MURDOCH UNIVERSITY / UNIVERSITY OF SOUTHAMPTON SCHOOL OF LAW MEMORANDUM FOR RESPONDENT

Transcription

1 MURDOCH UNIVERSITY / UNIVERSITY OF SOUTHAMPTON SCHOOL OF LAW 14 TH INTERNATIONAL MARITIME MOOT 2013 MEMORANDUM FOR RESPONDENT On Behalf of: Twilight Carriers Ltd Against: Aardvark Ltd Aardvark House The High Street, Bootle, Merseyside. GERARD EVERETT / TONY MCWILLIAMS TEAM 2 VICTORIA UNIVERSITY COLLEGE OF LAW AND JUSTICE

2 TABLE OF CONTENTS TABLE OF CONTENTS... i List of Abbreviations... ii Index of Authorities... iii Statement of Facts The tribunal is validly constituted and has jurisdiction over the matters before it London is the correct seat for the arbitration The arbitration panel is properly constructed and governed Pursuant to cl 29 of the Charterparty the Owners were entitled to discharge the cargo at Rotterdam rather than Liverpool The Charterparty is incorporated into the Bills of Lading The Respondent was correct in delivering the cargo to Rotterdam The Claimant agreed to the cargo being delivered in Rotterdam and not Liverpool The Claimant was not the legal holder of the bills of lading Conclusion The claimant was not entitled to the cargo as they had abandoned the cargo to the sellers, Beatles Oils and Fats The claimants actions demonstrate a clear abandonment of the cargo Anticipatory Breach by the Claimant Conclusion The respondent is not liable for any damage caused to the cargo as a result of the detention of the Vessel by Somali pirates The respondent is entitled to rely on Article IV of the H(V)R s Exemption under the Act of War provisions of H(V)R Exemption under the Acts of Public Enemies provisions of H(V)R Exemption under any other cause, rule 2(q) of H(V)R Conclusion The respondent has not committed the tort of conversion Conclusion REQUEST FOR RELIEF The respondent respectfully requests that the tribunal find: i

3 List of Abbreviations Claimant Respondent Charter Vessel Cargo H(V)R Aardvark Ltd Twilight Carriers Beatles Oils & Fats Ltd Twilight Trader Palm Fatty Acid Distilate Haque Visby Rules ii

4 Index of Authorities Legislation Arbitration Act 1947 (USA)... 4 Arbitration Act 1996 (UK)... 4 Conventions H(V)R... 9, 10 UNICATRAL Model Law on International Arbitration (1985)... 4 United Nations Convention on Contracts for the International Sale of Goods Cases Aegean Sea Traders Corporation v Repsol Petroleo SA (The Agean Sea)... 8 Agrosin Pte Ltd v Highway Shipping Co Ltd (The Mata K) [1998] 2 Lloyds Rep Bandang Shipping Pte Ltd v Keppel Tatlee Bank Lyd... 8 Curtis & Sons v Mathews [1919] 1 KB Daval Aciers D Unisor et de Sacilor v Armare SL (The Nerano) [1996] 1 Lloyds Rep 1 (CA)... 4 Fletch v Burr (1874) LR 9 CP Frenkel v MacAndrews & Co Ltd [1929] AC Gordon v Harper (1796) 7 Term Rep Kawaski Kisen Kabushiki Kasha v Bantham SS Co [1939] 2 KB Kawaski Kisen Kabushiki Kasha v Belships Co Ltd (the Belpariel) (1939) 63 LI LR Keppel Tatlee Bank Ltd v Bandang Shipping Pte Ltd... 8 Kuwait Airways Corporation v Iraqi Airways Company (no. 4 and 5)[2002] 2 AC Miramar Maritime Corp v Holborn Oil Trading Ltd (the Miramar) [1984] 1 AC National Oil Co of Zimbabwe v Stuge [1991] 2 Lloyds Rep Pesquerias y. Secaderos de Bacalo de Espana Sa v Beer [1949] 1 All E.R Pickering v Barkley (1648) 82 ER Spettabile Consorzio Veneziano di Armamento e Navigazione v Northumberland Shipbuilding Co Ltd (1919) 121 LT Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR The Annefield, [1971] P 168 (CA)... 5 The Delos [2001] 1 Lloyds Rep The Merek, [1965] P223 (CA)... 6 iii

5 QUESTIONS PRESENTED 1. Whether the arbitration should be conducted under the rules of the Arbitration Act (1996) Chapter 23? 2. Whether the Buyer/Claimant has right of suit against the Respondent/Owner? 3. Whether the Respondent/Owner provided a ship that was seaworthy in accordance with Article III, Rules 1(a) of the H(V)R and/or properly manned, equipped and supplied in accordance with Article III, Rule 1(b)? 4. Whether the Respondent/Owner failed to properly and/or carefully load, handle, stow, carry, keep, care for and discharge the goods carried in breach of Article 111, r.2 of the H(V)R? 5. Whether the Respondent/Owner breached the contract of carriage between themselves and the Claimant/Buyer by discharging the cargo at Rotterdam to the Charterparty. 5. Whether the Respondent is entitled to limit liability to USD 1.4 million. 1

6 Statement of Facts 1. The dispute arises from a contract dated 23 rd May, 2008, for the purchase a total of 4000 metric tonnes of Palm fatty Acid Distillate (The Cargo) by the Claimant, Aardvark Ltd (The Buyer/Claimant) from Beatles Oils and Fats (The Charterer) for delivery to CIF Merseyside in accordance with Incoterms 2000 and the associated charterparty contract between the Charterer and Twilight Carriers Inc. (The Owner/Respondent) on September 12 th, 2008, for the use of the Twilight Trader (The Vessel) to ship the cargo, comingled, from various Malaysian ports to Mersey, United Kingdom (Mersey) per a standard Vegoil Voy Form Vegoilvoy 1/27/ Bills of Lading (BOL) were created denoting Vegetable Oils SDN BHD(Shipper), of Pasir Gudang, Malaysia as Shipper, signed To Order and nominating MT Twilight Trader (The Vessel) as the vessel. 3. En route, on 15 th November, 2008, the Vessel was held by Somali pirates, an event qualifying as an exemption under the Hague Visby rules applicable to the charterparty contract ( Conditions of Carriage : # 2 General Paramount Clause ) under article IV, r.2, and remained so until it was released on 13 th February, During the period of detention by Somali pirates, the Master and crew of the vessel were confined to quarters and were unable to manage the cargo. 5. On 20 th March, 2009, the Owner received a communication from the Buyer/Claimant in which they claimed to be the legal holders of the bills of lading relating to a portion of the comingled cargo aboard the Vessel. The correspondence further acknowledged the Charterer s intention to discharge the cargo at Rotterdam and of the Buyer/Claimant s refusal to authorise said discharge. The correspondence claimed that the Owner would be in breach of contract should they discharge as instructed by the Charterer and thereby responsible for all consequential loss and/or damage sustained. 6. Contemporaneously, on the 18 th and 19 th March, 2009, the cargo was inspected by Thomas, Cropper benedict on behalf of the Charterer and by Aspinall Lewis International on behalf of the Buyer/Claimant. The former found evidence of arsenic contamination in two of the Vessel s tanks with levels fifty times that of the other tanks, albeit the levels were still below UK maximum legal limits, suggesting the possibility of contamination. Aspinall Lewis International, whilst not reporting on the integrity of the cargo, observed that the tanks containing the cargo could have been opened and shut at any stage by the pirates. 2

7 7. The Owner/Respondent discharged the cargo to the Charterer against a letter of indemnity between 20 th and 22 nd March, 2009, acknowledging such discharge would be made without production of the original bills of lading. The Charterer sought to garnish property before judgment as well as to attach movable goods in a proceeding which the Buyer/Claimant was a defendant. The cargo was put into storage at Rotterdam port. 8. The Buyer/Claimant made an application to the Dutch Court to arrest the vessel on 23 rd March, 2009, and the vessel was arrested. The arrest was lifted on 27 th March, 2009, upon provision of security of USD1.4 million, subsequently issued by the Bank of Tokyo- Mitsubishi UFJ (Holland) NV on 3 rd April, The Charterer sought an order to sale on 23 rd May, 2009, which was granted on 24 th July, 2009 and unsuccessfully appealed by the Buyer/Claimant on 21 st August, The cargo was sold for USD 1,695,752.38, the proceeds of which are currently held by the Dutch Court. 10. Subsequent advice from the on purchasers of the cargo from the Buyer/Claimant confirmed the goods would not have entered the food chain and that the inability to guarantee that the goods were of GMQ would not have impacted the price they were prepared to pay for the goods accordingly. 3

8 1 The tribunal is validly constituted and has jurisdiction over the matters before it. 1.1 London is the correct seat for the arbitration 1. Article 20 of the UNCITRAL Model Law on International Commercial Arbitration 1 determines that parties to arbitration are free to agree on the place of said arbitration. 2. The cover to the charterparty states English law applies and the seat of arbitration is London. 3. This cover forms part of the charterparty and has the effect of varying cl. 31 thereby confirming that London rather than New York is the seat of arbitration. 1.2 The arbitration panel is properly constructed and governed 4. All panel members have been properly appointed 2 and the number of arbitrators is consistent with the legislation The arbitration will be conducted in accordance with the Arbitration Act 1947 (USA), rather than the Arbitration Act 1996 (UK). This statement is made on the basis that the document connecting both the claimant and the respondent is the bill of lading incorporating the provisions of the charterparty. 6. The incorporation clause within the charterparty is properly constructed according to the dicta as determined by Saville LJ. 4 This proposition has been specifically tested in respect of Congenbill forms, which makes specific reference to the arbitration clause contained in the charterparty The requirements of FOSFA have been adequately covered as cl 32 of FOSFA 81 provides that disputes can be referred to London for resolution. 8. Panel members have been appointed in accordance with the FOSFA rules of arbitration. 1 UNICATRAL Model Law on International Arbitration (1985). 2 Ibid s Ibid s 15, 4 Daval Aciers D Unisor et de Sacilor v Armare SL (The Nerano) [1996] 1 Lloyds Rep 1 (CA), 4. 5 The Delos [2001] 1 Lloyds Rep

9 2 Pursuant to cl 29 of the Charterparty the Owners were entitled to discharge the cargo at Rotterdam rather than Liverpool. 9. Cl. 29, the Liberty clause provides that the Owner may where practicable have the vessel call and discharge the cargo at another or substitute port declared or requested by the Charter. On the facts the Charter has explicitly requested the cargo to be discharged at Rotterdam. 2.1 The Charterparty is incorporated into the Bills of Lading. 10. The bills of lading, PG 1 PG 4 are CONGENBILL As such the bills on the reverse at cl 1, contain an incorporation clause. 11. This clause states All terms and conditions, liberties and exceptions of the Charterparty, dated overleaf, including the Law and Arbitration Clause / Dispute Resolution Clause are herewith incorporated. 12. In determining if an incorporation term is valid the effective words of that clause are considered. Lord Denning MR noted that a clause, which is germane to the subject matter of the bill of lading, such as provisions surrounding shipment, carriage and delivery of goods, can and should be incorporated into the bill of lading contract Further, any charterparty term that is being incorporated needs to make sense in the context of the bill of lading. 7 Part of this determination, or description issue, is that the test is applied intelligently and in keeping with business common sense. 8 This test has been found to include terms pertaining to the carriage and discharge of freight The third test for incorporation is that the clause must be consistent, the consistency issue, with the remaining clauses of the bills of lading. 10 The liberty clause, cl 29, is concerned 6 The Annefield, [1971] P 168 (CA), Ibid; The Merek, [1965] P223 (CA), Miramar Maritime Corp v Holborn Oil Trading Ltd (the Miramar) [1984] 1 AC 676, Ibid. 10 Agrosin Pte Ltd v Highway Shipping Co Ltd (The Mata K) [1998] 2 Lloyds Rep 614,

10 with providing the shipowner with reasonable flexibility in order to carry out its obligations under the contract of carriage. 15. For a liberty clause to be read into a contract of carriage and thus allowing deviation from the described route, Viscount Summer noted that the described voyage and the liberty clause must be read together and reconciled. 11 An important notion is that the liberty clause cannot frustrate and must be subordinate to the described voyage On the facts the cl 29 of the Charterparty provides scope for the shipowner to alter the point of discharge. The test as determined in the Miramar, allows for clauses pertaining to the discharge of freight. Further, the deviation does not frustrate the contract and is consistent with the wishes of the claimant. On this basis the respondent submits that the deviation is valid. 3 The Respondent was correct in delivering the cargo to Rotterdam. 17. The claimant is mistaken in its contention that the cargo was delivered to the incorrect port. The correspondence clearly shows that Rotterdam was the correct port of discharge. 3.1 The Claimant agreed to the cargo being delivered in Rotterdam and not Liverpool 18. The Claimant acknowledged the Charterer s proprietary right to the cargo in an dated 17 th March, 2009 (p 29 bundle): We have received the bills of lading for the cargo but have not heard from you how you wish to proceed with the disposal of the above cargo. Can you please assist us by providing us with the full details of your proposed sales and the destination of the other Beatles material on the twilight Trader. 11 Frenkel v MacAndrews & Co Ltd [1929] AC Ibid,

11 19. The Charterer advised the Claimant that the cargo would be discharged in Rotterdam (p30 bundle) In mitigation we intend to ask Owners, twilight carriers, to take this cargo to Rotterdam where we are arranging for it (and other cargo) to be sold 20. The Claimant sought instructions from the Charterer as to where to forward the Bills of Lading, implicitly acknowledging the Charterer s right to be their legal holder. (p31 bundle) Please advise where you want the bills of lading sending. 21. The Claimant agreed to send the Bills of Lading to Rotterdam but made the release of the Bills of Lading conditional upon a refund of the purchase price (p33 bundle). we have couriered the bills to Johnson & Johnson in Rotterdam for them to make available when the vessel arrives (and when you have provided the return of the purchase price. 3.2 The Claimant was not the legal holder of the bills of lading 22. The Claimant did not have a right to withhold the Bills of Lading as they were not the legal holders. In Aegean Sea Traders Corporation v Repsol Petroleo SA (The Agean Sea) 13 Thomas J held that in satisfying the provisions of s5(2)(b) of COGSA: The section requires him to have possession as a result of the completion of an endorsement by delivery. Although the sending and receipt of a document through the post often constitutes service of a document, the sending of a bill of lading through the post does not without more constitute delivery; the person receiving it has to receive it into his possession and accept the delivery before he becomes the holder. 23. Similarly in Keppel Tatlee Bank Ltd v Bandang Shipping Pte Ltd 14 it was held: 13 [1998] 2 Lloyd s Rep 39. 7

12 The mere fact of physical possession of the bills of lading did not constitute the holder the lawful holder for the purpose of suit under the Act Section 5(2) also requires the holder must do so in good faith. Thomas J noted in Aegean Sea Traders Corporation v Repsol Petroleo SA (The Agean Sea) 16 that good faith was not defined by the Act but took the view that it denoted honest conduct. 3.3 Conclusion 25. The Claimant agreed to the transfer of the bills of lading to the Charterer and acknowledged the Charterer s proprietary interest in the cargo thereby extinguishing any claims they may have had to the holding of the bills of lading prior. 26. The Claimant s subsequent attempts to reclaim legal holding of the bills of lading are not supported by the statute or common law in that the mere physical holding of the bills of lading does not constitute legal holding. 27. The Respondent acted correctly in taking instruction from the Charterer as the legal holder of the bills of lading. 4 The claimant was not entitled to the cargo as they had abandoned the cargo to the sellers, Beatles Oils and Fats. 28. In abandoning the cargo the claimant has forfeited any ownership and / or possessory rights over the product. 4.1 The claimants actions demonstrate a clear abandonment of the cargo 29. On the 6 th of March 2009 the claimant via advised Beatles that they no longer had ownership interest in the cargo. In doing this the claimant provided notice of anticipatory breach of the contract. 14 [2003] 1 Lloyd s Rep 619, sub nom Bandang Shipping Pte Ltd v Keppel Tatlee Bank Lyd 15 Ibid, at N13 above 8

13 30. Abandonment is characterised as the giving up of intent to have control over the goods. By giving notice of their desire to have the purchase price of the cargo refunded the claimant has demonstrated a desire to forfeit any ownership rights to the cargo. Further, the claimant made enquiries to the charter regarding where the bills of lading should be returned. On the facts this demonstrates a clear desire to abandon the cargo. 4.2 Anticipatory Breach by the Claimant 31. The claimant, in an from to the charterer on the 6 th March 2009 demonstrates a clear unpreparedness to perform its obligations under the contract of sale. In doing so the respondent is able to claim anticipatory breach. 32. A claim for anticipatory breach needs to arise prior to the actual performance of the contract. The actions of the claimant give rise to an implied refusal to perform its obligations under the contract. 33. Lord Coleridge CJ sets out the test for implied refusal to perform 17, whereby whether acts or conduct amount to an intimation of an intention to abandon and altogether to refuse performance of the contract. Atkin LJ noted, intimation is established if the words or conduct make it quite plan that the obligations will not be performed in accordance with the contract The charterer in having accepted the claimant s anticipatory repudiation subsequently precludes the claimant from retracting the breach This proposition has been codified in article 72 of the CIGS 20, which allows for one party to declare the contract avoided if it is clear the other party will commit a fundamental breach. 17 Fletch v Burr (1874) LR 9 CP 208, Spettabile Consorzio Veneziano di Armamento e Navigazione v Northumberland Shipbuilding Co Ltd (1919) 121 LT 628, Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR United Nations Convention on Contracts for the International Sale of Goods

14 36. On the facts the claimant is clearly flagging their intentions to bring the contract to an end prior to the full performance of the agreement. In light of this the claimant has forfeited any rights to the cargo, thus the respondent is entitled to act in accordance with the instructions of the charterer. 4.3 Conclusion. 37. The respondent was correct in delivering the cargo to the charterer as the claimant had abandoned any interests in the cargo and further or in the alternative the claimant was in anticipatory breach of the contract of sale. 5 The respondent is not liable for any damage caused to the cargo as a result of the detention of the Vessel by Somali pirates. 38. During the period 15 th November 2008 and 13 February 2009, the vessel was under the detention of Somali pirates. During this time the crew of the vessel where restrained and unable to perform their duties. 39. Any claim under article III r 2 of the H(V)R s is subject to the exclusions set out in article IV of the H(V)R s. 5.1 The respondent is entitled to rely on Article IV of the H(V)R s. 40. The statement of claim under point 1 of the particulars refers to the respondent breaching Article III rule 2 of the H(V)R. 41. This rule is subject to the provisions of Article IV which provides: Neither the carrier nor the ship shall be responsible for the loss or damage resulting from.. These exemptions include, acts of war, acts of public enemies and any other cause arising without the actual fault or privity of the carrier. 10

15 5.1.1 Exemption under the Act of War provisions of H(V)R 42. An act of war does not require a formal declaration or the severing of diplomatic relations between governments. 21 The term is to be given an ordinary business meaning rather than a technical international public law definition. 22 Act of War has been defined to include civil wars An act of war is deemed to be an act of aggression by one country against another. Acts of War was considered to include transgressions where no formal state of hostilities existed but would in a common sense way 24 be called war or, hostile acts connected with civil war The respondent submits, following the definitions contained in case law, the actions of the Somali pirates amounts to an act of war against the vessel and crew of the Twilight Trader Exemption under the Acts of Public Enemies provisions of H(V)R 45. Public enemies is not defined in the H(V)R s. Case law however, recognises that acts of piracy are included in the definition of perils of the sea 26 and thus fall under this exemption. 46. The facts are clear that whilst on the described route the vessel was attacked by Somali pirates. As such the exemption under the H(V)R applies, the respondent is not responsible or any loss or damage arising from this act of piracy Exemption under any other cause, rule 2(q) of H(V)R 47. Further, or in the alternative, the respondent relies on the provisions contained in article IV r 2(q), being that any damage that may have occurred to the cargo did so without any 21 Kawaski Kisen Kabushiki Kasha v Belships Co Ltd (the Belpariel) (1939) 63 LI LR National Oil Co of Zimbabwe v Stuge [1991] 2 Lloyds Rep Curtis & Sons v Mathews [1919] 1 KB Kawaski Kisen Kabushiki Kasha v Bantham SS Co [1939] 2 KB 544, Pesquerias y. Secaderos de Bacalo de Espana Sa v Beer [1949] 1 All E.R Pickering v Barkley (1648) 82 ER

16 fault or privity of the carrier or without the fault or neglect of the agents or servants of the carrier. 48. There is nothing in the facts to support any proposition put by the claimant that the respondent acted in such a way as to cause the purported damage to the cargo. 5.2 Conclusion 49. The respondent having acted in a proper manner is entitled to the protections contained in article IV of the H(V)R s. As a corollary the claimant has no standing in the claim for damage arising from the detention of the vessel by Somali pirates. 6 The respondent has not committed the tort of conversion. 50. To succeed in a claim of the conversion the claimant needs to show that they either had possession or had an immediate right to possession at the time of conversion. 27 As noted in argument 4.1, the claimant has abandoned the cargo. 51. Once abandoned the claimant forfeits any rights of ownership in the cargo. 52. Elements to the tort of conversion: 28 The respondent was within its rights to dispose of the cargo as per the instructions of the charter. In having no ownership interest in the cargo as a result of abandonment, the claimant has no say in what happens to the cargo. The selling of the cargo by the respondent was not an act of encroachment on the rights of the claimant as the claimant had abandoned the cargo. 6.1 Conclusion 53. The claimant has abandoned the cargo as evidenced by the facts and as such the respondent has not claim to answer under the tort of conversion. 27 Gordon v Harper (1796) 7 Term Rep Kuwait Airways Corporation v Iraqi Airways Company (no. 4 and 5)[2002] 2 AC

17 7 REQUEST FOR RELIEF 7.1 The respondent respectfully requests that the tribunal find: 54. If, which is denied, Owners are liable to Aardvark for delivering the cargo to Beatles instead of Ardvark the correct calculation of damages is the market value of the cargo at Rotterdam (having been the valid place of discharge pursuant to clause 29 and/or the agreement referred to above). The best evidence of the market value of this cargo in Rotterdam at or around 20 March 2009 is the price paid in Rotterdam on 19 March 2009 in respect of the other parcel of PFAD on board the Vessel which was sold by Beatles at USD 350 per mt C&F Rotterdam afloat. In the premises any claim is limited to USD 1.4 million. 55. Further and/or alternatively if, which is denied, the cargo should have been delivered in Liverpool the market value of the cargo in Liverpool in or about March 2009 is the price paid in Rotterdam plus the freight costs from Rotterdam to Liverpool, namely USD 380 per mt, USD 1.52 million. 56. In the premises paragraphs 24 and 25 are denied. It is further denied that Aardvark are entitled to the costs of the Dutch proceedings, the Dutch Courts made the appropriate costs orders and these should not be revisited. Further and in any event the costs of the unsuccessful appeal should not be allowed in any event because by definition it should never have been brought. 13