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SEVENTEENTH ANNUAL
INTERNATIONAL MARITIME LAW ARBITRATION MOOT
2016
__________________________________________________________________________________
MEMORANDUM FOR RESPONDENT
THE UNIVERSITY OF SYDNEY
TEAM 11
__________________________________________________________________________________
ON BEHALF OF: AGAINST:
Hestia Industries Zeus Shipping and Trading Company
RESPONDENT CLAIMANT
COUNSEL
Rahul Maria Eric Harry
Arora Mellos Shi Stratton
TEAM 11 MEMORANDUM FOR RESPONDENT
II
TABLE OF CONTENTS
ABBREVIATIONS V
LIST OF AUTHORITIES VI
STATEMENT OF FACTS 1
ARGUMENTS ON JURISDICTION 2
I. THE TRIBUNAL DOES NOT HAVE JURISDICTION TO DETERMINE RESPONDENT’S
DEFENCE OF FRUSTRATION AND THEREFORE CLAIMANT’S PLEADING FOR DEMURRAGE
2
A. The law of Western Australia governs the arbitration agreement 2
i. The law of Western Australia has the closest and most real connection to
the arbitration agreement
3
ii. The choice of London as the arbitral seat does not mean that English law
governs the arbitration agreement
4
B. The arbitration agreement does not grant the Tribunal jurisdiction over
RESPONDENT's defence of frustration and therefore CLAIMANT's pleading for
demurrage
4
i. It is reasonable for parties to limit the scope of their arbitration agreement 4
ii. The language of the agreement indicates that frustration is not arbitrable 5
iii. The Parties’ decision to delete certain words indicates frustration is not
arbitrable
6
iv. The Tribunal does not have jurisdiction to hear CLAIMANT’s pleading for
demurrage because RESPONDENT’s defence of frustration is not arbitrable
6
TEAM 11 MEMORANDUM FOR RESPONDENT
III
ARGUMENTS ON THE MERITS OF THE CLAIM 7
II. RESPONDENT IS NOT LIABLE TO PAY DEMURRAGE 7
A. The Athena left the Loading Place before laytime expired 7
B. The Athena left the Loading Place despite her interception and subsequent return
to port
9
C. Laytime was interrupted when the Athena was intercepted by the Hades Coast
Guard
11
i. The delay was by reason of “public enemies” 12
ii. The delay was by reason of “arrests” 12
III. RESPONDENT IS NOT LIABLE TO PAY DEMURRAGE BECAUSE A FORCE MAJEURE
EVENT LISTED IN CLAUSE 19 CAUSED THE DELAY
13
A. The delay was caused by a Force Majeure Event listed in Clause 19 14
i. RESPONDENT is not liable to pay demurrage because of the exemptions
listed in Clause 19(c) of the Charterparty
14
ii. RESPONDENT is not liable to pay demurrage because of the exemptions
listed in Clause 19(d) of the Charterparty
15
B. The Parties intended for Clause 19 to cover long or indefinite delays 17
IV. IN THE ALTERNATIVE, RESPONDENT IS NOT LIABLE TO PAY DEMURRAGE BECAUSE
THE CHARTERPARTY WAS FRUSTRATED AT COMMON LAW
18
A. The Parties could not have foreseen the detention of the Athena for 358 days 18
B. The delay rendered performance radically different from what the Parties
intended
19
TEAM 11 MEMORANDUM FOR RESPONDENT
IV
ARGUMENTS ON THE MERITS OF THE COUNTER-CLAIM 20
V. RESPONDENT IS ENTITLED TO CLAIM SALVAGE REWARD 20
A. The Athena and its cargo were in danger 21
B. The Athena and its cargo were recognised subjects of salvage 21
C. RESPONDENT was not a volunteer 22
i. RESPONDENT did not act under a pre-existing contractual duty which
would preclude a salvage claim
22
ii. RESPONDENT did not act under a pre-existing statutory duty which would
preclude a salvage claim
22
iii. In the alternative, RESPONDENT went beyond the scope of its duty so as to
convert the pre-existing towage contract into a salvage service
23
D. The salvage services were successful 25
REQUEST FOR RELIEF 25
TEAM 11 MEMORANDUM FOR RESPONDENT
V
ABBREVIATIONS
Charterer Hestia Industries
Charterparty The voyage charterparty between CLAIMANT and
RESPONDENT
CLAIMANT Zeus Shipping and Trading Company
Force Majeure Event An event listed in Clause 19 of the Charterparty
HLNG Hades Liquefied Natural Gas
LNG Liquefied Natural Gas
Loading Place Port of Hades
Master Captain Marcus Yi
New York Convention Convention on the Recognition and Enforcement
of Foreign Arbitral Awards (New York, 1958)
Parties CLAIMANT and RESPONDENT
Record 2016 International Maritime Law Arbitration
Moot Scenario
RESPONDENT Hestia Industries
The Athena The MV Athena
TEAM 11 MEMORANDUM FOR RESPONDENT
VI
LIST OF AUTHORITIES
CASES AND ARBITRAL AWARDS REFERRED TO AT PAGE:
Academy of Health and Fitness Pty Ltd v Power [1973] VR 254 7
Akai Pty Ltd v People’s Insurance Co Ltd (1996) 188 CLR 418 2
Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50 2
Andreas Sobonis v The National Defender [1980] 1 Lloyd’s Rep 40 21
Anglo-Northern Trading Co v Emlyn Jones [1917] 2 KB 78 20
Arnold v Britton and others [2015] UKSC 36 8, 12, 14, 15, 16, 17
Atlantic Maritime Co v Gibbon [1954] 1 QB 88 20
Atlantic Mutual Insurance Co v King [1919] 1 KB 307 15
Australian Broadcasting Commission v Australasian Performing Rights
Association (1973) 129 CLR 99
12
Award in ICC Case No. 1434, 103 J.D.I. (Clunet) 978, 982 (1976) 13
Bank Line Ltd v Arthur Capel & Co [1919] AC 435 20
Bonython v Commonwealth (1950) 81 CLR 486 2
Brett v Barr Smith (1919) 26 CLR 87 15
Burke v State Bank of New South Wales (1994) 37 NSWLR 53 9
C v D [2007] EWCA Civ 1282 3
Carboex SA v Louis Dreyfus Commodities Suisse SA [2013] 2 WLR 754 10
Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402 15
Coast Lines Ltd v Hudig & Veder Chartering NV [1972] 2 WLR 280 3
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales
(1982) 149 CLR 337
5, 6, 18
Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157
FCR 45
2, 4, 5, 6
Compania Naviera Aeolus SA v Union of India [1962] 3 All ER 670 9
TEAM 11 MEMORANDUM FOR RESPONDENT
VII
Concut Pty Ltd v Worrell (2000) 176 ALR 693 10
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of
Taxation (1981) 147 CLR 297
8, 12, 14, 15, 16, 17
Dallah Real Estate and Tourism Co v Ministry of Religious Affairs of the
Government of Pakistan [2011] 1 AC 763
2
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 5
Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 5, 18, 19
Denny, Mott & Dickson Ltd v James B Fraser & Co Ltd [1944] AC 265 20
Dias Compania Naviera SA v Louis Defus Corp [1978] 1 All ER 724 9
Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] 1 WLR
623
7
Dovuro Pty Ltd v Wilkins (2000) 105 FCR 476 15
E L Oldendorff & Co GmbH v Tradax Export SA [1974] AC 479 10
Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage &
Towage) Ltd (‘The Sea Angel’) [2007] EWCA Civ 547
18
Electricity Generation Corporation v Woodside Energy Ltd & Others
(2014) 251 CLR 640
10
Ellul v Oakes (1972) 3 SASR 377
Eridania SpA v Oetker (The Fjord Wind) [2000] 2 Lloyd’s Rep 191 5
Esso Australia Ltd v Australian Petroleum Agents’ & Distributors’
Association [1999] 3 VR 642
6
Fisher v The Oceanic Grandeur (1972) 127 CLR 312 20, 21
Franklins Pty Ltd v Metcash Trading Ltd (2009) 264 ALR 15 8, 12, 14, 15, 16, 17
Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235 14
Goldberg v Ng (1995) 185 CLR 83 5
Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455 9, 10, 12, 13, 17
Great Elephant Corporation v Trafigura Beheer BV, The Crudesky [2012]
EWHC 1745 (Comm)
13, 17
Guthiel v Ballarat Trustees, Executors & Agency Co Ltd (1922) 30 CLR
293
15
TEAM 11 MEMORANDUM FOR RESPONDENT
VIII
High Seas Venture Ltd Partnership v Sinom (Hong Kong) Ltd (‘The 7’)
[2008] 1 Lloyd's Rep 504
8
Hirji Mulji v Cheong Yue SS Co Ltd [1926] AC 497 5, 6, 20
Hunter v Northern Insurance Co (1888) 13 AC 717 8, 10
Interim Award in ICC Case No. 7929, XXV Y.B. Comm. Arb. 312 (2000) 4
International Fina Services AG v Katrina Shipping Ltd (The Fina Samco)
[1995] 2 Lloyd’s Rep 344
15
Investors Compensation Scheme v West Bromwich Building Society
[1998] 1 WLR 896
8, 12, 14, 15, 16, 17
J Lauritzen AS v Wijsmuller BV [1990] 1 Lloyd's Rep 1 5, 6, 15
Leaf v International Galleries [1950] 2 KB 86 7
Lebeaupin v Richard Crispin & Co [1920] 2 KB 714 14
Leonis Co v Rank [1908] 1 KB 499 8, 10
Louis Dreyfus & Cie v Parkas Cia Naviera SA [1959] 1 QB 491 6
Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 10
McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 10
Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR
366
3
Metropolitan Water Board v Dick, Kerr & Co Ltd [1918] AC 119 18
Minchillo v Ford Motor Co of Australia Ltd [1995] 2 VR 594 10
Mottram Consultants Ltd v Bernard Sunley & Sons Ltd [1975] 2 Lloyd’s
Rep 197
6
National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 18, 19
Newman v Walters (1804) 127 ER 330 23
Nielsen v Wait (1885) 16 QBD 67 9
Nissho Iwai Australia Ltd v Malaysian International Shipping Corp
Berhad (1989) 167 CLR 219
5
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 2
TEAM 11 MEMORANDUM FOR RESPONDENT
IX
Owners and/or Demise Charterers of the Tug “Sea Tractor” v Owners of
the Ship “The Tramp” [2007] 2 Lloyd’s Rep 363
21
Owners of “SS Melanie” v Owners of “SS San Onofre” [1925] AC 246 23
Owners, Charterer, Master and Crew of the Margaret Philippa v The MV
Santo Rocco di Bagnara (1991) 101 ALR 491
22
Pacific Carriers v BNP Paribas (2004) 218 CLR 451 10
Pan Foods Co Importers & Distributors Pty Ltd v Australia and New
Zealand Banking Group Ltd (2000) 170 ALR 579
9, 10, 13, 17
Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd & Ors (1993)
43 FCR 439
2, 5
Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council
[2010] NSWCA 64
15
Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724 (‘The Nema’) 5, 18, 20
Prince v Livingstone (1882) 9 QBD 679 10
Provincial Insurance Australia Pty Ltd v Consolidated Wood Products
Pty Ltd (1991) 25 NSWLR 541
8, 12, 14, 15, 16, 17
R v International Trustee for the Protection of Bondholders
Aktiengesellschaft [1937] AC 500
3
Rainy Sky SA v Kookmin Bank [2012] 1 All ER 1137 9, 10, 13, 17
Re Continental C&G Rubber Co Pty Ltd (1919) 27 CLR 194 5, 6
Re United Railways of Havana and Regla Warehouses Ltd [1961] AC
1007
3
Rinehart v Welker [2011] NSWCA 403 4, 5
Roelandts v Harrison (1854) 9 Ex 444 8
Rothwells Ltd (in liq) v Connell (1993) 27 ATR 137 3
Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169 5, 6
Seeley International Pty Ltd v Electra Air Conditioning BV [2008] FCA
29
4, 5
Shogun Finance Ltd v Hudson [2004] 1 AC 919 6
Simmons Ltd v Hay (1964) 81 WN (Pt 1) (NSW) 358 18
TEAM 11 MEMORANDUM FOR RESPONDENT
X
Sir Lindsay Parkinson & Co Ltd v Commissioners of Works [1949] 2 KB
632
19
Society Maritime Caledonienne v The Cythera [1965] NSWR 146 21
Sorby v Commonwealth (1983) 152 CLR 281 5
Spinney’s (1948) Ltd v Royal Insurance Co [1980] 1 Lloyd’s Rep 406 15
State Rail Authority of NSW v Codelfa Construction Pty Ltd (1982) 150
CLR 29
18
Sulamérica Cia Nacional de Seguros SA v Enesa Engenharia SA [2013]
1 WLR 102
2, 3
Symes v Mahon [1922] SASR 447 13
The Assunzione [1954] 2 WLR 234 3
The Aztecs (1870) 3 Asp. M.L.C. 326 21
The Beaverford v The Kafiristan (Owners) [1938] AC 136 23
The Beulah (1842) 166 ER 650 24
The Charlotte (1848) 3 W. Rob. 68 21
The Five Steel Barges (1890) 15 P.D. 142 24
The Glaucus (1948) 81 Ll L Rep 262 21, 24
The Glenbeg (1940) 67 Ll L Rep 437 24
The Helmsman (1950) 84 Ll L Rep 207 21
The Homewood (1928) 31 Ll L Rep. 336 24
The Jubilee (1879) 4 Asp. 275 24
The Leon Blum [1915] P. 90 24
The Liverpool [1893] P. 154 24
The Lomonosoff [1921] P 97 21
The Minnehaha (1861) 15 ER 444 24
The Mount Cynthos (1937) 58 Ll L Rep 18 21
The North Goodwin No. 16 [1980] 1 Lloyd’s Rep 71 24
TEAM 11 MEMORANDUM FOR RESPONDENT
XI
The Princess Alice (1848) 3 W. Rob. 138 24
The Refrigerant [1925] P. 130 24
The Renpor (1883) 8 P.D. 115 25
The Saratoga (1861) Lush. 318 24
The Ship Texaco Southampton v Burley [1982] 2 NSWLR 336 23
The Stanmore (1897) 13 T.L.R. 165 24
The Troilus [1950] P 92 21
Triton Navigation Ltd v Vitol SA [2003] EWCA Civ 1715 10
Turnbull v Owners of the Strathnaver (1875) LR 1 App Case 58 21
Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk
Hydropower Plant LLP [2013] 1 WLR 1889
2
W J Tatem Ltd v Gamboa [1939] 1 KB 132 18
Ward v Byham [1956] 1 WLR 496 23
Wells v Owners of The Gas Float Whitton (No 2) [1897] AC 337 21
Williams v Williams [1957] 1 WLR 148 23
BOOKS REFERRED TO AT PAGE:
Beale, Hugh, Chitty on Contracts (Sweet & Maxwell, 32nd ed, 2015) 18
Blackaby, Nigel, Constantine Partasides, Alan Redfern, and Martin
Hunter, Redfern and Hunter on International Arbitration (Oxford
University Press, 6th ed, 2015)
2, 3
Born, Gary, International Commercial Arbitration (Kluwer Law
International, 2nd ed, 2014)
2, 4, 13
Eder, Bernard, Howard Bennett, Steven Berry, David Foxton and
Christopher Smith, Scrutton on Charterparties and Bills of Lading (22nd
ed, 2011, Sweet & Maxwell)
8
Griffin, Paul Liquefied Natural Gas: The Law and Business of LNG
(Globe Business Publishing Ltd, 2nd ed, 2012)
14
TEAM 11 MEMORANDUM FOR RESPONDENT
XII
Hill, Christopher, Maritime Law (Lloyd’s Shipping Law Library, 6th ed,
2003)
12
McKendrick, Ewan, Force Majeure and Frustration of Contract (Lloyd’s
of London Press Ltd, 2nd ed, 1991)
20
Rainey, Simon, The Law of Tug and Tow and Offshore Contracts,
(Informa Law from Routledge, 3rd ed, 2011)
24
Reeder, John Brice on Maritime Law of Salvage (Sweet & Maxwell, 5th
ed, 2012)
20
Rose, Francis, Kennedy’s Law of Salvage (Stevens & Sons Limited, 7th
ed, 2010)
20
Schofield, John, Laytime and Demurrage (Lloyd’s Shipping Law Library,
6th ed, 2011)
10
Stone, Richard and James Devenney, The Modern Law of Contract
(Routledge, 10th ed, 2015)
23
Thomson, Joshua, Warnick, Leigh and Kenneth Martin, Commercial
Contract Clauses: Principles and Interpretation (Thomson Reuters
(Professional) Australia Ltd, 2nd ed, 2016)
13
Treitel, Sir Guenter Frustration and Force Majeure (Sweet & Maxwell,
3rd ed, 2014)
18, 20
White, Michael, Australian Maritime Law (The Federation Press, 3rd ed,
2014)
20, 21, 23, 25
JOURNAL ARTICLES REFERRED TO AT PAGE:
Lew, Julian, ‘The Law Applicable to the Form and Substance of the
Arbitration Clause’ (1999) 9 ICCCA Congress Series 114
3
STATUTES AND CONVENTIONS REFERRED TO AT PAGE:
Admiralty Act 1988 (Cth) 12
Arbitration Act 1996 (UK) 2
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, opened for signature 10 June 1958, 330 UNTS 38 (entered into
force 7 June 1959)
3
Customs Act 1901 (Cth) 16
TEAM 11 MEMORANDUM FOR RESPONDENT
XIII
Customs and Other Legislation Amendment (Australian Border Force)
Act 2015 (Cth)
16
International Arbitration Act 1974 (Cth) 2
International Convention on Salvage, opened for signature 1 July 1909,
1996 UNTS 194 (entered into force 28 April 1989)
23
Maritime Conventions Act 1911 (Singapore) 23
Merchant Shipping Act 1995 (UK) 23
Navigation Act 2012 (Cth) 23
Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth) 22
Supreme Court Act 1981 (UK) 12
UNCITRAL Model Law on International Commercial Arbitration 2
TEAM 11 MEMORANDUM FOR RESPONDENT
1
STATEMENT OF FACTS
1. Hestia Industries (RESPONDENT) is a producer of Hades Liquefied Natural Gas (HLNG) based in
Hades. In July 2014, RESPONDENT contacted Zeus Shipping and Trading Company (CLAIMANT), a
shipping company based in Demeter, and invited CLAIMANT to tender for the transport of its HLNG
from Hades to Demeter.
2. CLAIMANT offered to transport the HLNG aboard the Athena in accordance with its standard
form Charterparty. Under that Charterparty, Clause 30 provided that the Parties would arbitrate "any
dispute arising out of or in connection with this contract". Clause 9 provided for 10 lay-days and
Clause 10 required RESPONDENT to pay demurrage when those lay-days expired. Clause 19 excused
liability if a Force Majeure Event caused a delay in performance.
3. RESPONDENT was only prepared to accept the terms of the Charterparty if a non-negotiable
amendment was made to Clause 30. In accordance with RESPONDENT’S request, CLAIMANT amended
Clause 30, limiting its scope to “dispute[s] arising under this contract” and omitting the conferral of
jurisdiction to arbitrate for questions regarding the “existence, validity or termination” of the
contract. Both Parties duly executed the amended Charterparty.
4. When the Athena arrived at the Port of Hades, violent protests erupted. Shortly thereafter,
Opposition Leader Jacqueline Simmons seized power by way of a military coup in an
“unprecedented move”. As her first act, President Simmons ordered the Hades Coast Guard to stop
the Athena from leaving Hades. The Athena was intercepted and detained at the Port for 358 days.
5. Following President Simmons’ sudden resignation, the Athena was released. During its period of
detention, the Athena’s propeller shafts had been tampered with. Both broke shortly after the Athena
set sail from Hades. Hestug, a business owned by RESPONDENT, towed the Athena to safety, "likely
saving many millions of dollars’ worth of cargo and vessel."
6. CLAIMANT commenced arbitral proceedings on 16 November 2015 for the payment of demurrage.
RESPONDENT cross-claimed for salvage reward.
TEAM 11 MEMORANDUM FOR RESPONDENT
2
ARGUMENTS ON JURISDICTION
I. THE TRIBUNAL DOES NOT HAVE JURISDICTION TO DETERMINE RESPONDENT’S DEFENCE OF
FRUSTRATION AND THEREFORE CLAIMANT’S PLEADING FOR DEMURRAGE
1. The Parties have agreed that the Tribunal has jurisdiction to hear the salvage counter-claim.1 However,
RESPONDENT challenges the Tribunal’s jurisdiction to hear the defence of frustration, and therefore to
determine the pleading for demurrage.
2. Under the doctrine of competence-competence, the Tribunal has power to determine its own
jurisdiction2 by construing the arbitration agreement according to its governing law.3 The law of Western
Australia governs the arbitration agreement (A). Under that law, the arbitration agreement does not grant
the Tribunal jurisdiction over RESPONDENT's defence of frustration and therefore CLAIMANT’s pleading
for demurrage (B).
A. The law of Western Australia governs the arbitration agreement
3. The Parties have not expressly chosen a governing law for the arbitration agreement. In the absence of
such a choice, the system of law with the “closest and most real connection” to the arbitration agreement
governs that agreement.4 In this case, this is the law of Western Australia (i). The choice of London as
the arbitral seat does not change this conclusion (ii).
1 Record 76-8. 2 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; See also QH Tours Ltd v Ship Design and
Management (Aust) Pty Ltd (1991) 105 ALR 371, 384 (Foster J); Comandate Marine Corp v Pan Australia Shipping Pty Ltd
(2006) 157 FCR 45 (‘Comandate’), 87-8 [164]-[166] (Allsop J); Dallah Real Estate and Tourism Co v Ministry of Religious
Affairs of the Government of Pakistan [2011] 1 AC 763, 830 [84] (Lord Collins of Mapesbury JSC); Ust-Kamenogorsk
Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] 1 WLR 1889, 1902 (Lord Mance);
UNCITRAL Model Law on International Commercial Arbitration, Article 16(1); International Arbitration Act 1974 (Cth), s
16; Arbitration Act 1996 (UK), s 30(1). 3 Gary Born, International Commercial Arbitration (Kluwer Law International, 2nd ed, 2014), (‘Born’) 1405-6; Paper
Products Pty Limited v Tomlinsons (Rochdale) Ltd & Ors (1993) 43 FCR 439 (‘Paper Products’), 444 (French J). 4 Bonython v Commonwealth (1950) 81 CLR 486, 498 (Viscount Simon, Lords Simonds, Morton of Henryton, MacDermott
and Reid); Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50, 61 (Lord Diplock); Oceanic Sun Line Special
Shipping Co Inc v Fay (1988) 165 CLR 197, 217 (Wilson and Toohey JJ); Akai Pty Ltd v People’s Insurance Co Ltd (1996)
188 CLR 418, 418-9, 437-441, 443 (Toohey, Gaudron and Gummow JJ); Sulamérica Cia Nacional de Seguros SA v Enesa
Engenharia SA [2013] 1 WLR 102 (‘Sulamérica’), 108 [8]-[9] (Moore-Bick LJ).
TEAM 11 MEMORANDUM FOR RESPONDENT
3
(i) The law of Western Australia has the closest and most real connection to the arbitration
agreement
4. The Parties expressly chose the law of Western Australia to govern their substantive agreement.5 There
is a presumption that the same law governs the arbitration agreement.6 That presumption is only rebutted
in two situations: first, the parties may expressly agree that a different law should govern the arbitration
agreement; second, the law of the substantive agreement may render the award unenforceable and
entirely undermine the arbitration agreement.7 Neither exception applies. Therefore, the Tribunal should
apply the law of Western Australia to both agreements.
5. Further, CLAIMANT is located in Demeter,8 and RESPONDENT in Hades.9 Both Demeter and Hades apply
the law of Western Australia.10 Therefore, four additional factors indicate that the law of Western
Australia has the closest and most real connection to the arbitration agreement. First, both Parties are
located in states that apply Western Australian law.11 Second, both Parties executed their counterparts
of the Charterparty in states that apply Western Australian law.12 Third, the subject matter13 of the
arbitration agreement is “disputes arising under the Charterparty”,14 which is an agreement for the
voyage of a Hades-flagged ship15 between states that apply Western Australian law. Fourth, the
arbitration is regulated by an Australian set of institutional rules16 and involved preliminary activities
5 Record 36, Clause 31. 6 Redfern and Hunter, 156-7; Julian Lew, ‘The Law Applicable to the Form and Substance of the Arbitration Clause’ (1999)
9 ICCCA Congress Series 114 (‘Lew’), 143; Michael Mustill and Stewart Boyd, The Law and Practice of Commercial
Arbitration in England (Butterworths Legal, 2nd ed, 1989), 63; Sulamérica, 109 [11] (Moore-Bick LJ); Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, opened for signature 10 June 1958, 330 UNTS 38 (entered into
force 7 June 1959) (‘New York Convention’), art V(1)(a). 7 Redfern and Hunter, 159; C v D [2007] EWCA Civ 1282, [28] (Longmore LJ); Sulamérica, 115 [29]-[30] (Moore-Bick
LJ). 8 Record 2. 9 Record 1, 79. 10 Record 79. 11 Rothwells Ltd (in liq) v Connell (1993) 27 ATR 137, 143 (Fitzgerald P and Williams J). 12 R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 500 (‘International Trustee’),
529 (Lord Atkin); Re United Railways of Havana and Regla Warehouses Ltd [1961] AC 1007, 1021 (Jenkins, Romer and
Willmer LJJ); Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366, 369 (Rogers J). 13 International Trustee, 529 (Lord Atkin); The Assunzione [1954] 2 WLR 234, 261 (Hodson LJ); Coast Lines Ltd v Hudig
& Veder Chartering NV [1972] 2 WLR 280, 286 (Lord Denning M.R.), 289 (Megaw LJ). 14 Record 20, Clause 30(a). 15 Record 2. 16 Record 45, Clause 30(a).
TEAM 11 MEMORANDUM FOR RESPONDENT
4
such as appointing arbitrators and exchanging points of claim,17 which took place in states that apply
Western Australian law.
(ii) The choice of London as the arbitral seat does not determine that English law governs the
arbitration agreement
6. In light of the above factors, CLAIMANT cannot rely on the choice of London as the arbitral seat to rebut
the presumption that Western Australian law, as the proper law of the contract, also governs the
arbitration agreement. In any event, a determination that English law governs the arbitration agreement
does not prejudice RESPONDENT’s submission that the arbitration agreement does not grant the Tribunal
jurisdiction to determine RESPONDENT’s defence of frustration.
B. The arbitration agreement does not grant the Tribunal jurisdiction over RESPONDENT's defence
of frustration and therefore CLAIMANT's pleading for demurrage
7. On the proper construction of the Charterparty, the Parties objectively intended that the defence of
frustration was not arbitrable as a dispute “arising under the Charterparty”.18 This is because it is
reasonable for parties to limit the scope of the arbitration agreement (i), and both the language of the
arbitration agreement (ii) and the Parties' decision to delete certain words (iii) indicate that frustration is
not arbitrable. As a result, the Tribunal does not have jurisdiction to determine CLAIMANT’s demurrage
pleading (iv).
(i) It is reasonable for parties to limit the scope of the arbitration agreement
8. Australian courts have not adopted the approach taken by English courts that there is an automatic
presumption of one-stop arbitration, irrespective of the language used by the parties.19 Arbitration is a
consensual process, 20 and the Parties are entitled to draw limits on the jurisdiction of the Tribunal.21
17 Record 72-3, 75-7. 18 Born, 1064; Interim Award in ICC Case No. 7929, XXV Y.B. Comm. Arb. 312, 317 (2000). 19 Rinehart v Welker [2012] NSWCA 95 (‘Rinehart’), [121] (Bathurst CJ), [204] (McColl JA). 20 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 (‘Codelfa’), 346 (Mason J);
Comandate, 87 [165] (Allsop J). 21 Seeley International Pty Ltd v Electra Air Conditioning BV [2008] FCA 29 (‘Seeley’), [37] (Mansfield J).
TEAM 11 MEMORANDUM FOR RESPONDENT
5
Accordingly, in determining the scope of an arbitration agreement, the Tribunal should examine the
precise words and specific commercial context of the clause.22 This is particularly so because the Parties
have demonstrated care in arriving at and expressing their bargain.23
9. Even if there is any ambiguity in the arbitration agreement as to the arbitrability of frustration, it should
be construed in favour of RESPONDENT’S right to resolve disputes through litigation. First, the
Charterparty is CLAIMANT’s standard form contract,24 and so ambiguity should be resolved against
CLAIMANT.25 Second, construing the clause broadly to encompass disputes such as frustration would
deny RESPONDENT the right to seek a court remedy. A party may only surrender such rights by express
words or clear implication.26 RESPONDENT did not do so.
(ii) The language of the agreement indicates that frustration is not arbitrable
10. A claim of frustration does not arise “under” the Charterparty for three reasons. First, frustration requires
a supervening event that is unforeseen by the parties.27 This means frustration arises outside the scope
of the contract and not under the Parties’ contractual obligations. The Parties cannot have intended an
unforeseen event to be within the Tribunal's jurisdiction. Second, frustration is a mode of termination,
and a frustrated contract ceases to exist.28 A dispute cannot arise under a non-existent contract. Hence,
frustration does not arise under the Charterparty.
22 Paper Products, 448 (French J); Comandate, 87 [164] (Allsop J); Seeley, [37] (Mansfield J); Rinehart, [120] (Bathurst
CJ), [204] (McColl JA). 23 Seeley, [37] (Mansfield J). 24 Record 3. 25 Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500, 510 (Mason, Wilson, Brennan, Deane and Dawson
JJ); Nissho Iwai Australia Ltd v Malaysian International Shipping Corp Berhad (1989) 167 CLR 219, 227 (Mason CJ,
Brennan, Deane, Gaudron and McHugh JJ); Eridania SpA v Oetker (The Fjord Wind) [2000] 2 Lloyd’s Rep 191, 216 (Clarke
LJ). 26 Sorby v Commonwealth (1983) 152 CLR 281, 309-310 (Mason, Wilson and Dawson JJ); Goldberg v Ng (1995) 185 CLR
83, 93-4 (Deane, Dawson and Gaudron JJ). 27 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 (‘Davis Contractors’), 729 (Lord Radcliffe);
Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724 (‘The Nema’), 751 (Lord Roskill); Codelfa, 359 (Mason J). 28 Re Continental C&G Rubber Co Pty Ltd (1919) 27 CLR 194 (‘Continental’), 201 (Knox CJ, Barton J); Hirji Mulji v
Cheong Yue SS Co Ltd [1926] AC 497 (‘Hirji Mulji’), 509; Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169
(‘Scanlan’s’), 203 (McTiernan J); J Lauritzen AS v Wijsmuller BV [1990] 1 Lloyd's Rep 1 (‘The Super Servant Two’), 8
(Bingham LJ); Codelfa, 357 (Mason J).
TEAM 11 MEMORANDUM FOR RESPONDENT
6
(iii) The Parties’ decision to delete certain words indicates frustration is not arbitrable
11. The parol evidence rule generally prevents pre-contractual negotiations from being used to construe the
final contract.29 However, Australian and English courts have consistently held that when parties modify
standard form contracts by deleting particular words, the deleted words may be used to construe those
that remain.30 Here, the Parties specifically deleted words giving the Tribunal jurisdiction over “any
question regarding [the contract's] existence, validity, or termination”.31 Deleting those words indicates
the Parties intended that the Tribunal would not have power to hear such questions. Frustration is a form
of termination, and a frustrated contract no longer exists.32 It necessarily regards the contract’s existence
and termination. Thus, the Tribunal does not have jurisdiction to determine the defence of frustration.
(iv) The Tribunal does not have jurisdiction to hear CLAIMANT’s pleading for demurrage because
RESPONDENT’s defence of frustration is not arbitrable
12. Where parties limit the Tribunal’s jurisdiction to hear a defence, they necessarily limit the Tribunal’s
jurisdiction over claims against which that defence is raised. In such circumstances, both the claim and
the defence should be determined through litigation. Here, the Parties intended for the scope of the
arbitration agreement to be limited.33 The defence of frustration does not fall within that limited scope.
CLAIMANT’s assertion that its pleading for demurrage and RESPONDENT’s defence of frustration are
arbitrable undermines their agreement and the nature of arbitration as a consensual process. 34
29 Codelfa, 347-8 (Mason J); Shogun Finance Ltd v Hudson [2004] 1 AC 919, 944 (Lord Hobhouse). 30 Louis Dreyfus & Cie v Parkas Cia Naviera SA [1959] 1 QB 491, 513 (Diplock J); Mottram Consultants Ltd v Bernard
Sunley & Sons Ltd [1975] 2 Lloyd’s Rep 197, 209 (Lord Cross); Codelfa, 352 (Mason J); NZI Capital Corp Pty Ltd v Child
(1991) 23 NSWLR 481, 493-4 (Rogers CJ Comm D); Esso Australia Ltd v Australian Petroleum Agents’ & Distributors’
Association [1999] 3 VR 642, 647 (Hayne J); BP Australia Pty Ltd (formerly BP Australia Ltd) v Nyran Pty Ltd (2003) 198
ALR 442, 449-50 (Nicholson J). 31 Record 46, Clause 30(a). 32 Continental, 201 (Knox CJ, Barton J); Hirji Mulji v Cheong Yue SS Co Ltd [1926] AC 497 (‘Hirji Mulji’), 509 (Lord
Summer); Scanlan's, 203 (McTiernan J); The Super Servant Two, 8 (Bingham LJ). 33 Record 25, 27, 45. 34 Codelfa, 346 (Mason J); Comandate, 87 [165] (Allsop J).
TEAM 11 MEMORANDUM FOR RESPONDENT
7
13. Further, the Parties' different degree of knowledge about the Charterparty indicates that the
representation is a term.35 CLAIMANT drafted the Charterparty and uses it as a standard form contract.36
RESPONDENT was encountering the Charterparty for the first time. A reasonable person would consider
CLAIMANT to be more familiar with the Charterparty and the effect of any amendments. Therefore, they
would consider CLAIMANT's representations about that effect binding.
ARGUMENTS ON THE MERITS OF THE CLAIM
II. RESPONDENT IS NOT LIABLE TO CLAIMANT FOR DEMURRAGE
14. The Athena was detained at the Port of Hades because the Master of the Athena chose to return the
vessel to port.37 This conduct, recognised by CLAIMANT itself as unacceptable,38 led to RESPONDENT
being unable to receive valuable and likely time-sensitive cargo.39 The cargo was held at the port for
almost a year even though the voyage was anticipated to only take one month.40 Despite this, CLAIMANT
now seeks that it be rewarded in the sum of $US 17.9 million.41
15. Demurrage only accrues upon the expiration of laytime.42 Here, RESPONDENT is not liable to CLAIMANT
for demurrage because the Athena left the Loading Place before laytime expired (A) and despite her
interception and subsequent return to port (B). In the alternative, laytime was interrupted when the
Athena was intercepted by the Hades Coast Guard (C).
A. The Athena left the Loading Place before laytime expired
16. Clause 9(c)(i) of the Charterparty provides that RESPONDENT was permitted ten days for loading. The
time spent loading would be calculated from when CLAIMANT tendered the Notice of Readiness “until
35 Leaf v International Galleries [1950] 2 KB 86, 89 (Denning LJ); Dick Bentley Productions Ltd v Harold Smith (Motors)
Ltd [1965] 1 WLR 623, 628 (Lord Denning MR); Ellul v Oakes (1972) 3 SASR 377, 381 (Bray CJ); Academy of Health
and Fitness Pty Ltd v Power [1973] VR 254, 265 (Crockett J). 36 Record 3. 37 Record 57, 65. 38 Record 58. 39 Record 61. 40 Record 2, 75. 41 Record 69, 70. 42 Record 36, Clause 10.
TEAM 11 MEMORANDUM FOR RESPONDENT
8
the vessel leaves the Loading Place”.43 CLAIMANT tendered the Notice of Readiness on 3 October
2014.44 On 7 October 2014, five days before laytime expired, the Master sailed the Athena from her
berth, issued a Statement of Facts for the port visit,45 cleared customs,46 and continued on the voyage to
Demeter until she was intercepted near the boundary of Hades’ territorial sea.47 This amounted to the
Athena leaving the Loading Place for four reasons.
17. First, a vessel leaves the loading place when it leaves the port at which it was loaded. That the vessel
may remain within the territorial waters of the state to which the Port belongs is irrelevant. The natural
and ordinary meaning48 of a “loading place” is the place where loading occurs. A charterer can only
load the vessel from land when she is physically at her berth; a ship cannot still be loaded when she is
at sea approximately twelve nautical miles away. This is why the Parties expressly defined the Loading
Place as a “port” and not the State of Hades at large.49
18. Second, courts have held that a vessel has left port when she has passed the limits of the port, ready for
her voyage and with the purpose of proceeding without any intention of coming back.50 That meaning
has also been adopted as “usual maritime custom” so that a vessel’s visit to a port is formally treated as
being at an end when she clears customs and her Master issues a Statement of Facts as a record of its
time of leaving.51 The Tribunal should construe “Loading Place” in accordance with that meaning.
Hence, by sailing approximately twelve nautical miles away from the Port of Hades towards the
boundary of the territorial sea, the Athena left the Loading Place.
43 Record 34. 44 Record 54. 45 Record 54. 46 Record 54. 47 Record 57. 48 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 (‘Cooper Brookes’),
320 (Gibbs CJ); Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541, 560
(Mahoney JA) (‘Provincial Insurance’); Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR
896, 913 (Lord Hoffmann) (‘Investors Compensation Scheme’); Franklins Pty Ltd v Metcash Trading Ltd (2009) 264 ALR
15, [53] (Giles JA) (‘Franklins’); Arnold v Britton and others [2015] UKSC 36 (‘Arnold’), [15] (Lord Neuberger). 49 Record 29, Box 5. 50 Bernard Eder, Howard Bennett, Steven Berry, David Foxton, Christopher Smith, Scrutton on Charterparties and Bills of
Lading (22nd ed, 2011, Sweet & Maxwell), 260; Roelandts v Harrison (1854) 9 Ex 444, 456 (Parke B); Price v Livingstone
(1882) 9 QBD 679, 681 (Jessel MR); Leonis Co v Rank [1908] 1 KB 499, 519 (Kennedy LJ); Hunter v Northern Insurance
Co (1888) 13 AC 717, 733 (Lord Watson). 51 Record 61; High Seas Venture Ltd Partnership v Sinom (Hong Kong) Ltd (‘The Newforest’) [2008] 1 Lloyd's Rep 504,
512 (Mackie J).
TEAM 11 MEMORANDUM FOR RESPONDENT
9
19. Third, that construction accords with the commercial purpose of the clause. Clause 9(c)(i) explicitly
allows laytime as “time permitted for loading”.52 The commercial purpose of such laytime clauses is to
ensure that charterers do not delay a voyage by taking too long to load.53 That purpose was fulfilled
when loading was completed and the Athena cleared customs, after which no further loading took
place.54 The Athena’s delay was not due to any default in loading on RESPONDENT’s part. In fact, loading
was completed on 6 October 2014, almost a week before the allotted laytime expired.55
20. Fourth, to require a vessel to leave a state’s territorial sea for it to leave the loading place has
commercially unreasonable consequences which the Tribunal should avoid.56 For example, a vessel that
transports goods between two coastal states but navigates close to the coast and within the territorial sea
of the first state for much of its journey would be construed to never have left the loading place during
that time. In that event, laytime would continue to run and demurrage would accrue whether or not the
vessel was loaded within the allotted time. The Parties did not intend for such commercially
unreasonable consequences. Hence, when the Athena left the port where it was loaded and sailed almost
twelve nautical miles away, it left the Loading Place before laytime expired and before demurrage began
to accrue.
B. The Athena left the Loading Place despite her interception and subsequent return to port
21. The interception and subsequent return of the Athena to the Port of Hades does not mean she never left
the Loading Place for three reasons. First, this construction imposes an artificial restriction upon the
ordinary meaning of the word. “Leave” would be read in the sense of “leave and never return” even
52 Record 34. 53 Nielsen v Wait (1885) 16 QBD 67, 70 (Lord Esher MR); Compania Naviera Aeolus SA v Union of India [1962] 3 WLR
1123, 1131 (Lord Reid); Dias Compania Naviera SA v Louis Defus Corp [1978] 1 All ER 724, 726 (Lord Diplock). 54 Record 54. 55 Record 54. 56 Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455 (‘Gollin’), 464 (Mason, Murphy, Brennan, Deane and
Dawson JJ); Burke v State Bank of New South Wales (1994) 37 NSWLR 53 (‘Burke’), 71 (Santow J); Pan Foods Co
Importers & Distributors Pty Ltd v Australia and New Zealand Banking Group Ltd (2000) 170 ALR 579 (‘Pan Foods’), 584
(Kirby J); Rainy Sky SA v Kookmin Bank [2012] 1 All ER 1137 (‘Rainy Sky’), 1149 (Clarke LJ).
TEAM 11 MEMORANDUM FOR RESPONDENT
10
though the actual meaning only entails the act of going away from a place. Returning to a place does
not mean one never left.57
22. Second, this strained construction has commercially unreasonable consequences which the Tribunal
should avoid.58 Under this construction, if the Athena was returned to the Port of Hades and detained
there, laytime would continue to run and demurrage would accrue; but if the Athena were detained
anywhere else in the world, including on the high seas, demurrage would not accrue. Neither the
Athena’s navigational route nor the place of detention were material points of difference that would
result in fundamentally different allocations of risk. The Parties, as reasonable commercial businesses,59
did not intend laytime to run or demurrage to accrue on an irrelevant distinction and the Tribunal should
give effect to that intention.
23. Third, the conclusion that the Athena’s interception and return did not require RESPONDENT to pay
demurrage is the most commercial one because it was CLAIMANT and not RESPONDENT which had the
ability to prevent the interception.60 The commercial purpose of a demurrage clause is to allocate risk
of delays to the party which is most capable of mitigating that risk. A voyage charter is traditionally
divided into four stages, each of which must be completed before the next can begin:61 the loading
voyage, the loading operation, the carrying voyage, and the discharging operation.62 Both parties share
the responsibility for ensuring that the loading operation is completed on time but the shipowner alone
bears responsibility for delays that occur at sea during the carrying voyage.63 This recognises the relative
capacity of the parties in balancing the obligations assumed between them: both parties can contribute
57 Prince v Livingstone (1882) 9 QBD 679, 681 (Jessel MR); Hunter v Northern Insurance Co (1888) 13 AC 717, 733 (Lord
Watson); Leonis Co v Rank [1908] 1 KB 499, 519 (Kennedy LJ). 58 Gollin, 464 (Mason, Murphy, Brennan, Deane and Dawson JJ); Burke, 71 (Santow J); Pan Foods, 584 (Kirby J); Rainy
Sky, 1149 (Clarke LJ). 59 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181, 189 (Gleeson CJ, Gummow and Hayne JJ); Pacific
Carriers v BNP Paribas (2004) 218 CLR 451, 462 (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Electricity
Generation Corporation v Woodside Energy Ltd & Others (2014) 251 CLR 640, 656 (French CJ, Hayne, Crennan and Kiefel
JJ). 60 Minchillo v Ford Motor Co of Australia Ltd [1995] 2 VR 594, 609 (Ormiston J); Concut Pty Ltd v Worrell (2000) 176
ALR 693, 708-9 (Kirby J); McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579, 589 (Gleeson CJ). 61 John Schofield, Laytime and Demurrage (Lloyd’s Shipping Law Library, 6th ed, 2011) (‘Schofield’), 2 [1.12]. 62 Schofield, 2 [1.11], 302-3 [4.470]; EL Oldendorff & Co GmbH v Tradax Export SA [1974] AC 479, 556 (Lord Diplock). 63 Schofield, 2-3 [1.14]-[1.15], 302-3 [4.470]; Triton Navigation Ltd v Vitol SA [2003] EWCA Civ 1715, [11] (Mance LJ);
Carboex SA v Louis Dreyfus Commodities Suisse SA [2013] 2 WLR 754, 762 (Moore-Bick LJ).
TEAM 11 MEMORANDUM FOR RESPONDENT
11
to the efficacy of the loading operation but once the vessel is at sea on its carrying voyage, the journey
is entirely under the control of the shipowner and the charterer cannot mitigate delays that occur there.
24. Consistent with that commercial allocation of risk, RESPONDENT should not be held responsible for the
interception of the Athena because RESPONDENT had no capacity to prevent that interception. By
contrast, CLAIMANT could have prevented that delay. CLAIMANT appointed a Master for the voyage and
exercised control over the Athena through him.64 CLAIMANT could have selected a Master who was
aware of the limits of a flag state’s jurisdiction,65 or at least who would communicate with CLAIMANT
rather than simply following the Coast Guard’s orders.66 That CLAIMANT recognised the Master’s
conduct was unacceptable and immediately stood him down indicates that a more competent Master
could have prevented the delay.67
25. Further, as CLAIMANT warranted the Athena would be “in every way fitted for the voyage”,68 CLAIMANT
could have given the Master the means of testing whether the Athena was within Hades’ territorial
waters, such as by ensuring the Athena was equipped with appropriate navigational instruments. Since
the commercial purpose of the demurrage clause is to allocate risk to the party which has the most
capacity to mitigate it, and RESPONDENT has no such capacity, the risk should not be allocated to
RESPONDENT. Therefore, RESPONDENT is not liable to pay demurrage in spite of the Athena’s
interception and subsequent return to the Port of Hades.
C. Laytime was interrupted when the Athena was intercepted by the Hades Coast Guard
26. In the alternative, the Athena’s interception by the Hades Coast Guard69 interrupted laytime under
Clause 9(e) of the Charterparty.70 Here, two of the exemptions contained in Clause 9(e) apply to interrupt
laytime: the delay was by reason of public enemies (i), and the delay was by reason of arrests (ii). If the
Athena’s interception was due to either reason, laytime was interrupted and demurrage did not accrue.
64 Record 53. 65 Record 62. 66 Record 56, 58. 67 Record 58. 68 Record 31, Clause 1. 69 Record 57. 70 Record 35, Clause 9(e).
TEAM 11 MEMORANDUM FOR RESPONDENT
12
i) The delay was by reason of “public enemies”
27. The Hades Coast Guard acted on the orders of Jacqueline Simmons,71 who took control of Hades through
a military coup.72 The Coast Guard’s interception of the Athena was directly responsible for the ensuing
delay. President Simmons and her followers, including the Hades Coast Guard employees, were public
enemies. The natural and ordinary meaning of “public enemy”73 is an enemy of the public as a group.
Simmons overthrew the publically elected government in Hades and imposed her own regime against
their democratic will. This positioned Simmons, and all individuals and bodies that acted on her behalf,
as public enemies of the State of Hades. As such, laytime was interrupted by public enemies and
demurrage did not accrue.
ii) The delay was by reason of “arrests”
28. The Hades Coast Guard’s seizure of the Athena was directly responsible for the delay. The Hades Coast
Guard intercepted the Athena, and directed her back to the Port of Hades.74 Once it was detained there,
the Athena was not free to leave with its cargo.75 The seizure of the Athena amounted to “arrests”. The
natural and ordinary meaning of “arrests” relates to seizures of persons or objects.76 The Parties are
presumed to intend this meaning, and not the specific technical application of the term in contexts where
judicial process is invoked to detain a vessel for the purposes of securing a maritime claim under
Admiralty jurisdiction.77 If the Parties had intended the term to apply only in that specific maritime
context, they would have expressly used the phrase “Court issued arrest proceedings”, as they do
elsewhere in the Charterparty where this is the intended meaning.78 The Tribunal should strive to give
71 Record 55, 57. 72 Record 55. 73 Cooper Brookes, 320 (Gibbs CJ); Provincial Insurance, 560 (Mahoney JA); Investors Compensation Scheme, 913 (Lord
Hoffmann); Franklins, [53] (Giles JA); Arnold, [15] (Lord Neuberger). 74 Record 57, 62. 75 Record 60. 76 Cooper Brookes, 320 (Gibbs CJ); Provincial Insurance, 560 (Mahoney JA); Investors Compensation Scheme, 913 (Lord
Hoffmann); Franklins, [53] (Giles JA); Arnold, [15] (Lord Neuberger). 77 Christopher Hill, Maritime Law (Lloyd’s Shipping Law Library, 6th ed, 2003), 103-5; Admiralty Act 1988 (Cth), s 15;
Supreme Court Act 1981 (UK), s 21. 78 Record 40, Clause 19(d).
TEAM 11 MEMORANDUM FOR RESPONDENT
13
the different clauses of the Charterparty a harmonious operation.79 The use of the plural “arrests” in
favour of the singular “arrest” further indicates that the Parties intended not to refer to the specific
maritime notion but to the range of ordinary occurrences that may potentially arise in the course of a
voyage charterparty.
29. Further, the legality or legitimacy of the arrest is irrelevant. 80 There is no requirement that the arrest be
lawful or violent: past decisions have held that the term “arrests” includes unlawful arrests and voluntary
submissions to authority.81 Further, requiring arrests to be lawful would lead to unreasonable
consequences. If the term “arrests” only encompassed lawful arrests, a commercial party would be
required to second-guess the lawfulness of government authorities or to resist their directions by force
to benefit from the clause. The Parties are reasonable commercial businesses and did not intend such an
unreasonable outcome.82 As such, the Athena was delayed by “arrests” such that laytime was interrupted
and demurrage did not accrue.
III. RESPONDENT IS NOT LIABLE TO PAY DEMURRAGE BECAUSE A FORCE MAJEURE EVENT LISTED IN
CLAUSE 19 CAUSED THE DELAY
30. Clause 19 of the Charterparty excludes liability where a failure or delay in performance is caused by a
Force Majeure Event.83 RESPONDENT is not liable to pay demurrage because the delay of the Athena was
by reason of a Force Majeure Event listed in Clause 19 (A), and the Parties intended for Clause 19 to
cover long and indefinite delays (B).
79 Born, 1065; Australian Broadcasting Commission v Australasian Performing Rights Association (1973) 129 CLR 99
(‘ABC’), 109 (Gibbs J); Born, 1065; Award in ICC Case No. 1434, 103 J.D.I. (Clunet) 978, 982 (1976); Gollin, 464 (Mason,
Murphy, Brennan, Deane, Dawson JJ). 80 Great Elephant Corporation v Trafigura Beheer BV, The Crudesky [2012] EWHC 1745 (Comm) (‘Great Elephant’), [65]-
[66] (Teare J). 81 Symes v Mahon [1922] SASR 447, 453 (Murray CJ); Myer Stores Ltd v Soo [1991] 2 VR 597, 626 (McDonald J). 82 Gollin, 464 (Mason, Murphy, Brennan, Deane and Dawson JJ); Burke, 71 (Santow J); Pan Foods, 584 (Kirby J); Rainy
Sky, 1149 (Clarke LJ). 83 Record 39, Clause 19.
TEAM 11 MEMORANDUM FOR RESPONDENT
14
A. The delay was caused by a Force Majeure Event listed in Clause 19
31. A force majeure clause is a risk allocation mechanism.84 It gives commercial parties flexibility and
certainty by excluding liability where performance is prevented by events beyond their control.85 The
scope of a force majeure clause is a question of construction.86 RESPONDENT is not liable to pay
demurrage because of the exemptions listed in Clause 19(c) of the Charterparty (i) and in Clause 19(d)
of the Charterparty (ii).
(i) RESPONDENT is not liable to pay demurrage because of the exemptions listed in Clause 19(c) of
the Charterparty
32. The delay of the Athena was caused by “hindrances of whatsoever nature in mining, processing, loading,
shipping or discharging of products”. In this context, “shipping” refers to the carrying voyage of the
Athena from Hades to Demeter. This is because the Parties intended to use the natural and ordinary
meaning of words in the Charterparty.87 “Shipping” naturally refers to the carrying voyage of the Athena
from the loading port to the discharge port. This meaning is harmonious with other parts of the
Charterparty88 where the word “shipping” is used to refer to the carrying voyage.89
33. Further, the words of a force majeure clause must be construed in light of the words that precede and
follow it.90 The phrase “mining, processing, loading, shipping or discharging” indicates a clear intention
of the Parties to encompass each part of the HLNG supply chain.91 Therefore, the detention of the Athena
in the Port of Hades constitutes a hindrance in shipping of products.
84 Joshua Thomson, Leigh Warnick and Kenneth Martin, Commercial Contract Clauses: Principles and Interpretation
(Thomson Reuters (Professional) Australia Ltd, 2nd ed, 2016) (‘Thomson et al.’), 552. 85 Thomson et al, 552. 86 Lebeaupin v Richard Crispin & Co [1920] 2 KB 714, 720 (McCardie J); Gardiner v Agricultural and Rural Finance Pty
Ltd [2007] NSWCA 235, [224] (Basten JA). 87 Cooper Brookes, 320 (Gibbs CJ); Provincial Insurance, 560 (Mahoney JA); Investors Compensation Scheme, 913 (Lord
Hoffmann); Franklins, [53]; Arnold, [15] (Lord Neuberger). 88 ABC, 109 (Gibbs J). 89 Record 35, Clause 9(e). 90 Lebeaupin v Richard Crispin & Co [1920] 2 KB 714, 720 (McCardie J). 91 Paul Griffin, Liquefied Natural Gas: The Law and Business of LNG (Globe Business Publishing Ltd, 2nd ed, 2012), 14.
TEAM 11 MEMORANDUM FOR RESPONDENT
15
(ii) RESPONDENT is not liable to pay demurrage because of the exemptions listed in Clause 19(d) of
the Charterparty
34. RESPONDENT can rely on three different exemptions listed in Clause 19(d). First, the delay was caused
by “hostilities… or other similar cause”. The Parties refer to war and hostilities as separate Force
Majeure Events in Clause 19(d).92 The Tribunal should give meaning to every word of the clause.93
Therefore, “hostilities” requires a lower threshold of violence than war. Taking its natural and ordinary
meaning,94 “hostilities” refers to any violent conflict.
35. Further, courts have held that “hostilities” includes acts committed in the course of an organized armed
rebellion.95 When parties use a term that has been given a specific meaning by courts, they are presumed
to intend its legal meaning.96 Therefore it can be inferred that a change of government, led by the General
of the Hades military97 and described as a “military coup”,98 is a violent conflict. This is evident because
the coup was sparked by a “violent rampage”99 and large protests at the Port of Hades.100 Therefore, the
military coup amounted to “hostilities”.
36. In any event, the Parties intended for the military coup to be covered by “other similar cause”. The
words of a general catch-all phrase must be interpreted with regard to the class of events that precede
it.101 The Force Majeure Events under Clause 19(d) are all interventions that are external to the
Charterparty and have a tangible physical effect on performance. The military coup in Hades was an
92 Record 40. 93 International Fina Services AG v Katrina Shipping Ltd (The Fina Samco) [1995] 2 Lloyd’s Rep 344, 350 (Neill LJ);
Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402, 411 (Lockhart and Hill JJ); Dovuro Pty Ltd v Wilkins
(2000) 105 FCR 476, [152] (Finkelstein J). 94 Cooper Brookes, 320 (Gibbs CJ); Provincial Insurance, 560 (Mahoney JA); Investors Compensation Scheme, 913 (Lord
Hoffmann); Franklins, [53]; Arnold, [15] (Lord Neuberger). 95 Atlantic Mutual Insurance Co v King [1919] 1 KB 307, 310 (Bailhache J); Spinney’s (1948) Ltd v Royal Insurance Co
[1980] 1 Lloyd’s Rep 406, 437 (Mustill J). 96 Brett v Barr Smith (1919) 26 CLR 87, 93 (Isaacs J); Guthiel v Ballarat Trustees, Executors & Agency Co Ltd (1922) 30
CLR 293, 299 (Knox CJ); Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64, [167]
(Campbell JA). 97 Record 55. 98 Record 55. 99 Record 52. 100 Record 52. 101 Eiusdem generis: Lend Lease Real Estate Investments Ltd v GPT RE Ltd [2006] NSWCA 207 [31] (Spigelman CJ); The
Super Servant Two [1990] 1 Lloyd’s Rep 1, 7 (Bingham LJ); Cody v JH Nelson Pty Ltd (1947) 74 CLR 629, 639 (Starke J);
Sun Fire Office v Hart (1889) 14 App Cas 98, 103 (Lord Watson).
TEAM 11 MEMORANDUM FOR RESPONDENT
16
external event that physically affected the departure of the Athena from the Port of Hades. Therefore,
the Parties intended Clause 19(d) of the Charterparty to apply in such circumstances.
37. Further, the detention of the Athena was caused by the military coup. The entire purpose of the coup
was to stop the Parties' shipment of HLNG.102 It was triggered by a "flashpoint of public and political
anger"103 in Hades against the departure of the Athena and the export of HLNG. After the coup ended,
President Simmons' first act was to instruct the Hades Coast Guard to stop the Athena.104 Therefore, the
military coup in Hades falls within the “hostilities... or other similar cause” exemption. As the delay was
directly caused by a Force Majeure Event under Clause 19(d), RESPONDENT is not liable to pay
demurrage.
38. Second, the delay was caused by acts of the Queen’s enemies. The order of coup leader Jacqueline
Simmons caused the delay of the Athena.105 This was an act of the Queen’s enemies. The natural and
ordinary meaning of “Queen’s enemies”106 refers to persons who oppose the Queen, who represents the
legitimate constitutional government of the state. A person who overthrows that government by force is
such an enemy. The Parties intended that ordinary meaning. Therefore, the military coup falls within
the “act of the Queen’s enemies” exemption. As the delay was caused by a Force Majeure Event under
Clause 19(d), RESPONDENT is not liable to pay demurrage.
39. Third, the delay was caused by the intervention of customs authorities. The Hades Coast Guard is a
“customs authority” under Clause 19(d) of the Charterparty, which includes any governmental body that
exercises customs powers and functions. The Hades Coast Guard exercises customs powers. It is
controlled by the Hades government107 and performs the customs functions of patrolling Hades’ waters
and preventing the export of prohibited goods from Hades.108 These functions are commonly exercised
102 Record 55. 103 Record 52. 104 Record 55. 105 Record 55. 106 Cooper Brookes, 320 (Gibbs CJ); Provincial Insurance, 560 (Mahoney JA); Investors Compensation Scheme, 913 (Lord
Hoffmann); Franklins, [53]; Arnold, [15] (Lord Neuberger). 107 Record 55, 57. 108 Record 57, 62.
TEAM 11 MEMORANDUM FOR RESPONDENT
17
by customs authorities in the jurisdictions of both Hades and Demeter.109 Therefore, the Parties intended
for the Hades Coast Guard to be a customs authority within the meaning of Clause 19(d).
40. On its ordinary meaning,110 the interception of the Athena and its subsequent detention in the Port of
Hades is an “intervention” within the meaning of Clause 19. The legality of this intervention by the
Hades Coast Guard is irrelevant.111 The Parties intended for Clause 19 to apply where the intervention
of customs authorities causes a failure or delay in performance that is beyond the Parties’ control.
Whether the intervention was lawful or unlawful in this instance, the practical outcome was the same
because the Athena was nonetheless detained. Therefore, the Parties did not intend to distinguish
between lawful and unlawful interventions.
41. In addition, such a construction would produce unreasonable consequences, which the Tribunal should
avoid.112 This would require RESPONDENT to second-guess the lawfulness of the acts of customs
authorities and resist unlawful acts, or be in breach. The Parties cannot have intended to allocate risk in
this way.
B. The Parties intended for Clause 19 to cover long or indefinite delays
42. Clause 19 of the Charterparty allows either Party to cancel shipment in arrears if delivery is suspended
for 30 days or “any immediately succeeding periods of 30 days during which disability may
continue”.113 This indicates that the Parties had turned their mind to delays lasting well beyond the
expected length of the voyage. Moreover, the Parties have listed Force Majeure Events including war,
epidemics and quarantine.114 Such events are serious and can last for a long or indefinite period of time.
This indicates that the Parties intended for Clause 19 to apply where delays last 358 days.
109 Customs Act 1901 (Cth) s 197; Customs and Other Legislation Amendment (Australian Border Force) Act 2015 (Cth), s
14. 110 Cooper Brookes, 320 (Gibbs CJ); Provincial Insurance, 560 (Mahoney JA); Investors Compensation Scheme, 913 (Lord
Hoffmann); Franklins, [53] (Giles JA); Arnold, [15] (Lord Neuberger). 111 Great Elephant, [65]-[66] (Teare J). 112 Gollin 464 (Mason, Murphy, Brennan, Deane and Dawson JJ); Burke 71 (Santow J); Pan Foods, 584 (Kirby J); Rainy
Sky, 1149 (Clarke LJ). 113 Record 41. 114 Record 40.
TEAM 11 MEMORANDUM FOR RESPONDENT
18
IV. IN THE ALTERNATIVE, RESPONDENT IS NOT LIABLE TO PAY DEMURRAGE BECAUSE THE
CHARTERPARTY WAS FRUSTRATED AT COMMON LAW
43. If the delay was not caused by a Force Majeure Event, the Charterparty was frustrated by delay because
the Athena was detained for 358 days. Frustration arises where an unforeseen event beyond the control
of the parties has a substantial impact on the contract, rendering performance radically different from
what the parties intended.115 Here, the Parties could not have foreseen the interception and subsequent
detention of the Athena for 358 days (A). The delay rendered performance radically different from what
the Parties intended (B). As a result, frustration discharged the Parties from any obligation to perform
once the Athena was detained (C).
A. The Parties could not have foreseen the detention of the Athena for 358 days
44. The Parties must have been able to foresee the supervening event as a serious possibility in order to
exclude the doctrine of frustration.116 It was not a serious possibility that the Athena would be intercepted
on the orders of the President and detained in the Port of Hades before the commencement of the voyage.
At the time of entering the Charterparty, there had never been violent protests at the Port of Hades
relating to the export of HLNG. There was no evidence of mainstream political opposition to the export
of HLNG before entry into the Charterparty. The only evidence available to the Parties before entering
the Charterparty was the statement from one Hades newspaper that environmental protests were planned
against RESPONDENT’s plant. Further, the Parties must have foreseen the extent of the delay in order to
exclude the doctrine of frustration.117 Even if there was a possibility that environmental protests would
disrupt the loading operations, the Parties could not have foreseen that delays would last for 358 days.
115 Davis Contractors, 728-9 (Lord Radcliffe); National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 (‘National
Carriers’), 700-1 (Lord Simon of Glaisdale); The Nema, 738 (Lord Diplock); State Rail Authority of NSW v Codelfa
Construction Pty Ltd (1982) 150 CLR 29, 39 (Mason and Wilson JJ). Edwinton Commercial Corp v Tsavliris Russ
(Worldwide Salvage & Towage) Ltd [2007] EWCA Civ 547 (‘The Sea Angel’), [84] (Rix LJ). 116 Sir Guenter Treitel, Frustration and Force Majeure (Sweet & Maxwell, 3rd ed, 2014) (‘Treitel’), 512; Hugh Beale, Chitty
on Contracts (Sweet & Maxwell, 32nd ed, 2015), 1709; Simmons Ltd v Hay (1964) 81 WN (Pt 1) (NSW) 358 (‘Simmons v
Hay’), 362 (Sugerman J). 117 Treitel, 514; Metropolitan Water Board v Dick, Kerr & Co Ltd [1918] AC 119, 132 (Lord Atkinson); W J Tatem Ltd v
Gamboa [1939] 1 KB 132, 135 (Goddard J); Davis Contractors, 724 (Lord Reid), 731 (Lord Radcliffe); Simmons v Hay,
362 (Sugerman J).
TEAM 11 MEMORANDUM FOR RESPONDENT
19
45. Further, the cause of the frustrating event could not have been foreseen.118 Here, the Parties could not
have foreseen that an “unprecedented”119 military coup would lead to a new President, who, as her very
first act, instructed the Hades Coast Guard to intercept the Athena and return it to port.120 Hades was
experiencing economic hardship given the “savage spending cuts” and the fact that it no longer printed
its own currency.121 In these circumstances, RESPONDENT could not have foreseen that the government
would prohibit the export of valuable energy commodities. Otherwise, the Parties would have expressly
listed such an event in Clause 19, as they did for a multitude of unlikely but foreseeable events.122
B. The delay rendered performance radically different from what the Parties intended
46. At the time of entering the Charterparty, the Parties would not have intended for the Charterparty to
remain on foot if delays lasted for 358 days for three reasons. First, CLAIMANT’s fundamental obligation
was to transport the cargo of HLNG from Hades to Poseidon “with all reasonable speed”.123 The Parties
made extensive provision in the Charterparty for the arrival of the Athena at the Port of Hades,124 the
loading of cargo125 and the agreed laytime.126 These provisions contemplate the departure of the Athena
from the Port of Hades after 10 lay-days. Instead, the Athena left Hades more than one year after its
arrival at the port. Such a delay renders performance radically different from what the Parties intended
and has a substantial impact on the Charterparty. Performance was not merely more onerous or
financially burdensome.127 The commencement of the voyage was impossible for the entire period of
the delay.
118 Davis Contractors, 716 (Viscount Simons), 724 (Lord Reid); Sir Lindsay Parkinson & Co Ltd v Commissioners of Works
[1949] 2 KB 632, 665 (Asquith LJ). 119 Record 55. 120 Record 55. 121 Record 79. 122 Eiusdem generis: Sun Fire Office v Hart (1889) 14 App Cas 98, 103 (Lord Watson); Cody v JH Nelson Pty Ltd (1947) 74
CLR 629, 639 (Starke J); J Lauritzen AS v Wijsmuller BV [1990] 1 Lloyd's Rep 1, 7 (Bingham LJ); Lend Lease Real Estate
Investments Ltd v GPT RE Ltd [2006] NSWCA 207, [31] (Spigelman CJ). 123 Record 31, Clause 1. 124 Record 31, Clause 1. 125 Record 31, Clause 2; Record 31-2, Clause 3; Record 33, Clause 5; Record 33, Clause 6; Record 33, Clause 7; Record 33-
4, Clause 8. 126 Record 33, Clause 4; Record 34-6, Clause 9; Record 36, Clause 10. 127 Davis Contractors, 716 (Viscount Simonds); National Carriers, 700 (Lord Simon of Glaisdale).
TEAM 11 MEMORANDUM FOR RESPONDENT
20
47. Second, frustration is to be assessed at the time the event occurs and the Tribunal must compare, at that
point in time, a reasonable commercial estimate of the probable length of the delay with the remaining
portion of the Charterparty.128 Commercial parties cannot be required to “wait and see” how long the
delay will endure.129 Here, the Athena’s return was beyond the control of either Party. President
Simmons directly ordered the detention of the Athena.130 Further, her rise to power was based on a
policy of stopping all HLNG exports.131 In addition, the detention was caused by widespread public
opposition against the export of HLNG by RESPONDENT.132 Therefore, it was reasonable to conclude, at
the time when the Athena was detained, that the delay would be indefinite.
48. Third, the surrounding circumstances of the Charterparty indicate that RESPONDENT was experiencing
“a traumatic twelve months on the Hades Stock Exchange” with a crisis of confidence in its share
price.133 In this context, the timely shipment of the cargo was essential to the commercial purpose of the
Charterparty. At the time of entering the Charterparty, the Parties would not have intended to remain
bound where delays lasted for 358 days.
49. Therefore, the Charterparty was frustrated at this time,134 and the Parties were automatically discharged
from any obligation to perform.135 As demurrage had not begun to accrue at this time, RESPONDENT is
not liable to pay demurrage under the Charterparty.
ARGUMENTS ON THE MERITS OF THE COUNTER-CLAIM
V. RESPONDENT IS ENTITLED TO CLAIM SALVAGE REWARD
50. RESPONDENT is entitled to salvage reward because all four elements of a salvage claim are satisfied.136
128 Anglo-Northern Trading Co v Emlyn Jones [1917] 2 KB 78, 84–5 (Bailhache J); Bank Line Ltd v Arthur Capel & Co
[1919] AC 435, 454–5 (Lord Sumner); Denny, Mott & Dickson Ltd v James B Fraser & Co Ltd [1944] AC 265, 277–8 (Lord
Wright); Atlantic Maritime Co v Gibbon [1954] 1 QB 88, 113 (Evershed MR). 129 The Nema, 752 (Lord Roskill). 130 Record 55. 131 Record 52. 132 Record 26 and 52. 133 Record 26. 134 Treitel, 405; The Nema, 752 (Lord Roskill). 135 Ewan McKendrick, Force Majeure and Frustration of Contract (Lloyd’s of London Press Ltd, 2nd ed, 1991), 37; Treitel,
544; Hirji Mulji, 505 (Lord Sumner). 136 Francis Rose, Kennedy & Rose: Law of Salvage (Sweet & Maxwell Ltd, 7th ed, 2009) (‘Kennedy & Rose’), 1 [1.001];
Michael White, Australian Maritime Law (The Federation Press, 3rd ed, 2014) (‘White’), 455; Brice and Reeder (eds), Brice
TEAM 11 MEMORANDUM FOR RESPONDENT
21
There was a danger to the Athena and its cargo (A), both the Athena and its cargo of HLNG were
recognised subjects of salvage (B), the salvage services were rendered voluntarily (C), and were
successful (D). Accordingly, the Tribunal should allow RESPONDENT’s counter-claim.
A) The Athena and its cargo were in danger
51. Whether a vessel and its cargo are in danger is determined objectively in light of the surrounding
circumstances.137 Salvage requires a real danger of physical loss or damage to the cargo or vessel
salved138 but the danger need not be imminent.139 Loss of use of a vessel constitutes a sufficient danger
for the purposes of salvage.140 Here, the Athena's propellers were broken and it could no longer proceed
under its own power. Hence it was unable to move and not in a position to avert any threat that may
have arisen on the high seas.141 As it was effectively disabled,142 the Athena and its cargo were in danger,
and would have been in danger if the salvage services were not rendered.143
B) The Athena and its cargo were recognised subjects of salvage
52. Vessels and their cargo are both recognised as property capable of being the subject of salvage.144
Hence, both the Athena and its cargo of HLNG could be salved.
on Maritime Law of Salvage (5th ed.) (‘Brice’), 2 [1-05]; Fisher v The Oceanic Grandeur (1972) 127 CLR 312 (‘Fisher’),
318-9 (Stephen J) 137 Kennedy & Rose, 181 [5.004]; Owners and/or Demise Charterers of the Tug “Sea Tractor” v Owners of the Ship “The
Tramp” [2007] 2 Lloyd’s Rep 363, 365 [19] (Steel J). 138 White, 458. 139 Kennedy & Rose, 181 [5.004]; The Charlotte (1848) 3 W. Rob. 68 (‘Charlotte’), 71 (Dr. Lushington); The Aztecs (1870)
3 Asp. M.L.C. 326, 326 (Sir Robert Phillimore). 140 The Lomonosoff [1921] P 97, 105 (Hill J); Society Maritime Caledonienne v The Cythera [1965] NSWR 146, 152
(Macfarlan J); Andreas Sobonis v The National Defender [1980] 1 Lloyd’s Rep 40, 44 (Pollack J); Fisher, 323-4 (Stephen
J). 141 Record 73. 142 Record 74; White, 459; The Helmsman (1950) 84 Ll L Rep 207, 213 (Pilcher J). 143 Record 73; Brice, 50 [1-164], 52 [1-169]; Charlotte, 71 (Dr. Lushington) approved in Turnbull v Owners of the
Strathnaver (1875) LR 1 App Case 58 (‘The Strathnaver’), 65 (Sir Robert Phillimore) and The Mount Cynthos (1937) 58 Ll
L Rep 18, 25 (Sir Boyd Merriman P); The Glaucus (1948) 81 Ll L Rep 262 (‘Glaucus’), 266 (Willmer J); The Troilus [1950]
P 92 (Lord Porter). 144 Kennedy & Rose, 103 [4.019], 113-4 [4.041]-[4.042]; White, 459-460; Brice, 224 [3-27], 234 [3-35]; Wells v Owners of
The Gas Float Whitton (No 2) [1897] AC 337, 343 (Lord Herschell), 347 (Lord Watson).
TEAM 11 MEMORANDUM FOR RESPONDENT
22
C) RESPONDENT was a volunteer
53. RESPONDENT was a volunteer.145 The salvage services were not provided pursuant to either a pre-existing
contractual duty (i) or a pre-existing statutory duty (ii) that would preclude RESPONDENT from claiming
salvage reward.146 In the alternative, the pre-existing contract of towage was converted into a salvage
service (iii).
i) RESPONDENT did not act under a pre-existing contractual duty which would preclude a salvage
claim
54. Neither the Charterparty nor the towage contract with Hestug conferred upon RESPONDENT a duty to
provide salvage services.
55. First, the Charterparty contained no obligation to rescue a vessel or cargo in danger. The only references
to salvage in the entire Charterparty are found in Clauses 19 and 21.147 Clause 19 entitles the Athena to
deviate in order to provide salvage services to a different vessel. Clause 21 entitles CLAIMANT to salvage
reward if it owns or even operates a vessel that provides salvage services. Neither clause places any
obligation upon RESPONDENT to salve the Athena.
56. Second, even if the towage contract did impose obligations upon RESPONDENT, these came to an end
when the towlines were released from the Athena. Bound for Poseidon, the Athena then proceeded to
“set sail under its own steam” in open waters.148 At that point, the towage services were completed and
Hestug’s subsequent assistance was not performed as part of the towage contract.
ii) RESPONDENT did not act under a pre-existing statutory duty which would preclude a salvage
claim
57. RESPONDENT was not required by statute to rescue the Athena or its cargo. In particular, RESPONDENT
was not obliged to rescue the Athena under any environmental duties like that found in the Protection
145 White, 463; Kennedy & Rose, 263 [8.005]. 146 Brice, 64 [1-213]-[1-214]; Hill, 337; Kennedy & Rose, 263-4 [8.006]-[8.007], 267-8 [8.014]-[8.016]; Owners, Charterer,
Master and Crew of the Margaret Philippa v The MV Santo Rocco di Bagnara (1991) 101 ALR 491, 498 (Ryan J). 147 Record 40, Clause 19; Record 42, Clause 21. 148 Record 71.
TEAM 11 MEMORANDUM FOR RESPONDENT
23
of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth).149 Performance of an existing public
duty imposed by law has still been considered voluntary, provided there is no conflict with the public
interest.150
58. Similarly, RESPONDENT was not obliged to rescue the Athena under Section 181 of the Navigation Act
2012 (Cth). This provision, derived from Article 10(1) of the International Convention on Salvage,151
only obliges the Master of a vessel to render assistance to persons in distress at sea.152 Thus, while
RESPONDENT may have been under a duty to assist persons on board the Athena, this duty did not oblige
RESPONDENT to save “many millions of dollars’ worth of cargo and vessel”.153 Moreover, the section
specifically imposes a criminal sanction of imprisonment upon a defaulting Master, who is a natural
person and not a corporation. Therefore, the section did not impose a statutory duty upon RESPONDENT
that would preclude a salvage claim with respect to that cargo and vessel. This is consistent with the
approach taken in other common law jurisdictions in similar circumstances.154 Compliance with the
Master’s statutory duty to render assistance to persons does not prevent that assistance from being
voluntary for the purpose of claiming salvage reward.155
iii) In the alternative, RESPONDENT went beyond the scope of its duty so as to convert the pre-
existing towage contract into a salvage service
59. Salvage can be awarded where the salvor is a tug that has been engaged to tow the salved vessel if a
supervening event changes the situation from one merely of towage.156 For the towage contract to have
been converted into a salvage service, two elements must be satisfied: the Athena must have been in
149 E.g. Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 21. 150 Richard Stone and James Devenney, The Modern Law of Contract (Routledge, 10th ed, 2015), 105-7; Ward v Byham
[1956] 1 WLR 496, 498 (Lord Denning); Williams v Williams [1957] 1 WLR 148, 151 (Lord Denning). 151 International Convention on Salvage, opened for signature 1 July 1909, 1996 UNTS 194 (entered into force 28 April
1989) (‘Salvage Convention’), Article 10(1). 152 Record 71; Kennedy & Rose, 272-3 [8.024]; Navigation Act 2012 (Cth) s 181. 153 Record 71. 154 Maritime Conventions Act 1911 (Singapore), s 6(2); Merchant Shipping Act 1995 (UK) (‘MSA’), s 93(7); see also MSA,
s 224. 155 White, 465; Newman v Walters (1804) 127 ER 330, 332 (Heath J); Owners of “SS Melanie” v Owners of “SS San Onofre”
[1925] AC 246, 261-2 (Lord Phillimore) approved in The Beaverford v The Kafiristan (Owners) [1938] AC 136, 147 (Lord
Wright). 156 White, 528-530; The Ship Texaco Southampton v Burley [1982] 2 NSWLR 336, 340B (Glass JA).
TEAM 11 MEMORANDUM FOR RESPONDENT
24
danger due to circumstances which could not reasonably have been contemplated by the Parties, and the
tug must have incurred risks or performed duties which could not reasonably be held to be within the
scope of the contract.157 Both are satisfied on the facts.
60. First, when parties enter into a towage contract, all they contemplate is that the tug will accelerate the
vessel’s progress.158 The tug is not entitled to greater remuneration simply because it encounters
problems ordinarily arising in the course of performance.159 However, the sabotage and immobilisation
of the Athena falls outside those categories of reasonably contemplated difficulties.160 Further, the
Parties would not reasonably have expected the tug to render assistance to the Athena after the contract
had been completely performed. They intended only that the tug would use best endeavours to guide the
Athena to open waters.161 When this was completed, the contract was discharged and those obligations
were not revived simply because a subsequent danger arose.
61. Second, by rescuing the Athena and towing her back to the Port of Hades,162 RESPONDENT incurred risks
and performed duties beyond the scope of the towage contract. For a tug to assume the risk of towing
an immobilised vessel, it must be aware of this risk before entering into the contract. If the tug is not
aware of this additional risk, it is entitled to salvage reward.163 Here, both the nature and extent of the
services provided by RESPONDENT could not reasonably be held to be within the scope of the towage
contract. At the time of entering into the towage contract, there was no indication that the Athena was
unseaworthy. It only became apparent that its propeller shafts had been tampered with after the towlines
were released. Therefore, in assisting the Athena while she was in danger, RESPONDENT assumed a much
greater degree of risk than was contemplated in the towage contract. This is particularly so because
157 Kennedy & Rose, 308 [8.094]; Rainey, The Law of Tug and Tow and Offshore Contracts, [7.28]; The Homewood (1928)
31 Ll L Rep 336, 339 (Hill J) applied in The North Goodwin No. 16 [1980] 1 Lloyd’s Rep 71, 73-4 (Sheen J). 158 Kennedy & Rose, 305 [8.091]; The Princess Alice (1848) 3 W. Rob. 138, 139-140 (Dr. Lushington) approved in The
Strathnaver, 63 (Sir Robert Phillimore); The Jubilee (1879) 4 Asp. 275, 276 (Lord Porter); Glaucus, 266 (Willmer J). 159 The Refrigerant [1925] P. 130, 140 (Bateson J). 160 Record 71, 73; The Saratoga (1861) Lush. 318, 322 (Dr. Lushington); The Minnehaha (1861) 15 ER 444, 463-5 (Lord
Kingsdown); The Five Steel Barges (1890) 15 P.D. 142, 144 (Sir James Hannen P); The Liverpool [1893] P. 154, 160 (Gorell
Barnes J); The Stanmore (1897) 13 T.L.R. 165, 165-6 (Sir Francis Jeune P); The Leon Blum [1915] P. 90, 101 (Sir Samuel
Evans); The Glenbeg (1940) 67 Ll. L. Rep. 437, 440 (Langton J). 161 Kennedy & Rose, 307 [8.093]; Minnehaha, 464 (Lord Kingsdown). 162 Record 71, 73. 163 Kennedy & Rose, 307-8 [8.094]-[8.095]; The Beulah (1842) 166 ER 650, 650 (Dr. Lushington).
TEAM 11 MEMORANDUM FOR RESPONDENT
25
Hestug, being unaware of the Athena’s distressed condition, could not take ordinary precautions to
mitigate that risk.
62. Further, the quantity of services provided was doubled. The tug not only guided the Athena to open
waters pursuant to its obligations under the towage contract, but also towed the Athena back to port. The
performance of these additional duties establishes a right to salvage reward that supersedes the initial
towage contract.164
D) The salvage services were successful
63. An act of assistance that produces a useful result creates a right to salvage reward.165 Here,
RESPONDENT’s salvage services preserved a sufficiently significant amount of property by saving “many
millions of dollars’ worth of cargo and vessel”.166 Accordingly, RESPONDENT is entitled to salvage
reward.167
REQUEST FOR RELIEF
For the reasons set out above, RESPONDENT requests that the Tribunal:
a) declare that it does not have jurisdiction to hear RESPONDENT’s defence of frustration and therefore
CLAIMANT’s pleading of demurrage;
b) declare that CLAIMANT is not entitled to demurrage;
c) declare that RESPONDENT is entitled to salvage reward; and
d) award further or other relief as the Tribunal considers fit.
164 Kennedy & Rose, 310 [8.097]; Minnehaha, 464-5 (Lord Kingsdown) 165 Kennedy & Rose, 366-7 [9.004]-[9-005]; White, 466; Brice, 103 [1-356]; Salvage Convention, Article 12. 166 Record 71; The Renpor (1883) 8 P.D. 115, 117 (Brett MR).
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