Modhulika Bose Rachana Rautray Shivam Bhardwaj Udbhav Tiwari

Transcription

1 FOURTEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION, 2013 The West Bengal National University of Juridical Sciences Kolkata, India Memorandum for the Claimant In the Matter of Arbitration between: Claimants Limited v. Respondents Carriers Inc. (Claimant) (Respondent) Team No: 12 Modhulika Bose Rachana Rautray Shivam Bhardwaj Udbhav Tiwari

2 FOURTEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION, 2013 MEMORANDUM FOR THE CLAIMANTS In the Matter of Arbitration between: Claimants Limited v. Respondents Carriers Inc. (Claimant) (Respondent) Team 12

3 TABLE OF CONTENTS A. List of Abbreviations...III B. Table of Authorities...IV C. Statement of Facts...1 D. Questions Presented...2 E. Summary of Arguments...3 F. Proper law and Jurisdiction...6 G. Substantive Defence Submissions Respondents were entitled to deliver the Cargo at Rotterdam in pursuance of Clause 29 of the Charterparty Liberty Clause is enforceable against the Claimants The Clause is consistent with the delivery obligations of the Carrier Claimants had agreed to take the Delivery at Rotterdam Claimants in their correspondences with the Beatles, had agreed to receive the Cargo at Rotterdam Respondents cannot be bound by the notice sent on 20 March, Claimants were not entitled to delivery of the cargo having purported to abandon the cargo to their Sellers (Beatles) Claimants have abandoned title to the cargo Claimants conduct is evidence of their desertion of claims on the Cargo Sellers retained complete title of the Cargo on termination of the sales contract Respondents are not liable for the Tort of Conversion Respondents were Justified in delivering Cargo to Beatles Oils & Fats Respondents were not in breach of their duties as a bailee Respondent s Act of Delivery was Lawfully Justified Respondents are exempted from liability arising out of the Event of Piracy Respondents exercised due diligence and were not negligent in carrying, stowing or handling of the goods Respondents had no knowledge about the measure, quality, condition, content and value of the goods Memorandum for the Claimants Page I

4 5.2. Heating of the cargo was not a specified cargo care measure in the Tanker Voyage Charter Party Respondents have successfully discharged burden of proof required to seek exemption under sub clause e, f and q of Art IV of H(V)R Sub clause (e) and (f) of Article IV of H(V)R are applicable since the Respondents were not negligent The loss occasioned by piracy is exempted under sub clause (q) of Art IV of H(V)R. 15 H. Damages Respondents are not entitled to damages as they have suffered no injury to their property There was no damage caused to the Cargo due to their conversion from GMQ to non- GMQ The Respondents are only responsible for the transshipments cost to carry the Cargo to Liverpool form Rotterdam I. PRAYER FOR RELIEF Memorandum for the Claimants Page II

5 A. LIST OF ABBREVIATIONS Claimant: Claimants Ltd. Respondents: Respondents Carriers Inc. Charterparty: Charterparty dated 12 September, Bill of Lading: Bill of lading No. 1, No 2, No 3, issued on 25 October, 2008 PDAF : Palm Fatty Acid Distillate Cargo: Palm Fatty Acid Distillate (PFAD) H(V)R: The Hague-Visby Rules - The Hague Rules as Amended by the Brussels Protocol (1968) Art. : Article : Paragraph Memorandum for the Claimants Page III

6 B. TABLE OF AUTHORITIES CASES Agean Sea Traders Corp v. RespolPetroleo S.A. (The Agean Sea) [1998] 2 Lloyd's Rep Albacora S.R.L. v. Westcott &Laurance Line, Ltd, [1996] 2 Lloyd s Rep BungaSeroja, [1991] 1 Lloyd s Rep. 512 at Cosco Bulk Carrier Co Ltd v Team-Up Owning Co Ltd [2010] EWHC Czech v. General Steam Co. (1867) L.R. 3 C.P GH Renton & Co Ltd v Palmyra Trading Corp of Panama (The Caspiana), [1957] A.C Goodwin, Ferreira & Co Ltd. v. Lamport& Holt Ltd. (1929) 34 LIL Ismail v. Polish Ocean Lines, (1975) Vol. 2 Q.B. (Com. Ct.) Kuwait Airways Corp. v. Iraqi Airways Co (No. 6) [2002] 2 A.C Kuwait Petroleum Corp. v.i & D Oil Carriers (The Houda) [1994] 2 Lloyd s rep Kwei Tek Chao (t/a Zung Fu Co) v British Traders and Shippers Ltd., [1954] 2 QB Ltd. v. Rambler Cycle Co. Ltd. [1959] 2 Lloyd s Rep MCC Proceeds Inc v Lehman Bros International (Europe) [1998] 4 All E.R Mobile Shipping Co. v. Shell Eastern Petroleum Ltd (The MobileCourage) [1987] Lloyd s rep Motis Export Ltd v. Dampskibsselkabet 1 Lloyd's Rep Paal Wilson & Co.A/S v. Partenreederei Hannah Blumenthal [1983] 1 AC Pejovic [2001] JBL Pendle & Rivett, Ltd v. Ellerman Lines, Ltd, 29 L.L.L.Rep Photo Production Ltd. v Securicor Transport Ltd., [1980] AC Quaker Oats v. M/V Torvanger, 734 F.2d Quaker Oats v. M/V Torvanger, 734 F.2d, Russell v. Niemann, (1864) 17 CB (N.S) Memorandum for the Claimants Page IV

7 SA Sucre Export v. Northern River Shipping Ltd. (The Sormovskiy 3068) [1994] 2 Lloyd s Rep SA Sucre Export v. Northern River Shipping Ltd. (The Sormovskiy) [1994] 2 Lloyd s Rep The Future Express[1993] 2 Lloyd's Rep. 542, The Glendarroch (1894) P The Rafaela S [2005] All ER (D) White and Carter (Councils) Ltd v. Mcgregor 1962 AC 413, STATUTES The Hague Visby Rules, TREATISES BLACK'S LAW DICTIONARY (9th ed. 2009) M. L. Hendrikse, N. H. Margetson, N. J. Margetson, ASPECTS OF MARITIME LAW, Kluwer Law International, (2008) Simon Baughen, Shipping Law,(Cavendish Publishing Limited, 2004) Sir Guenter Treitel, QC; Professor Francis M B Reynolds, QC, CARVER ON BILLS OF LADING, Sweet & Maxwell, (2011) Stephen Girvin, CARRIAGE OF GOODS BY SEA, Oxford University Press, (2007) Memorandum for the Claimants Page V

8 C. STATEMENT OF FACTS 1. The Claimant, Aardvark Ltd, are the holders of the Bill of Ladings PG 1, PG2, PG3 and PG4. covering a Cargo constituting 4,000 mt of Palm Fatty Acid Distillate (PFAD) that Aardvark has bought from Beatles Oils & Fats ( Sellers). Respondents, Twilight Carriers Inc. are the owners of m.v. Twilight Trader which was chartered to carry the above stated cargo under the above stated Bills of Lading. 2. The Respondents had charted the vessel out to Beatles Oils & Fats via a charterparty dated 12 th September, 2008 for the transport of the said cargo to Liverpool, Merseyside. 3. The vessel, enroute to Merryside, Liverpool with its cargo, was captured and held off for a period of 90 days (15 th November 2008 to 13 February, 2009) by Somalian Pirates off the coast of Somalia. 4. Meanwhile, unaware of this development, in January 2009, Aardvark received the shipping documents (except for the insurance policy) from Beatles and having found them in order paid the c.i.f price of the full Cargo and in return received the endorsed Bill of Ladings PG 1, PG2, PG3 and PG4. 5. On the 6 th of March, after receiving the insurance documents Aardvark found them to be not in accordance with the contract of Sale and hence informed Beatles that as a seller they were in breach of the contract of sale, demanding immediate repayment of the contract price of USD 2,986, In several communications between Beatles and Aardvark, the parties were contemplated discharging the cargo an alternative destination, Rotterdam, and to that effect, on repayment of contract price by Beatles, Aardvark was ready to deliver the Bills of Lading at Rotterdam. 7. On 19 th March, Beatles instructed the Carriers to deliver and discharge the cargo at Rotterdam against a Letter of Indemnity furnished by them. Memorandum for the Claimants 1

9 8. 20 th March, 2009 Beatles confirmed that they had no intention to return the contract price to Aardvark but intended to receive the Cargo at Rotterdam nevertheless. Aardvark, in reply, through correspondence, informed both Beatles as well as Owners of Twilight Trader that as the holder of bills of Lading they intended to take the delivery of the Cargo at Liverpool as stipulated in the Bill of Ladings. 9. The Owners released Cargo to Beatles between the 20 th and the 22 nd of March, at Rotterdam against the Letter of Indemnity given by Beatles. 10. The Beatles got the cargo arrested as security for claims against Aardvark. Beatles subsequently then obtained an order form the Dutch Court to sell the Cargo. On 25 th August, 2009, Beatles sold the Cargo for USD 1,695, Sale proceeds are currently held by the Dutch Court. 11. Simultaneously, on 23 rd March, 2009 Aardvark instituted proceedings before the Dutch Court to arrest Twilight Trader, and against its owners for wrongfully delivering the Cargo to Beatles in absence of Bills of Ladings. The Carriers obtained an order for release by furnishing a security ( Bank Guarantee in favour Aardvark) against a security of USD 1.4 million. The figure was reached at by the court after assessing the value of the Cargo as well as assumed legal costs of USD 200, The present Arbitral Proceedings have Been instituted by Aardvark against the Carriers Twilight Carriers, claiming damages for alleged wrongful delivery of the Cargo at Rotterdam, to Beatles. Memorandum for the Claimants 2

10 D. QUESTIONS PRESENTED. 1. Whether Clause 29 allows the Respondent to deliver the Cargo at Rotterdam? 2. Whether the Respondent, in breach of the Contract of carriage, has wrongfully delivered the Cargo at Rotterdam instead of Liverpool? 3. Whether the Respondent, in breach of the Contract of carriage, has wrongfully delivered the Cargo to Beatles, in absence of a Bills of Lading? 4. Whether the respondents are liable for a tort of Conversion? 5. Whether the Respondent has failed to discharge his duty of care under H(v)R Art III:2 and is liable for the damages, if any, so caused? E. SUMMARY OF ARGUMENTS 1. RESPONDENTS WERE ENTITLED TO DELIVER THE CARGO AT ROTTERDAM, PURSUANT TO CLAUSE 29 OF THE CHATERPARTY. There exists a valid charterparty whose terms bind the Applicants. The Liberty clause provides for substituted performance of the obligation to deliver whenever it seems practicable and hence is consistent with the delivery obligations of the Carrier. As the carrier is bound by the instructions of the Charterer on receiving the letter of indemnity, they delivered as per instructions provided. The carriers have relied on the conduct of the applicants who had even provided for the bills of lading at Rotterdam at the time of delivery. Hence, there was due consideration of the claimants rights however their decision to comply by the Sellers instructions was reasonable. Memorandum for the Claimants 3

11 2. CLAIMANTS HAD AGREED TO TAKE DELIVERY OF THE CARGO AT ROTTERDAM. Claimants never intended to receive the cargo at Liverpool and to the contrary had an intention to allow Beatles to receive the delivery of the Cargo at Rotterdam by making available the Bills of Lading to them, more so the notice about the Claimant s title on the goods was sent to the Respondents after they had accepted the letter of indemnity issued by the Sellers. Thus making the Respondents non liable for the delivery of the cargo at Rotterdam and not Liverpool. 3. CLAIMANTS WERE NOT ENTITLED TO DELIVERY OF THE CARGO, HAVING PURPORTED TO HAVE ABANDONED THE CARGO TO THE SELLERS. As the Claimants only possess conditional property in goods and have evidenced that they have lost interest in holding the goods it is the Respondents contention that they were entitled to delivering goods without the production of bill of lading against a letter of indemnity which was in their legitimate interest. Such right stems from the dispute over title of Cargo due to which the Respondents have delivered the same to the perceived rightful owners thereby fulfilling their obligation to deliver. Further the express exemption clause incorporated in the Charterparty which was consented to on part of the Claimants provides authority to the Respondents to carry out such delivery. 4. THE RESPONDENTS ARE NOT LIABLE FOR THE TORT OF CONVERSION. The essence of tort of conversion includes the intentional act of delivering the cargo to a party who is not entitled under the bills of lading to receive the same without any legal justification. In the present case since the Claimants did not possess a title to the cargo thus they were not entitled to demand the delivery of the same. The Respondents being under a reasonable belief as to the legitimacy of the title of the Sellers to the cargo in transit were thus Memorandum for the Claimants 4

12 legally justified in delivering the same to them and hence are not liable under the tort of conversion. 5. THE RESPONDENTS HAVING DISCHARGED THE DUTY OF CARE AS MENTIONED IN ART. III OF THE H(V)R ARE ELIGIBLE FOR THE EXEMPTION MENTIONED THEREIN. Respondents were not aware of the of the weight, measure, quality, quantity, conditions, contents and value of the cargo being loaded on the vessel thus they could not be fixated with any particular level of duty of care. Moreover the act of piracy being wholly out of the physical control of the carriers, any loss so occasioned by the act cannot be attributed to the carriers. Having adopted all the necessary care and by the application of the exemption clause as provided by the charterparty, the carriers are eligible for the exemptions provided under Art III of the H(V)R. Memorandum for the Claimants 5

13 PLEADINGS F. PROPER LAW AND JURISDICTION [1] The Respondents humbly submits to the Jurisdiction of this Tribunal and do not wish to challenge the same. We submit that the present dispute is covered by the Arbitration Clause contained in the Fixture note of 12 September, 2009, which calls for London Arbitration and that the same is governed by the Arbitration Act, 1996 which constitutes the Lex Arbitri for the present arbitral proceedings. We also submit that the Proper Law of contract (for Charterparty as well as the Bill of Ladings) is English Law. G. SUBSTATIVE DEFENCE SUBMISSIONS 1. RESPONDENTS WERE ENTITLED TO DELIVER THE CARGO AT ROTTERDAM IN PURSUANCE OF CLAUSE 29 OF THE CHARTERPARTY Liberty Clause is enforceable against the Claimants. [2] Charterparty was entered into by the Respondents and the Beatles who had chartered M.V. Twilight Trader. Inspite of not being privy to the contract, the Claimants are bound by the Liberty Clause as all the terms and conditions, liberties, and exceptions of the Charterparty have specifically been incorporated into the Bill of Ladings which constitutes the contract of carriage as between the Claimants and Respondents. Further, the Charterparty of 12 th September, 2009 was specifically negotiated and concluded with due notice to the Claimants The Clause is consistent with the delivery obligations of the Carrier. [3] The Charterparty being a contract between the charterer and the carrier wherein the carrier undertakes to perform the carriage for the benefit of the Charterer, Clause 29 simply allows the Charterer to instruct the carrier to change the destination of the voyage. 1 Fact file, 3 Memorandum for the Claimants 6

14 Clause 29 provides Owner may, when practicable have the vessel call and discharge the cargo at another or substitute port declared or requested by the Charter. Respondents submit that the said clause is consistent with its delivery obligations as it does not contemplate a complete exception of the Carrier from its delivery obligations under the contract of carriage but merely allows for a substituted performance of the same 2. Further, such substituted performance is deemed complete delivery under the contract. [4] Therefore Liberty clause does not frustrate/nullify the primary object of the contract and to hold otherwise would in effect fetter the parties freedom to contract 3. [5] The Respondents received a Letter of Indemnity from Beatles on 19 th March, 2009, 4 asking the Respondents to deliver the Cargo at Rotterdam instead of Liverpool against the Letter of Indemnity. Thus treating them as instructions from the Charterer, Respondents delivered the Cargo at Liverpool in pursuance of the Clause 29 of the Voyage Charterparty. [6] However, Respondents in deciding to comply with the instructions of the Charterers gave due consideration to the prevailing circumstances and the conduct of the Claimants who had throughout represented in their communications, till 19 March, 2009, that the Bills of Lading would be transferred and made available, and was infact made available 5, at Rotterdam at the time of delivery. Regardless of the issue of contestable titles of Cargo, Respondents submit that their decision to comply with the request of the Sellers was reasonable and that the Cargo interests of the Claimants, if any, had been duly considered. 2 GH Renton & Co Ltd v Palmyra Trading Corp of Panama (The Caspiana), [1957] A.C Id. 4 Fact file, 68 17, Fact file, 33. Memorandum for the Claimants 7

15 2. CLAIMANTS HAD AGREED TO TAKE THE DELIVERY AT ROTTERDAM. 2.1.Claimants in their correspondences with the Beatles, had agreed to receive the Cargo at Rotterdam. [7] Firstly, Respondents contend that Claimants never intended to receive the Cargo. Even before the sale dispute had arisen between Beatles and the Claimant, the Claimants were in talks with other potential buyers and had intended to divert the Cargo for sale to another port, on expectation of better returns 6. [8] Secondly, the Claimants had strongly objected to receiving the Cargo in Liverpool, where according to them the Cargo was suppose to be of no values as it had lost its GMQ- status 7. [9] Thirdly, after Beatles had declared that Cargo will not be discharged at Liverpool 8, the Claimants continued to co-ordinate with Beatles, and were willing to transfer and make available the Bills of Lading at Rotterdam 9 [10] Therefore it is clear that the Claimants never intended to receive the cargo at Liverpool and to the contrary had an intention to allow Beatles to receive the delivery of the Cargo at Rotterdam by making availing the Bills of Lading to them. 2.2.Respondents cannot be bound by the notice sent on 20 March, [11] The notice sent by the Claimants on 20 March, 2009 was sent after the Respondents had already received and accepted the Letter of Indemnity and the terms mentioned therein after taking due consideration of Claimants conduct [ 2.1] [12] The said notice, intimating Respondents of a change in Claimants intention to allow for the delivery of the Cargo at Rotterdam came after the Respondents had already reached Rotterdam and has started discharging the Cargo. The Respondents therefore contend 6 Fact file, 24 7 Fact file, 27 8 Fact file, 28 9 Fact file, 29, 31, 33 Memorandum for the Claimants 8

16 that notice came too late and the Respondents cannot be reasonably expected to rely and or comply with the same. 3. CLAIMANTS WERE NOT ENTITLED TO DELIVERY OF THE CARGO HAVING PURPORTED TO ABANDON THE CARGO TO THEIR SELLERS (BEATLES). 3.1.Claimants have abandoned title to the cargo Claimants conduct is evidence of their desertion of claims on the Cargo.. [13] Sellers were referred to as the cargo owners in the correspondence that passed between the Claimants and the sellers. Such reference is direct consequence of Claimant s terminating the sale contract and asking back for the consideration amount. 10 The said conduct implies that the Claimants were no longer interested in holding title of the goods and that with such termination, title reverted back to the Sellers Sellers retained complete title of the Cargo on termination of the sales contract. [14] What the buyer obtains when the title under the document is given to him is the property in the goods, conditioned on the fact that the property reverts back to the seller if upon examination by the buyer he finds them not in accordance with the contract. That means that what the buyer gets is only a conditional property in the goods, the condition being a condition subsequent. 11 In the present case the Claimants notified the Sellers that they were terminating the sales contract because the documents of sale received by them were not in accordance with the contract of sale, thus the reversionary interest of the Sellers in the cargo was restored back to them in the event of the afore-stated condition subsequent having took place Sellers had a better title to the Cargo in Carriage. 10 Fact file, Kwei Tek Chao (t/a Zung Fu Co) v British Traders and Shippers Ltd., [1954] 2 QB 459. Memorandum for the Claimants 9

17 [15] There are circumstances under which the ship owner is obliged to deliver the cargo even without the production of the bills of lading. 12 Mere possession or representation of goods cannot generate better title. 13 The consignee does not necessarily obtain the right to suit on transfer of the bill of lading; as such transfer may not always coincide with the intention to pass property or security in goods. 14 Aardvark has admitted to the sellers being cargo owners where latter are the best to decide on the destination of the cargo. 15 Further communications reveal Aardvark s intention to revert the bills of lading to the sellers on the condition that they would be paid for the same. It is not essential for the carrier to enquire of who has rightful title of the goods 16, however the defence admits to a dispute over such title 17. Under such dispute it was reasonable on part of the Respondents to deliver the goods to the perceived rightful owners who were Sellers in the present case. 3.3.Respondents were not Obliged to deliver the Goods to The Claimants. [16] The defence admits there lies a duty on part of the carrier to deliver goods to the right party that has title to the goods, however the carriers are not bound to deliver against production of bill of lading if they have notice of any clear claim or better title. 18 In the instant case, there is no prima facie evidence that that the Claimants had a better title to the Cargo The Communication relied upon by Claimants was not sufficient ground for Respondents to deliver the Cargo to them. 12 Clarke J. in SA Sucre Export v. Northern River Shipping Ltd. (The Sormovskiy 3068) [1994] 2 Lloyd s Rep Pejovic [2001] JBL 461, Sir Guenter Treitel, QC; Professor Francis M B Reynolds, QC, CARVER ON BILLS OF LADING, Sweet & Maxwell, (2011). 14 The Future Express[1993] 2 Lloyd's Rep. 542, Fact file, The Rafaela S [2005] All ER (D) 236, Fact file, Motis Export Ltd v. Dampskibsselkabet 1 Lloyd's Rep. 837, upheld by the Court of Appeal [2000] 1 Lloyd's Rep. 211; [2000] C.L.C 515, 19. Memorandum for the Claimants 10

18 [17] The defence submits that as exhibited in the facts 19 there was no requisite intention to take delivery 20. Furthermore, there existed a clear dispute between the buyers and sellers; hence it was unclear which party had the rightful title to goods. The carrier is not required to inquire into the true owner of the goods. In the present situation it was in the defence s legitimate interest 21 to deliver the goods against indemnity. An indemnity stems from the desire to avoid the unjust enrichment of one wrongdoer at the expense of another. 22 It is a duty to make good any loss, damage or liability incurred by another or alternatively the right of an injured. 23 Such contractual communication protects the carrier from being held for damages if a cause of action arises from wrongful delivery. As such interest is legitimate it has not put the claimants in jeopardy or deprived them of their right. Hence a clear cause of action lies against the seller, if they truly are the lawful holders of the bill of lading. 3.5.There was no breach of contract of carriage on the part of Respondents. [18] In consideration of all contentions above, the Respondent being a common carrier undertaking to carry goods of any person willing to pay their charges 24, have a right to invoke the express exemption clause in the contract of carriage against its absolute liability towards Aardvark RESPONDENTS ARE NOT LIABLE FOR THE TORT OF CONVERSION. [19] Carriers were legally justified in altering the port of discharge and in delivering the goods to Beatles Oils & Fats and hence are not liable for the tort of conversion. 19 Fact file, Agean Sea Traders Corp v. RespolPetroleo S.A. (The Agean Sea) [1998] 2 Lloyd's Rep White and Carter (Councils) Ltd v. Mcgregor 1962 AC 413, Gorman Francis J, Indemnity and Contribution under Maritime Law, Tulane Law Review, Vol. 55, Issue 4, ,, 55 Tul. L. Rev ( ). 23 Black's Law Dictionary (9th ed. 2009). 24 Simon Baughen, SHIPPING LAW,(Cavendish Publishing Limited, 2004). 25 The Glendarroch (1894) P. 226, M. L. Hendrikse, N. H. Margetson, N. J. Margetson, ASPECTS OF MARITIME LAW, Kluwer Law International, (2008), 103; Stephen Girvin, CARRIAGE OF GOODS BY SEA, Oxford University Press, (2007). Memorandum for the Claimants 11

19 4.1.Respondents were Justified in delivering Cargo to Beatles Oils & Fats. [20] Beatles Oils & Fats issued a letter of indemnity to the respondents, 26 as charterers they were not prevented from ordering delivery of the cargo without production of the bill of lading in the particular circumstance where they were entitled to the possession of cargo. 27 Hence the respondents were justified in delivering the cargo to Beatles Oils & Fats, since they possessed the title to goods as true owners Respondents were not in breach of their duties as a bailee. [21] Breach of the duty imposed by bailment occurs when an act encroaching upon the rights of the owner 29 is committed by the bailee. The duty of a bailee towards the bailor emanates from the latter s right to possess the cargo. 30 Claimants conducted in a manner that the carriers reasonably assumed that they had abandoned the cargo, 31 thus absolving them of any duty towards the claimants under the terms of bailment Respondent s Act of Delivery was Lawfully Justified. [22] To prove tort of conversion an act without lawful justification has to be committed by the bailee upon the goods owned by the bailor. 32 The act of delivery of cargo in the instant case by the Respondents although was justified since the Claimants had agreed on altering the destination of the cargo from Liverpool to Rotterdam. 33 Moreover the Respondents were legally justified in altering the port of discharge on request of the charterers when practicable. 34 Since the respondents were reasonably satisfied with the 26 Fact file, Kuwait Petroleum Corp. v.i & D Oil Carriers (The Houda) [1994] 2 Lloyd s rep. 541;Ltd. v. Rambler Cycle Co. Ltd. [1959] 2 Lloyd s Rep See also Mobile Shipping Co. v. Shell Eastern Petroleum Ltd (The MobileCourage) [1987] Lloyd s rep Fact file, Kuwait Airways Corp. v. Iraqi Airways Co (No. 6) [2002] 2 A.C MCC Proceeds Inc v Lehman Bros International (Europe) [1998] 4 All E.R. 675 at 686 CA. 31 Fact file, 33, 34; Paal Wilson & Co.A/S v. Partenreederei Hannah Blumenthal [1983] 1 AC MCC Proceeds Supra n Fact file, Fact file, Memorandum for the Claimants 12

20 title of the sellers to the cargo, 35 it appeared practicable to them to discharge the goods at Rotterdam without the production of bills of lading RESPONDENTS ARE EXEMPTED FROM LIABILITY ARISING OUT OF THE EVENT OF PIRACY. [23] The incidence of piracy, which changed the status of cargo from GMQ to non GMQ goods, cannot be attributed to the Respondents. The applicability of exemption clauses under Article IV of the H(V)R 37 absolves the Carriers of any liability since they were diligent during the course of shipment. 5.1.Respondents exercised due diligence and were not negligent in carrying, stowing or handling of the goods Respondents had no knowledge about the measure, quality, condition, content and value of the goods. [24] The Respondents were unaware of the weight, measure, quality, quantity, conditions, contents and value of the cargo being loaded on the vessel. 38 The Carriers responsibility not fixated to a particular standard 39 varies in accordance with the voyage and conditions so expected to meet. Respondents being unaware of the material information about the cargo cannot be expected to employ cargo care measures which would have been expected of the carrier who possesses substantial knowledge about the cargo Heating of the cargo was not a specified cargo care measure in the Tanker Voyage Charter Party. [25] Sub clause (a) of Clause 16 of the Taker Voyage Charter Party states that, Notwithstanding any other provisions herein the Owner shall not be responsible if 35 Refer to Argument 1.1: Title to Goods. 36 SA Sucre Export v. Northern River Shipping Ltd. (The Sormovskiy) [1994] 2 Lloyd s Rep THE HAGUE VISBY RULES Fact file, 16, 18, BungaSeroja, [1991] 1 Lloyd s Rep. 512 at 91, Albacora S.R.L. v. Westcott &Laurance Line, Ltd, [1996] 2 Lloyd s Rep Memorandum for the Claimants 13

21 temperatures are not maintained by reason of any cause beyond the Owner s control. Piracy is an act that is outside the control of the carrier and thus he has no physical hold on the situation. 41 Moreover piracy is an accepted ground to exempt the liability of the carrier under sub clause (e) of Article IV of H(V)R. 42 Further sub clause (b) of the Tanker Voyage Charter Party categorically states that unless agreed to in writing by Owner, the vessel is not under any obligation to heat the cargo. As has been made explicit by the facts of the case there were only carrying instructions so received by the crew of the vessel and no written agreement on the heating of the cargo and hence the Respondents were under no obligation to heat the cargo at any time during the voyage, captivity or after its release from the captivity to its way to Fujairah Exemption clause in the charter-party absolves the Respondents of their liability in the event of piracy. [26] Under the Bill of Lading, the contract was to carry with reasonable care unless prevented by the excepted peril. The General Exceptions Clause further mentions under sub clause (a) neither the Vessel, her Master nor Owner shall be responsible for any loss of or damage arising or resulting from act of war; act of public enemies, pirates or assailing thieves et al Thus there exists documentary proof that the Respondents were not to be made liable in case the goods were taken over or ceased by the pirates. Further sub clause (b) of the Exceptions Clause states that Neither the Vessel nor the Owner shall be made liable for loss or damage due to contamination, deterioration etc unless there is negligence on the part of the vessel. 44 The cargo was not broached during the period of its captivity, furthermore during captivity no maintenance or inspection on deck was 41 Cosco Bulk Carrier Co Ltd v Team-Up Owning Co Ltd [2010] EWHC Russell v. Niemann, (1864) 17 CB (N.S) Fact file, Photo Production Ltd. v Securicor Transport Ltd., [1980] AC 827. Memorandum for the Claimants 14

22 allowed whatsoever, 45 thus negating in essence the argument of lack of due diligence by the claimants Respondents have successfully discharged burden of proof required to seek exemption under sub clause e, f and q of Art IV of H(V)R Sub clause (e) and (f) of Article IV of H(V)R are applicable since the Respondents were not negligent. [27] Even assuming that the change of status of goods from GMQ to non GMQ caused some loss to the Claimants, the same can be attributable to the event of piracy and not to the negligence of the Carriers. 46 When a loss due to the event of piracy has been proven the ship owners are relieved of the burden of proving that the loss was not caused by their negligence, 47 thus making sub clause (e) and (f) operative since the loss so occasioned was due to event of piracy and not due to the negligence of the Respondents The loss occasioned by piracy is exempted under sub clause (q) of Art IV of H(V)R. The carrier to avail of the benefit of the exemption under clause (q) the carrier should be aware of the actual cause that caused damage in the case, whatever that might be. 49 Respondents having proved that the loss so occasioned to the claimants had been the result of piracy and not because of the fault or privity of the carriers themselves or their servants, 50 can avail the benefit of this catch all exemption clause. Further the incident of piracy being 45 Fact file, , Fact file, 38, Czech v. General Steam Co. (1867) L.R. 3 C.P. 14 as cited in Ismail v. Polish Ocean Lines, (1975) Vol. 2 Q.B. (Com. Ct.) See submission Pendle & Rivett, Ltd v. Ellerman Lines, Ltd, 29 L.L.L.Rep. 133, 136 and Quaker Oats v. M/V Torvanger, 734 F.2d Goodwin, Ferreira & Co Ltd. v. Lamport& Holt Ltd. (1929) 34 LIL 192. Memorandum for the Claimants 15

23 wholly uncontrollable in nature could not have been prevented by the Respondents thence making their reliance on the afore-stated sub clause valid and enforceable. 51 H. DAMAGES Respondents are not entitled to damages as they have suffered no injury to their property. [30] According to the principle of res perit domino, only an owner of a property can suffer actual losses for any damages caused to it. As has already been submitted by the Respondents, Claimants did not have any property in the Cargo [ 3 ]. Therefore they cannot claim any damages arising from its non-delivery, misdelivery or degradation in its quality or value. [31] In absence of any actually damage that has occurred, the contractual breaches, if any, established by the Claimants are only answerable to claims of nominal damages. There was no damage caused to the Cargo due to their conversion from GMQ to non-gmq. [32] Assuming but not accepting that the Cargo lost its GMQ status because of the acts and omissions of the Respondents, no material damage had occurred to the Cargo as there was no difference in the market value between GMQ and non-gmq PDAF in Liverpool for the months of March and April of Further, the sub- buyers of the Claimants were also willing to buy non-gmq PDAF under their sale contracts with the Claimants. 53 Therefore the Claimants did not suffer any damages because of the Cargo losing its GMQ status. 51 Quaker Oats v. M/V Torvanger, 734 F.2d, Fact file, Fact file, 60, 61. Memorandum for the Claimants 16

24 The Respondents are only responsible for the transshipments cost to carry the Cargo to Liverpool form Rotterdam. [33] In the arrest proceedings initiated by the Claimants against the Respondents before the Dutch Courts, the Courts assessed the value of Cargo and legal costs incurred by the Claimants to be USD 1.4 million. The Bank guarantee of the same amount has already been furnished by the Beatles, on behalf of the Respondents, in favour of the Claimants. Respondents therefore contend that under the current proceedings they are only responsible for transhipment costs of the Cargo to make good the losses, if any, suffered by the Claimants due its delivery at Rotterdam instead of Liverpool. The freight charges for the relevant route prevalent in or about March, 2009 was USD 30 per mt. Therefore under the current proceeding the Respondents should only be found liable for USD( 30x4000) i.e. USD 120, 000 I. PRAYER FOR RELIEF For all the reasons submitted above, the Respondents respectfully requests this arbitral panel to: DECLARE and ADJUDGE that: a) The Respondents were not negligent in carrying out cargo care measures. b) That the Respondents were not responsible for the conversion of the GMQ to non- GMQ status of the PDAF. c) The Respondents are not liable to the Claimants for the non- delivery of the 4000 mt of PDAF d) The Respondents are not liable to the Claimants for delivering the cargo of 4000 mt, against a Letter of Indemnity to Beatles. Memorandum for the Claimants 17

25 e) The Respondents are not liable to the Claimants for any damages whatsoever, as the Claimants had no preprimary interest in the Cargo which is the subject matter of these proceedings Alternatively The respondents are only liable for USD 120, 000 under the present proceedings as the Respondents Owners have already furnished a Bank Guarantee of USD 1.4 million before the Dutch Courts to the Claimants towards their Cargo claims and legal costs. - On Behalf of the Respondents - Memorandum for the Claimants 18