ANANTA TAQWA

UNIVERSITAS PADJADJARAN

TEAM 23

AGAINST

CERULEAN BEANS AND

AROMAS LTD

THE NINETEENTH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

CLAIMANT RESPONDENT

ON BEHALF OF

DYNAMIC SHIPPING LLC

AND

THE SHIP ‘MADAM DRAGONFLY’

MEMORANDUM FOR RESPONDENT

COUNSEL

M IRFAN DIMASYQI PUTRI PARIMARMA YOGI BRATAJAYA

ESTHER CHRISTIE E M

TEAM 23 MEMORANDUM FOR RESPONDENT

i

Table of Contents LIST OF ABBREVIATIONS.................................................................................................................. iii

List of authorities ..................................................................................................................................... iv

Statement of Facts ..................................................................................................................................... 1

I. THE TRIBUNAL DOES NOT HAVE JURISDICTION TO HEAR THE DISPUTE ...................... 2

A. Clause 27(d) is Applicable in this Case ........................................................................................ 3

B. The Parties Must Adhere to Clause 27(e) ..................................................................................... 4

C. In Any Event, CLAIMANT Cannot Depart from Clause 27(d) ........................................................ 4

i. A Master Mariner has sufficient experience in settling the disputed technical matters .............. 5

ii. The absence of procedural rules in Clause 27(d) does not bar its operation ............................... 5

iii. Resolution of dispute before an expert will not represent a duplication of effort ...................... 5

II. RESPONDENT IS PROTECTED BY THE HAGUE-VISBY RULES ............................................ 6

A. RESPONDENT Exercised Due Diligence to Make the VESSEL Seaworthy ..................................... 7

i. There are no violations of the relevant regulatory codes within Clause 15 of the Charterparty . 7

ii. Alternatively, RESPONDENT performed due diligence since the VESSEL was seaworthy at the

beginning of the voyage .................................................................................................................... 8

B. RESPONDENT has Complied with Article III rule 2 of the HVR .................................................... 9

C. RESPONDENT is Exempted from Liability for Damages under Art IV rule 2 of the HVR ............ 9

i. The fault of the navigation .......................................................................................................... 9

ii. Act of God ................................................................................................................................. 10

III. RESPONDENT HAS NOT BREACHED THE CHARTERPARTY ............................................. 10

A. The Deviation was Justifiable ..................................................................................................... 10

B. The Delay was Caused by Force Majeure Events ....................................................................... 11

i. The solar flare is constituted as an act of God .......................................................................... 11

ii. The storm is classified as a force majeure event within Clause 17 ........................................... 12

C. Delivery occurred on 8:42pm on 29 July 2017 ........................................................................... 13

i. The CARGO had been discharged to the port authority ............................................................. 13

ii. All possession of the CARGO had been relinquished ................................................................. 13

ii

iii. CLAIMANT is estopped from asserting that issuance of the barcode does not constitutes as

delivery ............................................................................................................................................ 14

IV. RESPONDENT IS NOT LIABLE FOR THE LOSS AND DAMAGES ....................................... 15

A. RESPONDENT is not Liable for the Damaged CARGO .................................................................. 15

B. In any Event, RESPONDENT’s Liability is Limited by Article IV rule 5 of the HVR .................. 16

i. RESPONDENT is not barred from relying on Article IV rule 5 ................................................... 16

ii. RESPONDENT is only liable for 666.67 units of account per container ...................................... 17

C. RESPONDENT is not Liable for the Replacement CARGO and Settlement Payments ................... 17

i. RESPONDENT is not liable for the delay ..................................................................................... 18

ii. Alternatively, the damages are too remote ................................................................................ 18

V. CLAIMANT DOES NOT HOLD A MARITIME LIEN OVER THE VESSEL ............................ 19

A. CLAIMANT’s Basis for a Maritime Lien Falls Outside of the Scope of Section 15 of the

Admiralty Act ...................................................................................................................................... 19

B. CLAIMANT is not Entitled to be Subrogated for the Crews’ Lien for Wages .............................. 20

VI. CLAIMANT IS LIABLE FOR ALL SUMS CLAIMED BY RESPONDENT .............................. 21

A. RESPONDENT is Entitled to Freight .............................................................................................. 21

B. CLAIMANT is Liable for Demurrage ............................................................................................ 21

C. CLAIMANT is Liable for the Cost of Repairs to the Hull ............................................................. 22

D. CLAIMANT is Liable to pay for agency fees at Port of Dillamond .............................................. 24

E. CLAIMANT is Liable to pay for agency fees at Port of Spectre .................................................... 24

F. CLAIMANT is Liable to pay for the use of electronic system at the Port of Dillamond ............... 24

REQUEST FOR RELIEF ....................................................................................................................... 25

iii

List of Abbreviations

CLAIMANT Cerulean Beans and Aromas ltd.

RESPONDENT Dynamic Shipping LLC

Charterparty The Voyage Charterparty between

CLAIMANT and RESPONDENT

CARGO 70.000 kg of specialty grade Coffee beans

Force Majeure Event An event listed in Clause 17 of the

Charterparty

HVR Hague-Visby Rules 1968

UK Arbitration Act UK Arbitration Act 1996

LMAA Terms 2017 London Maritime Arbitrators Arbitration 2017

Admiralty Act Australian Admiralty Act 1988

Parties CLAIMANT and RESPONDENT

¶ Paragraph

iv

List of Authorities

Cases

A.I.C.C.O. v. Forggensee Navigation (The Polar) [1993] 2 Lloyd’s Rep. 478...................................... 10

Albacora Srl v. Westcott & Laurence Line [1966] 2 Lloyd’s Rep. 53 ................................................... 10

Algar v Middlesex County Council (Cassels J) [1945] 2 All ER ............................................................ 17

Badgin Nominees Pty. Ltd. v Oneida Ltd. anor [1998] VSC 188 ............................................................ 5

Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221 ................................................ 23

Barclays Bank Plc v Nylon Capital LLP, [2014] 2 C.L.C. 469 ................................................................ 7

British Shipbuilders v VSEL Consortium Plc [1997] 1 Lloyd's Rep. 106 ................................................ 3

British Shipowners v. Grimond (1876) 3 Rett. 968, 972 .................................................................. 15, 18

Burston Finance Ltd v Speirway Ltd [1974] 1 WLR 1648 ..................................................................... 23

Channel Tunnel Group v. Balfour Beatty Construction Ltd [1993] A.C. 334 (H.L.)....................... 4, 5, 7

Chartered Bank v. British India S.N. Co. [1909] A.C. 369, 375 ...................................................... 15, 18

Cheltenham & Gloucester plc v Appleyard (“C & G”) [2004] EWCA Civ 291 ................................... 23

Cott UK Ltd v FE Barber Ltd [1997] 3 All ER 540 ................................................................................. 4

CV Sheepvaartonderneming Ankergracht v Stemcor (A/sia) Pty Limited [2007] FCAFC 77 ........... 9, 11

Daewoo Heavy Industries Ltd. & Anor v Klipriver Shipping Ltd. & Anor (The Kapitan Petko Voivoda)

[2003] EWCA Civ 451 ....................................................................................................................... 18

Delaforce v Simpson-Cook (Handley AJA) (2010) 78 NSWLR 483 ..................................................... 17

Eastern City [1958] 2 Lloyd’s Rep. 127 ................................................................................................. 25

El Greco (Aust) Pty Ltd v Mediterranean Shipping Co SA [2004] FCAFC 202 .................................... 20

F.C. Bradley & Sons Ltd. v Federal Steam Navigation Co. Ltd. [1927] 27 Ll. L. Rep. 395 ................... 8

G.H. Renton v. Palmyra Trading Corporation of Panama [1957] A.C. 149 ......................................... 10

Gamlen Chemical [1980] 147 CLR ....................................................................................................... 10

Goldman v Thai Airways International Ltd [1983] 1 WLR 1186 .......................................................... 19

v

Great China [1998] 196 CLR 161 ......................................................................................................... 11

Hadley v Baxendale [1854] 9 Ex 341 ..................................................................................................... 21

Hilditch Pty Ltd v Dorval Kaiun KK (No 2) [2007] 245 ALR 125 ....................................................... 11

Hilton v. Tucker, (1888) 39 Ch D 669 .................................................................................................... 16

Holt v Markham [1923] 1 KB 504 CA ................................................................................................... 17

Independent Petroleum Group Ltd v. Seacarriers Count Pte Ltd (The “Count”), [2008], 1 Lloyds Rep

72, 76 ................................................................................................................................................... 26

Jones v Sherwood Computer Services Plc [1992] 1 W.L.R. 277 ............................................................. 3

Kemp v Intasun Holidays [1987] BTLC 353 .......................................................................................... 21

Kish v Taylor [1912] AC 604 ................................................................................................................. 12

Kodros Shipping Corp of Monrovia v. Empresa Cubana de Fletes (The “Evia”), 1982, 1 A.C. 334 .... 26

Kyokuyo Co Ltd v AP Moller-Maersk A/S (t/a Maersk Line) [2017] EWHC 654 (Comm) ..................... 7

Lebeaupin v Richard Crispin and Company (1920) 2 K.B. 714 ............................................................ 14

MP Kemp Ltd v Bullen Developments Ltd [2014] EWHC 2009 (Ch) ...................................................... 3

MSC Mediterranean Shipping Company S. A. v Glencore International AG [2017] EWCA Civ 365 . 15,

21

National Grid Plc v M25 Group Ltd [1999] 1 E.G.L.R. 65 ..................................................................... 3

Navrom v. Callitsis Ship Management S.A. (THE “RADAUTI”) [1987] 2 Lloyd's Rep. 276 ................ 13

Nichols v Marsland (1876) 2 Ex. D. 1, (CA) .......................................................................................... 13

Norwich Union Life Assurance Society v P&O Property Holdings Ltd [1993] 1 E.G.L.R. 164 .............. 3

Nugent and Killick v Michael Gross Aviation Ltd and Others [2000] 2 Lloyd’s Rep. 222 ................... 19

Nugent v Smith [1876] 1 CPD 423 ......................................................................................................... 11

Ocean Chemical Transport Inc v Exnor Craggs Ltd [2000] 1 All ER (Comm) 519 ............................... 8

Ogden v. Graham, [1861], 1 B & S 773 ................................................................................................. 26

Palacath Ltd v. Flanagan [1985] 2 All ER 161 ....................................................................................... 4

vi

Parsons Corporation v C.V. Scheepvaartonderneming (The Happy Ranger) [2002] 2 Lloyd’s Rep. 357

............................................................................................................................................................. 18

Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 1 Lloyd’s Rep 321 .................................................. 7

Reardon Smith Line Ltd. v. Australian Wheat Board (The “Houston City”), 1953, 1 Lloyds Rep 131 . 26

River Wear Commrs v Adamson (1877) 2 App. Cas. 743, (H.L) ........................................................... 13

Rolls Royce v. Heavylift-Volga Dnepr [2000] 1 Lloyd’s Rep. 653 ........................................................ 19

Sailing Ship Garston Co v. Hickie (1885) 15 QBD 580 ......................................................................... 24

Sailing Ship Garston Co. v Hickie [1885] 15 QBD 580, 587 ................................................................. 25

Seafood Imports Pty v. ANL Singapore [2010] 272 A.L.R. 149 ............................................................ 10

Seven Network (Operations) Ltd v Warburton (No 2) [2011] NSWSC 386 .......................................... 17

Shell International Petroleum Co. v. Seabridge Shipping (The Metula) [1978] 2 Lloyd’s Rep. 5 ........ 24

Shell Oil Company v Ship Lastrigoni [1974] 131 CLR 1 ....................................................................... 22

Ship Hako Endeavour and Others v Programmed Total Marine Services Pty Ltd [2013] FCAFC 21 . 22,

23

Ship Sam Hawk v Reiter Petroleum Inc [2016] FCAFC 26 ................................................................... 22

Thames Valley Power Ltd v Total Gas & Power Ltd, [2006] 1 Lloyd's Rep. 441 ................................... 6

The Amstelslot [1963] 2 Lloyd’s Rep. 223 ............................................................................................... 8

The Golden Victory [2007] 2 A.C. 353 ................................................................................................... 21

The Leoborg (No 2) [1964] 1 Lloyd's Rep 380, 383 .............................................................................. 23

The SS Aragon [1943] 3 DLR 178, 180 .................................................................................................. 23

The Xantho (1887) 12 A.C. 503.............................................................................................................. 11

Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2008] UKHL 48 ............................ 21

Transoceanic Petroleum Carriers v. Cook Industries Inc. [1981] 2 Lloyd’s Rep. 272 ................... 14, 26

Wayne Tank & Pump Co. Ltd. v Employers Liability Assurance Corporation Ltd. [1973] 2 Lloyd’s

Rep. 237 (CA) ..................................................................................................................................... 20

Wilky Property Holdings plc v. London & Surrey Investments Limited [2011] EWHC 2226 (Ch) . 4, 5, 6

vii

Statutes

Admiralty Act 1988 ................................................................................................................................. 24

Australia Navigation Act 2012 ............................................................................................................... 11

International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1968

........................................................................................................................................... 11, 12, 13, 21

Merchant Shipping Act 1984 .................................................................................................................. 18

Other Authorities

André J. Faurès, Improving Procedures for Expert Testimony, (1994) Planning Efficient Arbitration

Proceedings: Law Applicable in International Arbitration XVII 154–160, Ed. Albert Jan Van den

Berg ....................................................................................................................................................... 8

Anthony Aust, Pacta Sunt Servanda, Online Ed (Oxford: MPEPIL, 2007) ............................................ 8

Benjamin’s Sale of Goods. General Editor A.G. Guest. 4th Ed. (London: Sweet & Maxwell, 1992) .... 15

Black’s Law Dictionary, 8th Ed (2004) ..................................................................................................... 8

Boyd et al., Scrutton on Charterparties, 21 Ed, (London: Sweet & Maxwell, 2008) ............................ 27

Charles Taylor, Guide to Hull Claim, (London: Witherby & Co Ltd, 2003) ......................................... 26

D.C. van den Boom, The System of Liability of Articles III and IV of the Hague (Visby) Rules, 2008 . 13

Dicey, Morris & Collins, The Conflict of Laws, 5th Ed (London: Sweet & Maxwell, 2006) .................. 8

Ewan McKendrick, Force Majeure and Frustration, 2nd Ed, (New York: Informa Law from

Routledge, 1995) ..................................................................................................................... 15, 16, 17

Galanis, G, D. Hayes, G. Zodiatis, P.C. Chu, Y-H Kuo, and G. Kallos, 2011: Wave Height

Characteristics in the Mediterranean Sea by Means of Numerical Modeling, Satellite Data,

Statistical and Geometrical Techniques. Marine Geophysical Research, DOI 10.1007/s11001-011-

9142-0 ................................................................................................................................................. 16

Gard, Guidance to Masters, 2nd Ed (Norway: Colorprint, 2006) ............................................................. 7

H Wehberg, Pacta Sunt Servanda, (1959) 53 The American Journal of International Law (4) .............. 8

John F Wilson, Carriage of Goods by Sea, 7th Ed (Essex: Pearson Education Limited, 2010) ............. 14

John Schofield, Laytime and Demurrage, 6th Ed (London: Routledge, 2011) ...................................... 26

viii

Jui-Sheng Chou, Expert Systems with Applications, (2013) 40 El Sevier ................................................ 9

Julian Cooke, Voyage Charters (New York: Informa Law from Routledge, 2014) ............ 18, 20, 25, 26

Julian Cooke, Voyage Charters, 4th Ed (London: Informa, 2007) .......................................................... 13

Kendall, Freedman and Farrel, Expert Determination, 5th Ed (London: Sweet & Maxwell, 2014)......... 9

Maritime and Coastguard Agency, Training and Certification Guidance: UK Requirements for Master

and Deck Officers, MSN 1856 (M+F) .................................................................................................. 7

Neza Susnik, Solar Flare, University of Ljubljana, Faculty of Mathematics and Physics, (Ljubljana:

March 2011) ........................................................................................................................................ 14

Pierre A Karrer, The Law Applicable to The Arbitration Agreement, (2014) 26 SAcLJ, Ed. Sandra Jean

Tan, Academy Publishing ..................................................................................................................... 8

Richard Aikens, Bills of Lading, 2nd Ed (United Kindom: Taylor & Francis, 2006) ............................. 21

Richard Stone, The Modern Law of Contact, 8th Ed (London: Routledge-Cavendish, 2009) ................ 10

Robert Hunt, The Law Relating to Expert Determination, 2008 .............................................................. 9

Roger Brownsword, Smith and Thomas: A Casebook on Contract, 13th Ed (London: Sweet &

Maxwell, 2015) ................................................................................................................................... 10

Rupert Harris, Jonathan Andrews and Gary Field, Charterer’s Liability, (Steamship Insurance

Management Services Limited, London, 2005) .................................................................................. 26

S. Royer, Hoofdzaken der Vervoerdersaansprakelijkheid in het Zeerecht (diss. Leiden), Zwolle: W.E.J.

Tjeenk Willink 1959 ........................................................................................................................... 13

The Oxford English Dictionary, Oxford: Clarendon Press, 1989 .......................................................... 17

TEAM 23 MEMORANDUM FOR RESPONDENT

1

STATEMENT OF FACTS

PERFORMANCE OF THE CHARTERPARTY

1. Cerulean Beans and Aromas LTD (CLAIMANT) is a coffee bean supplier based in Cerulean.

Dynamic Shipping LLC (RESPONDENT) is the shipowner of the vessel Madam Dragonfly, a small

container ship (VESSEL). Both entered into a voyage Charterparty dated 22 July 2017

(CHARTERPARTY) for the urgent delivery of rare coffee beans (CARGO) from Cerulean to

Dillamond. Box 9 specifically stated that discharge must be by 7pm 28 July 2017.

2. On 24 July 2017 the VESSEL had finished loading and was on its way to the Port of Dillamond,

when a solar flare knocked out its communication and navigation systems. This caused the

VESSEL to deviate from the agreed route and make an intermediate stop at the Port of Spectre.

3. On 29 July 2017, at 7am when the VESSEL was approaching the discharge port at Dillamond she

was struck by a “once in a lifetime” storm that caused congestion at the port and forced the

VESSEL to wait outside the Port of Dillamond. The CARGO was delivered later in the day at

8:42pm and RESPONDENT waited for the CARGO until around midnight where a non-negotiable

barcode was issued. CLAIMANT would only be able to physically retrieve the CARGO at

approximately 1:55pm on 31 July 2017, where by that time 3 out of 4 containers had suffered

water damage due to floods following the storm.

4. Without informing RESPONDENT, CLAIMANT bought replacement coffee beans and made a

settlement payment towards its client Coffees of the World Ltd.

THE MARITIME EQUITABLE LIEN

1. On 19 July 2017, prior to the finalisation of the CHARTERPARTY RESPONDENT requested

USD100,000 from CLAIMANT to be put in a separate bank account to pay for crews’ wages as

the crew will not sail before this occurs. CLAIMANT complied given the urgency of the shipment.

2. On 5 August 2017 The Dillamond Weekend Times reported that the crew of the Madam

Dragonfly employed by RESPONDENT were walking away from the company after reports that

2

they had not been paid their wages since the first week of June. Also, RESPONDENT has not repaid

the USD100,000 within the separate bank account.

3. CLAIMANT has submitted a claim for a maritime equitable lien over the VESSEL.

ARBITRATION

1. CLAIMANT gave notice towards RESPONDENT 11 August 2017 to refer the dispute to arbitration,

claiming USD30,200,000 for damages in respect of the damaged CARGO, the replacement coffee

payment, and the settlement payment. RESPONDENT denies any liability and counterclaimed for

freight, demurrage, and other damages.

ARGUMENTS ON JURISDICTION

I. THE TRIBUNAL DOES NOT HAVE JURISDICTION TO HEAR THE DISPUTE

1. Upon the CARGO’s collection by CLAIMANT, it was found that most of the CARGO was water

damaged.1 CLAIMANT then initiated arbitration proceedings to request the tribunal for the granting

of its claim for damages by sending a notice of arbitration.2 As a response, RESPONDENT objects the

jurisdiction of the tribunal on deciding such claim, by asserting that the dispute should firstly be

referred to an Independent Master Mariner in accordance with Clause 27(d).3

2. The arbitration clause of the Charterparty provides a multi-tier dispute resolution procedure.4 The

first-tier, under Clause 27(d), involves a resolution mechanism for any dispute relating to technical

matters by an independent Master Mariner.5 Only if and when that has been satisfied, parties may

commence arbitration proceedings in accordance with Clause 27(a).6 Presently, there exists disputed

technical matters which concern when and how the CARGO was damaged.7

1 Moot Scenario, p. 25. 2 Moot Scenario, p. 34. 3 Moot Scenario, p. 40. 4 Charterparty, Cl. 27, Moot Scenario, p. 12. 5 Charterparty, Cl. 27(d), Moot Scenario, p. 12. 6 Charterparty, Cl. 27(a), Moot Scenario, p. 12. 7 Moot scenario, p. 43.

3

3. In accordance with the clause, in the present case, the tribunal lacks the authority to resolve the

claim for damages made by CLAIMANT since clause 27(d) is applicable (A) and hence the parties

must abide to clause 27(e) (B). In any event, CLAIMANT cannot depart from the expert determination

agreement (C).

A. Clause 27(d) is Applicable in this Case

4. In the course of determining whether Clause 27(d) is applicable, the tribunal must consider the scope

of an expert’s jurisdiction in accordance with the intention of the parties under the contract.8

Pursuant to Clause 27(d), the appointed expert’s conferred jurisdiction is to settle any dispute as to

technical matters arising out or in connection with the contract.9 The phrase “technical matters” is

given a restrictive meaning by the parties as matters surrounding the technical aspects of the

performance of the Charterparty which can be considered to be within the technical knowledge of a

Master Mariner.10 The question that the tribunal needs to answer to determine its jurisdiction is

whether or not the disputed technical matters are within the knowledge of a Master Mariner.

5. RESPONDENT submits that the question must be answered in the affirmative. It is well established

that a person whom legally qualified to be a Master Mariner must possess a certificate of

competence.11 The obligatory certificate can only be acquired only if the applicant has satisfied the

pre-requisite requirements comprising of a minimum of three years experiences as a deck officer

and possesses the compulsory knowledge regarding the vessel as a whole including the cargo

conditions.12 This includes the experience on how to keep the cargo safe by supervising it

periodically during the voyage,13 along with 3 years of experience on handling various cargoes.

8 MP Kemp Ltd v Bullen Developments Ltd [2014] EWHC 2009 (Ch); Jones v Sherwood Computer Services Plc [1992] 1 W.L.R. 277; Norwich Union Life Assurance Society v P&O Property Holdings Ltd [1993] 1 E.G.L.R. 164; National Grid Plc v M25 Group Ltd [1999] 1 E.G.L.R. 65; British Shipbuilders v VSEL Consortium Plc [1997] 1 Lloyd's Rep. 106. 9 Charterparty, Cl. 27(d), Moot Scenario, p. 12. 10 Charterparty, Cl. 27(g), Moot Scenario, p. 12. 11 Maritime and Coastguard Agency, Training and Certification Guidance: UK Requirements for Master and Deck Officers, MSN 1856 (M+F), at 6. 12 Maritime and Coastguard Agency, Training and Certification Guidance: UK Requirements for Master and Deck Officers, MSN 1856 (M+F), at 6. 13 Gard, Guidance to Masters, 2nd Ed (Norway: Colorprint, 2006), at 115-116.

4

6. The broad and profound knowledge possessed by a Master Mariner should objectively sufficient to

provide the answers for the disputed technical matters in this case. Hence, the disputed technical

matters fall within the knowledge of a master mariner.

B. The Parties Must Adhere to Clause 27(e) of the Charterparty

7. In the most common sense, Clauses under a contract are a binding law between the parties, and

nonfulfillment of respective obligations is a breach of a contract.14 This is reaffirmed by the pacta

sunt servanda principle which is embodied as an elementary and universally agreed principle

fundamental to all legal systems.15 Consequently, if the parties have made an agreement for a

particular form of dispute resolution, they should be held to that agreement.16

8. RESPONDENT refers this tribunal to paragraph [4] – [6]. The circumstances in the present case

fulfilled the requirement of the operation of Clause 27(d). Therefore, the parties must be held to

their agreement17 and the reference of the dispute settlement shall be made to a Master Mariner prior

to the conduct of this proceedings.

C. In Any Event, CLAIMANT Cannot Depart from Clause 27(d)

9. A party can only depart from its agreed commitment to a dispute resolution mechanism if good

reasons to do so are shown.18 The existence of good reasons must be determined with a case per

case basis.19 Here, the required good reasons to depart from the expert determination agreement are

non-existent since a master mariner is capable to settle the disputed matters (i), the absence of

procedural rules within the clause does not bar its operation (ii), and referring the dispute to expert

determination will not represent a duplication of effort (iii).

14Cott UK Ltd v FE Barber Ltd [1997] 3 All ER 540; H Wehberg, Pacta Sunt Servanda, (1959) 53 The American Journal of International Law (4) at 775. 15 Anthony Aust, Pacta Sunt Servanda, Online Ed (Oxford: MPEPIL, 2007), at 45; Black’s Law Dictionary, 8th Ed (2004). 16 Channel Tunnel Group v. Balfour Beatty Construction Ltd [1993] A.C. 334 (H.L.); Palacath Ltd v. Flanagan [1985] 2 All ER 161 at 165(f)-(g); Wilky Property Holdings plc v. London & Surrey Investments Limited [2011] EWHC 2226 (Ch). 17 Wilky Property Holdings plc v. London & Surrey Investments Limited [2011] EWHC 2226 (Ch). 18 Channel Tunnel Group v. Balfour Beatty Construction Ltd [1993] A.C. 334 (H.L.); Dicey, Morris & Collins, The Conflict of Laws, 5th Ed (London: Sweet & Maxwell, 2006), at 831 p. 16-004; Pierre A Karrer, The Law Applicable to The Arbitration Agreement, (2014) 26 SAcLJ, Ed. Sandra Jean Tan, Academy Publishing, at 863. 19 André J. Faurès, Improving Procedures for Expert Testimony, (1994) Planning Efficient Arbitration Proceedings: Law Applicable in International Arbitration XVII 154–160, Ed. Albert Jan Van den Berg, at 550.

5

i. A Master Mariner has sufficient experience in settling the disputed technical matters

10. In commencing a proper expert determination, it is imperative to consider the experience of the

expert before his/her appointment.20 As explained in paragraph [5] – [6], a Master Mariner possesses

the required knowledge to handle the disputed technical matters within this case, hence is capable

to resolve it.

ii. The absence of procedural rules in Clause 27(d) does not bar its operation

11. A stipulation of procedural rules does not determine whether an expert determination agreement

operates or not. In Wilky Property Holdings plc v London & Surrey Investments Ltd,21 the court

dictated the parties to be held to their agreed expert determination clause, notwithstanding the

appropriateness of its procedural rules, since even if the parties fails to specify the procedural rules,

the expert himself will determine how he will proceed.22

12. Here, the clause did not elaborate certain procedure rules to conduct the expert determination.

Clause 27(d) and (e) only laid out that any dispute as to technical matters shall be referred to a

Master Mariner and the expert’s written determination will be conclusive and binding to both

parties.23 Referring to the aforementioned case, it is therefore the absence of procedural rules in the

present expert determination agreement does not bar its operation.

iii. Resolution of dispute before an expert will not represent a duplication of effort

13. Thames Valley Power Ltd v Total Gas & Power Ltd24 established that a proceeding before an expert

determination will represent a duplication of effort, since there will be no chance of adding new

evidence if the dispute has been conducted in another proceeding. In contrast, referring the disputed

technical matters to a Master Mariner will not represent a duplication of effort, since the opinion

given by Simon Webster cannot be considered as an evidence.

20Jui-Sheng Chou, Expert Systems with Applications, (2013) 40 El Sevier, at 2263-4; Robert Hunt, The Law Relating to Expert Determination, 2008, at 20; Badgin Nominees Pty. Ltd. v Oneida Ltd. anor [1998] VSC 188 – 18 Dec 1998 – unreported. 21 Wilky Property Holdings plc v London & Surrey Investments Ltd [2011] EWHC 2226. 22 Kendall, Freedman and Farrel, Expert Determination, 5th Ed (London: Sweet & Maxwell, 2014), Chapter 16. 23 Charterparty, Cl. 27(d)(e), Moot Scenario p. 12. 24 Thames Valley Power Ltd v Total Gas & Power Ltd, [2006] 1 Lloyd's Rep. 441, p. 55.

6

14. RESPONDENT acknowledges that the technical matters inquiries have been answered by a Maritime

Engineer.25 On the proper construction of the Charterparty, the parties intended to appoint a Master

Mariner to resolve disputes as to technical matters.26 However, as proven earlier,27 since the

disputed technical matters must be referred to expert determination, thus the opinion given by the

tribunal-appointed expert, Simon Webster, is immaterial and unreliable.

15. In any event the expert opinion of Simon Webster can be relied, the authorities in Barclays Bank

Plc v Nylon Capital LLP28 dictate that a court should not deprive the parties to enforce their chosen

dispute resolution mechanism, even if the process was not, on an objective basis, suitable for the

dispute which had arisen. Here, the parties should not be deprived of the agreed method of dispute

resolution just by virtue of there being an expert opinion by Simon Webster,29 since it is inconsistent

with what was agreed upon.

ARGUMENTS ON THE MERITS OF THE CLAIM

II. RESPONDENT IS PROTECTED BY THE HAGUE-VISBY RULES

16. Evidence of a contract of carriage containing details of the CARGO and other matters regarding the

voyage can be found within the Dock Receipt.30 In Kyokuyo Co Ltd v Maersk Line Baker J held that

the HVR applied even when no physical Bill of Lading was issued where it was satisfied that the

terms of carriage required a Bill of Lading.31 It has been acknowledged that there has been no

issuance of a physical Bill of Lading within the voyage.32 However, numerous references towards

the requirement of a Bill of Lading can be found within the Charterparty, most notable in Clause 22

25 Moot Scenario, p. 43. 26 Charterparty Cl. 27(d), Moot Scenario, p. 12. 27 Memorandum of RESPONDENT, ¶4-6. 28Barclays Bank Plc v Nylon Capital LLP, [2014] 2 C.L.C. 469; Channel Tunnel Group v. Balfour Beatty Construction Ltd [1993] A.C. 334 (H.L.); Roger Brownsword, Smith and Thomas: A Casebook on Contract, 13th Ed (London: Sweet & Maxwell, 2015), at 2-5; Richard Stone, The Modern Law of Contact, 8th Ed (London: Routledge-Cavendish, 2009), at 9. 29 Moot Scenario, p. 43. 30 Moot Scenario, p. 16. 31 Kyokuyo Co Ltd v AP Moller-Maersk A/S (t/a Maersk Line) [2017] EWHC 654 (Comm); See also Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 1 Lloyd’s Rep 321. 32 Clarifications, ¶4.

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where it provides that freight be calculated on Bill of Lading weight.33 Hence, absence of a physical

Bill of Lading does not bar RESPONDENT from relying on the HVR.

A. RESPONDENT Exercised Due Diligence to Make the VESSEL Seaworthy

17. Article III rule 1 of the HVR provides that a carrier shall exercise due diligence before and at the

beginning of the voyage to make a VESSEL seaworthy and to properly man, equip and supply a

vessel.34 The extent of “due diligence” is one of fact depending on numerous factors, such as the

nature of the vessel, the state of knowledge at the time, and provisions of regulatory codes.35

18. RESPONDENT has exercised due diligence to provide a seaworthy vessel since there are no violations

of the relevant regulatory codes within Clause 15 of the Charterparty (i), and alternatively, the

VESSEL was seaworthy at the beginning of the voyage (ii).

i. There are no violations of the relevant regulatory codes within Clause 15 of the

Charterparty

19. In common law, onerous and unusual terms of the contract will be null and void. Ocean Chemical

Transport v Exnor Craggs36 laid out the focus of the onerous or unusual clause, “in assessing the

extent to which clause is onerous or unusual, one focuses on “meaning and effect of the clause in

question”, not the kind or type of clause”.

20. Clause 15 (1) of the Charterparty incorporates the Australia Navigation Act 2012, which provides

guidelines on the safety of vessels.37 CLAIMANT may argue that by not providing the correct

hardcopy maps, RESPONDENT has breached Clause 15 by not complying with the Australian

Navigation Act .

21. However, the question stands whether Clause 15 applies such provisions or if it was onerous or

unusual, making such clause null and void. This must be answered in the negative. The Australia

33 Moot Scenario, p. 11. 34 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1968, Article III rule 1 35 F.C. Bradley & Sons Ltd. v Federal Steam Navigation Co. Ltd. [1927] 27 Ll. L. Rep. 395; The Amstelslot [1963] 2 Lloyd’s Rep. 223, 230. 36 Ocean Chemical Transport Inc v Exnor Craggs Ltd [2000] 1 All ER (Comm) 519. 37 Charterparty, Cl. 15, Moot Scenario, p. 8; Australia Navigation Act 2012.

8

Navigation Act can only be violated by Australian vessels within Australian territory or beyond, and

foreign vessels within Australian territory.38 This renders the Australia Navigation Act to be

inapplicable in this case for two reasons. First, the VESSEL is Cerulean flagged and second, the

voyage ran between Cerulean and Dillamond, which both adopt English law.39 Hence, the

submission that RESPONDENT has breached Clause 15 is baseless.

ii. Alternatively, RESPONDENT performed due diligence since the VESSEL was seaworthy

at the beginning of the voyage

22. The question whether the carrier exercised due diligence to make the vessel seaworthy is only

considered if unseaworthiness is established at the beginning of the voyage.40

23. The article posted by The Cerulean Mail advised to make back-up arrangements for those in the

Cerulean region.41 The VESSEL was considered seaworthy at the beginning of the voyage since it

was not affected by the solar flares when it was in the Cerulean region. Her navigational systems

were only affected when she had passed the Port of Spectre. At this time, the nature of the solar

flares had significantly changed because of two reasons. First, its unexpected nature is reinforced

by an article following the solar flare describing it as “an unprecedented international emergency”.42

Second, its affected area spread from only Cerulean to also the greater international region. These

changes of nature necessitate the distinction between the reported solar flare on 18 July 2017 and

on 29 July 2017, the former being an occurrence that could be overcome without a hardcopy map.

24. RESPONDENT had taken all steps necessary to make the VESSEL seaworthy with adequate navigation

systems and insured cargoworthiness by applying a waterproof sealant on the containers. Therefore,

RESPONDENT has exercised due diligence and provided a seaworthy vessel.

38 Australia Navigation Act 2012, Sec. 9 39 Moot Scenario, p. 37 40 CV Sheepvaartonderneming Ankergracht v Stemcor (A/sia) Pty Limited [2007] FCAFC 77. 41 Moot Scenario, p. 35. 42 Moot Scenario, p. 35.

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B. RESPONDENT has Complied with Article III rule 2 of the HVR

25. Article III rule 2 provides that the carrier shall properly and carefully load, handle, stow, carry, keep,

care for and discharge the goods carried.43 The words “properly” and “carefully” within the rules

relate to the method chosen and agreed for performing the contract of carriage in accordance with

a sound system, and also the careful application of that system.44 There must be a causative link

between the failure to properly and carefully act and the damage which the claim is made.45

26. With the knowledge that the CARGO is susceptible to water damage and the fact that the voyage was

initially estimated to take 4 days, RESPONDENT applied a waterproof sealant on the CARGO which

lasts for 5 days, a day longer than the expected duration of the voyage.46

27. The actual voyage that took more than 5 days cannot be attributed to RESPONDENT for caused by

the two force majeure events. Therefore, the direct causative relation to the damages are not non-

compliance with Article III rule 2 of the HVR.

C. RESPONDENT is Exempted from Liability for Damages under Art IV rule 2 of the HVR

28. Article IV rule 2 provides a lengthy list of exceptions to a carrier’s liability. If the carrier fulfils its

obligation under Art III r 1 or Art III r 2,47 it can rely on the exemptions listed in Article IV rule 2.

29. Here, the delay was not at fault of the RESPONDENT, since it was rendered by events listed under

Article 4 rule 2 of the HVR, namely; the fault of the navigation (i) and act of god (ii).

i. The fault of the navigation

30. The word “navigation” involves the nautical fault exception concern acts of navigation taken on

board the vessel relying on the exception.48 It also follows that such act involves neglect to keep the

43 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1968, Article III rule 2 44 G.H. Renton v. Palmyra Trading Corporation of Panama [1957] A.C. 149 at 166; Albacora Srl v. Westcott & Laurence Line [1966] 2 Lloyd’s Rep. 53; Seafood Imports Pty v. ANL Singapore [2010] 272 A.L.R. 149. 45 A.I.C.C.O. v. Forggensee Navigation (The Polar) [1993] 2 Lloyd’s Rep. 478. 46 Moot Scenario, p. 14. 47 Gamlen Chemical [1980] 147 CLR at 152, 154 per Stephen J, 164-165 per Mason and Wilson JJ; Great China [1998] 196 CLR 161 at 193 [85], 195-196 [91]-[95], 216-219 [143]-[146], 243 [228]; Ankergracht [2007] FCAFC 77; Hilditch Pty Ltd v Dorval Kaiun KK (No 2) [2007] FCA 2014 per Rares J. 48 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1968, Article 4 rule 2; The Xantho (1887) 12 A.C. 503; Julian Cooke, Voyage Charters, 4th Ed (London: Informa, 2007), p. 1022.

10

charts up-to-date.49 Applicably, the fact that the hard-copy map on board the VESSEL was not

replaced to the agreed map for the current voyage falls under this exception’s scope. Therefore,

RESPONDENT’s liability for the delay is exempted by virtue of Article 4 rule 2.

ii. Act of God

31. “Act of God” is commonly interpreted as natural causes, directly and exclusively without human

intervention, which could not have been prevented by any amount of foresight and care reasonably

to be expected from him.50

32. The solar flare shall constitute an Act of God for two reasons. First, it is an extraordinary event

caused completely by nature without any human intervention, since the effect is so spectacular.51

Second, the effect of the event was unforeseeable thus making it impossible for human to take any

reasonable steps to avoid or mitigate its impact. This is proven by the fact that all VESSELs suffered

the same outcome where they too lost its communication and navigational systems.52

33. Referring to this, the storm at Dillamond is considered as an act of God, since it was purely a natural

event which occurred very suddenly. Therefore, RESPONDENT’s liability for the delay at the Port of

Dillamond is exempted.

III. RESPONDENT HAS NOT BREACHED THE CHARTERPARTY

A. The Deviation was Justifiable

34. In common law, departure from proper or agreed route is permissible in two conditions; when the

vessel encounters perilous circumstances and to avoid danger to the ship or cargo.53

49 D.C. van den Boom, The System of Liability of Articles III and IV of the Hague (Visby) Rules, 2008, at 93; S. Royer, Hoofdzaken der Vervoerdersaansprakelijkheid in het Zeerecht (diss. Leiden), Zwolle: W.E.J. Tjeenk Willink 1959, at 484. 50 Nugent v Smith [1876] 1 CPD 423; John F Wilson, Carriage of Goods by Sea, 7th Ed (Essex: Pearson Education Limited, 2010), at 263. 51 Neza Susnik, Solar Flare, University of Ljubljana, Faculty of Mathematics and Physics, (Ljubljana: March 2011), at. 1. 52 Moot Scenario, p. 35. 53 Kish v Taylor [1912] AC 604.

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35. The deviation to Spectre was justifiable for two reasons. First, since the VESSEL was seaworthy,54

the deviation was solely cause by a perilous circumstance when an unprecedented solar flare event

shut-down its communication and navigation systems.55 Second, as a consequence of encountering

the solar flare the VESSEL deviated to Spectre in order to avoid danger to the ship or CARGO, since

the hardcopy maps on-board were for Spectre,56 and navigating further to Dillamond without proper

navigational tools would have been dangerous.

B. The Delay was Caused by Force Majeure Events

36. CLAIMANT’S claim for damages was made on the basis of the delayed delivery. Here, it is submitted

that the delay was caused by force majeure events, namely solar flares (i) and storm (ii).

i. The solar flare is constituted as an act of God

37. Navrom v Callitsis Ship Management S.A.57 deemed that the necessary element of force majeure is

that the event must not be reasonably foreseeable, for the relevant party ought then to have taken

steps to prevent or avoid it. Further, it is more a question of causation, whether the incidence of a

particular peril which could have been foreseen can really be said to have caused one party’s failure

to perform.58

38. Clause 17 of the Charterparty incorporates the term “Act of God” as a force majeure event.59 Acts

of God is defined as extraordinary and unforeseeable events or accidents that take place without

human intervention, and its impact is impossible to be mitigated by humans.60

39. We refer this tribunal to paragraphs [26], where 25 July 2017 solar flare is different in nature than

the reported 18 July 2017 solar flare. This makes the two unable to be considered as the same

occurrence and the former cannot be considered as a predictable occurrence.

54 Memorandum of RESPONDENT, ¶17-24. 55 Moot Scenario, p. 17. 56 Moot Scenario, p. 19. 57 Navrom v. Callitsis Ship Management S.A. (THE “RADAUTI”) [1987] 2 Lloyd's Rep. 276. 58 Benjamin’s Sale of Goods. General Editor A.G. Guest. 4th Ed. (London: Sweet & Maxwell, 1992), at 8-90; Ewan McKendrick, Force Majeure and Frustration, 2nd Ed, (New York: Informa Law from Routledge, 1995), at 24-5, 79. 59 Charterparty Cl. 17, Moot Scenario, p. 17. 60 Nichols v Marsland (1876) 2 Ex. D. 1, (CA); River Wear Commrs v Adamson (1877) 2 App. Cas. 743, (H.L).

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40. Therefore, the 25 July 2017 solar flare, with its unforeseeable and unavoidable nature, fulfills the

requirement of a force majeure event.

ii. The storm is classified as a force majeure event within Clause 17

41. Among all the events laid out in Clause 17 of the Charterparty,61 the storm can be constituted as an

(a) act of God and (b) unforeseen weather event.

a. The storm falls within the phrase “Act of God”

42. Bad weather i.e. typhoons, hurricanes, storms, can constitute as an act of God when it is so extreme

that, judged in the light of the usual conditions at the place of contractual performance, the party

affected could not reasonably have expected to encounter it.62

43. In this case, the storm was extremely severe. This is evidenced by its impact at land, which brought

with it rain, hail, and severe winds which knocked down powerlines and trees and upturned cars.63

The storm at sea was unusually worse.64 Pursuant to satellite data of wave height characteristics,65

the waves and winds on the Mediterranean Sea is statistically sufficient and safe, and there is no

climatic generalization asserted towards the Mediterranean Sea zone. This leads to the conclusion

that the storm was not within the normal condition of PORT.

44. Hence, the storm must be considered as an act of God.

b. Alternatively, the storm is classified as an unforeseen weather event

45. In The Mary Lou,66 bad weather, if sufficiently severe, unexpected and unprecedented, may be

constituted as a force majeure.

46. Here, the storm was clearly described as “once in a lifetime” which implies that the storm was

unprecedented. The news reported that the storm did not pick up on radars until approximately 45

61 Charterparty Cl. 17, Moot Scenario, p. 9 62 Lebeaupin v Richard Crispin and Company (1920) 2 K.B. 714; Ewan McKendrick, Force Majeure and Frustration, 2nd Ed (New York: Informa Law from Routledge, 1995), at 142. 63 Moot Scenario, p. 21, 36. 64 Moot Scenario, p. 20. 65 Galanis, G, D. Hayes, G. Zodiatis, P.C. Chu, Y-H Kuo, and G. Kallos, 2011: Wave Height Characteristics in the Mediterranean Sea by Means of Numerical Modeling, Satellite Data, Statistical and Geometrical Techniques. Marine Geophysical Research, DOI 10.1007/s11001-011-9142-0 (paper download), at 4. 66 Transoceanic Petroleum Carriers v. Cook Industries Inc. [1981] 2 Lloyd’s Rep. 272.

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minutes before it hit Dillamond which indicates that the storm was a sudden event and there is no

reasonable anticipation that can be done by RESPONDENT to escape its effects.67

47. Therefore, the storm is an unforeseen weather event under Clause 17 of the Charterparty.

C. Delivery Occurred on 8:42pm on 29 July 2017

i. The CARGO had been discharged to the port authorities

48. RESPONDENT arrived at the discharge port on 29 July 2017. Taking into consideration that the

contemplated time of delivery under the voyage charter has elapsed and there was an urgency of the

use of the goods,68 RESPONDENT immediately discharged the goods and made it available for

collection once the ship had docked.69 A barcode was issued and sent to CLAIMANT to receive the

CARGO. With the barcode, the CLAIMANT was able to access the electronic facilities maintained by

the port authority.

49. This conduct sufficiently constitutes delivery. It renders the CARGO to be completely under the

control of the consignee that he may do what he likes with them70 and placed them under the absolute

dominion and control of the CLAIMANT as the consignee.71 The immediate discharge was justifiable

because of two reasons. First, CLAIMANT’s agent left and therefore was absent at the time of the

delivery.72 Second, RESPONDENT considered the urgency of the needs of the CARGO and passing of

the supposed delivery time and therefore permitted to conduct the discharge.73 Conclusively, the

discharge to the port authority lawfully constitutes as delivery.

ii. All possession of the CARGO had been relinquished

50. What is involved in delivery is the shipowner divesting or relinquishing the power to compel any

dealing in or with the cargo which could prevent the true consignee from obtaining possession of

67 Moot Scenario, p. 21. 68 Clarification, ¶6. 69 Moot Scenario, p. 24. 70 British Shipowners v. Grimond (1876) 3 Rett. 968, 972. 71 Chartered Bank v. British India S.N. Co. [1909] A.C. 369, 375. 72 MSC Mediterranean Shipping Company S. A. v Glencore International AG [2017] EWCA Civ 365. 73 Merchant Shipping Act 1984, Sections 493.

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it.74 The delivery cannot be affected when the goods are discharged to an independent warehouse if

the shipowner still maintain any lien or right of disposition over the goods.75

51. In Mediterranean Shipping Company SA v Glencore International AG, the court held that the carrier

had not divest itself of all powers to control any physical dealing in the goods by discharging the

goods to its own terminal. Similarly, goods were not considered delivered when they were not taken

and entered to a warehouse in the consignee’s name.76 The two cases decided that no relinquishment

of possession had been made because the discharge was made to a place where the carrier may still

take control of the goods.

52. In contrast, RESPONDENT discharged the goods to the port authority and did not hold any lien over

the goods. Moreover, RESPONDENT provided a barcode as an access specifically in the CLAIMANT’s

name.77 This means that the RESPONDENT designed the barcode for the exclusive use of CLAIMANT.

Thereafter, RESPONDENT is left with no control over the goods.

53. By virtue of these facts, delivery of the CARGO had taken place on 8:42pm on 29 July 2017 when it

is placed in the port authority’s custody since all power to control any physical dealing with the

CARGO has been relinquished.

iii. CLAIMANT is estopped from asserting that issuance of the barcode does not constitute

as delivery

54. Under the doctrine of estoppel, a party is only prevented from denying a clear representation of fact

that previously taken,78 when the relying party reasonably rely upon the representation to its

detriment.79

55. Accordingly, CLAIMANT’s acquiescence toward RESPONDENT’s proposal of the use of electronic

system is a clear representation because of two reasons; first, it was communicated clearly to

74 Julian Cooke, Voyage Charters (New York: Informa Law from Routledge, 2014), at 544. 75 Julian Cooke, Voyage Charters (New York: Informa Law from Routledge, 2014), at 103. 76 Hilton v. Tucker, (1888) 39 Ch D 669. 77 Moot Scenario, p. 23. 78 Seven Network (Operations) Ltd v Warburton (No 2) [2011] NSWSC 386. 79 Delaforce v Simpson-Cook (Handley AJA) (2010) 78 NSWLR 483 at 491.

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CLAIMANT. Second, CLAIMANT did not contest RESPONDENT’s proposal to discharge the CARGO by

electronic release system, amounting to an affirmation.80 This representation was relied upon by

RESPONDENT to its detriment as RESPONDENT would bear financial losses as if the tribunal were to

adjudge that the delivery occurs in accordance with the argument previously taken by CLAIMANT

(Delivery occurs on 31th July 2018). For these reasons, CLAIMANT is estopped from asserting that

the delivery did not occur by the issuance of barcode.

IV. RESPONDENT IS NOT LIABLE FOR THE LOSS AND DAMAGES

56. CLAIMANT has submitted that RESPONDENT is liable for all claims and damages amounting to a total

of USD30,200,000 in respect of the damaged CARGO, the replacement coffee and the settlement

payment.81 RESPONDENT denies any liability towards the aforementioned claims. RESPONDENT is

not liable for the damaged CARGO (A), and in any event, RESPONDENT’s liability is limited by the

HVR (B). RESPONDENT is not liable for the costs in respect of the replacement cargo and settlement

payments (C).

A. RESPONDENT is not Liable for the Damaged CARGO

57. RESPONDENT denies that it would be liable for USD15,750,000 on account of the damaged CARGO.82

Following the statement of an expert opinion the CARGO was damaged sometime in the 24 hours

from 4:30am on 30 July 2017.83 A carrier’s responsibility for safe custody of the goods comes to an

end when lawful delivery has been made.84 Since delivery of the CARGO was made on the 29th of

July 2017, RESPONDENT would not be liable for any damage suffered by the CARGO in the timeframe

following the delivery.

80 Algar v Middlesex County Council (Cassels J) [1945] 2 All ER; Holt v Markham [1923] 1 KB 504 CA. 81 Moot Scenario, p. 38. 82 Moot Scenario, p. 38. 83 Moot Scenario, p. 43. 84 British Shipowners v. Grimond (1876) 3 Rett. 968, 972; Chartered Bank v. British India S.N. Co. [1909] A.C. 369, 375; Julian Cooke, Voyage Charters, 4th Ed (New York: Informa Law from Routledge, 2014), at 217.

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B. In any Event, RESPONDENT’s Liability is Limited by Article IV rule 5 of the HVR

58. Clause 28 of the Charterparty provides an, “Incorporating Clause Paramount: Owners to have

benefit of Article IV rule 5.”85 Article IV rule 5 directly references the Limitation of Liability

provisions within the HVR. RESPONDENT can rely on Article 4 rule 5 (i). Applying the rules,

RESPONDENT would only be liable for 666.67 units of account for 3 containers (ii).

i. RESPONDENT is not barred from relying on Article IV rule 5

59. First, the words “in any event” within Article IV rule 5 are to be construed widely.86 Hence, in any

event that RESPONDENT has breached Article III rule 1 or 2 of the rules it can still rely on the

limitation of liability provisions in Article IV rule 5.87

60. Second, CLAIMANT argues that RESPONDENT had committed ‘willful misconduct’ by placing the

CARGO in a place where it would be susceptible to damage, and thus pursuant to Article IV rule 5(e)

of the HVR, RESPONDENT would be barred from limiting their liability.88

61. The burden of proof for proving Article IV rule 5(e) lies with the CLAIMANT to prove that the carrier

acted “recklessly” and with the actual knowledge that damage would probably result.89 The carrier

must know that he is misconducting himself when he does (or fails to do) the acts complained of

and does them intentionally or recklessly as to the consequences.90

62. In the case beforehand, when the CARGO was offloaded on Sunday,91 RESPONDENT was under the

assumption that CLAIMANT would be able to collect the CARGO immediately or within a reasonable

time thus preventing damage to the CARGO.92 There was no actual intention from RESPONDENT to

85 Moot Scenario, p. 12. 86 Parsons Corporation v C.V. Scheepvaartonderneming (The Happy Ranger) [2002] 2 Lloyd’s Rep. 357. 87 Parsons Corporation v C.V. Scheepvaartonderneming (The Happy Ranger) [2002] 2 Lloyd’s Rep. 357; Daewoo Heavy Industries Ltd. & Anor v Klipriver Shipping Ltd. & Anor (The Kapitan Petko Voivoda) [2003] EWCA Civ 451. 88 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1968, Article 4 rule (5)(e). 89 Nugent and Killick v Michael Gross Aviation Ltd and Others [2000] 2 Lloyd’s Rep. 222; Goldman v Thai Airways International Ltd [1983] 1 WLR 1186; Richard Aikens, Bills of Lading, 2nd Ed (United Kindom: Taylor & Francis, 2006), at 346. 90 Rolls Royce v. Heavylift-Volga Dnepr [2000] 1 Lloyd’s Rep. 653. 91 Moot Scenario, p. 23-24. 92 Moot Scenario, p. 25.

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deliver damaged CARGO. Thus, RESPONDENT is not barred from relying on Article 4 rule 5 of the

HVR since it has not committed any “willful misconduct”.

ii. RESPONDENT is only liable for 666.67 units of account per container

63. RESPONDENT’s liability towards the damaged CARGO is limited by Article IV rule 5 which provides,

“Neither the carrier nor the ship shall in any event be or… liable for any loss or damage to… the

goods in an amount exceeding 666.67 units of account per package or unit.”93 In the recent case of

El Greco v Mediterranean Shipping, the Federal Court of Australia held that “per package or unit”

shall be interpreted with reference to what is explicitly mentioned within the sea carriage document

and thus stated that “per package or unit” referenced the containers which stored the individual bags

where it was stated that the description of the cargo was in containers “as packed”.94

64. In the case at hand, the dock receipt issued after loading directly mentions that the numbers of

packages are equal to 4 containers.95 Hence, the term “per package or unit” in Article 4 rule 5 of the

HVR shall be interpreted as the number of containers rather than the individual bags of coffee

transported. For this reason, RESPONDENT would only be liable for 666.67 units of account per

container for the three containers damaged.

65. Consistent with Article IV rule 5(d), the unit of account mentioned in this Article is the Special

Drawing Right as defined by the International Monetary Fund. Multiplying 666.67 units of account

by the 3 containers that were damaged, and converting the amount to US dollars, RESPONDENT

would be liable for USD2,193.235.

C. RESPONDENT is not Liable for the Replacement Cargo and Settlement Payments

66. CLAIMANT has asserted that RESPONDENT must be held liable for damages in the amount of

USD9,450,000 in respect of the replacement coffee that CLAIMANT had to supply and an additional

USD5,000,000 in respect of CLAIMANT’s settlement payments to its client Coffees of the World

93 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1968, Article 4 rule 5 94 El Greco (Aust) Pty Ltd v Mediterranean Shipping Co SA [2004] FCAFC 202. 95 Moot Scenario, p. 16.

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Ltd.96 RESPONDENT denies any liability for the aforementioned claims as the delay was not at the

fault of RESPONDENT (i). Alternatively, the damages fall outside of the principle of remoteness (ii).

i. RESPONDENT is not liable for the settlement payments as a result of the delay

67. CLAIMANT has made a settlement payment in the amount of USD5,000,000 with its client due to

failure to deliver the CARGO by 28 July 2017.97

68. A party would not be liable for any damage where its ability to perform a contract is affected solely

by a force majeure event within the force majeure clause.98 Here, the delay was caused by two force

majeure events which contributed to the delay.99 As the VESSEL was proven to be seaworthy,100 the

force majeure events were the sole causes of the delay. As a result, RESPONDENT is not liable for

the settlement payments since the delay was not caused by RESPONDENT.

ii. Alternatively, the damages are too remote

69. The principle of remoteness set by Alderson B in the landmark case of Hadley v Baxendale provides

that the damages in which a party ought to receive in respect of a breach of contract should be such

as may fairly and reasonably be considered either arising naturally from such breach of contract

itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at

the time they made the contract, as the probable result of the breach of it.101 It must be in principle

wrong to hold someone liable for risks for which the people entering into such a contract would not

reasonably be considered to have undertaken.102

70. Mere mention of a particular fact will not be sufficient.103 It is acknowledged that RESPONDENT was

made aware that the delivery of the CARGO was conducted to satisfy CLAIMANT’s client.104

However, RESPONDENT had no knowledge when they entered into the Charterparty that

96 Moot Scenario, p. 30. 97 Moot Scenario, p. 29 98 Wayne Tank & Pump Co. Ltd. v Employers Liability Assurance Corporation Ltd. [1973] 2 Lloyd’s Rep. 237 (CA) 99 Memorandum for RESPONDENT, ¶36 - 47 100 Memorandum of RESPONDENT, ¶17 - 24 101 Hadley v Baxendale [1854] 9 Ex 341. 102 Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2008] UKHL 48. 103 Kemp v Intasun Holidays [1987] BTLC 353. 104 Moot Scenario, p. 2.

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RESPONDENT would be liable towards CLAIMANT’s client.105 Mere mention that the urgency of the

shipment was to satisfy CLAIMANT’s client will not suffice. CLAIMANT unilaterally brought

replacement coffee and made settlement payments without informing RESPONDENT beforehand.106

71. Furthermore, damages in respect of replacement coffee and settlement payments does not “arise

naturally” from a breach of delivering damaged cargo. The usual damages arising from a breach of

delivering damaged cargo is to compensate the worth of the cargo that was damaged.107 Therefore,

RESPONDENT cannot be held liable for the USD9,450,000 and USD5,000,000 in respect of

replacement cargo and settlement payments.

V. CLAIMANT DOES NOT HOLD A MARITIME LIEN OVER THE VESSEL

72. On 19 July 2017 a preliminary agreement was made between both parties where CLAIMANT would

store USD100,000 into a separate bank account so RESPONDENT could pay its crews’ wages.108

While RESPONDENT admits that it is yet to pay the crew’s wages nor has it repaid the USD100,000,

it does not entitle CLAIMANT to assert a maritime lien over the VESSEL. This contention is on the

basis that CLAIMANT’s claim falls outside of the scope of the Admiralty Act (A), and CLAIMANT

cannot be subrogated to the crews’ lien for wages (B).

A. CLAIMANT’s Basis for a Maritime Lien Falls Outside of the Scope of Section 15 of the

Admiralty Act

73. Pursuant to section 15 of the Admiralty Act, a proceeding on a maritime lien includes a reference to

a lien for: salvage; damage done by a ship; wages of the master, or of a member of the crew, of a

ship; or master’s disbursements.109 Courts in Australia have restricted the scope for reasons to

proceed on a maritime lien to only what is explicitly mentioned within section 15 of the Admiralty

105 Moot Scenario, p. 2. 106 Moot Scenario, p. 30. 107 MSC Mediterranean Shipping Company S.A. v Glencore International AG [2017] EWCA Civ 365; The Golden Victory [2007] 2 A.C. 353. 108 Moot Scenario, p. 1. 109 Admiralty Act 1988, s. 15.

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Act.110 Hence, CLAIMANT cannot assert a maritime lien in respect of unpaid funds within a trust

account as it does not fall within the scope of section 15 of the Admiralty Act.

B. CLAIMANT is not Entitled to be Subrogated for the Crews’ Lien for Wages

74. The only viable foothold for CLAIMANT to obtain a maritime lien is if it were to be subrogated for

the crew’s maritime lien for wages. In this sense, commonwealth courts have widely rejected that a

maritime lien for wages could be transferable.111 Siopsis J in The Ship Hako Endeavour went so far

as to say that, “The proposition that the respondent could exercise rights of subrogation was based

on a fiction. The facilities for an action in rem provided by s 15 of the Admiralty Act are not intended

to support such a fiction.”112

75. Furthermore, the principle of subrogation states that A is entitled to be subrogated and to be regarded

in equity as having had an assignment to him of B’s rights as a secured creditor where A’s money

is used to pay off the claim of B.113 In the case beforehand, there is no evidence that CLAIMANT has

used any of its money to pay off the crews’ wages. Hence, this Tribunal shall not grant CLAIMANT

the remedy to be subrogated for the crews’ maritime lien for wages.

76. For the reasons above, CLAIMANT has no right to assert a maritime lien over the VESSEL.

110 Ship Sam Hawk v Reiter Petroleum Inc [2016] FCAFC 26; Shell Oil Company v Ship Lastrigoni [1974] 131 CLR 1. 111 Ship Hako Endeavour and Others v Programmed Total Marine Services Pty Ltd [2013] FCAFC 21; The SS Aragon [1943] 3 DLR 178, 180; The Leoborg (No 2) [1964] 1 Lloyd's Rep 380, 383. 112 Ship Hako Endeavour and Others v Programmed Total Marine Services Pty Ltd [2013] FCAFC 21. 113 Burston Finance Ltd v Speirway Ltd [1974] 1 WLR 1648; Cheltenham & Gloucester plc v Appleyard (“C & G”) [2004] EWCA Civ 291; Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221.

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ARGUMENTS ON THE COUNTERCLAIM

VI. CLAIMANT IS LIABLE FOR ALL SUMS CLAIMED BY RESPONDENT

77. On 7th August 2017, RESPONDENT sent an invoice consisting a list of sums payable by CLAIMANT

to RESPONDENT.114 CLAIMANT must be liable to pay for all the sums claimed by RESPONDENT.

A. RESPONDENT is Entitled to Freight

78. Clause 22 of the Charterparty provides freight to be paid within two banking days of delivery of the

CARGO, with freight to be calculated on Bill of Lading weight on completion of load.115 Since

delivery occurred on the 29th of July, pursuant to Clause 22 of the Charterparty, freight was due on

the 1st of August. RESPONDENT had successfully delivered all the CARGO in good condition since

the water-damage suffered by the CARGO only occurred within the timeframe subsequent to the

delivery.116

79. In any event RESPONDENT is to be held liable for the damaged CARGO, it is still entitled to the full

sum of freight. In The Metula, where parties have stipulated that freight is payable on intaken

quantity, such a provision governs both the place of measurement and the liability for goods lost on

the voyage.117 The document issued at the beginning of the voyage stipulates the quantity of CARGO

at 70,000kg. Hence, regardless of whether or not some of the CARGO has been delivered damaged,

RESPONDENT is entitled to the full sum of freight of USD500,000 at USD125,000/container.

B. CLAIMANT is Liable for Demurrage

80. RESPONDENT submits that the VESSEL became an “arrived ship” from 7am and thus laytime had

commenced. Clause 8 (c) (i) provides 0.5 WWD as laytime calculated from when the vessel arrives

at the discharge port until the CARGO has been discharged.118 At 7am on the 29th of July 2017, the

114 Moot Scenario, p. 32 115 Moot Scenario, p. 11. 116 Memorandum of RESPONDENT, ¶55-62. 117 Shell International Petroleum Co. v. Seabridge Shipping (The Metula) [1978] 2 Lloyd’s Rep. 5; Julian Cooke, Voyage Charters, 4th Ed (New York: Informa Law from Routledge, 2014), at 306-7. 118 Moot Scenario, p. 8.

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VESSEL was instructed by port authorities to wait ~100nm out from Dillamond due to congestion

resulting from the storm.119

81. In Sailing Ship Garston Co v Hickie Brett MR held that the definition of “port” may extend to the

space of water in which the “port authorities” can exercise the authority over ships, and ships within

that space of water are submitting to the jurisdiction which is claimed by those authorities.120 The

port authorities of the port of Dillamond exercised their authority to instruct vessels approaching

the port to wait ~100nm outside Dillamond, which the VESSEL, along with other vessels in the area,

complied with.121 Therefore, the VESSEL must be considered as having “arrived” at the discharge

port in Dillamond since it was subject to the Port Authorities.

82. Since laytime commenced at 7am, and delivery occurred on the issuance of the barcode at 12am,

pursuant to Clause 8 (c) (i) of the Charterparty, laytime ended at 7pm and thus the remainder 5 hours

to count as demurrage at USD20,000/hour amounting to USD100,000.

C. CLAIMANT is Liable to the Cost of Repairs for the Hull

83. The extent of the charterer’s liability for damage to the hull will depend on who or what caused the

damage.122 The common grounds to hold the charterer liable for damage to the hull are damages

that result from nomination of an unsafe port, incompetent stevedores, bad bunkers or the CARGO

carried on board.123 CLAIMANT may possibly argue that the port it nominated was prospectively safe,

however it was not.

84. To establish that the port is unsafe, an approach must be taken in setting port limits for the case at

hand. Port limits are extended to the area where the Port Authority can exercise its jurisdiction.124

119 Moot Scenario, p. 20. 120 Sailing Ship Garston Co v. Hickie (1885) 15 QBD 580. 121 Moot Scenario, p. 20. 122 Rupert Harris, Jonathan Andrews and Gary Field, Charterer’s Liability, (Steamship Insurance Management Services Limited, London, 2005), at 11. 123 Julian Cooke, Voyage Charters4th Ed (New York: Informa Law from Routledge, 2014), at 285, 597, 1256; Charles Taylor, Guide to Hull Claim, (London: Witherby & Co Ltd, 2003), at 47. 124 Sailing Ship Garston Co. v Hickie [1885] 15 QBD 580, 587; John Schofield, Laytime and Demurrage, 6th Ed (London: Routledge, 2011), at 83.

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85. Eastern City125 established that a port will not be safe unless the particular ship can reach it, use it,

and return from it without, in the absence of some abnormal occurrence, being exposed to danger

which cannot be avoided by good navigation and seamanship. The term “abnormal” refers to

something that is out of the ordinary course, that is unexpected, and for which the notional charterer

or owner would not have considered. This is further reaffirmed in other cases126 where it was held

that a port will be rendered unsafe if the ship is unable to reach it safely.

86. In addition, The Houston City127 stated that the lack of place to berth will render a port unsafe, even

when due to bad weather.

87. In casu, the storm which occurred in Dillamond is not an abnormal occurrence or in other words

expected, since it was picked up by port radars 45 minutes before it hit Dillamond.128 Both

CLAIMANT and RESPONDENT acknowledged that the storm was about to hit the Port of Dillamond,

when CLAIMANT notified RESPONDENT that the VESSEL’s radar detected the upcoming storm 30

minutes before it hit.129

88. The port authorities should have taken precautions to give a way out for the VESSEL to avoid the

storm.130 Instead, Dillamond’s port authority instructed VESSEL to wait 100nm out of the port, by

reason of a lack of a safe place to berth within the port , where it was by no means a safe place, since

the VESSEL was struck by the storm nonetheless.131 The storm which hit the area where the VESSEL

was told to wait caused the tangling of anchor on a coral bed which resulted to damage to the hull.

Hence making the nominated port unsafe.

89. Since CLAIMANT nominated an unsafe discharge port, where the VESSEL was unable to reach the

port and berth safely, CLAIMANT must be liable to the repairs of the hull.

125 Eastern City [1958] 2 Lloyd’s Rep. 127. 126 Ogden v. Graham, [1861], 1 B & S 773; Independent Petroleum Group Ltd v. Seacarriers Count Pte Ltd (The “Count”), [2008], 1 Lloyds Rep 72, 76; Transoceanic Petroleum Carriers v. Cook Industries Inc (The “Mary Lou”), [1981], 2 Lloyds Rep 272, 280. 127 Reardon Smith Line Ltd. v. Australian Wheat Board (The “Houston City”), 1953, 1 Lloyds Rep 131. 128 Moot Scenario, p. 19, 21. 129 Moot Scenario, p. 19. 130 Kodros Shipping Corp of Monrovia v. Empresa Cubana de Fletes (The “Evia”), 1982, 1 A.C. 334; Boyd et al., Scrutton on Charterparties, 21 Ed, (London: Sweet & Maxwell, 2008), at 122. 131 Moot Scenario, p. 20.

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D. CLAIMANT is Liable to pay for agency fees at Port of Dillamond

90. On box 12 it is said that payment for agency fees at the discharge port will be regulated under Clause

12 of the Charterparty. 132 There are 2 clauses concerning the payment of agency fees. Clause 2

reads ‘agents at the loading place’ and has specifically stated that the agency fees at the loading port

will be borne by RESPONDENT as the shipowner.133 While Clause 12 reads ‘agents at load and

discharge ports’, but does not mention which party should pay the fees on which port.134

91. On proper interpretation of the Charterparty, Clause 2 and 12 must be read in context of the entire

Charterparty. The creation of two different clauses shows the parties intention to differentiate the

liability for agency fees at both ports. If clause 12 also covers the agency fees at the loading port,

the express provision for agency fees at the loading port in Clause 2 would be redundant. Since it

has been specifically regulated in Clause 2 that RESPONDENT is to pay the agency fees at the loading

port, therefore, the agency fees at the discharge port shall be borne by CLAIMANT as the charterer.

E. CLAIMANT is Liable to pay for agency fees at Port of Spectre

92. The regulation regarding the use of port’s agent at any port or ports on passage in distress is

enshrined in Clause 12(b) of the Charterparty. It has been previously elaborated that by creation of

2 different clauses concerning agency fees means that the parties have intended to differentiate the

liability for agency fees on each port. Since Clause 2 has given burden to pay agency fees at the

loading port to the RESPONDENT, hence the agency fees at ports mentioned on Clause 12 shall be

borne by the CLAIMANT as the charterer.

F. CLAIMANT is Liable to pay for the use of electronic system at the Port of Dillamond

93. The CARGO was discharged to the port authority in Dillamond using the available electronic

systems. However, this was not done immediately after the notice of readiness to discharge was

issued. RESPONDENT had given CLAIMANT time to take the CARGO from RESPONDENT before

132 Moot Scenario, p. 3. 133 Moot Scenario, p. 4. 134 Moot Scenario, p. 7.

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discharging the CARGO to port authorities. With the immediate necessity for the use of the CARGO

RESPONDENT felt the need to discharge and hand-over the CARGO to CLAIMANT using the fastest

way since the festival had already begun. Had CLAIMANT receive the CARGO immediately after

discharge, RESPONDENT would not have had to discharge the CARGO to port authorities and use the

electronic systems. By virtue of these facts it is clear that the main reason for the usage of electronic

systems at the port of Dillamond was for CLAIMANT’s benefit and hence, CLAIMANT shall be liable

for the use of electronic systems.

REQUEST FOR RELIEF

From the submissions above, RESPONDENT requests that this Arbitral Tribunal:

a) Declare that it does not have jurisdiction to hear the disputes;

b) Declare that RESPONDENT is not liable for damages amounting to USD30,200,000 comprising

of:

1. USD15,750,000 on account of the damaged CARGO;

2. USD9,450,000 for the Replacement Coffee Payment;

3. USD5,000,000 on account of the Settlement Payment

c) Declare that CLAIMANT does not hold a maritime equitable lien over the VESSEL;

d) Declare that RESPONDENT is entitled to freight, demurrage, cost of repairs, use of electronic

access systems, and agency fees at the Port of Spectre and at the Port of Dillamond

e) Award further or other relief as The Tribunal considers fit.