t 19th international maritime law arbitration...the 19th international maritime law arbitration...

THE 19TH INTERNATIONAL MARITIME LAW ARBITRATION

MOOT, 2018

NATIONAL LAW UNIVERSITY, JODHPUR

TEAM NO 8

MEMORANDUM FOR THE RESPONDENTS

ON BEHALF OF

DYNAMIC SHIPPING LLC

RESPONDENT

AGAINST

CERULEAN BEANS AND AROMAS

CLAIMANT

TEAM

DIVYAKSHI JAIN SAHER FATIMA

SHAGUNTAPARIA

ii

TABLE OF CONTENTS

List of Abbreviations .............................................................................................................. iv

Index of Authorities ................................................................................................................. v

Summary of Arguments .......................................................................................................... 2

Arguments Advanced .............................................................................................................. 3

I. THIS TRIBUNAL does not HAve the JURISDICTION TO HEAR THE

MATTER .............................................................................................................................. 3

A. The Tribunal has the power to decide its own Jurisdiction ....................................... 3

B. the Charterparty contains a valid arbitration agreement, which specifies London as

the seat ............................................................................................................................... 3

C. The claimant has failed to comply with pre-arbitration procedures .......................... 4

II. The Respondent was Entitled to Deviate to Spectre. ................................................ 6

A. Valid Force Majeure Event arose due to the emergence of solar flares .................... 6

B. The presence of electronic charts on the vessel complied with the current

regulations .......................................................................................................................... 7

III. The Respondent Has not Breached Its Duty to Provide A Seaworthy Ship. ...... 8

A. The requirement of exercising due diligence has been complied with. ..................... 8

B. The duty of seaworthiness has a relative nature. ....................................................... 9

IV. The Respondent Should Not Be Held Liable for the Damages Accruing as A

Result of the Water Damage. ............................................................................................ 10

A. The liability of the goods passed with the discharge of the goods .......................... 11

B. Alternatively, even if The Charterparty contemplates delivery to the agents, there

were conditions which would negate this clause. ............................................................ 12

iii

V. The Respondent is not liable to pay the amounts claimed by the Claimant. ........ 13

A. The Claimant is not entitled to the amount on account of damaged cargo .............. 13

B. The Claimant is not liable to get payment of the replacement coffee ..................... 14

C. The Claimant is not liable to get the amount paid for settlement of disputes. ......... 14

VI. The Respondent is liable to claim for the amounts mentioned in the invoice. . 14

A. The Respondent is liable to receive the freight claimed in the invoice. .................. 15

B. The Claimant is liable to pay the General Average Claims made by the Respondent

in the invoice. ................................................................................................................... 16

VII. The Claimant is Liable for the Demurrage Accrued Under the Charterparty 18

VIII. The Respondent is entitled to limit Their liability .............................................. 19

A. The Respondents are liable to limit their liability under The Convention on

Limitation for Liability of Maritime Claims, 1976 .......................................................... 19

B. Alternatively, the Respondent is entitled to limit its liability under Article IV Rule 5

of the Hague-Visby Rules. ............................................................................................... 20

IX. THE CLAIMANT Cannot Exercise Maritime Lien Over Madam Dragonfly

On Account Of Unpaid Crew Wages ............................................................................... 20

A. The English Law is applicable to the claim ............................................................. 21

B. The present matter is not a Maritime Claim ............................................................ 21

C. claim does not give rise to a Maritime Lien ............................................................ 22

X. The claimant does not have Maritime Equitable Lien over Vessel ....................... 23

PRAYER FOR RELIEF ....................................................................................................... 24

iv

LIST OF ABBREVIATIONS

Abbreviations Full Form

Arbitration Agreement

Charterparty

Claimant

COTW

Co.

ECDIS

Expert evidence

GRT

IMO

LLMC

Master Mariner

NOR

Parties

Respondent/ Shipowner

SDR

SOLAS

Tribunal

USD

Vessel

Voyage Charterparty

The Clause 27 of the Voyage Charterparty

The Voyage Charterparty between Claimant and Respondent

Cerulean Beans And Aromas

Coffees of the World

Corporation

Electronic Chart Display and Information System

Statement of Expert Opinion of Mr. Simon Webster

Gross Registered Tonnage

International Maritime Organization

Convention on Limitation of Liability for Maritime Claims, 1976

Mr. Simon Webster, appointed by the Tribunal to provide Expert

Evidence

Notice of Readiness

Claimant and Respondent

Dynamic Shipping Co. Ltd.

Special Drawing Rights

International Convention for the Safety of Life at Sea, 2002

The Arbitral tribunal appointed on September 7, 2017

United States Dollars

The Madame Dragonfly

The Voyage Charterparty between Claimant and Respondent

v

INDEX OF AUTHORITIES

Cases

Albacora S.R.L. v. Westcott &Laurance Line, Ltd. (The “Maltasian”), [1966] 2 Ll. L. Rep.

53, pp. 58 and 62. ................................................................................................................. 13

Aries Tanker Corporation v. Total Transport Ltd. (1977) 1 Weekly Law Reports. ................ 17

Asfar v. Blundell [1896] 1 QB 123. ......................................................................................... 16

Bank of Boston Connecticut v. European Grain & Shipping Ltd.(The Dominique), [1989] 1

Lloyd’s Rep. 431 (HL) ......................................................................................................... 17

Bourne v. Gatliffe(1844) 11 Cl. & Fin. 45 ............................................................................... 13

Brian Glasgow (the bankruptcy trustee of Harlequin Property SVG Limited) v ELS Law

Limited, [2017] EWHC 3004 (Ch) ...................................................................................... 25

Brook v. Wentworth, 3 Anstruther 881 .................................................................................... 25

Cable& Wireless plc v. IBM United Kingdom Ltd, [2002] 2 All ER (Comm) 1041 ................. 6

Cargo ex Galam (1863, P. C.) B. & L.167. ............................................................................. 16

Christopher Brown Ltd v. Genossenschaft Oesterreichischer GmbH, [1954] 1 QB 8 .............. 4

Compania De Vapores Ins. Co., SA v. Mo-Pac R.R. Co., 232 F.2d 657 (5th Cir. 1985). .......... 9

Dakin v. Oxley 143 E.R. 938:(1864) 15 C.B. N.S. 646. .......................................................... 16

Demby Hamilton Co. Ltd. v. Barden, [1949] 1 All E.R. 435. .................................................. 12

Duthie v. Hilton (1868) L.R. 4 C.P. 138 .................................................................................. 16

Falke v. Scottish Imperial Insurance Company, (1996) 34 Ch. D 234 .................................... 25

G. H. Renton & Co., Ltd. v. Palmyra Trading Corporation of Panama (The “Caspiana”)

[1956] 2 Ll. L. Rep. 379. ..................................................................................................... 12

Gaudet Geipel and Others v Brown (The Ex Cargo Argos) 1873] UKPC 15: (1873-74) LR 5

PC 134 .................................................................................................................................. 16

Grant v. Poillon, 20 How. 162. ................................................................................................ 23

vi

Great China Metal Industries Co. Ltd. v. Malaysian International Shipping Cooperation

Berhad (The “Bunga Seroja”),[1999] 1 Ll. L. Rep. 512, point 34. .................................... 12

Harbour Assurance Co (UK) v. Kansa General International Insurance Co Ltd, (1993) QB

701.......................................................................................................................................... 4

he Velox v. Werke, 21 Fed. 479 ................................................................................................ 22

Heart Research Institute Ltd v. Esiron Ltd, (2002) N..S.W.S.C 646 ......................................... 7

HIH Casualty and General Insurance Ltd v. Chase Manhattan Bank, [2003] UKHL 6 .......... 7

Hooper Bailie Assoc Ltd v. Natcon Group Pty Ltd, [1992] 28 NSWLR 194, 211 (NSW SCt) 6

Horne Coupar v. Velletta& Company, 2010 BCSC 483 ........................................................... 7

ICC Case No 6276 ..................................................................................................................... 6

ICC Case No 9812, Final Award (2009) 20(2) ICC Ct Bull 69, 73. ......................................... 6

In Re S.S. Winged Arrow, 425 F.2d 991 (5th Cir. 1970). .......................................................... 8

J.W. Stone Oil Dist., LLC v. Bollinger Shipyard, 2007 WL 2710809 (E.D. La. 2007). ............ 8

Kirchner v. Venus (1859) 12 Moore P.C. 361. ........................................................................ 16

L'ArenaManwaring, Bee199. ................................................................................................... 23

Laurie v. Douglas, (1846) 15 M. & W. 746. ........................................................................... 14

Luke v. Lyde(1759) 2 Burr. 883. .............................................................................................. 16

Melhuish v. Garrett (1858) 4 Jur.(N.S.) 943 ............................................................................ 17

Menetone v. Gibbons, 3 T. R. 269 ........................................................................................... 22

Monarch Airlines Ltd. v. London Luton Airport, (1997) CLC 698 ........................................... 7

Navalmar UK Ltd v Kale MadenHammaddelerSanayiveTicaret AS (The Arundel Castle)

[2017] EWHC 116 (Comm). ................................................................................................ 19

Oldendorff (E L) & Co GmvH v Tradax Export SA (The Joanna Oldendorff) (HL) [1973] 2

Lloyd’s Rep 285; [1974] AC 479. ....................................................................................... 19

vii

Papera Traders Co. Ltd. v Hyundai Merchant Marine Co. Ltd. (The “Eurasian Dream”),

[2002] 1 Ll. L. Rep. 719. ..................................................................................................... 11

Parsons Corporation v. CV Scheepvaartonderneming Happy Ranger, [2006] 1 Ll. L. Rep.

649........................................................................................................................................ 10

Proctor, Garratt, Marston v. Oakwin S.S. Co. [1926] 1 K.B. 244 .......................................... 13

Scott v. Chaffe, 2 Fed. Rep. 401 ............................................................................................... 23

Sea Tank Shipping v. Vinnlstodin HF Vatryggingafelag Islands FH [2018] EWCA Civ 276.

.............................................................................................................................................. 21

Shields v. Davis (1815) 6 Taunt. 65 ......................................................................................... 17

Smith, Hogg & Co., Ltd. v. Black Sea & Baltic General Insurance Company, Ltd. (The

“Librum”), [1940] 67 Ll. L. Rep. 253, p. 258. .................................................................... 11

SOS Maritime Brokers v. The Ship Dana Star, (1996) 2 NZLR 482 ....................................... 22

St. John Shipping Co. v. Rank [1957] 1 Q.B. 267; The Brede [1974] Q.B. 233 ...................... 17

Swiss Bank Corporation v. Novorissiysk Shipping Co,[1995] 1 Lloyd’s Rep 202. ................... 5

Tamil Nadu Electricity Board v. ST-CMS Electric Company Private Limited, (2007) EWHC

713 (Comm.). ......................................................................................................................... 5

The Angela Maria, 35 Fed. 430 ............................................................................................... 22

The Aramis [1987] 2 Lloyd's Rep 58. ...................................................................................... 21

The Bowbelle, [1990] 1 WLR 1330. ........................................................................................ 20

The cape Bari, [2016] UKPC 20 .............................................................................................. 20

The General Sheridan, 2 Id. 294 .............................................................................................. 23

The Halcyon Isle, (1981) AC 221 ............................................................................................ 22

The Kiersage, 2 Curtis C.C. 421 .............................................................................................. 24

The Leerort, [2001] 2 Lloyd's Rep 291. .................................................................................. 20

The Louisa, (1848) 3 W. Rob. 99 ............................................................................................ 24

viii

The Lyons, (1887) 6 Asp. M.L.C. 199 ..................................................................................... 24

The Maud Carter, 29 Fed. I56 ................................................................................................. 22

The Neptune,(1834) 3 Hagg. Adm. 129 ................................................................................... 24

The New Eagle, (1846) 4 Notes of Cases, 426 ........................................................................ 24

The Olgla, 32 Fed. 329 ............................................................................................................ 22

The Petone, [1917] P. 198 ........................................................................................................ 24

The Scotia, 35 Fed. 907 ............................................................................................................ 23

The Sparti, (2000) 2 Lloyd’s Rep 618 ..................................................................................... 24

The Thames, 10 Fed. Rep. 848;................................................................................................ 22

The Two Ellens, L.R. 4 P.C. 161; ............................................................................................ 23

The William Fletcher, 8 Benedict 537 ..................................................................................... 23

The Young Mechanic, 2 Curtis C.C. 404 ................................................................................. 24

Turner, Nott & Co. v. Lord Mayor, etc. of Bristol (1928) 31 LI.L.R. 359. ............................. 13

Union of India v. McDonnell Douglas Corp (1993) Lloyd’s Rep 48. ....................................... 5

Vandewater v. Mills, 15 L.Ed. 554 .......................................................................................... 24

Vlassopoulos v. British & Foreign Marine Insurance Co., [1929] 1 KB 187 ......................... 18

Statutes

Sale of Goods Act, 1923 Section 25 (NSW). ........................................................................... 12



Section 39, Merchant Shipping Act, 1995 (England). ............................................................. 24

Senior Courts Act, 1981, Section 20(2)(e) (England). ............................................................. 23

Senior Courts Act, 1981, Section 20(2)(j) (England) .............................................................. 23

Senior Courts Act, 1981, Section 20(2)(o) (England). ............................................................ 23

Senior Courts Act, 1981, Section 20(2)(o) and (p) (England). ................................................ 23

ix

Senior Courts Act, 1981, Section 20(2)(r) (England). ............................................................. 23

Other Authorities

William Tetley, Stevedores And Maritime Liens, The Maritime Lawyer,Vol.8, p 270 ........... 22

Treatises

A Von Ziegler, C Debbatista, ABK Plegat, J Windahl (eds), Transfer of ownership in

International Trade, 2ndedn (The Netherlands, 2011), at 134 and ff. .................................. 12

Ahmad Hussam Kassem, The Legal Aspects of Seaworthiness: Current Law and

Development, 2006, pp-20. .................................................................................................. 10

AlekaMandaraka-Sheppard, Modern Maritime Law, Vol. 1, 3rd ed., p. 196-198. ................... 24

Clare Ambrose and Karen Maxwell, London Maritime Arbitration, 3rded., p 31. .................... 5

Gary B Born, International Commercial Arbitration, vol 1, 853. ............................................. 4

Gary B Born, International Commercial Arbitration, Vol. 1, p 978 ......................................... 5

Julian Cooke et al., Voyage Charters, 2014 (4thedn., Informa Law). ...................................... 13

Nigel Blackaby et al, Redfern and Hunter on International Arbitration, p 346. ................... 4, 5

Robert Force, A comparison of the Hague, Hague-Visby, and Hamburg rules: Much Ado

About, Tulane Law Review, vol-70,1996,pp.2063. ............................................................. 10

Wharton, Conflict of Laws, 3 ed., P 322, 358 .......................................................................... 22

Wilson, J.F. (2010) Carriage of Goods by Sea (7th ed). Longman, p. 191. ............................ 12

Yvonne Baatz et al., Maritime Law, 2014 at Pg. 218 (2nd edn., Sweet & Maxwell). ............... 14

Regulations

Australian Maritime Safety Authority Marine Notice 06/ 2013. ............................................... 8

The Merchant Shipping (Safety of Navigation) Regulations 2002, SOLAS chapter V

(regulation 19). ....................................................................................................................... 8

x

The Merchant Shipping (Safety of Navigation) Regulations 2002, SOLAS chapter V

(regulation 27). ....................................................................................................................... 8

International Conventions

Convention on Limitation of Liability for Maritime Claims, 1976 Art. 2(b). ......................... 20

International Institute for the Unification of Private Law Principles, 2010 Art.7.1.7". ............ 7

York-Antwerp Rules 1994, Rule A. ........................................................................................ 18

York-Antwerp Rules, r.A.1. ..................................................................................................... 17

1

STATEMENT OF FACTS

1. The Claimant contracted with the Respondent to use the Respondent’s Vessel, the

Madam Dragonfly by Charterparty dated 22 July, 2017. The Charterparty required the

Respondent to transport 70,000 Kg of Coffee from Cerulean to Dillamond.

2. On 24 July 2017, the Vessel proceeded to Dillamffond. On 26 July, the Vessel

experienced an unprecedented degree of solar flares. The force majeure event knocked down

all the communicating systems. As a result the Vessel moved to the Port of Spectre.

3. On 29 July 2011, the Port of Dillamond experienced extreme weather conditions such

as high levels of rainfall and flooding. The Port of Dillamond was closed for 12 hours.

Subsequently, due to the congestion on the port the Vessel had to wait 100 nautical miles

outside the Port. The Vessel’s anchor had to be cut and damage occurred to the hull because

of the coral bed.

4. By email dated 29 July 2017 at 4:28 pm, the Respondent informed about the readiness

of Vessel. As the Claimant’s failed to take delivery on the same day, the Respondent

delivered the coffee at the warehouse for its safe keeping. The same was informed to the

Claimant.

5. The Claimant took the cargo only on 31st July 2017.The Claimant on 22 July 2017

asserted that the Respondent had breached the Charterparty as the Vessel had deviated and

the cargo had been damaged.

6. By email dated 1 August 2017, the Claimant sought USD$3.2 million from the

Respondent for losses associated with the Madam Dragonfly’s deviation to Spectre and the

damage to the cargo with other associated losses.

7. By email dated 2 August 2017, all liability had been denied by the Respondent. On 8

August, claimant denied payments with respect to the shipment, the demurrage and use of

other additional services.

2

8. By email dated 11 August 2017, the Claimant referred the dispute to arbitration,

appointing Mr. David Friedman as its arbitrator.

SUMMARY OF ARGUMENTS

The Respondent is being sued by the Claimant for damage to the consignment of coffee. This

tribunal does have the prerequisite jurisdiction to hear the matter as the Claimant has not

failed to comply with the Pre-Arbitral Procedures and in case, such failure does not bar the

jurisdiction of the Tribunal.

The present claim is pursuant to the discharge of a maritime obligation. Even if it is

considered a Maritime Claim, it still does not give rise to a Maritime Lien as the principle has

been restricted under English law. Further, Seafarer’s Lien is not assignable and there is also

a statutory bar on such assignment.

The deviation to Port of Spectre was due to the occurrence of force majeure event. As a result

the exclusion clause of the Charterparty gets engaged. Moreover the duty of due diligence

had been complied with. Additionally the electronic map system complies with the nautical

chart requirements. This in turn relieves Respondent of its liability.

The Respondent is not liable for the water damage as the risk inherent in the goods had

already passed when the goods were placed in the warehouse. Also, the Respondent is not

liable for the damages that are being claimed by the Claimant. Further, they are liable to

receive the amounts mentioned that they had put in the invoice. Lastly, their liability is

limited under various International conventions.

3

ARGUMENTS ADVANCED

I. THIS TRIBUNAL DOES NOT HAVE THE JURISDICTION TO HEAR THE

MATTER

The Respondent submits that this Tribunal does not have the requisite jurisdiction to hear the

present matter as [A.], it has the power to decide its own jurisdiction,[B.]the Charterparty

provides for London as the seat of arbitration. Additionally, [C.] the Claimant has failed to

comply with the Pre-Arbitral Procedures.

A. THE TRIBUNAL HAS THE POWER TO DECIDE ITS OWN JURISDICTION

The Claimant argues that this Tribunal has the competence to rule on its own jurisdiction.

This is because it is a well-established principle of Kompetenz-Kompetenz.1 The principle

encapsulates that the tribunal has an inherent power to rule on its own jurisdiction, including

questions as to the validity of the arbitration agreement.2Hence, this Tribunal is entitled to

rule on its substantive jurisdiction to hear the merits of these claims.3

B. THE CHARTERPARTY CONTAINS A VALID ARBITRATION AGREEMENT, WHICH

SPECIFIES LONDON AS THE SEAT

The law applicable to the arbitration in the present case is English law as (i) the Arbitration

Clause is valid, and (ii) the parties have expressly agreed to arbitrate in London for all

disputes.

1Nigel Blackaby et al, Redfern and Hunter on International Arbitration, p 346.

2 Gary B Born, International Commercial Arbitration, Vol. 1, 853.

3Christopher Brown Ltd v. Genossenschaft Oesterreichischer GmbH, [1954] 1 QB 8; Harbour Assurance Co

(UK) v. Kansa General International Insurance Co Ltd, (1993) QB 701

4

i. The Arbitration Clause is valid

An arbitration agreement is valid where it contains the requisite degree of certainty4.

Charterparties often contain abbreviated arbitration clauses.5 The English courts have held

that an abbreviated arbitration clause will contain the requisite degree of certainty where it

can give effect to the parties’ presumed intentions.6 Therefore, the words ‘Arbitration in

London’7 used in the Charterparty are sufficiently certain to give effect to the parties’

intention. The Clause is therefore valid and capable of being enforced.

ii. The parties have agreed to arbitrate in London for all disputes

Parties to an arbitration agreement may choose which law governs the validity of that

agreement.8 In the present case, there is no evidence to suggest that the Parties have impliedly

chosen for the substantive law of the Charterparty (the law of New South Wales, Australia) to

govern the arbitration agreement9. Hence, the words ‘Arbitration in London’ signify that the

parties intended to refer disputes to arbitration applying English rules10.

C. THE CLAIMANT HAS FAILED TO COMPLY WITH PRE-ARBITRATION PROCEDURES

Failure to comply with the necessary procedural requirements of the arbitration agreement

constitutes a jurisdictional defect.11 If dispute resolution clauses unequivocally provide that

negotiations or other procedural steps are a mandatory obligation, then that must be 4Clare Ambrose and Karen Maxwell, London Maritime Arbitration, 3rded., p 31.

5Id.

6Supra, Note 4.

7Charterparty, Clause 27.

8 Nigel Blackaby et al, Redfern And Hunter on International Arbitration, p 167; Union of India v. McDonnell

Douglas Corp (1993) Lloyd’s Rep 48.

9Tamil Nadu Electricity Board v. ST-CMS Electric Company Private Limited, (2007) EWHC 713 (Comm.).

10Swiss Bank Corporation v. Novorissiysk Shipping Co,[1995] 1 Lloyd’s Rep 202.

11 Gary B Born, International Commercial Arbitration, Vol. 1, p 978

5

objectively complied with, in order to proceed with arbitration12.It has been held that

particular pre-arbitration procedural requirements are mandatory obligations and, are

jurisdictional requirements whose violation requires dismissal of arbitral proceedings13.

An Expert Determination was a necessary pre-condition for commencing arbitral proceedings

in the present Arbitration Clause.

Under sub-clause (g) of the Arbitration Clause14 ‘any dispute as to technical matters arising

out of or in connection with this contract shall be referred to Expert determination by an

independent Master Mariner’. The use of the word ‘shall’ exhibits the intention of the parties

to mandatorily refer the dispute to an Expert determination.

Under sub-clause (d) of the Arbitration Clause15, the present dispute is Technical Matter.

Technical Matter has been defined as matters surrounding the technical aspects of the

performance of the Charterparty, such as the vessel's route, loading and unloading of cargo,

storage conditions and other matters which can reasonably be considered to be within the

Expert technical knowledge of a Master Mariner16.

It is submitted that the present dispute is a Technical Matter as per the Section (g) of the

Arbitration Clause. Hence, the dispute necessarily had to be sent to a Master Mariner and is

not within the scope of the arbitration.

Sub-clause (e) of the Arbitration Clause17, clearly states that the Claimant could not have

initiated arbitral proceedings until sub-clause (d) has been satisfied first. Therefore, the

12 ICC Case No 6276; ICC Case No 9812, Final Award (2009) 20(2) ICC Ct Bull 69, 73.

13Cable& Wireless plc v. IBM United Kingdom Ltd, [2002] 2 All ER (Comm) 1041; Hooper Bailie Assoc Ltd v.

Natcon Group Pty Ltd, [1992] 28 NSWLR 194, 211 (NSW SCt)





6

Arbitration Clause expressly provides for an Expert determination before the commencement

of the Arbitral Proceeding, a step the Claimant has not complied with. Further, sub-clause

(f)of the Arbitration Clause18 clearly states the intention of the parties for the Expert

determination to be conclusive and binding upon the parties19.

The Claimant had an obligation to abide by the conditions of the Clause. Additionally, as

Charterparty is the Claimant’s standard form of contract, in case of an ambiguity, it must be

construed against the Claimant as encapsulated in the doctrine if Contra Proferentem20. The

Claimant has failed to comply with the pre-arbitration process and hence the jurisdiction of

the tribunal is defective.

II. THE RESPONDENT WAS ENTITLED TO DEVIATE TO SPECTRE.

The occurrences of solar flares led the Respondent to deviate the Vessel to the only viable

option i.e. Spectre. Respondent was not negligent in its conduct. [A.] The exclusion clause

under the Charterparty is engaged as a valid force majeure event had occurred. [B.]

Moreover, the presence of electronic charts on board was in compliance with the current

regulations.

A. VALID FORCE MAJEURE EVENT AROSE DUE TO THE EMERGENCE OF SOLAR FLARES

When non-performance is due to an impediment beyond control, that it could not reasonably

be expected to be taken into account at the time of the conclusion of the contract or to have

avoided or overcome it or its consequences, performances is exempted.21 Clause 17 of the


19Heart Research Institute Ltd v. Esiron Ltd, (2002) N..S.W.S.C 646

20Horne Coupar v. Velletta& Company, 2010 BCSC 483; HIH Casualty and General Insurance Ltd v. Chase

Manhattan Bank, [2003] UKHL 6; Monarch Airlines Ltd. v. London Luton Airport, (1997) CLC 698

21International Institute for the Unification of Private Law Principles, 2010 Art.7.1.7".

7

Charterparty provides for the Act of God as an exception.22 The defense of Act of God

applies where first, the accident was due exclusively to abnormal natural events without

human interest, and second, there was no intervening negligent behavior by the Vessel

owner.23In re S.S. Winged Arrow24, affirmed that where a vessel had been sufficiently moored

based upon the anticipated path of Hurricane Betsy, the Act of God defense applied to relieve

its owner of tort damages resulting from its breakaway.

The event of solar flares is an Act of God and it leads to unintentional interference causing

partial or total loss of the received signal, slower signal acquisition or other adverse effects,

without any human interference.25The solar flares that obstructed the navigation system in the

present case were not under the control of Respondent. Moreover, the Respondent has not

been negligent in his conduct. The degree of solar flares was unforeseeable in nature, such

that it created an international emergency. Thus, it was a force majeure event, relieving the

Respondents from their liability.

B. THE PRESENCE OF ELECTRONIC CHARTS ON THE VESSEL COMPLIED WITH THE

CURRENT REGULATIONS

The International Maritime Organization requires that all vessels engaged in international

voyages shall carry nautical charts on board.26The ship-owners can choose to rely either on

paper charts, or on electronic charts to fulfill the nautical chart carriage requirement.27

22Charterparty, Clause 17(b).

23J.W. Stone Oil Dist., LLC v. Bollinger Shipyard, 2007 WL 2710809 (E.D. La. 2007).

24425 F.2d 991 (5th Cir. 1970).

25Australian Maritime Safety Authority Marine Notice 06/ 2013.

26The Merchant Shipping (Safety of Navigation) Regulations 2002, SOLAS chapter V (regulation 27).

27The Merchant Shipping (Safety of Navigation) Regulations 2002, SOLAS chapter V (regulation 19).

8

The news article on July 25 specified that according to the Cerulean National

Communications Agency the delay can only be attributed to old/faulty equipment.28 It also

stated that any Navigation or satellite communication systems which comply with the current

regulations would have re-connected to the system. Any problems in re-connection with the

navigation system after the solar flares can only be attributed to old or faulty systems

installed in the vessel. The Navigation system of Dynamic Shipping was not faulty as the

system connected without any repair.29

III. THE RESPONDENT HAS NOT BREACHED ITS DUTY TO PROVIDE A

SEAWORTHY SHIP.

The preconditions of the defense of Act of God are that there is absence of human agency,

neglect and that the vessel is seaworthy.30 Clause 17 of the Charterparty also makes the

operation of the exemptions given with respect to force majeure events conditional to this

duty.31[A.] The Respondent did not breach its duty of providing a seaworthy ship as the

requirement of due diligence had been complied with. [B.] Moreover, the duty of due

diligence is relative in nature.

A. THE REQUIREMENT OF EXERCISING DUE DILIGENCE HAS BEEN COMPLIED WITH.

The Charterparty combines the condition of seaworthiness with the requirement of due

diligence.32 Liability of the carrier for cargo damage caused by unseaworthiness arises only

when before and at the commencement of a voyage it due diligence was not exercised to

28Moot Problem p. 35.


30Compania De Vapores Ins. Co., SA v. Mo-Pac R.R. Co., 232 F.2d 657 (5th Cir. 1985).



9

discover and rectify all the unseaworthy conditions.33 The standard of due diligence is

determined by considering the facts of the case and is affected by changes in the level of

knowledge as well as the technology used.34

In the present case, Clause 17 of the Charterparty limits the obligations of the carrier on

failure or delay in performance under the events of force majeure.35 These exceptions are

conditioned to the duty of exercising due diligence.36The newspaper clippings on 18th July

indicated the possibility of solar flares being strong enough to disrupt the connection.

However, the solar flares on the 24th of July37 were unprecedented and the degree was

unforeseeable. The Respondent did not fail in its diligence, as electronic map system was not

faulty and immediately reconnected after the flares were over, without any repair needed.38

Therefore, the Respondent fulfilled its obligation of due diligence.

B. THE DUTY OF SEAWORTHINESS HAS A RELATIVE NATURE.

Seaworthiness must be judged by the standards and practices of the industry at the relevant

time, at least so long as those standards and practices are reasonable.39Eurasian Dream,

provided benchmarks for negligence of the master and crew, being an inherent lack of ability;

a lack of adequate training or instructions, a lack of knowledge about a particular vessel

and/or its systems; a disinclination to perform the job properly or even a physical or mental

33 Robert Force, A comparison of the Hague, Hague-Visby, and Hamburg rules: Much Ado About, Tulane Law

Review, vol-70,1996,pp.2063.

34 Ahmad Hussam Kassem, The Legal Aspects of Seaworthiness: Current Law and Development, 2006, pp-20.





39Parsons Corporation v. CV Scheepvaartonderneming Happy Ranger, [2006] 1 Ll. L. Rep. 649.

10

disability orincapacity.40 Failure to fulfill the seaworthiness obligation does not affect the

carrier’s liability as long as unseaworthiness is not a cause for the loss or damage.41

In the present matter there has been no stance of incompetence by either the master or crew

which can tantamount to unseaworthiness. The Expert Evidence specifies that the cargo had

been delivered in the warehouse at the time when it was damaged and out of the carrier’s

tackle.42 As agents of the Claimant were absent at the time delivery, the cargo was delivered

to the warehouse, after intimating the Claimant.43 Thus, even if the Vessel is considered

unseaworthy, the damage did not take place when the goods were on board.

Thus, the Respondent was prudent in attempting to avoid the impact of the overwhelming and

unexpected natural event and took reasonable precautions under the circumstances.

IV. THE RESPONDENT SHOULD NOT BE HELD LIABLE FOR THE

DAMAGES ACCRUING AS A RESULT OF THE WATER DAMAGE.

The water damage occurred on 30th July at around 1 a.m. when the goods were in the

warehouse. Thus, in order to establish that despite the transfer of the goods, the liability

remained with the Respondent the Claimant is endeavouring to establish that [A.] the liability

of the goods passed with the discharge of the goods. [B.] Alternatively, even if the

Charterparty contemplates delivery to the agents, there were conditions which would negate

this clause.

40Papera Traders Co. Ltd. v Hyundai Merchant Marine Co. Ltd. (The “Eurasian Dream”), [2002] 1 Ll. L. Rep.

719.

41Smith, Hogg & Co., Ltd. v. Black Sea & Baltic General Insurance Company, Ltd. (The “Librum”), [1940] 67

Ll. L. Rep. 253, p. 258.



11

A. THE LIABILITY OF THE GOODS PASSED WITH THE DISCHARGE OF THE GOODS

The default position is that property passes at such time as the parties intended it to be

transferred44 which is ascertained on the basis of the terms of the contract, the conduct of the

parties and the circumstances of the case.45 In Demby Hamilton Co. Ltd. v. Barden46, it was

established that where the delivery has been delayed as a result of the fault of either the buyer

or the seller, the risk for any loss which might not have occurred, but for such fault, is on the

party in fault.

Delivery under a contract with carrier is limited to the goods course of transit.47 Goods are

deemed to be in course of transit from the time when they are delivered to a carrier by water,

until the buyer, or the buyer’s agent takes delivery of them from the carrier.48 A master is

always under a duty to use reasonable care to ensure the success of the voyage, by protecting

his ship and cargo from avoidable risks.49 The standard of care varies in accordance with the

type of the voyage and the particular conditions that may occur throughout the journey.50

Master must take reasonable care,51 in accordance with a sound system52 and does not take

into account all weaknesses and idiosyncrasies pertaining to a particular cargo.53

44 Sale of Goods Act, 1923 Section 25 (NSW).

45 A Von Ziegler, C Debbatista, ABK Plegat, J Windahl (eds), Transfer of ownership in International Trade,

2ndedn (The Netherlands, 2011), at 134 and ff.

46[1949] 1 All E.R. 435.

47Sale of Goods Act, 1923 Section 36 (NSW).

48 Sale of Goods Act, 1923 Section 47 (NSW).

49Great China Metal Industries Co. Ltd. v. Malaysian International Shipping Cooperation Berhad (The “Bunga

Seroja”),[1999] 1 Ll. L. Rep. 512, point 34.

50Id.

51Wilson, J.F. (2010) Carriage of Goods by Sea (7th ed). Longman, p. 191.

52G. H. Renton & Co., Ltd. v. Palmyra Trading Corporation of Panama (The “Caspiana”) [1956] 2 Ll. L. Rep.

379.

12

In the present matter, the delay in delivery was caused due the failure of the Claimant to be

present at the port and receive the shipment on July 29, when the respondent was ready to

unload the shipment. According to the Expert Evidence, the water damage took place

sometime on July 30.54 Therefore at the time of damage, the goods had already been kept at

the warehouse by the Respondent and the delivery was complete as per the terms of the

Charterparty. Therefore the Respondent cannot be held liable for any damage that happened

after the coffee was delivered to the warehouse.55

B. ALTERNATIVELY, EVEN IF THE CHARTERPARTY CONTEMPLATES DELIVERY TO THE

AGENTS, THERE WERE CONDITIONS WHICH WOULD NEGATE THIS CLAUSE.

Clause 12(a) of the Charterparty provides that the delivery has to be done by handing over the

goods to the agent present at the loading place.56 However, this condition is subject to the

reasonability of the time period for which the Respondent is supposed to keep the goods.57

After the expiry of such time, the ship owner is entitled to do what is reasonable to prevent

delay to his ship and to maintain any lien.58 He may land and warehouse the

goods.59Furthermore, there were force majeure conditions due to the flooding caused by the

storm, the Respondent placed the goods in the warehouse in order to avoid any damage by

the flood water.60 This indicates the reasonability of placing the goods in the warehouse, as

53Albacora S.R.L. v. Westcott &Laurance Line, Ltd. (The “Maltasian”), [1966] 2 Ll. L. Rep. 53, pp. 58 and 62.



56Charterparty, Clause 12(a).

57Bourne v. Gatliffe(1844) 11 Cl. & Fin. 45; Proctor, Garratt, Marston v. Oakwin S.S. Co. [1926] 1 K.B. 244;

Turner, Nott & Co. v. Lord Mayor, etc. of Bristol (1928) 31 LI.L.R. 359.

58 Julian Cooke et al., Voyage Charters, 2014 (4thedn., Informa Law).

59Id.


13

the Respondent was worried that the goods might get damaged as a result of exposure to the

elements during the flood.

For the claimant to succeed in his application for breach by the carrier, it needs to prove that

its loss was the direct result of a breach by the carrier of the contract.61Thus, since the

Respondent had already waited for two days for the agents to take delivery, their placing of

the goods in the warehouse was appropriate and cannot be challenged on the ground that it

does not count as delivery.

V. THE RESPONDENT IS NOT LIABLE TO PAY THE AMOUNTS CLAIMED

BY THE CLAIMANT.

The Claimant has addressed several payments which must be made by the Respondent in

order to restore the damage done to them as a result of the perceived negligence of the

Respondent. [A.] The Claimant is not entitled to amounts on account of the damaged Cargo

[B.] USD 9,450,000 for the Replacement Coffee Payment [C.] and USD 5,000,000 on

account of the Settlement Payment.

A. THE CLAIMANT IS NOT ENTITLED TO THE AMOUNT ON ACCOUNT OF DAMAGED

CARGO

The Shipowner is bound to take the same care of goods as a person would of his own goods

i.e. an ordinary and reasonable care.62 The test of reasonable care is that of how a prudent

man would take care of his own goods. The Respondent had delivered the goods as soon as it

was unloaded from the ship and placed in the warehouse on July 30, 2017 at around 12:02

a.m., thereby completing the transaction.63 However, according to Expert Report, the damage

61 Yvonne Baatz et al., Maritime Law, 2014 at Pg. 218 (2nd edn., Sweet & Maxwell).

62Laurie v. Douglas, (1846) 15 M. & W. 746.


14

to the cargo took place at July 30.64 Therefore, the Respondent does not have the liability to

pay for damages.

B. THE CLAIMANT IS NOT LIABLE TO GET PAYMENT OF THE REPLACEMENT COFFEE

The agreement between COTW and the Claimant for the delivery of coffee on an assigned

date is a separate transaction from the contract of carriage between Claimant and Respondent.

One transaction cannot overlay the other and should not be allowed to. Thus, the Respondent

should not be held liable for a liability emerging from a separate contract altogether.

C. THE CLAIMANT IS NOT LIABLE TO GET THE AMOUNT PAID FOR SETTLEMENT OF

DISPUTES.

The amount paid for settlement of dispute and in order to avoid legal liability to COTW was

paid by CBA in order to protect themselves from any legal action instituted by COTW.65

However, the Respondent did not have any role in the transaction and the contract between

COTW and CBA. The Respondent cannot be made liable to pay the settlement amount

arising out of an exclusive transaction between COTW and the Claimant. Furthermore, it was

an economic loss which was reasonably foreseeable and thus the Claimant should have put in

an express clause to protect themselves against any such liability.

VI. THE RESPONDENT IS LIABLE TO CLAIM FOR THE AMOUNTS

MENTIONED IN THE INVOICE.

The Respondent has claimed certain amounts in an invoice sent to the Claimant which

included all those payments which were payable to the Respondent by the Claimant. The

Claimant is liable to pay the [A.] amount of freight as claimed by the Respondent in the

Invoice, and [B.] the General average claims made by the Respondent in the invoice.



15

A. THE RESPONDENT IS LIABLE TO RECEIVE THE FREIGHT CLAIMED IN THE INVOICE.

The Respondent has claimed for certain freight in the invoice. They are liable to receive the

same because (i) the Respondent is entitled to the freight because he completed his part of the

contract (ii) Alternatively, even if the Respondent was unable to complete his part of the

contract, the claim for freight cannot be set-off against the loss in cargo.

i. The Respondent is entitled to the freight because he completed his part of the

contract.

Freight, in the ordinary mercantile sense, is the reward payable to the carrier for the carriage

and arrival of the goods in a merchantable condition,66 ready to be delivered to the

merchant.67 The true test of the right to freight is the question whether the service in respect

of which the freight was contracted to be paid has been substantially performed,68 or, if not,

whether the performance has been prevented by the act of the cargo-owner.69 The Shipowner

is entitled to full freight when he delivers the goods in a merchantable condition, at the port

of destination or is ready to deliver them, but the consignee does not take delivery within a

reasonable time.70

The freight payable in the present Charterparty was in respect to the delivery of the goods

which would have been done on time if the representatives of the Claimant had been

available at the port to receive the delivery.71

66Asfar v. Blundell [1896] 1 QB 123.

67Kirchner v. Venus (1859) 12 Moore P.C. 361.

68Dakin v. Oxley 143 E.R. 938:(1864) 15 C.B. N.S. 646.

69Gaudet Geipel and Others v Brown (The Ex Cargo Argos) 1873] UKPC 15: (1873-74) LR 5 PC 134; Cargo ex

Galam (1863, P. C.) B. & L.167.

70Duthie v. Hilton (1868) L.R. 4 C.P. 138; Luke v. Lyde(1759) 2 Burr. 883.

71 Issue V.

16

ii. Even if the contract was not completed a claim against cargo cannot result in

deduction of freight.

A claim against cargo cannot be held to avoid the basis of avoidance of freight payment.72

Freight is a right of the carrier, and no deductions are to be made separately. Such deductions

are allowed only as a separate cause of action or counterclaim for the damage.73 There will

only be a right to make such deductions if the charterparty expressly permits deductions.74

The Charterparty in the present case does not provide for any deductions or set-off. Thus,

these deductions in freight claimed by the Claimant are not possible to be claimed against the

Respondent.

B. THE CLAIMANT IS LIABLE TO PAY THE GENERAL AVERAGE CLAIMS MADE BY THE

RESPONDENT IN THE INVOICE.

Under the General Average Act when, and only when, any extraordinary sacrifice or

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

purpose of preserving from peril the property involved in the common maritime

adventure.75General Average act and the Charterparty provides that the owners shall pay any

dues or charges levied on the ship by reason of cargo being on board and all other dues or

charges whatsoever.76

The Respondent is liable to receive compensation for the agency fees at Spectre, the repairs

to the hull, the agency fees at Dillamond and the use of electronic access system. The agency 72Aries Tanker Corporation v. Total Transport Ltd. (1977) 1 Weekly Law Reports.

73Melhuish v. Garrett (1858) 4 Jur.(N.S.) 943; Shields v. Davis (1815) 6 Taunt. 65; St. John Shipping Co. v.

Rank [1957] 1 Q.B. 267; The Brede [1974] Q.B. 233.

74Bank of Boston Connecticut v. European Grain & Shipping Ltd.(The Dominique), [1989] 1 Lloyd’s Rep. 431

(HL).

75 York-Antwerp Rules, r.A.1.

76Charterparty Clause 23.

17

fees is payable when the Respondent has to appoint agents at the port in order to get the

goods transported. As iterated above, the agency fees would be valid as the agents were not

present.77 The agency fees at Dillamond is the right of the Respondent as they had required

assistance and the agents of the Claimant were not present at the port to provide the required

assistance. Thus the Respondent is liable to receive the agency fees at Spectre and at

Dillamond.

The expenditure incurred for repairs to the ship’s hull gives rise to an entitlement for

contribution in General Average as these expenses were in direct consequence of a “General

Average act”.78 In the case of Vlassopoulos v British and Foreign Marine Insurance Co79,

applying to the port for these repairs to the vessel was held to be covered under the General

Average clause.

Further, the Charterparty also provides that the ship will not be answerable for losses through

explosion, bursting of boilers, breakage of shafts, or any latent defect in the machinery or

Hull not resulting from want of due diligence by the Owners of the ship.80 The damage to the

hull in the present case did not arise from the above reasons, but was a result of trying to save

the cargo from being damaged by the storm. The Respondent used the electronic access

system to help the delivery of the cargo of the Claimant. Thus, this amount was a necessary

link in the sending of the goods to COTW.

77SupraNote 64.

78 York-Antwerp Rules 1994, Rule A.

79[1929] 1 KB 187.


18

VII. THE CLAIMANT IS LIABLE FOR THE DEMURRAGE ACCRUED UNDER

THE CHARTERPARTY

A valid NOR can only be tendered when the vessel has reached the agreed place and is ready

physically and legally.81 The vessel is physically and legally ready when the ship is prepared

to commence cargo operations without delay and to comply with charterers’ orders whenever

they are given. These conditions are necessary for laytime to start.82

The test for an arrived ship under a port Charterparty is that she must have reached a position

under the customary waiting area. The vessel must be at the immediate and effective

disposition of the charterers.83 A vessel, that could not immediately proceed to berth due to

congestion and was directed to anchor outside port limits by the port authority, is not an

arrived ship for the purposes of tendering NOR, if it cannot be proved that the vessel was in

the port limits.84

In the present case delay happened only due to port congestion and not the lack of readiness.

At the time of tendering the NOR, i.e. at 8:58A.M.and 4:32 P.M on 29th July, the ship was

ready to berth. The email sent at 4:32 P.M. was the valid NOR as it specified the time

remaining to berth. The ship was ready to berth at the time of issue of NOR. Further, since

the Charterparty states that the place of destination is Port of Dillamond, it amounts to a port

charter, the requirement the vessel being berthed for tendering a valid NOR is also

eliminated. Thus the notice was a valid. Therefore, there is no demurrage payable.

81Navalmar UK Ltd v Kale MadenHammaddelerSanayiveTicaret AS (The Arundel Castle) [2017] EWHC 116

(Comm).

82Id.

83Oldendorff (E L) & Co GmvH v Tradax Export SA (The Joanna Oldendorff) (HL) [1973] 2 Lloyd’s Rep 285;

[1974] AC 479.

84Supra Note 111.

19

VIII. THE RESPONDENT IS ENTITLED TO LIMIT THEIR LIABILITY

The Respondent has been made liable for the damages to the tune of USD 30,200,000.

However, they are not liable to pay the same. [A.] They are liable to limit their liability under

The Convention on Limitation for Liability of Maritime Claims, 1976. [B.] and Article IV

Rule 5.

A. THE RESPONDENTS ARE LIABLE TO LIMIT THEIR LIABILITY UNDER THE

CONVENTION ON LIMITATION FOR LIABILITY OF MARITIME CLAIMS, 1976

LLMC provides for limitation of liability in cases relating to loss resulting from delay in the

delivery of cargo.85 It further lays down the limit of liability for property claims for ships not

exceeding 2,000 GRT is 1.51 million SDR.86

The burden of limiting of liability of the Shipowner as a result of the personal act or omission

was described in The Bowbelle87 as a heavy burden, which description has been approved by

the Court of Appeal in The Leerort88 and by the Privy Council in The Cape Bari89. This

burden entails a need for proving any such personal act or omission which would be subject

to judicial discretion.

The Claimant has not been able to establish that the liability of USD 30,200,000 is justified

against the Respondent due to any personal act or omission. Also the Claimant’s claim

against the Respondents to the tune of USD 30,200,000 is not warranted because the Vessel

is a ship having not more than 2000 GRT which is limited under the LLMC.

85 Convention on Limitation of Liability for Maritime Claims, 1976 Art. 2(b).

86 http://www.imo.org/en/About/Conventions/ListOfConventions/Pages/Convention-on-Limitation-of-Liability-

for-Maritime-Claims-(LLMC).aspx

87[1990] 1 WLR 1330.

88[2001] 2 Lloyd's Rep 291.

89[2016] UKPC 20.

20

B. ALTERNATIVELY, THE RESPONDENT IS ENTITLED TO LIMIT ITS LIABILITY UNDER

ARTICLE IV RULE 5 OF THE HAGUE-VISBY RULES.

The Charterparty laid down that the Claimant as entitled to get the benefit of Article IV Rule

5.90 It is accepted that the words "per package" in Article IV r. 5 cannot apply to a bulk

cargo.91 The context in which the word was used in the phrase "per package or unit" in

Article IV rule 5 referred to a physical item or composite of items rather than a unit of

measurement. Because a "package" is unquestionably a physical item, the use of the words

together point to their both being concerned with physical items rather than vague units of

measurement, acting on the principle of noscitur a sociis.92Furthermore, in an email between

parties it was made clear by the Respondents that they had made changes to the Charterparty

which were necessary which involved the changing of the use of the term “bags” to

“containers” which was signed by them93, and were not objected to by the Claimant which

indicates an implied consent. Thus, the Respondent is entitled to limit his liability as per the

Article IV Rule 5 of the Hague-Visby Rules.

IX. THE CLAIMANT CANNOT EXERCISE MARITIME LIEN OVER MADAM

DRAGONFLY ON ACCOUNT OF UNPAID CREW WAGES

The Respondent submits that the Claimant does not have a Maritime Lien over the Vessel as,

applying [A.] English Law, the [B.] present matter is not a Maritime Claim, and even if it is,

it [C.] does not give rise to a Maritime Lien.


91The Aramis [1987] 2 Lloyd's Rep 58.

92Sea Tank Shipping v. Vinnlstodin HF Vatryggingafelag Islands FH [2018] EWCA Civ 276.


21

A. THE ENGLISH LAW IS APPLICABLE TO THE CLAIM

It is submitted by the Respondent that the governing law of the Maritime Lien Claim is

English Law. It is clear that the creation of a lien must be governed by the law of the place

where the vessel is situated when the services are rendered94. Further, the creation of liens for

services on the high seas, as for seamen's wages, is on the same theory governed by the law

of the ship's flag95.

The Madam Dragonfly is a commercial cargo ship vessel flagged in Cerulean96, the vessel is

presently situated in Dillamond and the owners and Charterers conduct business in Cerulean.

Both countries have adopted the laws of England and thus, the same is the law governing the

Claim.

B. THE PRESENT MATTER IS NOT A MARITIME CLAIM

A traditional Maritime Lien is a means of securing rights and is peculiar to maritime law97. If

the subject matter of the agreement concerns navigation, only then it is considered maritime

claim.98Preliminary services leading to a maritime contract are in no part towards to the ship

or the cargo and are not rendered in the discharge of a maritime obligation.

In Plummer v. Webb99, Story J. observed that when there is a contract of mixed nature, it is

not a sufficient foundation for admiralty jurisdiction that some ingredients of a maritime

nature are involved. The whole contract must be maritime, if this be regarded a maritime

94The Maud Carter, 29 Fed. I56 ; The Halcyon Isle, (1981) AC 221; Wharton, Conflict of Laws, 3 ed., P 322,

358

95The Olgla, 32 Fed. 329; The Velox v. Werke, 21 Fed. 479; The Angela Maria, 35 Fed. 430

96 Moot Problem p. 37

97 William Tetley, Stevedores And Maritime Liens, The Maritime Lawyer,Vol.8, p 270

98Menetone v. Gibbons, 3 T. R. 269; SOS Maritime Brokers v. The Ship Dana Star, (1996) 2 NZLR 482

99The Thames, 10 Fed. Rep. 848;

22

contract at all, it is certainly only partly so the object100. Therefore, the whole contract was

not of a maritime nature, and does not fall under maritime jurisdiction101.Further, the breach

must also be maritime102.

In the present matter, the money transferred by the Claimant was to be used as security by the

crew, and was not in its essence, a maritime contract. Even if a part of it is deemed to be

maritime in nature, as the purpose of the security of the seafarer’s wages, even then the

contract as a whole is not maritime, the mere circumstance that certain stipulations contained

therein are not strictly maritime, will still be considered.

C. CLAIM DOES NOT GIVE RISE TO A MARITIME LIEN

The Respondent submits that (i) The principle of Maritime Lien is restricted in England, (ii)

the Seafarer’s Lien is not assignable, and (iii) there is a Statutory Bar on Assignment

i. The principle of Maritime Lien is restricted in England

The principle of Maritime Lien is restricted in England103to only certain claims are

recognized to constitute Maritime Lien at common law. These are Damage caused by a

ship104, Salvage105, Seamen’s wages106, Master’s wages and disbursements107, Bottomry and

Respondentia108. A maritime lien is considered to be a strict right, and cannot be extended by

100L'ArenaManwaring, Bee199.

101Grant v. Poillon, 20 How. 162.

102The William Fletcher, 8 Benedict 537; The General Sheridan, 2 Id. 294; Scott v. Chaffe, 2 Fed. Rep. 401.

103The Two Ellens, L.R. 4 P.C. 161; The Scotia, 35 Fed. 907

104 Senior Courts Act, 1981, Section 20(2)(e) (England).

105 Senior Courts Act, 1981, Section 20(2)(j) (England).

106 Senior Courts Act, 1981, Section 20(2)(o) (England).

107 Senior Courts Act, 1981, Section 20(2)(o) and (p) (England).

108 Senior Courts Act, 1981, Section 20(2)(r) (England).

23

construction, analogy, or inference109. Therefore, even if the present claim qualifies as a

Maritime Claim, it still does not fall under any of the categories of Maritime Lien.

ii. Seafarer’s Lien is not assignable

Under Common Law, Maritime Liens are either transferrable or not110. Lien is regarded as a

personal privilege for the sole benefit of the lien holder111. This personal right of maritime

lien is not capable of being transferred, even by express contract112. In The Petone113, it was

held by J. Hill that a person who pays off a privileged claimant does not get assigned the

right, in general, as well as in claims for wages. Therefore, the crew’s right to sue for lien

cannot be transferred to the Claimant114.

iii. Statutory Bar on Assignment

A seaman’s lien and his remedies for the recovery of his wages are not capable of being

renounced by any agreement115. Therefore, there is a clear statutory prohibition from

allowing the Seafarer’s to transfer or assign their right to the Claimants.

X. THE CLAIMANT DOES NOT HAVE MARITIME EQUITABLE LIEN OVER

VESSEL

Under English law, work and labour done or money expended by one man to preserve or

benefit the property of another do not create any lien upon the property saved or benefitted,

109Vandewater v. Mills, 15 L.Ed. 554; The Young Mechanic, 2 Curtis C.C. 404; The Kiersage, 2 Curtis C.C. 421

110AlekaMandaraka-Sheppard, Modern Maritime Law, Vol. 1, 3rd ed., p. 196-198.

111The New Eagle, (1846) 4 Notes of Cases, 426; The Neptune,(1834) 3 Hagg. Adm. 129

112The Sparti, (2000) 2 Lloyd’s Rep 618

113 [1917] P. 198

114The Lyons, (1887) 6 Asp. M.L.C. 199; The Louisa, (1848) 3 W. Rob. 99

115 Section 39, Merchant Shipping Act, 1995 (England).

24

nor create any obligation to repay the expenditure.116A lien can only arise if there is an

express or implied contract to that effect.117In maritime equitable lien, unlike a common-law

lien, the person claiming the lien is not usually in possession or occupation of the

property.118Further, there must be certain liability in relation of which the lien is exercised. In

the present matter, it has already been established that the Claimant does not have any

justifiable legal claims against the Respondent.119 In the absence of any legal claim, there is

no way in which an equitable lien can be exercised.

PRAYER FOR RELIEF

For all the reasons submitted above, the Respondent respectfully requests this tribunal to:

DECLARE that this arbitral panel does not have jurisdiction to hear the disputes arising out

of the Charterparty; and further

ADJUDGE that the Claimant is liable to the Respondent for the claims made by the

Respondent in its Statement of Defence against the Claimant further

ADJUDGE that the Claimant cannot hold a maritime lien over Madam Dragonfly, further

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

claimed:

a) Cost of the water damaged cargo of USD15,750,000

b) Cost of the Replacement Coffee Payment of USD9,450,000

116Falke v. Scottish Imperial Insurance Company, (1996) 34 Ch. D 234

117 Brian Glasgow (the bankruptcy trustee of Harlequin Property SVG Limited) v ELS Law Limited, [2017]

EWHC 3004 (Ch)

118Brook v. Wentworth, 3 Anstruther 881.

119 Issue V.

25

c) Loss on account of the Settlement Payment of USD5,000,000.

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