INTERNATIONAL MARITIME LAW ARBITRATION MOOT TEAM 1 SMU Respondent

Transcription

1 INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2016 TEAM 1 SMU Respondent Rodney Yap Thye Yi Darren Lim Wei Xiang Sean Lim Zhan Hui Teo Zhe Han Priscilla Nicole Santa Maria 0

2 Abbreviations AC Law Reports, Appeal Cases All ER All England Law Reports All ER (Comm) All England Law Reports (Commercial Cases) Art Article Ch Law Reports Chancery CLR Commonwealth Law Reports E.G.L.R. Estates Gazette Law Reports EWCA (Civ) Court of Appeal (Civil Division) EWHC England and Wales High Court HLNG Hades Liquefied Natural Gas HST Hawaii Standard Time ICC International Chamber of Commerce ICJ International Court of Justice KB Law Reports King s Bench Lloyd s Rep Lloyd s Law Reports LNG Liquefied Natural Gas M. & W Meeson & Welsby's Exchequer Reports Master the shipmaster of the Athena NSWSC New South Wales Supreme Court P Probate, Divorce and Admiralty Division QB Law Reports Queen s Bench Division the Claimant Zeus Shipping and Trading Company the Port the Port of Hades the Respondent Hestia Industries UKHL United Kingdom House of Lords UKPC United Kingdom Privy Council UNCITRAL United Nations Commission on International Trade Law UNCLOS United Nations Convention on the Law of Sea WASC Western Australia Supreme Court WLR Weekly Law Reports 1

3 Respondent s table of authorities Statutes and Arbitration Rules International Arbitration Act Maritime Law Association of Australia & New Zealand Arbitration Rules 7 United Nations Commission on International Trade Law (UNCITRAL) 7 Model Law Cases Bangladesh Export Import Co v Sucden Kerry [1995] 2 Lloyd's Rep British Energy Power and Trading Ltd v Credit Suisse [2008] EWCA Civ Budgett v Binnington & Co. [1891] 1 Q.B Case Concerning Barcelona Traction, Light, and Power Company, Ltd [1970] 11 ICJ 1 CDV Software Entertainment AG v Gamecock Media Europe Ltd [2009] 19 EWHC 2965 Christie & Vesey v Helvetia [1960] 1 Lloyd s Rep. 540 (EWHC) 19 Connaught Restaurants Ltd. v. Indoor Leisure Ltd [1994] 1 WLR Davis v Garrett (1830) 6 Bing EL Oldendorff & Co GmbH v Tradax Export SA [1974] AC Fiona Trust & Holding Corporation and others v Privalov and others [2007] 7 2 All ER (Comm) 1053 Francis Travel Marketing P/L v Virgin Atlantic Airways Ltd [1996] NSWSC Freedom Maritime Corporation v International Bulk Carriers SA (The Khian 14 Captain) [1985] 2 Lloyd s Rep 212 (EWHC) Fyffes v Reefer Express (The Kriti Rex) [1996] 2 Lloyd s Rep Grant v Maddox (1846) 15 M. & W Gem Shipping Co of Monrovia v Babanaft (Lebanon) SARL (The Fontevivo) 20 [1975] 1 Lloyd's Rep 339 General Feeds Inc v Burnham Shipping Corp (The Amphion) [1991] 2 22 Lloyd s Rep. 101 High Seas Venture Ltd Partnership v Sinom (Hong Kong) Ltd (The 14 Newforest) [2008] 1 Lloyd s Rep. 504 (EWHC) Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha [1962] EWCA Civ 25 7 International Chamber of Commerce Cases Nos 4555, 5946, 7722, and J. Lauritzen A.S. v Wijsmuller B.V, (The Super Servant Two) [1990] 1 Lloyd's 8 Rep 1 Kawasaki Kisen Kabushiki Kaisha of Kobe v Bantham Steamship Co Ltd 17 2

4 [1939] 2 K.B. 544 Kopitoff v Wilson (1876) 1 QBD Kish v Taylor [1912] A.C Lavabre v Wilson (1779) 1 Dougl Louis Dreyfus v Lauro (1938) 60 Ll.L.Rep Luigi Monta of Genoa v Cechofracht Co Ltd [1956] 2 Q.B Maritime National Fish v Ocean Trawlers [1935] AC Minchillo v Ford Motor Co of Australia Ltd [1995] 2 VR National Carriers Limited v Panalpina (Northern) Ltd [1981] 1 All ER NEC Australia Pty Ltd v Gamif Pty Ltd 42 FCR 410 (1993) (Federal Court of 18 Australia, NSW) Owners of S.S. Sebastian v de Vizcaya (The Sebastian) [1919] 1 Ll L Rep Poussard v. Spiers and Pond (1876) 1 Q.B Produce Brokers Co Ltd v Olympia Oil and Cake Co Ltd [1917] 1 K.B (EWCA) President of India v Moor Line, Ltd. [1958] 2 Lloyd's Rep. 205 (High Court 20 of Australia) Price v Livingstone (1882) 9 Q.B.D , 15, 16 Re Strand Music Hall Co Ltd (1865) 35 Beav , 17 Sadler Brothers Co v Meredith [1963] 2 Lloyd s Rep. 293 (EWHC) 19 Sailing Ship Garston Co v Hickie & Co (1885) 15 Q.B.D , 15 SCA (Freight) Ltd v Gibson [1974] 2 Lloyd's Rep 533 (EWHC) 19 Scaramanga v Stamp (1880) 5 C.P.D. 295 (CA) 20 Schuler (L) AG v Wickman Machine Tool Sales Ltd [1974] A.C Singapore Airlines Ltd v Buck Consultants Ltd [2011] EWHC 59 (Ch) 18 Societe Franco Tunisienne d Armement v Sidermar S.P.A. (The Massalia) 9 [1961] 2 Q.B. 278 Tea Trade Properties Ltd v CIN Properties Ltd [1990] 1 E.G.L.R The Domald [1920] P The Homwood (1928) 31 Llyold s Rep The Lomonosoff [1921] P The Sava Star [1995] 2 Lloyd s Rep The Theseus (1925) 23 L.I.L. Rep The Tramp [2007] EWHC 31 (Admlty); 27 The Troilus [1951] 1 Lloyd's Rep Upper Hunter County District Council v Australian Chilling and Freezing Co 17 Ltd (1968) 118 CLR 429 Watson v Haggitt [1928] A.C

5 Other authorities Eric Sullivan, The Marine Encyclopaedic Dictionary (2 nd Edition Lloyd s of 13, 17 London Press Ltd 1988) J Schofield, Laytime and Demurrage (6 th ed) Lloyd s Shipping Law Library 14 Scrutton on Charterparties and Bills of Lading, 22 nd ed, (London, Sweet & 15, 17, 20, 21, 22 Maxwell, 2011) McKendrick, Force Majeure and Frustration of Contract, 2 nd ed, (Informa 17 Law from Routledge, 2013) Kim Lewison, The Interpretation of Contracts, 6 th ed, (London, Sweet & 18 Maxwell, 2015) The Baltic and International Maritime Council 25 < 4_The_maintenance_of_ships.aspx> (accessed 6 March 2016) 4

6 I. SUMMARY OF FACTS 1. By a voyage charterparty ( Charterparty ) dated 21 July 2014, Zeus Shipping and Trading Company ("the Claimant") chartered a vessel ( the Athena ) to Hestia Industries ("the Respondent") for one voyage from Hades to Poseidon. This was for the potential transport of Hades Liquefied Natural Gas ( HLNG ) from the Respondent s newly established LNG plant in Hades. The Claimant was the party that drafted all the terms of the Charterparty. 2. The parties specifically arranged to use the Athena, a Hades flagged vessel, for this voyage because the vessel is one of the few vessels, in the world, that is equipped with technology to efficiently transport HLNG. 3. Before both parties formally entered into the Charterparty, there were negotiations between the two parties that spanned from 14 July to 21 July The Claimant ed an initial draft to the Respondent on 14 July However, on 16 July 2014, the Respondent ed the Claimant and requested for an amendment to clause 30 of the Charterparty ( Arbitration clause ) to limit the scope of arbitrable issues. On 21 July 2014, the Claimant sent the Respondent a revised Charterparty where the Arbitration clause was amended. This was the version of the Charterparty that was signed and agreed to. 4. On 3 October 2014, the Athena arrived at the Port of Hades ( the Port ). Loading was completed within the allowed laytime, and the Athena left the loading place early in the morning of 7 October 2014 at On the same day, the Hades Opposition staged an unexpected coup. The winner of that power struggle, newly appointed President Simmon, had directed the Coast Guard to intercept the Athena to prevent the export of HLNG. 5

7 5. The Coast Guard intercepted the Athena late in the day on 7 October As the Athena was outside the territorial limits of Hades, the Athena s shipmaster ( the Master ) initially refused to submit to the Coast Guard. Nevertheless, the Master finally complied the Coast Guard asserted that he had authority to take control over a Hades-flagged vessel on the high seas. 6. The Athena would be then be detained at the Port for over a year. Around 30 April 2015, the Respondent attempted but failed to arrange for an alternative vessel to transport the HLNG because only Hades-flagged vessels were permitted into the Port. Finally, around 30 September 2015, the Opposition President Simmons resigned. On 5 October 2015, the Coast Guard released the Athena. The Claimant then instructed the Athena to engage Hestug, incidentally a business owned by the Respondent, for towage services. 7. After Hestug towed the Athena into open waters, an unfortunate discovery was made the Athena s propeller shafts had broken down from tampering while it was detained at the Port. Fortunately, Hestug s tugboats were close enough to render assistance to the distressed Athena, thus preserving the HLNG and the vessel. II. THE TRIBUNAL DOES NOT HAVE THE JURISDICTION TO DETERMINE THE ISSUE OF FRUSTRATION 8. The Tribunal does not have the jurisdiction to determine whether or not frustration arose for two reasons. Firstly, the presumption of one-stop adjudication does not apply. Secondly, the Parties did not intend for clause 30 ( the Arbitration clause ) to extend to the issue of frustration. As a preliminary point, under the Model 6

8 Law 1 the Tribunal has the right to determine the admissibility, relevance, materiality and weight of the evidence offered. 2 A. The presumption of one-stop adjudication does not apply 9. There is a general presumption of a one-stop adjudication that the Parties intended for all matters to be resolved in one forum. 3 However, the general presumption does not apply in the current case in the face of countervailing evidence. 4 Parties did intended for different fora for different dispute resolutions. 5 B. The Parties did not intend for the Arbitration clause to extend to frustration 10. The powers of the Tribunal extend as far as the Arbitration clause stipulates. To arrive at the proper construction of the Arbitration clause, the Tribunal should interpret the language of the arbitration clause as a whole with the Parties intention in mind against the commercial background of the contract Arbitral tribunals have considered extrinsic evidence of one Party s subjective understanding of the contract, and held that such evidence was decisive to the meaning of the clause even though it contradicted with the plain meaning of the text. 7 In the face of persuasive evidence of clear intent of the Parties, the meaning of the terms can be overridden. 8 1 Maritime Law Association of Australia & New Zealand Arbitration Rules s 2 which applies International Arbitration Act 1974 s Article 27(4) of the United Nations Commission on International Trade Law (UNCITRAL) Model Law. Applies in Australia. 3 Fiona Trust & Holding Corporation and others v Privalov and others [2007] 2 All ER (Comm) 1053 at [13]. 4 Letter to Zeus Shipping and Trading Company, Moot Scenario at p Ibid. 6 Francis Travel Marketing P/L v Virgin Atlantic Airways Ltd [1996] NSWSC 104; Fiona Trust & Holding Corporation and others v Privalov and others [2007] 2 All ER (Comm) 1053 at [5]. 7 ICC Case Nos 4555,5946,7722, and Ibid 7

9 12. The amendments made to the Arbitration clause clearly illustrate the Parties intention not to arbitrate on frustration. 9 The original clause 30 allowed arbitration for any dispute arising out of or in connection with this contract, including any question regarding its existence, validity, or termination 10 The amended clause 30, reads Any dispute arising under this contract shall be referred to arbitration 11 Parties removed the words including any question regarding its existence, validity, or termination These words were removed following the request made by the Respondent. 13 In the letter, the Respondent identified a category of issues that he is not prepared to arbitrate, such as disputes that relate to but do not arise out of the contract, and identified misrepresentation as one such example. 14 The effect of finding for misrepresentation goes towards the validity and existence of a Charterparty. The effect of finding for frustration is that the Charterparty is automatically terminated. 15 Since disputes relating to termination of the Charterparty are not intended to be arbitrated, frustration is similarly not intended to be arbitrated upon. III. THE CHARTERPARTY HAD BEEN FRUSTRATED 14. In the alternative, the delay had frustrated the Charterparty, and the Charterparty had therefore been terminated as of 1 st January This submission rests on a positive finding on the requirements of frustration. 16 Firstly, the interception by the Coast Guard was a supervening event that changed the nature of the outstanding obligations/rights from what the Parties reasonably contemplated. 9 clause 30 of original Charterparty, Moot Scenario at p 20; clause 30 of amended Charterparty, Moot Scenario at p clause 30 of original Charterparty, Moot Scenario at p clause 30 of amended Charterparty, Moot Scenario at p Moot Problem at p Ibid. 14 Ibid. 15 J. Lauritzen A.S. v Wijsmuller B.V, (The Super Servant Two) [1990] 1 Lloyd's Rep 1 16 National Carriers Limited v Panalpina (Northern) Ltd [1981] 1 All ER 161 at 175 8

10 Secondly, that the frustrating event occurred without default of either the Claimant or the Respondent. Thirdly, that it was not sufficiently provided for in the Charterparty. C. The delay had resulted in a radical departure from what the Parties reasonably contemplated at the point of signing 15. The delay in delivery of HLNG was disproportionate to the duration that was originally contemplated by the Parties. To determine if the delay was disproportionate, the obligations of the Parties and the intended duration should be considered. Frustration is likely where the length of the delay is more than twice the contemplated duration and where there is no alternative recourse Presently, the voyage had been delayed for approximately 12 times longer than intended. 18 The original voyage duration contemplated by the Parties is for 1 month. 19 While the Parties did contemplate for delays, the buffer period was for 3 days. 20 In addition, HLNG was only available from Hades and there were no other alternatives to transport the HLNG out of Hades. 17. This delay goes beyond the nature of the outstanding obligations and/or rights of the Parties. The Respondent was relying on the timely delivery of the HLNG to improve its financial state as its share prices have been falling for the past year. 21 Especially in light of the extensive costs it had incurred in building the LNG plant in Hades. 22 The Respondent likely had subsequent contracts dependent on the timely delivery of the HLNG and suffered significant losses as a result of the delay Societe Franco Tunisienne d Armement v Sidermar S.P.A. (The Massalia) [1961] 2 Q.B Message from the Athena, Moot Scenario at p Intended end date of voyage, Moot Scenario at p Letter to Zeus, Moot Scenario at p The Hades Advocate, Moot Scenario at p Ibid. 23 Letter to Zeus Shipping and Trading Company, Moot Scenario at p 61. 9

11 18. Thus the delay had significantly changed the outstanding obligation/rights of what the Parties had originally contemplated when signing the contract. Accordingly, the Charterparty had been frustrated after the delay extended beyond 2 months. D. The Charterparty was frustrated without the fault of either party (1) If the Coast Guard did have the authority, the supervening event was the presidential decree which is not attributable to either party. 19. The general rule is that in order for frustration to be made out, the frustration must arise without blame or fault on either Parties. 24 Whether an announcement by the President amounts to a presidential decree depends on the Constitution of the particular country. A common formality however, is that the decree has to be countersigned by the Prime Minister or other relevant ministers Given that President Simmons came to power through a coup backed by the military, 26 it is most likely that she would have nominated her own members of parliament who would assist her with the countersigning. The Respondent submits that the announcement amounted to a presidential decree. Thus the presidential decree was the supervening event resulting in the delay without the fault of either Party. (2) Alternatively, the delay was due to the negligence of the Master as the Coast Guard did not have authority to direct the Athena back to Port 21. In the alternative, it is submitted that the Charterparty was frustrated by the Master s negligence, without the fault of either Party. The Master was negligent in believing that the Coast Guard that had the authority to direct the Athena back to Port. 24 Maritime National Fish v Ocean Trawlers [1935] AC 524 at This is a common formality for Austria, France, Germany, Italy, Korea, and Iceland, Parliamentary Reports of Australia, Papers on Parliament No. 31, 1998, Juliet Edeson, Powers of Presidents in Republics. 26 Moot Problem, at p55. 10

12 22. There was no authority as the Athena was outside the territorial waters of Hades at the point of interception. Furthermore, Article 91 of UNCLOS did not apply to extend the jurisdiction of Hades aboard the Athena, because there was no genuine link between the Athena and Hades. 27 Genuine link requires a State to show management, ownership, jurisdiction and control for its jurisdiction over a vessel to be recognized by other States The Claimant is from Poseidon and does not operate primarily within Hades. Thus, Hades is unlikely to have staffed the Athena therefore lacking any form of management, ownership or control over the Athena. Consequently, there is no genuine link between the Athena and Hades. 24. Accordingly, the Master had acted negligently in deciding to comply with the Coast Guard, rather than seeking instructions or clarifications with the Parties. This is further corroborated by the Claimants ordering him to step down. 29 Since the Master was acting negligently, his act cannot be attributed to either the Claimant or the Respondent. Thus there is no fault by either party for the delay of the Athena. E. The Charterparty made no sufficient provision for such a delay 25. The Respondent submits that the Charterparty did not make sufficient provision for such a delay. The general rule is that the doctrine of frustration will only apply if no provisions are made to cover the event ( Force Majeure event ) in the express terms of the contract. 30 To determine if the Parties had addressed the Force Majeure event, the courts will turn to the force majeure clause as it stipulates the consequence and secondary obligations of the Parties. 27 Art 91 United Nations Convention on the Law of Sea (UNCLOS). 28 Case Concerning Barcelona Traction, Light, and Power Company, Ltd [1970] ICJ 1 29 Letter to Athena, Moot Scenario at p Bangladesh Export Import Co v Sucden Kerry [1995] 2 Lloyd's Rep

13 (1) The Force Majeure clause does not cover events relating to a Presidential Decree 26. The general rule is that force majeure clauses are to be interpreted narrowly. 31 The Coast Guard was not acting as a customs authority within the meaning of clause 19(d). A customs authority is concerned with regulating the import and export of goods according to the law. Jacqueline Simmons issued a presidential decree ordering the Coast Guard to intercept the Athena and have it returned to port. 32 The presidential decree did not declare that the export of HLNG is illegal; rather, it was merely an order for the Athena to be prevented from leaving. 27. Therefore, the Coast Guard in acting on the orders of the President was merely enforcing the presidential decree and not acting in the capacity of a customs authority. As such the coast guards intervention does not fall within the scope of clause 19(d). 28. Further, bearing in mind the narrow reading of force majeure clauses, in order for the event to be found to be addressed by the clause, clear words would be needed to describe it. 33 Clause 19(d) makes no reference to any authoritative acts by the President or presidential decrees therefore, the current situation of a presidential decree does not fall within the scope of clause 19(d). IV. THE CLAIMANT IS NOT ENTITLED TO DEMURRAGE 29. The Claimant contends that it is entitled to demurrage because the Athena had not left the Loading Place. 34 This contention is misconceived. 31 Poussard v. Spiers and Pond (1876) 1 Q.B Moot Problem at p55 33 Connaught Restaurants Ltd. v. Indoor Leisure Ltd [1994] 1 WLR for the purposes of Box 5 and clause 9(c)(i) of the Charterparty, Moot Scenario pg

14 A. The Athena did leave the Loading Place within the meaning of clause 9(c)(i) 30. Pursuant to clause 9(c)(i), 35 laytime ends when the vessel leaves the Loading Place. On a plain and ordinary construction, laytime ceases to run when the Athena leaves the Port. (1) The Athena is deemed to have left the Port by the issuance of the Statement of Facts 31. Contractual terms should be interpreted according to their customary meaning in a particular trade. 36 The more reasonable the interpretation, the more likely the parties had intended such interpretation Under usual maritime custom, the issuance of the Statement of Facts by the Master marks the departure of the vessel from port. 38 By industry definition, a statement of facts records, inter alia, the time of commencement and completion of cargo operations. 39 It is therefore customary for the statement to be issued only when cargo operations is completed, and the vessel s visit to the port is at an end Further, it is more reasonable that the Statement of Facts is intended for laytime calculation. 41 This ensures certainty and renders laytime calculation uncontentious. Courts accordingly recognise the strong evidential value of statements 35 Clause 9(c)(i) of the Charterparty, Moot Scenario pg Produce Brokers Co Ltd v Olympia Oil and Cake Co Ltd [1917] 1 K.B. 320 (EWCA) at 330 per Scrutton LJ: though the meaning of a contract is varied, you may use a custom first of all in the case where you are using the custom as a dictionary to explain what words in the contract mean ; in Grant v Maddox (1846) 15 M. & W. 737 (Exchequer), a contract under which an actress was engaged for three years at a weekly salary was held to entitle her to be paid only during the theatrical season, for the word year had that special meaning in theatrical circles. 37 Schuler (L) AG v Wickman Machine Tool Sales Ltd [1974] A.C. 235 per Lord Reid: The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear. 38 Moot Scenario pg E Sullivan, The Marine Encyclopaedic Dictionary (Lloyd s of London Press Ltd 2 nd ed, 1988), p Moot Scenario pg As required by the alternative interpretation of clause 9(c)(i) to do so with reference to when the Athena actually leaves the geographical boundary of the Port. 13

15 of facts. 42 In contrast, unnecessary contention arises if laytime is taken to end when the Athena crosses the Port s geographical limits. It is difficult to determine when exactly is this point of time. Parties could not have intended this peculiar construction. 34. Accordingly, leaves the Loading Place 43 is intended to mean the moment the Athena departs from Hades as recorded by the Statement of Facts. Since the Statement of Facts was issued within the allowed laytime, 44 no demurrage was accrued. 45 (2) Further, and in any case, the Athena did in fact leave the Port within the allowed laytime 35. The contractually understood boundaries of the Port of Hades under the Charterparty does not refer to the actual legal boundaries of Hades territorial waters. References to a particular port in a charterparty must be understood in its ordinary commercial sense ( commercial Port of Hades ). 46 Beyond an area for cargo operations, 47 the commercial Port of Hades only extends to waters where port discipline is exercised. On such spaces of water, port authorities regularly exercise 42 High Seas Venture Ltd Partnership v Sinom (Hong Kong) Ltd (The Newforest) [2008] 1 Lloyd s Rep. 504 (EWHC): the evidential value of the SoF is unquestionably strong whether or not the requisite mutuality is achieved and almost regardless of its contractual status in this case, the owners submitted a demurrage claim accompanied by a copy of the statement of facts. The charterers rejected the claim. Although the statement of facts referred to bad weather, the owners subsequently asserted that the statement of facts was wrong, and that the real reason for delay in discharge was not bad weather but shortage of lighters or inadequate fenders. See also Freedom Maritime Corporation v International Bulk Carriers SA (The Khian Captain) [1985] 2 Lloyd s Rep 212 (EWHC) at p 214 where the court accepted that the statement of fact did provide some prima facie evidence of adverse weather. 43 Under clause 9(c)(i) of the Charterparty, Moot Scenario pg Moot Scenario pg Ibid. 46 Price v Livingstone (1882) 9 Q.B.D. 679 at p 68. See also J Schofield, Laytime and Demurrage (6 th ed) Lloyd s Shipping Law Library at p Sailing Ship Garston Co v Hickie & Co (1885) 15 Q.B.D. 580 at p 588 per Brett MR. 14

16 control over ships, and shipowners regularly submit to the jurisdiction claimed by those authorities On the facts, the Athena did leave the commercial Port of Hades. She was intercepted at a location where port discipline is not exercised by the Hades Coast Guard. When the Athena was intercepted, the Master initially refused to comply on the basis that the Athena was outside Hades territorial waters. 49 The Coast Guard did not dispute this. 50 Even the Claimant believed this was the case. 51 The subsequent compliance was only on account of the Athena flying Hades flag. 52 From the parties conduct, port discipline is not exercised at that particular space of water. It follows that the Athena had left the commercial Port of Hades 53 within the allowed laytime. 37. Accordingly, the Athena did leave the Loading Place within the laytime. (3) It is immaterial that the Athena s departure was temporary 38. The phrase leaves the Loading Place 54 is analogous to a vessel s final sailing 55 from port under certain voyage charters. 56 Both expressions refer to the point of commencement of the carrying voyage A vessel has finally sailed from port when she had left the port for the purpose of proceeding on the voyage. 58 It is irrelevant that she was subsequently driven back to port against her will by reasons such as bad weather whether legally required or not; Id at p Moot Scenario pg Ibid. 51 The Claimant promptly removed the shipmaster from command after the Athena was returned to port Moot Scenario pg Moot Scenario pg Sailing Ship Garston Co v Hickie & Co (1885) 15 Q.B.D. 580 at p 590 per Brett MR. 54 Under clause 9(c)(i) of the Charterparty, Moot Scenario pg Price v Livingstone (1882) 9 Q.B.D. 679 at p Chapter 12, Scrutton on Charterparties and Bills of Lading, 22 nd ed, (London, Sweet & Maxwell, 2011) para ; see Price v Livingstone (1882) 9 Q.B.D The carrying voyage is the third stage of the adventure contemplated by a voyage charter: EL Oldendorff & Co GmbH v Tradax Export SA [1974] AC 479 at 556 per Lord Diplock, HL. 15

17 40. The Athena should be deemed to have left the Loading Place. Firstly, she had left the Loading Place for the purpose of proceeding on the voyage, with no intention to turn back. 60 Secondly, the Coast Guard interception is irrelevant inasmuch as bad weather was in Price v Livingstone since the English Court of Appeal did not restrict this principle to instances of bad weather Accordingly, the Claimant is not entitled to demurrage because the Athena had left the Loading Place within the allowed laytime. B. In any event, the the delay is covered by the laytime exception clause No demurrage was accrued since laytime was suspended under clause 9(e) of the Charterparty. 63 Under clause 9(e), laytime will not count during periods of delay by reason of arrests or delay or stoppage of goods in transit. (1) The Coast Guard s interception amounts to an arrest under clause 9(e) 43. The expression arrests is intended to cover Coast Guard interceptions. The ordinary meaning of arrests should be preferred 44. The parties intended for arrests to carry an ordinary commercial meaning, rather than a technical meaning which specifically refers to Court issued arrests. 45. Contractual terms should be given commercially sensible interpretations over narrow technical ones. 64 This applies with equal force for commercial shipping contracts Price v Livingstone (1882) 9 Q.B.D. 679 at p Ibid. 60 Ibid. 61 It is urged that she was driven back to Cardiff, and so had not finally sailed. That she was driven back is, to my mind, immaterial for the present purpose. per Jessel M.R. Id at p clause 9(e) of the Charterparty, Moot Scenario pg Ibid. 16

18 46. In the maritime commercial context, arrests is ordinarily understood as vessel apprehension by state authority or by the exercising of a lien on the vessel. 66 This holds a broad meaning which also covers Executive action. 67 Similarly, Rule 10 of the Second Schedule of the Australian Marine Insurance Act 1909 states that in interpreting maritime insurance policies, the term arrest, &c., of kings, princes, and people only refers to executive acts, and does not refer to ordinary judicial process. Such instances of use demonstrate that arrests does not exclusively refer to apprehension of vessels by Court order. 47. The parties in the present case intended an ordinary meaning of arrests, rather than an overly technical one. Being ordinary commercial parties, they would not have in mind the niceties of public law, and would not intend to draw a pedantic distinction between arrests initiated by the Executive, and in rem orders issued by Court. 68 The meaning of arrests under clause 9(e) is different from the meaning of Court issued arrest proceedings under clause 19(d) 48. In construing a contract, each part should be taken as deliberately inserted; resulting in a presumption against redundant words. 69 In the present case, arrests 64 Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 437; 41 ALJR 348 per Barwick CJ (narrow approach not to be taken to intention of parties to commercial agreements); Minchillo v Ford Motor Co of Australia Ltd [1995] 2 VR 594 at 609 per Ormiston J (Fullagar J agreeing) (warranty by manufacturer was not to be construed in a technical way but in a manner which would be understood by a person in business). 65 Chapter 1, Scrutton on Charterparties and Bills of Lading, 22 nd ed, (London, Sweet & Maxwell, 2011) para 1 052, citing Kawasaki Kisen Kabushiki Kaisha of Kobe v Bantham Steamship Co Ltd [1939] 2 K.B. 544 ( war ) and Luigi Monta of Genoa v Cechofracht Co Ltd [1956] 2 Q.B. 552 ( government ) 66 E Sullivan, The Marine Encyclopaedic Dictionary (Lloyd s of London Press Ltd 2 nd ed, 1988), p rather than the technical one which only refers to Court issued arrests. 68 In Kawasaki Kisen Kabushiki Kaisha of Kobe v. Bantham Steamship Co. Limited [1939] 2 K.B. 544, High Court at first instance said that what he had to determine was what the parties meant by the clause of the charterparty. He thought they were using the word war...in the sense in which an ordinary commercial man would use it. He did not think the parties in a case of this sort were going into the niceties of international law. cited by McKendrick, Force Majeure and Frustration of Contract, 2 nd ed, (Informa Law from Routledge, 2013) at p Re Strand Music Hall Co Ltd (1865) 35 Beav. 153: The proper mode of construing any written instrument is, to give effect to every part of it, if this be possible, and not to strike out or nullify one 17

19 stands alone under clause 9(e), while arrest under clause 19(d) is qualified to be initiated by Court. 49. It follows that clauses 9(e) and 19(d) cannot both refer to Court-issued arrests. The same word used in different parts of a contract should carry different meanings 70 especially if the alternative interpretation is contrary to the presumption against redundant words. 71 To illustrate, if arrests per se under clause 9(e) means Court-initiated apprehensions, it would be redundant for clause 19(d) to qualify that the arrest there is Court issued. 50. Furthermore, had the parties intended for clause 9(e) to refer specifically to Court-issued arrests, they would have added similar qualifying words (as in clause 19(d)) to specify accordingly. (2) The Coast Guard s interception amounts to a delay or stoppage of goods in transit 51. In the marine insurance context, transit refers to the phase when goods are being transported between two points. 72 The transit phase begins when goods have been placed on the means of carriage. 73 clause in a deed, unless it be impossible to reconcile it with another and more express clause in the same deed. principle applied in Singapore Airlines Ltd v Buck Consultants Ltd [2011] EWHC 59 (Ch) and accepted on appeal: [2011] EWCA Civ 1542 cited in Chapter 7, Kim Lewison, The Interpretation of Contracts, 6 th ed, (London, Sweet & Maxwell, 2015) p Chapter 5, Kim Lewison, The Interpretation of Contracts, 6 th ed, (London, Sweet & Maxwell, 2015) p 366; see Watson v Haggitt [1928] A.C. 127 per Lord Warrington of Clyffe: the presumption that the same words have the same meaning may only be used to resolve an ambiguity when necessary; in British Energy Power and Trading Ltd v Credit Suisse [2008] EWCA Civ 53, the same word was given different meanings in different parts of the contract; Tea Trade Properties Ltd v CIN Properties Ltd [1990] 1 E.G.L.R. 155 per Hoffmann J. 71 Re Strand Music Hall Co Ltd (1865) 35 Beav. 153: The proper mode of construing any written instrument is, to give effect to every part of it, if this be possible, and not to strike out or nullify one clause in a deed, unless it be impossible to reconcile it with another and more express clause in the same deed. principle applied in Singapore Airlines Ltd v Buck Consultants Ltd [2011] EWHC 59 (Ch) and accepted on appeal: [2011] EWCA Civ 1542 cited in Chapter 7, Kim Lewison, The Interpretation of Contracts, 6 th ed, (London, Sweet & Maxwell, 2015) p NEC Australia Pty Ltd v Gamif Pty Ltd 42 FCR 410 (1993) (Federal Court of Australia, NSW): The ordinary meaning of "transit" essentially connotes that goods are in motion between two points 18

20 52. In the present case, the Coast Guard s interception amounts to a delay in transit 74 since transit had already begun when the Athena was intercepted. 75 Furthermore, even if the Tribunal finds that the Athena had not left port, transit had nonetheless begun since the HLNG had been fully loaded on to the Athena. 76 (3) The contra proferentem rule is not applicable even if there is ambiguity 53. By the contra proferentem rule, ambiguous clauses will be interpreted against the interests of the party responsible for introducing them into the contract. 77 The rule is of little utility in the context of commercially negotiated agreements. 78 Particularly, the rule is inapplicable against the party who seeks to rely on a clause drafted by the opposing party In construing arrests in the present case, the contra proferentem rule cannot be applied to construe any ambiguity against the Respondent. While the Respondent relies on clause 9(e), the entire Charterparty is drafted by the Claimant. 80 There is no basis to construe any ambiguity against the Respondent. Furthermore, the rule is of 73 Sadler Brothers Co v Meredith [1963] 2 Lloyd s Rep. 293 (EWHC) at 307 per Roskill J: one wants to bear in mind that transit has in its nature the element of carriage about it and the carriage starts not when the movement of the vehicle in which the carriage is taking place starts, but when the goods are placed on the vehicle applied in SCA (Freight) Ltd v Gibson [1974] 2 Lloyd's Rep 533 (EWHC) at p 534: the transit had begun at least when the goods had been loaded onto the lorry. 74 clause 9(e) of the Charterparty, Moot Scenario pg The Athena had sailed from the Port at 0900 hours on 7 October (Moot Scenario pg 54) while the intervening prohibition occurred late on 7 October 2014 (at Moot Scenario pg 55). 76 Moot Scenario pg Christie & Vesey v Helvetia [1960] 1 Lloyd s Rep. 540 (EWHC) at pg CDV Software Entertainment AG v Gamecock Media Europe Ltd [2009] EWHC 2965, at [56] per Gloster J: the principle was of uncertain application and little utility in the context of commercially negotiated agreements. 79 CDV Software Entertainment AG v Gamecock Media Europe Ltd [2009] EWHC 2965 at [56], per Gloster J: The evidence showed that the clause in question had been proposed as an idea by the Legal and Business Affairs Adviser to CDV, but then actually drafted by the US lawyer then acting for Deep/Gamecock. In such circumstances, the rule can have no application. 80 Moot Scenario pg

21 little utility since the present Charterparty has been commercially negotiated, and is not a standard terms agreement Accordingly, the contra proferentem rule cannot be used against the Respondent. C. In the event that the Coast Guard had no authority to intercept the Athena, the delay would be due to the Claimant s fault 56. In the event this Tribunal finds that the Coast Guard had no authority to intercept the Athena, any delay would be due to the Claimant s own default. Thus, the Respondent cannot be liable for demurrage. 57. A charterer will not be liable for demurrage if the delay arises though the shipowner s fault. 82 In a voyage charter adventure, the shipowner is generally responsible for the shipmaster s fault. 83 The Master is at fault for making a unauthorised deviation. 58. In the absence of express stipulations to the contrary, shipowners have an implied undertaking to their charterers that their vessels would not make unjustified departure from their scheduled routes. 84 Departure from the route is only justified if necessary to save life 85 or if it is involuntary Moot Scenario pg President of India v Moor Line, Ltd. [1958] 2 Lloyd's Rep. 205 (High Court of Australia) at 212 per Dixon CJ, endorsing the rule in Budgett v Binnington & Co. [1891] 1 Q.B Gem Shipping Co of Monrovia v Babanaft (Lebanon) SARL (The Fontevivo) [1975] 1 Lloyd's Rep 339 at pg 343 per Donaldson J: there is no doubt as to [the shipowner s] responsibility for the actions of the master who decided to leave the discharging berth. 84 Davis v Garrett (1830) 6 Bing. 716: Scaramanga v Stamp (1880) 5 C.P.D. 295 (CA); Louis Dreyfus v Lauro (1938) 60 Ll.L.Rep. 94, Fyffes v Reefer Express (The Kriti Rex) [1996] 2 Lloyd s Rep. 171 at 191 cited in Chapter 12, Scrutton on Charterparties and Bills of Lading, 22 nd ed, (London, Sweet & Maxwell, 2011) para Scaramanga v Stamp (1880) 5 C.P.D. 295 (CA) where the vessel was held to have made an unjustified deviation because the deviation was not necessary to save the lives of the people on board. 86 Lavabre v Wilson (1779) 1 Dougl. 284; Kish v Taylor [1912] A.C

22 59. A shipmaster has no authority to deviate his vessel from the route unless there is no possibility for him to communicate with the shipowner In the present case, the Master s decision to return the Athena to port is an unnecessary and unjustified deviation. Firstly, it was unnecessary to return to port since the Coast Guard did not have authority to arrest the Athena, as submitted earlier. 88 Secondly, in neglecting to seek advice from the Claimant before returning to port, 89 the Master had acted in excess of his authority in taking the extraordinary step of deviation. Upon interception by the Coast Guard, the reasonable course of action should have been to anchor the Athena and seek advice from the Claimant, since this involves an issue of law that is outside the Master s expertise. 61. Furthermore, no reasonable shipmaster would perceive any danger posed by the Hades Coast Guard, that could at best deploy two men with a rubber dinghy 90 to apprehend a large vessel with crew on board. 62. Accordingly, the Respondent cannot be liable for demurrage since the delay was caused by the Claimant s own fault. D. In any event, the Respondent bears no risk for delays arising from the nature of the cargo beyond its cargo loading obligations 63. In the present case, the Respondent has fully performed its cargo loading obligations within the allowed laytime. 91 Subsequently, delay was caused by a supervening prohibition on export of the Respondent s HLNG Chapter 12, Scrutton on Charterparties and Bills of Lading, 22 nd ed, (London, Sweet & Maxwell, 2011) para As argued above in (ii) 89 Moot Scenario pg The Hades Advocate, 7 October 2014, Moot Scenario pg Cargo loading operations were completed at 2350 hours on 6 October 2014, Moot Scenario pg The prohibition on the export of HLNG was announced on 7 October 2014 (Moot Scenario pg 55), while the Charterparty was entered into on 21 July 2014 (Moot Scenario pg 29 Box 1). 21

23 64. A charterer has obligations in respect of cargo loading. 93 However, beyond these obligations, the charterer is not liable for supervening delays caused by the cargo 94 provided that: 95 (a) (b) the agreement was to carry a specific cargo; the parties have equal knowledge of the cargo s potential for delays in shipment; and (c) the charterer had taken reasonable steps to enable the vessel to sail In the present case, the Respondent bears no liability for the delay caused by the supervening prohibition on export of the Respondent s HLNG. 66. Firstly, the parties had specifically contracted to carry HLNG. This is evidenced by the Respondent s request for a special tanker that could transport HLNG and the Claimant s corresponding proposal Secondly, both parties had equal knowledge (or lack thereof) of potential difficulties in forwarding the cargo. Neither party would have anticipated the intervening prohibition on the export of HLNG since it was brought about by a sudden coup. 98 Furthermore, the earliest protest against the export of HLNG (that precipitated the coup) 99 only occured after the Charterparty was entered into Thirdly, although the Respondent did not enable the Athena to sail earlier, it had acted reasonably. As the present case involves an absolute prohibition on export 93 EL Oldendorff & Co GmbH v Tradax Export SA [1974] AC 479 (House of Lords) at 556 per Lord Diplock. 94 Due to prohibition on the export of the cargo. 95 Owners of S.S. Sebastian v de Vizcaya (The Sebastian) [1919] 1 Ll L Rep 500; The Domald [1920] P. 56; General Feeds Inc v Burnham Shipping Corp (The Amphion) [1991] 2 Lloyd s Rep. 101; cited in in Chapter 7, Scrutton on Charterparties and Bills of Lading, 22 nd ed, (London, Sweet & Maxwell, 2011) para Owners of S.S. Sebastian v de Vizcaya (The Sebastian) [1919] 1 Ll L Rep 500 at 501 per Bailhache J. 97 Moot Scenario pg 2 and Moot Scenario pg Ibid. 100 The Hades Advocate, 4 October 2014, Moot Scenario pg 52 while the Charterparty was entered into on 21 July 2014, the first protest was staged on 4 October

24 of HLNG, there was nothing in its power to enable the Athena to sail earlier. Thus, the Respondent should be taken to have acted reasonably. 69. Accordingly, the Respondent bears no liability for this delay as it arises from the nature of the cargo, and the Respondent had duly performed its cargo loading obligations. V. THE RESPONDENT IS ENTITLED TO A SALVAGE AWARD A. The doctrine of separate legal personalities does not prevent the Respondent from claiming salvage 70. Hestia, not Hestug, owned the tugs and thus the doctrine of separate legal personality does not apply to disentitle Hestia from its salvage claims. 101 B. The elements of salvage have been established 71. Hestia is entitled to claim for salvage if it can satisfy these three requirements: (1) Hestia must have been a volunteer; (2) The Athena was in danger at the time of salvage (3) the salvage of the Athena must have been successful It is submitted that, first, Hestia was a volunteer in this salvage operation. Second, there was danger to the Athena upon the breakdown of its propeller. Third, the salvage was successful; indeed, this is not disputed as the tugs had rendered assistance to the [Athena] [And saved] many millions of dollars worth of cargo and vessel. 103 (1) The respondents were volunteers during the salvage The contractual relationship had ceased 101 dated 23 rd November 2015, Page 73 of the Moot Problem 102 Supra n October 2015, The Hades Advocate, Moot Problem

25 73. Zeus contends that the tow contract between Hestia and the Athena prevents Hestia from being a volunteer in the salvage operation. However, it is submitted that this contractual relationship had ceased. 74. The contract was solely for tow services. 104 The obligations under the contract were discharged after the tugboats had guided the Athena to open waters and the towlines were release[d] from the vessel. 105 The parties to the towage contract, Hestug and the Athena, did not contemplate that the Athena would have been immobilized by the breakdown of its propellers. Thus when Hestug returned to assist the distressed Athena, the contractual relationship had already ceased. Even if a contractual relationship exists, the towage contract can still be converted into a salvage service 75. If this Honorable Tribunal finds that a contractual relationship still existed between Hestug and the Athena, it is further submitted that the towage contract between parties can be converted into a salvage contract. 76. For the towage contract to be converted into a salvage contract, Hestia needs to show that (1) the tow is in danger that could not reasonably have been contemplated by the parties and (2) that risks are incurred or duties performed by Hestug that could not reasonably be held to be within the scope of the contract First, both parties, Hestia and Zeus, could not have reasonably contemplated that the Athena s sabotaged propeller shafts would break in the middle of its voyage. Sabotage of the vessel would not be an ordinary event that commercial parties apply their minds to dated 5 October : The Hades Advocate, dated 7 October Moot problem p The Homwood (1928) 31 Llyold s Rep 336 at

26 78. The responsibility of ascertaining a ship s seaworthiness, before voyage, falls on the shipowner, Zeus Assuming that Zeus had conducted a survey of the Athena and the tampered propeller was undetected, this would mean that both Zeus and Hestia were unaware of the unseaworthiness of the vessel. In the alternative scenario where Zeus had not discharged its duty to survey the Athena, this would mean that both parties had not applied their minds to the potential unseaworthiness of the vessel. Secondly, since the danger was uncontemplated, Hestug s salvage operation did not fall within the scope of the intended obligations under the contract. Hence the elements to convert a towage contract into a salvage service has been established. Self-interest is not a factor to be taken into account to disentitle parties from a salvage award 79. Traditionally, the concept of self-interest disentitles a salvor from being characterised as a volunteer as seen in The Lomonsoff. 109 However, subsequent judicial commentary point to the irrelevance of self-interest in ascertaining whether a salvor has been a volunteer Furthermore, Australia is a signatory to the 1989 Salvage Convention ( The Convention ). The Convention specifically permits sister ship salvage under Art 12(3). Ships are entitled to a salvage award despite the self-interest in salvaging a ship 107 This is a practical reality since only the shipowners and their external surveyors would have the prior opportunity to inspect the Athena before it departs from the port at Hades. The Baltic and International Maritime Council < hips.aspx> (accessed 6 March 2016) 108 Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha [1962] EWCA Civ 7; Kopitoff v Wilson (1876) 1 QBD The Lomonosoff [1921] P The Sava Star [1995] 2 Lloyd s Rep. 134; In The Sava Star, Clarke J allowed a claim for salvage by the owners of cargo on board the distressed ship. This was despite the fact that the salvors were selfinterested in the cargo. 25

27 that belongs to the same owner. Thus the tenor of the provisions in the Convention shows that self-interest is not a factor that disentitles claims for salvage awards. Even if self-interest is a relevant factor, it was not the predominant motivation for the salvage 81. If this Honourable Tribunal finds that Hestug is self-interested in the salvage, the respondent further submits that Hestug did not salvage the Athena only to save the HLNG on board. 82. For self-interest to disentitle a party from a salvage award, the self-interest must be the only reason for the salvage. In The Lomonosoff, the soldiers were held to not have been self-interested in salvaging the ship despite their self-interest in saving their own lives. There were alternative and less risky methods for them to escape without using the salvaged ship. Thus there were two reasons for salvaging the ship (1) the preservation of their own lives and (2) to prevent the salvaged vessel from falling into the possession of their Bolshevist enemies In the present case, there were also two reasons for salvage operation (1) preserving the HLNG cargo (2) saving the Athena. Saving the Athena is a separate reason for the salvage operation because it is a precondition to the successful preservation of the HLNG onboard. The Athena is one of the newest vessels with the latest technology to be able to safely transport LNG. 112 There were no available vessels that could carry the HLNG from Hades as Athena is the only Hades flagged H Max HLNG carrier worldwide. 113 Thus Hestia could not preserve the HLNG on the Athena without salvaging Athena. 84. The self-interest in saving the cargo should only be taken into account in assessing the quantum of the salvage award. The presence of the self-interest in the 111 Supra n Mail dated 14 July 2014 from Zues 113 dated 30 April HST 26