MEMORANDUM FOR THE RESPONDENTS - Murdoch … · LIVERPOOL CONTRACT HAD BEEN ESTABLISHED ... Act of...

FOURTEENTH ANNUAL INTERNATIONAL MARITIME LAW

ARBITRATION MOOT COMPETITION 2013

In The Matter Of An Arbitration Held At Southampton

MEMORANDUM FOR THE RESPONDENTS

ON BEHALF OF:

Twilight Carriers Inc

RESPONDENTS

AGAINST:

Aardvark Ltd

Aardvark House

The High Street

Bootle

Merseyside

CLAIMANTS

Team Number 24

Cederic Van Eccelpoel, Véronique Beeckx

Content

A. LIST OF ABBREVIATIONS .............................................................................................. iii

B. LIST OF AUTHORITIES .................................................................................................... iii

C. TABLE OF EXHIBITS ........................................................................................................ vi

D. SUMMARY OF THE FACTS .............................................................................................. 1

ARGUMENTS PRESENTED ................................................................................................... 4

1. THE ARBITRAL TRIBUNAL HAS JURISDICTION .................................................... 4

1.1. CLAIMANTS IMPLICITLY AGREED TO THE ARBITRATION BY BRINGING

THEIR CLAIMS BEFORE THE TRIBUNAL ...................................................................... 4

1.2. THE BILLS OF LADING PG1 TO PG4 CONTAIN AN EXPRESS REFERENCE TO

AN ARBITRATION CLAUSE ............................................................................................. 4

2. APPLICABLE LAW ............................................................................................................ 6

2.1. ENGLISH LAW APPLIES ............................................................................................. 6

2.2. HAGUE-VISBY RULES APPLY .................................................................................. 6

2.3. ALL TERMS AND CONDITIONS, LIBERTIES AND EXCEPTIONS OF THE

CHARTER PARTY ARE INCORPORATED INTO THE BILLS OF LADING ................ 7

3. THE CLAIMS ARE INADMISSIBLE .............................................................................. 7

3.1 CLAIMANTS HAVE NO RIGHT OF SUIT, THERE THEY CAN NOT BE

CONSIDERED THE LAWFUL HOLDERS OF THE BILLS OF LADING ....................... 7

3.2 NO BRANDT v. LIVERPOOL CONTRACT HAD BEEN ESTABLISHED

BETWEEN CLAIMANTS AND RESPONDENTS .............................................................. 9

3.3 NO CLAIM IN TORT CAN BE MADE BY CLAIMANTS ...................................... 10

4. IF, WHICH IS DENIED, THE CLAIMS ARE ADMISSIBLE, THESE ARE THE

SUBSTANTIAL ISSUES ....................................................................................................... 11

4.1 THERE IS NO PRESUMPTION OF LIABILITY ........................................................ 11

4.2. RESPONDENTS WIL NOT BE RESPONSIBLE FOR LOSS OR DAMAGE

ARISING OR RESULTING FROM THE PIRACY TAKEOVER ..................................... 12

4.2.1 Art iv, r2 of the Hague Visby rules excludes the respondents for liability arising

from piracy ....................................................................................................................... 12

4.2.2 The charter party excludes liability arising from piracy, Act of war, and public

enemies in section 17, the General Exceptions Clause .................................................... 14

ii

4.2.3 The deviation of the Twilight Trader does not affect the validity of the exoneration

clauses stipulated in the Charterparty ............................................................................. 14

4.3. RESPONDENTS HAVE TAKEN ALL NECESSARY MEASURES TO AVOID

BEING HIJACKED ............................................................................................................. 15

4.4.RESPONDENTS HAVE TAKEN EVERY MEASURE POSSIBLE TO SECURE THE

CARGO DURING THE HIJACK ....................................................................................... 16

4.5.THERE IS NO TORT OF NEGLIGENCE .................................................................... 16

4.6. RESPONDENTS HAD THE RIGHT TO DISCHARGE AT ROTTERDAM ............ 17

4.6.1 Claimants were not entitled to delivery ................................................................... 17

4.6.2 Respondents had the right to discharge the cargo in Rotterdam due to a liberty

clause ................................................................................................................................ 19

4.6.3 Claimants agreed delivery at Rotterdam ................................................................ 19

4.6.4 There is no tort of conversion ................................................................................. 20

5. IF WHICH IS DENIED, THE RESPONDENTS ARE LIABLE TO CLAIMANTS

FOR DELIVERING THE CARGO TO BEATLES: .......................................................... 21

5.1 THE CALCULATION OF THE DAMAGES IS THE CARGO VALUE AT

ROTTERDAM ..................................................................................................................... 21

5.1.1 The market value of the cargo ................................................................................. 22

5.1.2 The alleged consequential damages were not reasonably foreseeable ................... 24

5.2 THE DUTCH COURT COSTS SHOULD NOT BE REVISITED ............................... 24

iii

A. LIST OF ABBREVIATIONS

Beatles Beatles Oils & Fats Ltd

Charterparty Charterparty dated 12 september 2008

Claimants Aardvark Ltd

COGSA 1971 Carriage of Goods by Sea Act 1971

COGSA 1992 Carriage of Goods Act by Sea 1992

Owners Twilight Carriers Inc

PFAD Palm Fatty Acid Distillate

Respondents Twilight Carriers Inc

Bills of Lading Bills of Lading PG1 to PG4

Vessel Twilight Trader

B. LIST OF AUTHORITIES

Cases

Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep. 39

at p.60

Astro Valiente Compania Naviera s.a. v. the Government of Pakistan Ministry of Food and

Agriculture (the "Emmanuel Colocotronis"), [1982] 1 Lloyd's Rep. 286

A/S Hansen-Tangens Rederi III v Total Transport Corporation (The Sagona) [1984] 1

Lloyd’s Rep 194

Athel Viscount, (1934) 48 Ll. Rep 164

Bangladesh Chemical Industries v Tex-Dilan Shipping Co (The S.L.S. Everest) [1981] 2

Lloyd’s Rep. 389

Brandt v Liverpool, Brazil & River Plate Steam Navigation Co Ltd [1924] 1 K.B. 575

Caparo Industries plc v Dickman [1990] UKHL 2

Cia Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos) (No. 2) [1990]

2 Lloyd’s Rep. 395

Daval Aciers D’Usinor Et De Sacilor and Others (The Nerano) (1994) 2 Lloyd’s Rep 50

iv

Debs v Sibec Developments Ltd (1990) R.T.R. 91.

Hadley v Baxendale [1854] EWHC Exch J70

Hamilton v Pandorf (1887) App Cas 518

Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) (2003) 1 Lloyd’s Rep. 571

Ilyssia Cia. Naviera SA v Bamaodah (The Elli 2) [1985] 1 Lloyd’s Rep. 107

J. I. MacWilliam Co. Inc v Mediterranean Shipping Co. SA (The Rafaela S) [2005] 1 Lloyd’s

Rep. 347 at p. 357

Kallang Shipping SA Panama v. Axa Assurances Senegal and another (“The "Kallang" (No

2)). [2009] 1 Lloyd's Rep. 124

Keppel Tatlee Bank Ltd v Bandung Shipping Private Ltd [2003] 1 Lloyd's Rep. 619 at p. 622

Koufos v C Czarnikow Ltd (The Heron II) [1967] 3 All ER 686

Kuwait Petroleum Corp v. I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541

Leigh & Sillivan Ltd v Aliakmon Shipping Co Ltd, (The Aliakmon), (1986) AC 785

Masefield AG v Amlin Corporate Member Ltd & Anor [2011] EWCA Civ 24 26/01/2011

Miramar Maritime Corp v Holburn Oil Trading Ltd (1984) 2 Lloyd’s Rep 129

Mitsui & Co Ltd v Novorossiysk Shipping Co (The Gudermes) [1993] 1 Lloyd’s Rep. 311

More v Slue (1671) 1 vent 190

Pacific Molasses Co and United Molasses Trading Co v Entre Rios Compania Naviera SA

(The San Nicholas) [1976] 1 Lloyd's Rep. 8

Pickering v Barkley (1648) Style 132

Profindo Pte ltd v Abani Trading Pte ltd (the mv “Athens”) [2013] Lloyd's Rep. Plus 8

Roe v Minister of Health (1954) 2 AER 131

Siemens AG/BKMI Industrieanlagen GmbH v. Dutco Construction Company, XVII YBCA

140 (1993) (Cour de Cassation, Paris)

Strathlorne Steamship Company, Ltd. v. Andrew Weir & Co., (1934) 50 Ll.L.Rep. 185

Sylvia Shipping Co Limited v Progress Bulk Carriers Limited [2010] EWHC 542

Sze Hai Tong Bank Ltd v. Rambler Cycle Co. Ltd (1959) 2 LLR at 120

v

The Aramis [1989] 1 Lloyd’s Rep. 213

The Nai Matteini (1988) 1 Lloyd’s Rep 452

The National Navigation Co v. Endesa Generacion SA (The "Wadi Sudr"). [2009] 1 Lloyd's

Rep. 666

The Rewia [1991] 2 Lloyd's Rep 325

The Stettin (1889) 14 P.D. 142

Transfield Shipping Inc v Mercator Shipping Inc (The 'Achilleas') [2008] 3 WLR 345

Welex A.G. v Rosa Maritime Ltd (The Epsilon Rosa) [2003] 2 Lloyd’s Rep. 509

Statutes

Carriage of Goods by Sea Act 1971

Carriage of Goods by Sea Act 1992

Sale of Goods Act 1979

UK Arbitration Act 1996

Treaties, Rules

Hague – Visby Rules 1968

Salvage Convention 1989

Other Authorities

A. G. Guest, Benjamin’s Sale of Goods, (seventh edition, London, Sweet & Maxwell)

Alan Redfern and Martin Hunter, Law and Practice of International Commercial Arbitration

(Sweet and Maxwell, 2003)

Biswas, Shrideep. “Costal Insecurity.” South Asia Intelligence Review. 3 October 2001. Web.

9 November 2011.

Comite Maritime International, The travaux préparatoires of the Hague Rules and of the

Hague-Visby rules

C. Debattista, Sale of goods carried by sea, (London, Butterworths, 1990)

Emmanual Gaillard and John Savage (eds), Fouchard Gaillard Goldman on International

Commercial Arbitration (Kluwer Law International, 1999)

vi

I. Carr, P. Stone, International Trade Law, (4e Edition, Abingdon, Routledge-Cavendish,

2010)

M. Bridge, Benjamin’s Sale of Goods, (eight edition, London, Sweet & Maxwell, 2010)

M. Dockray, K. Reece, Cases and Materials on the Carriage of Goods by Sea, (London,

Cavendish Publishing Limited, 2004)

R. Burnett, V. Bath, Law of the international Business of Australasia, (Sydney, The

federation press, 2009)

Scrutton on Charterparties and Bills of Lading (Twenty-second Edition, Sweet and Maxwell,

2011)

C. TABLE OF EXHIBITS

1. Email from Tom Williams to Paul Taylor, dated 23 May 2008, PFAD contract 1234

[page 1 Moot Problem]

2. Email from Tom Williams to Paul Taylor, dated 23 May 2008, PFAD contract 1235


3. Charter Party (fixture re-cap, standard VEGOIL voy form. “VEGOILVOY 1/27/50”)

[page 3 – 12 Moot Problem]

4. Email from Tom Williams to Paul Taylor, dated 23 September 2008, Amended PFAD

contracts 1234 & 1235


5. Bill of Lading, CONGENBILL 2007, PG1

[page 14-15 Moot Problem]






[page 20-21Moot Problem]

vii

9. Sales contract between Aardvark Limited and Delta Limited, No. 54028, 2 December

2008


10. Sales contract between Aardvark Limited and Caspian BV, No. 01206, 20 January

2009


11. Email from Chris Smith to Ben Thompson, dated 25 February 2009 (02:32), PFAD


12. Email from Paul Taylor to Mark Wiggins, dated 6 March 2009 (14:00), PFAD

contracts


13. Email from Mark Wiggins to Paul Taylor, dated 15 March 2009 (21:00), PFAD

contracts



contracts



contracts



contracts



contracts



contracts



viii

contracts



contracts



contracts



contracts


23. Message from Aardvark Limited to Owners of the Twilight Trader, dated 20 March

2009, Twilight Trader - Top Urgent, Bills of Lading PG1 to PG4


24. Fax from Thomas, Cropper & Benedict to Charterers Inc, dated 18 March 2009, mv

TWILIGHT TRADER – Analysis


25. Experts report Aspinall Lewis International, 19 March 2009, Inspection of the Cargo of

Palm Oil After Hijacking at Somalia November 2008 - February 2009, MT

TWILIGHT TRADER


26. Message from Paradox Bank to Aardvark Ltd, dated 3 April 2009, bank guarantee No.

478 in favour of Aardvark Ltd for USD 1,400,000, Rotterdam Guarantee Form 2008,

guarantee No. 478, dated 3 April 2009


27. Sales note between D&F Brokers Ltd and Aardvark Ltd, No. 0164, dated 16 April

2009


28. Sales note between D&F Brokers Ltd and Aardvark Ltd, No. 0178, dated 7 May 2009


29. Report of Surveys Inc, dated 9 June 2009

ix


30. Experts report of Dutch Surveyors BV, Inquiries regarding the value of Palm Fatty

Acid Distillate (PFAD) and regarding the quality of the product during transport/

storage under various conditions


31. Agreed statement of facts for the arbitration: the Dutch proceedings and sale of the

cargo


32. Single joint expert report of Kevin Ackroyd, dated 29 October 2012


33. Message from Horatio Brigden (Caspian BV) to Paul Taylor (Aardvark Ltd), dated 23

November 2009, PFAD ex TWILIGHT TRADER after release from piracy


34. Message from Geronimo McKegney (Delta Limited) to Paul Taylor (Aardvark Ltd),

dated 25 November 2009, PFAD ex TWILIGHT TRADER after release from piracy


35. Message from Mark Wiggins to Twilight Carriers, Freight rates and PFAD prices


36. FOSFA 79 contract



39. FOSFA Rules of arbitration and appeal

D. SUMMARY OF THE FACTS

1. Claimants, Aardvark Ltd, are the buyers and receivers of a cargo of 4,000 mt of Palm Fatty

Acid Distillate (PFAD) carried on board the Vessel TWILIGHT TRADER under the PG1 to

PG 4 Bills of Lading.

2. Respondents are the Disponent owners of the Vessel. The Owners sub chartered the Vessel

to Beatles Oils & Fats Ltd by way of a Charterparty dated 12 September 2008.

3. The Bills of Lading were all signed by Agents for and on behalf of the Master. All the Bills

of Lading provided for discharge in Liverpool, Merseyside.

4. The contracts of carriage contained in or evidenced by the Bills of Lading incorporates the

Hague-Visby Rules, and the Bills of Lading provide that all terms and conditions, liberties

and exceptions of the Charterparty dated 12 September 2008, including the Law and

Arbitration Clause are herewith incorporated.

5. The cargo carried under the Bills of Lading was sold to Aardvark by Beatles on CIF

Liverpool terms.

6. A separate cargo of about 14,500 mt of Crude Palm Oil and PFAD (which is not the subject

of these proceedings) was sold by Beatles to another purchaser Ecclestone Oils and also

carried on board the Vessel under different bills of lading.

7. While the Vessel was en route to Merseyside it was held off Somalia by Somali pirates

between 15 November 2008 and 13 February 2009.

2

8. Beatles presented the shipping documents for the cargo to Aardvark in or about mid

January 2009. The shipping documents appeared to be in compliance with the contractual

requirements and so the purchase price was paid to Beatles and the Bills of Lading were

endorsed to the Claimants.

9. After receiving Beatles’ insurance policy, on 6 March 2009, Aardvark claimed that Beatles

was in repudiatory breach of the sale contract by failing to insure the cargo under the agreed

terms. Beatles could not relate to this claim.

10. Following a series of messages it became apparent that Claimants had abandoned the

cargo by bringing the sale contract to an end.

11. Beatles, being the legal owner of the cargo after the ending of the sales contract, asks

Claimants on 17 March 2009 to send them the bills of lading. As a consequence of their

dispute, Claimants were not prepared to release the bills of lading.

12. Respondents had no primary knowledge of the contractual arrangements between

Claimants and Beatles, or the correspondence between them which is mentioned above.

13. On 19 March 2009 Beatles issued a Letter of Indemnity to Respondents asking them to

deliver the cargo to them (i.e. Beatles) at Rotterdam without production of the bills of lading.

14. On 20 March 2009 Claimants wrote to Respondents claiming that they were the lawful

holders of the Bills of Lading. Notwithstanding that notification Respondents discharged the

3

cargo on or about 20-22 March 2009 to Beatles. The cargo was put in storage at Rotterdam

port.

15. On or about 23 March 2009 Beatles arrested the cargo as security for their claims against

Aardvark. Aardvark tried to set aside the arrest of the Cargo in the Rotterdam Courts, but

failed at first instance. Beatles then obtained permission from the Dutch Court for the Cargo

to be sold. This sale has now taken place and, as ordered, by the Dutch Court, the proceeds

are held in the Dutch Court account, pending a decision in the present arbitration.

16. The Court of Rotterdam rejected Aardvark’s appeal to set aside the arrest of the cargo.

On 23 March 2009 Aardvark arrested the Vessel in Rotterdam as security for their claims for

damages against Respondents for delivery of the cargo in Rotterdam without production of

the Bills of Lading. The Vessel was released against security provided by Beatles on behalf of

Respondents.

4

ARGUMENTS PRESENTED

1. THE ARBITRAL TRIBUNAL HAS JURISDICTION

1. If Claimants dispute competence of the arbitration, it is submitted (1) they implicitly agreed

by bringing this arbitration before the Tribunal and (2) the bills of lading PG1 to PG4 contain

a valid arbitration clause.

1.1. CLAIMANTS IMPLICITLY AGREED TO THE ARBITRATION BY BRINGING THEIR CLAIMS BEFORE

THE TRIBUNAL

2. Party autonomy is a key aspect for arbitration.1 The arbitration parties are free to determine

how the proceedings are to be conducted, subject only to minimum safeguards. Claimants

agreed to the arbitration by bringing their claims before this tribunal. If they were to be

opposed by the arbitration, they should have sought the appropriate court for their claims in

their natural jurisdiction.

1.2. THE BILLS OF LADING PG1 TO PG4 CONTAIN AN EXPRESS REFERENCE TO AN ARBITRATION

CLAUSE

3. The incorporation of an arbitration clause into a bill of lading requires (1) an express

reference to an arbitration clause on the bill of lading, and (2) an identifiable charterparty.

4. The Bills of Lading state that, “All terms and conditions, liberties and exceptions of the

Charterparty, dated as overleaf, including the Law and Arbitration Clause/Dispute

Resolution Clause, are herewith incorporated.” This constitutes an express reference to the

arbitration clause, which is to be found in the Charterparty. The charterparty is not identified.

1 Siemens AG/BKMI Industrieanlagen GmbH v. Dutco Construction Company, XVII YBCA 140 (1993) (Cour

de Cassation, Paris); Alan Redfern and Martin Hunter, Law and Practice of International Commercial

Arbitration, Sweet and Maxwell, 267 (2003); Emmanual Gaillard and John Savage (eds), Fouchard Gaillard

Goldman on International Commercial Arbitration, Kluwer Law International, 1421 (1999).

5

The mere fact that on the Bills of Lading there is a lack of date or parties’ names in relation to

the Charterparty does not affect validity of the arbitration contract.2 I explain.

5. The Vessel Twilight Trader is chartered by Respondents as ‘disponent owner’ and

subchartererd to Beatles. These two charterparties apply to the carriage performed under bills

of lading n° PG1 to PG4 because the bills of lading are issued on the 25th

of October while the

subcharter is a voyage charter concluded on 12 September 2008 for a voyage from Pasir

Gudang, Malaysia to Liverpool, Merseyside, United Kingdom.

6. The presence of two charterparties can create doubts as to which charterparty the bills of

lading refer to. In ‘The Kallang’ the court ruled that when there is more than one charterparty

and one of the charter parties is voyage charter, the voyage charter will prevail.3 In casu, the

subcharter is a voyage charter and most closely connected to the bill of lading. Remark : a

headcharter concluded by a disponent owner is often agreed for financial and fiscal reasons.

This is known in the shipping industry. A charterparty agreed for financial reason cannot

reasonably be considered as a charterparty to which the carrier and the shipper wish to

incorporate.4 Last remark, the Bills of Lading stipulate they are “ To be used with charter

parties”.5 It should be noted that where it is clearly stated in the bill of lading that the

consignee should look at the charter party the consignee is obliged to do so.6 It might have

been expected from Claimants that they had asked the previous bills of lading holder a copy

2 Scrutton on charterparties and bills of lading, Twenty-second Edition, Sweet and Maxwell, 2011, page 98;

Pacific Molasses Co and United Molasses Trading Co v Entre Rios Compania Naviera SA (The San Nicholas)

[1976] 1 Lloyd's Rep. 8; Bangladesh Chemical Industries v Tex-Dilan Shipping Co (The S.L.S. Everest) [1981] 2

Lloyd’s Rep. 389;Welex A.G. v Rosa Maritime Ltd (The Epsilon Rosa) [2003] 2 Lloyd’s Rep. 509. 3 Kallang Shipping SA Panama v. Axa Assurances Senegal and another (“The "Kallang" (No 2)). [2009] 1

Lloyd's Rep. 124; The National Navigation Co v. Endesa Generacion SA (The "Wadi Sudr"). [2009] 1 Lloyd's

Rep. 666; Pacific Molasses Co and United Molasses Trading Co Ltd v Entre Rios Compania Naviera SA (The

San Nicholas) [1976] 1 Lloyd's Rep 8. 4 The Rewia [1991] 2 Lloyd's Rep 325.

5 See exhibits 5 to 8

6 Astro Valiente Compania Naviera s.a. v. the Government of Pakistan Ministry of Food and Agriculture (the

"Emmanuel Colocotronis"), [1982] 1 Lloyd's Rep. 286

6

of the charterparty. In casu Beatles could not have refused to deliver a copy of the

charterparty to the Claimants as they had a contractual obligation hereto under section 13 of

the FOSFA sales contract.7

7. In addition, an email8 from John Walker to Claimants sent on 12 September 2008 contains

the following sentence: “We have pleasure in confirming the following fixture concluded

today in accordance with your authority, all subjects lifted and fixture reconfirmed by

owners.” This proves that Claimants had knowledge of the Charterparty, and were in fact

aware of its content.

2. APPLICABLE LAW

2.1. ENGLISH LAW APPLIES

8. On the same grounds as the arbitration clause, namely a valid incorporation by explicit

reference into the bills of lading, the applicable law in the present case is English Law.

2.2. HAGUE-VISBY RULES APPLY

9. The Hague – Visby Rules - incorporated under English law as the COGSA 1971 - apply to the claim

as matter of contract (viz. General Paramount Clause9). This notwithstanding a, at first sight, battle of

the forms between the General Paramount Clause and section 1 of the Bills of Lading. Since the

country of shipment, Malaysia, only is party to the 1924 Hague Rules, the clause foresees that the

Hague-Visby Rules as enacted in the country of destination, the United Kingdom, will apply. As such,

the General Paramount Clause and section 1 of the Bills of Lading comply.

7 See exhibit 37

8 See exhibit 3

9 See Section 2 of the PG1 to PG4 Bills of Lading, exhibits 5 to 8

7

10. The Hague – Visby Rules also apply as a matter of statute law (viz. carriage of goods under a bill

of lading to a port located in a Contracting party).

2.3. ALL TERMS AND CONDITIONS, LIBERTIES AND EXCEPTIONS OF THE CHARTER PARTY ARE

INCORPORATED INTO THE BILLS OF LADING

11. All terms and conditions of the Charterparty are validly incorporated into the Bills of

Lading by general reference.10

The use of wide clauses can be effective in including al the

terms of a Charterparty into a Bill of Lading.11

In The Miramar12

for instance, the phrase “all

terms of the charterparty” was considered as sufficiently descriptive to incorporate all the

terms of the Charterparty.

3. THE CLAIMS ARE INADMISSIBLE

3.1 CLAIMANTS HAVE NO RIGHT OF SUIT, THERE THEY CAN NOT BE CONSIDERED THE LAWFUL

HOLDERS OF THE BILLS OF LADING

12. On the 6th

of March 2009, Claimants abandoned the cargo on board of the Vessel towards

Beatles by bringing the underlying sales contract to an end, due to their dispute with Beatles.13

They only received the Bills of Lading on or about 17 March 2009.14

As ownership of the

cargo is determined by the underlying sales contract, the Bills of Lading only give a

possessory title. The abandoning of the cargo therefore ensured that Beatles remained the

legal owner of the goods, and should have received the Bills of Lading from the Claimants.

10

See Section 1 of the PG1 to PG4 Bills of Lading, exhibits 5 to 8 11

I. Carr, P. Stone, International Trade Law, 4e Edition, Abingdon, Routledge-Cavendish, 2010, 274.

12 Miramar Maritime Corp v Holburn Oil Trading Ltd (1984) 2 Lloyd’s Rep 129. See also The Nai Matteini

(1988) 1 Lloyd’s Rep 452; Daval Aciers D’Usinor Et De Sacilor and Others (The Nerano) (1994) 2 Lloyd’s Rep

50. 13

See exhibit 12 14

See exhibit 16

8

13. Notwithstanding multiple requests by Beatles15

, Claimants did not deliver the Bills of

Lading to them. Instead they presented themselves to Respondents as the lawful holders of the

Bills of Lading. The term “holder” denotes either a person with possession of the bill of

lading who is identified in the bill of lading as the consignee of the goods, or a person who

comes into possession as a result of negotiation of the bill of lading by delivery or by

endorsement and delivery.16

The Bills of Lading are expressly made to be “to order”.17

They

are not consigned to a named party. The Bills of Lading are endorsed in blank by the shipper,

Vegetable Oils.18

Where a bill of lading has been endorsed in blank, it becomes similar to a

bearer Bill of Lading which can be transferred simply by delivering the bill to the intended

transferee without any further endorsement.19

In casu no endorsement was necessary for

Claimants to obtain the Bills of Lading, yet, possession in good faith still is mandatory for

being considered lawful holder of the Bills.

14. In this regard, Claimants also are estopped from asserting any title to the goods. If which

is denied, Claimants ought to have had any proprietary rights to the goods, estoppel by

representation makes that the true owner of goods, by words or conduct, voluntarily20

represents or permits it to be represented that another person is the owner of the goods.21

Seeing Claimants abandoned the cargo, they furthermore explicitly stated “…however that is

a decision for you as cargo owners and charterers to make.” in an e-mail towards Beatles.22

Hereby they admitted that Beatles were, and still are, the legal cargo owners.

15

See exhibits 17, 19, and 21 16

COGSA 1992 s.5(2)(a), (b). 17

See exhibits 5 to 8. 18

The back of the Bills of Lading only contains the shipper’s name and signature. See exhibit 5, 6, 7 and 8. 19

Keppel Tatlee Bank Ltd v Bandung Shipping Private Ltd [2003] 1 Lloyd's Rep. 619 at p. 622. 20

Debs v Sibec Developments Ltd (1990) R.T.R. 91. 21

M. Bridge, Benjamin’s Sale of Goods, eight edition, London, Sweet & Maxwell, 2010, 349. 22

See exhibit 14

9

15. As Claimants neither accepted the Bills in good faith due to their abandoning, nor can

have possession of the Bills in good faith because they no longer were the legal owners of the

cargo when receiving the Bills of Lading, they can not be considered the lawful holders of the

Bills of Lading.23

16. Section 2(1) of the COGSA 1992 provides that the “lawful holder” shall, by virtue of

becoming the holder of the bill, have transferred to and vested in him all rights of suit under

the contract of carriage as if he had been a party to that contract. The transfer of rights of suit

therefore depends on the fact whether a party can be qualified as a lawful holder of the bill.24

As such, Claimants do not have any right of suit against Respondents.

3.2 NO BRANDT v. LIVERPOOL25 CONTRACT HAD BEEN ESTABLISHED BETWEEN CLAIMANTS AND

RESPONDENTS

17. Cargo interests who are neither original parties to the contract of carriage nor within the

provisions of the COGSA 1992, can have an implied contract between them and the carrier.26

This depends on the facts. Respondents never delivered the cargo to Claimants, nor did they

accede to the request of Claimants to do so. In these circumstances no such implied contract

can originate, as it clearly not has been Respondents intention to do so.27

An implied contract

23

Scrutton on charterparties and bills of lading, page 44; Aegean Sea Traders Corp v Repsol Petroleo SA (The

Aegean Sea) [1998] 2 Lloyd’s Rep. 39 at p.60. 24

Scrutton on charterparties and bills of lading, page 43. 25

Brandt v Liverpool, Brazil & River Plate Steam Navigation Co Ltd [1924] 1 K.B. 575. 26

Scrutton on charterparties and bills of lading, page 50; R. Burnett, V. Bath, Law of the international Business

of Australasia, Sydney, The federation press, 2009, 170; C. Debattista, Sale of goods carried by sea, London,

Butterworths, 1990, 54. 27

Scrutton on charterparties and bills of lading, page 51; Ilyssia Cia. Naviera SA v Bamaodah (The Elli 2) [1985]

1 Lloyd’s Rep. 107; The Aramis [1989] 1 Lloyd’s Rep. 213; Cia Portorafti Commerciale SA v Ultramar Panama

Inc (The Captain Gregos) (No. 2) [1990] 2 Lloyd’s Rep. 395; Mitsui & Co Ltd v Novorossiysk Shipping Co (The

Gudermes) [1993] 1 Lloyd’s Rep. 311. The reasoning in The Aramis is particularly important in holding that

there was no Brandt v Liverpool contract made out.; R. Burnett, V. Bath, Law of the international Business of

Australasia, Sydney, The federation press, 2009, 170

10

can also not have originated from a business reality, since there are no enforceable obligations

between Claimants and Respondents.28

3.3 NO CLAIM IN TORT CAN BE MADE BY CLAIMANTS

18. Where there is no contract between parties, which is already made clear in the sections 3.2

and 3.3 of this memorandum, a party might have the right to put forward a claim in tort except

if the party can not obtain locus standi.29

In “The Aliakmon”:30

In casu it was settled that a

plaintiff cannot sue in tort, unless he can prove he has property interest in the goods. This

property interest can either be a form of ownership, or the right to delivery of the goods on

discharge.31

19. Two things should weigh in mind.

First, Claimants lost their property interest when they abandoned the cargo. This is already

duly mentioned in previous sections, and will therefore not be repeated here.

20. Second, if the abandoning of the cargo is not retained, it should be noticed that the goods

shipped were portion of a bulk cargo. According to section 16 of the Sale of Goods Act 1979

(Which applies since the FOSFA conditions apply to the sales contract, and make English law

applicable)32

, property in goods shipped in bulk can only pass on ascertainment, which

happens on discharge. Section 20A of the Sale of Goods Act 1979 does not apply since the

28

C. Debattista, Sale of goods carried by sea, London, Butterworths, 1990, 55. 29

C. Debattista, Sale of goods carried by sea, London, Butterworths, 1990, 55; R. Burnett, V. Bath, Law of the

international Business of Australasia, Sydney, The federation press, 2009, 171 30

Leigh & Sillivan Ltd v Aliakmon Shipping Co Ltd, (The Aliakmon), (1986) AC 785. Reiterated by the House

of Lords in Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) (2003) 1 Lloyd’s Rep. 571. 31

C. Debattista, Sale of goods carried by sea, London, Butterworths, 1990, 60; R. Burnett, V. Bath, Law of the

international Business of Australasia, Sydney, The federation press, 2009, 171 32

See exhibit 37

11

bulk from which the goods are to come is not identified in the sales contract33

between

Claimants and Beatles.34

With discharge taking place between 20-22 March, the alleged tort

act (either negligence or conversion) had already occurred.35

The Bills of Lading only

represent a portion of the total cargo carried by the Vessel, which also carried on board a

separate cargo of about 14,500 MT of Crude Palm Oil and PFAD belonging to Ecclestone

Oils under different Bills of Lading. Claimants being the holders of Bills of Lading relating to

a portion of bulk cargo which has not yet been delivered, do not have the necessary interest to

put forward a claim in tort.36

Claimants contractual right to acquire property in the future does

not suffice to allow them to sue.37

4. IF, WHICH IS DENIED, THE CLAIMS ARE ADMISSIBLE, THESE ARE THE

SUBSTANTIAL ISSUES

4.1 THERE IS NO PRESUMPTION OF LIABILITY

21. The Bills of Lading provide that the cargo is shipped at the port of loading in apparent

good order and condition. As there is a difference between “condition”38

and “quality” of the

goods, the master’s duty is merely to record the “condition” of the goods on shipment. It is

perfectly possible that the goods already had been contaminated on shipment, as the

deficiency would not have been “apparent” to the ship’s crew on loading since it was pumped

directly from the shore tanks into dark ship’s tanks. In addition, the master is not to have the

same expertise as a chemist and he is only bound by way of what would be “apparent” to a

reasonable man with reasonable eyesight at the time of loading.39

In this regard, the Bills of

33

See exhibits 1 and 2 34

A. G. Guest, Benjamin’s Sale of Goods, seventh edition, London, Sweet & Maxwell, 263. 35

C. Debattista, Sale of goods carried by sea, London, Butterworths, 1990, 61-62. 36

R. Burnett, V. Bath, Law of the international Business of Australasia, Sydney, The federation press, 2009, 171 37

Leigh & Sillivan Ltd v Aliakmon Shipping Co Ltd, (The Aliakmon), (1986) AC 785. 38

Condition relates to the subsequent state of fitness of the goods. 39

Athel Viscount, (1934) 48 Ll. Rep 164.

12

Lading also provide that condition was unknown. It can not be proven that the contamination

occurred during the voyage.

4.2. RESPONDENTS WIL NOT BE RESPONSIBLE FOR LOSS OR DAMAGE ARISING OR RESULTING

FROM THE PIRACY TAKEOVER

4.2.1 ART IV, R2 OF THE HAGUE VISBY RULES EXCLUDES THE RESPONDENTS FOR LIABILITY ARISING FROM

PIRACY

22. Article IV, r.2 of the Hague-Visby rules provides that “Neither the carrier nor the ship

shall be responsible for loss or damage arising or resulting from

(c) perils, dangers and accidents of the sea or other navigable waters;

…

(e) act of war;

(f) act of public enemies;

…

(q) any other cause arising without the actual fault and privity of the carrier, or without the

fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the

person claiming the benefit of this exception to show that neither the actual fault or privity of

the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the

loss or damage.”

23. A peril of the sea is defined as something which is fortuitous and unexpected, not

something due to ordinary wear and tear, nor to the operation of any cause ordinarily

13

incidental to the voyage and therefore to be contemplated.40

Piracy as such, has long been

regarded as a peril of the sea.41

24. Piracy as we know it today in Somalia can be brought under the scope of the provisions on

act of war, public enemies, and any other cause arising without the actual fault and privity of

the carrier.42

This is founded on the fact that the modus operandi of pirates has significantly

changed over the years. Modern piracy is characterized by the use of small high-speed boats,

heavy machine guns, and other high-tech devices such as radars and satellite communication.

They have a preference for hostages and kidnapping because they seek to use their targets as a

mechanism to maximize profit, as in the case of ransom.43

25. Mostly, they are well organized and connected to other similar groups, some important

persons they work for, or even with the authorities. Their goals are not just looting of the

small ships. They attack for fulfilling their part of the business. Well-established analysts

institutions are concerned that pirates, mainly those from Somalia, are linked to jihadist

terrorist groups, such as Al-Qaeda.44

Although not directly proven, it appears the organization

is at least profiting monetarily from piracy activities, and many suspect some pirates are

working with the motivation of raising funds for terrorist groups. The line between acts of

maritime piracy and terrorism is hazy, and with some governments playing a part in it,

modern piracy can not be regarded other than as an act of public enemies or even an act of

war.

40

Hamilton v Pandorf (1887) App Cas 518, p 530, per Lord Herschell; M. Dockray, K. Reece, Cases and

Materials on the Carriage of Goods by Sea, London, Cavendish Publishing Limited, 2004, 29. 41

Pickering v Barkley (1648) Style 132; More v Slue (1671) 1 vent 190. 42

I. Carr, P. Stone, International Trade Law, 4e Edition, Abingdon, Routledge-Cavendish, 2010, 251; Comite

Maritime International, The travaux préparatoires of the Hague Rules and of the Hague-Visby rules, 408. 43

Masefield AG v Amlin Corporate Member Ltd & Anor [2011] EWCA Civ 24 26/01/2011 44

Biswas, Shrideep. “Costal Insecurity.” South Asia Intelligence Review. 3 October 2001. Web. 9 November

2011.

14

26. Considering this, it is clear that Respondents can not be held liable for any damage

resulting, directly or indirectly, from the pirate hijack between 15 November 2008 and 13

February 2009.

4.2.2 THE CHARTER PARTY EXCLUDES LIABILITY ARISING FROM PIRACY, ACT OF WAR, AND PUBLIC ENEMIES

IN SECTION 17, THE GENERAL EXCEPTIONS CLAUSE

27. Section 17 of the Charterparty provides that “neither the Vessel, her Master or Owner,

nor the Charterer shall, unless otherwise in this Charter expressly provided, be responsible

for any loss or damage or delay to or failure to discharge or deliver the cargo arising or

resulting from:-- Act of God; act of war; act of public enemies, pirates or assailing

thieves,…”

28. Since Respondents can fully rely on all provisions of the Charterparty, they deny their

liability.45

4.2.3 THE DEVIATION OF THE TWILIGHT TRADER DOES NOT AFFECT THE VALIDITY OF THE EXONERATION

CLAUSES STIPULATED IN THE CHARTERPARTY

29. The fact that the Vessel deviated from its intended route towards the Somali coast region

does not make the provisions of the Charterparty invalid.46

30. First, section 21 of het Charterparty for sees in a Deviation Clause. This clause gives

Respondents a wide liberty to deviate the Vessel. For instance, it mentions that “The Vessel

45

See section 2.3 of this memorandum 46

See section 1.2.2 of the Aspinall Lewis International inspection, exhibit 25.

15

shall have liberty … to deviate for the purpose of saving life of property…” It is to be noticed

that a resembling provision is to be found in the Salvage Convention 1989.47

However, the

aim of the Salvage Convention is to oblige the master of a ship to render assistance to third

persons in difficulty at sea. The text of the Charterparty-clause can be elucidated in a much

broader way, and so rely to the situation where a master deviates for the purpose of saving life

or cargo on board of his own ship. Deviation for the safety of the crew falls within the scope

of this provision. Taking the circumstances in consideration, one should ascertain that in the

present case Respondents can not be held liable for deviating from its intended course after

the hijack.

31. Secondly, Respondents can not be held responsible for the deviation, as of the moment of

the hijack they no longer had control over the Vessel. It has been established that on 15

November 2008 control of the Vessel was taken over by Somali pirates, and that the Vessel’s

crew was held hostage until released on 12 February 2009.48

4.3. RESPONDENTS HAVE TAKEN ALL NECESSARY MEASURES TO AVOID BEING HIJACKED

32. To the contrary of what Claimants allege, no breach of Article III, r.2 of the Hague-Visby

rules has occurred. Respondents have made proper preparations and took appropriate

precautions to minimise the risk of being hijacked. In this respect, they commenced a pirate

watch when entering the Gulf of Aden on 14 November 2008. Despite their best efforts,

Somali pirates boarded the Vessel on 15 November 2008.49

47

Article 10 of the convention 48

See section 1.2.2 of the Aspinall Lewis International inspection, exhibit 25. 49

See section 1.2.2 of the Aspinall Lewis International inspection, exhibit 25.

16

4.4.RESPONDENTS HAVE TAKEN EVERY MEASURE POSSIBLE TO SECURE THE CARGO DURING THE

HIJACK

33. Since it is proven that the entire crew of 23 men was held hostage 24 hours a day at the

bridge of the Vessel, there was not much that could be done to secure the cargo. Despite this,

they managed to observe the deck area once every hour. The Master and Chief Officer stated

that they did not observe any broaching of the cargo tanks during the period of captivity.50

As

for any other measures, for example in connection with the cargo temperature, it is clear that

Respondents can rely on Force Majeure to exclude them from any possible liability. Specific

for the heating issue, section 16 of the Charterparty provides that “…the Owner shall not be

responsible if such temperatures are not maintained by reason of any cause beyond Owners

control…” Accordingly, Respondents can not be held liable for breaching article III r. 2 of the

Hague-Visby rules on this matter.

4.5.THERE IS NO TORT OF NEGLIGENCE

34. A tort of negligence requires four elements:

Duty of care51

Breach of duty

Causation

Damages

All four elements need to be proven for a claim to succeed.

35. Having established that Respondents had a duty of care, Claimants must prove that the

Respondents failed to do what the reasonable person would have done in the same situation.

Only if Respondents fail to come up to the standard, there will be a breach of the duty of care.

50

See section 1.2.4 of the Aspinall Lewis International inspection, exhibit 25. 51

Caparo Industries plc v Dickman [1990] UKHL 2.

17

In Roe v Minister of Health52

it was said the defendant will only be liable if a reasonable

person would have foreseen the loss or damage in the circumstances prevailing at the time of

the alleged breach of duty. As mentioned under sections 4.2 and 4.3 of this memorandum,

Respondents did everything in their power to prevent the Vessel from being hijacked by

pirates, and to secure the cargo in the best possible way. Respondents in every manner

exercised the care that a reasonably person would exercise in like circumstances. As a result

hereof there is no breach of duty, which is one of the necessary elements for a tort claim to

succeed.

4.6. RESPONDENTS HAD THE RIGHT TO DISCHARGE AT ROTTERDAM

4.6.1 CLAIMANTS WERE NOT ENTITLED TO DELIVERY

36. Notwithstanding the existence of Bills of Lading, the carrier always retains the

responsibility of ensuring that he delivers cargo to the true owner. It is a fact that the law has

recognised that Bills of Lading are the best evidence of a cargo owner’s title to the goods53

and that possession of them is the best evidence of the holder’s title to the goods.54

As

Claimants have proven though, this is no absolute truth. Having abandoned the cargo they had

no title of ownership on the goods. Nevertheless, they remained holders of the Bills of

Lading.

37. Not complying to the general rule, Respondents discharged the cargo at Rotterdam

between the 20th

and the 22nd

of March 2009, delivering it to Beatles without production of

the Bills of Lading. In this regard it should be noticed that a carrier can deliver without

52

Roe v Minister of Health (1954) 2 AER 131. 53

J. I. MacWilliam Co. Inc v Mediterranean Shipping Co. SA (The Rafaela S) [2005] 1 Lloyd’s Rep. 347 at p.

357. 54

The Stettin (1889) 14 P.D. 142.

18

production of the Bills of Lading, but does so at his own risk.55

Respondents decided to

deliver the cargo to Beatles without production of the Bills of Lading after they received a

Letter of Indemnity from Beatles on the 19th

March 2009.56

38. Two things need to be considered when judging Respondents actions.

First, it is established in “The Sagona”57

and “The Houda”58

that there is a practice in the oil

cargo trade for cargoes to be delivered against a letter of indemnity. Especially when the

vessel is chartered, the shipowner is entitled to rely on the indemnity if he complies with the

charterers instructions, and does so in a way that the “act is not apparently illegal in itself, but

is done honestly and bonna fide in compliance with the directions…” . 59

In casu,

Respondents did not only receive a distinct Letter of Indemnity from Beatles (The

Charterers), they can also rely on the provisions of the Charterparty as clause 24 of the

Charterparty contains the following provision: “The Charterer shall indemnify the Owner, the

Master, and the Vessel from all consequences or liabilities that may arise ... or from

complying with any orders of the Charterer or its agents.” Taking into account that the Bills

of Lading60

also designated Beatles to be the notifying party, Respondents actions were as

such not uncustomary.

39. Second, Respondents had no knowledge of the correspondence between Claimants and

Beatles. They based their decision completely on the letters they received from respectively

Beatles and the Claimants on 19 and 20 March 2009. As it turns out, they made the correct

decision by delivering the cargo to Beatles, them being shown the true owner at the moment.

55

Per, Lord Denning in Sze Hai Tong Bank Ltd v. Rambler Cycle Co. Ltd (1959) 2 LLR at 120. 56

See exhibit 31 57

A/S Hansen-Tangens Rederi III v Total Transport Corporation (The Sagona) [1984] 1 Lloyd’s Rep 194. 58

Kuwait Petroleum Corp v. I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541. 59

Strathlorne Steamship Company, Ltd. v. Andrew Weir & Co., (1934) 50 Ll.L.Rep. 185. 60

See exhibit 5 to 8

19

Claimants claims are ill-founded as they have no rights to the goods itself, being merely

holders of the Bills of Lading.

4.6.2 RESPONDENTS HAD THE RIGHT TO DISCHARGE THE CARGO IN ROTTERDAM DUE TO A LIBERTY

CLAUSE

40. The Charterparty provides in section 29 that “…The owner may, when practicable, have

the Vessel call and discharge the cargo at another or substitute port declared or requested by

the charterer. The owner or the Master is not required to give notice of discharge of the

cargo, or the forwarding thereof as herein provided…”61

41. Respondents can rely on all provisions of the Charterparty since it is duly incorporated

into the Bills of Lading. In this regard they had a contractual right to discharge the goods in

Rotterdam on charterers request. Respondents are in no way liable to Claimants for this

action.

4.6.3 CLAIMANTS AGREED DELIVERY AT ROTTERDAM

42. If which is denied, Claimants are the legal owners of the cargo, they agreed for the cargo

to be delivered at Rotterdam. For this we refer to the correspondence between Claimants and

Beatles. In the 16 March 2009 15:20 email Claimants stated they “did not consider that the

cargo should be sent to Liverpool…” The 18th

of March 2009 16:01 email provides that

Claimants had “…couriered the bills to Johnson & Johnson in Rotterdam for them to make

available when the vessel arrives…”. This evidences that Claimants were in agreement with

Beatles for the cargo to be delivered at Rotterdam. Beatles merely acted in accordance with

61

See exhibit 3

20

this agreement by instruction Respondents to discharge the cargo at Rotterdam. The fax62

sent

by Claimants to Respondents on the 20th

of March 2009 provided that Claimants had not

authorised Beatles to ask for discharge at Rotterdam. However, the fax was sent to late as

discharge had already began the 20th

of March 2009. Knowing this, the fax sent by Claimants

can only be considered an attempt to artificially create a breach of contract by Respondents.

4.6.4 THERE IS NO TORT OF CONVERSION

43. A conversion requires three elements:

the plaintiff has clear legal ownership or right to possession of the property at the time

of the conversion;

the defendant's conversion by a wrongful act or disposition of plaintiff's property

rights;

there are damages resulting from the conversion.

44. All three of these elements must be fulfilled for a conversion claim to succeed. Claimants

do not meet the first and last requirement.

45. Claimants abandoned the cargo on the 6th

of March 2009. When the cargo was delivered

to Beatles between 20 and 22 March 2009, Claimants did not have legal ownership of the

cargo, nor did they have a right to possession of the cargo. As Claimants had no right to

possession of the cargo, they neither could have suffered any damage. Due to this, no

conversion occurred.

62

Exhibit 23

21

46. There is a lack of identity of property. Since the cargo was shipped in bulk, property of the

goods could only pass on ascertainment.63

Claimants had no existing property rights on the

goods when the alleged conversion occurred. If, which is denied, Claimants did have existing

property rights, they are estopped from them by representation of their own actions.64

Their

claim is ill-founded.

5. IF WHICH IS DENIED, THE RESPONDENTS ARE LIABLE TO CLAIMANTS

FOR DELIVERING THE CARGO TO BEATLES:

5.1 THE CALCULATION OF THE DAMAGES IS THE CARGO VALUE AT ROTTERDAM

47. Since “Hadley v Baxendale”65

damages are recoverable under two limbs66

:

1) Damages which may fairly and reasonably be considered as arising naturally

from the breach;

2) Damages which may reasonably be supposed to have been in the contemplation

of the parties, as liable to result from the breach, at the time of the contract.

48. The 2009 case of the "Achilleas" added a further requirement to those of “Hadley v.

Baxendale”, namely that the loss claimed be a type of loss for which the guilty party can

reasonably be assumed to have assumed responsibility.67

Although the case of the “Sylvia”68

tempered the effect of the “Achilleas” in a way that the orthodox approach would remain the

general test of remoteness applicable in the great majority of cases, there still may be

63

See section 3.3 of this memorandum 64

See section 3.1 of thus memorandum 65

Hadley v Baxendale [1854] EWHC Exch J70; (1854) 9 Exch 341 at page 354. 66

Profindo Pte ltd v Abani Trading Pte ltd (the mv “Athens”) [2013] Lloyd's Rep. Plus 8; Koufos v C Czarnikow

Ltd (The Heron II) [1967] 3 All ER 686. 67

Transfield Shipping Inc v Mercator Shipping Inc (The 'Achilleas') [2008] 3 WLR 345. 68

Sylvia Shipping Co Limited v Progress Bulk Carriers Limited [2010] EWHC 542.

22

"unusual" cases, in which the context, surrounding circumstances or general understanding of

the market make it necessary to consider whether there was an assumption of responsibility.

49. Respondents are not liable to Claimants for any deterioration in value of the cargo due to

the pirate hijack. Claimants can only prescribe to a compensation for the damages they

incurred as a result of the misdelivery to Beatles by Respondents. These damages fall under

the first limb of the “Hadley v Baxendale” rule, and are therefore recoverable.

5.1.1 THE MARKET VALUE OF THE CARGO

50. The calculation of the damages has to be in accordance with article IV, 5 (b) of the

Hague-Visby rules, which provides that: “The total amount recoverable shall be calculated

by reference to the value of such goods at the place and time at which the goods are

discharged from the ship in accordance with the contract or should have been so

discharged.”

51. In accordance with the liberty clause provided in the Charterparty, and subsequent, the

agreement by Claimants, the goods were properly discharged at Rotterdam on 20 – 22 March

2009. The value of the goods therefore is the market value at Rotterdam. This value is best

evidenced by the price paid in Rotterdam on 19 March 2009 in respect of the other parcel

non-GMQ PFAD on board on the Vessel Twilight Trader, which was sold by Beatles at USD

350 per MT C&F Rotterdam. The value of the damages incurred by Claimants amounts, 4,000

x USD 350, which brings the total to USD 1.4 million.

52. If which is denied, the cargo should have been delivered in Liverpool, the calculation of

the damages is the price paid in Rotterdam on 19 March 2009 plus the freight costs from

23

Rotterdam to Liverpool. The total amount of the damages would than be USD 350 per MT +

USD 30 per MT freight costs, being USD 380 per MT, USD 1.52 million.69

53. In order to obtain this number we did not ignore the Kevin Ackroyd Single Joint Expert

Report70

, however, we doubt its plausibility. First, all prices given in the report, as well the

PFAD prices as the freight rates, diverge seriously from the prices given by the Beatles

consultant Mark Wiggins.71

Each PFAD price given by Kevin Ackroyd is significantly higher

than the prices provided by Mark Wiggins, which can be proven on the basis of the attached

chart.72

The freight rates provided by Kevin Ackroyd are also considerably higher than those

provided by Mark Wiggins, who can prove his numbers in much more detail.73

Second, the

words used by Kevin Ackroyd render the report untrustworthy in our opinion. An expert

judging facts by saying “As far as I can remember…”74

is not adequate to stand by in a legal

dispute. In addition, he only speaks in general terms and provides no controllable sources on

which he bases his opinion, or from whom he acquires his information. For these reasons we

consider the entire report unreliable, and do not take it into account for the calculation of the

damages. On the ground of article 37,1,(b) of the UK Arbitration Act 1996 we ask the tribunal

to do the same thing, and not take the report into account.

54. Furthermore, the fact that the individual buyers of Claimants would have accepted to take

the non-GMQ PFAD for the same price as GMQ PFAD75

does not prove that the market

value of non-GMQ PFAD in Liverpool is equal to GMQ PFAD. It is to short-sighted to

extrapolate an individual case to the general market value of the goods.

69

See exhibit 35 70

See exhibit 32 71

See exhibit 35 72

See Chart in exhibit 35 73

See exhibit 35 74

See exhibit 32 Section F 75

See exhibits 33 and 34

24

5.1.2 THE ALLEGED CONSEQUENTIAL DAMAGES WERE NOT REASONABLY FORESEEABLE

55. The price of USD 522.50 per MT paid by Claimants to buy in goods to sell to their sub-

buyers in Liverpool is no consequential damages that Respondents are liable for towards

Claimants. On the moment the contract of carriage originated it was not reasonably

foreseeable for Respondents, nor in contemplation of the parties, that Respondents could be

held liable for obligations by Claimants towards third parties. Respondents also never

recognised an assumption of this responsibility. It was in no way predictable for Respondents

that Claimants already would have sold goods that yet had to be delivered to them. As a result

hereof the alleged damages do not fall under either the first, nor the second limb of the

“Hadley v Baxendale” rule. The alleged damages are not recoverable.

5.2 THE DUTCH COURT COSTS SHOULD NOT BE REVISITED

56. The Dutch Court ordered that Claimants should pay the costs of this procedure since their

claim was rejected. The costs were Euro 262 for disbursements and Euro 816 for legal fees.76

These costs should not be revisited.

76

See exhibit 31

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