i
16TH
ANNUAL INTERNATIONAL MARITIME LAW ARBITRATION
MOOT, 2015
MEMORANDUM FOR THE DEFENDANTS / CHARTERERS
NATIONAL LAW SCHOOL OF INDIA UNIVERSITY (BANGALORE, INDIA)
IN THE MATTER OF AN ARBITRATION
BETWEEN:
WESTERN TANKERS INC …CLAIMANTS/OWNERS
AND
LDT PTE …DEFENDANTS/CHARTERERS
TEAM NUMBER 5
BHUVANYAA VIJAY
GARGI ROHI
RADHIKA GOYAL
SHRADDHA GOME
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
ii
TABLE OF CONTENTS
QUESTIONS PRESENTED/ISSUES RAISED ......................................................................................................... iv
LIST OF ABBREVIATIONS ................................................................................................................................... v
INDEX OF AUTHORITIES .................................................................................................................................. vii
CASES ............................................................................................................................................................ vii
STATUTES AND CONVENTIONS........................................................................................................................ x
BOOKS ............................................................................................................................................................. x
ARTICLES........................................................................................................................................................ xi
MISCELLANEOUS ........................................................................................................................................... xii
STATEMENT OF FACTS ....................................................................................................................................... 1
THE PARTIES, THE CHARTER PARTY AND THE BILL OF LADING .................................................................... 1
THE PROVISION OF BUNKERS .......................................................................................................................... 1
THE SAFETY EQUIPMENT ................................................................................................................................ 1
THE ALTERNATIVE DISCHARGE LOCATION .................................................................................................... 1
THE NON-PAYMENT OF HIRE AND SUBSEQUENT OFF-HIRE ........................................................................... 2
CARGO THEFT/PIRATE ATTACK ...................................................................................................................... 2
CLAIMS ............................................................................................................................................................ 2
ARGUMENTS ADVANCED ................................................................................................................................... 3
I. THE TRIBUNAL DOES NOT HAVE JURISDICTION OVER THE PRESENT DISPUTE ........................................ 3
A. There is a Latent Ambiguity in the Fully Fixed Recap with regard to the Incorporation of the
Arbitration Clause ....................................................................................................................................... 3
B. Pre-Contractual Negotiations Prove Charterers’ Intention against Arbitration in London ............. 4
C. All Sections of the Fully Fixed Recap have not become Binding on the Parties ............................ 4
D. The Seat and Forum of Arbitration should be Singapore ................................................................ 5
II. THE TORT OF FRAUD IS NOT ADMISSIBLE BEFORE THIS TRIBUNAL ................................................... 6
A. The Term “Disputes Arising out of this Charter” does not extend to the Tort of Fraud ................. 6
B. The Parties did not intend to Include the Tort of Fraud as an Admissible Matter before this
Tribunal....................................................................................................................................................... 7
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
iii
III. ASA2 IS NOT THE AGENT OF CHARTERERS .............................................................................. 8
A. Doctrine of Apparent Authority is not applicable due to Lack of Representation .......................... 8
B. Owners Knew or Ought to have Known that ASA2 does not have the Requisite Authority .......... 9
C. Charterers are not Bound by the Doctrine of Estoppel by Negligence .......................................... 11
IV. CHARTERERS DID NOT COMMIT TORT OF FRAUD ................................................................... 12
A. Charterers had no Dishonest Intention .......................................................................................... 12
B. The Owners did not Suffer any Damage due to Charterers’ Representation ................................. 13
V. CHARTERERS DID NOT BREACH THE C/P DUE TO NON PAYMENT OF HIRE ............................. 14
A. Vessel was Off-Hire on Due-Date ................................................................................................. 14
B. C/P was Frustrated ......................................................................................................................... 14
C. Vessel went Off-Hire from July 04 due to “Loss of Time” under Cl 21(a)(ii) .............................. 15
VI. OWNERS PROVIDED A VESSEL NOT “FIT FOR THE SERVICE” ................................................... 15
A. Piracy was a Reasonably Foreseeable Peril on the Contemplated Voyage ................................... 16
B. Vessel was not Fit to Encounter Piracy ......................................................................................... 17
C. Master was Incompetent ................................................................................................................ 19
D. Vessel was not Cargo-worthy ........................................................................................................ 20
VII. OWNERS ARE LIABLE TO CHARTERERS IN BAILMENT FOR LOSS OF CARGO ........................... 20
VIII. OWNERS ARE LIABLE TO CHARTERERS IN CONVERSION FOR NEGLIGENT LOSS OF CARGO. ... 22
A. Charterers have Title to Sue .................................................................................................. 22
B. Lack of Demand and Refusal does not Defeat the Claim of Conversion ...................................... 23
C. The Goods were Lost due to the Negligence of the Bailees .......................................................... 24
PRAYER ............................................................................................................................................... 25
ANNEXURES .......................................................................................................................................... a
ANNEXURE A: DISTANCE BETWEEN THE RELEVANT CO-ORDINATES .................................................. a
ANNEXURE B: PROVISION OF BUNKER SUPPLY (CALCULATIONS) ...................................................... d
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
iv
QUESTIONS PRESENTED/ISSUES RAISED
I. Does the Arbitral Tribunal have jurisdiction to hear the present dispute?
II. Is Tort of Fraud admissible before this Tribunal?
III. Whether ASA2 is the agent of the Charterers?
IV. Are Charterers liable for the Tort of Fraud?
V. Are Charterers in breach of Charterparty due to non-payment of hire due and owing?
VI. Did Owners provide a Vessel fit for the service?
VII. Are Owners liable to Charterers in bailment?
VIII. Are Owners liable to Charterers under Tort of Conversion?
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
v
LIST OF ABBREVIATIONS
ADL Alternative Discharge Location
AEI Angola Energy Imports (Consignees)
Art. Article
B/L Bill of Lading
BMP4 Best Management Practices: Version 4, 2011
BVI British Virgin Islands
C/P Shelltime-4 Charterparty, Issued Dec. 1984 amended Dec. 2003
Cl Clause
CSO Company Security Officer
FO Fuel Oil
GO Gas Oil
HVR Hague-Visby Rules, 1968
IMB International Maritime Bureau
LDTP Less Dependable Traders Pte (Charterers/Defendant)
Med. Mediterranean region
Moot Scenario IMLAM Moot Scenario, 2015
MT Metric Tonnes
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
vi
OPL Off/Outer Port Limits
ROB Remaining on Board
S. Section
SIRE Ship Inspection Report
V/C Voyage Correspondence in Moot Scenario
WAF West Africa
WTI Western Tankers Inc. (Owners/Claimant)
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
vii
INDEX OF AUTHORITIES
CASES
Abuja International Hotels Ltd. v. Meridien Sas, [2012] EWHC 87 (Comm) ...................................... 5
Actis Co. v. Sanko Steamship Co. (‘The Aquacharm’), [1982] 1 Lloyd’s Rep 7 ................................ 16
Adamastos Shipping v. Anglo-Saxon Petroleum (‘The Saxon Star’), [1957] 1 Lloyd’s Rep. 271
(C.A.) ............................................................................................................................................... 15
Albacruz (Cargo Owners) v. Albazero (‘The Albazero’), [1977] AC 774 .......................................... 20
Alfred C Toepfer v. Tossa Marine Co. Ltd. (‘The Derby’), [1985] 2 Lloyd's Rep. 325 .......... 16, 17, 18
Armagas Ltd. v. Mundogas Ltd. (‘The Ocean Frost’), [1986] AC 717 ................................................. 9
Armstrong v. Strain, [1951] 1 T.L.R. 856, 871 ................................................................................... 12
Atapattu, R. v. The Secretary of State for the Home Department, [2011] EWHC 1388 (Admin) ...... 22
Banco Espirito Santo, S.A. v. Concessionaria Do Rodoanel Oeste S.A, 2012 NY Slip Op 06186 ....... 4
British Road Services Limited v. Arthur Crutchley & Co. Limited, [1968] 1 All ER 811 .................. 21
Cheikh Boutros Selim El-Khoury v. Ceylon Shipping Lines (‘The Madeleine’), [1967] 2 Lloyd’s Rep.
224.............................................................................................................................................. 16, 17
Chi Sun Hua Steel Co. Ltd. v. Crest Tankers, 1990 AMC 2816 (N.D.Cal. 1990) ................................ 4
China Pacific SA v. Food Corporation of India (‘The Winson’), [1982] AC 939 .............................. 23
Derry v. Peek, (1889) LR 14 App Cas 337.......................................................................................... 12
Dole Food Co. v. Watts, 303 F.3d, 1104 (9th
Cir. 2002) ....................................................................... 5
East West Corporation v. DKBS 1912 and AKTS Svenborg, [2003] QB 1509 ............................. 21, 23
Empresa Cubana Importadora de Alimentos Alimport v. Iasmos Shipping Co. SA (‘The Good
Friend’), [1984] 2 Lloyd’s Rep 586 ................................................................................................ 17
ENE Kos 1 Limited v. Petroleo Brasileiro SA (‘The KOS’), [2012] UKSC 17 ................................... 20
Ethiopian Oilseeds & Pulses Corp. v. Rio Del Mar Foods Inc., [1990] 1 Q.B. 86 ............................... 6
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
viii
FC Bradley & Sons Ltd v. Federal Steam Navigation Co, [1926] 24 Ll L Rep 446 ........................... 16
Fiona Trust and Holding Corp. v. Yuri Pavalov and Ors., [2007] UKHL 40 ...................................... 7
Glencore International AG v.Owners of the "Cherry", the "Epic" and the "Addax" (‘The Cherry’),
[2003] 1 SLR 471............................................................................................................................. 11
Golden Fleece Maritime Inc v. ST Shipping and Transport Inc. (‘The Elli’), [2007] EWHC 1890
(Comm) ............................................................................................................................................ 15
Great China Metal Industries Co Limited v. Malaysian International Shipping Corporation Berhad
(‘The Bunga Seroja’), (1998) 72 ALJR 1592 .................................................................................. 18
Greenfield v. Philles Records, 750 NYS2d 565 [2002] ......................................................................... 4
Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947) ..................................................................................... 6
Hongkong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd (‘The Hongkong Fir’), [1961] 1
Lloyd's Rep. 159 .................................................................................................................. 15, 16, 17
Houghland v. RR Low (Luxury Coaches), (1962) 1 QB 694 ............................................................... 21
In Re Kinoshita & Co., 287 F.2d 951, 953 (2d Cir.1961) ...................................................................... 6
International Fina Services AG v. Katrina Shipping Ltd (‘The Fina Samco’), [1994] 1 Lloyd's Rep.
153, [1995] C.L.C. 1335 .................................................................................................................. 15
Investors Compensation Scheme Ltd v. West Bromwich, [1997] UKHL 28 ......................................... 4
Iran v. Barakat Galleries Ltd. [2007] EWCA Civ 1374 ..................................................................... 22
JI McWilliams Co. Inc. v. Mediterranean Shipping Company SA, (‘The Rafaela S’), [2005] UK HL
11...................................................................................................................................................... 22
Kass v. Kass, 91 N.Y.2d 554, 566 ......................................................................................................... 4
Kroft Entertainment Inc. v. CBS Songs, 653 F.Supp. 1530 (S.D.N.Y. 1987) ....................................... 4
Leigh and Sullivan Ltd. v. Aliakmon Shipping Co. Ltd. (‘The Alkiamon’), [1986] AC 785................ 23
McFadden v. Blue Star Line, [1905] 1 K.B. 697 ................................................................................. 20
Mercantile Credit Co. Ltd. v. Hamblin, [1965] 2 QB 242................................................................... 12
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
ix
Mitchell v. Ealing LBC, [1979] QB 1 .................................................................................................. 23
Moorgate Mercantile Co Ltd. v. Twitchings, [ 1977] AC 890 ............................................................ 11
Morris v. CW Martin & Sons Ltd., 1 QB 716 [1996] .......................................................................... 21
Northern Shipping Co. v. Deutsche Seereederei G.M.B.H. and Others (‘The Kapitan Sakharov’),
[2000] 2 Lloyd's Rep. 255 ................................................................................................................ 18
Notara v. Henderson, (1870) L.R 5 Q.B 354 ...................................................................................... 21
Obestain Inc v. National Mineral Development Corp Ltd, (‘The Sanix Ace’), [1987] 1 Lloyd's Rep
465.................................................................................................................................................... 23
P&O Trans European Ltd, [2001] EWCA Civ. 227 ........................................................................... 21
Pagnan v. Feed Products, [1987] 2 Lloyd’s Rep. 601 .......................................................................... 5
Papera Traders Co Ltd v. Hyundai Merchant Marine Co Ltd (‘The Eurasian Dream No.1’), [2002] 1
Lloyd’s Rep. 719. ............................................................................................................................. 16
Poseidon Schiffahrt GmbH v. Nomadic Navigation Co Ltd (‘The Trade Nomad’), [1997] C.L.C.
1542, [1999] C.L.C. 755 .................................................................................................................. 15
Rama Corporation Ltd. v. Proved Tin and General Investments Ltd., [1952] 2 QB 147 ..................... 8
Raynes v. Ballantyne, (1898) 14 T.L.R. 399 (H.L.) ............................................................................ 21
Reeve v. Palmer, (1858) 5 C.B. (N.S.) 84 ........................................................................................... 21
Rhodian River Shipping Co. SA and Rhodian Sailor Shipping Co. SA v. Halla Maritime Corp
(‘The Rhodian River’) [1984] 1 Lloyd's Rep 373 .............................................................................. 9
Schwarzchild v. Harrods, EWCH 528 [2008] ..................................................................................... 22
Shelton v. Andres, (1985) 106 Ill.2d 153 ............................................................................................... 4
Spectra International v. Tiscali UK, [2002] All E.R. (D) 209 .............................................................. 5
Spiliada Maritime Corp v. Cansulex Ltd, [1987] AC 460 ................................................................. 5, 6
St. Pierre v. Chriscan Enterprises Ltd., 2011 BCCA 97 ....................................................................... 4
Stapely v. Gypsum Mines, [1953] AC 663 ........................................................................................... 24
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
x
State v. Home Indemnity Co., 66 N.Y.2d 669 (N.Y. 1985) ................................................................... 4
Sulamerica CIA Nacional De Seguros SA & Ors v. Enesa Engenharia SA & Ors., [2012] EWCA Civ
638...................................................................................................................................................... 5
Sutcliffe v. Chief Constable of Western Yorkshire, [1996] R.T.R. 86 ................................................. 21
Tancred v. Allgood, (1859) 4 H.&N. 438 ............................................................................................ 23
Texaco, Inc. v. American Trading Transp. Co., 644 F.2d 1152, 1154 (5th Cir. 1981); ........................ 6
The Arianna, [1987] 2 Lloyd’s Rep. 376 ................................................................................. 16, 17, 20
The Fjord Wind, [1999] 1 Lloyd’s Rep. 307 ....................................................................................... 17
Tracer Research Corp. v. National Environmental Services, 42 F.3d 1292 (9th Cir. 1994) ................ 6
Tradax Export SA v. Dorada Compania Naviera SA of Panama (‘The Lutetian’), [1982] 2 Lloyd’s
Rep. 140 ........................................................................................................................................... 14
United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960) .......... 7
Voss v. APL Co. Pte. Ltd., [2002] 2 Lloyd’s Rep. 707 ........................................................................ 22
Wald v. Chicago Shippers Association, (1988) 175 Ill.App.3d 607 ...................................................... 4
Wilson and Meeson v. Pickering, [1946] 1 K.B. 422 .......................................................................... 11
Yarde v. Artoglou, 2012 NY Slip Op 32793(U) .................................................................................... 4
STATUTES AND CONVENTIONS
The U.K. Torts (Interference with Goods) Act, 1977 .......................................................................... 22
BOOKS
Alan Redfern et al, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION (5th
edn., 2009) ........... 7
Benjamin’s Sale of Goods (8th
edn., 2010) ......................................................................... 20, 21, 22, 23
Clerk & Lindsell on Torts (20th
edn., 2010) ................................................................................... 22, 23
Gary Born, INTERNATIONAL ARBITRATION AND FORUM SELECTION AGREEMENTS: DRAFTING AND
ENFORCING (4th
edn., 2013) ................................................................................................................ 4
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
xi
Gary Born, INTERNATIONAL COMMERCIAL ARBITRATION: COMMENTARY AND MATERIALS (2nd
edn.,
2001) .............................................................................................................................................. 6, 7
Halsbury’s Laws of England, Vol. 7 (5th
edn., 2008) .................................................................... 17, 20
Halsbury’s Laws of England, Vol.3(1) (4th
edn., 2005) ...................................................................... 21
Jean-François Poudret and Sébastien Besson, COMPARATIVE LAW OF INTERNATIONAL ARBITRATION
(2007) ................................................................................................................................................. 8
Kim Lewison, THE INTERPRETATION OF CONTRACTS (2nd
edn., 1997) .................................................. 4
N.Palmer, PALMER ON BAILMENT (3rd
edn., 2009). ..................................................... 20, 21, 22, 23, 24
Paul Todd, MARITIME FRAUD AND PIRACY (2nd
edn., 2010) ................................................................ 18
Philippe Fouchard et al, FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL COMMERCIAL
ARBITRATION (1999). ......................................................................................................................... 7
Simon Baughen, SHIPPING LAW (4th
edn., 2009).................................................................................. 20
Terence Coghlin et al, TIME CHARTERS (6th
edn., 2008). ........................................ 5, 14, 15, 16, 20, 21
Treitel, THE LAW OF CONTRACT (12th
edn., 2007). ................................................................................ 9
W.V.H. Rogers, WINFIELD AND JOLOWICZ ON TORT (18th
edn., 2010) ................................................ 22
ARTICLES
A. Tettenborn, Reversionary Damage to Chattels, 53(2) CAMBRIDGE LAW REVIEW 326 (1994) ....... 23
C. Hawes, Tortious Interference with Goods: Title to Sue, 17(2) CANTERBURY LAW REVIEW 331, 342
(2011) ......................................................................................................................................... 22, 23
D.J. Bentley, A New Found Halliday: The Eighteenth Report of the Law Reform Committee
(Conversion and Detinue) 35(2), THE MODERN LAW REVIEW, 171 (1972). .................................... 22
F.D. Rose Commercial Law, Bailment and a Correlative Right to Unjust Enrichment, LAW
QUARTERLY REVIEW (2011) ............................................................................................................. 20
G.H. Treitel, The Legal Status of Straight Bills of Lading, LAW QUARTERLY REVIEW (2003). .......... 22
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
xii
Mark D. Greenberg, The Appropriate Source of Law for Forum Non Conveniens Decisions in
International Cases: A Proposal for the Development of Federal Common Law Mark, 4(1)
BERKELEY JOURNAL OF INTERNATIONAL LAW (1986). ...................................................................... 6
N.E. Palmer, The Application of the Torts (Interference with Goods) Act 1977 to Actions in Bailment,
41(6) MODERN LAW REVIEW 629, (1978) ........................................................................................ 22
Robin Hickey , Wrongs and Possession of Property, CONVEYANCER AND PROPERTY LAWYER (2011)
.......................................................................................................................................................... 22
S. Douglas, The Abolition of Detinue, 30 CONVEYANCER AND PROPERTY LAWYER (2008). ........ 21, 23
MISCELLANEOUS
Ahmad Taleb, Piracy in West Africa Targets the Region’s Oil Industry, INTERNATIONAL POLICY
DIGEST AND GLOBAL RISKS INSIGHTS (Dec. 30 2014) ................................................................... 17
Gard Alert: West African piracy awareness areas expand (Feb. 26 2014) ................................... 17, 18
IMB Piracy Report Highlights Violence in West Africa, ICC COMMERCIAL CRIME SERVICE (July 15
2013) ................................................................................................................................................ 16
IMB Warns of West Africa Piracy Threat, ICC COMMERCIAL CRIME SERVICE (Mar. 7 2014) ..... 16, 17
Interim Guidelines for Owners, Operators and Masters for Protection Against Piracy in the Gulf of
Guinea Region (To be read in conjunction with BMP4), INTERNATIONAL MARITIME
ORGANISATION AND BIMCO (Dec. 21, 2012) ................................................................................. 18
International Maritime Bureau Piracy Reporting Centre Piracy Maps and News/Reports ................. 16
Law Com. No.196, Scot. Law Com. No.130, Right of Suit in Respect of Contracts for the Goods by
Sea, 26 (1991) ............................................................................................................................ 20, 21
Mary Harper, Danger zone: Chasing West Africa’s pirates, BBC NEWS (Nov. 13 2014) .................. 17
Report warns shipping of phishing scams, ICC COMMERCIAL SERVICES (May 09 2014) ................... 18
The ungoverned seas: The waters around Somalia are calmer, but piracy in west Africa is rising,
THE ECONOMIST (Nov. 29 2014)...................................................................................................... 17
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
xiii
The United Nations Institute for Training and Research, UNOSAT Global Report on Maritime
Piracy-A Geospatial Analysis 1995-2013, (2014) ........................................................................... 16
The United Nations Office on Drugs and Crimes, Maritime Piracy in the Gulf of Guinea:
Transnational Organised Crime in West Africa (Feb 22, 2013). .................................................... 16
Updated Revised West Africa High Risk Area and Voluntary Reporting Area, Ship Security Advisory
No. 31-14, Dec. 22 2014 .................................................................................................................. 17
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
1
STATEMENT OF FACTS
THE PARTIES, THE CHARTER PARTY AND THE BILL OF LADING
Less Dependable Traders Pte (the Defendants), a company incorporated in Singapore, entered into a
time charterparty (Shelltime-4) with Western Tankers Inc. (the Claimants), incorporated in the BVI.
Western Dawn (Vessel) was chartered to carry the oil cargo (comprising 30,000MT JET A1 and
72,199MT GO) from Singapore to OPL Luanda with redelivery at Med. The Master was Captain
Stelios Smith. The Bill of Lading named LDTP as both the consignor/shipper and the carrier and
Angola Energy Imports as the Consignee.
THE PROVISION OF BUNKERS
According to C/P and Voyage Order, Vessel was to be bunkered by Charterers at Singapore. The
Master requested for 1500MT FO, with 490MT FO ROB. Charterers provided 950MT FO at Port of
Loading due to inadequate credit, with an assurance to deliver the rest subsequently. On June 28,
Atlantic STS Agency (ASA2), a third party, represented to the Master that 300MT FO would be
made available at Alternative Discharge Location (ADL). Breaching C/P and Voyage Order, Master
followed ASA2’s instructions leading to cargo theft/pirate attack at ADL.
THE SAFETY EQUIPMENT
Owners were to provide a Vessel fit for service. They arranged for their CSO to review the
requirements of the Vessel, pursuant to which anti-piracy safety-items (such as razor wire,
torchlights, etc.) were to be procured. However, these were “not received” by Vessel.
THE ALTERNATIVE DISCHARGE LOCATION
As per Master’s information, the coordinates of STS location/“OPL Area 1” were 900S and
1130E. On June 28, Captain William Anya from ASA2 (third party), sent an email to the Master
changing these coordinates to 600S and 810E (ADL). He directed Western Dawn to proceed to
ADL, where, it was represented that STS Operations would be conducted by Vessel Antelope.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
2
Antelope had no relationship with Charterers’ agent, ASA. Master followed these instructions,
breaching C/P and Voyage Order. In the Voyage Correspondence to Charterers, Master only
mentioned the name of Vessel Antelope, without disclosing that ASA2 and not the named disport
agent ASA had contacted him. The exact coordinates of ADL were not disclosed either.
THE NON-PAYMENT OF HIRE AND SUBSEQUENT OFF-HIRE
On July 03, Owners sent a notice of default in respect of non-payment of hire to Charterers. The next
day, during the subsistence of the three-day grace period for hire-payment under C/P, Charterers
declared Vessel off-hire, due to “no contact with receiver/chrtr.”
CARGO THEFT/PIRATE ATTACK
Following instructions of ASA2 and thus, upon reaching ADL, Vessel went missing on July 04. She
faced pirate attack and cargo diversion from July 04 to 17. Consequently, 28190MT GO was
discharged. Vessel failed to meet her discharge target date and was unable to discharge full cargo in
accordance with B/L.
CLAIMS
Owners commenced arbitration proceedings in London on November 01 2014 claiming:
Hire, as due and owing under C/P, or alternatively damages for Charterers’ failure to pay the
same.
Loss and Damages arising out of the Tort of Fraud committed by Charterers who had no
intention of supplying bunkers either at Durban or at STS Area 1.
Charterers raised a counter-claim on the following matters:
Owners breached C/P by providing a Vessel that was not fit for service due to Master’s
incompetency and his failing to deploy BMP4 measures.
Owners are also liable for converting and/or breaching their duty as bailee in respect of part
of cargo on the Vessel.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
3
ARGUMENTS ADVANCED
I. THE TRIBUNAL DOES NOT HAVE JURISDICTION OVER THE PRESENT DISPUTE
1. Arbitration is a creature of consent and cannot continue against the intention of the parties.
Charterers did not intend for this Tribunal to have jurisdiction over the present dispute. This
intention must be respected because the incorporation of the arbitration agreement in the
Fully Fixed Recap was ambiguous in nature [A]. This ambiguity can be resolved by looking
to the pre-contractual negotiations between the Broker and Charterers which show the
Charterers’ intention to not hold arbitration in London [B]. In any case, not all provisions of
the Fully Fixed Recap, including the Law & Litigation section, had become binding on the
parties [C]. Therefore, the jurisdiction of this Tribunal should be vacated in favour of
Singapore, which would be a more suitable forum [D].
A. THERE IS A LATENT AMBIGUITY IN THE FULLY FIXED RECAP WITH REGARD TO THE
INCORPORATION OF THE ARBITRATION CLAUSE
2. The Fully Fixed Recap, which concludes the contract between Owners and Charterers, has
been left blank under the Law & Litigation section.1 This raises a doubt in the mind of a
reasonable person as to whether the arbitration clause of C/P has been included into the final
contract. Since, the parties differ in their intention as to the seat of the arbitration, this
omission in the Fully Fixed Recap, which amended and incorporated C/P is a material
omission. Further, leaving the Law & Litigation section blank could mean that the parties
were undecided with regard to the incorporation of the arbitration clause. Therefore, this
material omission is sufficient to create an ambiguity in the Fully Fixed Recap.
1 Moot Scenario, Page 5, Fully Fixed Recap, Email dated May 26 2014 17:09 (UTC+1).
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
4
B. PRE-CONTRACTUAL NEGOTIATIONS PROVE CHARTERERS’ INTENTION AGAINST
ARBITRATION IN LONDON
3. Where an ambiguity exists, a strict reading of the contract itself would not be reflective of the
parties’ true intention.2 This ambiguity then needs to be resolved by the Tribunal through
admission of evidence of the parties’ intentions and the background in which the contract was
formed.3 It has been held that in such a situation, pre-contractual negotiations are helpful in
evincing parties’ intentions.4
4. Following this, the pre-contractual negotiations between Charterers and Broker need to be
looked into in order to resolve the aforementioned ambiguity. In the pre-contractual
correspondence between Charterers and Broker, the former had informed Broker that they
were “not too keen on a London arbitration” because of a “negative experience with it.”5 This
shows Charterers’ intention against having a London-seated arbitration. Therefore, the seat of
arbitration cannot be London as arbitration must occur at a mutually agreed seat.6
C. ALL SECTIONS OF THE FULLY FIXED RECAP HAVE NOT BECOME BINDING ON THE PARTIES
5. Owners may contend that since Charterers have agreed to make the Fully Fixed Recap
binding upon themselves, they cannot subsequently refuse to be bound by just the Law &
Litigation section of the Fully Fixed Recap. However, it is submitted that not all provisions of
the Fully Fixed Recap, including the Law & Litigation section, had become binding on the
parties. It is possible to conceive of a contract which has become binding on the parties but
2 St. Pierre v. Chriscan Enterprises Ltd., 2011 BCCA 97; Yarde v. Artoglou, 2012 NY Slip Op 32793(U); Shelton v.
Andres, (1985) 106 Ill.2d 153; Wald v. Chicago Shippers Association, (1988) 175 Ill.App.3d 607; Greenfield v. Philles
Records, 750 NYS2d 565 [2002]; Kroft Entertainment Inc. v. CBS Songs, 653 F.Supp. 1530, 1533 (S.D.N.Y. 1987); Chi
Sun Hua Steel Co. Ltd. v. Crest Tankers, 1990 AMC 2816, 2817–2818 (N.D.Cal. 1990). 3 Kim Lewison, THE INTERPRETATION OF CONTRACTS, 201, ¶7.05 (2
nd edn., 1997); Kass v. Kass, 91 N.Y.2d 554, 566;
Banco Espirito Santo, S.A. v. Concessionaria Do Rodoanel Oeste S.A, 2012 NY Slip Op 06186; State v. Home Indemnity
Co., 66 N.Y.2d 669 (N.Y. 1985). 4 Investors Compensation Scheme Ltd v. West Bromwich, [1997] UKHL 28;
5 Moot Scenario, Page 2, Charterer’s Correspondence, Email dated May 23 2014, 12:30 (UTC+8).
6 Gary Born, INTERNATIONAL ARBITRATION AND FORUM SELECTION AGREEMENTS: DRAFTING AND ENFORCING, 29 (4
th
edn., 2013).
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
5
with some sections of the contract still being subject to negotiations.7 When it is unclear
whether the parties intended to bind themselves fully on the issue, the Tribunal must examine
the background circumstances, the nature of the alleged contract and the negotiations
between the parties, and seek to infer what a reasonable person would have intended.8
6. It is a well-settled principle that only when all subjects are lifted does a charterparty become
binding.9 In the present case, only the management subjects had been lifted by Charterers and
it was not said that all subjects had been lifted.10
Further, simply because the parties have
used the term Fully Fixed Recap, it would not mean that the contract has been concluded,
leaving no scope for further negotiations.11
Thus, arbitration could still have been a subject of
negotiation as it is not clear whether parties intended to bind themselves on this issue.
D. THE SEAT AND FORUM OF ARBITRATION SHOULD BE SINGAPORE
7. In light of the aforementioned ambiguity and Charterers’ disinclination to have London as
seat, it is submitted that the Tribunal should vacate its jurisdiction in favour of Singapore
according to the doctrine of forum non conveniens. In the instant case both requirements of
the doctrine are being fulfilled; that is, an adequate forum exists elsewhere and the balance of
interests lies in favour of the dismissal of dispute from the present forum.12
8. Singapore is a better-suited seat as it has the closest and most real connection to the dispute.13
The Port of Loading was at Singapore14
and Charterers who are also the Consignors as well
7 Pagnan v. Feed Products, [1987] 2 Lloyd’s Rep. 601, “[T]here is no legal obstacle which stands in the way of the
parties agreeing to be bound now while deferring important matters to be agreed later.” 8 Spectra International v. Tiscali UK, [2002] All E.R. (D) 209.
9 Terence Coghlin et al, TIME CHARTERS, 25, ¶1.11 (6
th edn., 2008).
10 Procedural Order No. 2, ¶20.
11 Coghlin supra note 9, at 282, ¶16.18.
12 Spiliada Maritime Corp v. Cansulex Ltd, [1987] AC 460; Dole Food Co. v. Watts, 303 F.3d, 1104, 1118-1120 (9
th Cir.
2002). 13
Sulamerica CIA Nacional De Seguros SA & Ors v. Enesa Engenharia SA & Ors., [2012] EWCA Civ 638; Abuja
International Hotels Ltd. v. Meridien Sas, [2012] EWHC 87 (Comm). 14
Moot Scenario, Page 43, Bill of Lading.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
6
as the Carrier have been transacting from Singapore.15
Further, the obligations to be
performed under C/P like provision of bunkers or providing a fit vessel were conducted in
Singapore making it an adequate forum whereas London does not have any connection with
C/P’s performance. Also, holding the proceedings in London would cause great hardship to
the Charterers in procuring witnesses and evidence, another factor to be considered under the
doctrine when determining the balance of interests.16
Therefore, with the two tests being
satisfied, the Tribunal should vacate its proceedings in favour of Singapore.
II. THE TORT OF FRAUD IS NOT ADMISSIBLE BEFORE THIS TRIBUNAL
9. Owners contend that Charterers have committed the Tort of Fraud by not providing bunkers
to Vessel and they wish to make the matter admissible before this Tribunal. However,
Charterers submit that the Tort of Fraud, if any, does not come within the scope of the
arbitration agreement as the term “disputes arising out of this charter” does not cover torts
[A] and was not intended to include the claim of Tort of Fraud [B].
A. THE TERM “DISPUTES ARISING OUT OF THIS CHARTER” USED IN C/P DOES NOT EXTEND TO
THE TORT OF FRAUD
10. Courts have interpreted the “arising out of” language in the agreement narrowly to cover only
those disputes that directly involve the “construction and performance of the contract”
itself.17
Significantly, courts have noted that such agreements ought to have used “relating to”
or “arising in connection with” if they intended to include a broader class of claims.18
15
Procedural Order No. 2, Dramatis Personae. 16
Spiliada Maritime Corp v. Cansulex Ltd, [1987] AC 460; Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947); Mark D.
Greenberg, The Appropriate Source of Law for Forum Non Conveniens Decisions in International Cases: A Proposal for
the Development of Federal Common Law Mark, 4(1) BERKELEY JOURNAL OF INTERNATIONAL LAW, 157(1986). 17
Gary Born, INTERNATIONAL COMMERCIAL ARBITRATION: COMMENTARY AND MATERIALS, 320 (2nd
edn., 2001); In Re
Kinoshita & Co., 287 F.2d 951, 953 (2d Cir.1961). 18
In Re Kinoshita & Co., 287 F.2d 951, 953 (2d Cir.1961); Tracer Research Corp. v. National Environmental Services,
42 F.3d 1292 (9th Cir. 1994); Texaco, Inc. v. American Trading Transp. Co., 644 F.2d 1152, 1154 (5th Cir. 1981);
Ethiopian Oilseeds & Pulses Corp. v. Rio Del Mar Foods Inc., [1990] 1 Q.B. 86.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
7
11. Owners may rely on the English case of Fiona Trust v. Privalov,19
to show that tortious
claims can be included within the scope of arbitration agreement when the agreement is with
regard to “disputes arising out of the charter.” However, in Fiona, unlike the present dispute,
the issue was whether the validity of the arbitration agreement when marred by bribery can
be arbitrated. The case should not be interpreted to mean, that in every contractual dispute
involving a tort, such a tortious claim would automatically become admissible in arbitration.
12. The Tort of Fraud as alleged by Charterers does not arise from C/P. The Master received
instructions to proceed to ADL from ASA2, a party that is not the agent of Charterers.
Actions, fraudulent or otherwise, undertaken by third parties do not arise out of C/P20
as they
are not privy to the contract. Therefore, the term “disputes arising out of this charter” does
not extend to the Tort of Fraud.
B. THE PARTIES DID NOT INTEND TO INCLUDE THE TORT OF FRAUD AS AN ADMISSIBLE
MATTER BEFORE THIS TRIBUNAL
13. The intention of parties is essential to determine the scope of the arbitration agreement.21
The
Tribunal must consider the dispute in question and then elicit from the arbitration agreement
whether or not the parties intended a dispute of the kind in question to be resolved by
arbitration.22
A party cannot be required to submit to arbitration any dispute which it has not
agreed to submit.23
14. In the instant case, C/P makes no mention of including tortious claims under the scope of the
arbitration agreement. The scope of arbitration agreement is based on the intention of the
parties who can choose to limit the jurisdiction of the Tribunal to only certain types of
19
Fiona Trust and Holding Corp. v. Yuri Pavalov and Ors., [2007] UKHL 40. 20
Born supra note 17, at 320. 21
Alan Redfern et al, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION, 94 (5th
edn., 2009); Philippe Fouchard et
al, FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION, 296 (1999). 22
Redfern supra note 21, at 94. 23
United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960).
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
8
disputes or to clearly defined issues.24
Therefore, in absence of any evidence to suggest that
the parties intended to include Tort of Fraud claims, their inclusion cannot be assumed.
III. ASA2 IS NOT THE AGENT OF CHARTERERS
15. Owners contend that ASA2 is the agent of Charterers. However, Charterers submit otherwise
on three grounds: First, the Doctrine of Apparent or Ostensible Authority does not apply in
the absence of a representation [A]. Second, in any case, Owners knew or ought to have
known that ASA2 does not have the requisite authority [B]. Third, Charterers are not bound
by the Doctrine of Estoppel by Negligence [C].
A. DOCTRINE OF APPARENT AUTHORITY IS NOT APPLICABLE DUE TO LACK OF
REPRESENTATION
16. It is a well-settled principle that the Doctrine of Apparent Authority cannot be applied in the
absence of a representation, a reliance on that representation, and an alteration in position
resulting from such reliance.25
17. It is submitted that Charterers did not represent ASA2 as their agent, either by their words or
by conduct. In fact, Owners did not inform Charterers about the third party ASA2, who
directed them to proceed to ADL with a promise to provide 300MT FO bunkers.26
In the
Voyage Correspondence as well, Owners only mentioned the name of Vessel Antelope
without disclosing that ASA2 and not the named agent ASA had contacted them.27
Thus,
even though Charterers asked the Master to “continue to liaise with your STS coordinator”28
they were not referring to ASA2 as is contended by Owners.
24
Jean-François Poudret and Sébastien Besson, COMPARATIVE LAW OF INTERNATIONAL ARBITRATION, 265 (2007). 25
Rama Corporation Ltd. v. Proved Tin and General Investments Ltd., [1952] 2 QB 147. 26
Moot Scenario, Page 38, V/C dated July 03 2014 16:28 (UTC+1); Moot Scenario, Page 35, V/C dated June 28 2014
18:02 (UTC+1). 27
Moot Scenario, Page 38, V/C dated July 03 2014 16:28 (UTC+1). 28
Moot Scenario, Page 41, V/C dated July 03 2014 12:24 (UTC+8).
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
9
18. In light of the Voyage Correspondence which clearly mentioned ASA as the disport agent,
who were also appointed by the Owners themselves,29
it was reasonable for Charterers to
assume that Owners were liaisoning with ASA.30
Considering the given facts and
circumstances, Charterers could not have foreseen that a third party (ASA2) had been
contacting the Master. In fact, practicing abundant caution Charterers had instructed Master
to “keep Chrtrs informed.” However, Master, by not marking a copy of his correspondence
with ASA2 to Charterers, failed to carry out this instruction.
19. Additionally, as per Voyage Order, the Master should not have relied on any other party
without “referring such instructions to Charterer for handling.”31
Moreover, as soon as
Charterers were informed about Master liaisoning with ASA2, a third party, they immediately
declared Vessel off-hire.32
This shows that they could not have instructed the Master to
“liaise with” ASA2 or represented ASA2 as their agent. Thus, a mere failure to spot the name
of Vessel Antelope in the correspondence despite express orders to the contrary does not
amount to giving ASA2 apparent authority.33
B. OWNERS KNEW OR OUGHT TO HAVE KNOWN THAT ASA2 DOES NOT HAVE THE REQUISITE
AUTHORITY
20. In any case, even if the Tribunal concludes that the conduct of Charterers amounted to a
representation as to ASA2’s authority, there can be no ostensible agency when the other party
knows that the agent’s authority does not extend to the power of giving directions.34
First,
Owners knew or ought to have known that ASA2 was a third party who could not issue any
29
Moot Scenario, Page 38, V/C dated July 03 2014 16:28 (UTC+1). 30
Treitel, THE LAW OF CONTRACT, 761 (12th
edn., 2007). 31
Moot Scenario, Page 13, Voyage Order. 32
Moot Scenario, Page 40, V/C dated July 04 2014 09:52 (UTC+8). 33
Rhodian River Shipping Co. SA and Rhodian Sailor Shipping Co. SA v. Halla Maritime Corp (‘The Rhodian River’)
[1984] 1 Lloyd's Rep 373. 34
Armagas Ltd. v. Mundogas Ltd. (‘The Ocean Frost’), [1986] AC 717.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
10
voyage-related directions (i). Second, in any case, even if ASA2 were to be Charterers’ agent,
their authority in that capacity was limited (ii).
(i) Owners knew or ought to have known that ASA2 was a third party
21. Owners submit that Voyage Correspondence clearly mentions Atlantic Services Agency
‘ASA’ ([email protected]) as the disport agent.35
ASA was appointed by Owners
themselves36
and Charterers, while corresponding with the Master, always marked a copy to
this email address.37
The order mandates that “the Master shall disregard any voyage-related
instructions received from third parties and immediately refer such instructions to Charterer
for handling.”38
Yet, in breach of the Order, Owners followed the directions received from a
third party [email protected]
in breach of the Voyage Order. Thus, there cannot be an apparent agency when the Owners
knew (or ought to have known) that ASA2 was a third party who did not have the authority to
direct the vessel to ADL.
(ii) In any case, even if ASA2 were adjudicated to be the Charterers’ agent, their authority in
that capacity was limited
22. Assuming, but not conceding that Owners believed ASA2 to be ASA, they could still not
have relied on the representations made by ASA2. This is because Charterers’ agents had no
authority to issue directions relating to ADL.
23. As per Cl 12, C/P, it is the Charterers and not their agents who shall give the Master all
requisite instructions and sailing directions.41
Similarly, Cl 13 limits the power to issue
voyage-related instructions to Charterers only. Where the intention was to include
35
Moot Scenario, Page 15, Voyage Order. 36
Moot Scenario, Page 15, Voyage Order. 37
Moot Scenario, Page 33, V/C dated June 28 2014 16:27 (UTC+8); Moot Scenario, Page 34, V/C dated June 28 2014
18:43 (UTC+8). 38
Moot Scenario, Page 13, Voyage Order. 39
Moot Scenario, Pages 35-38, V/C. 40
Moot Scenario, Page 35, V/C dated June 28 2014 18:02 (UTC+1). 41
C/P, Cl 12(b).
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
11
“Charterers or their agents” it has been expressly mentioned in the succeeding lines of the
same clauses.42
Thus, by specifying only “Charterers” and with the deliberate omission of “or
their agents,” these clauses make clear that the Master is only supposed to follow the
instructions given by Charterers. Owners relied on the instructions of ASA2, despite being
well aware of these express prohibitions and the limited authority of the agents.
24. In The Cherry,43
the court refused to accept ostensible agency on the ground that the
apparent agents had acted outside the scope of their authority.44
Similarly, in the instant case,
authority of the agent was limited; therefore, Owners should not have relied upon ASA2’s
instructions to proceed to ADL without informing Charterers.45
Thus, the Doctrine of
Apparent Authority cannot apply and ASA2 cannot be considered as Charterers’ agent.
C. CHARTERERS ARE NOT BOUND BY THE DOCTRINE OF ESTOPPEL BY NEGLIGENCE
25. Owners might contend that inability on part of Charterers to recognize the name of the vessel
“Antelope” which ASA2 purports to control, amounts to negligence and therefore they are
bound by Doctrine of Estoppel by Negligence. However, Charterers submit that to constitute
such an estoppel, negligent conduct must result in a clear and unequivocal representation.46
As previously submitted,47
Charterers did not represent ASA2 as their agent either by their
words or by conduct.
26. In any case, even if the Tribunal were to come to the conclusion that there was such a
representation, it is submitted that there cannot be an estoppel unless the same is the
proximate cause for the loss.48
The test in relation to negligence and its effect is
42
C/P, Cl 12, Lines 220-221; C/P, Cl 13, Lines 227, 233. 43
Glencore International AG v. Owners of the "Cherry", the "Epic" and the "Addax" (‘The Cherry’), [2003] 1 SLR 471. 44
The Cherry, [2003] 1 SLR 471. 45
The Cherry, [2003] 1 SLR 471. 46
Moorgate Mercantile Co Ltd. v. Twitchings, [ 1977] AC 890. 47
Refer to Issue III.A. in this Memorandum. 48
Wilson and Meeson v. Pickering, [1946] 1 K.B. 422.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
12
foreseeability49
which is not fulfilled in the present case. It is submitted that the proximate
cause of Owner’s loss was ASA2 directing Master to ADL where a pirate attack took place50
and not any alleged negligence on the part of Charterers. As submitted earlier, this was not a
natural or foreseeable consequence of the representations.51
Hence, the Doctrine of Estoppel
is inapplicable in the instant case.
IV. CHARTERERS DID NOT COMMIT TORT OF FRAUD
27. As has been previously submitted, the parties did not intend to make the Tort of Fraud
admissible before the Tribunal. However, if the Tribunal were to find otherwise, it is
submitted that the Charterers did not commit the Tort of Fraud in the instant case. The
Owners contend that Charterers committed the Tort of Fraud by making untrue
representations regarding bunker-supply without having any intention to provide the same.
Further, they also attribute ASA2’s representations to Charterers.52
These contentions are
challenged by Charterers as the pre-requisites of the Tort of Fraud have not been fulfilled.
First, Charterers had no dishonest intention [A] and second, no actual damages were caused
to Owners due to Charterers’ representation [B].
A. CHARTERERS HAD NO DISHONEST INTENTION
28. Fraud is proved only when it is shown that the false representation was made knowingly53
or
without belief in its truth.54
However, in the present case, Charterers’ representations as to the
supply of bunkers were made without any dishonest intention or knowledge of their falsity.
As admitted by the Master, the place where the remaining bunkers were needed was OPL
49
Mercantile Credit Co. Ltd. v. Hamblin, [1965] 2 QB 242. 50
Moot Scenario, Page 42, V/C dated July 17 2014 23:25 (UTC+). 51
Mercantile Credit Co. Ltd. v. Hamblin, [1965] 2 QB 242; Refer to Issue III.A., ¶18 in this Memorandum. 52
Moot Scenario, Page 63, Statement of Claim, ¶17-21. 53
Armstrong v. Strain, [1951] 1 T.L.R. 856, 871. 54
Derry v. Peek, (1889) LR 14 App Cas 337.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
13
Luanda, the discharge port. Mere non-supply of total amount of required bunkers at the Port
of Loading is insufficient to prove dishonest intention on Charterers’ part.
29. All representations made by Charterers were honest and true at the time they were made.
First, the intention of Charterers to further supply the bunkers during the course of the
voyage is clear from the credit line of US$ 750,000 to US$ 1,000,000 requested by them.55
This would have been sufficient to provide the requisite bunkers.56
However, the effort
fructified in a credit line of only US$ 650,000. Accordingly, Charterers assured the provision
of remaining bunkers at a later time.57
30. Admittedly, Charterers assured the next bunker supply at OPL Luanda. However, Vessel not
turning up there to receive bunkers was an event not in the control of Charterers. Owners
relied on the instructions of a third party (ASA2) against the Voyage Orders in going to ADL
and hence Charterers cannot be made liable for the same.58
B. OWNERS DID NOT SUFFER ANY DAMAGE DUE TO CHARTERERS’ REPRESENTATION
31. For a claim to arise in Tort of Fraud, it must be proved that the Owners suffered damages as a
result of relying on the defendants’ representations.59
First, Charterers submit that there was
no actual damage caused to Owners due to the non-supply of bunkers before reaching OPL
Luanda. Owners have already admitted that the bunker supply was sufficient to reach the Port
of Discharge (OPL Luanda).60
Further, the delay that may have been caused did not result in
any actual damage.
32. Second, the damage caused to Vessel was not suffered due to Charterers’ representation that
the bunkers would be supplied at OPL Luanda, but due to the representations made by a third
55
Moot Scenario, Page 20, V/C dated May 27 2014 12:00 (UTC+8). 56
Refer to Annexure B, ¶2 in this Memorandum. 57
Moot Scenario, Page 21, V/C dated May 27 2014 14:10 (UTC+8); Moot Scenario, Page 26, V/C dated June 03 2014
17:21 (UTC+8). 58
Moot Scenario, Page 25, V/C dated June 03 2014 12:17 (UTC+8). 59
Moot Scenario, Page 13, Voyage Order; Moot Scenario, Page 35, V/C dated June 28 2014 19:50 (UTC+2). 60
Moot Scenario, Page 28, V/C dated June 03 2014 20:02 (UTC+8).
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
14
party to supply bunkers at ADL. This shows that no actual damage has been suffered by
Owners due to Charterers’ representations.
V. CHARTERERS DID NOT BREACH THE C/P DUE TO NON PAYMENT OF HIRE
33. Charterers are required to pay hire to Owners on an advanced-monthly basis, as per C/P
terms. Charterers submit that there is no hire due and owing to Owners as Vessel was off-hire
on due-date [A]. Further, in any event, C/P was frustrated [B] and Vessel went off hire no
later than July 4 under Cl 21(a)(ii), C/P due to “loss of time”[C].
A. VESSEL WAS OFF-HIRE ON DUE-DATE
34. The Charterers submit that there is no hire due and owing to Owners. It has been held in The
Lutetian,61
that Charterers are not obliged to pay hire if on the due-date Vessel is off-hire. It
is submitted that Vessel was off-hire at all times when hire was allegedly due and owing.
According to Cl 9(a), C/P, there is a three day grace period running till July 06. Thus it
follows that hire could be paid till July 06. As a result, when Vessel went off-hire before this
date, Charterers were not under any obligation to pay hire.
B. C/P WAS FRUSTRATED
35. In any event, C/P was frustrated and hire had ceased to be due at noon on July 04, pursuant to
Cl 20, C/P. As per this clause, should Vessel be missing, the “charter shall terminate and the
hire shall cease at the noon of the day she was last heard of.” It is submitted that Vessel went
missing62
from July 04-17 due to pirate attack/cargo theft, which attracted Cl 20. Thus, C/P
was frustrated by no later than July 04. As will be argued subsequently,63
the breach of
Owners’ obligation under Cl 1 and 2, C/P, by not providing a Vessel “fit for the service,”
61
Tradax Export SA v. Dorada Compania Naviera SA of Panama (‘The Lutetian’), [1982] 2 Lloyd’s Rep. 140 as cited in
Coghlin supra note 9 at 282, ¶16.18. 62
Moot Scenario, Page 46, Tanker Gone Missing News Report. 63
Refer to Issue VI. in this Memorandum.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
15
went to the root of the contract and deprived Charterers of substantially the whole benefit of
the charter due to cargo theft. This was a breach of an absolute obligation and not a minor
breach, thus justifying the frustration of C/P.64
C. VESSEL WENT OFF-HIRE FROM JULY 04 DUE TO “LOSS OF TIME” UNDER CL 21(A)(II)
36. Furthermore, Charterers submit that Vessel was off-hire from July 04 under Cl 21(a)(ii), C/P
as there was “an undisputed loss of time” resulting from “breach of orders or neglect of
duty”65
on the part of the Master. By not following Charterers’ instructions to liaise with the
Disport Agent (ASA) as mentioned in the Voyage Order66
and instead following orders given
by ASA2, a third party,67
the master exhibited “neglect of duty.”
37. Further by failing to deploy anti-piracy precautions as required by C/P and/or WAF industry
practice,68
Master breached his duty to provide a fit Vessel.69
Thus, the Master’s conduct
attracts Cl 21(a)(ii), C/P. This resulted in “loss of time” caused by way of interruption of
service first when the vessel went to ADL without authorization by Charterers and second,
when due to vessel being unfit, the piracy attack took place. Thus Vessel went off hire
according to the terms set out in Cl. 21, C/P.
VI. OWNERS PROVIDED A VESSEL NOT “FIT FOR THE SERVICE”
38. Charterers submit that Owners breached Cl 1(c), C/P by providing a Vessel that was not “fit
for the service”. Cl. 1 and 2(a) impose absolute obligations on Owners.70
Thus, whether the
64
Hongkong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd (‘The Hongkong Fir’), [1961] 1 Lloyd's Rep. 159. 65
Moot Scenario, Page 68, Statement of Defence, ¶14.c. 66
Moot Scenario, Page 14, Voyage Order. 67
Refer to Issue III. in this Memorandum. 68
Moot Scenario, Page 12, BIMCO Piracy Clause, sub cl. (e) & (f). 69
Refer to Issue VI. in this memorandum. 70
International Fina Services AG v. Katrina Shipping Ltd (‘The Fina Samco’), [1994] 1 Lloyd's Rep. 153, [1995] C.L.C.
1335; Adamastos Shipping v. Anglo-Saxon Petroleum (‘The Saxon Star’), [1957] 1 Lloyd’s Rep. 271 (C.A.); Poseidon
Schiffahrt GmbH v. Nomadic Navigation Co Ltd (‘The Trade Nomad’), [1997] C.L.C. 1542, [1999] C.L.C. 755; Golden
Fleece Maritime Inc v. ST Shipping and Transport Inc. (‘The Elli’), [2007] EWHC 1890 (Comm); Coghlin supra note 9,
at 820, 822, 880, ¶38.24, 38.31, 38.143.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
16
lower standard of due-diligence was exercised or not is irrelevant to any question of
compliance or breach.71
39. To discharge the said obligation, two requirements exist: first, Owners are bound to provide a
Vessel physically fit to encounter all reasonably foreseeable perils on the contemplated
voyage72
and to man the ship with a competent Master and Crew.73
Second, Vessel must be
cargoworthy74
i.e., nothing must endanger her safety or that of the cargo.
40. It is submitted that piracy was a reasonably foreseeable peril on the contemplated voyage [A],
that Owners failed to discharge absolute obligation to provide a Vessel ‘fit’ to encounter such
peril [B] and that the Master was incompetent [C]. Further, Vessel was not cargoworthy [D].
A. PIRACY WAS A REASONABLY FORESEEABLE PERIL ON THE CONTEMPLATED VOYAGE
41. In the present case, Vessel was undertaking a voyage to WAF (OPL Luanda),75
a stretch of
sea notorious for piracy76
with “rogue interests operating in the area”77
as suggested by
Owners themselves when they labelled it a “known security/piracy threat area.”78
42. It is submitted that WAF piracy is rising79
with incidents “stretching all the way from the
Ivory Coast to Angola”80
and accounting for 19% of attacks worldwide, as reported by the
71
Coghlin supra note 9, at 810, ¶38.5. 72
The Hongkong Fir, [1961] 1 Lloyd's Rep. 159; Cheikh Boutros Selim El-Khoury v. Ceylon Shipping Lines (‘The
Madeleine’), [1967] 2 Lloyd’s Rep. 224; Alfred C Toepfer v. Tossa Marine Co. Ltd. (‘The Derby’), [1985] 2 Lloyd's Rep.
325. 73
FC Bradley & Sons Ltd v. Federal Steam Navigation Co, [1926] 24 Ll L Rep 446, 454; The Hongkong Fir, [1961] 2
Lloyd’s Rep 478, 494; The Derby, [1985] 2 Lloyd’s Rep 325, 331, 333; Papera Traders Co Ltd v. Hyundai Merchant
Marine Co Ltd (‘The Eurasian Dream No.1’), [2002] 1 Lloyd’s Rep. 719. 74
Actis Co. v. Sanko Steamship Co., (‘The Aquacharm’), [1982] 1 Lloyd’s Rep 7; The Arianna, [1987] 2 Lloyd’s Rep.
376. 75
Moot Scenario, Page 43-44, Bill of Lading. 76
International Maritime Bureau Piracy Reporting Centre Piracy Maps and News/Reports available at https://icc-
ccs.org/piracy-reporting-centre/live-piracy-map and https://icc-ccs.org/piracy-reporting-centre/piracynewsafigures
[Accessed on Jan. 30 2015]; IMB Piracy Report Highlights Violence in West Africa, ICC COMMERCIAL CRIME SERVICE,
available at https://icc-ccs.org/news/865-imb-piracy-report-highlights-violence-in-west-africa (July 15 2013) [Accessed
on Feb. 1 2015]; IMB Warns of West Africa Piracy Threat, ICC COMMERCIAL CRIME SERVICE available at https://icc-
ccs.org/news/911-imb-warns-of-west-africa-piracy-threat (Mar. 7 2014) [Accessed on Feb. 12 2015]. 77
Moot Scenario, Page 46, Tanker Gone Missing News Report. 78
Moot Scenario, Page 22, V/C dated May 27 2014 16:59 (UTC+1). 79
The United Nations Institute for Training and Research, UNOSAT Global Report on Maritime Piracy-A Geospatial
Analysis 1995-2013, (2014) available at https://www.unitar.org/unosat/piracy [Accessed on Mar. 02 2015]; The United
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
17
IMB.81
Further, as erroneously perceived, the attacks are not just limited to the Gulf of
Guinea region (which is a base)82
but gangs have shown inclination to attack even far south.83
In pursuance of this, the noted Norwegian Maritime Authority expanded its Security Level 2
Area “all the way to and including the waters off Angola”84
and the International Registries,
Inc. too updated its WAF High Risk Area to include “Angola: Luanda (off port limits).”85
This makes piracy a reasonably foreseeable peril in the area of Vessel’s discharged location.
B. VESSEL WAS NOT FIT TO ENCOUNTER PIRACY
43. While fitness merely implies seaworthiness,86
“fit for the service” as required by C/P creates
an absolute obligation that the Vessel must also be suitable for the given voyage to be
undertaken.87
It is a greater standard per se, as a Vessel may be seaworthy but still unfit.88
Further, Owners can be held to a higher standard when aware of the peculiarities of the
voyage.89
Nations Office on Drugs and Crimes, Maritime Piracy in the Gulf of Guinea: Transnational Organised Crime in West
Africa (Feb 22, 2013). 80
The ungoverned seas: The waters around Somalia are calmer, but piracy in west Africa is rising, THE ECONOMIST
(Nov. 29 2014), available athttp://www.economist.com/news/middle-east-and-africa/21635049-waters-around-somalia-
are-calmer-piracy-west-africa-rising [Accessed on Apr. 01 2015]. 81
Mary Harper, Danger zone: Chasing West Africa’s pirates, BBC NEWS (Nov. 13 2014) available at
http://www.bbc.com/news/world-africa-30024009 [Accessed on Mar. 26 2015]. 82
Ahmad Taleb, Piracy in West Africa Targets the Region’s Oil Industry, INTERNATIONAL POLICY DIGEST AND GLOBAL
RISKS INSIGHTS (Dec. 30 2014) available at http://www.internationalpolicydigest.org/2014/12/30/piracy-west-africa-
targets-regions-oil-industry/ [Accessed on Mar. 21 2015]. 83
IMB supra note 76. 84
Notification dated Jan. 31 2014, springing from recent and credible reports of Nigerian piracy activity off the coast of
Angola, available at http://www.gard.no/webdocs/NMA_ISPS.pdf and http://www.sjofartsdir.no/en/safety/isps-
maritime-security/security-level-for-ships-flying-the-norwegian-flag/; Gard Alert: West African piracy awareness areas
expand (Feb. 26 2014) available at http://www.gard.no/ikbViewer/web/updates/content/20738993/gard-alert-west-
african-piracy-awareness-areas-expand [Accessed on Apr. 01 2015]. 85
Updated Revised West Africa High Risk Area and Voluntary Reporting Area, Ship Security Advisory No. 31-14, Dec.
22 2014, available at https://www.register-iri.com/forms/upload/SSAdvisory_31-14.pdf and https://www.register-
iri.com/index.cfm?action=page&page=244 [Accessed on Apr. 01 2015]. 86
The Madeleine, [1967] 2 Lloyd’s Rep. 224; The Hongkong Fir, [1961] 2 Lloyd’s Rep; The Derby, [1985] 2 Lloyd’s
Rep. 325 (C.A.). 87
Halsbury’s Laws of England, ¶465, Vol. 7 (5th
edn., 2008); The Fjord Wind, [1999] 1 Lloyd’s Rep. 307; Empresa
Cubana Importadora de Alimentos Alimport v. Iasmos Shipping Co. SA (‘The Good Friend’), [1984] 2 Lloyd’s Rep 586. 88
The Arianna, [1987] 2 Lloyd’s Rep. 376. 89
The Hongkong Fir, [1961] 2 Lloyd’s Rep 478.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
18
44. In the present case, Owners ought to have borne in mind “international standards and the
particular circumstances of the problem at hand.”90
By failing to follow anti-piracy
precautions as required by C/P and/or standard industry practice relating to WAF, they failed
to meet the absolute obligation cast on them to supply a vessel fit for the service.
45. “(T)he problems associated with West Africa piracy are well known, reported and
documented”91
such that the Vessel’s Master and crew needed to be acutely prepared, alert,
competent and skillful to be able to combat the threat of piracy.92
46. In accordance with C/P,93
Owners should have taken “reasonable preventative measures to
protect the Vessel, her crew and cargo” which includes BMP4 to be implemented as the
minimum threshold (“default position”)94
irrespective of where Vessel is sailing to.
Additionally, as part of standard industry practice, Owners should have followed BIMCO’s
interim measures that aim to bridge the gap between the advice currently found in the BMP4
and the prevailing situation in WAF.95
However, there is evidence to show that the “stores
and spares Sing order (were) not received”96
and the indispensable ‘razor wire’ was not
deployed. It is no excuse to submit that “Vessel (was) doing best to comply with BMP4” as in
the absence of the safety-items being deployed, Master’s efforts were ineffective.
47. Owners ought to have known that imposters and phishing scams are likely97
in this area.
Hence, communications with third-parties (ASA2) ought not to have been made for
90
Paul Todd, MARITIME FRAUD AND PIRACY, 1.114 (2nd
edn., 2010); Northern Shipping Co. v. Deutsche Seereederei
G.M.B.H. and Others (‘The Kapitan Sakharov’), [2000] 2 Lloyd's Rep. 255; Great China Metal Industries Co Limited v.
Malaysian International Shipping Corporation Berhad (‘The Bunga Seroja’), (1998) 72 ALJR 1592. 91
Procedural Order No. 2, ¶8. 92
The Derby, [1985] 2 Lloyd’s Rep 325. 93
Moot Scenario, Page 11, BIMCO Piracy Clause; Moot Scenario, Page 8, Piracy Clause. 94
Gard Alert supra note 84. 95
Interim Guidelines for Owners, Operators and Masters for Protection Against Piracy in the Gulf of Guinea Region
(To be read in conjunction with BMP4), INTERNATIONAL MARITIME ORGANISATION AND BIMCO (Dec. 21, 2012)
available at
http://www.imo.org/OurWork/Security/WestAfrica/Documents/Guidelines_for_protection_against_Piracy_in_the_Gulf_
of_Guinea_Region.pdf [Accessed on Mar. 1 2015]. 96
Moot Scenario, Page 36, V/C dated June 29 2014 11:59 (UTC+1). 97
Report warns shipping of phishing scams, ICC COMMERCIAL SERVICES (May 09 2014) available at https://icc-
ccs.org/news/931-report-warns-shipping-of-phishing-scams [Accessed on Mar. 5 2015].
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
19
“(U)nnecessary interaction with other parties creates opportunities for information regarding
the vessel’s position to be compromised,”98
as indeed occurred.
48. Further, email correspondence to Agents and Charterers should have been through controlled
address lists,99
which was blatantly disregarded by Master as he corresponded with a spurious
third party (ASA2).100
Section 7 of BMP4 lays down Master’s planning procedures, which
when read with industry practice relating to WAF, suggest that Master must avoid
waiting/slowing down and should not give away waiting positions. However, Master not only
gave away the location of Vessel to a third party but also the Vessel arrived and was
“drifting” at ADL101
clearly not applying the BMP4 self-defence measures like evasive
manoeuvres/ high speed.
C. MASTER WAS INCOMPETENT
49. It is also submitted that Master was incompetent when he followed instructions other than
those given to Vessel by Charterers, breaching Cl 12, C/P and Voyage Order. Such breaches
have been dealt with above.102
50. In addition, Cl 13(b), C/P specifies that when there is a request to discharge at an alternative
location (a) there must be a written communication by only the Charterers “that specifically
refers to this clause” and (b) this must be in consideration of Owners receiving a “charters
letter of indemnity,” none of which were satisfied, as no such instructions were given by the
Charterers.103
98
BIMCO supra note 95. 99
Id. 100
Moot Scenario, Page 35-38, V/C. 101
Moot Scenario, Page 40, V/C dated July 04 2014 05:20 (UTC+1). 102
Refer to Issue III.B. in this Memorandum. 103
Refer to Issue III in this Memorandum.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
20
D. VESSEL WAS NOT CARGO-WORTHY
51. Whether Vessel is fit is prima facie a question of fact104
which depends upon the effect of
unfitness on the security or integrity of her cargo.105
Due to reasons mentioned under VI(A)-
(C) and given that WAF piracy is known for violent cargo thefts, unfitness of Vessel
contributed to the theft of cargo.106
52. It is submitted that even a minimal contribution is sufficient to establish causation.107
As
such, the taking of anti-piracy measures substantially reduces the risk of a pirate attack. Thus,
by not taking such measures and by thereby increasing the pirates’ chances of a successful
hijacking, the vessel’s unfitness directly contributed to the loss of the cargo.
VII. OWNERS ARE LIABLE TO CHARTERERS IN BAILMENT FOR LOSS OF CARGO
53. The Vessel went missing from July 04-17, 2014.108
During this period 28190MT GO was
stolen and lost in a pirate attack. Charterers submit that Owners, due to a breach of their duty
as bailees, are liable for the loss of cargo.
54. First, there was a bailor-bailee relationship under the C/P109
between Charterers and Owners.
As Charterers are also the Shippers, they have a right to sue under C/P.110
This is evidenced
by Cl.27(c)(ii), C/P according to which Charterers may bring a claim “arising out of any loss
of…cargo.” Further, Charterers are also Cargo-Owners as they are the Sellers in the sales
contract between them and AEI111
under which they have retained title.112
Thus a bailment
104
Coghlin supra note 9, at 191, ¶8.37. 105
The Arianna, [1987] 2 Lloyd’s Rep. 376. 106
McFadden v. Blue Star Line, [1905] 1 K.B. 697, 703; Simon Baughen, SHIPPING LAW 92(4th
edn., 2009). 107
Id. 108
Moot Scenario, Page 42, V/C dated July 17 2014 dated 23:25 (UTC+1); Moot Scenario, Page 46, Tanker Gone
Missing News Report. 109
ENE Kos 1 Limited v. Petroleo Brasileiro SA (‘The KOS’), [2012] UKSC 17; F.D. Rose Commercial Law, Bailment
and a Correlative Right to Unjust Enrichment, LAW QUARTERLY REVIEW [2011]; Benjamin’s Sale of Goods, ¶18-076,
19-150, 18-226 (8th
edn., 2010); Halsbury supra note 87, at ¶325. 110
Law Com. No.196, Scot. Law Com. No.130, Right of Suit in Respect of Contracts for the Goods by Sea, 26(1991);
Albacruz (Cargo Owners) v. Albazero (‘The Albazero’), [1977] AC 774; Benjamin supra note 109, at ¶18-157. 111
Moot Scenario, Page 30, V/C dated June 08 2014 12:30 (UTC+8). 112
Procedural Order 2, ¶ 22; N.Palmer, PALMER ON BAILMENT, 51 (3rd
edn., 2009).
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
21
arises independently from C/P,113
as Master has voluntarily taken possession of the goods.
Thus, the Defendants can additionally sue as Cargo-Owners.
55. Second, it is a well-established rule that it is the duty of the Master, on behalf of Owners,114
(as bailees) to take reasonable care of the goods entrusted to him.115
This duty includes
“taking active measures”116
and extends to the duty to protect goods from theft.117
Accordingly, the bailee is liable for any loss arising out of a breach of this duty. Further,
when the bailment arises from a contract, the bailee is required to fulfill his duty of care as
mentioned in that contract.118
In this case, Owners breached this duty under both common
law and C/P by providing an unfit Vessel119
and by not deploying “stores and spares” in
accordance with BMP4.120
Consequently, they are liable for the losses arising out of the
pirate-attack.
56. It is submitted that any exercise of due diligence on Master’s part was neither sufficient nor
adequate in relation to the special risks involved.121
Additionally, as in the case of damage or
loss of cargo, the bailee is prima facie liable “unless he can prove that such loss or damage
occurred without fault on his part.”122
As previously submitted, it was Master’s breach of
duty which led to the loss and thus the burden has not been discharged.
113
East West Corporation v. DKBS 1912 and AKTS Svenborg, [2003] QB 1509; Halsbury’s Laws of England, Vol.3(1),
¶1(4th
edn., 2005); Benjamin supra note 109, at ¶5-009, 18-155, 18-157; Law Com. No.196, Scot. Law Com. No.130,
Right of Suit in Respect of Contracts for the Goods by Sea, 26 (1991). 114
Raynes v. Ballantyne, (1898) 14 T.L.R. 399 (H.L.) as cited in Coghlin supra note 9, at 337, ¶19.8. 115
Notara v. Henderson, (1870) L.R 5 Q.B 354; S. Douglas, The Abolition of Detinue, 30 CONVEYANCER AND PROPERTY
LAWYER (2008). 116
Notara v. Henderson, (1870) L.R 5 Q.B 354; Palmer supra note 112, at 1108. 117
East West Corporation v. DKBS 1912 and AKTS Svenborg, [2003] QB 1509; Sutcliffe v. Chief Constable of Western
Yorkshire, [1996] R.T.R. 86; Houghland v. RR Low (Luxury Coaches), (1962) 1 QB 694. 118
Halsbury supra note 113, at ¶4; Wincanton Ltd v. P&O Trans European Ltd, [2001] EWCA Civ. 227. 119
Refer to Issue VI.B. in this Memorandum. 120
Moot Scenario, Page 36, V/C dated June 29 2014 11:59 (UTC+1). 121
Refer to VI.B. in this Memorandum; British Road Services Limited v. Arthur Crutchley & Co. Limited, [1968] 1 All
ER 811 as cited in Sutcliffe v. Chief Constable of Western Yorkshire, [1996] R.T.R. 86. 122
Morris v. CW Martin & Sons Ltd., 1 QB 716 [1996]; Reeve v. Palmer, (1858) 5 C.B. (N.S.) 84; Houghland v. R R
Low (Luxury Coaches), (1962) 1 QB 694; Palmer supra note 112, at 52.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
22
VIII. OWNERS ARE LIABLE TO CHARTERERS IN CONVERSION FOR NEGLIGENT LOSS OF
CARGO
57. As per S.2(2) of UK’s Torts (Interference with Goods) Act,123
the bailee who allows the loss
or destruction of goods in breach of his duty will be liable under statutory conversion.124
It is
submitted that Owners by breaching their duty as bailees have attracted this liability.
Charterers submit that they have a sufficient title to sue under conversion [A]. Lack of
demand and refusal does not defeat the claim of conversion [B] and the goods were lost due
to the negligence of the bailees [C].
A. CHARTERERS HAVE TITLE TO SUE
58. It is submitted that according to the terms of the contract, the title to the goods is retained by
Charterers until the cargo passes the manifold of Vessel at the Port of Discharge.125
This
retention of title in the goods gives Charterers a possessory title,126
which is necessary to sue
in conversion.127
It is further submitted that AEI has not become entitled to immediate
possession of cargo, as even in a straight B/L, the holder must present the B/L in order to
claim delivery.128
As it is not known who currently holds the B/L,129
it is uncertain that AEI
is entitled to delivery or that they have an immediate right to possession.
123
Sec. 2(2), Torts (Interference with Goods) Act, 1977 applicable as per Cl 46, C/P. 124
Atapattu, R. v. The Secretary of State for the Home Department, [2011] EWHC 1388 (Admin); Schwarzchild v.
Harrods, EWCH 528 [2008]; N.E. Palmer, The Application of the Torts (Interference with Goods) Act 1977 to Actions in
Bailment, 41(6) MODERN LAW REVIEW 629, (1978). 125
Procedural Order 2, Page 3, ¶22. 126
Benjamin supra note 109, at ¶18-283; Palmer supra note 112, at ¶ 3-046, 242; Robin Hickey , Wrongs and Possession
of Property, CONVEYANCER AND PROPERTY LAWYER (2011): “if A is owner of something, she is entitled to have it. This
“right to possess” is seen as the most basic incident of ownership”; C. Hawes, Tortious Interference with Goods: Title to
Sue, 17(2) CANTERBURY LAW REVIEW 331, 342 [2011]. 127
W.V.H. Rogers, WINFIELD AND JOLOWICZ ON TORT, 834 (18th
edn., 2010); Clerk & Lindsell on Torts, 17-43 (20th
edn.,
2010); Iran v. Barakat Galleries Ltd. [2007] EWCA Civ 1374; D.J. Bentley, A New Found Halliday: The Eighteenth
Report of the Law Reform Committee (Conversion and Detinue) 35(2), THE MODERN LAW REVIEW, 171 (1972).
. 128 Benjamin supra note 109, at ¶18-094, 18-099; Voss v. APL Co. Pte. Ltd., [2002] 2 Lloyd’s Rep. 707 as upheld in JI
McWilliams Co. Inc. v. Mediterranean Shipping Company SA, (‘The Rafaela S’), [2005] UK HL 11; G.H. Treitel, The
Legal Status of Straight Bills of Lading, LAW QUARTERLY REVIEW (2003). 129
Procedural Order No.2, ¶15.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
23
59. Further, as there is no hire due and owing under the C/P as submitted earlier,130
Owners do
not have a lien over the goods and thus cannot preclude Charterers right to possess.
Moreover, under common law, bailees are estopped from denying the bailors title to the
goods.131
Thus, Owners cannot contest Charterers’ title to sue.
60. In any event, Charterers can recover based on the damage to their reversionary interest.132
The loss of cargo constitutes a permanent damage, which is necessary to sue for reversionary
interest.133
This holds true even when there is no possession or immediate right to
possession.134
It is further submitted that even if economical loss is borne by a third party,
Charterers can still recover from bailees, as property had not passed to the third party.135
Thus Charterers can hold Owners liable for damaging their reversionary interest in the Cargo.
A. LACK OF DEMAND AND REFUSAL DOES NOT DEFEAT THE CLAIM OF CONVERSION
61. Owners may submit that ‘demand and refusal’ are necessary elements of statutory
conversion. However, Charterers submit otherwise. A bailor (Charterers) has been excused
from making a demand if he knew that the demand would not be heeded.136
It follows that in
the present case, no need for a demand arises, as it would not been met because the goods
were lost due to piracy. Furthermore, in a “goods lost” case there is no need for refusal when
the goods are lost before or after the demand137
as “lost goods” would constitute an implicit
refusal.138
The court in Mitchell v Ealing139
opined that even if the goods have been lost
130
Refer to Issue V. in this Memorandum. 131
China Pacific SA v. Food Corporation of India (‘The Winson’), [1982] AC 939; Palmer supra note 112, at 278. 132
Clerk supra note 127, at 17-22 ; C. Hawes supra note 126, at 339; Tancred v. Allgood, (1859) 4 H.&N. 438 cited in A.
Tettenborn, Reversionary Damage to Chattels, 53(2) CAMBRIDGE LAW REVIEW 326 (1994). 133
East West Corporation v. DKBS 1912 and AKTS Svenborg, [2003] QB 1509; Leigh and Sullivan Ltd. v. Aliakmon
Shipping Co. Ltd. (‘The Alkiamon’), [1986] AC 785; Tettenborn supra note 132. 134
East West Corporation v. DKBS 1912 and AKTS Svenborg, [2003] QB 1509; Clerk supra note 127, at 17-22. 135
Obestain Inc v. National Mineral Development Corp Ltd, (‘The Sanix Ace’), [1987] 1 Lloyd's Rep 465; Benjamin
supra note 109, at ¶18-157. 136
Palmer supra note 112, at 71. 137
Douglas supra note 115; Clerk supra note 127, at 17-22. 138
Palmer supra note 112, at 73. 139
Mitchell v. Ealing LBC, [1979] QB 1.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
24
before demand, the bailee (Owners) in the present case is liable if lost due to his negligence.
As submitted earlier140
owners have been negligent in fulfilling their duties as bailees.
62. Generally, the need for an unequivocal demand or refusal arises to mostly ascertain the date
of the cause of action for purposes of the limitation period.141
It is submitted that the Tribunal
is not faced with any such issue and hence, no need for proving demand and refusal arises.
Thus, Owners cannot rely on a lack of demand and refusal to evade liability in conversion in
the present dispute.
B. THE GOODS WERE LOST DUE TO THE NEGLIGENCE OF THE BAILEES
63. As previously submitted,142
the loss of cargo (28,500MT GO) is attributed to Owners in their
capacity as bailees. They failed to take reasonable care of the goods in breach of their duty.
The negligent actions of the bailee allowed the Pirate attack/cargo theft to take place.143
Thus
the causal link between negligent action of Owners and loss to cargo was proximate.144
64. Therefore, all requirements of statutory conversion have been fulfilled and the Owners are to
be held liable in breach of their duty as bailees.
140
Refer to Issue VII, ¶55 in this Memorandum. 141
Palmer supra note 112, at 73. 142
Refer to Issue VII. in this Memorandum. 143
Refer to Issue VI.A. & B. in this Memorandum. 144
Yorkshire Dale Steamship Co. Ltd. v. Minister of War Transport, [1942] AC 691; Stapely v. Gypsum Mines
Ltd., [1953] AC 663.
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
25
PRAYER
In light of the above submissions, Charterers request the Tribunal to:
DECLARE that this Tribunal does not have jurisdiction to hear the present dispute.
ADJUDGE that
A. ASA2 is neither the actual nor the apparent agent of the Charterers
B. Owners are liable
1. Under Tort of Conversion
2. Under Bailment
C. Owners did not provide a Vessel ‘fit for the service’
D. Charterers are not liable
1. For the actions of ASA2
2. To pay hire to Owners
3. Under Tort of Fraud
E. Charterers are entitled to damages, interest or costs
F. Owners are not entitled to damages, interest or costs
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
a
ANNEXURES
ANNEXURE A: DISTANCE BETWEEN THE RELEVANT CO-ORDINATES
1. Distance between Singapore (Port of Loading) and OPL Luanda (Discharge Port): 10280 Km
2. Distance between OPL Luanda (Discharge Port) and Gibraltar ( Redelivery): 5319 Km
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
b
3. Distance between OPL Luanda and Alternative Discharge Location : 496 Km
4. Distance between Luanda and OPL Luanda: 191 Km
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
c
5. Distance between Luanda and Alternative Discharge Location : 641 Km
TEAM 5, MEMORANDUM FOR THE DEFENDANTS/CHARTERERS
d
ANNEXURE B: PROVISION OF BUNKER SUPPLY (CALCULATIONS)
1. Credit line of US$ 650,000 sufficient to buy = Credit Line Gained
Cost of Fuel Provided =
650000
630.25 =1031.33MT FO
2. Credit line of US$ 1,000,000 sufficient to buy= Credit Line asked for
Cost of Fuel Provided =
1000000
630.25 =1586.67MT FO
3. Approximate Distance between Singapore (Port of Loading) and OPL Luanda (Discharge
Port)= 10280 Km [MAP 1]
4. Approximate Distance between Gibraltar (Place of Redelivery) from OPL Luanda (Discharge
Port) =5319 Km [MAP 2]
5. Estimated Fuel required to go from OPL Luanda to Gibraltar (Place of Redelivery)=
Approximate Distance between Singapore and OPL Luanda: Fuel required :: Approximate
Distance between OPL Luanda and Gibralter: Fuel required (x)= 10280: (490+950) :: 5319: x
x=745.07MT FO