1

NINETEENTH ANNUAL

INTERNATIONAL MARITIME LAW ARBITRATION MOOT 2018

THE UNIVERSITY OF HONG KONG

TEAM 15

MEMORANDUM FOR RESPONDENT

CHAN HIU IN FERRIDA

CHEUNG TSZ HIM RYAN

FUNG KING YIU

MA YU KIT

2

Table of Contents

ABBREVIATIONS 4

LIST OF AUTHORITIES 6

SUMMARY OF ARGUMENT 6

SUMMARY OF FACTS 9

ARGUMENTS ON JURISDICTION 11

I. THE TRIBUNAL HAS NO JURISDICTION TO HEAR THIS CASE 11

ARGUMENTS ON THE MERITS OF THE CLAIM 12

II. RESPONDENT IS NOT LIABLE FOR ANY DAMAGES 12

A. Damage to the Cargo was caused by the unforeseeable storm 13

B. Damage to the Cargo was caused by CLAIMANT’s own default 14

C. Damage to the Cargo occurred after delivery 16

D. The Cargo Damages, Replacement Payment and compensation to the Buyer for

inferior coffee beans are not recoverable 18

E. Compensation for late delivery is too remote to be recoverable 19

III. RESPONDENT’S LIABILITY IS LIMITED TO APPROXIMATELY USD400

UNDER ARTICLE 4(5) OF THE HAGUE RULES 20

IV. CLAIMANT IS NOT ENTITLED TO A MARITIME LIEN 23

A. Maritime lien recognised in Australia is limited 23

B. Necessaries cannot give rise to maritime lien under Australian or English Law 24

C. Maritime lien arising out of bottomry is not recognised under Australian law 25

D. English maritime lien arising out of bottomry is not recognised in Australia 25

E. There is no valid bottomry bond between the Parties 26

ARGUMENTS ON THE MERITS OF THE COUNTERCLAIM 28

V. CLAIMANT OWES DEMURRAGE UNDER THE CHARTERPARTY 28

VI. CLAIMANT IS LIABLE FOR THE AGENCY FEE AT SPECTRE 29

3

VII. CLAIMANT IS LIABLE FOR COST OF HULL REPAIR 30

REQUEST FOR RELIEF 31

4

ABBREVIATIONS

Buyer Coffees of the World Ltd

Cargo 70,000 k.g. native Cerulean coffee beans

Cargo Damages Value of the damaged Cargo in the amount of USD15,750,000

Charterparty The voyage charterparty between CLAIMANT and

RESPONDENT

CLAIMANT Cerulean Beans and Aromas Ltd

Contract The contract for sale of the Cargo between CLAIMANT as the

seller and the Buyer as the buyer

Expert Determination

Clause

Clause 27(d) – (g) of the Charterparty

Festival The coffee festival organized by the Buyer in Dillamond from

midday 29 July 2017 to midnight 31 July 2017

Hague Rules The International Convention for the Unification of Certain Rules

of Law Relating to Bills of Lading (Brussels 25 August 1924)

IMO The International Maritime Organisation

Parties CLAIMANT and RESPONDENT

Port Authority The port authority at Dillamond

Record 2018 International Maritime Law Arbitration Moot Scenario

Replacement Payment CLAIMANT’s payment for replacement coffee beans to the

Buyer in the amount of USD9,450,000

5

RESPONDENT Dynamic Shipping LLC

Settlement Payment The amount of USD5,000,000 paid by CLAIMANT to the Buyer

pursuant to a settlement agreement whereby the Buyer released

CLAIMANT from any claim it may have against it in relation to

CLAIMANT’s breach of the Contract

Senior Courts Act 1981 The Senior Courts Act 1981 of the United Kingdom (formerly

known as the Supreme Court Act 1981)

Vessel The Madam Dragonfly

WWD Weather Working Day

6

LIST OF AUTHORITIES

CASES AND ARBITRAL AWARDS REFERRED TO

AT PAGE:

Alexander v. Cambridge Credit Corporation Ltd. (1987) 9 NSWLR

310

14

Belvino Investments No 2 Pty Limited v Australian Vintage Ltd [2014]

NSWSC 978

12

Brogden v Metropolitan Ry (1877) 2 App. Cas. 666 22

Brown Boveri (Aust) Pty Ltd v Baltic Shipping Co [1989] 1 Lloyd’s

Rep. 518

21, 22

Burlington Resources, Inc. v Ecuador, Jurisdictional Decision, ICSID

Case No. ARB 08/5, 2 June 2010

12

Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1979] 1

WLR 401

22

Compania Naviera Azuero, S.A. v British Oil & Cake Mills Ltd [1957]

1 Lloyd’s Rep 312

29

Daewoo Heavy Industries Ltd (of Korea) v Klipriver Shipping Ltd (of

Cyprus) (The Kapitan Petko Voivoda) [2002] EWHC 1306 (Comm)

23

Dairy Containers Ltd v Tasman Orient Line CV (The Tasman

Discoverer) [2004] UKPC 22

21

Empresa Cubana Importadora de Alimentos Alimport v Iasmos

Shipping Co SA, The Good Friend [1984] 2 Lloyd’s Rep 586

19

Far East Chartering v Great Eastern Shipping [2012] EWCA Civ 180 17, 18

Fletcher Construction v MTN Group (NSWSC, 14 July 1997, Rolfe J) 12

Galoo Ltd. (in liquidation) and Others v Bright Grahame Murray (a

firm) and Another [1994] 1 WLR 1360

14

Guernsey v Jacobs UK Ltd [2011] EWHC 918 22

Hain Steamship Co v Tate & Lyle Ltd [1936] 2 All ER 597 23

Heskell v Continental Express (1949) 83 Ll.L.Rep. 438 19

Mackay v Dick (1881) 6 App Cas 251 12

March v E. & M.H. Stramare Pty. Ltd. (1991) 171 CLR 506 14

Monarch Steamship Co Ltd v Karlshamms Oljefabriker [1949] AC 19 13, 19

Nea Agrex SA v Baltic Shipping Co Ltd (The Agios Lazarus) [1976]

QB 933

21

Nepean Highway Pty Ltd v Abnote Australasia Pty Ltd (2009) 26 VR

551

12

7

New South Wales v Bannabelle Electrical Pty Ltd [2002] NSWSC 178 12

North West Leicestershire DC v East Midlands Housing Association

[1981] 1 WLR 1396

22

Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd & Ors (1993)

43 FCR 439

11

Parsons Corp & Ors v CV Scheepvaartonderneming (The Happy

Ranger) [2003] 1 CLC 122

23

Sailing Ship Garston Co v Hickie (1885) 15 QBD 580 28

Seabridge Shipping AB v AC Orssleff’s Eftf’s A/S (The Fjellvang)

[1999] 2 Lloyd’s Rep 685

21

Secured Income Real Estate (Australia) Ltd v St Martins Investments

Pty Ltd (1979) 144 CLR 596

12

Shell Oil Co v The Ship ‘Lastrigoni’ [1974] HCA 27 24

Smit International Singapore Pte Ltd v Kurnia Dewi Shipping SA (The

Kurnia Dewi) [1997] 1 Lloyd’s Rep 553

22

Stag Line v Foscolo Mango [1932] AC 328 23

Sulamérica Cia Nacional de Seguros SA and others v Enesa

Engelharia SA and others [2012] EWCA Civ 638

11

The Arpad (1934) 49 Ll. L. Rep. 313 20

The Atlas (1827) 2 Hagg 48 26, 27

The Emancipation 1 Wm. Rob. 124 27

The Halcyon Isle [1980] 2 Lloyd’s Rep 325 25, 26

The Heron II [1969] 1 AC 350 19

The James W. Elwell (1921) 8 L.L.Rep. 115 26, 27

The River Gurara (Owners of Cargo Lately Laden on Board) v

Nigerian National Shipping Line Ltd [1998] QB 610

21

The Rosa S [1989] QB 419 22

The Royal Arch (1857) Swab. 269 27

The Ship ‘Sam Hawk’ v Reiter Petroleum Inc. [2016] FCAFC 26 24, 25, 26

Toll Holdings Pty Ltd v Stewart (2016) 338 ALR 602 18

Transfield Shipping Inc v Mercator Shipping Inc [2009] 1 AC 61 13

Triarno Pty Ltd v Triden Constractors Ltd (1992) 10 BCL 305 12

Victoria Laundry v Newman [1949] 2 KB 528 19

1144 Nepean Highway Pty Ltd v Abnote Australasia Pty Ltd (2009) 26

VR 551 12

8

BOOKS REFERRED TO

AT PAGE:

Beale, Hugh, Chitty on Contracts (Sweet & Maxwell, 32nd ed, 2015) 23

Blackaby, Nigel, Constantine Partasides, Alan Redfern, and Martin

Hunter, Redfern and Hunter on International Arbitration (Oxford

University Press, 6th ed, 2015)

11, 12

Born, Gary, International Commercial Arbitration (Kluwer Law

International, 2nd ed, 2014)

11

Constant, Benjamin, The Law Relating to the Mortgage of Ships

(Syren & Shipping, 1920)

11, 28

Cooke, Julian Andrew Taylor, John D. Kimball, David Martowski

and LeRoy Lambert, Voyage Charters (Informa Law from

Routledge, 4th ed, 2014)

13, 14

Jackson, David, Enforcement of Maritime Claims (Informa Law from

Routledge, 4th ed, 2005)

25

Meeson, Nigel and John Kimbell, Admiralty Jurisdiction and

Practice (Informa Law from Routledge, 5th ed, 2018)

24, 25

Thomas, D. Rhidian, Maritime Liens (Stevens, 1980) 25

JOURNAL ARTICLES REFERRED TO

AT PAGE:

Poole, Jill, ‘Loss of Chance and the Evaluation of Hypotheticals in

Contractual Claims’ [2007] LMCLQ 63

13

STATUTES AND CONVENTIONS REFERRED TO

AT PAGE:

Australian Law Reform Commission Report 33, Civil Admiralty

Jurisdiction, 198

24

Marine Insurance Act 1909 (Cth) 30

Admiralty Act 1988 (Cth) 23, 24, 25, 26

Hague Rules 9, 20, 21

London Maritime Arbitrators Association Terms 2017 11

Admiralty Act 1973 (New Zealand) 25

Senior Courts Act 1981 (UK) 25

Arbitration Act 1996 (UK) 11

York/Antwerp Rules 1994 29, 30, 31

9

SUMMARY OF ARGUMENT

1. It is RESPONDENT’s case that: (1) The Tribunal does not have jurisdiction to hear this

case. (2) RESPONDENT is not liable for any damages. (3) Even if RESPONDENT is

liable for any damages, its liability is limited by reference to Article 4(5) of the Hague

Rules to approximately USD400. (4) CLAIMANT is not entitled to a maritime lien. (5)

CLAIMANT is liable to RESPONDENT’s counterclaim.

SUMMARY OF FACTS

2. On 18 July 2017, CLAIMANT entered into the Contract with the Buyer to deliver the

Cargo by 28 July 2017 for the Festival.

3. Under the Charterparty entered into between CLAIMANT and RESPONDENT on 22

July 2017, RESPONDENT agreed to ship the Cargo on board the Vessel from the Port

of Cerulean to the Port of Dillamond.

4. CLAIMANT also agreed, upon the request of RESPONDENT, to pay USD100,000

into a separate bank account prior to the voyage as security for the crew’s wages for the

shipment.

5. By a letter dated 22 July 2017, CLAIMANT reminded RESPONDENT of the urgency

of the shipment and the importance of timely arrival, and requested the use of containers

that would be entirely waterproof. By a letter of even date, RESPONDENT replied that,

‘We appreciate the commercial sensitivities and importance of the voyage and confirm

that your instructions will be followed at all times’.

6. The voyage was estimated to take 4 days and 8 hours. At or around 9 a.m. on 24 July

2017, the Vessel departed from Cerulean. Shortly thereafter, the Vessel’s

communications and satellite systems were knocked out by solar flares and changed

her course to Spectre because the only hardcopy maps available were for Spectre. Only

10

after 17 hours did the Vessel’s system reconnect. At or around 7:17 a.m. on 27 July

2017, the Vessel left the Port of Spectre and continued its journey to Dillamond.

7. At or around 4:30 p.m. on 28 July 2017, CLAIMANT’s staff attended the Port of

Dillamond and were ready to take delivery of the Cargo.

8. By an email at 4:58 p.m. on 28 July 2017, RESPONDENT informed CLAIMANT that

the Vessel could not proceed past its location because of a storm. RESPONDENT

subsequently informed CLAIMANT about a damage done to the hull of the Vessel

during the storm.

9. By an email dated 29 July 2017 at 8:58 a.m., RESPONDENT informed CLAIMANT

that the Vessel had been waiting at around 100 n.m. out from Dillamond for a berth

since 7 a.m. on 29 July 2017 upon instruction of the Port Authority, due to congestion

at the port caused by the storm.

10. By an email dated 29 July 2017 at 4:28 p.m., RESPONDENT informed CLAIMANT

that the Vessel was due to berth in 30 minutes and delivery of the Cargo would be

approximately 2 hours later. RESPONDENT also attached a barcode to the same email

for CLAIMANT to access the electronic storage facilities maintained by the Port

Authority for collection of the Cargo.

11. By an email dated 29 July 2017 at 8:42 p.m., RESPONDENT informed CLAIMANT

that the Cargo was available for collection. However, CLAIMANT could only take

delivery of the Cargo at around 1:17 p.m. on 31 July 2017.

12. By an email dated 1 August 2017 at 9:17 a.m., CLAIMANT informed RESPONDENT

that 3 out of 4 containers of the Cargo were water damaged. As a result, CLAIMANT

could only deliver one container to the Buyer. CLAIMANT purchased and delivered

replacement coffee beans as substitute to the Buyer.

13. By a letter dated 1 August 2017, the Buyer confirmed settlement with CLAIMANT

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under which CLAIMANT was released from liability for failure to deliver the Cargo

on time and for delivery of inferior replacement coffee beans in consideration of the

Settlement Payment.

14. CLAIMANT commenced the present arbitral proceeding on 11 August 2017 for a total

claim of USD30,200,000 and for a maritime lien over the Vessel. RESPONDENT

counterclaimed for demurrage and other damages.

ARGUMENTS ON JURISDICTION

I. THE TRIBUNAL HAS NO JURISDICTION TO HEAR THIS CASE

15. The Tribunal has no jurisdiction to hear this case until and unless a Master has given a

determination pursuant to the Expert Determination Clause on the various technical

matters in dispute, including the Vessel’s seaworthiness, the Vessel’s deviation from

the agreed route as well as the time, cause and the extent of damage to the Cargo.

16. Under the doctrine of competence-competence, the Tribunal has power to determine its

own jurisdiction1 by construing the arbitration agreement according to its governing

law.2 Clause 28 of the Charterparty provides for the law of New South Wales to be the

governing law.3 The intention of the Parties must be that the law of New South Wales

governs the validity and the proper construction of the arbitration agreement contained

in Clause 27 of the Charterparty, including the Expert Determination Clause.4

17. The Expert Determination Clause imposes a condition precedent to the commencement

1 Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on

International Arbitration (Oxford University Press, 6th ed, 2015) (‘Redfern and Hunter’), 322 & 345.

The Arbitration Act 1996 (UK), which applies to this arbitral proceeding by virtue of Clause 7(a) of the

London Maritime Arbitrators Association Terms 2017, also provides for the competence of the tribunal

to rule on its jurisdiction under section 30(1). 2 Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd ed, 2014), 1405-6;

Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd & Ors (1993) 43 FCR 439, 444. 3 Record 12. 4 Sulamérica Cia Nacional de Seguros SA and others v Enesa Engelharia SA and others [2012] EWCA

Civ 638, [26].

12

of arbitral proceedings, i.e. that all disputes as to the technical matters arising out of or

in connection with the Charterparty have been referred to expert determination by a

Master.

18. As explained below, various technical matters arose in this case, such as the

seaworthiness of the Vessel, the Vessel’s deviation from the agreed route as well as the

time, cause and the extent of damage to the Cargo. These matters clearly fall within the

wide definition of ‘technical matters’ in Clause 27 (g) of the Charterparty.

19. The Expert Determination Clause imposes an implied duty on the Parties to co-operate

to agree on a Master, such implication necessarily arising from the express agreement

to refer disputed technical matters to a Master.5 Further, there must be an implied

obligation on the Parties to do all that was reasonably necessary to secure an expert

determination, including accepting the terms of appointment and procedures for expert

determination as reasonably stipulated by the appointed Master.6 As such, it cannot be

void for uncertainty.

20. As the Parties has not yet sought an expert determination by a Master pursuant to the

Expert Determination Clause, the condition precedent to the commencement of arbitral

proceedings is not fulfilled and the claim is not properly submitted to arbitration.7

Accordingly, the Tribunal has no jurisdiction to hear this case.

ARGUMENTS ON THE MERITS OF THE CLAIM

II. RESPONDENT IS NOT LIABLE FOR ANY DAMAGES

5 New South Wales v Bannabelle Electrical Pty Ltd [2002] NSWSC 178, [67] - [70]. 6 Mackay v Dick (1881) 6 App Cas 251, 263; Secured Income Real Estate (Australia) Ltd v St Martins

Investments Pty Ltd (1979) 144 CLR 596, 607; Triarno Pty Ltd v Triden Constractors Ltd (1992) 10

BCL 305; Fletcher Construction v MTN Group (Supreme Court of New South Wales, 14 July 1997,

unreported); 1144 Nepean Highway Pty Ltd v Abnote Australasia Pty Ltd (2009) 26 VR 551, [29], [36]-

[38]; Belvino Investments No 2 Pty Limited v Australian Vintage Ltd [2014] NSWSC 978, [59] –[65]. 7 Redfern and Hunter, [5.93]; Burlington Resources, Inc. v Ecuador, Jurisdictional Decision, ICSID Case

No. ARB 08/5, 2 June 2010.

13

21. RESPONDENT is not liable for the damage to Cargo, as such damage to the Cargo was

caused by the unforeseeable storm (A), or was caused by CLAIMANT’s own default

(B) after delivery of the Cargo (C). As a result, RESPONDENT is not liable for the

Cargo Damages, Replacement Payment and compensation to the Buyer for providing

inferior replacement coffee beans (D). The compensation to the Buyer for late delivery

under the Contract is also not recoverable as it is too remote (E).

A. Damage to the Cargo was caused by the unforeseeable storm

22. It is submitted that RESPONDENT is not liable for damage to the Cargo because of the

impossibility to foresee the storm when the Vessel decided to deviate.

23. The English House of Lords in Monarch Steamship Co Ltd v Karlshamms Oljefabriker8

held that if a vessel delayed because of the vessel’s unseaworthiness, and subsequently

encountered any foreseeable event which would cause the diversion of the ship, the

shipowner would be held liable for damages caused by the delay. Whether the damages

was foreseeable is a question of fact.9

24. In particular, Lord Porter in Monarch Steamship was of the view that a delay itself ‘does

not expose goods to any greater risk of being carried away by a flood or struck by

lightning than if they had been carried with dispatch.’ Therefore, CLAIMANT must

prove that the breach, namely unseaworthiness, is an ‘effective cause’ 10 of the

encountering of the storm which led to the damage to the Cargo and delay in delivery.

25. An effective cause is to be contrasted with the mere provision of the opportunity or

occasion for loss to be suffered.11 Whether a breach of duty was the effective cause of

8 [1949] AC 196 (‘Monarch Steamship’). 9 Monarch Steamship, 223; Transfield Shipping Inc v Mercator Shipping Inc [2009] 1 AC 61, 70. 10 Monarch Steamship, 212; Jill Poole, ‘Loss of Chance and the Evaluation of Hypotheticals in

Contractual Claims’ [2007] LMCLQ 63; Julian Cooke, Andrew Taylor, John D. Kimball, David

Martowski and LeRoy Lambert, Voyage Charters (Informa Law from Routledge, 4th ed, 2014) (‘Cooke’),

[21.41]. 11 Galoo Ltd. (in liquidation) and Others v Bright Grahame Murray (a firm) and Another [1994] 1 WLR

1360; Cooke, [21.41].

14

the loss or merely the occasion for the loss was to be determined by applying common

sense to the facts of each case.12

26. In the present context, the Vessel deviated to Spectre due to the broken satellite system

and absence of maps.13 Applying the common sense approach, it is indisputable that

the unseaworthiness merely provided an occasion for the Vessel to encounter the ‘once

in a life time’ storm14 which was only picked up by the radar 30 minutes before it hit,15

but never (and could not have) caused such loss per se. The storm was an entirely

unforeseeable event at the time when the Vessel deviated due to the alleged

unseaworthiness which broke the chain of causation.

27. This analysis is consistent with the expert opinion which stated that damage to the

Cargo occurred due to “the combination of prolonged use of the sealant and

unprecedented rainfall” 16 . Therefore, it is the unforeseeable storm which caused

damage to the Cargo, and RESPONDENT is not liable to damage to the Cargo because

of the Vessel’s unseaworthiness.

B. Damage to the Cargo was caused by CLAIMANT’s own default

28. Alternatively, even if the storm did not break the chain of causation, it is submitted that

the Cargo was damaged only because CLAIMANT failed to collect the Cargo at an

earlier time. Unseaworthiness was not the “effective cause” of CLAIMANT’s said

failure, therefore did not cause the damage to the Cargo.

29. On 28 July 2017 at 4:30 p.m., CLAIMANT’s staff had been waiting at the Port of

Dillamond to take delivery of the Cargo.17 The storm then hit Dillamond at or around

12 Alexander v. Cambridge Credit Corporation Ltd. (1987) 9 NSWLR 310, 316; March v E. & M.H.

Stramare Pty. Ltd. (1991) 171 CLR 506, 515; Galoo Ltd. (in liquidation) and Others v Bright Grahame

Murray (a firm) and Another [1994] 1 WLR 1360, 1374. 13 Record 19. 14 Record 21. 15 Record 19. 16 Record 43. 17 Record 19.

15

5 p.m. on the same day.18 The port was then closed for 12 hours19 and opened again on

29 July 2017 at or around 5 a.m. after the storm.

30. In an email dated 29 July 2017 at 7:04 a.m., CLAIMANT stated that, ‘Our guys waited

all night in pouring rain. Still no ship?’20 Therefore, CLAIMANT’s staff stayed in the

Port of Dillamond throughout the storm even though the port was closed.

31. By an email dated 29 July 2017 at 8:42 p.m., RESPONDENT informed CLAIMANT

that the Cargo was available for collection.21 The Cargo was damaged in the 24 hours

from 4:30am on 30 July 2017 due to the leakage of the sealant applied onto the

containers storing the Cargo.22

32. The only reasonable inference is that if CLAIMANT had collected the Cargo and taken

the Cargo from the containers within around eight hours between 8:42 p.m. on 29 July

2017 and 4:30 a.m. on 30 July 2017, damage to the Cargo must not have occurred.

33. CLAIMANT only collected the Cargo at 1:17 p.m. on 31 July 2017 due to the alleged

reason of ‘congestion at the port’ caused by the storm impeding CLAIMANT’s access

to the Cargo. 23 It is submitted that it was CLAIMANT’s default, instead of the

‘congestion at the port’, that caused CLAIMANT’s failure to collect the Cargo by 4:30

a.m. on 30 July 2017:

1) ‘Congestion at the port’ must refer to the traffic congestion near the port as a

result of flooding near the port.24 Had CLAIMANT arranged its staff to stay at

the Port of Dillamond until collection of the Cargo, the traffic congestion would

not have impeded CLAIMANT’s access to the Cargo in any way. CLAIMANT

18 Record 19. 19 Record 21. 20 Record 20. 21 Record 24. 22 Record 43. 23 Record 24. 24 Record 36.

16

gave no reason whatsoever as to why its staff, who stayed at the Port of Dillamond

throughout the storm and during closure of the port, did not stay at the port until

8:42 p.m. on 29 July 2017 when the Cargo became available for collection;

2) Alternatively, if ‘congestion at the port’ refers to the logistic congestion as a result

of a large number of vessels that have been delayed by the storm arriving at the

port in the same period, 25 it is submitted that, had CLAIMANT’s staff been at

the port ready for collection of the Cargo at 8:42 p.m. on 29 July 2017,

CLAIMANT must have obtained access to the Cargo within 8 hours before 4:30

a.m. on 30 July 2017.

34. Applying the above-mentioned common sense approach in determining whether a

breach is effective cause of damages,26 it is submitted that the unseaworthiness could

not have been an effective cause of CLAIMANT’s own default. Therefore,

RESPONDENT is not liable for the damage to the Cargo which flowed from

CLAIMANT’s failure to collect the Cargo.

C. Damage to the Cargo occurred after delivery

35. The water damage to the Cargo occurred from 4:30 a.m. on 30 July 2017, after

RESPONDENT delivered the Cargo to CLAIMANT at 12:02 a.m. on 30 July 2017.

RESPONDENT is thus not liable for such post-delivery damage to the Cargo.

36. It is trite that when the Cargo was carried by RESPONDENT, it was subject to a

bailment in favour of CLAIMANT. Such bailment was terminated upon delivery of the

Cargo. RESPONDENT is thus not liable for any damage to the Cargo which occurred

after delivery.

37. Delivery is effected when the shipowner relinquishes all its power to compel any

25 Record 25. 26 See Part II.

17

physical dealing with the cargo which can prevent the consignee from obtaining

possession of the cargo.27 This may be achieved, as the English Court of Appeal held

in Far East Chartering, by the shipowner’s surrender of possession of cargo to the port

authority, with an irrevocable delivery order to the port authority instructing it to allow

the consignee only to take possession of the cargo.28

38. It is submitted that the issuance of the barcode in this case is materially similar to the

irrevocable delivery order in Far East Chartering. Since the barcode, as a document

issued by the Port Authority,29 expressly stated that delivery of the barcode constituted

delivery of the Cargo from RESPONDENT to CLAIMANT,30 an objective reading of

the document would indicate that it was the intention of RESPONDENT and the Port

Authority that this was an irrevocable instruction from RESPONDENT to allow

CLAIMANT only to take possession of the Cargo.

39. RESPONDENT thus had relinquished all its power to compel physical dealing with the

Cargo by discharging the Cargo into the Port Authority’s electronic storage facilities

accessible by the barcode issued by RESPONDENT to CLAIMANT31 and making the

barcode usable by CLAIMANT at 12:02 a.m. on 30 July 2017.32 Delivery was thus

effected at 12:02 a.m. on 30 July 2017.

40. The fact that RESPONDENT could use the barcode to re-enter the electronic storage

facilities and take possession of the Cargo33 does not mean that RESPONDENT still

retained some power to compel physical dealing with the Cargo:

1) When the shipowner tries to relinquish all its power to compel physical dealing

27 Far East Chartering v Great Eastern Shipping [2012] EWCA Civ 180 (‘Far East Chartering’), [45]. 28 Far East Chartering, [45]. 29 PO2, [16]. 30 Record 23. 31 Record 22-23; PO2, [16]-[18]. 32 Record 23. 33 PO2, [17].

18

with the cargo by discharging the cargo into a place, without an irrevocable

instruction to a third party in charge of such place to allow only the consignee to

take possession of the cargo, the shipowner can only be considered devoid of any

power to compel physical dealing with the cargo if the place is accessible only by

the consignee;34

2) On the contrary, when the shipowner tries to relinquish all its power to compel

physical dealing with the cargo by surrendering possession of cargo to a third

party, no more should be required than an irrevocable instruction from the

shipowner to such third party to allow the consignee only to take possession of

the cargo to the exclusion of even the shipowner.35 Thus whether the shipowner

could take possession of the cargo after issuance of such irrevocable instruction

is immaterial in this case, other than that RESPONDENT’s taking possession of

the Cargo after issuance of the barcode would constitute conversion of the Cargo.

41. Since the water damage to the Cargo took place from 4:30 a.m. on 30 July 201736 after

delivery and the termination of the bailment relationship, RESPONDENT is not liable

for the damage to the Cargo.

D. The Cargo Damages, Replacement Payment and compensation to the Buyer

for delivery of inferior replacement coffee beans are not recoverable

42. As RESPONDENT is not liable for the damage to the Cargo, loss arising from such

damage is not recoverable against RESPONDENT.

43. The Cargo Damages is a direct loss arising from the damage to the Cargo,37 and thus it

is not recoverable.

34 Toll Holdings Pty Ltd v Stewart (2016) 338 ALR 602. 35 Far East Chartering, [45]. 36 Record 43. 37 Record 30. See also Empresa Cubana Importadora de Alimentos Alimport v Iasmos Shipping Co SA,

The Good Friend [1984] 2 Lloyd’s Rep 586.

19

44. The Settlement Payment includes compensation to the Buyer for CLAIMANT’s

delivery of inferior coffee beans as replacement for three quarters of the Cargo.38

Therefore, part of the Settlement Payment is a consequential loss arising from the

damage to the Cargo, and is thus not recoverable.

45. The Replacement Payment is expenses incurred in CLAIMANT’s attempt to mitigate

the above-mentioned part of the Settlement Payment.39 However, CLAIMANT was

under no duty in the first place to mitigate such part of the Settlement Payment, which

has been submitted to be not recoverable. Accordingly, the Replacement Payment

cannot be recoverable as mitigation expenses or at all.

E. Compensation to the Buyer for late delivery under the Contract is too remote

to be recoverable

46. The only item of damages unrelated to the damage to the Cargo is the remaining part

of the Settlement Payment reflecting compensation to the Buyer for late delivery. It is

submitted that this item of damages is too remote to be recoverable.

47. Carriers of goods are distinguishable from sellers of goods carrying on the same trade

as the charterer and are assumed to be limited in their knowledge of the practices and

exigencies of the trade of the charterer. 40 Therefore any sub-contract entered into by

the charterer with third party buyers over the goods is deemed outside of the

contemplation of the carrier when entering into the charterparty, regardless of whether

the carrier had knowledge of any such sub-contract.41

48. Accordingly, despite RESPONDENT’s knowledge of the Contract at the time of

38 Record 29. 39 Record 30; Record 37-38, [8] – [10]. 40 Victoria Laundry v Newman [1949] 2 KB 528, 536–537; Monarch Steamship, 216 & 222; The Heron

II [1969] 1 AC 350, 424. 41 The Arpad (1934) 49 Ll. L. Rep. 313; Heskell v Continental Express (1949) 83 Ll.L.Rep. 438, 459-

460.

20

entering into the Charterparty,42 the Contract is deemed outside of the contemplation of

RESPONDENT at the time of entering into the Charterparty. The part of the Settlement

Payment reflecting compensation to the Buyer for late delivery, being consequential

loss in relation to the Contract, is thus too remote to be recoverable.

49. Further or alternatively, compensation to the Buyer for delivery of inferior replacement

coffee beans and the Replacement Payment are also too remote to be recoverable. The

former is too remote for the same reasons mentioned above. The latter, as explained

above, is an attempt to reduce the compensation payable to the Buyer for

CLAIMANT’s failure to deliver three quarters of the Cargo. In other words, this

payment is CLAIMANT’s attempt to mitigate the consequential loss in relation to the

Contract. Since such consequential loss is not recoverable, CLAIMANT was under no

duty to mitigate in the first place, and thus the Replacement Payment cannot be

recoverable as mitigation expenses or at all.

III. RESPONDENT’S LIABILITY IS LIMITED TO APPROXIMATELY

USD400 UNDER ARTICLE 4(5) OF THE HAGUE RULES

50. Clause 28 of the Charterparty incorporates therein Article 4(5) of the Hague Rules

without qualification by Article 9 of the Hague Rules, which limits the liability of

RESPONDENT to the value of 100 pounds sterling at the time of delivery per package

or unit. It is submitted that despite any deviation of the Vessel, RESPONDENT’s

liability, if any, is limited by the Parties’ agreement to 3 packages for the purpose of

Article 4(5), which comes to around USD400.

51. Clause 28 of the Charterparty incorporates Article 4(5) of the Hague Rules by expressly

42 Record 2.

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incorporating ‘Clause Paramount: Owners to have benefit of Article 4(5)’.43 Under

Article 4(5) of the Hague Rules, the carrier shall not in any event be liable for any loss

or damage to or in connection with the Cargo in an amount exceeding 100 pounds

sterling per package or unit. CLAIMANT’s claim totalling USD30,200,000 for the

Cargo Damages, Replacement Payment and Settlement Payment, are allegedly loss or

damage to or in connection with the Cargo. Thus the claim is subject to the limit of

liability under Article 4(5).

52. Article 4(5) as incorporated into the Charterparty is not subject to any qualification by

Article 9 of the Hague Rules which provides for the monetary units in Article 4(5) as

gold value.44 Clause 28 of the Charterparty merely incorporates Article 4(5) instead of

incorporating the Hague Rules in its entirety. 45 Accordingly, the limit of

RESPONDENT’s liability under Article 4(5) is 100 pounds sterling per package or unit.

53. Parties could agree on the identity of what is a relevant ‘package or unit’ under Article

4(5)46 and such agreement would not be rendered null and void under Article 3(8) of

the Hague Rules as Article 3(8) is not incorporated into the Charterparty. The

description of the quantity of the Cargo as ‘4 containers’ under Item 4 of the

Charterparty constitutes the Parties’ agreement that the relevant ‘package or unit’ under

Article 4(5) is a container:

1) Unlike a description of the quantity of the cargo in a bill of lading which is merely

evidence of the fact of loading the cargo as described,47 a description of the

43 Nea Agrex SA v Baltic Shipping Co Ltd (The Agios Lazarus) [1976] QB 933; Seabridge Shipping AB

v AC Orssleff’s Eftf’s A/S (The Fjellvang) [1999] 2 Lloyd’s Rep 685. 44 Brown Boveri (Aust) Pty Ltd v Baltic Shipping Co [1989] 1 Lloyd’s Rep. 518; Dairy Containers Ltd v

Tasman Orient Line CV (The Tasman Discoverer) [2004] UKPC 22, [11].

45 Dairy Containers Ltd v Tasman Orient Line CV (The Tasman Discoverer) [2004] UKPC 22. 46 River Gurara (Owners of Cargo Lately Laden on Board) v Nigerian National Shipping Line Ltd [1998]

QB 610.

47 The River Gurara (Owners of Cargo Lately Laden on Board) v Nigerian National Shipping Line Ltd

[1998] QB 610.

22

quantity of the Cargo in the Charterparty does not just serve as evidence that the

Cargo as described had been loaded onto the Vessel, but as the Parties’ agreement

that the quantity of the Cargo was 4 containers. This reflected the Parties’

intention that a container is the relevant ‘package or unit’ under Article 4(5);

2) The Charterparty sent by CLAIMANT to RESPONDENT on 22 July 2017 is an

offer by CLAIMANT. By requesting a variation of one of the terms of the offer,48

RESPONDENT had in effect rejected CLAIMANT’s offer49 and made a counter-

offer with the description of the quantity of the Cargo under Item 4 of the

Charterparty as ‘4 containers’. 50 CLAIMANT accepted the counter-offer by

conduct including consigned the Cargo to RESPONDENT at the Port of Cerulean

on 24 July 2017. At no time did CLAIMANT communicate to RESPONDENT

any objection to the request for variation.51

54. Accordingly, the applicable limit of liability under Article 4(5) is 100 pounds sterling

per container. Taking the value of sterling at the time of delivery,52 i.e. 30 July 2017,53

as three containers were damaged,54 the limit of liability under Article 4(5) is around

USD400.

55. RESPONDENT’s entitlement to rely on Article 4(5) is not affected by any deviation of

the Vessel:

1) As a repudiatory breach of a charterparty, the charterparty may be terminated,

hence depriving the shipowner of the protection of limitation clauses thereunder

48 Record 14. 49 Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1979] 1 WLR 401; North West

Leicestershire DC v East Midlands Housing Association [1981] 1 WLR 1396. 50 Guernsey v Jacobs UK Ltd [2011] EWHC 918 (TCC), [45]. 51 Brogden v Metropolitan Ry (1877) 2 App. Cas. 666; Smit International Singapore Pte Ltd v Kurnia

Dewi Shipping SA (The Kurnia Dewi) [1997] 1 Lloyd’s Rep 553. 52 The Rosa S [1989] QB 419; Brown Boveri (Australia) Pty. v. Baltic Shipping [1989] 1 Lloyd’s Rep

518. 53 See Part III.B. 54 Record 44.

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if the charterer accepts the repudiation.55 CLAIMANT has elected not to accept

repudiation, but treated the Charterparty as still subsisting, as CLAIMANT

insisted that RESPONDENT should complete the voyage and deliver the Cargo

at the Port of Dillamond after being informed of Vessel’s deviation to the Port of

Spectre. 56 Accordingly, the Charterparty did not come to an end and the

protection of Article 4(5) as incorporated into the Charterparty remains available

to CLAIMANT.

2) Further or alternatively, Article 4(5) expressly provides the carrier with the

protection ‘in any event’. This means that RESPONDENT is protected

irrespective of the seriousness of any breach of the Charterparty on

RESPONDENT’s part.57 Thus even if there were any wrongful deviation, this

would not deprive RESPONDENT of the protection under Article 4(5).

IV. CLAIMANT IS NOT ENTITLED TO A MARITIME LIEN

56. CLAIMANT is not entitled to any maritime lien arising out of necessaries or bottomry

under Australian law. Alternatively, any foreign maritime lien arising out of bottomry

under the English law is not recognised in Australia.

A. Maritime lien recognised in Australia is limited

57. Section 15(2) of the Commonwealth Admiralty Act 1988 (‘the Admiralty Act’)

provides that a maritime lien includes, inter alia, a lien for damage done by a ship, and

wages of the master, or of a member of the crew, of a ship.

58. In the Australian Law Reform Commission Report 33, Civil Admiralty Jurisdiction,

55 Hain Steamship Co v Tate & Lyle Ltd [1936] 2 All ER 597; Stag Line v. Foscolo Mango [1932] AC

328, 347. 56 Record 18; Hugh Beale, Chitty on Contracts (Sweet & Maxwell, 32nd ed, 2015), [24-003]. 57 Daewoo Heavy Industries Ltd (of Korea) v Klipriver Shipping Ltd (of Cyprus) (The Kapitan Petko

Voivoda) [2002] EWHC 1306 (Comm); Parsons Corp & Ors v CV Scheepvaartonderneming (The Happy

Ranger) [2003] 1 CLC 122.

24

1986 (‘the ALRC Report’), upon which the Admiralty Act was based, the Commission

rejected the possibility of there being new maritime liens created other than the

established category before there is agreement at the international level on the proper

scope of maritime liens.

59. The Commission’s view was echoed by the landmark decision of The Ship ‘Sam Hawk’

v Reiter Petroleum Inc,58 in which the Full Court of Federal Court of Australia laid

down a two-step approach and decided that only foreign right which would be, or is

sufficiently analogous to, a maritime lien recognised by Australian law could be

recognised under section 15 of the Admiralty Act.

B. Necessaries cannot give rise to maritime lien under Australian or English Law

60. Necessaries is defined as ‘whatever is fit and proper for the service on which a vessel

is engaged, whatever the owner of that vessel, as a prudent man, would have ordered,

if present at the time’.59 The Full Court of Federal Court of Australia in The ‘Sam Hawk’

held that English law and Australian law do not recognise a maritime lien arising out

of the supply of necessaries.60 Moreover, English law requires a bottomry bond or

instrument of hypothecation before such a right would be recognised.61 The majority

arrived at such conclusion with emphasis on legal policy and the importance of certainty

in commercial context.

1. In this case, the subject matter in question, namely the USD100,000 paid by

CLAIMANT into the trust account as security for the wages of the crew,62 would

constitute the supply of necessaries.63 No maritime lien could arise on such ground.

58 [2016] FCAFC 26 (The ‘Sam Hawk’). 59 Nigel Meeson and John Kimbell, Admiralty Jurisdiction and Practice (Informa Law from Routledge,

5th ed, 2018) (‘Meeson’), 83 [2.172]. 60 See also Shell Oil Co v The Ship ‘Lastrigoni’ [1974] HCA 27. 61 The ‘Sam Hawk’, [112]. 62 Record 1. 63 D. Rhidian Thomas, Maritime Liens (Stevens, 1980) (‘Thomas’), 216-217 [389].

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C. Maritime lien arising out of bottomry is not recognised under Australian law

61. The unanimous view of scholars and courts across jurisdictions is that bottomry is

obsolete.64 In the words of Thomas, ‘in a world of improved communication and the

transnational spread of financial facilities the inevitable consequence has been a

substantial decline in the occasions when bottomry bonds are resorted to, and they

consequently represent ‘a mode of raising money out of common use at the present day

and unfamiliar in current practice’.65

62. Moreover, bottomry is the only maritime lien recognised in the law before the Act was

passed that is not mentioned in section 15(2) of the Admiralty Act. The Commission

had made the deliberate choice of excluding bottomry and only kept the four more

significant categories of lien in the Admiralty Act. The legislative intention behind

section 15(2) must be that bottomry no longer existed as a basis for maritime lien.66

63. To recognise the obsolete bottomry as giving rise to maritime lien would in effect be

creating a new maritime lien, which could not have been encouraged by the

Commission and also the Full Court of Federal Court of Australia.

D. English maritime lien arising out of bottomry is not recognised in Australia

64. Unlike the Admiralty Act, the UK counterpart which governed the admiralty

jurisdiction, namely the Senior Courts Act 1981, did not provide a list of categories of

lien. The Privy Council in The Halcyon Isle67 recognised that as a matter of common

law, bottomry can give rise to maritime claims.

65. However, even if there was a valid bottomry under English law, it could not have

satisfied the test laid down in The ‘Sam Hawk’ as being enforceable in Australia. The

64 See The Halcyon Isle [1980] 2 Lloyd’s Rep 325; David Jackson, Enforcement of Maritime

Claims (Informa Law from Routledge, 4th ed, 2005) [2.96]; The ‘Sam Hawk’; Meeson, 210-211 [10.4.3]. 65 The ‘Sam Hawk’, [372]. 66 Cf Section 2 of the New Zealand Admiralty Act 1973, where bottomry is still specified to give rise to

a maritime lien. 67 [1980] 2 Lloyd’s Rep 325.

26

only recognised categories of lien in Australia would be those listed in section 15(2) of

the Admiralty Act, and bottomry was not included. 68 Hence, it is impossible for

bottomry to be a foreign maritime lien which would be, or is sufficiently analogous to,

a maritime lien recognised by Australian law.

E. There is no valid bottomry bond between the Parties

66. In any event, no maritime lien can arise as there is no valid bottomry bond between the

Parties.

67. A valid bottomry bond depends upon a twofold necessity, namely: (1) the necessity to

obtain funds for purposes of the adventure; and (2) the necessity of obtaining them by

bottomry because they cannot be obtained in any other way.69 Moreover, there must

also be the assumption of a maritime risk on the part of the lender.70 It means that

payment of the money advanced is conditional upon the safe arrival of the ship, and

that the lender expects to lose his money if the ship is lost in the course of the voyage

by any of the perils.71

68. The burden of proof is on CLAIMANT to show that all elements are present, in

particular under the second limb of necessity, i.e. the absence of any feasible alternative

source of finance or credit other than the bottomry bond.72 In this case, RESPONDENT

in fact borrowed money by way of a debt, or at most a Quistclose trust on personal

credit. There is no valid bottomry bond.

69. Further, CLAIMANT had never assumed maritime risk. CLAIMANT paid the funds

prior to the voyage 73 and they expected to ‘receive the money back once

68 See Part VI.A. 69 The ‘Atlas’ (1827) 2 Hagg 48. 70 Thomas, 220 [394]. 71 The ‘James W. Elwell’ (1921) 8 Ll.L.Rep. 115. 72 Thomas, 219 [392]. 73 Record 1.

27

[RESPONDENT] has paid the crew.’74 There was no evidence indicating any intention

of CLAIMANT that RESPONDENT should only pay the crew after the completion of

voyage. Assuming that RESPONDENT obtained outside funds before the voyage

completed and paid the crew immediately, CLAIMANT would have demanded the

USD100,000 back before the Vessel arrived Dillamond. Therefore, there can be no

bottomry when CLAIMANT claimed a right of payment whether or not the ship

successfully completed the specified voyage.75

70. In terms of formality, the English Courts held that courts would only construe the

written instrument by their contents alone to decide whether a bottomry bond is valid.76

It is submitted that the letter dated 19 July 201777 would not satisfy the formality of a

bottomry bond as the wordings did not manifest an express or implied intention to

hypothecate the res for the sum of money advanced.78

71. Firstly, the said letter was only internal communication between the General Counsel

and Managing Director of CLAIMANT discussing the loan arrangement. No other

evidence available could be said to be a bottomry bond. Secondly, the only sentences

that could be said to have pointed to the intention of the Parties are ‘…all they have

asked … is that we pay the crew’s wages into a separate Bank account prior to the

voyage as the crew will not sail before this occurs. We will need to pay USD100,000’

and ‘…we will of course take steps to ensure our interests are adequately protected and

that we receive the money bank once [RESPONDENT] has paid the crew. Our funds

will really be used as security by the crew’. However, this sentence hardly contained

some of the prerequisites of a bottomry bond, namely the name of the Vessel, the

74 Record 1. 75 Thomas, 220 [395]; The ‘Atlas’ (1827) 2 Hag. Adm. 48; The Royal Arch (1857) Swab. 269. 76 The Emancipation 1 Wm. Rob. 124, 128; The ‘James W. Elwell’ (1921) 8 Ll.L.Rep. 115, 117. 77 Record 1. 78 Thomas, 222 [398].

28

hypothecation of the res, and the assumption of maritime risk.79

ARGUMENTS ON THE MERITS OF THE COUNTERCLAIM

V. CLAIMANT OWES DEMURRAGE UNDER THE CHARTERPARTY

72. CLAIMANT failed to take charge of the discharging operation. As a result,

RESPONDENT lost the use of the Vessel and the financial benefit derived therefrom

for 5 hours. The Parties agreed that CLAIMANT would bear the risk of such delay in

Clause 9 of the Charterparty by agreeing to pay to RESPONDENT demurrage at a rate

of USD20,000 per hour where the discharging operation fails to complete within the

permitted laytime.80 CLAIMANT now seeks to avoid this commitment.

73. Under Clause 8(c)(ii) of the Charterparty, the permitted laytime for discharging is 0.5

WWD, calculated from when the Vessel arrives at the discharge port until all Cargo has

been discharged. 81

74. At about 7 a.m. on 29 July 2017, the Vessel became an arrived ship when she arrived

at the location designated by the Port Authority.82 Whilst the Vessel was at some

distance from the Port of Dillamond, she did come within the jurisdiction of the port,

having submitted herself to the port discipline so exercised by the Port Authority.83

75. CLAIMANT’s contention that the Charterparty was a berth charter, with the result that

laytime would only start to run when the Vessel arrived at the discharging berth, is

inconsistent with Box 9 of the Charterparty, which unequivocally stated that the

discharging port is the Port of Dillamond and not a berth therein. It follows that the

Charterparty is in fact a port charter, not a berth charter.

79 Benjamin Constant, The Law Relating to the Mortgage of Ships (Syren & Shipping, 1920), 70. 80 Record 7. 81 Record 6. 82 Record 20. 83 Sailing Ship Garston Co v Hickie (1885) 15 QBD 580, 589.

29

76. As laytime had started to run from 7 a.m. on 29 July 2017 when the Vessel arrived at

the Port of Dillamond, the permitted laytime expired at 7 p.m. on the same day. It is

denied, as CLAIMANT alleges, that 29 July 2017 was not a WWD. A WWD is a day

on which the weather permits the relevant work to be done.84 Since the discharging

operation was in fact carried out on 29 July 2017, any assertion that it was not a weather

working day is untenable.

77. Clause 12(a) of the Charterparty provides that the Vessel shall be consigned to the

charterer’s agents at the port of discharge. 85 Despite what the Charterparty has

provided for, CLAIMANT failed to take part in the discharging operation. As a result

of CLAIMANT’s omission, the discharging operation only came to an end at around

12:02 a.m. on 30 July 2017 when RESPONDENT deposited the Cargo with the Port

Authority.86

78. Demurrage thus was accrued for 5 hours from 7 p.m. on 29 July 2017 to 12:02 a.m. on

30 July 2017 at a rate of USD20,000 per hour.

VI. CLAIMANT IS LIABLE FOR THE AGENCY FEE AT SPECTRE

79. RESPONDENT claims the agency fee incurred as a result of entering into the Port of

Spectre on the basis of general average.

80. Under Clause 19 of the Charterparty, general average shall be payable according to the

York/Antwerp Rules.87

81. The definition of general average is contained in Rule A of the York/Antwerp Rules

1994, which provides that:

84 Compania Naviera Azuero, S.A. v British Oil & Cake Mills Ltd [1957] 1 Lloyd’s Rep 312, 329. 85 Record 7. 86 Record 23. 87 Record 10.

30

‘[T]here is a general average act when, and only when, any extraordinary sacrifice

or expenditure is intentionally and reasonably made or incurred for the common

safety for the purpose of preserving from peril the property involved in a common

maritime adventure.’88

82. In this case, the master intentionally directed the Vessel to the Port of Spectre, being a

port of refuge, when a storm of solar flare of an extraordinary magnitude, and which

was then subsisting, had knocked down the Vessel’s satellite navigation system, with a

view to preserving the Cargo and the Vessel itself. The master’s decision to set sail to

the Port of Spectre was reasonable, given that the port was conveniently located in

between Cerulean and Dillamond. Accordingly, such an act shall be regarded as a

general average act.

83. In the circumstances, the agency fee incurred at the Port of Spectre is recoverable from

CLAIMANT by virtue of Rule X(a) of the York/Antwerp Rules 1994.89

VII. CLAIMANT IS LIABLE FOR COST OF HULL REPAIR

84. The cost of repairing the hull, which was damaged as a result of the storm,90 shall be

admitted as general average.

85. The storm rolled in very suddenly and the crew did not notice it on the radar until 30

minutes before it hit the Port of Dillamond.91 In light of the real and immediate peril,

the crew dropped the anchor with a view to avoiding the storm. When it became clear

to the master that the dropping of the anchor could not stop the Vessel from sailing into

88 A similar definition is contained in section 72 of the Marine Insurance Act 1909 (Cth). 89 Rule X(a) of York/Antwerp Rules 1994 reads: ‘When a ship shall have entered a port or place of

refuge…in consequence of accident, sacrifice or other extraordinary circumstances which render that

necessary for common safety, the expenses of entering such port or place shall be admitted as general

average…’ 90 Record 20. 91 Record 19.

31

the storm, he ordered that the anchor be lifted. The Vessel then tangled on a coral bed

and sustained damage to the hull.92

86. In the circumstances, the cost of repairing the damaged hull shall be admitted as general

average under Rule XVIII of the York/Antwerp Rules 1994.

REQUEST FOR RELIEF

87. For the reasons set out above, RESPONDENT requests that the Tribunal:

1) Declare that the it does not have jurisdiction to hear this case;

2) Declare that CLAIMANT is not entitled to any damages whatsoever;

3) Declare that CLAIMANT does not hold a maritime equitable lien, or any lien

whatsoever, over the Vessel;

4) Declare that RESPONDENT is entitled to freight, demurrage, the cost of hull

repairs, agency fees at the Port of Spectre and the Port of Dillamond, and the cost

of use of electronic access systems at the Port of Dillamond;

5) Award further or other relief as the Tribunal considers fit.

92 Record 20.