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Fourteenth Edition INTERNATIONAL MARITIME LAW ARBITRATION MOOT 8 to 12 July 2013 VERSAILLES SAINT-QUENTIN UNIVERSITY IN THE MATTER OF AN ARBITRATION HELD AT LONDON MEMORANDUM FOR THE RESPONDENT ON BEHALF OF: AGAINST: AARDVARK LTD TWILIGHT CARRIER « CLAIMANT » « RESPONDENT » TEAM NUMBER 3 LAURE BOULLENGER - NATACHA CONSTANTIN RAPHAELLE BRIOTTET - CHLOE GIRARD ELLIOTT GRESSARD ALEXANDRE YACINE SOULEYE

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Page 1: INTERNATIONAL MARITIME LAW ARBITRATION …...Fourteenth Edition INTERNATIONAL MARITIME LAW ARBITRATION MOOT 8 to 12 July 2013 VERSAILLES SAINT-QUENTIN UNIVERSITY IN THE MATTER OF AN

       

Fourteenth Edition

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

8 to 12 July 2013

VERSAILLES SAINT-QUENTIN UNIVERSITY

IN THE MATTER OF AN ARBITRATION HELD AT LONDON

MEMORANDUM FOR THE RESPONDENT

ON BEHALF OF: AGAINST:

AARDVARK LTD TWILIGHT CARRIER

« CLAIMANT » « RESPONDENT »

TEAM NUMBER 3

LAURE BOULLENGER - NATACHA CONSTANTIN – RAPHAELLE BRIOTTET - CHLOE GIRARD – ELLIOTT GRESSARD – ALEXANDRE YACINE SOULEYE

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Memorandum  for  the  Respondent    ii  

   

INTERNATIONAL MARITIME LAW ARBITRATION MOOT

2013

MEMORANDUM FOR THE RESPONDENT

TEAM NUMBER 3

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Memorandum  for  the  Respondent    iii  

   

TABLE OF CONTENTS

Table of Contents ...................................................................................................................... iii  Index of Abbreviations .............................................................................................................. iv  

List of Authorities ...................................................................................................................... v  Statement of Facts ...................................................................................................................... 1  

Questions Presented ................................................................................................................... 3  Arguments Presented .................................................................................................................. 4  

A.   THE  RESPONDENT  IS  NOT  LIABLE  FOR  ANY  DETERIORATION  IN  THE  QUALITY  OF  GOODS  .......  4  

1.   The  Respondent  is  not  liable  for  damage  arising  from  piracy  pursuant  to  Article  IV  r.  2  of  the  Hague-­‐Visby  Rules  ....................................................................................................................  4  

1.1   The  Respondent  is  entitled  to  rely  on  exceptions  under  Article  IV  r.  2  ...........  4  i.   First,  the  Respondent  is  not  liable  pursuant  to  Article  IV  r.  2  (f)  ........................  5  ii.   Secondly,  the  Respondent  is  not  liable  pursuant  to  Article  IV  r.  2  (q)  ..............  5  iii.   Thirdly,  the  Respondent  is  not  liable  pursuant  to  Article  IV  r.  2  (e)  .................  6  

1.2   The  hijacking  of  the  Vessel  could  not  have  been  avoided  by  reasonable  care  and  diligence  on  the  part  of  the  Respondent  ...........................................................................  7  1.3   Unseaworthiness  does  not  bar  the  Respondent  from  relying  on  the  exceptions  under  Article  IV  r.  2  .....................................................................................................  8  

2.   The  Respondent  is  not  liable  for  damage  arising  from  piracy  pursuant  to  the  general  exceptions  clause  of  the  Charterparty  ............................................................................................  9  

3.   In  the  further  alternative,  there  is  no  significant  deterioration  in  the  cargo  quality  ............  9  

B.   THE  RESPONDENT  WAS  ENTITLED  TO  DELIVER  THE  CARGO  OTHER  THAN  AS  AGAINST  PRESENTATION  OF  THE  BILLS  OF  LADING  .........................................................................................  10  

1.   The  Respondent  complied  with  the  Charterer’s  orders  ......................................................  10  

1.1.   Under  English  law  .................................................................................................................  11  1.2.   Under  comparative  law  ......................................................................................................  12  

2.   The  Claimant  abandoned  its  rights  over  the  cargo  and  so  any  action  in  conversion  against  the  Respondent  .............................................................................................................................  14  

3.   The  Respondent’s  obligation  to  deliver  the  goods  against  presentation  of  the  Bills  of  Lading  does  not  fall  within  the  scope  of  the  Hague-­‐Visby  Rules  ...................................................  15  

4.   Alternatively,  no  damages  shall  be  recoverable  because  of  the  Respondent’s  breach  of  Contract  ........................................................................................................................................  16  

C.   THE  RESPONDENT  WAS  ENTITLED  TO  CHANGE  THE  DISCHARGE  PORT  ...................................  16  

D.   ALTERNATIVELY,  THE  RESPONDENT  IS  ENTITLED  TO  LIMIT  ITS  LIABILITY  ................................  20  

Prayer for relief ........................................................................................................................ 22  

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   Memorandum  for  the  Respondent    

iv      

INDEX OF ABBREVIATIONS

Bills of Lading Used in combination with the Charterparty and

concluded by and between the Respondent and

the Charterer the: 25th of October 2008

Charterparty Tanker Voyage Charterparty “VEGOIL VOY

1/27/50” concluded by and between the Carrier,

the Vessel and the Charterer, the 12th of

September 2008

Contract of carriage Contractual relationship between the Claimant

and the Respondent

Sale contract Concluded by the Claimant and the Charterer

the 2nd of the December 2008

The Charterer Beatles Oils & Fats Limited Ltd

The Claimant Aardvark Limited Ltd

The Respondent Twilight Carriers

The Vessel The description and the position of the Vessel is

provided in the Part I – A of the Charterparty

(Moot Problem: p. 5)

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   Memorandum  for  the  Respondent    

v        

LIST OF AUTHORITIES

CASES

Republic of Bolivia v. Indemnity Mutual Marine Assn. Ltd (1909) 1KB 785;

Bradley (FC) & Son Ltd v Federal Steam Navigation Co. Ltd, (1927) 27 LI L Rep 395;

Re Piracy Jure gentium (1934) A.C. 586;

Leesh River Tea Co. Ltd. v. British India S.N. Co. Ltd, (1967) 2 Q.B.

The Andreas Lemos (1983) QB 647;

Interfoto Picture Library v. Stiletto Visual Programmes, (1989) QB 433, 445 (CA);

The Houda Kuwait Petroleum Corp. v. I&D Oil Carriers Ltd, (1994);

MB Pyramid Sound NV v. Briese Schiffahrts GMBH and Co, KG MS “Sina” and Latvian

Shipping Association Ltd (The Ines) (1995) 2 Lloyd’s Rep 144.

Kuwait Petroleum Corp. v. I&D Ouil Carriers Ltd, (1999) 1 Lloyd’s Rep. 837;

Director General of Fair Trading v. First National Bank, (2001) UKHL 52;

French Cour de Cassation, Cass. Com. 19 June 2007, n° 05-19646.

STATUTES

Carriage of goods by Sea Act, 1971 (UK);

Carriage of goods by Sea Act, 1992 (UK).

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   Memorandum  for  the  Respondent    

vi      

TREATIES

Convention for the Carriage of Goods by Sea: Rotterdam Rules, 2008;

United Nations Convention on the Law of the Sea, 1982;

International Convention For The Unification Of Certain Rules Of Law Relating To Bills of

Lading, Hague-Visby-Rules, 1968;

A/CN.9/WG.III/WP.101 – Transport Law: Draft convention on the carriage of goods (wholly

or partly) (by sea).

SECONDARY MATERIAL

Charterparties and Bills of Lading, 21st ed., London, Sweet and Maxwell, 2008;

International Carriage of Goods by Road: CMR, Malcolm A Clarke, 5th Edition, 2009;

Droit Maritime et Droit Fluvial, Smeesters and Winkelmolen, II, Bruxelles, Larcier, 1933, nr.

694, with a cross-reference to the Rapport de la Conférence de La Haye, 1921;

Universality of Jurisdiction over War Crimes, Cowles, California Law Review 33 (1945);

Deviation: a Doctrine All at Sea? Martin Dockray, (2000) LMCLQ 76;

IMB Piracy and Armed Robbery against Ships Annual Report for 2008;

IMB Piracy and Armed Robbery against Ships Annual Report for 2007;

Supreme Court of China, Judicial interpretation text, 16 February 2009.

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1      

STATEMENT OF FACTS [1] On 23 May 2008, Aardvark Ltd (the “Claimant”) concluded two contracts of sales (the

“Sale contract”) with Beatles Oils & Fat Limited (the “Charterer”). Its subject was the

purshase of 4000mt of Palm Fatty Acid Distillate, for a price of USD 2,986,671,38.

[2] On 12 September 2011, the Charterer concluded a charterparty (the “Charterparty”) with

Twilight Carriers (the “Respondent”). All of the Bills of Lading provided for loading at

Pasir Gudang, Malaysia and discharging at Liverpool, Merseyside UK.

[3] The Charterparty contained four Bills of Lading (the “Bills of Lading”) on the congen

form, providing all terms and conditions liberties and exceptions of the Charterparty. It

also refers to the Hague/Visby Rules.

[4] While the vessel (the “Vessel”) was en route to Merseyside, she was held off Somalia by

Somali pirates between 15 November and 13 February 2009.

[5] As the shipping documents appeared to be in compliance with the contractual

requirements, the purchase price was paid to Charterer in 26 January 2009 and the Bills of

Lading were endorsed to the Claimant. After receiving Charterer insurance policy on 6

March 2009, the Claimant advised the Charterer that they were in repudiatory breach of

the Sale contract in failing to insure the cargo under the agreed terms. The Claimant

demanded that the Charterer repay the purchase price.

[6] Following series of messages, the Claimant and the Respondent disagreed with to whom

the cargo shall be resell and where the cargo is to be discharged, Rotterdam or Liverpool.

The Claimant wanted to discharge at Liverpool where he had potential buyers for the

cargo whereas the Respondent intended to unload at Rotterdam.

[7] On or about 20-22 March 2009, the Respondent discharged the cargo at Rotterdam to the

Charterer against a letter of indemnity.

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[8] On 23 March 2009, the Charterer brought a petition to garnish property before judgement

as well as to attach moveable goods.

[9] The same day, the Dutch Court decided to arrest the Vessel, after an application brought

by the Claimant.

[10] On 27 March 2009, the Rotterdam Court ordered that the arrest could be lifted in return

for the Respondent providing security of USD 1,4 millions.

[11] On 15 July 2009 a hearing took place before the District Court of Rotterdam and by a

judgement handed down on or about 24 July 2009 the Court upheld the arrest and granted

an order for sale.

[12] By a contract of sale dated 25 August 2009, the Charterer sold the cargo for USD

1,695,752.38.

[13] The Claimant initiated arbitration proceedings in London and served its claim on the

Respondent on 6 April 2010. And the Respondent submitted its defence submission on 16

June 2010.

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   Memorandum  for  the  Respondent    

3      

QUESTIONS PRESENTED

A. Whether the Respondent is liable for any deterioration in the quality of goods.

B. Whether the Respondent is entitled to deliver the cargo other than as against surrender

of the Bills of Lading.

C. Whether the Respondent is entitled to change the discharge port.

D. Whether the Respondent is entitled to limit its liability.

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4      

ARGUMENTS PRESENTED

A. THE RESPONDENT IS NOT LIABLE FOR ANY DETERIORATION IN THE

QUALITY OF GOODS

1. The Respondent denies liability for any deterioration in the quality of goods by reason of

piracy under the Hague-Visby Rules (1) and under the Charterparty (2). Alternatively,

there is no significant deterioration in the quality of the goods (3).

1. The Respondent is not liable for damage arising from piracy pursuant to Article IV

r. 2 of the Hague-Visby Rules

2. The Respondent is entitled to rely on exceptions under Article IV r. 2 (1.1) since the

hijacking of the Vessel could not have been avoided by reasonable care and diligence on

the part of the Respondent (1.2) and due diligence has been exercised to make the Vessel

seaworthy (1.3).

1.1 The Respondent is entitled to rely on exceptions under Article IV r. 2

3. The contract of carriage contained in or evidenced by the Bills of Lading incorporated the

HVR1. The Respondent herein relies on exceptions (e) and/or (f) and/or (q) under Article

IV r. 2, which provides that:

4. ”Neither the carrier nor the ship shall be responsible for loss or damage arising or

resulting from:

(e) Act of war.

(f) Act of public enemies.

(q) any other cause arising without the actual fault and privity of the carrier, or without

the fault or neglect of the agents or servants of the carrier.”

                                                                                                               1  Moot  Problem,  p.4:  email  of  12  September  2008.    

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i. First, the Respondent is not liable pursuant to Article IV r. 2 (f)

5. The Respondent is entitled to rely on exception in Article IV r. 2 (f), which exempts

liability for damage arising from acts of public enemies. On 15 November 2008, “the

vessel was boarded by Somali pirates”.2 Pirates have long been considered as public

enemies under English law3. They are hostis humanis generis, enemy of mankind4,

attacking vessels at sea for private gain5; Discussion between Lord Phillimore and Sir

Norman Hill during the drafting work of the Brussels Convention indicates that the notion

of “public enemies” means pirates.6 Consequently, piracy falls within the scope of Article

IV r. 2 (f).

6. The Respondent argues that it was prevented from heating up the goods by reason of

piracy, which caused damage to the goods.7 It is ascertained that the Respondent was

instructed by the Claimant to heat up the cargo “during the voyage” and “in the last week

prior to arrival”8. It is also ascertained that “the product was heated and cooled down for

several time”9. Therefore, the Respondent carried out its obligation until the Vessel and

her crew have been taken over by Somali pirates.10 The entire crew was “confined all 24

hours per day to the bridge” and “no maintenance or inspections on deck were allowed

whatsoever”11 .By reason of piracy, the Respondent could not take measures to heat up the

goods during captivity. Consequently, the product cooled down and its quality

deteriorated. A public enemies act caused damage to the goods.

ii. Secondly, the Respondent is not liable pursuant to Article IV r. 2 (q)

7. The Respondent is also entitled to rely on Article IV r. 2 (q), which excludes liability for

damage resulting from no actual fault of the carrier and no negligence of the servants.

Firstly, since the Master is the agent of the Respondent, the acts of his servants fall within                                                                                                                2  Moot  Problem,  p.  41:  investigation  of  19  March  2009.  3  Scrutton,  Scrutton  on  Charterparties  and  Bills  of  Lading,  21st  ed.,  London,  Sweet  and  Maxwell,  2008,  Art.  109.    4  Re  Piracy  Jure  gentium  (1934)  A.C.  586.  5  Republic  of  Bolivia  v  Indemnity  Mutual  Marine  Assn.  Ltd  (1909)  1KB  785;  The  Andreas  Lemos  (1983)  QB  647.  6  Smeesters  and  Winkelmolen,  Droit  Maritime  et  Droit  Fluvial,  II,  Bruxelles,  Larcier,  1933,  nr.  694,  with  a  cross-­‐reference  to  the  Rapport  de  la  Conférence  de  La  Haye,  1921,  pp.  153-­‐154.  7  Moot  Problem,  p.  51:  Dutch  survey.  8  Moot  Problem,  p.  41:  investigation  of  19  March  2009.  9  Moot  Problem,  p.  51:  Dutch  survey.  10  Moot  Problem,  p.  42:  investigation  of  19  March  2009.  11  Moot  Problem,  p.  42:  investigation  of  19  March  2009.  

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the scope of Article IV r. 2 (q). Secondly, damage was caused by arsenic found in tanks 3

P&S and 7 P&S.12 The Claimant claims that damage was also caused by product rancidity

due to light and oxygen exposure.13 In both cases, tank opening did not result from the

Respondent’s fault or negligence. In The Chyebassa, 14 it was held that the carrier was not

liable for theft by stevedoreʹs servants where the theft did not arise in the course of the

servantʹs employment. By analogy, the Respondent is not liable for arsenic being

introduced into the tanks by Somali pirates. Pirates were not acting on behalf of the

Respondent and cannot be regarded as its servants. The same reasoning applies for any

damage arising from the tank opening by third parties on the Vessel.15

8. Prior to loading, all tanks on the Vessel were passivated with nitric acid with the same

process. It should have removed any arsenic that may have been present.16 However,

arsenic was found after the Vessel was released. This means that the tanks were opened

during the period of captivity. As said above, the crew was held hostage. On the contrary,

pirates were free to access the tanks. Consequently, pirates introduced arsenic (or material

containing arsenic) into the tanks, which contaminated the goods.

9. Moreover, though the crew was confined to the bridge under extreme conditions (poor

hygiene, not allowed to stand or to look outside), they were observing the tank opening

from their prison. 17 They did not observe unauthorized access to the cargo. However, the

number of pirates on board was undetermined.18 Then, any pirate could have opened the

tanks during the period of captivity off Somalia. Whether the cause was seen or not by the

Respondent, damage would have happened. Under these circumstances, damage was not

caused by the Respondent’s fault or negligence.

iii. Thirdly, the Respondent is not liable pursuant to Article IV r. 2 (e)

10. In the alternative, the Respondent is entitled to rely on exception in Article IV r. 2 (e),

                                                                                                               12  Moot  Problem,  p.  38:  sampling  analysis  of  18  March  2009.  13  Moot  Problem,  p.50:  Dutch  survey.    14  Leesh  River  Tea  Co.  Ltd.  v.  British  India  S.N.  Co.  Ltd.  (1967)  2  Q.B.  15  As  said  above,  the  Claimant  contends  that  damage  was  caused  by  rancidity  of  the  product  due  to  oxygen  and  light  exposure.  This  means  that  the  tanks  have  been  opened.  16  Moot  Problem,  p.  38:  sampling  analysis  of  18  March  2009.  17  Moot  Problem,  p.  42:  investigation  of  19  March  2009.  18  Moot  Problem,  p.  42:  investigation  of  19  March  2009.  

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which exempts liability for damage arising from acts of war. Under international law,

every State may seize a pirate ship or aircraft and arrest the persons on board.19 The crime

of piracy is the longest recognized crime to be subject to universal jurisdiction.20

Therefore, pirates are deemed to be at war with every State and individual. The

Respondent argues that the hijacking of the Vessel on 15 November 2008 is an act of war

purported by enemies of mankind,21 regardless of any nationality. Thus, the hijacking of

the Vessel falls within the scope of Article IV r. 2 (e) and caused above-mentioned

damage to the goods.

1.2 The hijacking of the Vessel could not have been avoided by reasonable

care and diligence on the part of the Respondent

11. In order to rely on exceptions under Article IV r. 2, the Respondent must prove that the

hijacking of the Vessel does not result from its negligence. Firstly, such an event was

unforeseeable. Somali pirates in the Gulf of Aden boarded the Vessel on 15 November

2008. According to the International Maritime Bureau (IMB) Annual Piracy Report for

2008, 111 incidents were reported for the east coast of Somalia and the Gulf of Aden in

2008.22 This is an increase of nearly 200% compared to 2007. However, the report was

issued in January 2009. On 15 November 2008, the IMB Annual Piracy Report for 2007

had authority in piracy issues. Therefore, neither the IMB nor the Respondent was

expecting the peak of pirate attacks in this area when the contract of carriage was

concluded.

12. Moreover, regarding the locations of actual and attempted attacks in 2007, 44 were

reported in Somalia against 52 in Indonesia and Malaysia.23 Thus, when the Vessel loaded

the goods at Pasir Gudang as provided by the Bills of Lading, the Claimant accepted

piracy risks in the first place. The unexpected hijacking of the Vessel in the Gulf of Aden

was a risk the Claimant “always took”. 24Consequently, it was an unfortunate and

unforeseeable event.

                                                                                                               19  Article  105  of  the  United  Nations  Convention  on  the  Law  of  the  Sea  (1982).  20  Cowles,  «  Universality  of  Jurisdiction  over  War  Crimes  »,  California  Law  Review  33  (1945),  pp.  181-­‐194.  21  Re  Piracy  Jure  gentium  (1934)  A.C.  586.  22  IMB  Piracy  and  Armed  Robbery  against  Ships  Annual  Report  for  2008.  This  report  is  an  analysis  of  worldwide  reported  incidents  of  piracy  and  armed  robbery  against  ships  from  1  January  to  30  September  2008.  23  IMB  Piracy  and  Armed  Robbery  against  Ships  Annual  Report  for  2007.  24  Moot  Problem,  p.  26:  email  of  15  March  2009.  

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13. Secondly, the Respondent has exercised diligence in order to reduce piracy risks. The

crew “commenced anti-pirate watch” as soon as the Vessel entered the Gulf of Aden at

7.42 a.m. on 14 November 2008.25 Although the Respondent was being vigilant during the

night and the day after, Somali pirates boarded the Vessel at 12.50 a.m. on 15 November

2008. Therefore, the Respondent was careful in order to avoid the boarding. Furthermore,

as said above, the IMB Annual Piracy Report for 2007 had authority to deal with piracy

risks. The Respondent followed the advice within this report not to call to ports in

Somalia and the Vessel did not slow down her speed. Nonetheless, from 2007 to 2008,

recommendations were strengthened as regards to the navigation in this area. 26

Consequently, any possibility of hijacking while entering the Gulf of Aden could not have

been absolutely eliminated by the Respondent. Precaution measures were taken and piracy

was beyond the Respondent’s control.

1.3 Unseaworthiness does not bar the Respondent from relying on the

exceptions under Article IV r. 2

14. The Respondent claims that it has not breached Article III r. 1 of the Hague-Visby Rules.

A Master Mariner with tanker experience performed the inspection of the cargo.27 Yet

there is no evidence within the report that there has been a breach of a warranty of

seaworthiness. Then, the Claimant cannot prove the Respondent has not exercised due

diligence to provide a seaworthy ship at the commencement of the voyage.

15. Additionally, since the Vessel is classed NKK,28 the Respondent denies all alleged failures

to provide safety equipment at the commencement of the voyage.

16. Moreover, neither seaworthiness nor due diligence is absolute. Both are relative to the

state of knowledge and the standards prevailing at the material time.29 In this respect, it

was ascertained above that the Respondent could not reasonably expect the Vessel to be

taken over by pirates off Somalia. Thus, the Respondent had a prudent attitude.

                                                                                                               25  Moot  Problem,  p.  42:  investigation  of  19  March  2009.  26  Notably,  the  recommended  distance  for  vessels  sailing  off  the  Somali  coast  passed  from  200  to  250  nautical  miles.    27  Moot  Problem,  p.  41:  investigation  of  19  March  2009.  28  Moot  Problem,  p.  3:  email  of  12  September  2008  29  Bradley  (FC)  &  Son  Ltd  v  Federal  Steam  Navigation  Co.  Ltd  (1927)  27  LI  L  Rep  395.  

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17. For these reasons, the Respondent is entitled to rely on exceptions under Article IV r. 2

and is not liable for any damage by reason of piracy.

2. The Respondent is not liable for damage arising from piracy pursuant to the general

exceptions clause of the Charterparty

18. The Contract of carriage contained in or evidenced by the Bills of Lading provided at

clause 17 that neither the vessel nor her owner shall be responsible for any loss or damage

arising or resulting from “pirates”.

19. Neither the Claimant nor the Respondent denies that the hijacking of the Vessel on 15

November 2008 is piracy.30 By reason of piracy, damage was caused to the goods.

20. The Respondent contends that it is entitled to rely on the general exceptions clause for any

damages arising from pirates. Hence, the Respondent cannot be held liable.

3. In the further alternative, there is no significant deterioration in the cargo quality

21. In the alternative, the Respondent argues that the cargo remains of good merchantable

quality. Firstly, the analysis of the cargo conducted on 6 March 2009 proves that there is

no indication of significant contamination or deterioration in the cargo quality.31 The

arsenic levels found in tanks 3 P&S and 7 P&S are “below the UK maximum legal limits

for foodstuff”. As a result, the cargo remains suitable for use in the human chain since no

other apparent evidence of organic contaminated the cargo. Therefore, the Claimant

cannot prove that the product quality was depreciated by reason of contamination.

22. Secondly, the survey performed after the discharge of the goods indicates that it cannot be

ascertained to what extend the product has suffered from being exposed to fluctuating

temperatures.32 Though the Respondent was instructed by the Claimant to heat up the

product, no recommended temperatures to be maintained were given. The “slip melting

point” and the “viscosity” of the product mentioned in the Bills of Lading only refer to its

                                                                                                               30  Moot  Problem,  p.25:  email  of  6  March  2009.  31  Moot  Problem,  p.  38:  sampling  analysis  of  18  March  2009.  32  Moot  Problem,  p.  51:  Dutch  survey.  

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characteristic changes. As there is no evidence that the absence of heating amounted to

damage the goods, the Respondent is entitled to rely on the Clause 16 (a) of the Charter

Party33. Hence, the Respondent denies any deterioration of the goods, and consequently

any liability for damage due to a lack of heating.

23. Thirdly, the survey also indicates that the quality of the product was not depreciated by

reason of its rancidity due to oxygen exposure. The product is stowed in a shoretank at

Rotterdam since March 2009 “in unheated condition” and “with air above the product”34.

However, these conditions of stowage are slowing the oxidation reactions, which get the

product more rancid. Then, there is no evidence that the quality of the product was

deteriorated neither by oxygen exposure nor, as seen above, a lack of heating.

24. For these reasons, the Respondent claims that it cannot be proved that the cargo went from

being GMQ cargo to non-GMQ cargo. The goods remain of good merchantable quality.

B. THE RESPONDENT WAS ENTITLED TO DELIVER THE CARGO OTHER

THAN AS AGAINST PRESENTATION OF THE BILLS OF LADING

25. The Respondent cannot be held liable for misdelivery since it complies with the

Charterer’s orders (1) and the Claimant abandoned its rights on the cargo (2). The

Respondent’s obligation to deliver the goods against presentation of the Bills of Lading

does not fall within the scope of the Hague-Visby Rules (3). Alternatively, the Claimant is

not entitled to seek damages (4).

1. The Respondent complied with the Charterer’s orders

26. In maritime law, there is a well-established rule that the carrier can deliver the goods at

the destination only against the production of a bill of lading by the consignee. However,

as it is often the case, the practice differs from the rules: the carrier often delivers the

goods without obtaining a bill of lading. Delivery of the goods without presentation of the

                                                                                                               33  Moot  Problem,  p.  9:  Charter  Party.  34  Moot  Problem,  p.  50:  Dutch  survey.  

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bill of lading is one of the most common problems in the carriage of goods by sea. This

issue will be interpreted in the light of English law (1.1) and comparative law (1.2).

1.1. Under English law

27. First, the Respondent was ordered by the Charterer to deliver the goods without

presentation of the Bills of Lading but against a letter of indemnity issued by the latter to

it. Secondly, the Claimant sent to the Respondent an email, which indicates that following

the Charterer’s instructions would constitute a breach of the Contract of carriage.35

Therefore, the Respondent was placed under an extremely difficult position. Regarding

the Charterer’s orders, the Respondent had to determine if the cargo was going to be

delivered to the person entitled to its possession. This goes against the well-established

principle by which a carrier is not bound to investigate who is entitled to possession of the

goods.

28. When the Respondent arrived at the discharge port, the Claimant was not there to take

delivery of the goods and present the Bills of Lading. Moreover, the Respondent could not

be ensured that the person willing to take delivery of the cargo in the email was the lawful

holder of the Bills of Lading. Therefore, the Respondent only had two options: the first

one was to refuse the Charterer’s order to deliver the goods without the surrender of the

Bills of Lading. This would have meant to leave the cargo in the Vessel or to abandon it at

the port of discharge. The second one was to deliver the goods against a letter of

indemnity and to comply with the orders of the Charterer, to whom the Respondent was

bound under the Contract of carriage. Thus, the Respondent discharged the cargo pursuant

to the Charterer’s orders in exchange for a letter of indemnity.

29. In Otis Export Ltd. V. Dampskibsselkabet AF 1912 Aktiesekkab, it was held that in

absence of an express term under the contract, the master must only deliver the goods to

the holder of the bill of lading. This rule was consistent with The Houda.36 As a matter of

fact, Rix J. said that: “In my judgment a true owner cannot in absence of some special

arrangement oblige a shipowner to deliver his goods to him without presenting his bill of

lading […]. In practice, a suitable indemnity will be likely to satisfy the shipowner, all the

                                                                                                               35  Moot  problem  p.  36  :  email  of  20  March  2009.  36  Kuwait  Petroleum  Corp.  V.  I&D  Ouil  Carriers  Ltd.  (1999)  1  Lloyd’s  Rep.  837.  

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more so where the goods owner has a reasonable explanation for the absence of his bill of

lading”. Hence, in absence of Bills of Lading, the Carrier is entitled to deliver the cargo

against a letter of indemnity.

30. Rix J. also said that it was not necessary to imply the terms to allow delivery without a bill

of lading, largely because of the widespread use and acceptability of the letter of

indemnity. The widespread use of the letter of indemnity grew up because it was

necessary for the bill of lading contracts to be efficient. Therefore Rix J suggests that the

shipowner is obliged to deliver against either the bill of lading or a contractual indemnity.

In the case at hand, the Claimant was not at the port of discharge to present the Bills of

Lading and receive the cargo. The Respondent could not rely on the email as it could have

been sent by anyone. This is why the Respondent decided to deliver the cargo to the

Charterer who provides it a letter of indemnity. As a matter of fact, the Carrier is not

required to enquire the person claiming the goods is indeed entitled to receive them.37

1.2. Under comparative law

31. Although the obligation of the carrier to deliver the cargo against surrender of a bill of

lading is interpreted strictly by the English courts, such an interpretation is weakened

under comparative law.

32. In French law, the Supreme Court held that the agreement of the Charterer could allow the

Carrier to deliver the cargo without presentation of the bill of lading.38 In this case, the

French Court reminds the rule of delivery against bills of lading. In the meantime, the

Court reserves the case of the freedom of contract, which should leave to the parties the

right not to present the bill of lading on delivery if they agreed on it.

33. In China, the Supreme Court has adopted a judicial interpretation text39 in 2009 dealing

with delivery without bill of lading. Article 9 of this text provides that the Carrier, upon

demand of the Charterer, can deliver the goods other than to the cargo receiver.40

                                                                                                               37  The  Houda  (1994)  2  Lloyd’s  Rep.  541,  552  (col.  2),  per  Neill  L.J.;  556  (col.  2),  per  Millett  L.J.  Similar  reasoning  was  extended  to  straight  Bills  of  Lading  in  The  Rafaela  S,  in  para.  7.122ff.  38  Cass.  Com.  19  June  2007,  n°  05-­‐19646.  39  Supreme  Court  of  China,  Judicial  interpretation  text,  16  February  2009,  art.  9.  40  Chinese’s  Courts  apply  judicial  interpretations  the  same  way  as  statutes.  

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34. Also, on 3 July 2008 the United Nations Commission on International Trade Law

(UNCIRAL) approved the draft Convention on Contracts for the International Carriage of

Goods Wholly or Partly by Sea, which was adopted by the Legal Committee of the

General Assembly on 14 November 2008 also known as the Rotterdam Rules.41 The

Rotterdam Rules are now opened for signing but will enter into force as soon as it will be

ratified by twenty countries. Despite the fact that they are not yet enforceable, these rules

provide interesting provisions. They cannot be ignored as the aim of this convention is to

extend and modernize international rules already in existence and achieve uniformity of

admiralty law in the field of maritime carriage, updating and/or replacing many provisions

in the Hague Rules, Hague-Visby Rules and Hamburg Rules.

35. Article 46 (c) of the Rotterdam Rules provides that “The carrier that delivers the goods

upon instruction of the shipper or the documentary shipper … is discharged from its

obligation to deliver the goods under the contract of carriage, irrespective of whether the

non-negotiable transport document has been surrendered to it”. This Article gives then

the right for the Carrier to deliver the goods without the presentation of the bill of lading

when the Charterer gave him instructions to do so.

36. Again, Article 53 of the Rotterdam Rules provides that “The right of control may be

exercised only by the controlling party and is limited to: … c) The right to replace the

consignee by any other person including the controlling party”,42 pursuant to the Article

54 the controlling party is “when a non-negotiable transport document ... that it shall be

surrendered in order to obtain delivery of the goods: (a) The shipper is the

controlling party”. This provision shows that the Charterer can replace the cargo receiver

by itself as controlling party despite the fact that a bill of lading has been issued. Hence,

the Respondent could legitimately deliver the cargo to the Charterer as controlling party.

37. All this comparative law highlights that the obligation for the Carrier to deliver the goods

only against presentation of a bill of lading is not absolute. An exception to the principle

is found when the Charterer demands expressively that he cargo is to be deliver to itself.

                                                                                                               41  A/CN.9/WG.III/WP.101  –  Transport  Law:  Draft  convention  on  the  carriage  of  goods  (wholly  or  partly)  (by  sea).  42  A/CN.9/WG.III/WP.101  –  Transport  Law:  Draft  convention  on  the  carriage  of  goods  (wholly  or  partly)  (by  sea),  Art  53  1)  c).  

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38. The Respondent argues that it is not liable for wrongful delivery of the cargo, as it was

acting under the Charterer’s orders.

2. The Claimant abandoned its rights on the cargo, and consequently any action in

conversion against the Respondent

39. On 6 March 2009, the Claimant informed the Seller, also the Charterer, of its intention to

terminate the Contract of Sell because of the Seller’s breach. Then, the Claimant

“require[s] immediate repayment of the contract price”.43 The behaviour of the Claimant

shows that it was not interested in the cargo anymore. Therefore, the Claimant has waived

its rights on the cargo and could not pretend to be its owner anymore; despite the fact that

the Claimant was in possession of the bill of lading. However, the Claimant pretends to

bring an action in bailment for the tort of conversion,44 this action shall be inadmissible.

40. It is fundamental to mention that the bill of lading is a document of title. Also, the

transferee of a bill might have an independent contractual or possessory right to the

delivery of the goods. The bill of lading itself does not give him such a right. Indeed, the

transfer of the bill does not always transfer the symbolic possession of the goods, the

latter being dependent upon the intention of the parties.

41. Furthermore, the mere holder of the bill of lading is not entitled to bring a claim for non-

delivery/conversion against the carrier. Indeed, it is possible for the property to become

separated from the bill of lading. In the case at stake here, property of the goods passed

from the Claimant to the Respondent during shipment, when the Claimant decided to

terminate the Contract of Sell.

42. Moreover, the Claimant cannot ignore that the Claimant brought a petition to garnish

property of the goods45 and that the Court of Appeal of Rotterdam upheld the judgment of

                                                                                                               43  Moot  problem  p.  25:  email  of  6  March  2009.  44  Moot  problem  p.  69:  Claim  Submissions.  45  Moot  problem  p.  53:  Statement  of  facts.  

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the District Court of Rotterdam that granted an order for sale.46 This means that the

Respondent is the true owner of the goods.

43. Therefore, conversion action can only be brought against the person to whom the goods

have been delivered, that is to say the Charterer.

3. The Respondent’s obligation to deliver the goods against presentation of the Bills of

Lading does not fall within the scope of the Hague-Visby Rules

44. The Claimant argues that delivery without presentation of the Bills of Lading is a breach

of the Hague-Visby Rules.

45. Delivery is not mentioned as one of the carrier‘s obligations as set out in Article II and

Article III rule 2 of the Hague-Visby Rules. Moreover, misdelivery claims shall be

excluded from the scope of the Rules because cargo is delivered outside the temporal limit

of the rules. Indeed, the “tackle to tackle” rule contained in Article I (e) provides that

“carriages of goods covers the period from the time when the goods are loaded on to the

time they are discharged from the ship”. For these reasons, it is generally assumed that

misdelivery claims fall outside the ambit of the Rules. In Nikolay Malakhov Shipping Co

Ltd v SEAS Sapfor Ltd, the New South Wales Court of Appeal held that Article III rule 2

imposed no obligation on the carrier in respect of its appointment of independent

contractors to perform services under the contract of carriage outside the “tackle to tackle”

period.

46. Therefore, the Respondent did not breach its obligation under the Hague-Visby Rule when

the Respondent delivered the goods without Bills of Lading.

                                                                                                               46  Moot  problem  p.  54:  Statement  of  facts.  

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4. Alternatively, no damages shall be recoverable because of the Respondent’s breach

of Contract

47. If the Tribunal states that the Respondent is in breach of the Contract of carriage because

the Respondent delivered the cargo without presentation of the Bills of Lading, the

Claimant cannot seek damages.

48. In The Ines, Clarke J held that in such circumstances no damages should be recoverable,

as no losses have been sustained.47 Indeed, the cargo has been delivered to the Carrier,

which is entitled to possession unlike the Claimant.

49. Therefore, the Claimant shall not seek damages since the cargo has been delivered to the

person entitled to possess the goods.

C. THE RESPONDENT WAS ENTITLED TO CHANGE THE DISCHARGE

PORT

50. The Claimant argued that “In breach of the contract of carriage the Owners delivered the

cargo at Rotterdam and not Liverpool”.48 Between the 20 and the 22 March 2009, the

Respondent discharged the cargo at Rotterdam against a letter of indemnity.

51. In all contracts of carriage, the carrier must deliver the goods at the agreed port of

destination. However, exceptions may entitle the carrier to change the port of destination.

The Respondent claims that it was entitled to discharge the cargo at Rotterdam because

the Claimant had abandoned the cargo, and consequently its rights on it (1). Moreover,

there was an agreement from the Claimant to change the port of destination (2). Finally,

the liberty clause under the Charterparty authorizes the Respondent to discharge the cargo

at Rotterdam (3).

                                                                                                               47  MB  Pyramid  Sound  NV  v  Briese  Schiffahrts  GMBH  and  Co  KG  MS  (The  Sina)  and  Latvian  Shipping  Association  Ltd  (The  Ines)  (1995)  2  Lloyd’s  Rep  144.  48  Moot  Problem,  p.  69:  Claim  Submission.  

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1. The Claimant had abandoned the cargo, and consequently its rights on it

52. As seen above49, the Respondent contends that the Claimant was purported to have

abandoned the cargo to Beatles. Therefore, the Claimant had no more rights on the goods

and the Respondent could not be instructed to go to a specific place. The Claimant did not

own the cargo anymore, and consequently it had no power to choose where it should go.

53. Moreover, the Respondent was told by the Claimant not to discharge the cargo on 20

March 2009.50 There was no communication between the Respondent and the Claimant

before this date. The Respondent was already at Rotterdam when it received this email

because the Respondent had clear instructions to go there from Beatles. Moreover, there is

no evidence within this email that the Claimant wanted the Respondent to call and

discharge the cargo at another port. Therefore, the Respondent was allowed to stay at

Rotterdam.

54. For these two reasons, the Claimant had no more rights on the merchandise and cannot

claims breach of contract. It was no more part to this contract. Therefore, the Respondent

was entitled to go to Rotterdam instead of Liverpool.

2. The Claimant agreed to change the port of destination

55. On 16 March 2009, the Claimant sent an email to Beatles, in which it specifically

mentioned that the Respondent could go wherever it wanted to with the cargo: “We have

made it clear from the outset, whilst reserving our rights, that we did not consider that the

cargo should be sent to Liverpool where it would have no value. We have also made it

clear however that this is a decision for you as cargo owners and charterers to make”.51

This is explicit: it was agreed that the Respondent could choose the port of destination.

56. Moreover, two days later, the Claimant shown that it agreed for the Vessel to go to

Rotterdam by saying “we have couriered the bills to Johnson & Johnson in Rotterdam for

                                                                                                               49  See  above,  §39  -­‐  §43.  50  Moot  Problem,  p.  36:  email  of  20  March  2009.  51  Moot  Problem,  p.  27:  email  of  16  March  2009.  

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them to make available when the vessel arrives”.52 The Claimant agreed for the change of

port by sending the Bills of Lading to Rotterdam.

57. In these two emails, the Claimant accepted the change of port. First of all, in the first

email, it agreed for the Respondent to decide where the Vessel should go. In the second

email, it is implicit that the Claimant authorized the Vessel to go to the port of Rotterdam.

Indeed, sending someone in this port necessarily implies that they had agreed to that.

58. Therefore, the Claimant is acting in bad faith by assessing that the change of port

constitutes a breach of contract. Good faith is a rule of classical contract law. The English

courts have developed it in commercial cases, notably litigation arising out of the carriage

of goods by sea. In Director General of Fair Trading v. First National Bank, Lord

Bingham said that the “requirement of good faith in this context is one of fair and open

dealing”.53 He was talking about the duty of good faith imposed by the Unfair Terms in

Consumer Contracts Regulations 1994. Regarding the good faith principle, the Claimant

failed to its duty.

59. As a result, the Claimant agreed to change the port of destination and was acting in bad

faith. Consequently, the Respondent is not liable for any change of destination.

3. The Respondent was entitled to discharge the cargo at Rotterdam pursuant to the

liberty clause of the Charterparty

60. In Davis v. Garrett,54 it was established that the absence of any contractual provision

allowing the carrier to deviate implies “a duty in the owner of a vessel, whether a general

ship or hired for the special purpose of the voyage, to proceed without unnecessary

deviation in the usual and customary course”. Deviation has been defined as an intentional

and unreasonable change in the geographical route of the contracted voyage.55 However,

                                                                                                               52  Moot  Problem,  p.  33:  email  of  18  March  2009.    53  Director  General  of  Fair  Trading  v.  First  National  Bank  (2001)  UKHL  52,  (2001)  3  WLR  1297,  (2002)  1  Lloyd’s  Rep  489,  para  17.  54  Davis  v.  Garrett  (1830)  6  Bing.  716,  725  per  Tindal  C.J.  55  Martin  Dockray,  “Deviation:  a  Doctrine  All  at  Sea?”  (2000)  LMCLQ  76.  

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in the present case, a contractual provision gives specific rights to the Respondent to

deviate, and consequently to change the port of destination.

61. The contract of carriage contained in or evidenced by the Bills of Lading materially

provided as follows:

“29. Liberty clause (a) In any situation whatsoever and wheresoever occurring ... which

in the judgment of the Owner or Master is likely to give rise to risk of ... delay or

disadvantage to ... the Vessel or any part of her cargo, or to make it unsafe, imprudent or

unlawful for any reason to commence or proceed on or continue the voyage or to enter or

discharge the cargo at the port of discharge... the Owner or Master may discharge ... the

cargo ... The Owner may, when practicable, have the Vessel call and discharge the cargo

at another or substitute port declared or requested by the Charterers.” 56

62. First, the Respondent was requested by Beatles to call and discharge at another port. As a

matter of fact, the letter of indemnity provided that Beatles requested the Respondent to

deliver the cargo at Rotterdam.57

63. Secondly, the Respondent claims that there was a disadvantage for the Vessel or the cargo

to go to Liverpool. The survey provides that “as a supposed result of the hijack and fear of

deterioration of the product(s) the initial buyer in Liverpool, UK rejected the

consignments”.58 This means that the goods could not have been sold in Liverpool

whereas there was a potential buyer in Rotterdam.59 It was ascertained that “there was

only GMQ PFAD available on the open market” in Liverpool.60 Therefore, the decision

not to go to Liverpool was justified since the cargo may not have been sold regarding its

quality.

64. Moreover, the single joint expert report indicates that the cost to go to Liverpool is very

expensive. “Freight indication on 25th March for vessels was et Euro 37.50 per mt loading

2nd to 5th April in Rotterdam (approx USD 50per mt). There would be insurance at

                                                                                                               56  Moot  Problem,  p.11:  Charter  Party.  57  Moot  Problem,  p.  53:  Claim  Submission.  58  Moot  Problem,  p.48:  Single  Joint  Report.  59  Moot  Problem,  p.30:  email  of  17  March  2009.  60  Moot  Problem,  p.58:  Single  Joint  Report.  

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approximately USD 1,3 per met to bring the cargo from Rotterdam to Liverpool”.61

Consequently, going to Liverpool would have broadly increased the price of freight and

the loss would have been subsequent. The Respondent argues that such a loss of money is

an economic risk and a disadvantage for the cargo. As a result, the Respondent was

entitled to go to Rotterdam pursuant to the liberty clause.

65. Alternatively, the Respondent claims that it is also entitled to deviate under the Hague-

Visby Rules. Pursuant to Article IV (4), “any deviation in saving or attempting to save life

or property at sea, or any reasonable deviation, should not be deemed to be an

infringement or breach of these rules or of the contract of carriage.” As said above, going

to Liverpool would have been a risk and a disadvantage for the cargo. Under these

circumstances, proceeding by the normal route can be regarded as a reasonable deviation.

Therefore, the Respondent did not breach the contract of carriage by changing the port of

destination.

66. For these reasons, the Respondent was entitled to call and discharge the cargo at another

port, and consequently did not breach the contract of carriage.

D. ALTERNATIVELY, THE RESPONDENT IS ENTITLED TO LIMIT ITS

LIABILITY

67. In the alternative, if the Tribunal finds that the Respondent is liable for any deterioration

in the quality of the goods, it is still entitled to limit its liability under the Hague-Visby

Rules.

68. Pursuant to Article IV r. 5 (a), “neither the carrier nor the ship shall in any event be or

become liable for any loss or damage to or in connection with the goods in an amount

exceeding the equivalent of 666.67 units of account per package or unit or units of

account per kilo of gross weight of the goods lost or damaged, whichever is the higher”.62

67. According to this rule, the price cannot exceed 666.67 units of account per package. The

Bills of Lading issued by the Respondent mentioned 4 packages amounting to a gross

                                                                                                               61  Moot  Problem,  p.59:  Single  Joint  Report.  62  Art  IV.5(a),  Hague-­‐Visby  Rules.  1968.  

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quantity of 4000 m.t. of palm fatty acid distillate. Therefore, the maximum amount that

the Respondent may have to pay cannot exceed USD 2,666,680 (4000 x 666.67 =

2,666,680).

68. However, Article IV r. 5 (e) provides that neither the Respondent nor the Vessel “shall be

entitled to the benefit of the limitation of liability … if it is proved that the damage

resulted from an act or omission of the carrier done with intent to cause damage, or

recklessly and with knowledge that damage would probably result.”63

69. The hijacking of the Vessel is not an act or omission intended by the Respondent to cause

damage. Somali pirates held the entire crew captive from 15 November 2008 to 13

February 2009 under extreme conditions. The Respondent strictly denies being involved

in any case in the hijacking. As a matter of fact, the Respondent was the first victim who

suffered from piracy and there is absolutely no evidence to prove its involvement.

70. Moreover, it was said above that the hijacking of the Vessel was a wholly unexpected

event. 64 It does not result from any act or omission of the Respondent regarding its

knowledge that damage would happen at the time of the attack.

71. As a result, damage was not caused by the Respondent’s act or omission, and

consequently it is entitled to limit its liability pursuant to Article IV r. 5.

                                                                                                               63  Article  IV  r.  5  (e)  of  the  Hague-­‐Visby  Rules.    64  See  above,  §11  -­‐  §13.  

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PRAYER FOR RELIEF For all the reasons submitted above, the Respondent respectfully requests this arbitral panel

to:

ADJUDGE that the Respondent is not liable to the Claimant for the following amounts

claimed:

a) The difference between the price paid for the cargo and its value at Liverpool plus its

value at Liverpool the 30 March 2009:

USD 747.50 per.mt x 4,000 mt = USD 2,990,000

b) The price paid to buy goods in to sell to their sub-buyers in Liverpool:

USD 522.50 per.mt x 4,000 mt = USD 2,090,000

c) The Dutch Courts costs:

USD 138,843.14 + USD 107,913.12 = USD 246,756.26

In the alternative

DECLARE that any liability of the Respondent is limited to USD 2,666,680.

further

ADJUDGE that the Respondent has to pay:

a) The price paid in Rotterdam for the goods the 19 March 2009:

USD 350 per.mt x 4,000mt = 1,400,000 USD

further and/or alternatively

b) The market value of the cargo in Liverpool, which is the price of the market in

Rotterdam plus the fret:

USD 380 per.met x 4,000mt = 1,520,000 USD

in the further alternative

ADJUGE:

a) that the Claimant is not entitled to the costs of the Dutch proceedings according to the

costs ordered made by the Dutch Courts:

EUR 262 + EUR 816 = EUR 1078 (USD 1403.70)

b) the cost of the unsuccessful appeal should not be allowed because it should never have

been brought