team 10 gujarat national law university claimant€¦ · the charterers finalised an order of 950mt...

16TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT,

2015

IN THE MATTER BETWEEN

WESTERN TANKERS INC……………………………CLAIMANT

AND

LDT PTE…………………………….……………….DEFENDANT ____________________________________________

MEMORANDUM FOR THE CLAIMANT

TEAM 10

JAIDRATH ZAVERI • SAI SARANYA HARIHARAN • SHILPA NAIR • SURABHI SABOO

TEAM 10: MEMORANDUM FOR THE CLAIMANT

Page | 2

TABLE OF CONTENTS

LIST OF ABBREVIATIONS…………………………………………………………………….3

INDEX OF AUTHORITIES……………………………………………………………………...5

STATEMENTS OF FACTS………………………………………………………………………9

ARGUMENTS ADVANCED………………………………………………………………….…11

I. THE ARBITRAL TRIBUNAL HAS THE JURISDICTION TO HEAR THE PRESENT MATTER..11

A. THERE WAS A VALID AGREEMENT TO ARBITRATE ESTABLISHING LONDON

ARBITRATION AS THE PROPER FORUM FOR ARBITRATION……………………11

B. TORT OF FRAUD IS ADMISSIBLE IN THIS ARBITRATION……………………….13

II. BREACH OF CHARTERPARTY……………………………………………………...14

A. WITH RESPECT TO NON-PAYMENT OF HIRE……………………………………15

B. THE VESSEL WAS DIRECTED TO PROCEED TO AN ALTERNATIVE DISCHARGE

PLACE WHERE A QUANTITY OF CARGO WAS DISCHARGED FROM THE VESSEL,

WITHOUT THE AUTHORIZATION OF THE

OWNER………………………………………………………………………..18

III. TORT OF FRAUD…………………………………………………………………...21

A. ASA2 WAS ACTING ON BEHALF OF THE CHARTERERS AND THEY ENJOYED A

PRINCIPAL-AGENT RELATIONSHIP…………………………………………….21

B. SUFFICIENT SUPPLY OF BUNKERS WAS NOT MADE BY THE CHARTERERS AND

THERE WAS NO INTENTION FROM THEIR END TO DO THE SAME………………..23

IV. THE ALLEGATIONS RAISED AGAINST THE MASTER ARE DENIED…………...……...26

PRAYER…………………………………………………………………………...……...27


Page | 3

LIST OF ABBREVIATIONS

&…………………………………………………………………………………………… and

AC………………………………………………………………………………..Appeal Cases

All ER……………………………………………………………..…….All England Reporter

App Cas…………………………………………………………………………..Appeal Cases

Art………… ………………………………………………………………………...….Article

ASA…………………………………………………………..……...Atlantic Services Agency

ASA2………………………………………………………...….....Atlantic STS Agency Ltd

B.L.R……………………………………………………………….…......Building law reports

C.A…………………………………………………………………………….....Civil Appeals

CLOUT……………………………………………...….…….Case Law on UNCITRAL Texts

Co……………………………………………………………………………………..Company

C.P.D……………………………………………………….…………Common Pleas Division

CSO………..............................................................................................Chief Security Officer

CST………………………………………………………………...………………...Centisoke

e-mail………………………………………………………………....…….electronic mail

esp………………………………………………………………………………...…..especially

EWCA Civ………………………..... Court of Appeal of England and Wales (Civil Division)

Exch………..................................................................................Exchequer Reports (England)

H.L………………………………………………………………………...……House of Lords

i.e…………………………………………………………………………………….…...that is

IFO……………………………………………………………..……….. Intermediate Fuel Oil

L.T…………………………………………………………………………Law Times Reports

Laycan…………………………………………………………….....Laytime and Cancellation


Page | 4

LJ…………………………………………………………………………………..Lord Justice

J…………………………………………………………………………….……………Justice

Ll. L. Rep…………………………………………………………… Lloyd's List Law Reports

Lloyd’s Rep…………………………………………………………….... Lloyd’s Law reports

LR…………………………………………………………………………………Law Reports

Ltd……………………………………………………………………………………....Limited

M. & G…………….……Manning & Granger's Common Pleas Reports (England and Wales)

MAL……………………………………………………………………Model Arbitration Law

MAX………………………………………………………………………….……...Maximum

MIN…………………………………………………………………………….…….Minimum

Model Law………..UNCITRAL Model Law on International Commercial Arbitration, 1985

OPL………………………………………………………………….………… Off Port Limits

para……………………………………………………………………..…………….paragraph

Pte………………………………………………………………………………...……..Private

Pty………………………………………………………………………………..... …Propriety

QB………………………………………………………………...…………….Queen’s Bench

QBD…………………………………………………………………..Queen’s Bench Division

ST4………………………………………………………………………………….Shelltime 4

STS…………………………………………………………………..…….Ship to ship transfer

UNCITRAL…………………...…...United Nations Commission on International Trade Law

UTC………………………………………………………………Coordinated Universal Time

v…………………………………………………………………………………………..versus

W.L.R…………………………………………………………………….Weekly Law Reports

WTI…………………………………………………………..…Western Tankers Incorporated


Page | 5

INDEX OF AUTHORITIES

ARTICLES REFERRED TO

1. Andrew Tweeddale, Incorporation of Arbitration Clauses, 68 Arbitration 48, 56

(2002).

BOOKS REFERRED TO

1. BLACK’S LAW DICTIONARY (10th ed., Thomson Reuters).

2. CHITTY ON CONTRACTS SPECIFIC CONTRACTS (Sweet & Maxwell, Volume II, 30th ed.

2008).

3. CLARE AMBROSE & KAREN MAXWELL, LONDON MARITIME ARBITRATION ( LLP

1996).

4. JEAN-FRANÇOIS POUDRET & SÉBASTIEN BESSON, COMPARATIVE LAW OF

INTERNATIONAL ARBITRATION (Sweet & Maxwell 2007).

5. SIR JACK BEATSON, ANDREW BURROWS, JOHN CARTWRIGHT, ANSON’S LAW OF

CONTRACT (29th ed., OXFORD).

6. STEWART C. BOYD, STEVEN BERRY, ANDREW S. BURROWS, BERNARD EDER, DAVID

FOXTON & CHRISTOPHER SMITH, SCRUTTON ON CHARTERPARTIES AND BILLS OF

LADING (Sweet & Maxwell, 21st ed. 2008).

7. TERENCE COGHLIN, ANDREW W. BAKER, JULIAN KENNY & JOHN D. KIMBALL, TIME

CHARTERS (6th ed. 2008).

CASES REFERRED TO

1. Aggeliki Charis Compania Maritima SA v. Pagnan SpA (The Angelic Grace), [1983]

2 Lloyd's Rep 171.

2. Angus v. Clifford [1891] 2 Ch. 449.

3. Armagas v. Mundagos (The Ocean Frost), [1986] 2 Llyod’s Rep. 109 (H.L.).


Page | 6

4. Astel-Peiniger Joint Venture v. Argos Engineering & Heavy Industries Co Ltd., Case

78: MAL 7(2) (CLOUT).

5. Bird v. Brown, (1850) 4 Exch. 786.

6. Bolton Partners v. Lambert, (1889) 41 Ch.D. 295.

7. British Bank of the Middle East v. Sun Life, [1983] 2 Lloyd’s Rep. 9.

8. Cullen v. Thomson, (1862) 6 L.T. 870.

9. Derry v. Peek, (1889) LR 14 App Cas 337.

10. Edington v. Fitzmaurice (1885) 29 Ch D 459.

11. Empresa Exportadora de Azucar v. Industria Azucarera Nacional S.A. (The

Playa Larga and Marble Islands), [1995] 1 Lloyd's Rep 87.

12. Excomm Ltd v. Ahmed Abdul-Qawi Bamaodah (The St. Raphael), [1985] 1 Lloyd’s

Rep 403 (“The St. Raphael”).

13. Excomm Ltd v. Ahmed Abdul-QawiBamaodah (The St Raphael), [1985] 1 Lloyd’s

Rep. 403.

14. Firth v. Staines, [1897] 2 Q.B. 70.

15. Freeman & Lockyer v. Buckhurst Park Properties, [1964] 2 Q.B.

16. Gay Constructions Pty Ltd and Spaceframe Buildings (North Asia) Ltd v. Caledonian

Techmore (Building) Ltd., Case 87: MAL 7(2) (CLOUT).

17. Goff v. Gauthier (1991) P. & C.R. 388. cf.

18. Habas Sinai Ve Tibbi Gazlar Isthisal Endustri A.S. v. Sometal S.A.L, [2010] EWHC

29 (Comm).

19. Harbour Assurance v. Kansa General International Insurance, [1993] QBD 701.

20. Keighley Maxted & Co v. Durant, [1901] A.C. 240.

21. Leolga v. John Glynn, [1953] 2 QB 374.

22. Mackender v. Feldia, (1967) 2 QB 590.


Page | 7

23. Mareva Navigation Co v. Canaria Armadora SA (The Mareva AS), [1977] 1 Lloyd’s

Rep. 368.

24. Modern Building Wales Ltd v. Limmer & Trinidad Co Ltd., [1975] 1 W.L.R. 1281.

25. National Carriers Ltd v. Panalpina (Northern) Ltd, [1981] AC 675.

26. Sea Land Securities v. Dickinson, [1942] 2 K.B. 65.

27. Sea Trade Maritime Corp v. Hellenic Mutual War Risks Association (Bermuda) Ltd.

(The Athena), [2007] 1 Lloyd’s Rep 280 (“The Athena”).

28. Secretary of State for Foreign and Commonwealth Affairs v. Percy International &

Kier International, [1998] All ER (D) 13.

29. Streford v. Football Association, [2007] EWCA Civ 238.Tank express v. Compagnie

Financiere Belge des Petroles, (1948) 82 L1.L.Rep 43 (H.L).

30. The Borvigilant, [2003] 2 Lloyd’s Rep. 520.

31. The Jasmine B, [1992] 1 Lloyd’s Rep.

32. The Kostas K, [1985] 1 Lloyd’s Rep.231.

33. The London Explorer, [1971] 1 Lloyd’s Rep. 523.

34. The Mediolanum, [1984] 1 Lloyd’s Rep. 136 (C.A.).

35. The “Nerano”, Daval d’Aciers d’Usinor v. Armare SrL, [1994] Lloyd’s Rep. 50 .

36. The Rijn, [1981] 2 Lloyd’s Rep. 267.

37. The Starsin, [2003] 1 Lloyd’s Rep.571.

38. Tracomin SA v. Sudan Oil Seed Co [1983] 1 Lloyd’s Rep. 560.

39. Tracomin SA v. Sudan Oil Seed Co, [1983] 1 Lloyd’s Rep. 560.

40. Wilson v. Tumman, (1843) 6 M. & G. 236, 242.

41. Wyndham Rather Ltd v. Eagle Star & British Dominions Insurance Co Ltd., (1925)

21 Ll. L. Rep. 214.


Page | 8

42. Wyndham Rather Ltd v. Eagle Star & British Dominions Insurance Company Ltd.,

(1925) 21 Lloyd’s Law Rep.

MISCELLANEOUS

1. The Hague-Visby Rules

STATUTES

1. Arbitration Act 1996


Page | 9

STATEMENT OF FACTS

THE PARTIES AND THE CHARTERPARTY

Less Dependable Traders Pte. (“The Charterers”), chartered the vessel Western Dawn (“The

Vessel”) from Western tankers Inc. (“The Owners”) by way of an amended Shelltime

4charterparty with rider clauses dated 26 May 2014 (“The Charterparty”). The Vessel was

chartered for a period of three months, plus or minus 30 days. The Charterparty was for a

time charter trip to include a voyage from Singapore to OPL Luanda, West Africa, with

redelivery in the Mediterranean area.In accordance with the Charterparty, voyage orders were

given on 27 May 2014 for the Vessel to load “30,000MT MIN/MAX Jet A1 Plus 70,000MT

+/-10% Moloo Gasoil” (“The Cargo”).

THE VOYAGE AND BUNKERS

The Vessel arrived and anchored at PBT Singapore on 27 May 2014. The Master requested

the Charterers for 1500MT of bunkers, as was required to complete the voyage. Subsequently

the Charterers finalised an order of 950MT of bunkers with their bunker suppliers. The

Master, on receipt of this information, protested the insufficient supply of the bunkers. In

reply, the Charterers assured the Master that sufficient bunkers would be available in Durban

or Cape Town. The Vessel departed from Singapore on 08 June 2014 with the Cargo and

950MT IFO 380 CST, of bunkers on board. On 20 June 2014 the Master informed the

Charterers that the Vessel would soon reach Durban and proceeded to remind them about

their promise/ assurance of supplying the remaining quantity of bunkers in Durban. On 25

June 2014, the Master sent a voyage correspondence to the Charterers, protesting the decision

of the Charterers of not providing bunkers at Durban. The Master requested the coordinates

of the next bunkering location and further informed the Charterers that without sufficient

bunkers the Vessel would be compelled to reduce the speed and that the Owners would not


Page | 10

be liable for such a speed reduction. On 28 June 2014, the Charterers instructed the Master to

proceed to STS Area 1 to take receipt of the bunker supply and discharge the cargo. Later on

the same day, ASA2, acting on the Charterers’ behalf informed the Master that the discharge

would now take place using the vessel ANTELOPE at an alternative discharge place, the

coordinates of which were also provided in the same voyage correspondence. They also

assured the Master that 300MT of bunkers, the exact quantity that the Charterers had to

supply, would be supplied at the alternative discharge place. Meanwhile, the Owners, on 03

July reminded the Charterers of the impending due payment of the second hire. On 04 July

2014, the Vessel reached the designated location. The vessel Antelope was nowhere in sight.

The same was relayed to ASA2, which was acting on the Charterers’ behalf. The same day,

the Charterers went off hire citing that there was no communication with them. The next

communication from the Master was on 17 July 2014. The Master reported that a series of

unauthorised STS transfers took place at the alternative discharge place, which resulted in a

loss of about, 28,190 MT of the Cargo. The Vessel suffered material damage as a result of

these unauthorized STS transfers.

THE CLAIMS

The Owners contend that the Charterers are liable to pay the due hire, as owed by them under

the Charterparty. The Charters committed fraud by making false misrepresentations and are

liable to pay the Owners loss and damages, arising from such fraud.


Page | 11

ARGUMENTS ADVANCED

I. THE ARBITRAL TRIBUNAL HAS THE JURISDICTION TO HEAR THE PRESENT

MATTER.

It is submitted by the Owners that London Arbitration is the proper forum of Arbitration and

the Laws of England apply to the disputes. It is also submitted that these disputes, one of

which relates to a tort of fraud committed by the Charterers, are admissible by virtue of the

construction of the Arbitration clause under the Shelltime 4 (hereinafter “ST4”).

A. THERE WAS A VALID AGREEMENT TO ARBITRATE ESTABLISHING LONDON

ARBITRATION AS THE PROPER FORUM FOR ARBITRATION.

1. An Arbitration clause can be specifically drafted by the parties for the contract or can be

incorporated from any other document. A reference to a document containing an

arbitration clause constitutes a valid arbitration agreement if the clause is made a part of

the contract.1 The courts in various cases have held that general words of incorporation

i.e. general reference to the document is sufficient to incorporate the Arbitration clause

contained therein.2

2. Also, where the parties made reference to a standard form of contract that contained an

Arbitration clause, then this would be sufficient to incorporate that Arbitration clause.3

1Habas Sinai Ve Tibbi Gazlar Isthisal Endustri A.S. v. Sometal S.A.L, [2010] EWHC 29 (Comm). 2Modern Building Wales Ltd v. Limmer & Trinidad Co Ltd., [1975] 1 W.L.R. 1281; Wyndham Rather Ltd v. Eagle Star & British Dominions Insurance Co Ltd., (1925) 21 Ll. L. Rep. 214; Tracomin SA v. Sudan Oil Seed Co, [1983] 1 Lloyd’s Rep. 560; Excomm Ltd v. Ahmed Abdul-QawiBamaodah (The St Raphael), [1985] 1 Lloyd’s Rep. 403., Astel-Peiniger Joint Venture v. Argos Engineering & Heavy Industries Co Ltd., Case 78: MAL 7(2) (CLOUT); Gay Constructions Pty Ltd and Spaceframe Buildings (North Asia) Ltd v. Caledonian Techmore (Building) Ltd., Case 87: MAL 7(2) (CLOUT) 3Secretary of State for Foreign and Commonwealth Affairs v. Percy International & Kier International, [1998] All ER (D) 13; Modern Buildings Wales Ltd v. Limmer & Trinidad Co Ltd., [1975] 2 Lloyd’s Rep 318; Habas Sinai; Sea Trade Maritime Corp v. Hellenic Mutual War Risks Association (Bermuda) Ltd. (The Athena), [2007] 1 Lloyd’s Rep 280 (“The Athena”); Tracomin SA v. Sudan Oil Seed Co [1983] 1 Lloyd’s Rep 560; Excomm Ltd v. Ahmed Abdul-Qawi Bamaodah (The St. Raphael), [1985] 1 Lloyd’s Rep 403 (“The St. Raphael”); Wyndham Rather Ltd v. Eagle Star & British Dominions Insurance Company Ltd., (1925) 21 Lloyd’s Law Rep 214; Streford v. Football Association, [2007] EWCA Civ 238.


Page | 12

The rationale behind this is that the parties would be privy to the terms rather than when

they are incorporating some other document, to the terms of which, they aren’t privy to.4

3. In the present case, there was a contract concluded between the parties, in which the

parties had used the standard form of Charterparty, the ST4 along with Rider clauses and

amendments.5 Thus, it is a case of an incorporation of a standard form of contract which

was incorporated in its entirety.

4. Where the arbitration clause in the Charterparty on its true construction and without any

verbal manipulation to include disputes under the bills of lading and between the parties

to it, general words of incorporation of the arbitration clause into the bills of lading will

be sufficient.6 And it has been said that of the words and expressions frequently and

generally used, the phrase “arising out of” is probably the widest.7 So, based on these and

the wording of the arbitration clause (“all disputes arising out of this Charter”) in the ST4,

the bills of lading can incorporate the arbitration clause.

5. Thus, it is seen that there was a valid agreement to arbitrate, evidenced by the Arbitration

clause in the standard Charterparty, ST4, (incorporated through a general reference) that

provided for the laws of England and the Arbitration Act 1996 to be followed.8 The

Charterers are accepting to resolve the dispute by arbitration but are refusing to go

according to London Arbitration which is warranted by the ST4. The intention of parties

is to be taken from the signed contract which the parties agreed upon. The Charterparty is

itself an agreement between the parties and by virtue of a standard form being

incorporated into the contract between them; they are bound by the Arbitration clause.

Thus the proper forum of Arbitration is London Arbitration.

4Andrew Tweeddale, Incorporation of Arbitration Clauses, 68 Arbitration 48, 56 (2002). 5Bundle of Documents, page 5. 6The “Nerano”, Daval d’Aciers d’Usinor v. Armare SrL, [1994] Lloyd’s Rep. 50 at 52. 7 CLARE AMBROSE AND KAREN MAXWELL, LONDON MARITIME ARBITRATION, 28 ( LLP 1996). 8 Clause 46, ST4.


Page | 13

B. TORT OF FRAUD IS ADMISSIBLE IN THIS ARBITRATION.

6. It has been recognised by majority of the laws that an arbitrator can also decide disputes

relating to liability in tort of one of the parties.9 In Mackender v. Feldia10, Longmore LJ

cited Mustill and Boyd, Commercial Arbitration Second Edition at page 120 wherein they

said that the phrase “arising out of”, “cover every dispute except a dispute as to whether

there was a contract at all” Thus it can be said that the term “arising out of this contract”

will cover all disputes including those relating to tortious claims. The English courts also

recognized the jurisdiction of an arbitrator to decide a tort claim where the arbitration

clause refers to the claim “arising out of”, “concering” or “in connection” with the

contract.11

7. Further in Aggeliki Charis Compania Maritima SA v. Pagnan SpA (The Angelic Grace)12,

the court held that

“To some extent the claims in contract and in tort are true alternatives .To some

extent they may not be true alternatives, but they clearly overlap. In any event all

claims and cross-claims arise out of the same incident, the identical set of facts

which have to be investigated by the arbitrators.”

Thus, there is an overlap between tortuous and contractual claims and it is to be decided

on the facts whether the origins are identical or not.

8. Also in Empresa Exportadora de Azucar v. Industria Azucarera Nacional S.A. (The

Playa Larga and Marble Islands)13, arbitration for the tort of conversion was allowed and

the Court upheld the dictum of Mr. Justice Mustill, that a tortious claim does arise out of

9JEAN-FRANÇOIS POUDRET & SÉBASTIEN BESSON, COMPARATIVE LAW OF INTERNATIONAL ARBITRATION, 266 (Sweet & Maxwell 2007). 10(1967) 2 QB 590. 11JEAN-FRANÇOIS POUDRET & SÉBASTIEN BESSON, COMPARATIVE LAW OF INTERNATIONAL ARBITRATION, 266 (Sweet & Maxwell 2007). 12[1983] 2 Lloyd's Rep 171. 13Empresa Exportadora de Azucar v. Industria Azucarera Nacional S.A. (The Playa Larga and Marble Islands), [1995] 1 Lloyd's Rep 87.


Page | 14

a contract containing an Arbitration clause if there is a sufficiently close connection

between the tortious claim and a claim under the contract.

9. Disputes that are to be referred to arbitration include not only those that are of a

contractual nature, but also those founded in tort.14 Where there is a reference of a dispute

as to whether any party has committed fraud, it is apt to cover post contractual fraud.

Moreover claims for damages for the commission of fraud are arbitrable and

commonplace in London Arbitration.15

10. In the present case there is an issue relating to the tort of fraud which is in connection to

the concept of agency and provision of bunkers by the Charterers, which arises out of the

contract. This shows that the tortious claim of fraud is in close connection with the

contractual claims. Therefore by virtue of the phrase “All disputes arising out of this

charter”, used in the ST4, coupled with the fact that fraud is also as such arbitrable, the

claims relating to tort of fraud are admissible under this arbitration.

11. Thus the defense of the Charterers that the dispute as to tort of fraud is not admissible

under this Arbitration has no substance and is liable to be quashed.

II. BREACH OF CHARTERPARTY

It is contended before this Tribunal that the act of the Charterers to go off-hire due to no

contact, as has been stated by them, amounts to a breach of the Charterparty as it is not a

valid ground to go off–hire. It is also contended that the Charterers directed the ship to an

alternative discharge place and unloaded a part of the cargo, and in doing so damaged the

hull and machinery of the ship. The Owners are entitled to claim damages for the damage

caused to the Vessel due to the STS transfer at the alternative discharge place. Further,

they are entitled to receive hire for the period till the Vessel resumes service.

14Harbour Assurance v. Kansa General International Insurance, [1993] QBD 701. 15Harbour Assurance v. Kansa General International Insurance, [1993] QBD 701.


Page | 15

A. WITH RESPECT TO NON-PAYMENT OF HIRE

12. In legal terms the result of a time Charterparty is that, an exchange of promises takes

place, Ship-owners promise to put services of a ship and her crew at Charterers’ disposal

which is given in exchange of Charterers’ promise to pay hire. In this respect, hire

operates as consideration given by the Charterers to the Ship-owners for the services of a

ship and her crew made available to the former.16

13. The obligation to pay hire is an absolute obligation. It means that in case hire is not paid

when due, the Charterers are in default of payment of hire and are in breach of the time

Charterparty and neither non performance nor negligence in performing is required on the

part of the Charterers.17

14. In the present case, hire was to be paid per month in advance as per the terms of the

Charterparty. The laycan period started from 04 June 2014 at midnight18, and thus for the

purpose of calculation of period of hire under the Charterparty, a month of service would

start from 04 June 2014. This means that hire will be due and is supposed to be paid by

the close of business on every 3rd day of the month after 04 June 2014.

15. The Charterers went off–hire on 04 July 2014. The reason for this as has been stated by

them in the mail dated 04 July 2014 sent at 12:24 (UTC+8), is due to no contact with the

receiver or Charterers.19

16. At this point it is necessary to mention that there was communication with the Charterers

as evidenced by the e-mail of 04 July 2014 at 05:22 (UTC+1) from the Master to the

Charterers.20 There was communication with the agents of the Charterers as well. Further,

16Tank express v. Compagnie Financiere Belge des Petroles, (1948) 82 L1.L.Rep 43 (H.L). 17TERENCE COGHLIN, ANDREW W. BAKER, JULIAN KENNY & JOHN D. KIMBALL, TIME CHARTERS, 294 (6th ed. 2008). 18Bundle of Documents, page 5. 19Bundle of Documents, page 41. 20Bundle of Documents, pages 41- 42.


Page | 16

the noon reports were sent on a daily basis by the Master.21 This also establishes that

there was contact with the Charterers and/or their agents.

17. Another important point to which attention must be drawn to is that even if we assume

without conceding that there was no contact with the charterer, they cannot go off–hire as

under the Charterparty.

18. According to Mareva Navigation Co v. Canaria Armadora SA ( The Mareva AS)22, “It is

settled law that prima facie hire is payable continuously and that it is for the charterers

to bring themselves clearly within an off-hire clause if they contend that hire ceases. The

owners provide the ship and the crew to work her. So long as these are fully efficient and

able to render to the charterers the service then required, hire is payable continuously.”

This goes to show that, to go off–hire, the Charterers have to show that their case falls

well under the off–hire clause in the Charterparty. The same has been held in Sea Land

Securities v. Dickinson23 and Leolga v. John Glynn.24 Nowhere in the Charterparty agreed

to by the Owners and the Charterers does it say that the Charterers can go off-hire if there

is no contact with them. It is not provided for in the off–hire clause under the

Charterparty.

19. Further, the Vessel was directed to an alternative discharge place by the Charterers. It can

be interpreted from The Rijn25, that an event which is the natural result of compliance

with the Charterers’ orders does not give rise to off-hire. Thus, deviation of the Vessel to

the alternative discharge place was in compliance with the Charterers orders and

instructions and does not amount to the Vessel going off-hire.

21Bundle of Documents, Procedural Order no 2, para 6. 22[1977] 1 Lloyd’s Rep. 368, per Kerr J, pages 381-382. 23[1942] 2 K.B. 65. 24[1953] 2 QB 374, at page 383. 25[1981] 2 Lloyd’s Rep. 267.


Page | 17

20. So in any case the hire is due and payable under the Charterparty terms by the Charterers

to the Owner till the end of the time charter. Thus Charterers are in breach of the

Charterparty for not paying hire.

21. Further, there was no frustration of the Charterparty as alleged by the Charterers.

Frustration means an event which renders the performance of the contract impossible.

“Frustration of a contract takes place when there supervenes an event (without default of

either party and for which the contract makes no sufficient provision) which so

significantly changes the nature (not merely the expense or onerousness) of the

outstanding contractual rights and/or obligations from what the parties could reasonably

have contemplated at the time of its execution that it would be unjust to hold them to the

literal sense of its stipulations in the new circumstances; in such case the law declares

both parties to be discharged from further performance.”26

22. There was no action on the part of the Owners that rendered the performance of the

contract impossible. With regard to the unloading of cargo, the Charterers took the vessel

to an alternative discharge port. The Charterer’s agents gave instructions regarding

discharge of a part of the cargo at the alternative discharge port and also mentioned that

bunkers will be provided before the cargo transfer.27 The ship was to be under the voyage

instructions of the Charterers. At that alternative port the Charterers and/or their agents

acting on their behalf, discharged a quantity of cargo. In this process the hull and

machinery of the ship was damaged. It is pertinent to mention that this damage, which

rendered the performance of the contract impossible, took place as a result of an action

taken by the Charterers and/or their agents acting on their behalf and in no way, due to

the Owners’ actions. Since there was a fault of a party involved, there was no frustration.

26National Carriers Ltd v. Panalpina (Northern) Ltd, [1981] AC 675. 27Bundle of Documents, page 35, voyage correspondence as on 28 June 2014 at 18:02 (UTC +1), from Atlantic STS Agency Ltd. to the Master.


Page | 18

23. The Master followed all the orders of the agents of the Charterers, and was not in neglect

of his duty. There was no failure to follow orders on his part.

24. These go to show that the Charterers had no grounds to not pay hire and go off hire.

B. THE VESSEL WAS DIRECTED TO PROCEED TO AN ALTERNATIVE DISCHARGE

PLACE WHERE A QUANTITY OF CARGO WAS DISCHARGED FROM THE VESSEL,

WITHOUT THE AUTHORIZATION OF THE OWNER.

25. Under a time charter, the Vessel remains in the possession of the Owner, and the Master

and crew remain the Owners servants. The Charterer gets a right to have the use of the

Vessel.28 The Master and the Owners were responsible for the operation, management

and navigation of the Vessel throughout the Vessel’s service.29

26. The port of discharge and the quantity of cargo to be discharged from the Vessel had been

stated in the bills of lading.30 A bill of lading is interpreted using ordinary methods of

contractual interpretation.31 The Owners and the Charterers agreed to discharge the cargo

at OPL Luanda as evidenced by the bills of lading, in the quantity as mentioned in the

bills of lading. A designated port of discharge on a bill of lading must be treated that it

had originally been written in the Charterparty. The Charterer has no right to change it32

therefore to alter the terms of the bills of lading, authorization of the Owners was needed.

27. As per Clause 13 of the Charterparty, ST4, when the Charterers request the Owners to

discharge a quantity of cargo either without the production of Bills of Lading at the time

of the discharge and/or at a discharge place other than that named in the Bills of Lading,

the Owners shall do the same in consideration of receiving the Charterers Letter of

28The London Explorer, [1971] 1 Lloyd’s Rep. 523, at page 526. 29Bundle of Documents, page 18. 30Bundle of documents, pages 43-44. 31The Starsin, [2003] 1 Lloyd’s Rep. 571, 577-578. 32The Kostas K, [1985] 1 Lloyd’s Rep. 231, 235-236; The Jasmine B, [1992] 1 Lloyd’s Rep. 39.


Page | 19

Indemnity. This indemnity shall be deemed to given by the Charterers on each and every

occasion.

28. In light of the above stated Clause, it can be said that the discharge of the cargo has to be

undertaken by the Owner on behalf of the Charterers. The Charterers can merely request

the Owners to carry out the same in the above said manner.

29. As has been stated, the Charterers and/or their agents acting on their behalf directed the

Vessel to an alternative discharge place without the authorization of the Owner and in

breach of the Charterparty, and without furnishing a Letter of Indemnity to the Owner for

the same. Since the Owners were responsible for the navigation of the Vessel, the

Charterers were required to obtain the authorization for the same from the Owners.

30. The Master was under the orders and direction of the Charterers merely with regard to the

employment of the Vessel. However, employment of the vessel with respect to discharge

of cargo involved the operation, management and navigation of the Vessel and hence,

required the prior authorization of the Owner.

31. At that alternative discharge place, a quantity of cargo was discharged from the Vessel

without the authorization of the Owners and in breach of the Charterparty. During the

said discharge, material damage was caused to the Vessel as has been stated by the

Owners in the Statement of Claim.33 As a result of the damage, the Vessel was unable to

meet her discharge target at OPL Luanda and was unable to discharge the full cargo to

Angola Energy Imports in accordance with the voyage orders and the Bills of Lading.

32. The loss of cargo was a result of the instructions given by Charterers and/or their agents

acting on their behalf, regarding redirection the Vessel and discharge of cargo at the

alternative discharge place. As per Article III (2) of the Hague-Visby Rules, it is the duty

of the Carrier to properly and carefully load and discharge the goods carried. And the

33Bundle of documents, page 62.


Page | 20

conditions laid down in the proviso34 of the said clause of the article are not fulfilled in

the present case. In the present case the Carrier is the Charterer.35 Therefore, the

discharge of the cargo is under his responsibility and the Owners cannot be held liable for

any damage to the cargo caused during its discharge from the Vessel. Throughout the

voyage, the Owners and the Master, in their capacity as a bailee, took reasonable

measures to safeguard the Vessel and their cargo. Hence, there was no breach of duty as a

bailee on the part of the Owners, with respect to the cargo on the Vessel. The duty of the

Owners as a bailee was from the point of time after the cargo was loaded on the Vessel,

i.e., after they received possession of the cargo, till before the cargo was discharged.

33. Further, in accordance with the BIMCO STS Clause36, the Charterers had to indemnify

the Owners for all consequences that arise out of any STS operation. This includes the

damage to the hull and machinery of the ship. This also includes any loss of hire as a

consequence arising out of the STS operation.37 In the present case, since there was a

damage to the hull and machinery that arose out of the STS operation conducted by the

Charterers and/or agents acting on their behalf, the Owners are entitled to claim damages

for it. Also, hire would be payable for the time consumed by the ship to be repaired as the

damage was a direct consequence of the STS operation. Thus, the Charterers cannot deny

to pay hire till the Vessel has returned to a position which is not less favourable to them.

34 Article IV, Hague-Visby Rules. 35 Bundle of documents, page 43-44. 36 Bundle of documents, page 10. 37Bundle of documents, page 11, Clause (f), BIMCO STS Clause.


Page | 21

III. TORT OF FRAUD.

The representations made by the Charterers and/or ASA2, acting on their behalf were of a

fraudulent nature and were made dishonestly, so with an intention that the Owners would

rely on them.

A. ASA2 WAS ACTING ON BEHALF OF THE CHARTERERS AND THEY ENJOYED A

PRINCIPAL-AGENT RELATIONSHIP.

34. Authority is “the official right or permission to act, esp. to act on another’s behalf.”38

35. Authority may be implied from the conduct of the parties or the nature of employment

that is persisting.

36. The Owners would like to make a reference to the voyage correspondence from Atlantic

STS Agency Ltd. (ASA Angola Ltd.) to the Master of the Vessel that was sent on 28 June

2014 at 18:02 (UTC+1)39. It clearly said that ASA2 had further control of the Vessel for

local instruction and that they were to be the new STS coordinator, owing to the fact that

the control of the Vessel had been passed on to them by the Charterers. The mail further

addressed the query that the Owners had raised on 28 June 2014 at 11:42 (UTC+2)40

regarding a confirmation about the exact coordinates of STS Area 1 and the form of

discharge of the cargo. It also assured the Owners of bunker supply as asked for by them,

either upon their arrival at STS Area 1 or before cargo transfer by their service vessel

ANTELOPE.

37. The voyage correspondence dated 03 July 2014 at 16:28 (UTC+ 1)41 from the Master of

the Vessel to Chris at LDTP, informed the Charterers about the near arrival of the Vessel,

WESTERN DAWN at the new OPL discharge location, that which was as confirmed by

38BLACK’S LAW DICTIONARY, 158 (10th ed., Thomson Reuters). 39Bundle of documents, page 35. 40Bundle of documents, page 33. 41Bundle of documents, page 38.


Page | 22

the geographical coordinates sent by ASA2, via their voyage correspondence dated 28

June 2014 at 18:02 (UTC+1). Further, via the same correspondence, the Master was

informed that the STS vessel, ANTELOPE, was to supply bunkers on arrival, before

cargo transfer.42

38. In a case where a person does not have actual authority to act as another’s agent, he may

still have apparent authority to act. Apparent authority arises where the principal by

words or conduct, has represented to the party dealing with the agent that the agent has

authority to act on his behalf.43 The principal is liable as if the agent had been authorised

and may sue on the contract if he ratifies it. In every case where it is said that an agent has

apparent authority, that authority must be founded on a representation made, or at least

authorised by the principal. That is, the agent’s apparent authority can only be created by

the principal’s own statements or conduct or by those of someone authorised to make

such representations on the principal’s behalf.44

39. Where an agent purports to conclude a contract, but does so without authority (actual or

apparent), and the principal chooses to adopt the contract, the contract is said to have

been ratified. A principal may cure any lack of authority in the agent by subsequently

ratifying what the agent has done. Where the principal ratifies, he makes himself liable on

the contract as it had originally been made with his authority.45 In other words, the effect

of ratification is retrospective.46A contract can only be ratified by the person on whose

behalf it was purportedly made.47

42Bundle of documents, page 35. 43Armagas v. Mundagos (The Ocean Frost), [1986] 2 Llyod’s Rep. 109 (H.L.); Freeman & Lockyer v. Buckhurst Park Properties, [1964] 2 Q.B. 44British Bank of the Middle East v. Sun Life, [1983] 2 Lloyd’s Rep. 9. 45Wilson v. Tumman, (1843) 6 M. & G. 236, 242; Bird v. Brown, (1850) 4 Exch. 786; Firth v. Staines, [1897] 2 Q.B. 70, Bolton Partners v. Lambert, (1889) 41 Ch.D. 295; Keighley Maxted & Co v. Durant, [1901] A.C. 240. 46The Borvigilant, [2003] 2 Lloyd’s Rep. 520. 47CHITTY ON CONTRACTS SPECIFIC CONTRACTS, 18 (Sweet & Maxwell, Volume II, 30th ed. 2008).


Page | 23

40. On 04 July 2014 at 09:52 (UTC+8) 48 , the Charterers, by virtue of a voyage

correspondence sent by them to the Master, acknowledged the Master’s previous voyage

correspondence dated 03 July 2014 at 16:28 (UTC+1)49, and asked the Master to continue

to liaise with their STS coordinator. They also confirmed information regarding the next

bunker supply and next load port intention.

a) The above points, with reference to the respective voyage correspondences clearly

indicate that ASA2 was making the representations on behalf of the Charterers and

that by virtue of the said correspondence50, dated 04 July 2014 by the Charterers to

the Master, the Charterers have acknowledged the information sent by the Master to

the Charterers, which was otherwise, as per the correspondences, a matter of

communication only between ASA2 and the Master. The Charterers further instructed

the Master to continue to liaise with their STS coordinator, thereby clearly admitting

to the knowledge of the existence of ASA2 and the representations made by them to

the Master on behalf of the Charterers, via their voyage correspondence dated 04 July

2014 sent at 09:52 (UTC+8)51

b) There is thus a clear existence of agency which can be noticed with the successful

establishment of a Principal – Agent relationship between the Charterers and ASA2.

B. SUFFICIENT SUPPLY OF BUNKERS WAS NOT MADE BY THE CHARTERERS AND

THERE WAS NO INTENTION FROM THEIR END TO DO THE SAME.

41. A statement of intention may be looked upon as a misrepresentation of existing fact, if at

the time a statement was being made, the person making the statement did not in fact

intend to do what he said or knew that he did not have the ability to put the intention into

48Bundle of documents, page 40. 49Bundle of documents, page 38. 50Bundle of documents, page 40. 51Bundle of documents, page 40.


Page | 24

effect; for the promisor’s state of mind was not what he led the other party to believe it to

be.52

42. All the promises made by the Charterers through their voyage correspondences to the

Master, with respect to delivery of sufficient bunker supply, initially in Singapore and

then on failure to do the same, on passing Durban or Cape Town, and further the

representations made by ASA2, the Charterers’ agents as proven, who said that a

sufficient supply of bunkers would be available on arrival at STS Area 1, were all untrue

and none of them were fulfilled.

43. Clause 7(a) of ST4 clearly mentions that the Charterers are duty bound to provide and pay

for all fuel.

44. Of necessity, the ability of the Charterers to provide the ship with the correct quantity of

bunkers requires the co-operation of the owners and their officers, upon whom the

charterers must largely rely for the provision of information as to previous and current

consumption. The owners or their officers may also indicate the further quantities that

will be required for safe completion of the next voyage or voyages ordered by the

Charterers.53 The Vessel had arrived in Singapore ready in all respects for loading of

cargo and the Master, an officer of the Owners, had clearly specified the exact quantity of

bunkers that they would have required for the whole voyage, to the Charterers, well in

advance.

45. Further, it is clear from the voyage correspondences that transpired between the parties,

the Charterers or the agents, ASA2, acting on their behalf, with the Master, that neither

the Charterers nor the agents, ASA2, acting on their behalf had any intention of providing

52Edington v. Fitzmaurice (1885) 29 Ch D 459; Angus v. Clifford [1891] 2 Ch. 449, 470; Goff v. Gauthier (1991) P. & C.R. 388. cf. 53TERENCE COGHLIN, ANDREW W. BAKER, JULIAN KENNY & JOHN D. KIMBALL, TIME CHARTERS, 248 (6th ed. 2008).


Page | 25

bunkers anywhere post the commencement of the voyage from Singapore, the proof of

the same being non delivery of bunkers as has been stated above.

46. The Charterers may in certain limited circumstances be responsible for damage done to

the ship as a result of the non safety of the bunkering place to which the ship is directed

to, by the bunker suppliers if the bunker suppliers are the Charterers’ agents for this

purpose, or if the Charterers’ orders as to bunkering are properly to be construed as orders

to bunker at such place as the bunkering suppliers may direct.54

47. The cargo, which was to be discharged at the nominated discharge port, OPL Luanda,

was instead discharged at STS Area 1, clearly showing that there was no intention, either

on the part of the Charterers or on the part of ASA2, their agents, to perform their

obligations as per the Charterparty. Although it was on the instruction of the Charterers

and/or ASA2 that the Vessel had been directed to proceed off the Angolan Coast, as is

clear from the voyage correspondences, the Charterers took no responsibility of the same

but as has been clearly proved above, the Charterers did have a Principal – Agent

relationship with ASA2 and hence were bound by the latter’s actions.

48. The voyage correspondences made in furtherance of the Charterparty, by the Charterers

and/or ASA2 on behalf of them, with fraudulent intentions, were only so made so that the

Owners would rely on them and act accordingly, as they did by steering the Vessel off the

Angolan coast on the instructions of ASA2, to take delivery of the bunkers, the supply of

which had been promised since the start of the voyage.

49. The above stated actions which resulted in a breach of the Charterparty and the said

fraudulent misrepresentations thereby amounted in the commission of tort of fraud by the

Charterers.55

54The Mediolanum, [1984] 1 Lloyd’s Rep. 136 (C.A.). 55Derry v. Peek, (1889) LR 14 App Cas 337; Cullen v. Thomson, (1862) 6 L.T. 870.


Page | 26

IV. THE ALLEGATIONS RAISED AGAINST THE MASTER ARE DENIED

50. The Owners deny the allegations made against them by the Charterers with respect to the

Master of the Vessel failing to follow anti-piracy precautions, and/or industry practice

relating to West Africa, as required by the Charterparty.

51. The items required with respect to the protective measures, as have been listed in BMP4,

although not supplied in Singapore, were to be taken delivery of at the next port where

the Vessel would be making a stop to take delivery of the remaining fuel, as promised by

the Charterers. Although the items mentioned in the voyage correspondence from Rich

Evasion CSO to Lucius at Purchasing WTI on 03 June 2014 at 17:51 (UTC+8)56 were

available for delivery to the WESTERN DAWN in Durban57, the fact that the Charterers

refused to supply fuel at Durban compelled the Master to proceed to the next port where

the fuel would be supplied by the Charterers, thus without taking delivery of the said

items at Durban.

52. The voyage correspondence, sent by the Master to Rich Evasion on 29 June 201458,

makes a clear mention that the Vessel was doing its best to comply with BMP4.

53. The Owners would thus like to establish that the Charterparty was not breached by them

in any respect and that the Vessel provided by them was one which was fit for service, as

required by the Charterparty – The Master was competent in performing all his acts.

56Bundle of Documents, page 27. 57Bundle of Documents, Procedural Order no 2, para 14. 58Bundle of documents, pages 35-36, voyage correspondence sent at 11:59 (UTC+1).


Page | 27

PRAYER

In the light of the above submissions, the Owners request the Tribunal to declare:

1. That the Charterers are in breach of Charterparty due to non-payment of hire.

2. That the Charterers are in breach of Charterparty for directing the Vessel to an

alternative discharge place without the authorization of the Owners and

discharging a quantity of cargo there, without the authorization of the Owners.

3. That the Charterers committed tort of fraud.

4. That the Owners provided a Vessel that was fit for service and did not breach the

Charterparty.

5. That the Owners did not breach their duty as a bailee in respect of the cargo on the

Vessel.

Therefore, the following reliefs are prayed for:

1. Hire as due or owing under the Charterparty, or alternatively damages for

Charterer’s failure to pay the same.

2. Loss and damage resulting from the Charterer’s fraud.

3. Damages with respect to the damage to the hull and machinery.

4. Compound, or alternatively simple, interest for any sum found owing to the

Owners under Section 49 of the Arbitration Act, 1996

5. Costs in accordance with the Arbitration Act, 1996

6. Further or other reliefs as the Tribunal considers fit.