The Eleventh Annual International Maritime Law Arbitration Moot

2010

UNIVERSITAS GADJAH MADA

INDONESIA

MEMORANDUM FOR THE RESPONDENT

On Behalf of: Against:

SSP Pty Limited New England Chartering and

Trading Company LLC

Level 17 10 Fleet Street

Gamma City of Kappa
UPSILON OMICRON

RESPONDENT CLAIMANT

Team No. 12

Counsels

DANDI ANDILA HAMID

KARTIKA SARDJANA
ELDO KREDAINOU ALWI
RIFQY HADDAD
ROYHAN AKBAR
TEAM TWELVE - RESPONDENT
TABLE OF CONTENTS I

TABLE OF AUTHORITIES IV

QUESTIONS PRESENTED VIII

SUMMARY OF FACTS 1

ARGUMENTS PRESENTED 5

I. THE MLAANZ ARBITRAL TRIBUNAL DOES NOT HAVE JURISDICTION OVER

THE PRESENT CASE 5

a. Neither Claimant nor Respondent has exercised the exhaustion of local remedies

i. The courts of Omicron has exclusive jurisdiction over the present case 6

1. The Letter is a modification of contract and has been accepted by the

Claimant through acquiescence 6

II. THE RESPONDENT IS NOT LIABLE TO INDEMNIFY THE CLAIMANT FOR

LOSS AND DAMAGE SUFFERED 8

a. The Respondent is not liable for any loss and/or damage suffered by Theta Pty

Ltd 12

i. The Letter sent by the Respondent only provided specific warranty 12

ii. The UQIS Letter declaring quarantine specifically mentions Omicron Barley

as a prohibited import 13

b. The Respondent is not liable for any loss and/or damage suffered by Beta Beta

Pty Ltd 13

i. The status of the Cargo’s endorsee is unclear and therefore the claim is

foreshadowed 14

I
 ii. The allegations of the Claimant may not be used as evidence against the

Respondent 14

c. The Respondent is not liable for any loss and/or damage suffered by New

England Chartering and Trading Company LLC (the Claimant) during the

Voyage subject to the Addendum 15

i. The Respondent is not liable for Freight unpaid and damages for detention 15

1. The Respondent is no longer the Charterer of the Vessel and it is not

the indorsee of the Bill of Lading for the voyage to the Port of Zeta

(BoL II) 15

2. The Respondent has reserved all rights to the Addendum and has

signed it on a “without prejudice” basis 15

3. Even if Addendum does apply, the Respondent is still not liable 17

a. The Commencement of Laytime clause 17

b. The Exceptions to Laytime clause 18

4. The Claimant is not entitled to any payment more than the fixed rate of

demurrage in the Charter Party 18

III. THE CLAIMANT IS RESPONSIBLE FOR LOSS AND DAMAGE SUFFERED 19

a. The Claimant is liable for any loss and/or damage suffered by Theta Pty Ltd 19

i. Negligence made by the Master (agent of Claimant) render the Claimant liable

for loss and damage suffered by Theta 19

1. Methods of proving negligence 19

a. Existence of Duty 20
b. Breach of Duty 20

c. Causation 22

II
 d. Damage 22

ii. Claimant has failed to commit its obligation under the Charter Party with due

diligence and care 23

1. Misrepresentation of the Claimant 23

b. The Claimant is liable for any loss and/or damage suffered by Beta Beta

PtyLtd 24

i. Basic Principles of Burden of Proof 24

1. First principle of proof - A carrier is prima facie liable for all loss or

damage to cargo received in good order and out-turned short or in bad

order 24

2. Second Principle of Proof – the Parties must prove all the facts

available to them 25

PRAYER FOR RELIEF IV

III
 TABLE OF AUTHORITIES

Cases

A/S Reidar v Arcos [1927] 1 KB 352

The Affaire Losinger and Co., PCIJ Series A/B No. 67 (1936)

Agri Careers, Inc. v. Jepsen, 463 N.W. 2d 93 (Iowa Ct. App. 1990)

Allience Mfg. Co. v. Foti, 146 So. 2d 464 (La. Ct. App. 4th Cir. 1962)

The Ambatielos Case (Greece v. UK), RIAA XII 83, ILR 23 (1956),

The Anglo-Iranian Oil Co. Case, 1952 ICJ Rep. at p. 99

Blyth v Birmingham Waterworks Co (1856) 11 Exch 781

Brown Jenkinson & Co Ltd v Percy Dalton (London) Ltd. (CA) Court of Appeal

Castano v Gabriel 302 NYS 2d 943, at page 946 (1969)

Chandris v Isbrandtsen-Moller [1951] 1 KB 240

Donoghue v. Stevenson (1932) AC 562

Elettronica Sicula S.p.A. (ELSI) (United States of America v. Italy), ICJ Report (1989)

ERG Raffinerie Mediterranee SpA v Chevron USA Inc (The Luxmar) [2006] 2 Lloyd’s Rep 543

FC Bradley & Sons Ltd v Federal Steam Navigation Co (1926) 24 LIL Rep 446 at 445

The Finnish Ships Arbitration, 3 UNRIAA p. 1479 (1934)

Heaven v Pender (1883) 11 QBD 503, Court of Appeal

Hellenic Lines, Ltd v. Chemoleum Corp., 36 A.D. (2d) 944, 321 N.Y.S. (2d) 399, 1971 AMC 2605

(N.Y. Supr. Ct., App. Div. 1971)

Hill v. Van Erp (1998)

Hunter Grain Pty Ltd. v. Hyundai Merchant Marine Co. Ltd. (1993) FCA 276

In Re Polemis and Furniss,Withy & Co [1921] 3 KB 560,CA

IV
Interhandel Case (Switzerland v. USA), ICJ Rep. 1959, 6, at 26–9

Inverkip Steamship Co Ltd v Bunge & Co [1917] 2 KB 193,

Laurel Race Course, Inc. v. Regal Const. Co., Inc., 274 Md. 142, 333 A.2d 319 (1975)

McFadden v Blue Star Line [1905] 1 KB 697

Mitchell v. Trawler Racer, Inc., 362 U.S. 539 (1960)

Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd,The Eurasian Dream [2002] EWHC

118; [2002] 1 Lloyd’s Rep 719

Porter v. General Boiler Casing Co., Inc., 284 Md. 402, 396 A.2d 1090 (1979)

Prestype Inc. v. Carr, 248 N.W. 2d 111

Richco International Ltd v Alfred C Toepfer International GmbH (The Bonde) [1991] 1 Lloyd’s Rep

136, 143 (Potter J)

Silver v. Ocean Steamship Co. [1930] 1 K.B. 416

Steel v State Line (1877) 3 App Cas 72

Suisse Atlantique Societe d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1965] 1

Lloyd’s Rep 166

Sylvia Moore v. Angela MV (2003) 353 F3d 376

Tattersall v National Steamship Co (1884) 12 QBD 297,DC

Thompson v. Kings Entertainment Co., 653 F. Supp. 871, 873 (ED Va.1987)

Trade Arbed, Inc. v. M/V Swallow, 688 F. Supp. 1095 (1998)

Vinmar v Theresa [2001] 2 Lloyd’s Rep 1

Statutes

COGSA 1991 (Schedule 1 : The Hague Modified)

COGSA 1991 (Schedule 2 : Hamburg Rules)

V
International Arbitration Act 1974

Mirepresentation Act UK 1967

MLAANZ Rules

Books

1. Anita Stuhmcke, Essential Tort Law, Great Britain, (2nd Ed., 2001).

2. Byan A. Garner, Black’s Law Dictionary (8th Ed. 2004).

3. Donald Gifford, Understanding the Australian Legal System, Great Britain:Cavendish

Publications (2007).

4. Halsbury's Laws of England, London: Butterworths LexisNexis (4th Ed., Volume 17(1) , 2002),

page 401.

5. John Collier & Vaughan Lowe, The settlement of disputes in international law: institutions and

procedures, Oxford University Press (1999).

6. Martin Dockray, Cases and Materials: On the Carriage of Goods by Sea, Cavendish Publications

(3rd Ed., 2004).

7. William Tetley, Marine Cargo Claims, Thompson Carswell (4th Ed., 2004).

Article

1. Henry W. Ballantine, Separate Entity of Parent and Subsidiary Corporations, California Law

Review, Vol. 14, No. 1 (Nov., 1925), pp. 12-21, California Law Review, Inc.,

<http://www.jstor.org/stable/3475351>, 17 April 2010.

2. Jane Argyle, Solicitor, Anderson Lloyd, <http://www.andersonlloyd.co.nz/uploads/file

s/__Without_prejudice___negotiating_with_confidence_(Jane_Argyle).pdf>, 13 Aprill 2010

VI
3. Manches Briefing, Private Company Shares Sales – Waranties and Indemnities,

<http://www.manches.com/dow nloads/briefings/Share_Sales_-

_Warranties_&_Indemnities.pdf>, 16 April 2010.

VII
 QUESTIONS PRESENTED

I. Whether the MLAANZ Arbitral Tribunal has Jurisdiction over the present case
II. Whether the Respondent is Liable to Indemnify the Claimant for Loss and
Damage Suffered
III. Whether the Claimant is liable for loss and damages suffered by Theta Pty Ltd
and Beta Beta Pty Ltd
IV. Whether the Claimant is liable for consequential losses suffered by the
Respondent

VIII
 Statement of Facts

1. A Charter Party was made between the New England Chartering and Trading Company

LLC (so forth herein called “the Claimant”) and SSP Pty Ltd (so forth herein called “the

Respondent”) on the 19th July 2008 in Gamma, Upsilon. 1 The Charter Party contained

provisions regarding the conditions of carriage of the Cargo of an approximate of 25,000

metric tons of single super phosphate (SSP, hereinafter called “the Cargo”) 2, owned by

the Respondent as the Seller of the Cargo and Charterer of the MV Super P (hereinafter

called “the Vessel”), and bought by Theta Pty Ltd, and its transport from Alpha, Rholand

to Gamma, Upsilon by the Claimant, as the Owner of the Vessel.

2. Following the Charter Party, the Cargo was loaded with 25,103.6250 metric tons of SSP3

and the Master of the Vessel informed the Respondent of the discovery of foreign objects

found on the surface of the Cargo loaded in Hold 1 during an inspection initiated by the

Owner’s Surveyor. 4 The foreign objects included: (a) some fragments of bitumen; and (b)

one piece of timber. 5 As a response to this, the Respondent made a letter on the 6th

October 2008 (hereinafter called the Letter) giving warranty that the Cargo met “the

product specifications in relation to moisture and absence of foreign objects, of the type

discovered, neither of which would affect the handling, storage or use of the Cargo”. 6

3. The Master of the Vessel released a clean Bill of Lading (hereinafter called BoL I) of

which the Cargo was shipped on board on the 29th September 2008. Upon this release, the

Vessel sailed from Alpha, Rholand to Gamma, Upsilon.

1
Facts, Page 1.
2
Ibid
3
Facts, Page11.
4
ibid
5
Ibid
6
ibid

1
 4. Upon arrival at the Port of Gamma, Upsilon, the Cargo was ordered into quarantine by

the Upsilon Quarantine Inspection Service (so forth herein called “the UQIS”). The

reason for the Quarantine was that during the inspection initiated by the UQIS on the 16th

October 2009, it was discovered that there was a piece of dunnage from a previous cargo

upon which was attached Omicron Barley, a prohibited import into Upsilon. Due to this

discovery, pratique is refused by the UQIS and the Vessel is prohibited to discharge any

cargo until further notice from the UQIS. 7 The UQIS notified the Claimant via a letter

dated 19th October 2008.

5. On the same day, the Claimant notified the Respondent of the quarantine imposed by the

UQIS. With this letter, the Claimant also notified that they claim indemnity to the

Respondent, shall any claim of loss or damage made against the Vessel arise; as,

according to the Claimant, the quarantine was imposed upon discovery of dunnage (piece

of timber) which is a foreign object indicated in the letter of 6th October 2008. This claim

of indemnity is based on the letter sent to the Claimant by the Respondent dated 6th

October 2008. 8 This claim of indemnity was rejected by the Respondent as, according to

the Respondent, the reason for quarantine was not the discovery of the timber but was the

discovery of Omicron Barley, a residue of previous cargo. Furthermore, the Respondent

claims that the Master of the Vessel should not have released Clean Bill of Lading upon

discovery of foreign objects on the Vessel. 9

6. Due to problems arising as a result of the quarantine, Theta Pty informed the Claimant

they will re-sell the cargo to another company called Beta Beta Pty Ltd, a subsidiary of

the Omega Phosphorous Company, which is located in Qoppa, a country which does not

7
Facts, Page 14
8
Facts, Page 15
9
Facts, Page 16

2
 impose the same policies regarding organic matter as Upsilon. Prior to this decision,

Theta Pty has made efforts in decontaminating the Cargo of any residues of Omicron

Barley as to satisfy the concerns of the UQIS, but this proposal for decontamination was

rejected by the UQIS and so the quarantine remains. As a result of this transaction

between Theta Pty Ltd and Beta Beta Pty Ltd, Theta Pty Ltd suffered losses due to the

fact that Theta Pty Ltd sold the Cargo at a lower price from the original at which they

bought from SSP Pty Ltd. Aside from the losses from the price, Theta Pty Ltd also

claimed transportation expenses associated with the re-export of the Cargo. The cost of

losses from the decreased price amounted to U$4,999,889, excluding transportation

expenses which, at the time of the letter, were undetermined. 10 As a response to this, the

Claimant agreed to pay the amount requested by Theta Pty Ltd and informed the original

charterers, the Respondent, of the situation and asked the Respondent to enter into an

Addendum to the Charter Party and also demanded indemnity from the Respondent. 11 In

response, the Respondent agreed to enter into an Addendum on a “without prejudice”

basis but reserved their rights in regard to the claim for indemnity. 12

7. Following the signature of the Addendum, the Vessel sailed to Zeta, Qoppa. Upon arrival

at the port, the Vessel was embargoed due to allegations of contamination upon the Cargo

transported by the Vessel. 13 This embargo was imposed on 8 November 2008 and was

lifted on 29 October 2009, amounting to an approximate of 1 year of the Vessel in

anchorage. 14

10
Facts, Page 17
11
Facts, Page 20
12
Facts, Page 25
13
Facts, Page 27
14
Facts, Page 26

3
8. The Claimant informed the Respondent of the embargo imposed in Qoppa and that they

had an obligation to nominate a safe port at which the Vessel could discharge the Cargo

on board in a timely manner. Consequently, the Respondent has argued that they are no

longer the owners of the Cargo on board the Vessel because the Cargo was sold by them

to Theta Pty Ltd which has in turn on-sold the Cargo to Beta Beta in Qoppa. Thus the

Respondent informed the Claimant that they were not in a position to give any orders

which might infringe the rights of the Cargo owners and urged the Claimant to seek

directions from the holders of the Bills of Lading, which in this case was no longer the

Respondent.

9. During the 1 year period of the embargo, several losses were suffered by the Claimant in

connection with the consequential losses by the idleness of the Vessel. The Claimant

claimed loss for damages and claims indemnity toward the Respondent. Having already

sold the Cargo to another party and the cause of damages not connected with the

Respondent, the Respondent felt that they had no responsibility to indemnify nor to pay

for damages suffered by the Claimant.

10. Considering that a dispute has arisen between the parties to the Charter Party, the

Claimant appointed Mr John Jones as arbitrator and requested to bring the dispute to an

arbitral tribunal. The Respondent appointed Mr James Rhodes as their arbitrator and

agreed to bring the dispute to an arbitrary tribunal.

4
 I. THE MLAANZ ARBITRAL TRIBUNAL DOES NOT HAVE JURISDICTION

OVER THE PRESENT CASE

a. Neither Claimant nor Respondent has exercised the exhaustion of local

remedies

1. In a case to arbitration, both parties have the right to challenge the jurisdiction of the

Tribunal. This fact is stated in the International Arbitration Act 1974 15.

2. The Exhaustion of Local Remedies is a principle widely known and used in International

Law where the parties to a dispute must exhaust local remedies before moving on to

international forums of dispute settlement. 16 The failure to exhaust local remedies operates as

a procedural bar to the pursuit of an international claim. 17

3. The Ambatielos case 18 mentions that “[t]he rule thus invoked by the United kingdom

Government is well established in international law. Nor is its existence contested by the

Greek Government. It means that the State …has the right to resist such an action if the

persons alleged to have been injured have not exhausted all the remedies available to them

under the municipal law of that State [emphasis added].” It may be concluded from the

Ambatielos case that the “local remedies” rule requires that municipal means of dispute

settlement shall have been exhausted before an international action can be brought.

15
Rule 2, MLAANZ; International Arbitration Act 1974, art. 4 Schedule 2 – UNCITRAL Model Law on International
Commercial Arbitration (as adopted by the United Nations Commission on International Trade Law on 21 June
1985), art. 32 Schedule 3 – Convention on the Settlement of Investment Disputes Between States and Nationals of
Other States.
16
C.F. Amerasinghe, Local Remedies in International Law, Cambridge, 1990, at 319-58.
17
See: John Collier & Vaughan Lowe, The settlement of disputes in international law: institutions and
procedures, Oxford University Press (1999), pg. 196; 1998 ILC Draft Articles on State Responsibility, arts. 21, 22
and commentary thereon. See also: C.F. Amerasinghe, Local Remedies in International Law. Cambridge, 1990;
Finnish Ships Arbitration, 3 UNRIAA p. 1479 (1934); Ambatielos Case (Greece v. UK), RIAA XII 83, ILR 23
(1956); Switzerland v. USA, ICJ Rep. 1959, 6, at 26-9.
18
Ambatielos Case (Greece v. UK), RIAA XII 83, ILR 23 (1956).

5
4. The same is also true in the Elletronica Sicula S.p.A case (ELSI case) 19 which confirmed that

the customary international law principle of exhaustion of local remedies could not be

considered dispensed with unless such [dispensation] has been made explicitly. 20

5. Apart from that, article 26 of the ICSID convention mentions that shall a party to a dispute

require the use of local remedies in the dispute settlement process, thus the exhaustion of

local remedies must be fulfilled before the dispute may be brought before an international

tribunal. In this case, the Respondent, being one of the parties to the dispute contests the

jurisdiction of the arbitral tribunal appointed due to the fact that the local remedies of both or

either parties have not yet been exhausted and therefore renders the arbitral tribunal

incompetent until such time as the local remedies of the parties has been exhausted and there

are no other means of municipal dispute settlement which have not been used.

ii. The courts of Omicron has exclusive jurisdiction over the present case

1. The Letter is a modification of contract and has been accepted

by the Claimant through acquiescence

6. The Letter sent by the Respondent on 6 October 2008 mentions that the Courts of Omicron

have exclusive jurisdiction for any matter arising from the contract which was governed by

Omicron Law. 21 The Letter in itself is considered as communications between the parties and

is considered as a modification of the Charter Party as the Letter contained several matters in

which may affect the consequences of the Charter Party itself.

19
Elettronica Sicula S.p.A. (ELSI) (United States of America v. Italy), ICJ Report (1989).
20
UNCITRAL Investor-State Claim - Mytilineos Holdings v Serbia and Montenegro - Partial Award United Nations
Commission on International Trade Law UNCITRAL Award; see also p.15; Interhandel Case (Switzerland v. USA),
ICJ Rep. 1959, 6, at 26–9; The Affaire Losinger and Co., PCIJ Series A/B No. 67 (1936); The Anglo-Iranian Oil
Co. Case, 1952 ICJ Rep. at 99.
21
Facts, page 11.

6
7. In this case, the Respondent made an offer to the Claimant by sending the Letter to the

Claimant, the Claimant then responded to the letter with no mention of the clause regarding

the exclusive jurisdiction of Omicron Courts. Acceptance by silence or acquiescence is a rule

recognized in international law of contracts where a party to a contract may accept the

modifications without explicitly mentioning their acceptance to do so. In that event, a certain

reasonable period of time must pass without any objections raised by either party in order to

take the assumption of acquiescence as a fact. Due to the fact that the Claimant has agreed

and acknowledged other matters within the letter, it is assumed that the Claimant has also

acknowledged and accepted the exclusive jurisdiction of Omicron Courts through a

modification of the Charter Party by means of the Letter.

8. There are several prerequisites in which to consider that a party to a contract has accepted a

contract: where an offerree with reasonable opportunity to reject an offer then his silence and

inaction And takes the benefit of them under circumstances which would indicate to a

reasonable man that they were offered with the expectation of compensation is considered as

an acceptance. 22 In the present case, the Claimant had approximately 2 years to raise an

objection in regard with the exclusive jurisdiction of the Courts of Omicron. Within that time

frame, the Claimant made several allegations 23 based on the Letter but made no mention at

all of the jurisdiction requirements. It may then be safely concluded that the Claimant was

aware of the clause but made no objection of that fact. Thus, it may be concluded that the

Claimant accepted the terms as mentioned in the Letter through acceptance by silence or

22
See Restatement of Contracts Sec. 72 (1932). See 1 A. Corbin, Contracts Secs. 72, 73 (1953); 1 S. Williston,
Contracts Sec. 91 (3rd ed. W. Jaeger 1957); See also Allience Mfg. Co. v. Foti, 146 So. 2d 464 (La. Ct. App. 4th Cir.
1962); Agri Careers, Inc. v. Jepsen, 463 N.W. 2d 93 (Iowa Ct. App. 1990); Prestype Inc. v. Carr, 248 N.W. 2d 111;
Laurel Race Course, Inc. v. Regal Const. Co., Inc., 274 Md. 142, 333 A.2d 319 (1975);
Thompson v. Kings Entertainment Co., 653 F. Supp. 871, 873 (ED Va.1987); Porter v. General Boiler Casing Co.,
Inc., 284 Md. 402, 396 A.2d 1090 (1979).
23
Facts, page 15, 20, 34, 36, 37.

7
 acquiescence thus giving exclusive jurisdiction to the Courts of Omicron by consensual

agreement of Parties to a Contract of Law.

9. In the Alkimos case, the Judge observed that had the parties not amended the terms of clause

17 such as to change its nature from an Arbitration Agreement to an exclusive jurisdiction

clause, it would have been within the rights of the HMM to invoke section 7(2) of the

International Arbitration Act 1974 and seek a mandatory stay of the proceedings. But as such

in the present case, the parties have agreed (the Claimant having agreed by acquiescence)

that the Arbitration Clause has been amended in favor of the exclusive jurisdiction of

Omicron Courts.

10. Thus, having proven that the exhaustion of local remedies has not been fulfilled and also that

the Court of Omicron has exclusive jurisdiction over the present case, the Respondent

contends that this arbitrary tribunal does not yet have jurisdiction over the present case.

II. THE RESPONDENT IS NOT LIABLE TO INDEMNIFY THE CLAIMANT FOR

LOSS AND DAMAGE SUFFERED

11. In the present case, the Claimant based their claims for indemnification on the Letter sent by

the Respondent, claiming that the Letter was a Letter of Indemnity which rendered the

Claimant’s entitlement of such indemnity was stated in the Letter. The Respondent contends

that the Letter that it sent was not intended to be and is factually not a Letter of Indemnity,

but merely a letter of warranty in which the Respondent warrants the condition of the goods

mentioned without ever claiming to indemnify the Claimant.

12. The basic definition of warranties is that they are “contractual statements made by the seller

that amount to assurances as to the condition of the Target Company or business and, in

8
 particular, as to the existence and level of any liabilities.24” Meanwhile, the basic definition

of Indemnity is that they are the “an express or implied promise that something in

furtherance of the contract is guaranteed by one of the contracting parties. 25”

13. Based on these definitions and the Facts of the case, it may be inferred that the Respondent

was only making such “statements” amounting to assurances, 26 without any mention of

undertaking to mention specific potential legal liability. The Respondent only mentioned that

although foreign material was found on the holds of the cargo, those foreign materials will

not affect the “handling, use and storage of the Cargo”.

14. No part of the Letter mentioned any suggestion of indemnification by the Respondent shall

any loss or damage be suffered by the Claimant arising from or in connection with the

warranty itself. The Respondent also did not intend to ask for the issuance of a clean BoL I in

exchange for the Letter as it only made to assure the Claimant that the foreign objects will

not substantially affect the Cargo.

15. Another point is that the Letter only provides warranty specific to the foreign objects

mentioned in the Letter, which are (a) some fragments of bitumen; and (b) one piece of

timber. 27 From the Facts of the case, it may be inferred that the Respondent did not have any

knowledge of the existence of Omicron Barley within the holds of the Vessel and thus did

not give any warranty to such objects. The Respondents based their warranty on the report

made by the Claimant’s Surveyor who conducted an independent survey of the Vessel and

the Cargo itself. The Respondent trusted that it was the Claimant’s obligation to ensure that

24
Manches Briefing, Private Company Shares Sales – Waranties and Indemnities, <http://www.manches.com/dow
nloads/briefings/Share_Sales_-_Warranties_&_Indemnities.pdf>, 16 April 2010.
25
Byan A. Garner, Black’s Law Dictionary (8th Ed. 2004).
26
Facts, page 11.
27
Ibid.

9
 the Vessel was in compliance with the UQIS’s zero tolerance policy for organic material. 28

Had the Respondents been aware of the situation, the Respondent would have acted in a

different manner.

16. Even if the Letter constituted as a Letter of Indemnity and that the Claimant based their

claims on the Letter, such Letters of Indemnity are not accepted in several tribunals.

The Brown Jenkinson case mentioned that although no party had been defrauded, the carriers

still made a representation of fact which was known to be false, therefore they were guilty of

the tort of deceit and the indemnity was unenforceable. 29 Article 3(8) of the COGSA 1991

Schedule 1 modified Hague/Visby Rules 30 mentions that any agreement whereby the

carrier’s responsibilities are reduced are considered to be forbidden, hence as a consequence,

letters of indemnity which in nature provides such reduction would be “null and

void”. 31Article 17(2) of the Hamburg Rules (COGSA 1991) stipulates the same principle. 32

Thus, having a “null and void” letter or document as an instrument to base their claims, the

Claimant then loses any entitlement toward any indemnification by the Respondent.

17. In any case, the Respondent, being the shipper, is not held responsible for loss and damage

suffered by the carrier, the Claimant in this case. Article 4(3) of the Modified Hague Rules

(in the COGSA 1991) mentions “[t]he shipper shall not be responsible for loss and damage

sustained by the carrier or the ship arising or resulting from any cause without the act, fault

or neglect of the shipper, his agents or his servants.” 33

28
Facts, page 10.
29
Brown Jenkinson & Co. Ltd. v. Percy Dalton (London) Ltd.; See also Silver v. Ocean Steamship Co. [1930] 1
K.B. 416; Hellenic Lines, Ltd v. Chemoleum Corp., 36 A.D. (2d) 944, 321 N.Y.S. (2d) 399, 1971 AMC 2605 (N.Y.
Supr. Ct., App. Div. 1971).
30
Art. 3 (8), COGSA 1991, Schedule 1A, The Modifications.
31
William Tetley. Marine Cargo Claims. (4th Ed, 2004).
32
The Hamburg Rules (COGSA 1991), Article 17(2).
33
Art. 4 (3), COGSA 1991, Schedule 1A, The Modifications; Art. 12, COGSA 1991, Schedule 2, The Hamburg
Rules.

10
18. The Carriage of Goods by Sea Act (COGSA) in its Schedule 2 (the Hamburg rules)

mentioned in article 4(1) that the responsibility of the carrier for the goods under the

Convention covers the period during which the carrier is in charge of the goods at the port of

loading, during the carriage and at the port of discharge. 34 Having said so, in the present case,

the Cargo was in fact already under the responsibility of the Claimant as the Respondent had

already transferred the goods to the Claimant, and as undisputed by the Claimant, the goods
35
were in apparent good order at the time of shipment on board the Vessel. Thus, it may be

inferred that the Claimant had received the goods in good order and the goods were already

under the care of the Claimant as of date of shipped on board. 36

19. Furthermore, the Claimant is then estopped from proving the condition of the goods pre-

loading as the BoL I was already issued as a “clean” bill of lading. In the case of Trade

Arbed, Inc. v. M/V Swallow it is held that “[a] bill of lading is prima facie evidence that the

carrier received the goods as described therein and creates a rebuttable presumption that the

goods were delivered to the carrier in good condition…If a cargo owner purchases the cargo

in reliance on a clean bill of lading, then a carrier is estopped from offering evidence of the

cargo’s pre-shipment condition.” 37 It is also held in the case of Hunter Grain Pty Ltd. v.

Hyundai Merchant Marine Co. Ltd., where Hyundai issued clean bills of lading in return for

a letter of indemnity. 38

20. In both cases the issuer of the bills of lading are then estopped to prove or give evidence that

the goods were received in good order as the bill of lading served as prima facie evidence

that the goods were received in good order. Thus, in the present case, the Master, having

34
Art. 4 (1), COGSA 1991, Schedule 1, The Hamburg Rules.
35
Facts, page 12.
36
Ibid.
37
Trade Arbed, Inc. v. M/V Swallow, 688 F. Supp. 1095 (1998) Prima facie evidence of BoL.
38
Hunter Grain Pty Ltd. v. Hyundai Merchant Marine Co. Ltd. (1993) FCA 276.

11
 issued a clean BoL I is estopped from proving otherwise the condition of goods that he

received. It is then assumed that the goods were received in apparent good order and that any

damage occurred while under the care of the Claimant.

a. The Respondent is not liable for any loss and/or damage suffered by Theta

Pty Ltd

i. The Letter sent by the Respondent only provided specific warranty

21. As aforementioned in the argument above, the Letter sent by the Respondent on the 6th

October 2008 only provided a warranty for the use, handling and storage of the cargo for the

two specific objects mentioned in the Letter which are (a) some fragments of bitumen and (b)

one piece of timber. The Letter did not provide any guarantee nor warranty to Omicron

Barley.

22. By not being aware of the existence of Omicron Barley within the hold, the Respondent then

made a letter warranting the use, handling and storage of the Cargo, with regard to the

“foreign objects of the type discovered.” While the Respondent only gave warranty for those

specific objects, the Claimant may argue that “one piece of timber”, being an organic matter,

is also a warranty which extends to Omicron Barley. But, although timber is also an organic

matter, the reason for the quarantine itself was not organic matter, as will be further

explained in the argument below in point (ii).

23. Even if the warranty for timber does extend to become a warranty for Omicron Barley, the

Barley being also an organic matter, the Respondent is still not liable for such loss and

damage suffered due to the fact that it was the Claimant’s obligation under the Charter Party

to ensure the compliance of the Vessel with the UQIS zero tolerance policy. 39

39
Facts, page 10.

12
24. Although the Respondent was in the best position to know the condition of the Cargo, the

Respondent is only obliged to ensure the good condition of the Cargo until such time as the

responsibility passes to the Claimant. As have been mentioned in previous arguments, the

Cargo was, at that time, already under the responsibility of the Claimant.

ii. The UQIS Letter declaring quarantine specifically mentions

Omicron Barley as a prohibited import

25. The UQIS, upon inspection of the Vessel, declared that Quarantine was to be implied upon it

and went further to inform the Master of that status. In that letter, the UQIS Chief Quarantine

Officer informed the Master that the ship was not granted pratique and was forbidden to

unload upon the discovery of Omicron Barley as the Barley is a prohibited import into

Upsilon. 40This reason for quarantine specifically mentions Omicron Barley being the cause

of it, without any mention of other organic matter. As the timber was not included as the

reason for the quarantine, it may be inferred that the UQIS does not prohibit the existence of

the timber itself, although it is an organic matter. Thus, as the warranty does not extend to

Omicron Barley, then it may be concluded that the warranty in such case is considered

inapplicable.

b. The Respondent is not liable for any loss and/or damage suffered by Beta

Beta Pty Ltd

i. The status of the Cargo’s endorsee is unclear and therefore the

claim is foreshadowed

26. The Cargo’s indorsee as stated in the letter sent by Theta Pty Ltd stated that the Cargo was

on-sold to a company in Qoppa called the Omega Phosphorus Company. 41 In doing so, they

40
Facts, page 14.
41
Facts, page 17.

13
 made an invoice to a company called the Beta Beta Pty Ltd 42 who as the Respondent

understands is a wholly owned subsidiary of the Omega Phosphorus Company. In this case,

the party to make the claim to the Claimant was Beta Beta Pty Ltd. in which case, a

subsidiary company does not have title to claim based on a legal act made by its Mother

Company. 43

ii. The allegations of the Claimant may not be used as evidence against

the Respondent

27. The loss suffered by Beta Beta Pty Ltd is, according to the Claimant, due to the effects that

the bitumen had on the Cargo itself (Single Super Phosphate). But, the only proof of that

claim is the claim itself. There were no communications as revealed to the Respondent for

any claims made by Beta Beta itself. Further to that argument, the Respondent conducted

investigations as how the bitumen was to be found in the first place. The result of the

investigation mentioned that the bitumen fragments were caused by the fault of the cranes

which overextended their reach and “grabbed” at the dock. 44In any case, the bitumen was

found on the surface of the Cargo 45 itself and not within the Cargo. A reasonable person

would see that if the bitumen was merely found on the surface, it would not render the Cargo

as contaminated and unable to be used. Thus, the warranty 46 by the Respondent is not

misrepresented.

42
Facts, page 19.
43
Henry W. Ballantine, Separate Entity of Parent and Subsidiary Corporations, California Law Review, Vol. 14, No.
1 (Nov., 1925), pp. 12-21, California Law Review, Inc., <http://www.jstor.org/stable/3475351>, 17 April 2010.
44
Facts, page 35.
45
Ibid.
46
Facts, page 6.

14
 c. The Respondent is not liable for any loss and/or damage suffered by New

England Chartering and Trading Company LLC (the Claimant) during the

Voyage subject to the Addendum

i. The Respondent is not liable for Freight unpaid and damages for

detention

1. The Respondent is no longer the Charterer of the Vessel and it

is not the indorsee of the Bill of Lading for the voyage to the

Port of Zeta (BoL II)

28. The Respondent, having sold the Cargo to Theta Pty Ltd, no longer has any binding

obligations toward the Claimant or any other party with regard to the Cargo. Furthermore, the

Voyage to the Port of Zeta was necessitated by the Claimant’s breach of duty as stipulated in

clause 20 of the Charter Party. This breach of duty will be further explained below in point

III sub a(i).

2. The Respondent has reserved all rights to the Addendum and

has signed it on a “without prejudice” basis

29. The Respondent, upon receipt of the Addendum sent by the Claimant, sent a letter to inform

them that the Respondent has reserved all rights to claim any amount of freight paid in

respect to the voyage the subject of the Addendum (from the Port of Gamma to the Port of

Zeta) and that they have signed the Addendum on a “without prejudice” basis. 47

30. “Without prejudice” itself is a principle which is used to enable parties to negotiate freely

without fear of having the communications between them to be used against them shall any

47
Facts, page 25.

15
 dispute arise. 48 In this case, the Respondent considers the Addendum as a communication

which is “without prejudice” as the Respondent had no intention to still be part of the voyage

but is willing to assist the resolution of the matter which have come to the hands of the

Claimant.

31. Jane Argyle mentioned that this principle is applicable when two features are present: (a)

there is a dispute and; (b) the communications have some bearing on the mediation or

settlement of the dispute. Halsbury’s Laws of England also mentioned that “without

prejudice” communications are: “Letters written and oral communications made during a

dispute between parties which are written or made for the purpose of settling the dispute, and

which are expressed or otherwise proved to have been made without prejudice cannot

generally be admitted in evidence. The rule does not apply to communications which have a

purpose other than settlement of the dispute.” 49

32. In the present case, the Respondent signed the Addendum on a “without prejudice” basis for

the settlement of the issues arising between the Claimant and third parties. This constitutes a

form of “purpose of settling the dispute” which in turn qualifies the “without prejudice”

principle to be applicable n this case.

33. Having said so, the communications between the Respondent and the Claimant, particularly

the Addendum, may not be used as evidence and is therefore unable to be used a basis for

claims. The Claimant, having based their claims on the Addendum, is not entitled to any

payment and/or indemnification made by the Respondent for loss and/or damage.

48
Donald Gifford, Understanding the Australian Legal System, Great Britain:Cavendish Publications (2007), pg.
102.
49
Halsbury's Laws of England, London: Butterworths LexisNexis (4th Ed., Volume 17(1) , 2002), page 401, pg. 401.

16
 3. Even if Addendum does apply, the Respondent is still not liable

a. The Commencement of Laytime clause

34. The Vessel, upon arrival at the Port of Zeta, was deemed to be unfit to unload and was

therefore embargoed until such time as the embargo was lifted. Due to the fact that the

Vessel was deemed unfit to unload, thus the “Commencement of Laytime” clause in the

Addendum applies.

35. Within that clause, it is stipulated that “[l]aytime shall commence to count 24 hours after

notice of readiness is tendered within office hours. Time used prior to commencement of

laytime not to count as used laytime… If upon entering the port the vessel fails….. [to be]

found unfit to discharge the cargo, then time shall cease to count as used laytime or time on

demurrage until the vessel is fully ready to proceed with the discharging operation.”

36. In the present case, the Claimant, having been rejected at the Port of Gamma then sailed to

the Port of Zeta where, upon arrival, the Vessel was deemed unfit to unload and was then

forbidden to discharge. This “unfitness” of the Vessel renders the time during which the

Vessel was inspected to not count as time on demurrage according to the “Commencement of

Laytime” clause under the Addendum. Thus, having proven that the time during which the

Vessel was inspected at the Port of Zeta does not count as used laytime or time on

demurrage, it may be concluded that the Respondent has no obligation to pay any such costs

with regards to laytime or time on demurrage.

b. The Exceptions to Laytime clause

37. Even if the time during which the Vessel was inspected by the authorities of the Port of Zeta

does count as laytime or time on demurrage, the Respondent is exempt from liability on the

basis that the embargo is included as an exception to laytime under the “Exceptions to

17
 Laytime” clause under the Addendum. It is stipulated within that clause that“[a]ny of the

following causes are excepted, regardless of where they occur: strikes….; restraints of

established authorities; ... Charterers or Receiver shall not be liable for any loss or damage

resulting trout any such excepted causes and time lost by reason thereof shall not count as

used laytime or time on demurrage.” 50 [emphasis added]

38. Therefore, according to the stipulation from the facts above, it may be concluded that the

time spent at the Port of Zeta during the embargo, which counts as a restraint of established

authorities and that having analyzed that the embargo was not implemented due to the fault

of the Respondent, “shall not count as used laytime or time on demurrage.” Further on, the

same clause mentions that in the case of such exceptions, the Respondent may not be held

responsible.

4. The Claimant is not entitled to any payment more than the

fixed rate of demurrage in the Charter Party

39. The Claimant mentioned in their letter dated 8 April 2009 that the amount of demurrage no

longer suffices as compensation for the loss that they have suffered due to detention at the

Port of Zeta. The Claimant then claimed damages for detention to the Respondent.

40. In the Inverkip Steamship Co Ltd v Bunge & Co, the owners of the vessel claimed that they

were entitled to recover damages of an unliquidated amount in addition to the rate of

demurrage fixed by the charterparty. The Court of Appeal held that the owners may only

claim the fixed rate of demurrage in the charterparty. 51 Warrington LJ said: “[w]hether

50
Facts, page 22.
51
Inverkip Steamship Co Ltd v Bunge & Co [1917] 2 KB 193; ERG Raffinerie Mediterranee SpA v Chevron USA
Inc (The Luxmar) [2006] 2 Lloyd’s Rep 543; Richco International Ltd v Alfred C Toepfer International GmbH (The
Bonde) [1991] 1 Lloyd’s Rep 136, 143 (Potter J); Suisse Atlantique Societe d’Armement Maritime SA v NV
Rotterdamsche Kolen Centrale [1965] 1 Lloyd’s Rep 166; A/S Reidar v Arcos [1927] 1 KB 352; Chandris v
Isbrandtsen-Moller [1951] 1 KB 240.

18
 deliberately or by inadvertence the parties have provided that the shipowners shall accept

compensation at a fixed rate in respect of the detention which as in fact occurred…they must

be content with that.” 52As mentioned by the above case, owners of the ship are generally not

entitled to any payment in addition to the demurrage rate as already fixed in the charterparty,

thus the Claimant is also not entitled to any additional payment for damages for detention by

the Respondent.

III. THE CLAIMANT IS RESPONSIBLE FOR LOSS AND DAMAGE SUFFERED

a. The Claimant is liable for any loss and/or damage suffered by Theta Pty Ltd

i. Negligence made by the Master (agent of Claimant) render the

Claimant liable for loss and damage suffered by Theta

40. Essential Tort Law 53 mentions that there are 4 elements in which to prove the existence of

negligence. They are as follows:

1. Methods of proving negligence

a. Existence of Duty 54

41. The Existence of Duty is defined as the legal test which establishes a link between the

parties 55 and without the existence of this duty, the action in negligence will fail 56. In the

present case, there are duties under the Charter Party which both parties have to fulfill. One

of these duties is that the Owners (the Claimant) must “…make the Vessel in all respects

seaworthy…” 57. In this case, seaworthiness shall include the ability and compliance of the

Vessel to load and discharge at the appointed Port of discharge. This also includes Clause 20

52
Inverkip Steamship Co Ltd v Bunge & Co [1917] 2 KB 193, 198 (Warrington LJ).
53
Anita Stuhmcke, Essential Tort Law, Great Britain, (2nd Ed., 2001), 2; Hill v. Van Erp (1998).
54
Ibid; Donoghue v. Stevenson (1932) AC 562.
55
Anita Stuhmcke, Essential Tort Law, Great Britain, (2nd Ed., 2001), 5.
56
Ibid; Heaven v Pender (1883) 11 QBD 503, Court of Appeal
57
Facts, page 3; Mitchell v. Trawler Racer, Inc., 362 U.S. 539 (1960); Vinmar v Theresa [2001] 2 Lloyd’s Rep 1;
FC Bradley & Sons Ltd v Federal Steam Navigation Co (1926) 24 LIL Rep 446 at 445; Papera Traders Co Ltd v
Hyundai Merchant Marine Co Ltd,The Eurasian Dream [2002] EWHC 118; [2002] 1 Lloyd’s Rep 719.

19
 of the Charter Party which specifically mentions that there is “zero tolerance for any foreign

organic matter”. 58 In the present case, the Claimant had the duty to (a) make the Vessel

seaworthy (hold cleanliness) and to (b) ensure its compliance with the UQIS policy.

b. Breach of Duty

42. From the Existence of Duty, the Breach of that Duty must then be proven. The need for this

is to prove that the Claimant has omitted to do something 59 which a reasonable person

“guided upon those considerations which ordinarily regulate the conduct of human affairs,

would do, or doing something which a prudent and reasonable would not do.” 60

43. To determine the standard of care there are two questions which must be answered: (a) that a

reasonable person in the defendant’s (the Claimant in this case) position would have foreseen

that their conduct posed a risk of injury to the claimant; and (b) the reasonableness of the

defendant’s response to the risk. 61

44. In the present case, the Vessel was ordered into quarantine by the UQIS for the discovery of

Omicron Barely which was a residue of previous cargo. 62 According to clause 20 of the

Charter Party, the Claimant has the obligation to make all the holds in the Vessel clean from

“previous cargo residues” 63. Meanwhile, the UQIS imposed the quarantine on the basis of

discovery of residues of previous cargo, which turns out to be Omicron Barley which is a

prohibited import into Upsilon.

58
Facts, page 10.
59
Anita Stuhmcke, Essential Tort Law, Great Britain, (2nd Ed., 2001), 35; Heaven v Pender (1883) 11 QBD
503, Court of Appeal
60
Blyth v Birmingham Waterworks Co (1856) 11 Exch 781
61
Anita Stuhmcke, Essential Tort Law, Great Britain, (2nd Ed., 2001) 01, 20, 36; Vinmar v Theresa [2001] 2
Lloyd’s Rep 1; Steel v State Line (1877) 3 App Cas 72; McFadden v Blue Star Line [1905] 1 KB 697; Tattersall v
National Steamship Co (1884) 12 QBD 297,DC.

62
Facts, page 14.
63
Facts, page 10.

20
45. The Master being the agent of the Claimant 64, should have been aware, as there was a duty of

the Claimant to ensure, of such risks which may have arisen had he done or not done his

duties. The Claimant also had the obligation and ability to clean the holds of the vessel as the

vessel is owned by them and as such the previous cargo was found in the holds of the vessel

and not in the Cargo. A reasonable person would have foreseen the consequences of the

inactivity or omission that they have committed. Although the Claimant argued that they had

the intention to clause the BoL I, the result of it is that they still issued a clean bill of lading.

The existence of the Letter sent by us does not count due to the fact that the warranty was

based on mistaken information provided by the Surveyor of the Claimant. In any case, the

Letter itself only extends the warranty to the two foreign objects mentioned in the letter, and

not to Omicron Barley, which is the cause of the quarantine imposed by UQIS. By not

ensuring the hold cleanliness which will also affect the vessel’s compliance with the UQIS

policy, the Claimant has committed a Breach of Duty with regard to the Charter Party.

46. According to the aforementioned reasoning, it may be concluded that the Master being the

agent of the Claimant 65, should have taken all measures and actually had the ability to take

those measures to ensure that the holds were clean and that any foreign objects found should

have been indicated in the BoL I that he issued. The Master failed to take these measures and

has therefore omitted an act which a reasonable person would have done otherwise.

c. Causation

47. The tort of negligence requires the element of Causation which is that the negligence then

caused damage to the parties involved. 66 In the present case the quarantine imposed by the

64
Article 4(5)(e), COGSA 1991, Schedule 1A, The Modifications.
65
Ibid.
66
Anita Stuhmcke, Essential Tort Law, Great Britain, (2nd Ed., 2001), 47; In Re Polemis and Furniss,Withy & Co
[1921] 3 KB 560,CA.

21
 UQIS then resulted in the inability of the ship to discharge which then rendered loss to the

Parties. Due to the fact that the quarantine itself is caused by negligence done on the part of

the Claimant, it may be safely concluded that the negligence in consequence caused loss for

the parties involved.

d. Damage

48. The Damage which happened must not be too far or remote from the cause and also the

negligence itself. Reasonable forseeability must exist. 67 In the present case, it is reasonable to

believe that the quarantine would be included as a “reasonable foreseeability” due to the fact

that the Claimant themselves had the obligation to ensure the compliance with the UQIS

policy. Having that obligation, it is reasonable to conclude that the Claimant would have

been aware of the consequences if they had not fulfilled this obligation.

49. Based on the aforementioned facts of the four elements to the tort of negligence, and having

proven that there was a Duty of Care, a Breach of Duty, Causation and Damage, it may be

concluded that the Claimant has in fact committed negligence.

ii. Claimant has failed to commit its obligation under the Charter

Party with due diligence and care.

2. Misrepresentation of the Claimant

50. The Claimant having conducted a survey of the Vessel at the point of loading informed the

Respondent in regard with the foreign objects mentioned. Based on the information given by

the Surveyor, the Respondent then issued a Letter of Warranty for two objects: (a) some

fragments of bitumen and (b) one piece of timber. The Claimant, having been the one to

conduct the survey, failed to inform the Respondent with due diligence of the existence of

67
Anita Stuhmcke, Essential Tort Law, Great Britain, (2nd Ed., 2001), 59.

22
 Omicron Barley which was then later discovered by the UQIS. It may be concluded that the

Respondent based their Letter on false information.

51. Aside from the obligations mentioned in the Charter Party, the Claimant also has obligations

as stipulated under article 16 of the Hamburg Rules. 68 This article stipulates in sub (1) that

“[i]f the bill of lading contains particulars concerning the general nature, leading marks,

number of packages…or has reasonable grounds to suspect do not accurately represent the

goods actually taken over or, where a “shipped” bill of lading is issued…the carrier or such

other person must insert in the bill of lading a reservation specifying these inaccuracies,

grounds of suspicion or the absence of reasonable means of checking.” In the present case,

the Master also failed to perform his due diligence to clause the BoL I. It is also impossible

to determine his intentions to clause the BoL I as the bill of lading that he issued remained a

clean one. 69 The Respondent denies that it sent the Letter in exchange for a clean bill of

lading as the wording in the Letter itself did not mention any demand to issue a clean bill of

lading. 70

b. The Claimant is liable for any loss and/or damage suffered by Beta Beta Pty

Ltd

52. According to William Tetley, 71 there are four principles of burden of proof. As the ones

relevant to this case are principles 1 and 2, the Respondent shall explain the two principles as

follows:

iii. Basic Principles of Burden of Proof

68
Art. 16, COGSA 1991, Schedule 2,The Hamburg Rules.
69
Facts, page 12.
70
Facts, page 11.
71
William Tetley, Marine Cargo Claims, Thompson Carswell (4th Ed., 2004).

23
 3. First principle of proof - A carrier is prima facie liable for all

loss or damage to cargo received in good order and out-turned

short or in bad order

53. Based on this principle, the Claimant may not deny that they have received the goods in good

order 72 as the Claimant did issue a clean BoL I which serves as prima facie evidence that the

Cargo has in fact been received in good order. 73

54. Having said so, it is also proven that the Claimant, being the Carrier, is responsible for the

Cargo while the Cargo is under his care. 74 After investigations, it was discovered that the

presence of bitumen was due to the fault of the Claimant, as the cranes overextended their

reach and “grabbed” at the bitumen dock whilst loading the cargo. 75 The Claimant, as the

carrier, has the obligation to properly equip 76 the vessel so that it is fit for loading and

unloading 77 the cargo.

55. Had the Claimant ensured the cranes were operable 78 and would not cause any damage to the

cargo by emitting foreign objects due to its misuse, the bitumen would not have entered the

holds.

4. Second Principle of Proof – the Parties must prove all the facts

available to them

56. Both the Claimant and Respondent have used all the evidence that were available to them in

regard with this case, including communications which were not marked as “without

72
Hunter Grain Pty Ltd. v. Hyundai Merchant Marine Co. Ltd. (1993) FCA 276, 23;
73
Ambatielos Case (Greece v. UK), RIAA XII 83, ILR 23 (1956).
74
Art. 4 (1) and 4 (2), COGSA 1991, Schedule 2, The Hamburg Rules
75
Facts, page 35.
76
Art. 3, COGSA 1991, Schedule 1A, The Modifications; Martin Dockray, Cases and Materials: On the Carriage of
Goods by Sea, Cavendish Publications (3rd Ed., 2004).
77
Art. 4, COGSA 1991, Schedule 2,The Hamburg Rules.
78
Sylvia Moore v. Angela MV (2003) 353 F3d 376.

24
 prejudice”, all sea carriage documents available to them, and all other evidence as a result of

investigations conducted by both parties. From the abovementioned it may be concluded that

the Respondent has fulfilled both principles of proof and that with the fulfillment of both

principles, it is clear that the Claimant may be held liable in the case of Beta Beta Pty Ltd.

57. From the facts all mentioned above, it can be concluded that the Respondent is not liable for

the indemnification to the Claimant due to the Letter providing only specific warranty and

not indemnity for the specific objects mentioned. The Respondent is also not liable to pay for

any loss/damage of third parties due to false allegations and misrepresentation made by the

Claimant. In addition to that the Respondent is also not bound by the Addendum.

58. Instead the Claimant is liable for losses and/or damages suffered by third parties and also the

Respondent due to misrepresentation and misinformation in regard with the BoL I and BoL

II, as well as the unworthiness of the ship which caused the Quarantine, the Embargo, and the

existence of Bitumen on the surface of the Cargo. The Claimant also committed negligence

and breach of contract under clause 20 of the Charter Party.

59. Due to the fact above the Respondent is also entitled to payment of consequential loss by the

Claimant under clause 20 of the Charter Party.

25
 PRAYER FOR RELIEF

The Respondent, having made the abovementioned arguments, pleads to the IMLAM

Arbitary Tribunal to ajudge and declare:

I. That the MLAANZ Arbitral Tribunal does not yet have jurisdiction over the

present case

If the MLAANZ Arbitral Tribunal does have jurisdiction over the present case, to adjudge

and declare that

I. The Respondent is not liable to indemnify the Claimant for loss and/or damages

suffered

II. The Claimant is liable for loss and damage suffered by third parties and by the

Respondent

III. The Respondent is entitled o payment of consequential loss by the Claimant

IV