SIXTEENTH ANNUAL INTERNATIONAL MARITIME LAW
ARBITRATION MOOT COMPETITION 2015
IN THE MATTER OF AN ARBITRATION HELD IN MELBOURNE
Claimant/Owner
Western Tankers Inc
Respondent/Charterer
AND
LDT PTE
_____________________________________________
MEMORANDUM FOR THE OWNERS
TEAM NO.8
Georgiana Andreea Ban
Silvia Fernández Castro
Andrea López García de Blas
Álvaro Nieto Gómez
TABLE OF CONTENTS
TABLE OF CONTENTS .......................................................................................................... i
LIST OF ABREVIATIONS ................................................................................................... iii
LIST OF AUTHORITIES: BOOKS ..................................................................................... iv
LIST OF AUTHORITIES: CASES AND ARBITRAL AWARDS ..................................... v
LIST OF AUTHORITIES: LEGISLATION ........................................................................ ix
STATEMENT OF FACTS ...................................................................................................... 1
PART ONE: JUSRIDICTION ................................................................................................ 3
A.
THIS TRIBUNAL HAS JURISDICTION ........................................................................ 3
I.
THIS
TRIBUNAL
HAS
THE
POWER
TO
RULE
ON
ITS
OWN
JURISDICTION. ................................................................................................................. ..3
II.
THE CHARTERPARTY CONTAINS A VALID ARBITRATION AGREEMENT,
WHICH SPECIFIES LONDON AS THE SEAT. ................................................................. 3
B.
THE CLAIM RELATED TO TORT OF FRAUD IS ADMISSIBLE IN THIS
ARBITRATION ......................................................................................................................... 5
PART TWO: MERITS ............................................................................................................... 6
A.
BREACH OF THE CONTRACT...................................................................................... 6
I.
THE CHARTERERS AND/OR PERSONS ACTING ON THEIR BEHALF
BREACHED THE TERMS OF THE CHARTERPARTY ................................................... 6
i.
THE CHARTERERS AND/OR THEIR AGENTS REDIRECTED THE VESSEL,
WITHOUT
THE
OWNERS’
AUTHORISATION,
IN
BREACH
OF
THE
CHARTERPARTY ................................................................................................................ 6
i
THE DAMAGES RESULTING FROM FOLLOWING THE CHARTERERS’
ii.
AGENT’S INSTRUCTIONS SHALL BE INDEMNIFIED BY THE CHARTERERS AS
STATED IN THE CHARTERPARTY.................................................................................. 8
THE CHARTERERS DID NOT PAY HIRE ON JULY 3rd 2014 AS REQUIRED
II.
BY THE TERMS OF THE CHARTERPARTY ................................................................... 8
i.
THE CHARTERPARTY WAS NOT FRUSTRATED BY JULY 4 TH.................... 9
ii.
THE VESSEL WAS ON HIRE .............................................................................. 12
B.
THE OWNERS DID NOT BREACH THE CHARTERPARTY, AS THE VESSEL
WAS FIT FOR SERVICE........................................................................................................ 13
I.
THE MASTER WAS COMPETENT AT ALL TIMES ......................................... 13
II.
THE VESSEL WAS SEAWORTHY ..................................................................... 16
III.
THE MASTER COMPLIED WITH THE SPECIAL PROVISIONS TO ST4 PRO-
FORMA CONCERNING “PIRACY” ................................................................................. 17
C.
THE OWNERS DID NOT BREACH THEIR DUTY AS BAILEE OF THE CARGO . 17
D.
LIABILITY FOR TORT OF FRAUD............................................................................. 18
I.
TORT LAW APPLIES IN A CONTRACTUAL SITUATION ............................. 19
II.
THE
RESPONDENT
MADE
AN
ACTIONABLE
FRAUDULENT
MISREPRESENTATION.................................................................................................... 19
III.
THE CLAIMANT IS ENTITLED TO CLAIM IN TORT OF DECEIT ................ 21
IV.
THE CLAIMANT’S LOSS WAS DIRECTLY CAUSED BY RESPONDENT’S
MISREPRESENTATION.................................................................................................... 22
E.
THE CHARTERERS ARE ENTITLED TO COMPOUND OR SIMPLE INTEREST
ON THE AMOUNT OWED .................................................................................................... 23
PART THREE: PRAYER FOR RELIEF ............................................................................ 25
ii
LIST OF ABREVIATIONS
BMP4
:
Best Management Practices
Cargo
:
Cargo transported to Luanda
Charterers
:
LTD PTE
Charterparty
:
The Charterparty
Claimant
:
Western Tankers Inc.
HVR
:
The Hague-Visby Rules
Owners
:
Western Tankers Inc.
Respondent
:
LTD PTE
ST4
:
Shelltime 4
STS
:
Ship to Ship
Vessel
:
The Western Dawn
Voyage Orders
:
Voyage orders issued May 27th
WAF
:
West Africa
iii
LIST OF AUTHORITIES: BOOKS
Blackaby, N. (n.d.). Redfern and Hunter on International Arbitration. Oxford University Press,
5th ed., 2009.
Burrows, A. (2013). A Casebook on Contract. Portland, Oregon, USA: TJ International.
Chen-Wishart, M. (2005). Contract Law. Oxford University Press.
Clare Ambrose, K. M. (2002). London Maritime Arbitration (Second Edition ed.). (B. Harris,
Ed.) LLP.
Coghlin, T., Baker, A. W., Kenny, J., & Kimball, J. D. (2008). Time Charters. London:
Lloyd's Shipping Law Library.
Cooke, J., Young, T., Taylor, A., Kimbald, J. D., Martowski, D., & Lambert, L. (1993).
Voyage Charters. London: LLP.
Hedley, S. (2006). Tort. United Kingdom: Oxford University Press.
Hepple, H. &. (2000). Tort. Cases & Materials (5th ed.). London: Butterworths.
Hilliard, J. O. (2008). The Law of Contract (Second Edition ed.). (N. Padfield, Ed.) Oxford,
United Kingdom: Oxford University.
McKendrick, E. (2012). Contract Law. Text, Cases and Materials (Fifth Edition ed.). Oxford,
United Kingdom: Oxford University Press.
Thomas, R. (2008). Legal Issues related to Time Charterparties. London: Informa.
Treitel, G. (2014). Frustration and Force Majeure. London: Sweet & Maxwell.
Tweedale, A., & Tweedale, K. (2005). Arbitration of Commercial Disputes. International and
English Law and Practice. Oxford University Press.
iv
LIST OF AUTHORITIES: CASES AND ARBITRAL AWARDS
A.
Abdullah M Fahem v Mareb Yemen Insurance Co Ltd [1997] 2 Lloyd’s Rep. 738………….19
Actis Steamship Co Ltd v. The sanko steamship Co Ltd (The Aquacharm) [1982] 1 WLR 119
(CA) ………………………………………………………………………………...……12, 15
Andre & Cie. S.A. v. Orient Shipping (Rotterdam) B.V. (The Laconian Confidence) 1997, 1
Lloydís Rep. 139 (Q.B.)……………………………………………………………………....12
Armagas v. Mundogas (The Ocean Frost) [1986] 2 Lloyd’s Rep. 109 (H.L.)………………...7
Aughton v MF Kent Services [1991] 87 BLR 1, CA…………………………………………...4
B.
B.C.Hydro & Power v B.G. Checho International [1993] 99 D.L.R. (4th) 577………………19
Ben Line Steamers Ltd v. Pacific Steam Navigation Co (The Benlawers) [1989] 2 Lloyd's
Rep. 51……………………………………………………………………...………………...16
British Bank of the Middle East v. Sun Life [1983] 2 Lloyd’s Rep. 9………………………….7
British Westinghouse Electric Co. Ltd. v. Underground Electric Railways Co. of London Ltd.
[1912], AC 673……………………………………………………………………………….18
Bryan v Maloney (1995) 128 A.L.R. 163 at 167……………………………………………...19
C.
Capital Trust International Ltd. v. Radio Design AB [2002] EWCA Civ 135……………...…5
Ca Venezolana De Navegacion v. Bank Line (The Roachbank) [1987] 2 Lloyd's Rep.
498…………………………………………………………………………………………….12
Christopher
Brown
Ltd
v.
Genossenschaft
Oesterreichischer
Waldbesitzer
Holzwirtschaftsbetriebe Registrierte GmbH [1954] 1 QB 8, 12-3.............................................3
v
Cosco Bulk Carrier Co. Ltd. v. Team-Up Owning Co. Ltd. (the Saldanha) [2010] EWHC
1340……………………………………………………………………………………….12, 13
D.
Davis Contractors v. Fareham U.D.C. [1956] A.C. 696………………….……………….9, 10
Derry v. Peek [1889] LR 14 App Cas 337……………………………………………………22
Diary Containers Ltd v. N.Z.I. Bankt Ltd [1995] 2 N.Z.L.R. 30……………………………..19
Doyle v. Olby (ironmongers) Ltd [1969] 2 QB 158, Court of Appeal………………………..22
E.
East West Corp. v. DKBS 1912 [2003] EWCA CW 83, [2003], QB 1509…………………...18
Edgington v. Fitzmaurice [1885] L.R. 29 Ch. D. 459…………………………………….20, 21
F.
Fiona Trust & Holding Corporation v Privalov [2007] EWHC 1217 (Comm)……………….5
Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480…………7
G.
Garnac v. HMF Faure [1968] A.C. 1130……………………………………………………...6
Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad [1998]
196 CLR 161………………………………………………………………………………….15
Gunter Henck v Andre et Cie [1970] 1 Lloyd’s Rep. 235.........................................................19
H.
Hirji Mulji v. Cheong Yue Steamship Co Ltd [1926] AC 497………………………………..11
Hogarth v. Miller [1891] A.C. 48 (H.L.)…………………………………………………..…12
Hyundai Merchant Marine Co Ltd v. Furnace Withy (Australia) Pty (the Doric Pride) [2006]
EWCA Civ 599, [2006] 2 All ER (comm.) 188, [2006] 2 Lloyd’s Rep 175, [2007] 2 CLC
1042…………………………………………………………………………………………...12
vi
J.
J Lauritzen AS v. Wijsmuller BV (The Super Servant Two) [1990] 1 Lloyd’s Rep 1……...9, 11
K.
Krell v. Henry [1903] 2 K.B. 740..............................................................................................9
M.
Manifest Shipping & Co. Ltd. v. Uni-Polaris Insurance Co. Ltd. and la Réunion Europeene,
(The Star Sea) [1997] 1 Lloyd's Rep. 360……………………...…………………………14, 15
Morris v. CW Martin and Sons Ltd. [1966] 1 QB 716, 738, CA, per Salman LJ.....................18
N.
National Carriers ltd v. Panalpina (Northern) Ltd [1981] AC 675………………..……...9, 11
O.
Overseas Tankship (UK) Ltd. v Morts Dock & Engineering (The Wagon Mound) [1961] AC
388, PC………………………………………………………………………………………..22
P.
Panamanian company v Finnish company, 125 Clunet 1008 (1998)………………………….4
Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co. Ltd. (The Eurasian
Dream) [2002] 1 Lloyd's Rep. 719……………………………………………………..……..14
R.
Robin Hood Flour Mills, Ltd. v. N. M. Paterson & Sons, Ltd. (The Farrandoc) [1967] 1
Lloyd's Rep. 232……………………………………………………………………………...14
Rhodian River Shipping Co SA and Rhodian Sailor Shipping Co SA v Halla Maritime
Corporation (The Rhodian River and Rhodian Sailor) [1984] 1 Lloyds Rep. 373……………7
Royal Greek Government v. Minister of Transport [1948] 82 L.I. L.Rep. 196…………..…..12
vii
S.
Sempra Metals Limited (formerly Metallgesellschaft Limited) v. Her Majesty's Commissioners
of Inland Revenue and another [2007] UKHL 34 (par.41)………………………………..…23
Smith New Court Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254, House
of Lords……………………………………………………………………………………….22
T.
The Berge Sund [1993] 2 Lloyd’s Rep. 453 (C.A.)……………………………...……...……12
The Gang Cheng [1998] 6 MLJ 488……………………………………………………….…15
The Good Friend above n 32, 592 (per Staughton J)…………………………………………15
The Roberta, [1938] 60 Ll. L. Rep. 84. Lord Justice Greer at p. 86………………………….15
The Schwan, [1908] P. 356…………………………………………………………………...14
U.
Union of India v. N.V. Reederij Amsterdam (The Amstelslot) [1963] 2 Lloyd’s Rep. 223 at p.
230 per Lord Reid; [1938] 60 Ll. L. Rep. 84. Lord Justice Greer at p. 86…………………...15
W.
Westdeuche Landesbank Girozentrale v. Islingtin LBC [1996] AC 669..................................23
W. J. Tatem Ltd. v. Gamboa [1938] 61 LI.L.Rep. 149…………………………………….....10
viii
LIST OF AUTHORITIES: LEGISLATION
Arbitration Act 1996
Frustrated Contracts Act 1943
Misrepresentation Act 1967
The Hague Visby Rules- The Hague Rule as Amended by the Brussels Protocol 1968
ix
STATEMENT OF FACTS
1. The Claimant is Western Tankers Inc. (the “Owners”), a long-established and reliable
company incorporated in the BVI. The Owners own, among other vessels, the ‘Western
Dawn’ (the “Vessel”).
2. The Respondent is LDT Pte (the “Charterers”), a company incorporated in Singapore.
3. The Owners agreed to let and the Charterers agreed to hire the Vessel. The Charterers
chartered the Vessel on an amended ST4 charterparty with rider clauses dated May 26th 2014
for a period of three months, plus or minus 30 days (the “Charterparty”). The Charterparty
was for a time charter trip to include a voyage from Singapore to OPL Luanda, West Africa,
with re-delivery in the Mediterranean area.
4. Among other terms, the Charterparty required the Charterers to stem sufficient bunkers.
Further, pursuant to the terms of the Charterparty, voyage orders were given on May 27th
2014 for the Vessel to load “30,000mt MIN/MAX Jet A1 PLUS 70,000mt +/-10% MOLOO
GASOIL” (the “Cargo”).
5. The Vessel completed loading of the Cargo on June 8th 2014.
6. Bills of Lading for the Cargo were issued on June 8th 2014. Full payment for the Cargo was
received by the Charterers on June 8th 2014.
7. The Vessel was then ordered to proceed to OPL Luanda for discharge of the Cargo.
8. While proceeding towards Luanda, the Master, following the instructions of the Charterers
and/or persons acting on their behalf (ASA2), directed the Vessel to proceed to an alternative
discharge place in international waters off the Angolan coast.
9. While the Vessel was at the alternative discharge place, a quantity of cargo was discharged
from the Vessel, again without authorization of the Owners and in breach of the Charterparty.
1
a) The Cargo was loaded on the Vessel on June 8th 2014.
a. Bill of Lading LDTP-WD01-001: 30,000.559 metric tons.
b. Bill of Lading LDTP-WD01-002: 72,199.127 metric tons.
b) When the Vessel established contact with the Owners and the Charterers after
proceeding to the alternative discharge place, the Cargo remaining on board the Vessel
was on or around July 17th 2014 30,000mt of Jet A1 fuel and about 44,000mt gasoil.
c) By reason of the above about 28,190mt of gasoil had been discharged from the Vessel
and in breach of the Charterparty.
10. As a result of the discharge the Vessel suffered material damage.
a. Damage was done to, among other things, the Vessel’s navigation equipment, maindeck hose crane and starboard-side accommodation ladder and bridge equipment
(including electronic navigation systems, radar and ECDIS).
b. The only communication equipment working on-board following the discharge of
the Cargo were the GMDSS installation and VHF radio, both located in the Vessel’s
citadel.
11. As consequence of the above, the Vessel could not meet the discharge target date at
Luanda nor discharge the full Cargo to Angola Energy Imports as purported within the
voyage instructions and Bills of Lading.
12. The Vessel then returned to Cape Town for assistance and further orders. The Charterers
failed to give the Vessel voyage orders at any point following the cargo transfer at the
alternative discharge place.
2
PART ONE: JUSRIDICTION
A. THIS TRIBUNAL HAS JURISDICTION
I.
THIS TRIBUNAL HAS THE POWER TO RULE ON ITS OWN JURISDICTION
1. It is a well-established principle of international arbitration that an arbitral tribunal has an
inherent power to rule on its own jurisdiction, including questions as to the validity of the
arbitration agreement1 as well as regarding the matters submitted to arbitration in accordance
with the arbitration agreement. This principle is also recognized in section 30 of the
Arbitration Act 1996, which states, “the arbitral tribunal may rule on its own substantive
jurisdiction”2. The Claimant therefore argues that this Tribunal has the power to rule on its
own jurisdiction.
II. THE CHARTERPARTY CONTAINS A VALID ARBITRATION AGREEMENT,
WHICH SPECIFIES LONDON AS THE SEAT.
2. Clause 46 (b) of the amended ST4 clearly specifies that London is the seat of this arbitration3.
An arbitration agreement is valid under English law when said agreement is in writing 4 .
Furthermore, under Section 5(2) (a) of the Arbitration Act 1996 an arbitration agreement is
“in writing” when made in writing regardless of it being signed by the parties or not 5. This
requirement is satisfied by the London arbitration agreement herein sustained.
3. Additionally, the arbitration agreement is valid since concluded by reference as clause
incorporated within the Charterparty granted the terms of Section 6 (2) of the Arbitration Act
1996, according to which “the reference in an agreement to a written form of arbitration
1
Christopher Brown Ltd v Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte GmbH
[1954] 1 QB 8, 12-3.
2
Section 30, Arbitration Act 1996.
3
See ST4 Standard form taking into consideration the amendments referenced by the Fixture Recaps (Moot Problem, p. 5)
4
5
Section 5, Arbitration Act 1996.
Ibidem.
3
clause or to a document containing an arbitration clause constitutes an arbitration agreement
if the reference is such as to make that clause part of the agreement6”.
4. In regard of this particular point, authorities have agreed that in those situations where there is
an incorporation of terms such as the ST4, and in relation to the arbitration clause, express
wording of such fact and intent of the parties to do so7 shall suffice in order to give validity to
such incorporation8.
5. Needless to say, according to the facts disclosed in relation to this scenario, the intention of
the parties is that of determining London as seat of the arbitration and English Law as the one
applicable to all disputes arising in relation to the Charterparty; hence complying with the
required degree of certainty and, once more, confirming the validity of the arbitration
agreement.
6. The Claimant understands and upholds that, without prejudice to the foregoing, there is no
question as to the validity of this arbitration agreement and no basis for express or implied
choice to arbitrate in Singapore and/or apply Singapore Law, as the Respondent contends9.
7. This is so, given that no reference to Singapore and/or Singapore Law in relation to any
disputes arising from the Charterparty is made in any of the previous communications since,
in fact, London and English Law are determined and to be applied. In addition, no implied
choice can be argued by Respondents in light of the scenario at hand since case law strictly
states that implied choice must be demonstrated with reasonable certainty by the terms of the
contract or, on the contrary, the circumstances of the case 10 . A certainty that, in no such
degree whatsoever, is present in the scenario hereby depicted; no reference was made either in
the communications between the parties or in the Charterparty itself to Singapore and
Singapore Law.
6
7
8
9
Section 6 (2), Arbitration Act 1996.
Aughton v MF Kent Services [1991] 87 BLR 1, CA.
(Tweedale & Tweedale, 2005, p. 309).
Moot Problem, p. 6.
Award in ICC case nº 5865 Panamanian company v Finnish company, 125 Clunet 1008 [1998].
10
4
B. THE CLAIM RELATED TO TORT OF FRAUD IS ADMISSIBLE IN THIS
ARBITRATION
8. The Respondent argues that tort of fraud is not under the scope of the arbitration agreement
given that the ST4 states that “all disputes arising out of this charter shall be referred to
Arbitration in London in accordance with the Arbitration Act 1996” 11 . The Respondent,
therefore, claims that the wording of this clause does not extend and was not intended to
extend to the tort of fraud.
9. Nevertheless, the Claimant does not agree with the Respondent’s position since it is
recognised that the wording “all disputes arising out of this charter” covers all diferences and
claims arising from a given contractual relationship as well as to non-contractual claims,
including tortious claims, between the parties thereto relating to the said contractual
relationship.
10. Such interpretation of the wording “arising out of” has been defended in English case law,
whereby the scope of the arbitration agreement should be understood as related to all claims
connected to the contractual relationship. If questions regarding this were to be intented not to
be included within the scope of the arbitration agreement, more restrictive and less elastic
terms should be used for that purpose12.
11. Ultimately, when using this type of wide wording, the goal is to put in the hands of the parties
mechanisms to ensure that all claims resulting from the contract can be addressed in the
arbitration13.
11
12
13
Clause 46 (b) under section “Law and litigation” of the ST4.
Fiona Trust & Holding Corporation v Privalov [2007] EWHC 1217 (Comm).
Capital Trust International Ltd. v Radio Design AB [2002] EWCA Civ 135.
5
PART TWO: MERITS
A. BREACH OF THE CONTRACT
I. THE CHARTERERS AND/OR PERSONS ACTING ON THEIR BEHALF
BREACHED THE TERMS OF THE CHARTERPARTY
12. While proceeding to OPL Luanda, the Charterers and/or persons acting on their behalf
directed the Vessel to an alternative discharge place in international waters off the Angolan
coast, without the authorisation of the Owners. As a result of such instructions, a quantity of
cargo was discharged, again, without authorisation of the Owners and causing significant
damage to the Vessel14.
i.
THE CHARTERERS AND/OR THEIR AGENTS REDIRECTED THE VESSEL,
WITHOUT THE OWNERS’ AUTHORISATION, IN BREACH OF THE
CHARTERPARTY
13. The Claimant states that ASA2 is an agent of the Charterers. In order to determine the relation
between ASA2 and the Charterers in terms of the former being agents of the latter, it is
necessary to establish where the agent’s authority lays. An agent’s actual authority is that
which the principal has actually conferred to it, and whose exercise by the agent is therefore
consented by the principal. This consent may be given expressly, but it may be also inferred
from the conduct of the principal15.
14. In this sense, the Charterers provided the disport agents’ information in the Voyage Orders16,
indicating the name and contact person of the company, “Atlantic Services Agency” and
“William”, respectively. On the June 28th 2014, a message was received by a company with
the same reference and with knowledge of the Charterparty situation and its details, which to
all effects, due to the authority provided by the Charterers in the Voyage Orders, was to be
14
Moot Problem, p. 42.
Garnac v. HMF Faure [1968] A.C. 1130.
16
Moot Problem, p. 14.
15
6
considered an agent of the Charterers. Furthermore, previous to this message, the Charterers
had reassured this authority in their communications with the Master of the Vessel 17 , by
informing that voyage orders would soon be delivered, ordering the Master to follow them
orders, but which were later delivered by ASA218. In addition to this, on July 4th the Master
sent an e-mail to both ASA2 and the Charterers, in which, as is standard in an e-mail, ASA2’s
contact information was visible, and no complaints were received from the latter19. As a result
of the conduct and statements of the Charterers20, it can be understood that an apparent or
ostensible authority to act is held by ASA221.
15. In addition, Clause 13(a) of the ST4 states that the Master of the Vessel is to be under the
orders and direction of the Charterers during the time the Charterparty is in place. The orders
provided by ASA2 as an agent must be considered to all effects equivalent to those of the
Charterers, which should be consequently bound as principal by ASA2’s actions. The Master,
as a third party in good faith, acted upon reliance on such appearance of authority, thereby
complying with the terms of the Charterparty.
16. After establishing this fact, it is necessary to focus on the reasons why the Charterparty was
breached. According to the BIMCO Ship to Ship Transfer Clause (b)22 “the Charterers shall
direct the Vessel to a safe area for the conduct of such ship to ship operations where the
Vessel can safely proceed to, lie and depart from”. However this requirement was not
17
Moot Problem, p. 34.
Moot Problem, p. 40.
19
Moot Problem, pp. 40-41.
18
20
British Bank of the Middle East v. Sun Life [1983] 2 Lloyd’s Rep. 9; Rhodian River Shipping Co SA and Rhodian Sailor
Shipping Co SA v Halla Maritime Corporation (The Rhodian River and Rhodian Sailor) [1984] 1 Lloyds Rep. 373; Armagas
v. Mundogas (The Ocean Frost) [1986] 2 Lloyd’s Rep. 109 (H.L.); Freeman & Lockyer v. Buckhurst Park Properties
(Mangal) Ltd [1964] 2 QB 480.
21
Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480.
22
Moot Problem, p. 10.
7
complied with, as the location designated was in a high risk piracy area 23. Therefore, the
Charterers breached the Charterparty in this respect.
THE DAMAGES RESULTING FROM FOLLOWING THE CHARTERERS’
ii.
AGENT’S INSTRUCTIONS SHALL BE INDEMNIFIED BY THE CHARTERERS
AS STATED IN THE CHARTERPARTY
17. The Claimant states that the Respondent is liable for the damages occurred to the Vessel, as
those damages arose while the ship was upon the course instructed by the Charterers’ agents.
The Claimant, to its understanding of the facts, points out that the direct cause for such
damages are the agent’s instructions.
18. According to the BIMCO Ship to Ship Transfer Clause (a)24, all STS transfers are at the risk,
cost, expense and time of the Charterers. Furthermore, clause (f) states that the Charterers
must indemnify the Owners for any damages that may arise as a result of such STS “including
any loss of hire; damage to or claims arising from other alongside vessels, equipment,
floating cranes or barges; loss of or damage to cargo; and pollution”25.
19. Therefore, given that the instructions for the STS originated from an agent of the Charterers,
not only was the STS operation at the Charterers’ risk and cost, but the latter are bound by the
Charterparty to indemnify any damages arising from the STS operation.
II.
THE CHARTERERS DID NOT PAY HIRE ON JULY 3rd 2014 AS REQUIRED
BY THE TERMS OF THE CHARTERPARTY
20. As stated in clauses 8 and 9 of the ST4, hire is due from the time and date of her delivery to
the Charterers until the time and date of redelivery to the Owners. To this effect, hire was due
23
UNODC,” Transnational Organized Crime in West Africa: A Threat Assessment”, February 2013; “IMB Piracy Report and
Implications for Nigerian Shipping”, Daily Independent (Lagos), 4 February 2010. ANEX ****: https://icc-ccs.org/piracyreporting-centre/live-piracy-map/piracy-map-2014.
24
Moot Problem, p. 10.
25
Moot Problem, p. 11
8
by the Charterers on the June 3rd 2014. The Owners proceeded to remind the Charterers of the
hire due on such date26.
21. In this context, the Claimant holds that: (1) the contract was not frustrated by July 4th, (2)
neither was the Vessel off hire from the same date.
i.
THE CHARTERPARTY WAS NOT FRUSTRATED BY JULY 4 TH
22. The Charterers claim frustration of the Charterparty by July 4th27. The Owners state that the
Charterers alleged no frustrating event, and furthermore, no frustrating event occurred before
July 4th 2014.
23. In this sense, the currently favored test for ascertaining whether the contract is frustrated was
laid down by the House of Lords in Davis Contractors Ltd v Fareham UDC28. It requires
three elements.
24. First of all, there must be a radical change in the obligations so that it would be unjust to hold
the parties to the literal sense of its stipulations in the new circumstances29. In this case, this
element of the test is not fulfilled, as the Charterparty could have still been performed. The
purpose for which the contract was concluded, the usage of a vessel to transport fuel to
Luanda in exchange of payment of the hire agreed, could still be achieved.
25. Claimants consider that what has occurred in this case is a mere delay, as the Vessel could not
arrive within the delivery date to Luanda (estimated date of arrival 3, 4 of July). The voyage
ended up requiring more time to reach the discharge point than expected but never became a
different kind of voyage from that contemplated in the contract.
26
27
Moot Problem, p. 39.
Moot Problem, p. 68.
28
Davis Contractors v. Fareham U.D.C. [1956] A.C. 696.
National Carriers ltd v. Panalpina(Northern) Ltd [1981] AC 675; J Lauritzen AS v. Wijsmuller BV (The Super Servant
Two) [1990] 1 Lloyd’s Rep. 1 (p.716, Section 4).
29
9
26. In some of the leading cases regarding frustration, the crucial point was not the length of the
delay before the events finally took place but the fact that they did not take place in the only
day or days in which the facilities agreed in the contract were available30.
27. Within the aforementioned circumstances, the Charterparty could still be performed as it was
agreed for a period of 3 months. Even though it is true that the estimated date of arrival to
Luanda was not reached31, the Cargo could still be delivered. Therefore, discharge would be a
drastic measure in this case.
28. In any respect, for a delay of any nature to frustrate a contract its effect must be radical, such
long interruption that leads to performance of a different contract32. In this case, we are not in
presence of such a delay, as it was still possible for the Vessel to reach its destination.
29. The length of the delay required to frustrate a charterparty depends on the circumstances33. In
considering whether a delay is sufficient to frustrate, one relevant factor is the length of the
delay, but it could also source from other circumstances such as the perishable nature of the
goods or the fact that they satisfy a seasonal need of the shipper or of a buyer from the latter34.
30. First of all, and taking into account the last place and date in which the Vessel reported her
position, the distance from there to Luanda and the speed of the Vessel, it was clear that the
delay would not have been very long35.
31. As for the rest of the circumstances, oil or fuel does not qualify as perishable goods and it is
not known whether a seasonal need existed or not in this regard. Therefore, the Claimant
states that the Vessel was not frustrated by the delay. In these cases, courts have been
30
Krell v. Henry [1903] 2 K.B. 740.
Moot Problem, pp. 38 – 41.
32
W. J. Tatem Ltd. v. Gamboa [1938] 61 LI.L.Rep. 149.
33
(Cooke, et al., 1993, p. 471)
34
(Treitel, 2014, p. 404)
35
Moot Problem, p. 4.1
31
10
reluctant to hold the instances of delay that have come before them sufficient to frustrate a
contract36.
32. With regard to the second element of the aforementioned test, the event that supervenes has to
derive from unforeseen circumstances, in terms of them not being regulated in the contract37.
In this case, delays, as loss of time, are regulated in the ST4 as an off hire event in certain
circumstances 38 . Therefore, even if there was a radical change in the obligations of the
contract, it was not frustrated by July 4th as a result of the aforementioned delay.
33. Lastly, the occurrence of the event must not be due to either party39. In this case, the delay
was due to the Charterers’ behavior. As a result of the lack of fuel, the Master had to reduce
speed, which resulted in the Vessel not fulfilling its estimated date of arrival40.
34. In addition, the Claimant argues that, in any case, there is no place for frustration of purpose.
In this sense, it has to be taken into account that the doctrine of discharge by frustration of
purpose has scarcely been applied in England since the coronation cases were decided, at the
very beginning of the 20th century. English courts maintain a very strict approach to
frustration of purpose, providing no illustration of discharge by this reason apart from the
aforementioned cases41. As a result, the Claimant argues that the doctrine of frustration of
purpose would not be applicable in this case.
35. In light of this, the Claimant holds that no frustrating event occurred before July 4th 2014, and
therefore the contract was neither discharged by frustration of purpose nor frustrated by delay.
36. Alternatively, if the contract was frustrated, it was terminated automatically as from the date
in which it happened, both parties being discharged for further performance 42. The Frustrated
36
Davis Contractors v. Fareham U.D.C.
W. J. Tatem Ltd. v. Gamboa.
38
See Clause 21 of the ST4 Standard form taking into consideration the amendments referenced by the Fixture Recaps (Moot
Problem, p. 5)
39
National Carriers Ltd v. Panalpina (Northern) Ltd.
40
Moot Problem, p. 32.
41
(Treitel, pp. 343-344)
42
(Coghlin, Baker, Kenny, & Kimball, p. 490); J Lauritzen AS v. Wijsmuller BV (The Super Servant Two); Hirji Mulji v.
Cheong Yue Steamship Co Ltd [1926] AC 497.
37
11
Contracts Act of 1943 states that if the party to whom the sums were paid or payable incurred
expenses before the time of discharge, or for the purpose of, the performance of the contract
the court may, if considered just to do so, and taking in consideration all circumstances of the
case, allow the party to retain or, as the case may be, recover the whole or any part of the
sums so paid or payable, not being an amount in excess of the expenses so incurred.
37. According to this, and without prejudice of what is stated under section 2.4, the Charterers
should return the Owners the quantity spent in security devices as well as all the rest of
expenses incurred for the purpose of the contract.
ii.
THE VESSEL WAS ON HIRE
38. In communications held on July 4th 201443, the Charterers claimed that the Vessel was offhire due to a breach in the communications between the Master and the Charterers.
39. Firstly, the Claimant argues that given that the Master continued to communicate with ASA2,
agent of the Charterers, there was no breach of the Charterparty in that respect. However, in
any case, the Claimant states that the lack of communications does not construe a valid
argument for rendering a vessel off hire in light of this Charterparty.
40. In order to determine if a vessel is off hire, two requirements must be fulfilled. First of all, it
has to be established that the full working of the vessel has been prevented. Following this, it
should be examined whether such circumstance has been caused by an event within the
wording of the clause44.
41. In this sense, the full working of the Vessel was not prevented, as she was still able to perform
the next operation that the charter service required from her45, which was no other than the
normal development of the Charterparty and the discharge of the cargo.
43
Moot Problem, p. 41.
Actis Co. Ltd. v. The Sanko Steamship Co. (The Aquacharm) 1982, 1 Lloydís Rep. 7 (C.A.); Ca Venezolana De
Navegacion v. Bank Line (The Roachbank), [1987] 2 Lloyd's Rep 498; Andre & Cie. S.A. v. Orient Shipping (Rotterdam)
B.V. (The Laconian Confidence) 1997, 1 Lloydís Rep. 139 (Q.B.).
45
Hogarth v. Miller [1891] A.C. 48 (H.L.); The Berge Sund [1993] 2 Lloyd’s Rep. 453 (C.A.).
44
12
42. Even if it is determined that the Vessel was prevented from working, the burden is on the
Charterers to show that the off hire clause operates in the relevant circumstances and to bring
themselves within its terms46.
43. Should the parties have considered the breach of communications as an off-hire event under a
time charterparty, they could have done so straightforwardly by way of an express provision
in a ‘breach of communications’ clause, given that in the ST4 only ejusdem generis clauses
are to be effective47.
44. Hence, there must be a clause in the Charterparty that explicitly states that when a breach of
communications happens, the Vessel is off-hire. In the Charterparty there is no explicit
reference to an off-hire situation due to lack of communication between the Master and the
Charterers. Therefore, the Vessel was to remain on hire.
B.
THE OWNERS DID NOT BREACH THE CHARTERPARTY, AS THE VESSEL
WAS FIT FOR SERVICE
45. The Claimant contends that the Charterparty was not breached, as the Vessel was ready and
fit for service in the following aspects: (1) The Master was competent at all times, (2) the
Vessel was seaworthy and (3) the Master complied with the special provisions to ST4 proforma concerning “piracy”.
I.
THE MASTER WAS COMPETENT AT ALL TIMES
46. In accordance to Clause 27 paragraphs a) and c) of the ST448 governing this charter contract,
The Hague-Visby Rules apply to the Counterclaim submitted by Respondents on the basis of
the alleged loss to or in connection with the cargo.
46
Royal Greek Government v. Minister of Transport (1948) 82 L.I. L.Rep. 196; Hyundai Merchant Marine Co Ltd v.
Furnace Withy (Australia) Pty (The Doric Pride) [2006] EWCA Civ 599, [2006] 2 All ER (comm.) 188, [2006] 2 Lloyd’s
Rep 175, [2007] 2 CLC 1042; Cosco Bulk Carrier Co. Ltd. v. Team-Up Owning Co. Ltd. (The Saldanha) [2010] EWHC
1340.
47
Cosco Bulk Carrier Co. Ltd. v. Team-Up Owning Co. Ltd. (The Saldanha).
48
See ST4 Standard form taking into consideration the amendments referenced by the Fixture Recaps (Moot Problem, p. 5)
13
47. Article III, rule 1 of the HVR provides that a carrier shall exercise due diligence before and at
the beginning of a voyage to make a vessel seaworthy and to properly man, equip and supply
a vessel. In this sense, the Claimant contends that it clearly ensured that the Master and the
Crew were competent.
48. The Charterers base the Master’s incompetence on the fact that “he followed instructions
other than those given to the Vessel by Charterer” 49 . However, the Master was not even
negligent, he acted diligently as Clause 13 (a) of the ST4 was complied with by the Master,
given that all orders followed by the Master of the Western Dawn originated from the
Charterers or their agents, for that matter. In the present case, ASA2 acted as an agent 50 and,
therefore, by following orders the Owners did not breach the terms of the Charterparty in any
way whatsoever.
49. Alternatively, and only if the Tribunal considers that ASA2 is not an agent of the Charterers,
the Claimant denies liability for damages resulted by following such instructions, given that
the Master proceeded with the diligence required in such circumstances.
50. The Master of the Western Dawn was informed that the STS Agency that would perform the
STS transfer was the “Atlantic Agency” and the contact was “William”51. A first message was
received following the Charterer’s message from an agency under the same name (“Atlantic
STS Agency Ltd”) and signed by “Captain William Edward Anya”52. Given the coincidence of
names and the information provided in the message it is fair to assume that the Master acted
reasonably by trusting that the sender was the agent acting on behalf of the Charterers.
However, if the Master were to be considered negligent by the Tribunal, the Claimant holds
that negligence does not render by itself a person incompetent. The definition of competent
crew requires that the crewmembers are familiar with the vessel and her equipment and are
49
Moot Problem, p. 69.
Moot Problem, p. 35.
51
Moot Problem, p. 34.
52
Moot Problem, p. 35.
50
14
able to deal with any problem that may arise during the voyage 53, a requirement that was met
by the Master of the Western Dawn.
51. In order to test whether a person of the crew is competent or incompetent a question must be
answered: “would a fully competent (prudent) person be able to discover the problem and
resolve it?” If the answer is positive, then the person is considered competent, otherwise the
person will be considered incompetent54. In light of the facts of the controversy, in the worst
of cases we may say that the Master’s negligence did not render him incompetent but
ultimately competent with a certain degree of negligence55. It is at this point cautious to say
that one mistake does not imply incompetence of the crew or the Master 56 , and thus the
Vessel cannot be considered unseaworthy as an effect of the previously alleged reasons.
52. Competence or, on the contrary, incompetence need to be demonstrated within the
particularities of each case and according to this Master’s actions; the Claimant, hence, defend
the competence and lack of negligence.
52. Even if this Tribunal finds that the Claimant breached Article III, rule 1 HVR the Claimant
argues that Article IV, rule 2 of the HVR applies to exclude the Claimant’s liability for the
alleged damage to the Cargo because the alleged loss arose from (i) acts or omissions of the
shipper, his agent or representative. In this sense, the agent of the Charterers directed the
Vessel to the alternative discharge point57 in which the Cargo was discharged in breach of the
Charterparty.
53
The Schwan, [1908] P. 356; Manifest Shipping & Co. Ltd. v. Uni-Polaris Insurance Co. Ltd. and la Réunion Europeene,
(The Star Sea) [1997] 1 Lloyd's Rep. 360; Robin Hood Flour Mills, Ltd. v. N. M. Paterson & Sons, Ltd. (The Farrandoc)
[1967] 1 Lloyd's Rep. 232; Papera Traders Co. Ltd. and Others v. Hyundai Merchant Marine Co. Ltd. (The Eurasian Dream)
[2002] 1 Lloyd's Rep. 719.
54
The Roberta, [1938] 60 Ll. L. Rep. 84. Lord Justice Greer at p. 86.
55
Union of India v. N.V. Reederij Amsterdam (The Amstelslot) [1963] 2 Lloyd’s Rep. 223 at p. 230 per Lord Reid; [1938] 60
Ll. L. Rep. 84. Lord Justice Greer at p. 86
56
Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd and La ReÂunion Europeane (The Star Sea) [1997] 1 Lloyd's
Rep 360, per Lord Justice Leggatt at pp 373-4, approved by the House of Lords [2001] 1 Lloyd's Rep 389.
57
Moot Problem, p. 35.
15
II.
THE VESSEL WAS SEAWORTHY
53. For a vessel to be seaworthy for the purposes of the Charterparty, she and her equipment must
be reasonably fit to withstand the perils which may foreseeably be encountered on the voyage
and also fit to keep the cargo reasonably safe from those perils 58 . Seaworthiness is an
objective attribute measureable by the fact that the Vessel is capable of complying with the
terms of the contract and safely harbouring the transported goods.
54. Again, Claimants hold that they did not breach Article III, rule 1 of the HVR, as the Vessel
was properly equipped. Further and alternatively, the Owners state that they did not breach
Article III, rule 2 of the HVR by failing to properly and carefully carry, keep and care for the
Cargo. In this sense, the Vessel fulfilled all the requirements contained in the Charterparty. As
for the BMP4, the purpose of the Industry Best Management Practices (BMP) is to assist
ships to avoid, deter or delay piracy attacks in the High Risk Area59. This high risk area is
defined by the BMP4 as “the Gulf of Aden, Arabian Sea and Northern Indian Ocean”.
Specifically, and for the purpose of BMP, the High Risk Area is an area bounded by Suez and
the Strait of Hormuz to the North, 10ºS and 78ºE60.
55. Given that the voyage planed out in the Charterparty did not enter within the limits of the High
Risk Area, the BMP4 clause was not to be complied with. Consequently, the Claimant stands
by the Master’s actions, supporting the compliance with the special provision added to the
ST4 and therefore sees no indication of unfitness of the Vessel as pursued by the Respondent.
56. Alternatively, if the BMP4 is considered mandatory, the Claimant states that its behaviour was
in accordance with the due diligence standards. In this sense, the Owners ordered the security
58
The Good Friend above n 32, 592 (per Staughton J); Actis Steamship Co Ltd v. Sthe sanko steamship co ltd (The
Aquacharm) [1982] ; The Gang Cheng [1998] 6 MLJ 488; Great China Metal Industries Co Ltd v Malaysian International
Shipping Corp Berhad [1998] 196 CLR 161; Ben Line Steamers Ltd v. Pacific Steam Navigation Co (The Benlawers) [1989]
2 Lloyd's Rep. 51.
59
BMP4, p. 1.
60
BMP4, p. 4.
16
devices required 61 . As the aforementioned systems were not ready in Singapore, the
implementation of some measures was rescheduled for Durban. The Vessel was expected to
stop in such location in order to receive fuel supply, as planned out by the Charterers in their
voyage instructions62. However, she did not stop at Durban due to the Charterers’ decision to
continue the voyage. The Master, according to the ST4, which states that the Vessel is to be
under the Charterers’ orders and direction during the time the Charterparty is in place,
complied with the indications given by the Charterers, bypassing the stop previously
scheduled by the Charterers.
57. Even if this Tribunal finds that the Claimant breached Article III, rule 2 the Claimant argues
that Article IV, rule 2 of the HVR applies to exclude the Claimant’s liability for the alleged
damage to the Cargo because the loss arose from (i) acts or omissions of the shipper, his agent
or representative. In this sense, and as mentioned above, the agent of the Charterers directed
the Vessel to the alternative discharge point where part of the cargo was discharged in breach
of the Charterparty.
III. THE MASTER COMPLIED WITH THE SPECIAL PROVISIONS TO ST4 PROFORMA CONCERNING “PIRACY”
58. The Claimant states that the Special Provisions to ST4 pro-forma concerning “Piracy” were
complied with at all times. The Master did his due diligence regarding the safety and
protection of the Vessel and the crew, as stated above.
C.
THE OWNERS DID NOT BREACH THEIR DUTY AS BAILEE OF THE
CARGO
59. The Respondent state that Owners breached their duty as bailee of the cargo. Claimant rejects
this allegation and contends that it did not breach such a duty because (1) Owners and the
61
62
Moot Problem, pp. 21, 22, 26.
Moot Problem, p. 27.
17
Master were at all times diligent in caring for the cargo and (2) the alleged loss can only be
attributed to the Charterers.
60. When facing a bailment case, and regardless of the type of bailment encountered, the test of
the reasonable person is applied as to determine the degree of duty of care upon the bailee. In
other words, the bailee, under all possible and reasonable circumstances, is bound to take the
best possible care of the cargo to him entrusted as per the terms in the contract established63.
Such a principle is properly reflected in Art. III, rule 2 HVR. As stated before, the Master
complied with the due diligence required regarding the cargo. Therefore, he did not breach his
duty as bailee of the cargo removed from the Vessel between the 4th and 17th of July. On the
contrary, Article IV, rule 2 of the HVR applies to exclude the Claimant’s liability for the
alleged damage to the Cargo because the loss arose from (i) acts or omissions of the
Charterers, their agent or representative.
61. In addition, and in reference to the fact that the receivers named in the Bill of Lading did not
receive or take possession of the cargo removed from the Vessel between the aforementioned
dates, the Claimant holds that, should the Tribunal consider that Owners breached their
obligation as bailee of the cargo, the Charterers did not fulfil their duty to mitigate their loss.
By not providing new orders, and in spite of it not being a contractual obligation, the
Charterers contributed to the Cargo not reaching the receivers named in the Bill of Lading.
The Respondent cannot recover damages in respect of any part of his loss that he could have
avoided by taking reasonable steps64.
D.
LIABILITY FOR TORT OF FRAUD
62. The Claimant argues that the Respondent is liable to pay damages for the tort of fraud since:
(1) tort law applies in a contractual situation, (2) the Respondent made an actionable
63
Morris v. CW Martin and Sons Ltd. [1966] 1 QB 716, 738, CA, per Salman LJ; East West Corp. v. DKBS 1912 [2003]
EWCA CW 83, [2003], QB 1509.
64
British Westinghouse Electric Co. Ltd. v. Underground Electric Railways Co. of London Ltd. [1912], AC 673.
18
fraudulent misrepresentation; (3) the Claimant is entitled to claim in tort of deceit; and (4) the
Claimant’s loss was directly caused by Respondent’s misrepresentation.
I.
TORT LAW APPLIES IN A CONTRACTUAL SITUATION
63. Contractual and tortious duties may co-exist on the same facts. The “concurrence” approach,
as affirmed by the modern case law, can be seen in Henderson v Merrett Syndicates Ltd65,
where the House of Lords held that Names at Lloyd’s might sue member’s agents (with
whom they had a contract) for negligence as well as for breach of contract in the management
of underwriting businesses so as to gain the advantage of the longer time limit under the
Latent Damage Act 1986. As Lord Goff put it66:
64. The result may be untidy but, given that the tortious duty is imposed by the general law, and
the contractual duty is attributable to the will of the parties, I do not find it objectionable that
the claimant may be entitled to take advantage of the remedy which is more advantageous to
him67.
65. Additionally, authorities understand that tortious claims regarding misrepresentation 68 or
including the determination of the mere existence of the contract for that matter, fall under the
wording of “arising out of” pointing out that “as a matter of general principle, where a claim
fell within an arbitration clause, all defences must be available to the arbitration”69.
II.
THE
RESPONDENT
MADE
AN
ACTIONABLE
FRAUDULENT
MISREPRESENTATION
66. Actionable misrepresentation will occur when a false statement of fact is made and the party to
whom it is made, upon reliance thereon, is misled and consequently suffers damage. Whether
this misrepresentation leads the relying party to enter into a contract or not will determine the
65
[1995] 2 A.C. 145.
[1995] 2 A.C. at 194.
67
This is a general trend: B.C.Hydro & Power v. B.G. Checho International (1993) 99 D.L.R. (4th) 577; Bryan v. Maloney
[1995] 128 A.L.R. 163 at 167; Diary Containers Ltd v. N.Z.I. Bankt Ltd [1995] 2 N.Z.L.R. 30.
68
Gunter Henck v. Andre et Cie [1970] 1 Lloyd’s Rep 235.
69
Abdullah M Fahem v. Mareb Yemen Insurance Co Ltd [1997] 2 Lloyd’s Rep 738.
66
19
entitlement of the claimant to base its claim on tort or on the purely contractual relationship70.
The statement the Respondent made informing the Master about the existence of bunker
supply available passing Durban or Cape Town71 is not a statement of intention but a clear
statement of fact, of an untrue fact.
67. In any case, even if the Respondent would claim that the rebunkering in Durban was solely a
statement of intention, it can be clearly seen that it was a dishonest statement of intention.
There is no proof that the Respondent proceeded to purchase any bunkers or carry out any
type of negotiation with bunker providers or with traders. Therefore, as stated in Edgington v
Fitzmaurice72, the false statement of fact is implicit in the dishonest statement of intention:
68. “It was argued that this was only the statement of an intention, and that the mere fact that an
intention was not carried into effect could not make the Respondent liable to the Plaintiff. I
agree that it was a statement of intention, but it is nevertheless a statement of fact, and if it
could not be fairly said that the objects of the issue of the debentures were those which were
stated in the prospectus the Respondent were stating a fact which was not true; and if they
knew that it was not true, or made it recklessly, not caring whether it was true or not, they
would be liable…”.
69. The Claimant argues that the Respondent never had the intention to provide the rebunker
passing Durban. This can be seen in the limited credit line that the Charterer had to purchase
gasoil. It was not possible for the Charterer to provide more bunkering73 but the Respondent
stated otherwise to the Master74 . Therefore, their actions constitute a misrepresentation of
intention and a misrepresentation of mind, and as Tribunals hold: a misrepresentation as to
70
(McKendrick, 2012, pp. 3,17)
Moot Problem, p. 26.
72
Edgington v Fitzmaurice [1885] L.R. 29 Ch. D. 459.
73
Moot Problem, p. 21.
74
Moot Problem, p. 26.
71
20
the state of a man’s mind is a misstatement of fact 75. Therefore, the representations were
dishonest and false thus contrary to Charterers arguments.
70. The representations were made with the intention that the Owners would rely on them and the
Claimant did rely on them. On 28 June 2014, ASA2, on behalf of Charterers, gave directions
to the Vessel with the intention that the Master would follow them. Tribunals hold that the
party that makes a representation is liable for misrepresentation even though the Claimant
could have entered the transaction or taken a detrimental course of action relying on both the
misrepresentation and his own mistaken belief. Therefore, when the Respondent states the
incompetency of the Master as the reason for excluding its liability, it has to be considered
that the own mistake of the Claimant does not affect the Respondent liability for
misrepresentation. In Edgington v Fitzmaurice the Court held that if the false statement of fact
actually influenced the Plaintiff, the Respondent are liable, even though the Plaintiff may
have been also influenced by other motives. Therefore, it is clear that the Captain relied on
the representations and that made him direct the vessel to the STS area.
71. The representations did not lead the Claimant to enter into the Charterparty, therefore under
common law it is actionable the tort of deceit and not a contractual claim76.
III.
THE CLAIMANT IS ENTITLED TO CLAIM IN TORT OF DECEIT
72. The representations did not make the Claimant enter into the contract, as the Charterparty had
already been agreed upon. But it is clear that the representation stating that there were bunkers
available passing Durban did make the Claimant go through with the contract. When the
misrepresentation has not made the misrepresentee enter into a bilateral contract, the claimant
75
76
Edgington v Fitzmaurice.
(Chen-Wishart, 2005, p. 196)
21
must be entitled to rely on the tort actions for fraudulent or negligent misrepresentation. Since
the statement made was fraudulent, the claimant will be entitled to claim the tort of deceit77.
73. In the moment of assuring the existence of bunkers available in a future location, the
Respondent acted knowingly of the untruthfulness of the statement, or at least careless
whether it was true or false. Therefore, the action of deceit will be actionable as the
requirement that tribunals hold is that it is required that the representee proves that the
representor made his false statement: knowingly or without belief in its truth or recklessly,
careless whether it be true or false78
IV. THE CLAIMANT’S LOSS WAS DIRECTLY CAUSED BY RESPONDENT’S
MISREPRESENTATION.
74. Firstly, the measure of damages in cases of tort of deceit is the tort reliance measure, which
seeks to put the Claimant into as good a position as if no representation, had been made; it is
not the contractual expectation measure which seeks to put the claimant into as good a
position as if the representation had been true79. The House of Lords in Doyle v Olby80 holds
that point explaining how “in contract, the Respondent has made a promise and broken it.
The object of damages is to put the plaintiff in as good a position, as far as money can do it,
as if the promise had been performed. In fraud, the Respondent has been guilty of a deliberate
wrong by inducing the plaintiff to act to his detriment. The object of damages is to
compensate the plaintiff for all the loss he has suffered […]. In contract, the damages are
limited to what may reasonably be supposed to have been in the contemplation of the parties.
In fraud, they are not so limited. The Respondent is bound to make reparation for all the
actual damages directly flowing from de fraudulent inducement”.
77
78
79
80
(Chen-Wishart, p. 218)
Derry v. Peek [1889] LR 14 App Cas 337.
(Burrows, 2013, p. 595)
Doyle v. Olby (ironmongers) Ltd [1969] 2 QB 158, Court of Appeal.
22
75. Secondly, the remoteness test for the tort of deceit is not reasonable foreseeability as in the tort
of negligence81 but rather the wider test of directness. Therefore, the Claimant, as victim of
the fraud, is entitled to compensation for all the actual loss directly flowing from the
transaction induced by the wrongdoer82. The Respondent is bound to make reparation for all
the damage directly derivate from the transaction, although such damage need not have been
foreseeable, it must have been directly caused by the transaction.
76. Therefore, the Owners are entitled to claim all the loss and damages resulting directly from the
Charterers fraud resulting from the previously argued misrepresentation deriving from the
latter’s actions.
77. Lastly, upon this point, the Claimant argues that, given the facts up until here described, the
Respondent is directly responsible, and thus liable, for all the damages, both economic and
material in terms of damages to the Vessel, suffered through the fallout of the situation.
E.
THE CHARTERERS ARE ENTITLED TO COMPOUND OR SIMPLE
INTEREST ON THE AMOUNT OWED
78. The Owners argue that if they are entitled to damages then they are also entitled to interest on
the amount awarded. An arbitral tribunal has a discretionary power to award simple or
compound interest. The award of interest may be on the whole or part of any amount awarded
by the tribunal in respect of any period up to the award83.
79. The Owners state that compound interest should be paid both on the debts and the damages
claimed84 in order to fully compensate the Owners for the loss suffered85 at such a rate and at
81
82
83
Overseas Tankship (UK) Ltd. v Morts Dock & Engineering (The Wagon Mound) [1961] AC 388, PC
Smith New Court Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254, House of Lords.
Arbitartion Act 1996 s. 49 (3)(a).
84
Westdeuche Landesbank Girozentrale v. Islingtin LBC [1996] AC 669 .
Sempra Metals Limited (formerly Metallgesellschaft Limited) v. Her Majesty's Commissioners of Inland Revenue and
another [2007] UKHL 34 (par.41).
85
23
such compounding periods as the Tribunal sees fit. Alternatively, the Owners hold that they
are entitled to simple interest on the amount.
24
PART THREE: PRAYER FOR RELIEF
The Owners claim
(a) Damages as particularised in the phase of this arbitration relating to quantification of
damages.
(b) Interests and/or compound interests of any sum to them owed.
(c) Costs.
(d) Further or other relief as the Tribunal considers fit.
25