MEMORANDUM FOR THE CLAIMANT TEAM NO. 29 Akinteye Ifeoluwa Akinola Disu Damilare Otuyiga Olasunkanmi Azees Oyarinde Isreal Oluwapelumi

Transcription

1 NINETEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2018 OBAFEMI AWOLOWO UNIVERSITY ILE-IFE, NIGERIA IN THE MATTER OF ARBITRATION HELD IN ENGLANDIA Claimant Cerulean Beans and Aroma Ltd. Respondent Dynamic Shipping LLC. The Ship Madam Dragonfly MEMORANDUM FOR THE CLAIMANT TEAM NO. 29 Akinteye Ifeoluwa Akinola Disu Damilare Otuyiga Olasunkanmi Azees Oyarinde Isreal Oluwapelumi

2 TABLE OF CONTENTS LIST OF AUTHORITIES...3 LIST OF ABBRIEVATION...7 STATEMENT OF FACTS...8 PART ONE: JURISDICTION...9 A THIS TRIBUNAL HAS THE POWER TO RULE ON ITS OWN JURISDICTION..9 B.THE BREACH OF THE CHARTER PARTY CONTAINS MATTERS NOT WITHIN THE TECHNICAL KNOWLEDGE OF A MASTER MARINER...9 C. THE AWARD OF THE EXPERT DETERMINATION IS UNLIKELY TO BE ENFORCED BY THE NYC...11 PART TWO: MERITS BREACH OF CHARTER PARTY...12 A.THE RESPONDENT FAILED TO DELIVER THE CARGO AT THE TIME CONTRACTED.12 1.The Respondent Failed to Carry a Chart in Line with Extant Maritime Laws and Practices The Respondent negligently failed to take into consideration NASA s Meteorological Warning The Respondent breached Clauses 8(b) and 15(b) of the Voyage Charter party...15 PART THREE: MARITIME LIEN A. The Claimant has a maritime lien over Madam Dragonfly...17 PART FOUR: DAMAGES AND REBUTTALS A. THE RESPONDENT IS LIABLE TO THE CLAIMANT FOR DAMAGES There is a breach of contract The damage was foreseeable and not too remote The Claimant took steps to mitigate its loss There was no break in the chain of causation...23 B.THE CLAIMANT IS NOT LIABLE FOR PAYMENT OF ANY OF THE COUNTERCLAIMS CLAIMED BY THE RESPONDENT...24 a. The Claimant is not liable for payment of freight...24 b. The Claimant is not liable for payment of agency fees at the port of spectre...25 c. The Claimant is not liable for payment of the cost of repairs to damages caused by Madam Dragonfly...25 d. The Claimant is not liable for payment of the agency fees at the port of Dillamond...25 e. The Claimant is not liable for payment of demurrage and use of electronic access system...26 PRAYER FOR RELIEF...27 Page 2

3 TABLE OF AUTHORITIES: BOOKS C. T. Salomon and P D. Sharp, Chap 10: Damages in International Arbitration, in J. Fellas and J. H. Carter (eds), International Commercial Arbitration in New York (OUP New York 2010) 295. Wagon Mound (No. 1) [1961] AC 388; J. Chitty, H. Beale, Chitty on Contracts, 6th ed., 2008, Ch. 26, paragraph 111. H. McGregor, McGregor on Damages (19th ed. Sweet & Maxwell, London 2016), Section Black s Law Dictionary, ninth edition, page 445 The Young Mechanic, 2 Curtis 404, 4I3. Steven H. Reisberg, What Is Expert Determination? The Secret Alternative to Arbitration, NYLJ Volume 250 No. 115 Hunt, Robert The Law Relating to Expert Determination (2008)18(1) BCL 2. Arthur L. Shipman, The Maritime Lien, The Yale Law Journal, Vol. 2, No. 1 (Oct. 1892), pp Redfern and Hunter on International Arbitration (Oxford University) Press, 5th ed, 2009) Gary B Born, International Commercial Arbitration (Kluwer Law International 2009) vol 1, 853; Nigel Blackaby et Page 3

4 LIST OF AUTHORITIES: CASES B. Borealis AB v Geogas Trading SA [2010] EWHC 2789 (Comm) Bulkhaul Ltd v. RhodiaOrganique Fine Ltd [2008] EWCA Civ Baulderstone Hornibrook Engineering Pty. Ltd. V Holdings Pty. Ltd (1998) 14 BCL 277, Badgin Nominees Pty. Ltd. v Oneida Ltd. Anor [1998] VSC Dec 1998 C. Cott UK Ltd v FE Barber Ltd (1997) 3 All ER 540 Christopher Brown Ltd v Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte GmbH [1954] 1 QB 8, 12-3; Corr v. IBC Vehicles Ltd [2008] 1 AC 884 G. Galoo v. Bright Grahame Murray [1994] 1 W.L.R. 1360, H. Hadley v. Baxendale (1854) 9 Exch. 341 H Parsons (Livestock) Ltd v. Uttley Ingham & Co Ltd [1977] EWCA Civ 13 J. Jones v Sherwood Computer Services [1992] 2 All ER 170. K. Koufos v. C Czarnikow Ltd (The Heron II) [1969] 1 AC 350. L. Lagden v. O Connor [2004] 1 AC 1067 Lombard North Central plc and Automobile World (UK) Ltd [2010] EWCA Civ 20. Lilly Q Co. v. D. M. Stevenson Q CO. 1 R. Rubenstein v. HSBC Bank plc [2012] EWCA Civ Page 4

5 Re Dawdy and Hartcup (1885) 15 QBD 426 S. Supershield Ltd v. Siemens Building Technologies FE Ltd [2010] EWCA Civ 7 T. Transfield Shipping Inc v. Mercator Shipping Inc (The Achilleas) [2008] UKHL 48 V. Victoria Laundry (Windsor) Ltd v. Newman Industries Ltd [1949] 2 KB 528. Z. Zeke Services Pty Ltd v Traffic Technologies Limited [2005] QSC 135 Page 5

6 LIST OF AUTHORITIES: INTERNATIONAL CONVENTIONS, RULES AND STATUTES. INTERNATIONAL International Convention on Maritime Liens and Mortgages The International Convention for the Safety of Life at Sea (SOLAS), 1974, adopted on 1 November 1974 by the International Conference on Safety of Life at Sea U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) DOMESTIC Australian Navigation Act 2012 UK Carriage of Goods by Sea Act 1971 Page 6

7 LIST OF ABBREVIATIONS AA- ARBITRATION ACT 1996 CB- CERULEAN BEANS AT AROMA DS- DYNAMIC SHIPPING LLC IMO- INTERNATIONAL MARITIME ORGANISATION MD- MADAM DRAGONFLY NYC- NEW YORK CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS SOLAS - THE INTERNATIONAL CONVENTION FOR THE SAFETY OF LIFE AT SEA KG-KILOGRAM Page 7

8 STATEMENT OF FACTS 1. On July 22, 2017, Cerulean Beans and Aroma (Claimant) entered into a voyage charter party agreement with Dynamic Shipping LLC (Respondent) to ship 1,000 70kg bags of exceptionally rare, high quality, speciality grade green coffee to Dillamond before 7 pm on the 28 th of July, Also, the Claimant advanced the Respondent USD 100,000 to be used as wages for the crews of the Ship Madam Dragonfly (Vessel). 2. On 25 th of July, the vessel deviated to the Port of Spectre against the express instruction of the Claimant. Also, against the instruction of the Claimant, the Claimant was not notified of the deviation till 17 hours after the deviation. 3. On 28 th of July, 2017 at 7 pm, the Respondent failed to deliver the Cargo. The Cargo was not delivered until 31 st of July at 1:17 pm at which point 75% of the Cargo had been damaged. 4. On the 31 st of July, the Claimant was able to deliver only 250 bags of the coffee and had to procure replacement coffee for USD 9,450,000 and settlement payment for USD 5,000,000 to its client as a result of the breach. 5. On 1 August 2017, the Claimant informed the Respondent of the Breach of the Charter party and requested for Arbitration on 11 August Page 8

9 PART ONE: JURISDICTION 6. The Claimant argues that this tribunal (Tribunal) has jurisdiction to hear the merits of this dispute because: (A) this Tribunal has the power to rule on its own jurisdiction; (B) the breach of the Charter party contains matters not within the technical knowledge of a master mariner; (C)the award of the Expert Determination is unlikely to be enforced by the NYC. A THIS TRIBUNAL HAS THE POWER TO RULE ON ITS OWN JURISDICTION 7. It is a well-established principle of international arbitration that an arbitral tribunal has an inherent power to rule on its own jurisdiction, including questions as to the validity of the arbitration agreement. 2 The Claimant, therefore, argues that this Tribunal has the power to rule on its own jurisdiction. B. THE BREACH OF THE CHARTER PARTY CONTAINS MATTERS NOT WITHIN THE TECHNICAL KNOWLEDGE OF A MASTER MARINER 8. Clause 27(g) of the voyage Charter expressly excluded matters not reasonably within the technical knowledge of a Master Mariner. Consequently, in Zeke Services Pty Ltd v Traffic Technologies Limited 3, the court held that if a dispute as to Complicated disputes of fact or of law is not of a kind which can be determined in an informal way by reference to the specific technical knowledge or the learning of the expert, an expert cannot determine it. 4 2 Christopher Brown Ltd v GenossenschaftOesterreichischerWaldbesitzerHolzwirtschaftsbetriebeRegistrierteGmbH [1954] 1 QB 8, 12-3; Gary B Born, International Commercial Arbitration (Kluwer Law International 2009) vol 1, 853; Nigel Blackaby et al, Redfern and Hunter on International Arbitration (Oxford University) Press, 5th ed, 2009) [2005] QSC Re Dawdy and Hartcup (1885) 15 QBD 426 Page 9

10 9. In the same vein, in the case of Cott UK Ltd v FE Barber Ltd 5 the court refused to let an expert determine a contract which contained a clause referring disputes to the determination of an expert on the grounds that: (a) There were no rules identified in the contract or in the expert s professional association governing the mode of his determination. (b) The expert appointed had no experience in the areas of dispute. (c) The contract gave no guidance as to the rules or principles pursuant to which the expert was to approach his determination. (d) The nature of the dispute itself a claim for damages for breach of contract was inapt for determination by an expert. (Emphasis supplied.) 10. The decision of the court in the above case is on all fours with this case as it involves the beach of the voyage charter party by the Respondent, the quantum of which can only be determined by an arbitral panel. The claim of the Claimant for the coffee replacement payment and settlement payment which the Claimant incurred out of the breach of the contract, as well as the price for the damaged cargo, fall outside of the technical expertise of a Master Mariner. While the Claimant admit that the Claimant has jurisdiction to determine matters such as the deviation of MD and other related matters, the existence of the breach of a charter party as well as a claim for a Maritime Law which is a matter of law and not of fact takes the matter out of the realm of expert determination. 11. It is a trite law that Maritime Lien arises out of law and not of fact. A maritime lien attaches to the thing itself, and to every part and all the proceeds thereof, not by agreement of the parties, but by 5 (1997) 3 All ER 540. Page 10

11 law. 6 An expert, therefore, has not the authority to determine on such an issue as it exclusively within the province of a body judicially constituted. 12. The Claimant, therefore, submits on the holding of Mr Justice Chesterman of the Supreme Court of Queensland, in Zeke Services Pty Ltd v Traffic Technologies Limited 7 that to allow the expert to determine some only of the complaints would be unsatisfactory. The same decision-maker should determine all questions in dispute. As the court must determine some, it should determine all. (emphasis added). In this case, the Tribunal should determine it all! 8 (C) THE AWARD OF THE EXPERT DETERMINATION IS UNLIKELY TO BE ENFORCED BY THE NYC. 13. Unlike Arbitration under the Section 66 of the Arbitration Act 1996, where an Arbitrator s award may be enforced as if it were a judgment or order of the Court, to obtain the fruits of a successful Expert Determination, a party must commence proceedings in a Court of competent jurisdiction for a declaration or order for specific performance of the agreement by which the parties agreed to the resolution of the dispute by Expert Determination In the same vein, the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) governs only arbitration and arbitral awards. Expert 6 Arthur L. Shipman, The Maritime Lien, The Yale Law Journal, Vol. 2, No. 1 (Oct., 1892), pp Ibid. 8 BaulderstoneHornibrook Engineering Pty. Ltd. V Kayah Holdings Pty. Ltd (1998) 14 BCL 277, Jones v Sherwood Computer Services [1992] 2 All ER 170. Of particular importance is the observation of Gillard J in Badgin Nominees Pty. Ltd. v Oneida Ltd. Anor [1998] VSC Dec 1998 unreported where he observed that the lack of procedural rules and methodology in expert determination is significant and mitigates against justice and fairness where he is obliged to investigate disputed questions of fact and/or law and come to a conclusion about them. 9 Hunt, Robert The Law Relating to Expert Determination (2008)18(1) BCL 2. Page 11

12 determinations, on the other hand, are governed solely by State law and most likely would not be afforded the benefit of the New York Convention The Claimant, therefore, submits that in any case, the award of a Master Mariner would not be enforced under the NYC or any other international treaty, nor in any domestic statute. PART TWO: BREACH OF CHARTER PARTY A. THE RESPONDENT FAILED TO DELIVER THE CARGO AT THE TIME CONTRACTED 1. The Respondent Failed to Carry a Chart in Line with Extant Maritime Laws and Practices 16. The International Convention for the Safety of Life at Sea (hereinafter referred to as SOLAS) 11,requires that vessels (other than fishing vessels) greater than 500 tonnes, or vessels greater than 150 tonnes when engaged on international voyages, carry up to date official charts, sailing directions, list of lights, notices to mariners, tide tables and all other nautical publications necessary for the intended voyage. The International Maritime Organization (IMO)also requires that the master or officer in charge of navigation use the largest (most detailed) scale charts for the intended route, corrected with the latest available information. 17. Regulation 2.1 of Chapter V of SOLAS provides that all ships, irrespective of size shall have:.4. nautical charts and nautical publications to plan and display the ship s route for the intended voyage and to plot and monitor positions throughout the voyage;an 10 Steven H. Reisberg, What Is Expert Determination? The Secret Alternative to Arbitration, NYLJ Volume 250 No The International Convention for the Safety of Life at Sea (SOLAS), 1974, adopted on 1 November 1974 by the International Conference on Safety of Life at Sea, convened by the International Maritime Organization (IMO), and entered into force on 25 May Page 12

13 electronic chart display and information system (ECDIS) may be accepted as meeting the chart carriage requirements of this subparagraph;.5. back-up arrangements to meet the functional requirements of subparagraph.4, if this function is partly or fully fulfilled by electronic means; 18. Similarly, Regulation 27 of the same chapter further enumerated the charts to take along on voyages, as well as the state of such charts. It provided thus: Nautical charts and nautical publications, such as sailing directions, lists of lights, notices to mariners, tide tables and all other nautical publications necessary for the intended voyage, shall be adequate and up to date. 19. In the same vein, the Australian Navigation Act provides the legislative basis for many of Australia s responsibilities for maritime matters including ship safety, seafarers, marine accidents, aids to navigation and shipboard aspects of the marine environments. The Act also gives effect to relevant international conventions. Chapter 6, Part 6, Division 5 of the Act establishes the Australian Hydrographic Services and Offences and civil penalties relating to taking a vessel to sea without charts, making the possession of charts as a backup to navigational systems a condition precedent before embarking on a voyage. 20. In casu, Clause 15(a) of the Voyage Charter party between the Claimant and Dynamic Shipping LLC expressly provided in subparagraph (i) and (ii) that the Respondent must ensure that Madam Dragonfly complies with: 1. The applicable requirements of the Commonwealth of Australia Navigation Act 2012 and the Regulations thereunder. 12 An Act relating to maritime safety and the prevention of pollution of the marine environment, and for related purposes, No. 128, 2012, [Assented to 13 September 2012]. Page 13

14 2. Owner must only nominate and provide vessels complying with all of the provisions of this Contract. 21. Consequently, when the communications and satellite system on Madam Dragonfly were knocked out by solar flares as intimated by Marc Simpson s mail to Jay Mizzone on 26 July, , and the acknowledgment by the former that the vessel did not carry hardcopy maps 14 which were global best practices and required by the law constitutes negligence and breach of Clauses 15(a)(i) and 15(a)(ii) of the charter party. 22. Furthermore, the defence of Force Majeure under Clause 17 of the Voyage Charter party will not avail the Respondent as the diversion was a result of the Respondents negligence and breach of the Charter party. 23. The Claimant thus submits that the Respondent breached Clauses 15(a)(i) and 15(a)(ii) of the charter party and that the defence of force majeure will not avail in the instant case. 2. The Respondent negligently failed to take into consideration NASA s Meteorological Warning 24. Regulation 5 of Chapter V of SOLAS which deals with meteorological services and warnings recognises the importance of taking meteorological warnings and instruction earnestly before setting on a voyage and is of the effect that: Contracting Governments undertake to encourage the collection of meteorological data by ships at sea and to arrange for their examination, dissemination and. exchange in the manner most suitable for the purpose of aiding navigation. Administrations shall 13 Page 17 of the Moot Scenario 14 Page 18 of the Moot Scenario Page 14

15 encourage the use of meteorological instruments of a high degree of accuracy and shall facilitate the checking of such instruments upon request. Arrangements may be made by appropriate national meteorological services for this checking to be undertaken, free of charge to the ship. 25. Consequently, it behoves on Masters and Owners to be abreast, and take into consideration meteorological warnings and recommendation when planning a voyage. Thus, on the 18th of July, 2017, the Cerulean Mail reported that the solar flare, which allegedly caused Madam Dragonfly to divert to Spectre on the 25 th of July, was an ongoing phenomenon and more are expected in the coming weeks. 15 It further reported that NASA predicts the explosions will last another twoweeks and has advised anyone in the Cerulean region who relies on radio or satellite communication systems to make backup arrangements. 16 (Emphasis supplied.) 26. Consequently, the Claimant avers that the Respondent did not exercise due diligence and negligently failed to take into consideration NASA s Meteorological Warning. 3.The Respondent breached Clauses 8(b) and 15(b) of the Voyage Charter party 27. Regulation 34of SOLAS which deals with safe navigation and avoidance of dangerous situations stipulated conditions precedent that an owner of a vessel must fulfil before embarking on a voyage. It provides as follows: 1 Prior to proceeding to sea, the master shall ensure that the intended voyage has been planned using the appropriate nautical charts and nautical publications for the area concerned, taking into account the guidelines and recommendations developed by the Organization. 15 Page 35 of the Moot Scenario 16 Ibid. Page 15

16 2 The voyage plan shall identify a route which:.1 takes into account any relevant ships routeing systems;.2 ensures sufficient sea room for the safe passage of the ship throughout the voyage;.3 anticipates all known navigational hazards and adverse weather conditions; and.4 takes into account the marine environmental protection measures that apply, and avoids, as far as possible, actions and activities which could cause damage to the environment Condition as to Possession of Valid and Up-To-Date Certificates. 28. In the same vein, Article III of the UK Carriage of Goods by Sea Act 1971 provides as follows: The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to (a)make the ship seaworthy. (b)properly man, equip and supply the ship. 29. Likewise, Clauses 8(b) and 15(b) of the Voyage Charter party both provided for the worthiness of the equipment to be used on Madam Dragonfly. 30. The Claimant, therefore, avers that the Respondent breached the aforementioned provisions and was grossly negligent by using old and faulty navigation system on the vessel. According to the Cerulean National Communication Agency, any prolonged delay in reconnection to the communications system was a result of old/faulty equipment. In the Agency s own word, Any navigation or satellite system communication systems which comply with the current regulations for the use of those systems in commercial ventures would have re-connected straight away. Page 16

17 31. The Claimant thus contends and submits that the Respondent was grossly negligent and breached the condition as to the worthiness of the equipment employed aboard the vessel. B. THE RESPONDENT IS LIABLE FOR THE DAMAGE TO THE CARGO 1. The Respondent did not Deliver and Discharged the Cargo till 31 st of July and the Cargo was still in the care of the Respondent till delivery was effected 32. According to the Black s Law Dictionary, discharge is any method by which a legal duty is extinguished while delivery was defined as the formal act of transferring something ; the giving or yielding possession or control of something to another. 33. Furthermore, Clause 12(a) of the Voyage Charter party prescribes that the delivery and discharge will occur when the Charterer s agent are cosigned to attend to matters concerning the cargo and the vessel. Furthermore, Clause 8(c) stipulated that discharge can only take during Weather Working Day (WWD). 34. Consequently, due to the massive flooding of Dillamond, the Claimant was unable to effect delivery till 31 st of July, 2017, during which period the cargo of coffee was in the care of the Respondent. 35. The applicant thus submits that the Respondent did not deliver and discharge the cargo till 31 st of July and the cargo was still in the care of the Respondent till delivery was effected. 2. The damage to the Cargo was a Direct Consequence of the Breach of the Charter Party 36. According to Alderson B. in the case of Hadley v Baxendale: Now we think the proper rule in such a case as the present is this: Where two parties have made a contract which one of them has broken, the damages which the other party Page 17

18 ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated. 37. In casu, the Respondent has full knowledge of the facts and yet, grossly and negligently beached the charter party contract. The Claimant thus submits that the damage to the cargo was a direct consequence of the breach of the charter party. PART THREE: MARITIME LIEN A. THE CLAIMANT HOLDS A MARITIME LIEN AGAINST THE RESPONDENT 38. According to the Black s Law Dictionary, a maritime lien is a lien on a vessel, given to secure the claim of a creditor who provided maritime services to the vessel or who suffered an injury from the vessel s use. 39. In the same vein, Judge Curtis further described the nature of a maritime lien thus: Page 18

19 "A real and vested interest in the thing, constituting an encumbrance placed thereon by operation of law, to be executed by judicial process against the thing to which no party is made a party save by his voluntary intervention and claim." A maritime lien, therefore, attaches to the thing itself, and to every part and all the proceeds thereof, not by agreement of the parties, but by law Consequently, Article 4 of the International Convention on Maritime Liens and Mortgages establishes instances where rights of maritime lien arise. Article 4(1)(a) of the Same Treaty provides that the following claim may be made against the owner: (a) claims for wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf. 42. In this case, the Claimant advanced the Respondent $100,000 which was to be used as wages for the shipping crew of Madam Dragonfly. This money was however misappropriated by the Respondent. 43. The Claimant, therefore, submits that in view of its status as a creditor of the Respondent, a clear reading of Article 4 of the International Convention on Maritime Liens and Mortgages entitles it to a maritime lien on Madam Dragonfly. The Claimant claims for wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel which the Respondent failed to disburse as agreed. PART FOUR: LIABILITY FOR DAMAGES 17 The Young Mechanic, 2 Curtis 404, 4I3. 18 Arthur L. Shipman, The Maritime Lien, The Yale Law Journal, Vol. 2, No. 1 (Oct., 1892), pp Page 19

20 A. THE RESPONDENT IS LIABLE TO THE CLAIMANT FOR DAMAGES 44. According to Black s Law Dictionary, Damages are money claimed by or ordered to be paid to, a person as compensation for loss or injury. 19 In any claim for damages, certain conditions must be fulfilled. First, one must prove the existence of a wrong 20 that is, a breach of contract. Second, one must establish that the damage is not too remote and that the losses were reasonably foreseeable at the time the parties entered into the contract. 21 Third, any damages awarded are subject to deductions for any failure to mitigate (or contributory negligence in the case of breaches of duty of care). Fourth, any damages awarded are also subject to any breaks in the chain of causation These conditions shall be examined as they relate to the instant case. 1. The Respondent Breached the Contract 46. The Claimant has already established that there was indeed a breach of contract as the Respondent failed to carry out the contract in conformity with the terms of the charter party which caused a damage to the cargo, a result of which is an extra cost of getting a replacement coffee for USD9,450, The Damage was Foreseeable and not too Remote 47. Further, the Claimant strongly contends that the damage to the cargo is not too remote and that the losses were reasonably foreseeable at the time the parties entered the contract. 19 Black s Law Dictionary, ninth edition, page H. McGregor, McGregor on Damages (19th ed. Sweet & Maxwell, London 2016), Section Wagon Mound (No. 1) [1961] AC 388; J. Chitty, H. Beale, Chitty on Contracts, 6th ed., 2008, Ch. 26, paragraph C. T. Salomon and P D. Sharp, Chap 10: Damages in International Arbitration, in J. Fellas and J. H. Carter (eds), International Commercial Arbitration in New York (OUP New York 2010) 295. Page 20

21 48. Under English law, damages for breach of contract are recoverable only to the extent the loss that has occurred was reasonably foreseeable by the parties at the time they entered into the agreement. This test is closely connected to and sometimes identical to one of remoteness. This rule was first expressed in the 1854 case of Hadley v. Baxendale as follows: Where two parties have made a contract, which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it Thus, the loss is recoverable only if the type of loss 24 that occurs is in the contemplation of the parties (i.e., foreseeable) 25 and not unlikely 26 at the date of contracting (rather than the date of breach). 27 What is in the contemplation of the parties is assessed objectively on the basis of the ordinary course of things and subjectively on the basis of special circumstances or knowledge attributed to the parties. 28 If the remoteness test is satisfied, the Respondent is seen as having assumed the responsibility for the loss Hadley v. Baxendale (1854) 9 Exch H Parsons (Livestock) Ltd v. Uttley Ingham& Co Ltd [1977] EWCA Civ Hadley v. Baxendale (supra) 26 Koufos v. C Czarnikow Ltd (The Heron II) [1969] 1 AC Hadley s Case (supra) 28 Victoria Laundry (Windsor) Ltd v. Newman Industries Ltd [1949] 2 KB Transfield Shipping Inc v. Mercator Shipping Inc (The Achilleas) [2008] UKHL 48; Supershield Ltd v. Siemens Building Technologies FE Ltd [2010] EWCA Civ 7; Rubenstein v. HSBC Bank plc [2012] EWCA Civ Page 21

22 50. In casu, by virtue of the letter dated 22 July , the Claimant stated with clear and unambiguous words that it is very important that the containers used are entirely waterproof. The perishability of the coffee beans was also expressed in the same letter where they were described as exceptionally rare, high quality, speciality grade green coffee (similar to Kopi Luwak coffee) which would not ordinarily be shipped just in fibre bags as the risk of moisture damage is too great. 51. Against these express instructions, it then does not lie in the Respondent to excuse their negligence with foreseeability of the damage to be caused to the coffee beans. The usage of a sealant which could only be waterproof for 5 days is by itself a flagrant disregard of a fundamental term of the contract and also a showcase of professional negligence. 3. The Claimant Took Steps to Mitigate its Loss 52. The statement of fact vividly shows that the Claimant took steps to mitigate its loss. 31 In common law jurisdictions, it is accepted that the aggrieved party is under a duty to take steps to minimise and not increase its loss. Accordingly, damages may be reduced if that party has not taken steps to mitigate its loss. 53. Under English law, the Claimant must take all reasonable steps to minimise its loss as a result of the Respondent s breach of its obligation. The Claimant cannot recover losses that it could have, through reasonable action or inaction, avoided. 54. Again, as a consequence of the first rule, the Claimant can recover the costs that it has incurred in taking reasonable steps to minimise its loss. This is true even if the steps taken have in fact increased the loss. The instant case is on all fours with the above common law position and thus, the 30 Page 2 of the statement of fact 31 Correspondence dated August 1, 2017 in the statement of fact (page 27) Page 22

23 Claimant submits that the Respondent is liable for damages. 32 The burden of proof in this context is on the defendant There was no Break in the Chain of Causation 55. Irrespective of factual causation, English law can treat some losses as not having been legally caused by the breach, on the basis that it is not fair to hold the defendant responsible for them due to a break in the chain or Novus actus interveniens. 34 If the breach of contract was the effective or dominant cause of the loss, damages may be recoverable even if the cause was not the sole cause of the loss In Borealis AB v Georgas Trading SA 36, the court held that for there to be a break in causation, the innocent party's actions must obliterate" the effect of the original cause of the loss. In the instant case, the damage to the coffee beans was the direct result of the Respondent s breach of the contract and there was no act of the Claimant that could be said to have caused a break in the chain of causation. 32 Lagden v. O Connor [2004] 1 AC 1067, Lord Scott, paragraph Lombard North Central plc and Automobile World (UK) Ltd [2010] EWCA Civ 20. A Claimant should nevertheless consider whether to take steps to show how it has mitigated its loss, as failure to do so can be risky. Bulkhaul Ltd v. RhodiaOrganique Fine Ltd [2008] EWCA Civ Corr v. IBC Vehicles Ltd [2008] 1 AC 884, per Lord Bingham: The rationale of the principle that a novus actus interveniens breaks the chain of causation is fairness. 35 Galoo v. Bright Grahame Murray [1994] 1 W.L.R. 1360, [2010] EWHC 2789 (Comm) Page 23

24 57. The Respondent may argue that the coffee beans could have been damaged after delivery, but a careful perusal of the spirit and letter of the correspondence dated the 31 st day of July 37 reveals that indeed, the coffee beans had been damaged before delivery. 58. In casu, the Respondent has full knowledge of the facts and yet, grossly and negligently beached the charter party contract. The Claimant thus submits that the damage to the cargo was a direct consequence of the breach of the charter party. 59. Consequent upon the foregoing, the Claimant submits that the Respondent is liable to pay damages of the sum of USD30,200,000, being USD15,750,000 for the damaged coffee (which is now completely unusable), USD9,450,000 for the replacement coffee and USD5,000,000 for the amount we are due to pay our client in damages under our contract for delivery of the coffee to them. B. THE CLAIMANT IS NOT LIABLE FOR PAYMENT OF ANY OF THE COUNTERCLAIMS CLAIMED BY THE RESPONDENT. 60. The Claimant totally rejects liability for the payment of any of the counterclaims claimed by the Respondent. 1. the Claimant is not Liable for Payment of Freight 61. For the freight, Clause 22 of the charter party is clear to the effect that freight is to be paid by telegraphic transfer in United States Dollars to Owner's account 90%, less full commissions, within two banking days of delivery of the cargo. The Owners will issue an invoice immediately upon 37 In the exact words, one of the containers weighed in differently than the others. Hopefully just our bad calculations and nothing more sinister Page 24

25 delivery of the cargo 38. Since the Respondent was in breach of the delivery as earlier argued in issue two, the Claimant is discharged under contract law. 2. the Claimant is not Liable for Payment of Agency Fees at the Port of Spectre 62. For agency fees at the Port of Spectre, to which the Madam Dragonfly was required to deviate during the voyage, the term of the charter party is clear to the effect that the vessel is to comply with all the requirements and regulations for all ports and countries of call under this charter party. The Respondent clearly did not comply with the requirements. The term further states that in the event of any delay as a consequence of the ship failing to comply with any aforementioned Statutes or Regulations, time shall not count nor demurrage accrue during the period of such delay and any extra expenses incurred, including cost of stevedoring / received labour, equipment and truck demurrage, ordered and not used, to be for Owners account. Thus, the Claimant is not liable for the agency fees at the Port of Spectre 3. The Claimant is not Liable for Payment of Damages to Madam Dragonfly 63. For the cost of repairs to damage caused to the Madam Dragonfly when avoiding dangerous weather conditions, the Claimant contends that it can only be recovered under General Average (York- Antwerp) and Rule C of the Rule provides that "loss or damage sustained by the ship or cargo through delay, whether on the voyage or subsequently, such as demurrage, and any indirect loss whatsoever, such as loss of market, shall not be admitted as general average." 4. the Claimant is not Liable for Payment of Agency Fees at the Port of Dillamond 38 Page 11 of the statement of fact Page 25

26 64. On agency fees at the Port of Dillamond, the Claimant rejects liability on the basis that the delay which resulted in the agency fees was caused by the Respondent as a result of the flagrant disregard of the term of the charter party to take the most direct route. 5. The Claimant is not Liable for Payment of Demurrage or Use of Electronic Access System at the Port of Dillamond 65. On demurrage, by the correspondence dated the 28 th day of July 2017 at exactly 11:45 pm, the staff of the Claimant were already at the port to take delivery of the cargo which the Respondent failed to deliver until 31 st July In this instance, Clause 8(c) and Clause 16(c) preclude the Claimant from liability. 40 And the same argument avails the Claimant for the use of electronic access systems at the Port of Dillamond. 66. In Lilly Q Co. v. D. M. Stevenson Q CO. 41, a vessel was chartered to load a cargo of coal in sixty hours, weather permitting and Sundays and holidays excepted. A clause provided that if she were detained longer, demurrage was to be payable at 12s. 6d. per hour unless detention arises from a... strike... at any... mine... with which the vessel may be booked. The lay-days expired on November 16, and a strike occurred on November 28 and lasted until December 11. The Court of Session held that the exceptions clause applied and that demurrage was not payable in respect of the period in which the strike was in operation. 39 Page 24 of the statement of fact 40 Owners agree that in the event of any delay caused by any dispute or industrial action in or in connection with the ship s flag or crew wages and/or conditions of employment, time shall not count nor demurrage accrue during the period of such delay and any extra expenses incurred, including cost of labour ordered and not used, to be for Owners account. 41 (1895) 22 R Page 26

27 PRAYER FOR RELIEF For the reasons set out above, the Claimant requests this Tribunal to: DECLARE that this Tribunal has jurisdiction to hear the merits of the Claimant s claims; FIND that the Respondent is liable for the breaches of contract, the damage to the Cargo, the Replacement Coffee Payment and the Settlement Payment as argued above; and AWARD damages to the Claimant and interest on the amounts claimed. Page 27