memorandum for the super charters inc

15TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT JULY 2014

Team no. 13

ERASMUS UNIVERSITY ROTTERDAM

MEMORANDUM FOR THE SUPER CHARTERS INC.

IN THE MATTERS OF ARBITRATION BETWEEN:

Claimant Reliable Tankers Inc.

v.

Respondent Super Charters Inc.

Claimant

Super Charters Inc.

v. Respondent Reliable Tankers Inc.

COUNSEL

ALEXANDER J. BARENDREGT ♦ EVANGELIA PATRIKALAKI ♦

MARTA K. KOŁACZ ♦ NEDYALKO MINKOV ♦ SONJA VAN WIJK

Erasmus University Rotterdam Memorandum for the Super Charters Inc.

Page | ii

TABLE OF CONTENTS:

TABLE OF CONTENTS: .......................................................................................................... ii

LIST OF ABBREVIATIONS ...................................................................................................... iv

TABLE OF AUTHORITIES ....................................................................................................... vi

TABLE OF CASES .................................................................................................................. viii

INDEX OF LEGAL ACTS ......................................................................................................... xi

INDEX OF DOCUMENTS INVOKED ..................................................................................... xi

STATEMENT OF FACTS ......................................................................................................... 1

INTRODUCTORY REMARKS ON LEGAL ARGUMENTS AND APPLICABLE LAW .... 4

I. THE TRIBUNAL SHOULD FIND NO GENUINE MISNOMER IN COMMENCING

THE ARBITRATION PROCEEDINGS IN THE NAME OF THE RELIABLE TANKERS

INC. ............................................................................................................................................ 6

1. Bad faith should not be honored. .................................................................................... 6

II. THE TRIBUNAL SHOULD CONSIDER THE OWNER’S CLAIMS AS TIME

BARRED .................................................................................................................................... 6

1. Parties have the autonomy to agree about the time for commencement of the

arbitration. ............................................................................................................................... 6

III. THE TRIBUNAL SHOULD FIND A BREACH OF CONTRACTUAL

OBLIGATIONS COMMITED BY THE RELIABLE TANKERS INC. WHICH LED TO

THE SUBSEQUENT CANCELLATION OF THE CHARTER PARTY BY THE

CHARTERERS. ......................................................................................................................... 9

1. The Tribunal should find a breach of contractual obligations committed by the Reliable

Tankers Inc. which lead to the cancellation of the Charter Party by the Charterers. ............. 9

2. The Reliable Tankers Inc. were in breach of contractual obligations. ............................ 10

3. The cancellation of the Charter Party. ............................................................................ 11


Page | iii

1. The Tribunal should regard the arrest of the Vessel as an unavoidable hindrance to the

fulfillment of the Charter Party for which the fault is to be borne by the Owners as a legal

successor of the Reliable Tankers Inc. ................................................................................. 13

IV. THE TRIBUNAL SHOULD FIND THAT THE FREIGHT STIPULATED IN THE

CONTRACT WAS NOT DUE AND PAYABLE AND THAT THE RELIABLE TANKERS

INC. ACTIONS LEAD TO SUBSEQUENT DAMAGES FOR THE CHARTERERS. ........ 14

1. Freight is not due and payable. ...................................................................................... 14

2. The claim for damages. ................................................................................................... 17

3.. Further claim for the set-off damages. ............................................................................. 18

V. REQUEST FOR RELIEF ................................................................................................. 18


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LIST OF ABBREVIATIONS

& And

§ Section

¶/¶¶ Paragraph/Paragraphs

Ad hoc For this

ASBATANKVOY

Charter Party

Association of Ship Brokers & Agents Tanker Voyage Charter

Party

C.A. Court of Appeal

Charterers The Super Charters Inc.

ed./eds. Editor/Editors

ETA Estimated Time of Arrival

Ibid. Ibidem (in the same place)

Laycan Laydays Cancelling

Memorandum Memorandum for the Super Charters Inc. submitted by the

Team of Erasmus School of Law, Rotterdam participating in

15th

International Maritime Law Arbitration Moot.

MT Metric ton

No. Number

Owners The Reliable Holdings Inc. acting as a legal successor of the

Reliable Tankers Inc.

p./pp. Page/ Pages

Recap The summary of the Charter Party

Vessel The Reliable Butterfly

Voyage The transport of crude oil at each of two terminals from the


Page | v

loading port BlueLand, to Redland for bunkers and thereafter to

the discharge port IndigoLand.

Tribunal Panel consisting of the Chairperson (presiding arbitrator) and

Ms. Arbitrator 1 and Mr. Arbitrator 2

USD United States dollars

v. Versus; against

Vol. Volume


Page | vi

TABLE OF AUTHORITIES

Books: Audley Sheppard,

English Arbitration Act (Chapter 23),

Part I, The Arbitral Proceedings, Section

34 [Procedural and evidential matters],

in: L. Mistelis (ed.),

Concise International Arbitration

[Kluwer Law International, 2010].

Referred to in: ¶ 21 of the

Memorandum

Clare Ambrose, Karen Maxwell,

The Arbitration Act 1996 - London Maritime

Arbitration,

[1st., LLP, 1996].


Memorandum

David St John Sutton, Judith Gill, Matthew

Gearing,

Russell on Arbitration,

[23rd., Sweet & Maxwell, 2007].


Memorandum

John F. Wilson,

Carriage of Goods by Sea,

[7th., Pearson, 2010].


Memorandum

Michael Mustill,

Commercial arbitration,

[2nd., Butterworths, 2001].

Referred to in: ¶19 of the

Memorandum


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Robert Merkin,

Arbitration Law,

[3rd., Informa Law, 2004].

Referred to in: ¶ 24, 28 of the

Memorandum

Stephen Girvin,

Carriage of Goods by Sea,

[2nd., Oxford University Press, 2011].


Memorandum

Articles

and

Rapports:

Andrew Tweeddale, Karen Tweeddale,

'Commencement of Arbitration and Time-

Bar Clauses',

[Arbitration, Vol. 75, No. 4, 2009].


Memorandum

Cavinder Bull,

‘Commencing Arbitration’,

in: Albert Jan van den Berg (ed),

‘International Arbitration: The Coming of a

New Age?’,

ICCA Congress Series, Volume 17 ,Kluwer

Law International, 2013.


Memorandum


Page | viii

TABLE OF CASES

A Antaios Compania Naviera S.A. v. Salen

Rederierna A.B. (‘The Antaios’),

[1985] A.C. 191.


Memorandum

B

B. Richards, Devisee of John Richards, Deceased

v. Bluck,

136 E.R. 1319.


Memorandum

Blackgold Trading of Monrovia v. Almare S.p.A

Navigazione of Genoa, (‘The Almare Seconda’),

[1981] 2 Lloyd's Rep. 433.


Memorandum

C

Cholmondeley v. Clinton,

[1937] E.R. 527.


Memorandum

Colonial Bank (now bank of Boston Connecticut)

v. European Grain & Shipping Ltd.,

(‘The Dominique’),

[1989] 1 Lloyds Rep. 436.


Memorandum

D De Silvale v. Kendall,

[1815] 4 M & S 37.


Memorandum

G

Geogas S.A. v. Tranumo Gas Ltd.,

(‘The Baleares’),

[1993] 1 Lloyd's Rep. 215.


Memorandum

H

Harbour & General Works Ltd. v. Environment

Agency,

[1999] Adj.L.R. 02/19.


Memorandum

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Hume v. Rundell,

[1824] E.R. 311.


Memorandum

I

Investors Compensation Scheme Ltd. v. West

Bromwich Building Society,

[1998] 1 W.L.R. 896.


Memorandum

J James Reid and James Stewart v. William

Blackedon Fairbanks, Jonathan Crane Allison,

and David Allison,

138 E.R. 1371.


Memorandum

L Law Debenture Trust Corp. plc v. Elektrim

Finance B.V.,

[2005] EWHC 1412 (Ch), 2 All ER (Comm) 476.


Memorandum

Lazard Brothers & Company v. Midland

Bank Ltd.,

[1993] AC 289 [HL].


Memorandum

Lorna I Compania Naviera General S.A

v. Keramental Ltd.,

[1983] 1 Lloyds Rep. 373.


Memorandum

M

Mannai Investment Co Ltd. v. Eagle Star Life

Assurance Co. Ltd.,

[1997] A.C. 749.


Memorandum

Marbienes Compania Naviera S.A. v. Fervostaal

A.G., (‘The Democritos’),

[1976] 2 Lloyd's Rep. 149 (C.A.).


Memorandum

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Maredelanto Compania Naviera S.A. v. Bergbau-

Handel G.m.b.H.,

[1970] 2 Lloyd's Rep. 43 (C.A.).


Memorandum

Metalfer Corp. v. Pan Ocean Shipping Co. Ltd.,

[1998] 2 Lloyd’s Rep 632.


Memorandum

Monroe Brothers, Ltd. v. Ryan,

[1935] 2 K.B. 28.


Memorandum

P Pittalis v. Sherefettin,

[1986] 1 QB 868.


Memorandum

R Robertson v. French,

[1803] 102 ER 779.


Memorandum

S

SEB Trygg Holding A.B. v. Manches,

[2005] EWHC 35 Lloyd’s Rep 129 (Com).


Memorandum

Smith v. Lucas,

[1880-81] L.R. 18 Ch. D. 531.


Memorandum

Southland Frozen Meat & Produce Export Co.

Ltd. v. Nelson Bros Ltd.,

[1898] A.C. 442.


Memorandum

Strand Music Hall Co. Ltd.,

(1865) 55 ER 853.


Memorandum

W WJ Alan and Co Ltd. v. El Nasr Export and

Import Co.,

[1971] 1 Lloyd’s Rep 401.


Memorandum

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INDEX OF LEGAL ACTS

Arbitration Act

English Arbitration Act 1996 c. 23

Referred to in: ¶¶19,

23 of the

Memorandum

INDEX OF DOCUMENTS INVOKED

ASBATANKVOY form [the Charter Party] Referred to in: ¶¶ 18, 21, 23, 28, 29, 30,

32,33,34, 38, 39, 40, 42, 43, 44, 45, 46,

47, 49 of the Memorandum

Claim submission

of the Reliable Holdings Inc.

Referred to in:¶ 14 of the Memorandum

Combined claim submission

of the Super Charters Inc.


Correspondence

from the Super Charters Inc. to the Reliable

Tankers Inc. From 10 October 2011


Correspondence

from the Super Charters Inc. to the Reliable

Tankers Inc. from 19 November 2011


Correspondence

from the Reliable Tankers Inc. to the Super

Charters Inc. from 19 November 2011



Page | xii

Correspondence




Correspondence



Referred to in:¶¶ 10, 29 of the

Memorandum

Correspondence



Referred to in: ¶¶ 12, 13, 31 of the

Memorandum

Moot Problem Referred to in: ¶ 19 of the Memorandum

Newspaper Article concerning the merger of

the Reliable Tankers Inc. and Reliable

Holdings Inc. from 3 January 2012

Referred to in: ¶ 22 of the Memorandum

Notice of Appointment and Arbitration of the

Reliable Holdings Inc. from 28 January 2012

Referred to in: ¶¶ 14, 22, 27, of the

Memorandum

Notice of Appointment and Arbitration

of the Reliable Holdings Inc. from 24

February 2012


Notice of Appointment and Arbitration of the

Super Charters from 12 February 2012

Referred to in: ¶¶ 15, 28 of the

Memorandum

Notice of Cancellation of the Super Charters

from 27 November 2012

Referred to in:¶¶ 11, 31 of the

Memorandum

Reliable Tankers Inc. Internal Note from 23

November 2011



Page | xiii

Spot Tanker Market Report Referred to in:¶ 35 of the Memorandum

Standard Terms of the Super Charters Inc. Referred to in:¶¶23, 24, 25, 28 of the

Memorandum

Standard Terms of the Reliable Tankers Inc. Referred to in:¶¶ 39, 40, 41, 44, 45 of

the Memorandum

The Super Charters Company Single Voyage

Charter Party Rider Clauses


Erasmus University Rotterdam Memorandum for the Charters Inc.

Page | 1

STATEMENT OF FACTS

1. Please note the following statements as a description of the course of the contractual

relationship between the Super Charters Inc. (hereafter: the Charterers) and the Reliable

Holdings Inc. (hereafter: the Owners) acting as a legal successor of the Reliable Tankers Inc.

The Charterers ask the Tribunal to see there are two referrals, where in the first one, wrongly

commenced on 28 January 2012, the Charterers are the Respondent, but in the second

commenced on 12 February 2012 the Charterers are acting as the Claimant. Regarding the

fact of the similarity of the claims in both disputes, in the following document the Charterers

will present combined submissions which are to be construed as appropriate in each referral.

2. On 1 October 2011, 22nd Century Broking (Intermediary) offered an agency in business

relation between the Charterers and the Reliable Tankers Inc.

3. Nonetheless, the Charterers and the Reliable Tankers Inc., due to the clear position and good

reputation of the latter, resigned from the agency offer on 10 October 2011. The Charterers

sent an invitation for tender concerning a ship able to load and transport bulk of crude oil

on two terminals in BlueLand going to IndigoLand (hereafter: the Voyage).

4. After the ongoing scrupulous negotiations, which lasted till middle of November, parties were

ready to enter the Charter Party. The Reliable Tankers Inc., after accepting the detailed

ETA provisions on 17 November 2011, sent a firm offer. There was also an exchange of

standard terms, although the Owners led to a common mistake by not correcting Clause 2.

The Charterers, from that point, did not accept the shape of the Clause 2 and based on parties

intention proved by the Owners’ message from that day.

5. On 19 November 2011, the Charterers made an amendment to the Charter Party, and asked

the Reliable Tankers Inc. for confirmation and circulation of the Charter Party for signatures


Page | 2

in due course. At the same time the Charterers asked about a certain captioned ship - Reliable

Butterfly (hereafter: the Vessel), which was the only one available.

6. The same day (19 November 2011) the Reliable Tankers Inc. recap the fixture of the Vessel.

In a separate message the Reliable Tankers Inc. confirmed and ensured the conditions of

the ETA and the laycan (5-6 December2011) and that the Vessel should sail by 8 December

2011 and finish the discharge by 10 January 2012 - so before shutting down the refinery

planned on 15 January 2012. The laycan was narrowed to 5 December 2011.

7. The Reliable Tankers Inc., did not inform the Charterers about the faith of the Vessel. News

about the arrest reached the Charterers on 22 November 2011 through back channels, and not

directly from the Reliable Tankers Inc. As a consequence this would mean that the Vessel

would not meet the laycan of 5 December 2011.

8. The Reliable Tankers Inc., despite the knowledge that not promising financial condition of

the company would be a reason of not releasing the Vessel from the arrest and not meeting

the laycan, wrongly assured on 23 November 2011 that the Vessel would be on time,

however, did not ensure the proper progress of the Voyage.

9. On 25 November 2011 it became clear that the Reliable Tankers Inc. are incapable of dealing

with the problem. The Reliable Tankers Inc. informed the Charterers that the Vessel was not

able to meet the laycan and that there was no possibility to point out new dates. Thereafter, far

from informing immediately, the Reliable Tankers Inc. also declared a revised ETA and a

new laycan for undetermined dates.

10. On 27 November 2011 the Charterers sent the Notice of Cancellation including clear refusal

of the revised ETA and the laycan. The Charterers filed a claim for damages, since the

Charter Party was breached.


Page | 3

11. On 28 November 2011 the Reliable Tankers Inc. accepted cancellation of the Charter

Party but wrongly denied the fact of its breach. Furthermore, the Reliable Tankers Inc.

groundlessly invoked the clause concerning the relief from liability.

12. Due to negligence in appointing revised ETA and the laycan the Reliable Tankers Inc.

exposed the Charterers for financial loss regarding such market realities as higher prices of

ship charter. The Reliable Tankers Inc. claimed also outstanding freight, which was not due

at the moment of the breach. This because the Vessel never arrived in the port of loading.

13. On 28 November 2011 the Reliable Tankers Inc. placed also a new offer for replacing the

Vessel with a sister vessel. Unfortunately, the sister vessel would arrive a few days later than

the stated laycan. Therefore, Charterers were unable to accept this offer and were forced to fix

another vessel from another company.

14. On 28 January 2012 the Reliable Tankers Inc. sent the Notice of Appointment and

Arbitration concerning a breach of the Charter Party by the Charterers and referring the

current and future cases to arbitration in London. Mr. Smith was appointed as an arbitrator.

As it turned out later Reliable Tankers Inc. merged with the Owners in December 2011. The

merger was kept in secret and mislead a lot of investors.

15. Therefore, on 12 Febuary the Charterers considered commencing the arbitration as

invalid because of appointing a non-existent party. Mr. John was appointed as an

arbitrator to this referral. On the same date, the Charterers addressed their Notice of

Appointment and Arbitration to the Owners as a legal successor of the Reliable Tankers

Inc. which included referral to arbitration in London as a result of breach of Charter Party.

Mr. John was again appointed as an arbitrator. The Owners were also informed about the

time-barred claims.


Page | 4

16. Nevertheless, the Owners in the mail from 24 February 2012 clumsily rebutted arguments

about invalidly commenced arbitration by invoking results of an universal succession or

alternatively a clear misnomer in their Notice of Appointment and Arbitration. Mr. Smith

was again appointed as an arbitrator. However, their action broke the time bar in Clause 4 of

the Super Charters’ standard terms and in any case was burden with the bad faith.

17. On 14 March 2012’ the Owners filed the Claim Submissions for second referral because of

which the Charterers submit combined submissions.

INTRODUCTORY REMARKS ON LEGAL ARGUMENTS AND APPLICABLE LAW

18. The Charterers and the Reliable Tankers Inc. entered into a Charter Party concerning the

Vessel able to load and transport bulk of crude oil on 19 November 2011, on an amended

ASBATANKVOY form (hereinafter: the Charter Party) subject of it was the Vessel owned by

Reliable Tankers Inc., flying a Bahamas’ flag and registered at the Port of Nassau, carrying

out the transportation of 260,000 MT of crude oil from BlueLand to IndigoLand, with the

stipulated freight respective to the cargo transported. The prearranged laycan was stipulated

for 5/6 December with the precondition for further specification of the exact date.

19. The parties have agreed in the Charter Party that any dispute of whatsoever nature, arising out

of or relating to their Charter Party, shall be put to ad hoc arbitration in London, United

Kingdom, thus agreeing to the law of England as the lex arbitri.1 Furthermore, the parties

agreed on the applicability of the English Arbitration Act 1996 (hereinafter: the Arbitration

Act) as far as procedure before the Tribunal is concerned. For that reason, when discussing

the conduct of the Parties, a reference to general principles of the Arbitration Act itself and to

general principles of the law is made, bearing in mind the international context of arbitration.2

1 ASBATANKVOY, Part II - clause 24.

2 Michael Mustill, Commercial arbitration, [2nd., Butterworths, 2001] pp. 66-82.


Page | 5

20. The Charterers submit the following claims and arguments in their support, to be considered

by the present Tribunal:

Commencing the arbitration proceedings in the name of Reliable Tankers Inc. was a

fundamental error,

The Reliable Tankers Inc. are liable for the breach of contractual relation which led to

the cancellation of the Charter Party,

The Owners’ claims are time-barred,

The Owner bears the responsibility of the arrest of the Vessel,

The freight stipulated in the Charter Party was not due and payable,

The Owners’ actions lead to subsequent damages for the Charterers.


Page | 6

I. THE TRIBUNAL SHOULD FIND NO GENUINE MISNOMER IN

COMMENCING THE ARBITRATION PROCEEDINGS IN THE NAME OF

THE RELIABLE TANKERS INC.

1. Bad faith should not be honored.

21. It should be held that the Owners as a legal successors of the Reliable Tankers Inc. acted to

the Charterers detriment and, accordingly, also to the detriment of the arbitration proceedings.

The Charterers represent a position that the conduct of the Owners falls within the meaning of

the term ‘bad faith’. It has been prescribed as malice in the context of personal spite or desire

to injure for improper reason.3 Moreover, the Charterers want to underline that, they relied on

the Reliable Tankers Inc. good reputation in their contractual relationships which was proven

by signing the Charter Party without the intermediary.4

22. The Owners’ had a duty to appoint a real counter party to the proceedings which was on

contrary not fulfilled. The Charterers were not aware, and had no obligation to be, of the

newspaper article at the time of its publication (3 January 2012), thus, the Notice of

Arbitration and Appointment from 28 January 2012 in the name of Reliable Tankers Inc. was

misleading and as a consequence caused delay of the proceedings.

II. THE TRIBUNAL SHOULD CONSIDER THE OWNER’S CLAIMS AS TIME

BARRED

1. Parties have the autonomy to agree about the time for commencement of the

arbitration.

23. The Tribunal should find that the parties voluntarily agreed on unilateral conditions regarding

commencing the arbitration which do not preclude a fully bilateral agreement constituting a

3

Audley Sheppard, English Arbitration Act (Chapter 23), Part I, The Arbitral Proceedings, Section 34

[Procedural and evidential matters], in: L. Mistelis (ed.), Concise International Arbitration [Kluwer Law

International, 2010], pp. 835-836. 4 Correspondence from the Super Charters Inc. to the Reliable Tankers Inc. from 10 October 2011.


Page | 7

contract to refer. Parties are free to do so according to the § 14 (1) of the Arbitration Act.

Consequently, in the conclusion of the Charter Party, the Reliable Tankers Inc. accepted, inter

alia, the time bar provision included as Clause 4 in the Charterers’ Standard Terms. As stated

by the ‘Waller L.J. in Harbour & General Works v Environment Agency’ case the application

of the principle of party autonomy means that the choice of the parties has to be respected.5

24. A time bar clause in the Charterers’ Standard Terms is unilateral6 and this fact does not

preclude its enforceability.7 Under English law, the lack of specific mutual consent to arbitrate

or litigate likewise does not invalidate unilateral option clauses. The Court of Appeal in the

‘Pittalis v. Sherefettinheld’ case held that the clause did constitute an arbitration agreement

supporting the unilateral options to arbitrate.8 Thus, the fact that the option is exercisable by

one of the parties is irrelevant. Parties have accepted the arrangement and there is no question

of any lack of mutuality because the arrangement suits both parties.9

25. The fulfillment of a condition is a jurisdictional barrier that must be crossed before the

Tribunal can hear the dispute.10

With respect to that the notification of a claim must be treated

as such a condition to commence the arbitration proceedings.11

The parties agreed that, certain

steps should be taken by certain dates, and, therefore, they would be held to their bargain.12

Accordingly, it should be held by the Tribunal that the Owners did not follow the contracted

5 See: Harbour & General Works Ltd. v. Environment Agency, [1999] Adj.L.R. 02/19.

6 WJ Alan and Co Ltd. v. El Nasr Export and Import Co., [1971] 1 Lloyd’s Rep 401. & Pittalis v.

Sherefettin,[1986] 1 QB 868. 7 Robert Merkin, Arbitration Law, [3rd., Informa Law, 2004], p. 482.

8 Also: Law Debenture Trust Corp. plc v. Elektrim Finance B.V., [2005] EWHC 1412 (Ch), 2 All ER

(Comm) 476. 9 Pittalis v. Sherefettin,[1986] 1 QB 868.

10 Cavinder Bull, ‘Commencing Arbitration’, in: Albert Jan van den Berg (ed), ‘International Arbitration: The

Coming of a New Age?’, ICCA Congress Series, Volume 17 ,Kluwer Law International, 2013, p. 149. 11

Clare Ambrose, Karen Maxwell, The Arbitration Act 1996 - London Maritime Arbitration, [1st., LLP, 1996],

p. 83. 12

Andrew Tweeddale, Karen Tweeddale, 'Commencement of Arbitration and Time-Bar Clauses', [Arbitration,

Vol. 75, No. 4, 2009], p. 485.


Page | 8

procedure for the commencement of arbitration, meaning that the Owners did not respect the

contractual condition precedent for commencing the arbitration. With regard to the

aforementioned Clause 4, the Owners had to notify a claim to the Charterers within 10 days of

the discharge or when discharge would have taken place and after that start the proceedings

within the next few days. This Clause clearly states two conditions for the commencement of

arbitration proceedings. The Charterers didn’t receive any notification of a claim before 28

January 2012.

26. Furthermore, there was even no offer for an amicable settlement which was possible at the

time and could suggest a notification of a claim. This comportment was based on the Owners’

bad faith of not acting according to the agreed standard terms. With regard to aforementioned,

the Charterers invoke the decision in the ‘Metafer Corp v. Pan Ocean Shipping Co.’ case

where the limitation of time by contract was held to bar the claims.13

Similarly to the current

dispute there was a fixture agreement according to which, the claims had to be referred to

arbitration within 30 days of completion of the voyage. The interpretation of this clause

requiring notice to be given within a certain number of days was that, if it was not given, the

claims were barred.

27. Even if the Tribunal finds that the condition for commencement is met, it is submitted that

there was a fundamental error in beginning the proceedings in the name of a non-existent

party. It was certified in the ‘Lazard Brothers & Company v. Midland Bank Ltd.’ that the

defect could not be amended to substitute different legal entity.14

Accordingly, the Notice of

Appointment and Arbitration from 28 January 2012 should be considered as null and void15

and hence, the arbitration as not commenced by the Owners properly precluding at the same

13

Metalfer Corp. v. Pan Ocean Shipping Co. Ltd., [1998] 2 Lloyd’s Rep 632. 14

Lazard Brothers & Company v. Midland Bank Ltd., [1993] AC 289 [HL], see also:

SEB Trygg Holding A.B. v. Manches, [2005] EWHC 35 Lloyd’s Rep 129 (Com). 15

David St John Sutton, Judith Gill, Matthew Gearing, Russell on Arbitration, [23rd., Sweet & Maxwell, 2007],

p. 191.


Page | 9

time mere misnomer.16

If the Tribunal accepted on the contrary, this could easily be corrected

by simple amendment as to the name of the party.17

However, the Tribunal should find that

the Owners intentionally started the proceedings on behalf of the Reliable Tankers Inc. and

because of that the error cannot be regarded as mere misnomer, thus cannot be corrected and

proceeding must be deemed as null and void.

28. Last but not least, the Charterers wants to underline that by considering a breach by the

Reliable Tankers Inc. [point III], it should be found that parties by the Charter Party could not

have intended limitations of Clause 4 to apply to breach of contract.18

Accordingly, the fact of

the breach diminished the importance of time-bar pre-condition and preclude benefiting from

it by the party being in the breach of contractual relation. As a consequence, commencing the

arbitration by the Charterers without fulfilling the procedure does not influence validity of the

referral from 12 February 2012.

III. THE TRIBUNAL SHOULD FIND A BREACH OF CONTRACTUAL

OBLIGATIONS COMMITED BY THE RELIABLE TANKERS INC. WHICH

LED TO THE SUBSEQUENT CANCELLATION OF THE CHARTER PARTY

BY THE CHARTERERS.

1. The Tribunal should find a breach of contractual obligations committed by the

Reliable Tankers Inc. which lead to the cancellation of the Charter Party by the

Charterers.

29. The Charter Party should be considered cancelled. As mentioned in the Statement of Facts,

submitted within the present Memorandum, the Voyage, subject to the presently regarded

Charter Party, was interrupted abruptly by an arrest imposed on the Vessel, upon its arrival at

16

Metalfer Corp. v. Pan Ocean Shipping Co. Ltd., [1998] 2 Lloyd’s Rep 632. 17

AMB Generali Holding A.G. v. SEB Trygg Liv Holding A.B., [2005] EWCA Civ 1237; [2006] 1 WLR 2276. 18

Robert Merkin, Arbitration Law, [3rd., Informa Law, 2004], p. 483.


Page | 10

the Bunker Port in Redland. The Reliable Tankers Inc. did not inform the Charterers about the

arrest of the Vessel, an act which should be regarded by the Tribunal as a breach in Reliable

Tankers’ obligation of disclosure implied in the Charter Party.19

After an enquiry was made

by the Charterers, the Reliable Tankers Inc., at first, reassured the Charterers that the arrest

would not affect the stipulated voyage. However, in later correspondence it became clear that

the former are incapable of dealing with the pending problem.20

Furthermore, the Reliable

Tankers Inc. proved to be unable to provide a renewed cancellation date and expected time of

arrival of the Vessel for the purposes of the Charter Party. In the light of the aforementioned

situation, the Charterers rejected the revision of the proposed laycan.

2. The Reliable Tankers Inc. were in breach of contractual obligations.

30. The arrest of the Vessel carrying out the Voyage under the present Charter Party is to be

regarded as an evident disturbance in the stipulated schedule of the Voyage, and furthermore,

a major impediment to her meeting the stipulated laycan of 5-6 December 2011. It is

important to note that, had the Reliable Tankers Inc. provided reasonable security, the arrest

could have been avoided. Following the decision, along with its respective reasoning, in

respect of the ‘Marbienes Compania Naviera S.A. v. Fervostaal A.G.’ case, 21

English courts

established the existence of an implied obligation upon the owner to exercise reasonable

diligence in ensuring the arrival of the vessel within the cancelling date. The latter has been

accepted despite the belief that cancelling clauses in general do not impose an absolute

obligation for the vessel to arrive by the cancelling date. Consequently, by not securing the

19

The Super Charters Company Single Voyage Charter Party Rider Clauses, ¶ 27: ETA, “Any changes which

affect Vessel’s ETA by 6 hours or more (3 hours if Vessel is within 24 hours of port) shall be advised to

Charterer immediately, with brief explanation.” 20

Correspondence from the Reliable Tankers Inc. to the Super Charters Inc. from 25 November 2011. 21

Marbienes Compania Naviera S.A. v. Fervostaal A.G., (‘The Democritos’), [1976] 2 Lloyd's Rep. 149 (C.A.).


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undertaken voyage, subject to the Charter Party, the Reliable Tankers Inc. committed a breach

in their contractual obligation to exert reasonable diligence on their part of the contract.

31. The Charterers consider that the offer to dispatch the sister-ship of the Vessel to carry out the

stipulated Voyage, once it was established the latter was arrested, cannot be regarded as a

valid action by the Reliable Tankers Inc. to redeem their fault for not ensuring the unimpeded

fulfillment of their contractual obligations. The Tribunal should note that the arrest of the

Vessel will irreversibly hinder the completion of the stipulated Voyage. The reason for such

contention is the lack of persuasion that the offered substitution would possibly provide the

timely conduct of the stipulated Voyage. Next, the fact that the offer in question was made

after the cancellation of the Charter Party was announced by the Charterers is to serve as

evidence of its ineptitude.22

Furthermore, the offer of the another ship, which had to begin its

approach voyage from that moment on, should be regarded by the Tribunal as evidence of the

Reliable Tankers Inc. inability to meet their obligations derived from the Charter Party.

3. The cancellation of the Charter Party.

32. In addition to the aforementioned breach of contractual obligation by the Reliable Tankers

Inc., the Tribunal should consider the noncompliance of the actions performed by Reliable

Tankers Inc. in regard of ETA clause included in the Charter Party. Thus, the Charterers look

forward to the present Tribunal to find their actions in regard of the delicate and unfortunate

situation which has arisen in the present case as correct and reasonable. The Charterers,

furthermore, consider that the inability of the Reliable Tankers Inc. to provide the necessary

securities to ensure the fulfillment of the Voyage, as well as to provide a revised laycan, was a

breach of their contractual obligations.

22

Correspondence from the Reliable Tankers Inc. to the Super Charters Inc. from 28 November 2011; where the

Notice of Cancellation was from 27 November 2011.


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33. The Charterers rejected the revision of the cancelling date and expected time arrival dates

proposed by the Reliable Tankers Inc, as the latter failed to provide specific dates, making it

practically impossible for a revision to be negotiated. Furthermore, by weighing the situation

in which the stipulated Vessel, and therefore the Charter Party in its entirety were, the

Charterers became aware of the improbability of the Voyage to be fulfilled by the Reliable

Tankers Inc. and had right to cancel the Charter Party. The decision of the Charterers is

supported by the decision of the Court of Appeal in ‘The Mihalis Angelos’ case where the

court held that the expected Ready to Load provision (which is considered the same as ETA

clause) is to be regarded as a condition of the contract, which allows the charterer to terminate

the charter party in case of the clause being breached by the owner. It is widely accepted in

English law that parties to a charter party, such as the present, are to stipulate for an ETA (and

also Estimated Ready to Load) clause to be included in the charter party. It has also been

agreed that should an ETA clause be included in the charter party, it creates for the charterer

the right to terminate the charter party and claim damages if the vessel fails to arrive by the

stipulated date.23

34. Furthermore, it should be noticed by the Tribunal that the cancellation of the Charter Party is

justified immediately when it became obvious that the Voyage could not meet conditions of

the Charter Party. In ‘The Baleares’24

case, the Court of Appeal stated that the owners are in

breach when it becomes clear that there is no reasonable prospect of the vessel being able to

perform the contemplated voyage.25

23

Maredelanto Compania Naviera S.A. v. Bergbau-Handel G.m.b.H., [1970] 2 Lloyd's Rep. 43 (C.A.).

Later, the assertion of the Court found in the Mihalis Angelos Case, stating that the charterer is entitled to the

right of anticipatory cancellation should it be found that the conduct of the voyage is in discordance with the

contractual stipulations, is confirmed by the Court of Appeal (Civil Division) in Georgian Maritime Corp v Sea

Land Industries (Bermuda) Ltd. [1998] C.L.C. 1395 24

Geogas S.A. v. Tranumo Gas Ltd., (‘The Baleares’), [1993] 1 Lloyd's Rep. 215. 25

Ibid.


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35. In addition, a brief analysis of the price rates of crude oil,26

the cargo stipulated to be

transported by the Vessel, served as a further reason for the Charterers to terminate the halted

Charter Party in order to consider alternative options. The latter was based on the arising

possibility of serious financial losses to be suffered due to the occurred delay. It is important

to note that such measures taken by the Charterers are not at all uncommon in the legal

practice, and have even been defended by the courts. Again in the ‘The Mihalis Angelos’ case,

Lord Denning stated that: ‘The charterers have the option of cancelling the contract as soon

as it becomes plain that the vessel cannot possibly be ready to load on or before [the

cancelling date]. This is a sensible interpretation: because, as a matter of commercial

convenience, it is better for both sides that, when it is obvious that the vessel will not arrive in

time, the charterer should be able to cancel. The charterer can then engage another vessel:

and the shipowner can use his ship elsewhere’.27

1. The Tribunal should regard the arrest of the Vessel as an unavoidable hindrance to

the fulfillment of the Charter Party for which the fault is to be borne by the Owners

as a legal successor of the Reliable Tankers Inc.

36. The Charterers believe that the Tribunal should find that the arrest is a consequence of

previous undertakings of the Reliable Tankers Inc. that created an unavoidable hindrance to

the completion of the present contract. The Charterers invoke the ‘Monroe Bros. v Ryan’

case28

and although the circumstances in the current dispute do not correspond to the ones

considered in mentioned case, the conclusion made by the Court of Appeal is relevant to the

matter of the arrest of the Vessel.

26

Spot Tanker Market Report. 27

Maredelanto Compania Naviera S.A. v. Bergbau-Handel G.m.b.H., [1970] 2 Lloyd's Rep. 43 (C.A.). 28

Monroe Brothers, Ltd. v. Ryan,[1935] 2 K.B. 28; See also: Blackgold Trading of Monrovia v. Almare S.p.A

Navigazione of Genoa, (‘The Almare Seconda’), [1981] 2 Lloyd's Rep. 433.


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37. In the ‘Monroe Bros v Ryan’ case29

it has been established by the Court that in case of a

charter party as the one in the present case, where the preliminary voyage was undertaken

upon the completion of a previous adventure, the party (the owners) ‘run the risk of the

engagements clashing with one another so as to prevent the performance of one or other of

their contracts, and they have to take the consequences by paying damages to the party whose

contract they, in the result, have failed to perform.’30

The assertion of the Court is with regard

to a situation in the cited case where due to delays in the prior voyage the vessel failed to meet

her stipulated ready-to-load date. For those reasons, the court adjudged a compensation to be

paid by the owners.

38. Consequently, the Charterers believe that the Tribunal should find that the arrest of the Vessel

which prevented the fulfillment of the Charter Party in question is in fact a failure on part of

the Reliable Tankers Inc. to perform their obligations of the Charter Party towards the

Charterers. Furthermore, based on the latter fault on part of the Reliable Tankers Inc., the

Tribunal should adjudge a compensation for damages to be paid by the Owners to the

Charterers.

IV. THE TRIBUNAL SHOULD FIND THAT THE FREIGHT STIPULATED IN

THE CONTRACT WAS NOT DUE AND PAYABLE AND THAT THE

RELIABLE TANKERS INC. ACTIONS LEAD TO SUBSEQUENT DAMAGES

FOR THE CHARTERERS.

1. Freight is not due and payable.

39. The freight clause in the Standard Terms of the Reliable Tankers Inc.31

is not binding upon

the Charterers, thus the Charterers ask the Tribunal to rule that the freight was deemed

29

Monroe Brothers, Ltd. v. Ryan,[1935] 2 K.B. 28. 30

Ibid., p. 38 31

Standard Terms of the Reliable Tankers Inc.; Clause 4.


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payable at the delivery of the cargo and, therefore not due and payable at the moment of the

cancellation. A contract needs to be construed in accordance with the intention of the parties

as determined objectively from the nature of the terms used and any other relevant evidence.32

The Charter Party states that freight is due at the delivery of the cargo. Taking this in

consideration, the Charter Party itself prevails over the Standard Terms of the Reliable

Tankers Inc.33

40. Even if the Tribunal finds that the Standard Terms are part of the Charter Party, the Charter

Party needs to be looked at as a whole in its context in construing individual provisions.34

Where the context of a contract is particular commercial field, the commercial realities and

usages will be considered in determining the natural meaning of the terms.35

At common law

there is a presumption that freight is payable only on the delivery of the goods to the owner.36

Therefore, the natural meaning of the terms of the contract would be that freight is payable at

the delivery of the cargo to the Charterers.

41. Furthermore, The Clause 4 of the Standard Terms of the Reliable Tankers Inc. is not an

express stipulation and is not drawn sufficient and clear. In the ‘De Silvale v. Kendall’ case

Lord Ellenborough stated that: ‘Under English law freight and wages do not become due until the

voyage has been performed. This can otherwise be agreed by a provision in the Charter Party by

express stipulation in such manner as to control the general operation of law’. 37

In this case there is

32

Cholmondeley v. Clinton, [1937] E.R. 527. & Mannai Investment Co Ltd. v. Eagle Star Life Assurance Co.

Ltd., [1997] A.C. 749. & Investors Compensation Scheme Ltd. v. West Bromwich Building Society, [1998] 1

W.L.R. 896. 33

Smith v. Lucas, [1880-81] L.R. 18 Ch. D. 531. 34

See: Hume v. Rundell, [1824] E.R. 311. & B. Richards, Devisee of John Richards, Deceased v. Bluck, 136 E.R.

1319. & James Reid and James Stewart v. William Blackedon Fairbanks, Jonathan Crane Allison, and David

Allison, 138 E.R. 1371.; ; In re: Strand Music Hall Co. Ltd., (1865) 55 ER 853. 35

Southland Frozen Meat & Produce Export Co. Ltd. v. Nelson Bros Ltd., [1898] A.C. 442.; see also: Antaios

Compania Naviera S.A. v. Salen Rederierna A.B. (‘The Antaios’), [1985] A.C. 191. 36

John F. Wilson, Carriage of Goods by Sea, [7th., Pearson, 2010], p. 289, see also: Stephen Girvin, Carriage of

Goods by Sea,[2nd., Oxford University Press, 2011], p. 337. 37

De Silvale v. Kendall, [1815] 4 M & S 37.










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no express stipulation. Referring to the ‘Lorna I’ case38

advanced freight provisions should be

drawn sufficient and clear. In ‘Robertsen v. French’ case the Court stated that in the absence

of a reason for ascribing a technical or other special meaning to a word, it is to be given the

meaning that it would naturally have in the ordinary English usage.39

42. With regard to the aforementioned, the sentence “lifting subjects” could be interpreted in

different ways. If it comes to the interpretation at the conclusion of the Charter Party,

Charterers argue that “lifting subjects” must be interpreted against the background of its

industry. Common practice is that this provision is used when actually lifting something from

the quayside into the vessel before the commencement of the voyage. In the current dispute

the Charter Party is for the transport of crude oil and it is, therefore, unusual to pay for freight

in advance.

43. However, in case the Tribunal finds that the freight must be seen as advanced freight, and that

the interpretation of ‘lifting subjects’ is the conclusion of the contract, the freight is still not

due and payable. When there is advanced freight, the sums are payable in the loading port.

Here, the Vessel never arrived at the loading port. The Vessel was on her way to the Redland

when the Charter Party was fixed. As a result, the Charterers interpreted the provision as if

freight was payable in the port of loading, since the Vessel never commenced the approach

Voyage.

44. The Clause 2 of the Standard Terms of the Reliable Tankers Inc. is misinterpreted by the

Owners.40

It provides cancellation of the Charter Party without either party being required to

act any further. It does not release either Party from liability as stated by the Owners.

38

Lorna I Compania Naviera General S.A v. Keramental Ltd.,[1983] 1 Lloyds Rep. 373. 39

Robertson v. French, [1803] 102 ER 779. 40

Standard Terms of the Reliable Tankers Inc.; Clause 2.


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However, if Clause 2 is a mutual relieve of obligations and liabilities, the Charterers were,

thereby released from any obligation to pay freight.

45. To the extent that the Tribunal finds that the Owners are released from liability, the Charter

Party should be rectified by reason of a common or unilateral mistake. There was no intention

on the side of the Charterers to accept the provision in which either Party would be released

from liability. The terms of Clause 2 must have been amended so as to displace the Owners’

usual regime of releasing them from liability.

2. The claim for damages.

46. The Charter Party is terminated by the Charterers because of negligence by the Reliable

Tankers Inc. The arrest could easily be avoided by granting a guarantee. However, as stated in

the Internal Note of the Reliable Tankers Inc.41

, they were unwilling to pay the bunker

supplier. They had no haste what so ever and no intention in providing a guarantee. If they

had done so, the Vessel would be released from the arrest, and would have proceeded to the

loading port on time. If the Vessel arrived on time the Charterers would not have been forced

to cancel the Charter Party.

47. The Reliable Tankers Inc. did not proceed to the port of loading with utmost dispatch and

therefore the Vessel could not meet its laycan. Since the Vessel’s laycan was not met, the

Charterers were allowed to cancel the Charter Party. The Charters ask the Tribunal to hold the

Owners as a legal successors of the Reliable Tankers Inc. liable for the damages occurred of

fixing another vessel.

41

Reliable Tankers Inc. Internal Note from 23 November 2011.


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3.. Further claim for the set-off damages.

48. The Charterers are entitled to and do set-off the damages that occurred.42

By the breach of the

Reliable Tankers Inc., the Charterers have suffered a loss. For reasons set out before the

Charterers had to fix another vessel. This resulted in an increase of the freight price of $US

824,000. The offered option of waiting for the sister vessel, was not a suitable one. As the

sister vessel would not meet the laycan of 5 December 2012, which would result in a delayed

arrival at the terminal. Since the terminal would be shut down due to maintenance, the risk

was too high to wait for a new laycan of the sistership. As a consequence, Charterers fixed

two other vessels. Because of the minor delay, the Charterers had to pay damages to the

Terminal of $US 100,000 for the late arrival and $US 300,000 for the loss.

49. In the light of the facts and arguments listed above the Charterers look forward to the Tribunal

to find their actions for the freight claim in the present case as correct and reasonable. The

Charterers reject the arguments of the Owners and state that they are not obliged to pay

freight under the Charter Party. The Charterers counterclaim $US 824,000 being the

difference between the charter freight and the amount payable under replacement fixtures by

the Charterers and the sums due and payable at the load port for the delayed arrival $US

100,000 and sums due and payable at the port of discharge $US 300,000.

V. REQUEST FOR RELIEF

On the basis of the foregoing arguments and the Charterers’ prior written submissions, the

Charterers’ respectfully requests the Tribunal

42

Colonial Bank (now bank of Boston Connecticut) v. European Grain & Shipping Ltd., (‘The Dominique’),

[1989] 1 Lloyds Rep. 436.


Page | 19

TO ADJUDGE AND DECLARE that:

a) there was no genuine misnomer in commencing the arbitration proceeding in the name of

the Reliable Tankers Inc.;

b) the stipulated fright is not due and payable;

c) the Owner’s claims are time barred and not meeting the conditions to commence the

arbitration;

d) the Owners as a legal successor of the Reliable Tankers Inc. are liable for the breach of

contractual relation which led to the cancellation of the Charter Party;

e) the Owners as a legal successor of the Reliable Tankers Inc. are liable for the arrest of the

Vessel which was an obstacle to fulfill the obligations concluded in the Charter Party;

f) the Owners as a legal successor of the Reliable Tankers Inc. are liable for the subsequent

damages for the Charterers.

And to ORDER the Owners to:

1. Pay the total amount of USD 6159368 consisting of:

a) USD 4,935,368,75 for the loss resulting in obligation (which is denied) to pay freight;


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b) USD 824,000 for the increase in freight for fixing another vessel;

c) USD 300,000 for sums due and payable at the port of discharge;

d) USD 100,000 for the sums due and payable at the load port for the delayed.

2. Pay the costs of arbitration, including the Charterers’ expenses for the legal representation;

3. Pay the Charterers’ simple or compound interest on any sum found owing to them at such a

rate and with such rests and for such a period as the Tribunal sees fit.

Rotterdam, 2 May 2014.

On behalf of the Super Charters Inc.:

ALEXANDER J. BARENDREGT ♦ EVANGELIA PATRIKALAKI

MARTA K. KOŁACZ ♦ NEDYALKO MINKOV ♦ SONJA VAN WIJK

memorandum for the super charters inc

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