17thannual international maritime law - … international maritime law arbitration moot competition,...

17THANNUAL INTERNATIONAL MARITIME LAW

ARBITRATION MOOT COMPETITION, 2016

HIDAYATULLAH NATIONAL LAW UNIVERSITY

IN THE MATTER OF AN ARBITRATION HELD IN LONDON

MEMORANDUM FOR HESTIA INDUSTRIES

On Behalf of Against

Hestia Industries. Zeus Shipping and Trading Co.

RESPONDENTS CLAIMANTS

TEAM: 10

SIDDHARTHA IYER● MANASVINI MUKUND ● JAYA RISHI

17TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT, 2016

ii

Memorandum on behalf of the Respondent

TABLE OF CONTENTS

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

INDEX OF AUTHORITIES ...................................................................................................... v

QUESTIONS PRESENTED.................................................................................................... vii

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

THE PARTIES AND THE CHARTER PARTY .............................................................................. 1

AMENDMENT TO CHARTER PARTY ...................................................................................... 1

ARRIVAL AT HADES ............................................................................................................... 1

DETENTION OF SHIP .............................................................................................................. 1

NOTICE FOR DEMURRAGE ..................................................................................................... 2

EVENTUAL RELEASE.............................................................................................................. 2

NOTICE FOR ARBITRATION ................................................................................................... 2

THE CLAIM ............................................................................................................................ 3

SUMMARY OF ARGUMENTS ............................................................................................... 3

ARGUMENTS ADVANCED ................................................................................................... 4

[I] THAT THE TRIBUNAL DOES NOT HAVE THE JURISDICTION TO ENTERTAIN

THE DISPUTE RELATING TO WHETHER THE CONTRACT HAS BEEN

FRSUTRATED ...................................................................................................................... 4

[A] This Tribunal may rule on its Jurisdiction. .................................................................. 4

[B] The Jurisdiction of the Tribunal is limited to disputes arising under the contra ct ....... 5

[B] The Intention of the parties was to exclude the matters incidental to the contract ...... 5

[C] A dispute relating to whether a Charter Party has been frustrated does not arise under

the terms of the Charter Party per se .................................................................................. 6

[D] The Pro-Arbitration Presumption is inapplicable in the instant case. .......................... 7

[E] Frustration is a fact based question............................................................................... 8

[II] THAT THE CHARTER PARTY HAS BEEN FRUSTRATED ..................................... 9

[A] That the obligations contained in the Charter Party could not be met, by either party,

neither of whom is to blame for the same. .......................................................................... 9

[B] That the Purpose of the Charter Party has been defeated, and the delay was enough to

frustrate the agreement. ...................................................................................................... 9

[C] That the frustrating event was not reasonably foreseeable......................................... 10

[D] That the performance of the Charter Party was prevented by State Action. .............. 11

[E] In arguendo: The contract was temporarily impossible. ............................................. 12


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[III] THAT THE RESPONDENT IS NOT LIABLE TO PAY DEMURRAGE TO THE

CLAIMANT ......................................................................................................................... 13

[A] Laytime Ceased to operate the moment the Vessel left the port of Hades ................ 13

[B] The burden falls on the Owner to exercise due diligence and be “Reasonably well

informed” .......................................................................................................................... 14

[C] The ship was not in the ‘Immediate and Effective Disposal’ of Charterers post

loading operations............................................................................................................. 15

[D] The detention of the Vessel was due to the negligence of the Master ....................... 17

[IV] THAT THE RESPONDENTS ARE ENTITLED TO A SALVAGE REWARD........ 18

[A] The operation that took place was in the nature of a salvage ..................................... 18

[B] A salvage operation deserves an award...................................................................... 19

[C] Elements of salvage .................................................................................................... 19

[D] A salvage operation undertaken by the cargo-owners is entitled to a salvage award 23

PRAYER .................................................................................................................................. 25


iv


LIST OF ABBREVIATIONS

AC Appeals Cases (England)

All ER All England Reports

Arb. Arbitration

Art. Article

Carriers Zeus Shipping and Trading Co.

Charterers Hestia Industries

Discharge Berth Poseidon

EWCA England and Wales Court of Appeal

Fed.

Govt.

Federal

Government

HLNG Hades Liquefied Natural Gas

K.B. Law Reports Kings Bench

Lloyd’s Rep. Lloyd’s Law Reports

LMLN Lloyd’s Maritime Law Newsletter

LNG Liquefied Natural Gas

Loading Port Hades Port

Q.B. Queen’s Bench

Shipowners Zeus Shipping and Trading Co.

UKHL United Kingdom House of Lords

Vessel MV Athena


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INDEX OF AUTHORITIES

Cases

Barclays Bank plc v. Nylon Capital LLP [2011] EWCA 826 ¶28 (English Ct. App.); Negrin

v. Kalina, 2010 WL 2816809, at 5* (S.D.N.Y.). ................................................................... 8

Brass v. Maitland (1856) 6 El & B1 470 at 487. ..................................................................... 14

Cf Dahl v. Nelson (1881) 6 App Cas 38 at 54 ......................................................................... 10

Colarado Coal Furnace Distribs. v. Prill Mfg. Co., 605 F.2d 499 (10th Cir. 1979)................ 12

Davis Contractors Ltd. v. Fareham UDC [1956] AC 696 at 729.............................................. 9

Denny Mott & Dickson Ltd. v. James B Fraser & Co. Ltd. [1926] AC 197 at 509................... 8

Embiricos v Sydney Reid & Co [1914] 3 KB 45 at 54 ............................................................. 9

First Options of Chacago, Inc. v. Kaplan 514 U.s. 938, 943 (U.S. S.Ct. 1995)........................ 5

Gem Shipping Co of Monrovia v Babanaft (Lebanon SARL) (The Fontenvivo) [1975] 1

Lloyd’s Rep. 339 .................................................................................................................. 17

Granite Rock Co. v. Int’l Bhd of Teamsters, 130 S.Ct. 2847, 2862 (U.S. S. Ct. 2010). ............ 6

HirjiMulji v. Cheong Yue Steamship Co. [1926] AC 497 at 505............................................... 6

Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26

CA…………....................................................................................................………………..7

In re Anglo-Russian Merchant Traders and Batt, [1917] 2 K.B. 679 (C.A.)........................... 11

Insigma Tech. Co. Ltd v. Alstom Tech. Ltd, [2009] 3 SLR (R) 936, ¶¶ 30, 33 (Singapore Ct.

App.). ..................................................................................................................................... 6

Interim Award in ICC Case no. 7929, XXV Y.B. Comm. Arb. 312, 317 (2000) ..................... 5

Krell v. Henry [1903] 2 KB 740; WJ Tatem v Gamboa [1939] 1 KB 132 at 137 .................. 6,8

Lenonis SS Co Ltd v. Rank Ltd [1908] 1 K.B. 449. ................................................................. 16

Louis Dreyfus Negoco SA v. Blystad Shipping & Trading Inc., 252 F.3d 218 (2d Cir 2001). .. 6

Moller v. Herring, 255 F. 670, 3 A.L.R 624 (5th Cir. 1919) .................................................... 11

Overseas transportation Co v Mineralimportexport (The Sinoe) [1971] 1 Lloyd’s Rep. 514.17

Paal Wilson & Co. A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854 at 909 ........ 10

Pete Smith Co. v. City of El dorado, 258 Ark. 862, 529 S.W.2d 147 (1975) .......................... 12

Petrinovic& Co Ltd v Mission Francaise des Transports Maritimes (1941) 71 L1.L Rep. 208.

.............................................................................................................................................. 17

SociedadFinanciera de BiensRaices SA v Agrimpex Hungarian Trading co for Agricultural

Products (The Aello) [1961] A.C. 135 ................................................................................ 16

The Altus (Total Transport Crop Amoco Trading Co) [1985] 1 Lloyd’s Rep. 423 at 427. .... 13


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The Charlotte (1848) 3 W Rob 68. ........................................................................................... 20

The India (1842) 1 Wm Rob 406. ............................................................................................ 22

The Johanna Oldendorff[1974] A.C 479 at 556. ............................................................... 13, 15

The Neptune (1824) 1 Hagg 227.............................................................................................. 21

The owners of the tug Sea Tractor v the owners of Tramp (Tramp) [2007] 2 Lloyd’s Rep 363

.............................................................................................................................................. 20

The Sava Star [1995] 2 Lloyd’s Rep 134, p 141 ................................................................. 21,23

The Tojomaru [1972] AC 242 (HL)......................................................................................... 22

Walter Rau NeusserOel und Fett AG v. Cross Pac. Trading Ltd, XXXI Y.B. Comm. Arb.

559, 564 (Australian Fed. Ct. 2005) (2006). .......................................................................... 5

XXXI Y.B. Comm. Arb. 559,564 (Australian Fed. Ct. 2005) (2006). ...................................... 7

Other Authorities

AlekaMandaraka-Sheppard, Modern Maritime Law, 3rdedn, Vol 2, 2013, Informa Law from

Routledge. ...................................................................................................................... 19, 23

Brice, on Maritime Law of Salvage, 5thedn, 2011, Sweet & Maxwell. ............................. 18, 21

Cooke on Voyage Charters Cooke, Et al., Voyage Charters (3rd Edn) (London: Informa,

2007) .................................................................................................................................... 14

Evolving Law and Practice of Voyage Charterparties, Robert Gay at Chapter 6 pg. 125. ...... 14

Michael Furmston, The Law of Contract, 4thedn at pg. 1678 .................................................. 10

Summerskill on Laytime, Simon Baughen, Sweet & Maxwell 5th Ed., (2013). ........... 05,13, 15

The Industry; (1835) 3 Hagg 203............................................................................................. 19

Statutes and Conventions

Salvage Convention, 1989 ....................................................................................................... 18

Commercial Arbitration Act, 2012 ............................................................................................ 4


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QUESTIONS PRESENTED

I. WHETHER THE TRIBUNAL HAS THE JURISDICTION TO ADJUDICATE THE ISSUE AS

TO WHETHER THE CONTRACT HAS BEEN FRUSTRATED OR NOT

II. WHETHER THE CHARTER PARTY HAS BEEN FRUSTRATED

III. WHETHER THE OWNERS ARE ENTITLED TO DEMURRAGE

IV. WHETHER THE CHARTERERS ARE ENTITLED TO SALVAGE REWARD


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STATEMENT OF FACTS

THE PARTIES AND THE CHARTER PARTY

Hestia Industries (The Charterers) agreed to Charter the vessel Athena MV, bearing a Hades

Flag, from Zeus Shipping and Trading Company (The Owners) by way of an amended

Charter Party, which was slightly different from the Standard Charter Party Agreement that

was used by the Owners ordinarily. The vessel sailing from Poseidon to Hades, to load a

shipment of Hades Liquefied Natural Gas (HLNG) from Hades and bring it back to Poseidon.

The ship was set to sail on the 20th of September 2014, from Poseidon and the loading days

were from the 1st of October 2014 to the 3rd of October 2014.

AMENDMENT TO CHARTER PARTY

Pursuant to a request by the Charterers, the Arbitration Clause, (Clause 30) was modified in

order to limit the jurisdiction of the Arbitration Tribunal. This was done to limit the

Jurisdiction to disputes arising under the contract, and to specifically exclude disputes

incidental to the contract.

ARRIVAL AT HADES

The Vessel arrived at Hades, on the 3rd of October 2014, and was met with violent protests,

which were against the export of HLNG, the cargo for which the Charterers had chartered the

Ship. The loading of the cargo was performed despite the protests.

DETENTION OF SHIP

On the 7th of October 2014 As the ship was about to set sail, the Leader of the Opposition

backed by the military of Hades, performed a coup, and seized control over the parliament of

Hades. The first act of the new President was to send the coast guard to intercept the vessel,

and bring it back to port. The captain of the ship initially refused to turn the ship around, but


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on being reminded that the Ship was a Hades Flag Bearing Vessel, he had no choice but to

turn the ship around, and return to the Port of Hades.

NOTICE FOR DEMURRAGE

On the 15th of April 2015, The Owners issued a claim for interim demurrage, to the

Charterers. The charterers, in their reply dated 30th of April 2015 stated that the delay was

excessive, and that they intended to Charter another Vessel to Tranship the Cargo. They

however, could not do this, as there was no other ship in the world, which was capable of

Carrying LNG, and had a Hades Flag, and the new Government did not allow a Non-Hades

flag bearing vessel to make berth.

EVENTUAL RELEASE

As a result of the Resignation of the President on the 30th of September 2015, the Coast

Guard allowed the vessel to finally set sail, on the 6th of October 2015. However, the ship

was damaged and unable to make the voyage from Hades to Poseidon on its own, and

required tugs. The Tugs were provided by the Hestia Industries, the Charterers. After

reaching the open water it soon became apparent that the Vessel MV Athena would not be

able to make the journey to Poseidon. Its propeller shafts had been tampered with and both

broke shortly after the vessel set sail on its own. The Respondents tug services were able to

rescue the Vessel, and brought it all the way to the port of Poseidon.

NOTICE FOR ARBITRATION

Once the Ship was allowed to leave the port of Hades, the Owners sent a final demurrage

notice to the Charterers on the 6th of October 2015. After receiving no reply, they sent a

notice for Arbitration dated 16th November 2015, for the purposes of determining the

Demurrage issue.


3


THE CLAIM

The Owners have claimed that the lay time never ceased to expire as the ship had to return to

port because of the cargo, and not because of any fault of the ship owners, per se, and

therefore the Charterers owe them Demurrage. The Charterers on the other hand, claim that

because of the delay the contract has been frustrated and accordingly the demurrage claim

cannot stand. They also object to the Jurisdiction of the Tribunal to determine the issue as to

whether or not the contract has been frustrated, but admit that the tribunal has the Jurisdiction

to determine its own Jurisdiction. The Charterers have also claimed salvage reward for the

tugs provided by it to the Vessel, citing the lack of contract between the Charter Parties, at

the time of rescue operations, due to frustration of the Charter Party.

SUMMARY OF ARGUMENTS

I. THE JURISDICTION OF THIS TRIBUNAL IS LIMITED TO DISPUTES ARISING UNDER THIS

CHARTER PARTY, AND DOES IN NO CIRCUMSTANCES EXTEND TO DISPUTES THAT ARISE

OUT OF THIS CONTRACT. ACCORDINGLY, THIS TRIBUNAL DOES NOT AND CANNOT HAVE

THE JURISDICTION TO ENTERTAIN A DISPUTE RELATED TO THE FRUSTRATION OF THE

CHARTER PARTY IN QUESTION, AS FRUSTRATION FALLS UNDER THE TERM ARISING OUT OF

THE CONTRACT, AND NOT UNDER THE CONTRACT PER SE. UPON EXAMINING THE

INTENTIONS OF THE PARTIES IT BECOMES ABUNDANTLY CLEAR THAT THEY INTENDED TO

REMOVE THE DETERMINATION OF AN ISSUE LIKE FRUSTRATION FROM THE JURISDICTION

OF THE TRIBUNAL

II. THE CHARTER PARTY AGREEMENT BETWEEN THE CLAIMANT AND THE RESPONDENT

STANDS FRUSTRATED. THIS IS BECAUSE OF THE HUGE DELAY THAT PREVENTED BOTH

PARTIES FROM FULFILLING THEIR OBLIGATIONS. THE REASON FOR THIS DELAY WAS

ACTION TAKEN BY THE SOVEREIGN STATE OF HADES AND THEREFORE THE BLAME FOR

THE DELAY OR RATHER NON-PERFORMANCE OF THE CONTRACT CANNOT BE ATTRIBUTED

TO ANY SINGLE PARTY, AND THEREFORE THIS CONTRACT STANDS FRUSTRATED.


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III. THE CLAIMANTS ARE NOT ENTITLED TO ANY DEMURRAGE, AS DEMURRAGE IS PAYABLE

ONLY WHEN THE LAY DAYS PROVIDED FOR IN THE CHARTER PARTY ARE COMPLETED. IN

THE INSTANT CASE THE LAY TIME CEASED TO OPERATE WHEN THE LOADING WAS

COMPLETE AND THE VESSEL DEPARTED FROM THE PORT OF HADES. THE BURDEN OF

PROOF LIES ON THE CLAIMANTS IN THIS CASE AS THE SHIP WAS NOT IN THE IMMEDIATE

AND EFFECTIVE DISPOSAL OF THE RESPONDENTS. FURTHER, THE SHIP REMAINED AT THE

PORT OF HADES FOR SUCH A LONG DURATION OF TIME BECAUSE OF THE NEGLIGENCE OF

THE MASTER, WHO DECIDED TO RETURN TO PORT, A DECISION WHICH WAS CRITICISED BY

THE CLAIMANTS THEMSELVES.

IV. THE RESPONDENTS IN THIS CASE ARE ENTITLED TO A SALVAGE REWARD. THIS IS BECAUSE

THE NATURE OF THE ENTIRE OPERATION AFTER THE VESSEL MV ATHENA LEFT THE PORT

OF HADES WAS IN THE NATURE OF A RESCUE OPERATION. THE VESSEL MV ATHENA

WOULD HAVE BEEN AT THE RISK OF SINKING. THE TUG SERVICES WHICH RESCUED MV

ATHENA SAVED MILLIONS OF DOLLARS’ WORTH OF CARGO AND VESSEL, WHICH IS WHY

THE RESPONDENTS DESERVE A SALVAGE REWARD FOR THEIR ACTIONS.

ARGUMENTS ADVANCED

[I] THAT THE TRIBUNAL DOES NOT HAVE THE JURISDICTION TO

ENTERTAIN THE DISPUTE RELATING TO WHETHER THE CONTRACT HAS

BEEN FRSUTRATED

[A] This Tribunal may rule on its Jurisdiction.

1. According to Section 16(1)1an Arbitral Tribunal has the Jurisdiction to rule on its own

Jurisdiction. This is based on the principles of Kompetenz-Kompetenz, which state

that The Arbitral Tribunal has the first and only Jurisdiction to decide upon its

Jurisdiction and whether or not the Agreement by virtue of which it exists, is valid.

2. The Respondent accordingly submits to the fact that the Tribunal may rule on its own

Jurisdiction.

1Section 16 (1) of the Commercial Arbitration Act, 2012.


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[B] The Jurisdiction of the Tribunal is limited to disputes arising under the contract

3. Arbitration is way to resolve only those disputes that the parties have agreed to submit

to.2 An Arbitral Tribunal should construe the validity and the scope of an Arbitration

Clause in accordance with the general principles of the interpretation of contracts, i.e.

seeking the real and common intent of the parties, based on the wordings of the

clause, and the principles of confidence or good faith.3 The Jurisdiction of the

Tribunal is established by virtue of the contract, and it can only operate within the

limits set by the contract itself.4

4. In the instant case, the Arbitration Clause limits the scope of Arbitration to disputes

which arise under the contract. Further, the terms arising out of the contract was

specifically removed from the Arbitration Clause, with the intention to remove

disputes that relate to but do not arise out of the terms of Charter Party.5

5. It is therefore submitted that the Arbitral Tribunal does not have the Jurisdiction to

entertain disputes that do not directly arise under the terms of the contract. Since the

dispute at the first level relates to the frustration of the contract, which is not under the

contract per se, the Tribunal does not have the Jurisdiction entertain the same.

[B] The Intention of the parties was to exclude the matters incidental to the contract

6. Arbitration Clauses are contractual provisions and are governed by the ordinary rules

of contractual interpretation.6 The fundamental principle of documentary

interpretation is to give to the intention of the parties as expressed in the document.7

2First Options of Chacago, Inc. v. Kaplan 514 U.s. 938, 943 (U.S. S.Ct. 1995). 3Interim Award in ICC Case no. 7929, XXV Y.B. Comm. Arb. 312, 317 (2000). 4Summerskill on Laytime, Simon Baughen, Sweet & Maxwell 5th Ed., (2013) para 10-16 at pg. 320. 5Moot Scenario Pg. 25. 6Walter Rau NeusserOel und Fett AG v. Cross Pac. Trading Ltd , XXXI Y.B. Comm. Arb. 559, 564 (Australian

Fed. Ct. 2005) (2006). 7Insigma Tech. Co. Ltd v. Alstom Tech. Ltd , [2009] 3 SLR (R) 936, ¶¶ 30, 33 (Singapore Ct. App.).


6


One must seek the presumed intention of the contracting parties, whose declarations

are to be interpreted in accordance with the rules of good faith.

7. In the instant case the Respondent requested an Amendment to the Charter Party,

whereby all matters incidental to the contract and not specifically arising under the

terms of the Charter Party were to be excluded from the scope of Arbitration. This

proposed amendment was accepted by the Claimant.8

8. It is submitted that this action of the Respondent made it clear that they did not wish

to subject disputes incidental to the Charter Party to Arbitration. The dispute relating

to frustration of the Charter Party is related to the Charter Party, but does not arise

under the terms of the Charter Party. It is therefore submitted that the intention of the

parties at the time of entering into the Charter Party, was to exclude all matter

incidental to the Charter Party.

[C] A dispute relating to whether a Charter Party has been frustrated does not arise

under the terms of the Charter Party per se

9. The term ‘arising under’ has a relatively narrower scope9 and the term ‘arising out of’

is a broader formation of arising under.10

10. The doctrine of frustration is based on the disappearance of the foundation of the

contract.11 The occurrence of a frustrating event brings the contract to an end

forthwith, without more and automatically.12 It is based on the facts and

circumstances that evolve around the fulfilments of the obligations, and not the terms

of the contract per se.13

8Moot Scenario Pg. 25. 9Granite Rock Co. v. Int’l Bhd of Teamsters, 130 S.Ct. 2847, 2862 (U.S. S. Ct. 2010). 10Louis Dreyfus Negoco SA v. Blystad Shipping & Trading Inc ., 252 F.3d 218 (2d Cir 2001). 11Krell v. Henry [1903] 2 KB 740; WJ Tatem v Gamboa [1939] 1 KB 132 at 137. 12HirjiMulji v. Cheong Yue Steamship Co. [1926] AC 497 at 505. 13Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26 CA.


7


11. In the instant case it is the contention of the Respondent that the contract has been

frustrated and therefore the Tribunal does not have the Jurisdiction to entertain this

dispute.

12. It is submitted that since the frustration of a contract leads to its end, such

determination cannot arise under the terms of the contract. Since the determination of

whether or not a contract has been frustrated, is primarily a factual issue, it does not

arise under the terms of the contract, even if it is closely related to the contract. The

difficulties that arise in the fulfilment of the obligations of a charterparty is what

determines whether it has been frustrated and not the terms of the charterparty. The

events that took place in Hades, which shall determine the frustration of the contract

and not the terms of the contract per se, and therefore it submitted that a dispute

relating to the determination of frustration does not arise under the terms of the

contract per se.

[D] The Pro-Arbitration Presumption is inapplicable in the instant case.

13. In Walter Rau NeusserOel und Fett AG v. Cross Pac. Trading Ltd14 the Australiant

federal Court opined that The Courts will assume that the parties did not intend the

inconvenience of having possible disputes from their transactions being heard in two

places…. there is no legal rule that a dispute necessarily falls within an Arbitration

clause unless the court can be persuaded with a positive assurance that the clause is

not susceptible of any meaning that would include the dispute with the clause.

14. If from the conduct of the parties it is clear that they intended two different dispute

Arbitration cannot be forced upon them.15

14XXXI Y.B. Comm. Arb. 559,564 (Australian Fed. Ct. 2005) (2006). 15Barclays Bank plc v. Nylon Capital LLP [2011] EWCA 826 ¶28 (English Ct. App.); Negrin v. Kalina, 2010

WL 2816809, at 5* (S.D.N.Y.).


8


15. In the instant case the Respondent requested the Claimants to reduce the scope of

Arbitration.16

16. It is submitted that the Pro-Arbitration rule can only be applied when parties do not

expressly exclude a category of disputes from the scope of Arbitration. Since matters

incidental to the contract have been expressly excluded the Pro-Arbitration Rule

cannot be applied in this case and Arbitration cannot be compelled. It is also

submitted that the Respondents through their request to reduce the scope of

Arbitration, made it clear that they intended to have two different dispute resolution

systems in place, which is why Arbitration cannot be compelled in this case.

[E] Frustration is a fact based question

17. An event relied upon as frustration a contract is something which happens in the

world of fact.17 The doctrine of frustration is based on the disappearance of the

foundation of the contract.18

18. In the instant case it is contended that by the Respondent that the contract has been

frustrated.19

19. It is submitted that since the frustration of a contract is not only primarily a fact based

question, but is also based on the disappearance of the contract itself it cannot be said

to be an issue arising under the terms of the contract. It is therefore submitted that this

Tribunal does not have the Jurisdiction to entertain any dispute or claim relating to the

frustration of the Charter Party in question.

16Moot Scenario Pg. 25. 17Denny Mott & Dickson Ltd. v. James B Fraser & Co. Ltd. [1926] AC 197 at 509. 18Krell v Henry [1903] 2 KB 740. 19Moot Scenario Pg. 73.


9


[II] THAT THE CHARTER PARTY HAS BEEN FRUSTRATED

[A] That the obligations contained in the Charter Party could not be met, by either

party, neither of whom is to blame for the same.

20. Frustration occurs whenever the law recognises that without default of either party a

contractual obligation has become incapable of being performed because the

circumstances in which performance is called for would render it a thing radically

different from that which was undertaken by the contract.20

21. In the instant case, a military coup took place in Hestia, and the usurper Govt.

prevented the Vessel MV Athena from leaving the port of Hades.21

22. It is submitted that this action of the Govt. prevented both the Claimant and the

Respondent from fulfilling their obligations. It is also submitted that the blame for this

is not attributable to either party, and therefore the obligations that were set out in the

Charter Party have been unfulfilled without any fault per se.

[B] That the Purpose of the Charter Party has been defeated, and the delay was enough

to frustrate the agreement.

23. In Embiricos v Sydney Reid & Co.22the court held that ‘Commercial men must not be

asked to wait till the end of a long delay to find out from what in fact happens whether

they are bound by a contract or not; they must be entitled to act on reasonable

commercial probabilities at the time when they are called upon to make up their

minds.’

24. A contract may be treated as frustrated by virtue of a delay even before the full nature

of the delay is known, provided that the frustrating event relied upon reasonably and

20Davis Contractors Ltd. v. Fareham UDC [1956] AC 696 at 729. 21Moot Scenario, Pg. 55. 22[1914] 3 KB 45 at 54.


10


objectively gives rise to the inference that it will cause such delay as will frustrate the

contract.23

25. In the instant case the Vessel MV Athena was not allowed to leave the port of Hades

for almost a year.24 The Respondents notified the Claimants that in their opinion the

Charter Party had been frustrated on 30 April 2015.25

26. It is submitted that this delay in the transport of HLNG from the port of Hades to

Poseidon was a frustrating delay. The delivery of the fuel nearly a year after what was

originally anticipated makes the delay a frustrating delay. The entire voyage that was

planned lost its purpose as the result of this prolonged delay, as a result of which this

Charter Party is frustrated.

[C] That the frustrating event was not reasonably foreseeable.

27. It is usually said that the event relied upon as frustrating the contract must not have

been foreseen by the parties.26 The fact that it may be have been a remote possibility

is not sufficient to exclude the doctrine, and the fact that parties to some extent

contemplated that the performance of the contract might be affected does not

necessarily prevent the contract from being discharged by frustration.27

28. In the instant case, the export of HLNG was met with violent protests, and eventually

a military coup took place in the country of Hades after the new formed govt.

prevented the Vessel MV Athena from leaving the port of Hades.28

29. It is submitted that in no way can a military coup be anticipated in any country. It is a

rare and freak event that happens very rarely. While it is true that the export of HLNG

23Cf Dahl v Nelson (1881) 6 App Cas 38 at 54. 24Moot Scenario, “The Hades Advocate”,Pg 67. 25Moot Scenario, Pg 65. 26Paal Wilson & Co. A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854 at 909. 27Michael Furmston, The Law of Contract, 4thedn at pg. 1678. 28Moot Scenario. Pg 52.


11


was met with huge protests, no reasonable person could have anticipated a military

coup. The Govt. at the time of the formation of the Charter Party had granted the

Respondents the permission to export HLNG despite the protests, and accordingly the

Respondents were entitled to assume that the shipment would go through without a

hitch. It is therefore submitted that the entire factual scenario is not something any

reasonable person could assume a real risk. It may be argued that it could have been a

remote possibility, but it was so remote that no prudential businessman could have

reasonably been expected to make a provision for it or take it into consideration.

[D] That the performance of the Charter Party was prevented by State Action.

30. The performance of a promise that was lawful and possible when made may become

impossible to perform due to the enactment of subsequent legislation, the outbreak of

war, or some other action by government authorities.29Prevention of performance by

state action is a valid defence if no means of the avoiding the legal interference was

reasonably available.30

31. In the instant case the vessel MV Athena was prevented from leaving the port of

Hades, by the coast guard of Hades, pursuant to a Presidential order.31

32. It is submitted that the performance of the Charter Party was prevented by the action

of the newly formed Govt. of Hades. It is clear from the factual scenario that all

required permissions for the export of HLNG had been obtained by the then existing

government. When the Charter Party agreement was entered into the promises made

were legal, and were made illegal only after the agreement was in force thereby

rendering it impossible to perform.

29 In re Anglo-Russian Merchant Traders and Batt, [1917] 2 K.B. 679 (C.A.). 30Moller v. Herring, 255 F. 670, 3 A.L.R 624 (5th Cir. 1919). 31Moot Scenario. Pg 57.


12


[E] In arguendo: The contract was temporarily impossible.

33. Frustration may be partial in the sense that some, but not all, of the contracting

purpose is destroyed.32 Frustration may also be partial in the sense that it is temporary,

in which case the duty of performance must be temporarily suspended. 33

34. In the instant case, the Vessel MV Athena was not allowed to leave the port of Hades

for nearly a year. It reached its intended destination almost a year after the originally

anticipated date of arrival.34

35. Without Prejudice to all other submissions made, it is submitted that if the Charter

Party as a whole is not considered frustrated, it was at least for a large period of time

temporarily frustrated. During this period the Charter Party and all of the obligations

that it contains could not have been carried out, rendering it inoperative for the time

being. Thus the underlying obligations in the Charter Party should also be deemed to

have been temporarily suspended.

32Pete Smith Co. v. City of El dorado , 258 Ark. 862, 529 S.W.2d 147 (1975). 33Colarado Coal Furnace Distribs. V. Prill Mfg. Co ., 605 F.2d 499 (10th Cir. 1979). 34Moot Scenario, “ The Hades Advocate”,Pg 67.


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[III] THAT THE RESPONDENT IS NOT LIABLE TO PAY DEMURRAGE TO THE

CLAIMANT

36. Laytime is the time during which a ship is lying for the purpose of loading or

discharging, as distinct from moving with the object of carrying her cargo from one

place to another.35 Demurrage is an amount payable by charterers to shipowners in

respect of delay to the ship as a result of her being kept beyond the agreed laydays for

loading or discharging.36

[A] Laytime Ceased to operate the moment the Vessel left the port of Hades

37. Time ceases to count against the charterers when the ship is no longer detained by the

physical problems involved in loading and discharging and is ready to leave subject to

clearances and other obstacles not the responsibility of the charterers.37

38. The essential characteristics of a voyage Charter Party are38:

a. The Loading voyage

b. Loading operation

c. Carrying Voyage

d. Discharging Operation

39. The Liability transfers from the shipowner to the charterer from function to function.

The liability of the charterer ceases and is transferred to the shipowner post the

loading operation for the carrying voyage.39

40. In the present case, the loading operations ceased on the 6thof October, 2014 post

which the vessel set sail from the port of Hades on 7th October 2014.40

35The Altus (Total Transport Crop Amoco Trading Co) [1985] 1 Lloyd’s Rep. 423 at 427. 36Summerskill on Laytime, Simon Baughen, Sweet & Maxwell 5th Ed., (2013) para 10-01 at pg. 309. 37Summerskill on Laytime, Simon Baughen, Sweet & Maxwell 5th Ed., (2013) para 1-12 at pg. 9. 38The Johanna Oldendorff[1974] A.C 479 at 556. 39Ibid. 40 Statement of Facts, Moot Scenario Pg.54.


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41. It is submitted that the liability of the Respondent in terms of laytime ceased as soon

as the loading operations were complete, i.e. 7th October at 2350 hours. The liability

was transferred to the Claimant as soon as the vessel made way for the voyage to the

discharge port at 0900 hours.

42. It is therefore submitted that the Claimant were directly liable if the circumstances

that were suffered happened during the carrying voyage portion of the operations. It is

further submitted that given that laytime itself failed to accrue, there can be no

question of demurrage.

[B] The burden falls on the Owner to exercise due diligence and be “Reasonably well

informed”

43. It is sufficient if the shipper says what the goods are provided that the shipowner and

the vessel’s personnel should be able to know from the description of the goods as to

what risks they involve.41

44. Even if provided the cargo in question qualifies as “Legally Dangerous Cargo”42, it

should be enough if the vessel’s personnel should be able to know from the shipper’s

description of the goods what general types of risk these goods involve. Where the

description of goods is written into the Charter Party and so has been agreed by the

shipowner, it may be enough if a reasonably well informed shipowner would know

what dangers the cargo would present.43

45. Further, under a Voyage Charter Party, if a carrier undertakes to ship a particular

consignment of cargo from and to a certain country, through exercise of due

diligence, if the shipowner can bring himself to be aware that the cargo might of this

41 Brass v. Maitland (1856) 6 El & B1 470 at 487. 42Cooke on Voyage Charters : “It is submitted that in principle where the condition of the goods on shipment is

such that they are liable to cause … or even serious delay to the voyage, they fall within the category of

dangerous goods.’ 43Evolving Law and Practice of Voyage Charterparties, Robert Gay at Chapter 6 pg. 125.


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type from this load port might well lead to interferences from the authorities in the

said country of discharge, then the shipowner should not be able to recover on the

basis that the shipper did not declare that this was legally dangerous cargo.44

46. In the present case, it is evident that both the claimant and the respondent were

equally aware45 of the public opposition against the production of HLNG. The

protests and public sentiment against the production of HLNG were also well

documented as they were published both in ‘The Hades Advocate” and “The Law

Institute of Hades Journal”.46

47. It is therefore submitted before this tribunal that considering both the sides party to

the Charter Party possessed identical knowledge of the situation, the Respondent

cannot be made liable for not informing the Claimant of the situation in Hades.

48. It is also submitted that if the Claimant had no reasonable mechanism to ascertain the

political consequences of the cargo that led to the detention of the vessel, it is equally

true that the Respondent could not have foreseen the consequences either. It is further

submitted that the burden fell upon the Claimant to assess the risks involved with

chartering the said cargo and make an informed choice.

[C] The ship was not in the ‘Immediate and Effective Disposal’ of Charterers post

loading operations.

49. After loading or discharging has finished, the charterers are not liable for any delay

unless it arises from some fault on their part.47 It is not sufficient even in a port

Charter Party if the boat has reached the nominated port, but must also be within the

effective disposition of the charterers.48 As per the “Reid Test”49 the two conditions

44Ibid at Pg. 126. 45 Procedural Order No.2, Clause 1. 46 Moot Scenario, “The Hades Advocate”, Pg. 26, 52. 47Summerskill on Laytime, Simon Baughen, Sweet & Maxwell 5th Ed., (2013) para 1-11 at Pg. 8. 48The Johanna Oldendorff[1974] A.C 479 at 556.


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required are that the ship should be within the port and should be within the

immediate and effective disposition of the charterers.

50. In Leonis SS Co Ltd v Rank Ltd50 it was held that “… it ought to be the area of the

named port of destination n arrival within which the master can effectively place his

ship at the disposal of the charterer, the vessel herself being the, so far as she is

concerned, ready to load and as near as circumstances permit to the actual loading

spot’.”

51. Similarly, in The Aello51 it was held that the vessel in question was not an arrived ship

in terms of port area because she had not arrived in the commercial sense and was not

at the disposition of the charterers. The commercial area was held to be the “area in

which the actual loading spot is to be found and to which vessels seeking to load

cargo of the relevant description usually go, and in which the business of loading

such cargo is usually carried out”.

52. In the present case it is evident through the factual scenario52 that the loading

operations commenced on 3rd October 2014 and were completed on 6th October 2014.

Port clearance was obtained on 7th October post which the vessel sailed from the port

of Hades on the same day.

53. It is submitted that the liability of the Respondent in terms of lay time accrued, ceased

when the loading operations were complete and the vessel sailed from the port of

Hades. It is further submitted that once the vessel set sail from the port, the vessel was

no longer in the ‘Immediate or effective disposal’ of the Respondent. Therefore, it is

49Ibid. 50Lenonis SS Co Ltd v. Rank Ltd [1908] 1 K.B. 449. 51SociedadFinanciera de BiensRaices SA v Agrimpex Hungarian Trading co for Agric ultural Products (The

Aello) [1961] A.C. 135. 52 Moot Scenario, pg. 54.


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submitted in the present case that the contention of the Claimant that laytime was

exhausted is false and demurrage does not accrue to the Claimant.

[D] The detention of the Vessel was due to the negligence of the Master

54. Despite the absolute nature of the laytime warranty, charterers will not be liable for

demurrage where they can show that they are protected by exceptions in the Charter

Party; or that they delay was attributable to the fault of the shipowners or to the

employees, servants or agents of the shipowners; or that the loading or discharging

was illegal by the law of the place of performance.53

55. The charterers can also be exempt from demurrage in cases where working the ship is

made illegal by the law of the place of performance.54

56. A temporary removal of the vessel from her berth while loading or discharging may

interrupt demurrage if the charterers can show that it occurred due to the fault of the

shipowners.55Demurrage has been held to be interrupted where an enforced removal

was final.56

57. In the present case, it is evident that the primary reason for the return of the Vessel to

the port of Hades is due to the conduct of the master.57

58. It is therefore submitted that the Respondent cannot be made liable for the negligence

of the master. Despite orders of the Claimant to continue with the voyage, the master

returned to the port negligently precipitating the detention of the vessel for an

enormous duration despite being outside the territorial waters of Hades.

53Overseas transportation Co v. Mineralimportexport (The Sinoe) [1971] 1 Lloyd’s Rep. 514. 54Ibid. 55Gem Shipping Co of Monrovia v. Babanaft (Lebanon SARL) (The Fontenvivo) [1975] 1 Lloyd’s Rep. 339. 56Petrinovic& Co Ltd v. Mission Francaise des Transports Maritimes (1941) 71 L1.L Rep. 208. 57 Moot Scenario, Pg. 57.


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[IV] THAT THE RESPONDENTS ARE ENTITLED TO A SALVAGE REWARD

59. Brice58 defines salvage as a right in law, which arises under English law when a

person, acting as a volunteer (that is, without any pre-existing contractual or other

legal duty so to act), preserves or contributes to preserving at sea any vessel, cargo,

freight or other recognized subject of salvage from danger. This is known to be the

‘civil salvage’.59

[A] The operation that took place was in the nature of a salvage

60. It is submitted that the rescue operation carried out by the Respondents tug services,

was in the nature of salvage.

[A.1] Definition of salvage under the 1989 salvage convention

61. Article 1(a) defines that for the purpose of the convention60 salvage operation means

any act or activity undertaken to assist a vessel or any other property in danger in

navigable waters, or in any other waters whatsoever.

62. In the light of the present facts the operation undertaken by the Respondents qualify

as a salvage as it meets with all the essentials provided for in the definition i.e.,

a) MV ATHENA is a ship capable of navigation and hence can be called a

vessel under 1(B)61 of the convention.

b) The operation undertaken was an act to protect the cargo onboard MV

ATHENA in navigable waters when met with a danger as a result of

broken shafts which could have resulted in the vessel sinking.62

58 Brice, on Maritime Law of Salvage, 5thedn, 2011, Sweet & Maxwell, Pg 1. 59Ibid. 60 This Convention shall apply whenever judicial or arbitral proceedings relating to matters dealt with in this

Convention are brought in a State Party by the virtue of Article 2 of the Convention. 61Defines ‘vessel’ as any ship or craft, or any structure capable of navigation under the 1989 Convention.


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63. It is submitted that prima facie the operation undertaken by the respondents qualify as

one that of salvage under the convention and should be awarded for undertaking the

same.

[B] A salvage operation deserves an award

64. It is to provide a positive incentive to seafarers to take risks for the purpose of

assisting others in danger.63 Although the parties involved may regulate, if they wish,

the rendering of salvage services by agreement, the right to be rewarded for salvage at

sea under common law is based both on equitable principles and public policy and is

not contractual in origin.64

65. Therefore it is submitted that due to the above underlying principles and absence of

any regulation upon the operation undertaken by the charterers, they are entitled to be

awarded.

[C] Elements of salvage

66. Salvage arises when [C.1] the property is in danger, [C.2] the salvors are volunteers

and [C.3] there is success, or contribution to success by their services. 65

[C.1] The ship was exposed to real danger

67. There must be some real danger that is likely to expose the property to destruction or

damage.66 The master’s decision that the ship is in danger must be reasonable. No

62Moot Scenario, “The Hades Advocate”, Pg. 71. 63As per Sir John Nicholl, in The Industry; (1835) 3 Hagg 203, p 204. 64AlekaMandaraka-Sheppard, Modern Maritime Law, 3rdedn, Vol 2, 2013, Informa Law from Routledge, p 483. 65Ibid. 66The Phantom; [1866] LR 1 A&E 58, p 60, per Dr Lushington.


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actual or immediate distress is required; it suffices that there is a misfortune that may

expose the vessel to risk of destruction without assistance.67

68. In The Charlotte,68Dr.Lushington said:

According to the principles which are recognized in this court in questions of this

description, all services rendered at sea to a vessel in danger or distress are salvage

services. It is not necessary, I conceive, that the distress should be actual or

immediate, or that the danger should be imminent and absolute; it will be sufficient if,

at the time the assistance is rendered, the ship has encountered any damage or

misfortune which might possibly expose her to destruction if the services were not

rendered.69

69. In the instant case, when the vessel was freed to leave Hades bound for Poseidon with

the Respondent’s cargo, when the towlines were released from the vessel shortly after

the vessel set sail, both propeller shafts broke, due to tampering with the propellers of

the vessel. As a result of which, the ship could have sunk in a very short period along

with the cargo. 70

70. Further it was held by Steel J in The owners of the tug Sea Tractor v the owners of

Tramp (Tramp),71that the vessel must have encountered a situation that would expose

it to damage if the service was not rendered, so that no reasonable person in charge

of the venture would refuse a salvor’s help, if it was offered to him upon a condition

of paying a salvage award.

71. It is submitted that due to the circumstances it is evident that the vessel was exposed

to a very high degree of danger which could have resulted in the sinking of the vessel

67AlekaMandaraka-Sheppard, Modern Maritime Law, 3rdedn, Vol 2, 2013, Informa Law from Routledge, p 492. 68(1848) 3 W Rob 68. 69Ibid, p 71. 70 Moot Scenario, “The Hades Advocate”, Pg 71. 71 [2007] 2 Lloyd’s Rep 363.


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herself. Furthermore, the tugs that had guided the vessel to open waters were not far

away and hence conducted the salvage operation in the shortest time possible that

saved many millions of dollars’ worth of vessel and cargo.

72. It is also submitted that in the instant case the Vessel MV Athena had encountered a

situation in which if the Respondent’s tugs had not rescued her, she would have been

exposed to dangers as grave as sinking. Also, the Master of the ship did not explicitly

deny the services provided before or during the operation, and therefore it amounts to

a condition where a salvage award should be granted in lieu of services rendered by

the Respondents.

[C.2] That the services rendered were voluntary in nature

73. As per definition of salvage72 there is no limit to the class of persons that can be

considered as volunteers.73

[C.2.1] The charterers qualify as volunteers due to the absence of a

pre-existing covenant connected to salvage in the charter party

74. In The Neptune,74it was held that a salvor is a person who, without any particular

relation to a ship in distress, confers useful service and gives it as a volunteer

adventurer, without any pre-existing covenant connected with the duty of employing

himself for the preservation of the ship.

75. It is submitted that the claim of the charterers towards salvage needs to be fulfilled as

there was a voluntary service in the absence of a pre – existing agreement between the

parties.

72Brice, on Maritime Law of Salvage, 5thedn, 2011, Sweet & Maxwell, p 1. 73 Per Clarke J in The Sava Star [1995] 2 Lloyd’s Rep 134, p 141. 74 (1824) 1 Hagg 227.


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[C.3] The operation was successful in saving both vessel and cargo

76. The third element for an award of salvage to be made is that the services must either

succeed in, or contribute to the success of, saving the property. There must be

meritorious services.

77. The principle was laid down by Dr Lushington in The India75 where he said that: ‘

…unless the salvors by their services conferred actual benefit on the salved property,

they are not entitled to salvage remuneration’.

78. Lord Diplock, in The TojoMaru,76examined certain cases of salvage contracts that

differentiate them from ordinary contracts for work and labour: ‘ The first distinctive

feature is that the person rendering the salvage service is not entitled to any

remuneration unless he saves the property in whole or in part. This is what is meant

by ‘success’ in cases about salvage.

79. In the instant case it is crucial to note that the operation was an absolute success

because shortly after the towlines were released on or about 6 October 2015, the

vessel began to drift in an uncontrolled manner which could have led to the sinking of

the vessel. 77The Respondent’s tugs undertook a salvage operation in respect of the

Athena, which resulted in the successful preservation of the value of not only the

cargo but the vessel herself.

80. It is therefore submitted that in the above premise, the respondent is entitled to

salvage award.

75 (1842) 1 Wm Rob 406. 76 [1972] AC 242 (HL). 77 Moot Scenario, pg 76 & 77.


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[D] A salvage operation undertaken by the cargo-owners is entitled to a salvage award

81. Prior to The Sava Star78, there had been no authority stating that the owners of cargo

on board a ship in need of salvage, who render assistance and advice as to how a

particular cargo on board should be handled and, therefore, contribute in the salvage

of ship and cargo, could claim salvage.The issue before the court was whether or not

cargo-owners should be entitled to a salvage award; the owners of the salved ship

argued that they should not, as their services were rendered out of self- interest or for

self-preservation.

82. Clarke J held that the owners’ submission that cargo- owners were not volunteers

would be rejected and stated that the reason why persons with contractual duties or

persons such as the master and crew of the ship cannot recover a salvage award is

because they are performing services ordinarily to be expected of them. However the

same principles aren’t applicable in the case of cargo – owners who aren’t bound by

any such contractual duty.79

83. He reviewed the principles of cases with regard to salvage services rendered to sister

ships, where the owner of the salving tug and the owner of the salved are the same,

and salvage had still been rewarded against both the salved ship and the cargo on

board her.80

84. In the instant case, the tug company which came to the rescue was Hestug, a business

owned by the cargo owners, Hestia Industries. Furthermore, it was these tugs owned

by Hestia which undertook the salvage efforts necessary to preserve life and property

when the Athena could no longer proceed under its own power after leaving Hades. 81

78 [1995] 2 Lloyd’s Rep 134. 79Ibid. 80AlekaMandaraka-Sheppard, Modern Maritime Law, 3rdedn, Vol 2, 2013, Informa Law from Routledge, p 488. 81Moot Scenario, “The Hades Advocate”, Pg 71.


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85. It is submitted that the due to the salvage operation voluntarily undertaken by the

salvors, to extract the vessel from the danger that had arisen on 6 October 2015 not

only the cargo on board MV ATHENA was saved but the vessel herself was

preserved too. Therefore the claimants in the present case, based upon all the

requirements to claim a salvage award being fulfilled by the Respondents are liable to

pay the sum and the same shall be considered.


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PRAYER

In light of the above submissions, the Respondent requests the Tribunal to:

1. FIND That the Tribunal does not have the Jurisdiction to decide the issue of

Frustration of the Charter party, and the subsequent issues relating to Demurrage

2. FIND That the Respondent does not owe any Demurrage to the Claimant

3. DECLARE That the Respondent is due a salvage reward

4. AWARD Interests and costs in the favour of the Respondent

Dated this 20th day of April, 2016 on behalf of the Respondent.

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