15TH INTERNATIONAL MARITIME LAW ARBITRATION MOOT JULY 2014
Team no. 13
ERASMUS UNIVERSITY ROTTERDAM
MEMORANDUM FOR THE RELIABLE HOLDINGS INC. IN THE MATTER OF ARBITRATION BETWEEN: Claimant Reliable Holdings Inc.
v.
Respondent Super Charters Inc.
COUNSEL ALEXANDER J. BARENDREGT ♦ EVANGELIA PATRIKALAKI ♦ MARTA K. KOŁACZ ♦ NEDYALKO MINKOV ♦ SONJA VAN WIJK
Erasmus University Rotterdam
Memorandum for the Reliable Holdings Inc.
TABLE OF CONTENTS: LIST OF ABBREVIATIONS ....................................................................................................... ii TABLE OF AUTHORITIES ....................................................................................................... iv TABLE OF CASES .................................................................................................................... vi TABLE OF LEGAL ACTS .......................................................................................................... x INDEX OF DOCUMENTS ......................................................................................................... x STATEMENT OF FACTS: ....................................................................................................... 1 INTRODUCTORY REMARKS ON LEGAL ARGUMENTS AND APPLICABLE LAW .... 4 I.
THE TRIBUNAL SHOULD FIND THAT ARBITRATION WAS VALIDLY
COMMENCED ON 28 JANUARY 2012. ................................................................................ 5 1.
There was a clear misnomer in the Notice of Arbitration and Appointment from 28th
January 2012. .................................................................................................................................................................5 2.
The Charterers had an intention in acknowledging the arbitration as invalid. .................7
3.
The Tribunal should find the time bar clauses as clearly technical terms. ..........................8
II. THE TRIBUNAL SHOULD ESTABLISH THAT THE FREIGHT WAS DUE AND PAYABLE AND THAT THERE IS NO ALLOWABLE DEDUCTION FROM THE FREIGHT. ................................................................................................................................ 11 1.
Freight was due and payable. ................................................................................................................. 11
2.
Claim for damages is not possible....................................................................................................... 13
3.
Deduction from freight is not allowable. ......................................................................................... 14
III.
THE TRIBUNAL SHOULD ESTABLISH THAT THE CANCELLATION OF THE
CHARTER PARTY COMITTED BY THE CHARTERERS IS TO BE CONSIDERED ANTICIPATORY AND IN CONFLICT WITH THE PRINCIPLES OF THE CONTRACT LAW IN RESPECT TO CHARTER PARTIES. ..................................................................... 15 IV.
PRAYER FOR RELIEF ................................................................................................ 17
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Memorandum for the Reliable Holdings Inc.
LIST OF ABBREVIATIONS And & §
Section
¶/¶¶
Paragraph/Paragraphs
Ab initio
From the beginning
Ad hoc
For this
ASBATANKVOY
Association of Ship Brokers & Agents Tanker Voyage Charter
Charter Party
Party
CA
Court of Appeal
Charterers
The Super Charters Inc. (the Respondent)
ed./eds.
Editor/Editors
ETA
Estimated Time of Arrival
HL
House of Lords
Ibid.
Ibidem (in the same place)
Laycan
Laydays Cancelling
Memorandum
Memorandum for the Reliable Holdings Inc. acting as a legal successor of the Reliable Tankers Inc. submitted by the Team of Erasmus School of Law, Rotterdam participating in 15th International Maritime Law Arbitration Moot.
MT
Metric ton
No.
Number
Owners
The Reliable Holdings Inc. (the Claimant)
p./pp.
Page/ Pages
Recap
The summary of the Charter Party
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Memorandum for the Reliable Holdings Inc.
Vessel
The Reliable Butterfly
Voyage
The transport of crude oil at each of two terminals from the loading port BlueLand, to Redland for bunkers and thereafter to the discharge port IndigoLand.
Tribunal
Panel consisting of the Chairperson (presiding arbitrator) and Ms. Arbitrator 1 and Mr. Arbitrator 2
UNCITRAL
United Nations Commission on International Trade
USD
United States dollars
v.
Versus; against
Vol.
Volume
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TABLE OF AUTHORITIES
Books:
Alan Redfern, Martin Hunter,
Referred to in: ¶ 29
Nigel Blackaby, Constantine Partasides,
of the Memorandum
Law and Practice of International Commercial Arbitration, [4th., Sweet & Maxwell, 2004] Clare Ambrose, Karen Maxwell,
Referred to in: ¶ 31
The Arbitration Act 1996 - London Maritime Arbitration,
of the Memorandum
[1st., LLP, 1996] Gary Born,
Referred to in: ¶ 30
International Commercial Arbitration,
of the Memorandum
[1st., vol. II, Kluwer Law International, 2009] John F. Wilson,
Referred to in: ¶ 39
Carriage of Goods by Sea,
of the Memorandum
[7th., Pearson, 2010] Joseph Chitty,
Referred to in:
Chitty on Contracts,
¶¶29,32,35,37 of the
[31st., Sweet & Maxwell, 2013]
Memorandum
Julian D. M. Lew, Harris Bor ,
Referred to in: ¶ 28
Gregory Fullelove, Joanne Greenaway,[eds.],
of the Memorandum
Arbitration in England, with chapters on Scotland and Ireland, [Kluwer Law International 2013]
Referred to in: ¶ 28,
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Memorandum for the Reliable Holdings Inc.
Mauro Rubino - Sammartano,
29 of the
International Arbitration: Law and Practice,
Memorandum
[1st., Kluwer Law International, 2001] Michael Mustill, Commercial arbitration,
Referred to in: ¶ 19
[2nd., Butterworths, 2001]
of the Memorandum
Robert Merkin,
Articles:
Arbitration Law,
Referred to in: ¶ 34
[3rd., Informa Law, 2004]
of the Memorandum
Simon Crookenden,
Referred to in: ¶ 21
'Correction of the Name of a Party to an Arbitration'
of the Memorandum
[Arbitration International, Vol. 25, Kluwer Law International 2009] Raymond A. Connell,
Referred to in: ¶ 45
‘Charter Party Termination and the Approach Voyage’,
of the Memorandum
[Tulane Maritime Law Journal, Vol. 25, 2000-2001]
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TABLE OF CASES A
AMB Generali Holding A.G. v. SEB Trygg Liv
Referred to in: ¶ 26 of the
Holding A.B.,
Memorandum
[2005] EWCA Civ 1237; [2006] 1 WLR 2276. Ambatielos v. Grace Bros. & Co.,
Referred to in: ¶ 45 of the
[1922]10 Lloyd's List L. Rep. 159.
Memorandum
Andre & Cie S.A. v. Marine Transocean Ltd.,
Referred to in: ¶ 37 of the
(‘The Splendid Sun’),
Memorandum
[1981] QB 694. André & Cie v. Cook Industries Inc.,
Referred to in: ¶ 39 of the
[1987] 2 Lloyds Rep. 463.
Memorandum
Aries Tanker Corporation v. Total Transport Ltd.,
Referred to in: ¶¶ 43, 44 of the
(‘The Aries’),
Memorandum
[1977] 1 Lloyd’s Rep 340 [HL]. B
Babanaft International Co. SA v. Avant Petroleum
Referred to in: ¶ 33 of the
Inc., (‘The Oltenia’),
Memorandum
[1982] 1 WLR 871.
C
Ballintine Books, Inc, v. Capital Distibuting Co.,
Referred to in: ¶ 30 of the
[2d Cir.1962] 302 F.2d 17.
Memorandum
Calloner v. Bower
Referred to in: ¶ 37 of the
[1984] 269 E.G. 275
Memorandum
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Cheikh Boutros Selim EI-Khoury v. Ceylon
Referred to in: ¶ 45 of the
Shipping Lines, Ltd.,(‘The Madeleine’),
Memorandum
[1967] 2 Lloyd's Rep. 224, 244 [Q.B.]. Christie & Vesey, Ltd. v. Maatschappij Tot
Referred to in: ¶ 45 of the
Exploitatie Van Schepen en Andere Zaken,
Memorandum
Helvetia N.V., (‘The Helvetia-S’), [1960] 1 Lloyd's Rep. 540, 551 [Q.B.]. Colonial Bank [now Bank of Boston Connecticut]
Referred to in: ¶¶ 39,43 of the
v. European Grain & Shipping Ltd.,
Memorandum
(‘The Dominique’), [1989] 1 Lloyd’s Rep. 436. Courtney & Fairbairn Ltd. v. Tolaini Brothers
Referred to in: ¶ 36 of the
(Hotels) Ltd.,
Memorandum
[1975] 1 WLR 297. E
G
Eurosteel Ltd. v. Stinnes A.G.,
Referred to in: ¶ 26 of the
[2000] 1 All ER 964.
Memorandum
Government of Newfoundland v. Newfoundland
Referred to in: ¶ 44 of the
Railway Co.,
Memorandum
[1888] 13 App. Cas. 199. H
Henriksens Rederi A/S v. THZ Rolimpex,
Referred to in: ¶¶ 35, 46, 44 of the
(‘The Brede’),
Memorandum
[1973] 2 Lloyd’s Rep. 332.
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Hyundai Merchant Marine Co. Ltd. v. Americas
Referred to in: ¶ 38 of the
Bulk Transport Ltd.,
Memorandum
(‘The Pacific Champ’), [2013] 2 Lloyd’s Rep. 320. L
Lazard Brothers & Company v. Midland
Referred to in: ¶ 25 of the
Bank Ltd.,
Memorandum
[1993] AC 289 [HL]. M
Metallgesellschaft A.G. v. M/V Capitan Constante
Referred to in: ¶ 42 of the
and Yacimintos Petroliferos Fiscales,
Memorandum
[1986] 790 F.2d 280.
P
Moel Tryvan Ship Co. v. Andrew Weir & Co.,
Referred to in: ¶ 45 of the
[1910] 2 K.B. 844, 854.
Memorandum
Paal Wilson & Co v Partenreederei Hannah
Referred to in: ¶ 37 of the
Blumentahl, (‘The Hannah Blumentahl’),
Memorandum
[1983] 1 A.C. 854. R
S
Russell v. Duke of Norfolk,
Referred to in: ¶ 29 of the
[1949] 1 All ER 109.
Memorandum
Seagate Shipping Ltd. v. Glencore
Referred to in: ¶ 45 of the
International A.G.,
Memorandum
[2008] 2 C.L.C. 350. Storer v. Manchester C.C.,
Referred to in: ¶ 37 of the
[1974] 1 W.L.R 1403.
Memorandum
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T
Memorandum for the Reliable Holdings Inc.
The Sardinia Sulcis v. Owners of the Al Tawwab,
Referred to in: ¶ 22, 25, 26 of the
(‘The Sardinia Sulcis’),
Memorandum
[1991] 1 Lloyd’s Rep. 201 (CA). U
Unisys International Services Ltd. v. Eastern
Referred to in: ¶ 23 of the
Counties Newspaper Group Ltd.,
Memorandum
[1991] 1 Lloyd’s Rep. 538 CA.
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TABLE OF LEGAL ACTS
The UNCITRAL Model Law on
Referred to in: ¶ 19 of
International Commercial Arbitration1985
the Memorandum
UNCITRAL Model Law
with amendments as adopted in 2006 Referred to in: ¶ 27,
Arbitration Act
English Arbitration Act 1996 c. 23
28, 31, 35 of the Memorandum
INDEX OF DOCUMENTS ASBATANKVOY form [the Charter Party]
Referred to in:¶¶5, 19, 20, 24, 37, 38, 39, 40, 41, 42, 43, 44, 45 of the Memorandum Referred to in:¶ 18 of the Memorandum
Claim submission of the Reliable Holdings Inc.
Referred to in:¶ 40 of the Memorandum
Combined claim submission of the Super Charters Inc.
Referred to in:¶ 38 of the Memorandum
Correspondence from the Super Charters Inc. to the Reliable Tankers Inc. from 19 November 2011 Correspondence
Referred to in:¶¶ 7,38 of the
from the Reliable Tankers Inc. to the Super
Memorandum
Charters Inc. from 19 November 2011 Referred to in:¶ 41 of the Memorandum
Correspondence from the Reliable Tankers Inc. to the Super Charters Inc. from 23 November 2011
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Correspondence
Referred to in:¶¶ 11, 41 of the
from the Reliable Tankers Inc. to the Super
Memorandum
Charters Inc. from 25 November 2011 Correspondence
Referred to in: ¶¶13, 42 of the
from the Reliable Tankers Inc. to the Super
Memorandum
Charters Inc. from 28 November 2011 Expert Report of Tim Bowman
Referred to in: ¶22 of the Memorandum
Internal note from 20 November 2011
Referred to in: ¶ 8, 32 of the Memorandum
Moot Problem
Referred to in: ¶ 37 of the Memorandum
Newspaper Article concerning the merger of
Referred to in: ¶¶14 ,22 of the
the Reliable Tankers Inc. and Reliable
Memorandum
Holdings Inc. from 3 January 2012 Notice of Appointment and Arbitration of the
Referred to in:¶¶ 15, 19, 21, 26, 27, 31,
Reliable Holdings Inc. from 28 January 2012
35 of the Memorandum
Notice of Appointment and Arbitration
Referred to in:¶ 21 of the Memorandum
of the Reliable Holdings Inc. from 24 February 2012 Notice of Appointment and Arbitration of the
Referred to in:¶¶ 16, 35,36 of the
Super Charters from 12 February 2012
Memorandum
Notice of Cancellation of the Super Charters
Referred to in:¶¶ 11, 12, 36 of the
from 27 November 2012
Memorandum
Standard Terms of the Super Charters Inc.
Referred to in:¶¶ 31,32, 33 of the Memorandum
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Standard Terms of the Reliable Tankers Inc.
Referred to in:¶¶ 37,38, 42, 43 of the Memorandum
The Super Charters Company Single Voyage Charter Party Rider Clauses
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Referred to in:¶ 19 of the Memorandum
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Memorandum for the Reliable Holdings Inc.
STATEMENT OF FACTS: 1.
Please note that following statements represent the stand of the Claimant (the Reliable Holdings Inc.) on an issue against the Respondent (the Super Charters Inc.).
2.
The entity Reliable Tankers Inc., which concluded the Charter Party and acted as the owner of the Reliable Butterfly (hereinafter: the Vessel), no longer exists as an individual enterprise following the merger with Reliable Holding Inc., cited in the present document as the Owners, as being addressed by Super Charters (hereafter: the Charterers).
3.
On 1 October 2011 22nd Century Broking offered their services to conclude the Voyage Charter Party between the Reliable Tankers Inc. and the Charterers.
4.
On 10 October 2011, Reliable Tankers Inc. were approached by a representative of the Charterers, who invited the former to enter direct discussions for the transport of crude oil at each of two terminals from the loading port BlueLand and thereafter to the discharge port IndigoLand (hereafter: the Voyage).
5.
Following a series of negotiations between the parties, the recapitulation of a standard ASBATANKVOY Charter Party was made on 17 November 2011.
6.
The Charter Party was fully fixed by the parties on 19 November 2011 at 17.00 hrs. subject of it was the Vessel owned by Reliable Tankers Inc., flying a Bahamas’ flag and registered at the Port of Nassau, carrying out the transportation of 260,000 MT of crude oil from BlueLand to IndigoLand, with the stipulated freight respective to the cargo transported. The prearranged laycan was stipulated for 5/6 December with the precondition for further specification of the exact date.
7.
By a message of 19 November 2011 to the Charterers, the Reliable Tankers Inc. informed that the Vessel started heading to her bunker port and ETA at load port as per Recap (3 December 2011). Since loading would takes a few days, the Vessel was supposed to sail by 8 December 2011, a 30 days voyage. Discharging was expected to be completed at 10 January 2011. Page | 1
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8.
Memorandum for the Reliable Holdings Inc.
On 20 November 2011 the time bar for commencing a suit was extended to 30 days, instead of 20 days, due to the approved request issued by the Reliable Tankers Inc.
9.
Upon entering the bunker port (Redland), the Vessel was arrested by a third-party bunker supplier. Following that event, the Reliable Tankers Inc. exerted an utmost effort to solve the matter in a manner that would allow the Vessel to proceed further on her Voyage and meet the stipulated laycan. However, the latter’s efforts proved unsuccessful to provide a solution to the situation. This could be attributed mainly to the financial condition of the Reliable Tankers Inc. who relied on the freight stipulated in the Charter Party in providing them with the required resource to cover pending debts. The stipulated freight, however, was not paid by the Charterers at the time of the arrest, although it was due from the date of conclusion of the Charter Party.
10.
During the Voyage the Reliable Tankers Inc. asserted due diligence to keep the counterparty, including their respective servants and agents situated at the Port of Discharge, informed about the progress of the Voyage and update the latter on possible delays. It is important to note that, until the moment of the aforementioned arrest, the progress of the Vessel was according to the time plan set by the Reliable Tankers Inc., thus bound to meet its laycan at the time.
11.
Being aware that the stipulated laycan could not be met, the Reliable Tankers Inc. contacted the Charterers, and informed them about the current situation on 25 November 2011. The Reliable Tankers Inc., furthermore offered a revision of the laycan, based on what was contractually preconcert. The Charterers in turn rejected the suggested change of the laycan by notice received by the Reliable Tankers Inc. on 27 November 2011.
12.
As a result from the latter decline, the Charter Party was cancelled without recourse on 27 November 2011, with the effect that both parties are released from any further obligations to perform the Charter Party. Page | 2
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13.
Memorandum for the Reliable Holdings Inc.
In the light of the pending arrest on the Vessel, the Reliable Tankers Inc. addressed the Charterers offering a sister-ship of the Vessel, to substitute the latter for the purposes of the stipulated Voyage. The offer was made with the belief that the Voyage could still be completed in timely fashion under a revised laycan. Thus the Vessel would be able to discharge before the closing of the refinery. The proposal was in turn dismissed by the Charterers, thus leading to the cancellation of the Charter Party.
14.
On 3 January 2012 the merger of the Reliable Tankers Inc. with the Owners became public. It was announced in a reputable newspaper.
15.
On 28 January 2012, the Owners sent the Notice of Arbitration and Appointment to the Charterers and appointed Mr. Smith as arbitrator. However, by mistake the Owners used the wrong paper which still contained the name of Reliable Tankers Inc.
16.
On 12 February 2012 the Charterers considered the appointment as invalid and made a new appointment, appointing Mr. John as arbitrator.
17.
On 24 February 2012 the Owners considered the Charterers’ appointment as invalid since there was already the Notice of Arbitration and Appointment made on 28 January 2012 and the Reliable Tankers Inc. and the Reliable Holdings Inc. can be seen as the same entity.
18.
On 14 March 2012 the Owners filed the Claim Submissions, for which the Charterers filed Counter Submissions as well as 2nd reference Claim Submissions.
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INTRODUCTORY REMARKS ON LEGAL ARGUMENTS AND APPLICABLE LAW 19.
The Reliable Tankers Inc. and the Charterers started their contractual relationship by entering into a Charter Party on 19 November 2011 which thereafter was acquired by the Owners as a result of the legal succession. Parties agreed that any dispute of whatever nature, arising out of or relating to the Charter Party, shall be put to ad hoc arbitration in London, United Kingdom, thus agreeing to the laws of England as the lex arbitri.1 Furthermore, the parties agreed on the applicability of the English Arbitration Act 1996 (hereinafter: the Arbitration Act) as far as procedure before the Tribunal is concerned.2 For that reason, when discussing the conduct of the parties, a reference to general principles of the Arbitration Act itself and to general principles of the law is made, bearing in mind the international context of arbitration as a matter of basing the Arbitration Act on UNCITRAL Model Law.3
20.
The Owners, in their quality of surviving entity following a merger with Reliable Tankers Inc., assert that: there was a clear misnomer in the Notice of Arbitration and Appointment from 28 January 2012; the Owners commenced the arbitration validly on 28 January 2012; time bars for the notification of a suit arising out of the contract should be treated as technical terms; the cancellation of the Charter Party committed by the Charterers is to be considered a breach of the Contract; the freight was due and payable and that there is no allowable deduction from the freight.
1
ASBATANKVOY, Part II, Clause 24. Notice of Appointment and Arbitration of the Reliable Tankers Inc. from 28 January 2012. 3 Michael Mustill, Commercial arbitration, [2nd., Butterworths, 2001] pp. 66-82. 2
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I.
Memorandum for the Reliable Holdings Inc.
THE TRIBUNAL SHOULD FIND THAT ARBITRATION WAS VALIDLY COMMENCED ON 28 JANUARY 2012.
1. There was a clear misnomer in the Notice of Arbitration and Appointment from 28th January 2012. 21.
There is no reason for the Tribunal to consider, that the arbitration was not validly commenced on 28 January 2012. The arbitration was commenced by the intended party, since it was a bona fide mistake and not the ulterior purpose in the conduct of the Owners. 4 Because of that, the Owners are asking the Tribunal to regard the whole dispute as the one referral.
22.
The Tribunal should notice that the merger became widely known to the public on 3 January 2012 5 , therefore, on the 28 January 2012 the Charterers were aware of the company’s restructuring and there was no reasonable doubt as to the identity of the Owners. 6 Consequently, the clear misnomer in the Notice of Arbitration and Appointment from 28th January 2012 which was then clarified in the Notice from 24 February 2012 could not and did not aim for putting the Charterers under a misapprehension as to who was commencing the proceedings. Moreover, according to the Fruitland law there is no obligation to give a notice of the succession, 7 thus the Owners did not violate the law and were not acting to the detriment of the Charterers.
23.
In any case the Tribunal finds that the information about the merger was not in the public domain, the Owners are relying on the general opinion proven in the case law that a nonintentional mistake, as to the name of a counterparty, does not influence its identity. The mistake in the presented case was only to the name of the Owners, and any correction would 4
Simon Crookenden, 'Correction of the Name of a Party to an Arbitration' [Arbitration International, Vol. 25, Kluwer Law International 2009]. 5 Newspaper Article concerning the merger of the Reliable Tankers Inc. and Reliable Holdings Inc. from 3 January 2012. 6 The Sardinia Sulcis v. Owners of the Al Tawwab, (‘The Sardinia Sulcis’), [1991] 1 Lloyd’s Rep. 201 CA. 7 Expert Report of Tim Bowman. Page | 5
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not change the identity of the company. As it was held in the ‘Unisys International Services Ltd. v. Eastern Countries Newspaper Group Ltd.’ case, where the circumstances of commencing the arbitration remained similar to the one in the dispute between the Owners and the Charterers, the misnomer is ‘simply as to an attribute of the contracting party, namely its name, and not as to any more fundamental characteristic of identity’.8 24.
Furthermore, the Tribunal should consider that the description of the Owners was clear enough (by invoking the Charter Party, appointing the same arbitrator, name suggesting belonging to the holding) and proved that there could be no mistake as to the identity of the party, but only to the name, which thereafter could be easily amended. Thus, there was no reasonable doubt as to the identity of the person (the Owners) intending to issue the Notice of Arbitration and Appointment in whom the rights of the ownership were vested at the date when the Notice was issued.
25.
The Tribunal should find also that the conduct of the Owners falls within genuine misnomer. As it was held in ‘Lazard Brothers & Company v. Midland Bank Ltd.’ case, the genuine misnomer is an exception to the rule that proceedings cannot be commenced in the name of a non-existing party9. The only prerequisites, which were met by the Owners [¶¶ 23,24], are: that the mistake is genuine and not misleading or causing any doubt as to the identity of the counterparty.10
26.
Finally, it should be underlined that the amendment of the name relates back 11 , thus the Owner was a party to this dispute ab inito and there was no reason to invalidate arbitration. As it was declared in the ‘AMB Generali Holding A.G. v. SEB Trygg Liv Holding A.B.’ case, it is possible to amend the name to that of the party holding contractual rights without 8
Unisys International Services Ltd. v. Eastern Counties Newspaper Group Ltd.,[1991] 1 Lloyd’s Rep. 538 CA. Lazard Brothers & Company v. Midland Bank Ltd.,[1993] AC 289 [HL]. 10 See also: The Sardinia Sulcis v. Owners of the Al Tawwab, (‘The Sardinia Sulcis’), [1991] 1 Lloyd’s Rep. 201 (CA). 11 Ibid. 9
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interfering procedure.12 The same result was achieved in the decision of ‘The Sardinia Sulcis’ case, where it was stated that if the name on the record refers to an entity, which no longer exists, there is a possibility to correct the record. 13 Above all, as it was decided in the ‘Eurosteel Ltd. v. Stinnes A.G.’ case, where a party has ceased to exist by reason of the universal succession, the arbitration does not lapse and the tribunal was entitled to continue with the referral.14 2. The Charterers had an intention in acknowledging the arbitration as invalid. 27.
The Charterers’ stance on commencing the arbitration on 28 January 2012 was an opportunistic point that caused the delay of making fair resolution without an unnecessary delay15 and aims for causing unfairness due to the fact that the Owners would lose the right to claim unpaid freight under arbitration.
28.
Consequently, it should be underlined the Charterers violate § 40 of the Arbitration Act, concerning the general duty of the parties, by the conduct of which the possibility to solve the dispute is unambiguously delayed and is contradictory to the sense of cooperation. 16 Principles of fairness, impartiality and avoidance of unnecessary delay are the core of the Arbitration Act17 and with regard to them the Tribunal should take suitable measures to avoid further delay.18
29.
Moreover, the Tribunal should consider the right of the Owners to present their case, regardless of the formalistic stance adopted by the Charterers, which is contrary to the nature
12
AMB Generali Holding A.G. v. SEB Trygg Liv Holding A.B.,[2005] EWCA Civ 1237; [2006] 1 WLR 2276. The Sardinia Sulcis v. Owners of the Al Tawwab, (‘The Sardinia Sulcis’), [1991] 1 Lloyd’s Rep. 201 CA. 14 Eurosteel Ltd. v. Stinnes A.G.,[2000] 1 All ER 964. 15 Arbitration Act 1996, § 1(a). 16 Julian D. M. Lew, Harris Bor, Gregory Fullelove, Joanne Greenaway, et al. [eds.], Arbitration in England, with chapters on Scotland and Ireland,[Kluwer Law International 2013] pp. 339 – 360. 17 Mauro Rubino - Sammartano, International Arbitration: Law and Practice, [1st., Kluwer Law International, 2001] p. 67. 18 Arbitration Act 1996, § 33(1)(b). 13
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of arbitration.19 Even if the Tribunal adjudges that the referral misses the formal attributes to be conclusive, it should, in respect of § 33 (1) (a) of the Arbitration Act, give a reasonable chance to the Owners to present their case. The flexibility of the Tribunal 20 to adjust proceedings is vital.21 With regards to the procedural fairness, Lord Tucker L.J. said in the ‘Russell v. Duke of Norfolk’ case: ‘There are in my view no words which are of universal application in every kind of domestic tribunal whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case.’ 22 30.
Above all, by reason of speed of the procedures, the Tribunal should declare that the referral was sufficient enough to start arbitration proceedings. The fact remains that the Owners acted with the willingness to arbitrate. The mere fact arising out of minor procedural issues regarding the amendment of the Owners name, should not be relevant for the straying or invalidity of the commencement of the proceedings.23 The general duty of an arbitrator is to settle and resolve the dispute between the parties in an adjudicative manner. 24 In the ‘Ballentine Books, inc. v. Capital Distributing Co.’ case it was held that an arbitrator should act affirmatively to simplify and expedite the proceedings this due to speed and informality of the proceedings for the parties.25 3. The Tribunal should find the time bar clauses as clearly technical terms.
31.
The Tribunal should find that the Notice of Appointment and Arbitration from 28 January 2012 is within the time limits. Parties are free to agree when arbitral proceedings are to be
19
Mauro Rubino - Sammartano, International Arbitration: Law and Practice, [1st., Kluwer Law International, 2001] p.553 20 Joseph Chitty, Chitty on Contracts,[31st., Sweet & Maxwell, 2013] pp. 165-167. 21 Alan Redfern, Martin Hunter, Nigel Blackaby Constantine Partasides, Law and Practice of International Commercial Arbitration, [4th., Sweet & Maxwell, 2004] no. 6-41. 22 Russell v. Duke of Norfolk,[1949] 1 All ER 109. 23 Gary Born, International Commercial Arbitration, [1st., vol. II, Kluwer Law International, 2009] p.1616 24 Ibid. 25 Ballintine Books, Inc, v. Capital Distibuting Co., [2d Cir.1962] 302 F.2d 17.
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regarded as commenced.26 The party autonomy, which is one of the main principles27 of the Arbitration Act, is governed in its § 14. Thus, the Owners’ legal predecessor accepted the Clause 4 of the Super Charters Standard Terms.28 32.
The fact that, according to the time bar clause, the parties were supposed to give a notification of the claim, should not be regarded as a pre-condition and does not create an enforceable legal obligation.29 As a consequence, no specific procedure has to be followed, given that the ratio of Clause 4 was to create the option to the Reliable Tankers Inc. to commence proceedings against the Charterers within a specific time limit which was subsequently proved by the extension of that time up to 30 days.30 At the same time, the ratio of the clause is contrary to the existence of any obstacles, meaning additional conditions, precluding from arbitration.
33.
Even if the Owners had to follow a specific procedure, meaning, firstly to notify the claims within 10 days of discharge and then commence arbitration in further days, the procedure mentioned in the Clause 4 of the Charterers’ Standard Terms had no reason to be treated as a conditio sine qua non. It was proved in the ‘The Oltenia’ case where the presentation of a claim within the time-bar was not treated as a condition to commence arbitration proceedings31.
34.
In case the Tribunal finds that the first condition for commencing arbitration (10 days to give a notice of claims) was of great importance for the Charterers, the general principles of equity and balance of convenience between the parties should have been followed.32 The Charterers sent a Notice of Appointment and Arbitration on the 12 February 2012, similar with the one 26
Arbitration Act 1996, § 14(1) Clare Ambrose, Karen Maxwell, The Arbitration Act 1996 - London Maritime Arbitration, [1st., LLP, 1996] p.7. 28 Standard Terms of the Super Charters Inc. 29 Joseph Chitty, Chitty on Contracts,[31st., Sweet & Maxwell, 2013] p.131. 30 Internal note from 20 November 2011. 31 Babanaft International Co. SA v. Avant Petroleum Inc., (‘The Oltenia’), [1982] 1 WLR 871. 32 Robert Merkin, Arbitration Law, [3rd., Informa Law, 2004] p. 489. 27
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Memorandum for the Reliable Holdings Inc.
of the Owners. The Charterers didn’t follow any procedure. Thus, this implies that no high significance was given to the procedure followed before commencing the arbitration. 35.
Consequently, on the ground of the aforementioned, the Owners are asking the Tribunal to consider the referral from 28 January 2012 as validly commenced. At the same time the Owners ask the Tribunal to treat the whole dispute as one case. However, if the Tribunal finds that there was no misnomer, the Owners ask the Tribunal for the extension of the time for beginning arbitral proceedings by invoking § 12(3) of the Arbitration Act. The Owners want to underline that the conduct of the Charterers was to the detriment of the Owners. By referring to the Notice of Appointment and Arbitration from 12 February 2012 the Charterers deprived the Owners of the possibility to amend the name of the party on time and, therefore, their right to arbitration.33
36.
However, a potential settlement could not be achieved before commencing arbitration proceedings due to the fact of no further communication between the Owners and the Charterers by the time of cancellation, on 27 November 2011. However, in case of necessity of settlement, it could not be treated as a condition for commencing the arbitration because: ‘if the law does not recognize a contract to enter into a contract, it cannot recognize a contract to negotiate. The reason is because it is too uncertain to have any binding force’.34
33 34
Joseph Chitty, Chitty on Contracts,[31st., Sweet & Maxwell, 2013] pp. 149-151. Courtney & Fairbairn Ltd. v. Tolaini Brothers (Hotels) Ltd.,[1975] 1 WLR 297. Page | 10
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II.
Memorandum for the Reliable Holdings Inc.
THE TRIBUNAL SHOULD ESTABLISH THAT THE FREIGHT WAS DUE AND PAYABLE AND THAT THERE IS NO ALLOWABLE DEDUCTION FROM THE FREIGHT.
1. Freight was due and payable. 37.
The Tribunal should establish that Standard Terms of the Reliable Tankers Inc. are applicable and overrule the general provisions of the Charter Party. The Reliable Tankers Inc. and the Charterers fixed the freight rate in the Charter Party35. According to English case law, freight is payable according to the terms of the contract. 36 The precise time of payment may be expressed in multiple ways. The Charter Party Recap states that ‘Both parties special terms fully incorporated as per attached’.37 The Clause in the Standard Terms38 can be seen as an offer of the Reliable Tankers Inc. 39 Under the objective test of an agreement, an apparent intention to be bound will suffice the conduct if the alleged offeror (the Reliable Tankers Inc.) is such as to induce a reasonable person to believe that he is making the alleged offer and if the alleged offeree (The Charterers) actually holds that belief.40 The Charterers accepted this offer by fixing the Charter Party, thus accepting prevailing application of the Standard Terms of the Reliable Tankers Inc.
38.
In the light of the relation between the parties and the Charter Party itself, ‘lifting subjects’ must be interpreted as fulfilling the provisions and, therefore the conclusion of the Charter Party. The Clause 4 of the Standard Terms of the Reliable Tankers Inc. states: ‘Freight
35
ASBATANKVOY Part I (F). Henriksens Rederi A/S v. THZ Rolimpex, (‘The Brede’), [1973] 2 Lloyd’s Rep. 332.; & Lord Simon in Aries Tanker Corporation v. Total Transport Ltd., (‘The Aries’),[1977] 1 Lloyd’s Rep 340 [HL]. 37 Moot Problem, p. 47. 38 Standard Terms of the Reliable Tankers Inc., Clause 4. 39 Storer v. Manchester C.C., [1974] 1 W.L.R 1403.; contrary to: Andre & Cie S.A. v. Marine Transocean Ltd., (‘The Splendid Sun’),[1981] QB 694. 40 Joseph Chitty, Chitty on Contracts,[31st., Sweet & Maxwell, 2013] p. 34. and Andre & Cie S.A. v. Marine Transocean Ltd., (‘The Splendid Sun’),[1981] QB 694. as explained in: Paal Wilson & Co v Partenreederei Hannah Blumentahl, (‘The Hannah Blumentahl’), [1983] 1 A.C. 854. & Calloner v. Bower (1984) 269 E.G. 275. 36
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Memorandum for the Reliable Holdings Inc.
deemed earned in full discountable non-returnable and 95% of minimum freight payable upon lifting subjects remaining 5% of minimum plus balance for overage payable on completion of discharge and disconnection of hoses’. 41 It becomes clear from the correspondence from 19 November 2011, 42 where the Charterers confirm to be ‘fully fixed with subjects lifted at 1700’ and the confirmation of the Owners where the Recap states ‘all subs lifted as per 1700 hrs London 19 November 2011’, that subjects lifted means the conclusion of the Charter Party.43 Since the subjects were lifted on 19 November 2011, the second Recap was binding upon the parties and, therefore, the Standard Terms of the Reliable Tankers Inc. were fully incorporated.44 39.
As a consequence, the obligation to pay freight arose before the beginning of the actual Voyage. Thus, freight must have been paid before the Vessel left the port of OrangeLand. Furthermore, the obligation to pay freight remains after termination of the Charter Party. This was upheld by the House of Lords in ‘The Dominique’ case,45 where the vessel was arrested in the bunker port. The court ruled that freight is due at the time indicated and, if not paid, will remain due even though the goods never arrive at their destination. 46 For that reason, the freight risk is for the Charterers and they are not able to transfer this risk back to the Owners.47 According the House of Lords in ‘The Dominique’ case, freight being deemed to have been earned can be treated as a liability in debt. 48 Thus, the freight is still payable.
41
Standard Terms of the Reliable Tankers Inc., Clause 4. Correspondence from the Charterers to the Reliable Tankers Inc. from 19 November 2011. 43 Correspondence from the Reliable Tankers Inc. to Charterers from 19 November 2011. 44 Hyundai Merchant Marine Co. Ltd. v. Americas Bulk Transport Ltd., (‘The Pacific Champ’), [2013] 2 Lloyd’s Rep. 320. 45 Colonial Bank [now Bank of Boston Connecticut] v. European Grain & Shipping Ltd., (‘The Dominique’),[1989] 1 Lloyd’s Rep. 436. 46 John F. Wilson, Carriage of Goods by Sea, [7th., Pearson, 2010], p.292. 47 J. Hobhouse in: Colonial Bank [now Bank of Boston Connecticut] v. European Grain & Shipping Ltd., (‘The Dominique’),[1989] 1 Lloyd’s Rep. 436. 48 Colonial Bank [now Bank of Boston Connecticut] v. European Grain & Shipping Ltd., (‘The Dominique’), [1989] 1 Lloyd’s Rep. 436.; see also: John F. Wilson, Carriage of Goods by Sea, [7th., Pearson, 2010], p.294. 42
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Memorandum for the Reliable Holdings Inc.
2..Claim for damages is not possible. 40.
The Reliable Tankers Inc. were not in breach of the Charter Party as counterclaimed by the Charterers.49 The Vessel was on her way to the port of loading when she was arrested in the bunker port. There was no negligence in providing security, since the Reliable Tankers Inc. did everything in their power to release the Vessel from the arrest. They contacted the Charterers as soon as possible to inform them about the arrest and the possibility to make the excising laycan or provide a new laycan.50
41.
If the Charterers had paid the freight in advance, as stated in the Charter Party, the Reliable Tankers Inc. would have been able to pay for the supplies, and the Vessel could have proceeded to the loading port. However, the Charterers did not pay for the freight in advance. As a consequence, the Reliable Tankers Inc. were not able to pay their debts and the Vessel could not sail to BlueLand.
42.
The counterclaim of the Charterers for the market loss is not admissible under UK law. This is based on the ‘Metallgesellschaft A.G v. M/V Capitan Constante and Yacimintos Petroliferos Fiscales’ case. 51 The Charter Party is cancelled without recourse as stated in the Standard Terms of the Reliable Tankers Inc., which relieves the Owners of all liability.52 Even if the Tribunal finds that the Owners as a legal successor of the Reliable Tankers Inc. are liable for the damages of the Charterers, the Owners are not liable for the full amount claimed. On 28 November 2011 the Reliable Tankers Inc. offered a sister ship, which was suitable to perform the fixture.53 This gesture can be seen as damage prevention, since the losses would have been limited. If the Charterers had accepted this offer, the damages would have been reduced.
49
Combined claim submissions of the Charterers, ¶15a. Correspondence from the Reliable Tankers Inc. to the Charterers from 23 November 2011 and 25 November 2011. 51 Metallgesellschaft A.G. v. M/V Capitan Constante and Yacimintos Petroliferos Fiscales, [1986] 790 F.2d 280. 52 Standard Terms of the Reliable Tankers Inc., Clause 2. 53 Correspondence from the Reliable Tankers Inc. to the Charterers from 28 November 2011. 50
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Memorandum for the Reliable Holdings Inc.
There would not have been increased costs, as claimed by the Charterers, for securing a replacement tanker to carry the cargo. 3. Deduction from freight is not allowable. 43.
If the Tribunal finds that there is a breach by the Owners, the Charterers cannot rely on the equity principle and have no right to deduction from freight. The Court of Appeal decided in ‘The Aries’ case, that a claim from the Charterers in respect of deduction from freight couldn’t be asserted under common law.54 Clause 4 of the Standard Terms of the Reliable Tankers Inc.55 states that the freight is discount less and non-returnable. Even if there was a breach of the Charter Party by Reliable Tankers Inc., this does not give rise to equity in favour of the Charterers.56
44.
The Charterers would have a possibility to bring a cross-claim for compensation, proving that the clause of action is not covered by an exception and is not time barred.57 However, from ‘The Aries’ case it can be concluded that there is no universal rule that claims arising out of the same contract may be set against one another in all circumstances. 58 The Charter Party is said to be entire and indivisible, with a result that freight is payable according the terms of it. 59
For the rule of the equitable principles, as stated in the cases: ‘The Aries’ and ‘The Brede’,
to apply, there must be some ground for equitable intervention, other than the mere existence of a cross-claim. 60 Consequently, the Charterers have no right to set-off their damages, entitling them to a deduction from freight, since such right is excluded by the Charter Party.61
54
Aries Tanker Corporation v. Total Transport Ltd., (‘The Aries’),[1977] 1 Lloyd’s Rep 340 [HL].; & Henriksens Rederi A/S v. THZ Rolimpex, (‘The Brede’), [1973] 2 Lloyd’s Rep. 332. 55 Standard Terms of the Reliable Tankers Inc., Clause 4. 56 Held by the HL in: Colonial Bank [now Bank of Boston Connecticut] v. European Grain & Shipping Ltd., (‘The Dominique’),[1989] 1 Lloyd’s Rep. 436. 57 Aries Tanker Corporation v. Total Transport Ltd., (‘The Aries’),[1977] 1 Lloyd’s Rep 340 [HL]. 58 Also in: Government of Newfoundland v. Newfoundland Railway Co., [1888] 13 App. Cas. 199. 59 Aries Tanker Corporation v. Total Transport Ltd., (‘The Aries’),[1977] 1 Lloyd’s Rep 340 [HL].; & Lord Denning in: Henriksens Rederi A/S v. THZ Rolimpex, (‘The Brede’), [1973] 2 Lloyd’s Rep. 332.: ‘the good conduct of business demands that freight should be paid according to the terms of the contract’. 60 Ibid. 61 Ibid. Page | 14
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III.
Memorandum for the Reliable Holdings Inc.
THE TRIBUNAL SHOULD ESTABLISH THAT THE CANCELLATION OF THE CHARTER PARTY COMITTED BY THE CHARTERERS IS TO BE CONSIDERED
ANTICIPATORY
AND
IN
CONFLICT
WITH
THE
PRINCIPLES OF THE CONTRACT LAW IN RESPECT TO CHARTER PARTIES. 45.
The Owners believe that the cancellation of the Charter Party on part of the Charterers was in conflict with the established principles and regulations of the law, as it was committed before the stipulated cancellation date, thus constituting a violation of the contractual obligations of the Charterers. English courts have already established that the cancellation clause serves to provide the charterer the option to cancel the charter party if the vessel arrives at the load port after the fixed date. 62 However, such clause is not to be regarded as incorporating a promise made by the owner that the vessel will arrive before or on the agreed cancelling date. 63 Furthermore, it is held, following the ‘Moel Tryvan Ship’ case, that even where the cancellation date has passed prior to the arrival at the load port, the vessel is to proceed with the approach voyage, and the charterer is not entitled to declare in advance of the arrival whether the charter party is to be cancelled.64 In another case, ‘The Madeleine’, the court has ruled out the charterer’s right of ‘anticipatory cancellation’ .65 Furthermore, it states that ‘it is clear law that there is no contractual right to rescind a charter-party under the cancelling clause, unless and until the date specified in this clause has been reached.’66 62
Ambatielos v. Grace Bros. & Co., [1922]10 Lloyd's List L. Rep. 159. Raymond A. Connell, ‘Charter Party Termination and the Approach Voyage’, [Tulane Maritime Law Journal, Vol. 25, 2000-2001] 64 Moel Tryvan Ship Co. v. Andrew Weir & Co.,[1910] 2 K.B. 844, 854.: ‘The cancelling clause is obviously inserted for the exclusive benefit of the charterers, and I fail to see how as a matter of business the charterers can tell whether it will be to their interests to cancel before the arrival of the ship.’ 65 Cheikh Boutros Selim EI-Khoury v. Ceylon Shipping Lines, Ltd.,(‘The Madeleine’),[1967] 2 Lloyd's Rep. 224, 244 [Q.B.].; recently confirmed in: Seagate Shipping Ltd. v. Glencore International A.G.,[2008] 2 C.L.C. 350. 66 Cheikh Boutros Selim EI-Khoury v. Ceylon Shipping Lines, Ltd.,(‘The Madeleine’),[1967] 2 Lloyd's Rep. 224, 244 [Q.B.].; see also: 63
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46.
Memorandum for the Reliable Holdings Inc.
Consequently, the Owners look forward to the Tribunal to find his actions for the freight claim in the present case as correct and reasonable. The Owners, furthermore, considers that there is no deduction from freight possible, and therefore the Respondent is bound to pay US$ 4,935,468.75 by way of freight or damages in the same amount, plus the interest and other costs.
Christie & Vesey, Ltd. v. Maatschappij Tot Exploitatie Van Schepen en Andere Zaken, Helvetia N.V., (‘The Helvetia-S’), [1960] 1 Lloyd's Rep. 540, 551 [Q.B.].
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IV.
Memorandum for the Reliable Holdings Inc.
PRAYER FOR RELIEF
On the basis of the foregoing arguments and the Owners’ prior written submissions, the Owners acting as the Claimant respectfully requests the Tribunal
TO ADJUDGE AND DECLARE that:
a) there was a clear misnomer and therefore, the arbitration was validly commenced on 28 January 2012,
b) the time bar clauses were only the clearly technical terms;
c) the fright is due and payable and there is no allowable deduction from it;
d) the Charterers committed the anticipatory cancellation of the Charter Party.
And to ORDER the Charterers to:
1. Pay the total amount of USD 4,935,368,75 for the deemed fright or alternatively as damages for the Charterers’ failure to pay the same;
2. Pay the costs of the arbitration, including the Owners’ expenses for the legal representation;
3. Pay the Owners’ simple or compound interest on any sum found owing to them at such a rate as the Tribunal sees fit.
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Memorandum for the Reliable Holdings Inc.
Rotterdam, 2 May 2014.
On behalf of the Reliable Holdings Inc.:
ALEXANDER J. BARENDREGT ♦ EVANGELIA PATRIKALAKI
MARTA K. KOŁACZ ♦ NEDYALKO MINKOV ♦ SONJA VAN WIJK
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