. From that day, costs started accruing on a daily basis. With such breach

of contractual obligation to nominate the port on time, the Claimant is entitled to claim damages

and detention resulting from the breach. The Claimant does not necessarily have to stipulate a

specific sum payable, so long as they provide the cargo owner with all the materials he could

possibly need in order to determine the amount to discharge the lien. From all the emails sent to the

Respondent which stipulated the calculation of daily hire and bunker costs and also the invoice

stating the amount of freight that was due, the Respondent is reasonably enabled to determine what

the correct sum is.47 Thus, the Claimant was entitled to exercise the lien, and has validly done so

when it gave notice to the Respondent via an email dated 20 October 201648.

(b) The B/L is between Claimant and Idoncare

25. Although the Master was the signatory of the B/L, his authority to sign was on the behalf of the

Claimant and not the owner. 49 Clause 26 of the Voyage Charterparty entitles the master to sign on

behalf of Claimant50, thus the B/L is between Claimant and Idoncare. The master is merely acting as

an agent to Claimant. Being the carrier of the vessel, the Claimant is in the physical possession of

42

Moot Scenario pg 22. 43


Moot Scenario pg79. 45


Moot Scenario pg 21, Clause 16 of the Voyage Charterparty. 47

Albermarle Supply Co Ltd. v Hind & Co. [1928] 1.K.B. 307, 318. 48


The Rewia [1991] 2 Lloyd’s Rep. 325, 333 (Lord Justice Leggatt). 50

Moot Scenario pg 22, Clause 26 of Voyage Charterparty.

10

the cargo as the vessel is still drifting outside Singapore 51 and thus is entitled to exercise the lien

without relying on IMLAM.

(c) The B/L incorporates the Voyage Charterparty

26. If there is both a time charter party and a voyage charter party, the voyage charter party terms

will usually be incorporated52 as terms in a time charter are in many respects inapposite to the

carriage of goods on a voyage53. The usage of the word "freight” (as opposed to “hire”) in the B/L

must necessarily refer to the Voyage Charterparty, as it is the general practice of shipping trade. 54 It

is also noteworthy that the Voyage Charterparty stipulates the exact same voyage in the B/L

particularly where both documents provide for the same 7 ports in China as the legit imate

discharge ports.55

(d) The lien clause in the Voyage Charterparty is incorporated into the B/L

27. Claimant is entitled exercise lien on cargo belonging to Idoncare as the holder of B/L because

the lien clause 19 of the Voyage Charterparty had been incorporated into the bill of lading. The

term “all terms and conditions” in the Condition of Carriage attached to the B/L is wide enough to

incorporate the lien clause.56 Being a common clause in the trade, the parties to the bill clearly had

in mind that the lien clause 19(a) of the Voyage Charterparty is incorporated when referring to the

charterparty clause in question without the need for clarity and certainty by stating the

incorporation of lien clause explicitly.57 Another feature of shipping practice is that the shipowner

looks primarily to his lien in the event of dispute, since a lien is more extensive as against the

51


The Nanfri [1978] 1 Lloyd’s Rep. 287, 392 (Lord Deninng M.R.). 53

The SLS Everest [1981] 2 Lloyd’s Rep. 389, The Nanfri [1978] 1 Lloyd’s Rep. 287. 54

Itex Itagrani Export SA v Care Shipping Corporation and others (The "Cebu) (No 2) [1990] 2 Lloyds Rep 316, 321 (Justice Sheen).

55 The "Epic" [2000] SGCA 28.

56 Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities & Energy Resources, intervener) [2015] SGHC

311.

57 Caresse Navigation Ltd v Zurich Assurances MAROC & Ors [2014] EWCA Civ 1366 (The Ranger case) at [12].

11

consignees than their own direct personal liability. 58 Since the clause intimately concerns the

interests of the consignee in the carriage and delivery of the cargo, the most general form of

incorporating words would be sufficient to incorporate it.

(e) The Claimant has continuous possession of the Cargo, and entitled to

exercise the lien before and without arriving at any port of discharge

28. Till to date, the Cargo remains on board the M.V. Tardy Tessa as it drifts outside Singapore’s

OPL59 Hence, it is undisputed that the Claimant still retains possession of the Cargo. The legitimate

discharge ports are all in China, whereby its local courts may not recognise the Claimant’s lien over

the Cargo. Article 87 of the Chinese Maritime Code provides that the shipowner is entitled to a lien

over the cargo of the debtor for freight and other amounts outstanding, but this right only to a

reasonable extent. 60 First, the shipowner must request the charterer to provide security before

exercising the lien.61 The shipowner can only exercise a lien if no security has been voluntarily

provided by the charterer. Secondly, the shipowner can only lawfully exercise a lien over the freight

if the cargo is owned by the party who is liable to pay the overdue freight. In certain maritime

courts in China, the lien clause has to be specifically referred to in order to incorporate such clause.

29. In light of the risk of losing the lien in if the Cargo is unloaded and kept at the Chinese ports,

the Claimant is legally justified to exercise a lien over the cargo before completing the carrying

voyage62.

58

The’ Trade Resolve” [1999] SGHC 109 at para [67], Miramar Maritime Corporation v Holborn Oil Trading Ltd

[1983] 2 Llyod’s Rep. 319, 324. 59

Moot Scenario pg 97 (Parties’ Joint Expert Report). 60

Maritime Code Of The People’s Republic Of China, Article 87 “ If the freight, contribution in general average,

demurrage to be paid to the carrier and other necessary charges paid by the carrier on behalf of the own er of the goods

as well as other charges to be paid to the carrier have not been paid in full, nor has appropriate security been given, the

carrier may have a lien, to a reasonable extent, on the goods.” 61

Loh, W.Y. Ince & Co International Law Firm: “Shipping owners’ liens on cargo for unpaid freight in china”, retrieve

from https://www.skuld.com/Documents/Topics/Legal_Defence/InceCo

Owners_liens_on_cargo_for_unpaid_freight_2014.pdf?epslanguage=en 62

Mihalios Xilas [1978] 2 Lloyd's Rep 186.

12

C. Alternatively, even if Claimant is not a party to the B/L, Claimant has the

authority to exercise lien

(a) IMLAM had an implied obligation to confer Claimant rights to exercise

lien

30. Ordinarily, there is an implied obligation on IMLAM to allow Claimant to collect the freight

due under an owners’ bill which is an implicit corollary to the employment clause 8 63 in the Time

Charterparty which provides 64 “The master shall be under the orders and directions of the

charterers as regards employment and agency”. Thus IMLAM is obliged to delegate the collection

of freight to the Claimant when the Claimant is not in default. This should extend to the exercise

of lien given that the lien clause in the Voyage Charterparty is incorporated.

(b) IMLAM had assigned their right through equitable assignment

31. An equitable assignment need not take a particular form and equity has always looked to the

intent rather than the form . What is of essence is a sufficient expression of an intention65 to assign

and conduct may be adequate evidence of such an intention 66 . IMLAM had expressed their

intention to assist Claimant in exercising their lien over the Cargo and impliedly assigning their

rights to Claimant in acting on their behalf. Once clear intention is conveyed, equitable assignment

is created.

32. An equitable assignment is absolute and complete without notice having been given to the

debtor. The debtor will only be bound after receiving notice of it. 67 Although the assignment was

only communicated between IMLAM and Claimant through exchange of emails68, the absence of

63


In The Bulk Chile [2013] 2 Lloyd’s Rep. 38. 65

IM Skaugen SE v MAN Diesel & Turbo SE [2016] SGHCR 6 cited Coulter v Chief Constable of Dorset Police [2004]

1 WLR 1425 [12]. 66

Damayanti Kantilal Doshi v Indian Bank [1998] 3 SLR(R) 851. 67

See paragraph 41 of Halsbury 4th

edn. 68

Moot Scenario page 36 (Email: Thursday, 20 October, 2016 20:12 PM).

13

initial notice to Respondent is therefore not fatal 69 . The notice of lien is sufficient to alert the

Respondent of the assignment.

33. If valuable consideration had been given for the assignment, equity would give effect to it, "for

then equity looks on that as done which ought to be done”. The assignment of the lien from

IMLAM to Claimant was made in exchange of the Claimant paying the hire to IMLAM promptly70,

which the Claimant had done as evidenced by the bank slip of payment71. Thus, the assignment was

valid.

(c) Claimant has independent rights to exercise lien

34. The law of equitable assignment has developed and is often treated as tantamount to a transfer

of the assignor’s legal rights.72 It is increasingly accepted that an equitable assignee has a cause of

action which he can assert independently of the assignor, and the presence of the assignor can be

dispensed with by the court where there is no risk of double jeopardy. 73

35. As such, with IMLAM being well aware that the Claimant will be exercising the lien74, it is the

Claimant as the equitable assignee (and not IMLAM as the equitable assignor), which now has the

substantive legal right to exercise the lien. 75 The principle of joinder should only be confined to

situation where the assignor is a trustee for the assignee and not in the case of transfer of rights.76

The general requirement to join the assignor is merely procedural, and can be done at any time

before final judgment. Such procedural requirement can be dispensed with where the assignee is

seeking interlocutory relief,77 as is the case here as the Claimant is applying for the sale of cargo

pendente lite78. Hence, the non-joinder of IMLAM as a party is immaterial.

69

Gorringe v Irwell India Rubber Works (1886) 34 Ch D 128. 70

Moot Scenario pg 36 (Email: Thursday, 20 October, 2016 20:12 PM). 71

Moot Scenario pg 36 (Email: Tuesday, 1 November, 2016 10:21 AM). 72

M Smith, The Law of Assignment (2nd edn 2013) 231-236 [11.39] – [11.47]. 73

Central Insurance Co Ltd v Seacalf Shipping Corpn (The Aiolos) [1983] 2 Lloyd’s Rep 25 (CA) 33-34. 74

Moot Scenario pg 35 (Email : Thursday, 20 October, 2016 15:23 PM). 75

National Westminster Bank plc v Kapoor [2011] EWCA Civ 1083; [2012] 1 All ER 1201 at [43]. 76

Ibid [40]. 77

Roberts v Gill & Co [2010] UKSC 22; [2011] 1 AC 240 at [63] to [71]. 78


14

D. An equitable lien may be imposed irrespective of possession.

36. An equitable lien defined as an equitable right, conferred by law upon one person, to a charge

upon the real or personal property of another until certain specific claims have been satisfied79

Alternatively, in this case, even if it is decided that the Claimant cannot impose a possessory lien

because it does not have possession over the Cargo. The Claimant may still impose an equitable lien

in respect that the owners whom are in a Time Charter with the Claimants80 have possession over

the Cargo.

III. IT IS NECESSARY AND JUST FOR THE CARGO TO BE SOLD PENDENTE LITE

A. The Claimant has a prima facie case against the respondent

(a) The Respondent’s failure to pay freight amounts to a repudiatory breach

37. Payment of freight is an innominate term, 81 as non-payment would deprive the Claimant

substantially the whole benefit that the Claimant can obtain from the Voyage Charterparty,82 hence

goes to the root of the contract.83 The Respondent’s non-payment of the freight within 5 days of the

issuance of the Claimant’s invoice on 9 October 2016 is a clear breach of this innominate term.

38. The Respondent’s suggestion to pay the freight once the Cargo has been delivered to Ningbo is

substantially inconsistent with its obligation as laid down in the Voyage Charterparty, hence cannot

be deemed as a valid and genuine attempt to remedy its breach.84 The Respondent’s non-payment of

freight was persistent and cynical, and it would not be reasonable for the Claimant to assume that

the Respondent would finally make good on its promise.85 Since the last reported location of the

79

See Butterworths, Halsbury’s Laws of England (4th ed reissue, 1997) vol 28 [754] 80

Moot Scenario pg 1 81

Spar Shipping AS v Grand China Logistics Holding [2016] EWCA CIV 982. 82

Hong Kong Fir Shipping Co. Ltd. v Kawasaki Kisen Kaisha Ltd. [1962] 2 Q.B. 26, 72 (Lord Justice Diplock). 83

Federal Commerce & Navigation Co Ltd v Molena Alpha Inc. (The Nanfri) [1979] 1 Lloyd’s Rep. 207, 207 (Lord

Justice Wilberforce). 84

Ross T. Smyth & Co. Ltd. v T. D. Bailey, Son & Co [1940] 3 AII E.R. 60,72 (Lord Justice Wright). 85

Alan Auld Associates Ltd v Rick Pollard Associates [2008] EWCA Ciy 655.

15

Vessel was at OPL Singapore, the Claimant had to wait for 11 days for the Vessel to reach Ningbo86

and for the Respondent to pay their freight. Hence, on the law and factual circumstances, the

Claimant was fully entitled to terminate the Voyage Charterparty to avoid further damages.

(b) The Respondent’s failure to nominate a legitimate discharge port on

time is a repudiatory breach

39. The intention of the parties were to treat the nomination of a legitimate discharge port on time

as a condition precedent by which the failure to perform will relieve the other party of its liability.87

A voyage charterparty is essentially a contract to carry specified goods on a defined voyage or

series of voyages in which is dependent on the Respondent’s nomination of permitted port expressly

stipulated in clause 16 of the Voyage Charterparty when the Vessel passes Singapore for bunkering.

Since the list of ports is expressly listed in the Voyage Charterparty, the obligation of the

Respondent to nominate either one of the seven ports named is absolute. Hence, the Respondent’s

failure to nominate a legitimate discharge port on time amounts to a repudiatory breach. Since 11

October 2016, the Claimant has imposed upon the Respondent a total USD10,000 per day pro-rata

which consists of USD8,000 daily hire and USD2,000 bunker consumption of the Vessel.88 Since

the Respondent has breached this absolute obligation of nomination of a discharge port under the

Voyage Charterparty, the Respondent is liable to pay damages of USD10,000 that accrued on a

daily basis until the nomination of a discharge port is validly made.

(c) There is a valid acceptance of repudiation by the Respondent

40. The Claimant, as the innocent party to the breach, has communicated clearly and unequivocally

expressed its intention to terminate the Voyage Charterparty via the email to the Respondent on 22

86

World Seaport: Sea Route & Distance, http://ports.com/sea-route/port-of-singapore,singapore/mawei-

port,china/#/?a=0&b=0&c=Port%20of%20Singapore,%20Singapore&d=ningbo%20Port ,%20China 87

Bentsen v. Taylor [1893] 2 Q.B. 274 at 281 (Bowen L.J. as then he was) , Comptoir Commercial Anversois v. Power

[1920] 1 K.B. 868, 899 (Scrutton L.J.), Bunge Corporation (New York) v Tradax Export SA (Panama) [1981] APP.L.R.

02/25. 88


16

October 2016.89 The Respondent acknowledged the termination. 90 As such, the termination was

valid, and the Claimant is further entitled to sue for damages.91

(d) Port congestion does not fall under the scope of “any other event

whatsoever which cannot be avoided or guarded against” under clause

24

41. Clause 24 (Force Majeure) of Part II Coal Orevoy92 can be construed as a laytime exception

clause.93 Generally, in laytime exception clause cases, the eiusdem generis rule shall apply.94 Force

majeure clauses should be construed according to the eiusdem generis rule,95 which restricts the

interpretation of “any other event…..cannot be avoided or guarded against” to the terms in the

preceding phrase. “Port congestion” is not expressly stated as one of situations falling under force

majeure, 96 and neither can it be reasonably deemed to be of the same category as the listed

situations which includes “Act of God, war, terrorism, civil commotion….arrest or restraint of

princes, rulers and peoples”.97

42. In any event, the allegation of port congestion lacks factual basis. The average time for a vessel

to wait at China ports is between 0-2 days.98 After passing Singapore on 11 October 2016,99 the

Respondent was obliged to nominate a discharge port among the seven China ports stated in the

B/L. 100 However, it took the Respondent 5 days to notify the Claimant of the alleged port

congestion at all 7 ports. The Respondent only requested to discharge at Ningbo on 21 October

89


Ibid. 91

Heyman v Darwins Ltd [1942] AC 356, 361 (Viscount Simon). 92


E.D.& F. Man Sugar Ltd v Unicargo Transportgesellschaft mbH (The “Ladytramp”) [2012] EWHC 2879 (Comm). 94

Knutsofrd v Tillmans [1908] A.C. 406 affirming [1908] 2 K.B. 385 95

Tandrin Aviation Holdings Ltd v Aero Toy Store LLC [2010] EWHC 40 (Comm). 96

Connaught Restaurants Ltd v Indoor Leisure Ltd [1994] 1 LWR 501. 97

Tillmanns & Co. v ss. Knutsford Ltd [1908] 1 K.B. 185. 98

China : Port Congestion Report as of 14th

March 2017, http://www.benlineagencies.com/congestion_china_pdf.php 99



17

2016, which is 10 days later. Hence, it is highly doubtful that all 7 Chinese ports in China were

congested at the same time for so long.

B. There is substantial risk of harm necessitating the sale of the Cargo

43. Interim measures are usually granted in situations where it is crucial to avoid irreparable

harm.101 In order to decide if an interim measures can be issued, the tribunal would look at the

nature of the measures requested and the effect that it will have onto the parties of the dispute.102

More often than not, the term ‘irreparable’ is not used to gauge the injury that will be suffered by

the Claimant but rather the substantial risk of serious damage that might occur. If irreparable harm

cannot be proven, it is sufficient that there is substantial or material risk. It is also necessary to order

for an interim measure if acts of prejudice may be taken before the final awards are ordered.103

(a) The Cargo endangers the crew of the M.V. Tardy Tessa

44. A cargo can be ordered for sale if the goods it is carrying is perishable 104 or deteriorating.105 If

there is a possibility that an injury may occur, an immediate action must be taken in order to prevent

it. The cargo has been seen to be overheating, which may lead it to self- ignite and explode.106 The

urgency in this case extends to more than monetary loss but also to the safety of the vessel crew.

Since coal is combustible in nature, spontaneous combustion can occur without any warning, as

what happened to the vessel in Alberto Fassini.107 In that case, Dr R Lessing who is a chemical

expert stated that when coal is exposed to oxygen at a temperature that is moderately warm or hot, it

can lead to actual ignition. Based on the report by the Master of the Vessel, he stated that the Cargo

has signs of overheating.108 This due to the long retention of the cargo as a result from the delay,

101

Plama Consortium Limited v Republic of Bulgaria (ICSID Case No. ARB/03/24). 102

Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd ed, 2014).

103 Tokios Tokelės v. Ukraine Case No. ARB/02/18 Order No. 3.

104 Article 26 (1) of the UNCITRAL Arbitration Rules.

105 Enimont Overseas A.G. v Ro Jugatanker Zadar (‘’The Olib’’) (1991) 2 Ll.L. Rep. 108.

106 Moot Scenario pg 37 (Email: Sunday, 30 November, 2016 14:12 PM).

107 Fiumana Societa Di Navigazione v Bunge & Co. Ltd (1930) 36 Ll.L.Rep. 171.

108 Enimont Overseas (n 106).

18

coupled by the bad weather and sea conditions that have a tendency to affect the temperature of the

Cargo. The risk of combustion is real. Hence, it is urgent for the cargo to be sold in order to ensure

their safety and not prolong the retention of the cargo.

(b) The value of the cargo is depreciating

45. Based on the report made by Caleb Coalman,109 the market price of coal in China (where the

Cargo ought to be delivered under the Voyage Charterparty) has decreased significantly from the

Spring of 2011 till May 2016. Since the Respondent has delayed the discharge of the vessel, there is

a possibility that the value will decline even further. If the value of the cargo depreciates as

substantially as what was stipulated in the report, the Claimant will suffer grave monetary loss. In

the circumstance that the Claimant receives the final award, they may not be able to compensate for

the loss that they have suffered due to the failure of the Respondent to nominate a discharge port.

C. There is urgency necessitating the sale of the Cargo

(a) The costs accrued are more than the value of the cargo

46. Respondent had failed to nominate a discharge port after passing by Singapore for bunkering110

and had left the Vessel adrift at sea for 20 days as per 30 November 2016. 111 Since the Respondent

had delayed the discharge, costs for the Vessel on sail have accrued, causing the Claimant to pay

hire longer than necessary to the Vessel owner and hinder them for entering into other voyage

charterparties. The costs that are borne by the Claimant may increase more than the value of the

freight, detention or other costs that are owed to them.

109

Coal Report, pg 3, Moot Scenario pg 99. 110

Moot Scenario pg 21, Clause 16 Voyage Charterparty 111

Enimont Overseas (n 99).

19

47. The additional costs that had accrued had amounted up to USD 101, 666.67 based on the time

and bunker consumption in that duration.112 The freight and additional costs that are owed by the

Respondent are clearly crucial to the Claimant in order for the latter to fulfil their obligations under

the Time Charterparty with IMLAM.113 Further, the sooner the Claimant disposes with the Cargo,

the sooner it would be able to enter into a new voyage charterparty and mitigate its losses. Any

delay would only expose the Claimant to greater costs than may be recoverable under the final

award. Hence, there is an urgency to sell the cargo pending litigation.

(b) The Claimant has no other reliable alternatives

48. The Claimant is requesting for the sale of the cargo due to the lack of reliable alternatives. The

reliability of the alternatives are in question since the present case, the methods available may not

be ideal and may even lead to the detriment of the Claimant. The alternatives present are a) for the

vessel to wait outside the discharge port114 b) dock at a bonded warehouse.115 The first alternative,

which is to wait off the discharge port bears some risks to the Claimant. If they decide to wait

outside the port in order to avoid unnecessary charges, there is no guarantee that the Respondent

will pay the outstanding amount due. The condition of the vessel and Cargo must also be a factor to

consider, as such any possible risk damage towards the vessel and the Cargo if the Claimant were to

allow the vessel to be at sea.116 In the case of Transgrain Shipping, the charterers ordered for the

vessel to wait outside the discharge port for a period of 4 months. Damage on the cargo was found

and the tribunal held it to be due to the prolonged period at the anchor along with the nature of the

cargo.

49. The second option is to dock at a bonded warehouse. Although it might be convenient for the

Claimant to request for the Cargo to be stored at a Singapore warehouse (considering its last

112

Moot Scenario pg 67 (Email: Friday, 21 October, 2016 11:00 AM). 113

Moot Scenario pg 6, Clause 11 (a) Time Charterparty. 114

Santiren Shipping Ltd v Unimarine S.A. (1981) 1 Ll. L. Rep. 159. 115

Sang Stone Hamoon Jonoub Co Ltd v Bayue Shipping Co Ltd (“The Ba Yue”) [2015] EWHC 288 (Comm). 116

Transgrain Shipping (Singapore) Pte Ltd V Yangtze Navigation (Hong Kong) Co Ltd. [2016] EWHC 3132 (Comm).

20

reported position was closer to the Singapore port), 117 the Claimant faces the risk of monetary loss

or inability to enforce lien. 118 Section 130 of the Merchant Shipping Act 119 states that the

warehousemen can sell the goods within 90 days or if it is perishab le in nature. The proceeds of the

sale will be given based on the priority in Section 131 where the shipowner is third in line. There is

no certainty that the Claimant would be able to recover its losses if the Cargo is sold in this manner.

It must be noted that the additional costs that are due by the Respondent to the Claimant is

increasing by USD 10 000 per day. The possibility for the amount to increase is existent, as there is

no way to know when the litigation will take place.

50. In the case of Five Oceans Corporation,120 the court had resorted to sell the cargo pendent lite

due to the fact that there are no other alternatives available. It was contended that the discharge port

India, does not protect the enforcement of lien. Here, it is not stipulated as to whether the discharge

port would protect the lien owner’s right. Since there is a risk of such, the Claimant should be

allowed to sell the cargo.

117

Moot Scenario pg 67 (Email: Friday, 21 October, 2016 11:00 AM). 118

Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities Energy Resources, intervener) [2015] SGHC 311. 119

Merchant Shipping Act (Chapter 179) (Original Enactment: Act 19 Of 1995). 120

Five Ocean Corporation v Cingler Ship Pte Ltd (PT Commodities Energy Resources, intervener) [2015] SGHC 311.

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PRAYER OF RELIEF

For the reason set out above, the Claimant requests this Tribunal to:

FIND that it has jurisdiction and power to order the sale of Cargo on board M.V. Tardy Tessa

pendente lite

FIND that the Claimant is entitled to exercise a lien over the Cargo

FIND that it is necessary and just for the Cargo to be sold pendente lite

CLAIMANT’S MEMORANDUM - Murdoch University · CLAIMANT’S MEMORANDUM ... M Smith, The Law of...

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