MEMORANDUM FOR C - Murdoch · PDF fileChannel Tunnel Group v. Balfour Beatty Construction...
Transcript of MEMORANDUM FOR C - Murdoch · PDF fileChannel Tunnel Group v. Balfour Beatty Construction...
1 8 T H I N T E R N A T I O N A L M A R I T I M E L A W A R B I T R A T I O N M O O T , 2 0 1 7
U N I V E R S I T A S G A D J A H M A D A
TEAM 12
MEMORANDUM FOR CLAIMANT
ON BEHALF OF AGAINST
Furnace Trading PTE LTD Inferno Resources SDN BHD
CLAIMANT/OWNERS RESPONDENT/CHARTERERS
Idoncare Berjaya Utama PTY. LTD.
RESPONDENT/SUB-CHARTERERS
COUNSEL
ALDIO PRIMADI
PRIDIERO ANUGERAH
INDIRA JAUHARA
JOHANNA DEVI
MICHELLE ALRIANI
NADYA AZKIA
TEAM 12 MEMORANDUM for CLAIMANT
i
TABLE OF CONTENTS
INDEX OF AUTHORITIES ................................................................................................................ III
LIST OF ABBREVIATIONS ............................................................................................................... IX
STATEMENT OF FACTS ................................................................................................................... 1
I. CLAIMANT VALIDLY TERMINATED THE VCP BASED ON RENUNCIATION AND REPUDIATORY
BREACH ....................................................................................................................................... 2
A. RESPONDENT’S BREACH AMOUNTED TO REPUDIATORY BREACH ...................................... 2
B. RESPONDENT’S CONSISTENT REFUSAL TO PERFORM ITS DUTY AMOUNTED TO
RENUNCIATION ................................................................................................................................ 4
II. CLAIMANT IS ENTITLED TO EXERCISE LIEN OVER THE CARGO ..................................... 5
A. INCORPORATION OF VCP TERMS TO THE B/L MANDATES CLAIMANT THE RIGHT TO
EXERCISE LIEN OVER THE CARGO ................................................................................................... 6
B. CLAIMANT VALIDLY EXERCISED ITS RIGHT OF LIEN OVER THE CARGO ............................ 7
III. CLAIMANT IS ENTITLED TO EXERCISE LIEN OVER THE SUB-FREIGHT ......................... 9
A. B/L VESTED CLAIMANT THE RIGHT TO INTERCEPT THE SUB-FREIGHT............................... 9
B. CLAIMANT SENT A VALID NOTICE OF LIEN ON SUB-FREIGHT .......................................... 10
IV. RESPONDENT IS LIABLE TO INDEMNIFY CLAIMANT OVER THE DAMAGES .................. 12
A. BREACH OF THE VCP ENTAILED DAMAGES FOR DETENTION AND OTHER LOSSES AND
COSTS……………………………………………………………………………………………12
B. COSTS INCURRED FROM EXERCISING LIEN IS RECOVERABLE SINCE IT SERVES AS AN ACT
OF MITIGATION .............................................................................................................................. 13
V. THE TRIBUNAL HAS THE POWER TO GRANT CLAIMANT THE LIBERTY TO SELL THE
CARGO VIA INTERIM MEASURE ............................................................................................... 14
A. IAA AND SCMA RULES EMPOWER THE TRIBUNAL TO GRANT CLAIMANT THE INTERIM
MEASURE FOR ITS LIBERTY TO SELL THE CARGO .......................................................................... 14
TEAM 12 MEMORANDUM for CLAIMANT
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B. THE TRIBUNAL IS THE CORRECT FORUM TO RENDER THE INTERIM MEASURE FOR
CLAIMANT’S URGENT APPLICATION INSTEAD OF THE HIGH COURT .............................................. 16
1. The Intention of the Parties Reflects that the Tribunal is the Most Appropriate Forum 16
2. The Tribunal is Effective in Granting Claimant’s Application for Interim Measure .... 17
3. The Tribunal is Capable of Securing the Relief Sought ................................................. 18
C. THE ORDER FOR SALE OF CARGO FALLS WITHIN THE TRIBUNAL’S POWER UNDER
§12(1)(D) OF IAA .......................................................................................................................... 19
VI. THE CIRCUMSTANCE OF THE CASE ARE SUCH THAT IT IS JUST AND NECESSARY FOR
THE TRIBUNAL TO ORDER THE SALE OF CARGO .................................................................... 20
A. THE CONDITION OF CARGO JUSTIFIES THE INTERIM ORDER OF THE SALE OF CARGO ....... 20
1. The Cargo is Perishable in Nature ................................................................................ 21
2. The Condition of Cargo will endanger the condition of the Vessel ............................... 22
B. THE INTERIM MEASURES OF THE SALE OF CARGO WILL MITIGATE THE LOSSES SUFFERED
BY CLAIMANT ................................................................................................................................ 22
C. THE ORDER OF SALE IS CONSISTENT WITH CLAIMANT’S RIGHTS OF LIEN ........................ 23
1. The Right of Lien over the Cargo Manifests the Right to Obtain Proceeds from the Sale
of the Cargo ........................................................................................................................... 23
2. The Absence of Contractual Rights of Sale under VCP does not Prevent the Sale of
Cargo ..................................................................................................................................... 24
PRAYER FOR RELIEF .................................................................................................................... 25
TEAM 12 MEMORANDUM for CLAIMANT
iii
INDEX OF AUTHORITIES
Cases Referred in page:
Alan Auld Associates Ltd v. Rick Po Allard Associates [2008] EWCA Civ 655
[2008] BLR 419
2
Albemarle Supply v. Hind & Co [1928] KB 307 7
Alpha Bank S.A v. The “Sea Urchin” [2014] SGHC 24 19,21
American Steel Barge Co. v Chesapeake & Ohio Coal Agency Co., 115 F.
669 (1st Cir. 1902)
8
Bank of Scotland plc v. Owners of MV “Union Gold” [2013] EWHC 1696 17
Bank of Scotland v. The “Nel” (1997) 140 FTR 271 19, 21
Bangladesh Chemical Industries Corp v. Henry Stephens Shipping Co and
Tex-Bilan Shipping Co (The “SLS Everest”) [1981] 2 Lloyd’s Rep 389
5
Bremer Handelsgesellschaft mbH v. Vanden Avenne-izegem PVBA [1978] 2
Lloyd’s Rep `09
1
British Westinghouse Electric and Manufacturing Co Ltd v. Underground
Electric Railways Co of London Ltd [1912] AC 673, 690
12
Bunge Corporation v. Tradax Export SA [1981] 2 Lloyd’s Rep 1 1
Cascade Shipping Inc v. Eka Jaya Agencies (Pte) Ltd [1993] 1 SLR 980;
[1993] SGCA 7
9
Castleton Commodities Shipping Company Pte Ltd v. Silver Rock
Investments (The “Clipper Monarch”) [2015] EWHC 2584 Comm
23
Channel Tunnel Group v. Balfour Beatty Construction Ltd. (The “Channel
Tunnel”) [1993] AC 334
17
Cetelem SA v. Roust Holdings Ltd (“Cetelem”) [2005] 1 WLR 3555 19
Cresta Shipping v. Petromar Energy Resources Pte Ltd (The “Epic”) [2000]
SGCA 28
11
Dry Bulk Handly Handling Inc & Aor v. Fayette International Holdings Ltd
& Aor (The “Bulk Chile”) [2012] EWCA 2107 (Comm),
8,10
Emilia Shipping Inc v. State Enterprise for Pulp & Paper Industries [1991] 2
MLJ 379
22
TEAM 12 MEMORANDUM for CLAIMANT
iv
Federal Commerce Ltd v. Molena Alpha Inc (The “Nanfri”) [1979] 1 Lloyd’s
Rep 201
2,9
Feoso (Singapore) Pte Ltd v. Faith Maritime Company Limited [2003] SGCA
34
4
Fidelitas v. V/O Exportchleb [1963] 2 Lloyd’s Rep. 113 (C.A) 6
Five Ocean Corporation v. Cingler Ship Pte Ltd [2015] SGHC 311 5,18,19
Force India Formula One Team Ltd v. 1 Malaysia Racing Team Sdn Bhd
[2013] EWCA Civ 780
1
Gerald Metals SA v. Timis [2016] EWHC 2327 15
Heyman v. Darwins Ltd [1942] AC 356 1
Hong Kong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd [1961] EWCA
Civ
2
India Steamship Co. v. Louis Dreyfus Sugar Ltd (The “Indian Reliance”)
[1997] 1 Lloyd’s Rep. 52
8, 10
Itex Itagrani Export SA v. Care Shipping Corporation et al (The “Cebu”
(No.2)) [1990] 2 Lloyd’s Rep 316
5
Jackson v The Union Marine Insurance Co Ltd (1874-75) LR 10 CP 125 1
Kallang Shipping Co. SA Panam v. Axa Assurances Senegal (The “Kallang”
(No.2)) [2008] EWHC 2761 (Comm)
5
K/S A/S Seateam & Co v. Iraq National Oil Co (The “Sevonia Team”) [1983]
2 Lloyd’s Rep 640
5
Larner v. Fawcett [1950] 2 All ER 727 20
London Arbitration 5/91 [1991] 299 LMLN 3(2) 7,11,12
London Arbitration 6/15 [2015] 923 LMLN 1 7
The “Makassar Caraka Jaya Niaga III-39” [2012] SGHC 175 13
Metall Market v. Vitorio Shipping Co. Ltd (The “Lehmann Timber”) [2012] 2
Lloyd’s Rep. 73
11
Metro Trading International v. Petromar Energy Resources (The “Epic”)
[2000] SGCA 28
4,5
TEAM 12 MEMORANDUM for CLAIMANT
v
Miramar Maritime Corporation v. Holborn Oil Trading Ltd (The
“Miramar”) [1983] 2 Lloyd’s Rep. 319
6
Mobil Cerro Negro Ltd v. Petroleos de Venezuela SA [2008] EWHC 532 15
Molthes Rederi Aktieselskabet v. Ellerman’s Wilson Line Limited [1927] 1
K.B 710 at 716 - 717
8, 9
National Navigation v. Endesa Generacion [2009] EWHC 196 (Comm) 5
NCC International AB v. Alliance Concrete Singapore Pte Ltd [2008] SGCA
5
15
Paragon Shipping Pte. Ltd v. Freight Connect (S) Pte. Ltd [2014] SGHC 165 11
Photo Production Ltd v. Securicor Transport Ltd [1980] 1 Lloyd's Rep 545 1
Pacific Molasses Co. and United Molasses Trading Co. Ltd v. Entre Rios
Compania Naviera S.A (The “San Nicholas”) [1976] 1 Lloyd’s Rep 8
5
Rudolf A. Oetker Kg v. The Owners and/or Demise Charterers of The Ship or
Vessel “Kingdom Container” [2006] HCAJ 150, 151, 153, 268 And 270-
272/2003
21
Ross T Smyth & Co Ltd v. T D Bailey, Son & Co [1940] 3 All ER 60 3
Santiren Shipping Ltd v. Unimarine S.A (The “Chrysovalandou-
Dyo”) [1981] 1 Lloyd`s Rep 159
4
SK Shipping PTE Ltd v. Petroexport Limited [2009] EWHC 2974 1,3
Spar Shipping AS v. Grand China Logistics Holding (Group) Co Ltd [2015]
EWHC 718
3,20
Starlight Shipping v. Tai Ping Insurance [2008] 1 Lloyd’s Rep 230 15
Targart v. Fisher [1903] 1 KB 391 9
Taxfield Shipping Ltd v. Asiana Marine Inc. And Others [HCCT15/2006] 20
Telford Homes (Creekside) Limited v. Ampurius Nu Homes Holdings Ltd
[2013] EWCA Civ 577
2
The "Dwima 1" [1996] 2 SLR 670; [1996] SGHC 83 18,20,22
The “Hansa Nord” [1975] 2 Lloyd’s Rep. 445 1
The Myrto [1977] 2 Lloyd’s Rep. 243 20
The Solhaug, 2 F. Supp. 294, 300 (S.D.N.Y. 1931) 8
TEAM 12 MEMORANDUM for CLAIMANT
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The “Turtle Bay” [2013] SGHC 165 18,19
Universal Cargo Carriers v. Citati [1957] 2 QB 401 3
Vitol SA v Norelf Ltd (The “Santa Clara”) [1996] 2 Lloyd's Rep 225 1
Books Referred in page:
Alan Redfern, M. Hunter, Nigel Blackaby, Law and Practice of International
Commercial Arbitration (Sweet&Maxwell, 4th ed., 2004)
13
Andrew Burrows, John Cartwright, Sir Jack Beatson, Anson’s Law of
Contract (Oxford University Press, 29th ed., 2010)
1
Hugh Beale, Chitty in Contracts, (Sweet & Maxwell Ltd, 31st ed., 2012) 3
Anthony Rogers et al., Cases and Materials on the Carriage of Goods by Sea
(Routledge, 4th Edition, 2016)
8,10
Edwin Peel, GH Treitel, The Law of Contract (Sweet and Maxwell, 12th ed.,
2007)
3
Frank-Bernd Weigand, Practitioner’s Handbook on International
Commercial Arbitration (Oxford University Press, 2nd ed., 2010)
15
Friedrich von Wieser, Social Economics (Routledge, Vol.23, 2003), 18
Harvey McGregor, McGregor on Damages (Sweet & Maxwell, 17th ed.,
2003)
12
Jill Poole, Textbook on Contract law (Oxford University Press, 13th ed., 2016) 1,2
JP Van Niekerk, The Development of the Principles of Insurance Law in the
Netherlands from 1500 to 1800 (Juta & Co Ltd, Volume 1, 1998)
20
Julian Cooke, Tim Young, Michael Ashcroft, Andrew Taylor, John Kimball,
David Martowski, LeRoy Lambert, Michael Sturley, Voyage Charter
(Informa Law, 4th ed., 2014)
1,5,7,8,9,10,11,12
John Schofield, Layitme and Demurrage, (Informa Routledge, 6th ed., 2011) 12
Mauro Rubino-Sammartano, International Arbitration: Law and Practice
(JurisNet, 3rd ed.; 2014)
15
Michael Pryles and Michael J. Moser, Asian Leading Arbitrators’ Guide to
International Arbitration (JurisNet, 2007)
17
TEAM 12 MEMORANDUM for CLAIMANT
vii
Neil Andrews, Contract Law, (Cambridge University Press, 2nd ed., 2015) 2
Nigel Meeson, Admiralty Jurisdiction and Practice (LLP, 3rd ed.,2003) 20
Rolf A Schütze, Institutional Arbitration: A Commentary (Bloomsbury
Publishing, 2013)
14,17,18
Terrence Coghlin, et al. Time Charters (Informa Law, 7th ed., 2014) 8,9,10
Thomas Scrutton, Scrutton on Charterparties (Sweet & Maxwell, 20th ed.,
2008)
5
Journals Referred in page:
Emmanuel Gaillard, Anti-suit Injunctions in International Arbitration: IAI
Seminar (Juris Publishing and International Arbitration Institute, 2005)
15
Ronald Wong, Interim Relief in Aid of International Commercial Arbitration,
(2012) 24 Singapore Academy of Law Journal
13,16
Yulianto S Nugroho, Rudy R Rustam, Iman and Muksin Saleh, Effect of
Humidity on Self-Heating of a Sub-Bituminous Coal Under Adiabatic
Conditions (International Association for Fire Safety Science, 2008)
21
Miscellaneous Referred in page:
Charles Lockwood, Financial obligations under contract and repudiatory
breach: In What Circumstances Do Grounds for Termination Arise?
<http://www.incelaw.com/en/knowledge-bank/publications/financial-
obligations-under-contract-and-repudiatory-breach-in-what-circumstances-
do-grounds-for-termination-arise>
1
Sian Morris, Hire – Not a Condition of the contract
<https://www.steamshipmutual.com/publications/Articles/rip_the_astra1016
.htm>
2
Jeremy Andrews, Talia Taylor, Termination on Commercial Contract
<https://www.dlapiper.com/en/uk/insights/publications/2016/03/termination
-of-commercial-contracts/>
1
TEAM 12 MEMORANDUM for CLAIMANT
viii
John Mackle, Up A Creek Without A Boat Saying "No" to Contractual
Obligations <http://www.clarionsolicitors.com/blog/up-a-creek-without-a-
boat>
12
Morgan Lewis Stamford, An Introductory Guide to Arbitration in Singapore
<https://www.morganlewis.com/~/media/files/publication/marketing%20ma
terial/supplemental%20info/mlstamford_arbitrationsingapore_june15.ashx>
17
Propensity of Coal to Self-heat <http://www.iea-
coal.org/documents/82476/7685/Propensity-of-coal-to-self-heat-CCC/172>
21
Legal Instruments Referred in page:
Chartered Institute of Arbitrators, International Arbitration Practice
Guideline: Applications for Interim Measure
<http://www.ciarb.org/docs/default-source/ciarbdocuments/guidance-and-
ethics/practice-guidelines-protocols-and-rules/international-arbitration-
guidelines-2015/2015applicationinterimmeasures.pdf?sfvrsn=26>
16
Min Naing, SIAC Annual Report 2011 (SIAC, 2011) 17
Singapore International Arbitration Act (Chapter 143A) 14,15,17,18
Singapore Banking Law <http://www.singaporelaw.sg/sglaw/laws-of-
singapore/commercial-law/chapter-22>
23
Singapore Law of Credit and Security
<http://www.singaporelaw.sg/sglaw/laws-of-singapore/commercial-
law/chapter-11>
18
Singapore Supreme Court Of Judicature Act (Chapter 322, Section 80) Rules
Of Court
17
United Nations Commission On International Trade Law,
Settlement of Commercial Disputes – Possible uniform rules on certain issues
concerning settlement of commercial disputes: conciliation, interim measures
of protection, written form for arbitration agreement (UN Doc
A/CN.9/WG.II/WP.108)
15
TEAM 12 MEMORANDUM for CLAIMANT
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LIST OF ABBREVIATIONS
¶ Paragraph
¶¶ Paragraphs
§ Symbol Section
All ER All England Law Reports
Art. Article
B/L Bill of Lading
Cargo 84,000.052 MT of Australian Anthracite Steam Coal
Case File IMLAM Moot Scenario 2017
Ch. Chapter
Charterer Inferno Resources Sdn Bhd
Claimant Furnace Trading Pte Ltd
EWHC England and Wales High Court
EWCA Civ Court of Appeal of England and Wales Decisions
(Civil Division)
i.e. Namely
IAA Singapore International Arbitration Act
(Chapter 143A)
KB Law Reports King’s Bench
Lloyd’s Rep Lloyd’s Law Reports
LMLN Lloyd’s Maritime Law Newsletter
Master Captain Tan Xiao Ming of MV TARDY TESSA
mt Metric Tonnes
O. Order
TEAM 12 MEMORANDUM for CLAIMANT
x
Owner Furnace Trading Pte Ltd
p./pp. Page/Pages
QBD Law Reports Queen’s Bench Division
r. Rule
Respondent Inferno Resources Sdn Bhd
SCMA Rules Singapore Chamber of Maritime Arbitration Rules 3rd
edition (October 2015)
SDNY United States District Court for the Southern District
of New York
SGCA Singapore Court of Appeal
SGHC Singapore High Court
Shipowner Imlam Consignorist GmbH
SIAC Singapore International Arbitration Center
SLR Singapore Law Reports
Sub-charterer Idoncare Berjaya Utama Pty. Ltd
TCP Time Charterparty
UNCITRAL Model Law UNCITRAL Model Law on International Commercial
Arbitration (1985)
USD United States Dollars
VCP Voyage Charterparty
Vessel M.V. Tardy Tessa
TEAM 12 MEMORANDUM for CLAIMANT
1
STATEMENT OF FACTS
1 The Tardy Tessa (“Vessel”) is initially time chartered by Imlam Consignorist GmbH (“CMI”) to
Furnace Trading Pte Ltd (“Claimant”) which then voyage chartered by Claimant to Inferno
Resource Sdn Bhd (“Respondent”) for the carriage of 80,000 mt Australian Steam Coal (the
“Cargo”) that belongs to Idoncare Berjaya Utama Pty. Ltd (“Sub-Charterer”).
2 Voyage Charterparty (“VCP”) requires the freight to be paid five days after the issuance of Bill of
Lading (“B/L”) and for the disport to be nominated when the Vessel passes Singapore. Despite
Claimant’s consistent reminder, those obligations were not performed by Respondent. As a result,
Claimant suffered substantial losses and the voyage were severely delayed.
3 Respondent were given opportunity to remedy its breaches when Claimant extends the deadline
for the remittance of freight and the nomination of discharging port. However, Respondent
inconsistently performed its contractual obligation by nominating discharge port that is not within
the agreed range, Busan, and requested the freight to be paid after the discharge of the Cargo.
4 To mitigate the losses that Claimant continued to incur and to urge Respondent to remit the freight
and nominate legitimate discharging port, Claimant was forced to exercise its right of lien on the
Cargo and the Sub-freight. Further, Respondent’s consistent failure to perform its obligation also
left Claimant no choice but to terminate the VCP. Subsequently, Claimant filed a declaratory relief
to enforce the validity of its exercise of lien and to hold Respondent accountable toward the
liabilities it has caused before the SCMA Arbitral Tribunal (“The Tribunal”)
5 Bearing in mind the deteriorating condition of the Cargo and the danger it poses to the Vessel,
waiting the final award of the declaratory relief is no longer a viable way. Seeing that the Tribunal
has the power to issue interim order to preserve the value of the Cargo, Claimant filed an urgent
application for the sale of the Cargo pendente lite.
TEAM 12 MEMORANDUM for CLAIMANT
2
I. CLAIMANT VALIDLY TERMINATED THE VCP BASED ON RENUNCIATION AND REPUDIATORY
BREACH
6 Respondent failed to punctually pay the freight and to nominate legitimate discharge port,
subsequently entitling Claimant to terminate the VCP.1 Upon Respondent’s repudiatory breach,2
and renunciation,3 Claimant not only accepted, 4 but also clearly and unequivocally terminated the
contract based on its rights pursuant to the VCP.5
7 Claimant’s termination of the VCP is lawful because Respondent’s conduct amounted to
repudiatory breach [A], and renunciation of its obligation under the VCP [B]. Thus, Respondent
shall be held accountable for the accrued liabilities.6
A. Respondent’s Breach Amounted to Repudiatory Breach
8 Repudiatory breach requires a breach going to the root of the contract7 that entails the frustration
of the commercial purposes of the contract.8 Determining the root of the contract can be implicitly
drawn from the nature of the contract.9
1 Case File, p. 68 2 Julian Cooke et al., Voyage Charter (Lloyd’s Shipping Law Library, 4th ed., 2014) p. 68; Jill Poole, Textbook on
Contract Law (Oxford University Press,13th ed., 2016) p. 310; Charles Lockwood, Financial Obligations under
Contract and Repudiatory Breach: In What Circumstances Do Grounds for Termination Arise?, (Ince & Co, 2014) 3 SK Shipping PTE Ltd v. Petroexport Limited [2009] EWHC 2974 (Justice Flaux); Heyman v. Darwins Ltd [1942]
AC 356 (Lord Porter); Jeremy Andrews andTalia Taylor, Termination on Commercial Contract, (DLA Piper, 2016) 4 Case File, p. 64 5 Vitol SA v. Norelf Ltd (The “Santa Clara”) [1996] 2 Lloyd's Rep 225 (Lord Steyn); Force India Formula One Team
Ltd v. 1 Malaysia Racing Team Sdn Bhd [2013] EWCA Civ 780 (Arnold J); Photo Production Ltd v. Securicor
Transport Ltd [1980] 1 Lloyd's Rep 545 (Lord Wilberforce) 6 Heyman v. Darwins Ltd [1942] AC 356, (Lord Porter); SK Shipping PTE Ltd v. Petroexport Limited [2009] EWHC
2974 (Jutsice Flaux) 7 Cehave MV v. Bremer Handelgesellschaft mbH (The “Hansa Nord”) [1975] 2 Lloyds Rep 445 (Lord Denning);
Julian Cooke et al., above n. 2, p. 48 8Jackson v. The Union Marine Insurance Co Ltd (1874-75) LR 10 CP 125 (Bramwell B) 9 Bunge Corpn v. Tradax SA [1981] 2 Lloyd’s Rep 1 (Lord Wilberforce); Charles Lockwood, Financial Obligations
under Contract and Repudiatory Breach: In What Circumstances Do Grounds for Termination Arise?
TEAM 12 MEMORANDUM for CLAIMANT
3
9 The terms of the VCP clearly evince that time is of the essence of the VCP, as it requires
performance in a timely manner in specific order.10 Respondent is under the obligation to remit
the freight 5 days after the B/L is issued,11 and it needs to nominate the discharge port on its arrival
in Singapore for bunkering.12 Further, the commercial purposes of the VCP is to ensure the safety
and timely delivery of the Cargo due to its volatile market price13 and fragile condition.14 Thus,
only a punctual payment of freight and prompt nomination of discharge port would lead to the
conformity that time is of the essence of the VCP.
10 Further, deprivation of the innocent party to its substantial benefit is regarded as repudiatory
breach. Here, Respondent’s breaches are repudiatory as it jeopardizes Claimant’s substantial
benefits.15 Claimant’s sole benefit generated from the VCP was the punctual remittance of the
freight. The fact that Claimant is under a time-charter agreement to CMI in which it is under the
obligation to pay monthly hire to CMI16 signifies the importance of punctual payment of freight
from Respondent. Delay in nominating the discharging port also substantially deprives Claimant’s
benefit as it causes daily detention charges,17 and forces Claimant to forego potential benefit that
it could have from chartering the Vessel to any future charterers. As such, Respondent’s conducts
amount to a repudiatory breach.
10 Andrew Burrows et al., Anson’s Law of Contract (Oxford University Press, 29th ed., 2010); Bremer
Handelsgesellschaft mbH v. Vanden Avenne-izegem PVBA [1978] 2 Lloyd’s Rep `09 (Lord Wilberforce) 11 Case File p. 22 12 Case File, p. 21 13 See ¶¶ 62-32 14 See ¶¶ 57-61 15 Hong Kong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ (Diplock LJ); Alan Auld
Associates Ltd v. Rick Po Allard Associates [2008] EWCA Civ 655; [2008] BLR 419s (Lord Justice Tuckey); Federal
Commerce Ltd v. Molena Alpha Inc (The “Nanfri”) [1979] 1 Lloyd’s Rep 201 (Lord Wilberforce); Jill Poole, above
n. 2, p. 310 16 Case File, p. 36 17 Case File, pp. 52-67
TEAM 12 MEMORANDUM for CLAIMANT
4
B. Respondent’s Consistent Refusal to Perform Its Duty Amounted to Renunciation
11 Renunciation requires an expression that would lead a reasonable person with the impression that
the breaching party has no intention to fulfill its contractual obligations.18 An explicit expression
though, is unnecessary.19 Failure to exhibit willingness to perform its contractual obligation,20
failure to provide prompt confirmation,21 failure to consistently perform its contractual obligation,
22 and showing willingness to perform, but in fact, unable to perform23 constitute as grounds for
renunciation.
12 Here, even though Respondent’s correspondences did not signify an express renunciation, it
evinced clear renunciation that Respondent did not intend to perform any of their obligations under
the VCP due to the following facts:
a) Respondent exhibited consistent unwillingness to pay the freight and nominate the discharge
port;24
b) Respondent stood silent when Claimant inquired confirmation on its reminder towards
outstanding freight and nomination of discharge port;25
c) Respondent attempted to perform the contract into something radically different from its
original term by nominating Busan which is not under the range of agreed discharge ports;26
18 Sian Morris, Hire – Not a Condition of the Contract, (Steamship Mutual, 2013); Neil Andrews, Contract Law,
(Cambridge University Press, 2nd ed., 2015) p. 446; Telford Homes (Creekside) Ltd v. Ampurius Nu Homes Holdings
Ltd [2013] EWCA Civ 577 (Lord Justice Longmore); Hugh Beale, Chitty on Contracts (Sweet & Maxwell, 31st ed.,
2012) 19 Edwin Peel, GH Treitel, The Law of Contract (Sweet & Maxwell, 12th ed., 2007), ¶ 12-074 20 Spar Shipping AS v. Grand China Logistics Holding (Group) Co Ltd [2015] EWHC 718 (Popplewell J) 21SK Shipping PTE Ltd v. Petroexport Limited [2009] EWHC 2974 (Justice Flaux); John Mackle, Up A Creek Without
A Boat? Saying No to Contractual Obligations, (Clarion, 2010) 22 Ross T Smyth & Co Ltd v. T D Bailey, Son & Co [1940] 3 All ER 60 at 72 (Lord Wright); Spar Shipping AS v. Grand
China Logistics Holding (Group) Co Ltd [2015] EWHC 718 (Popplewell J) 23 Universal Cargo Carriers v. Citati [1957] 2 QB 401 (Devlin J); Spar Shipping AS v. Grand China Logistics Holding
(Group) Co Ltd [2015] EWHC 718 (Popplewell J) 24 Case File, pp. 50-69 25 Ibid., pp. 50-69 26 Ibid., p. 58
TEAM 12 MEMORANDUM for CLAIMANT
5
d) Respondent failed to comply with the deadline to nominate the discharge port by 20th October
at 1200H LT27 as Respondent nominated Ningbo on 21st October at 13.22 pm;28
e) Respondent also intended to alter its obligation by blatantly requesting for the freight to be
remitted after the discharge of the Cargo when it was initially agreed for the freight to be paid
5 days after the issuance of the B/L;29
f) Respondent consistently made impression that it possesses the ability to punctually remit
freight and legitimately nominate the discharge port, but turns out unable to do so;30
The collaboration of the aforementioned facts affirm that Respondent has made expression to
Claimant in which it reasonably led Claimant to infer that Respondent possessed the absolute
inability to perform the VCP.
II. CLAIMANT IS ENTITLED TO EXERCISE LIEN OVER THE CARGO
13 Despite Claimant’s consistent reminders, 31 Respondent failed to legitimately nominate the
discharge port32 and to remit the freight.33 This left Claimant no choice but to exercise its right of
lien over the Cargo. 34 Claimant is rightful to exercise its lien upon the Cargo because the
incorporation of VCP terms to the B/L mandates Claimant the right to exercise the lien [A], and
Claimant has validly executed its right of lien upon the Cargo [B]
27 Ibid., p. 64 28 Ibid., p. 67 29 Ibid., p. 22 30 Ibid., pp. 50-54 31 Ibid., pp. 53 - 68 32 Ibid., p. 57 33 Ibid. 34 Ibid., p. 66
TEAM 12 MEMORANDUM for CLAIMANT
6
A. Incorporation of VCP Terms to the B/L Mandates Claimant the Right to Exercise Lien Over
the Cargo
14 Claimant conferred its right to exercise lien over the Cargo from the VCP Lien Clause. 35
Incorporation of lien clause to the bill of lading is required to exercise lien over cargo that belongs
to sub-charterer.36 Claimant submits that the imposition of VCP Lien Clause validly extended to
the holder of the B/L, namely the Sub-Charterer,37 because the wording of the B/L referred to the
VCP [1] and it also facilitated the incorporation of the VCP Lien Clause to the B/L [2].
1. The Terms of the B/L Provided a Reference to the VCP
15 Admittedly, the B/L does not mention any sort of serial code or date of the VCP. However, where
a bill of lading purports to incorporate a charter but fails to provide details of the charter concerned,
it can be properly identified through examination of the terms of the bill of lading.38 Here, the
terms “freight payable as per charterparty” contained in the B/L 39 shall suffice to provide
reference to the VCP.
16 This was the position in The Kallang (No.2)40 where a ship had been time chartered and then
voyage chartered. In the midst of confusion as to which charterparty its bill of lading intended to
incorporate, the court relied the on the term “freight payable as per charterparty” as referring to
35 Case File, p. 31 36 Metro Trading International v. Petromar Energy Resources (The “Epic”) [2000] SGCA 28; Santiren Shipping Ltd
v. Unimarine S.A (The “Chrysovalandou-Dyo”) [1981] 1 Lloyd`s Rep 159; Feoso (Singapore) Pte Ltd v. Faith
Maritime Company Limited [2003] SGCA 34 (Belinda Ang Saw J), ¶ 39; Julian Cooke et al., above n. 2, ¶ 17A.57;
Thomas Scrutton, Scrutton on Charterparties (Sweet & Maxwell, 20th ed., 2008), p. 76 37 Procedural Order No. 3, ¶ 2(1) 38 Metro Trading International v. Petromar Energy Resources (The “Epic”) [2000] SGCA 28; Pacific Molasses Co.
and United Molasses Trading Co. Ltd v. Entre Rios Compania Naviera S.A (The “San Nicholas”) [1976] 1 Lloyd’s
Rep 8 (Lord Denning); Bangladesh Chemical Industries Corp v. Henry Stephens Shipping Co and Tex-Bilan Shipping
Co (The SLS Everest) [1981] 2 Lloyd’s Rep 389 (Lord Denning), ¶ 392; K/S A/S Seateam & Co v. Iraq National Oil
Co (The “Sevonia Team”) [1983] 2 Lloyd’s Rep 640 (Lloyd J) 39 Case File, pp. 41, 43, 45 40 Kallang Shipping Co. SA Panam v. Axa Assurances Senegal (The “Kallang” (No.2)) [2008] EWHC 2761 (Comm)
(Hirst QC)
TEAM 12 MEMORANDUM for CLAIMANT
7
the voyage charterparty “under which freight (as opposed to hire) is payable”.41 Several courts
share the same approach,42 holding that the word ‘freight’ means a vessel employment fee earned
from voyage charterparty and thus refer to voyage charterparty. Therefore, the existence of terms
“freight payable as per charterparty” shall enable the Tribunal to find that the B/L provide a
reference to the VCP.
2. The Wording of the B/L Facilitates the Incorporation of VCP Lien Clause
17 Having submitted that the B/L refers to the VCP, Claimant further submits that the wording of the
B/L incorporate the VCP Lien Clause. General words of incorporation in a bill of lading such as
those in Congenbill Form - “all terms and conditions, liberties and exceptions of the Charter
Party” - are sufficient to incorporate lien clause. 43 Likewise, the verbatim general words of
incorporation are used in the B/L.44 Hence, the Tribunal should find that the VCP Lien Clause has
been incorporated to the B/L due to the existence of general words of incorporation.
B. Claimant Validly Exercised its Right of Lien Over the Cargo
18 Having submitted that Claimant has the right of lien over the Cargo, Claimant submits that it
lawfully executed its lien. The VCP Lien Clause provides that “Claimant shall have a lien on the
cargo for freight [and] demurrage […] due under the [Voyage] Charter Party”.45 Here, Claimant
has validly executed the VCP Lien Clause since Respondent owes freight [1] and Claimant has
sent a valid notice of lien [2].
41 Ibid. 42 Itex Itagrani Export SA v. Care Shipping Corporation et al (The “Cebu” (No.2)) [1990] 2 Lloyd’s Rep 316, ¶ 321
(Sheen J); Five Ocean Corporation v. Cingler Ship Pte Ltd [2015] SGHC 311 (Belinda Ang Saw Ean J), ¶ 28; National
Navigation v. Endesa Generacion [2009] EWHC 196 (Comm) (Gloster J), ¶ 110 43 Fidelitas v. V/O Exportchleb [1963] 2 Lloyd’s Rep. 113 (C.A) (Lord Denning MR), ¶ 125-126; Miramar Maritime
Corporation v Holborn Oil Trading Ltd (The “Miramar”) [1983] 2 Lloyd’s Rep. 319 (Mustill J), p. 324 44 Case File, pp. 41, 43, 45 45 Ibid., p. 31
TEAM 12 MEMORANDUM for CLAIMANT
8
1. Respondent Owes Freight Under the VCP
19 Respondent owes freight in the minimum of USD 771,120.48,46 which shall be paid five banking
days after the release of the B/L to Claimant. 47 This means the payment shall be due on 9th October
2016. However, even after the issuance of the invoice,48 and Claimant’s copious reminders,49
Respondent still failed to pay the freight. This failure, thus entitles Claimant to invoke its right of
lien over the Cargo.
2. Claimant Has Sent a Valid Notice of Lien
20 Claimant further perfected its execution of lien by delivering a proper notice of lien to Respondent
as follows:
a) On 18th October 2016,50 Claimant notified Respondent that should it fail to remit the freight
and if the discharge port remains un-nominated, Claimant will exercise its right of lien over
the Cargo. Claimant also reminded Respondent in respect of the amount of freight and the
daily drifting charges.
b) On 20th October 2016,51 Claimant sent a notice of lien, providing that it exercised its right of
lien over the Cargo. The lien was exercised “to mitigate the very substantial damages, losses,
cost and expenses which we have incurred and continue to incur.”52
21 Respondent cannot argue that the said notice of lien is invalid due to Claimant’s failure in inserting
a specific amount of sum. Claiming a definite amount in the notice of lien is unnecessary,53 as long
46 Case File, p. 49 47 Ibid., p. 52 48 Ibid., p. 49 49 Ibid., pp. 53 - 68 50 Ibid., p. 62 51 Ibid., p. 65 52 Ibid. 53 Julian Cooke et al., above n. 2, ¶17.24; London Arbitration 5/91 [1991] 299 LMLN 3(2); London Arbitration 6/15
[2015] 923 LMLN 1; Albemarle Supply v. Hind & Co [1928] KB 307 (Scrutton LJ), ¶ 318
TEAM 12 MEMORANDUM for CLAIMANT
9
as it provides “particulars from which [Respondent] [it]self can calculate the amount for which
[the] lien is due”.54
22 Here, Respondent is in reasonable position to determine the amount of sum that is sufficient to
discharge the lien by itself. Claimant sent the invoice for a sum of freight in minimum basis of
USD 771,120.48 to Respondent.55 Claimant has consistently reminded Respondent that Claimant
incurred USD10,000 per day due to drifting charges amounting to USD 91,666.67 per 20th October
– when Claimant finally exercised its right of lien over the Cargo.56 Hence, the Tribunal should
find that despite the absence of specific amount in the notice of lien, Claimant has exercised its
right of lien over the Cargo lawfully since Respondent can self-calculate the outstanding sum.
III. CLAIMANT IS ENTITLED TO EXERCISE LIEN OVER THE SUB-FREIGHT
23 Respondent argued that its failure to pay freight was due to Sub-Charterer’s inability to remit the
sub-freight. Subsequently, Claimant submits that it deserves the right to intercept the sub-freight
from Sub-Charterer because the B/L vested Claimant the right of interception of the sub-freight
[A]. Further, Claimant perfected its right by delivering a valid notice of lien on sub-freight [B].
A. B/L Vested Claimant the Right to Intercept the Sub-Freight
24 Absence of the specific term of ‘sub-freight’ in the charterparty does not bar Claimant in exercising
the lien on the sub-freights. Where the sub-freight is indicated under bill of lading, owners may
intercept.57
54 Albemarle Supply v. Hind & Co [1928] KB 307 (Scrutton LJ), ¶ 318 55 Case File, p. 491 56 Case File, p. 65 57 Molthes Rederi Aktieselskabet v Ellerman’s Wilson Line Limited [1927] 1 K.B 710 (Greer J), ¶ 718; Dry Bulk
Handly Handling Inc & Aor v. Fayette International Holdings Ltd & Aor (The “Bulk Chile”) [2013] EWCA Civ 184,
[2012] 2 Lloyd’s Rep 594 (Andrew Smith J), p.19; Terrence Coghlin et al., Time Charters (Informa Law, 7th Edition,
2014), p. 592;
TEAM 12 MEMORANDUM for CLAIMANT
10
25 The incorporation of freight terms under the charterparty may be inferred in cases such as the
instant case, where there exists terms acknowledging the incorporating freight.58 As laid down in
The Indian Reliance, the term “freight payable as per charterparty,” incorporates all terms and
provisions related to freight of any sub-charterer between the disponent owner and the shipper.59
The current B/L provides such terms found in the Special Condition.60
26 Furthermore, not only have the terms been incorporated, but the Master also signed the B/L.
Pursuant to Clause 26 of the VCP, the Master may sign the bill of lading on behalf of owners.61
Acting as Claimant’s agent, Master’s signatory of the B/L represents the owner’s bill where owner
acts as carrier,62 and the sub-charterer as shipper.63 Hence, in such circumstance, Sub-Charterers
shall pay the sub-freight to Claimant.64
B. Claimant Sent a Valid Notice of Lien on Sub-Freight
27 Claimant affirms the validity of the notice of lien on Sub-Freight sent on 20th October as it was
sent before the sub-freight was paid to Respondent [1], and the details within the notice of lien on
Sub-Freight suffices [2].
58 India Steamship Co. v. Louis Dreyfus Sugar Ltd (The “Indian Reliance”) [1997] 1 Lloyd’s Rep. 52 (Rix J); Julian
Cooke et al., above n. 2, ¶13.119 59 Ibid; Terrence Coghlin et al., above n. 57, p. 569-560; Anthony Rogers et al., Cases and Materials on the Carriage
of Goods by Sea (Routledge, 4th Edition, 2016 ), p.258 60 Case File, p. 41 61 Ibid., p. 22 62 Terrence Coghlin et al., above n. 57, p. 592 63 Case File, pp. 41, 48 64 Terrence Coghlin et al., above n. 57, p. 592
TEAM 12 MEMORANDUM for CLAIMANT
11
1. The Notice of Lien on Sub-Freight was Sent Before the Sub-Freight was Paid to Respondent
28 Owners can only intervene sub-freight if the shipper has not yet paid such freight prior to the
notice.65 In Cascade Shipping v. Eka Jaya,66 owners were only allowed to intercept the sub-freight
if it has not been paid to the charterer.
29 On 15th October, Claimant received correspondence from Respondent stating its inability to pay
freight as it “yet [has] to receive the same from sub-chrts”.67 Within the next five days until the top
urgent reminder,68 and notice of lien on sub-freight,69 confirmation of Sub-Charterer’s payment of
freight remained pending. Consequently, it can be deduced that without confirmation of payment,
Claimant rightfully and validly intercepted the sub-freight.
2. The Details within the Notice of Lien on Sub-Freight Suffices
30 Respondent is in no position to argue that the notice of lien sent by Claimant provides insufficient
particulars which leads to its invalidity. This is because the notice was sufficient for the following
reasons:
31 First, as laid down in The Bulk Chile, a mere notification that there is an amount due suffices to
be regarded as a valid notice of lien.70 The lack of details as to the exact amount does not affect
the validity of the notice.71 As Andrew Smith J emphasized,72 “all that is required is that in fact
some amount is due to the party giving the notice from that party’s charterer.”
65Federal Commerce Ltd v. Molena Alpha Inc (The “Nanfri”) [1979] 1 Lloyd’s Rep 201 (Lord Russell); Targart v.
Fisher [1903] 1 KB 391; Molthes Rederi Aktieselskabet v Ellerman’s Wilson Line Limited [1927] 1 K.B 710 (Greer
J), ¶ 718; Cascade Shipping Inc v. Eka Jaya Agencies (Pte) Ltd [1993] 1 SLR 980, [1993] SGCA 7; Julian Cooke et
al., above, n. 2, ¶ 17.37 66 Cascade Shipping Inc v. Eka Jaya Agencies (Pte) Ltd [1993] 1 SLR 980, [1993] SGCA 7, p.29 67 Case File, p. 56 68 Ibid., p. 64 69 Ibid., p. 66 70Dry Bulk Handly Handling Inc & Aor v. Fayette International Holdings Ltd & Aor (The “Bulk Chile”) [2013] EWCA
Civ 184, [2012] 2 Lloyd’s Rep 594 (Andrew Smith J) 71 Ibid. 72 Ibid., pp. 53, 60
TEAM 12 MEMORANDUM for CLAIMANT
12
32 Second, the notice must explicitly include the owners’ request for direct payment of the freight.73
In The Indian Reliance, Rix J was of the view that “sub-freights would become payable to the
order of the owner and not into the [previously] designated account.”74 Presently, besides having
included payment of sub-freight being made to Claimant, Claimant also provided its bank account
details within the VCP to ensure that payment be made to it rather than to Respondent.
33 Accordingly, Respondent’s sufficiency of details in its Notice of Lien on Sub-Freight renders the
validity of the lien.
IV. RESPONDENT IS LIABLE TO INDEMNIFY CLAIMANT OVER THE DAMAGES
34 In terms of liability of the damages,75 Respondent shall indemnify Claimant over the damages in
respect of delay to the vessel during the exercise of the lien, as their breach of the VCP entailed
damages for detention [A], and as the cost of mitigating the loss that Respondent would have
suffered [B].
A. Breach of the VCP entailed Damages for Detention and other Losses and Costs
35 Costs of a lien may be recoverable as damages from a breach of contract.76 Here, Respondent not
only failed to pay freight, but also failed to nominate a legitimate discharge port. Subsequently,
Claimant incurred losses and costs as follows:
73 India Steamship Co. v. Louis Dreyfus Sugar Ltd (The “Indian Reliance”) [1997] 1 Lloyd’s Rep. 52 (Rix J); Julian
Cooke et al., above, n. 2, p.317; Terrence Coghlin et al., above, n. 57, pp. 569-560; Anthony Rogers et al., above n.
59, p. 258 74India Steamship Co. v. Louis Dreyfus Sugar Ltd (The “Indian Reliance”) [1997] 1 Lloyd’s Rep. 52 (Rix J); Julian
Cooke et al., above, n. 2, p.317 75 Cresta Shipping v. Petromar Energy Resources Pte Ltd (The “Epic”) [2000] SGCA 28 (Chao Hick Tin JA, L P
Thean JA, Yong Pung How CJ); Julian Cooke et al., above, n. 2, ¶ 17.37 76 Julian Cooke et al., above, n. 2, p. 472; Metall Market v. Vitorio Shipping Co. Ltd (The “Lehmann Timber”) [2012]
2 Lloyd’s Rep. 73 (Arden, Patten LLJ, Sir Bernard Rix); London Arbitration 12/91 (1993) 304 LMLN 3 (2)
TEAM 12 MEMORANDUM for CLAIMANT
13
36 First, a shipowner is entitled to claim damages in detention where a vessel is delayed by default
of the charterer.77 Paragon Shipping Pte Ltd. v. Freight Connect affirms such as the judgment
favored the plaintiff with indemnity for “any sum that [defendant] may be liable to pay […] arising
out of defendant’s failure.”78 Additionally, failure to nominate a discharge port results to damages
for detention.79 Therefore, Claimant further claims damages in detention at the demurrage rate80
in respect of 14 days, in the sum of USD 1.96 million.
37 Second, expenses were incurred for the crew and vessel management. Similar to Makassar Caraka
Jaya Niaga III-39, the calculated expenditures and loss included: crew transport expenses, crew
medical expenses, and bunker supplies.81 Likewise, similar conditions of the crew onboard,82 and
with the additional losses of USD 771,120.48, and 10 days hire and bunker costs amounting to
USD 101,666.67, Claimant shall be indemnified from Respondent.
38 Accordingly, following Respondent’s breach, Claimant shall be indemnified for the damages,
expenses, and losses.
B. Costs Incurred from Exercising Lien is Recoverable since it Serves as an Act of Mitigation
39 Besides breach of contract, costs may also be recoverable through mitigating loss reasonably.83
Mitigation requires Claimant to take reasonable steps to reduce the loss incurred resulting from
77 Paragon Shipping Pte Ltd v. Freight Connect (S) Pte Ltd [2014] SGHC 165 (Judith Prakash J); Zim Israel
Navigation Co Ltd v. Tradax Petroleum Export SA (The “Timna”) [1971] 2 Lloyd’s Rep 91 (CA); Julian Cooke et al.,
above n. 2, p. 472 78 Paragon Shipping Pte Ltd v. Freight Connect (S) Pte Ltd [2014] SGHC 165 (Judith Prakash J) 79 John Schofield, Layitme and Demurrage (Informa Routledge, 6th ed., 2011) p. 76, ¶ 3.25; Zim Israel Navigation Co
Ltd v. Tradax Petroleum Export SA (The “Timna”) [1971] 2 Lloyd’s Rep 91 (CA) (Donaldson J) 80 John Schofield, above n. 79, p. 439, ¶ 8.1; Julian Cooke et al., above n. 2, p. 656, ¶ 21.101 81 The “Makassar Caraka Jaya Niaga III-39” [2012] SGHC 175 p.12 82 Case File, p. 37 83 London Arbitration 12/91 (1993) 304 LMLN 3 (2)
TEAM 12 MEMORANDUM for CLAIMANT
14
Respondent’s breaches.84 Failure to mitigate restricts Claimant’s right to recover such damages.
Claimant contends that it took all reasonable steps to mitigate its loss.
40 Following Respondent’s breaches, Claimant informed and continuously reminded Respondent to
alleviate their conduct, and upon Respondent’s refusal to act on its breach, Claimant eventually
exercised the lien. Had it not been for Claimant’s exercise of the lien,85 both Respondent and
Claimant would further incur “very substantial damages, losses, costs and expenses,”86 detailed
above. Thus, Claimant shall be indemnified for such costs.
V. THE TRIBUNAL HAS THE POWER TO GRANT CLAIMANT THE LIBERTY TO SELL THE CARGO VIA
INTERIM MEASURE
41 Claimant submitted the urgent application for liberty to sell the Cargo before the Tribunal seeking
for interim measure in order to preserve the value of the Cargo.87 Respondent is not in the position
to argue that the Tribunal does not have the power to grant Claimant the liberty to sell the Cargo,88
because the IAA and SCMA Rules empower the Tribunal to grant such liberty through interim
measure [A]. Although the High Court possesses such power in the case of urgency, the Tribunal
is the correct forum to render the interim measure for Claimant’s urgent application [B]. Further,
the order for sale of Cargo falls within the Tribunal’s power under §12(1)(d) of IAA [C].
A. IAA and SCMA Rules Empower the Tribunal to Grant Claimant the Interim Measure for
its Liberty to Sell the Cargo
84 The “Asia Star” [2010] 2 Lloyd’s Rep 121,127 (Rajah JA); British Westinghouse Electric and Manufacturing Co
Ltd v. Underground Electric Railways Co of London Ltd [1912] AC 673, 690 (Viscount Haldane LC); Cresta Shipping
v. Petromar Energy Resources Pte Ltd (The “Epic”) [2000] SGCA 28 (Chao Hick Tin JA); Harvey McGregor,
McGregor on Damages (Sweet & Maxwell, 17th ed, 2003) p. 217, ¶ 7-004 85 London Arbitration 12/91 (1993) 304 LMLN 3 (2); Julian Cooke et al., above, n. 2, p.618 86 Case File p. 65 87 Ibid., pp. 90-91 88 Ibid., p. 95
TEAM 12 MEMORANDUM for CLAIMANT
15
42 Consent is the cornerstone in arbitration.89 The parties’ consent to the arbitral proceedings entails
the tribunal’s power to take measures prescribed under the rule.90 Claimant and Respondent have
vested the Tribunal with the authority under SCMA Rules and IAA.91 Here, consistent with the
SCMA Rules, the IAA gives the Tribunal power to grant Claimant the interim measure for liberty
to sell Cargo.
43 Pursuant to § 12(1) of IAA, the Tribunal can make orders to any party for an “interim injunction
or any other interim measure”.92 The same section provides that an arbitral tribunal may allow any
party for “the preservation, interim custody or sale of any property which is or forms part of the
subject-matter of the dispute.”93 This shall infer that under IAA, arbitral tribunals have the power
to grant the liberty to sell property through interim measure. Such power is affirmed in a case
under SIAC in 2011.94 In that case, the tribunal - pursuant to § 12(1) of IAA - made interim order
to an Indonesian shipper to sell the cargo of coal sitting in a Chinese port pendente lite, as the
cargo was deteriorating during the long holiday period of Chinese New Year.95
44 Further, the SCMA Rules supports the Tribunal’s power to grant interim measure. Rule 33.1 of
SCMA Rules provides that the Tribunal has the power to “make such orders or give such directions
as it deems fit in so far as they are not inconsistent with the [IAA].”96 Thus, the IAA and SCMA
Rules empower the Tribunal to grant liberty to sell cargoes through issuing interim measures.
89 Alan Redfern, M. Hunter, Nigel Blackaby, Law and Practice of International Commercial Arbitration (Sweet &
Maxwell, 4th ed., 2004), ¶ 1-08 90 Ronald Wong, Interim Relief in Aid of International Commercial Arbitration, (2012) 24 Singapore Academy of Law
Journal, ¶ 10 91 Case File, p. 23 92 Singapore International Arbitration Act (Chapter 143A) (“IAA”), §12(1)(i) 93 Ibid., §12(1)(d) 94 Min Naing, SIAC Annual Report 2011 (SIAC, 2011), p. 3; Rolf A. Schütze, Institutional Arbitration: A Commentary
(Bloomsbury Publishing, 2013), ¶¶ 178-181 95 Ibid. 96 SCMA Rule, r. 33.1
TEAM 12 MEMORANDUM for CLAIMANT
16
B. The Tribunal is the Correct Forum to Render the Interim Measure for Claimant’s Urgent
Application Instead of the High Court
45 Claimant is aware of its right to submit the urgent application to the High Court pursuant to
§12A(4) of IAA.97 However, the Tribunal shall serve as the correct forum to render the interim
measure for Claimant’s urgent application. §12A(6) of IAA provides that, the High Court shall
make an order only if the arbitral tribunal “has no power or is unable for the time being to act
effectively.” 98 This is affirmed in NCC International, 99 which introduced three alternative
conditions where the court may have the power to render interim order: when arbitration was
inappropriate, ineffective, or incapable of securing the relief sought.100
46 In this case, it is not necessary to submit the urgent application to the High Court because the
Tribunal is appropriate [1], effective [2], and capable of securing the relief sought [3].
1. The Intention of the Parties Reflects that the Tribunal is the Most Appropriate Forum
47 Intention of the parties can be drawn from the arbitration agreement.101 The existence of arbitration
agreement evinces that arbitration is the most appropriate forum to settle disputes, hence the
claimant needs not to prove its appropriateness. 102 The arbitration agreement “does that for
him”.103 The existence of valid and binding Arbitration Agreement in this case shall therefore
evince the Tribunal is the most appropriate forum for Claimant to submit its application.
97 IAA, §12A(4) 98 Ibid., §12A(6) read with IAA, §15A(4) 99 NCC International AB v. Alliance Concrete Singapore Pte Ltd [2008] SGCA 5 (Andrew Phang Boon Leong JA);
Gerald Metals SA v. Timis [2016] EWHC 2327 (Leggatt J); Starlight Shipping v Tai Ping Insurance [2008] 1 Lloyd’s
Rep 230 (Cooke J), ¶¶ 22, 24, 27 100 Ibid. 101 Mauro Rubino-Sammartano, International Arbitration: Law and Practice (JurisNet, 3rd ed., 2001), p. 83; Frank-
Bernd Weigand, Practitioner’s Handbook on International Commercial Arbitration (Oxford, 2nd ed.; 2010), ¶ 1.172 102 Gaillard, Emmanuel, Anti-suit Injunctions in International Arbitration: IAI Seminar (Juris Publishing and
International Arbitration Institute, 2005), p. 351 103 Ibid.
TEAM 12 MEMORANDUM for CLAIMANT
17
48 Instead, should Respondent challenges the appropriateness of the Tribunal, it is Respondent’s
burden of proof to show the Court in question is more appropriate.104 Under Mobil Cerro Negro
v. Petroleos de Venezuela,105 the English High Court rejected the granting for interim order due to
the failure of the defendant to prove link with the English jurisdiction.
49 Respondent failed to prove that it is parties’ intention to submit the disputes to the High Court as
it failed to show how the High Court is more appropriate than the Tribunal. Hence, the power to
grant the interim measure shall remain within the Tribunal.
2. The Tribunal is Effective in Granting Claimant’s Application for Interim Measure
50 The Tribunal has been constituted,106 and is effective enough to exercise its power to grant
Claimant’s application for interim measure due to the following reasons:
51 First, the nature of ‘interim measure’ demands to be prioritized.107 The International Arbitration
Practice Guideline on Applications for Interim Measure mentions, “Arbitrators should deal with
applications for interim measures promptly and expeditiously.”108 This means the arbitrators
should “give priority to applications for interim measures” 109 and “deal with the application as
quickly as possible [...].”110
52 Second, the Tribunal is more familiar with the case. Generally, arbitral tribunals are already
familiar with the case and subject matter, hence taking shorter time to make interim order.111 On
104 NCC International AB v. Alliance Concrete Singapore Pte Ltd [2008] SGCA 5 (Andrew Phang Boon Leong JA) 105 Mobil Cerro Negro Ltd v. Petroleos de Venezuela SA [2008] EWHC 532 (Walker J); United Nations Commission
On International Trade Law, Settlement of Commercial Disputes – Possible uniform rules on certain issues concerning
settlement of commercial disputes: conciliation, interim measures of protection, written form for arbitration
agreement (UN Doc A/CN.9/WG.II/WP.108), ¶ 76 106 Case File, pp. 103-104; Procedural Order No.2; Procedural Order No.3 107 Chartered Institute of Arbitrators, International Arbitration Practice Guideline: Applications for Interim Measure,
Art.1 ¶ 1 108 Ibid. 109 Ibid., Commentary on Art.1 ¶ 1 110 Ibid. 111 Ronald Wong, above n. 89, ¶ 11; United Nations Commission On International Trade Law, Settlement of
TEAM 12 MEMORANDUM for CLAIMANT
18
the other hand, interim measure through the Court may take longer process because courts may
ask parties to present arguments due to unfamiliarity with the case, and possibility for appeal.112
Thus, Claimant contends that the Tribunal is effective in renderring the interim order.
3. The Tribunal is Capable of Securing the Relief Sought
53 The Tribunal is capable to secure the relief sought by Claimant because the interim order made by
the Tribunal is enforceable. § 12(6) of IAA stipulates, “All orders or directions made or given by
an arbitral tribunal in the course of an arbitration shall, [...] be enforceable in the same manner
as if they were orders made by a court [...].”113 It indeed infers that, same as the court, the
enforcement the order made by arbitral tribunal requires the court assistance.114
54 However, in enforcing interim order made by the tribunal, the court may not make an order that
bypasses the order made by arbitral tribunal. In Channel Tunnel, Lord Mustill stated, “The purpose
of [court ordered] interim measures of protection [...] is not to encroach the procedural powers of
the arbitrators but to reinforce them, [...].”115
55 Here, in enforcing the Tribunal-ordered interim measure, the Court shall only reinforce the order
made by the Tribunal and not bypass it. That way, such enforcement would not necessarily prolong
the proceeding, and the relief sought by Claimant remains secured. Having submitted that the
Tribunal is appropriate, effective, and capable of securing the relief sought, thus, the Tribunal,
Commercial Disputes – Possible uniform rules on certain issues concerning settlement of commercial disputes:
conciliation, interim measures of protection, written form for arbitration agreement (UN Doc A/CN.9/WG.II/WP.108),
¶ 77 112 United Nations Commission On International Trade Law, Settlement of Commercial Disputes – Possible uniform
rules on certain issues concerning settlement of commercial disputes: conciliation, interim measures of protection,
written form for arbitration agreement (UN Doc A/CN.9/WG.II/WP.108), ¶ 76 113 IAA, §12(6) 114 Ibid.; Singapore Supreme Court Of Judicature Act (Chapter 322, Section 80) Rules Of Court (“Rules of Court”),
O. 69A, r. 5; Morgan Lewis Stamford, ‘An Introductory Guide to Arbitration in Singapore’ , ¶19 115 Channel Tunnel Group v. Balfour Beatty Construction Ltd. (The “Channel Tunnel”) [1993] AC 334 (Lord Keith),
¶ 88; Michael Pryles and Michael J. Moser, Asian Leading Arbitrators’ Guide to International Arbitration (JurisNet,
2007), p. 236
TEAM 12 MEMORANDUM for CLAIMANT
19
instead of the High Court is the correct forum to render the interim measure for Claimant’s urgent
application.
C. The Order for Sale of Cargo Falls Within the Tribunal’s Power Under §12(1)(d) of IAA
56 Sale of cargo may only be granted in order to support the act of preservation.116 The IAA empowers
the Tribunal to grant order for sale in order to preserve property.117 Claimant’s request for the sale
of the Cargo is an act of preservation of its contractual right of lien under VCP and is intended to
preserve the value of the Cargo. 118 Claimant submits that the preservation of property shall
encompass preservation of a contractual right and value of cargo.
57 First, contractual right is a property. Singaporean Law of Credit and Security clearly provides that
contractual right is a type of personal property in intangible form.119 Reference to ‘property’ in
§12(1)(d) of IAA is not limited to tangible object.120 This means, arbitral tribunals are not excluded
to order preservation of intangible property.121 Thus, the Tribunal should find that preserving
Claimant’s contractual right of lien is a preservation of a property.
58 Second, the value of the Cargo shall be constituted as property because ‘value of property’ is
defined as an importance attached to the “concrete property itself”.122 In other words, a value is
inseparable from a property. Hence, the Cargo and its value are interdependent, and any action
conducted to preserve the Cargo is intended to also preserve the value and vice versa. This is
reflected in SIAC Case 2011,123 where the arbitral tribunal under §12(1)(d) of IAA granted the
116 Min Naing, SIAC Annual Report 2011 (SIAC, 2011), p.3; Rolf A. Schütze, above n. 94, ¶¶ 178-181; Bank of
Scotland plc v. Owners of MV “Union Gold” [2013] EWHC 1696 (Mr. Justice Teare); The “Turtle Bay” [2013] SGHC
165 (Belinda Ang Saw Ean J); The “Dwima 1” [1996] SGHC 83 (S Rajendran J); Five Ocean Corporation v. Cingler
Ship Pte Ltd [2015] SGHC 311 (Belinda Ang Saw Ean J) 117 IAA, §12(1)(d) 118 Case File, p. 91 119 Singapore Law of Credit and Security, §1.5 120 IAA, §12(1)(d) 121 Ibid. 122 Friedrich von Wieser, Social Economics (Routledge, Vol.23, 2003), p.145 123 Min Naing. SIAC Annual Report 2011 (SIAC, 2011), p.3, p.3; Rolf A. Schütze, above n. 94, ¶¶ 178-181
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application for sale of cargo in order to preserve the value of the cargo of Indonesian steam coal
from deterioration thus amounting as an act of preservation of property.
59 Thus, the order for sale of Cargo falls within the Tribunal’s power under §12(1)(d) of IAA because
the right of lien and the value of the Cargo that Claimant seeks to preserve are considered as
property.
VI. THE CIRCUMSTANCE OF THE CASE ARE SUCH THAT IT IS JUST AND NECESSARY FOR THE
TRIBUNAL TO ORDER THE SALE OF CARGO
60 Due to Respondent’s breaches, Claimant suffered substantial losses and expenses. This left
Claimant with no choice but to exercise the lien over the Cargo. However, Respondent showed no
indication to perform its obligation, and the condition of the Cargo keeps diminuating.
Accordingly, Claimant asserts that it is necessary to issue the order as it is justified by the condition
of the Cargo [A], and it amounts as an act of mitigation to prevent further losses of Claimant [B].
Further, such right is consistent with the right of lien lawfully exercised by Claimant [C].
A. The Condition of Cargo Justifies the Interim Order of the Sale of Cargo
61 The granting of interim measure for one of the parties to appraise and sell the cargo – instead of
resorting to normal appraisement process – requires the existence of ‘special circumstance’.124 In
situations where there is a rapid diminuation of the value of the cargo on board the vessel,125 and
where the condition of the cargo put the vessel into a risk of being endangered,126 suffice to
establish the ‘special circumstance’ justifying the sale of cargo. Here, the Tribunal should exercise
124 The “Turtle Bay” [2013] SGHC 165 (Belinda Ang Saw Ean J), ¶ 29 125 Cetelem SA v. Roust Holdings Ltd (“Cetelem”) [2005] 1 WLR 3555 (The Vice Chancellor Lord Justice Clarke and
Lord Justice Neuberger) ¶ 65; Five Ocean Corporation v. Cingler Ship Pte Ltd [2015] SGHC 311 (Belinda Ang Saw
Ean J), ¶ 48. 126 Alpha Bank S.A v. The “Sea Urchin” [2014] SGHC 24 (Belinda Ang Saw Ean J), ¶ 22; Governor and Company of
the Bank of Scotland v. Nel (The) [1999] 2 FC 578 (Prothonotary Hargrave), ¶ 10,15
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21
its power to grant Claimant the liberty to sell the cargo pendente lite because the coal is perishable
in nature [1] and this will endanger the safety of the Vessel [2].
1. The Cargo is Perishable in Nature
62 The power to issue interim measure depends on the nature of the disputed goods. Courts have
tendencies to grant sale of cargo pendente lite to perishable goods.127 This is because it would be
wrongful “if perishable goods perished and became of no value while the dispute between the
parties as to their ownership was being decided at law.”128
63 Diminuation of quality of the cargo is sufficient to identify ‘special circumstance’ to justify the
order of sale129 as it constitutes as a perishable condition. 130 In the case of Cetelem, Clarke LJ
granted perishable cargo to be sold pendente lite, as without the immediate sale of the cargo, its
value would cease to exist.131
64 In this case, based on joint expert report, the coal is “deemed to change from bituminous to sub-
bituminous”,132 which demonstrate extreme quality degradation from Anthracite quality.133 Signs
of overheating are also detected.134 “Strong winds and swell owing to monsoon season” further
exarcebate matters with its potential to damage the Cargo.135 The collaboration of the aforesaid
127 Nigel Meeson, Admiralty Jurisdiction and Practice (LLP, 3rd ed., 2003) pp. 157-162; The Myrto [1977] 2 Lloyd’s
Rep. 243, pp. 259-261 128 Taxfield Shipping Ltd v. Asiana Marine Inc. And Others [HCCT15/2006] (Judge L.Chan), ¶ 22; Larner v.
Fawcett [1950] 2 All ER 727 (Somervell L. J), ¶ 729 G, H 129 The "Dwima 1" [1996] 2 SLR 670; [1996] SGHC 83 (S Rajendran J), ¶ 32. 130 JP Van Niekerk, The Development of the Principles of Insurance Law in the Netherlands from 1500 to 1800 (Juta
& Co Ltd, Vol. 1, 1998), p. 291 131 Cetelem SA v Roust Holdings Ltd (“Cetelem”) [2005] 1 WLR 3555 (The Vice Chancellor Lord Justice Clarke and
Lord Justice Neuberger), ¶ 48 132 Case File, p. 98 133 Case File, p. 21 134 Ibid., p. 37 135 Ibid.
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22
facts affirm that it is necessary to sell the Cargo pendente lite due to the diminishing quality of the
Cargo.
2. The Condition of Cargo will endanger the condition of the Vessel
65 The presence of the Cargo in the long haul will prove harmful to the Vessel, thus justifying the
sale of the Cargo pendente lite. In The Nel, the Court held that the private sale of cargo is in order
since the constant presence of sulphur on board would cause corrosion damage to the vessel.136
66 In the case at hand, because of the volatile nature of the Cargo,137 it is extremely dangerous for the
Cargo to be kept adrift in hot and humid regions.138 The Vessel has drifted, and is currently drifting,
in OPL Singapore ever since 16th October 2016.139 The crew also indicated signs of self-ignition.140
Hence, should the Cargo remain onboard any longer, it would put the Vessel and the crew at risk.
Thus, since the Cargo is unlikely to be kept in the Vessel within secure condition, the Cargo must
be sold immediately.
B. The Interim Measures of the Sale of Cargo Will Mitigate the Losses Suffered by Claimant
67 Selling the cargo pendent lite acts as a means of mitigation for the injuries Claimant suffered from
the payable freights and other sums due from Respondent. The proceeds from the sale of the Cargo
shall be channeled to compensate any losses that the breaching party has caused.141
68 Further, by selling the Cargo pendente lite, it can preserve the value of Cargo in early sale rather
than be burdened by increasing costs of detention charges.142 Without the order of sale granted by
136 Bank of Scotland v The “Nel” (1997) 140 FTR 271 (Prothonotary Hargrave), ¶ 15 137 Herminé Nalbadian, Propensity of Coal to Self-heat, (IEA Clean Coal Centre, 2010) 138 Yulianto Nugroho et al., Effect of Humidity on Self-Heating of a Sub-Bituminous Coal Under Adiabatic Conditions
(International Association for Fire Safety Science, 2008), p.188 139 Case File, p. 35. 140 Ibid., p. 37. 141 Alpha Bank S.A. v. The “Sea Urchin” [2014] SGHC 24 (Belinda Ang Saw Ean J), ¶ 34 142 Rudolf A. Oetker Kg v. The Owners and/or Demise Charterers of The Ship or Vessel “Kingdom Container” [2006]
HCAJ 150, 151, 153, 268 And 270-272/2003 (Hon Waung J), ¶ 68
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23
the Tribunal, the Cargo will be stored inside the Vessel for an uncertain period of time which may
diminish the value of the Cargo due to its fluactuative market price ,143 or even brings harm to the
Vessel due to volatile condition.144
C. The Order of Sale is Consistent with Claimant’s Rights of Lien
69 Respondent is not in the position to argue that the sale of cargo will omit Claimant’s right of lien
instead of preserving it. Contrary to this, the Tribunal should grant the interim order of sale of the
Cargo because the right of the proceeds of sale may be conferred to the rights of lien [1], even with
the absence of the right to sell stated in lien clause [2].
1. The Right of Lien over the Cargo Manifests the Right to Obtain Proceeds from the Sale of the
Cargo
70 In The Dwima, Judge S Rajendran upheld that the plaintiffs are able to transfer their rights of lien
to the proceeds of sale of the perishable object,145 so long as it is the subject matter, i.e. lien, of the
plaintiff’s claim for freight.146 These steps taken were consistent with the intention to preserve the
lien instead of derogating Claimant’s right to exercise lien.147
71 Similar to the aforementioned cases, the subjct matter of Claimant’s exercise of lien upon the
unpaid freight is the deteriorating Cargo condition. This implies that it is possible and appropriate
for the Tribunal to grant liberty to sell the Cargo pendente lite.
143 Case File, pp. 99-102 144 Yulianto Nugroho, et al, above n. 137, p.188 145 The “Dwima 1” (1996) 2 SLR 670; (1996) SGHC 83 (S Rajendran J), ¶ 32-34 146 Emilia Shipping Inc v. State Enterprise for Pulp & Paper Industries [1991] 2 MLJ 379 (Chan Sek Keong J), ¶ 54 147 The “Dwima 1” (1996) 2 SLR 670; (1996) SGHC 83 (S Rajendran J), ¶ 20
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2. The Absence of Contractual Rights of Sale under VCP does not Prevent the Sale of Cargo
72 Even in the absence of a statutory or contractual power of sale, Singaporean law confers a lien
holder the right to apply for an order of sale where it is desired that the property be sold at once.148
73 In The Clipper Monarch, HHJ Waksman considered that the existence of specific provision that
allows the sale of cargo is trivial. This is because the court was convinced that claimant was also
the beneficiary by way of assignment of a true lien in favour of the carrier and as against the
shipper, pursuant to the bill of lading, and subsequently granted interim measures to sell the cargo
because the exercise of lien “can be said to have been transformed into a right to the proceeds of
sale of the cargo concerned”.149
74 The conditions in the said case are also applicable in the instant case. Claimant was not only lawful
in exercising its lien based on the VCP, but also against Sub-Charterer, pursuant to the Bill of
Lading.150 The absence of right to sell the Cargo stated in VCP will not render Claimant unable to
be granted the liberty to sell the Cargo.
148 Singapore Banking Law, §22.8.6 149 Castleton Commodities Shipping Company Pte Ltd v. Silver Rock Investments (The “Clipper Monarch”) [2015]
EWHC 2584 Comm (HHJ Waksman), ¶ 9 150 See ¶¶ 8-11
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25
PRAYER FOR RELIEF
75 In light of the aforementioned submission, Claimant respectfully request the Tribunal to declare
that:
a) Claimant’s termination of VCP is lawful since Respondent’s conduct amounted as a
repudiatory breach;
b) Claimant is entitled to exercise lien over the Cargo and the Sub-freight;
c) Respondent is liable for the indemnification toward the cost that Claimant incurred from
its exercise of lien;
d) The Tribunal has the power to grant Claimant the liberty to sell the Cargo pendente lite;
and
e) It is necessary and just for the Tribunal to grant Claimant the liberty to sell the Cargo
pendente lite.
RESPECTFULLY SUBMITTED ON 19 APRIL 2017,