Prashasti Janghel Rinki Singh Dinesh Dangi Vivek Kumar … · III.A. THE CHARTERERS HAVE BREACHED...

16th

INTERNATIONAL MARITIME LAWARBITRATION MOOT, 2015

HIDAYATULLAH NATIONAL LAW UNIVERSITY, RAIPUR

MEMORANDUM FOR THE CLAIMANT

ON BEHALF OF AGAINST

Western Tankers Inc. Super Charterers Inc.

CLAIMANTS RESPONDENTS

TEAM NO. 20

Prashasti Janghel

Rinki Singh

Dinesh Dangi

Vivek Kumar Pandey

ii

Contents

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

STATUES .................................................................................................................................. v

BOOKS ...................................................................................................................................... v

ARTICLES ............................................................................................................................... vi

LIST OF CASES……………………………………………………………………………....vi

STATEMENT OF FACTS ........................................................................................................ X

I.THE CHARTERPARTY AGREEMENT CONTAINS A VALID ARBITRATION AGREEMENT

AND THEREFORE THE TRIBUNAL HAS THE JURISDICTION TO TAKE UP THE PRESENT

MATTERS. ............................................................................................................................... 1.

I.A. That the present tribunal has the power to rule on its own jurisdiction by virtue a valid

arbitration agreement. ............................................................................................................... 1

I.A.1The Arbitration Agreement was in writing incorporated in the Standard form of

Charterparty, Shelltime 4 (hereinafter called as

ST4)……………………………………………………………………………………………………..…2.

I.A.2. The parties consented to the underlying arbitration agreement in ST4.

…………………………………………………………………………………………………..3

I.B. That in absence of an express exclusion clause, the dispute concerning fraud by the respondents

is arbitrable before the Tribunal ............................................................................................... 3

II. THE RESPONDENT IS LIABLE TO PAY DAMAGES AND INTEREST THEREON….4

II.A. THE RESPONDENT IS LIABLE UNDER TORT OF FRAUD FOR THE LOSS INCURRED

BY THE CLAIMANT……………………………………………………………………………………….6

II.A.1.THE ATLANTIC SERVICE AGENCY (ASA2 ANGOLA LTD.) IS THE AGENT OF

THE CH II.A.1.2. ASA2 is good agency of the respondents as the respondent ratified the acts of

ASA2…………………………………………………………………………………………………………6.

II.A.1.THE ATLANTIC SERVICE AGENCY (ASA2 ANGOLA LTD.) IS THE AGENT OF

THE CHARTERERS AND THERE IS A VALID AGENCY RELATIONSHIP…………….6

iii

II.A.1.2. ASA2 is good agency of the respondents as the respondent ratified the acts of ASA2….7

I I.A.1.3. The Respondents passed the control of vessel under TCP to the ASA2 and thus, ASA2 is

are the Sub-Charterers…………………………………………………………………………………….8

II.B. THE RESPONDENT IS LIABLE FOR TORT OF FRAUD……………………………………..9

II.B.1. THE RESPONDENT MADE A FALSE REPRESENTATION OF PROVIDING BUNKERS

TO THE CLAIMANT……………………………………………………………………………………….9.

II.B.2. THE REPRESENTATIONS MADE BY THE RESPONDENT WERE FRAUDULENT.….10

II.B.3. THE CLAIMANT RELIED ON THE REPRESENTATIONS MADE AND ACTED

UPON……………………………………………………………………………………………………….11

II.B.4. THE CLAIMANT SUFFERED LOSS OF BECAUSE OF MISREPRESENTATIONS MADE

BY THE RESPONDENT…………………………………………………………………………………11

II.C. THE LOSS SUFFERED AS A RESULT OF RESPONDENT’S FRAUDULENT

MISREPRESENTATION FALLS WITH ITS LIABILITY………………………………......12

II.C.1 THERE WAS A SUFFICIENT CAUSAL CONNECTION BETWEEN THE LOSSES

INCURRED, AND THE FRAUDULENT MISREPRESENTATION…………………….………….12

II.C.1.1 The piracy attack was a result of the respondent’s misrepresentation………………...12

II.C.2. The vessel failed to meet its laycan and was unable to discharge full cargo to the

receivers under B/L……………………………………………………………………………………..13

III. THE RESPONDENT BREACHED THE CHARTERPARTY……………………………14

III.A. THE CHARTERERS HAVE BREACHED THE CHARTERPARTY BY DIRECTING THE

VESSEL TO A ALTERNATE DISCHARGE PLACE…………………………………………………14

III.A.1.THE CHARTERERS NOMINATED OPL LUANDA AS A DISCHARGE PORT IN THE

VOYAGE ORDERS………………………………………………………………………………………14

III.A.2. THE CHARTERERS CHANGED THE CHANGED THE NOMINATED PORT TO STS

AREA 1……………………………………………………………………………………………………..15

III.B. THE OWNERS ARE ENTITLED TO DAMAGES/ LOSSES INCURRED DUE TO THIS

DEVIATION UNDER PRINCIPLES OF COMMON LAW…………………………………………16

III.C.1. The charterparty was never frustrated as contented by the respondents………………….17

IV. QUANTIFICATION OF DAMAGES……………………………………………………18

V.THE CLAIMANT IS NOT LIABLE TO PAY DAMAGES TO THE RESPONDENTS…18.

iv

V.A.THE CLAIMANTS ARE NOT LIABLE FOR ANY LOSS ARISING OUT OF

UNSEAWORTHINESS OF THE VESSEL……………………………………………………………..18

V.A.1. THE RESPONDENT’S LOSS INCURRED DUE TO THE PIRATES ATTACK………….18

V.A.1.1. The claimant rely on the excepted peril under article IV, rule 2 of HVR………………..19

V.A.2. THE CLAIMANTS EXERCISED DUE DILIGENCE TO MAKE THE SHIP SEAWORTHY

AS REQUIRED UNDER ARTICLE III:1 OF HVR……………………………………………………19.

V.A.2.1. The Master of the Ship was not Incompetent………………………………………………21

V.A.3. UNSEAWORTHINESS OF THE VESSEL DID NOT CONTRIBUTE TO THE LOSS OF THE

CARGO…………………………………………………………………………………………………….22.

V.B. THE CLAIMANTS ARE NOT LIABLE UNDER BAILMENT AND FOR

CONVERSION OF THE CARGO………………………………………………………………22

PRAYER FOR RELIEF .......................................................................................................... 23

LIST OF AUTHORITIES

v

STATUES

English Arbitration Act, 1996 (U.K.)

UNCITRAL Model Law on International Commercial Arbitration,

Hague Visby Rules, 1968.

BOOKS

Cartwright, Misrepresentation, Mistake and Non-Disclosure ( sweet & Maxwell, 3rd

edition,

2012) .

Paul Todd, Maritime Fraud and Piracy (Infroma, 2nd

edition, 2010)

Baughen, Simon, Shipping Law (Cavendish Publishing Limited, 2nd ed, 2001)

Colinvaux, Raoul, Carver: Carriage by Sea (London Stevens & Sons, 13th ed, 1982)

Girvin, Stephen, Carriage of Goods by Sea (Oxford University Press, 2nd ed, 2011)

Terence Coghlin, Andrew W. Baker, Julian Kenny, John D. Kimball, Time Charters (Informa,

7th

edition , 2014)

Christopher Hill, Maritime Law ( LLP London, 6th

edition 2003)

Peter Watts, F.M.B Reynolds, Bowstead & Reynolds on Agency (Sweet &Maxwell 19th

edition,

2010)

Billins Roger, Agency Law (sweet & Maxwell, 2010)

Edwin Peel, The Law of Contracts (Sweet &Maxwell, 11th

edition, 2011)

Janet O’Sullivian, Jonathan Hillard, The law of Contract (Oxford Publications, 5th

edition ,2011 )

Gary B. Born, International Arbitration Cases and Materials (Wolters Kluwer, 2011)

Gary b. Born, International Commercial Arbitration (vol. 1, Kluwer Law International, 2010)

Nigel Blackabyl, Redfern and Hunter on International Arbitration (Oxford University Press,5th

vi

ed, 2009)

John tackarberry, Arthur Marriot, Handbook of Arbitration and Dispute Resolution Practice,

(Sweet &Maxwell, 4th

edition, 2011)

ARTICLES

Andrew Tweeddale and Keren Tweeddale, “Incorporation of Arbitration Clauses Revisited”,

76(4) ARBITRATION 656 (2010).

Brian Casey, “Re-examining the Arbitration Agreement: Is It Still Autonomous? The Common

Law Canadian Experience” in Albert Jan van den Berg (ed.) INTERNATIONAL

COMMERCIAL ARBITRATION: IMPORTANT CONTEMPORARY QUESTIONS (Volume

13, 2006).

David Altaras, “Incorporation and Stay - Welex AG v Rosa Maritime Ltd on Appeal”,

ARBITRATION 56 (2004).

Masood Ahmed, “Arbitration Clauses: Fairness, Justice and Commercial Certainty” in William

W. Park (ed.) ARBITRATION INTERNATIONAL (2010).

William Tetley, “The Burden and Order of Proof in Marine Cargo Claims” available at <

http://www.mcgill.ca/files/maritimelaw/burden.pdf

LIST OF CASES

1. Andrews v. Mockford [1896] 1 Q.b. 372

2. Angus v. Clifford,[1891] 2 Ch. 449, CA

3. Ardennes(cargo owners)v. Ardennes (owners)(The Ardennes) [1951] 1 K.B. 55.

4. Barton v. County NatWest Ltd.[1999] Lloyd’s Rep. Bank. 408, CA

vii

5. Ben Line Steamers Ltd v Pacific Steam Navigation Co – The “Benlawers” [1989] 2

Lloyd's Rep 51.

6. Bradford Equitiable Building Society v. Borders [1941] 2 All E.R. 205, HL

7. Bradford Third Equitable Benefit Building Society v. Borders [1941] 2 All E.R. 205, HL

8. Bradley v. Federal St eam Navigation, (1926) 24 Ll. L. Rep. 446, at p. 454-455,

9. CASES

10. Cf Cassa di Risparmio della Repubblica di San Marino S.p.A v. Barclays Bank Ltd.

[2011] EWHC 484 (Comm).

11. Commercial Finance Ltd. v. Gee [2005] EWHC 2056 (QB)

12. Daido Asia Japan Co. Ltd v. Rothen [2002] B.C.C 589.

13. Demand Shipping Co Ltd v Ministry of Food Government of the People’s Republic of

Bangladesh and Another - The “Lendoudis Evangelos II” [2001] 2 Lloyd's Rep 304.

14. Derry v. Peek (1889) 14 App. Cas. 337, HL

15. Dixon v Sadler (1839) 5 M & W 405 414

16. Empresa Cubana Importada de Alimentos v Iasmos Shipping Co SA – The “Good

Friend” [1984] 2 Lloyd’s Rep 586;

17. F. C. Bradley & Sons Ltd v Federal Steam Navigation Company, Ltd (1926) 24 Lloyd’s

Rep 446;

18. Goose v. Wilson Standford & Co.[2001] Lloyd’s Rep. P.N. 189, CA

19. Gordan v. Selico Co. Ltd. [1985] 2 E.G.L.R.

20. Great China Metal Industries Co Limited v Malaysian International Shipping

Corporation Berhad – The “Bunga Seroja” (1998) 72 ALJR 1592

21. Kopitoff v Wilson (1876) 1 QBD 377;

viii

22. Kuwait petroleum Corporation v. I. & D. Oil Carriers Ltd. [1994] 2 Lloyd’s Rep. 541.

23. Le Lievre v. Gloud, [1893] 1 QB 491, CA

24. M.D.C Ltd v N.V. Zeevaart Maatschappij - The “Beursstraat” [1962] 1 Lloyd’s Rep 180

25. Mafo v. Adams[1970] 1 Q.B 548, CA.

26. Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd and La ReÂunion Europeane

(The Star Sea) [1997] 1 Lloyd's Rep 360,.

27. Maxine Footwear v. Canadian Government [1959] AC 589.

28. McFadden v Blue Star Line, [1905] 1 K.B. 697 703

29. Mead v. Babington [2007] EWCA Civ 518

30. Morris v. C. W. Martin & Sons Ltd. [1966] 1 QB 716 (CA),

31. Mullet v. Mason (1866) L.R. 1 C.P

32. Noel v. Poland [2001] 2 B.C.L.C. 645

33. Northern Shipping Co v. Deutsche Seereederei G.M.B.H. and Others –The “Kapitan

Sakharov” [2000] 2 Lloyd's Rep 255. at 266; Great China Metal Industries Co Limited v

Malaysian International Shipping Corporation Berhad – The “Bunga Seroja” (1998) 72

ALJR 1592

34. Pasley v. Freeman (1793) 3 T.R. 5

35. Peek v. Gurney (1873) L.R. 6 H.L. 377

36. President of India v West Coast S.S.Co, [1963] 2 Lloyd’s Rep 278, 281;

37. President of India v. Metacalfe Shipping Co. ltd (The Dunelmia)[1970] 1 Q.B 289.

38. Project Asia Line Inc. and Another v. Shone, (The Pride of Donegal), [2002] 1 Lloyd's

Rep. 659.

39. Shipping Corporation of India v Gamlen Chemical Co A/Asia Pty Ltd (1980) 147 CLR

http://www.bailii.org/cgi-bin/redirect.cgi?path=/uk/cases/UKPC/1959/1959_13.html

ix

142

40. Smith Kline & French LaboratoriesLtd. V. Long [1989] 1 W.L.R. 1, CA

41. Smith New Court securities Ltd. v.Scrimgeour Vickers (Asset Management) Ltd.[1997]

A.C. 245, HL.

42. Standard Chartered Bank v. Pakistan National Shipping Corp. [2002] UKHL 43

43. Stanton v Richardson (1874) LR 7 CP 421

44. SX Holdings Ltd. v. Synchronet Ltd [2001] C.P. Rep. 43, CA

45. Thames and Mersey Marine Insurance Co v Hamilton, Fraser and Co (1887) 12 AC 484,

492

46. The Amstelslot [1963] 2 Lloyd’s Rep 223 at p 230.

47. The Eurasian dream [1996] 2 Lloyd's Rep 171.

48. Thomas Witter Ltd. v. TBP Industries Ltd. [1996] 2 All E.R. 573.

49. UCB Corporate Services Ltd. v. Williams [2002] EWCA Civ 555

50. Venetico Marine SA v. International General Insurance Company Limited and Others.

[2003] EWHC 3644 (Comm)

51. Virginia Co. v. Norfolk Shipping Co., 17 Com. Cas. 277

52. Way v. Hearn (1862)13 C.B. (N.S.) 292

53. Weld-Blundell v Stephens [1920] AC 956 (HL).

54. Williams v. Natural Life Health Foods Ltd. [1998] 1 W.L.R. 830, HL

x

STATEMENT OF FACTS

Claimant is Western Tankers Inc (the “Owners”), a company incorporated in BVI whereas

respondent is LDT Pte. (the “Charterers”) which is incorporated in Singapore. Claimant owns the

Western Dawn which is a Long Range 2 tanker (the vessel).

On 26 may 2014 by a charter party the claimant provided their vessel M/T Western Dawn for the

purpose of transporting jet and gas oil respectively. The vessel was required to load and discharge

“30,000mt MIN/MAX Jet A1 Plus 70,000mt +/- 10% Moloo Gas oil” (The Cargo).

Respondent hired the aforesaid vessel on an amended shell time 4 (herein after ST4) charterparty

for a period of three months plus or minus 30 days. The charterparty in the present case was for a

time charter trip which requires a voyage from Singapore to OPL Luanda, West Africa, with

redelivery in the Mediterranean area.

On 8th

of June 2014 the vessel completed its loading of the cargo and thus, the bills of ladings were

issued on 8th

of June 2014.

On 25th

June 2014 the Master of Western Dawn informed the respondent that they shall require

bunker recharge at/before Luanda discharge. It was further stated that Master/Owner will not be

responsible for any delays caused by the charterers not supplying fuel in good time.

On 28th

of June 2014 the Captain of the vessel was informed by the Atlantic STS agency ltd (ASA

Angola ltd) that the charterers have passed the control of the vessel under the TCP to them. They

further informed the captain of the vessel that they shall be the vessel’s STS (ship to ship transfer)

coordinator. On this same date the ASA Angola ltd informed the master of the Western Dawn that

their vessel Western Dawn will be aided by the vessel Antelope for the purpose of STS.

xi

The communication by ASA Angola ltd on 28th

of June required from the Western Dawn to contact

master of antelope for information regarding discharge rotations and quantities. On 28th

of June 2014

the respondent informed the claimant that the next bunker supply shall be on arrival to STS 1.

As required by the ASA Angola ltd, the Master of Western Dawn tried to contact Captain Anya of

Antelope on 1st of July 2014, 2

nd of July 2014 and 3

rd of July 2014 however the same were remain

un-answered.

On 3rd

of July 2014 claimant required the due hire from the respondent however on 4th

of July 2014

the respondent advised the charterer that they should consider the vessel as off-hire due to no contact

with the charterer/receiver.

On 4th

of July 2014 the Claimant informed the respondent that Antelope did not arrived at STS 1,

thereby this resulted in the failure of the vessel to get bunkered.

On 17th

of July 2014 the Master of Western Dawn communicated to the Owners as well as the

charterer’s that the ship was attacked by the pirates however now the ship is under their control.

Because of the pirate attack about 28190mt gasoil of the cargo was stolen by the pirates. It was

further informed that due to small bunker the vessel is now proceeding towards Cape Town for

assistance with an economical speed.

Hence, the present matter is brought forth the panel for arbitration with respect to due hire and

damages for breach of charter party by the respondent.

xii

ISSUES FRAMED

I. WHETHER THE CHARTER PARTY AGREEMENT CONTAINS A VALID

ARBITRATION AGREEMENT AND THEREFORE THE TRIBUNAL HAS

JUTRISDICTION TO TAKE UP THE PRESENT MATTERS?

II. WHETHER THE RESPONDENT IS LIABLE TO PAY DAMAGES AND INTEREST

THEREON?

III. WHETHER THE RESPONDENT IS LIABLE FOR TORT OF FRAUD?

IV. WHETHER THE RESPONDNET BREACHED THE CHARTERPARTY?

V. WHETHER THE VESSEL WAS UNSEAWORTHY?

VI. WHETHER THE CLAIMANTS ARE LIABLE UNDER BAILMENT?

1

ARGUMENTS

I. THE CHARTERPARTY AGREEMENT CONTAINS A VALID ARBITRATION

AGREEMENT AND THEREFORE THE TRIBUNAL HAS THE JURISDICTION TO TAKE

UP THE PRESENT MATTERS.

1. The Claimant submits that the Arbitral tribunal is the authority entrusted with the power under the

charterparty to hear the merits of this dispute because (A) this tribunal has competence to rule over its

own jurisdiction and under the charterparty there is a valid arbitration agreement, and (B) the tribunal

has competence under the laws of England and The Arbitration Act, 1996, to hear the merits of the

issue relating to tort of fraud.

I.A. THAT THE PRESENT TRIBUNAL HAS THE POWER TO RULE ON ITS OWN

JURISDICTION BY VIRTUE A VALID ARBITRATION AGREEMENT.

2. An arbitration agreement does not merely serve to establish the obligation to arbitrate; it is also a

basic source of the powers of the arbitral tribunal. It is the arbitration agreement that establishes the

competence of the arbitral tribunal as it serves as a source by which the agreement of the parties is

obtained.1 It is a well-established principle of international arbitration that an arbitral tribunal has an

inherent power to rule on its own jurisdiction, including questions as to the validity of the arbitration

agreement2. In the arbitral process the jurisdiction of the arbitral tribunal is derived simply and solely

from the express or implied agreement of the parties.3

1 Nigel Blackabyl, Redfern and Hunter on International Arbitration (Oxford University) Press, 5

th ed, 2009) ¶ 1.57,

1.58, p. 21.

2 Christopher Brown Ltd v Genossenschaft Oesterreichischer Waldbesitzer Holz Wirtschaftsbetriebe Registrierte

GmbH [1954] 1 QB 8; Gary B Born, International Commercial Arbitration (Kluwer Law International 2009) vol 1,

853; Nigel Blackaby et al, Redfern and Hunter on International Arbitration (Oxford University) Press, 5th

ed, 2009)

346-7. Arbitration Act 1996, s. 30(1). Compare art. 36(1)(a)(i), (a)(iii) and (iv) of the UNCITRAL Model Law.

3 Insigma Technology Co. Ltd. v. Alstom Technology Ltd. [2008] SGHC 134.

2

In the case in hand, the charterparty agreement4 has incorporated a valid arbitration agreement which

is spelt out in the same in clause 46(b) as ‘law and litigation clause’.

I.A.1. The Arbitration Agreement was in writing incorporated in the Standard form of Charterparty,

Shelltime 4 (hereinafter called as ST4).

3. Under section 6 of the Arbitration Act, 1996, an arbitration agreement is explained to be an

agreement in writing, between the parties to a contract, intending to resolve their disputes through

arbitration.5 An arbitration agreement is also found as a clause in a document to which the parties

refer as their primary contract.6 An arbitration agreement is in writing when it is made in writing

(whether or not it is signed by the parties)7. It is noted through a case that an arbitration clause that

was contained in standard conditions of contract is effectively incorporated and binds the parties,

although there was no specific reference to it in the provision that effected the incorporation.8 The

only evidence of consent to an arbitration agreement will be a party’s consent to the underlying

contract, with no separate indications of consent to the arbitration clause specifically.9

4. In the case in hand, it is pertinent to note that the parties to dispute had agreed on SHELLTIME 4 as

the primary contract.10

Therefore,, ST4 became the underlying contract and clause 46(b) of ST4

provides for dispute resolution mechanism stating “all disputes arising out of this charter shall be

referred to Arbitration in London in accordance with the Arbitration Act, 1996.” The consent of both

the parties to be bound by ST4 impliedly entails their consent to clause 46(b) and thus, the parties

4 Amended shelltime 4 time charterparty, Moot Problem pg. 5.

5 Section 6(a) and Section 6(b) of Arbitration Act, 1996.

6 Section 6(b) Arbitration Act, 1996; John tackarberry, Arthur Marriot, Handbook of Arbitration and Dispute

Resolution Practice, (Sweet &Maxwell, 4th

edition, 2011), page 49 7 Section 5(2) (a) of the Arbitration Act 1996.

8 Secretary of State for Foreign and Commonwealth affairs vs. The Percy Thomas Partnership, (1998) C.I.L.L 1342.

9 Gary b. Born, International Commercial Arbitration (vol. 1, Kluwer Law International, 2010)Page 661, ¶ 4.

10 Moot Problem Page 3 Fixture recap ¶ 5.

3

chose The Arbitration Act, 1996 as the lex arbitri.11

The validity of the arbitration agreement is

therefore decided as provided under the provisions of Arbitration Act, 1996.

I.A.2. The parties consented to the underlying arbitration agreement in ST4.

5. The respondents had consented to being governed by the Arbitration Act, 1996 and thus where a

written agreement was concluded the same cannot be denied by the respondents. The responds are

flawed on relying on the fixture recap, which are merely negotiations between parties, on concluding

that they had not consented to be governed by Arbitration Act, 1996. A valid arbitration in the

present matter can only be the written agreement to which the parties did not make any specific

exemptions.12

Any proposed changes that either of the parties wanted to incorporate into the

charterparty could have been done by modulating ST4 or including Rider clauses. As per ST4 along

with the Special provisions and Rider clauses13

, the claimants and the respondents had left the ‘law

and litigation’ clause unaltered. Thus, any such failure on part of the respondents shows their

intention to be governed by the Arbitration Act 1996.

6. Alternatively, also the validity of an agreement under the laws of England is decided under the

common law principles of contract.

I.B. THAT IN ABSENCE OF AN EXPRESS EXCLUSION CLAUSE, THE DISPUTE

CONCERNING FRAUD BY THE RESPONDENTS IS ARBITRABLE BEFORE THE

TRIBUNAL.

7. Under Article 7(1) of the UNCITRAL Model Law14

“Arbitration agreement is an agreement by the

parties to submit to arbitration all or certain disputes which have arisen or which may arise between

11

The Petr Shmidt, [1995] 1 Lloyd’s Rep 202. Sulamerica CIA Nacional De Seguros SA and others v. Enesa

Engenharia SA and others [2012] EWHC 42 (Comm); [2012] EWCA Civ 638. 12

Gary b. Born, International Commercial Arbitration (vol. 1, Kluwer Law International, 2010) page 618 ¶ 3. 13

Moot Problem, Charterparty dated 26th

May 2014 page 5-12. 14

Article 7(1) Of UNCITRAL Model Law.

4

them in respect of a defined legal relationship whether contractual or not. An arbitration agreement

may be in the form of an arbitration clause in a contract or in the form of a separate agreement.” In

deciding whether the claim in tort lies within the arbitrator’s jurisdiction, the enquiry takes place in

two stages:

1. The first is to identify the nature of the dispute, and

2. To decide whether the tortious claim has sufficiently close connection with claims under the

contract to bring it within the scope of the arbitration clause.15

8. In the present case, arbitration clause reads “All disputes arising out of this charter shall be referred

to Arbitration in London in accordance with the Arbitration Act 1996”.16

In the case of Fiona trust

And Holding Corporation & Others v. Yuri Privalov & others17

, the House of Lords considered

various cases on the meaning of phrases such as “arising under” and “arising out of”, and the court

said “ the construction of an arbitration clause should start from the assumption that the parties, as

rational businessmen, are likely to have intended any dispute arising out of the relationship into

which they have entered or purported to enter to be decided by the same tribunal. The clause had to

be construed in accordance with that presumption unless the language made it clear that certain

questions were intended to be excluded from the arbitrator's jurisdiction.”18

Any doubts concerning

the scope of arbitrable issues should be resolved in favour of arbitration, whether the problem at hand

is the construction of the contract language itself or an allegation of waiver, delay, or a like defence

15

Empresa Exportadora de Azucar vs. Industria Azucarera Nacional SA, The Playa Larga and Marble inslands [1983]

2 Lloyd’s Rep 171. 16

Clause 46(B) of Arbitration Act, 1996. 17

[2007] UKHL 40. 18

Lord Hoffman in Fiona Trust & Holding Corporatioin v Privalov [2007] UKHL 40.

5

to arbitrability.19

The tribunal has jurisdiction to hear disputes that fall within the scope of a valid

arbitration agreement made between the disputing parties.20

9. Since in the present case the arbitration clause clearly uses the words “all disputes arising out of this

charter”, it is manifest that the parties did not make any exemptions regarding arbitrable matters.

Therefore, the general intention of parties while drafting their arbitration agreement, is to refer to the

arbitral tribunal those disputes which arise out of an established legal relationship and/or disputes

arising out of or in connection with the underlying contract.21

The language of the arbitration clause

is clear on the point that the allegations of fraud are not expressly or impliedly excluded from the

arbitral tribunal’s jurisdiction. Further it is pertinent to note that the parties did not agree on any

express clause to exclude any matter from being taken up by the present arbitral tribunal, therefore in

the merit issues, the question of fraud is arbitrable.22

Therefore, a contractual dispute is arbitrable

unless it can be said with positive assurance that the arbitration clause is not susceptible of an

interpretation that covers the asserted dispute. 23

II. THE RESPONDENT IS LIABLE TO PAY DAMAGES AND INTEREST THEREON.

10. The Claimant submits that the respondent is liable to pay losses/ damages incurred by the claimant’s

breach because: (A) The Charterers/ or persons acting on behalf of the charterers have committed the

Tort of fraud due to which the claimant suffered losses. (B) Alternatively, The Respondent is liable to

pay damages for the breach of charterparty under common law principles. (C) The respondent failed

to pay the outstanding hire which is due under the terms of the charterparty.

19

MOSES H. CONE, 460 U.S. at 24-25, 103 S.Ct. 927. Kamaya Company Ltd. v. American Property Consultants Ltd.

APC 959 P.2d 1140 (1998).;ML Park Place Corp. v. Hedreen, 71 Wash.App. 727, 739. 20

Redfern, A, et al, Law and Practice of International Commercial Arbitration (4th ed, 2004) 157. 21

New York Convention on the Recognition and Enforcement of Foreign Arbitral Award Art. II (i), 1959; MARTIN

HUNTER, supra note 6 at 24. The London Steamship Owner’s Mutual Insurance Association Ltd. Vs. The Kingdom

of Spain and The French State, [2013] EWHC 3188 (Comm) at para 98, 99, 101. 22

Ferro Corp. v. Garrison Indus., Inc., 142 F.3d 926, 927-28 (6th Cir.1998). 23

United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347 (4th

.Ed.2d 1409

(1960).

6

II.A. THE RESPONDENT IS LIABLE UNDER TORT OF FRAUD FOR THE LOSS INCURRED BY

THE CLAIMANT.

II.A.1.THE ATLANTIC SERVICE AGENCY (ASA2 ANGOLA LTD.) IS THE AGENT OF THE

CHARTERERS AND THERE IS A VALID AGENCY RELATIONSHIP.

11. It is submitted that the respondents had impliedly shown their consent to the acts of the STS

coordinators, ASA2 and that the same results into good agency. The relationship of agent and

principal may be express or implied from the conduct or situation of the parties or, by subsequent

ratification by the principal of acts done on his behalf24

. An Agreement between agent and principal

is implied in a case where one party has conducted himself towards another in such a way that it is

reasonable for that other to infer from that conduct assent to an agency relationship.25

12. In the instant case, the Master of the vessel on three different dates, specifically requested the

respondents to advice/confirm the STS coordinators, to which the respondents never replied.26

Also,

the Master repeatedly asked the respondents to supply the sufficient bunkers, replying to which on

28th

June 2014, it was confirmed by them that the bunkers would be supplied on arrival at STS Area

1.27

With respect to this, the Master enquired into the location of Area 1 for STS28

. Same day the

agent ASA2 in its mail represented that they are the STS coordinators and provided instructions for

the location of STS Area 1 and that confirmed that it will be supplying 300 mts IFO bunkers on

arrival at STS Area 1 from v/l ANTELOPE.29

On 3rd

July, The Master in reply to this informed

charterers that this supply of bunkers is limited and would not be sufficient, it will require more

24


edition, 2010)

, page 39, ¶ 2-001, Pole v leask (1862) 33 L.J Ch. 161-162; Townsends Carriers Ltd. V. Pfizer ltd. (1977) 121 S.J.

375; Vogel v. Koshtamm (R&A Ltd.) [1971] 3 W.L.R. 537 25


edition, 2010), page 55, ¶ 2-

030. 26

Moot Problem, page 29, 31,32. 27

Moot problem, page 34. 28

ibid 29

Moot problem, page 35.

7

bunkers at bony.30

The charterers on 4th

July, in response to this confirmed that the next bunkers

would be provided at bony and asked the Master should continue to liaise with their STS

coordinator.31

This induced the claimants to infer from the conduct of the charterer and the agent that

there was assent to an agency relationship.32

13. In the case of Garnac Grane Co. Inc. V. HMF Faure & Fairclough Ltd and Bunge corporation33

, the

court held that the parties through their conduct and conversations had formed an agency relationship

even though they denied this to be so. Thus, in the case in hand the respondents are the principal

authority and are liable for the acts of its agents.

II.A.1.2. ASA2 is good agency of the respondents as the respondent ratified the acts of ASA2.

14. The claimant submits that the charterers ratified the acts of ASA2 in its mail to the Master sent on 4th

July 2014.34

Where an act is done purportedly in the name or on behalf of another by a person who

has no actual authority to do that act, the person in whose name or on whose behalf the act is done

may, if third party believed the act to be authorised, by ratifying the act, make it as valid and

effectual, as if it had been originally done by his authority, whether the person doing the act was an

agent exceeding his authority, or was a person having no authority to act for him at all.35

Ratification

will be implied whenever the conduct of the person in whose name or on whose behalf the act is done

such as to amount to clear evidence that he adopts or recognises such act or transaction36

. In the

present case the conduct of the respondents in their mail dated 4th

July is clear evidence of

30


Moot problem, page 40 32

Bearnside v. Dayrell (1849) 3 Ex. 344. 33

[1967] 2 All E.R. 353. 34

Supra note 11. 35

Wilson v. Tunman and Freston (1843) 6 M. & G. 236 at 242; Bird v. brown (1850) 4 Exch.786 at 798; Firth v.

Staines [1897] 2 Q.B.70. 36


edition, 2010), page 84, ¶

22-070. Crest Nischolson (Londinium) Ltd. v. Akaria Investments Ltd. [2010] EWCA 243 (Ch) at [72]; Aviva Life &

Pensions UK Ltd. v. Stand Street Properties Ltd. [2010] EWCA Civ 444.Waiwera Co-operative Dairy Co. Ltd. v.

Wright, Stephenson &Co. Ltd. [1971]N.Z.L.R; Akelv. Turner [1926] G.L.R 574 (N.Z.)

8

ratification.37

The words of the charterers in its mail dated 4th

July are unequivocal representing the

ratification and cannot be accounted for any other interpretation.38

15. Further, inactivity of the principle can be taken as manifesting assent, and hence, constitutes

ratification.39

When the silence or inactivity is known to and relied on by the third party, an estoppel

may in appropriate cases against the principal, who may be estopped from saying that he has not

ratified.40

In Yona International Ltd. v. La Reunion Franchise SA d’Assurances41

, it was said that

ratification can be inferred from silence where the principal “allows a state to come about which is

inconsistent with treating the transaction as unauthorized”. Hence, it can be inferred that the

charterers never refused that ASA2 was its agent and if not then who was the STS coordinator.

Ratification merges almost imperceptibly into estopple.42

Hence, it is submitted that ASA2 is a good

agency of the respondents.

II.A.1.3. The Respondents passed the control of vessel under TCP to the ASA2 and thus, ASA2 is are the

Sub-Charterers.

16. The Respondents passed the control of the Vessel under TCP to the good agency of ASA.43

And thus,

ASA 2 is the Sub-Charterer. In the case of NYK Bulkship (Atlantic) NV v Cargill International SA

(The Global Santosh)44

it was held that the term “agents” include sub-sub-charterers and receivers and

is not to be limited to agents strictly. Therefore, in any case ASA2 is the agent of the Charterer.

II.B. THE RESPONDENT IS LIABLE FOR TORT OF FRAUD.

37

Supra note 11 38

Supra note 11, Pertersen v. Moloney [1951] 84 C.L.R. 91 at 101 ; McLauchlan-Troup v. Peters[1983] V.R. 53. 39

Yona International Ltd. v. La Reunion Franchise SA d’Assurances [1996] 2 Llyod’s Rep. 84 at 106. 40

Cf. Spiro v. Lintern [1973] 1 W.l.R. 1002; Worboys v. Carter [1987] 2 E.G.L.R. 1. 41

[1996] 2 Llyod’s Rep. 84 at 106.. 42

Suncorp Insurance and Finance v. Milano Assecurazioni SpA Stockbrokers Ltd. [1993] 2 Llyod’s Rep. 225 at 234-

235; Geniki Investments International Limited v. Ellis Stockbrokers Ltd. [2008]EWHC 549 (QB). 43

Moot problem, page, 35. 44

[2014] EWCA Civ 403

9

17. Tort of Fraud / deceit is an act whereby a person suffered loss by acting on a statement which was

made to him fraudulently by another person.45

A tort of deceit committed when there is a false

representation made by the defendant or on behalf of the defendant to the representee; that the

representation was made fraudulently; that the defendant intend the representee to act on it and that

the representation was an inducement to his own action as a result of which the representee suffered

the loss which he claims. 46

II.B.1. THE RESPONDENT MADE A FALSE REPRESENTATION OF PROVIDING BUNKERS TO

THE CLAIMANT.

18. In the tort of deceit/fraud the representee must show that a misrepresentation was made to him by

which he was deceived. 47

Such communication can be through the medium of words written to him

including the representee’s interpretation of the meaning of the defendants conduct.48

If the

representation is made by defendant himself, or through the agent49

, or if he manifestly approves and

adopts a representation made by a third party, he is responsible for it and is liable in deceit if the

other elements of the claim against him are established.50

19. In the present case in hand, on 3rd

June 2014, the charterers represented that a sufficient bunkers

would be available passing Durban or Cape Town which the respondent failed to provide with.51

Again on 28th

June 2014, the charterer52

and the agent ASA253

represented that the bunkers would be

45

Pasley v. Freeman (1793) 3 T.R. 51; Derry v. Peek (1889) 14 App. Cas. 337, HL at 363. 46

Cartwright, Misrepresentation, Mistake and Non-Disclosure (3rd

edition, sweet & Maxwell, 2012) page 190, ¶ 5-06 47


edition, sweet & Maxwell, 2012) page 190, ¶ 505. 48

Bradford Third Equitable Benefit Building Society v. Borders [1941] 2 All E.R. 205, HL, at 211; Gordan v. Selico

Co. Ltd. [1985] 2 E.G.L.R. 79. 49

ibid 50

Commercial Finance Ltd. v. Gee [2005] EWHC 2056 (QB); Standard Chartered Bank v. Pakistan National

Shipping Corp. [2002] UKHL 43; Williams v. Natural Life Health Foods Ltd. [1998] 1 W.L.R. 830, HL; Noel v.

Poland [2001] 2 B.C.L.C. 645; SX Holdings Ltd. v. Synchronet Ltd [2001] C.P. Rep. 43, CA; Daido Asia Japan Co.

Ltd v. Rothen [2002] B.C.C 589. 51

Moot problem, page 26, ¶ 4. 52

Moot pronlem, page 34, ¶ 3. 53

Moot Problem, page 35, ¶ 1

10

available at “STS Area 1”. Also on the same day ASA2 on behalf of charterer instructed that she

would be receiving “300MT IFO bunkers”.54

II.B.2. THE REPRESENTATIONS MADE BY THE RESPONDENT WERE FRAUDULENT.

20. The core of action of deceit is fraud on the parts of representor by which the claimant was deceived.55

Fraud is proved when it is shown that a false representation has been made knowingly, or without

belief in its truth, or recklessly without caring whether it is true or false.56

The representor is

fraudulent if he has made the statement “recklessly, careless whether it be true or false”.57

“Recklessness” involves not caring whether the statement is true; an indifference to the truth.58

In the

present case respondent was reckless about the statements made regarding supplying bunkers on

Durban/ Cape Town and at Luanda, at the STS Area 1, as the Master repeatedly confirmed that the

vessel would be taking bunkers on arrival.59

Whereas when the vessel arrived at STS Area 1, the STS

v/l ANTELPOE was not found60

, which was communicated to the charterers.61

The Charterers or

ASA2 made the representations dishonestly as they never intended to provide bunkers at STS Area 1.

Therefore representations made were fraudulent.

II.B.3. THE CLAIMANT RELIED ON THE REPRESENTATIONS MADE AND ACTED UPON.

54

ibid 55


edition, sweet & Maxwell, 2012) page 185, ¶ 5-01 56

Derry v peek (1889) 14 App. Cas. 337, HL. 57

Lord Herschell in Derry v. Peek, ¶. 5-14. 58

Angus v. Clifford,[1891] 2 Ch. 449, CA at 471; Le Lievre v. Gloud, [1893] 1 QB 491, CA, at 501; Thomas Witter

Ltd. v. TBP Industries Ltd. [1996] 2 All E.R. 573 at 585 -587. 59

Moot problem, page 35, 37,38. 60


Moot problem, page 41.

11

21. In tort of fraud it must be shown that the representor intended the representee to act on the

representation in the manner which resulted in damage to him.62

There has to be representator’s

intention that his statement would cause an act of reliance of the kind which the representee has

established.63

It is submitted that, in the present case, the charterer made the representation to the

owners with the intention that the owners would rely on them and would act upon it. The ASA2 on

behalf of charterer gave the directions to the vessel to reach at STS Area 1 with the intention that the

Master of the vessel would follow it.64

The Claimant relied on the representations made by the

charterer/ ASA2 and the vessel followed the instructions of ASA2, also the Master prior to the

vessel’s arrival at the STS Area 1, the Master repeatedly confirmed, on 28 and 29 June and 1, 2, 3

July 2014, that the vessel would be taking bunkers on arrival.65

II.B.4. THE CLAIMANT SUFFERED LOSS OF BECAUSE OF MISREPRESENTATIONS MADE BY

THE RESPONDENT.

22. The vessel failed to meet het laycan and was unable to discharge the full cargo to the receiver in

accordance with the voyage orders and bills of lading. Hence, It is submitted by the claimant that as

the Charterers have committed the tort of Fraud, as a result of which the owners suffered the

damages.

II.C. THE LOSS SUFFERED AS A RESULT OF RESPONDENT’S FRAUDULENT

MISREPRESENTATION FALLS WITH ITS LIABILITY.

62

Bradford Equitiable Building Society v. Borders [1941] 2 All E.R. 205, HL at 211; Barton v. County NatWest

Ltd.[1999] Lloyd’s Rep. Bank. 408, CA at 419-420; Goose v. Wilson Standford & Co.[2001] Lloyd’s Rep. P.N. 189,

CA, at 201-202; Mead v. Babington [2007] EWCA Civ 518. 63

Way v. Hearn (1862)13 C.B. (N.S.) 292 at 305;Peek v. Gurney (1873) L.R. 6 H.L. 377; Andrews v. Mockford

[1896] 1 Q.b. 372. 64

Moot problem, page 35, ¶ 1 65

Supra note 15.

12

23. Damages in deceit are to compensate the representee for all the loss which can properly be said to

have been caused by his reliance on the fraudulent misrepresentation.66

Damages in deceit are given

to compensate the representee’s loss.67

“Loss in deceit” extends not only to economic loss but also to

other tangible loss, such as damage to property68

and loss of property.69

The loss can be direct or

consequential.70

II.C.1 THERE WAS A SUFFICIENT CAUSAL CONNECTION BETWEEN THE LOSSES

INCURRED, AND THE FRAUDULENT MISREPRESENTATION.

24. The principle of causation applies in the tort of deceit and hence it must be shown that there is

sufficient continuing casual link between the misrepresentation and the loss suffered as a result of

reliance put on it71

, which is a question of fact.72

The fact that the claimant might have acted

differently had he not been induced by the misrepresentation is relevant to the question of whether

his loss caused by misrepresentation.73

II.C.1.1 The piracy attack was a result of the respondent’s misrepresentation.

25. On acting upon the misrepresentations made by the respondent, the vessel proceeded towards the

STS Area 1, where the STS v/s ANTELOPE was not found.74

As a result of which the vessel in was

standing in the International waters of Angola Coast waiting for further orders from the charterer,

which they failed to provide75

and was attacked by the pirates. Piracy attacks usually occur whilst

66


edition, sweet & Maxwell, 2012) page Page, 218, ¶ 1 67


edition, sweet & Maxwell, 2012) page 218, ¶ 1 68

Mullet v. Mason (1866) L.R. 1 C.P. 69

Smith Kline & French LaboratoriesLtd. V. Long [1989] 1 W.L.R. 1, CA; Mafo v. Adams[1970] 1 Q.B 548, CA. 70

SX Holdings Ltd. v. Synchronet Ltd. [2001] C.P Rep. 43, CA. 71


edition, sweet & Maxwell, 2012) page 223, ¶ 5-38. 72

Smith New Court securities Ltd. v.Scrimgeour Vickers (Asset Management) Ltd.[1997] A.C. 245, HL. 73

UCB Corporate Services Ltd. v. Williams [2002] EWCA Civ 555;Cf, Cassa di Risparmio della Repubblica di San

Marino S.p.A v. Barclays Bank Ltd. [2011] EWHC 484 (Comm). 74

Supra Note 16 75

Moot problem, page 41, ¶ 1

13

ships are transiting the straits, sometimes up to 15 miles offshore.76

The pirates that resulted in the

damage to vessel and the theft of cargo.77

26. Further, it is clearly mentioned in the Charterparty agreement under the LTDP rider clauses78

in

BIMCO STS clause that all ship to ship transfers shall be at the Charterer’s risk, cost and expense.79

Also, it was the duty of the Charterer to direct the vessel to a safe area for the conduct of STS

operations, where it can safely proceed to, lie and depart.80

Under the terms of agreed BIMCO STS

clause, the charterer shall indemnify the owners against any and all consequences arising out of the

ship to ship operations including damage to the vessel and other costs and expenses incurred as a

result of such damage.81

II.C.2. The vessel failed to meet its laycan and was unable to discharge full cargo to the receivers under

B/L.

27. The Master was tricked, because the charterer under the terms of Charterparty shall direct the vessel

to a safe area for STS operations.82

The Master had no option in such a case but to trust the charterer

that the area would be safe and to proceed.83

The claimant submits that the vessel was under the

control of the pirates from the date 4th

to 17th

July 2014 which was the result of the charterer’s

misrepresentation.84

Hence, the vessel missed its laycan and failed to discharge the full cargo to the

receiver under the B/L as the cargo was robbed by the pirates.

76

Paul Todd, Maritime Fraud and Piracy ( 2nd

edition, Infroma, 2010), page 27, ¶ 2.15. 77



Clause (a), BIMCO ship tot ship transfer clause for Time Charter Parties; Moot problem, page 10. 80

Clause (b), BIMCO ship tot ship transfer clause for Time Charter Parties; Moot problem, page 10. 81

Clasue (f), BIMCO ship tot ship transfer clause for Time Charter Parties; Moot problem, page 11. 82

Supra note 39. 83

Kuwait petroleum Corporation v. I. & D. Oil Carriers Ltd. [1994] 2 Lloyd’s Rep. 541. 84

Moot problem, 41-42, 46.

14

28. Further, if the charterer is the seller under the charterparty then the relationship between the two will

be governed by the terms of the charterparty.85

It is clearly mentioned in the Charterparty under the

LTDP rider clauses in BIMCO Piracy Clause for Time Charter Parties 2013 that if the vessel is

attacked by the pirates any time lost shall be for the account of the charterer.86

Also the Charterers

shall be liable to indemnify the owners for any claims from the holders of B/L or third parties caused

by the vessel proceeding in piracy prone area.87

29. Hence, it is humbly submitted that the charterers are liable to pay the damages for the aforesaid.

III. THE RESPONDENT BREACHED THE CHARTERPARTY.

30. The claimant submits that even if the respondent is not liable for the tort of fraud, the claimant can

recover the losses/ damages incurred under the principles of common law, as the respondents

breached the terms of the charterparty agreement.

III.A. THE CHARTERERS HAVE BREACHED THE CHARTERPARTY BY DIRECTING THE

VESSEL TO A ALTERNATE DISCHARGE PLACE.

III.A.1.THE CHARTERERS NOMINATED OPL LUANDA AS A DISCHARGE PORT IN THE

VOYAGE ORDERS.

31. In present case there is a trip charterparty which is a hybrid or has the attributes of both time and

voyage charterparty.88 In general terms a voyage charterparty specifies the respective load port and

discharge port.89 It is equally open for the charterparty to confer upon the charterer an option, which

85

Ardennes(cargo owners)v. Ardennes (owners)(The Ardennes) [1951] 1 K.B. 55;President of India v. Metacalfe

Shipping Co. ltd (The Dunelmia)[1970] 1 Q.B 289. 86

Clause (e) BIMCO Piracy Clause for Time Charter Parties 2103; Moot Problem, page 12. 87

Clause (c) BIMCO Piracy Clause for Time Charter Parties 2103; Moot Problem, page 12 88

Christopher Hill, Maritime Law ( LLP London, 6th

edition 2003), page 169. 89

Cf. Nelson, Donkin & Co v Dahl (1879) 12 Ch D 568 (CA), 580 -581,

15

may be of a limited or extensive nature, to identify the port(s) of loading and discharge at time after

the a contract has been entered into.90 The charterer is obliged to nominate a load/discharge port,

providing the obligation has crystallized.91 In the present case, the discharge port was not mentioned

in the Charterparty, but in the voyage orders as “OPL Luanda” as discharge port in the voyage

orders92.

III.A.2. THE CHARTERERS CHANGED THE CHANGED THE NOMINATED PORT TO STS AREA 1.

32. Once made, a valid nomination has retrospective effect; the nominated port is treated as if it had been

written into the charter at the time of its making and the contract is rendered complete and becomes a

contract to load/discharge at the nominated port(s).93

In the absence of any special provision in a

charterparty, the effect of the nomination of a loading or discharging port by the charterer is that the

charterparty must thereafter be treated as if the nominated port had originally been written into the

charterparty and that the charterer has neither the right nor the obligation to change that nomination.94

A change of nomination may be convenient to charterers but potentially detrimental to owners as

undertaking a different voyage from that initially contemplated may incur additional cost suffering

loss of time, failing to meet a cancelation date under the existing or a subsequent charter, arriving

before or after a lay day, incurring third party liabilities,95

In the present case the charterers/ their

agents gave the instructions to the Master to discharge the cargo at alternative place (Area 1) while

the vessel was on its way to OPL Luanda thus in breach of charterparty. Therefore, there was

deviation from the nominated discharge port.

90

ibid 91

Mansel oil Ltd v Troom Storage Tankers SA[2008] 2 Lloyd’s Rep 384. Aktieselskabet OLivebank v Dansk Svovlsyre

[1919] 1 KB 338. 92

VOYAGE ORDER NUMBER LTDP. WD01/ WESTERN DAWN/ 27 MAY 2014, Moot problem, Page 13, 93

Anglo- Danubian Transport cov Ministry Of Food(1949) 83 L1 L R 137; Reardon Smith Line v Ministry of

Agriculture, Fisheries and food[1962] 1 QB 43 (CA). 94

Jasmine B in Bulk Shipping V IPCO Trading [1992] 1 Lloyd’s Rep 39,42. 95

Antiparos Ene v Sk shipping Co Ltd and others[2008] 2 Lloyd’s Rep 237.

16

III.B. THE OWNERS ARE ENTITLED TO DAMAGES/ LOSSES INCURRED DUE TO THIS

DEVIATION UNDER PRINCIPLES OF COMMON LAW.

33. In the case of Anglo Danubian Transport Co Ltd v Ministry of Food96

the owners were held entitled

to damages or other compensation which were incurred because of deviation from the discharge port.

Where a vessel under a time charter suffers damages by reason of safety of nominated port, the

charterers will be liable to the owner in respect of such damages, by virtue of express indemnity

clause supporting the right to direct employment.97

If ship-owner acts on the order of employment

and suffer damages, he should have an implied right of indemnity at common law.98

34. So, in view of the above cases the charterers are liable to pay damages for breach of contractual

liability or to indemnify for the losses suffered by the breach of common law liability.

III.C. THE RESPONDENT IS LIABLE TO PAY HIRE AS DUE AND OWING UNDER THE

CHARTERPARTY.

35. It is trite that hire is the consideration provided by the charterers for the use of the vessel and her

crew made available by the owners.99

It is a common contracting practice for the agreed hire rate, a

matter determined by negotiation, in certain trades on the basis of world scale to be paid in advance

and periodically, for example, monthly, semi- monthly. In the payment process default may be made

by the charterer by failure to pay on due date. The obligation to pay on due date is an absolute

obligation (unless modified by the express term) and there for, the reason to default is immaterial.100

36. The obligation to pay hire is continuous and unconditional. It exists throughout the period of charter

from delivery to redelivery, or for as long as the charter survives and it is unconnected with the

96

(1949) 83 L1 L R 137. 97

Royal Greek Government Vv Minister of transport (1949) 83 L1 L Rep 228 at pp. 234-235. 98

Lord Mustill in Torwald Klaveness A/S v Arni Maritime Corp. 1994] 1 WLR 1465; R.D.Rhidian Thomas, Legal

issues relating to Time Charterparties ( Informa, ) Page 48.; Strathlorne Steamship Co ltd v Andrew Weir & Co

(1934) 50 L1 L Rep 185. 99

A/S Tankexpress v Compagnie Financiere Belge Des Petroles [1949] AC 76,94,(1948) 82 L1 L Rep 43. 100

A/S Tankexpress v Compagnie Financiere Belge Des Petroles [1949] AC 76,94,(1948) 82 L1 L Rep 43.

17

charterer’s use of vessel101

The payment is to be made on the due date with no latitude allowed unless

introduced by the terms of charterparty.102

37. In the present case the hire was accrued on 3rd

July 2014 and it was required to be paid on that

date.103

But the charterer refused to pay the due hire,104

thus in breach of this absolute contractual duty

to pay hire.

III.C.1. The charterparty was never frustrated as contented by the respondents.

38. A time charterparty is frustrated, if the vessel is lost for a sufficiently long time to frustrate the

adventure.105

A frustrating time is likely to be longer than the time for the voyage.106

39. In the case of Port Line Ltd. v. Ben Line Steamers Ltd.107

, the vessel was hired for a period of 10

months and was later lost for about 3 months. If the requisition were likely to last for substantially

less than the remaining period of the charterparty, the contract was not frustrated.108

40. In the instant case the vessel was lost for a period of 14 days starting from 4th

July to 17th

July

2014.109

The vessel was hired for a period of 3 months plus/minus 30 days.110

The period of

performance was left more than half and hence, the charterparty was not frustrated.

41. According to LTDP Rider clauses under BIMCO piracy Clause for Time charter, if the vessel was

seized by the pirates, the vessel shall remain on hire throughout the seizure period and the chatterers

obligations shall remain unaffected.111

101

Edvinton Commercial Corp v Tsavliris Russ Ltd [2007] 1 Lloyd’s Rep 335. 102

A/S Tankexpress v Compagnie Financiere Belge des Petroles [1949] AC 76; (1948) 82 L1 L Rep 43. 103



Martime fraud, page 49. 106

ibid 107

(1958) 2 Q.B. 146 108

Diplock J, Port Line Ltd. v. Ben Line Steamers Ltd (1958) 2 Q.B. 146. 109

Moot problem, page 46, 42. 110

Charterparty agreement dated 26th

may 2014. 111

Clause (f) BIMCO Piracy Clause for Time Charter Parties 2103; Moot Problem, page 12.

18

Therefore, it is humbly submitted that the vessel was on hire throughout the period of piracy and

hence, the charters are liable to pay the outstanding hire, which should have been to the owners on 3rd

July, 2014.

IV. QUANTIFICATION OF DAMAGES.

42. As, a result of Pirates attack, The vessel suffered damage to its navigation equipment, main-deck

hose crane and starboard-side accommodation ladder and bridge equipment (including electronic

navigation systems, radar and ECDIS) and about 30,000mts Jet A1 and 44,000mts Gasoil was robbed

by the pirates,112 which the Respondent is liable to pay. Also, the Respondents should indemnify the

Claimants against any claims of the third party holding the B/L. Further, the claimant claims any

Interest (Compound/Simple) on the sum found owing to the claimant under section 49 of the English

Arbitration Act, 1996.113

V. THE CLAIMANT IS NOT LIABLE TO PAY DAMAGES TO THE RESPONDENTS.

V.A.THE CLAIMANTS ARE NOT LIABLE FOR ANY LOSS ARISING OUT OF

UNSEAWORTHINESS OF THE VESSEL.

43. In the case of a breach of obligation to provide a seaworthy vessel, the carrier will not be responsible

if unseaworthiness was not the cause of loss, or if it was the cause, if he proves that he exercised due

diligence to make her seaworthy then he will not be liable.114

A ship should not be unseaworthy if

proper care is taken.115

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

resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to

make the ship seaworthy in accordance Article III of Hague Visby Rules (HVR).116

V.A.1. THE RESPONDENT’S LOSS INCURRED DUE TO THE PIRATES ATTACK.

112


Section 49(3) of English Arbitration Act, 1996. 114

Soyer at pg. 60; Project Asia Line Inc. and Another v. Shone, (The Pride of Donegal), [2002] 1 Lloyd's Rep. 659. 115

The Eurasian dream [1996] 2 Lloyd's Rep 171. 116

Article 4:1 of HVR.

19

44. To causation, unseaworthiness must be ‘a cause or, if it is preferred, a real or effective or actual

cause’ and in truth, unseaworthiness can never be the sole cause of the loss.117

The term “perils of the

seas” refers only to fortuitous accidents or casualties of the seas.118

Piracy is a peril of sea. The

Claimant submits that the loss of cargo was a result of piracy attack.119

V.A.1.1. The claimant rely on the excepted peril under article IV, rule 2 of HVR.

45. Where the cargo owner alleges a breach of Article III of HVR and the carrier relies on the exceptions

of Article IV Rule 2 in defence, the liability of the carrier ‘turns on’ whether the damage to the cargo

arose from a breach of Article III Rule 2 or from an excepted peril.120

Article IV Rule 2(c) of the

HVR exempts carriers from liability for loss or damage arising from ‘perils, dangers and accidents of

the sea or other navigable waters’.121

It includes within its scope ‘all perils…of a marine character, or

of a character incident to a ship as such’.122

Therefore the Claimant submits relies on the exception of

perils of sea under Article IV of the HVR and thus, is not liable for the loss of cargo.

V.A.2. THE CLAIMANTS EXERCISED DUE DILIGENCE TO MAKE THE SHIP SEAWORTHY AS

REQUIRED UNDER ARTICLE III:1 OF HVR.

46. The absolute duty at common law to provide a seaworthy ship is displaced by Article III, rule 1

of HVR, which requires the carrier to exercise due diligence to provide a seaworthy ship ‘before and

at the beginning of the voyage’123

Seaworthiness refers to the state of a ship that ‘is fit in design and

117

The Eurasian Dream. 118

Venetico Marine SA v. International General Insurance Company Limited and Others. [2003] EWHC 3644

(Comm) 119

Moot problem, page 42, ¶ 1. 120

Shipping Corporation of India v Gamlen Chemical Co A/Asia Pty Ltd (1980) 147 CLR 142 (Mason and Wilson,

JJ.) as cited in Great China Metal Industries Co Limited v Malaysian International Shipping Corporation Berhad –

The “Bunga Seroja” (1998) 72 ALJR 1592 (McHugh, J.) ¶ 95. 121

Paul Todd, Maritime Fraud and Piracy (2nd edn, Informa Publishing, 2010) 1.119 122

Thames and Mersey Marine Insurance Co v Hamilton, Fraser and Co (1887) 12 AC 484, 492 (Lord Bramwell). 123

Maxine Footwear v. Canadian Government [1959] AC 589.

http://www.bailii.org/cgi-bin/redirect.cgi?path=/uk/cases/UKPC/1959/1959_13.html

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structure’ and is suitably equipped to encounter the ordinary, foreseeable124

perils on the voyage.125

In the present case, Claimants submit that sufficient anti-piracy measures were taken to protect

against pirate attacks which, in any case, were not ‘ordinary perils. Piracy attacks, by nature being

fortuitous and unforeseeable, do not occur ‘in regular course’126

of a voyage. Consequently, they are

not ‘ordinary’ perils. On the present facts, such a conclusion equally applies to voyages through the

WAF Area, where pirate attacks are merely more frequent but not ordinary occurrences. Hence,

piracy is not an ordinary peril.

47. To satisfy the due diligence requirement under Article III Rule 1, a carrier must demonstrate that he

acted as per standard practices of the industry127

prevailing at the time of the incident and not at the

time of the trial.128

The carrier is not required to provide his vessel with the latest technology as long

as it has not become widely used or proved to be essential for the increasing safety of navigation.129

In the instant case, the Claimants exercised due diligence to make the ship fit to protect itself from

the piracy attack.130

The mere fact that with hindsight it is possible to see that extra precautions could

have been taken does not necessarily mean that due diligence was not exercised.131

Further, the

124

Empresa Cubana Importada de Alimentos v Iasmos Shipping Co SA – The “Good Friend” [1984] 2 Lloyd’s Rep

586; Ben Line Steamers Ltd v Pacific Steam Navigation Co – The “Benlawers” [1989] 2 Lloyd's Rep 51. 125

Northern Shipping Co v. Deutsche Seereederei G.M.B.H. and Others –The “Kapitan Sakharov” [2000] 2 Lloyd's

Rep 255. at 266; Great China Metal Industries Co Limited v Malaysian International Shipping Corporation Berhad –

The “Bunga Seroja” (1998) 72 ALJR 1592 citing Dixon v Sadler (1839) 5 M & W 405 414; McFadden v Blue Star

Line, [1905] 1 K.B. 697 703; Stanton v Richardson (1874) LR 7 CP 421; Indira Carr, International Trade Law (4th

edn., 2010) 208; NJ Margetson, ‘Duties of the Carrier’ in ML Hendriksen, HN Margetson and NJ Margeston (eds.),

Aspects of Maritime Law: Claims under Bills of Lading (Wolters Kluwer, 2008) 72. 126

Black's Law Dictionary (9th ed. 2009), ‘ordinary’. 127

Kopitoff v Wilson (1876) 1 QBD 377; M.D.C Ltd v N.V. Zeevaart Maatschappij - The “Beursstraat” [1962] 1

Lloyd’s Rep 180. 128

F. C. Bradley & Sons Ltd v Federal Steam Navigation Company, Ltd (1926) 24 Lloyd’s Rep 446; President of

India v West Coast S.S.Co, [1963] 2 Lloyd’s Rep 278, 281; Demand Shipping Co Ltd v Ministry of Food Government

of the People’s Republic of Bangladesh and Another - The “Lendoudis Evangelos II” [2001] 2 Lloyd's Rep 304. 129

Bradley v. Federal St eam Navigation, (1926) 24 Ll. L. Rep. 446, at p. 454-455, Virginia Co. v. Norfolk Shipping

Co., 17 Com. Cas. 277, at p. 278. See Tetley, supra 130

Moot Problem, page. 22, ¶ 1, 2; page 26, ¶ 2, page 27, ¶ 2, page 36, ¶ 1. 131

The Eurasian Dream, [1996] 2 Lloyd's Rep 171.

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claimant deployed the major requirements like razor wire, flash lights etc, as required under BMP4 as

per the charterparty.132

V.A.2.1. The Master of the Ship was not Incompetent.

48. Further, one mistake, or even more than one, does not necessarily render the particular crew member

incompetent.133

It is relevant to consider “what other skilled men do in comparable

circumstances”.134

In the situation when the Master followed the instructions of the charterer’s and its

agent’s, any other skilful man must have done the same in this situation as the Master in this case.

The Master continuously requested the Respondents to advice the STS co-ordinators of which the

Respondents never replied. Further the Master was asked by the charterer to liaise with the STS

coordinators.135

Therefore, the Master was not incompetent and it is submitted that the claimants

exercised due diligence to make the ship seaworthy.

V.A.3. UNSEAWORTHINESS OF THE VESSEL DID NOT CONTRIBUTE TO THE LOSS OF THE

CARGO.

49. The claimants submit that even if the tribunal finds that the ship was unseaworthy, the

unseaworthiness of the vessel did not contribute to the loss of the Cargo. The Respondents in breach

of Clause 12 of the ST4 failed to give the Master all requisite and sailing direction. The respondent

failed to instruct the claimant its STS coordinators and other instructions required by the Master of

the ship.136

The vessel as instructed by the Respondent positioned itself for the STS operations,137

132

Moot Problem, page 27, ¶. 1. 133

Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd and La ReÂunion Europeane (The Star Sea) [1997] 1

Lloyd's Rep 360, per Lord Justice Leggatt at pp 373-4, approved by the House of Lords [2001] 1 Lloyd's Rep 389. 134

The Amstelslot [1963] 2 Lloyd’s Rep 223 at p 230. 135

Moot Problem, page. 40, ¶ 2. 136

Moot problem, page 30, ¶ 1; page 33, ¶ 2. 137

Moot Problem, page 41, ¶ 1.

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which resulted in the piracy attack and the loss of cargo. Therefore, it is humbly submitted the

unseaworthiness of the vessel did not contribute to the loss of the cargo.

V.B. THE CLAIMANTS ARE NOT LIABLE UNDER BAILMENT AND FOR CONVERSION OF

THE CARGO.

50. In the event of loss of or damage to goods in his possession, a bailee is liable unless he can prove that

such loss or damage occurred without fault on his part.138

As proved above that the vessel was

seaworthy and that the loss of cargo was not caused due to the act of the Claimant but by the pirates

attack, the third party. Anyhow, the claimant rely on the doctrine of novus actus interveniens and

submits that the loss of goods third party intervention breaking the chain of causation. A

premeditated, wilful act like piracy severs the causal connection.139

When there is such a “new and

independent cause”140

of the damage, even if such an intervening act was foreseeable,141

the

Claimants are not liable.

138

Morris v. C. W. Martin & Sons Ltd. [1966] 1 QB 716 (CA), 139

Douglas Hodgson, The Law of Intervening Causation (Ashgate, 2008) 77. 140

Weld-Blundell v Stephens [1920] AC 956 (HL). 141

Ibid.

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PRAYER FOR RELIEF

WHEREFORE, In light of the above submissions the Claimant requests this Arbitral Tribunal to:

DECLARE that:

1. This Tribunal has jurisdiction to hear the dispute.

2. The Respondent is liable for the tort of fraud committed by the respondents/persons acting on

behalf of the Respondents.

3. The Claimant is not liable for pay damages to the Respondents.

ADJUDGE that the Respondent is liable –

1. To pay damages and loss as particularised in the phase relating to quantification of damages,

incurred due to fraudulent misrepresentations made by the respondent.

2. To pay hire as due and owing under the terms of charterparty.

3. To indemnify the claimant against the claims of third party.

4. To pay interest (compound/simple) upon the sum found owing to the owner under section 49 of

Arbitration Act, 1996 (UK)

5. Costs of the proceedings.

6. Any other order deemed fit by the tribunal

Place of Arbitration:

London, U.K.

Counsel for Claimant

Prashasti Janghel Rinki Singh Dinesh Dangi Vivek Kumar … · III.A. THE CHARTERERS HAVE BREACHED...

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