NINETEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2018 MEMORANDUM FOR CLAIMANT

Transcription

1 NINETEENTH ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2018 MEMORANDUM FOR CLAIMANT ERASMUS UNIVERSITY OF ROTTERDAM TEAM 25 ON BEHALF OF: CERULEAN BEANS AND AROMAS LTD AGAINST: DYNAMIC SHIPPING LLC AND THE SHIP MADAM DRAGONFLY CLAIMANT RESPONDENT COUNSEL Wilhelm Ankar - Frederick Nilsson - Arnaud Scherpenseel Ruchi Verma - Warren de Waegh - Marcus Wester

2 TABLE OF CONTENTS LIST OF AUTHORITIES... III STATEMENT OF FACTS... 1 A. ARGUMENTS ON JURISDICTION... 2 PRELIMINARY ISSUE OF JURISDICTION... 2 (I) THE TRIBUNAL HAS JURISDICTION TO DETERMINE CLAIMANT S PLEADING FOR DAMAGES... 2 (1) English law governs the arbitration agreement... 2 (2) The arbitration clause covers the claim for damages... 4 (3) The expert determination clause does not prevent the Tribunal from hearing the claim for damages... 4 B. ARGUMENTS ON THE MERITS OF THE CLAIMS... 7 PRELIMINARY ISSUE ON THE LAW APPLICABLE TO THE CHARTERPARTY... 7 (I) RESPONDENT BREACHED THE CHARTERPARTY... 7 (1) RESPONDENT unlawfully deviated Madam Dragonfly... 7 (2) RESPONDENT is liable for the unseaworthiness of Madam Dragonfly... 9 (3) RESPONDENT is liable for the delay in delivery of the Cargo of Madam Dragonfly (4) RESPONDENT is strictly liable for his breaches of the Charterparty (II) CLAIMANT IS ENTITLED TO DAMAGES (1) RESPONDENT is liable to reimburse the Replacement Coffee Payment (2) RESPONDENT is liable to pay damages reflected in the Settlement Payment (3) RESPONDENT is liable for the water-damage (III) LIABILITY IS NOT LIMITED PURSUANT TO THE HAGUE-VISBY RULES (1) CLAIMANT has declared the value of the goods (2) RESPONDENT acted recklessly and with knowledge that damage would probably result (IV) MARITIME LIEN (1) CLAIMANT is entitled to a maritime lien for bottomry (2) CLAIMANT is entitled to a maritime lien for the seafarer s wages... 21

3 C. ARGUMENTS ON THE MERITS OF THE COUNTERCLAIMS (I) RESPONDENT IS NOT ENTITLED TO CLAIM FREIGHT (II) RESPONDENT IS NOT ENTITLED TO CLAIM AGENCY FEES AT PORT OF SPECTRE (III) RESPONDENT IS NOT ENTITLED TO THE DAMAGES AMOUNTING TO THE REPAIRS TO THE HULL (IV) RESPONDENT IS RESPONSIBLE TO PAY THE AGENCY FEES AT THE PORT OF DILLAMOND (V) RESPONDENT IS NOT ENTITLED TO DEMURRAGE (1) Madam Dragonfly was not an arrived ship until 4:58 PM 29 July (2) Notice of Readiness has only been tendered on 29 July 2017 at 4:28 PM (3) Interruptions to laytime (VI) RESPONDENT IS NOT ENTITLED TO THE PAYMENT OF USD FOR THE USE OF ELECTRONIC ACCESS SYSTEMS AT PORT OF DILLAMOND D. PRAYER FOR RELIEF ii

4 LIST OF AUTHORITIES Adamastos Shipping Co Ltd v Anglo Saxon Petroleum Co Ltd [1958] 1 Lloyd s Rep 73 9 Asfar v Blunder [1986] 1 QB Baumvoll Manufactur von Scheibler v Gilchrest & Co. [1892] 1 QB C V Scheepvaartonderneming Ankergracht v Stemcor (A/sia) Pty Limited [2007] FCAFC Cable & Wireless Plc v IBM United Kingdom Ltd [2002] EWHC Empresa Cubana Importada de Alimentos 'Alimport' v Iasmos Shipping Co SA [1984] 2 Lloyd's Rep Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd (2008) 19 VR , 16 Eridania SpA v Rudolf A Oetker [2000] 2 Lloyd s Rep Ever Lucky Shipping Co Ltd v Sunlight Mercantile Pte Ltd [2003] SGHC Fiona Trust & Holdings Corporation v Privalov [2008] 1 Lloyd s Rep Glaholm v Hays (1841) 133 ER Grand China Logistics Holding (Group) Co. Ltd. v Spar Shipping AS [2016] EWCA Civ Hadley v Baxendale (1854) 9 Ex , 16 Hain SS Co v Tate & Lyle (1936) 41 Com Cas Internationale Guano v. MacAndrew [1909] 2 KB Joseph Thorley Ltd v Orchis Steamship Co Ltd [1970] 1 KB Louis Dreyfus Commodities Suisse SA v MT Maritime Management BV [2015] EWHC ,16 Mediterranean Shipping Company SA v Glencore International AG [2017] EWCA Civ Montedison SpA v Icroma Spa (The Caspian Sea) [1980] 1 Lloyd s Rep Nugent & Killick v Michael Goss Aviation Ltd [2000] 2 Lloyd s Rep Oldendorff (EL) & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1973] 2 Lloyd s Rep P & E Shipping Corporation v Empresa Cubana Exportadora e Importadora de Alimentos (The Ruth Ann) (1964) 335 F 2d Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd & Ors (1993) 43 FCR Payzu v Saunders [1919] 2 KB iii

5 R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 50 4 Re United Railways of Havana and Regla Warehouses Ltd [1961] AC Reardon Smith Line v Black Sea and Baltic General Insurance [1939] AC Rio Tinto v. Seed Shipping (1926) 24 Lloyd s Rep Socony Mobil Oil Co., Inc. v. Texas Coastal & International (1977) 559 F 2d 1008 (5th Cir) 17 Stag Line v Foscolo, Mango & Co [1932] AC Sulamérica Cia Nacional De Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638 2, 3, 6 Tamplin Steamship Co Ltd v Anglo Mexican Petroleum Products Co Ltd [1996] 2 AC The Europa [1908] P The Garden City (No. 1) [1982] 2 Lloyd's Rep The Golden Victory [2007] 1 CLC , 16 The Halcyon Skies [1976] 1 All ER The Pegase [1981] 1 Lloyd s Rep The Royal Arch (1857) Swab The Tacoma City [1991] 1 Lloyd s Rep The Torepo [2002] 2 Lloyd s Rep Thiess v. Australian SS. [1955] 1 Lloyd's Rep , 23 U.S. Shipping Board v. Masters (1923) 14 Lloyd s Rep Victoria Laundry (Windsor) Ltd v Newman Industries [1949] 2 KB Wah (Aka Alan Tang) & Anor v Grant Thornton International Ltd & Ors [2012] EWHC , 6 XL Insurance Ltd v Owens Corning [2000] 2 Lloyd s Rep Yemgas FZCO & Ors v Superior Pescadores SA (The Superior Pescadores) [2016] EWCA Civ iv

6 STATEMENT OF FACTS 1. CLAIMANT contracted with RESPONDENT on 22 July 2017 to charter the vessel Madam Dragonfly for an urgent transport of specialty grade green coffee (the Cargo) from Cerulean to Dillamond. 2. During negotiations, CLAIMANT expressly manifested that time was of the essence and agreed that the Cargo should be discharged no later than 7 PM on 28 July Madam Dragonfly departed on 24 July 2017 after CLAIMANT provided security for the crew s wages, as requested by RESPONDENT, which was a condition for the voyage to proceed. 4. During the voyage, contact was lost for 17 hours, because the communications and satellite systems were knocked out by solar flares. 5. On 27 July 2017, RESPONDENT informed CLAIMANT about the missing hardcopy maps for the contracted voyage. 6. On the same day, RESPONDENT failed to follow CLAIMANT s clear instructions to take the most direct route to the Port of Dillamond by unjustifiably deviating Madam Dragonfly. 7. On 28 July 2017, Madam Dragonfly could not become an arrived ship due to congestion in the Port of Dillamond, information of which was only provided to CLAIMANT on 29 July On the same day, whilst attempting to lift the anchor, the crew damaged the hull of Madam Dragonfly. 9. RESPONDENT only discharged the Cargo on 30 July However, CLAIMANT could only take delivery the next day. 10. Based on the expert determination, 75% of the Cargo was water-damaged whilst in the care of RESPONDENT, rendering it unmerchantable. 11. On 1 August 2017, CLAIMANT notified RESPONDENT of the breach of the voyage Charterparty of Madam Dragonfly. 1

7 A. ARGUMENTS ON JURISDICTION PRELIMINARY ISSUE OF JURISDICTION 1. The Tribunal s power is governed by the rules chosen by the Parties in the arbitration agreement and the lex arbitri. The Parties have chosen London as the seat of arbitration Accordingly, the procedures related to the arbitration are to be governed by the English Arbitration Act 1996 ( The Arbitration Act ). (I) The Tribunal has jurisdiction to determine CLAIMANT s pleading for damages 3. Under the competence-competence principle, the Tribunal has the power to determine its own jurisdiction pursuant to S. 30 of the Arbitration Act. 2 CLAIMANT s argument is threefold: (1) English law governs the arbitration agreement; (2) under English law, the Tribunal has jurisdiction to cover the claim for damages; and (3) expert determination does not limit this jurisdiction. (1) English law governs the arbitration agreement 4. Following the doctrine of separability as established under S. 7 of the Arbitration Act, the law governing the arbitration agreement does not necessarily follow the law governing the underlying contract. In Sulamérica v Enease Engenharia, 3 it was held that the initial presumption that the substantive law of the contract, also governing the arbitration agreement, can be displaced by any indication to the contrary. 4 The Court of Appeal laid down a three-stage test based on an express choice, implied choice and the closest and most real connection in order to determine the applicable law to the arbitration agreement In the present case, the initial presumption that the law of New South Wales governs the arbitration agreement has been rebutted, as there is (i) an express choice of English law; (ii) in the alternative, English law was an implied choice of law; or (iii) English law has the closest and most real connection to 1 Clause 27 of the Charterparty, Moot Scenario, p Nigel Blackaby et al., Redfern and Hunter on International Arbitration (Oxford University Press, 6 th ed, 2015), p Gary Born, International Commercial Arbitration (Kluwer Law International, 2 nd ed, 2014), p ; Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd & Ors (1993) 43 FCR 439, p Sulamérica Cia Nacional De Seguros SA v Enesa Engenharia SA [2012] EWCA Civ Sulamérica Cia Nacional De Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638, p Sulamérica Cia Nacional De Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638, p

8 the arbitration agreement. (i) English law was an express choice of law 6. The Parties expressly chose English law to govern the arbitration agreement by incorporating the London Maritime Arbitrators Association Terms 2017 ( LMAA ) in cl According to rule 6 (a) of the LMAA, in the absence of any agreement to the contrary, the law applicable to the arbitration agreement is English law. As cl. 27 does not contain any agreement to the contrary, the Parties intended for English law to govern the arbitration agreement by incorporating rule 6 (a) of the LMAA. (ii) English law was an implied choice of law 7. Should the Tribunal find that the Parties have not made an express choice of law, CLAIMANT submits that English law has been implicitly chosen by the Parties as the applicable law. 8. In XL Insurance, 7 Toulson J held that by providing for arbitration in London ( ) [the parties] had by implication chosen English law as the proper law of the arbitration agreement. 8 This was further supported by the landmark case of Sulamérica, where it was held that the seat chosen for arbitration was an important factor in deciding which law was applicable to the arbitration agreement In the present case, the Parties have made an express reference to the seat of arbitration to be in England hence making an implied choice for English law to govern the arbitration agreement. (iii) English law has the closest and most real connection with the arbitration agreement 10. If the Tribunal is not convinced that English law should apply based on the above arguments, CLAIMANT submits that English law has the closest and most real connection to the arbitration agreement. This is further supported by three factors, which rebut the presumption that the law of New South Wales governs the arbitration agreement. 11. First, both CLAIMANT and RESPONDENT are located in Cerulean, which applies all laws of the 6 Clause 27 of the Charterparty, Moot Scenario, p XL Insurance Ltd v Owens Corning [2000] 2 Lloyd s Rep XL Insurance Ltd v Owens Corning [2000] 2 Lloyd s Rep 500, para Sulamérica Cia Nacional De Seguros SA v Enesa Engenharia SA [2012] EWCA Civ

9 United Kingdom. 10 Second, both Parties performed their obligations under the Charterparty in states that apply English law. 11 Third, the Parties agreed on an English set of institutional rules to regulate the arbitration agreement Therefore, English law has the closest and most real connection to the arbitration agreement. (2) The arbitration clause covers the claim for damages 13. The Tribunal has jurisdiction to cover the claim for damages, as the scope of the arbitration agreement, on its proper construction, includes the claim for damages. 14. According to cl. 27 (a) of the Charterparty, any dispute arising out of or in connection with this contract is to be referred to arbitration. The House of Lords in Fiona Trust 13 took a liberal approach in interpreting arbitration agreements, by holding that an arbitration clause has to be construed to cover any dispute unless the language makes it clear that certain questions were intended to be excluded from the arbitrator s jurisdiction Clause 27(a) does not exclude any questions regarding damages from this Tribunal s jurisdiction. Hence, on the proper construction of cl. 27(a), the Tribunal has jurisdiction to adjudicate the claim for damages. (3) The expert determination clause does not prevent the Tribunal from hearing the claim for damages 16. The expert determination clause does not limit the Tribunal s jurisdiction to cover the claim for damages. Consequently, the arbitration proceedings have been validly commenced in accordance with cl. 27 of the Charterparty. This is because (i) the expert determination clause is unenforceable; and (ii) in the alternative, the claim for damages does not arise from matters which are to be determined according to the expert determination provisions under cl. 27 (d), (g) of the Charterparty. 10 Procedural Order No. 2, para. 1; Background Information and Assumptions No. 1, Moot Scenario, p R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 500, p. 529; Re United Railways of Havana and Regla Warehouses Ltd [1961] AC 1007, p Clause 27 of the Charterparty, Moot Scenario, p Fiona Trust & Holdings Corporation v Privalov [2008] 1 Lloyd s Rep Fiona Trust & Holdings Corporation v Privalov [2008] 1 Lloyd s Rep 254, para

10 (i) The expert determination clause is unenforceable 17. The expert determination clause should not be given legal effect as a condition precedent to arbitration, as the language of the clause does not constitute (a) an unequivocal commitment to commence the arbitration proceedings and (b) the procedure is not clearly set out. (a) The expert determination clause is not an unequivocal commitment to commence a process 18. The language used in cl. 27 (e) of the Charterparty does not amount to an unequivocal commitment to commence a process. 19. In Cable & Wireless, 15 the court held that the use of mandatory wording is an important consideration when considering the enforceability of a multi-tier dispute resolution clause. 16 This is supported by the decision in Wah, 17 which stated that for a dispute resolution clause to be enforced, there must be a sufficiently certain and unequivocal commitment to commence a process In the present case, cl. 27 (e) of the Charterparty states that a party may not commence legal proceedings ( ) unless clause (d) has been complied with. CLAIMANT submits that the use of may, in contrast to shall or must, refers to discretionary language, which indicates that the parties intended the expert determination to be non-mandatory. 21. This stands in contrast to cl. 27 (d), which does use mandatory language by stating that technical matters shall be referred to expert determination. It follows that the Parties had the intention to refer technical matters to expert determination, but did not have the intention to make non-compliance stand in the way of commencing arbitration proceedings, as the language does not amount to an unequivocal commitment to commence arbitration proceedings. 22. Therefore, the Parties did not intend the expert determination clause to be enforced as a condition precedent to arbitration. 15 Cable & Wireless Plc v IBM United Kingdom Ltd [2002] CLC Cable & Wireless Plc v IBM United Kingdom Ltd [2002] CLC 1319, p Wah (Aka Alan Tang) & Anor v Grant Thornton International Ltd & Ors [2012] EWHC Wah (Aka Alan Tang) & Anor v Grant Thornton International Ltd & Ors [2012] EWHC 3198, para

11 (b) The procedure in the expert determination clause is not sufficiently certain 23. The expert determination clause is unenforceable, as the Parties rights have not been set out with sufficient certainty. 24. It was held by Lord Justice Moore-Bick in Sulamérica that for any agreement to be effective in law it must define the parties rights and obligations with sufficient certainty to enable it to be enforced. 19 In this case, the Court of Appeal held that a multi-tier clause requiring mediation as the initial tier was unenforceable, because it only stated that the mediation had to take place, without setting out any defined mediation process, nor referring to the procedure of a specific mediation provider In the present case, cl. 27 (d) states that any dispute ( ) shall be referred to expert determination by an independent Master Mariner. The clause only defines how the procedure is to be performed, leaving the clause too nebulous. 21 It is also unclear how the Master Mariner has to be appointed. No institutional rules have been adopted to deal with these matters. 26. It follows that cl. 27 (d) is unenforceable, as the expert determination clause has not been laid down with sufficient certainty. (ii) Technical matters do not entail the claims for damages 27. In the alternative, the claims for damages are not to be referred to expert determination, as they do not constitute technical matters as defined under cl. 27 (g). 28. Clause 27 (d) of the Charterparty provides that any dispute as to technical matters should be referred to expert determination. The term technical matters is defined in cl. 27 (g) as matters surrounding the technical aspects of the performance of the Charterparty ( ) which can reasonably be considered to be within the expert technical knowledge of a Master Mariner. 29. When construing the agreement, it is clear that the claim for damages does not fall under the expert knowledge of a Master Mariner, as it does not relate to the technical performance of the Charterparty as 19 Sulamérica Cia Nacional De Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638, para Sulamérica Cia Nacional De Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638, para Wah (Aka Alan Tang) & Anor v Grant Thornton International Ltd & Ors [2012] EWHC 3198, para 72. 6

12 required by cl. 27 (g). This is further illustrated by the enumeration in cl. 27 (g), which consists of the vessel s route, loading and unloading of the cargo, storage conditions ( ). On this basis, the claim for damages is not to be referred to expert determination. B. ARGUMENTS ON THE MERITS OF THE CLAIMS PRELIMINARY ISSUE ON THE LAW APPLICABLE TO THE CHARTERPARTY 30. The Charterparty has validly incorporated the law of New South Wales as the applicable law. 22 Following the single-instrument view taken in the Superior Pescadores, 23 the Clause Paramount in cl. 28 of the Charterparty validly incorporates the Hague-Visby Rules ( HVR ). 31. CLAIMANT submits that (I) RESPONDENT breached the Charterparty, which (II) entitles CLAIMANT to claim for damages; (III) RESPONDENT s liability is limited pursuant to the HVR. (IV) CLAIMANT is entitled to a maritime lien over Madam Dragonfly. (I) RESPONDENT breached the Charterparty 32. RESPONDENT breached the Charterparty by (1) unlawful deviation; (2) the unseaworthiness of Madam Dragonfly; and (3) the delay in delivery. (4) RESPONDENT is strictly liable for these breaches. (1) RESPONDENT unlawfully deviated Madam Dragonfly 33. CLAIMANT submits that RESPONDENT breached Art. IV (4) HVR by (i) deviating from the most direct route, as provided by the Charterparty; and (ii) doing so intentionally; and (iii) unjustifiably. (i) Madam Dragonfly did not take the most direct route 34. The most direct geographical route is presumed to be between the port of loading and the port of unloading. 24 RESPONDENT was obliged to take the most direct geographical route from the port of 22 Clause 28 of the Charterparty, Moot Scenario, p Yemgas FZCO & Ors v Superior Pescadores SA [2016] EWCA Civ 101, para Reardon Smith Line v Black Sea and Baltic General Insurance [1939] AC

13 loading to the port of discharge under the Charterparty 25 and in accordance with Claimant s clear instructions RESPONDENT did not take the most direct route due to their deviation to the Port of Spectre. 27 (ii) RESPONDENT deviated intentionally 36. RESPONDENT s deviation was not involuntary, as he made the intentional choice to deviate. 37. It is established that a navigational error or an involuntary departure that is directly caused by weather conditions amounts to an unintentional deviation In the present case, it was RESPONDENT s choice, not directly the unintentional event of the solar flares, which caused him to deviate from the agreed route. 29 Therefore, RESPONDENT intentionally deviated Madam Dragonfly. (iii) RESPONDENT s deviation is not justified 39. RESPONDENT s deviation is not justified, because (a) it is not an attempt to save life or property; and (b) it cannot be qualified as reasonable. 30 (a) RESPONDENT s deviation is not an attempt to save life or property 40. RESPONDENT s deviation was due to the fact that Madam Dragonfly had no systems on board and the only maps she held were for Spectre. The deviation was not an attempt to save life or property, as neither one of them was at risk at any point during the voyage. The systems affected by the solar flares were only down for four hours Therefore, RESPONDENT s deviation was not an attempt to save life or property. 25 Letter of 22 July 2017, Moot Scenario, p Letter of 22 July 2017, Moot Scenario, p Annexure A to Points of Claim, Moot Scenario, p Rio Tinto v. Seed Shipping (1926) 24 Lloyd s Rep 316, p sent at 4:58 PM on 28 July 2017, Moot Scenario, p Clause 17 Charterparty, Moot Scenario, p. 9-10; Art. IV (4) Hague-Visby Rules. 31 The Cerulean Mail of 25 July 2017, Moot Scenario, p

14 (b) RESPONDENT s deviation is not reasonable 42. A deviation can be deemed reasonable if it occurs in "a way a prudent person controlling the voyage would do." 32 All relevant circumstances must be taken into account when assessing reasonableness In the Ruth Ann, 34 reasonableness was interpreted strictly. In that case, the perishable nature of the Cargo was the decisive element rendering the deviation was unreasonable. 44. The perishable nature of the cargo in the Ruth Ann is similar to the nature of the Cargo. While the coffee was not perished, RESPONDENT knew that the delayed delivery caused by the deviation would make the Cargo worthless for CLAIMANT. 35 On this basis, RESPONDENT did not act in a way a prudent person would do. Therefore, RESPONDENT s deviation is unreasonable. (2) RESPONDENT is liable for the unseaworthiness of Madam Dragonfly 45. RESPONDENT failed to exercise due diligence to make Madam Dragonfly seaworthy before and at the beginning of the voyage in accordance with Art. III (I) HVR and cl. 17 (6) of the Charterparty, 36 due to (i) the lack of proper navigational systems; and (ii) the absence of the right maps on board. Therefore, (iii) RESPONDENT breached an innominate term of the Charterparty, which is sufficiently serious to treat the Charterparty as repudiated. (i) The lack of proper navigational equipment on board makes Madam Dragonfly unseaworthy 46. Madam Dragonfly s navigational and communication systems would have reconnected directly after the solar flares knocked them out if they were in compliance with current regulations Madam Dragonfly has to comply with the requirements of the ISM Code. 38 Pursuant to Art. 6.2 of the ISM Code, she must have been appropriately manned to ensure the maintenance of the safe operation on board. The safety manning of the vessel is specified in Resolution A.1047 (27) to include appropriate 32 Stag Line v Foscolo, Mango & Co [1932] AC 328, p Stag Line v Foscolo, Mango & Co [1932] AC 328, p P & E Shipping Corporation v Empresa Cubana Exportadora e Importadora de Alimentos (1964) 335 F 2d 678, p Letter of 22 July 2017, Moot Scenario, p Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959] 1 Lloyd s Rep The Cerulean Mail of 25 July 2017, Moot Scenario, p Clause 15(a)(iii) of the Charterparty, Moot scenario, p. 8. 9

15 levels of responsibilities to be able to plan and conduct safe navigation as well manoeuvre and handle the vessel in all conditions. 39 Furthermore, in the Garden City 40, it was established that every shipowning corporation ought to institute a system for the supervision of navigation and the detection of faults In the present case, Madam Dragonfly was not adequately manned in regard to its navigational systems, because it was unable to manfoeuvre the vessel towards the destination after the solar panels were knocked out. Furthermore, the shipowner did not adequately supervise the system for navigation, as they did not detect the old/faulty equipment of the vessel prior to the commencement of the voyage. Therefore, RESPONDENT did not exercise due diligence to make Madam Dragonfly seaworthy. (ii) The absence of the right maps on board renders Madam Dragonfly unseaworthy 49. Madam Dragonfly was unseaworthy, as the rights maps for the agreed voyage were absent on board. 50. The seaworthiness of a vessel is an obligation that is relative to the particular voyage of that vessel. 42 Therefore, the maps necessary for this voyage must have been on board. In The Torepo, 43 the shipowner was able to prove that he had exercised due diligence to make the vessel seaworthy, as they were able to present the proper manuals and up-to-date charts on board In the present case, RESPONDENT is unable to present any such documentation, because they did not change the maps on board for the particular voyage to Dillamond before the beginning of the voyage Therefore, RESPONDENT did not exercise due diligence to make Madam Dragonfly seaworthy. (iii) CLAIMANT treats the Charterparty as repudiated 53. By not complying with the seaworthiness obligation, RESPONDENT has breached an innominate term 39 Art and of Annex 2 of Resolution A.1047 (27). 40 The Garden City (No. 1) [1982] 2 Lloyd's Rep The Garden City (No. 1) [1982] 2 Lloyd's Rep. 382, p. 389, Eridania SpA v Rudolf A Oetker [2000] 2 Lloyd s Rep 191, para. 18; Ever Lucky Shipping Co Ltd v Sunlight Mercantile Pte Ltd [2003] SGHC 80, para. 41; The Torepo [2002] 2 Lloyd s Rep The Torepo [2002] 2 Lloyd s Rep The Torepo [2002] 2 Lloyd s Rep sent at 7:17 AM on 27 July 2017, Moot Scenario, p. 18; sent at 4:58 PM on 28 July 2017, Moot Scenario, p

16 of the Charterparty. 46 This breach entitles CLAIMANT to treat the Charterparty as repudiated. 54. According to Tamplin Steamship, 47 if a delay caused by unseaworthiness makes it unreasonable to proceed with the adventure, the charterer is deprived the benefits intended in the Charterparty. This entitles the charterer to treat the Charterparty as repudiated. 55. The Charterparty was concluded for the transportation of premium quality coffee to CLAIMANT s buyer. As a result of the delay and delivery, which was primarily, or at least partly, caused by the unseaworthiness of the vessel, CLAIMANT had to purchase Replacement Coffee in order to comply with his obligations under his contract with the buyer. Thus, CLAIMANT was deprived of the benefits under the Charterparty concluded between the Parties and may treat the contract as repudiated. (3) RESPONDENT is liable for the delay in delivery of the Cargo of Madam Dragonfly 56. RESPONDENT is liable for the delay in delivery of the Cargo. CLAIMANT submits that (i) time was of the essence; (ii) RESPONDENT failed to deliver the Cargo on time; (iii) RESPONDENT cannot escape this liability since neither the solar flares nor the congestion constitute events of force majeure. (iv) RESPONDENT s breach allows CLAIMANT to treat the Charterparty as repudiated. (i) Time was of the essence 57. Time was of the essence in the Charterparty. This is demonstrated by box 9 of the Charterparty, which expressly states that the discharge must have occurred on 28 July Furthermore, CLAIMANT repeatedly emphasized the urgency of the shipment in his correspondence to RESPONDENT. 48 RESPONDENT was thus aware of time being of the essence. (ii) RESPONDENT failed to deliver the Cargo on time 58. RESPONDENT failed to deliver the Cargo by 7 PM on 28 July The access authority pass giving 46 Hong Kong Fir Shipping Co Ltd v Kaasaki Kisen Kaisha Ltd [1961] 2 Lloyd s Rep Tamplin Steamship Co Ltd v Anglo-Mexican Petroleum Products Co Ltd [1996] 2 AC 397, p Letter of 22 July 2017, Moot Scenario, p Box 9 of the Charterparty, Moot Scenario, p

17 access to the Cargo does not constitute actual delivery of the Cargo. 50 Therefore, the Cargo was only delivered to CLAIMANT at 1:17 PM on 31 July In the MSC Eugenia, 52 the Court of Appeal held that providing the shipper with a PIN code giving access to the goods does not constitute a symbolic act of delivery of the Cargo. Similarly, the authority pass containing the barcode that was given to CLAIMANT in the present case does not constitute delivery of the goods. Therefore, delivery only occurred when CLAIMANT took delivery of the goods, which was at 1:17 PM on 31 July (iii) The solar flares and the congestion do not constitute events of force majeure 60. RESPONDENT cannot escape liability under cl. 17 of the Charterparty, since neither (a) the solar flares; nor (b) the congestion constitute events of force majeure. (a) The solar flares do not exempt RESPONDENT from liability for the occurred delay 61. RESPONDENT wrongly denies liability for the delay that occurred from 28 July 2017 to 29 July 2017 based on an outburst of solar flares as a force majeure exception. However, the delay follows from RESPONDENT s negligence, which caused the unseaworthiness and the deviation of Madam Dragonfly. (b) The congestion does not exempt RESPONDENT from liability for the occurred delay 62. RESPONDENT wrongly denies liability for the delay occurring from 29 July 2017 until 31 July 2017 based on congestion as a force majeure exception. This delay was, at least partly, caused by RESPONDENT s negligence due to the unseaworthiness of Madam Dragonfly and the consequent deviation. Where the damage has been caused by the unseaworthiness of the vessel, the shipowner should be held liable If the Tribunal deems that the delay caused by the congestion falls under a force majeure exception, 50 Access Authority Pass, Moot Scenario, p sent at 4:21 PM on 31 July 2017, Moot Scenario, p Mediterranean Shipping Company SA v Glencore International AG [2017] EWCA Civ The Europa [1908] P. 84; Baumvoll Manufactur von Scheibler v Gilchrest & Co. [1892] 1 QB

18 RESPONDENT did not fulfill cl. 17 (a) of the Charterparty, as he firstly did not give a prompt written notice of the force majeure event and secondly did not take reasonable steps to minimize any potential delay. 64. RESPONDENT informed CLAIMANT about the storm 30 minutes after learning about it on 28 July at 4:58 PM. He did not explicitly mention the severity of the event or the possibility of a significant delay. This conveyance of information was neither detailed nor prompt. RESPONDENT informed CLAIMANT about the delays due to the storm on 29 July at 8:58 AM. Thus, RESPONDENT did not satisfy the first requirement of cl. 17 (a) of the Charterparty by giving a prompt written notice. 65. In regard to the second requirement, RESPONDENT did not take reasonable steps to minimize the caused delay. Considering that CLAIMANT has emphasized the importance of the timely delivery on multiple occasions, it is reasonable to have expected RESPONDENT to notify CLAIMANT about the storm immediately. This would have allowed the Parties to reach an alternative solution, for example, by to nominate a different port for delivery Therefore, the congestion does not exempt RESPONDENT from liability for the occurred delay in delivering the Cargo. (iv) RESPONDENT fundamentally breached the Charterparty 72. As time was of the essence, RESPONDENT's delay in delivery is a fundamental breach, entitling CLAIMANT to treat the Charterparty as repudiated. 55 (4) RESPONDENT is strictly liable for his breaches of the Charterparty. 73. It follows from CLAIMANT's conduct that he has elected to treat the Charterparty as repudiated by purchasing Replacement Coffee. By taking delivery, CLAIMANT did not constitute a choice to affirm the Charterparty. 56 Accordingly, the Charterparty is replaced by a bailment of the Cargo from the 54 Port of Tauranga Limited; Decision No.533 [2004] NZComComm 533, p Grand China Logistics Holding (Group) Co. Ltd. v Spar Shipping AS [2016] EWCA Civ 982; Glaholm v Hays (1841) 133 ER U.S. Shipping Board v. Masters (1923) 14 Lloyd s Rep

19 moment of breach, because CLAIMANT elected to treat the Charterparty as repudiated As the bailee of the Cargo, RESPONDENT is strictly liable for any loss or damage incurred from the moment he chose to deviate from the agreed route. 58 As RESPONDENT made a decision to deviate, 59 his liability cannot be justified on the grounds available for a bailee, as these grounds require the cause of damage to be external to RESPONDENT s decision-making. 60 (II) CLAIMANT is entitled to damages 75. RESPONDENT is liable for USD for the (1) the Replacement Coffee Payment; and (2) the Settlement Payment as well as for USD 15,750,000 due to the (3) water-damage caused to the Cargo. (1) RESPONDENT is liable to reimburse the Replacement Coffee Payment 76. CLAIMANT is entitled to claim these damages as they are (i) not too remote to RESPONDENT s breach; and (ii) the measure of compensation of USD is founded on the basis of the compensatory principle. (i) The Replacement Coffee Payment is not too remote to RESPONDENT s breach 77. CLAIMANT is entitled to these damages, as they are not too remote to RESPONDENT s breach. 78. The loss suffered due to the delay qualifies as a consequential loss as it is an expense suffered due to a breach beyond the normal measure of damages that a plaintiff in a like situation would suffer In the present case, CLAIMANT made expenses on the Replacement Coffee Payment, which renders the damages beyond the normal measure. Therefore, the Replacement Coffee Payment falls under the realm of consequential damages. 80. According to Hadley v Baxendale, 62 RESPONDENT is liable for the consequential damages when it is shown specifically that the defendant had reason to know the circumstances responsible for the special 57 Thiess v. Australian SS. [1955] 1 Lloyd's Rep 459, p Hain SS Co v Tate & Lyle (1936) 41 Com Cas 350; Thorley v. Orchis [1907] 1 KB 660, p. 669; Internationale Guano v. MacAndrew [1909] 2 KB 360, p sent at 7:17 AM on 27 July 2017, Moot Scenario, p. 18; sent at 4:58 PM on 28 July 2017, Moot Scenario, p Thorley v. Orchis [1907] 1 KB 660, p. 669; Internationale Guano v. MacAndrew [1909] 2 KB 360, p Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd (2008) 19 VR Hadley v Baxendale (1854) 9 Ex. 341, p

20 damage and foresee the injury. 63 CLAIMANT explicitly informed RESPONDENT about the importance of a timely delivery of the Cargo in view of CLAIMANT s obligations towards his client. 64 CLAIMANT denoted the significance of the timely delivery at 7 PM on 28 July Therefore, RESPONDENT could reasonably have expected that the delayed delivery would lead to these consequential damages. (ii) The measure of compensation of USD is assessed on the basis of the compensatory principle 81. The amount of USD is assed on the basis of the compensatory principle. 82. It is well-established that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed Applying this compensatory principle on the purchase price of the Replacement Coffee, CLAIMANT would not have been obliged to purchase the Replacement Coffee had RESPONDENT properly performed the Charterparty. Therefore, CLAIMANT is entitled to claim damages reflecting their purchase price amounting to USD (2) RESPONDENT is liable to pay damages reflected in the Settlement Payment 84. Similarly to the Replacement Coffee Payment, CLAIMANT is entitled to claim these damages as they are (i) not too remote to RESPONDENT s breach; and (ii) measure of compensation amounting to USD is founded on the basis of the compensatory principle. (i) The Settlement Payment is not too remote to RESPONDENT s breach 63 Hadley v Baxendale (1854) 9 Ex Victoria Laundry (Windsor) Ltd v Newman Industries [1949] 2 KB 528, p. 537; The Pegase [1981] 1 Lloyd s Rep Letter of 22 July 2017, Moot Scenario, p. 2; Box 9 of the Charterparty, Moot Scenario, p Louis Dreyfus Commodities Suisse SA v MT Maritime Management BV [2015] EWHC 2505; The Golden Victory [2007] 1 CLC

21 85. The damages for the Settlement Payment qualify as consequential damages. 67 It is an expense suffered due to RESPONDENT s breach beyond the normal measure of damages and satisfies the remoteness test, similarly to the Replacement Coffee Payment In addition to the importance of the timely delivery of the Cargo, RESPONDENT was also made aware of the rare nature of the Cargo. RESPONDENT should thus reasonably have known that a delayed delivery would oblige CLAIMANT not only to purchase Replacement Coffee but also to further indemnify the third party. (ii) The measure of compensation of USD is assessed on the basis of the compensatory principle 87. According to the compensatory principle, 69 CLAIMANT would not have been required to pay the Settlement Payment had RESPONDENT properly performed the Charterparty. Therefore, CLAIMANT is entitled to claim damages reflecting this payment amounting to USD Without the Settlement Payment, CLAIMANT s loss would have been substantially higher. Thus, these are reasonable expenses in mitigating the loss which should be recoverable as part of the damages. 70 (3) RESPONDENT is liable for the water-damage 89. RESPONDENT is liable for 75% of the Cargo that was water-damaged upon delivery on 31 July 1:55 PM due to the combination of the bad weather and the prolonged use of the short-lived sealant containers sometime in the 24 hours from 4:30 AM on 30 July 2017 under Art. III (1) HVR In the present case, CLAIMANT clearly informed RESPONDENT about the high quality and rarity of the coffee, requiring RESPONDENT to pack the Cargo with an entirely waterproof packaging due to the high risk of moisture damage. 72 Despite this request, RESPONDENT used the short-lived five day 67 Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd (2008) 19 VR Hadley v Baxendale (1854) 9 Ex Louis Dreyfus Commodities Suisse SA v MT Maritime Management BV [2015] EWHC 2505; The Golden Victory [2007] 1 CLC Payzu v Saunders [1919] 2 KB Statement of Expert Opinion, Moot Scenario, p Letter of 22 July 2017, Moot Scenario, p

22 sealants for the Cargo without contemplating the possible risks. 91. Under Art. III (1) HVR, the carrier must exercise due diligence to make the vessel cargoworthy for the given cargo in order to ensure its preservation, 73 taking into consideration all its known susceptibilities. 74 This entails that the vessel must be reasonably fit to receive and carry the cargo and deliver it at the specified destination prior to the voyage Considering CLAIMANT s continuous reminders on the special quality of the Cargo and its susceptibility to water, RESPONDENT should have used sealants that would not have put the quality of the Cargo under jeopardy. By using short-lived packaging, RESPONDENT did not exercise due diligence before the commencement of the voyage to make Madam Dragonfly cargoworthy. 93. Therefore, RESPONDENT is liable for the water-damage amounting to USD (III) Liability is not limited pursuant to the Hague-Visby Rules 94. RESPONDENT s liability pursuant to the HVR is not limited, as CLAIMANT (1) declared the value of the goods before shipment. In the alternative, (2) the RESPONDENT cannot rely on the limits of limitations under Art. IV rule 5 (e) HVR. (1) CLAIMANT has declared the value of the goods 95. According to Art. IV (5) (a) HVR, where the value has been declared by the shipper and inserted in the bill of lading, there is no limit for liability. 96. In the present case, CLAIMANT has declared the value of the coffee to RESPONDENT as $300/kg. 76 As no bill of lading has been issued in the present case, the value could not have been inserted. 97. Therefore, CLAIMANT has declared the value of the goods in accordance with Art. IV (5) (a) HVR. (2) RESPONDENT acted recklessly and with knowledge that damage would probably result 98. If the Tribunal holds that RESPONDENT declared the value in accordance with Art. IV (5) (a) HVR, 73 Socony Mobil Oil Co., Inc. v. Texas Coastal & International (1977) 559 F 2d 1008 (5th Cir), C V Sheepvaartonderneming Ankergracht v Stemcor (A/sia) Pty Limited [2007] FCAFC 77, p Empresa Cubana Importada de Alimentos 'Alimport' v Iasmos Shipping Co SA [1984] 2 Lloyd's Rep Letter of 22 July 2017, Moot Scenario, p

23 RESPONDENT cannot rely on Art. IV (5) (a) HVR, as they infringed Art. IV (5) (e) HVR. 99. According to Art. IV (5) (e) HVR, RESPONDENT can break through the limitation of liability if the damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result. Dyson J held that for a person to have acted recklessly and with knowledge that damage would probably result, it suffices that he/she acted regardless of the possible consequences of his act RESPONDENT had actual knowledge that by deviating, delay would occur, which could result in the possibility of damage to the Cargo. RESPONDENT was well aware that there was guaranteed waterproving of containers up to 5 days 78 and that the waterproof containers were perfect for short voyages. 79 Without the deviation, Madam Dragonfly would have arrived before the storm hit Dillamond at 4:58 PM on 28 July Consequently, the Cargo would have been delivered before the waterdamage to the Cargo would occur sometime in the 24 hours from 4:30 AM on 30 July Therefore, the deviation was a reckless act and RESPONDENT had knowledge that damage to the Cargo would be a possible consequence of this delay Thus, RESPONDENT cannot rely on Art. IV (5) (a) HVR, as he infringed Art. IV (5) (e) HVR. (IV) Maritime Lien 102. CLAIMANT is (1) entitled to a maritime lien for bottomry; and in the alternative, (2) CLAIMANT is entitled to enjoy the rights of the seafarer s maritime lien for wages. (1) CLAIMANT is entitled to a maritime lien for bottomry 103. CLAIMANT is (i) the provider of a financial security system that RESPONDENT is obliged to arrange for the seafarers in accordance with the Maritime Labour Convention 2006, as amended (MLC). (ii) this entitles CLAIMANT to a maritime lien for bottomry. 77 Nugent & Killick v Michael Goss Aviation Ltd [2000] 2 Lloyd s Rep 222, p Letter of 22 July 2017, Moot Scenario, p Letter of 22 July 2017, Moot Scenario, p sent at 4:58 PM on 28 July 2017, Moot Scenario, p Statement of Expert Opinion, Moot Scenario, p

24 (i) CLAIMANT is the provider of a financial security system 104. Both Cerulean and Dillamond have enacted the laws of the United Kingdom. 82 According to Standard A2.5.2 MLC, which entered into force on 18 January 2017, a vessel flying the flag of a Member State that is a party to the Convention, cannot sail without having a financial security system in place that ensures monetary aid to the seafarers in the event of abandonment of seafarers. 83 Madam Dragonfly is a commercial cargo ship flagged in Cerulean. 84 CLAIMANT is the financial security provider under the MLC According to Standard A2.5.3 (9) MLC, a financial security system should be provided, which is sufficient to cover the costs and expense of repatriation of seafarers and up to four months arrears of wages or entitlements due under a seafarer s contract of employment in case of abandonment. According to Standard A2.5.2 (2) (c) MLC, abandonment occurs if the shipowner has unilaterally severed their ties with the seafarer including failure to pay contractual wages for a period of at least two months In the present case, the seafarers have been abandoned, as no crew member has been paid since the first week of June. 85 This constitutes a period of exactly two months. The seafarers, aware of the financial troubles after revelations of corruptions, nepotism and fraud causing the entire executive to resign last year, 86 sought to protect their right to financial security under Standard A2.5.2 (2) (c) by not sailing until their wages were paid in full into a separate sort of trust account CLAIMANT provided RESPONDENT with financial security by paying an amount of USD to really be used as a security by the crew, 87 into a separate Bank account prior to the voyage of the seafarers. The amount of USD is more than sufficient to cover up to four months of wages or 82 Background Information and Assumptions No. 1, Moot Scenario, p Standard A (4) MLC. 84 Points of Claim No. 1, Moot Scenario, p The Dillamond Weekend Times of 5 August 2017, Moot Scenario, p The Dillamond Weekend Times of 5 August 2017, Moot Scenario, p Internal Memo of 19 July 2017, Moot scenario, p

25 entitlements due under a seafarers contract and the essential needs of the seafarers in accordance with Standard A2.5.2 (9), especially since Madam Dragonfly is a small container ship Therefore, RESPONDENT provided a system of financial security that covered the event in case of abandonment. (ii) The financial security system amounts to bottomry 109. The financial security system provided for by CLAIMANT gives the necessary funding in order to allow for the continuation of the voyage. Therefore, CLAIMANT is entitled to a maritime lien for bottomry It is well established that the commercial nature of bottomry resulting from a security transaction is to allow for the continuation of the shipping adventure. It provides a master or owner of a ship with a method of obtaining funds by giving a loan in a situation of necessity when the owner s credit will not gain such funds. 90 As stated by Dr. Lushington, a bottomry bond in its nature depends upon the distress of the vessel and the want of personal credit In this case, there was a situation of necessity, as the Port State Control Inspectors are entitled to detain a vessel not in compliance with the MLC requirements. 92 The financial security, which would really be used as security by the crew 93, was necessary to allow for the continuation of the shipping adventure. This method of obtaining funds could not be obtained by RESPONDENT s credit, as the MLC requires RESPONDENT to put a financial security system in place by a financial security provider. CLAIMANT was the financial security provider by providing RESPONDENT with a method of obtaining funds by giving a loan necessary for the continuation of the voyage when RESPONDENT could not gain such funds himself Therefore, CLAIMANT is entitled to a maritime lien for bottomry. 88 Box 18 of the Charterparty, Moot scenario, p D.C. Jackson, Enforcement of Maritime Claims (4th edn, Informa, 2005), p Ibid, p The Royal Arch (1857) Swab. 269, p Standard A5.1.4 MLC. 93 Internal Memo of 19 July 2017, Moot scenario, p

26 (2) CLAIMANT is entitled to a maritime lien for the seafarer s wages 113. In the alternative, (i) seafarers are entitled to a maritime lien for wages, which (ii) CLAIMANT is entitled to enjoy. (i) Seafarers are entitled to a maritime lien for wages 114. It is well established under English law that the crew is entitled to a maritime lien for wages. 94 The rationale for the maritime lien is that the crew is to be remunerated for service in, or to, the particular ship to which the maritime lien attaches. 95 Since the seafarers navigated Madam Dragonfly to the Port of Dillamond, the seafarers provided service to the vessel. On this basis, the seafarers enjoy a maritime lien for their wages. (ii) CLAIMANT is entitled to enjoy the seafarers right 115. According to Standard A2.5.2 (12), if the provider of insurance or other financial security has made any payment to any seafarer in accordance with this Standard, such provider shall, up to the amount it has paid and in accordance with the applicable law, acquire by subrogation assignment or otherwise, the rights which the seafarer would have enjoyed It has already been established that CLAIMANT is the provider of financial security for the seafarers. The amount of USD 100,000 on account of the crew s wages was paid directly by CLAIMANT s company into a bank account set up by RESPONDENT for the sole purpose of holding wages. 96 Furthermore, it has come to CLAIMANT s attention that the funds paid into RESPONDENT s separate account for crew wages have been spent Therefore, CLAIMANT is the financial security scheme provider according Standard A2.5.2 (12). Thus, CLAIMANT acquires the rights, including the maritime lien for wages, which the seafarer would have enjoyed. 94 The Halcyon Skies [1976] 1 All ER 856; The Tacoma City [1991] 1 Lloyd s Rep The Tacoma City [1991] 1 Lloyd s Rep 330, p Procedural Order No. 2, para Procedural Order No. 2, para