T 20TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT€¦ · team 13 | memorandum for panther...

TEAM 13 | MEMORANDUM FOR PANTHER SHIPPING INC.

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THE 20TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2019

THE WEST BENGAL NATIONAL UNIVERSITY OF JURIDICAL SCIENCES

TEAM 13

MEMORANDUM FOR PANTHER SHIPPING INC.

ON BEHALF OF AGAINST

PANTHER SHIPPING INC OMEGA CHARTERING LIMITED

CLAIMANT RESPONDENT

TEAM

AATMIK JAIN ● INSHA RAHMAN ● NEIL TRIVEDI ● TOSHITA JHA


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TABLE OF CONTENTS

TABLE OF CONTENTS ------------------------------------------------------------------------------------- ii

INDEX OF AUTHORITIES--------------------------------------------------------------------------------- iv

LIST OF ABBREVIATIONS ------------------------------------------------------------------------------ viii

QUESTIONS PRESENTED --------------------------------------------------------------------------------- ix

STATEMENT OF FACTS ----------------------------------------------------------------------------------- 1

ARGUMENTS ADVANCED -------------------------------------------------------------------------------- 3

I. CLAIMANT IS ENTITLED TO ALL COSTS RELATING TO THE ISSUE OF HULL CLEANING ---------- 3

A. RESPONDENT IS LIABLE FOR THE COST OF CLEANING TO THE AMOUNT OF USD 41,000 ---------- 3

1. RESPONDENT Failed to Fulfil its Obligations Under Cl. 83 of the CP ---------------------- 3

2. CLAIMANT Undertook Cleaning on its Own Account Under the Assurance that it would be

Remunerated for the Same ------------------------------------------------------------------------------- 4

B. RESPONDENT IS LIABLE FOR THE COST OF VOYAGE TO SOUTH ISLAND TO THE AMOUNT OF USD

55,567.42 ----------------------------------------------------------------------------------------------------------- 6

1. CLAIMANT Reserved the Rights to Claim “All Costs” in Relation to Cleaning ------------ 6

2. CLAIMANT was Justified in Carrying Out Cleaning at South Island ------------------------ 7

II. THE CLAIMANT IS ENTITLED TO LOSS OF HIRE UNDER THE NEXT FIXTURE FOR A PERIOD OF

FOUR YEARS ---------------------------------------------------------------------------------------------------- 8

A. THE DURATION OF THE NEXT FIXTURE OUGHT TO BE CONSTRUED AS FOUR YEARS ---------------- 8

B. THE RESPONDENT HAD SPECIAL KNOWLEDGE OF THE NEXT FIXTURE AT THE TIME OF ENTERING

INTO THE CP -------------------------------------------------------------------------------------------------------- 9

C. ALTERNATIVELY, THE CLAIMANT SUFFERED A LOSS OF CHANCE DUE TO LATE REDELIVERY -- 11


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III. THE VESSEL WAS NOT OFF-HIRE FROM MAY 7, 2016 TO JUNE 26, 2016 AND HIRE CONTINUED

TO ACCRUE ---------------------------------------------------------------------------------------------------- 12

A. THE FULL WORKING OF THE VESSEL HAS NOT BEEN PREVENTED ------------------------------------ 12

B. THE EVENT DOES NOT AMOUNT TO AN OFF-HIRE EVENT PURSUANT TO CL.17 -------------------- 13

1. Deficiency of Ratings ---------------------------------------------------------------------------- 14

2. Detention by Port State Control for Vessel Deficiencies ------------------------------------ 14

3. Any Other Similar Cause Preventing the Full Working of the Vessel --------------------- 15

C. THE HIRE CONTINUED TO ACCRUE AND THE RESPONDENTS ARE NOT ENTITLED TO DAMAGES - 17

IV. RESPONDENT IS NOT ENTITLED TO INDEMNITY FOR THE CARGO CLAIM ----------------------- 18

A. RESPONDENT’S CLAIM IS TIME BARRED AS PER CLAUSE 6 OF THE ICA. ---------------------------- 18

1. RESPONDENTS Failed to Meet the ‘If Possible’ Standard ------------------------------------ 18

2. The RESPONDENT Failed to Provide the Amount Claimed & the Contract of Carriage - 19

3. The RESPONDENT’S Notice is Insufficient in its Nature and Effect ------------------------- 21

B. IN THE ALTERNATIVE, THE APPORTIONMENT OF CLAIM WILL NOT BE AS PER CL. 8(A) OF THE ICA

22

PRAYER ------------------------------------------------------------------------------------------------------ 23


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INDEX OF AUTHORITIES

CASES

A

A v A (Children: Habitual Residence) [2014] AC 1 .................................................................................................... 23

A.C. Yule & Sons Ltd. v. Speedwell Roofing & Cladding Ltd. [2007] EWHC 1360...................................................... 14

A/S Rendal v Arcos Ltd [1937] 58 LLR 287 ............................................................................................................... 27

Action Navigation Inc. v. Bottiglieri di Navigazione S.p.A. (‘The Kitsa’) [2005] EWHC 177 (Comm) ......................... 11

Actis Co. Ltd. v. The Sanko Steamship Co. Ltd. (‘The Aquacharm’), [1982] 1 Lloyd’s Rep 237 (QB) .......................... 20

Adelaide Steamship v. The Crown, [1923] Lloyd’s Rep 324 ....................................................................................... 23

Ajayi v. Brisco [1964] 1 WLR 1326 ........................................................................................................................... 13

Akt Tankexpress v. Compagnie Financiere Belge des Petroles, [1947] 80 Lloyd’s Rep. 365 (HL) ............................... 25

Aldgate Construction Company Ltd v. Unibar Plumbing & Heating Ltd [2010] EWHC 1063...................................... 19

Allied Maples Group Ltd v. Simmons & Simmons [1995] 1WLR 1602 ........................................................................ 19

Andre & CIE S.A. v. Orient Shipping (‘Rotterdam B.V.’) (‘The Laconian Confidence’), [1997] 1 Lloyd’s Rep 139 (QB)

............................................................................................................................................................................. 21

Aries Tanker Corporation v. Total Transport Ltd. (‘The Aries’), [1977] 1 Lloyd’s Rep 334 (HL) ................................ 25

Attorney General v. Blake [2000] UKHL 45 .............................................................................................................. 17

B Black Sea & Danube Shipping Co. v. Goeland Transport & Trading Co. [1942] 74 LILR 192 .................................... 11

Bottiglieri di Navigazione S.p.A. v. Cosco Quindao Ocean Shipping Co. (‘The Bunga Saga Lima’) [2005] EWHC 244

(Comm.) ............................................................................................................................................................... 13

Bulfracht (Cyprus) Ltd. v. Boneset Shipping Co. Ltd. (‘The Pamphilos’) [2002] 2 Lloyd’s Rep 681 ............................ 11

Burton & Co. v. English & Co., [1883] 12 QB 218 ..................................................................................................... 23

C Czarnikow Ltd v. Koufos (‘The Heron II’) [1967] UKHL 4 ........................................................................................ 18

C.A. Venezolana De Navegacion v. Bank Line (‘The Roachbank’) [1987] 2 Lloyd’s Rep 498 (QB) ............................. 21

Cathiship S A v Allanasons Ltd (‘The Catherine Helen’) [1998] 2 Lloyd's Rep 511 ..................................................... 29

Central Property Trust Ltd. v. High Tree House Ltd. [1974] 1 KB 130 ....................................................................... 13

Chaplin v. Hicks [1911] 2 K.B. 786 ........................................................................................................................... 19

Chellew Navigation Co. v. Appelquist [1933] 38 Com Cas 218 ................................................................................... 11

Colonial Bank v. European Grain & Shipping Ltd. (‘The Dominique’), [1989] 1 Lloyd’s Rep 431 (HL) ..................... 25

Combe v. Combe [1951] 2 KB 215............................................................................................................................. 13

Compania Sud Americana de Vapores SA v Sinochem Tianjin Ltd (‘The Aconcagua’) [2010] 1 Lloyd’s Rep 1 ............ 30

Court Line v. Dant & Russell, (‘The Errington Court’), (1939) 44 Comm Cas. 345 .................................................... 21


v

CPR v. Board of Trade [1925] 22 Ll.L.R. 1HL........................................................................................................... 11

G Galoo Ltd. v. Bright Grahame Murray, [1994] 1. WLR 1360 CA ............................................................................... 25

Golden Straight Corp v. Nippon Yusen Kubishika Kaisha [2007] UKHL 12 ............................................................... 17

Gregg v. Scott [2005] UKHL 2 .................................................................................................................................. 19

H Hadley v. Baxendale (1854) 9 Ex. 341 ....................................................................................................................... 17

Halycon Steamship Co. Ltd. v. Continental Grain Company [1943] 75 Ll L R 80 KB ................................................. 25

Harmony Shipping Co. S.A. v. Saudi-Europe Line Ltd. (‘The Good Helmsman’), [1981] 1 Lloyd’s Rep 377 (CA) ....... 22

Henriksens Rederi A/S v. THZ Rolimpex (‘The Brede’), [1973] 2 Lloyd’s Rep 333 (CA) ............................................. 25

Highwater Estates Ltd v. Graybill [2009] EWHC 1192 QB ........................................................................................ 27

Hyundai Merchant Marine Co Ltd v. Gesuri Chartering Co Ltd (‘The Doric Pride’) [1991] 1 Lloyd’s Rep 100 .......... 17

I

Ipsos S A v. Dentsu Aegis Network Limited [2015] EWCH 1171 (Comm) ................................................................... 27

J Jackson v. Bank of Scotland [2005] UKHL 3 ............................................................................................................. 18

James v. Heim Galleries [1980] 256 EG 819 .............................................................................................................. 13

L Laminates Acquisitions v BTR Australia Limited [2004] 1 All ER (Comm) 737 .......................................................... 27

Leolga Compaia de Navigacion v. John Glynn & Son, [1953] 2 QB 374 ..................................................................... 20

London Arbitration 20/99 .......................................................................................................................................... 12

London Arbitration 25/17 ..................................................................................................................................... 11, 12

M Maharaja v. Chand [1986] AC 898 ............................................................................................................................ 13

Mareva Navigation Co. Ltd. v. Canaria Armadora S.A (‘The Mareva A.S.’), [1977] 1 Lloyd’s Rep 368 (QB) ............. 20

McGill v. The Sports and Entertainment Media Group [2016] EWCA Civ 1063 ......................................................... 19

Melzer v MF Global UK Ltd (Case C-228/11) [2013] QB 1112 .................................................................................. 23

Monarch Steamship Co. Ltd. v. Karlshamms Oliefabriker, [1949] AC 196 ................................................................. 25

Mulvenna v. Royal Bank of Scotland [2003] EWCA Civ 1112 .................................................................................... 18

O Ocean Glory Compania Naviera S.A. v. A/S P.V. Christensen (‘The Ioanna’), [1985] 2 Lloyd’s Rep 164 .................... 20

P


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Pagnam S.p.A. v. Feed Products Ltd. [1987] 2 Lloyd’s Rep 601 ................................................................................. 14

R Royal Greek Government v. Minister of Transport (The Illissos), [1942] 82 Ll L Rep 196 (CA) .................................. 20

S Santa Martha Baay Scheepvaart & Handelsmaatschappij N.V. v. Scanbulk A/S (‘The Rijn‘) [1981] 2 Lloyd’s Rep 26711

Satef-Huttenes Albertus Spa v. Paloma Tercera Shipping Co (‘The Pegase’) [1981] 1 Lloyd’s Rep 175 ...................... 18

Sea & Land Securities v. W.M. Dickinson, [1942] 2 KB 65 ........................................................................................ 20

Senate Electrical Wholesalers Ltd v. Alcatel Submarine Networks Ltd [1999] 2 Lloyd’s Rep 423 .......................... 27, 29

Seven Seas Properties Ltd v. Al-Essa (No. 2) [1993] 1 WLR 1083 .............................................................................. 18

Seven Seas Transportation Ltd. v. Atlantic Shipping Co. S.A., [1975] 2 Lloyd’s Rep 188 (QB) ................................... 25

Sidermar S.P.A. v. Apollo Corporation (‘The Apollo’), [1978 ]1 QB 2000 .................................................................. 24

South Caribbean Trading Ltd. v. Trafigura Beheer B.V. [2004] EWHC 2676 (Comm.) ............................................... 13

Statoil ASA v. Louis Dreyfus Energy Services L.P(‘The Harriette N’) [2008] EWHC 2257 (Comm)............................ 14

Steel v The State Line Steamship Company [1877] 3 AC 72 ........................................................................................ 30

Supershield Limited v. Siemens Building Technologies FE Limited [2010] 1 Lloyd’s Rep 349 .................................... 18

T Teoco UK Ltd v Aircom Jersey 4 Ltd [2016] 4 WLUK 527 ......................................................................................... 29

Timothy Wright v. Lewis Silkin LLP [2016] EWCA Civ 1308 ..................................................................................... 19

Transfield Shipping Inc v. Mercator Shipping Inc (‘The Achilleas’) [2008] UKHL 48 ................................................ 17

U Usner v Luckenbach Overseas Corp [1971] 400 U.S. 494 .......................................................................................... 30

V Van Weelde Scheepvaartkantor B.V. v. Compania Naviera Sea Orient S.A. (‘The Agrabele’) [1985] 2 Lloyd’s Rep 296

............................................................................................................................................................................. 14

Victoria Laundry (Windsor) Ltd v. Newman Industries Ltd [1949] 2 KB 528 CA ........................................................ 18

W W J Alan & Co. Ltd. v. El Nasr Export & Import Co. [1972] 2 QB 189 ....................................................................... 13

Wellesley Partners LLP v. Withers [2015] EWCA Civ 1146 ....................................................................................... 19

Western Sealanes Corporation v. Unimarine S.A. (‘The Pythia’), [1982] 2 Lloyd’s Rep 160 (QB) .............................. 21

Wye S.S. Co. v. Compagnie P.O. [1922] 1 KB 617 ..................................................................................................... 11

Youell v. Bland Welch & Co. Ltd. [1990] 2 Lloyd’s Rep 431, 454 ............................................................................... 13

OTHER AUTHORITIES


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‘Ocean Yield: Extension of charter contract for the Vessel: ‘Connector’’ (Market Screener, 23 August 2018)

<https://www.marketscreener.com/OCEAN-YIELD-ASA-13704266/news/Ocean-Yield-Extension-of-charter-

contract-for-the-vessel-Connector-27152165/> ...................................................................................................... 16

‘Shipping Claim, Notification Clauses’, (Eversheds Sutherland, 12 August 2015) <https://www.eversheds-

sutherland.com/global/en/what/articles/index.page?ArticleID=en/Transport/Shipping_Claim_Notification_Clauses>

............................................................................................................................................................ 26, 27, 28, 29

‘Top Ships Announces Extension of Time Charter of M/T Eco Fleet’ (Thomson Reuters, 3 May 2018)

<https://www.reuters.com/article/brief-top-ships-announces-extension-of-t/brief-top-ships-announces-extension-of-

time-charter-of-m-t-eco-fleet-

idUSASC09ZJY?feedType=RSS&feedName=companyNews&utm_source=feedburner&utm_medium=feed&utm_c

ampaign=Feed%3A+reuters%2FcompanyNews+%28News+%2F+US+%2F+Company+News%29> ..................... 16

BIMCO, ASBA, and SMF, ‘NYPE 2015: Time Charterparty – Explanatory Notes’ (2018) 7 ...................................... 22

Priyanka Ann Saini, ‘Capital Product Partners Announce Extension of Time Charters for Two Vessels, Secures

Additional Time Charter’ (Sea News, 1 May 2018) <https://seanews.co.uk/news/global-events/capital-product-

partners-announces-extension-of-time-charters-for-2-vessels-secures-additional-time-charter/>.............................. 16

Stephanie Roker, ‘Diana Shipping to extend Time Charter Contract for m/v Astarte’ (Dry Bulk, 18 October 2018)

<https://www.drybulkmagazine.com/dry-bulk/18102018/diana-shipping-to-extend-time-charter-contract-for-mv-

astarte/> ................................................................................................................................................................ 16

World Health Organisation ‘Ebola Virus Disease: Factsheet’ (2018) <https://www.who.int/news-room/fact-

sheets/detail/ebola-virus-disease> .......................................................................................................................... 25

RULES

New York Produce Exchange Form, 2015....................................................................................................... 22, 23, 25

BOOKS

A. Alizadeh and N. Nomikos, Shipping Derivatives and Risk Management (1st edn, 2009) .......................................... 16

Hugh Beale, Chitty on Contracts, (30th edn, Sweet & Maxwell 2008) ............................................................. 13, 14, 15

Piers Feltham, Spencer Bower: Reliance Based Estoppel (5th edn, Bloomsbury Professional 2017) ............................ 13

Sir Bernard Eder, Scrutton on Charter Parties and Bills of Lading (23rd edn, Sweet & Maxwell 2015) .................. 11,23

Terrence Coughlin, Andrew W. Baker, Julian Kenny, John D. Kimball, and Tom Belknap, Time Charters (7th edn.,

Lloyd’s Shipping Law Library 2014) ..................................................................................................................... 22

JOURNAL ARTICLES

Heath J. Benton, ‘Global Emergency Power in the Age of Ebola’ [2016] 57 Harvard International Law Journal, 1 ...... 26

John Weale, ‘Can an Efficient Vessel be Placed Off-Hire’ [2002] 33 Journal of Maritime Law & Commerce 133. ...... 21

Michael Marks Cohen, ‘Confusion in the Drafting and Application of Off-Hire Clauses’ [1978] 9 Journal of Maritime

Law and Commerce, 343 ....................................................................................................................................... 23


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LIST OF ABBREVIATIONS

ASBA Association of Ship Brokers and Agents

BIMCO The Baltic and International Maritime Council

Cl. Clause

CLAIMANT Panther Shipping Inc.

RESPONDENT Omega Chartering Co.

Receivers Hawkeye Import & Export Pty.

CP Charterparty

NYPE New York Produce Exchange Form

LMAA London Maritime Arbitrators Association

ICA Inter-Club Agreement

p. Page Number

Moot Scenario IMLAM 2019 Moot Scenario (v3)

USD United States Dollar

Vessel M/V Thanos Quest

SMF Singapore Maritime Foundation

Lloyd’s Rep. Lloyd’s Law Reports

QB Law Reports Queen’s Bench Division

KB Law Reports King’s Bench Division

EWCA Civ. England and Wales, Court of Appeal (Civil Division)

EWHC England and Wales, High Court of Justice

WLR Weekly Law Reports

UKHL United Kingdom House of Lords


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QUESTIONS PRESENTED

I. Whether the Owners are entitled to claim remuneration for the costs of hull-

cleaning?

II. Whether the Owners are entitled to damages for loss of next fixture on

account of late re-delivery?

III. Whether the Charterers are entitled to restitution of the alleged overpaid

sum of hire?

IV. Whether the Charterers are entitled to claim indemnification for the entire

amount of the cargo claim?


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STATEMENT OF FACTS

THE CHARTERPARTY

On the March 18, 2016, Omega Chartering Co. (“The Charterers”), agreed to charter the vessel “M/V

THANOS QUEST” (“The Vessel”) from Panther Shipping Inc. (“The Owners”), by way of an amended

NYPE 2015 Standard form including the Charterer’s Rider Clauses. The Vessel was delivered into

the Charterparty on March 29, 2016, at West Coast and was to be redelivered at Wahanda at the end

of the charter. The Vessel sailed with the cargo of Hawkeye Import & Export Pty. (“The Receivers”)

for Wahanda on April 20, 2016.

THE DETENTION AT WAHANDA BY PORT AUTHORITIES

Upon arrival at Wahanda, the Vessel was detained by Port Authorities owing to an Ebola Outbreak

at West Coast. Post inspection, the apprehensions of Port Authorities and common ailments in crew

members, resulted in the quarantine of the Vessel from May 7 to June 26, 2016. During this period,

the hull of the Vessel was extensively fouled. The Owner informed the Charterer of the same, and

asked them to undertake cleaning activities pursuant to their obligations under the Charterparty. The

Charterers sought to evade such obligation by offering an inadequate lump-sum amount in full

settlement of the same.

REDELIVERY OF THE VESSEL

There were significant delays in the undertaking of discharging operations by the Charterers.

Consequently, the Vessel was redelivered late and in dirty condition, in breach of the Charterers

obligations under the Charterparty on June 30, 2016. The Owners were required to undertake cleaning

activities on their own accord at South Island against an assurance of remuneration by the Charterers.

Owing to the late redelivery, the Owners suffered a loss of Next Fixture of a duration of four years.


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NOTICE OF CARGO CLAIM

During the discharging operations, it was discovered that the cargo had been damaged due to a mishap

in the ballasting activities. The Charterers sought 100% indemnity from the Owners for cargo claims

arising thereby, and provided the latter with an insufficient notice of a such claim. The Charterers

further asked for multiple time extensions to ascertain the quantum of such claim, which were granted

by the Owners on May 29 and August 28, 2017. However, the Charterers provided the Owners with

essential information such as the quantum and contract of carriage governing the claim, as late as the

counter-claim submissions.

CLAIMS

The Owner contends that the Charterer is liable for remuneration of hull cleaning costs, and damages

accruing from its breach of the charter due to failure to redeliver Vessel on time. The Charterer

contends that the Owner is liable for indemnification of the cargo claim, in full, and restitution of the

overpaid sum of hire.


3

ARGUMENTS ADVANCED

MERITS OF THE CLAIM

I. CLAIMANT IS ENTITLED TO ALL COSTS RELATING TO THE ISSUE OF HULL CLEANING

1. Claimant contends its entitlement to all costs arising out of the vessel’s hull being fouled. Its

entitled costs include the cost of cleaning amounting to USD 41,000 [A], along with the cost of the

voyage to South Island amounting to USD 55,567.42 [B].

A. RESPONDENT IS LIABLE FOR THE COST OF CLEANING TO THE AMOUNT OF USD 41,000

2. CLAIMANT submits that the cost for cleaning must be remunerated as the RESPONDENT was in

breach of its obligations under Cl.83 of the CP [1], and that the cleaning exercise undertaken by the

CLAIMANT on its own account was under the assurance that it would be remunerated for the same [2].

1. RESPONDENT Failed to Fulfil its Obligations Under Cl. 83 of the CP

3. With the implementation of the 2013 BIMCO Clause, the prior position of placing obligations

on the Owners1 underwent a significant shift. At present, when a vessel is found to have spent a

prolonged period of time at a port, leading to fouling, beyond ordinary wear and tear,2 the Charterer

must restore it to the same condition as she was on delivery.3 A contractual manifestation of the

above, Cl. 83 of the CP, states in unequivocal terms that the Charterer must undertake such cleaning

prior to redelivery at its risk, cost, expense and time.4

1 Santa Martha Baay Scheepvaart & Handelsmaatschappij N.V. v. Scanbulk A/S (‘The Rijn‘) [1981] 2 Lloyd’s Rep 267; Action Navigation Inc. v. Bottiglieri di Navigazione S.p.A. (‘The Kitsa’) [2005] EWHC 177 (Comm). 2 CPR v. Board of Trade [1925] 22 Ll.L.R. 1HL; Chellew Navigation Co. v. Appelquist [1933] 38 Com Cas 218; Bulfracht (Cyprus) Ltd. v. Boneset Shipping Co. Ltd. (‘The Pamphilos’) [2002] 2 Lloyd’s Rep 681. 3 Wye S.S. Co. v. Compagnie P.O. [1922] 1 KB 617; Black Sea & Danube Shipping Co. v. Goeland Transport & Trading Co. [1942] 74 LILR 192; London Arbitration 25/17; Sir Bernard Eder, Scrutton on Charter Parties and Bills of Lading (23rd edn, Sweet & Maxwell 2015) 446 Art 195. 4 CP, cl.83.


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4. Only when a Charterer is prevented from carrying out cleaning himself, does Cl.83(d) apply.

Therefore, the Charterer is obligated to provide the Owner with a lump sum amount in order for the

latter to clean the vessel.5

5. Commercial practice shows that vessels can be taken to nearby ports where cleaning is

undertaken prior to redelivery.6 Despite being informed that cleaning could not be undertaken at

Wahanda, a month prior to the date the Vessel was redelivered, the RESPONDENT made no effort to

carry out cleaning elsewhere.

6. In the instant case, ignoring requests from the CLAIMANT on June 26, 2016 7 and June 29,

2016,8 the RESPONDENT redelivered the vessel in a severely damaged condition.9 The RESPONDENT

simply suggested the CLAIMANT with a port where the latter could undertake the necessary work,

thereby avoiding responsibility of carrying out cleaning,.10. In spite of being informed that a lump

sum amount could not be agreed upon, owing to inspection not having been carried out, the

RESPONDENT insisted on the same.

7. RESPONDENTS mere suggestion of a potential cleaning port falls short of requirement of

fulfilment of obligation. The obligation was to undertake cleaning. Further, the absence of an attempt

to undertake cleaning elsewhere was indicative of the RESPONDENT’S insincerity.

8. Thus, the RESPONDENT failed to fulfil its obligations under Cl. 83 of the CP.

2. CLAIMANT Undertook Cleaning on its Own Account Under the Assurance that it would be

Remunerated for the Same

5 CP, cl 83(d). 6 The Kitsa (n 1); London Arbitration 25/17; London Arbitration 20/99. 7 Moot Scenario, p. 34 8 Moot Scenario, p. 42. 9 Moot Scenario, p. 84, 85. 10 Moot Scenario, p. 39.


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9. According to the doctrine of equitable estoppel, when one party, by way of his words or

conduct, with the intention of inducing the other on the faith of such representation, causes the other

to alter his position to his detriment, he is estopped from going back on his word11. Such is the case

on grounds of equity and justice.12 Additionally, the principles of estoppel are enforceable, even in

the absence of detriment 13

10. In the instant case, the RESPONDENT made an unequivocal promise to remunerate the

CLAIMANT for the costs of cleaning undertaken by it as against an original invoice.14 Further, on July

29, 2016, the CLAIMANT reiterated that should the RESPONDENT fail to fulfil its obligations, the

cleaning would be carried out at South Island with the costs being covered by the latter.15 On the basis

of the same, the CLAIMANT chose to carry out cleaning of the vessel at South Island Port. An invoice

of USD 41,000 was provided against the same.16 Here, the assurance of the Respondent induced the

Claimant to undertake cleaning operations. Hence, the RESPONDENT must be estopped from going

back on its assurance and causing detriment to the CLAIMANT.

11. The RESPONDENT must, therefore, make good the costs incurred amounting to USD 41,000.

11 W J Alan & Co. Ltd. v. El Nasr Export & Import Co. [1972] 2 QB 189; Maharaja v. Chand [1986] AC 898; Bottiglieri di Navigazione S.p.A. v. Cosco Quindao Ocean Shipping Co. (‘The Bunga Saga Lima’) [2005] EWHC 244 (Comm.); Hugh Beale, Chitty on Contracts, (30th edn, Sweet & Maxwell 2008) 308, para 3-093; Piers Feltham, Spencer Bower: Reliance Based Estoppel (5th edn, Bloomsbury Professional 2017). 12 Combe v. Combe [1951] 2 KB 215; Central Property Trust Ltd. v. High Tree House Ltd. [1974] 1 KB 130; South Caribbean Trading Ltd. v. Trafigura Beheer B.V. [2004] EWHC 2676 (Comm.); Hugh Beale, Chitty on Contracts, (30th edn, Sweet & Maxwell 2008) 310, para 3-095. 13 Ajayi v. Brisco [1964] 1 WLR 1326; James v. Heim Galleries [1980] 256 EG 819; Youell v. Bland Welch & Co. Ltd. [1990] 2 Lloyd’s Rep 431, 454. 14 Moot Scenario, p. 28. 15 Moot Scenario, p. 43 16 Moot Scenario, p. 50.


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B. RESPONDENT IS LIABLE FOR THE COST OF VOYAGE TO SOUTH ISLAND TO THE AMOUNT OF USD

55,567.42

12. The CLAIMANT submits that the cost of the voyage to South Island must be remunerated as

the CLAIMANT reserved the right to claim ‘all costs’ in relation to cleaning [1], and that it was justified

in carrying out cleaning at South Island [2].

1. CLAIMANT Reserved the Rights to Claim “All Costs” in Relation to Cleaning

13. Where one party makes a proposal to another, regarding the contents of a contractual term, a

lack of objection to those terms is to be regarded as an acceptance of them.17 In circumstances of an

express undertaking or implied obligation to speak, silence will amount to acceptance,18 especially if

there is a course of dealing between parties.19 Such acceptance is based on the principle of

unconscionablity of denial of existence of an obligation.20 Additionally, the impression created by

silence and inactivity must be viewed in light of preceding events as well as the general conduct of

parties.21

14. In the instant case, through the correspondence dated June 18, 2016, the CLAIMANT reserved

complete rights to claim all costs subsequently. These included “costs/ time/ expenses” for cleaning

the vessel, along with “any deviation time/ bunkers to a convenient port”.22 Despite engaging with all

other contentious claims, at no point did the RESPONDENT protest this particular reservation of rights,

suggesting acceptance of it.

17 Pagnam S.p.A. v. Feed Products Ltd. [1987] 2 Lloyd’s Rep 601; Statoil ASA v. Louis Dreyfus Energy Services L.P(‘The Harriette N’) [2008] EWHC 2257 (Comm). 18 Van Weelde Scheepvaartkantor B.V. v. Compania Naviera Sea Orient S.A. (‘The Agrabele’) [1985] 2 Lloyd’s Rep 296. 19 Hugh Beale, Chitty on Contracts, (30th edn, Sweet & Maxwell 2008) 181, para 2-072. 20 A.C. Yule & Sons Ltd. v. Speedwell Roofing & Cladding Ltd. [2007] EWHC 1360. 21 The Agrabele (n 18) 22 Moot Scenario, p. 34.


7

15. The disputed cost of the voyage, per the Final Hire Statement was inclusive of bunker as well

as deviation costs to travel to a convenient port, thereby bringing it within the scope of the

CLAIMANT’s accepted proposition.23

16. In light of the same, the CLAIMANT is rightfully entitled to the amount claimed.

2. CLAIMANT was Justified in Carrying Out Cleaning at South Island

17. As established above, the conduct of the parties is of utmost importance while determining

what obligations they consent to fulfil .24 Additionally, once ascertained the parties are estopped from

denying their fulfilment of such obligations.25

18. On two separate occasions, June 9, 2016 and June 18, 2016, the CLAIMANT established that it

would undertake cleaning at a “convenient port” in case the RESPONDENT failed to fulfil its

obligations.26 The correspondence on June 27, 2016 merely stated that cleaning arrangements could

be made at North Titan “if Owners were sailing north”.27 This statement created an impression that

while North Titan was a prospective port, the CLAIMANT had the option of choosing to clean the

vessel elsewhere.

19. Therefore, at no point was there a binding obligation on the CLAIMANT to carry out cleaning

at North Titan and hence, the cleaning carried out at South Island was a reasonable and justified

action.

20. Thus, the CLAIMANT is entitled to the cost of voyage to South Island.

23 Moot Scenario, p. 52. 24 Hugh Beale, Chitty on Contracts, (30th edn, Sweet & Maxwell 2008) 183, para 2-076. 25 Combe (n12); Central Property Trust Ltd (n 12) ; South Caribbean Trading (n 12); Hugh Beale, Chitty on Contracts, (30th edn, Sweet & Maxwell 2008) 310, para 3-095 . 26 Moot Scenario, p. 28, 34. 27 Moot Scenario, p. 39.


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II. THE CLAIMANT IS ENTITLED TO LOSS OF HIRE UNDER THE NEXT FIXTURE FOR A PERIOD OF

FOUR YEARS

21. The CLAIMANT submits that the RESPONDENT is liable to provide damages for the loss of Next

Fixture due to late redelivery of the Vessel. For this, the duration of the Next Fixture ought to be

construed as four years [A]. The damages for this fixture stem from the RESPONDENT’S special

knowledge about the same [B]. Alternatively, damages also arise due to CLAIMANT suffering a loss of

chance [C].

A. THE DURATION OF THE NEXT FIXTURE OUGHT TO BE CONSTRUED AS FOUR YEARS

22. It is common practice in time-charter contracts to include an extension clause which gives the

charterer an option to extend the contract for a specified period.28 Shipping is a risky business wherein

parties involved are often subject to freight and price fluctuations owing to market instability.29 An

extension option is granted by shipowners to benefit the charterer, making the contract more

attractive, by providing certainty of hire rate in such a market.30 Furthermore, it provides the party to

continue business association with a credible ship-owner.31 Exercise of the extension option is thus,

a frequent commercial occurrence in the industry.32

28 Terrence Coughlin, Andrew W. Baker, Julian Kenny, John D. Kimball, Tom Belknap, Time Charters (7th edn, 2014) 430 para 23.6. 29 A. Alizadeh and N. Nomikos, Shipping Derivatives and Risk Management (1st edn, 2009) 399, 400. 30 A. Alizadeh and N. Nomikos, Shipping Derivatives and Risk Management (1st edn, 2009) 463. 31 A. Alizadeh and N. Nomikos, Shipping Derivatives and Risk Management (1st edn, 2009) 399, 400. 32 ‘Top Ships Announces Extension of Time Charter of M/T Eco Fleet’ (Thomson Reuters, 3 May 2018) <https://www.reuters.com/article/brief-top-ships-announces-extension-of-t/brief-top-ships-announces-extension-of-time-charter-of-m-t-eco-fleet-idUSASC09ZJY?feedType=RSS&feedName=companyNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FcompanyNews+%28News+%2F+US+%2F+Company+News%29> accessed 28 April 2019 ; Priyanka Ann Saini, ‘Capital Product Partners Announce Extension of Time Charters for Two Vessels, Secures Additional Time Charter’ (Sea News, 1 May 2018) <https://seanews.co.uk/news/global-events/capital-product-partners-announces-extension-of-time-charters-for-2-vessels-secures-additional-time-charter/> accessed 28 April 2019; Stephanie Roker, ‘Diana Shipping to extend Time Charter Contract for m/v Astarte’ (Dry Bulk, 18 October 2018) <https://www.drybulkmagazine.com/dry-bulk/18102018/diana-shipping-to-extend-time-charter-contract-for-mv-astarte/> accessed 28 April 2019. ‘Ocean Yield: Extension of charter contract for the Vessel: ‘Connector’’ (Market Screener, 23 August 2018) <https://www.marketscreener.com/OCEAN-YIELD-ASA-13704266/news/Ocean-Yield-Extension-of-charter-contract-for-the-vessel-Connector-27152165/> accessed 28 April 2019.


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23. In the instant case, the duration of the Next Fixture was two years, with Champion Chartering

having an option of extending it for an additional two years.33 Although non-binding, a contractual

option of extension for two years suggests an active interest in a long-term contractual relationship.

Had Champion Chartering been absolutely uninterested in extending the fixture beyond two years,

the option would not have been included in the contract. Additionally, owing to the common practice

of extension of CP, the balance of probabilities suggests that it is not unreasonable for parties in the

instant case to expect the same. Thus, the RESPONDENT cannot claim that the possibility of extension

is remote and hence beyond the scope of the damage amount sought.

B. THE RESPONDENT HAD SPECIAL KNOWLEDGE OF THE NEXT FIXTURE AT THE TIME OF

ENTERING INTO THE CP

24. Where parties have agreed that a ship will be chartered for a period of time, the charterers are

under a duty to ensure that the ship is redelivered at the end of that period, and failure of the same is

a breach of contract.34 When a Charterer fails to do so, an Owner is entitled to claim damages, both

of the normal measure, as well as additional losses.35 The suffering party, must as far as possible,

monetarily be placed in the same position as if the contract had been performed.36

25. Hadley v. Baxendale established that losses of two kinds would yield damages; first, the kind

that are a natural consequence of breach, hence, within reasonable foreseeability; and second, the

kind that arise due to unusual circumstances but special knowledge of which existed with the parties.37

In The Achilleas, in addition to the requirement of foreseeability, a requirement of acceptance of

responsibility for the “kind or type” of loss caused was added.38

33 Moot Scenario, p. 32. 34 Hyundai Merchant Marine Co Ltd v. Gesuri Chartering Co Ltd (‘The Doric Pride’) [1991] 1 Lloyd’s Rep 100. 35 Terrence Coughlin, Andrew W. Baker, Julian Kenny, John D. Kimball, Tom Belknap, Time Charters (7th edn, 2014) 102, para 4.52. 36 Golden Straight Corp v. Nippon Yusen Kubishika Kaisha [2007] UKHL 12; Attorney General v. Blake [2000] UKHL 45; Hugh Beale, Chitty on Contracts (30th edn, Sweet & Maxwell 2008) 1598, para 26-001. 37 Hadley v. Baxendale (1854) 9 Ex. 341. 38 Transfield Shipping Inc v. Mercator Shipping Inc (‘The Achilleas’) [2008] UKHL 48.


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26. In absence of an explicit clause claiming contrary,39 an assumption of responsibility could be

presumed when special circumstances were “known to” or “communicated to” the party in breach.40

Entering into a contract is conduct enough to induce the suffering party to believe that the breaching

party had assumed responsibility to make reparations for such damages.41 Where the claim for

damages for exceptional losses relies upon the special knowledge of a party, such knowledge should

have existed at or before making of the contract.42

27. In the instant case, prior to the formation of the CP, the CLAIMANT had on March 1, 2016

publicly announced that the Vessel was going to be chartered for a period of 3-5 years.43 Following

this announcement, on March 18, 2016, the CLAIMANT and the RESPONDENT entered into the CP.

Here, the special circumstances were known to the RESPONDENT at the time of the entering into the

CP. The RESPONDENT was hence aware that following the conclusion of its CP, the Vessel was

chartered for the Next Fixture which would extend over a considerable period of time. In absence of

a clause excluding liability for this particular loss, assumption of responsibility ought to be presumed.

28. Due to the late redelivery of the Vessel, the Next Fixture, which extended over a period of

four years was cancelled.44 Resultantly, a loss of USD 15,330,000 was caused to the CLAIMANT. Since

the notice explicitly mentioned a 3-5 year charter period, the four year period of the Next Fixture falls

within its scope.

29. Thus, the RESPONDENT possessed special knowledge about the next fixture which satisfies the

second limb of Hadley v Baxendale.45 Further, since the same was provided at the time of entering

39 C Czarnikow Ltd v. Koufos (‘The Heron II’) [1967] UKHL 4; Satef-Huttenes Albertus Spa v. Paloma Tercera Shipping Co (‘The Pegase’) [1981] 1 Lloyd’s Rep 175; Seven Seas Properties Ltd v. Al-Essa (No. 2) [1993] 1 WLR 1083. 40 The Achilleas [2008] (n 38) ; Supershield Limited v. Siemens Building Technologies FE Limited [2010] 1 Lloyd’s Rep 349; Mulvenna v. Royal Bank of Scotland [2003] EWCA Civ 1112. 41 The Heron II (n 39). 42 Victoria Laundry (Windsor) Ltd v. Newman Industries Ltd [1949] 2 KB 528 CA; Jackson v. Bank of Scotland [2005] UKHL 3; Hugh Beale, Chitty on Contracts (30th edn, Sweet & Maxwell 2008) 1633 para 26-061. 43 Moot Scenario, p. 1. 44 Moot scenario p. 40. 45 Hadley (n 37).


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into the CP, there is acceptance of responsibility. Thus, the RESPONDENT is liable for the entire sum

of damages arising due to cancellation of the Next Fixture.

C. ALTERNATIVELY, THE CLAIMANT SUFFERED A LOSS OF CHANCE DUE TO LATE REDELIVERY

30. A suffering party may claim damages when breach of a contractual obligation results in a loss

of opportunity for him to gain a benefit or avoid harm.46 Damages granted must be equivalent to the

amount of loss.47 Additionally, the party claiming such damages must prove that the third party, in

absence of such breach, would have acted in a manner such to confer the benefit in question.48 On the

basis of balance of probability, the suffering party must prove that the breaching party’s actions

caused the loss of chance.49

31. In the instant case, the loss of the Next Fixture, was a direct consequence of the Vessel being

redelivered after its lay-can period.50 Had the RESPONDENT not breached its obligation of redelivering

the Vessel within the stipulated time frame, the Next Fixture would have been in existence. In lieu of

the same, a direct causal link exists between the breaching party’s actions and the chance lost. Further,

the benefit in question would have been conferred.

32. Thus, the CLAIMANT lost the chance of benefitting under the aforementioned Next Fixture and

is entitled to damages.

46 Allied Maples Group Ltd v. Simmons & Simmons [1995] 1WLR 1602. 47 Chaplin v. Hicks [1911] 2 K.B. 786. 48 Simmons (n 45); Wellesley Partners LLP v. Withers [2015] EWCA Civ 1146; McGill v. The Sports and Entertainment Media Group [2016] EWCA Civ 1063; Aldgate Construction Company Ltd v. Unibar Plumbing & Heating Ltd [2010] EWHC 1063. 49 Timothy Wright v. Lewis Silkin LLP [2016] EWCA Civ 1308; Gregg v. Scott [2005] UKHL 2. 50 Moot Scenario, p. 40, 41.


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MERITS OF THE COUNTERCLAIM

III. THE VESSEL WAS NOT OFF-HIRE FROM MAY 7, 2016 TO JUNE 26, 2016 AND HIRE

CONTINUED TO ACCRUE

33. The CLAIMANT submits that the Vessel was not off-hire under Cl.17 of the CP from May 7,

2016 to June 26, 2016, and the hire continued to accrue against the RESPONDENT.

34. An inherent burden is placed upon the Charterers to bring themselves definitively under the

scope of the relevant off-hire clause.51 In order to claim off-hire, a Charterer must prove that by virtue

of an event enumerated as an off-hire event within the clause, the full working of the Vessel was

prevented leading to a discernible loss of time.52 In situations of doubt, the Court ought to look

favourably upon the Owners whose right to continuous hire is sought to be infringed.53

35. In light of the same, the full working of the vessel has not been prevented [A]. Moreover, the

event does not amount to an off-hire event pursuant to Cl.17 [B]. Last, the hire continued to accrue

and the RESPONDENT is not entitled to any damages [C].

A. THE FULL WORKING OF THE VESSEL HAS NOT BEEN PREVENTED

36. The essence of an off-hire clause is to account for circumstances wherein a Charterer’s

obligation of continuous payment of hire is excepted.54 Such circumstances arise when owing to a

Vessel’s inability to undertake and render services, the Charterers are subjected to a consequent delay

or loss of time.55 It is essential for the full working of the vessel to be prevented in order to claim off-

51 Sea & Land Securities v. W.M. Dickinson, [1942] 2 KB 65; Leolga Compaia de Navigacion v. John Glynn & Son, [1953] 2 QB 374; The Doric Pride (n 34). 52 Mareva Navigation Co. Ltd. v. Canaria Armadora S.A (‘The Mareva A.S.’), [1977] 1 Lloyd’s Rep 368 (QB); Actis Co. Ltd. v. The Sanko Steamship Co. Ltd. (‘The Aquacharm’), [1982] 1 Lloyd’s Rep 237 (QB). 53 Royal Greek Government v. Minister of Transport (The Illissos), [1942] 82 Ll L Rep 196 (CA). 54 The Illissos (n 52). 55 The Mareva A.S. (n 51); Ocean Glory Compania Naviera S.A. v. A/S P.V. Christensen (‘The Ioanna’), [1985] 2 Lloyd’s Rep 164 (QB).


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hire.56 However, a ship that is in every way sound and well found, by herself, ought not to be deemed

off-hire by way of an external artificial obstruction.57

37. In the instant case, the Vessel in itself remained in every way sound, well found and fully

efficient. The Vessel’s ability to carry out the immediate service was unaffected as she continued to

assume full working conditions. The service of berthing was hindered by an artificial obstruction,

completely unrelated to the Vessel’s efficiency.

38. Further, mere detention by the Port State Control must not be construed to render the Vessel

inefficient in itself, especially since the reason behind such detention is not a deficiency in the vessel.

39. Therefore, the full working of the Vessel had not been prevented in the prescribed manner as,

thereby invalidating the off-hire claim.

B. THE EVENT DOES NOT AMOUNT TO AN OFF-HIRE EVENT PURSUANT TO CL.17

40. While the parties have agreed to the quantum of the off-hire claim, the CLAIMANT disputes

that the delay so alleged by the RESPONDENT,58 is tantamount to an off-hire event in accordance with

Cl.17 of the CP.

41. In order to claim off-hire, the event causing the delay ought to be a fortuitous event falling

within the scope of the events enumerated under the off-hire clause.59 A prima facie understanding

of the scenario makes it sufficiently evident that the event is unrelated to any causes defined under

the off-hire clause, namely, deficiency of stores, breakdown of machinery, fire, detention by arrest or

average accidents of the vessel, dry-docking, and cleaning of underwater parts.

56 Western Sealanes Corporation v. Unimarine S.A. (‘The Pythia’), [1982] 2 Lloyd’s Rep 160 (QB); C.A. Venezolana De Navegacion v. Bank Line (‘The Roachbank’) [1987] 2 Lloyd’s Rep 498 (QB); The Aquacharm (n 51); John Weale, ‘Can an Efficient Vessel be Placed Off-Hire’ [2002] 33 Journal of Maritime Law & Commerce 133. 57 Court Line v. Dant & Russell, (‘The Errington Court’), (1939) 44 Comm Cas. 345; The Roachbank (n 56). 58 Moot Scenario, p. 77. 59 The Rijn (n 1); Andre & CIE S.A. v. Orient Shipping (‘Rotterdam B.V.’) (‘The Laconian Confidence’), [1997] 1 Lloyd’s Rep 139 (QB).


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42. With due regard to the same, the event does not amount to a deficiency of ratings [1]; it does

not amount to detention by Port State Control for vessel deficiencies [2]; and the event does not fall

within the scope of any other similar cause [3].

1. Deficiency of Ratings

43. Ratings refers to all seafarers, inclusive of the crew, aboard the ship that are employed by the

Owners.60 The expression “deficiency of men” denotes a situation where in there is a numerical

insufficiency of crew on board.61 “Deficiency of men” finds no application when there is a full

complement of crew aboard the vessel.62 Numerical insufficiency or deficiency of men, will fail to

render the ship off-hire if such deficiency does not prevent the full working of the ship.63

44. In the instant case, the RESPONDENT raised no concerns regarding the lack of a full

complement of crew onboard. Here, aside from regular occupational hazards of headaches and

common cold, the crew did not face any grave health related apprehensions throughout the voyage.64

Hence, even if deficiency was to be construed beyond mere numerical insufficiency, it fails to

encompass the extraneous circumstances of the case.

The event, therefore, does not amount to a deficiency of ratings.

2. Detention by Port State Control for Vessel Deficiencies

45. Detention by Port State Control only amounts to an off-hire event when the purpose for such

detention is a deficiency of the vessel discovered upon inspection.65 The Owner provides and

60 BIMCO, ASBA, and SMF, ‘NYPE 2015: Time Charterparty – Explanatory Notes’ (2018) 7. 61 The Illissos (n 53). 62 Terrence Coughlin, Andrew W. Baker, Julian Kenny, John D. Kimball, and Tom Belknap, Time Charters (7th edn., Lloyd’s Shipping Law Library 2014) 446, para 25.24. 63 Harmony Shipping Co. S.A. v. Saudi-Europe Line Ltd. (‘The Good Helmsman’), [1981] 1 Lloyd’s Rep 377 (CA). 64 Moot Scenario, p. 26. 65New York Produce Exchange Form, 2015 cl. 17; BIMCO, ASBA, and SMF, ‘NYPE 2015: Time Charterparty – Explanatory Notes’ (2018) 15, 16.


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maintains the Vessel, including its crew, and the hire is payable against their efficient undertaking of

services ordered by Charterers.66

46. In the instant case, the Vessel was detained by Port State Control due to their apprehensions

owing to an Ebola outbreak at the port of origin.67 The discovery of certain common symptoms in a

few crew members, is unrelated and not intended to be included within the purview of vessel

deficiencies. The clause as well as its explanation, make it evident that the scope of such detention

amounting to an off-hire event is limited to vessel deficiencies. Here, detention was caused by entirely

extraneous circumstances, unrelated to the Vessel and its efficiency as required under the clause.

Thus, the event does not amount to detention by Port State Control for vessel deficiencies.

3. Any Other Similar Cause Preventing the Full Working of the Vessel

47. An off-hire clause acts as an exception to the Charterer’s fundamental obligation to pay

continuous hire for the entirety of the charter period,68 and ought to be duly scrutinized and applied

restrictively.69 An ejusdem generis interpretation of the off-hire clause must be construed to reflect

the general context of the charter and the clause as a whole70. Only events which are similar to the

ones enlisted under the clause must be considered within its scope.71 Reaffirming the principle above,

Cl.17 makes it abundantly clear that the sweeping clause is inapplicable in situations not fulfilling the

requisite criteria.72

48. Accordingly, a strict approach must be followed while interpreting sweeping “any other

event” clauses for the rule of ejusdem generis which ought to be applied. Entirely extraneous causes

66 The Mareva A.S. (n 52). 67 Moot Scenario, p. 25. 68 The Mareva A.S. (n 52); Michael Marks Cohen, ‘Confusion in the Drafting and Application of Off-Hire Clauses’ [1978] 9 Journal of Maritime Law and Commerce, 343; Sir Bernard Eder, Scrutton on Charterparties and Bills of Lading (23rd edn, Sweet & Maxwell 2015) 438, para 17-025. 69 Burton & Co. v. English & Co., [1883] 12 QB 218; Melzer v MF Global UK Ltd (Case C-228/11) [2013] QB 1112; A v A (Children: Habitual Residence) [2014] AC 1. 70 The Laconian Confidence (n 59). 71 Adelaide Steamship v. The Crown, [1923] Lloyd’s Rep 324; The Laconian Confidence (n 59). 72 New York Produce Exchange Form, 2015 cl. 17.


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such as “unexpected interference by the authorities” both remote and unforeseeable at the time of

formation of contract, should not to be construed to fall within the scope of such clause.73

49. A consideration of the mentioned cause indicates an apparent genus, where in they all relate

to the physical condition of the vessel, and the efficiency of the ship, crew and cargo. The clause also

encompasses within itself the possibility of interference by port authorities but only to the extent of

vessel deficiencies. The voyage was commenced in lieu of all necessary regulations and health

certifications. The occurrence of an Ebola outbreak in itself is extremely remote, and cannot be

assumed to have been intended to fall within the interpretation of off-hire events.

50. Further, the parties have considered the possibility of a disease outbreak as evinced from the

ZIKA Virus Protection Clause74 which precludes an off-hire claim. The alleged delay, preventive

inspection and resultant detention by way of quarantine, have all been influenced by largely

extraneous causes, which are too remote to have been espoused by the parties to fall within the scope

of the off-hire clause.

51. In time charters, risks pertaining to the maintenance and navigation of the vessel are accorded

to the Owners, while those arising out of commercial operations are for the Charterer’s account.75

The off-hire clause is the contractual manifestation of risks associated with maintenance of the Vessel.

Furthermore, the granting of free pratique during a voyage has been deemed to be a formality arising

out of the Charterer’s use of the Vessel.76

52. Therefore, the quarantine of the Vessel by Port State Control does not amount to an off-hire

event within the purview of the off-hire clause of the CP.

73 The Roachbank (n 56); The Laconian Confidence (n 59). 74 CP, cl. 122; Moot Scenario, p. 20. 75 The Doric Pride (n 34). 76 Sidermar S.P.A. v. Apollo Corporation (‘The Apollo’), [1978 ]1 QB 2000.


17

C. THE HIRE CONTINUED TO ACCRUE AND THE RESPONDENTS ARE NOT ENTITLED TO DAMAGES

53. The Owners provide the ship and the crew to work and maintain it, and the Charterers must

pay hire continuously until the ship is redelivered for the right to exploit the vessel’s earning

capabilities.77 This contractual relationship for services is evinced from Cl.6 and 7 of the NYPE 2015

form.78 The Charterer’s obligation of continuous payment of hire persists, triggering of the off-hire

clause or the Owners’ breach being the only exceptions.79 It has been established that the events in

this scenario do not satisfy the requirements of an off-hire claim.

54. Further, prevailing law mandates that a loss and consequence should be of a reasonably

contemplatable nature, not entirely remote from the breach or cause.80 There exists no general right

of set off with respect to claims for damages, including one against hire payable.81

55. In the instant case, the CLAIMANT has fulfilled all their obligations in so far as ensuring the

efficiency of the Vessel, including the ship and crew. The departure of the Vessel, despite the

abnormal occurrence of an Ebola outbreak at the port of origin, was in accordance with agreed upon

and lawful norms.

56. The CLAIMANT’s conduct has in no manner prevented or prejudiced the RESPONDENT use of

the Vessel and such a claim ought to be subjected to the test of remoteness. Considering the nature of

Ebola, its incubation period, development of symptoms, rarity, et al.,82 the Vessel and its crew were

not subject to any grave health related concerns during the voyage. Such detention and quarantine,

stems from a combination of extraneous circumstances. The same is guided by the outbreak of an

77 Sea & Land Securities (n 51). 78 New York Produce Exchange Form, 2015 cl. 6, 7. 79 Halycon Steamship Co. Ltd. v. Continental Grain Company [1943] 75 Ll L R 80 KB; Akt Tankexpress v. Compagnie Financiere Belge des Petroles, [1947] 80 Lloyd’s Rep. 365 (HL); Sea & Land Securities (n 51). 80 Hadley (n 37); Monarch Steamship Co. Ltd. v. Karlshamms Oliefabriker, [1949] AC 196; Galoo Ltd. v. Bright Grahame Murray, [1994] 1. WLR 1360 CA. 81 Seven Seas Transportation Ltd. v. Atlantic Shipping Co. S.A., [1975] 2 Lloyd’s Rep 188 (QB); Henriksens Rederi A/S v. THZ Rolimpex (‘The Brede’), [1973] 2 Lloyd’s Rep 333 (CA); Aries Tanker Corporation v. Total Transport Ltd. (‘The Aries’), [1977] 1 Lloyd’s Rep 334 (HL); Colonial Bank v. European Grain & Shipping Ltd. (‘The Dominique’), [1989] 1 Lloyd’s Rep 431 (HL). 82 World Health Organisation ‘Ebola Virus Disease: Factsheet’ (2018) <https://www.who.int/news-room/fact-sheets/detail/ebola-virus-disease> accessed 29 April 2019.


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extremely rare, difficult to diagnose disease,83 and the hastened decisions of a third-party unrelated

to the conditions of the Vessel or its navigation.

57. Thus, the hire continued to accrue from May 7 to June 26, 2016, and the RESPONDENT is

entitled to no damages for the hire so paid.

IV. RESPONDENT IS NOT ENTITLED TO INDEMNITY FOR THE CARGO CLAIM

58. The CLAIMANT submits that the notice of indemnity claim brought by the RESPONDENT is

barred by time [A]. Alternatively, even if the claim is found to have been brought within time, the

apportionment of the same would not be as per Cl.8(a) of the ICA [B].

A. RESPONDENT’S CLAIM IS TIME BARRED AS PER CLAUSE 6 OF THE ICA.

59. The claim for indemnity brought by the charterers is barred by time as the notice of July 7,

2016 does not fulfil the requirements as per Cl.6 of the ICA. The charterers have failed to meet the

“if possible” standard provided in Cl.6 [1]. They have not provided owners with essential information

such as the amount claimed and the contract of carriage [2]. As a result, the notice becomes

insufficient in its nature and effect [3].

1. RESPONDENTS Failed to Meet the ‘If Possible’ Standard

60. The use of the expression “if possible” in Cl. 6 of the ICA does not allow for parties to alleviate

themselves from making efforts to provide the required information in support of a claim.84 So long

as the information is ascertainable, the parties are obligated to include it with their notice of claim.85

83 Heath J. Benton, ‘Global Emergency Power in the Age of Ebola’ [2016] 57 Harvard International Law Journal, 1. 84 ‘Shipping Claim, Notification Clauses’, (Eversheds Sutherland, 12 August 2015) <https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Transport/Shipping_Claim_Notification_Clauses> accessed on 28 April 2019. 85 ‘Shipping Claim, Notification Clauses’, (Eversheds Sutherland, 12 August 2015) <https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Transport/Shipping_Claim_Notification_Clauses> accessed on 28 April 2019.


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The party making such claim is bound to exhaust all avenues in order to acquire the relevant

information, subject to which the information can be regarded impossible to provide.86

61. In the instant case, the RESPONDENT failed to provide the CLAIMANT with all the information

surrounding the claim, even though the same was possible. The contract of carriage was with the

RESPONDENT at the time of making the claim but was still not provided.87 Moreover, the RESPONDENT

failed to exhaust all avenues to quantify the actual amount of claim before serving the notice of claim

on July 7, 2016.

62. The RESPONDENT failed to convey any ascertained quantum of damages despite time

extensions being granted.88 The facts illustrate that the aforementioned quantum had been provided

by the Receivers during the course of these extensions.89 However, the same was only made available

to the CLAIMANT along with the counter-claim submissions.90

Thus, the RESPONDENT has failed to meet the if possible standard.

2. The RESPONDENT Failed to Provide the Amount Claimed & the Contract of Carriage

63. The commercial purpose of a notice is to formally inform a defendant of a claim, such that he

may make requisite financial provisions to meet it.91 This requires a notice to be clear and

informative.92 When no amount has been provided by the third party, the defendant seeking

indemnification ought to take reasonable steps to ascertain such amount using alternative sources,

such as surveys and market prices.93

86 Ipsos S A v. Dentsu Aegis Network Limited [2015] EWCH 1171 (Comm). 87 Moot Scenario p. 82 (Procedural Order No 2 cl. 15). 88 Moot Scenario p. 57, 58. 89 Moot Scenario p. 82 (Procedural Order No 2 cl 10). 90 Moot Scenario p. 82 (Procedural Order No 2 cl 15). 91 Highwater Estates Ltd v. Graybill [2009] EWHC 1192 QB. 92 Senate Electrical Wholesalers Ltd v. Alcatel Submarine Networks Ltd [1999] 2 Lloyd’s Rep 423; Laminates Acquisitions v BTR Australia Limited [2004] 1 All ER (Comm) 737; A/S Rendal v Arcos Ltd [1937] 58 LLR 287. 93 ‘Shipping Claim, Notification Clauses’, (Eversheds Sutherland, 12 August 2015) <https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Transport/Shipping_Claim_Notification_Clauses> accessed on 28 April 2019.


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64. Further, the notice should also shed light on the nature of the claim,94 involving its form and

substance, making the contract of carriage essential.95 Such is needed to understand the basis of the

claim and what is being claimed by the third party.

65. In the instant case, the notice lacked clarity and information, and was not commercially viable.

The CLAIMANT could not make any financial provision based on the claim of July 7, 2016 as it failed

to specify the amount in question. The Preliminary Survey Report attached with the notice referred

to damage of cargo in Hold No. 2 and stated that “it is too early to say the likely quantum of damage”

and “estimates majority of the cargo to be severely damaged”.96 It merely anticipated the market

prices for English Tea, believing them to be in the range of USD 60-65/kg.97 However, the report is

vague as it did not provide any certainty as to the extent of damage or the amount of money being

claimed for it. Additionally, the report informs that the Receivers may take steps to salvage or

recondition the damaged tea.98 These steps seek to mitigate the quantum of damages, and therefore,

leave the owners unsure as to the actual amount.

66. Adding to the above failure, the RESPONDENT has also failed to provide the CLAIMANT with

the details of the contract of carriage, which is the document forming the basis of the Receivers’

claim. Such details of the contract of carriage would have enabled the CLAIMANT know the form and

substance of the underlying claim. The contract of carriage would also allow for verification of the

validity of the claim upon which the RESPONDENT’s claim for indemnity is founded.

67. Thus, the RESPONDENT failed to provide essential information in their notification regarding

quantum of the claim and the contract of carriage.

94 Highwater (n 91). 95 ‘Shipping Claim, Notification Clauses’, (Eversheds Sutherland, 12 August 2015) <https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Transport/Shipping_Claim_Notification_Clauses> accessed on 28 April 2019. 96 Moot Scenario p. 46 (Preliminary Survey Report). 97 Moot Scenario p. 46 (Preliminary Survey Report). 98 Moot Scenario p. 46 (Preliminary Survey Report).


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3. The RESPONDENT’S Notice is Insufficient in its Nature and Effect

68. Sufficiency of a notice of claim is determined by ascertaining whether the same can be

understood by a reasonable recipient in the overarching context of the claim.99 A notice should

provide full and all relevant information as to the clause of the ICA under which they are brought,

the relevant documents and other information.100 The purpose of contractual notices is commercial

certainty and failure to abide by their terms is not a trivial matter which can be dismissed on a

technicality.101 Further, its language should be such that it notifies the party of an actual claim and

not merely that a claim may be made.102

69. In the instant case, the notice was insufficient as a reasonable person could not ascertain

whether the notice was for a claim being made against them or a notice giving information of a future

claim. Nowhere in the correspondence does the RESPONDENT mention that it would be bringing a

claim of indemnity against the CLAIMANT. Until the correspondence dated June 29, 2016,103 the

RESPONDENT was still discussing with the Receivers the likelihood of a claim against them.

70. The correspondence dated July 7, 2016 stated that the RESPONDENTs would revert once the

Receivers’ claim against them became clear.104 The survey report attached with this correspondence

mentioned that the Receivers “would be” making a claim against the RESPONDENT and further

information would be provided pertaining to the potential loss.105 Here, the context of the claim was

unclear, owing to the failure in providing an amount claimed, the contract of carriage and even details

as to under what provisions of the CP the claim is being brought against the CLAIMANT.

99 Senate Electrical Wholesalers Ltd v. Alcatel Submarine Networks Ltd [1999] 2 Lloyd’s Rep 423; Laminates Acquisitions v. BTR Australia Ltd [2004] 1 All ER (Comm) 737. 100 ‘Shipping Claim, Notification Clauses’, (Eversheds Sutherland, 12 August 2015) <https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Transport/Shipping_Claim_Notification_Clauses> accessed on 28 April 2019. 101 Laminates (n 99) ; Teoco UK Ltd v Aircom Jersey 4 Ltd [2016] 4 WLUK 527. 102 Cathiship S A v Allanasons Ltd (‘The Catherine Helen’) [1998] 2 Lloyd's Rep 511. 103 Moot Scenario p. 44. 104 Moot Scenario p. 45. 105 Moot Scenario p. 46 (Preliminary Survey Report).


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71. Since the underlying claim was uncertain, the RESPONDENT’S notice of claim,106 does not have

the effect of a valid notice.

Hence, from the contentions established above it is clear that the Respondents have failed to meet the

notice requirements as per ICA Cl.6 and thus their notice would be barred by time.

B. IN THE ALTERNATIVE, THE APPORTIONMENT OF CLAIM WILL NOT BE AS PER CL. 8(A) OF THE

ICA

72. The claim cannot be apportioned as per Cl.8(a) of the ICA as the act of improper ballasting

by a crew member amounted to negligence of the crew and not unseaworthiness. The obligation to

make a vessel seaworthy does not suggest that the ship must be immune from the negligence of her

crew.107 Crew’s failure to use the knowledge and qualifications that they possess or use the vessel’s

equipment properly to prevent any danger, will only amount to negligence and not

unseaworthiness.108 A sole act of operating-negligence, despite the effect it may have on the ship’s

physical makeup, does not itself render the ship unseaworthy.109

73. In the instant case, the act of improper ballasting was a one-off incident by a single member

of the crew and could not render the whole crew incompetent or the vessel unseaworthy.110 At most,

the act would amount to negligence, as recognised by the RESPONDENT in its correspondence dated

June 27, 2016111 as well as the counter-claim submissions. 112

74. Thus, the RESPONDENT’s contention that the claim arose out of unseaworthiness is not well

found and cannot be apportioned as per Cl.8(a) of the ICA.

106 Moot scenario p. 45. 107 Compania Sud Americana de Vapores SA v Sinochem Tianjin Ltd (‘The Aconcagua’) [2010] 1 Lloyd’s Rep 1. 108 Steel v The State Line Steamship Company [1877] 3 AC 72. 109 Usner v Luckenbach Overseas Corp [1971] 400 U.S. 494. 110 Moot Scenario, p. 46 (Preliminary survey report). 111 Moot Scenario, p. 38. 112 Moot Scenario, p. 72 (Counterclaim Submissions cl. 9).


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PRAYER

For the reasons set out above, the CLAIMANT respectfully requests the Tribunal to:

1. DECLARE that the RESPONDENT is liable to pay the following costs incurred with regard to

hull cleaning:

Ø USD 41,000.00 for the cost of hull cleaning.

Ø USD 55,567.42 for the voyage to South Island to perform the cleaning.

2. FIND that the vessel was never off- hire for the duration of the CP and thus DECLARE the

RESPONDENT liable for hire amount.

3. FIND that the claim for indemnity brought by the RESPONDENT is time barred.

4. DECLARE that the RESPONDENT is liable to pay USD 15,330,000.00 for the loss due to

Cancellation of Next Fixture for a period of 4 years.

5. AWARD all costs and interests on sums found due to the CLAIMANT, compounded as the

tribunal deems fit.

Dated this 29th of April 2019 by Thor and Loki Brothers of Deck House, Mooring Lane,

London, EC3,

Solicitors for the CLAIMANT, Panther Shipping Inc.

T 20TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT€¦ · team 13 | memorandum for panther...

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