INTERNATIONAL MARITIME LAW ARBITRATION MOOT

Transcription

1 INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2014 THE UNIVERSITY OF HONG KONG TEAM 3 MEMORANDUM FOR THE CLAIMANTS CECILIA WING YU CHOI PAK HEI LI ADRIAN YIU YEUNG LO MANTONG AMANDA ZHANG i

2 LIST OF ABBREVIATIONS LIST OF AUTHORITIES SUMMARY OF ARGUMENTS 1 SUMMARY OF FACTS 1 ARGUMENTS PRESENTED 1 The tribunal has no jurisdiction to consider the claims 1 The Tribunal is competent to consider the claim and rule on its own jurisdiction 2 The succeeding entity of the original Ship-owner Reliable Tankers Inc. is time-barred from commencing an action The Claimants reference to arbitration was brought within time 2.1 Universal Tankers Inc. is an non-existent entity at the time when arbitration was first purported to be commenced 2.2 The recognition of Universal Succession under English Law 2.3 Reliable Tankers is discontinued as a corporation 2.4 Extension of time not incorporated into the contract Parol Evidence Rule Exception to the Parol Evidence Rule: The existence of a collateral agreement Non-applicability of the exception Statements made after contract have no contractual force 2.5 Summary 3 The Claimants reference to arbitration was valid 3.1 The approach voyage never commenced 3.1 Definition of Approach Voyage 3.2 The Vessel failed to Start in time 3.3 The Approach Voyage was never commenced 3.2 The delay deprived the Charterer of the substantial benefit of the Charterparty and amounts to a repudiatory breach 4 The claimant breached the charterparty by failing to proceed to Blueland ( Loadport ) with reasonable dispatch 4.1 The duty to proceed to Loadpart with reasonable dispatch i ii ii

3 4.2 The release of the arrested vessel was deliberately refrained 5 The Claimant breached the Charterparty by Failing to Provide Honest and Reasonable E.T.A. Date 5.1 The Claimant did not provide a honest and reasonable prediction of E.T.A. date 6 Respective breaches are repudiatory and hence entitle the Shipowner to treat the Charterparty as at an end 6.1 Termination is an acceptance of repudiation 7 Clause 2 of the Charterparty merely releases the parties from future obligations without prejudice to past liabilities on proper construction 7.1 Existing liabilities is not excluded 7.2 Deleted words could be considered 8 The said Clause can be rectified by common and/or unilateral mistake 8.1 Common Mistake 8.1 The presence of entire agreement clause does not preclude rectification 8.2 Unilateral Mistake 9 The Ship-owners are liable for the damages 9.1 The 95% advance freight was not deemed to be paid. 9.2 Charterers are entitled to set off the counterclaimed sum 9.3 The Ship-owners are liable for the damages 9.4 Calculation of Damages 9.5 The Charterer is Entitled to the Costs of the Replacement Vessel iii

4 List of Abbreviations E.T.A. Estimated Time of Arrival Date First Reference Reliable Tanker s letter dated 28 January referring the matter to arbitration Reliable Holdings/Shipowner Reliable Holdings Inc. Reliable Tankers/Shipowner Reliable Tankers Inc Respondent/Charterers Super Charters Inc Second Recap Recap of the terms of the Charterparty dated 19 November 2011 Second Reference Shipowner s dated 12 February 2011 referring the matter to arbitration The Bunker Port Redland The Charterparty The voyage charterparty between the Shipowner and Reliable Holdings Inc regarding the Vessel Reliable Butterfly for a voyage from 1/2 SP Blueland to 1/2 SP Indigoland carrying a full cargo of crude oil The Load Port Blueland The Vessel The Reliable Butterfly iv

5 List of Authorities Statutes Arbitration Act 1996 Rules London Court of International Arbitration Arbitration Rules Cases Bank of Credit and Commerce International SA v. Munawar Ali, Sultana Runi Khan and Others [2001] UKHL 8 Barker v Windle (1856) 18 C.B. (N.S.) 759 Ben Shipping v An Board Bainne (The C Joyce) [1986] 2 Lloyd s Rep. 285 Caffin v Aldridge [1982] 2 QB 648, 650. C.f. Chartbrook v Persimmon [2009] UKHL 38. Chartbrook v Persimmon [2009] UKHL 38 Chwee Kin Keong v Digilandmall.com [2005] 1 S.L.R City and Westminster Properties (1934) Ltd v. Mudd[1959] Ch 129 Commission for the New Towns v Cooper (1995) Ch. 259 Dalkia v Celtech [2006] 1 Lloyd s Rep 599 Diary Containers v Tasman Orient Line (The Tasman Discoverer) [2004] 2 Lloyd s Rep. 647 Ets. Georges et Paul Levy v Adderley Navigation (The Olympic Pride) [1980] 2 Lloyd s Rep. 67, 72-73; Evera S.A. Commercial v North Shipping Company Ltd [1986] 2 Q.B. 367 Evera SA Commercial v North Shipping Co Ltd [1956] 2 Lloyd s Rep 367 Grand Met v William Hill [1997] 1 BCLC 390. [2009] v

6 Grant v Bragg [2009] EWCA Civ 1228, [2009] 1 All E.R. (Comm) 1166 Hadley v Baxendale (1854) 9 Ex 341 Harrison v Garthorne (1872) 26 L.T. (N.S.) 508 Hartog v Colin & Shields [1939] 3 A.E.R. 566 Hudson v Hill (1874) 43 L.J.C.P. 273 J J Huber (Investments) Ltd v Private DIY Co Ltd [1995] NPC 102 Jacobs v. Batavia & General Plantaitons Trust Ltd [1924] 1 Ch 287 Leslie Shipping Co v Welstead [1921] 3 KB 420 Littman v Aspen Oil (Broking) Ltd [2005] EWCA Civ 1579 Littmann v Aspen Oil (Broking) Ltd [2005] EWCA Civ Louis Dreyfus & Cie v Parnaso [1959] 1 QB Louis Dreyfus & Co v Lauro (1938) 60 Lloyd s LL Rep 94. Maersk v Mobile [2001] 2 Lloyd s Rep 127 Mitsui v Garnac Grain [1984] 2 Lloyd's Rep Monroe Brothers Ltd v Ryan [1935] 2 KB 28, 38 Mopani Cooper Mines plc v Millennum Underwriting Ltd [2008] EWHC 1331 (Comm), [2008] Bus LR Digest D12 Mottram Consultants v Bernard Sunley [1975] 2 Lloyd s Rep 197, 209 Sunday & Co v Keighley, Maxsted & Co (1922) 27 Com Cas 296 Surgicraft Ltd v Paradigm Biodevices Inc [2010] EWHC 1291 (CH). T&N v Royal and Sun Alliance (No.2) [2004] 1 Lloyd s Rep. 106 The Almare Seconda [1981] 2 Lloyd s Rep 433 vi

7 The Baleares [1993] 1 Lloyd s Rep 215 The Dominique [1989] 1 Lloyd s Rep 431, HL The London Explorer [1972] A.C. 1 The Mihalis Angelos [1971] QB 164 The Myrtos [1984] 2 Lloyd s Rep 449 The Rio Claro [1987] 2 Lloyd s Rep 173 The Texaco Melbourne [1994] 1 Lloyd s Rep 473 Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163qw Other Authorities Bauhen, Shipping Law (Routledge, 5th Edition, 2012) Carver, Carriage by Sea (13th ed, Steven & Sons, 1982) Chen-Wishart, Contract Law (Oxford University Press, 2010) Chitty and Beale, Chitty on Contract (31st ed, Sweet & Maxwell 2012) Collins et al, Dicey, Morris and Collins on the Conflict of Laws (Sweet & Maxwell, 15th Edition, Oct McMeel, The Construction of Contracts: Interpretation, implication and rectification (Oxford University Press, 2011) vii

8 A. SUMMARY OF ARGUMENTS This memorandum seeks to establish the following: Reliable Holdings Inc. s ( Reliable Holdings ) reference to arbitration was not brought within the contractual limitation period; the Claimants are not entitled to the freights set out below; the Claimants breached the Charterparty; and the Claimants are liable to pay any damages counterclaimed by the Respondent. B. SUMMARY OF FACTS 2. Reliable Tankers Inc ( Reliable Tankers ) is the original ship-owner of Reliable Butterfly ( Vessel ). Reliable Holdings is the only surviving entity after its merger with Reliable Tankers subject to all liabilities, obligations and penalties of the constituent companies. They are collectively referred to as the Claimants. 3. Super Charters Inc ( Respondent ) is the charterer and chartered the Vessel. 4. On 17 th November 2011, Reliable Tankers made an offer ( Offer ), by , to The Respondent regarding a voyage charterparty ( Charterparty ). Terms of the Offer were based on the ASBANTANKVOY 1977 ( ASBANTANKVOY ) and Super Charters Company Single Voyage Charter Party Rider Clauses 2011 ( Rider Clauses ), with amendments specified in the ( First Recap ). 1

9 5. The Respondent, on 19 th November 2011, confirmed the Offer and requested a drawn-up charter for signatures. On the same day, Reliable Tankers replied with a recap of the terms of the Charterparty ( Second Recap ). 6. Terms of the First Recap and the Second Recap are identical save: First, Reliable Tankers updated the Charterparty Date to be 19 th November 2011; Second, Reliable Tankers omitted the deletion of to either party whatsoever from the Standard Terms of Reliable Tankers. Both recaps consistently amended Clause 24 of the Rider Clauses such that an arbitration shall be held in the City of London pursuant to the English Law. 7. The Vessel was later arrested at the bunker port. On 25 th November 2011, Reliable Tankers informed the Respondent that the Vessel would not make her laycan. 8. On 27 th November 2011, the Respondent purported to decline the revised laycan and thus issued a notice of cancellation to Reliable Tankers. By an dated 28 th November 2011, Reliable Tankers confirmed that the Charterparty was cancelled without recourse. 9. Reliable Tankers ceased to exist as an entity due to its merger with Reliable Holdings, in which Reliable Holdings became the only surviving entity on 23 rd January. Despite the successful merger, the non-existent Reliable Tankers attempted to refer the dispute to arbitration by a letter dated 28 th January 2011 ( First Reference ) and appointed Mr. Smith as the arbitrator. On 12 th February 2011, the Respondent replied and alleged that 2

10 Reliable Tankers appointment was invalid because Reliable Tankers no longer existed after the merger. Nevertheless, the Respondent appointed Mr. John as the arbitrator. 10. By an dated 12 th February 2011 ( Second Reference ) written to Reliable Holdings, the Respondent referred the dispute to arbitration and reiterated its appointment of Mr. John as the arbitrator. The Respondent also averred that Reliable Holdings was time-barred from counter-claiming against it. 1 On 24 th February 2011, Reliable Holdings refuted the Respondent allegation and, again, appointed Mr. Smith as the arbitrator. On 14 th March 2011, Reliable Holdings produced its Claim Submissions. 12. In response to Reliable Holdings Claim Submissions, The Respondent made its Combined Submissions, which are the amalgamation of Defence & Counterclaim regarding Reliable Tankers claim ( First Reference ) and Claim Submissions against Reliable Holdings ( Second Reference ). In the Combined Submissions, the Respondent claimed against Reliable Holdings its loss suffered from Reliable Holdings breach of the Charterparty. C. ARGUMENTS PRESENTED THE TRIBUNAL HAS NO JURISDICTION TO CONSIDER THE CLAIMS 3

11 13. It is hereby submitted that the tribunal does not have valid jurisdiction in the matter of an Arbitration between Reliable Holdings and Super Charterers, as the Claimants are time barred from commencing this claim against the Charterers. The Tribunal is competent to consider the claim and rule on its own jurisdiction 14. This claim is under Clause 24 of ASBANTANKVOY, which states this Tribunal is competent to consider the claim, any and all differences and disputes of whatsoever nature arising out of ASBANTANKVOY shall be put to arbitration in the City of London. 15. Moreover, the court is competent to rule on its own jurisdiction according to Article 23.1 of the London Court of International Arbitration Arbitration Rules. 2. THE SUCCEEDING ENTITY OF THE ORIGINAL SHIP-OWNER RELIABLE TANKERS INC. IS TIME-BARRED FROM COMMENCING AN ACTION 2. Universal Tankers Inc. is an non-existent entity at the time when arbitration was first purported to be commenced 16. It is submitted that as there is an effective merger between Reliable Tankers Inc. and Reliable Holdings Inc, Reliable Tankers Inc will not be an existent-entity and any subsequent arbitration proceedings initiated by Reliable Tankers will not be valid. 4

12 2.2. The recognition of Universal Succession under English Law 17. English company law does not specifically provide for Universal Succession, however English law recognizes a foreign law universal succession as long as it is properly structured According to the Expert evidence given by Tim Bowman, the surviving entity of the merger becomes the owner of all rights and properties of the constituent companies and the Surviving Company shall become subject to all liabilities, obligations and penalties of the constituent companies. The Surviving Company automatically takes over all rights and the discontinuing corporation will no longer be an existing entity Reliable Tankers is discontinued as a corporation 19. It is hereby submitted that as Reliable Tankers Inc did not exist at the time the arbitration was first purported to commence, the alleged commencement is a nullity. 20. The succeeding entity is time barred from commencing claim in the second reference 2 Under clause 4 of the contractual time bar of the Standard Terms of Standard Charters Inc., arbitration had to be commenced by 10th of January, which 20 days after discharge would have been completed. As Reliable Holdings Inc attempted to commence 1 Collins et al, Dicey, Morris and Collins on the Conflict of Laws (Sweet & Maxwell, 15th Edition, Oct 2012),

13 proceedings on 12th February, it is submitted that they are time barred from commencing any claim Extension of time not incorporated into the contract 2.4. Parol Evidence Rule 22. It is submitted that there is no extension of time as no such extension was provided in the concluded written contract. 23. The general rule established in Jacobs v. Batavia & General Plantations Trust Ltd 2 that once the contracting parties have elected to enshrine their contract in a written document, parties cannot adduce extrinsic evidence to add, vary or contradict the written document as the document is the sole repository of the terms of the contract Exception to the Parol Evidence Rule: The existence of a collateral agreement 24. The relevant exception to the Parol Evidence rule is when a collateral agreement may exist, as suggested by the case of City and Westminster Properties (1934) Ltd v. Mudd 3. In this case, the tenant had been induced to sign the lease by an oral assurance given by the lessors agent. It was held that the evidence of the assurance given by the lessors agent was admissible to prove the existence of a collateral agreement. 2 [1924] 1 Ch [1959] Ch 129 6

14 Non-applicability of the exception 25. It is submitted that the present claim must be distinguished from the case of City and Westminster Properties (1934) Ltd v. Mudd 4. In this claim, the Ship-owners were not induced to enter the contract by the oral representation of a member of Super Charterer. The contract, containing and intending to contain the whole agreement has already been entered and in forced. Hence, it is submitted that the exception does not apply and the Parol Evidence Rule must be applied Statements made after contract have no contractual force 26. It is sound law that Statements made after the conclusion of a contract have no contractual force unless supported by a separate and valid consideration, according to Thornton v Shoe Lane Parking Ltd 5. Moreover, past consideration is not good consideration. 27. In this case, as there is no consideration, the statement made by a member of the Charterer will have no contractual force as there is no separate and valid consideration Summary 4 Ibid. 5 [1971] 2 QB 163 7

15 28. It is hereby concluded that the tribunal does not have valid jurisdiction over this claim, as the Ship-owners are time barred from commencing a claim. 3. THE CLAIMANT BREACHED THE CHARTERPARTY BY FAILING TO APPROACH THE VOYAGE IN TIME 3. The approach voyage never commenced 29. Shipowners must commence the voyage to the loading port at such a time that it is reasonably certain that, proceeding normally, she can arrive at the loading port on or about the estimated time of arrival. 6 This is known as the start in time obligation. To determine whether the Shipowner breached this duty, the Tribunal has to define the approach voyage. 3. Definition of Approach Voyage 30. Case law generally seek to ascertain the point of time at which the ship embarks upon the chartered service stated in the charterparty. In Willes J s words, the approach voyage 6 Voyage Charterparties, 4.12; The Myrtos [1984] 2 Lloyd s Rep 449; The Baleares [1993] 1 Lloyd s Rep 215, 227; Louis Dreyfus & Co v Lauro (1938) 60 Lloyd s LL Rep 94. 8

16 begins when the Vessel commenc[es] to do that for which the shipowner is to be paid freight. 7 3 It is submitted that the approach voyage is the journey last port of call to the port of loading. This definition is consistent with Leggatt J s reasoning in Mitsui v Garnac Grain 8. Leggatt J requires the Shipowner to set sail on the date on which when proceeding with all convenient speed it would normally be necessary to sail in order to reach a port in the load port range on or about the E.T.A. 32. To sail means that the ship has to definitely leave the dock or moorings at which she was lying, ready for her voyage, and with the intention, of proceeding upon it forthwith The last port of call approach is most consistent with both common sense and commercial practicality as it is determinable with reasonable certainty. And the start in time obligation often relates to previous engagements of vessels which end at a port most of the time. The last port of call is the most suitable place to see whether the Vessel started in time The Vessel failed to Start in time 7 Voyage Charterparties, 4.17; Barker v Windle (1856) 18 C.B. (N.S.) 759; Harrison v Garthorne (1872) 26 L.T. (N.S.) 508; Hudson v Hill (1874) 43 L.J.C.P. 273; Evera S.A. Commercial v North Shipping Company Ltd [1986] 2 Q.B [1984] 2 Lloyd's Rep Carver, Carraige by Sea (1982), p

17 34. The Charterparty was entered into on 19 th November According to the itinerary in the Charterparty 11, the Vessel was in Orangeland on 16 th November and was expected to arrive in Redland for Bunkering on 22 nd November. 35. Orangeland is not the last port of call after the conclusion of the Charterparty before the Vessel set off to the Load Port. The Vessel could not be said to have embarked on the chartered service as from Orangeland because the Charterparty has not been concluded before that voyage began. Correspondences with the Shipowner reveals that the journey from Orangeland to Redland has already begun a few days prior to the signing of the Charterparty. 12 Hence, the approach voyage was the journey from Redland to Blueland. 36. Having defined the voyage to the load port, the date on which the Vessel must commence the voyage is determined as follows. 37. The date on which the Shipowner must start in time is determined by reference to the E.T.A. date. The E.T.A. date was taken as the date by which the vessel is to arrive at the load port. Then we determine the time normally needed (assuming the Vessel proceeded with reasonable dispatch) to complete the approach voyage by the E.T.A. date. Then, 10 Bundle, p Bundle, p Bundle, p

18 we engage in a process of a count-back from the E.T.A. date to determine the date on which the Vessel ought to have started the voyage It is not disputed that if the Vessel did not set sail on 25 th November, then the laycan and hence the E.T.A date, which is earlier than the laycan date, (3 rd December) cannot be met. 14 The Vessel did not leave Redland before 25 th and hence failed to start in time The Approach Voyage was never commenced 39. It is submitted that the approach voyage was never commenced. Any delays before the commencement of the approach voyage are entirely at the Shipowner s risk. 15 The Shipowner is not entitled to rely on any exemptions/exceptions in the Charterparty, unless the Charterparty says so by express words or by necessary implication The delay deprived the Charterer of the substantial benefit of the Charterparty and amounts to a repudiatory breach 13 Evera SA Commercial v North Shipping Co Ltd [1956] 2 Lloyd s Rep 367; The Myrtos [1984] 2 Lloyd s Rep Bundle, p. 92, Voyage Charterparties, 4.15, Monroe Brothers Ltd v Ryan [1935] 2 KB 28, 38; The Rio Claro [1987] 2 Lloyd s Rep

19 40. The authorities have not discussed the nature of the start in time obligation. It is submitted that it is a condition given the previous negotiations showing the importance of the Vessel arriving before the laycan. 4 Should the Tribunal rule that the start in time obligation in the intermediate term, it is submitted that the delay deprived the Charterer of the substantial benefit of the Charterparty and amount to a repudiatory breach. 17 The Charterer needed the oil to be discharged at the discharge port before the planned refinery shutdown from 15 th January THE CLAIMANT BREACHED THE CHARTERPARTY BY FAILING TO PROCEED TO BLUELAND ( LOADPORT ) WITH REASONABLE DISPATCH 4. The duty to proceed to Loadpart with reasonable dispatch 42. The Shipowner has a duty to proceed to the Loadport with reasonable dispatch. The duty is provided for in Clause 1 of the ASBANTANKVOY Form Part II 19 and also implied by common law If the Tribunal is minded to hold that the approach voyage commenced before the Vessel was arrested at Redland, it is submitted that the Shipowner failed to proceed with 17 Evera SA Commercial v North Shipping Co Ltd [1956] 2 Lloyd s Rep Bundle, p. 89, Bundle, p Girvin, Carriage of Goods by Sea 2 nd ed, 413; Louis Dreyfus & Co v Lauro (1938) 12

20 reasonable dispatch by failing to avoid being arrested or refusing to furnish security to release the Vessel The release of the arrested vessel was deliberately refrained 44. The Shipowner deliberately refrained from securing the release of the arrested Vessel. 21 The term is a innominate term. As argued above, this failure also deprived the Charterer of the substantial benefit of the Charterparty and hence is a repudiatory breach that entitles the Charter to treat the Charterparty as at an end THE CLAIMANT BREACHED THE CHARTERPARTY BY FAILING TO PROVIDE HONEST AND REASONABLE E.T.A. DATE 5. The Claimant did not provide a honest and reasonable prediction of E.T.A. date 45. Clause 1 of the Standard terms of the Reliable Tankers Inc provides that the Shipowner has an obligation to inform the Charterers of any expected change of E.T.A date. 23 Clause 1 requires Post-Fixture Notices of E.T.A. where the original E.T.A. changes. 21 Bundle, p Baughen, pp Bundle, p

21 46. By stating a date of expected readiness to load or E.T.A. date 24, the Shipowner was undertaking that he honestly and on reasonable grounds believe that the date named is the date when the Vessel will be ready to load. If when the Shipowner makes the prediction, knowing that the Vessel cannot reach the Loadport by that date, or there are no reasonable grounds for such a belief, then he commits a breach of condition entitling the Charterer to repudiate the contract It is a breach of condition and hence a repudiation when the Shipowner made a prediction of the time of arrival, either at its own volition or pursuant to its obligation under Clause 1 of Reliable Tanker s Standard Terms, knowing full well that it will not be possible for the Vessel to reach the Loadport by that date The Shipowner by 23 rd November knew or ought to have known that the Vessel will not be able to reach the Loadport by the E.T.A. date as he is not going to furnish the security for its release and negotiations with the arrestors were almost certainly futile RESPECTIVE BREACHES ARE REPUDIATORY AND HENCE ENTITLE THE SHIPOWNER TO TREAT THE CHARTERPARTY AS AT AN END THE TERMINATION PARADOX 24 The Myrtos [1984] 2 Lloyd s Rep 449, 45 Leggatt J ruled that E.T.A, Expected readiness to load and similar phrases are analogous and do not warrant difference in treatment. 25 John Wilson, Carriage of Goods by Sea (2010), p. 66; The Mihalis Angelos [1971] QB 164; Sunday & Co v Keighley, Maxsted & Co (1922) 27 Com Cas Girvin, pp Bundle, p

22 6. Termination is an acceptance of repudiation 49. It is submitted that the letter on 27 th November 28 accepts the Shipowner s Repudiation/Renunciation. Reliable Tankers s Standard Terms Clause 2 need not be relied upon. The right to treat a charterparty as having been repudiated by the owners may arise before a contractual right to cancel where it was clear that there was no reasonable prospect of the vessel being able to perform the contemplated voyage Termination may mean both a termination pursuant to a contractual clause and the acceptance of repudiation. 30 Explicit reference to a cancellation clause does not preclude the Charterers from arguing that the notice was an acceptance of repudiation. This principle was laid down in the case of United Dominions Trust (Commercial) Ltd v Ennis. 31 In that case, the judge referred to the intention of the innocent party, to whether the claim made under the termination was inconsistent with (not simply less than) that which arises on acceptance of repudiation. 5 The principle was affirmed in Dalkia v Celtech 32. These cases show that the purported exercise of power to terminate alone does not constitute an affirmation of the contract 28 Bundle, p Girvin, Carriage of Goods by Sea 2 nd ed, 318; The Baleares [1993] 1 Lloyd s Rep 215; The Mihalis Angelos [1971] QB 164 (CA); Chitty, Chitty on Contracts (2014), 22049; Leslie Shipping Co v Welstead [1921] 3 KB Maersk v Mobile [2001] 2 Lloyd s Rep [1968] 1 QB 54, 65, [2006] 1 Lloyd s Rep 599. C.f. however, Stocznia Gdynia SA v Gearbulk Holdings Ltd [2010] QB 27. C.f. also Shell Egypt West Manzala GmbH, Shell Egypt West Qantara GmbH v. Dana Gas Egypt Ltd (formerly Centurion Petroleum Corp) [2010] EWHC 465 (Comm). 15

23 in the face of a repudiatory breach. In the circumstances where the court finds both a repudiatory breach and a purported reliance on a cancellation clause, the court should look at whether the innocent party claimed additional entitlements under the cancellaton clause which are inconsistent with, and not simply less than that which arises on acceptance of repudiation 52. The Charterer despite having referred to the Standard Term Cancellation Clause expressly stated that the cancellation is without prejudice to any liabilities incurred by the Shipowner s breaches. Furthermore, the Charterer in effect waived the right to have a sister ship nominated. These conducts taken together shows a clear intention that the Charterer was in fact exercising his right to accept a repudiatory breach, treat the Charterparty as at an end and claim against the Shipowner. 7. CLAUSE 2 OF THE CHARTERPARTY MERELY RELEASES THE PARTIES FROM FUTURE OBLIGATIONS WITHOUT PREJUDICE TO PAST LIABILITIES ON PROPER CONSTRUCTION 7. Existing liabilities is not excluded 53. Alternatively, it is submitted that Reliable Tankers Inc s Standard Terms Clause 2 does not prejudice existing liabilities. 33 It merely releases the parties from future obligations. 33 Bundle, p

24 54. As a general rule, any limitation/exclusion of liability has to be effected by clear language and such clauses will be construed against the person relying on them The clause cancelled without recourse is ambiguous and therefore should be construed against the Shipowner who is seeking to exclude themselves from liabilities for his breaches. This reflects the well established contra proferentem rule Deleted words could be considered 56. Further, deleted words in a standard printed form which parties have adopted could be considered in construing Charterparty terms. The reasons for public policy which exclude evidence of negotiations are not applicable to deletions Lord Diplock in Louis Dreyfus & Cie v Parnaso 37 pronounced that: while I think that I must first look at the clause in its actual form, without the deleted words, if I find the clause ambiguous, I think that I am entitled to look at the deleted words to see if any assistance can be derived from them in solving the ambiguity This, of course, is 34 Voyage Charterparties, 112; Diary Containers v Tasman Orient Line (The Tasman Discoverer) [2004] 2 Lloyd s Rep. 647 at para Bank of Credit and Commerce International SA v. Munawar Ali, Sultana Runi Khan and Others [2001] UKHL 8 36 Voyage Charterparties, 117; Mottram Consultants v Bernard Sunley [1975] 2 Lloyd s Rep 197, 209; The London Explorer [1972] A.C. 1 at pp. 1516; note however, Ben Shipping v An Board Bainne (The C Joyce) [1986] 2 Lloyd s Rep Gerard McMeel, The Construction of Contracts (2011), 5.113; Mopani Cooper Mines plc v Millennium Underwriting Ltd [2008] EWHC 1331 (Comm); Caffin v Aldridge [1982] 2 QB 648, 650. C.f. Chartbrook v Persimmon [2009] UKHL [1959] 1 QB ; Mopani Cooper Mines plc v Millennium Underwriting Ltd [2008] EWHC 1331 (Comm). 17

25 subject to the prima facie rule that he cannot ascribe the intention to alter the meaning of words in the provisions where no ambiguity is present. 58. Christoper Clarke J in Mopani Cooper Mines plc v Millennum Underwriting Ltd 38 agreed with Lord Diplock. His Lordship further warned that care must be taken as to what inferences can properly be drawn from the deleted words. There are many reasons why words may be deleted from the standard form. 59. The original Charterparty 39 reveals that both parties agreed to delete to either party whatsoever from the clause. Objectively construed, without recourse simply means where the Charterer cancels the Charterparty relying on Reliable Tankers Inc s Standard Terms Clause 2, the Shipowner does not have recourse against him for the cancellation. Liabilities for breaches are not extinguished by the said Clause. 60. The Charterer considered the original clause, insofar as it releases the parties from liabilities, to be biased and unfair. The clause should be construed according to the parties intention that it does not operate to release the parties from liabilities. 8. THE SAID CLAUSE CAN BE RECTIFIED BY COMMON AND/OR UNILATERAL MISTAKE 8. Common Mistake 38 [2008] EWHC 1331 (Comm), [2008] Bus LR Digest D12 39 Bundle, p.3 and 4. 18

26 6 Should the Tribunal hold that Reliable Tankers Inc s Standard Terms Clause 2 in the Charterparty contained the words without recourse to either party whatsoever, we submit that the Charterparty should be rectified for common mistake to remove the said words. 8. The presence of entire agreement clause does not preclude rectification Where a formal charterparty has been drawn up and signed in terms which, as a result of a mistake, fail to reflect the prior agreement or common intention of the parties, the charterparty may be rectified so as to correct the mistake. The rectification is of the document, not of the agreement itself, which nearly always precedes the execution of the document The agreement was formed based on the acceptance of the Charterparty offered on 17 November which included the deletion of the phrase to either party whatsoever from the Shipowner s Standard Terms. The Charterer closed the deal based on the earlier Charterparty which contained the deletion. However that deletion was missing in the RECAP on 19 November 2011 by mistake J J Huber (Investments) Ltd v Private DIY Co Ltd [1995] NPC 102; Surgicraft Ltd v Paradigm Biodevices Inc [2010] EWHC 1291 (CH). 41 Voyage Charterparties, 7375; Ets. Georges et Paul Levy v Adderley Navigation (The Olympic Pride) [1980] 2 Lloyd s Rep. 67, 7273; Chartbrook v Persimmon [2009] UKHL Bundle, p. 4, Bundle, p

27 64. It is therefore submitted that the 19 November Charterparty fail to reflect the prior agreement/common intention of the parties and hence should be rectified by operation of common mistake. 65. The rectified document should be construed as argued above Unilateral Mistake 66. Should the Charterer fail both on the construction and common mistake point, we would rely on rectification by unilateral mistake. 67. Where one party signed a document, which did not record his intentions correctly, and the other party knew of the first party's intentions, the tribunal may rectify the document so that it reflects the first party's intentions. This is a case of rectification to correct a unilateral mistake The document should be rectified to delete the abovesaid phrase for unilateral mistake where the Shipowner is aware that the deletion clause was missing. 69. According to the doctrine of unilateral mistake where A is actually aware, or where it is patently obvious, that B is entering into the contract under a fundamental 44 Chitty 2014,

28 misapprehension as to its terms, A will not be entitled to insist upon the application of the objective rule and to enforce the contract accordingly It would be inequitable for the unmistaken party to object to rectification where he: Actually knows of the mistake and of the mistaken party s real intentions; Fails to draw the mistaken party s attention to the mistake; and the mistake results in benefit to the unmistaken party or detriment to the mistaken party The rectification may be rectified to coincide with the mistaken parties intention even though the other would never have agreed to that clause. In Littman v Aspen Oil (Broking) Ltd, 47 Jacob LJ and May LJ were prepared to order rectification even in absence of a prior agreement, i.e. where the non-mistaken party would not have agreed to rectified contract. 72. Internal correspondence of the Shipowner reveal that they are clearly knew that the Charterers misunderstood above said clause. The Shipowner deliberately fail to draw the Charterer s attention to the mistake. The mistake results in the Charterer losing the right to claim against the Shipowner. 45 Voyage Charterparties, 67; Hartog v Colin & Shields [1939] 3 A.E.R. 566; Chwee Kin Keong v Digilandmall.com [2005] 1 S.L.R Mindy ChenWishart, Contract Law (2010), p.303; Gerard McMeel, The Construction of Contracts (2011), 17.40; Commission for the New Towns v Cooper (1995) Ch. 259, p.280; Littmann v Aspen Oil (Broking) Ltd [2005] EWCA Civ [2005] EWCA Civ 1579; Gerard McMeel, The Construction of Contracts (2011), ; Longmore LJ is reluctant to adopt the approach. Note however that in dealing with the construction ground, their Lordships were not concerned that on true construction, the nonmistaken would not have accepted! 21

29 73. It is submitted that it is inequitable for the Shipowner to enforce the clause. The Tribunal may rectify the document to reflect the understanding of the Charterers that the clause releases the parties only from their future obligations but not their liabilities. 74. It is clear that the common intention of the party is that the phrase to either party whatsoever is to be deleted. This intention has not been changed. It is clear that the fact that the phrase remained in the latest Recap was a common mistake shared by both the Charterer and the Shipowner. 75. Even where both parties are agreed as to the wordings contained in the Charterparty, it does not automatically bar the rectification of the instrument when the wording has an effect meaning different from what was intended Therefore, it is not open for the Shipowner to argue that liability is excluded by the Clause. 9. THE SHIP-OWNERS ARE LIABLE FOR THE DAMAGES 9. The 95% advance freight was not deemed to be paid. 77. Clause 4 of Reliable Tanker s Standard Terms provides that freight was deemed to be paid upon lifting of subjects. The Shipowner relies on the said clause to argue that the 48 T&N v Royal and Sun Alliance (No.2) [2004] 1 Lloyd s Rep. 106, para ; Grand Met v William Hill [1997] 1 BCLC

30 freight to them was deemed to be paid. The Charterer is required to give written notice to the Shipowner to notify them of the lifting of subjects. 78. Correspondences between the Charterer and Shipowner on 19 November shows that the Shipowner confirmed fully fixed with subjects lifted at In Grant v Bragg 50, it was held that an offer which expressly states that it will last only for a specific time cannot be accepted after the specific time has lapsed. 79. The offer on 17 November 2011 was expressly said to be held open only for 24 hours. By 19 November 2011, 24 hours had already passed. Therefore, it is submitted that the lifting of subject could not have occurred on 19 November 2011 as the correspondences on 19 November 2011 could not have accepted the offer made on 17 November 201 Therefore, it is submitted that the freight was not deemed to be paid Charterers are entitled to set off the counterclaimed sum 80. In general, charterers must pay freight in full and are not entitled to rely on common law and equitable set-off to deduct the amount of freight due. 51 Any cross-claims made by charterers must be made by counterclaim or by separate action. 49 Bundle, p [2009] EWCA Civ 1228, [2009] 1 All E.R. (Comm) 1166 at [25]; Chitty on Contracts, The Dominique [1989] 1 Lloyd s Rep 431, HL. 23

31 8 It is submitted that this rule should not be followed by the tribunal because the authorities that approves the rule concerns the part of the voyage after the goods/cargos have been loaded. They do not concern where repudiatory breach on the part of the Shipowner occurred before the Vessel reached the port of loading. 82. It is submitted that, in the circumstances, the Dominique 52 should be distinguished and a set off should be allowed. The Dominique was the first case that applied the rule against deduction to a case involving a repudiatory breach, but it deals with the situation where the accrued right was transferred to a third party bank. The reference to the application of the rule as between the Shipowner and Charterer was obiter The Ship-owners are liable for the damages 9.3. Remoteness of Damages 83. The general rule is authoritatively stated by the case of Hadley v Baxendale 53, where the injured party can recover any loss actually resulting from the breach of contract as was within its contemplation at the time when contract was concluded. 84. It is submitted that this remoteness test is able to pass as the losses incurred is a direct result of the Ship-owner s clear breach of the charter party obligations. 52 Ibid. 53 (1854) 9 Ex 341 at p

32 9.4. Calculation of Damages 85. Contractual damages should place the Claimant in the same financial position as if the contract had been performed The Charterer is Entitled to the Costs of the Replacement Vessel 86. According to The Almare Seconda 55, the appropriate damages recoverable under a ship-owner s failure and breach of the charterparty obligations to make vessels available at the agreed time, is the extra cost of making alternative arrangements for the shipment of the cargo. Furthermore, according to Clause 23 of ABSTANKVOY, damages for breach of the charterparty shall include all provable damages, and all costs of suit and attorney fees incurred in any action hereunder. It is submitted that the Charterer is entitled to the costs of the two replacement vessel subsequently hired. 54 The Texaco Melbourne [1994] 1 Lloyd s Rep [1981] 2 Lloyd s Rep