THE FOURTEENTH ANNUAL
INTERNATIONAL MARITIME LAW ARBITRATION MOOT
7 - 12 JULY 2013
SOUTHAMPTON, ENGLAND
IN A MATTER OF AN ARBITRATION
MEMORANDUM FOR THE RESPONDENT
ON BEHALF OF AGAINST
TWILIGHT CARRIERS AARDVARK LTD.
(RESPONDENT) (CLAIMANT)
TEAM NO. 17
HESKY O. MANURUNG • PAULA APRIJANTO
SALMA IZZATII • YOGA B. PRANANTO
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
i
TABLE OF CONTENTS
TABLE OF CONTENTS ........................................................................................................ i
LIST OF ABBREVIATIONS ................................................................................................ II
LIST OF AUTHORITIES .................................................................................................... IV
SUMMARY OF FACTS.......................................................................................................... 1
SUMMARY OF ARGUMENTS ............................................................................................. 3
ARGUMENTS PRESENTED................................................................................................. 4
I. THE TRIBUNAL SHOULD GRANT A STAY OF THE CURRENT
PROCEEDING ................................................................................................................ 4
II. THE RESPONDENT IS NOT LIABLE TO COMPENSATE THE CLAIMANT
BY REASON OF PURPORTED MISDELIVERY ........................................................ 6
A. The Respondent is not liable towards the Claimant as the Claimant is not the
Cargo owner ................................................................................................................ 7
1. The Claimant does not hold the ownership of the Cargo since it has rejected
the Cargo .................................................................................................................. 7
2. The Respondent does not incur any liability towards the Claimant as the Cargo
had been delivered to the rightful owners ............................................................... 9
B. The Respondent has committed no tort of conversion .............................................. 10
1. The Claimant is not the owner of the Cargo .......................................................... 10
2. The Respondent did not deny the rights of the Cargo owner ................................ 10
III. THE RESPONDENT SHOULD NOT BE LIABLE FOR THE DETERIORATION OF
THE CARGO ....................................................................................................................... 11
A. The Respondent is exempted from any liability for damage caused by act of
pirates ........................................................................................................................ 12
1. The deterioration of the Cargo was caused by act of pirates ................................. 12
2. Act of pirates fall under Article IV rule 2 of the Hague-Visby Rules ................... 13
a. Perils and Dangers of the Sea ............................................................................ 13
b. Act of public enemies ........................................................................................ 13
c. Any other cause arising without the actual fault or privity of the carrier, or
without the fault or neglect of the agents or servants of the carrier ................... 14
3. Alternatively, act of pirates shall exempt the Respondent’s liability pursuant to
the General Exception Clause ................................................................................ 15
B. The Respondent’s reliance on the exemptions is not precluded by any alleged
unseaworthiness of the Vessel .................................................................................. 15
1. The Claimant cannot prove that the Vessel is unseaworthy .................................. 15
2. Even if the Vessel is unseaworthy, the Respondent should not be liable for the
deterioration of the Cargo since unseaworthiness is not the cause of the
deterioration ........................................................................................................... 16
IV. IN ANY CASE, THE AMOUNT OF DAMAGES CLAIMED IS NOT
RECOVERABLE ................................................................................................................ 17
A. The Claimant cannot claim the amount in the Sales Contract or the price they
paid to uphold the sub-contract with its sub-buyers ................................................. 18
B. The correct measure of damages should be based on the market value when
and where it should be discharged ............................................................................ 19
C. The Claimant is not entitled to the costs that have been incurred in relation
to the Dutch proceedings ........................................................................................... 20
PRAYER FOR RELIEF........................................................................................................ 22
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
ii
LIST OF ABBREVIATIONS
¶ /para./paras. Paragraph(s)
AC Appellate Court
AG Aktiengesellschaft
All E.R. All England Law Reports (United Kingdom)
Arbitration Clause Clause 31 of the Charterparty
Beatles Beatles Oils and Fats, Ltd.
Bhd./ Sdn.Bhd. Berhad/Sendirian Berhad
Bills of Lading Bills of Lading Number PG1-PG4
BV Besloten Vennootschap
Cargo 4000 mt PFAD that the Claimant bought from Beatles
Ch. Chancery Division
Charterparty Vegoilvoy Charterparty between Beatles and Respondent
dated 12 September 2008
CIF Cost, Insurance, and Freight
Civ Civil Division
Claimant Aardvark Ltd.
C.L.R. Commonwealth Law Reports
CLC Commercial Law Cases
Co. Company
Com. Cas. Commercial Law Reports
Comm Commercial Court
Commrs Commisioners
Corp. Corporation
edn. Edition
EWCA England and Wales Court of Appeal
EWHC High Court of England and Wales
FOSFA Federation of Oil, Seeds and Fats Association
General Exception Clause Clause 17 of the Charterparty
GmbH Gesellschaft mit beschränkter Haftung
Inc. Incorporated
J Justice
KB Court of King’s Bench
LJKB Law Journal King's Bench
Lloyd’s Rep. Lloyd’s Law Reports
LR Law Reports
Ltd. Limited
Mbh. Mit Beschränkter Haftung
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
iii
mt metric tonne
NIQB Northern Ireland Queen’s Bench Division
No. Number
NSWLR New South Wales Law Reports
p. Page/Pages
PC Privy Council Appeal Cases
PFAD Palm Fatty Acid Distillate
Plc. Public Limited Company
Procedural Order IMLAM Procedural Order 2013
Proceeding The present proceeding
Pty. Proprietary
QB/QBD Queen’s Bench Division
RCS Rapports de la Cour Supreme
Record IMLAM Moot Scenario, 2013
Respondent Twilight Carriers
SA Società Anonima
Sales Contract PFAD Contract No. 1234 and 1235 between Claimant and Beatles
SC Court of Session cases
SCLR Scottish Council of Law Reporting
SpA Società per Azioni
TCC Technology and Construction Court
Tribunal The present arbitral tribunal
UAE United Arab Emirates
UK United Kingdom
UKHL United Kingdom House of Lords
USD U.S. Dollars
Vessel MT Twilight Trader
WLR Weekly Law Reports
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
iv
LIST OF AUTHORITIES
CASES
Abbas (t/a A H Design) v Rotary (International) Ltd. [2012] NIQB 41 ................................ 13
Aes Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower
Plant JSC [2011] EWCA Civ 647 ...................................................................................... 6
Almare Seconda and Almare Quinta, The [1981] 2 Lloyd's Rep. 433 .................................. 19
Aratra Potato Co. Ltd. v Egyptian Navigation Co. (The El Amria) [1981]
2 Lloyd’s Rep. 119 .............................................................................................................. 4
Arpad (No. 2), The [1934] P 189 (CA) ........................................................................... 18, 19
Asiatic Petroleum Company Ltd. v Lennard’s Carrying Company Ltd.
[1915] AC 705 ................................................................................................................. 14
Attorney General of the Republic of Ghana (Ghana National Petroleum Corp.)
v Texaco Overseas Tank Ships Ltd. (The Texaco Melbourne) [1994] CLC 155 ............. 19
Barclays Bank Ltd. v C & E Commrs [1963] 1 Lloyd’s Rep. 81 ............................................ 9
Becker Gray v London Assurance Corporation [1918] AC 101 ........................................... 12
Braun v Bergenske Steamship Company (1921) 8 Lloyd’s Rep. 51 ...................................... 20
Breams Trustees Ltd. (as Trustee of the Baker 1988 Discretionary Settlement) v
Upstream Downstream Simulation Services Inc. [2004] EWHC 211 (Ch.) ............... 4, 5, 6
Bulk Oil (Zug) A.G. v Trans-Asiatic Oil Ltd. S.A [1973] 1 Lloyd's Rep. 132 ......................... 6
Canelhas Comercio Importacao e Exportacao Ltd. v Wooldridge [2004]
EWHC 643 (Comm) ......................................................................................................... 12
Caxton Publishing v Sutherland Publishing [1939] AC 178 ................................................ 10
Citi-March Ltd. v Neptune Orient Lines Ltd. [1996] 2 All E.R. 545 .............................. 4, 5, 6
City & General (Holborn) Ltd. v AYH Plc. [2005] EWHC 2494 (TCC) ................................ 6
Club Cruise Entertainment and Travelling Services Europe BV v Department
for Transport (The Van Gogh) [2008] EWHC 2794 (Comm) ......................................... 10
Cosco Bulk Carrier Co. Ltd. v Team-Up Owning Co. Ltd. (The Saldanha)
[2010] EWHC 1340 (Comm) ........................................................................................... 14
Deutsche Bank AG v Sebastian Holdings Inc [2010] 1 All E.R. (Comm) 808 ........................ 4
Donohue v Armco Inc and others [2002] 1 Lloyd’s Rep. 425 ........................................ 4, 5, 6
East West Corporation v DKBS 1912 and Akts Svendborg Utaniko Ltd. v P&O
Nedlloyd BV [2002] EWHC 83 (Comm) ............................................................................ 9
El Greco (Australia) Pty Ltd. and Another v Mediterranean Shipping Co. SA
[2004] 2 Lloyd's Rep. 537 ................................................................................................ 20
Enichem Anic SpA v Ampelos Shipping Co. Ltd. (The Delfini) [1990] 1 Lloyd's
Rep. 252 ............................................................................................................................. 9
Erichsen v Barkworth (1858) 3 H & N 894 ............................................................................ 9
Evans Marshall & Co. Ltd. v Bertola SA [1973] 1 All E.R. 992 ............................................. 4
F.C. Bradley & Sons Ltd. v Federal Steam Navigation Co. (1926) 24 Lloyd’s Rep. 446 .... 15
Fjord Wind, The [1999] 1 Lloyd's Rep. 307 ......................................................................... 16
Future Express, The [1992] 2 Lloyd’s Rep. 79 ....................................................................... 9
Global Process Systems Inc v Syarikat Takaful Malaysia Bhd. (The Cendor Mopu)
[2011] UKSC 5 ................................................................................................................. 12
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
v
Great China Metal Industries Co. Ltd. v Malaysian International Shipping Corp.
Bhd. (The Bunga Seroja) [1999] 1 Lloyd's Rep. 512 ....................................................... 12
Halifax Overseas Freighters v Rasno Export; Techno-Prominport; and
Polskie Linie Oceaniczne P.P.W. (The Pine Hill) [1958] 2 Lloyd's Rep. 146 ........... 4, 5, 6
Hawksford Trustees Jersey Ltd. v Stella Global UK Ltd. [2011] EWHC 503 (Ch.) ............. 14
Interbulk Ltd. v Aiden Shipping Co. Ltd. I.C.C.O. International Corn Co. N.V. V.
Interbulk Ltd. (The Vimeira) [1983] 2 Lloyd's Rep. 424 .................................................... 6
J Jarvis & Sons Limited v Blue Circle Dartford Estates Limited [2007] EWHC
1262 (TCC) ........................................................................................................................ 4
Jack L. Israel Ltd. v Ocean Dynamic Lines S.A. and Ocean Victory Ltd.
(The Ocean Dynamic) [1982] 2 Lloyd’s Rep. 88 ............................................................. 21
JI MacWilliam Co. Inc. v Mediterranean Shipping Co. SA (The Rafaela S)
[2003] EWCA Civ 556 ...................................................................................................... 9
Jindal Iron and Steel Co. Ltd. v Islamic Solidarity Shipping Company Jordan
Inc. [2003] EWCA Civ 144 ............................................................................................. 14
KG Bominflot Bunkergesellschaft Für Mineralöle Mbh. & Co. v Petroplus Marketing
AG (The Mercini Lady) [2012] EWHC 3009 (Comm) .................................................... 21
Kuwait Airways Corp. v Iraqi Airways Co. [2003] 1 CLC 183 ............................................. 10
Kuwait Petroleum Corp. v I & D Oil Carriers Ltd. (The Houda) [1994] CLC 1037 ........... 13
Kwei Tek Chao and Others (Trading As Zung Fu Co.) v British Traders and
Shippers LD [1954] 2 QB 459 ........................................................................................... 7
Lancs and Yorks Rly v McNicholl [1918] 88 LJKB 601 ....................................................... 10
Leigh and Sillavan Ltd. v Aliakmon Shipping Co. Ltd. [1986] 2 WLR 902 ........................... 9
Leyland S.S. Co. v Norwich Union [1918] AC 350 .............................................................. 12
Lickbarrow v Mason (1794) 5 T.R. 683 .................................................................................. 9
London Joint Stock Bank v British Amsterdam Maritime Agency (1910)
16 Com. Cas. 102 ............................................................................................................... 9
Maxine Footwear Co. Ltd. v Canadian Government Merchant Marine [1959] AC 589 ...... 15
MC Pearl, The [1997] 1 Lloyd’s Rep. 566 ............................................................................. 4
Meyerstein v Barber (1870) LR 4 H.L. 317 ............................................................................ 9
Mitsubishi Corp. v Eastwind Transport Ltd. and others [2004] EWHC 2924 (Comm) ....... 15
Mobile Shipping Co. v Shell Eastern Petroleum Ltd. (The Mobile Courage)
[1987] Lloydʼs Rep. 655 .................................................................................................... 9
Murdo Donald MacDonald v Robert & Elizabeth Pollock [2012] 1 Lloyd's Rep. 425 ...... 7, 8
Noble Denton Middle East v Noble Denton International [2011] 1 Lloyd’s Rep. 387 .......... 4
Oakley v Lyster [1931] 1 KB 148 .......................................................................................... 10
Oxford Shipping Co. Ltd. v Nippon Yusen Kaisha (The Eastern Saga) [1984]
2 Lloyd's Rep. 373 ......................................................................................................... 4, 6
Oxus Gold Plc., Oxus Resources Corporation v Templeton Insurance Limited
[2007] EWHC 770 (Comm) ............................................................................................. 19
Pacific Interlink Sdn. Bhd. v Owner of the Asia Star [2009] SGHC 91 ................................ 19
Papera Traders Co. Limited & Others v Hyundai Merchant Marine Co. Limited,
The Keihin Co. Limited, (The Eurasian Dream) [2002] EWHC 118 (Comm) .......... 15, 16
Rey Banano Del Pacifico C.A. and Others v Transportes Navieros Ecuatorianos
and Another (The Isla Fernandina) [2000] 2 Lloyd's Rep. 15 ........................................ 17
Rodocanachi, Sons & Co. v Milburn Brothers (1887) LR 18 QBD. 67 ............................... 19
Russell and others v Niemann [1864] 17 C B. (N. S.) 168 ................................................... 13
Serena Navigation Ltd. v Dera Commercial Establishment (The Limnos) [2008]
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
vi
EWHC 1036 (Comm) ...................................................................................................... 19
Sewell v Burdick (1884) 10 App. Cas. 74 ................................................................................ 9
Singh v Yaqubi [2013] EWCA Civ 23 .................................................................................. 19
Sinochem v Mobil Sales [2000] 1 Lloyd’s Rep. 670 ............................................................... 4
Skips A/S Nordheim And Others v Syrian Petroleum Co. Ltd. and Petrofina SA
(The Varenna) [1983] 1 Lloyd’s Rep. 416 ...................................................................... 13
Smith v Rosario Co. (1893) 2 QB 323 .................................................................................. 12
Smith, Hogg & Co. v Black Sea and Baltic [1940] AC 997 ................................................. 17
Spencer v Commonwealth of Australia (1907) 5 C.L.R. 418 ................................................. 20
Standard Chartered Bank v Pakistan National Shipping Corporation and
Others (No.3) [1999] 1 Lloyd's Rep. 747 (QB) ................................................................ 19
Stroms Bruks Aktie Bolag v John & Peter Hutchison [1905] AC 515 .................................. 20
Sucre Export SA v Northern River Shipping Ltd. (The Sormovskiy 3068)
[1994] CLC 433 ................................................................................................................. 9
Sze Hai Tong Bank Ltd. v Rambler Cycle Co. Ltd. [1959] 2 Lloyd’s Rep. 114 ...................... 9
Taunton-Collins v Cromie [1964] 1 WLR 633 ............................................................... 4, 5, 6
Teutonia, The [1872] LR 4 PC 171 ...................................................................................... 13
Toledo, The [1995] 1 Lloyd's Rep. 40 .............................................................................. 15, 16
Tradax Export S.A. v European Grain & Shipping Ltd. [1983] 2 Lloyd’s Rep. 100 .............. 7
Vargas Pena Apezteguia Y Cia Saic v Peter Cremer GmbH [1987] 1 Lloyd's Rep. 394 ........ 7
Vinmar International Ltd. And Another v Theresa Navigation SA [2001] 2 Lloyd's Rep. 1 .. 19
Xantho, The [1887] 12 App. Cas. 503 ................................................................................... 12
STATUTES
Arbitration Act 1996 (UK) ...................................................................................................... 4
SECONDARY MATERIALS
Bazier, David, Hostage to a Fortune: International Piracy on the Somali Sea
Lanes <http://www.un.org/wcm/content/site/chronicle/home/archive/webarticles2012/
hostagetoafortune. ............................................................................................................ 17
Committee Maritime International, The Travaux-Préparatoires of the Hague Rules
and of the Hague-Visby Rules (Antwerp, 1997) .............................................................. 14
Scrutton, Sir Thomas Edward, Scrutton on Charterparties and Bills of Lading
(18th edn, Sweet & Maxwell London 1974) ................................................................. 9, 13
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
1
SUMMARY OF FACTS
1. Aardvark Ltd. (the ‘Claimant’) concluded a contract (the ‘Sales Contract’) with
Beatles Oils and Fats, Ltd. (‘Beatles’) for the purchase of 4,000 mt of Palm Fatty Acid
Distillate – PFAD (the ‘Cargo’), agreed on CIF terms (Incoterms 2000). The Sales
Contract was amended, in which the Cargo was priced USD 747.50 per mt, CIF and
shipped to Liverpool, Merseyside.
2. To execute its contractual obligation to deliver the Cargo to the Claimant, Beatles
chartered the MT Twilight Trader (the ‘Vessel’) owned by Twilight Carriers (the
‘Respondent’) based on the standard form VEGOILVOY voyage charterparty (the
‘Charterparty’). The Charterparty was modified, in so far that it applies English law,
and to have dispute settlement in London Arbitration (‘Arbitration Clause’).
3. On 25 October 2008, four standard Congenbill form bills of lading (the ‘Bills of
Lading’) were issued under the Charterparty in Pasir Gudang, Malaysia. The Bills of
Lading provide that the port of discharge shall be Liverpool, Merseyside, UK. Within
its reverse side, it was stipulated that the terms within the Charterparty, including its
law of the seat and Arbitration Clause, shall be incorporated therein. The Vessel loaded
the Cargo in Pasir Gudang, and further loaded full cargo of 5,000 mt PFAD and 9,500
mt Crude Palm Oil – CPO in Dumai, Indonesia. On 5 November 2008, the Vessel
sailed from Dumai and proceeded to Liverpool, via the Suez Canal.
4. On 14 November 2008, the Vessel entered the Gulf of Aden and commenced anti-pirate
watch. However, on 15 November 2008, the Vessel was boarded by Somali pirates and
detained in the Somali coast where the crew were held hostage for three months. The
Vessel was released on 13 February 2009. Subsequently, the Vessel continued the
voyage and arrived in Fujairah, UAE, on 21 February 2009 to undergo survey of the
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
2
state of Cargo after the hijacking. The Cargo had been found contaminated with
arsenic substance likely due to unauthorized access of pirates during the time of
captivity. The deterioration of the Cargo has lowered its quality and price.
5. On 6 March 2009, the Claimant received the cargo insurance policy, which was
allegedly inconsistent with the terms of the Sales Contract. The Claimant also stated
that by reason of piracy the Cargo would have no value and ordered the Vessel to
proceed to Rotterdam. The Claimant asserted that Beatles committed repudiatory
breaches that bring the Sales Contract to an end, and demanded repayment from Beatles
of the contract price paid on 26 January 2009. Beatles denied liability, though
accepting termination of the Sales Contract.
6. Owing to the termination of the Sales Contract, Beatles requested the Claimant to
deliver the Bills of Lading to them. However, the Claimant refused while stating that
the dispute with Beatles would be pursued through normal FOSFA contractual
channels.
7. As the Bills of Lading were retained by the Claimant, Beatles issued a letter providing
an indemnity (‘Letter of Indemnity’) to the Respondent in place of the Bills of Lading
to discharge the Cargo in Rotterdam. On the other hand, the Claimant sent a letter to
the Respondent not to follow Beatles’s orders. On 20 March 2009 the Vessel arrived in
Rotterdam and discharged all the cargo aboard, pertaining to Beatles’ request.
8. On 23 March 2009, Beatles brought a petition to seize the Cargo to the Dutch Court.
On 23 May 2009, Beatles issued an application to the District Court of Rotterdam for
an order of sale of Cargo, granted on 24 July 2009. On 25 August, the Cargo was then
sold to AB Buyers for USD 1,695,752.38. The Dutch Court, pending resolutions to the
present proceeding, retained the proceeds. The Claimant contested the decision to the
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
3
Dutch Court of Appeal, which was dismissed, and the Claimant was ordered to pay
court fees (USD 138,843.14) and lawyer fees (USD 107,913.12).
9. On 23 March 2009, the Claimant (based on an application to the Dutch court) arrested
the vessel as security for their claims against the Respondent. The Vessel was released
with security of USD 1.4 million, which is the assessed value of the Cargo by the Dutch
Court.
10. On 16 April 2009, the Claimant bought 7,000 mt of PFAD rated USD 522.50 per mt in
order to fulfil the sales to its sub-buyers in Liverpool (Delta Ltd. and Caspian BV).
11. The Claimant initiated London arbitral proceedings (the ‘Proceeding’) against the
Respondent and submitted the Claim Submissions on 6 April 2010. The Respondent
submitted their defence on 16 June 2010.
SUMMARY OF ARGUMENTS
The Respondent is sued by the Claimant for its action of discharging the Cargo in Rotterdam
instead of Liverpool. The Respondent submits that it is not liable for misdelivery of the
Cargo towards the Claimant, since the Claimant does not hold the ownership of the Cargo. In
any event, the Respondent rejects any allegation of committing tort of conversion. The
Respondent further asserts that it is not liable for the deterioration of the Cargo since it is
exempted by virtue of Article IV rule 2 of the Hague-Visby Rules and/or the General
Exception Clause. Even if the Tribunal held that the Respondent is liable towards the
Claimant, the Respondent maintains that the Claimant’s calculation of damages as written in
the Claim Submission is incorrect and it proposes another calculation of damages. The
Respondent highlights that there is a risk of multiplicity of proceeding in the present case
and, consequently, this Proceeding ought to be stayed.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
4
ARGUMENTS PRESENTED
I. THE TRIBUNAL SHOULD GRANT A STAY OF THE CURRENT
PROCEEDING
12. The Respondent submits that the Tribunal should grant a stay of the present Proceeding
since there are strong reasons to do so. The power to stay the Proceeding derives from
Section 33(1)(a) of the Arbitration Act 1996 (‘Arbitration Act’). 1 The Section
provides that “the tribunal shall adopt procedures suitable to the circumstances of
particular case, avoiding unnecessary delay or expense, so as to provide a fair means
for the resolution of the matters falling to be determined.”2
13. Pursuant to the Charterparty which has been incorporated in the Bills of Lading, the
London Arbitration has exclusive jurisdiction to hear the dispute. 3 However, an
exclusive jurisdiction clause4 would not be enforced when there are strong reasons to
depart from it.5 Multiplicity of proceedings, as held in several cases6, is a strong reason
to grant a stay of proceeding.
14. Multiplicity of proceedings occurs in a situation when there are two separate
proceedings and the merits of there being only one.7 It is a strong reason for a stay as
has been elaborated in The Pine Hill.8 In the instant case, a shipowner sued the holders
of bills of lading and the charterers in two different proceedings. It was held that these
1 J Jarvis & Sons Limited v Blue Circle Dartford Estates Limited [2007] EWHC 1262 (TCC). 2 Section 30(1), UK Arbitration Act. 3 Bills of Lading No. PG1-PG4, Record, p. 4, 11, 15, 17, 19, 21. 4 Noble Denton Middle East v Noble Denton International [2011] 1 Lloyd’s Rep. 387, p. 388. 5 Aratra Potato Co. Ltd. v Egyptian Navigation Co. (The El Amria) [1981] 2 Lloyd’s Rep. 119; Citi-March Ltd.
v Neptune Orient Lines Ltd. [1996] 2 All E.R. 545; The MC Pearl [1997] 1 Lloyd’s Rep. 566; Donohue v Armco
Inc and others [2002] 1 Lloyd’s Rep. 425; Deutsche Bank AG v Sebastian Holdings Inc [2010] 1 All E.R.
(Comm) 808; Noble Denton Middle East v Noble Denton International [2011] 1 Lloyd’s Rep. 387, p. 388. 6 Evans Marshall & Co. Ltd. v Bertola SA [1973] 1 All E.R. 992; Aratra Potato Co. Ltd. v Egyptian Navigation
Co. (The El Amria) [1981] 2 Lloyd’s Rep. 119 Citi-March Ltd. v Neptune Orient Lines Ltd. [1996] 2 All E.R.
545; The MC Pearl [1997] 1 Lloyd’s Rep. 566; Sinochem v Mobil Sales [2000] 1 Lloyd’s Rep. 670. 7 Oxford Shipping Co. Ltd. v Nippon Yusen Kaisha (The Eastern Saga) [1984] 2 Lloyd's Rep. 373. 8 Halifax Overseas Freighters v Rasno Export; Techno-Prominport; and Polskie Linie Oceaniczne P.P.W. (The
Pine Hill) [1958] 2 Lloyd's Rep. 146; Taunton-Collins v Cromie [1964] 1 WLR 633; Citi-March Ltd. v Neptune
Orient Lines Ltd. [1996] 2 All E.R. 545; Donohue v Armco Inc. and Others [2001] UKHL 64; Breams Trustees
Ltd. (as Trustee of the Baker 1988 Discretionary Settlement) v Upstream Downstream Simulation Services Inc.
[2004] EWHC 211 (Ch.).
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
5
parallel actions were not allowed to proceed and the actions were to be consolidated
into one proceeding. McNair J laid out two reasons for this. First, the fact that
multiplicity of proceedings leads to a substantial increase in costs, usually also to
substantial delay, and generally to inconvenience. Second, there is a risk for
inconsistent findings between these two proceedings.
15. The circumstances in the abovementioned case are analogous to the present dispute.
Regardless whether the proceeding against Beatles has commenced, the Claimant has
expressed its intention to litigate in two proceedings. The first proceeding is against
Beatles as the Seller in Federation of Oils Seeds and Fats Association (‘FOSFA’)
contractual channels 9 and the second against the Respondent as the carrier in this
present dispute. 10 Both proceedings are arising from the same event, namely the
discharge of the Cargo in Rotterdam. Such intention to litigate in two proceedings
creates the risk for multiplicity of proceedings.
16. Critical to the adjudication of each of the proceedings is a determination by the relevant
court/tribunal on the issue of ownership of the Cargo.11 There is a real risk and
possibility that the findings and decision in each proceeding may be diametrically
opposite and inconsistent. This situation showcases that multiplicity of proceedings,
causes substantial injustice.12
17. In addition, it should be noted that the damages which the Claimant is seeking for in
these present proceedings would be exactly the same as those it is seeking in the
FOSFA proceedings. Without in any way detracting from the aforementioned risk of
inconsistent findings or making any concessions on the merits or otherwise of the
Claimant’s case herein, the court/tribunal in both proceedings may find in favour of the
9 Correspondence from Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record p. 35. 10 Claim Submission, Record, p. 65. 11 Claim Submissions ¶ 21(4), Record, p. 69; Defence Submissions ¶ 10(3), Record, p. 73; Correspondence from
Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 35. 12 The Pine Hill (n 8).
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
6
Claimant. The result of such case would be that the Claimant is entitled to satisfaction
of two presumably similar sets of damages. It goes without saying that it is against all
rules of natural justice and is repugnant to all sound legal principles if the Claimant is
to be awarded such “double damages”.13
18. As such, it is the Respondent’s submission that the Tribunal herein should readily grant
a stay of the present Proceeding. To allow these proceedings to proceed, thereby
possibly resulting in inconsistent findings14 and enabling the Claimant to “have its cake
and eat it” through double damages would undoubtedly cause substantial injustice.15
19. In light of the aforementioned circumstances, the appropriate option that the Claimant
should have taken is by settling the dispute involving all the relevant parties in one
proceeding, namely court. Unlike arbitration that has no inherent power to order
consolidated/concurrent hearings without the consent of all parties,16 the court will have
the power to compel all relevant parties to participate, thus avoiding the multiplicity of
proceedings.17
II. THE RESPONDENT IS NOT LIABLE TO COMPENSATE THE CLAIMANT
BY REASON OF PURPORTED MISDELIVERY
20. The Claimant has alleged that the Respondent is liable to compensate the Claimant
since the Respondent has discharged the Cargo in Rotterdam instead of Liverpool.18
The Claimant based its claims in breach of contract and tort of conversion. However, it
is the Respondent’s position that the Respondent is not liable towards the Claimant as
13 Bulk Oil (Zug) A.G. v Trans-Asiatic Oil Ltd. S.A [1973] 1 Lloyd's Rep. 132; City & General (Holborn) Ltd. v
AYH Plc. [2005] EWHC 2494 (TCC). 14 Interbulk Ltd. v Aiden Shipping Co. Ltd. I.C.C.O. International Corn Co. N.V. V. Interbulk Ltd. (The Vimeira)
[1983] 2 Lloyd's Rep. 424; Oxford Shipping Co. Ltd. v Nippon Yusen Kaisha (The Eastern Saga) [1984] 2
Lloyd's Rep. 373. 15 Aes Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2011] EWCA
Civ 647. 16 Section 35(2), UK Arbitration Act. 17 The Pine Hill (n 8). 18 Claim Submission ¶ 21, Record, p. 68.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
7
the Claimant is not the Cargo owner (A). Furthermore, the Respondent did not commit
tort of conversion (B).
A. The Respondent is not liable towards the Claimant as the Claimant is not the
Cargo owner
21. The Claimant’s assertion that the Respondent is liable towards the Claimant19 is a one-
dimensional view to the issues in the present case. The Claimant based its arguments
on the fact that it currently holds the Bills of Lading.20 Nonetheless, the Tribunal
should assess the facts that have transpired beyond the mere possession of the Bills of
Lading. As a matter of fact, the Claimant does not hold the ownership of the Cargo
since it has rejected the Cargo (1). Accordingly, the Respondent does not incur any
liability towards the Claimant as the Cargo had been delivered to the rightful owners
(2).
1. The Claimant does not hold the ownership of the Cargo since it has
rejected the Cargo
22. In Kwei Tek Chao and Others (trading as Zung Fu Co.) v British Traders and Shippers
Ltd21, it was affirmed that the consequence of rejection of goods by a buyer is that
ownership of the goods revests to the seller. It is the Respondent’s submission that the
Claimant had rejected the Cargo, thus the Claimant lost its ownership upon the Cargo.
23. To constitute a rejection, there must be a clear and unequivocal expression.22 In
Vargas Pena Apezteguia Y Cia Saic v Peter Cremer GmbH.,23 Saville J established that
“… a clear and unequivocal rejection is one where buyers indicate that they want and
will have nothing more to do with the goods.” It is further illustrated in Murdo Donald
19 Claim Submissions, Record, p. 68-9. 20 Clarification, Procedural Order No. 2 ¶ 6. 21 Kwei Tek Chao and Others (Trading As Zung Fu Co.) v British Traders and Shippers LD [1954] 2 QB 459. 22 Tradax Export S.A. v European Grain & Shipping Ltd. [1983] 2 Lloyd’s Rep. 100; Vargas Pena Apezteguia Y
Cia Saic v Peter Cremer GmbH [1987] 1 Lloyd's Rep. 394; Murdo Donald MacDonald v Robert & Elizabeth
Pollock [2012] 1 Lloyd's Rep. 425. 23 Vargas Pena Apezteguia Y Cia Saic v Peter Cremer GmbH [1987] 1 Lloyd's Rep. 394.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
8
MacDonald v Robert & Elizabeth Pollock24 as a condition where the buyer requested
the seller to take the goods back, claiming the goods were defective and requesting the
repayment of the purchase price. The court held that this request constitutes a situation
where a buyer rejected goods.
24. In the present case, through its correspondences with Beatles, the Claimant complained
about the state of the Cargo.25 The Claimant requested Beatles not to deliver the Cargo
to the Claimant 26 but to any place preferable to Beatles. 27 Further, the Claimant
requested Beatles to return the purchase price.28 In addition, in its correspondences, the
Claimant had referred Beatles as the “cargo owner”. 29 Such actions indicate that the
Claimant did not want and would have nothing more to do with the Cargo. Hence, this
shows that the Claimant had made a clear and unequivocal rejection of the Cargo.
25. The Claimant may argue that it did not make an unequivocal rejection since it still
retained the Bills of Lading. However, if there is a clear indication that the goods are
rejected, the rejection would not be affected by subsequent conduct or statements.30
Therefore, such an argument by the Claimant cannot be entertained for the reason that
the Claimant may not act inconsistent with what it had stated previously.
26. Based on the abovementioned elaboration, the Claimant has rejected the Cargo and the
Claimant’s act to retain the Bills of Lading does not affect the consequence of the
rejection. Accordingly, ownership of the Cargo has revested to the Seller and
correspondingly, the Claimant no longer holds the Cargo ownership.
24 Murdo Donald MacDonald v Robert & Elizabeth Pollock [2012] 1 Lloyd's Rep. 425 25 Correspondence from Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 25, 27. 26 Correspondence from Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 27. 27 Correspondence from Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 29 28 Correspondence from Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 25. 29 Correspondence from Mark Wiggins (Beatles) to Paul Taylor (the Claimant), Record, p. 26. 30 Graanhandel T. Vink B.V. v. European Grain & Shipping Ltd [1989] 2 Lloyd’s Rep 531; See Murdo Donald
MacDonald v Robert & Elizabeth Pollock [2012] 1 Lloyd's Rep. 425.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
9
2. The Respondent does not incur any liability towards the Claimant as
the Cargo had been delivered to the rightful owners
27. The main aim of a contract of carriage is to transport goods to the person who is the
rightful owner of the goods. 31 When a shipowner decides to discharge cargo to
someone who cannot produce a bill of lading, it does so at its own risk;32 that is to say,
the shipowner must prove that it has discharged the cargo to the rightful owner to be
free from any liability. Thus, a mere physical presence of a bill of lading is not
decisive to determine where the ownership of the cargo lies.33
28. Furthermore, when a shipowner delivers the goods to the rightful owner, the shipowner
will not incur any liability to the holder of the bill of lading. This is because the bill of
lading will no longer serve as a document of title.34
29. In the present case, pursuant to the Claimant’s rejection of the Cargo, ownership would
revest back to the Seller, namely Beatles. Thus, by delivering the Cargo to Beatles, the
Respondent had delivered the Cargo to the rightful owner.35 Consequently, the Bills of
Lading, which are retained by the Claimant, became exhausted. Thus, the Respondent
does not incur any liability towards the Claimant.
31 Erichsen v Barkworth (1858) 3 H & N 894. 32 Sze Hai Tong Bank Ltd. v Rambler Cycle Co. Ltd. [1959] 2 Lloyd’s Rep. 114; Barclays Bank Ltd. v C & E
Commrs [1963] 1 Lloyd’s Rep. 81; East West Corporation v DKBS 1912 and Akts Svendborg Utaniko Ltd. v
P&O Nedlloyd BV [2002] EWHC 83 (Comm); See also Mobile Shipping Co. v Shell Eastern Petroleum Ltd.
(The Mobile Courage) [1987] Lloydʼs Rep. 655. 33 Lickbarrow v Mason (1794) 5 T.R. 683; Leigh and Sillavan Ltd. v Aliakmon Shipping Co. Ltd. [1986] 2 WLR
902; The Future Express [1992] 2 Lloyd’s Rep. 79. 34 Meyerstein v Barber (1870) LR 4 H.L. 317, p. 330, 335; London Joint Stock Bank v British Amsterdam
Maritime Agency (1910) 16 Com. Cas. 102; Enichem Anic SpA v Ampelos Shipping Co. Ltd. (The Delfini)
[1990] 1 Lloyd's Rep. 252 Sucre Export SA v Northern River Shipping Ltd. (The Sormovskiy 3068) [1994] CLC
433, p. 455; JI MacWilliam Co. Inc. v Mediterranean Shipping Co. SA (The Rafaela S) [2003] EWCA Civ 556;
Sewell v Burdick (1884) 10 App. Cas. 74; East West Corporation v DKBS 1912 and Akts Svendborg Utaniko
Ltd. v P&O Nedlloyd BV [2002] EWHC 83 (Comm); Sir Thomas Edward Scrutton, Scrutton on Charterparties
and Bills of Lading (18th edn, Sweet & Maxwell London 1974) art. 102 par. (5) p. 199. 35 Agreed Statement of Facts for Arbitration Re: The Dutch Proceedings and Sale of the Cargo. Record, p. 53;
Surveys Inc. Records p. 48.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
10
B. The Respondent has committed no tort of conversion
30. Atkin J defines tort of conversion as dealing with goods in a manner inconsistent with
the right of the true owner, provided that it is also established that there is also an
intention on the part of the defendant in so doing to deny the owner's right or to assert a
right which is inconsistent with the owner's right.36 In the present case, the Respondent
did not commit tort of conversion since the Claimant is not the true owner of the Cargo
(1) and the Respondent did not deny the rights of the Cargo owner (2).
1. The Claimant is not the owner of the Cargo
31. A person claiming for tort of conversion must have the ownership of the goods.
Pursuant to the previous elaboration, the Claimant had rejected the Cargo making it no
longer the owner of the Cargo.37 Therefore, this element is not fulfilled.
2. The Respondent did not deny the rights of the Cargo owner
32. Flaux J in the Van Gogh38 had formulated the essential feature of tort of conversion
which is an absolute denial by the defendant of the plaintiff’s ownership of the goods.39
In the instant case, the plaintiff’s vessel was detained by the defendant, for the purpose
of an inspection. The plaintiff then claimed that the defendant’s action amounted to
tort of conversion. However, the court held that such detainment did not involve a
sufficiently extensive encroachment on the plaintiff’s rights to constitute tort of
conversion, rather it was a lesser act of interference.40
33. Similarly in the present case, notwithstanding whether the Claimant has right over the
Cargo, the Respondent’s act to discharge the Cargo in Rotterdam does not amount to an
36 Lancs and Yorks Rly v McNicholl [1918] 88 LJKB 601, p. 605; Oakley v Lyster [1931] 1 KB 148 p. 153;
Caxton Publishing v Sutherland Publishing [1939] AC 178 p. 201; Kuwait Airways Corp. v Iraqi Airways Co.
[2003] 1 CLC 183. 37 See ¶ 11-5. 38 Club Cruise Entertainment and Travelling Services Europe BV v Department for Transport (The Van Gogh)
[2008] EWHC 2794 (Comm). 39 ibid. 41 ibid.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
11
absolute denial. The Cargo was discharged for storage purpose, pending the resolution
of issues between the Claimant and Beatles.41 It was made clear by Beatles that it did
not intend to discharge the Cargo in Rotterdam, as an exercise of their claimed
ownership.42 In the absence of any positive assertion by Beatles as to ownership of the
Cargo, it is apparent that the Claimant was not absolutely deprived of its right to
ownership over the Cargo. Correspondingly, the claim by the Claimant premised upon
the tort of conversion is entirely misconceived.
III. THE RESPONDENT SHOULD NOT BE LIABLE FOR THE
DETERIORATION OF THE CARGO
34. During the Voyage, pirates captured and detained the Vessel for three months.43 The
Respondent’s entire crew of the Vessel was confined for 24 hours where they lived in
the clothes they had on with one blanket on the bridge of the vessel.44 Moreover, they
were only allowed to sit or lie and not allowed to look outside. 45 Under such
conditions, the crew was unable to take any measures to safeguard the Cargo. Despite
the circumstances suffered by the Respondent, the Claimant submits that the
Respondent is liable for the deterioration of the Cargo.46 The Claimant alleged that the
Respondent allowed the pirates to board the Vessel and did not take any measures to
safeguard the Cargo during the Vessel’s captivity.47 The Respondent submits that such
assertions should not be entertained for two reasons: first, the Respondent is exempted
from any liability for damage caused by act of pirates (A), and second, the
41 ibid. 42 Correspondence from Mark Wiggins (Beatles) to Paul Taylor (the Claimant), Record, p. 34. 43 Aspinall Lewis International Report ¶ 1.2.2, Record, p. 41. 44 ibid., ¶ 1.2.5, p. 42. 45 ibid. 46 Claim Submissions ¶ 21(1), Record, p. 68-9. 47 ibid.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
12
Respondent’s reliance on the exemptions is not precluded by any alleged
unseaworthiness of the Vessel (B).
A. The Respondent is exempted from any liability for damage caused by act of
pirates
35. The Claimant has relied on Article III rule 2 of the Hague-Visby Rules to assert that the
Respondent is liable for deterioration of the Cargo. 48 However, upon further
inspection, it can be seen that the applicability of the aforesaid Article is subject to the
exemptions within Article IV rule 2 of the Hague-Visby Rules. If the cause of the
damage falls within the exemptions, the shipowner shall be free from all liabilities.49
The Respondent submits that the deterioration of the Cargo was caused by act of pirates
(1), which falls under the exemptions contained within Article IV rule 2 of the Hague-
Visby Rules (2). Alternatively, acts of pirates shall exempt the Respondent’s liability,
pursuant to the General Exception Clause (3).
1. The deterioration of the Cargo was caused by act of pirates
36. To assess whether damage to cargo was caused by an excepted peril, the excepted peril
should be the immediate, direct,50 and dominant51 cause, and not a remote cause.52 In
the present case, the cause of the Cargo deterioration arises from act of pirates.
37. Upon shipment, the Cargo was Good Merchantable Quality (‘GMQ’).53 However, as
the pirates detained the Vessel during the passage to the Gulf of Aden, there was a
likelihood that the pirates had somehow come into contact and interfered with the
48 ibid. 49 Great China Metal Industries Co. Ltd. v Malaysian International Shipping Corp. Bhd. (The Bunga Seroja)
[1999] 1 Lloyd's Rep. 512, p. 516. 50 Becker Gray v London Assurance Corporation [1918] AC 101, at p. 114 (Lord Summer); Canelhas Comercio
Importacao e Exportacao Ltd. v Wooldridge [2004] EWHC 643 (Comm). 51 Leyland S.S. Co. v Norwich Union [1918] AC 350, p. 363 (Lord Dunedin); Global Process Systems Inc v
Syarikat Takaful Malaysia Bhd. (The Cendor Mopu) [2011] UKSC 5. 52 Smith v Rosario Co. [(1893) 2 Q. B. 323, p. 328; Leyland S.S. Co. v Norwich Union [1918] AC 350; The
Xantho [1887] 12 App. Cas. 503. 53 Sales Contract, Record, p. 1-2.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
13
Cargo.54 In fact, the Claimant has itself affirmed that by reason of act of pirates, the
Cargo had turned into non-GMQ pursuant to the Product Authentication International,
Ltd. (‘PAI’) ruling.55 Ultimately, the Cargo had lost its traceability due to the act of
pirates and rendering it unfit for consumption.56 There cannot be any doubt that the act
of pirates is the immediate, direct and dominant cause for the deterioration of the
Cargo.
2. Act of pirates fall under Article IV rule 2 of the Hague-Visby Rules
38. The Respondent is exempted from any liability of damage arising from act of pirates as
it falls within, at least, three exemptions within Article IV rule 2 of the Hague-Visby
Rules, namely perils of the sea (a), act of public enemies (b), and any other cause
arising without the actual fault or privity of the carrier, or without the fault or neglect of
the agents or servants of the carrier (c).
a. Perils and Dangers of the Sea
39. Historically, act of pirates fall within the definition of “perils of the sea”.57 In the case
of Russell v Niemann,58 it was established that pirates should be put into the same
category as dangers of the sea. Likewise, in The Teutonia,59 it was affirmed that act of
pirates is one of the instances of perils of the sea. Consequently, based on Article IV
rule 2 (c) of the Hague-Visby Rules, the Respondent should not be responsible for any
loss and damage to the Cargo which had arisen or resulted from an act of pirates.
b. Act of public enemies
54 Thomas, Cropper, Benedict Report ¶ 4.,Record, p. 38; Aspinall Lewis Report ¶ 3.1, Record, p. 43. 55 Correspondence from Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 27. 56 Single Joint Expert Report ¶ D, Record, p. 58. 57 Russell and others v Niemann [1864] 17 C B. (N. S.) 168; The Teutonia [1872] LR 4 PC 171; Skips A/S
Nordheim And Others v Syrian Petroleum Co. Ltd. and Petrofina S.A., (The Varenna) [1983] 1 Lloyd’s Rep.
416; Kuwait Petroleum Corp. v I & D Oil Carriers Ltd. (The Houda) [1994] CLC 1037; Abbas (t/a A H Design)
v Rotary (International) Ltd. [2012] NIQB 41; Sir Thomas Edward Scrutton, Scrutton on Charterparties and
Bills of Lading (18th edn, Sweet & Maxwell London 1974) p. 259. 58 Russell and others v Niemann [1864] 17 C B. (N. S.) 168 p. 175 (Byles J). 59 The Teutonia [1872] LR 4 PC 171 p. 179 (Milles LJ).
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
14
40. Based on the travaux préparatoires of the Hague-Visby Rules, Lord Phillimore and Sir
Norman Hill stated that the meaning of “act of public enemies” includes act of pirates
and it has been agreed by all of the Hague-Visby Rules’ drafters.60 In the case of Jindal
Iron and Steel Co. Ltd. v Islamic Solidarity Shipping Company Jordan Inc.,61 Lord
Steyn had laid down that the travaux préparatoires of the Hague-Visby Rules is a well-
established supplementary means of interpretation. Therefore, by virtue of the travaux
préparatoires, the Respondent can rely on Article IV rule 2 (f) of the Hague-Visby
Rules to exempt itself from liability.
c. Any other cause arising without the actual fault or privity of the
carrier, or without the fault or neglect of the agents or servants of the
carrier
41. Act of pirates also falls under the exemption within Article IV rule 2 (q) of the Hague-
Visby Rules. In Asiatic Petroleum Company Ltd. v Lennard’s Carrying Company
Ltd.,62 the words “actual fault or privity” infer something personal to a shipowner,
something blameworthy in him. In contrast, act of pirates does not arise out of the
condition on efficiency of the vessel, or the crew, or the cargo, or the trading history, or
any reasonable perception of such matters by outside body.63 In fact, act of pirates is a
truly extraneous cause. 64 Consequently, the Respondent is exempted by virtue of
Article IV rule 2 (q) Hague-Visby Rule because it arose without the actual fault or
privity of the Respondent as a shipowner.
60 The Travaux-Préparatoires of The International Convention for The Unification of Certain Rules of Law
Relating to Bills of Lading of 25 August 1924 The Hague Rules and of The Protocols of 23 February 1968 and
21 December 1979 The Hague-Visby Rules, p. 408. 61 Jindal Iron and Steel Co. Ltd. v Islamic Solidarity Shipping Company Jordan Inc. [2003] EWCA Civ 144. 62 Asiatic Petroleum Company Ltd. v Lennard’s Carrying Company Ltd. [1915] AC 705; Hawksford Trustees
Jersey Ltd. v Stella Global UK Ltd. [2011] EWHC 503 (Ch.). 63 Cosco Bulk Carrier Co. Ltd. v Team-Up Owning Co. Ltd. (The Saldanha) [2010] EWHC 1340 (Comm). 64 ibid.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
15
3. Alternatively, act of pirates shall exempt the Respondent’s liability pursuant
to the General Exception Clause
42. Under contract, the Respondent is exempted from liability by virtue of Clause 17 of the
Charterparty (‘General Exception Clause’)65 , which provides that “... neither the
Vessel, her Master nor Owner, ... shall be held liable for any loss of or damage to ... the
cargo ... arising or resulting from ... pirates.”
43. In Mitsubishi Corp. v Eastwind Transport Ltd. and others,66 it was held that parties to a
contract could make any terms for exceptions from liabilities, which will bind the
parties. If the Respondent cannot be exempted from act of pirates, it would render the
General Exception Clause ineffective and otiose, which is inconsistent with the
contractual arrangements entered into under the Charterparty.
B. The Respondent’s reliance on the exemptions is not precluded by any alleged
unseaworthiness of the Vessel
44. In order to preclude the Respondent from relying on the exemptions, the Claimant must
prove that the Vessel is unseaworthy and that the unseaworthiness caused the damage
to the Cargo.67 In the present case, the relevant facts and law do not support an
assertion that the Vessel is unseaworthy (1). In any case, the Respondent should not be
liable since unseaworthiness is not the cause of the deterioration of the Cargo (2).
1. The Claimant cannot prove that the Vessel is unseaworthy
45. The established definition of “seaworthiness” is found in the case of F.C. Bradley &
Sons Ltd. v Federal Steam Navigation Co.,68 where Scrutton LJ stated that “… the ship
65 Clause 17, Charterparty, Record, p. 9. 66 Mitsubishi Corp. v Eastwind Transport Ltd. and others [2004] EWHC 2924 (Comm). 67 The Toledo [1995] 1 Lloyd's Rep. 40; Papera Traders Co. Limited & Others v Hyundai Merchant Marine Co.
Limited, The Keihin Co. Limited (The Eurasian Dream) [2002] EWHC 118 (Comm); Maxine Footwear Co. Ltd.
v Canadian Government Merchant Marine [1959] AC 589. 68 F.C. Bradley & Sons Ltd. v Federal Steam Navigation Co. (1926) 24 Lloyd’s Rep. 446, p. 454; Papera
Traders Co. Limited & Others v Hyundai Merchant Marine Co. Limited, The Keihin Co. Limited (The Eurasian
Dream) [2002] EWHC 118 (Comm).
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
16
must have that degree of fitness which an ordinary careful owner would require his
vessel to have at the commencement of her voyage having regard to all the probable
circumstances of it”. This would include the physical condition of the vessel and its
equipment, the competence of the Master and crew, and the adequacy of stores and
documentation.69 In addition, the nature of the ship together with the circumstances of
the voyage must also be taken into consideration.70
46. The burden of proof to establish that the Vessel was unseaworthy lies on the
Claimant.71 The Record does not indicate that the Vessel’s physical condition, its crew,
together with the availability of documentation were in any way lacking in relation to
the Vessel’s ability to reasonably deal with an encounter with pirates.72
47. On the contrary, the fact is that the crew of the Vessel had commenced anti-pirate
watch during the Vessel’s entrance to the Gulf of Aden 73 , which shows that the
Respondent had performed due diligence to prepare the Vessel in readiness to
encounter with pirates. Thus, there is no ground whatsoever that indicates the Vessel
was unseaworthy before and at the beginning of the voyage. Therefore, the Claimant
cannot prove that the Vessel was unseaworthy.
2. Even if the Vessel is unseaworthy, the Respondent should not be liable
for the deterioration of the Cargo since unseaworthiness is not the
cause of the deterioration
69 Papera Traders Co. Limited & Others v Hyundai Merchant Marine Co. Limited, The Keihin Co. Limited (The
Eurasian Dream) [2002] EWHC 118 (Comm). 70 The Fjord Wind [1999] 1 Lloyd's Rep. 307, p. 315; Papera Traders Co. Limited & Others v Hyundai
Merchant Marine Co. Limited, The Keihin Co. Limited, (The Eurasian Dream) [2002] EWHC 118 (Comm). 71 The Toledo [1995] (n 67). 72 Correspondence from John Walker (Walker Brokers) to Paul Taylor (the Claimant), Record, p. 3-4; Thomas,
Cropper, Benedict Report, Record, p. 37-9; Aspinall Lewis International Report, Record, p. 40-3. 73 Aspinall Lewis International Report ¶ 1.2.2. Record, p. 41.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
17
48. In Smith, Hogg & Co. v Black Sea and Baltic,74 the test to prove unseaworthiness as the
cause of the damage is whether the damage would not have happened had the ship been
seaworthy. As there is lack of evidence on what had transpired during the time the
Vessel was hijacked, the Claimant cannot prove with any degree of certainty that
pirates would not have boarded the Vessel had there been more anti-pirate measures
undertaken. In any case, it was a likelihood that the pirates would adopt any means75 to
take over the Vessel, leaving any measures that may have been taken by the
Respondent futile. Therefore, unseaworthiness is not the cause of the damage to the
Cargo in the present case. In effect, the Respondent is entitled to rely on the exemptions
within Article IV rule 2 of the Hague-Visby Rules.
IV. IN ANY CASE, THE AMOUNT OF DAMAGES CLAIMED IS NOT
RECOVERABLE
49. Even if the Tribunal is of the view that the Respondent is liable, the amount of damages
set out in the Claim Submissions76 cannot be awarded on the ground that the Sales
Contract price or the price to uphold contract with sub-buyers are not the correct
measures of damages claimable (A). Applying the correct test, the damages should be
measured based on the market value (B). Furthermore, the Claimant is not entitled to
costs that have been incurred in relation to the Dutch court proceedings (C).
74 Smith, Hogg & Co. v Black Sea and Baltic [1940] AC 997 (Lord Wright); Rey Banano Del Pacifico C.A. and
Others v Transportes Navieros Ecuatorianos and Another (The Isla Fernandina) [2000] 2 Lloyd's Rep. 15. 75 Pirates in Somalia are armed with fast powerboats, which would carry 4-8 people, each armed with machine
guns and rocket-propelled grenades (RPGs). The amount of pirates that witheld the Vessel (around 30)
showcases the severity of the situation at hand. David Bazier, “Hostage to a Fortune: International Piracy on
the Somali sea lanes”, http://www.un.org/wcm/content/site/chronicle/home/
archive/webarticles2012/hostagetoafortune. 76 Claim Submissions ¶ 21(1), Record, p.70.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
18
A. The Claimant cannot claim the amount in the Sales Contract or the price
they paid to uphold the sub-contract with its sub-buyers
50. In the present case, the Claimant has claimed on the basis of USD 747.50 per metric
tonne (“mt”), which is the value of the Cargo added with the difference between that
value and the contract price.77 Such amount is equal to the Sales Contract price.78 In
the alternative, the Claimant has also claimed for the price of the replacement cargo, on
the basis of USD 522.50 per mt.79 It is the Respondent’s submission that these claims
should not be granted by the Tribunal because it was not based on the correct test on
the measure of damages.
51. In The Arpad No. 2,80 a plaintiff buyer procured a sales contract for the purchase of
goods with a seller. The goods were shipped in the defendant’s vessel. However, a
portion of the goods was not delivered due to the defendant’s breach. As a
consequence, the plaintiff claimed for a return of the sales contract price to the
defendant. The Court held that the defendant, as a shipowner, is not liable for the sales
contract price between the plaintiff and the seller since it was not privy to sales
contract. Conversely, the sales contract entered into by the buyer, unless contemplated
by the defendant as the liable party, cannot be the basis to award damages.81
52. Similar with the reasoning in the above case, the submissions by the Claimant should
be rejected. As a shipowner, the Respondent had no knowledge of the price paid by the
Claimant under the Sales Contract, or the price of the replacement cargo.82 As these
amounts are outside the contemplation of the Respondent, such amounts cannot be used
as a basis to calculate the damages.
77 Claim Submissions ¶ 21(1), Record, p. 69. 78 Correspondence between Paul Taylor (the Claimant) to Mark Wiggins (Beatles), Record, p. 25. 79 D&F Brokers Ltd. Sales Note No. 0164, Record, p. 46-7. 80 The Arpad (No. 2) [1934] P 189 (CA). 81 ibid., p. 192. 82 Defence Submissions ¶ 6, Record, p. 72.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
19
B. The correct measure of damages should be based on the market value when
and where it should be discharged
53. Having established that the Claimant has applied the incorrect measure of damages, the
Tribunal should apply the correct measure of damages, which is the market value of the
goods when and where it should be discharged.83 This rule goes with the rationale that,
as a result of the misdelivery, the plaintiff is assumed to have bought replacement cargo
at the price of market value in the place it should be discharged.84 As has been
elaborated, the Respondent is not liable for the Cargo turning to non-GMQ. 85
Therefore, the value shall be determined based on the market value of non-GMQ cargo
in the place when and where it should be discharged, namely on or about 20-30 March
2009 in Liverpool.
54. Market value is defined as the price at which actual buying and selling take place.86 In
the present case, there were no actual buying and selling of non-GMQ PFAD in
Liverpool during the time the Cargo was discharged.87 In consequence, there was no
market value of non-GMQ PFAD in Liverpool. In such circumstances, the market
value of non-delivered goods can be determined from the nearest market where such
cargo is available.88 In The Texaco Melbourne,89 a shipowner failed to deliver the
goods at the contractual port of discharge, Takoradi, Ghana. There was no market
83 Rodocanachi, Sons & Co. v Milburn Brothers (1887) LR 18 QBD. 67; The Almare Seconda and Almare
Quinta [1981] 2 Lloyd's Rep. 433; Attorney General of the Republic of Ghana (Ghana National Petroleum
Corp.) v Texaco Overseas Tank Ships Ltd. (The Texaco Melbourne) [1994] CLC 155, p. 156; Standard
Chartered Bank v Pakistan National Shipping Corporation and Others (No.3) [1999] 1 Lloyd's Rep. 747
(QBD); Vinmar International Ltd. And Another v Theresa Navigation SA [2001] 2 Lloyd's Rep. 1; Oxus Gold
Plc., Oxus Resources Corporation v Templeton Insurance Limited [2007] EWHC 770 (Comm). 84 Serena Navigation Ltd. v Dera Commercial Establishment (The Limnos) [2008] EWHC 1036 (Comm). 86 The Arpad (No. 2) [1934] P 189 (CA); Singh v Yaqubi [2013] EWCA Civ 23; Pacific Interlink Sdn. Bhd. v
Owner of the Asia Star [2009] SGHC 91. 86 The Arpad (No. 2) [1934] P 189 (CA); Singh v Yaqubi [2013] EWCA Civ 23; Pacific Interlink Sdn. Bhd. v
Owner of the Asia Star [2009] SGHC 91. 87 Single Joint Expert Re rtt ¶ 3 F, Record, p. 58. 88 Attorney General of the Republic of Ghana (Ghana National Petroleum Corp.) v Texaco Overseas Tank Ships
Ltd. (The Texaco Melbourne) [1994] CLC 155, p. 156. 89 ibid.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
20
value of such goods during that time at Takoradi. The Court awarded the damages
based on the market value at the nearest place where such goods were available, which
was in Italy, added with the freight cost to ship the goods to Takoradi.
55. In the present case, non-GMQ PFAD was only available in Europe. The nearest place
with available non-GMQ PFAD was in Holland.90 Therefore, the Claimant would need
to procure the Cargo replacement from Holland and ship it from the closest port,
namely Rotterdam, to Liverpool.
56. Even though the market value of non-GMQ PFAD in Rotterdam is not provided within
the Record,91 the sales price of similar cargo during the relevant time is a strong
evidence of the market value.92 In this instance, the market value shall be based on the
sales price of non-GMQ PFAD cargo aboard the Vessel, which is USD 350 per mt,93
added with freight cost to Liverpool, which is USD 30 per mt,94 amounting to USD 380
per mt.
C. The Claimant is not entitled to the costs that have been incurred in relation
to the Dutch proceedings
57. The Claimant had incurred costs in relation to the Dutch court proceedings against
Beatles.95 It should be noted that the appeal of such proceedings were ultimately
dismissed.96 The Claimant is now seeking to recover the costs incurred, including the
lawyer fees, in the Dutch court proceedings to the present Tribunal. However, the
Respondent submits otherwise.
90 Single Joint Expert ¶ 3 B, Record, p. 57-8. 91 Surveys Inc. Report, Record, p. 49; Dutch Surveryors BV Report, Record, p. 51; Single Joint Expert, Record,
p. 58-9; Correspondence from Mark Wiggins (Beatles) to the Respondent, Record, p. 62-4. 92 Braun v Bergenske Steamship Company (1921) 8 Lloyd’s Rep. 51; Stroms Bruks Aktie Bolag v John & Peter
Hutchison [1905] AC 515; Spencer v Commonwealth of Australia (1907) 5 C.L.R. 418, p. 431 (Isaacs J); El
Greco (Australia) Pty Ltd. and Another v Mediterranean Shipping Co. SA [2004] 2 Lloyd's Rep. 537. 93 Defence Submission ¶ 26, Record, p. 73. 94 Correspondence from Mark Wiggins (Beatles) to the Respondent, Record, p. 62. 95 Agreed Statement of Facts for the Arbitration Re: The Dutch Proceedings and Sale of the Cargo, Record, p.
54. 96 ibid.
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
21
58. In The Ocean Dynamic,97 it was held that costs incurred in foreign proceedings cannot
be awarded. It is also pertinent to refer to The Mercini Lady,98 where a buyer was
involved in a proceeding with a shipowner, claiming that the damage to the cargo was
caused by the shipowner’s breach. However, the buyer lost the proceeding and the
court ordered it to pay for the legal costs. The buyer then sued the seller for the
damage to the cargo and won the case. However, the court did not grant the legal costs
the buyer incurred in the previous proceeding with the shipowner. The reasoning of
such judgment was that the previous proceeding was the consequence of the buyer’s
own choice, which is a sufficiently independent matter and was not caused by the
seller’s breach.
59. In the present case, the Claimant’s entire issue in the Dutch court proceedings against
Beatles was independent of the Respondent’s action to discharge Cargo in Rotterdam.
It was the Claimant’s own choice to proceed, hence it cannot be regarded as a
consequence of the Respondent’s breach. Conversely, the Respondent cannot be held
liable for the Dutch court costs.
97 Jack L. Israel Ltd. v Ocean Dynamic Lines S.A. and Ocean Victory Ltd. (the Ocean Dynamic) [1982] 2
Lloyd’s Rep. 88. 98 KG Bominflot Bunkergesellschaft Für Mineralöle Mbh & Co. v Petroplus Marketing AG (The Mercini Lady)
[2012] EWHC 3009 (Comm).
TEAM NO. 17 MEMORANDUM FOR THE RESPONDENT
22
PRAYER FOR RELIEF
For all the reasons submitted above, the Respondent respectfully requests this Tribunal to:
DECLARE that the current Proceeding is stayed;
Alternatively,
ADJUDGE that the Claimant is not entitled to any relief claimed since the Claimant is not
the owner of the Cargo;
Further,
ADJUDGE that the Respondent is not liable:
a. Under the tort of conversion; and
b. For any losses arising from deterioration of the Cargo.
Even if the Respondent is held liable, the Respondent respectfully requests this Tribunal to:
ADJUDGE that, the Claimant has miscalculated the damages and the amount recoverable
shall be limited to the market value in Liverpool on the basis of USD 380 per mt.
ADJUDGE that the following damages are not recoverable:
a. Dutch court fees;
b. Legal fees in respect of the Dutch court proceedings;
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