ARBITRATION MOOT COMPETITION 2015 CLAIMANT S MEMORANDUM

Transcription

1 17 th ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT COMPETITION 2015 IN THE MATTER OF AN ARBITRATION HELD IN LONDON CLAIMANT S MEMORANDUM Claimant: Zeus Shipping and Trading Company Respondent: Hestia Industries TEAM 12 Kwek Jia Hao Helen Monachan Charles Beaty Timothy Chen Kelvin Leong Jessica Whittick 1

2 LIST OF AUTHORITIES A. CASES Aktibolaget Legis v. Berg & Sons [1964] 1 Lloyd s Rep 203 Asia Pacific Resources Pty Ltd v Forestry Tasmania (No. 2) (1998) Aust Contract R ; (Supreme Court of Tasmania, 5-7 & 10 November 1997); 5 May 1998 Bywell Castle (1879) 4 PD 219 C v D [2007] EWCA Civ Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334 China National Chartering Co Ltd v Daiichii Chuo Kisen Kaisha [2015] EWCA Civ 16 Davis Contractors v Fareham UDC [1956] AC 696 Fiona Trust & Holding Corporation and Others v Privalov and Others [2007] EWCA Civ 20 FirstLink Investments Corp Ltd v GT Payment Pte Ltd and others [2014] SGHCR 12 Harbour Assurance Co (UK) Ltd v. Kansa General International Insurance Co Ltd [1993] 1 Lloyd s Rep 455 Jackson v The Union Marine Insurance Co Ltd (1874) LR 10 CP 125 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) [1983] 1 A.C. 736 Lebeaupin v Crispin [1920] 2 KB 714 Leonis SS Co Ltd v. Rank Ltd (No. 1) [1908] 1 K.B. 499 Matsoukis v Priestman [1915] 1 KB 681 Ocean Tramp Tankers Corporation v. V/O Sovfracht (The Eugenia) [1963] 2 Lloyd s Rep 381 (CA) Premium Nafta Products Limited and others v Fili Shipping Company Limited and others [2007] UKHL 40 2

3 President of India v. Olympia Sauna Shipping Co SA (The Ypatia Halcoussi) [1984] 2 Lloyd s Rep. 455 R v. Fulham, Hammersmith and Kensington Rent Tribunal, Ex parte Zerex [1951] 2 KB 1 Sailing-Ship Garston Co. v. Hickie & Co (1885) 15 Q.B.D. 580 Southland Corp v. Keating 465 US 1 (1984) Sulamérica Cia Nacional de Seguros SA and others v Enesa Engeharia SA [2012] EWCA Civ 638 The Eastern City [1958] 2 Lloyd s Rep 127 The Evia (No.2) [1982] 2 Lloyd s Rep (HL) The Johanna Oldendorff [1974] A.C. 479 XL Insurance Ltd. v Owens Corning [2000] 2 Lloyds Rep. 500 B. STATUTES The Arbitration Act 1996 of the United Kingdom of Great Britain and Northern Ireland The International Arbitration Act 1974 of the Commonwealth of Australia UNCITRAL Model Law C. OTHER SOURCES Arbitration Rules, London Court of International Arbitration 3

4 TABLE OF CONTENTS I. STATEMENT OF FACTS... 6 A. THE PARTIES... 6 B. THE CHARTERPARTY... 6 C. PERFORMANCE OF THE CHARTERPARTY... 7 II. SUMMARY OF THE ISSUES... 9 III. PRELIMINARY ISSUE OF JURISDICTION A. THE CRUCIAL LAW OF THE ARBITRATION IS THE LAW OF ENGLAND AND WALES B. THIS TRIBUNAL MAY RULE ON ITS OWN SUBSTANTIVE JURISDICTION C. THE ARBITRATION CLAUSE IS GOVERNED BY THE LAW OF ENGLAND & WALES D. THIS TRIBUNAL HAS THE JURISDICTION TO HEAR THE MERITS OF THE SUBSTANTIVE CLAIM OF DEMURRAGE AND THE FRUSTRATION ISSUE ) The parties agreed to arbitrate all disputes ) Disputes under this contract does not bar the tribunal from hearing the frustration issue ) Frustration has not been expressly excluded from the jurisdiction of the arbitration agreement ) Frustration is an issue arising under the Charter Party IV. CLAIM FOR DEMURRAGE A. THE RESPONDENT IS LIABLE TO PAY FOR DEMURRAGE UNDER CLAUSE 10 OF THE CHARTERPARTY

5 B. THE VESSEL DID NOT LEAVE THE LOADING PLACE ) The express clause in the Charterparty provides for laytime to end when the Vessel safely leaves the port of Hades ) The Vessel submitted to the jurisdiction of the port authorities C. THE RESPONDENT IS LIABLE TO PAY FOR DETENTION DUE TO A BREACH OF WARRANTY ) The Respondent has breached the warranty to nominate a safe port ) Allegations of negligence by the Respondent D. THE DELAY IN THE DELIVERY OF THE CARGO DID NOT FRUSTRATE THE CHARTERPARTY ) There was foreseeability ) The force majeure clause made provisions for the supervening event ) Force majeure does not bring the contract to an end E. FORCE MAJEURE IS INVALID ) The events were in existence at the time the contract was made F. THERE WAS NO NEGLIGENCE ON THE PART OF THE MASTER V. THE CLAIMANT S DEFENCE TO THE RESPONDENT S COUNTERCLAIM FOR SALVAGE VI. PRAYER FOR RELIEF

6 CLAIMANT S CASE I. STATEMENT OF FACTS A. THE PARTIES 1. The Claimant is Zeus Shipping Trading Company, an established company in the tanker ships industry based in Poseidon. The Claimant owns a fleet of tankers, one of which is the Athena (the Vessel ). The Respondent is Hestia Industries, a new producer of Liquefied Natural Gas (LNG) based in Hades. B. THE CHARTERPARTY 2. On or about 22 July 2014, the Claimant as Owners and the Respondent as Charterers entered into an agreement for the hire of the Vessel for a voyage from the safe port of Hades to Poseidon for the purpose of transporting 260,000m 3 of LNG produced from Hades Shale Gas ( The Charterparty ). Pursuant to clause 9 (c)(i), the time permitted for loading was agreed to be 10 WWD SHINC, to be calculated from when Notice of Readiness ( NOR ) was tendered until the Vessel leaves the port of Hades. This is evidenced by the agreement which was executed on behalf of the Respondents in an titled MV Athena Charterparty, which was sent on 22 July Pursuant to box 5 of the Charterparty, the Respondent was obliged to nominate a safe port for the loading of the cargo. On or about 20 July 2014, the Hades Advocate highlighted that significant protests were planned in order to stop the Respondent s LNG exports from leaving Hades. 6

7 4. The terms of the Charterparty are based on the Claimant s own form, with the amendment of the arbitration clause in accordance to the Respondent s intention to only arbitrate disputes in London which arise out of the provisions of the Charterparty. C. PERFORMANCE OF THE CHARTERPARTY 5. The Charterparty provides for loading to be carried out at the port of Hades, and for cargo to be discharged at a berth in Poseidon. 6. On or about 20 September 2014, the Claimant informed the Respondent that the Vessel began the voyage from Poseidon to Hades, and that the estimated time of arrival at Hades was 0900hrs on 3 October. 7. On 3 October at 0915hrs, the Vessel arrived at the port of Hades, and the Master tendered the NOR. Pursuant to clause 9 (c)(i), the time permitted for loading began to run. On the same day, the Master informed the Claimant that violent protests related to the Respondent and the cargo erupted at the port of Hades, resulting in the port being closed for approximately two hours. The Claimant informed the Master to continue loading the cargo, and the Vessel subsequently commenced loading and completed loading on 6 October 2014, loading 260,000m 3 of cargo. On the next day, the Vessel left the berth of Hades at 0900hrs. 8. On 7 October 2014, a military coup which was precipitated by the protest and public opposition to the export of LNG by the Respondent, resulted in the opposition leader of Hades taking control over the Hades Parliament. The new President instructed the Coast Guard of Hades to turn the Vessel back to berth at Hades. On the same day, the Claimant demanded for the Master to report on the Vessel s position and status. 9. On or about 8 October 2014, the Master informed the Claimant that the Vessel was made to return to berth at Hades by the Coast Guard. It was unclear in those 7

8 circumstances when the Vessel would be released with the cargo from the port of Hades. 10. The Claimant informed the Respondent that the detention by the Coast Guard was directly related to the cargo on board the Vessel, and that pursuant to clause 9(c)(i) and box 5 of the Charterparty, laytime continued to run as the Vessel never left the port of Hades. As such, when laytime was exhausted, demurrage will accrue at the sum of US$50,000/day. 11. On 15 April 2015, the Claimant informed the Respondent that as the Vessel remained berthed in the loading place of Hades, laytime had expired and that the Respondent was liable for demurrage. On 30 April 2015, the Respondent denied liability and highlighted its intention to arrange an alternative vessel to tranship the cargo. 12. On 5 October 2015, after approximately one year, the Vessel was released by the Coast Guard and preparations were commenced to sail from Hades to Poseidon. The Claimant informed the Master to utilise Hestug for the tug services required at the port of Hades. 13. On 6 October 2015, the Claimant sent a second payment invoice to the Respondent on the total demurrage claim. 14. On 7 October 2015, the Vessel was led out to open waters by the tugs in order to begin the voyage to Poseidon. However, due to tampering of the Vessel s propellers during the period it was detained at the port of Hades, both its propeller shafts broke. Thereafter, the tugs which guided the Vessel to open waters rendered assistance and prevented the loss of the cargo. 8

9 II. SUMMARY OF THE ISSUES 14. The following issues arise for determination by the Tribunal: a. Whether this Tribunal has jurisdiction to determine the substantive merits of the parties claim, given that the Charterparty contains an express arbitration clause providing for London arbitration. b. Whether the Respondent is liable to the Claimant for demurrage for 358 days between October 2014 to October 2015 at the rate of US$50,000/day, totalling US$ 17.9m. c. Whether the Claimant is liable to the Respondent for the salvage reward for the towage services to the Vessel. 9

10 III. PRELIMINARY ISSUE OF JURISDICTION A. THE CRUCIAL LAW OF THE ARBITRATION IS THE LAW OF ENGLAND AND WALES 15. Where the seat of arbitration is within the territory of England, Wales or Northern Ireland it is subject to the laws of England & Wales. In particular, The Arbitration Act 1996 of England & Wales ( the Arbitration Act ) Clause 30 of the agreed Charterparty dated 22 nd July 2014 encompasses the agreed procedure for the resolution of disputes ( the Arbitration Clause ). The Arbitration Clause provides that Any dispute arising under this contract shall be referred to arbitration in London (emphasis added). 17. By choosing London as their seat, the parties have implicitly accepted that the crucial law (or lex arbitri) is that England & Wales, hence the mandatory provisions of the Arbitration Act and (where the parties have not otherwise agreed) non-mandatory provisions are therefore applicable in accordance with section 4(1) and (2) for mandatory and non-mandatory provisions respectively. B. THIS TRIBUNAL MAY RULE ON ITS OWN SUBSTANTIVE JURISDICTION 18. Pursuant to section 30 of the Arbitration Act, which codifies the Kompetenz-Kompetenz principle previously accepted by the common law 2 and international law, 3 this Tribunal may rule on the preliminary questions of its own substantive jurisdiction. Kompetenz- Kompetenz entitles arbitrators to determine for themselves whether they have the 1 Section 2(1) of the Arbitration Act provides: The provisions of this part apply where the seat of the arbitration is in England and Wales or Northern Ireland. 2 R v. Fulham, Hammersmith and Kensington Rent Tribunal, Ex parte Zerex [1951] 2 KB 1; Aktibolaget Legis v. Berg & Sons [1964] 1 Lloyd s Rep UNCITRAL Model Law on International Commercial Arbitration 1985 (With amendments) Article 16(1). 10

11 jurisdiction to determine the validity or applicability of an arbitration clause. Hence, this Tribunal may issue an award on whether or not it has jurisdiction to award on the substantive question of frustration and demurrage. 19. Pursuant to section 7 of the Arbitration Act, which applies as a non-mandatory provision of the Arbitration Act unless otherwise agreed by the parties, the arbitration agreement between parties is to be treated as a separate and distinct agreement. It shall not be regarded as invalid or non-existent simply because the substantive agreement between parties may be so, or contested to be so. This principle of separability (or otherwise ( severability )) is also well established in the common 4 and statute 5 law of England & Wales in addition to other jurisdictions. 6 C. THE ARBITRATION CLAUSE IS GOVERNED BY THE LAW OF ENGLAND & WALES 20. In Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd, 7 Lord Mustill said: It is by now firmly established that more than one national system of law may bear upon an international arbitration. 21. This notion is supported by operation of the doctrine of severability through section 7 or the common law. It allows for an arbitration agreement between parties to be governed by a separate law than the substantive agreement. It is not contested that the law of the substantive agreement is that of the State of Western Australia. 22. It is submitted that Clause 31 of the Charterparty only envisages that the substantive agreement, not the arbitration agreement, be governed by said law: The Laws of the 4 Harbour Assurance Co (UK) Ltd v. Kansa General International Insurance Co Ltd [1993] 1 Lloyd s Rep 455; Premium Nafta Products Ltd v. Fili Shipping Ltd [2007] UKHL The Arbitration Act 1996, s 7. 6 Severability has been recognized in the United States of America (Southland Corp v. Keating 465 US 1 (1984)) and indeed in the Commonwealth of Australia where the International Arbitration Act 1974 gives the UNCITRAL Model Law force of law in the Commonwealth, of which, Article 16(1) enshrines severability. 7 [1993] AC 334,

12 State of Western Australia shall govern this Charter Party (emphasis added). There is no express choice of governing law for the arbitration clause. 23. Chapter 1 Article 1 (1)(e) of Regulation (EC) No 593/2008 on the law applicable to contractual obligations (Rome I) excludes the operation of the regulation in regards to arbitration agreements. Hence it falls to common law to determine the governing law of the arbitration clause. 24. The case of Sulamérica Cia Nacional de Seguros SA and others v Enesa Engeharia SA pronounced the general methodology for determining the law governing the law of an arbitration clause: (i) Is there an express choice of the governing law? (ii) Is there an implied choice? (iii) Which system of law has the closest and most real connection with the arbitration agreement? 8 As a matter of principle it was held that the tests should be conducted separately and in that order as to respect the choices made by the parties. 25. As stated above, there is no express choice of law to govern the Arbitration clause. On the question of an implied choice, the case of FirstLink Investments Corp Ltd v GT Payment Pte Ltd and others 9 has considered the matter with depth and persuasively held that, where there is an express choice of substantive law and an express choice of seat in the arbitration agreement (as there is in this matter) the court would view the seat of the arbitration as an implied choice of law over the chosen substantive law. 26. The court in Firstlink took the view that it cannot always been assume that the parties would want their substantive agreement and their agreement for disputes to be governed by the same system of law; The natural inference would instead be to the contrary, 10 that when a commercial relationship breaks down into dispute, the separate 8 [2012] EWCA Civ 638, [9] (Moore-Bick LJ). 9 [2014] SGHCR [2014] SGHCR 12, [13] (Shaun Leong Li Shiong AR). 12

13 agreement for dispute settlement is now considered and at the forefront of either party s mind is the desire for neutrality. 27. This position is supported by the case of C v D, 11 another Court of Appeal judgment where at paragraph 26, Longmore LJ, concluding his analysis of previous cases on the matter, agrees with Lord Mustil that it would be rare for the law of the arbitration agreement not to follow the law of the chosen seat. He contends that there is a closer and real connection with the place the parties have deliberately chosen to arbitrate in than the law of the substantive agreement. 28. Furthermore in Firstlink, the judge recognised that the significance of the seat is recognised by 156 countries (parties to the New York Convention), Article V(1)(a) of which renders an arbitral award unenforceable if the arbitration agreement is not valid under the law of the country where the award was made in the absence of an express choice of law to govern the arbitration award. In addition, under the Model Law Article 34(2)(a)(i) an award may be set aside if the arbitration agreement is invalid under the law of the seat. 29. The judge, in applying the rational businessmen 12 test which, from the case of Premium Nafta Products Limited and other v Fili Shipping Company Limited and others, 13 is clearly still alive in the common law of England & Wales, concluded that rational businessmen must commonly intend that awards arising from their chosen dispute procedure are binding and enforceable. The result of which would be a clear implication that they intended for the law of their arbitration clause would follow their choice of seat. 11 C v D [2007] EWCA Civ ibid (n 8) [14]. 13 [2007] UKHL 40 [13] (Lord Hoffmann). 13

14 30. Indeed in the Sulamérica case itself, despite laying the general methodology, a strong factor for the court 14 in finding that the law governing the agreement did in fact follow the seat was that having chosen a seat in another country the parties had inevitably imported the Arbitration Act 1996 to govern procedure, but given that some provisions of the act are more substantive in their nature (the judge cites sections 5, 7, 8, 12, and 13 by way of example) that would be a strong implication that the parties had intended the law of England & Wales to govern all aspects of the arbitration agreement, including matters extending to validity and jurisdiction of the arbitrators. 31. This point is echoed by the judge in Firstlink 15 and was attributed in Sulamérica to Toulson J (as he then was) in XL Insurance Ltd. v Owens Corning, 16 who when also considering previous judgments of Lord Mustill, comments that it has clearly previously been the view that while it is not uncommon for the substantive law to be different from the law of the seat, it is far more uncommon for the law of the arbitration agreement to differ from the seat. 32. Toulson J states: The Arbitration Act contains various provisions which could not readily be separated into boxes labelled substantive arbitration law or procedural law, because that would be an artificial division Given the weight of authority, both nationally and internationally, that is outlined above and what is clearly common practice. 18 It is submitted that the law of the Arbitration clause is that of England & Wales. 14 ibid (n 7) [29]. 15 ibid (n 8) [15]. 16 [2000] 2 Lloyds Rep. 500, ibid (n 15) London Court of International Arbitration, Arbitration Rules, Article

15 D. THIS TRIBUNAL HAS THE JURISDICTION TO HEAR THE MERITS OF THE SUBSTANTIVE CLAIM OF DEMURRAGE AND THE FRUSTRATION ISSUE 1) The parties agreed to arbitrate all disputes. 34. The Respondent in Paragraph 4 of their particulars of defence claim that frustration is not a dispute arising under the Charterparty. This is not understood to be the position of English Law. The Arbitration Clause provides that all disputes that arise under the contract shall be subject to arbitration. This is a phrase that should be construed liberally. 35. The House of Lords in the matter of Premium Nafta Products Ltd v Fili Shipping Ltd 19 ( Fiona Trust ), held that reasonable businessmen 20 would have intended to have all disputes heard by one tribunal, which supports a liberal construction of the clause. 2) Disputes under this contract does not bar the tribunal from hearing the frustration issue 36. In Fiona Trust it was further held that only express indication 21 to demonstrate that the parties did not intend for all disputes to be heard by a single tribunal would defeat the presumption. 37. It is submitted that there is no such language seen on behalf of either party to suggest that frustration was not intended to be subject to arbitration. The Arbitration Clause does not expressly exclude any form of dispute and the claimants have a right to rely on the Charterparty as a comprehensive construction of what has been agreed between the parties. 19 Premium Nafta Products Ltd v. Fili Shipping Ltd [2007] UKHL ibid (n 19) [13] (Lord Hoffmann). 21 Fiona Trust & Holding Corporation and Others v Privalov and Others [2007] EWCA Civ 20, [17] (Longmore LJ). 15

16 3) Frustration has not been expressly excluded from the jurisdiction of the arbitration agreement 38. Pursuant to a letter dated 16 th July 2014, there is not an exclusion of frustration; the letter refers by way of example, only to misrepresentation. 39. English law recognises misrepresentation as one of five vitiating factors that may void a contract; misrepresentation, mistake, duress, undue influence and illegality. Frustration is not considered a vitiating factor, as such it submitted that express reference to misrepresentation only is not enough to exclude frustration, which is fundamentally a different doctrine and bears little similarity to misrepresentation. 4) Frustration is an issue arising under the Charter Party 40. It is submitted that frustration is an issue arising under the Charterparty. The Charterparty contains a force majeure clause, the purpose of which is to defeat the operation of frustration. It was held in Jackson v The Union Marine Insurance Co Ltd 22 that where that where there is a force majeure clause, it will apply in favour of the operation of the doctrine of frustration. Thus in determining the question of whether the contract has been frustrated the tribunal will have to consider whether the force majeure clause extends to and includes the circumstances of the parties. Hence it is submitted that frustration has become an issue arising under the Charterparty by nature of the existence of the force majeure clause. 41. It is further submitted that, given that given frustration is concerned with the substance of any contract, to determine whether or not it has been fundamentally alienated from its original purpose or that whether the contract which they did make is, on its true construction, wide enough to apply to the new situation, 23 any tribunal would have to 22 (1874) LR 10 CP Davis Contractors v Fareham UDC [1956] AC 696,

17 consider very deeply the contents of the Charterparty, its substance and purpose. Frustration is a question that relates to the nature of the Charter Party, rather than the nature of the parties and therefore must be considered as an issue arising under the Charterparty. 17

18 IV. CLAIM FOR DEMURRAGE 42. The Respondent is liable for demurrage in respect of 358 days, from 13 October 2014 to 6 October 2015, at the rate of US$50,000/day. as per clause 10 and box 24 of the Charterparty. A. THE RESPONDENT IS LIABLE TO PAY FOR DEMURRAGE UNDER CLAUSE 10 OF THE CHARTERPARTY. 43. Pursuant to Clause 10 of the Charterparty, demurrage over and above the lay-days calculated and allowed at the loading port is to be paid to the ship at the rate of US$50,000/day. Clause 9 (c)(i) establishes that the time permitted for loading is 10 WWD SHINC, which is calculated from when NOR is tendered until the Vessel leaves the Loading Place. 44. On the facts, the Vessel arrived and tendered an NOR on 3 rd October 2014, allowing laytime to run. Laytime subsequently expired on 13 th October 2014 after 10 WWD SHINC. However, the Vessel only left the Loading Place on 6 th October The Respondent is therefore liable for demurrage for 358 days, between 13 th October 2014 to 6 th October 2015, in respect of delay to the Vessel as a result of her being kept above the agreed laydays. B. THE VESSEL DID NOT LEAVE THE LOADING PLACE. 45. The Respondent firstly contends that the Vessel did in fact leave the Port of Hades, and denies that the Vessel was prevented from leaving the Port of Hades by the Coast Guard. A port, in contrast to a berth, may extend to areas beyond the place of loading or unloading. 24 In determining the definition of a port, and how far a port extends beyond the place of loading in a port charterparty, the Courts have highlighted that the 24 Sailing-Ship Garston Co. v. Hickie & Co (1885) 15 Q.B.D. 580,

19 term must be construed in a commercial sense, which demonstrates the true intentions of the parties. 25 1) The express clause in the Charterparty provides for laytime to end when the Vessel safely leaves the port of Hades. 46. The Claimant submit that by expressly providing for laytime to end when the Vessel leaves the port of Hades, and in consideration of the warranty of a safe port in box 5 of the Charterparty, there was an express clause highlighting the intentions of the parties for laytime to stop counting when the Vessel could safely leave the port of Hades. Additionally, the discrepancy between the standards utilised in box 5 and 9 of the Charterparty between a port and a berth referring to the loading and discharging places respectively, provides evidence to demonstrate that parties intended for a larger area to encompass the area permitted for loading, in contrast to the discharging procedure. 26 Although it may be unclear if the Vessel was within the territorial limits of Hades, the limits of the port for pilotage purposes is irrelevant in considering the commercial purpose of the Charterparty. 27 Based on the facts which indicate that the Vessel was successfully arrested by the Coast Guard, the Vessel was hence clearly prevented from safely leaving the port of Hades. 2) The Vessel submitted to the jurisdiction of the port authorities. 47. In an area where port authorities are able to exercise their authority on ships, and ships are submitting to the jurisdiction which is claimed by the authorities, it may be accepted that the space of water in which the authority is so exercised and submitted to 25 Leonis SS Co Ltd v. Rank Ltd (No. 1) [1908] 1 K.B. 499, 519; The Johanna Oldendorff [1974] A.C. 479 (Lord Reid). 26 See Charterparty box 5 & ibid (n 24) 594 (Baggallay L.J.). 19

20 as the port of the place, regardless of the legality of the authority. 28 The Claimant further contend that similar to the principles establishing if a ship has arrived at a port, if vessels are unable to go straight to a particular place to which the Charterers will wish them to go as the port authorities prevent them from doing so, it must then follow that such ships would not have been able to leave the port On the facts, although the Master issued a Statement of Facts and the Vessel subsequently left the berth, it was ultimately intercepted by the port authorities and made to return to berth at Hades. The ability of the Hades Coast Guard to exercise their authority on the Vessel demonstrates that the Vessel was still within the jurisdiction of the port authorities, and within the limits of the port of Hades. As such, the prevention of the Vessel from leaving the port renders the Respondent liable for demurrage. C. THE RESPONDENT IS LIABLE TO PAY FOR DETENTION DUE TO A BREACH OF WARRANTY. 49. Without prejudice to the claim for demurrage, the Respondent is liable for damages relating to detention on the grounds of the breach of warranty to nominate a safe port. 1) The Respondent has breached the warranty to nominate a safe port. 50. The Respondent has expressly provided that the vessel is to go to a safe port according to box 5 of the Charterparty. According to the definition of a safe port, the vessel must not be exposed to danger whether reaching or returning from it which cannot be avoided by good navigation and seamanship, 30 and the port must be prospectively safe upon nomination. 31 On the present case, problems in the nominated port have already 28 President of India v. Olympia Sauna Shipping Co SA (The Ypatia Halcoussi) [1984] 2 Lloyd s Rep. 455, 590 (Brett MR). 29 The Johanna Oldendorff (n 25) 535 (Lord Morris). 30 The Eastern City [1958] 2 Lloyd s Rep 127, [131]. 31 The Evia (No.2) (HL) [1982] 2 Lloyd s Rep. 20

21 been brewing as early as 20 th July 2014 before the nomination on 21 st July 2014 which meant that the port was prospectively unsafe. The same problems then escalated into huge protests on 4 th October, yet The Respondent did not fulfil its obligation under the safe port warranty to cancel the original orders despite the obvious risk, 32 nor was there any effort on the Respondent to mitigate the foreseeable danger. 51. In the Ocean Victory the critical issue that made the Court of Appeal decide that foreseeable danger did not necessarily make a port unsafe was that the particular abnormal occurrence at play was the result of two separate occurrences coinciding. 33 On the present case, there is no such abnormal occurrence because the series of events starting from 20 th July to the detention of the vessel were directly connected and formed part of a series of escalation leading up to the detention. Therefore, this is not an abnormal occurrence according to the Ocean Victory test but a foreseeable event as the political unsafety of Hades was the effective cause of the ship s detention. 2) Allegations of negligence by the Respondent. 52. The Claimant refutes any allegations of the Master s negligence by the Respondent. It is submitted that direct attention must be emphasised to the Polyglory case whereby the Master was not to be held negligent for agony of the moment situations such as the one faced by the Master in complying with the orders to return. In the case of Bywell Castle, 34 James LJ considered that the standard of negligence in such scenarios should not be held stringently against the Master. On the present case, the Master was caught in a dilemma and it would be unreasonable to expect him to take the risk of breaking the law by deciding on complicated legal matters at the snap of the moment. He is a 32 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) [1983] 1 A.C China National Chartering Co Ltd v Daiichii Chuo Kisen Kaisha [2015] EWCA Civ Bywell Castle (1879) 4 PD, 219,

22 seaman not a lawyer. It is ultimately the unsafety of Hades which was the effective cause of the vessel being detained. D. THE DELAY IN THE DELIVERY OF THE CARGO DID NOT FRUSTRATE THE CHARTERPARTY. 53. The contract was not frustrated; The English law doctrine of 'frustration' will only provide the parties with limited remedies and will only apply where performance is rendered impossible. Frustration will only apply in relation to a supervening event, and not events that existed at the time the contract was concluded. The Claimant submits that the supervening events existed at the time the contract was concluded due to clear movements of opposition to the natural gas. 1) There was foreseeability. 54. The event may not have fallen into the control of the Respondent but it was expressly cited in the Charterparty. 35 Frustration will not be found where the event in question has been foreseen by the parties or could reasonably have thought to have been foreseen as the essence of frustration lies in the fact that a frustrating event is generally supervening and unforeseen. 55. Where parties have applied their mind to the frustrating event, this will generally preclude reliance on the doctrine. Frustration is concerned with the incidence of risk unforeseen; supervening events that have occurred without default of either party. 56. The Respondent should be aware of the risks that they face from the opposition to natural gas. This opposition was not extraordinary or unanticipated, therefore, the Respondent should not be able to invoke the doctrine. 35 Ocean Tramp Tankers Corporation v. V/O Sovfracht (The Eugenia) [1963] 2 Lloyd s Rep 381 (CA). 22

23 2) The force majeure clause made provisions for the supervening event 57. The supervening events are covered by the force majeure clause. Bailhache J. in Matsoukis v Priestman 36 held that force majeure covered dislocation of business owing to a universal coal strike and access to machinery, but not bad weather, football matches or a funeral. In Lebeaupin v Crispin, force majeure was held to mean all circumstances beyond the will of man, and which it is not in his power to control. 37 Therefore, war, floods, epidemics and strikes are all cases of force majeure. Additionally, the force majeure event must be a legal or physical restraint and not merely an economic one. 3) Force majeure does not bring the contract to an end 58. Pursuant to Clause 19 of the Charterparty: In the event of a Force Majeure Event arising: Affected party shall give the other party prompt written notice of such cause or causes and shall take reasonable steps to minimize any delay so caused; Performance of obligations shall be resumed as soon as practicable (FM clause will entitle one or both parties to suspend performance or to seek an extension of time for performance. Unlike frustration, therefore, an FM event will not always bring a contract to an end if the FM clause provides otherwise.) after such disability is removed. If deliveries are suspended for money than 30 days the shipment in arrears may be cancelled at the option of either party who must inform the other party of such cancellations within 15 days after 36 Matsoukis v Priestman [1915] 1 KB 681, Lebeaupin v Crispin [1920] 2 KB

24 termination of the 30 days. Either party may likewise cancel in respect of any immediate succeeding periods of 30 days during which disability may continue. 59. Similar to many GAFTA forms that contain force majeure/ strikes clauses which allow the seller to serve a notice on buyers setting out that a delay is likely to occur in delivery of shipment of the goods in question and, if necessary, seeking an extension of time. Where the delay extends beyond 30 consecutive days, the buyers will have then an option to cancel the delayed portion of the contract. Force Majeure clause will entitle one or both parties to suspend performance or to seek an extension of time for performance. Unlike frustration, therefore, a Force Majeure event will not always bring a contract to an end if the Force Majeure clause provides otherwise. E. FORCE MAJEURE IS INVALID. 1) The events were in existence at the time the contract was made 60. However, the Respondent will not be entitled to invoke the Force Majeure clause because as a general rule a party cannot invoke a force majeure clause due to "circumstances beyond the control of the parties" which, to the knowledge of the party seeking to rely upon the clause, were in existence at the time the contract was made There is an important caveat to the above and that is parties cannot invoke a force majeure clause if they are relying on their own acts or omissions. Therefore, the Respondent will be liable for the full cost of demurrage, and not be entitled to invoke the option to cancel the delayed portion of the contract. F. THERE WAS NO NEGLIGENCE ON THE PART OF THE MASTER. 38 Asia Pacific Resources Pty Ltd v Forestry Tasmania (No. 2) (1998) Aust Contract R ; (Supreme Court of Tasmania, 5-7 & 10 November 1997); 5 May

25 62. The Master of the vessel was not negligent as the vessel was Hades registered (flag) and was under an obligation to comply with the Coast Guards of Hades. In the unlikely event that the court finds the Master negligent, this event is listed in the Force Majeure clause as (d.) Court issued arrest proceedings barratry of the master and crew, or other similar cause [ ]The Shipper and/or Charterer and/or Receiver shall not be liable on any basis whatsoever, without limitation, whether it be in contract, tort or otherwise and Nothing herein contained shall exempt the Shipowners from liability to comply with any government, state or provincial regulations. Therefore, the Master is entitled to comply with Hades regulation and shall not be liable on any basis such as tort. 63. Pursuant to Clause 19: Nothing herein contained shall exempt the Shipowners from liability to comply with any government, state or provincial regulations... 25

26 V. THE CLAIMANT S DEFENCE TO THE RESPONDENT S COUNTERCLAIM FOR SALVAGE 64. The Claimant submits that the General Average and the New Jason Clause in the Charterparty requires part of the loss suffered (salvage) to be shared among the various other parties that benefited by the intentional sacrifice. All of the parties to the marine adventure that benefited by the sacrifice must share in the loss. Therefore, the Respondent, as the charterer, must contribute on a pro rata basis to the cost of the salvage, this will be based on the market rate. VI. PRAYER FOR RELIEF For the reasons set out above, the Claimant requests the Tribunal to: FIND that this Tribunal has jurisdiction to determine this claim. FIND that the Claimant is entitled to the sum of US$17,900, by way of demurrage or detention or damages in the same amount, and interest on the said amount. FIND that the Claimant is not liable for the Respondent s counter-claims. AWARD interest and costs in favour of the Claimant. 26