FURNACE TRADING PTE LTD

Transcription

1 Eighteenth Annual International Maritime Law Arbitration Moot 2017 University of Exeter, team 17 IN THE MATTER OF AN ARBITRATION UNDER THE INTERNATIONAL ARBITRATION ACT (CAP 143A, REV ED 2002) AND THE SINGAPORE CHAMBER OF MARITIME ARBITRATION RULES BETWEEN FURNACE TRADING PTE LTD AND INFERNO RESOURCES SDN BHD CLAIMANT RESPONDENT MEMORANDUM OF THE RESPONDENT Counsel: Louise Bouvery, Jack Brett, Kiu Cheng, Christopher Eames, Oliver Smith, Kyle Spencer 1

2 Table of Contents ABBREVIATIONS 3 TABLE OF AUTHORITIES 4 CASE-LAW 4 STATUTE AND ARBITRATION RULES 6 OTHER MATERIALS 6 I. STATEMENT OF FACTS 7 II. THE NON-NOMINATION OF DISPORT BY THE RESPONDENT IS NOT A BREACH OF THE COAL-OREVOY VOYAGE CHARTERPARTY 8 I. THE CONTRACTUAL TERMS 8 II. THE RIGHT FOR THE RESPONDENT TO NOMINATE A NON-LISTED PORT 9 III. BUSAN IS A SAFE PORT 13 IV. THE CLAIMANT DID NOT MITIGATE ITS LOSS 15 III: NON-PAYMENT OF FREIGHT IS NOT A REPUDIATORY BREACH 16 IV: THE CLAIMANT HAS NO LIEN RIGHTS OVER THE CARGO 19 I. THE VOYAGE CHARTERPARTY CONFERS NO USEFUL LIEN RIGHTS: 19 II. THE VOYAGE CHARTERPARTY HAS NOT BEEN INCORPORATED 20 III. THE LIEN WAS NOT INCORPORATED INTO THE BILL OF LADING 23 IV. THERE IS NO IMPLIED RIGHT TO DETAIN THE CARGO 24 V. THE TRIBUNAL SHOULD NOT ALLOW THE CLAIMANT TO SELL THE CARGO 25 I. THE TRIBUNAL HAS NO IN REM JURISDICTION 25 II. THERE IS NO POSSIBILITY OF SELLING THE CARGO 26 1) THERE IS NO ASSET WHICH CAN BE PRESERVED 27 2) THERE IS NO URGENCY FOR SALE 28 VI: PRAYER FOR RELIEF 29 2

3 Abbreviations Bill of Lading The bill of lading issued by IMLAM on the 4 th October Claimant Furnace Trading Pte Ltd Charterparty The voyage charterparty concluded between Claimant and Respondent. Standard terms as amended by the parties. Idoncare Idoncare Berjaya Utama Pty Ltd IMLAM IMLAM Consignorist GmbH Master Captain Tan Xiao Ming Parties Claimant and Respondent Respondent Inferno Resources Sdn Bhd 3

4 Table of Authorities Case-Law Ampurius Nu Homes Holdings Ltd v Telford Homes (Creekside Ltd) [2013] EWCA Civ 577 Arnold v Britton & Ors [2015] UKSC 36 Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452 Bank Line Ltd v Arthur Capel and Co [1919] AC 435 Cehave NV v Bremer Handelsgesellschaft mbh [1975] 2 Lloyd's Rep 445 Dakin v Oxley (1864) 143 ER 938 Dominion Corporate Trustees Limited v Debenhams Properties Limited [2010] EWHC 1193 Faith Maritime Co Ltd v Feoso (Singapore) Pte Ltd [2002] SGHC 229 at 135 Federal Commerce & Navigation Co. Ltd. v Molena Alpha Inc [1978] 3 WLR. 991 Five Ocean Corporation v Cingler Ship PTE Ltd [2015] SGHC 311 G Scammell and Nephew Ltd v HC&JG Ouston [1941] 1 AC 251 Gill and Duffus v Riondda Furtures [1994] 2 Lloyd s Report s 67 Hong Kong Fir Shipping ltd v Kawasaki Kisen Kaisha ltd [1962] 2 QB 26-at page 31 Interfoto Picture Library v Stiletto [1987] EWCA Civ 6 International Arbitration Act 2002-Original enactment 1994 K/S A/S Seateam & Co v Iraq National Oil Co (The Sevonia Team) [1983] 2 Lloyd s Rep

5 Liberia v Evimeria Compania Naviera SA of Panama (The Agios Giorgis) [1976] 2 Lloyd s Reports 192 Maldives Airport v GMR Malé International Airport [2013] SGCA 16 Mirimar Maritime Corporation v Holborn Oil Trading ltd (The Miramar) [1984] 1 AC 676 (HL) Molthes Rederi Aktieselskabet v. Ellerman's Wilson Line Ltd. [1927] 1 K.B. 710 Navigazione Alta Italia SpA v Svenska Petroleum AB (The Nai Mateini) [1988] 1 Lloyd s Report s Navrom v Cattlitis Ship Management SA (The Radauti) [1987] 2 Lloyd s Rep NCC International v Alliance concrete Singapore [2008] 2 SLR 565 Payzu Ltd. V Saunders [1919] 2 KB 581 Siboti v BP France [2003] Lloyd s Reports 364 Skips A/S Nordheim v Syrian Petroleum Co. (the Varenna) [1984] QB 599 Smidt v Tiden (1874) L.R. 9 Q.B. 446 Sotiros Shipping Inc v Sameiet Solholt (The Solholt) [1983] 1 Lloyd s Rep 605 Spar Shipping [2015] EWHC 718 T.W Thomas & co v. Portsea Steamship Co ltd [1912] AC 1 Tat Seng Machine Movers PTE LTD V. Orix Leasing Singapore LTD: [2009] SGCA 42 The Agnoussiotis [1977] 1 Lloyd s Report s 268 The Athena [2007] 1 Lloyd s Report s 80 The Eastern City [1958] 2 Lloyd s Reports 127 5

6 The Evia (No2) [1983] 1 AC 736 (HL) The Heidberg (No2) [1994] 2 Lloyd s Reports 287 The Mathew [1990] 2 Lloyd s Reports 323 The Shillito (1897) 3 Com.Cas. 44. The Starsin [2003] 2 WLR 711 The Trade Resolve [1999] 4 SLR 424 Tradigrain SA & ORS v King Diamond Marine Limited (The Spiros C) [2000] 2 Lloyd s Reports 319 Turner v Goolam [1904] 91 LT 216 United Scientific Holdings ltd v Burnley Borough Council [1978] 2 All ER 62 Universal Cargo Carriers Corp v Citati [1957] 2 QB 401 Valilas v Januzaj [2014] EWCA Civ 436 WSG Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka [2002] SGHC 104 Statute and Arbitration Rules International Arbitration Act 2002-Original enactment 1994 Singapore Chamber of Maritime Arbitration Rules (3 rd edition, 2015) Sale of Goods Act 1999-(original United Kingdom enactment 1999) Other Materials Carver on Carriage by Sea 4th ed. s. 155 (2017) Cooke et al, Voyage Charters (Informa Law, 4th Ed, 2014) ( Voyage Charters ) Scrutton on Charterparties (20th ed., Sweet and Maxwell, 1996) (see Art.38) (2015) 6

7 I. Statement of Facts 1. The Respondent concluded a voyage charterparty with the Claimant for the carriage of coal, on the 1 st September According to this Charterparty, the Respondent was due to pay freight 5 banking days after the completion of loading of the cargo and signature and release of the Bill of Lading (Box 28), this made payment due on the 9 th October The Respondent had also to nominate a port of discharge from 8 ports in China, as provided in Box 16 of the Charterparty when the vessel passed Singapore. 3. After concluding this Charterparty, the Respondent entered into a sub-charterparty with Idoncare, as allowed by clause 4 of the Charterparty. Idoncare was the named shipper of the coal loaded in the vessel according to the Bill of Lading (dated 4 th October 2016) issued by the Master of the vessel. 4. Because of congestion in Chinese ports, the Respondent invoked its contractual right to nominate an un-accounted port and asked the Claimant multiple times to divert to Busan, South Korea. The first request was made on the 16 th October The diversion was denied by the Claimant. Moreover, the Respondent was unable to proceed the payment of freight in accordance with the Charterparty, as the sub-charterers of the Respondent, Idoncare, had not paid the sub-freight in time. Regarding this issue, the Respondent requested several times that the Claimant be patient. 5. The Claimant terminated the Charterparty 22 nd October 2016, which was a repudiatory breach of the Charterparty. The Claimant have commenced arbitral proceedings before the Singapore Chamber of Maritime Arbitration, as provided in clause 29 of the Charterparty in order to obtain a lien over the cargo loaded on the vessel for the payment of freight, 7

8 demurrage, and any other costs due under the Charterparty. The Respondent denies any liability. II. The Non-nomination of Disport by the Respondent is not a breach of the Coal-Orevoy Voyage Charterparty i. The contractual terms 1. The obligations of the Respondent for nominating a port of discharge are stated in the Coal- Orevoy Charterparty. 2. Clause 8(b) of the Charterparty (page 26, line 113) provides: The Vessel shall carry the cargo with due despatch to the port(s)/berth(s) of discharge stated in Box 16. If the charterers have the right to order the Vessel to discharge at one or more ports out of several ports named or within a specific range, the Charterers shall declare the actual port(s) of discharge to be inserted in the Bills of Lading prior to the arrival of the Vessel at the first port of loading. 3. The contractually permitted ports/berths of discharge referred to in Clause 8(b) as stated in Box 16, (as seen in the sent by Eric Yan to Gordon Grill on the 1 st September 2016 (page 20), at point 16 Discharge Port ) are: 1 spsb China (Dalian, Jinzhou, Yingkou, Yantai, Qingdao, Shanghai, Tianjin, Ningbo) CHOPT 8

9 CHTRS to declare discharge port when vessel passes Singapore for bunkering. 4. The Charterparty says directly above the signature block (page 25): In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. 5. Contractual interpretation is an objective exercise to understand the natural meaning of the words (Arnold v Britton & Ors 1 ). The contractual terms can therefore be identified and interpreted as follows: a. The Respondent had to nominate one safe port safe berth within the eight ports named in the Charterparty. For the avoidance of doubt these are Dalian, Jinzhou, Yingkou, Yantai, Qingdao, Shanghai, Tianjin, Ningbo, as provided in clause 8(b), Part II of the Charterparty and Box 16, Part I of the Charterparty. b. Regarding the clause inserted above the signature block in the Charterparty, the port had to be nominated when the vessel passed Singapore for bunkering. 6. However, according to the Charterparty, the Respondent has the right in certain circumstances to nominate a port not listed in Box 16 of the voyage Charterparty: ii. The right for the Respondent to nominate a non-listed port 7. Clause 16 of the Charterparty (page 29, line 469) provides: 1 Arnold v Britton & Ors [2015] UKSC 36. 9

10 (a) If there is a strike or lock-out or any other cause referred to in Clause 24 (hereinafter the hindrance ) (b) If there is a hindrance affecting or preventing the actual discharging of the cargo on or after the Vessel s arrival at or off port of discharge and same has not been settled within 48 hours, the Charterers shall have the option of ordering the Vessel to a safe port where she can safely discharge without risk of being detained by a hindrance. Such orders to be given within 48 hours after the Master or the Owners have given notice to the Charterers of the hindrance affecting the discharge. On delivery of the cargo at such port, all conditions of this Charter Party and of the Bill of Lading shall apply and the Vessel shall receive the same freight as if she had discharged at the original port of destination, except that if the distance to the substituted port exceeds 100 nautical miles, the freight on the cargo delivered at the substituted port to be increased in proportion. 8. According to clause 16 of the Charterparty, the Respondent is entitled to nominate discharge at an alternative safe port if there is a hindrance preventing the discharging of the cargo at one of the anticipated discharge ports. 9. Clause 24 of the Charterparty, as entitled Force Majeure (p. 32, line 816), to which clause 16 refers, provides that: Save to the extent otherwise in this Charter Party expressly provided, neither party shall be responsible for any loss or damage or delay or failure in performance hereunder resulting from Act of God, war, terrorism, civil commotion, quarantine, strikes, lockouts, arrest or 10

11 restraint of princes, rulers and peoples or any other event whatsoever which cannot be avoided or guarded against. 10. Therefore, clause 24 has to be understood as having a double-purpose: it lists the events constituting a force majeure but gives also the definition of hindrance mentioned in clause 16 (a) and (b). 11. Hence, hindrance should be read as including any other event whatsoever which cannot be avoided or guarded against, as stated in clause On the 16th of October 2016, Eric Yan sent an to Gordon Grill (page 57) delivering a message from the Respondent: Gordon, Chrts just spoke to me and requested to adv whether vsl can divert to Busan, South Korea due to congestion at Chinese ports. 13. The Respondent asked to divert to Busan, South Korea due to Chinese port congestion. Congestion at a port is not something which the Respondent cannot avoid or guard against. This clearly depends on the actions of third parties and whether they decide to use the port. 14. Thus, as the congestion meets the conditions of a hindrance, the Respondent was entitled to nominate a further safe port under clause 16 (b). It is provided in clause 16(b) that the nomination of a further port of discharge must be given within 48 hours after the Master or the owners have given notice to the charterers of the hindrance affecting the discharge. 11

12 However, neither the Master nor the Owner told the charterer that the Chinese ports were congested. Furthermore, in Navrom v Cattlitis Ship Management SA (The Radauti) 2, it was held that hindrance can include congestion at port. Therefore, this clause should be interpreted to mean that the Respondent were permitted to nominate an alternative port if there was congestion in China. 15. According to Box 3 of the Charterparty, whose wording is provided in the sent by Eric Yan to Gordon Grill on the first of September 2016 (page 20), at point 3 Owners, the Owners are Furnace Trading Pte Ltd Two Marina Boulevard #19-05 Singapore The Owners of the vessel under the Charterparty is thus the Claimant. 16. Hence, it was either the Master of the vessel or the Claimant s obligation to give notice to the Respondent of the hindrance affecting the Chinese ports and preventing the discharge of the cargo. 17. The Respondent s right to nominate another port therefore arose after a reasonable period of time. It cannot be equitable for the Claimant to deny the Respondent the right to nominate a different port by refusing to give notice of the hindrance (the port s congestion). This interpretation should be preferred because it is a construction that favours performance while the alternative construction would encourage avoidance. 3 Moreover, by not alerting the Respondent that the ports were congested and preventing them from nominating a safe port of discharge, the Claimant is in breach of its duty to mitigate its losses (discussed further below). 2 Navrom v Cattlitis Ship Management SA (The Radauti) [1987] 2 Lloyd s Rep Cehave NV v Bremer Handelsgesellschaft mbh [1975] 2 Lloyd's Rep

13 18. The Claimant precluded the nomination of Busan, South Korea as port of discharge alleging that Busan is not a safe port. iii. Busan is a safe port 19. The Respondent submits that Busan is a safe port and it was therefore a legitimate nomination. Moreover, the Respondent has conceded that it is liable to pay extra freight for nominating a port further than 100 miles from the original port (per clause 16(b)), as it can be seen in the from Eric Yan to Gordon Grill on the 16th of October 2016, quoting the request of the Respondent (page 58): Chrts repeat request for disport to be Busan, South Korea. We are aware that this is not the option available as per the original CP, however, we request the owners for their cooperation. We also understand that this will mean an extra distance to the disport and we are ready to amend frt rate on open book bss. Awaiting positive response from Ownrs. 20. Sellers LJ in The Eastern City 4 laid down the modern formulation for the safe port test: [A] port will not be safe unless, in the relevant period of time, the particular ship can reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship. 21. This test has been clarified by the House of Lords in The Evia (No 2) 5. There it was held that the test is one of prospective safety. In other words, the charterer warrants, at the time of the nomination, that when the Vessel arrives at the port it shall be safe. 4 The Eastern City [1958] 2 Lloyd s Reports The Evia (No2) [1983] 1 AC 736 (HL) 13

14 22. In this case, the army has secured Busan and it is therefore prospectively safe. This can be proved by the fact that other Vessels have called at Busan with no issues, as the Respondent informed the Claimant by on the 16th of October 2016 (page 60). Busan fulfils the requirements of a safe port and it was not permissible for the owners to refuse to discharge at it. Given that the Army has now secured the port of Busan, it is only likely to become safer rather than less safe. The test is not whether the port is safe at the time of nomination but rather whether it is safe when the vessel arrives. 6 The Complainant is therefore obliged to make its way to Busan on the strength of the Respondent s warranty that it will be safe when the ship arrives. 23. Furthermore, in The Eastern City 7 Sellers LJ held that the safety of a port should be viewed in respect of a vessel properly manned and equipped. The Claimant has stated by on the 16th of October 2016 that the time is not sufficient in order to make necessary arrangement for vsl to safely call at Busan i.e. arrange for armed guards, razor wires, antidotes etc (page 58). 24. This is not a proper response because the owner of the ship must keep the ship safely maintained. It has not done that in this case because this is normal equipment that should keep on board at all times. 25. Therefore, the Claimant is not entitled to refuse the nomination of Busan as port of discharge by the Respondent under clause 16(b) of the Charterparty because Busan satisfied the legal conditions of a safe port. 6 Ibid. 7 [1958] 2 Lloyd s Reports

15 26. Moreover, even before stating that Busan was unsafe, the Claimant said by on the 16th of October (pages 57-58) that this port was not permitted under the Time Charterparty concluded between the Ship-owner and the Claimant (page 1), and under the Charterparty concluded between the Claimant and Respondent. 27. This is not valid. The time Charterparty, (clause 1.b) (page 1) allows the vessel to sail within Australia and Asia. In addition, the port for the return of the vessel is Busan, as provided in clause 4(a) (page 2). iv. The Claimant did not mitigate its Loss 28. If the Tribunal finds against us and finds that the Respondent did in fact breach the contract, the Claimant was under a legal duty to mitigate its loss by accepting Busan as the discharge port. In this case it was under a duty not to unreasonably increase the loss suffered. 8 The Claimant should have accepted the nomination of Busan as an offer of alternative performance. 9 It has been confirmed in Sotiros Shipping Inc v Sameiet Solholt (The Solholt) 10 that mitigating a loss does include accepting performance of the contract in a different way. Here, therefore, the Claimant was reasonably expected to accept the nomination of Busan as a mitigation of its loss, even if the Respondent was in breach of contract. 8 Banco de Portugal v Waterlow & Sons Ltd [1932] AC Payzu Ltd. V Saunders [1919] 2 KB Sotiros Shipping Inc v Sameiet Solholt (The Solholt) [1983] 1 Lloyd s Rep

16 III: Non-Payment of Freight is Not a Repudiatory Breach 29. The non-payment of freight does not breach a condition of the contract because the term requiring freight to be paid is a mere innominate term 11 and the Respondent has not shown themselves to be unable to perform the contract The initial non-payment of freight by the Respondent does not deprive the Claimant of substantially the whole benefit of the contract 13, or encroach upon any express condition of the contract. 31. With regards to express conditions: The Sale of Goods Act 1999 of Singapore 14, section 10, subsection 1 explicitly states in the context of sales of goods contracts that: Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not of the essence of a contract of sale. 32. In the case of United Scientific Holdings ltd v Burnley Borough Council 15, the House of Lords held that the reference to the intention of the parties in this statute is of general application. Therefore, in order for the Claimant to argue that this is a condition of the contract, there needs to be an express term making the timely payment of freight as such. There is no such express statement. 11 Ampurius Nu Homes Holdings Ltd v Telford Homes (Creekside Ltd) [2013] EWCA Civ 577 (Lewison LJ) 12 Universal Cargo Carriers Corp v Citati [1957] 2 QB 401, Hong Kong Fir Shipping ltd v Kawasaki Kisen Kaisha ltd [1962] 2 QB Sale of Goods Act (original United Kingdom enactment 1999) 15 United Scientific Holdings ltd v Burnley Borough Council [1978] 2 All ER 62 16

17 33. Furthermore, even if there is an implied term purporting to make any and all breaches repudiatory, the case of Dominion Corporate Trustees Limited v Debenhams Properties Limited 16 limits this application to major breaches-i.e. a breach depriving the Claimant of substantially the whole contract s benefit Secondly, with regard to whether the non-payment of freight deprives the claimant of substantially the whole benefit of the contract 18. The delay in payment of freight, totalling 13 days by the time of the Claimant s notice of termination (page 68) does not substantially deprive the Claimant of the whole benefit of the contract. Further, as evidenced by the from Eric Yan on the 21 st October (pg 67) there is clear goodwill being shown by the Respondent to complete its obligations under the contract. 35. In the case of Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd 19, Lord Diplock formulates the test for whether an action represents a repudiatory breach at page 31: Does the occurrence of the event deprive the party who has further undertakings still to perform of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings? 36. In the recent case of Valilas v Januzaj 20, the Court of Appeal held that even where a party deliberately withholds payment due under a contract, this withholding is not a repudiatory breach if the counterparty expects to receive the payment eventually. This is conceptually 16 Dominion Corporate Trustees Limited v Debenhams Properties Limited [2010] EWHC Hong Kong Fir Shipping ltd v Kawasaki Kisen Kaisha ltd [1962] 2 QB Ibid. 19 Ibid. at page Valilas v Januzaj [2014] EWCA Civ

18 sound, as the counterparty will not be deprived of the substantial benefit of the contract, (the eventual payment). 37. This is directly analogous to our current case. There is no indication from the Respondent that there is an intention to not pay freight, or that it will at no stage be possible, merely that its payment will be delayed. This is backed up by the fact that the reason the Respondent is unable to pay is because Idoncare has not paid them the sub-freight yet. Therefore, the nonpayment of freight has not struck to the root of the contract, or breached any express condition of the contract. Furthermore, it does not show an intention not to perform the contract. In Bank Line v Arthur Capel it was held that mere delay in payment does not frustrate the purpose of the contract because a delay, even of considerable length and of wholly uncertain duration is an incident of maritime adventure Furthermore, the law with regards to non-payment of hire in a time charterparty shows the prima facie position that this tribunal should take. The recent case of Spar Shipping 22, Popplewell J shows that the common-law position, in absence of any contradictory contractual term, is that in a time charterparty, time is not of the essence, and non-payment of freight is not automatically considered a repudiatory breach of the contract. 39. This law exists in order to ensure that these commercial contracts are not easily repudiated, when world trade depends on them. Furthermore, it is clear that to allow repudiation in these circumstances would run counter to the principle of only allowing the breach of terms running to the heart of the contract as being repudiatory. 21 Bank Line Ltd v Arthur Capel and Co [1919] AC 435, 459 (Sumner J) 22 Spar Shipping [2015] EWHC

19 40. Lastly in the specific context of freight payments, there is a further factor to consider when evaluating if non-payment strikes to the heart of the contract such as to render a repudiatory breach. The common law position on when freight is payable to owners is that it is due on true and proper delivery of the cargo. This was first articulated in the case of Dakin v Oxley 23. As a result of this, in the absence of any express term to the contrary, if the common law expects the payment to be made on delivery of the cargo, any non-payment of freight before this time, even if in violation of the Charterparty, must not be considered as repudiatory by nature, it surely does not strike at the heart of the contract. What strikes to the heart of the contract must be the delivery and the payment, but crucially, not the timing of that payment. 41. Therefore, the Claimant s purported termination of the contract was wrongful and the Respondent is entitled to damages for wrongful termination of the contract. IV: The Claimant has no lien rights over the cargo i. The Voyage Charterparty confers no useful lien rights: 42. A contractual lien right is of no use against a third party outside the pertinent contract, as shown in Turner v Goolam 24 and Liberia v Evimeria Compania Naviera SA of Panama (The Agios Giorgis) Furthermore, the pertinent contract in this case, the Charterparty comprised of the COAL OVEROY standard terms as amended by the Parties by (dated Thursday, 1 September, :02 AM), does not provide for a lien in respect of sub freight. Clause 19 thereof only provides for the Claimant a lien over cargo in respect of freight due to them under this 23 Dakin v Oxley (1864) 143 ER Turner v Goolam [1904] 91 LT Liberia v Evimeria Compania Naviera SA of Panama (The Agios Giorgis) [1976] 2 Lloyd s Reports

20 Charter Party. Hence, the Claimant s rights are limited at best to a right in respect of freight from the Respondent, over the cargo. The Claimant cannot therefore exercise a right of lien over sub freight, see Molthes Rederi Aktieselskabet v. Ellerman's Wilson Line Ltd Since the Claimant is not in possession of the cargo, the only claim that must substantially be addressed in this respect is the assertion that the Claimant may direct the exercise of IMLAM s possessory lien right in order to claim the freight value. 45. The ability of the Claimant to benefit from such a right presupposes first of all that it was an effective term of an effective Bill of Lading (dated 4 October 2016). ii. The Voyage Charterparty Has Not Been Incorporated 46. There has however been no incorporation of the Charterparty terms. A charterparty not embodied in printed form cannot be incorporated into a Bill of Lading, see The Heidberg (No.2) 27. It would in general be commercially unsound to allow charterparty terms not contained in a tangible form to be incorporated as they cannot be transferred the third party under the Bill of Lading, so as to reliably evince the conditions of carriage which concern him. On this footing, permitting the incorporation of such terms would be tantamount to permitting the incorporation of terms agreed orally, which the law has precluded, see (The Heidberg) Furthermore, The Athena 29 and The Siboti 30 emphasize the paramount importance of commercial certainty in regards to incorporation of charterparty terms in general. In this case 26 Molthes Rederi Aktieselskabet v. Ellerman's Wilson Line Ltd [1927] 1 K.B. 710, The Heidberg (No2) [1994] 2 Lloyd s Reports ibid. 29 The Athena [2007] 1 Lloyd s Report s Siboti v BP France [2003] Lloyd s Reports

21 the contractual nexus is riddled with ambiguity. In the Bill of Lading s conditions of carriage, it claims to incorporate the terms of a Charterparty dated overleaf. However, none exists. There is no way to know which charterparty is being referred to. There are two charterparties outlined in this case: the Time Charterparty (dated 15 th February 2016) and the aforementioned Voyage Charterparty. 48. To add to this, there is no indication that Idoncare was aware of the charterparty chain so as to intend to incorporate the Charterparty or any other, in standard or amended form. The specific Charterparty terms agreed between the Respondent and the Claimant could not have been known to the Bill of Lading holder since the amendments to the standard terms were ed confidentially between the Claimant and the Respondent. 49. The Bill of Lading also references the Charterparty dated overleaf for particulars of cargo, freight, destination, etc yet nothing is mentioned to give these essential details. 50. According to clause 25 Bills of Ladings of the Charterparty (page 32), all Bills of Lading issued under the Charterparty shall be presented and signed by the master as per the COAL- OREVOYBILL form. This has not occurred. 51. The notice rules of incorporation designed to ensure incorporated terms are brought to the attention of the shipper cannot have been satisfied as a result, see Gill and Duffus v Riondda Furtures 31. The Bill of Lading must indeed be given a meaning that comports with what the parties would have reasonably understood in this problematic context (The Varenna 32 ), and it 31 Gill and Duffus v Riondda Furtures [1994] 2 Lloyd s Report s Skips A/S Nordheim v Syrian Petroleum Co. (the Varenna) [1984] QB

22 seems that there is no evidence that the Charterparty was known to Idoncare. Hence the contention that the Charterparty in this case has been incorporated is illusory. 52. However, more fundamentally, the nebulous nature of the Bill of Lading terms points to the complete absence of a contract of carriage at all. Parties intentions with respect to Bill of Lading terms should not attempt to be reconciled if they do not provide for one set of obligations over the other, Miramar Maritime Corporation v Holborn Oil Trading Ltd 33 and The Starsin 34. Hence, lack of agreement precludes enforcement of a Bill of Lading - see Navigazione Alta Italia SpA v Svenska Petroleum AB (The Nai Matteini) 35, G. Scammell and Nephew, Limited Appellants v H. C. and J. G. Ouston 36, Smidt v Tiden 37, K/S A/S Seateam & Co v Iraq National Oil Co (The Sevonia Team) It follows from the ambiguity that permeates the Bill of Lading in this case that it does not represent a valid contract. 54. Correspondingly, the Claimant has no lien rights effective against, or in virtue of, the shipper or carrier in respect of freight, see The Shillito This conclusion would apply equally, mutatis mutandis, were the Time Charterparty terms to be deemed to have been incorporated. Without prejudice to the primary issue that the Bill of Lading is too uncertain to be enforceable, it is the case that clause 23 of the Time Charterparty (page 10) does not contain any right for the Claimant in respect of the cargo. 33 Mirimar Maritime Corporation v Holborn Oil Trading ltd (The Miramar) [1984] 1 AC 676 (HL) 34 The Starsin [2003] 2 WLR Navigazione Alta Italia SpA v Svenska Petroleum AB (The Nai Mateini) [1988] 1 Lloyd s Report s 36 G Scammell and Nephew Ltd v HC&JG Ouston [1941] 1 AC Smidt v Tiden (1874) L.R. 9 Q.B K/S A/S Seateam & Co v Iraq National Oil Co (The Sevonia Team) [1983] 2 Lloyd s Rep. 640 at The Shillito (1897) 3 Com.Cas

23 56. This is less unrealistic than the contention that the Charterparty was incorporated, given that the Bill of Lading is headed IMLAM CONSIGNORIST on its face. The Starsin 40 establishes the preponderance of the face of Bills of Lading in their construction, and thus the most reasonable contention on the assumption that a contract exists is that the Time Charterparty terms apply. iii. The Lien was not incorporated Into the Bill of Lading 57. However, even if the Charterparty terms were in fact incorporated in principle, the Claimant s contractual lien was not however incorporated into the Bill of Lading. In the maritime law context, there is a strict approach to incorporation into a Bill of Lading where a right implies significant, substantive consequences for the parties, as it relates to clauses strictly extraneous to the carriage, discharge and delivery of cargo such as arbitration clauses: The Athena 41, T.W. Thomas & Co. Ltd. v. Portsea Steamship Co. Ltd 42, Siboti There are no reasons in principle why the same logic cannot be applied to the incorporation of lien clauses into Bills of Lading, since they are foreign to the carriage, discharge and delivery of cargo in the proper sense. Indeed, the law requires sufficient notice in respect of burdensome clauses that one would not expect to find in a contract, as per Interfoto Picture Library v Stiletto 44, applied in the context of incorporation of clauses into Bills of Lading, see The Heidberg No The Starsin [2003] 2 WLR The Athena [2007] 1 Lloyd s Report s T.W Thomas & co v. Portsea Steamship Co ltd [1912] AC 1 43 Siboti v BP France [2003] Lloyd s Reports Interfoto Picture Library v Stiletto [1987] EWCA Civ 6 45 The Heidberg (No2) [1994] 2 Lloyd s Reports

24 59. This should be held to apply a fortiori if lien clauses imply, surreptitiously, a further right to direct the carrier to exercise its lien as the Claimant contends. One can find support for such a proposition per Lord Lindley in Turner v Goolam 46 : A right to seize one person s goods for another person s debt must be clearly and distinctly conferred before a court of justice can be expected to recognise it. 60. Since the incorporation clause in this case makes no sufficient reference to the Charterparty, much less the lien clause, it should be held that it was not included in the Bill of Lading at all, or that its right to direct the carrier was not included. Idoncare is therefore, even assuming the Bill of Lading is valid and incorporated the Charterparty terms, a third party beyond the contractual reach of the Claimant, and thus it would not take subject to any of the Claimant s lien unincorporated non-possessory rights - The Aegnoussiotis 47. Should this not be acknowledged, a claim in conversion would be forthcoming, in the event of a lien being exercised wrongfully, see Orix Leasing 48. iv. There is No Implied Right to Detain the Cargo 61. Alternatively, it is maintained that no implied right to detain the cargo can be conferred, let alone incorporated into the Bill of Lading. In The Mathew [1990] 49 the possibility of a disponent owner s contractual lien entitling him to an implied right to direct the ship owner to retain the goods was rejected by Steyn LJ. Hence, irrespective of the incorporation of the lien clause, no right to detain a third party s cargo could be said to arise. This also does not 46 Turner v Goolam [1904] 91 LT The Agnoussiotis [1977] 1 Lloyd s Report s Tat Seng Machine Movers PTE LTD V. Orix Leasing Singapore LTD: [2009] SGCA The Mathew [1990] 2 Lloyd s Reports

25 comport with the well-established principle that liens are inoperable in relation to third parties, see Turner Moreover, the Bill of Lading cannot be construed in a manner divorced from the reasonable expectations of the parties, see The Varenna 51 at 86. Hence, it would not make sense for any lien clause to be construed such that it comprises of the implied right to indirectly detain the cargo or any lien rights over sub freight, given that there is no evidence of Idoncare s awareness of the existence of the Charterparty terms, much less the Claimant itself. 63. The ambit of the shipper s knowledge precludes an interpretation acknowledging the mere existence of third parties and surreptitious rights it had no way of knowing, such as rights akin to lien rights in respect of the shipper s cargo. V. The Tribunal Should Not Allow the Claimant to Sell the Cargo i. The Tribunal has no in Rem Jurisdiction 64. The Tribunal has no in rem jurisdiction in respect of the cargo, shipped by Idoncare. The Trade Resolve 52 establishes that the fact that parties submit themselves to the jurisdiction of the High Court does not mean that it has jurisdiction in respect of proprietary matters, and the same should apply with respect to the power of the Tribunal in this dispute. 65. The jurisdiction of the Tribunal to make an award is limited to the scope of the arbitration agreement within the meaning of s.2a of the International Arbitration Act 53, see WSG 50 Turner v Goolam [1904] 91 LT Skips A/S Nordheim v Syrian Petroleum Co. (the Varenna) [1984] QB The Trade Resolve [1999] 4 SLR International Arbitration Act Original enactment

26 Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka 54. Idoncare has made it clear in its Arbitration Notices that the arbitration agreement in this case has not allowed for the resolution of matters in rem. 66. Indeed, given that the Bill of Lading is not a valid contract, there is no effective extraneous arbitration clause against Idoncare that would permit the resolution of matters pertaining to cargo interests and, by extension, the sale of cargo. 67. It follows that, since Idoncare has merely entered an appearance in the action, the Tribunal cannot make an award against it in respect of the cargo, but only has in personam jurisdiction so far as concerns it. ii. There is No Possibility of Selling the Cargo 68. Even so, there is no possibility of selling the cargo such that the Claimant could receive the proceeds. Indeed, a possessory lien, as in this case, does not entitle one to sell the cargo directly, Faith Maritime Co Ltd v Feoso (Singapore) Pte Ltd 55. This can only be done under s.12 of the International Arbitration Act 56. The conditions for sale depend on what is necessary and just in the circumstances, see Rule 25 of the Singapore Chamber of Maritime Arbitration Rules. It is helpful to consider the necessity of sale under the auspices of the case law on the provisions of section 12A(4) of the International Arbitration Act read with section 12(1)(d), which provide the most guidance in this regard. In that regard, the sale was not necessary for the purpose of preserving assets and secondly the application for the sale isn t an urgent one, and consequently is not just or necessary. 54 WSG Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka [2002] SGHC Faith Maritime Co Ltd v Feoso (Singapore) Pte Ltd [2002] SGHC 229 at International Arbitration Act Original enactment

27 1) There is no asset which can be preserved 69. In the first place, there is nothing in this case that can be preserved by the sale of the cargo. Maldives Airport v GMR Malé International Airport 57 establishes that only contractual rights which lend themselves to being preserved or, put another way, those which, if lost, would not adequately be remediable by an award of damages can be assets. In this case, the Claimant has no potential interest that cannot be compensated by damages, since it seeks to recover purely economic loss. 70. Furthermore, in Five Ocean Corporation v Cingler Ship Pte Ltd 58, the court understood section 12A(4) of the International Arbitration Act read with section 12(1)(d) as only encompassing in the meaning of asset, following Maldives Airport, an in personam right such as that of the Claimant, on condition that the carrier agree to act on its behalf. This is not the case here as no formal documentation evinces such an agreement unequivocally, by contrast to that case which concerned an affidavit. 71. It therefore follows that the Claimant could have no right tantamount to a possessory interest on a proper appreciation of the facts. Further, as evident from the Joint Parties Expert Report, the favorable trend of the price of coal in the Australian market militates against the need for sale in order to preserve its value as an asset. There appears to be no meaningful change in the nature and value of the coal, seeing as that the expert qualifies the coal as sub bituminous on the basis of its calorific value, which has not changed at all, as can be seen from the Certificate of Sampling and Analysis dated the 4 th of October. Nor from that document has the volatility and the moisture content of the cargo changed. There is thus no sufficient reason on this footing for the sale of the cargo to be made. 57 Maldives Airport v GMR Malé International Airport [2013] SGCA Five Ocean Corporation v Cingler Ship PTE Ltd [2015] SGHC

28 2) There is no urgency for sale 72. Secondly, given the recent ruling in Five Ocean Corporation v Cingler Ship Pte Ltd 59, it is necessary to dispel grounds of urgency which lent themselves to the necessity of sale in that case. By way of contrast with that case, where the ship had been left out at sea for 70 days, the Tardy Tessa has only been at sea for 20 days. 73. Further, there was no realistic opportunity in that case to sell the cargo to a willing purchaser. In this case, the small length of time the ship and crew spent at sea and Idoncare s willingness to participate in the arbitration indicate otherwise. The fact in that case that no arbitral tribunal had been constituted was also germane to the court s reasoning, whereas in this case both parties have committed to arbitration voluntarily. 74. Maldives Airport 60 emphasizes that urgency requires that there be no alternative method of sale to the point where cargo will otherwise be lost. It should be borne in mind that the case law repeatedly emphasizes that the criterion of urgency is interpreted restrictively, see NCC International v Alliance concrete Singapore 61. Hence, it should be conclusively proven that no possibility of sale, and that is belied by The Expert Report which acknowledges the possibility of sale. 75. In any event, it cannot be just for the sale to occur on any grounds related to the cargo. The state of the cargo and, in particular, if it had a dangerous nature, would be the fault of IMLAM, the carrier in this case. It is contractually obliged to ensure the safety of the cargo under the Bill of Lading, and if it has not done so, it would be unjust for the Claimant to be able to leverage the damage caused by the party who assigned the rights it thereby exercises. 59 ibid. 60 Maldives Airport v GMR Malé International Airport [2013] SGCA NCC International v Alliance concrete Singapore [2008] 2 SLR

29 76. In addition, the Respondent has made it clear that the delay that has caused the situation of hardship on the Tardy Tessa is the result of the refusal of the Claimant to accept the Respondent s nomination of disport. 77. As a result, it would be unconscionable to allow the sale of cargo pursuant to a right which could not have been identified and consented to. It is therefore clear that the cargo cannot be sold pursuant to s.12 (1) IAA It should be borne in mind that, in this case, the credibility of the Master s Report contained in (Sunday, 30 November, :12 PM) cannot be ascertained. It would be appropriate for information regarding the situation on the ship to be certified by way of affidavit by the Tribunal pursuant to rule 30.5 of the Singapore Chamber of Maritime Arbitration Rules. The Tribunal should exercise care in relying upon it, and consider the Claimant s responsibility for it. VI: Prayer For Relief 79. For the reasons set out above, the Respondent requests the Tribunal to: a. FIND that the Respondent did not fail to nominate a legitimate discharge port. b. FIND that there was no repudiatory breach of contract. c. FIND that Furnace does not possess any lien rights in respect of sub freight. d. FIND that there is no jurisdiction or power to order sale of the cargo. 62 International Arbitration Act Original enactment