18 TH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT, 2017 TEAM NO: 13 MEMORANDUM FOR RESPONDENT ON BEHALF OF: AGAINST: RESPONDENTS CLAIMANTS

Transcription

1 18 TH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT, 2017 TEAM NO: 13 MEMORANDUM FOR RESPONDENT ON BEHALF OF: AGAINST: INFERNO RESOURCES SDN BHD and FURNACE TRADING PTE LTD IDONCARE BERJAYA UTAMA PTY. LTD. RESPONDENTS CLAIMANTS COUNSEL SERAY ELİF CEMRE EDİP BATURAY TOLGA RÜSTEM KAĞAN KAYA EKİZ YALÇIN ÖZKAN OKTAYKAAN

2 TABLE OF CONTENTS ABBREVIATIONS... IV LIST OF AUTHORITIES... VI STATEMENT OF FACTS... 1 ARGUMENTS ON JURISDICTION... 2 I. FURNACE TRADING PTE LTD v. INFERNO RESOURCES SDN BDH... 2 A. The tribunal has jurisdiction to determine RESPONDENT I s defence and CLAIMANT s pleading... 2 B. The tribunal does not have jurisdiction or power to grant liberty to CLAIMANT to sell the cargo... 4 II. FURNACE TRADING PTE LTD v. IDONCARE BENJAYA UTAMA PTY LTD... 5 A. The Tribunal does not have jurisdiction to determine RESPONDENT II s defence and CLAIMANT s pleading for damages arising from the breach of contract under the Voyage Charterparty... 5 B. Nonetheless RESPONDENT acknowledges jurisdiction of the Tribunal based upon implied arbitration agreement in compliance with Singapore International Arbitration Act... 6 ARGUMENTS ON MERIT... 8 I.RESPONDENT I DOES NOT OWE FREIGHT TO CLAIMANT... 8 A. CLAIMANT unlawfully terminated the Voyage Charterparty, claiming RESPONDENT I is in repudiatory breach... 9 II.RESPONDENT I FULFILLED ITS OBLIGATION TO NOMINATE A VALID DISCHARGE PORT... 9 A. Busan can be nominated due to congestion on listed ports on Voyage Charterparty B. Busan is a safe port C. Even if Busan nomination is invalid, the Ningbo nomination is a valid nomination III. CLAIMANT IS NOT ENTITLED TO CLAIM DAMAGES FOR DETENTION A. Laytime has not started running because of CLAIMANT s non-compliance to nominated discharge port; therefore, it is not entitled to damages for detention B. Even if damages for detention can be demanded by RESPONDENT I, it cannot be calculated by reference to the demurrage rate IV.CLAIMANT IS NOT ENTITLED TO LIEN OVER CARGO THEREFORE THE EXERCISE OF LIEN IS VOID AND UNLAWFUL A. CLAIMANT is not a party to the B/L and no charterers bill of lading was issued B. The charterparty incorporated to the B/L can only be the Time Charterparty C. CLAIMANT has no possession over the cargo on board thus is not qualified to lien over the cargo V.CLAIMANT S ACT OF NOT DISCHARGING THE CARGO ON BOARD IS UNLAWFUL VI. CLAIMANT DID NOT EXERCISE A VALID LIEN OVER SUB-FREIGHT TO BE PAID BY RESPONDENT II A. CLAIMANT has no contractual right to lien on sub-freight II

3 a. No contractual right to lien on sub-freight arises from the Voyage Charterparty b. No contractual right to lien on sub-freight which CLAIMANT can exercise arises from Time Charterparty B. No equitable assignment has been made by RESPONDENT I to CLAIMANT C. CLAIMANT is not the creditor under the B/L VII. EVEN IF THE TRIBUNAL HAS JURISDICTION TO GRANT LIBERTY TO THE CALIMANT TO SELL THE CARGO, THE CONDITION OF NECESSITY IS NOT SATISFIED VIII. COSTS AND EXPENSES RELATED TO SALE OF CARGO ON BOARD AND EXERCISING LIEN A. Costs of the arbitration and interests on sale of cargo B. Costs and expenses incurred as a result of the exercise of the lien REQUEST FOR RELIEF III

4 ABBREVIATIONS B/L cl. CLAIMANT Voyage Charterparty Sub-voyage Charterparty Disponent Owner FURNACE IAA IMLAM INFERNO IDONCARE Lloyd s Law Rep. Master NYPE The bill of lading no. IMOBL X dated 4 October 2016 Clause Furnace Trading Pte Ltd The voyage charterparty between Furnace Trading Pte Ltd and Inferno Resources Sdn Bhd The voyage charterparty between Inferno Resources SdnBhd and Idoncare Berjaya Utama Pty. Ltd. Furnace Trading Pte Ltd Furnace Trading Pte Ltd International Arbitration Act Revised Edition 2002 Imlam Consignorist GmbH Inferno Resources Sdn Bhd Idoncare Berjaya Utama Pty. Ltd. Lloyd s Law Reports Captain Tan Xiao Ming New York Produce Exchange p. Page Para. Record RESPONDENT I RESPONDENT II Paragraph 2017 International Maritime Law Arbitration Moot Scenario Inferno Resources Sdn Bhd Idoncare Berjaya Utama Pty. Ltd. s. Section Shipowner Time Charterer Imlam Consignorist GmbH Furnace Trading Pte Ltd IV

5 Time Charterparty The Vessel USD The time charterparty between CLAIMANT and Shipowner The M.V. TARDY TESSA United States Dollar V

6 LIST OF AUTHORITIES CASES AND ARBITRAL AWARDS REFERRED TO AT PAGE: Acre 1127 Ltd (formerly Castle Galleries) v. De Montfort Fine Art Ltd [2011] EWCA Civ Agnew v. Commissioner of Inland Revenue (Re Brumark Investments Ltd)[2001] U.K.P.C. 28, [2001] 3 W.L.R , 18 Aktieselskabet Olivebank v Dansk Fabrik [1919] 2 K.B Chitty on Contracts, 31st edn (Sweet & Maxwell, 2012), para Cooper Ewing & Co. v. Hamel &Horley (1923) 13 Ll. L. Rep Dakin v. Oxley [1864] 15 CB (N.S.) 646, per Willes J. at pp D Oz International Pte Ltd v PSB Corp Ltd [2010] 3 SLR Feoso (Singapore) Pte Ltd v Faith Maritime Company Limited[2003] 3 SLR (R) , 13 Five Ocean Corporation v Cingler Ship Pte Ltd, [2015] SGHC , 20, 21 Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd ed, Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) (HL) [2003] UKHL 12; [2003] 1 Lloyd's Rep 13 Kodros Shipping Corpn v Empresa Cubana de Fletes (No 2) (The Evia (No 2)) [1983] 1 AC 736 at 756; [1982] 2 Lloyd s Rep 307 at Molthes Rederi v. Ellerman s Wilson Line [1926] 26 Lloyd s Law Rep , 19 Ocean Prime Maritime Ltd Partnership v Qingsao Ocean Shipping Co [2007] EWHC 2796 (Comm); [2008] 1 Lloyd s Rep VI

7 Ocean Projects Inc v Ultratech Pte Ltd[1994] SGCA 64 (CA) 12 Pacific Recreation Pte Ltd v S Y Technology Inc [2008] 2 SLR Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd &Ors (1993) 43 FCR 439, PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA 4 RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appeal [2007] 4 SLR(R) 413 ( RDC Concrete ) 9 Reardon Smith Line v. Ministry of Agriculture, Fisheries and Food, [1962] 1 Q.B. 42 at p Samsun Logix v. Oceantrade [2008] 1 Lloyd s Law Rep Santiren Shipping Ltd. v. Unimarine S.A. (QB). [1981] 1 Lloyd s Rep p. 15 SIB International S.R.L v Metallgesellschaft Corp (the Noel Bay) [1989] 1 Lloyd s Rep. 361 at 366 (CA) 12 Sofial SA v Ove Skou Rederi (the Helle Skou)[1976] 2 Lloyd s Rep Somes v. British Empire Shipping Co. (1860) 8 HR Cas Tagart, Beaton & Co v Fisher& Sons [1903] 1KB The Annangel Glory [1988] 1 Lloyd s Rep The Attika Hope [1988] 1 Lloyd s Rep The Bulk Chile [2013] 2 Lloyd s Law Rep , 19 The Cebu (No 2)[1990] 2 Lloyd s Rep VII

8 The Epic [2000] SGCA The Epsilon Rosa [2002] 2 Lloyd s Rep The Garbis [1982] 2 Lloyd s Rep 283, The Hill Harmony [2001] 1 Lloyd s Rep, p. 147 (HL) 15, 16 The Ikariada [1999] 2 Lloyd s Rep 365, The Mathew [1990] 2 Lloyd s Law Rep The Nanfri [1979] A.C. 757, 784 9, 17, 18 The San Nicholas [1976] 1 Lloyd s Rep 8, 12 (CA) 18 The SLS Everest [1981] 2 Lloyd s Rep 389, (CA) 13 The Spiros C [2000] 2 Lloyd s Law Rep , 19 The Ugland Trailer [1985] 2 Lloyd s Rep , 18 The Western Moscow [2012] 2 Lloyd s Rep Unitramp v. Garnac Grain Co. (The Hermine) [1979] 1 Lloyd s Rep Wehner v Dene Steamship Co [1905] 2 KB 92 18, 19 BOOKS and ARTICLES REFERRED TO AT PAGE: Arms, W. Ray, The Ignition Temperature of Coal, University of Illinois Bulletin, Vol. XIX, Bulletin. 128, p , Bowtle, Graeme, Liens on Sub-Hire and Freight, Lloyds Maritime and Commercial Law Quarterly 18 Baatz et al, Maritime Law (Informa Law, 3rd Ed.,2014) 8 VIII

9 Coglin et al, Time Charters (Informa Law, 7 th Ed., 2014) 17, 18 Cooke et al, Voyage Charters (Informa Law, 4th Ed., 2014) 17 Parr and others, The Spontaneous Combustion of Coal, University of Illinois, Eng. Exp. Sta., Bulletin. 46, p. 50, Profiles, Propensity of Coal to Self-Heat, International Energy Agency Clean Coal Centre, p Stewart C Boyd and others, Scrutton on Charterparties and Bills of Lading (Sweet and Maxwell, 21st Ed., 2008) 14, 18 Tham, Chee Ho, Notice of Assignment and Discharge by Performance, Lloyd's Maritime and Commercial Law Quarterly, p STATUTES AND CONVENTIONS REFERRED TO AT PAGE: International Arbitration Act 2, 3, 4, 5, 6, 7 UNCITRAL Model Law on International Commercial Arbitration 2, 3, 6,7 SCMA Rules 3, 23 IX

10 STATEMENT OF FACTS 1. Inferno Resources Sdn Bhd (RESPONDENT I) concluded a voyage charterparty with Furnace Trading Pte Ltd (CLAIMANT) on 1 September 2016 for carriage of 80,000 mt 10% MOLOO Australian Steam Coal. Subsequently, concluded a sub-voyage charterparty with Idoncare Berjaya Utama Pty. Ltd. (RESPONDENT II). 2. The Master issued the B/L dated 4 October 2016 consigned To order which on the reverse of the B/L incorporates all terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf. The B/L refers on its face to Freight payable as per charterparty dated but no charterparty has been identified. 3. CLAIMANT issued Invoice No. 1002/2016 to Inferno on 4 October 2016 for a sum of USD771, due under the Voyage Charterparty on the basis Shang Hai would be the discharge port. 4. CLAIMANT requested nomination for discharge port from RESPONDENT I, starting from 11 October RESPONDENT I nominated Busan on 16 October 2016 but CLAIMANT refused this nomination. On 21 October 2016 Ningbo nomination is made. Within that period, RESPONDENT I did not pay freight to CLAIMANT and RESPONDENT II did not pay sub-freight to RESPONDENT I. 5. A lien was exercised by CLAIMANT over the cargo on board and the sub-freights under the Voyage Charterparty on 20 October Subsequently the nomination of Ningbo was made on 21 October CLAIMANT terminated the Voyage Charterparty on 22 October On 25 November 2016, CLAIMANT sent notice of arbitration to RESPONDENTS and the two arbitrations were consolidated forthwith into one arbitration proceeding on 1 December

11 ARGUMENTS ON JURISDICTION I. FURNACE TRADING PTE LTD v. INFERNO RESOURCES SDN BDH A. The tribunal has jurisdiction to determine RESPONDENT I s defence and CLAIMANT s pleading 1. According to the doctrine of competence-competence, the Tribunal has power to determine its own jurisdiction 1 with its own interpretation of the arbitration agreement 2 signed between RESPONDENT I and CLAIMANT in compliance with the applicable law stated in that agreement 3. Both parties agreed on the law of Singapore as the governing law of the Voyage Charterparty, dated 1 September 2016, and any dispute arising out of or in connection therewith According to Singapore International Arbitration Act (IAA) Section 5.1, this Act shall apply only to international arbitration which, pursuant to IAA Section 5.2.a, exists if at least one of the parties to such arbitration agreement at the time of the conclusion of the agreement has its place of business in any State other than Singapore. RESPONDENT I s place of business is in Malaysia and CLAIMANT s place of business is in Singapore. 5 Therefore, IAA shall apply to this dispute. 3. According to IAA Section 3, UNCITRAL Model Law, with the exception of Chapter VIII related to recognition and enforcement of award, has the force of law in Singapore. Unless otherwise agreed by the parties and the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it, either party may amend or supplement its claim or defense during the course of the arbitral proceedings. 6 Parties to the Voyage Charterparty did not prohibit the expansion of claims in regard to Article 23.2 of the Model Law. Thus, RESPONDENT I is entitled to amend or supplement its claims during the course of the arbitral proceedings. 1 International Arbitration Act (Chapter 143A), s.3; UNCITRAL Model Law on International Commercial Arbitration, Article 16(1); International Arbitration Act (Chapter 143A), s Record p.23, 25, International Commercial Arbitration; Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd & Ors [1993] 43 FCR 439, 444 (French J). 4 Record p Record p UNCITRAL Model Law on International Commercial Arbitration, Article 23(2). 2

12 4. The Tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute. 7 Any designation of the law or legal system of a given State shall be construed, unless otherwise expressed, as directly referring to the substantive law of that State and not to its conflict of laws rules. 8 Therefore, clause 29 of Voyage Charterparty shall be read as referring only to substantive law and not to the conflict of laws rules of Singapore. 5. Parties of Voyage Charterparty entered into an arbitration agreement in the form of an arbitration clause. 9 The exchange of s containing the fixture recap dated 1 September 2016 between RESPONDENT I and CLAIMANT 10 is within the scope of IAA Section 2A.10 referring the scope of electronic communication. In addition to that, the written form requirement satisfied is in accordance with IAA Section 2A.5 with the medium of electronic communication. Therefore, the arbitration agreement between the parties is a valid one. 6. Place of arbitration is not stated in the fixture recap concluded between CLAIMANT and RESPONDENT I. According to Singapore Chamber of Maritime Arbitration Rules Rule 22.1, unless otherwise agreed by the parties, the juridical seat of arbitration shall be Singapore. Where the seat of the arbitration is Singapore, the law of the arbitration under these Rules shall be Singapore law. Thus, place of arbitration is Singapore and the law that governs the arbitration procedure is the law of Singapore including IAA and the Model Law. 7. According to clause 29 of Voyage Charterparty 11 the law of Singapore is the governing law and any dispute arising out of or in connection with Voyage Charterparty shall be referred to arbitration. Even though parties did not specify the place of arbitration, with agreement on application of SCMA Rules to procedure of arbitration the place of arbitration is Singapore by default. 8. For the above reasons, it is submitted that the Tribunal has jurisdiction to determine RESPONDENT I s defense and CLAIMANT s pleading. 7 UNCITRAL Model Law on International Commercial Arbitration, Article UNCITRAL Model Law on International Commercial Arbitration, Article 28(1). 9 International Arbitration Act (Chapter 143A), s.2a. 10 Record p.20, 21, 22, Record p.23. 3

13 B. The tribunal does not have jurisdiction or power to grant liberty to CLAIMANT to sell the cargo 9. According to Section 2 of IAA, award is a decision of the arbitral tribunal on the substance of the dispute and includes any interim, interlocutory or partial award but excludes any orders or directions made under s.12 which is related to the powers of the Tribunal on making orders or giving directions to the Parties. 10. According to Section 12.6 of IAA, all orders or directions made or given by the Tribunal in the ongoing process of arbitration are subject to the leave of the High Court or a judge in order to be enforceable in the same manner as if these orders or directions were given by a court. 11. The distinction between award in Section 2 of IAA and orders or directions made pursuant to Section 12 of IAA lies in the relation between substance matter and procedure matter. Orders or directions itemized in Section 12 of IAA shall be related with procedural matters or protective injunctions which shall be completely excluded from the extent of the substantive matter and not have attributes of an award defined under Section 2 of IAA. The substance of an interim measure, and not the label given to that interim measure by the Tribunal, shall be a determining criterion on whether such order or direction is an interim measure or not. 12 The application of CLAIMANT for liberty to sell the cargo on board provided by an order with the attribute of irreversibility and irreparability clearly introduces the nature of such order that is related to the merits. Seeking liberty to sell the cargo on board by CLAIMANT in this present case, whether the Tribunal labels such order as interim measure or not, shall be deemed as an award, although interim measure shall not be prejudgment on substantive matter. Due to the close relation with substantive merits, the order of liberty to sell the cargo on board shall be given at the end of the arbitral proceedings. Therefore, such order is not within the scope of Section 12 of IAA and the Tribunal does not have jurisdiction to order such interim relief. 12 PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA. 4

14 12. Additionally, even if the Tribunal gave such order with attributes of an award under Section 2 of IAA providing liberty to sell the cargo, Section 24.b of IAA states that the High Court may set aside the award of the Tribunal if a breach of rules of natural justice occurs in connection with the making of the award by which the rights of any party may have been prejudiced. Therefore, ordering such interim relief with the possibility of being set aside by the High Court or in addition refusing leave given by High Court, will extend the time needed for arbitral proceeding and cause a breach of the right to fair trial of RESPONDENT I. Besides ordering such interim relief will be detrimental to procedural economy. II. FURNACE TRADING PTE LTD v. IDONCARE BENJAYA UTAMA PTY LTD A. The Tribunal does not have jurisdiction to determine RESPONDENT II s defence and CLAIMANT s pleading for damages arising from the breach of contract under the Voyage Charterparty 13. In the notice of arbitration dated 25 November 2016, CLAIMANT claims that clause 29 of Voyage Charterparty signed between CLAIMANT and RESPONDENT I entitles it to refer such dispute to arbitration. 13 However this arbitration agreement defined in Section 2A of IAA as an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship was formed by CLAIMANT and RESPONDENT I; therefore, only those parties are bound by this contract. The arbitration agreement in the form of an arbitration clause in Voyage Charterparty between those parties shall be considered enforceable only for the contracting parties and does not put RESPONDENT II in a legal relationship with CLAIMANT. 14. According to Section 2A.8 of IAA a reference in a bill of lading to a charter party, as present in this case, shall constitute an arbitration agreement in writing if the reference is such as to make that clause part of the bill of lading. With consideration that such reference stated in the B/L 14 is validly 13 Record p Record p.42. 5

15 incorporates the arbitration clause 15 set forth in Voyage Charterparty, such arbitration agreement shall be effective only between RESPONDENT II and the carrier, IMLAM. Therefore, where such arbitration clause is enforceable only between the carrier and RESPONDENT II the incorporation of arbitration agreement set forth in the overleaf of the B/L shall not be deemed as an arbitration agreement concluded between CLAIMANT and RESPONDENT II. 15. For the foregoing reasons, the Tribunal does not have jurisdiction to determine RESPONDENT II s defence and CLAIMANT s pleading for damages arising under Voyage Charterparty. B. Nonetheless RESPONDENT acknowledges jurisdiction of the Tribunal based upon implied arbitration agreement in compliance with Singapore International Arbitration Act 16. According to Singapore International Arbitration Act (IAA) Section 5.2.a, IAA shall apply only for international arbitration which exists if at least one of the parties to such arbitration agreement at the time of the conclusion of the agreement has its place of business in any State other than Singapore. In accordance with IAA Article 3, UNCITRAL Model Law, with the exception of Chapter VIII related to recognition and enforcement of awards has the force of law in Singapore. The place of business of RESPONDENT II is in Australia and the place of business of CLAIMANT is in Singapore. 16 Therefore, IAA and the Model Law shall apply to this dispute. 17. According to IAA Section 2A.6 where in any arbitral or legal proceedings a party asserts the existence of an arbitration agreement in a pleading, statement of case or any other document in circumstances in which the assertion calls for a reply and the assertion is not denied, there shall be deemed to be an effective arbitration agreement as between the parties to the proceedings. Accordingly, the fact that RESPONDENT II did not challenge the jurisdiction of the Tribunal and responded to the notice of arbitration sent by CLAIMANT on 25 November 2016 would constitute the conclusion of an implied arbitration agreement between the parties as per IAA Section 2A Record p.23, 25, Record p.71. 6

16 Therefore, the Tribunal has the jurisdiction to determine RESPONDENT II s defense and CLAIMANT s pleading. 18. In response to the notice of arbitration, RESPONDENT II s acknowledgment on jurisdiction of the Tribunal shall be deemed as an implied arbitration agreement. However, the applicable law was not specified in the response to notice of arbitration of RESPONDENT II. According to the Model Law Article 28.2, failing any designation by the parties, the Tribunal shall apply the law determined by the conflict of laws rules which it considers applicable. Parties of this implied arbitration agreement did not explicitly choose the governing law for the subject matter. In addition where the applicable law has to be determined, foreign law is regarded as a fact which needs to be proved under the common law. 17 As a rule of convenience, in the absence of proof of foreign law 18, Singapore law shall be applied by default. 19 RESPONDENT II did not set forth any foreign law that should apply to this dispute; therefore, the law applicable to the disputes arising between CLAIMANT AND RESPONDENT II shall be the law of Singapore. 19. In addition to the foregoing, according to the doctrine of competence-competence, the Tribunal has power to determine its own jurisdiction 20 with its own interpretation of the implied arbitration agreement between RESPONDENT II and CLAIMANT in compliance with the law of Singapore. 20. Finally, according to IAA Section 3, UNCITRAL Model Law, with the exception of Chapter VIII related to recognition and enforcement of award, has the force of law in Singapore. Unless otherwise agreed by the parties and the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it, either party may amend or supplement his claim or defence during the course of the arbitral proceedings. 21 Parties of the implied arbitration agreement did not prohibit the expansion of claims in regard to Article 23.2 of the Model Law. 17 Pacific Recreation Pte Ltd v S Y Technology Inc [2008] 2 SLR ibid. 19 D Oz International Pte Ltd v PSB Corp Ltd [2010] 3 SLR UNCITRAL Model Law on International Commercial Arbitration, Article 16(1); International Arbitration Act (Chapter 143A), s UNCITRAL Model Law on International Commercial Arbitration, Article 23(2). 7

17 Thus RESPONDENT II is not bound by the claims set forth either herein or in the response to the notice of arbitration and reserves the right to amend and supplement its claims. ARGUMENTS ON MERIT I.RESPONDENT I DOES NOT OWE FREIGHT TO CLAIMANT 21. RESPONDENT I has the obligation to pay freight according to the Voyage Charterparty 22 but in order for CLAIMANT to earn freight, CLAIMANT must also fulfill its obligations arising from Voyage Charterparty. If not otherwise agreed, in order to earn freight, owner or disponent owner must carry the cargo to the destination provided in the charterparty and be ready to deliver it there. 23 A distinction must be drawn between the time which freight becomes due and the time it is payable. 24 In the present case only the time of payment of freight is agreed which is within five (5) banking days after completion of loading and signing/releasing B/Ls, in any case BBB The principle on earning of freight has not been changed by the parties, CLAIMANT nevertheless has to carry the cargo to the destination provided and ready to deliver it there. CLAIMANT, did not divert the ship to the port which was nominated by RESPONDENT I, claiming the nomination was invalid. 26 As explained comprehensively below, 27 the nomination of discharge port made by RESPONDENT I is valid. Hence, the failure and unwillingness of CLAIMANT to perform its obligation to carry to cargo to the destination provided is its own fault and prevents it from earning the freight contracted for. This also causes its termination of Charterparty to be unlawful given that RESPONDENT I does not owe any freight and certainly not in breach of Voyage Charterparty. (A) 22 Record p. 22, cl Dakin v. Oxley (1864) 15 C.B. (N.S.) 646, per Willes J. at pp Maritime Law, p Record p. 22, cl Record p Memorandum for Respondent, para

18 A. CLAIMANT unlawfully terminated the Voyage Charterparty, claiming RESPONDENT I is in repudiatory breach 23. CLAIMANT terminated the Voyage Charterparty unlawfully, claiming RESPONDENT I has failed to pay freight and is in repudiatory breach of the Voyage Charterparty. 28 The contractual terms can be categorized as; condition terms, warranties and innominate terms. 29 One way for a breach to give right to terminate the charterparty, the guilty party must be in breach of a condition term CLAIMANT did not earn freight, 31 thus RESPONDENT I is not in breach of Voyage Charterparty. Even if it did, failure to pay freight cannot be deemed as a breach of a condition term. A condition term must be understood as, whether the intention of the parties to the contract was to designate that term as one that is so important that any breach would entitle the innocent party to terminate the contract.. 32 The clause on freight in the Voyage Charterparty is not drafted in such a manner that if breached, the innocent party would have the right to terminate the Voyage Charterparty, the term does therefore not allude to a condition. RESPONDENT I consistently provided that it was willing to perform its obligations under Voyage Charterparty and always has performed, therefore the termination of CLAIMANT is unlawful. II.RESPONDENT I FULFILLED ITS OBLIGATION TO NOMINATE A VALID DISCHARGE PORT 25. Although RESPONDENT I has the obligation to nominate a discharge port which is listed in the Voyage Charterparty, 33 Busan nomination as a discharge port is a valid nomination. Due to congestion at the listed ports, these ports became unsafe which made the Busan nomination necessary. It is submitted that (A) Busan is a safe port (B) therefore, RESPONDENT I fulfilled its obligation to nominate a valid discharge port. Without prejudice to our previous arguments, even if 28 Record p Federal Commerce & Navigation Co Ltd v Molena Alpha Inc (The Nanfri) [1979] A.C RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appeal [2007] 4 SLR(R) 413 ( RDC Concrete ), 31 Memorandum for Respondent, para RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appeal [2007] 4 SLR(R) 413 ( RDC Concrete ) 33 Record p.22. 9

19 Busan cannot be considered as a valid nomination, in any case the nomination of Ningbo as the discharge port is valid and on time. (C) A. Busan can be nominated due to congestion on listed ports on Voyage Charterparty 26. The safe port warranty is expressly stated in Voyage Charterparty. 34 Although RESPONDENT I is under the obligation to nominate one of the ports listed in cl.16 of the Voyage Charterparty as a discharge port, 35 if these ports become unsafe for any reason before nomination, RESPONDENT I has to nominate a safe port. 36 Even though congestion does not in principle render a port unsafe, if it would frustrate the object of the charter, then the port will be considered as such. 37 The present case is an example illustrating such exception. CLAIMANT persistently demanded RESPONDENT I to nominate a discharge port, 38 therefore it was obvious from the correspondence with CLAIMANT that any delay in the course of the voyage would not be tolerated by them. Congestions at Chinese ports would be likely to delay the discharge of the goods considerably. Therefore, RESPONDENT I had to nominate a port other than listed ones. 27. Congestion was of the nature to frustrate the object of the Voyage Charterparty. Thus, in the present case, congestion makes the Chinese ports unsafe, which means that Busan can be nominated as a discharge port. B. Busan is a safe port 28. The safe port warranty is expressly stated in Voyage Charterparty. 39 Busan is a safe port, thus, CLAIMANT s refusal of Busan port due to its not being safe is unlawful. The promise of nominating a port that is safe means that the port shall prospectively be safe when the ship will be using the port to discharge the goods; the port does not have to be safe at the time when the 34 Record p Record p Reardon Smith Line v. Ministry of Agriculture, Fisheries and Food, [1962] 1 Q.B. 42 at p. 110, Even where the charterer and owner have agreed on all the ports from which the charterer is to make his choice, the charterer is nevertheless obliged to nominate a port which it is possible for the ship to reach. 37 Unitramp v. Garnac Grain Co. (The Hermine) [1979] 1 Lloyd s Rep Record p Record p

20 nomination is made. 40 The request to nominate Busan was made on 16 October and it was refused by CLAIMANT due to the zombies arriving to Busan. On 17 October 2016, RESPONDENT I repeated this request and by that time the Korean military had already secured the area. 42 The port would have therefore been a safe port when the ship had arrived and used it. Additionally, it was provided that the zombies were travelling to Busan from on a train, therefore it was in any case not certain that they could ever make their way to the port area. Therefore, CLAIMANT s refusal of Busan as the discharge port is unlawful. C. Even if Busan nomination is invalid, the Ningbo nomination is a valid nomination 29. Without prejudice to our previous arguments, even if RESPONDENT I cannot nominate Busan as the discharge port, on 21 October 2016 RESPONDENT I made the nomination of Ningbo which is a port listed in the Voyage Charterparty. 43 CLAIMANT sent an to RESPONDENT I, for giving time to RESPONDENT I to nominate a valid discharge port and that if not its renunciation of the charterparty would be accepted This does not have any legal consequences, since there is no termination clause under the Voyage Charterparty to determine the scope of termination. It is a unilateral declaration of CLAIMANT s intention. Therefore, the nomination of Ningbo would be a valid nomination. 31. Additionally, this nomination has been made on time, since RESPONDENT I is obliged to nominate a discharge port when vessel passes Singapore for bunkering. 45 As far as it is known, the Vessel is drifting outside the port limits of Singapore and did not pass Singapore yet Kodros Shipping Corpn v Empresa Cubana de Fletes (No 2) (The Evia (No 2)) [1983] 1 AC 736 at 756; [1982] 2 Lloyd s Rep 307 at Record p Record p Record p Record p Record p Record p

21 III. CLAIMANT IS NOT ENTITLED TO CLAIM DAMAGES FOR DETENTION A. Laytime has not started running because of CLAIMANT s non-compliance to nominated discharge port; therefore, it is not entitled to damages for detention 32. In order for laytime to start, the ship must be an arrived ship 47 and the notice of readiness must be tendered. The statements of notice of readiness must be accurate and contain that the ship is arrived and ready to discharge, unless otherwise is accepted by the charterers 48 or their agents. 49 In the present case, these conditions were not fulfilled by CLAIMANT, because it did not divert the Vessel to the nominated port, claiming it is an invalid nomination A claim for detention will arise if the charterer s breach causes delay of the voyage. 51 In the present case, RESPONDENT I is not in breach of the Voyage Charterparty because it fulfilled its obligation to nominate a valid discharge port. 52 Therefore, damages for detention cannot be demanded by CLAIMANT. B. Even if damages for detention can be demanded by RESPONDENT I, it cannot be calculated by reference to the demurrage rate 34. Without prejudice to our previous arguments, if RESPONDENT I is entitled to claim damages for detention, demurrage rate stated in Voyage Charterparty, 53 cannot be applied for calculation of damages for detention. If there is an alternative evidence of the earning capacity of the ship, demurrage rate would not be applied for damages for detention. 54 CLAIMANT sent itinerary to RESPONDENT I starting from 10 October 2016 to 21 October 2016 which demonstrates its actual 47 Feoso (Singapore) Pte Ltd v Faith Maritime Company Limited [2003] 3 SLR (R) 556, For a vessel to be an arrived ship, not only must the vessel have arrived at the destination specified in the head charter, she must be both physically and legally ready to discharge her cargo. 48 Sofial SA v Ove Skou Rederi (the Helle Skou)[1976] 2 Lloyd s Rep Ocean Prime Maritime Ltd Partnership v Qingsao Ocean Shipping Co [2007] EWHC 2796 (Comm); [2008] 1 Lloyd s Rep Memorandum for Respondent, para Aktieselskabet Olivebank v Dansk Fabrik [1919] 2 K.B Memorandum for Respondent. Para Record 22. Demurrage rate: 140k PDPR/HDWTS. 54 SIB International S.R.L v Metallgesellschaft Corp (the Noel Bay) [1989] 1 Lloyd s Rep. 361 at 366 (CA). 12

22 damages in the amount of USD101, There is an evidence which shows CLAIMANT s actual damages, thus demurrage rate is inapplicable. 35. Additionally, this calculation of damages cannot be accepted either, since the nomination of Busan as the discharge port is valid. The damages must be calculated starting from the date which the nomination should have been made, until the date which the valid nomination is actually made. Since the valid nomination is made on 16 October 2016, only USD51, can be demanded. 36. Furthermore, a claim for damages might be reduced to a nominal award, if CLAIMANT was unwilling to perform its own obligations. 56 In the present case, CLAIMANT terminated the charterparty, while RESPONDENT I was willing to perform its obligations. 57 CLAIMANT did not discharge the cargo at the nominated port and was not in cooperation with RESPONDENT I. Even though RESPONDENT I was always willing to perform and ready compensate any extra costs which could arise from the Busan nomination, 58 CLAIMANT chose to terminate the Voyage Charterparty. Even if CLAIMANT is entitled to damages for detention, it must be reduced to a nominal award. IV.CLAIMANT IS NOT ENTITLED TO LIEN OVER CARGO THEREFORE THE EXERCISE OF LIEN IS VOID AND UNLAWFUL A. CLAIMANT is not a party to the B/L and no charterers bill of lading was issued 37. CLAIMANT is the disponent owner who has no right under the B/L since the B/L was issued on behalf of the Shipowner to constitute a contract of carriage between RESPONDENT II and IMLAM Both the Voyage Charterparty 60 and the Time Charterparty 61 have no clause giving the Master a right to issue bill of lading on behalf of CLAIMANT and no charterers bill of lading was issued to 55 Record p Acre 1127 Ltd (formerly Castle Galleries) v. De Montfort Fine Art Ltd [2011] EWCA Civ 87, extending Cooper Ewing & Co. v. Hamel & Horley (1923) 13 Ll. L. Rep. 590; Chitty on Contracts, para Record p Record p Feoso (Singapore) Pte Ltd v Faith Maritime Co Ltd, [2003] SGCA 34, p. 41, The SLS Everest [1981] 2 Lloyd s Rep 389, (CA). p.3. 13

23 make CLAIMANT the contractual carrier. The logo or banner and the signature of the Master 62 at the foot of the B/L 63 demonstrate Shipowner as the contractual carrier. Furthermore, even if the fixture recap concluded between CLAIMANT and RESPONDENT I constitutes a written term which modifies the COAL OREVOY Voyage Charterparty, it is only binding for the parties of that charterparty and cannot be enforced as against RESPONDENT II. 64 First, the charterparty incorporated to the B/L is the Time Charterparty. Even if for a moment it can be argued that the Voyage Charterparty is incorporated, the fixture recap cl giving the CLAIMANT a right to allow Master to sign and issue B/L s on behalf of disponent owners would not change the terms of the standard form charterparty. Otherwise, an unknown material to the shipper would have been intended to be incorporated to a document highly transferrable such as bill of lading and this would be incompatible with the commercial life. 66 B. The charterparty incorporated to the B/L can only be the Time Charterparty 39. The B/L refers under special instructions as the freight payable as per Charterparty dated but no charterparty has been identified 67. The B/L as a contract of carriage must give Shipowner a right to exercise lien by incorporating a lien clause either expressly or by reference into the contract 68. Since the charterparty dated left blank on the B/L 69, it can only be the Time Charterparty which the Shipowner party to it Time Charterparty is hierearchly at the top of the charterparty chain, and the Voyage Charterparty is unknown to both RESPONDENT II and the master of the vessel. If the Voyage Charterparty was 60 Record, p.32 cl Record, p.10, cl ICC Uniform Customs and Practice for Documentary Credits (UCP 600), cl.20; Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) (HL) [2003] UKHL 12; [2003] 1 Lloyd's Rep. 63 Record p The Epsilon Rosa [2002] 2 Lloyd s Rep Record p The Epsilon Rosa [2002] 2 Lloyd s Rep Record p Ocean Projects Inc v Ultratech Pte Ltd [1994] SGCA 64 (CA); The Epic, [2000] SGCA English courts reluctant to hold that the incorporation is void. Scrutton, A38/3, p.72; The Garbis [1982] 2 Lloyd s Rep 283, 287; The Ikariada [1999] 2 Lloyd s Rep 365, 372; The San Nicholas [1976] 1 Lloyd s Rep 8, 12 (CA); The SLS Everest [1981] 2 Lloyd s Rep 389, The San Nicholas [1976] 1 Lloyd s Rep 8. 14

24 known to parties the Master of would issue a bill of lading referred under cl.25 Voyage Charterpary. 71 Because, the cl 25 of the standard form Voyage Charterparty clearly stated that Bills of Lading shall be presented and signed by the Master as per the Coal-Orevoybill Bill of Lading form, always in accordance with Mate s Receipts and without prejudice to this charterparty the bill of lading issued must be a COAL OREVOYBILL and the master could reject other forms of bill of lading and CLAIMANT would allege that the charterparty incorporated is the Voyage Charterparty. However, the choice of Shipowners B/L was done willingly as to evidence the Time Charterparty is incorporated. 41. Parties intention was to incorporate a charterparty to the B/L known to them which means that CLAIMANT is not party to the B/L and the Shipowner is not in need to use his rights arising from the B/L. Furthermore, as CALAIMANT is the disponent owner, the issue of incorporation does not change the fact that CLAIMANT is not entitled to enjoy any rights under the B/L. C. CLAIMANT has no possession over the cargo on board thus is not qualified to lien over the cargo 42. Both the contractual carrier and the actual carrier is the Shipowner, meaning CLAIMANT has no possession over the cargo on board thus have no right to lien. The lien on cargo is a defence available to one in possession of a claimant s goods who is entitled at common law or by contract to retain possession until he is paid whatever he is owed. 72 The decision of not discharging the cargo until the sums owed to one in possession of that cargo is a special remedy in maritime law. CLAIMANT -as the Time Charterer- does not have the possession of the cargo. In addition, the physical carrier is also not entitled to lien over cargo since RESPONDENT II does not owe any sums due under any contractual relationship to the Shipowner. Therefore, the lien exercised on the cargo on board was void and the detention of the cargo is unlawful. 71 Record p Santiren Shipping Ltd. v. Unimarine S.A. (The "Chrysovalandou Dyo"), (QB). [1981] 1 Lloyd s Rep p. 7; Five Ocean Corporation v Cingler Ship Pte Ltd, [2015] SGHC 311, p.22; as A contractual lien is in the nature of security and may be defined as a right to retain possession of goods or documents belonging to another until all claims against that other are satisfied. 15

25 V.CLAIMANT S ACT OF NOT DISCHARGING THE CARGO ON BOARD IS UNLAWFUL 43. CLAIMANT as the Time Charterer has the right to employ and direct the Master as long as it fulfills its obligations to the Shipowner. 73 However, the decision of not discharging the cargo on board is not related to the employment but the navigation of the vessel. 74 In the case of The Hill Harmony 75, House of Lords held that charterers right to use the vessel cannot encroach on matters falling within the specialised professional maritime expertise of the master, particularly where safety or security of the vessel, her crew and cargo are involved. 44. The sent by the master to the shipowner reveals that the ship has been kept adrift in open seas, the crew is in need of help and the cargo shows signs of overheating that the cargo may selfignite and explode. 76 In this case the discharge of the cargo is necessary due to the condition of the crew and the cargo at the moment. Since the decision of not to discharge is a concern of seamanship it should be categorized as an order that relate to navigation which does not fall under the rights of the CLAIMANT Furthermore, the right to employ the vessel does not give CLAIMANT the right to detain the cargo belonging to a third party other than his debtor RESPONDENT I. Even if there was a late nomination of discharge port, it would only be a breach of contract between the RESPONDENTS. But for freight owed to CLAIMANT by RESPONDENT I does not give CLAIMANT a right to detain the cargo belonging to a third party, the RESPONDENT II. Rather than using carriers rights under the B/L, other charterparty obligations are only binding for those parties to that charter party. Due to the Shipowner s and CLAIMANT S unlawful detention of the cargo on board the RESPONDENTS damages should be indemnified. 73 Record p The Hill Harmony [2001] 1 Lloyd s Rep, p. 147 (HL). 75 ibid. 76 Record p The Hill Harmony [2001] 1 Lloyd s Rep, p. 147 (HL). 16

26 VI. CLAIMANT DID NOT EXERCISE A VALID LIEN OVER SUB-FREIGHT TO BE PAID BY RESPONDENT II 46. CLAIMANT alleges that a lien on sub-freight has been exercised on 20 October 2016 by a notice of lien on sub-freight 78 and that the dispute arises from the Voyage Charterparty. 79 However, the alleged lien exercised on sub-freight was not lawful. A. CLAIMANT has no contractual right to lien on sub-freight 47. Even though the juridical nature of lien on sub-freight is debatable, 80 it is accepted that the right to lien on sub-freights only exists if the charterparty explicitly grants a right to lien on sub-freights. 81 However, CLAIMANT does not have a right to lien on sub-freights neither under the Voyage Charterparty (a), nor under the Time Charterparty incorporated to the B/L (b). a. No contractual right to lien on sub-freight arises from the Voyage Charterparty 48. CLAIMANT bases its alleged right to lien on sub-freight on the Voyage Charterparty, both in the notice sent on 20 October and in the Notice of Arbitration. 83 However, CLAIMANT has no right under the Voyage Charterparty to lien on sub-freight, and in any case RESPONDENT II is not bound by the Voyage Charterparty. 49. The lien clause under the Voyage Charterparty, gives right to lien only on cargo 84 and not on subfreight. Given that the clause does not expressly give that right, no right to lien on sub-freight arises from the Voyage Charterparty. 78 Record p Record p Agnew v. Commissioner of Inland Revenue (Re Brumark Investments Ltd) [2001] U.K.P.C. 28, [2001] 3 W.L.R. 454; The Ugland Trailer [1985] 2 Lloyd s Rep. 372; The Nanfri [1979] A.C. 757, 784; Tagart, Beaton & Co v Fisher& Sons [1903] 1KB 391; Time Charters Samsun Logix v. Oceantrade [2008] 1 Lloyd s Law Rep. 450.; Agnew v. Commissioner of Inland Revenue (Re Brumark Investments Ltd) [2001] U.K.P.C. 28, [2001] 3 W.L.R. 454; The Ugland Trailer [1985] 2 Lloyd s Rep. 37; Time Charters 30.16; Voyage Charters 17A Record p Record p Record p.31 (a)the owners shall have a lien on the cargo for freight, deadfreight, demurrage and general average contribution due to them under this Charter Party. (b)the Charterers shall remain responsible for deadfreight and demurrage, incurred at port of loading and for freight and demurrage incurred at port of discharge. 17

27 50. Even if Voyage Charterparty were to give CLAIMANT a right to lien on sub-freight, RESPONDENT II is not a party to the Voyage Charterparty, and the Voyage Charterparty was not incorporated to the B/L, 85 thus, RESPONDENT II is not bound by its clauses in any regard. 86 b. No contractual right to lien on sub-freight which CLAIMANT can exercise arises from Time Charterparty 51. As comprehensively explained above 87, the Time Charterparty dated 15 February 2016 was incorporated into the B/L. Although there exists a right to lien on sub-freight in the Time Charterparty, CLAIMANT cannot exercise that right to lien because the clause in the Time Charterparty gives that right only to the Shipowner and not to CLAIMANT The lien clause in the NYPE Time Charterparty gives right to a shipowner to exercise a lien on subfreight in cases where the time charterer fails to make hire payment 89 and can be exercised only in respect of hire already accrued due at the time the sub-freights are liened. 90 However in the present case, all hire payment due under the Time Charterparty has been paid by CLAIMANT. 91 Furthermore, although it is accepted that a lien on sub-sub-freight may be exercised based on that clause, in order to do that back-to-back clauses must exist in the other charterparties in the charterparty chain. 92 Yet, there exists no such clause giving any right to lien on sub-freight in the Voyage Charterparty. 93 The party which could use the right under the lien clause and exercise a lien on sub-freight could only be the Shipowner. Even if the Shipowner tried to exercise its right to lien 85 Memorandum for Respondent, para Memorandum for Respondent, para Memorandum for Respondent, para Record p.10 Liens The Owners shall have a lien upon all cargoes, sub-hires and sub-freights (including deadfreight and demurrage) belonging or due to the Charterers or any sub-charterers, for any amounts due under this Charter Party, including general average contributions...the Owners shall also have a lien over any bunkers on board the Vessel, as well as over any sum due and/or payable to the Charterers under any sub-charter parties. 89 Agnew v. Commissioner of Inland Revenue (Re Brumark Investments Ltd) [2001] U.K.P.C. 28, [2001] 3 W.L.R. 454; Molthes Rederi v. Ellerman s Wilson Line [1926] 26 Lloyd s Law Rep. 259; Wehner v Dene Steamship Co [1905] 2 KB 92; The Ugland Trailer [1985] 2 Lloyd s Rep. 372; The Nanfri [1979] A.C. 757, 784; The Western Moscow [2012] 2 Lloyd s Rep 163.; The Bulk Chile [2013] 2 Lloyd s Law Rep. 38; Time Charters 30.38; Scrutton on Charterparties ibid. 91 Record p.34,36, The Cebu (No 2) [1990] 2 Lloyd s Rep 316.; The Western Moscow [2012] 2 Lloyd s Rep 163.; Time Charters Memorandum for Respondent, para

28 on sub-freight, it could not do so because it has received the hire payment and back-to-back clauses on lien on sub-freight did not exist in the charterparty chain, let alone CLAIMANT exercising a lien on sub-freight. B. No equitable assignment has been made by RESPONDENT I to CLAIMANT 53. The most commonly accepted theory as to the juridical nature of a lien on sub-freight is that it is exercised by way of equitable assignment. 94 It is accepted that the lien clause in the charterparties creates this equitable assignment. 95 In the present case the lien clause in the Voyage Charterparty concluded between RESPONDENT I and CLAIMANT does not make CLAIMANT RESPONDENT I s assignee since it does not include the right to lien on sub-freights. 96 Even if it were to be assumed that an equitable assignment for sub-freights could be done in another way, the assignor should make it clear that it assigns the debt immediately and irrevocably to the assignee. 97 However, in the present case, there are no such statements of RESPONDENT which could serve as an assignment. C. CLAIMANT is not the creditor under the B/L 54. If CLAIMANT were the contractual carrier under the B/L, it would be the party which the freight payment would be made. 98 However, Shipowner clearly is the carrier under the B/L 99, therefore the B/L is an owner s bill. In owner s bills, the creditor for freight payment is the owner. 100 So, only the Shipowner could intercept the B/L freight, 101 but it did not. When an owner s bill is prepared, the charterer cannot exercise the rights under the B/L since it does not have any such rights The Western Moscow [2012] 2 Lloyd s Rep 163.; The Bulk Chile [2013] 2 Lloyd s Law Rep. 38; The Cebu; The Ugland Trailer [1985] 2 Lloyd s Rep. 372; The Cebu [1983] 1 Lloyd s Rep 302; The Annangel Glory [1988] 1 Lloyd s Rep 45; The Attika Hope [1988] 1 Lloyd s Rep 439; The Spiros C [2000] 2 Lloyd s Law Rep. 319.; Lien on Sub-hire and Freight. 95 ibid. 96 Memorandum for Respondent para Notice of Assignment and Discharge by Performance, p The Bulk Chile [2013] 2 Lloyd s Law Rep. 38; Wehner v Dene Steamship Co [1905] 2 KB Memorandum for Respondent para. 38, Wehner v Dene Steamship Co [1905] 2 KB 92; Molthes Rederi v. Ellerman s Wilson Line [1926] 26 Lloyd s Law Rep. 259; The Bulk Chile [2013] 2 Lloyd s Law Rep. 38; The Spiros C [2000] 2 Lloyd s Law Rep The Bulk Chile [2013] 2 Lloyd s Law Rep. 38; Wehner v Dene Steamship Co [1905] 2 KB. 102 The Bulk Chile [2013] 2 Lloyd s Law Rep