EIGHTEENTH ANNUAL INTERNATIONAL MARITIME LAW … · TEAM 10 MEMORANDUM FOR CLAIMANT IV Record 2017...

EIGHTEENTH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2017

MEMORANDUM FOR CLAIMANT

THE UNIVERSITY OF SYDNEY

TEAM 10

ON BEHALF OF:

FURNACE TRADING PTE LTD

CLAIMANT

AGAINST:

INFERNO RESOURCES SDN BHD

AND

IDONCARE BERJAYA UTAMA PTY LTD

RESPONDENTS

COUNSEL

Margery Harry Declan Haiqiu Ai Godber Noble Zhu

TEAM 10 MEMORANDUM FOR CLAIMANT

I

TABLE OF CONTENTS

ABBREVIATIONS ......................................................................................................................... III

LIST OF AUTHORITIES ................................................................................................................ V

STATEMENT OF FACTS ................................................................................................................ 1

APPLICABLE LAW ......................................................................................................................... 2

I. SINGAPOREAN LAW APPLIES TO ALL ASPECTS OF THE DISPUTE ............................................... 2

A. Singaporean law governs the procedure of the arbitration ................................................... 2

B. Singaporean law is the substantive law applying to FURNACE and INFERNO’s dispute ....... 2

C. Singaporean law is also the substantive law applying to FURNACE and IDONCARE’s

dispute ................................................................................................................................... 3

ARGUMENTS ON THE INTERIM APPLICATION FOR SALE OF CARGO ......................... 4

II. A VALID AND ENFORCEABLE LIEN ON THE CARGO HAS BEEN EXERCISED ................................ 4

A. A right to lien on cargo in FURNACE’s favour arises under the Bill of Lading .................... 5

B. The lien on cargo may be exercised as INFERNO owes a freight debt to FURNACE .............. 5

C. Imlam properly exercised the lien on cargo ......................................................................... 7

1. Imlam has possession of the cargo ................................................................................. 7

2. The exercise of the lien was within reasonable limits .................................................... 8

III. THE TRIBUNAL CAN AND SHOULD ORDER THE SALE OF THE CARGO ....................................... 8

A. Tribunal has the power to order a sale of the cargo pendente lite ....................................... 8

1. The cargo forms part of the subject-matter of the dispute .............................................. 9

2. A sale of the cargo is necessary .................................................................................... 10

3. In the alternative, the parties have contractually agreed to give the Tribunal the wider

power to make interim awards as it sees fit .................................................................. 11

4. The location of the cargo is immaterial to the Tribunal’s power to order a sale .......... 12


II

B. The Tribunal should exercise its discretion and order a sale of the cargo ........................ 12

ARGUMENTS ON THE MERITS OF THE CLAIM ................................................................... 13

IV. INFERNO BREACHED THE VOYAGE CHARTERPARTY BY FAILING TO NOMINATE A

LEGITIMATE DISCHARGE PORT IN TIME .................................................................................. 13

A. INFERNO’s obligation to nominate a discharge port was not fulfilled by the attempted

nomination of Busan .......................................................................................................... 14

B. INFERNO breached the agreement by not declaring a discharge port in time .................... 16

V. THE VOYAGE CHARTERPARTY WAS NOT FRUSTRATED .......................................................... 16

VI. FURNACE HAS A VALID LIEN ON SUB-FREIGHT PAYABLE BY IDONCARE ................................ 17

A. FURNACE possesses the right to collect sub-freight from IDONCARE ................................ 17

B. FURNACE perfected its lien by sending written notice to IDONCARE ................................. 19

C. FURNACE retains its lien, despite termination of the Voyage Charterparty ....................... 20

VII. FURNACE’S TERMINATION OF THE VOYAGE CHARTERPARTY WAS NOT WRONGFUL ........... 20

A. INFERNO’s conduct constituted a repudiation of the agreement ........................................ 21

B. INFERNO’s failure to comply with FURNACE’s notice to perform gave FURNACE the right

to terminate the Voyage Charterparty ............................................................................... 22

1. FURNACE was entitled to give notice to perform .......................................................... 22

2. The time stipulated for performance by the notice was reasonable .............................. 22

C. FURNACE’s election to terminate was not wrongful .......................................................... 23

VIII. FURNACE IS ENTITLED TO DAMAGES FOR BREACH FROM INFERNO ..................................... 23

A. FURNACE can recover detention costs caused by INFERNO’s breach ................................. 24

B. FURNACE is indemnified for costs incurred after termination of the Voyage

Charterparty ....................................................................................................................... 24

REQUEST FOR RELIEF ............................................................................................................... 25


III

ABBREVIATIONS

art Article

BBB Before Breaking Bulk

Bill of Lading Bill no. IMOBL11223344X, dated 4 October, in the custom form of Imlam Consignorist GmbH, between Imlam and IDONCARE

Cargo 80,000 Mt 10% MOLOO Australian Steam Coal

COAL-OREVOY “COAL-OREVOY” Standard Coal and Ore Charter Party

Clarification 2017 International Maritime Law Arbitration Moot Scenario Clarifications

Fixture Recap Email of concluded terms of charterparty between FURNACE and INFERNO, from Eric Yan to Gordon Grill, dated 1 September 2016

Freight Clause Clause 19 of the Fixture Recap

FURNACE Furnace Trading Pte Ltd

IAA International Arbitration Act (Singapore, cap 143A, 2002 rev ed)

IDONCARE Idoncare Berjaya Utama Pty Ltd

Imlam Imlam Consignorist GmbH

INFERNO Inferno Resources Sdn Bhd

Lien Clause Clause 19(a) of the “COAL-OREVOY” Standard Coal and Ore Charter Party

LT Local Time

Master Tan Xiao Ming

Model Law UNCITRAL Model Law on International Arbitration (1985)

Nomination Clause Clause 16 of the Fixture Recap

Parties FURNACE, INFERNO and IDONCARE


IV

Record 2017 International Maritime Law Arbitration Moot Scenario

s Section

sch Schedule

SCMA Rules Singapore Chamber of Maritime Arbitration Rules (2015, 3rd ed)

Sub-Voyage Charterparty Voyage Charterparty, between INFERNO and IDONCARE, date unknown

Tardy Tessa M.V. Tardy Tessa

Time Charterparty Time Charterparty, between Imlam and Furnace, dated 15 February 2016

Voyage Charterparty Fixture Recap and “COAL-OREVOY” Standard Coal and Ore Charter Party, between Furnace and Inferno, dated 1 September 2016


V

LIST OF AUTHORITIES

CASES AND ARBITRAL AWARDS

Referred to at page:

Actis Co Ltd v The Sanko Steamship Co Ltd (‘The Aquacharm’) [1982] 1 Lloyd’s Rep 7

8

A/S Tank v Agence Maritime L Strauss (1939) 64 Ll L Rep 19

16

Aktieselskabet Olivebank v Dansk Svorlsyre Fabrik [1919] 2 KB 162

15, 24

Albemarle Supply Co Ltd v Hind & Co [1928] 1 KB 307

7, 8

Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] SLR 602

23

American Cyanamid Co v Ethicon Ltd [1975] AC 396

12

Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45

5, 17, 18, 19, 20

Associated Asian Securities Pte Ltd v Lee Kam Wah [1992] 3 SLR(R) 812

19

Attorney-General v Ting Choon Meng [2017] SGCA 6 (16 January 2017)

9

Bangladesh Chemical Industries Corporation v Stephens (Henry) Shipping Co and Tex Dilan Shipping Co [1981] 2 Lloyd’s Rep 389

4

Bank of Boston Connecticut v European Grain and Shipping (‘The Dominique’) [1989] AC 1056

7

Behzadi v Shaftesbury Hotels Ltd [1992] Ch 1

22

Blackburn v Flavelle (1881) 6 App Cas 628

14

Brani Readymix Pte Ltd v Yee Hong Pte Ltd [1994] SLR 1004

21

British Movietonews Ltd v London and District Cinemas Ltd [1952] AC 166

17

Care Shipping Corp v Latin American Shipping Corp (‘The Cebu’) [1983] QB 1005

19

Care Shipping Corporation v Itex Itagrani Export SA (‘The Cebu’) (No 2) [1993] QB 1

3, 21


VI

Cascade Shipping Inc v Eka Jaya Agencies (S) Pte Ltd [1993] 1 SLR(R) 187

8, 17, 20

Challenger Technologies Pte Ltd v Public Prosecutor [1994] SLR(R) 849

9

Chua June Ching Michelle v Chai Hoi Tong [2011] 4 SLR 418

8

Chuan Hong Petrol Station Pte Ltd v Shell Singapore (Pte) Ltd [1992] 2 SLR 1

13

Colonial Bank v European Grain & Shipping Ltd (‘The Dominique’) [1987] 1 Lloyd’s Rep 239 (Queen’s Bench)

6

Colonial Bank v European Grain & Shipping Ltd (‘The Dominique’) [1988] 3 WLR 60 (Court of Appeal)

6

Compania Naviera General SA v Kerametal Ltd (‘The Lorna I’) [1983] 1 Lloyd’s Rep 373

6, 7

D Amico Shipping Italia SP v Endofa DMCC [2016] EWHC 2223 (Comm) (24 June 2016)

6

Dallah Real Estate and Tourism Holding Co v The Minister of Religious Affairs, Government of Pakistan [2010] 2 Lloyd's Rep 691

2

Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696

16, 17

Donmar Productions Ltd v Bart [1967] 2 All ER 338

9

Dorsey James Michael v World Sport Group Pte Ltd [2013] 3 SLR 354

9

“Dwima 1”, The [1996] 1 SLR(R) 927

7

Edison, The [1932] P 52

24

ENE Kos 1 Ltd v Petroleo Brasileiro SA (No 2) [2012] 2 AC 164

25

“Epic”, The [2000] 2 SLR(R) 240

5

Ethel Radcliffe Steamship Company Ltd v W & R Barnett Ltd (1926) 24 Ll L Rep 277

16

Federal Commerce and Navigation Ltd v Molena Alpha Inc (‘The Nanfri’) [1979] 1 Lloyd’s Rep 201

19, 20

“Feng Hang”, The [2001] 3 SLR(R) 864

24

Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SLR 1159

5, 10, 11, 12


VII

Foo Jong Peng v Phua Kiah Mai [2012] 4 SLR 1267

15

Gaudet v Brown; Cargo ex Argos (1873) LR 5 PC 134

25

Gericke Pte Ltd v Nortrans Shipping Pool Pte Ltd [1997] 2 SLR(R) 652

7, 8

Hadley v Baxendale (1854) 9 Exch 341

24

Hammonds v Barclay (1802) 2 East 227

4

Heinrich Hanno & Co v Fairlight Shipping Co (‘The Kostas K’) [1985] 1 Lloyd's Rep 231

14, 16

Heyman v Darwins [1942] AC 356

20

Holiday Inns Inc v Hotel Enterprises Ltd [1974–1976] SLR(R) 362

9

India Steamship Co v Louis Dreyfus Sugar Ltd (‘The Indian Reliance’) [1997] 1 Lloyd’s Rep 52

20

Johnson v Agnew [1980] AC 367

24

Jones v Pacaya Rubber & Produce Co [1911] 1 KB 455

9

Jurong Town Corp v Wishing Star Ltd (No 2) [2005] SLR 283

23

K/S A/S Seateam & Co v Iraq National Oil Co (‘The Sevonia Team’) [1983] 2 Lloyd’s Rep 640

3

Kodros Shipping Corpn v Empresa Cubana de Fletes (No 2) (‘The Evia’) [1983] AC 736

15

Larrinaga Steamship Co Ltd v The King [1945] AC 246

25

Lee Hung Khoon v Yeo Tang Mui [1990] 1 SLR(R) 459

9

Leeds Shipping v Société Française Bunge (‘The Eastern City’) [1958] 2 Lloyd's Rep 127

15

Lim Kim Som v Sheriffa Taibah bte Abdul Rahman [1994] 1 SLR(R) 233

16, 17

Liverpool City Council v Irwin [1977] AC 239

14

Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 419

10, 11, 12, 13

Metall Market OOO v Vitorio Shipping Co Ltd [2014] QB 760

24

Moorcock, The (1889) 14 PD 64

15, 18


VIII

National Navigation Co v Endesa Generacion SA (‘The Wadi Sudr’) [2009] 1 Lloyd's Rep 666

3

Ng Giap Hon v Westcomb Securities Pte Ltd [2009] 3 SLR(R) 518

15

North Eastern Properties Ltd v Coleman [2010] 1 WLR 2715

23

North Stafford Steel, Iron and Coal Co (Burslem) Ltd v Ward (1868) LR 3 Exch 172

14

Ocean Projects Inc v Ultratech Pte Ltd [1994] 2 SLR(R) 245

17

Out of the Box Pte Ltd v Wanin Industries Pte Ltd [2013] 2 SLR 363

24

Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania Naviera SA (‘The San Nicholas’) [1976] 1 Lloyd’s Rep 8

3

“Pacific Vigorous”, The [2006] 3 SLR(R) 374

23

Pan-United Shipyard Pte Ltd v The Chase Manhattan Bank (National Association) [1999] 1 SLR(R) 703

7

Partenreederei M/S ‘Heidberg’ and Vega Reederei Friedrich Dauber v Grosvenor Grain and Feed Co Ltd and Union Nationale des Cooperatives Agricoles de Cereales and Assurances Mutuelles Agricoles (‘The Heidberg’) [1994] 2 Lloyd’s Rep 287

4

Port Line v Ben Line [1958] 1 Lloyd’s Rep 290

8

PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] 4 SLR 364

10

Public Prosecutor v Low Kok Heng [2007] 4 SLR 183

9

R v Wallis (1949) 78 CLR 529

14

Rashtriya Chemicals and Fertilizers Ltd v Huddart Parker Industries Ltd (‘The Boral Gas’) [1988] 1 Lloyd’s Rep 342

7

Raynes v Ballantyne (1898) 14 TLR 399

8

RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] SLR 413

21

Re Welsh Irish Ferries Ltd (‘The Ugland Trailer’) [1985] 2 Lloyd’s Rep 372

18, 19, 20

Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42

14, 15, 16

Richards (Charles) Ltd v Oppenhaim [1950] 1 KB 616

22


IX

San International Pte Ltd v Keppel Engineering Pte Ltd [1998] SLR 447

21

Santiren Shipping Ltd v Unimarine SA (‘The Chrysovalandou Dyo’) [1981] 1 Lloyd’s Rep 159

4, 7, 8

Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoria (‘The Scaptrade’)

8

Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193

14, 15, 17, 18, 19

SIB International SRL v Metallgesellschaft Corp (‘The Noel Bay’) [1989] 1 Lloyd’s Rep 361

24

Siti v Lee Kay Li [1996] SLR 934

22

SS Knutsford Ltd v Tillmanns [1908] AC 406

16

SS Matheos v Louis Dreyfus [1925] 1 AC 654

15

Stickney v Keeble [1915] AC 386

22, 23

Tappenden v Artus [1964] 2 QB 185

7

Tee Soon Kay v Attorney-General [2006] 4 SLR(R) 385

9

The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2015] 3 SLR 695

15, 17, 18

Tradigrain SA v King Diamond Shipping SA (‘The Spiros C’) [2000] 2 Lloyd’s Rep 319

18, 19

Tubantia, The [1924] PD 78

8

Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua [2017] SGCA 21 (22 March 2017)

17, 18

Turner v Haji Goolam [1904] AC 826

5

United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904

22

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

24

Wai Wing Properties Pte Ltd v Lim, Ganesh & Liu [1994] 1 SLR(R) 1004

23

Wehner v Dene Steam Shipping Co [1905] 2 KB 92

5

West Tankers Inc v Allianz SpA [2009] AC 1138

2


X

Williams v Greatrex [1957] 1 WLR 31

22

Xiamen Xindaan Trade Co Ltd v North China Shipping Co Ltd (‘The Michalakis’) [2009] EWHC 588

5

Xu Ren Li v Nakano Singapore (Pte) Ltd [2012] 1 SLR 729

9

Zim Israel v Tradex (‘The Timna’) [1971] 2 Lloyd’s Rep 91

24

Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029

6

BOOKS


Blackaby, Nigel and Constantine Partasides with Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration (Oxford University, 6th ed, 2015)

2, 9

Boyd, Stewart C et al, Scrutton on Charterparties and Bills of Lading (Sweet & Maxwell, 21st, 2008)

4

Cooke, Julian et al, Voyage Charters (Informa Law, 3rd ed, 2007)

5

Treitel, Guenter and F M B Reynolds, Carver on Bills of Lading (Sweet & Maxwell, 3rd ed, 2001)

3

STATUTE


Arbitration Act 1996 (UK)

2

International Arbitration Act (Singapore, cap 143A, 2002 rev ed)

2, 3, 9, 10, 12

International Chamber of Commerce Arbitration Rules (2017)

9

Interpretation Act (Singapore, cap 1, 2002 rev ed)

9

London Court of International Arbitration Rules (2014)

9

Singapore Chamber of Maritime Arbitration Rules (2015 3rd ed)

2, 3, 11, 12

UNCITRAL Model Law on International Commercial Arbitration 1985

2, 9, 10


1

STATEMENT OF FACTS

1. The Claimant, Furnace Trading Pte Ltd (‘FURNACE’), entered into a time charterparty dated 15

February 2016 – the Head Charterparty in this dispute – with the registered owner of the M.V.

Tardy Tessa (‘Tardy Tessa’), Imlam Consignorist GmbH (‘Imlam’).

2. On 1 September 2016, FURNACE and one of the two respondents, Inferno Resources Sdn Bhd

(‘INFERNO’), entered into a voyage charterparty for the carriage of Australian coal from Newcastle,

Australia to a port to be nominated during the voyage. INFERNO then sub-voyage chartered the

Tardy Tessa to the other respondent, Idoncare Berjaya Utama Pty Ltd (‘IDONCARE’).

3. The vessel presented at the port of loading in Newcastle on 1 October 2016, and Bills of Lading

were signed and released on 4 October. Clause 1 of the Conditions of Carriage incorporated ‘[a]ll

terms and conditions, liberties and exceptions of the Charter Party’ but did not identify a specific

charterparty. After the vessel set sail, FURNACE issued a freight invoice to INFERNO on 9 October.

4. The vessel arrived at Singapore for bunkering at 1515 local time (‘LT’) on 10 October and reached

Singapore’s outside port limits by 0800LT on 11 October. In response to requests from FURNACE

between 11 and 16 October to nominate a discharge port and pay freight, INFERNO claimed to be

waiting for freight and disport nomination from its sub-charterers, IDONCARE. INFERNO then

requested Busan, South Korea, on 16 October. FURNACE refused, referring to the terms of the

Voyage Charterparty, and on 21 October, INFERNO attempted nomination of Ningbo, China.

5. On 19 October, FURNACE sent notice to perform to INFERNO. On 20 October, FURNACE sent notice

of lien on cargo to INFERNO and notice of lien on sub-freight to IDONCARE. On 22 October,

FURNACE finally sent notice of termination to INFERNO, claiming that INFERNO had failed to pay

freight. On 30 October, a report from the Master described the conditions on board the ship as

worsening, with crew morale very low and the cargo at risk of self-ignition.

6. FURNACE commenced arbitral proceedings on 25 November 2016, and on 1 December made an

urgent application to sell the cargo. A joint expert, Caleb Coleman, was appointed to value the

cargo. To the best of the parties’ belief, the vessel remains adrift at its last reported location.


2

APPLICABLE LAW

I. SINGAPOREAN LAW APPLIES TO ALL ASPECTS OF THE DISPUTE

7. The Tribunal has the power to determine its own jurisdiction under the Kompetenz-Kompetenz

doctrine.1 Since the parties have selected Singapore as the seat, Singaporean law governs the

procedure of the arbitration (A). The substantive law applying to the disputes between FURNACE

and INFERNO (B), and between FURNACE and IDONCARE (C) is also Singaporean.

A. Singaporean law governs the procedure of the arbitration

8. FURNACE has stated,2 and INFERNO and IDONCARE have agreed,3 that they consent to the arbitration

and to the rules of the Singapore Chamber of Maritime Arbitration (‘SCMA Rules’).4 It follows

that, absent any express nominations to the contrary, the juridical seat – the legal rather than

geographical seat – is Singapore, and the International Arbitration Act (‘IAA’) applies.5 The SCMA

Rules provide that where Singapore is the juridical seat, the lex arbitri is that of Singapore.6

Consequently, all rules applying to the procedure of the arbitration are Singaporean.

B. Singaporean law is the substantive law applying to FURNACE and INFERNO’s dispute

9. The Voyage Charterparty governs the relationship between FURNACE and INFERNO.7 In that

charterparty, FURNACE and INFERNO agreed to ‘Singapore law and arbitration as per SCMA Rules’.8

The designation ‘Singapore law’ is to be construed ‘as directly referring to the substantive law’ of

Singapore, in accordance with art 28 of the UNCITRAL Model Law on International Commercial

Arbitration 1985 (‘Model Law’),9 which has force of law in this dispute.10 The SCMA Rules

1 UNCITRAL Model Law on International Commercial Arbitration 1985 s 2 art 16(1); International Arbitration Act (Singapore, cap 143A, 2002 rev ed) First Schedule; Arbitration Act 1996 (UK) s 30(1); West Tankers Inc v Allianz SpA [2009] AC 1138, 1150 [57] (Advocate General Kokott); Dallah Real Estate and Tourism Holding Co v The Minister of Religious Affairs, Government of Pakistan [2010] 2 Lloyd's Rep 691, 715 [95] (Lord Collins); Nigel Blackaby and Constantine Partasides with Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration (Oxford University, 6th ed, 2015) (‘Redfern and Hunter’) 340–1 [5.105–9]. 2 Record 72 [6], 78. 3 Record 84 [7], 87–8 [6]. 4 Record 72 [6], 84 [7], 87 [6]. 5 SCMA Rule 22.1; Redfern and Hunter 173 [3.56]. 6 SCMA Rule 22.1. 7 Record 20. 8 Record 23 [29]. 9 Model Law s 2 art 28; IAA sch 1.


3

confirm the application of this designation ‘to the substance of the dispute’.11 Therefore, the parties

have selected the substantive law of Singapore.

C. Singaporean law is also the substantive law applying to FURNACE and IDONCARE’s dispute

10. FURNACE and IDONCARE’s dispute is governed by the Voyage Charterparty, as incorporated by the

Bill of Lading. This Bill, issued to IDONCARE and dated 4 October 2016, provides that:

All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf,

including the Law and Arbitration Clause/Dispute Resolution Clause, are herewith

incorporated.12

11. Neither the Time Charterparty of 15 February 201613 nor the Voyage Charterparty of 1 September

201614 – the two charterparties in evidence – are dated 4 October 2016. However, in the interest of

giving commercial effect to the agreement, one of these should be said to have been incorporated.15

The Voyage Charterparty is the only contract that could have been incorporated into the Bill of

Lading. This is for two reasons.

12. First, the Bill of Lading refers to ‘freight payable as per charter party’.16 This demonstrates that the

Voyage Charterparty – which provides for freight17 – is incorporated, as opposed to the Time

Charterparty, which provides for hire,18 a distinction recognised at common law.19 It would make

no commercial sense for IDONCARE to have intended to pay freight in accordance with a

charterparty that did not provide for freight. For this reason, in such cases where the head

10 IAA s 3(1). 11 SCMA Rule 21. 12 Record 42 [1]. 13 Record 1. 14 Record 20. 15 Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania Naviera SA (‘The San Nicholas’) [1976] 1 Lloyd’s Rep 8, 11 (Lord Denning MR); K/S A/S Seateam & Co v Iraq National Oil Co (‘The Sevonia Team’) [1983] 2 Lloyd’s Rep 640, 644 (Lloyd J); National Navigation Co v Endesa Generacion SA (‘The Wadi Sudr’) [2009] 1 Lloyd's Rep 666, 697 (Gloster J); Guenter Treitel and FMB Reynolds, Carver on Bills of Lading (Sweet & Maxwell, 3rd ed, 2001) 82 [3–023]. 16 Record 41. 17 Record 22 [19]. 18 Record 6 [11]. 19 Care Shipping Corp v Itex Itagranni Exports SA (‘The Cebu’) (No 2) [1993] QB 1, 5 (Steyn J).


4

charterparty is a time charterparty and a voyage charterparty exists, it is the voyage charterparty that

is incorporated at common law.20

13. Secondly, the Time Charterparty makes no reference to arbitration. This is inconsistent with the

language of the Bill of Lading, which requires a ‘Law and Arbitration clause’.21 In contrast, the

phrase ‘law and arbitration’ is stipulated verbatim in Clause 29 of the Voyage Charterparty.22 For

these two reasons, the Bill of Lading must be read as incorporating all relevant terms of that

charterparty.23

14. Clause 29 of the Voyage Charterparty, which binds IDONCARE as the signatory to the Bill of

Lading, requires that ‘any dispute arising out of or in connection with this Charter Party’24 be

governed by Singaporean law, even if those disputes concern third parties to the Voyage

Charterparty. Singaporean law therefore applies to FURNACE and IDONCARE’s dispute, in the same

way that it applies to FURNACE and INFERNO’s dispute.

ARGUMENTS ON THE INTERIM APPLICATION FOR SALE OF CARGO

15. The Tribunal should order a sale of the cargo pendente lite. First, the requisite lien on the cargo has

been validly exercised for freight due under the Voyage Charterparty (II). Secondly, the Tribunal

can and should make an order for the sale of cargo (III).

II. A VALID AND ENFORCEABLE LIEN ON THE CARGO HAS BEEN EXERCISED

16. A lien on cargo entitles one party to retain possession of goods belonging to another party, but only

when certain amounts owing to the claiming party are outstanding.25 In the present case, the right of

lien arises under the Bill of Lading; it exists in favour of FURNACE, but is exercisable by Imlam (A).

20 Bangladesh Chemical Industries Corporation v Stephens (Henry) Shipping Co and Tex Dilan Shipping Co [1981] 2 Lloyd’s Rep 389, 393 (Dunn LJ); Partenreederei M/S ‘Heidberg’ and Vega Reederei Friedrich Dauber v Grosvenor Grain and Feed Co Ltd and Union Nationale des Cooperatives Agricoles de Cereales and Assurances Mutuelles Agricoles (‘The Heidberg’) [1994] 2 Lloyd’s Rep 287, 312 (Diamond J); Stewart C Boyd CBE et al, Scrutton on Charterparties and Bills of Lading (Sweet & Maxwell, 21st ed, 2008) 59–61, art 30. 21 Record 42 [1]. 22 Record 23 [29]. 23 Record 42 [1]. 24 Record 32 [26]. 25 Hammonds v Barclay (1802) 2 East 227, 235 (Grose J); Santiren Shipping Ltd v Unimarine SA (‘The Chrysovalandou Dyo’) [1981] 1 Lloyd’s Rep 159, 164 (Mocatta J).


5

The condition that certain amounts be outstanding is met here because INFERNO owes a freight debt

to FURNACE (B). Finally, Imlam properly exercised the lien on cargo (C).

A. A right to lien on cargo in FURNACE’s favour arises under the Bill of Lading

17. In the absence of a common law or statutory right, any right to lien must be conferred by a

contractual term.26 That contractual term is contained in the Bill of Lading between Imlam, the

carrier, and IDONCARE, the shipper. Given that the vessel is not demised to FURNACE under the

Time Charterparty,27 ‘the contract contained in the bill of lading is not with the charterers

[FURNACE], but with the owner [Imlam]’.28 The Bill of Lading incorporates the terms of the Voyage

Charterparty,29 and therefore reproduces Clause 19(a) of the ‘COAL-OREVOY’ (‘the Lien

Clause’). This reads:

The Owners shall have a lien on the cargo for freight … due to them under this Charter Party.30

18. Although this term only binds Imlam and IDONCARE, as the parties to the Bill of Lading,31 it exists

for FURNACE’s benefit and can only be exercised by Imlam, as trustee of this benefit.32 Imlam

undertook to act as trustee of FURNACE’s benefit by representing in its correspondence to FURNACE

that FURNACE has ‘[Imlam’s] assistance … [to] help chrts exercise the lien over the cargo’.33

B. The lien on cargo may be exercised as INFERNO owes a freight debt to FURNACE

19. Though a right of lien may exist under the Bill of Lading, it can only be exercised when amounts

become outstanding from INFERNO.34 In this case, INFERNO owes freight to FURNACE. INFERNO’s

obligation to pay freight is found in Clause 19 of the fixture recap (‘the Freight Clause’), which

26 Turner v Haji Goolam [1904] AC 826, 837 (Lord Lindley). 27 Record 10 [26]. 28 Wehner v Dene Steam Shipping Co [1905] 2 KB 92, 98 (Channell J). 29 Above [10]–[13]. 30 Record 31 [19(a)]. 31 The “Epic” [2000] 2 SLR(R) 240, 252 [29] (Yong Pung How CJ, L P Thean and Chao Hick Tin JJA). 32 Xiamen Xindaan Trade Co Ltd v North China Shipping Co Ltd (‘The Michalakis’) [2009] EWHC 588, [26]–[27] (Steel J); Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SLR 1159, 1170 [31]–[32], 1172 [36] (Belinda Ang Saw Ean J); Julian Cooke et al, Voyage Charters (Informa Law, 3rd ed, 2007) 433 [18.61]. 33 Record 36. See, eg, Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SLR 1159, 1107 [32] (Belinda Ang Saw Ean J). 34 Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45, 48 (Saville J).


6

stipulates that freight is ‘to be paid 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,

but in any case BBB’,35 that is, ‘before breaking bulk’.36 The words ‘within five banking days’

entail that freight must be paid by the end of five banking days following the three stipulated

events, which constitute the conditions precedent to INFERNO’s obligation to pay.37 Effectively, they

create a liability for freight upon fulfilment of the conditions precedent, but permit payment at a

later time.38 This is because ‘a provision for payment within five days after a certain event is

analogous to a provision for payment on or before the expiration of five days after that event’.39

20. The words ‘in any case BBB’ indicate that, in all instances, payment must be made before bulk is

broken, that is, before discharge of cargo commences. However, ‘in any case BBB’ cannot be read

as extending the date by which freight is due beyond five days. This is because ‘a more precise or

detailed provision should override an inconsistent general or widely expressed provision’.40 Further,

the words ‘in any case BBB’ indicate merely that FURNACE may ‘refuse to discharge the cargo until

such time as it has received [payment of freight]’.41 The words cannot postpone the time when that

freight is due to a time beyond the stipulated five days; they only advance that date where discharge

is possible before the end of five days. This ensures that freight is always received at a

commercially reasonable point in the voyage timeline.42

21. According to the Freight Clause, INFERNO was therefore obligated to pay freight by close of bank

on 14 October. This marks the end of five banking days after the completion of loading on 4

35 Record 22 [19]. 36 D Amico Shipping Italia SP v Endofa DMCC [2016] EWHC 2223 (Comm) (24 June 2016) [11] (Mr David Foxton QC sitting as a Deputy Judge of the High Court). 37 Colonial Bank v European Grain & Shipping Ltd (‘The Dominique’) [1988] 3 WLR 60, 68 (Mustill LJ) (Court of Appeal). 38 Colonial Bank v European Grain & Shipping Ltd (‘The Dominique’) [1987] 1 Lloyd’s Rep 239, 245 (Hobhouse J) (Queen’s Bench). 39 Compania Naviera General SA v Kerametal Ltd (‘The Lorna I’) [1983] 1 Lloyd’s Rep 373, 376 (Dillon LJ). 40 Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029, 1095 [131] (Chan Sek Keong CJ, Andrew Phang Boon Leong and V K Rajah JJA). 41 D Amico Shipping Italia SP v Endofa DMCC [2016] EWHC 2223 (Comm) (24 June 2016) [12] (Mr David Foxton QC sitting as a Deputy Judge of the High Court). 42 Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029, 1095 [131] (Chan Sek Keong CJ, Andrew Phang Boon Leong and V K Rajah JJA).


7

October 2016,43 signing and release of bills of lading on the same day,44 and issue of the freight

invoice on 9 October.45 INFERNO’s failure to pay freight by that time therefore constitutes a breach.

22. INFERNO remains obligated to pay freight despite termination of the Voyage Charterparty.

FURNACE’s right to freight accrued prior to termination, and therefore remains enforceable.

Termination does not rescind a contract ab initio, but leaves intact any rights already acquired under

the contract.46 FURNACE acquired its right to freight on 14 October, when INFERNO incurred its

correlative obligation to pay that freight. FURNACE retains its right, notwithstanding whether freight

has been earned, since INFERNO’s ‘liability to pay advance freight … is simply an obligation to

make a payment on account of freight at a time when it has not been earned’.47 Because INFERNO

failed to fulfil that obligation before termination, ‘the accrued liability to pay it continues’.48

C. Imlam properly exercised the lien on cargo

23. For a lien to be properly exercised, and therefore enforceable, three requirements must be met. First,

a demand must be made to the party against whom the lien is exercised.49 This is satisfied here as

FURNACE gave notice of lien to INFERNO at 1521LT on 20 October.50 Secondly, the party seeking to

enforce the lien must retain lawful and uninterrupted possession of the property.51 Thirdly, the

exercise of a contractual lien must be within reasonable limits.52 These are also satisfied, as Imlam

has possession of the cargo (1), and the lien was exercised within reasonable limits (2).

1. Imlam has possession of the cargo

43 Record 47. 44 Record 41. 45 Record 49. 46 Bank of Boston Connecticut v European Grain and Shipping (‘The Dominique’) [1989] AC 1056, 1108 (Lord Brandon). 47 Compania Naviera General SA v Kerametal Ltd (‘The Lorna I’) [1983] 1 Lloyd’s Rep 373, 374 (Sir John Donaldson MR). 48 Compania Naviera General SA v Kerametal Ltd (‘The Lorna I’) [1983] 1 Lloyd’s Rep 373, 374–5 (Sir John Donaldson MR). 49 Albemarle Supply Co Ltd v Hind & Co [1928] 1 KB 307, 318 (Scrutton LJ); Santiren Shipping Ltd v Unimarine SA (‘The Chrysovalandou Dyo’) [1981] 1 Lloyd’s Rep 159, 165 (Mocatta J). 50 Record 65. 51 Tappenden v Artus [1964] 2 QB 185, 195 (Diplock LJ); The “Dwima 1” [1996] 1 SLR(R) 927, 934 [19] (S Rajendran J); Pan-United Shipyard Pte Ltd v The Chase Manhattan Bank (National Association) [1999] 1 SLR(R) 703, 709 [15] (M Karthigesu JA, Lai Kew Chai and Goh Joon Seng JJ). 52 Albemarle Supply Co Ltd v Hind & Co [1928] 1 KB 307, 318 (Scrutton LJ); Rashtriya Chemicals and Fertilizers Ltd v Huddart Parker Industries Ltd (‘The Boral Gas’) [1988] 1 Lloyd’s Rep 342, 351 (Evans J); Gericke Pte Ltd v Nortrans Shipping Pool Pte Ltd [1997] 2 SLR(R) 652, 655 [7] (Tan Lee Meng JC).


8

24. As head owner of the vessel and carrier of the cargo, Imlam has actual possession, not only of the

vessel, but also of the cargo on board.53 The test for whether property comes under a person’s

possession is whether the property is ‘taken by a person of his own motion and for himself, and

subject in his hands, or under his control, to the uses of which it is capable’.54 Imlam’s actual

possession exists through the Master who, under the Time Charterparty, is the agent of Imlam.55 If

the Master remains on board the Tardy Tessa, Imlam therefore has possession of the cargo.

However, even if the Master is no longer on board, Imlam retains possession as owners of the

vessel on which the cargo is carried. Their continued collection of hire is evidence of this.56

2. The exercise of the lien was within reasonable limits

25. A party asserting a lien must claim it for a definite amount or give particulars from which an

amount could be calculated.57 Furthermore, the amount must not be exorbitant.58 Here, FURNACE

insisted on payment of definite sums as stipulated in various emails prior to notice of lien.59 Those

were ‘properly ascertained’60 as they corresponded to amounts owing under the freight invoice,61

and accorded with the terms of the Time Charterparty.62 They were therefore not exorbitant.

III. THE TRIBUNAL CAN AND SHOULD ORDER THE SALE OF THE CARGO

26. The Tribunal has the power, both by virtue of statute and the parties’ agreement, to order a sale of

the cargo pendente lite (A). The Tribunal should exercise its discretion to do so (B).

A. The Tribunal has the power to order a sale of the cargo pendente lite

53 Port Line v Ben Line [1958] 1 Lloyd’s Rep 290, 299 (Diplock J); Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoria (‘The Scaptrade’) [1983] 2 Lloyd’s Rep 253, 256–7 (Lord Diplock); Cascade Shipping Inc v Eka Jaya Agencies (S) Pte Ltd [1993] 1 SLR(R) 187, 206 [46] (L P Thean, S Rajendran and M Karthigesu JJ). 54 The Tubantia [1924] PD 78, 69 (Sir Henry Duke). See also Santiren Shipping Ltd v Unimarine SA (‘The Chrysovalandou Dyo’) [1981] 1 Lloyd’s Rep 159, 165 (Mocatta J); Chua June Ching Michelle v Chai Hoi Tong [2011] 4 SLR 418, 423–4 [11]–[14] (Choo Han Teck J). 55 Record 1 [2], 2 [6(a)], 3 [8]. See Raynes v Ballantyne (1898) 14 TLR 399, 399 (Lord Herschell); Actis Co Ltd v The Sanko Steamship Co Ltd (‘The Aquacharm’) [1982] 1 Lloyd’s Rep 7, 10 (Lord Denning MR). 56 Record 34–8. See Chua June Ching Michelle v Chai Hoi Tong [2011] 4 SLR 418, 423–4 [11]–[14] (Choo Han Teck J). 57 Albemarle Supply Co Ltd v Hind & Co [1928] 1 KB 307, 318 (Scrutton LJ); Gericke Pte Ltd v Nortrans Shipping Pool Pte Ltd [1997] 2 SLR(R) 652, 655 [7] (Tan Lee Meng JC). 58 Gericke Pte Ltd v Nortrans Shipping Pool Pte Ltd [1997] 2 SLR(R) 652, 655–6 [8] (Tan Lee Meng JC). 59 Record 51–65. 60 Gericke Pte Ltd v Nortrans Shipping Pool Pte Ltd [1997] 2 SLR(R) 652, 655–6 [8]–[9] (Tan Lee Meng JC). 61 Record 49. 62 Record 5–6 [10(a)].


9

27. The Tribunal has the power under the IAA to award interim relief because the cargo forms part of

the subject-matter of the dispute (1), and because a sale is necessary for its preservation (2).

Alternatively, the Tribunal may also derive its power from contractual agreement (3). That the

cargo to be sold is presently situated outside Singapore is immaterial to this claim (4).

1. The cargo forms part of the subject-matter of the dispute

28. The Tribunal is given the express power to grant the sale of the cargo interim under Singaporean

statute. Section 12(1) of the IAA relevantly provides:

an arbitral tribunal shall have powers to make orders or give directions to any party for —

(d) the preservation, interim custody or sale of any property which is or forms part of the

subject-matter of the dispute.

29. Section 12(1)(d) reflects art 17 of the Model Law, which states that the Tribunal may make any

necessary ‘interim measure of protection … in respect of the subject-matter of the dispute’. In

determining whether the cargo to which the sale application pertains ‘forms part of the subject-

matter of the dispute’, the Tribunal must take a ‘purposive interpretation’ of the statute.63 A

tribunal’s purpose in making an interim award is to maintain the status quo pending the outcome of

the arbitration64 – a purpose reflected in the frequent designation of such awards as ‘conservatory

measures’ in comparable jurisdictions,65 and in the term ‘preservation’ in s 12(1)(d) of the IAA.

30. In this light, the cargo clearly forms part of the subject-matter of the dispute: it is the object of a lien

claimed by FURNACE,66 and its sale at the voyage’s end constitutes the commercial purpose of the

63 Interpretation Act (Singapore, cap 1, 2002 rev ed) ss 9A(1)–(4); Challenger Technologies Pte Ltd v Public Prosecutor [1994] SLR(R) 849, 857 [35] (Lai Kew Chai J); Tee Soon Kay v Attorney-General [2006] 4 SLR(R) 385, 391 [15] (Tan Lee Meng J); Public Prosecutor v Low Kok Heng [2007] 4 SLR 183, 196 [41] (VK Rajah JA); Xu Ren Li v Nakano Singapore (Pte) Ltd [2012] 1 SLR 729, 734 [16] (Chan Sek Keong CJ); Dorsey James Michael v World Sport Group Pte Ltd [2013] 3 SLR 354, 360–1 [18]–[20] (Sundaresh Menon CJ, Chao Hick Tin and V K Rajah JJA); Attorney-General v Ting Choon Meng [2017] SGCA (16 January 2017) 06 [18] (Andrew Phang Boon Leong and Chao Hick Tin JJA). 64 Jones v Pacaya Rubber & Produce Co [1911] 1 KB 455, 457 (Buckley LJ); Donmar Productions Ltd v Bart [1967] 2 All ER 338, 339 (Ungoed-Thomas J); Holiday Inns Inc v Hotel Enterprises Ltd [1974–1976] SLR(R) 362, 369–70 [20]–[24] (FA Chua J); Lee Hung Khoon v Yeo Tang Mui [1990] 1 SLR(R) 459, 464 [14] (L P Thean J); Redfern and Hunter 421 [7.14]. 65 See, eg, International Chamber of Commerce Arbitration Rules (2017) art 28; London Court of International Arbitration Rules (2014) art 25. 66 Record 74 [18(2)].


10

contract. Risks, including loss of the lien and loss, damage or devaluation of the cargo itself

pendente lite, would have a detrimental impact on the ability of the Tribunal to make a suitable final

award. Were an award to be made in favour of FURNACE, the loss of an asset, worth $2.53–3.18

million,67 would hinder the fulfilment of that award. As the cargo is thus so germane to the dispute

and to its subject-matter, the Tribunal is within its powers to grant sale of the cargo pendente lite.

2. A sale of the cargo is necessary

31. Though on its face s 12 of the IAA imposes no other conditions which must be met in order for the

Tribunal to possess the power to order a sale, the provision is to be read with art 17 of the Model

Law,68 which stipulates that such orders are to be made where necessary.69 Only if necessity is

demonstrated will the Tribunal have the power to order interim sale.70

32. A measure is necessary if, without it, that ‘which is sought to be preserved would be lost’.71 The

threshold is not one of absolute certainty but of significant risk.72 In the present case such a risk

exists in respect of the cargo. First, in the absence of reports that the Tardy Tessa has docked, and

considering that it remains adrift,73 it is reasonable to infer that the cargo remains on board. In light

of the Master’s report of 30 November 2016, in which he explained that the cargo was overheating,

there is a significant risk of ignition.74 The content of volatile matter is quantified at 40.3% in the

joint expert report.75 This figure stands at nearly double that of South African Benchmark Coal,

indicating the gravity of the risk.76 Selling the cargo protects the coal against the risk of ignition.

67 Record 101–2. 68 PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] 4 SLR 364, 468 [221] (Sundaresh Menon CJ Quentin Loh J). 69 Model Law art 17. 70 Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 419, 468 [52] (Sundaresh Menon CJ, Andrew Phang Boon Leong JA and Woo Bih Li J). 71 Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 419, 465 [44] (Sundaresh Menon CJ, Andrew Phang Boon Leong JA and Woo Bih Li J). 72 Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SLR 1159, 1180 [62] (Belinda Ang Saw Ean J). 73 Clarification [5]. 74 Record 37. 75 Record 99. 76 Record 99.


11

33. Secondly, a sale of the cargo is necessary to preserve the coal against substantial decreases in value.

Where there is a ‘non-negligible risk’ of considerable depreciation, a sale will likely be necessary.77

Here, it is important to note that a significant time may pass between the arbitral hearing and

delivery of the final award. In this time, the coal is likely to depreciate in value. The joint expert

report identifies a ‘global down trend’ in the price of coal,78 and notes the cargo is a ‘distressed

load’.79 The report values the best case scenario sale price of a non-distressed load at $3,180,241.97

and the most discounted distressed load at $2,527,561.56.80 So substantial a difference in value

illustrates the necessity of selling the cargo before it is perceived as further distressed.

34. There are no alternative measures that could preserve the cargo – warehousing, the only

conceivable alternative, would leave it prone to damage, to further depreciation and to the

accumulation of storage costs. In the absence of a feasible alternative, a sale is necessary,81 and the

Tribunal therefore has the power to order this sale.

3. In the alternative, the parties have contractually agreed to give the Tribunal the wider power

to make interim awards as it sees fit

35. By agreeing to arbitration under the SCMA Rules, all parties have granted the Tribunal the wide

power to ‘make interim Awards … on different issues at different times’,82 and to ‘undertake to

carry out the Award without delay’.83 It is noted that while INFERNO denies liability in its Response

to Notice of Arbitration,84 it makes no submissions on jurisdiction in respect of the award,85 so its

contractual agreement on this point stands without mitigation.

36. Were the Tribunal to derive its authority in this manner, its sole limitation would be that found in

INFERNO’s agreement that the Tribunal’s powers extend only to issues that arise ‘out of or in

77 Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SLR 1159, 1181 [62] (Belinda Ang Saw Ean J). 78 Record 100. 79 Record 101. 80 Record 101–2. 81 Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 419, 465 [44] (Sundaresh Menon CJ, Andrew Phang Boon Leong JA and Woo Bih Li J). 82 SCMA Rule 36.2. 83 SCMA Rule 36.4. 84 Record 87 [4]. 85 Clarification [2(2)].


12

connection with the Voyage Charterparty’.86 As the application for sale relates to unpaid freight, the

terms of which are set out in the Voyage Charterparty,87 it is clearly an application in connection

with that charterparty. Therefore, the Tribunal has the power to order the interim sale of cargo.

37. In the event that the Tribunal derives its power from the parties’ contractual agreement to apply the

SCMA Rules, these arguments as to necessity above,88 and to justness below,89 demonstrate that the

Tribunal should exercise its discretion and make the order.

4. The location of the cargo is immaterial to the Tribunal’s power to order a sale

38. Since the seat of arbitration is Singapore, the location of the cargo is immaterial because the power

conferred upon the Tribunal by the IAA extends even to assets located outside Singapore.90 While

the interim award in Five Ocean Corporation v Cingler Ship Pte Ltd91 was granted by the High

Court, these same powers apply to the Tribunal.92 As such, the Tribunal may enforce the sale of the

cargo pendente lite.

B. The Tribunal should exercise its discretion and order a sale of the cargo

39. Section 12 of the IAA, when read alongside art 17 of the Model Law, appears to permit arbitral

tribunals to make orders under the provision as long as the cargo forms part of the subject-matter of

the dispute, and its sale is necessary. If these are the sole tests, they are here made out. However,

when courts have applied s 12A, which confers on them the same powers as arbitral tribunals have

under s 12, they have also required it be shown that the desired order passes the ‘balance of

convenience’ test.93 This requires them to ‘take whichever course appears to carry the lower risk of

injustice if it should turn out to have been wrong at trial in the sense of granting relief to a party

86 Record 87 [6]. 87 Record 22 [19]. 88 Above [31]–[34]. 89 Below [39]–[40]. 90 Five Ocean Corporation v Cingler Ship Pte Ltd [2015] SLR 1159, 1179 [39] (Belinda Ang Saw Ean J). 91 [2015] SLR 1159 (Belinda Ang Saw Ean J). 92 IAA s 12(6). 93 Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 419, 468 [53] (Sundaresh Menon CJ, Andrew Phang Boon Leong JA and Woo Bih Li J); American Cyanamid Co v Ethicon Ltd [1975] AC 396, 405 (Lord Diplock).


13

who fails to establish his rights at the trial, or of failing to grant relief to a party who succeeds at the

trial’.94 If this test must also be considered under s 12, this too is made out.

40. Considering the first limb of the test’s two hypotheticals: were the sale ordered, the risk of injustice

to INFERNO would be minimal. In the event that FURNACE failed on the merits of the claim, the

monies paid into the Tribunal as a result of the sale would merely be repaid to INFERNO and

IDONCARE. On the other hand, considering the second limb of the comparison: were the sale

application not granted but were FURNACE to succeed on the merits of the claim, the risk of

injustice would be high. For since the cargo would be of much diminished value by the time the

final award is delivered, FURNACE might not therefore be able to recuperate damages from

INFERNO. Given the greater injustice that would result were the order not granted, this Tribunal

should therefore exercise its power under s 12(1)(d) to order a sale of the cargo.

ARGUMENTS ON THE MERITS OF THE CLAIM

IV. INFERNO BREACHED THE VOYAGE CHARTERPARTY BY FAILING TO NOMINATE A

LEGITIMATE DISCHARGE PORT IN TIME

41. Clause 16 of the Fixture Recap of the Voyage Charterparty between FURNACE and INFERNO (‘the

Nomination Clause’) provides:

1 spsb China (Dalian, Jinzhou, Yingkou, Yantai, Qingdao, Shanghai, Tianjin, Ningbo) CHOPT

CHTRS to declare discharge port when vessel passes Singapore for bunkering.95

42. The clause therefore obligates INFERNO to nominate a safe port of discharge from one of the eight

named ports at the appointed time. Because Busan did not fall within the stipulated range of ports,

the nomination of Busan on 15 October 2016 did not constitute performance of this obligation (A).

Even if it did, neither this nomination nor the later nomination of Ningbo were made according to

the time stipulation, rendering INFERNO in breach of the agreement (B).

94 Chuan Hong Petrol Station Pte Ltd v Shell Singapore (Pte) Ltd [1992] 2 SLR 1, 18 [88] (Yong Pung How CJ, Chan Sek Keong and Warren L H Khoo JJ); Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] 2 SLR 419, 468 [53] (Sundaresh Menon CJ, Andrew Phang Boon Leong JA and Woo Bih Li J). 95 Record 21[16].


14

A. INFERNO’s obligation to nominate a discharge port was not fulfilled by the attempted

nomination of Busan

43. Consistently with the meaning ordinarily given to clauses of this kind,96 the Nomination Clause

only allowed INFERNO to fulfil its obligation by nominating one of the stipulated ports. This is

because, where a contract expressly stipulates the process by which an obligation is to be

performed, the agreement is not to be construed so as to allow performance by other means.97 The

bracketed list of ports found under the clause should therefore be construed as an express

qualification of the process by which INFERNO could discharge its obligation to nominate, a

qualification which excluded nomination outside the eight named ports.

44. The only way by which INFERNO could justify its nomination of Busan would be to imply a term

allowing performance other than as stipulated. In this regard, the only factual justification upon

which INFERNO could rely is the alleged congestion. This would require the Tribunal to read into the

clause words to the effect that, where congestion of some degree is present at the named ports,

INFERNO may discharge its obligation by nominating another port. The reading in of such words,

whose purpose is to ‘fill a gap’, is properly understood as a process of implication.98 Accordingly,

they can only be implied where necessary for the business efficacy of the contract.99 In the present

case, no term of this kind could have been implied which would have allowed nomination of Busan.

45. The term could not simply be one which allowed nomination of another port where all named ports

were merely congested, for ships frequently encounter congestion and the consequent delays do not

ordinarily render contracts commercially inoperable.100 Further, the contract already contemplated

the sort of delay caused by ordinary congestion because it included stipulations as to laytime and

96 Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42, 110 (Wilmer LJ); Heinrich Hanno & Co v Fairlight Shipping Co (‘The Kostas K’) [1985] 1 Lloyd's Rep 231, 234 (Hobhouse J). 97 North Stafford Steel, Iron and Coal Co (Burslem) Ltd v Ward (1868) LR 3 Exch 172, 177 (Willes J); Blackburn v Flavelle (1881) 6 App Cas 628, 634–5 (Sir Barnes Peacock); R v Wallis (1949) 78 CLR 529, 550 (Dixon J). 98 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193, 210 [31] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J). See also Liverpool City Council v Irwin [1977] AC 239, 253 (Lord Wilberforce). 99 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193, 233 [94] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J). 100 See, eg, Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42, 110 (Wilmer LJ).


15

demurrage.101 Therefore, no further stipulation would be necessary.102 Nor could INFERNO rely on

an implied term which allowed nomination of another port where all named ports were unsafe,

because congestion lies outside what is normally considered grounds for holding a port unsafe.103

46. The remaining implied term for which INFERNO could contend would be one to the effect that,

where all named ports are impossible, the obligation to nominate may be fulfilled by nomination of

an alternative possible port. Yet neither is this term necessary for business efficacy. Supposing all

eight ports were impossible, it would have remained open to INFERNO to nominate an impossible

port or to delay until a port became uncongested. Though both options would likely have caused

inconvenience, the contract would have remained commercially operable. FURNACE would still

have been paid freight promptly because the present contract required freight be paid in advance.

INFERNO would have been able to exploit the vessel as it saw fit, which was the commercial purpose

for which it entered into the Voyage Charterparty. That such a circumstance is disadvantageous for

INFERNO is not enough to justify implication of a term.104

47. Yet even if these words were implied, congestion did not render the ports impossible. For it to have

done so, the delay must have appeared, to the reasonable foresight of the parties at the time of

nomination,105 such as to frustrate the commercial object of the venture – that is, to render the

voyage something different from that contracted for.106 Here, the only evidence of congestion is a

mere reference.107 There is therefore no indication that this congestion was anything other than the

ordinary congestion which is expected to beset modern ports from time to time, and which the

parties, as commercial shipping companies, would necessarily have contemplated. Nor is there

101 Record 21 [16], 22 [18], 22 [20]. 102 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193, 239 [116] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J); The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2015] 3 SLR 695, 709 [31] Sundaresh Menon CJ, Chao Hick Tin and Andrew Phang Boon Leong JJA). 103 Leeds Shipping v Société Française Bunge (‘The Eastern City’) [1958] 2 Lloyd's Rep 127, 131 (Sellers J); Kodros Shipping Corpn v Empresa Cubana de Fletes (No 2) (‘The Evia’) [1983] AC 736, 759 (Lord Roskill). 104 The Moorcock (1889) 14 PD 64, 68 (Bowen LJ); Ng Giap Hon v Westcomb Securities Pte Ltd [2009] 3 SLR(R) 518, 537 [36] (Chao Hick Tin, Andrew Phang Boon Leong and V K Rajah JJA); Foo Jong Peng v Phua Kiah Mai [2012] 4 SLR 1267, 1278–9 [27] (Andrew Phang Boon Leong and V K Rajah JJA and Woo Bih Li J). 105 Reardon Smith Line v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42, 113 (Wilmer LJ) 106 SS Matheos v Louis Dreyfus [1925] 1 AC 654, 662 (Lord Dunedin); Aktieselskabet Olivebank v Dansk Svorlsyre Fabrik [1919] 2 KB 162, 169 (Duke LJ); Reardon Smith Line v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42, 112–3 (Wilmer LJ). 107 Record 57.


16

indication that the delay possessed the ‘degree of certainty of long duration’ that elsewhere has been

required to render a port impossible.108 On the meagre evidence of congestion before the Tribunal,

it cannot therefore be said that the eight Chinese ports were impossible.

B. INFERNO breached the agreement by not declaring a discharge port in time

48. INFERNO could only discharge its obligation under the Nomination Clause by nomination of a

legitimate port at or before the time stipulated.109 Use of the phrase ‘when vessel passes Singapore’

indicates that the decision was to be made before the vessel had passed Singapore. The Tardy Tessa

arrived at Singapore at 1515LT on 10 October 2016.110 By 12 October the vessel was described as

having been ‘drifting OUTSIDE SG OPL FROM 0800 LOCAL TIME ON 11 OCT’,111 that is, not

merely ‘outside port limits’, but also ‘outside Singapore’. The Master’s report of 30 October refers

to the vessel as having been ‘kept adrift in open seas for more than 20 days’, that is, at least from 10

October.112 The attempted nominations of Busan and Ningbo, made on 16 and 21 October, were

therefore made once the Tardy Tessa had passed outside Singapore, and was ‘adrift on the high

seas’,113 waiting for directions to proceed. Accordingly, INFERNO breached the Nomination Clause.

V. THE VOYAGE CHARTERPARTY WAS NOT FRUSTRATED

49. A contract is only frustrated if there has been such a change as to render an obligation ‘radically

different’ to what the contract contemplated.114 In the present case, the congestion did not constitute

such a change. As explained above, the evidence of congestion is meagre, and there is no

suggestion that any consequent delay would have been prolonged.115 FURNACE’s obligation to direct

the vessel remained unchanged, as did INFERNO’s obligation to pay freight. The commercial object

108 Reardon Smith Line v Ministry of Agriculture, Fisheries and Food (‘The Houston City’) [1962] 1 QB 42, 88 (Sellers LJ); SS Knutsford Ltd v Tillmanns [1908] AC 406, 408 (Lord Loreburn). 109 Ethel Radcliffe Steamship Company Ltd v W & R Barnett Ltd (1926) 24 Ll L Rep 277, 278 (Bankes LJ); A/S Tank v Agence Maritime L Strauss (1939) 64 Ll L Rep 19, 25 (Atkinson J); Heinrich Hanno & Co v Fairlight Shipping Co (‘The Kostas K’) [1985] 1 Lloyd's Rep 231, 234 (Hobhouse J). 110 Record 50. 111 Record 52. 112 Record 37. 113 Record 35. 114 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 728–9 (Lord Radcliffe); Lim Kim Som v Sheriffa Taibah bte Abdul Rahman [1994] 1 SLR(R) 233, 245–6 [27]–[29] (M Karthigesu and L P Thean JJA and Warren L H Khoo J). 115 Above [47].


17

of the voyage – the delivery of the cargo – would not have been defeated, but simply delayed.

Absent any evidence that this delay was inordinate, and because the contract already contemplated

delay in its laytime and demurrage clauses, it cannot be said that performance became ‘a different

thing from that contracted for.’116

VI. FURNACE HAS A VALID LIEN ON SUB-FREIGHT PAYABLE BY IDONCARE

50. For FURNACE to possess a valid lien on sub-freight, it must fulfil two conditions. First, it must

possess the right to a lien, arising by implication, or by express contract with INFERNO.117 Secondly,

once freight is outstanding from INFERNO, FURNACE must ‘perfect’ its lien by way of notice to

IDONCARE.118 These two conditions are satisfied because INFERNO assigned FURNACE the right to

collect sub-freight (A), and FURNACE perfected that lien by sending notice to IDONCARE (B).

FURNACE retains its right of lien despite termination of the Voyage Charterparty (C).

A. FURNACE possesses the right to collect sub-freight from IDONCARE

51. FURNACE’s right to collect sub-freight from IDONCARE arises by implication. This is because the

Lien Clause only provides that ‘the Owners shall have a lien on the cargo for freight.’119 The

absence of an express reference to a lien ‘on sub-freight’ indicates a gap in the Charterparty that

should be remedied by implication in fact. The implication of terms follows a ‘three-step

process’.120 First it must be ascertained that the gap in the contract arose only because the parties

failed to contemplate it.121 Secondly, the business efficacy test is applied to determine whether

116 British Movietonews Ltd v London and District Cinemas Ltd [1952] AC 166, 185 (Lord Simon); Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, 729 (Lord Radcliffe); Lim Kim Som v Sheriffa Taibah bte Abdul Rahman [1994] 1 SLR(R) 233, 246 [28] (M Karthigesu and L P Thean JJA and Warren L H Khoo J). 117 Ocean Projects Inc v Ultratech Pte Ltd [1994] 2 SLR(R) 245, 260 [32] (Yong Pung How CJ, M Karthigesu and L J Thean JJA). 118 Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45, 48 (Saville J); Cascade Shipping Inc v Eka Jaya Agencies (S) Pte Ltd [1993] 1 SLR(R) 187, 197 [22] (L P Thean, S Rajendran and M Karthigesu JJ). 119 Record 31 [19(a)]. 120 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193, 234 [101] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J); The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2015] 3 SLR 695, 705 [28] (Sundaresh Menon CJ, Chao Hick Tin and Andrew Phang Boon Leong JJA); Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua [2017] SGCA 21 (22 March 2017) [129] (Sundaresh Menon CJ, Chao Hick Tin and Judith Prakash JJA). 121 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193, 233 [94]–[95] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J); The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2015] 3 SLR 695, 705 [28] (Sundaresh Menon CJ, Chao Hick Tin and Andrew Phang Boon Leong JJA); Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua [2017] SGCA 21 (22 March 2017) [129] (Sundaresh Menon CJ, Chao Hick Tin and Judith Prakash JJA).


18

implication is necessary.122 Thirdly, the specific term to be implied is ascertained through the

officious bystander test.123

52. The preliminary step is satisfied since the absence of a contractual stipulation providing a lien on

sub-freight arises only because of the parties’ failure to contemplate it. The Lien Clause is

contained in a standard form charter which the parties neglected to modify, but rather have

confirmed to be ‘fixed clean’.124 This indicates that the parties did not turn their minds to a

provision conferring a lien on sub-freight. This gap may therefore be remedied by implication.125

53. Next, the business efficacy test is applied to determine ‘whether it is necessary in the business or

commercial sense to imply a term in order to give the contract efficacy.’126 This test will be

satisfied if ‘for the sake of the efficacy of the contract something more needs to be added’.127 Such

is the case here. The purpose of the Lien Clause is to provide security for freight outstanding under

the Voyage Charterparty.128 It is often the case that this security is the sub-freight due under a sub-

charter, in this instance, sub-freight due from IDONCARE to INFERNO.129 Absent an implied term, this

security would be rendered nugatory, leaving FURNACE without any means of obtaining the

consideration for which it contracted. This would undermine the commercial efficacy of the Voyage

Charterparty; an implied term conferring the right of lien on sub-freight is necessary to remedy this.

122 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193, 234 [98]–[99] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J); The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2015] 3 SLR 695, 705 [28] (Sundaresh Menon CJ, Chao Hick Tin and Andrew Phang Boon Leong JJA); Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua [2017] SGCA 21 (22 March 2017) [139] (Sundaresh Menon CJ, Chao Hick Tin and Judith Prakash JJA). 123 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193, 234 [98]–[100] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J); Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua [2017] SGCA 21 (22 March 2017) [138] (Sundaresh Menon CJ, Chao Hick Tin and Judith Prakash JJA). 124 Record 20. 125 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193, 233 [94] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J). 126 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2014] 4 SLR 193, 234 [101] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J). 127 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2014] 4 SLR 193, 232 [91] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J). See also The Moorcock (1889) 14 PD 64, 67 (Lord Esher MR). 128 Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45, 49 (Saville J). See also Re Welsh Irish Ferries Ltd (‘The Ugland Trailer’) [1985] 2 Lloyd’s Rep 372, 374 (Nourse J); Tradigrain SA v King Diamond Shipping SA (‘The Spiros C’) [2000] 2 Lloyd’s Rep 319, 323 (Rix LJ). 129 Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45, 49 (Saville J).


19

54. This necessity is supported by the factual background of the Voyage Charterparty. The commercial

object of the Voyage Charterparty must be considered in accordance with the terms of the Time

Charterparty between Imlam and FURNACE, under which the Voyage Charterparty operates.130

Clause 23 of the Time Charterparty states that ‘[Imlam] shall have a lien upon all cargoes, sub-hires

and sub-freights … belonging or due to the Charterers or any sub-charterers’.131 In effect, Clause 23

anticipates a ‘chain of equitable assignments’ which preserves Imlam’s right to ‘sub-freights under

any sub-sub-charter of which [FURNACE] is an equitable assignee’.132 This ‘chain’ of assignments is

broken if FURNACE is denied a lien on IDONCARE’s sub-freight.

55. The implied right of lien also satisfies the officious bystander test, as both parties would have

assented to its inclusion, had it been put to them at the time of the contract.133 Though it may appear

that a lien on sub-freight confers benefit unilaterally on FURNACE, this is not the case; it upholds the

interests of both parties. By providing security for INFERNO’s debt, a term endowing FURNACE with

a lien on sub-freight not only allows FURNACE to acquire what it is owed, but also absolves

INFERNO of that debt.134 It is therefore natural that ‘the parties … would have responded “Oh, of

course!” had the proposed term been put to them at the time of the contract’.135 On that basis, the

Tribunal ought to imply a right of lien on sub-freight into the Voyage Charterparty.

B. FURNACE perfected its lien by sending written notice to IDONCARE

56. Though a lien on sub-freight entitles FURNACE to intercept sub-freight otherwise contractually owed

to INFERNO,136 that lien can only be validly exercised by notice,137 once amounts owed by INFERNO

130 Associated Asian Securities Pte Ltd v Lee Kam Wah [1992] 3 SLR(R) 812, 816 (Yong Pung How CJ, L P Thean and Goh Joon Seng JJ). 131 Record 10 [23]. 132 Care Shipping Corp v Latin American Shipping Corp (‘The Cebu’) [1983] QB 1005, 1016 (Lloyd J). 133 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193, 234 [98], [101] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J). 134 Re Welsh Irish Ferries Ltd (‘The Ugland Trailer’) [1985] 2 Lloyd’s Rep 372, 374 (Nourse J); Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45, 49 (Saville J); Tradigrain SA v King Diamond Shipping SA (‘The Spiros C’) [2000] 2 Lloyd’s Rep 319, 323 (Rix LJ). 135 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2014] SLR 193, 234 [101] (Sundaresh Menon CJ, Chao Hick Tin JA and Judith Prakash J). 136 Federal Commerce and Navigation Ltd v Molena Alpha Inc (‘The Nanfri’) [1979] 1 Lloyd’s Rep 201, 210 (Lord Russell); Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45, 48 (Saville J).


20

became outstanding.138 Additionally, as a lien cannot be exercised on sub-freight already paid,

FURNACE’s notice must precede, or ‘intercept’, receipt of sub-freight by the INFERNO.139 FURNACE

has satisfied all of these conditions.

57. FURNACE gave notice of its lien by way of email at 1524LT on 20 October 2016.140 This notice was

valid because, at the time it was given, INFERNO was in breach of its obligation to pay freight by 14

October and therefore owed a freight debt to FURNACE.141 By issuing this valid notice, FURNACE

perfected its lien because it successfully intercepted receipt of IDONCARE’s sub-freight by INFERNO.

At the time that FURNACE issued its notice, INFERNO was yet to receive sub-freight from IDONCARE.

This is the obvious inference of INFERNO’s correspondence on 21 October, in which it claimed that

it had ‘not been paid freight from [its] sub-charts.’142 Since FURNACE has thus perfected its lien on

IDONCARE’s sub-freight, it may enforce payment of that sub-freight as a right.

C. FURNACE retains its lien, despite termination of the Voyage Charterparty

58. Although FURNACE’s right to IDONCARE’s sub-freight relies on contractual assignment by

INFERNO,143 the termination of the Voyage Charterparty did not cause FURNACE to lose its lien.

Termination of a contract ‘does not abrogate the contract’ and ‘the contract is not put out of

existence’.144 IDONCARE can deny neither the existence nor the legal consequence of FURNACE’s

lien on sub-freight; it is an accrued right. This is because the assignment to FURNACE of the chose in

action against IDONCARE preceded termination.145 FURNACE’s right to IDONCARE’s sub-freight must

therefore remain unaffected by termination of the Charterparty.

VII. FURNACE’S TERMINATION OF THE VOYAGE CHARTERPARTY WAS NOT WRONGFUL

137 Cascade Shipping Inc v Eka Jaya Agencies (S) Pte Ltd [1993] 1 SLR(R) 187, 197 [22] (L P Thean, S Rajendran and M Karthigesu JJ). 138 Annangel Glory Compania Naviera SA v M Golodetz Ltd Middle East Marketing Corporation (UK) Ltd and Clive Robert Hammond (‘The Annangel Glory’) [1988] 1 Lloyd’s Rep 45, 48 (Saville J). 139 Cascade Shipping Inc v Eka Jaya Agencies (S) Pte Ltd [1993] 1 SLR(R) 187, 197 [22] (L P Thean, S Rajendran and M Karthigesu JJ); India Steamship Co v Louis Dreyfus Sugar Ltd (‘The Indian Reliance’) [1997] 1 Lloyd’s Rep 52, 58 (Rix LJ); Federal Commerce and Navigation Ltd v Molena Alpha Inc (‘The Nanfri’) [1979] 1 Lloyd’s Rep 201, 210 (Lord Russell). 140 Record 66. 141 Above [19]–[22]. 142 Record 68. 143 Re Welsh Irish Ferries Ltd (‘The Ugland Trailer’) [1985] 2 Lloyd’s Rep 372, 374 (Nourse J). 144 Heyman v Darwins [1942] AC 356, 374 (Lord Macmillan). 145 Re Welsh Irish Ferries Ltd (‘The Ugland Trailer’) [1985] 2 Lloyd’s Rep 372, 374 (Nourse J).


21

59. A party may elect to terminate an agreement where that agreement has first been repudiated by the

other party.146 INFERNO’s repudiation of the agreement by words and conduct (A) and by failing to

comply with FURNACE’s notice to perform (B) entitled FURNACE to terminate. FURNACE’s election

to do so on 22 October was rightfully made (C).

A. INFERNO’s conduct constituted a repudiation of the agreement

60. A party is deemed to have repudiated a contract if a reasonable person would conclude from its

actions that the party no longer intends to be bound by the agreement.147 Such an intention may be

evinced through words or conduct, or through an express declaration of the party’s inability to

perform its obligations in some material respect.148 INFERNO’s conduct between 10 and 20 October

2016 evinces such an intention.

61. INFERNO’s non-performance of its obligation to pay freight constitutes one manifestation of this

intention. Though ‘mere failure or delay in making payment’ is insufficient,149 INFERNO’s conduct

exceeded this. First, INFERNO’s express declaration on 15 October that it was ‘unable to … make

payment of freight’ is a renunciation of its obligation to make that payment.150 This inability was

clearly material because it denied FURNACE the consideration and remuneration which it was

contemplated to receive under the Charterparty.151 Secondly, in trying to appease FURNACE by

promising payment ‘at disport after cargo discharge’,152 INFERNO indicated that it did not consider

itself bound by the clear obligation to pay at an advance time and ‘in any case’ before discharge.153

62. INFERNO’S intention not to be bound is further manifested in its failure to nominate a discharge port.

Here the intention was evinced first by its express declaration on 15 October that it was ‘unable to

146 RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] SLR 413, 443–4 [90] (Chan Sek Keong CJ and Andrew Phang Boon Leong and V K Rajah JJA). 147 San International Pte Ltd v Keppel Engineering Pte Ltd [1998] SLR 447, 458 [20] (Yong Pung How CJ, M Karthigesu and L P Thean JJA); RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] SLR 413, 444–5 [93] (Chan Sek Keong CJ and Andrew Phang Boon Leong and V K Rajah JJA). 148 San International Pte Ltd v Keppel Engineering Pte Ltd [1998] SLR 447, 458 [20] (Yong Pung How CJ, M Karthigesu and L P Thean JJA). 149 Brani Readymix Pte Ltd v Yee Hong Pte Ltd [1994] SLR 1004, 1011 [18] (M Karthigesu and LP Thean JJA and Chao Hick Tin J). 150 Record 56. 151 Care Shipping Corporation v Itex Itagrani Export SA (‘The Cebu’) (No 2) [1993] QB 1, 12 (Steyn J). 152 Record 68 (emphasis added). 153 Record 22 [19]; Brani Readymix Pte Ltd v Yee Hong Pte Ltd [1994] SLR 1004, 1011 [18] (M Karthigesu and LP Thean JJA and Chao Hick Tin J).


22

nominate disport’,154 secondly by its flouting of the terms of the agreement in respect of its

attempted nomination of Busan,155 and thirdly by its failing to justify its delayed nomination.

B. INFERNO’s failure to comply with FURNACE’s notice to perform gave FURNACE the right to

terminate the Voyage Charterparty

63. Where a party is in breach of an agreement, the wronged party is entitled to give notice to the party

in default,156 stipulating a reasonable time by which the defaulting party must perform.157 FURNACE

was entitled to give notice on 19 October 2016 as INFERNO was in default at the time (1). The time

stipulated for performance by the notice was reasonable (2).

1. FURNACE was entitled to give notice to perform

64. The notice to perform given by FURNACE to INFERNO at 1320LT on 19 October was validly issued,

given that, at the time, INFERNO was in breach of its obligations to pay freight and to nominate a

discharge port. As explained above, INFERNO was in breach of its obligation to pay freight from

close of bank on 14 October.158 In respect of the obligation to nominate, before 19 October INFERNO

was in breach of the express time stipulation in the Nomination Clause.159

2. The time stipulated for performance by the notice was reasonable

65. The time stipulated for completion by the notice was, as required, reasonable.160 Reasonableness

here rests on what remains to be done at the date of the notice, and whether the notifying party has

continually pressed for completion.161 At the time that notice was issued, INFERNO needed only to

make payment of freight and to communicate its choice of port. Neither task was onerous, and both

could therefore very reasonably be effected by 1200LT of the following day.

154 Record 56. 155 Record 67, 57, 58, 60, 62. 156 Behzadi v Shaftesbury Hotels Ltd [1992] Ch 1, 15 (Nourse LJ). 157 Siti v Lee Kay Li [1996] SLR 934, 950 [44] (M Karthigesu and L P Thean JJA and Lai Kew Chai J). 158 Above [19]–[22]. 159 Above [41]–[48]. 160 Stickney v Keeble [1915] AC 386, 418 (Lord Parker); Richards (Charles) Ltd v Oppenhaim [1950] 1 KB 616, 624 (Denning LJ); Williams v Greatrex [1957] 1 WLR 31, 35 (Denning LJ). 161 Stickney v Keeble [1915] AC 386, 419 (Lord Parker); Behzadi v Shaftesbury Hotels Ltd [1992] Ch 1, 15 (Nourse LJ). (Nourse LJ); United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904, 934 (Lord Diplock).


23

66. Further, INFERNO had copious time from 9 October – when it incurred its freight debt – to arrange

payment; and even longer, from the finalisation of the Voyage Charterparty on 1 September, to

decide on a discharge port. Its failure to do so does not render the short period provided in the

notice unreasonable.162 FURNACE had also previously made numerous requests for freight and

nomination of a discharge port between 10 and 15 October.163 Together, these factors affirm the

reasonableness of the time for performance stipulated by the notice.

C. FURNACE’s election to terminate was not wrongful

67. Where a party has expressly communicated its election to terminate, it is taken to have rightfully

exercised its right to terminate.164 Election will only be ineffective where the innocent party's

behaviour is consistent solely with an affirmation of the continuing existence of the contract,165 or

where it is in breach of an obligation which is condition precedent to the obligations which it claims

the other party has repudiated.166 Here, FURNACE expressly communicated its decision on 22

October,167 and acted entirely consistently with its election.168 It was not in breach of any obligation

that was condition precedent to those that INFERNO breached. Its communications on 20 and 21

October constituted a natural response and do not prejudice its right to terminate.169

VIII. FURNACE IS ENTITLED TO DAMAGES FOR BREACH FROM INFERNO

68. INFERNO will be liable to FURNACE for any damage caused by INFERNO’s breach, where those

damages are not too remote to be recoverable.170 To the extent these conditions are satisfied,

FURNACE will receive damages necessary to restore it to ‘the same position, financially, as [it]

162 Stickney v Keeble [1915] AC 386, 419 (Lord Parker); North Eastern Properties Ltd v Coleman [2010] 1 WLR 2715, 2732 [72] Briggs J. 163 Record 51, 54, 56. 164 The “Pacific Vigorous” [2006] 3 SLR(R) 374, 382 [15] (Belinda Ang Saw Ean J). 165 Jurong Town Corp v Wishing Star Ltd (No 2) [2005] SLR 283, 321 [171] (Chao Hick Tin JA, Lai Kew Chai and Woo Bih Li JJ); The “Pacific Vigorous” [2006] 3 SLR(R) 374, 382 [15] (Belinda Ang Saw Ean J). 166 Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] SLR 602, 617 [46] (Chao Hick Tin, Andrew Phang Boon Leong and V K Rajah JJA). 167 Record 68. 168 Jurong Town Corp v Wishing Star Ltd (No 2) [2005] SLR 283, 321 [171] (Chao Hick Tin JA, Lai Kew Chai and Woo Bih Li JJ). 169 Jurong Town Corp v Wishing Star Ltd (No 2) [2005] SLR 283, 321 [172] (Chao Hick Tin JA, Lai Kew Chai and Woo Bih Li JJ). 170 Wai Wing Properties Pte Ltd v Lim, Ganesh & Liu [1994] 1 SLR(R) 1004, 1022–3 [69] (Chao Hick Tin J).


24

would have enjoyed if the contract had not been broken’.171 The detention costs FURNACE incurred

up to the time the Voyage Charterparty was terminated were caused by INFERNO’s breach and are

recoverable (A). FURNACE is also entitled to damages indemnifying it for costs it incurred while

exercising its duty to ensure the safety of the cargo after termination of the Charterparty (B).

A. FURNACE can recover detention costs caused by INFERNO’s breach

69. It is well accepted that failure to nominate a discharge port pursuant to a voyage charterparty

entitles the injured party to compensation for detention costs.172 Here INFERNO’s breach detained

the Tardy Tessa, preventing it from prosecuting its voyage, and causing FURNACE substantial costs.

It was INFERNO’s failure to nominate a discharge port that forced the vessel to drift and incur

detention costs. That breach therefore satisfies not only the preliminary ‘but for’ test,173 but also the

‘common sense’ test for causation as the ‘“effective” or “dominant” cause of the loss.’174

70. FURNACE’s costs are not so remote that they are not compensable. The test for remoteness is one of

reasonable foreseeability.175 The incidence of detention costs follows so manifestly upon the

detention of the vessel, through failure to nominate a discharge port, that the reasonable person

would clearly have foreseen it.176 INFERNO is therefore liable to compensate FURNACE for the costs

arising from detention of the Tardy Tessa, until the date that the Charterparty was terminated.177

B. FURNACE is indemnified for costs incurred after termination of the Voyage Charterparty

71. FURNACE was under a duty to take reasonable care of the cargo upon termination of the Voyage

Charterparty. This duty was exercisable by FURNACE alone, as the party charged with the

171 SIB International SRL v Metallgesellschaft Corp (‘The Noel Bay’) [1989] 1 Lloyd’s Rep 361, 363 (Staughton LJ). See also The Edison [1932] P 52, 63 (Scrutton LJ). 172 Aktieselskabet Olivebank v Dansk Svorlsyre Fabrik [1919] 2 KB 162, 169 (Warrington LJ); Zim Israel v Tradex (‘The Timna’) [1971] 2 Lloyd’s Rep 91, 95 (Megaw LJ); Metall Market OOO v Vitorio Shipping Co Ltd [2014] QB 760, 816–7 [127] (Sir Bernard Rix). 173 The “Feng Hang” [2001] 3 SLR(R) 864, 871 [30] (Kan Ting Chiu J). 174 The “Feng Hang” [2001] 3 SLR(R) 864, 870 [29] (Kan Ting Chiu J). 175 Hadley v Baxendale (1854) 9 Exch 341, 354 (Alderson B); Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528, 539–40 (Asquith LJ); Out of the Box Pte Ltd v Wanin Industries Pte Ltd [2013] 2 SLR 363, 370 [16] (Sundaresh Meron CJ, Chao Hick Tin and Andrew Phang Boon Leong JJA). 176 Aktieselskabet Olivebank v Dansk Svorlsyre Fabrik [1919] 2 KB 162, 169 (Warrington LJ); Out of the Box Pte Ltd v Wanin Industries Pte Ltd [2013] 2 SLR 363, 370 [16] (Sundaresh Meron CJ, Chao Hick Tin and Andrew Phang Boon Leong JJA). 177 Johnson v Agnew [1980] AC 367, 401 (Lord Wilberforce); SIB International SRL v Metallgesellschaft Corp (‘The Noel Bay’) [1989] 1 Lloyd’s Rep 361, 364 (Staughton LJ).


25

employment of the vessel.178 FURNACE exercised that duty by ensuring that the cargo remained on

board the vessel, incurring further drifting costs as a consequence. FURNACE is entitled to an

indemnity for any loss incurred in the exercise of its duty, as a correlative right to that obligation.179

72. The costs arising from FURNACE’s exercise of its duty satisfy both causation and remoteness.

Regarding causation, INFERNO’s repudiatory breach gave rise to termination of the Charterparty, so

that matters of employment, and therefore the duty over the cargo, fell to FURNACE. The costs

incurred in the exercise of that duty are not too remote to be recoverable, as a reasonable person in

INFERNO’s position would have foreseen that such a duty would arise for FURNACE upon

termination of the Charterparty. INFERNO is therefore liable in damages to FURNACE, to indemnify it

for the costs it incurred after termination of the Voyage Charterparty.

REQUEST FOR RELIEF

For the reasons set out above, FURNACE requests that this Tribunal:

a) grant FURNACE liberty to sell the cargo on board the vessel;

b) declare that INFERNO is liable in relation to FURNACE’s claim;

c) declare that the liens on the sub-freights and cargo were validly and lawfully exercised; and

d) award further or other relief as the Tribunal considers fit.

178 Larrinaga Steamship Co Ltd v The King [1945] AC 246, 256 (Lord Wright); Record 3 [8(a)]. 179 Gaudet v Brown; Cargo ex Argos (1873) LR 5 PC 134, 165 (Sir James W Colville, Sir Barnes Peacock, Sir Montague Smith and Sir Robert P Collier); ENE Kos 1 Ltd v Petroleo Brasileiro SA (No 2) [2012] 2 AC 164, 179 (Lord Sumption JSC).

EIGHTEENTH ANNUAL INTERNATIONAL MARITIME LAW … · TEAM 10 MEMORANDUM FOR CLAIMANT IV Record 2017...

Documents

Transcript of EIGHTEENTH ANNUAL INTERNATIONAL MARITIME LAW … · TEAM 10 MEMORANDUM FOR CLAIMANT IV Record 2017...