FINAL MEMORANDUM FOR THE RESPONDENT (2)€¦ · Arthur DAIN Carole POMES-BORDEDEBAT Rodolphe RUFFIE...

I

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

EDITION 2015

MURDOCH UNIVERSITY

MELBOURNE

In the matter of an arbitration

BETWEEN

LDT PTE

Respondent

-and-

WEST TANKERS INC

Claimant

MEMORANDUM FOR THE RESPONDENT

Counsel for the Respondent:

University of Versailles, France

Team No. 6

Pierre CAPELLE

Pierre-Baptiste CHIPAULT

Arthur DAIN

Carole POMES-BORDEDEBAT

Rodolphe RUFFIE

Myriam SNOUSSI

INTERNATIONAL MARITIME LAW ARBITRATION – EDITION 2015 TEAM NO. 6

II

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ...................................................................................................... IV

INDEX OF AUTHORITIES ..........................................................................................................V

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

PART I – JURISDICTION..............................................................................................................2

I. The proper seat and forum is Singapore and Singapore arbitration ......................................2

A. The seat of arbitration cannot be London.........................................................................2

B. In fact, the proper seat of arbitration is Singapore ..........................................................4

II. Alternatively, should the Tribunal be considered to have jurisdiction over this matter, the

claim relating to fraud is not admissible as it does not fall within the scope of the

arbitration Clause.................................................................................................................4

PART II – MERITS.........................................................................................................................6

I. The Respondent fully performed its obligations under the Contract ....................................6

A. The Respondent was entitled to refuse to pay the second-period hire ..............................6

1. The second-period hire was due before 4 July 2014 and was to be paid until midnight

................................................................................................................................................................. 6

2. The payment was not due on 4 July 2014.....................................................................8

3. In the alternative, the Vessel was off-hire by 4 July 2014 for neglect of duty and

breach of order on the part of the Master ..........................................................................10

B. Neither the Respondent nor its agent instructed the Master to proceed towards an

alternative discharge place ..............................................................................................11

1. ASA2 is not and has never been the agent of the Respondent....................................11

2. The Respondent never issued instructions to the Master to proceed to an alternative

discharge place ..................................................................................................................13

3. In any event, the Vessel can be loaded or discharged at any place as the Respondent

may direct ..........................................................................................................................14

C. The Respondent had no obligation to fill the tank of the Vessel with a specific quantity

of fuel ..............................................................................................................................14

II. In fact, the Claimant breached its obligations under the Contract, thereby causing the

Vessel to be attacked by the pirates ...................................................................................15

A. The Claimant personally breached its obligations..........................................................15

B. The breaches of the Master.............................................................................................17


III

C. The Claimant’s breaches exclusively led to the piracy attack ........................................18

III. The Respondent did not commit maritime fraud ..............................................................19

IV. The Respondent is not liable for misrepresentation..........................................................23

PART III – PRAYER FOR RELIEF.............................................................................................25


IV

LIST OF ABBREVIATIONS

§

Arbitration Act 1996

Co.

Corp.

Ct.

Ct. App.

Ed.

Etc.

ICC

Ibid.

Id.

Ltd

op. cit.

p.

pp.

v.

Paragraph

Arbitration Act 1996 (UK) c 23

Company

Corporation

Court

Court of Appeal

Edition

Et cætera

International Chamber of Commerce, Paris

Ibidem

Idem

Limited Company

Opus citandum

Page

Page to page

Versus


V

INDEX OF AUTHORITIES

(in alphabetical order)

Type of document Document title Page

number

Abou-Rahmah v. Abacha [2007] A Lloyd’s Rep 115 21

Anders Utkilens Rederi A/S v Compagnie Tunisienne de Navigation [1976] 2 Lloyd’s 7

Anglo Northern v. Jones [1917] 2 KB 78 8

Aviva Insurance Ltd v. Brown [2012] Lloyd’s Rep IR 211 21

Avon Insurance PLC and others v. Swire Fraser Ltd [2000] EWHC 230 (Comm)). 20

Barlow International Ltd v. Eurotrust International Ltd [2006] 1 Lloyd’s Rep 225 21

Budd and Co Ltd v Johnson, Englehart & Co Ltd (The “Spind”) [1920] 2 Ll.L. Rep 27.

7

Capital Ltd and others v. Ludsin Overseas Ltd [2013] EWCA Civ 413 19

Coggs v. Bernard [1703] 2 LD Ray 909 15

DOMESTIC

CASES

Davis Contractors Limited v. Fareham, UDC [1956] AC 696. 8


VI

Derry v. Peek [1889] 14 App Cas 337 19

FC Bradley & Sons Ltd v. Federal Steam Navigation Co [1926] 24 Ll L Rep 446, 454 16

Freeman v. Reed [1863] 4 B. & S. 174, 184. 7

Government of Zanzibar v. British Aerospace Ltd [2000] EWHC 221 25

Howard Marine and Dredging Co. Ltd v. A. Ogden & Sons (Excavations) Ltd [1977] EWCA Civ 3

24

Jackson v. Union Marin Insurance Co. [1874] LR 10 C.P 125 9

Jahn (Trading as C. F. Otto Weber) v. Turnbull Scott Shipping Company, Ltd., and Nigerian National Line, Ltd. (The Flowergate) [1967] 1 Lloyd’s Report 2

18

Lloyd v. Grace Smith & Co. [1912] AC 716 13

Minerva Navigation Inc v. Oceana Shipping AG (M/V Athena) [2012] EWHC 3608 10

National Carriers Ltd v. Panalpina (Northern) Ltd [1981] AC 675. 8

Pioneer Shipping Ltd v. BTP Tioxide Ltd (The Nema) [1982] AC 724. 8

Reddam v. KPMG LLP [2004] WL 3761875, at *6 (C.D. Cal.) 5


VII

Royscot Trust v. Rogerson [1991] 2 QB 297. 23

Standard Chartered Bank v. Pakistan National Shipping Corp [2003] 1 AC 959; Court of Appeal, Eco 3 19

Strategic Fund Limited v. Skandinaviska Enskilda Banken AB [2012] EWHC 584 (Comm) 21

Tatem v. Gamboa [1938] 61 L1.L. Rep. 149 9

Taylor v. Caldwell [1863] E.B. & E. 746 9

Telecom Italia, Spa v. Wholesale Telecom Corporation [2001] 248 F.3d 1109 (3rd Cir. 2001) 5

The Afovos, Afovos Shipping Co SA v. R Pagnan & Fratelli [1983] 1 Lloyd’s Rep 335. 7

The Derby, Alfred C Toepfer Schiffahrtsgesellschaft GmbH v. Tossa Marine Co Ltd [1985] 2 Lloyd’s Rep 325, 331, 333

16

The Eurasian Dream, Papera Traders Co. limited v. Hyundai Merchant Marine Co. [2002] 1 Lloyd’s Rep 719, 736

16

The Hong Kong Fir, Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] 2 Lloyd’s Rep 478, 494

16

The Madeleine, Cheikh Boutros Selim El-Khoury and Others v. Ceylon Shipping Lines, Ltd., [1967] 2 Lloyd’s Rep. 224

7

The Pythia, Western Sealanes Corporation v. Unimarine SA [1982] 2 Lloyd’s Rep 160 per Goff J at p.168 10


VIII

Twinsectra Ltd v. Yardley [2002] 2 AC 164 21

Union of India v. NV Reederij Amsterdam [1963] 2 Lloyd’s Rep 223 16

Versloot Dredging BV v. Hdi-Gerling Industrie Versicherung Ag, The “DC Merwestone” [2013] Lloyd’s Rep EWHC 1666 (Comm)

21

AWARDS

ICC Award No. 2291, Clunet 1976, at 989 et seq. 21

H. Beale, Chitty on Contracts, 31st Ed., Sweet & Maxwell, 2014. 4, 10

Alison Clarke & Paul Kohler, Property Law: Commentary and Materials, Cambridge University Press, Cambridge, (2005). 15

Barry H. Garfinkel and James D. Fry, Ambiguity in "arising" phrases: caution for drafters of intended narrow arbitration clauses. 5

B. A. Garner, Black’s Law Dictionary, 5th Ed., West Publishing Company, 1979 11

P. Jones, ‘Reasonableness, Honesty and Good Faith’, International Sales Quarterly, March 1995. 21

BOOKS

Paul Todd, “Chapter 2 Introduction to Maritime Fraud: Issues Particular to Maritime Fraud”, Marine Fraud & Piracy, 2nd Edition 2010.

13

STATUTES

The Hague Visby Rules (HVR), articles III and IV. 15, 16, 17, 18

OTHER The UK Maritime Trade Operations, Best Management Practice for Protection against Somalia based Pirates BMP4, Version 4, (2011). 19

1

STATEMENT OF FACTS

1. On 26 May 2014, an amended Shelltime 4 charterparty with rider clauses (hereinafter

the “Contract”) was entered into between the ship-owner Western Tankers Inc., a

company incorporated in the British Virgin Islands (hereinafter the “Claimant”), and the

charterer LTD Pte, a company incorporated in Singapore (hereinafter the

“Respondent”). The Claimant and the Respondent are hereinafter referred to collectively

as the “Parties.” The Contract was negotiated through a broker (hereinafter the

“Broker”) whose mission was to resume the Parties’ intention. The purpose of the

Contract was to provide the Respondent with a vessel (hereinafter the “Vessel”) fit for

the carriage of petroleum products from Singapore to Luanda for a period of three

months. Regarding bunkering, the Respondent’s obligation was to provide all of the

fuel, which is expected to be needed for the entire voyage (hereinafter the “Voyage”).

Within the rider clauses, the “LAW AND LITIGATION” clause was left blank.

2. On 27 May 2014, the Master of the Vessel (hereinafter the “Master”) stated that the

Vessel required 1,500 metric tons of fuel for the entire Voyage. At this date, 490 metric

tons remained in the tank.

3. On 30 May 2014, the company Equator Bunkers granted the Respondent a credit line

for the purpose of purchasing a total of 950 metric tons of IFO for the fuel filling of the

tank of the Vessel.

4. By 8 June 2014, the Respondent had entered with the company Angola Energy Imports

into a sales contract relating to the carried goods.

5. On 8 June 2014, the Master issued two Bills of Lading, indicating OPL Luanda as the

discharge place. Accordingly, the Vessel was ordered to proceed to Angola.

6. On 25 June 2014, the Master slowed down the speed of the Vessel from 13 knots to 12

knots in order to save fuel.

7. On 28 June 2014, the Respondent requested the Master to proceed towards the ship-to-

ship area 1. The Master estimated its arrival on 3 July 2014.

The Vessel was instructed to proceed towards a different discharge place by a company

named the Atlantic Services Agency Ltd (hereinafter “ASA2”) and never reached the

ship-to-ship area 1.

8. Between 4 and 17 July, a group a pirates hijacked the Vessel. During the hijack, a

quantity of the Cargo was discharged and the Vessel suffered material damage.


2

PART I – JURISDICTION

1. The Respondent argues that this arbitral Tribunal (hereinafter the “Tribunal”) (I) has no

jurisdiction over the merits of this dispute (hereinafter the “Dispute”). (II) In any event,

the Tribunal should have no jurisdiction over the fraud claim as it falls outside the “Law

and Litigation” Clause.

I. The proper seat and forum is Singapore and Singapore arbitration

2. The Respondent argues that (A) the seat of arbitration is not, and was never intended to

be, London. Therefore, (B) the Tribunal shall declare that the proper seat of arbitration

is Singapore.

A. The seat of arbitration can not be London

3. The Claimant may wrongly argue that the arbitration will take place in London,

governed by laws of England. Based upon a true construction of the Contract and

in accordance with the intention of the Parties, the Respondent rightfully argues

that the proper seat and forum is Singapore and Singapore arbitration. Mainly

based upon autonomy party, an arbitration agreement shall be construed in accordance

with the intention of the Parties.

In the case at hand, The Respondent expressly excluded London during the negotiation

time of the Contract in its communication with Bill, the Broker, as follows:

First of all, this reservation to arbitration in London happens at the very beginning of

the negotiation phase. But most of all, the Respondent spontaneously considered the

litigation as a main point to be discussed while the Claimant never implied any

reservation on that matter. There can be no doubt that the Respondent intended to

discuss the “Law and Litigation” Clause. Moreover, not only did the Respondent say

that it did not want arbitration in London, but it also justified this affirmation. The


3

Respondent never agreed, and never intended to agree, on a seat of arbitration in

London, since it had a “negative experience on this.”1

Again, the Claimant may wrongly argues that the use of colloquial terms, such as

“keen” does not characterize the Parties’ intention to amend the Shelltime 4. But to the

contrary, this term was used earlier during the negotiation.2 Not only this term is used to

express the Parties’ reservation, but it was also used to conclude the upcoming

relationship between the Parties. 3 So this colloquial term has a substantial and

unambiguous meaning for the Parties.

Therefore, the arbitration should never have been seated in London in the Contract since

the Respondent never agreed on the “law and litigation” Clause.

4. On the assumption that the fixture expressly resumes the Parties’ intention and

expresses the willingness of the Parties, this recap4 does not do so. In fact, resulting

from the abovementioned elements, the fixture should have provided for arbitration,

thereby excluding London as the seat of arbitration. The “LAW AND LITIGATION” was

let blank in the fixture recap, as follows:

The recap should never have provided for arbitration in London. In all events, a

party cannot be brought before a panel without its proper consent. All the amended

clauses are contained in the fixture recap. The ones accepted without any reserve were

reproduced in this fixture recap. But yet the only matters upon which the Parties did not

agree are the law and litigation.

The fixture contains the pro-forma Shelltime 4 and the amended clauses to the Contract.

In any event, if the Parties had agreed on the “Law and Litigation” Clause, no mention

of the blank Clause would have been reproduced in the recap.

Therefore, the seat of arbitration cannot be London.

1 Moot problem: message sent on 23 May 2014 at 12:30 (UTC+8) from Bill at IMWMB to Charles at LDTP, p. 2. 2 Moot problem: message sent on 21 May 2014 at 10:50 (UTC+1) from Bill at IMWMB to Charles at LDTP, p. 1. 3 Moot problem: message sent on 22 May 2014 at 8:31 (UTC+1) from Bill at IMWMB to Charles at LDTP, p. 1. 4 Moot problem: email sent on 26 May 2014 at 17:09 (UTC+1) from Bill at IMWMB to Charles at LDTP and to Oliver at WTI, p. 5.


4

B. In fact, the proper seat of arbitration is Singapore

5. The Respondent contends that the proper seat of arbitration is Singapore since

there is no link with London nor London arbitration. The Contract maintains close

links in favour of a seat of arbitration in Singapore.

Firstly, the Respondent is incorporated in Singapore. The Vessel was stationed in

Singapore for approximately ten days. Then, the departure’s location of the voyage was

Singapore. The Contract was partially executed in Singapore. Hence, no link with

London seems to resort from the legal relationship existing between the Parties.

To the contrary, the element abovementioned seems to set the seat of arbitration in

Singapore, governed by Singapore Arbitration. Furthermore, the Respondent insists on

the fact that the Singapore International Arbitration Act is undoubtedly similar to the

Arbitration Act of 1996. There is nothing offensive with choosing arbitration in

Singapore. According to the existing close links between Singapore and the Contract,

Singapore arbitration is more likely to fit the Dispute.

Therefore, the Dispute shall be referred to Singapore arbitration. And according to the

“compétence-compétence” principle and the abovementioned elements, the Tribunal

should decline jurisdiction.

II. Alternatively, should the Tribunal be considered to have jurisdiction over this

matter, the claim relating to fraud is not admissible as it does not fall within

the scope of the arbitration Clause

6. The Claimant wrongly argues that the tort of fraud is admissible. The Respondent

contends that, in any event, the claim relating to fraud does not fall within the

scope of the “Law and Litigation” Clause providing that:

The scope of an arbitration agreement is to be construed according to its language and

in the light of the circumstances in which it was made.5 About ratione materiae

5 H. Beale, Chitty on Contracts, 31st Ed., Sweet & Maxwell, 2014.


5

jurisdiction and according to the Clause 46. (b), “all disputes arising out of this charter

shall be referred to Arbitration.”6

In Overseas Union Insurance Ltd v. AA Mutual International Insurance Co Ltd case,7

Evans, J. said that there was a broad distinction between arbitration clauses which

referred “only those disputes which may arise regarding the rights and obligations

which are created by the Contract itself” and those which “show an intention to refer

some wider class or classes of disputes.”

Firstly, the Clause 46. (b) clearly refers to the first type of clauses since the termination

“arising out of this charter” only extend to the rights and obligations created by the

Contract. Secondly, if the Parties intended to extend the scope of the arbitration Clause

to the tort of fraud, they had all the liberty to do so. However, the exact termination of

the Clause 46. (b) is not wide enough to include tort of fraud claims.

7. Furthermore, US Courts considered that arbitration clauses containing this termination

are usually construed narrowly.8 In Telecom Italia v. Wholesale Telecom Corp,9 US

Courts went on to establish a test determining the connection needed between a tort

claim and the main contract for the clause to apply.10 The test consists in whether the

tort was immediate and foreseeable result of the performance of contractual duties.

The tort of fraud being completely independent from the performance of the Contract,11

any act of fraud cannot immediately follow it. Furthermore, the international trade

operators are subject to a presumption of professional competence. Consequently, the

act of fraud could never have been a foreseeable result of the performance of the

Contract.

Therefore, the Tribunal will find that the scope of the “Law and Litigation” Clause does

not extend to, and was never intended to extend to, the tort of fraud.

6 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 46. (b). 7 [1988] 2 Lloyd’s Rep 63, 67. See also Premium Nafta Products LTD v. Fili Shipping Compagny LTD, [2007] UKLH40. 8 Reddam v. KPMG Llp, [2004] WL 3761875, at *6 (C.D. Cal.). 9 Telecom Italia, Spa v. Wholesale Telecom Corporation, [2001] 248 F.3d 1109 (3rd Cir. 2001). 10 Barry H. Garfinkel and James D. Fry, Ambiguity in "arising" phrases: caution for drafters of intended narrow arbitration clauses, Chapter 9. 11 See infra, The Respondent did not commit maritime fraud.


6

PART II – MERITS

8. The Tribunal will ascertain that: (I) the Respondent fully performed its obligations

under the Contract; (II) the Claimant breached its obligations under the Contract,

thereby causing the Vessel to be attacked by the pirates; (III) the Respondent did not

commit maritime fraud; (IV) the Respondent is not liable for misrepresentation.

I. The Respondent fully performed its obligations under the Contract

9. The Respondent argues that it fully performed its obligations under the Contract

because: (A) the Respondent was entitled to refuse to pay the second-period hire; (B)

neither the Respondent nor its agent instructed the Master to proceed towards an

alternative discharge place; (C) the Respondent had no obligation to fill the tank of the

Vessel with a specific quantity of fuel.

A. The Respondent was entitled to refuse to pay the second-period hire

10. The Contract allowed the Respondent to pay hire by monthly instalments and the

Respondent effectively paid the first instalment of hire due on 4 June 2014. The

Respondent argues that it was entitled to refuse to pay the second-period hire because:

(1) such instalment was due to the Claimant on 4 July 2014; (2) the frustration of the

Contract discharged the Respondent of its obligation as of 4 July 2014; in the

alternative, (3) as from 4 July, the Vessel was off-hire, as a result of a breach of orders

and neglect of duty on the part of the Master.

1. The second-period hire was not due before 4 July 2014 and was to be

paid until midnight

11. The Respondent contends that the second-period hire was due to the Claimant by

4 July 2014 and was to be paid until midnight.

Under Clause 8. of the Contract, which provides for computation of hire, 12 the

Respondent “shall pay for the use and hire of the vessel (…), from the time and the date

of her delivery (local time) to Charterers (...).”13 Also, according to Clause 9. of the

12 Francesco Berlingieri, Time Charter, Chapter 16, 7th Ed. 2014, 16.1, based on an analogy reasoning on s 4 and

5 of the New York Produce form. 13 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 8.


7

Contract, which provides for the mechanic of payment,14 “(…), payment of hire shall be

made (…) per calendar month in advance, (…).”15

Under the above provisions, delivery of the Vessel determines the due date of the first

instalment of hire. In accordance with a general principle, delivery occurs when the

ship-owner places the Vessel at the charterer’s disposal;16 and under a time charter, the

ship-owner shall serve a valid notice of readiness.17 The Claimant effectively noticed

the Vessel’s readiness on 4 June 2014 at 00:01 A.M. (UTC+8) (Singapore Time).18

The express reference to “per calendar” month in the Contract demonstrates the parties’

intent to refer to the “corresponding day” rule evidenced by Cockburn, C.J. in Freeman

v. Reed,19 and under which payment shall be made a month “in advance”. Such rule

must here be construed as solely applicable to the second–period hire.20 Pursuant to the

well-established “calendar day” rule, the second instalment was earned and due to the

Claimant on 4 July 2014.

12. The Respondent further argues that, in the absence of specific provisions, it was

allowed to perform its obligation to pay hire until midnight on the due date.

In the Afovos case,21 Hailsham J. stated that it is a:

“General principle of law not requiring authority that where a person

under an obligation to do a particular act has to do it on or before a

particular date he has the whole of that day to perform his duty.”

Besides, the last moment for timely payment should be calculated by reference to the

place where the payment is to be made.22

As neither the Contract nor any documents of the case provide for specific time for

payment, the Tribunal will consider the payment notice sent by the Claimant on 3 July

2014 as a gentle reminder of payment to fall due on the following day.

13. The arbitral Tribunal will consequently find that the second-period hire was not due

before 4 July 2014 and was payable until midnight London time (UTC+1) on this day

(i.e. 7:00 A.M. (UTC + 8)). 14 Francesco Berlingieri, Time Charter, Chapter 16, 7th Ed. 2014, 16.1, based on an analogy reasoning on Clauses 4 and 5 of the New York Produce form. 15 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 9. 16 The Madeleine [1967] 2 Lloyd’s Rep. 224. 17 Anders Utkilens Rederi A/S v. Compagnie Tunisienne de Navigation [1976] 2 Lloyd’s. 18 Moot problem: email sent on 4 June 2014 at 00:01 (UTC+8) from Chris at LDTP to JR BARR AGENCY PTE and Oliver at WTI, p. 28 and 29. 19 Freeman v. Reed [1863] 4 B. & S. 174, 184. 20 Budd and Co Ltd v. Johnson, Englehart & Co Ltd (The “Spind”) [1920] 2 Ll.L. Rep 27. 21 The Afovos [1983] 1 Lloyd’s Rep 335. 22 Francesco Berlingieri, Time Charter, Chapter 16, 7th Ed. 2014, 16.22


8

2. But the payment was not due on 4 July 2014

14. The Respondent contends that as the Contract was frustrated as from 4 July 2014,

it shall be discharged of its obligation to pay the second-period hire.

In Davis Contractors Limited v Fareham,23 the House of Lords established that the test

for frustration was whether the circumstances in which an obligation is to be performed

have rendered such obligation radically different from that which was undertaken in the

Contract. This test was further confirmed in National Carriers Ltd v. Panalpina

(Northern) Ltd case,24 adding that there should be frustration where a supervening event

(external event or extraneous change of situation) radically changed a party’s

obligations or rendered the performance of such obligations impossible. Frustration

operates automatically and discharges the Parties of further performance under the

Contract.

15. The Respondent argues that the interruption of the Vessel services and the delays

resulting from piracy frustrated the Contract.

Whilst the question whether delay may frustrate a contract is a question of law,25 the

question whether the delay actually experienced is of sufficient length to cause

frustration is a matter of fact.26 Further, the cause of the delay is not as relevant as the

effect of such impact upon the performance of their obligations by the parties.27 In the

Anglo Northern-Jones case,28 the court evidenced a proportionality test, according to

which the Tribunal must assess whether the interruption in the vessel services will be of

a sufficient length in relation to the unexpired balance of the charterparty; and the

length and effects of the delay must be assessed at the time when the cause of the delay

operated.

The Respondent considers that delay has started from the occurrence of pirate’s attack

on 4 July 2014 afternoon; continued for a thirteen-day period, corresponding to the

seizure of the Vessel by pirates until 17 July 2014, upon Master’s incident report;29 and

will end only after the Master conduct the Vessel back to Cape Town and damaged

Vessel will be repaired.

23 Davis Contractors Limited v. Fareham, UDC [1956] AC 696. 24 National Carriers Ltd v. Panalpina (Northern) Ltd [1981] AC 675. 25 Id. [1981] AC 675, per Lord Hailsham at page 688. 26 Francesco Berlingieri, Time Charter, Chapter 16, 7th Ed. 2014, 26.39. 27 Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) [1982] AC 724. 28 Anglo Northern-Jones [1917] 2 K.B. 78. 29 Moot problem: email sent on 17 July 2014 at 23:25 (UTC+1) from Master to Chris at LDTP, p. 42.


9

Considering that the Respondent, by noticing its intention to redeliver the Vessel on 4

August 2014,30 has reduced the total duration of the Contract from three months to two

months in accordance with Clause 4. (a) of the Contract, the remaining unexpired

duration of the Contract was of eighteen days at the time of release of the Vessel.

The Tribunal will therefore find the accumulated length to be sufficient to frustrate the

Contract.

16. The Respondent further contends that damage caused to the Vessel rendered the

Contract commercially impossible to perform.

In Taylor v. Caldwell case,31 the Court evidenced that a party may be discharged of its

contractual obligations as a result of the destruction of the subject matter of the

Contract. Also, in Jackson v. Union Marin Insurance Co case,32 the Court extended the

scope of application of the doctrine of frustration and held that a contract deprived of its

commercial purpose may be frustrated, and the parties discharged of their obligations

thereunder. In the latter case, the jury found that “a voyage undertaken after the ship

was sufficiently repaired would have been a different voyage (…) different as different

adventure.” The Respondent contends that it has lost all interests in the Contract and is

discharged of its contractual obligations as a result of frustration of the Contract, on the

basis that:

- due to the important damage suffered, the Vessel needs to be repaired in South

Africa,33 instead of delivering the Cargo at Luanda and charging oil in Nigeria

before redelivery in the Mediterranean Sea;

- and as pirates robbed half of the Cargo, the Respondent was unable to fulfil its

obligations to, and properly deliver the Cargo to, the designated receiver.

17. The Claimant may wrongly argue that, by inserting piracy provisions, the Parties

had provided for the occurrence of this particular event.

In Tatem v. Gamboa,34 a charter expressly providing for the evacuation of refugees from

North Spain to France was held to be frustrated by the occurrence of seizure by

nationalists, even if the parties had contemplated that the Vessel might be seized. In

30 Moot problem: email sent on 4 July 2014 at 09:37 (UTC+8) from Chris at LDTP to Oliver at WTI, p. 39 and 40. 31 Taylor v. Caldwell [1863] E.B. & E. 746. 32 Jackson v. Union Marin Insurance Co. [1874] L.R. 10 C.P. 125. 33 Moot problem: email sent on 17 July 2014 at 23:25 (UTC+1) from the Master to Chris at LDTP, p. 42. 34 Tatem v. Gamboa [1938] 61 L1.L. Rep. 149.


10

Bank Line v. Arthur Capel & Co,35 the House of Lords held that the doctrine of

frustration had not been excluded by special clauses of the Contract, as such clauses

merely gave the charterers an express option to cancel the voyage in the event of

requisition.36

If the Tribunal were to consider that the additional piracy provisions under the Contract

covered the abovementioned events, such provisions are not wide enough to apply

under the new circumstances. The ST4 Piracy Clause37 which the Parties added to the

Contract intends to provide for the event “where the vessel is scheduled to transit by

(…), or any other areas of known piracy risk,” and merely gives the Respondent an

option to require the Claimant to “extend existing war risk insurance” or “purchase a

off-hire insurance.” The Tribunal will hold that such Clause is not wide enough to apply

under the new circumstances, and that none of the additional piracy Clauses of the

Contract provide for the consequences of piracy.

18. The Tribunal will find that the Contract was frustrated either by delays or by

impossibility to be performed on the 4 July 2014, accordingly discharged the

Respondent of its obligation under the Contract, including but not limited to its

obligation to pay hire.

3. In the alternative, the Vessel was off-hire by 4 July for neglect of duty and

breach of order on the part of the Master

19. The Respondent relies on the Clause 21. (a) (ii) of the Contract. The Respondent

contends hire ceased to be earned and payable where an off-hire event falling within the

true construction of the Clause, causes an interruption in the Vessel services. As a

result, there shall be a loss of time on the “overall adventure.”38 The off-hire events are:

the Master’s neglect of duty39 and breach of orders.40

20. The Respondent contends that loss of time on the overall adventure is undisputable.

35 Id. [1919] A.C. 435. 36 H. Beale, The Chitty on contract, Sweet & Maxwell, 31st Ed., 23. 041. 37 Moot problem: special provision to ST4 pro-forma, Piracy Clause, p. 8. 38 The Pythia [1982] 2 Lloyd’s Rep 160 per Goff J at p.168 39 See infra, The Claimant’s breaches exclusively led to the piracy attack. 40 See infra, The breaches of the Master.


11

In The Athena,41 the Court interpreting the off-hire provision of NYPE ruled that net

loss of time is assessed by reference to the service immediately required of the ship, and

added that it “would have been decided in a same way under Shelltime 4.”42

In the present case, the prospected voyage included a loading in Singapore on 4 June,

and a discharge at Luanda, Angola, which was supposed to take place on 3 July,43 prior

to the Master reducing speed. Instead, the Vessel met the alternative discharge place on

4 July 2014. Therefore, the Respondent lawfully served a off-hire notice to the

Claimant, as no contact with the designated receiver of the Cargo, Atlantic Services

Agency, had ever been established. Further, intention of the Respondent was to load the

Cargo in Bonny, Nigeria, and to redeliver the Vessel on 4 August 2014 in North Africa.

The Tribunal will find that the Vessel was sailed to a non-contractual discharged place,

whereas it was required to deliver the Cargo at Luanda. Therefore, the Tribunal will

find that no hire was due on 4 July as the Vessel was off-hire from this date onwards.

B. Neither the Respondent nor its agent instructed the Master to proceed

towards an alternative discharge place

1. ASA2 is not and has never been the agent of the Respondent

21. The Claimant states that ASA2 gave instructions to the Master in the name of and

for the account of the Respondent.44 The Respondent argues that ASA2 is not and

has never been its agent. The agent can be defined as follows:

“A person authorized by another to act for him, one intrusted with

another’s business. One who represents and acts for another under the

contract or relation of agency. A business representative, whose function

is to bring about, modify, affect, accept performance of, or terminate

contractual obligations between principal and third persons.”45

The Contract and the correspondence between the Parties show that ASA2 is not and

has never been the agent of the Respondent.

22. The voyage order contained in the Contract clearly indicates that ASA2 is not and has

never been the agent of the Respondent. The Contract under which the Respondent

41 Minerva Navigation Inc v. Oceana Shipping AG (M/V Athena) [2012] EWHC 3608 (Comm) 42 Francesco Berlingieri, Time Charter, Chapter 37, 7th Ed. 2014, 37.101 43 Moot problem: email sent on 28 June 2014 at 12:29 (UTC+2) from the Master to Chris at LDTP, p. 34. 44 Moot problem: Statement of claim, §17 - §21, pp. 63-64. 45 Black’s Law Dictionary, 5th Ed, West Publishing Company, 1979.


12

chartered the Vessel contains in particular a voyage order document.46 This voyage

order specifically identifies in red letters the disport agent, who is referred to in this

statement of case as “ASA”:

- Name of the agent: “Pic William;”

- Name of the company: “Atlantic Services Agency;”

- Email address: “[email protected].”47

The voyage order document is addressed to the Master. He is contractually bound by the

terms of this document, which he accepted. The Master acknowledged receipt and

understanding of it.48 No other disport agent is mentioned.

23. ASA2 wrote to the Master on 28 June 2014 and introduced itself as a simple ship-to-

ship coordinator of the Vessel:49

- Name of the person: “Captain William Edward Anya;”

- Name of the company: “Atlantic STS Agency Ltd (ASA Angola Ltd);”

- Email address: “[email protected].”

It does not match with what the Parties agreed to in the voyage order. Therefore, ASA2

cannot be considered as the agent of the Respondent regarding the Contract.

24. Second of all, the correspondence between the different protagonists clearly indicates

that ASA2 is not and has never been the agent of the Respondent.

Before 28 June 2014, ASA2 had not appeared anywhere: neither in the Contract nor in

the emails exchanged. However, the subject of the alternative discharge place had been

mentioned twice between the Master and the Respondent: on the 28 June 2014, at 18:43

(UTC+8) and at 16:27 (UTC+8).50 In each message, the Respondent was careful enough

to copy ASA, the disport agent, in order to put itself in contact with the Master.

On 28 June 2014 at 18:02 (UTC+1), ASA2 sent an email to the Master by which it gave

instructions.51 The Master decided to follow those instructions without hesitation.52 In

other words, the latter followed instructions given by someone who has never been

mentioned in the Contract and who had never appeared in the correspondence before.

46 Moot problem: Voyage orders, pp. 13-19. 47 Moot problem: Voyage orders, “PART A – VOYAGE INSTRUCTIONS 1.2. DISCHARGING”, p. 13. 48 Moot problem: email sent on 27 May 2014 at 12:27 (UTC+8) from the Master to Chris at LDTP, p. 20-21. 49 Moot problem: email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35. 50 Moot problem: email sent on 28 June 2014 at 16:27 (UTC+8) from Chris at LDTP to the Master, p. 33; email sent on 28 June 2014 at 18:43 (UTC+8) from Chris at LDTP to the Master, p. 34. 51 Moot problem: email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35. 52 Moot problem: email sent on 28 June 2014 at 19:50 (UTC+2) from the Master to ASA2, p. 35.


13

On 4 July 2014, the Master wrote to both LDTP and ASA2 to indicate that it arrived at

the position indicated by ASA2. 53 By sending this message, the Respondent

acknowledged for the first time that the Master was in touch with ASA2. This email

gives three circumstantial pieces of evidence that ASA2 is not the agent of the

Respondent.

No one was at the abovementioned position when the Vessel arrived. The only thing left

to do for the Master was to contact the Respondent and to let it know that he was in

touch with ASA2.

Only two minutes after receiving this email, the Respondent indicated to the Claimant

that it was not in contact with the “receiver.”54 The Respondent found that the other

person to whom was addressed the Master’s arrival message55 was a third party. As a

matter of fact, no contact was established with the receiver. Had ASA2 been the

Respondent’s agent, the Respondent would not have informed the Claimant that there

was no contact with the receiver. The Respondent’s prompt reply is evidence of its good

faith.

Therefore, ASA2 cannot be regarded as the agent of the Respondent, as the

correspondence reveals. The Respondent does not know ASA2 and never ordered

ASA2 to give instructions to the Master.

2. The Respondent never instructed the Master to proceed to an

alternative discharge place

25. The Claimant contends that the Respondent issued instructions to the Master to

proceed to an alternative discharge place.56 The Respondent argues that neither

itself nor its agent instructed the Vessel to proceed to an alternative discharge

place. While the principal can be vicariously liable for the torts committed by its agents

in the course of the agency relationship,57 this principle is not intended to apply to torts

committed by third parties.

53 Moot problem: email sent on 4 July 2014 at 05:22 (UTC+1) from the Master to Chris at LDTP and to ASA2, pp. 40-41. 54 Moot problem: email sent on 4 July 2014 at 12:24 (UTC+8) from Chris at LDTP to Oliver at WTI, p. 41. 55 See supra 47. 56 Moot problem: Statement of claim, §9, p. 61. 57 Lloyd v. Grace Smith & Co. [1912] AC 716; Paul Todd, “Chapter 2 Introduction to Maritime Fraud: Issues Particular to Maritime Fraud”, Marine Fraud & Piracy, 2nd Edition 2010, §2.143.


14

As demonstrated above, ASA2 is a third party and not the Respondent’s agent.58 The

Respondent cannot be liable for the instructions given by ASA2 to the Vessel to

proceed to an alternative discharge place. The Respondent did not require the Vessel to

proceed to a discharge place at coordinates 06°00’00’’S – 08°10’00’’E instead of the

discharge place initially agreed at coordinates 09°00’00’’S – 11°30’00’’E.

Hence, neither the Respondent nor his agent ASA instructed the Vessel to proceed to

any alternative discharge place.

3. In any event, the Vessel can be loaded or discharged at any place as

the Respondent may direct

26. The Claimant contends that the Respondent breached the Contract by directing

the Vessel to proceed to an alternative discharge place without his consent.59 The

Respondent argues that it did not require the Claimant’s consent to load or

discharge the Vessel at any place.

As demonstrated above that no such instruction was ever given by the Respondent. But

even if this had been the case, the Respondent would have been perfectly entitled to do

so without the authorisation of the Claimant, pursuant to Clause 4. (a) of the Contract.

The Respondent may indeed load or discharge the Vessel at any place as it may direct.

Therefore, the Claimant cannot hold the Respondent contractually liable in this regard.

C. The Respondent had no obligation to fill the tank of the Vessel with a

specific quantity of fuel

27. The Claimant contends that the Respondent breached its obligation to stem

sufficient bunkers in Singapore.60 The Respondent argues that the Contract did

not require stemming sufficient bunkers in Singapore.

Under Clause 7. (a) of the Contract, the Respondent must “provide and pay for all fuel,

towage and pilotage (…).”61 Thus, the Respondent’s only obligation is to provide all of

the fuel, which is expected to be needed for the entire voyage. This Clause does not

impose on the Respondent an obligation to provide such fuel at the loading port. The

Respondent is free to provide and pay for all the fuel needed wherever it sees fit so long

58 See supra, ASA2 is not and has never been the agent of the Respondent. 59 Moot problem: Statement of claim, §9, p. 61. 60 Moot problem: Statement of claim, §5, p. 61. 61 Pro-forma Shelltime 4 issued 1984 amended December 2003, Clause 7. (a).


15

as it enables the Vessel to perform the entire voyage. In any event, the Claimant agreed

to leave the port of Singapore with the existing fuel stock and even asked the

Respondent to confirm the next location of fuel supply.62 How can the Claimant now

blame the Respondent for not having provided enough fuel at the loading port when it

deliberately and knowingly left the port with the disputed quantity of fuel?

Hence, the Tribunal will ascertain that there was no obligation upon the Respondent to

stem sufficient bunkers at the loading port and that the latter properly performed its

obligations.

II. In fact, the Claimant breached its obligations under the Contract, thereby

causing the Vessel to be attacked by the pirates

28. The Claimant breached its obligations under the Contract both in a personal capacity

(A) and through the Master (B). These breaches for which the Claimant is liable are the

real cause of the piracy attack (C).

A. The Claimant personally breached its obligations

29. The Claimant breached its obligation as bailee to hold the Cargo in bailment for

the Respondent. In accordance with Coggs v. Bernard, the Claimant and the

Respondent are to be considered as having acted respectively as bailee and bailor.63

In a bailment relationship, the bailor is the party that holds a legal title on the goods

while the bailee is the party that holds a possessory title.64 The main obligation of the

bailee is to deliver the good as it received them.65

In this case, the Claimant held a possessory title to the Cargo to which the Respondent

held a legal title at all times66 as it owns the Cargo. When the Respondent’s Cargo was

loaded in Singapore on 4 June 2014, possessory title thereto was transferred onto the

Claimant, on 8 June 2014, through the issuance of the Bills of Lading.67 From this

moment onwards, the baileeship began.

62 Moot problem: email sent on 8 June 2014 at 11:02 (UTC+8) from the Master to Chris at LDTP. 63 Coggs v. Bernard [1703] 2 LD Ray 909; also see Alison Clarke & Paul Kohler, Property Law: Commentary and Materials, Cambridge University Press, Cambridge, (2005), pp. 649-650. 64 Id. 65 See Thorley v. Orchis [1907] 1 K.B. 660, 669; Internationale Guano v. MacAndrew [1909] 2 K.B. 360, 365; Morrison v. Shaw Savill [1916] 2 K.B. 783; Hain v. Tate & Lyle (1936) 41 Com. Cas. 350 at p. 369. 66 Alison Clarke & Paul Kohler, Property Law: Commentary and Materials, Cambridge University Press, Cambridge, (2005), pp. 649-650. 67 Hague Visby Rules, Article III (4).


16

As a bailee, the Claimant’s primary and most obvious obligation was to deliver the

Cargo, as received from the Respondent, to the designated consignee (i.e. Angola

Energy Imports). Yet, between 4 and 17 July 2014, about 28,500 metric tons of gasoil

were removed from the Vessel,68 which Angola Energy Imports never received.69

Therefore, the Claimant breached its obligation to hold the Cargo in bailment for the

Respondent.

30. The Claimant breached its contractual obligation to provide a ship that was fit for

service70 for two reasons.

Firstly, the Claimant breached its obligation to take anti-piracy measures. Under English

law, the carrier shall be bound before and at the beginning of the Voyage to exercise

due diligence to make the ship seaworthy and to properly man, equip and supply the

ship.71 The Contract provides the obligation for the Claimant to “take reasonable

preventive measures to protect the vessel, her crew and cargo” “if the vessel proceeds

to or through an area in there is a current risk of piracy, verified by a competent

international authority, (...).”72

In the Eurasian Dream case, the Queen’s Bench stated that “the exercise of due

diligence is equivalent to the exercise of reasonable care and skill”.73 In order to be

seaworthy, a vessel must be fit for foreseeable perils of the sea and the duty relates to,

amongst other things, the vessel’s equipment.74 Further, an owner can be held to a

higher standard if it is aware of the peculiarities of the voyage.75

The Claimant, despite its awareness of the Voyage’s risk of piracy,76 did not take

sufficient protective measures to prevent the Vessel from piracy attack. Indeed, it failed

to deploy razor wire and other protective measures as required. 77 The expected

protective equipment did not arrive in time and the Vessel left Singapore without the

latter.78

68 Moot problem: email sent on the 17 July, 2014 23:25 (UTC+1), from the Master to Chris at LDTP, p. 42 69 Id. 70 Moot problem: Contract, Piracy Clause (sub-clause (1)), p. 8. 71 Hague Visby Rules, Article III (1). 72 Moot problem: Contract, Piracy Clause, p. 8. 73 [2002] 1 Lloyd’s Rep 719, 737. See also Union of India v. NV Reederij Amsterdam [1963] 2 Lloyd’s Rep 223. 74 FC Bradley & Sons Ltd v. Federal Steam Navigation Co [1926] 24 Ll L Rep 446, 454; The Hong Kong Fir [1961] 2 Lloyd’s Rep 478, 494; The Derby [1985] 2 Lloyd’s Rep 325, 331, 333; The Eurasian Dream [2002] 1 Lloyd’s Rep 719, 736. 75 The Hong Kong Fir [1961] 2 Lloyd’s Rep 478. 76 ICC International Maritime Bureau, Piracy annual report 2014. 77 Moot problem: email sent on the 3 June 2014 AT 12:01 (UTC+1) from Lucius to the Master, p. 27 78 Id.


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Therefore, The Claimant failed to take anti-piracy measures in order to provide a Vessel

that was fit for service.

Secondly, the Claimant breached its obligation to guarantee the agreed consumption of

the Vessel. The Contract stipulates that the laden Vessel consumes 46 tons of fuel per

day for a speed of 13 knots.79 As a consequence, for a speed of 12 knots, the laden

Vessel would have consumed as follows:

(46 × 12) ÷ 13 = 42 tons per day.

Since 25 June 2014, the Vessel reduced its speed to 12 knots. The Master was expecting

the Vessel to consume about 37 tons per day.80 Further, on 25 June 2014, the reserve on

board was 705 metric tons.81

On 17 July 2014, the reserve on board was 200 metric tons.82 On 4 July 2014, the

Vessel was attacked by pirates and did nothing but derived since. Hence the Vessel did

not consume fuel from 4 July to 17 July 2014. As a consequence, 200 metric tons

remained on board on 4 July 2014. From 25 June 2015 to 4 July 2014 (9 days), the

Vessel fuel consumption can be calculated as follows:

(705 – 200) ÷ 9 = 56 tons per day.

The Vessel consumed much more than what was provided in the Contract and much

more than what the Master stated.

Therefore, the Claimant failed to provide a vessel that would regularly consume fuel

and fit for service.

B. The breaches of the Master

31. The Claimant shall be declared liable for the acts of its employee.

As such, English law states that:

“Neither the carrier nor the ship shall be liable for loss or damage arising

or resulting from unseaworthiness unless caused by want of due diligence

on the part of the carrier to make the ship seaworthy, and to secure that

the ship is properly manned, equipped and supplied.”83

32. Furthermore:

79 Moot problem: Contract, fully fixed recap, p. 6. 80 Moot problem: email sent on the 25 June 2014 at 11:02 (UTC+3), from the Master to Chris at LDTP, p. 32. 81 Id. 82 Moot problem: email sent on the 17 July, 2014 23:20 (UTC+1), from the Master to Oliver at WTI, pp. 41-42. 83 Hague Visby Rules, Article IV (1).


18

“the carrier (…) shall (not) be responsible for loss or damage arising or

resulting from act, neglect, or default of the master of the carrier in the

navigation or in the management of the ship.” 84

This means that by contrast the carrier is liable for its Master’s contractual breaches

other than those falling under the scope of the Article IV of The Hague Visby Rules.

33. Moreover, The Hague Visby Rules also provide that:

“A carrier shall be at liberty to surrender in whole or in part all or any of

his rights and immunities or to increase any of his responsibilities and

obligations under these Rules.”85

“The provisions of these Rules shall not be applicable to charter parties,

but if bills of lading are issued in the case of a ship under a charter party

they shall comply with the terms of these Rules.” 86

As such, the Bill of Lading specifies that the Master is an agent of the carrier.87

Therefore, the Respondent argues that the Claimant is liable for all the acts of the

Master.

34. The Claimant breached its contractual obligation to disregard “any voyage-related

instructions received from third parties and immediately refer such instructions to

Charterer for handling.” 88 As demonstrated above,89 the Master received instructions

from a third party, ASA2, to proceed to a specific location and never referred to the

Respondent about it.90

Thus, the Claimant failed to comply with its obligation under the Voyage orders,

thereby breaching another of its contractual obligations.

C. The Claimant’s breaches exclusively led to the piracy attack

35. The Claimant’s multiple breaches led to a piracy attack during which an

important amount of the Cargo was removed. The Claimant breached its nautical

management obligation under the Contract and did not provide a Vessel fit for

84 Id. 85 Hague Visby Rules, Article IV (1). 86 Id. 87 Moot problem: Bill of Lading, pp. 43-44. 88 Moot problem: Voyage orders, p. 13. 89 See supra, ASA2 is not and has never been the agent of the Respondent. 90 Moot problem: email sent on 28 June 2014 at 18:02 (UTC+1), from Atlantic STS Agency Ltd to Master, p. 35.


19

service. Under the Contract, the Master and Owner are “fully and solely responsible for

the operation, management and navigation of the Vessel.”91

In the Flowergate case, it was held that the carrier is expected to have knowledge of

perils which have previously occurred and which are likely to occur in the future,

leading to the damaging of the goods.92 In light of the knowledge of the piracy problem

on the Angolan coast, the Claimant could have reasonably foreseen possible problems.

Therefore, further preparation and safety measures on behalf of the carrier were

necessary to prevent the Vessel from being hijacked by pirates.93 The Best Management

Practice provides for additional measure adding physical barriers, such as barbed wire

to prevent piracy attacks.94 The carrier can reasonably expect these additional measures

since the danger of piracy is known.

However, the Claimant let the ship proceed to an unsafe zone by following instructions

from a third party.95 The piracy attack took place in an unsafe zone without taking

sufficient preventive measures.96 During the attack, a certain quantity of gasoil was

removed from the boat.97

Therefore, the Respondent argues that the Claimant is liable for the damages resulting

from the piracy attack.

III. The Respondent did not commit maritime fraud

36. The Claimant contends that the Respondent is liable for the tort of fraud. The

Respondent argues that fraud cannot be characterized.

By way of preliminary comment, the Respondent will not answer the claim that it is

liable for the torts committed by ASA2. The absence of an agency relationship between

those two is no longer disputable.98 Thus, the claims relating to the false representations

made by ASA2 do not concern the Respondent.

Five conditions must be met to bring the claim in the tort of deceit, as it can be seen in

Derry v. Peek.99 Indeed, the Respondent must have made a false statement of fact, the

91 Moot problem: Voyage orders, pp. 18-19. 92 Jahn (Trading as C. F. Otto Weber) v. Turnbull Scott Shipping Company, Ltd., and Nigerian National Line, Ltd. (The Flowergate) [1967] 1 Lloyd’s Report 2. 93 Best Management Practice for Protection against Somalia based Pirates BMP4, Version 4, (2011). P.27 (8.5). 94 Id. 95 Moot problem: email sent on 28 June 2014 at 18:02 (UTC+1), from Atlantic STS Agency Ltd to Master, p. 35. 96 Moot problem: email sent on the 17 July 2014 at 23:25 (UTC+1), from the Master to Chris at LDTP, p. 42. 97 Id. 98 See supra, ASA2 is not and has never been the agent of the Respondent. 99 Derry v. Peek [1889] 14 App Cas 337.


20

Respondent must have known that the representation is false or must have been reckless

as to whether it is true or false, the Respondent must have intended the Claimant to rely

upon the statement, the Claimant must have in fact relied upon the statement and the

Claimant must thereby have suffered financial loss.100 The abovementioned conditions

are cumulative. Only the two first conditions and the fifth one are disputed.

37. The Respondent contends that it made true representations. The Claimant considers that

the representations were untrue.101 The Claimant challenges two representations made

by the Respondent:

- the statement according to which there is an alternative bunker supply available

off Durban or off Cape Town;

- the statement according to which there is a bunker supply on arrival to the ship-to-

ship area one.

Both of those representations were true. According to case law, the fraudulent

representation cannot be characterized when the representation is true or when the

representation is substantially correct.102

38. On the first issue, the Respondent replied to the protest of the Master against the

decision to fill the tank of the Vessel with 950 metric tons of fuel by stating on 3 June

2014 that they “have alternative bunker supply available passing Durban or Cape

Town.”103 This statement of the Respondent prompts three observations. First of all,

there was a bunker supply available off Durban or off Cape Town in case of need. Then,

the Respondent never stated that the Master was going to benefit from it. Lastly, there

was no need to benefit from this bunker supply. A brief glance at the track that the

Vessel has travelled after passing Cape Town makes it crystal-clear: the Vessel arrived

at Luanda, still had 200 metric tons of fuel and was even able to come back to South

Africa after the hijack. It must be noted that there are not less than 1,800 miles between

Luanda and South African coasts!

39. On the second issue, the Respondent stated on 28 June 2014 that there would be a

bunker supply at the ship-to-ship area 1.104 In fact, two locations must be distinguished:

the ship-to-ship area 1 where the Vessel should have arrived and the place where the 100 Standard Chartered Bank v. Pakistan National Shipping Corp (No. 2), [2003] 1 AC 959; Court of Appeal, Eco 3 Capital Ltd and others v. Ludsin Overseas Ltd [2013] EWCA Civ 413. 101 Moot problem: Statement of claim, §17, p. 63. 102 Avon Insurance PLC and others v. Swire Fraser Ltd [2000] EWHC 230 (Comm)). 103 Moot problem: email sent on 03 June 2014 at 17:21 (UTC+8) from Chris at LDTP to the Master, p. 26; Moot problem: email sent on 03 June 2014 at 12:17 (UTC+8) from the Master to Chris at LDTP, p. 25. 104 Moot problem: email sent on 28 June 2014 at 16:27 (UTC+8) from Chris at LDTP to the Master, p. 33.


21

Vessel arrived. It was agreed under the Contract that the Vessel would arrive at “OPL

Luanda,”105 the ship-to-ship area 1, whose coordinates have even been confirmed by the

Master:

09°00’00’’S – 11°30’00’’E (hereinafter “Point A”).106

The coordinates of the place where the Vessel arrived in fact are:

06°00’00’’S – 08°10’00’’E (hereinafter “Point B”).107

40. Logically, there was no tanker and no bunker supply at Point B: the Vessel was not

supposed to arrive at Point B but at Point A. The Claimant cannot blame the

Respondent for not having provided a bunker supply at Point B when it agreed to

benefit from the supply at Point A.

Therefore, the two-abovementioned representations were true at best or substantially

correct at worst. In any event, the untrue statement element of the fraud is missing.

41. The Respondent contends that it made representations with an honest belief in their

truth. The Claimant considers on the contrary that its co-contractor made

representations dishonestly.108 Lord Herschell stated in the Derry v. Peek case that:

“To prevent a false statement being fraudulent, there must, I think, always

be an honest belief in its truth. And this probably covers the whole ground,

for one who knowingly alleges that which is false, has obviously no such

honest belief.”109

To bring the claim in the tort of fraud, a combined test is required when it comes to the

dishonest requirement.110 It is necessary to prove dishonesty and in particular that:

“(1) the assured was dishonest by the ordinary standards of reasonable

and honest people; and (2) that the assured himself realised that by those

standards his conduct was dishonest.”111

These two requirements are not met.

42. The Respondent was not dishonest by the ordinary standards of reasonable and honest

people. In the international trade area, there exists of principle of standard of

105 Moot problem: Voyage orders, 1.2 Discharging, p. 13. 106 Moot problem: email sent on 28 June 2014 at 11:42 (UTC+2) from the Master to Chris at LDTP, pp. 33-34. 107 Moot problem: email sent on 28 June 2014 at 18:02 (UTC+1) from ASA2 to the Master, p. 35. 108 Moot problem: Statement of claim, §18, p. 63. 109 Derry v. Peek [1889] 14 App Cas 337, p. 374. 110 Twinsectra Ltd v. Yardley [2002] 2 AC 164; Aviva Insurance Ltd v. Brown [2012] Lloyd’s Rep IR 211. 111 Aviva Insurance Ltd v. Brown [2012] Lloyd’s Rep IR 211; Versloot Dredging BV v. Hdi-Gerling Industrie Versicherung Ag (The “DC Merwestone”) [2013] Lloyd’s Rep EWHC 1666 (Comm); Barlow International Ltd v. Eurotrust International Ltd [2006] 1 Lloyd’s Rep 225; Abou-Rahmah v. Abacha [2007] A Lloyd’s Rep 115.


22

reasonableness recognised by the common law case law,112 the arbitral case law113 and

doctrine.114 In this case, the Respondent was objectively honest. This assessment is

based on five circumstantial elements.

Firstly, the Respondent did not disregard the advice from the Master to have a quantity

of fuel on board equivalent to 1,500 tons of fuel.115 The Respondent asked the Master to

estimate the necessary quantity of fuel for the route from Singapore to Luanda.116 The

Master answered that it would be necessary to fill the tank with 1,500 metric tons of

fuel for the route from Singapore to Gibraltar,117 thus answered incorrectly to the

question and showed gross negligence. Secondly, even if the Master protested against

the decision of the Respondent to fill the tank of the Vessel with 950 metric tons of

fuel,118 the Respondent actually followed the Master’s initial advice to have 1,500

metric tons of fuel in the tank. Indeed, by adding 950 metric tons to the 490 metric tons

that remained in the tank of the Vessel,119 the quantity of fuel in the tank was of 1,440

metric tons on the day the Vessel left. In other words, there was almost 1,500 tons of

fuel in the tank when the Vessel left the loading port. Thirdly, the fuel level of the

Vessel did not require a bunker supply off Durban or off Cape Town. Fourthly, the

Respondent agreed to provide a bunker supply. Fifthly, by requiring from the Master to

direct the Vessel to the port of Bonny, Nigeria after having stopped off Luanda,120 the

Respondent showed a real will to continue the contractual relationship.

43. The Respondent did not realise that by the ordinary standards of reasonable and honest

people, its conduct was not dishonest. A charterer cannot be deemed dishonest for

telling the Master who carries its own goods that in case of need, the Vessel can benefit

from a fuel supply on the route. Nor can a charterer be deemed dishonest for providing a

fuel supply when the one who is supposed to benefit from it does not come at the agreed

supply location.

112 Strategic Fund Limited v. Skandinaviska Enskilda Banken AB, [2012] EWHC 584 (Comm). 113 ICC Award No. 2291, Clunet 1976, at 989 et seq. 114 P. Jones, Reasonableness, Honesty and Good Faith, International Sales Quarterly, March 1995, at 8 et seq. 115 Moot problem: email sent on 27 May 2014 at 12:27 (UTC+8) from the Master to Chris at LDTP, p.20. 116 Moot problem: email sent on 27 May 2014 at 09:27 (UTC+8) from Chris at LDTP to the Master, p. 20. 117 Moot problem: email sent on 27 May 2014 at 12:27 (UTC/8) from the Master to Chris at LDTP, pp. 20-21. 118 Moot problem: email sent on 03 June 2014 at 09:27 (UTC+8) from Chris at LDTP to the Master, p. 25; Moot problem: email sent on 03 June 2014 at 12:17 (UTC+8) from the Master to Chris at LDTP, p. 25. 119 Moot problem: email sent on 27 May 2014 at 12:27 (UTC/8) from the Master to Chris at LDTP, pp. 20-21. 120 Moot problem: email sent on 28 June 2014 at 18:43 (UTC+8) from Chris at LDTP to the Master, p. 34.


23

Hence, the Tribunal will find that the Respondent acted in accordance with what is

honest in the view of reasonable people and believed that its conduct was honest by the

required standards.

44. Contrary to its allegations,121 the Claimant did not rely upon the representations that the

Respondent made. Ignoring the statement of the Respondent according to which there

would be a bunker supply available off the city of Luanda at Point A,122 the Claimant

through the Master piloted the Vessel to Point B, where there was no bunker supply.

Hence, the Tribunal will find that the Claimant did not rely upon the representations

made by the Respondent.

45. Contrary to what it claims, the Claimant did not suffer damage as a consequence of

relying on the representations made by the Respondent.123 The Claimant cannot have

suffered damage as a consequence of relying on the representations made by the

Respondent, as long as it did not rely upon the representations made by the latter. It is

obvious and does not deserve further explanation.

Therefore, the Tribunal will find that the Claimant did not suffer damage consequently

to relying on the representations made by the Respondent. More generally, the Tribunal

will find that all of the fraud conditions have not been met. Thus, the Respondent cannot

be held liable for fraud.

IV. The Respondent is not liable for misrepresentation

46. Should any of the Respondent's representations be found inaccurate, such

erroneous statements were not made negligently but innocently, which does not

entitle the Claimant to damages.

In accordance with the Misrepresentation Act 1967,124 the Claimant can only claim

damages for negligent misrepresentations to the same extent as for fraudulent

misrepresentations125 if the Respondent fails to prove these misrepresentations to be

innocent ones. Section 2(1) of the Act provides follows:126

“Where a person has entered into a contract after a misrepresentation has

been made to him by another party thereto and as a result thereof he has

121 Moot problem: Statement of claim, §20, p. 64. 122 See supra, The Respondent made true representations. 123 Moot problem: Statement of claim, §21, p. 64. 124 Misrepresentation Act 1967. 125 Royscot Trust v. Rogerson [1991] 2 QB 297. 126 Misrepresentation Act 1967.


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suffered loss, then, if the person making the misrepresentation would be

liable to damages in respect thereof had the misrepresentation been made

fraudulently, that person shall be so liable notwithstanding that the

misrepresentation was not made fraudulently, unless he proves that he had

reasonable ground to believe and did believe up to the time the contract

was made the facts represented were true.”

Howard Marine v. Ogden 127 further specifies that if the representee proves a

misrepresentation under the Act, which, if fraudulent, would have sounded in damages,

the onus passes immediately to the representor to prove its reasonable ground to believe

the facts represented.

47. Not only the Claimant fails to prove its contention that the Respondent made

representations which were untrue, but the Respondent's correspondence with Singapore

bunker suppliers Equator Bunkers actually demonstrates that the Respondent had

reasonable ground to believe and did believe it would be able to provide a sufficient

supply of bunkers to the Vessel. In the email sent to Equator Bunkers as soon as 27 may

2014,128 the Respondent stated that it is “developing a new trade from the Singapore /

Malaysia area to Atlantic area” and therefore required “a 30 day credit line to the order

of US$750,000 to US$1million for the purchase of residual fuel”. Further email sent by

the Respondent to Equator Bunkers on 28 May 2014 shows that the Respondent

accepted a $650,000 credit line and intended to purchase 990 metric tons of fuel.129 The

quotation given by Equator Bunkers regarding the cost of fuel in its answer130 proves

that the credit line initially required and eventually accepted by the Respondent was

sufficient to purchase the quantity of fuel necessary for the main part of the Voyage.

Further bunker supplies would have been available later on, absent a change of

trajectory by the Claimant in violation of the Contract as demonstrated above.

The Tribunal will therefore find that the Respondent's alleged misrepresentations were

innocent, as it had reasonable ground to believe and did believe that its representation

was true.

48. With regards to the award of damages in case of innocent misrepresentation,

Section 2(2) of the Misrepresentation Act provides follows:

127 Howard Marine and Dredging Co. Ltd v. A. Ogden & Sons (Excavations) Ltd. [1977] EWCA Civ 3. 128 Moot problem: email sent on 27 May 2014 at 12:00 (UTC+8) from Chris at LDTP to Equator Bunkers, p. 20. 129 Moot problem: email sent on 28 May 2014 at 09:17 (UTC+8) from Chris at LDTP to Equator Bunkers, p. 22. 130 Moot problem: email sent on 28 May 2014 at 15:42 (UTC+8) from Equator Bunkers to Chris at LDTP, p. 23.


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“(2) Where a person has entered into a contract after a misrepresentation

has been made to him otherwise than fraudulently, and he would be

entitled, by reason of the misrepresentation, to rescind the contract, then,

if it is claimed, in any proceedings arising out of the contract, that the

contract ought to be or has been rescinded, the court or arbitrator may

declare the contract subsisting and award damages in lieu of rescission, if

of opinion that it would be equitable to do so, having regard to the nature

of the misrepresentation and the loss that would be caused by it if the

contract were upheld, as well as to the loss that rescission would cause to

the other party.”

The power to award damages for an innocent misrepresentation is available to the court

or arbitrator only if the representee claims that the Contract ought to be rescinded. The

Claimant does not claim and never claimed that the Contract ought to be rescinded by

reason of the Respondent's alleged misrepresentations.131 Rescission being no longer

available as not claimed by the Claimant, the Tribunal shall find that it has no power to

award damages in lieu of rescission.132

The Claimant is thus not entitled to claim damages for negligent misrepresentation as

the Respondent made the alleged misrepresentations innocently.

PART III – PRAYER FOR RELIEF

In light of the foregoing submissions, the Claimant respectfully requests the Tribunal to:

DECLARE that it has no jurisdiction to hear the merits of the present case; and

FIND that the Respondent is not liable for the breaches of the Contract, the tort of fraud

and the negligent misrepresentation; and

FIND that the Claimant is liable for providing a vessel that was not fit for service, and

for breaching its duty as bailee; and

AWARD to the Respondent damages and interest on the amounts claimed; and

ORDER the Claimant to pay all legal and other costs that may incur arising out of or in

relation to the present arbitration.

131 Moot problem: Statement of claim, §17-21, p. 65. 132 Government of Zanzibar v. British Aerospace (Lancaster House) Ltd [2000] EWHC 221.

FINAL MEMORANDUM FOR THE RESPONDENT (2)€¦ · Arthur DAIN Carole POMES-BORDEDEBAT Rodolphe RUFFIE...

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