Nluo Imam Claimant Memorandum

3RD NATIONAL LAW UNIVERSITY ODISHA INTERNATIONAL MARITIME ARBITRATION MOOT
WA
3RD NATIONAL LAW UNIVERSITY ODISHA INTERNATIONAL MARITIME

ARBITRATION MOOT, 2016
IN THE MATTER OF
LAFAYETTE AND COMPANY LIMITED
V.
ACC RADANI Pvt. Ltd.
In the Arbitration Matter concerning Public Policy, Damages and Repudiatory Breach of
Contract
MEMORANDUM ON BEHALF OF CLAIMANT
ON BEHALF OF: AGAINST:
LAFAYATTE AND COMPANY LIMITED ACC RADANI Pvt. Ltd.
(CLAIMANTS) (DEFENDANT)
MEMORANDUM FOR CLAIMANT Page

TABLE OF CONTENTS
LIST OF ABBREVIATIONS ................................................................................................................... iii
INDEX OF AUTHORITIES ..................................................................................................................... iv
TREATIES/CONVENTIONS....................................................................................................................... iv
STATUTES ................................................................................................................................................ iv
RULES ...................................................................................................................................................... iv
CASES ...................................................................................................................................................... iv
Indian Precedents............................................................................................................................... iv
Foreign Precedents.............................................................................................................................. v
BOOKS .................................................................................................................................................... vii
ARTICLES ............................................................................................................................................... vii
STATEMENT OF JURISDICTION ........................................................................................................ ix
STATEMENT OF FACTS ......................................................................................................................... x
ISSUES RAISED....................................................................................................................................... xii
SUMMARY OF ARGUMENTS ..............................................................................................................xiii
ARGUMENTS ADVANCED ..................................................................................................................... 1
[A] THE TRIBUNAL HAS DOMINION OVER THE MERITS OF THE DISPUTE ......................... 1
[A.1] THE ARBITRATION TRIBUNAL HAS JURISDICTION TO HEAR THE DISPUTE......................... 1
[A.1.1] The Owners and the Charterers are party to the NYPE 93 ........................................ 1
[A.1.2] The Owners has commenced these arbitration proceedings in accordance with the
English Arbitration Act 1996 ............................................................................................................. 2
[A.1.3] The Tribunal has the power to decide its own Jurisdiction ............................................ 3
[A.1.4] The Charter Party evinces the parties’ true intention to have London as the seat of
their arbitration .................................................................................................................................. 4
[A.2] THE INVOCATION OF ARBITRATION AT A FOREIGN SEAT BETWEEN TWO INDIAN
PARTIES IS NOT CONTRARY TO THE PUBLIC POLICY OF INDIA ........................................................... 5
[A.2.1] The principle of party autonomy provides the parties with a discretion to prefer the
most convenient and efficient forum to adjudicate their disputes ...................................................... 8
[A.2.2] The parties are at the liberty to choose the jurisdiction whose laws would govern
the terms of the arbitration agreement ............................................................................................. 8
[B] RESPONDENTS ARE LIABLE FOR REPUDIATORY BREACH OF CHARTER PARTY ... 10
MEMORANDUM FOR CLAIMANT Page i

[B.1] The actions of the Owners fall under the ambit of Repudiatory Breach of Charter
Party 10
[C] CHARTERERS ARE NOT ENTITLED TO MAKE ANY DEDUCTIONS FROM THE HIRE
AMOUNT .................................................................................................................................................. 11
[C.1] THE DEDUCTION MADE BY THE CHARTERERS DOES NOT FALL UNDER ANY
PERMISSIBLE PRINCIPLE....................................................................................................................... 12
[C.2] THE CHARTERERS ARE NOT ENTITLED TO DEDUCT THE HIRE AMOUNT
UNDER THE OFF-HIRE CLAUSE .................................................................................................... 13
[C.2.1] The Burden of Proof Lies upon the Charterers ............................................................. 14
[C.2.2] Off-Hire Clause is Exemptive in Nature............................................................................. 14
[D] CHARTERERS ARE LIABLE FOR STRUCTURAL DAMAGES CAUSED TO THE HOLDS
OF THE VESSEL ..................................................................................................................................... 17
[D.1] THE SHIP WAS SEAWORTHY WHEN DELIVERED ................................................................ 18
[D.2] THE DAMAGE IS CAUSED DUE TO CHARTERERS FAULT AND NEGLIGENCE .......................... 19
[E] THE CHARTERERS ARE LIABLE TO PAY THE OWNERS THE WITHHELD HIRE
AMOUNT ALONG WITH INTEREST ................................................................................................. 20
[E.1] THE CHARTERERS ARE LIABLE TO PAY THE MONEY WITHHELD BY THEM FOR THE
MONTH OF MARCH ................................................................................................................................ 20
[E.2] THE CHARTERERS HAVE BREACHED OBLIGATION BY NOT PROVIDING ANY

INSTRUCTIONS TO THE VESSEL ............................................................................................................ 21
[E.3] THE CHARTERERS ARE LIABLE TO PAY THE COSTS OF SANDBLASTING .......................... 22
PRAYER FOR RELIEF........................................................................................................................... 23
MEMORANDUM FOR CLAIMANT Page ii

LIST OF ABBREVIATIONS
¶ - Paragraph
AB QB - Alberta Court of Queen’s Bench (Canada)
All ER - All England Law Reports
Art. - Article
Art. - Article
B/L - Bill of Lading
Bus. - Business
c/p - Charterpaty
Cl. - Clause
CLJ - Cambridge Law Journal
Com Cas - Company Cases (England)
EWHC - England and Wales High Court
Ex - Exchequer
i.e. - That is
ILOHC - In Lieu of Hold Cleaning
KB - King’s Bench
Lloyd’s Rep - Lloyd’s Law Reports
LMAA - London Maritime Arbitration Association
LR - Law Reports
NYPE - New York Products Exchange
P&I - Protection and Indemnity Insurance
QBD Law Reports - Queen’s Bench Division
r/w - Read with
S. - Section
SCC - Supreme Court Cases
UNCITRAL Model Law, 1985 - United Nation Commission on International Trade Law,
Model Law on International Commercial Arbitration, 1985
v. - Versus
YBCA - Yearbook Commercial Arbitration
MEMORANDUM FOR CLAIMANT Page iii

INDEX OF AUTHORITIES
TREATIES/CONVENTIONS PAGE NO.

1. European Convention On International Commercial Arbitration of 1961 3
2. New York Convention on the Recognition and Enforcement of the Foreign Arbitral
Awards, 1958 5
STATUTES
1. Federal Code On Private International Law, 1987 4
2. France Code of Civil Law, 1981. 3
3. Indian Contract Act,1872 7
4. The Arbitration and Conciliation Act,1996 6
5. The English Arbitration Act, 1996 1,2,3,4,21
6. UNCITRAL Model Law on International Commercial Arbitration, 1985 2,3
RULES
1. NYPE 93 Time Charter Party (Revised September 1993) 2,4,5,9,11,19
2. United Nations Committee of International Trade Law Arbitration Rules, 1976 2,3
CASES
Indian Precedents
Bharat Aluminum Co. v. Kaiser Aluminum Technical Services, Inc. (2012) 9 SCC 552 6,7,8
Chatterjee Petroleum v. Haldia Petro Chemicals, 2013 ARBLR 456 (SC) 8
Enercon (India) Private Limited v. Enercon GMBH 2014 (5) SCC 1

,
8
M/s. Atlas Exports Industries v. M/s. Kotak and Company, (1999) 7 SCC 61 8
Reliance Limited v. Union of India and another. (2014) 5 SCC 1 8,9
Reliance Limited v. Union of India and another. (2015) 10 SCC 213 9
Renusagar vs. General Electric Co., (1984) 4 SCC 679 7
MEMORANDUM FOR CLAIMANT Page iv

Sasan Power Limited v. North American Coal Corporation India Pvt. Ltd. FA 15-2015 8
Sumitono Heavy Industries Ltd. v. ONGC Ltd. and Ors. (1998) 1 SCC 305 8
Videocon Industries Ltd. v. Union of India (2011) 6 SCC 161 9
Yograj Infrastructure Ltd. v. Ssangyong Engineering and Construction Company Ltd., (2012) 12 SCC
359 9
Foreign Precedents
A/S Tankexpress v. Campagnie Financiere Belge des Petroles, [1949] AC 76 10
ABB Lummus Global Ltd. v. Keppel Fels Ltd. (1992) 2 Lloyd’s Rep. 24 (LCIA rules) 4
Arab National Bank v. El Abdali (2005) 1 Lloyd’s Rep.608 4
Black Sea and Danube Shipping and Co. v. Goeland Transport and Trading Co. (1942)
74 L1.L.R 192 19
Braes of Doune Wind Farm (Scotland) Ltd. v. Alfred McAlpine Business Services Ltd. (2008)
1 Lloyd’s Rep. 608; 4
Brinkibon Ltd. V. Stahag Stahl und Stahlwarenhandelsgessellschaft mbh, [1983] 2 AC 34 10
Canadian Pacific Railway v. Board of Trade (1925)22 Lloyd's Rep.1. 17
Chellew Navigation Co. v. Appelquist, (1933) 38 Com. Cas. 218 17
Christopher Brown Ltd. v. Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe

Regisrierte GmbH (1954) 1 QB 8 3
Comandate Marine Corp v. Pan Australia Shipping Pty Ltd (2006) 157 FCR 45 1
Dubai Islamic Bank PJSC v. Paymentech Merchant Services Inc. (2001) 1 Lloyd’s Rep. 65 4
ENE Kos Ltd. v. Petroleo Brasileiro SA (The Kos), [2012]2 Llyod’s Rep. 292 19
Fiona Trust and Holding Corporation v Privalov [2007] Bus L R 1719 1
MEMORANDUM FOR CLAIMANT Page v

Flame SA v. Glory Wealth Shipping Pte. Ltd. (The Glory Wealth); [2013] EWHC 3153
(Comm.) 20
Giertsen v. Turnbull 1908 S.C 1101 18
Gill & Duffus Landauer Ltd v. London Export Corp. GmbH, [1982] 2 Lloyd’s Rep 627; 10
Hadley v. Baxendale, (1854) 9 Ex. 341, pg. 354-355 20
Hyundai Merchant Marine Co Ltd v. Furness Withy (Australia) Pty (The Doric Pride) [2006] 2
Lloyd’s Rep 175 14
Nanfri case [1978] 2 Lloyd's Rep. 132 12
Pacific Carriers Ltd. v. BNP Paribas (2004) 218 CLR 451 4
Petrodulos (2002) L.M.C.L.O. 66 4
Royal Greek Govt v Minister of Transport, The Ann Stathatos (1948) 82 LlL Rep 196 16
Seabridge Shipping AB v. AC Orsleff’s EFTS A/S [2000] CLC 656 2
Suisse Atlantique Societed’ Armement Maritime S.A. v. N.V. Rotterdamsche Colen Centrale,
[1966] 1 Llyod’s Rep. 529 10
Telfair Shipping Corp. v. Intersea Carriers SA (The Caroline P), [1984] 2 Lloyd’s Rep. 466 18
The “Berge Sund” [1993] 2 Lloyds Rep 453. 16
The Agios Lazaros, [1976] 2 Lloyd’s Rep 47 2
The Frotanorte [1995] 2 Lloyd’s Rep 254 2
The Nea Agrex S.A. v. Baltic Shipping Co. Ltd., (Agios Lazaros Case), [1976] 2 Lloyd’s Rep 47 2
The Pythia [1982] 2 Lloyd’s Rep 160 15
Tonkstar Ltd. v. American Home Assurance Co. (2006) EWHC 1234 (Comm.) 4
MEMORANDUM FOR CLAIMANT Page vi

Tritonia Shipping Inc. v. South Nelson Forest Products Corp, (1996) 1 Lloyd’s Rep 114 4
Vosnoc Ltd v. Transglobal Projects Ltd, [1997] 1 WLR 101 2
Zim ISS v. European Container [2013] EWHC 3581 20
BOOKS
Alan Redfern, J. Martin Hunter, Redfern and Hunter on International Arbitration, 5th ed., Oxford
University Press, (2009) 3
Bernard Eder, Scrutton on Charter Parties and Bills of Lading, Sweet and Maxwell, London
(23rd ed.,2015) 17, 19, 21
E. Gaillard; J. Savage (Eds.), Fouchard Gaillard Goldman on International Commercial

Arbitration 996, Kluwer (1999) 5
Gary B. Born, International Commercial Arbitration, vol. 1, p. 853, Kluwer Law International
(5th ed.,2009) 3
J.W. Carter, Carter’s Breach of Contract, 1st ed., Lexis Nexis Butterworths, Australia (2011). 9
Jean Francois Poudret; Sebastian Besson, Droit Compare De L’arbitrage International 907,
Bruylant/LGDJ/Schulthess (2002). 5
Julian coke, Voyage Charters, 4th ed., Informa Law (2014) 17
Robert Markin, Arbitration Law, Informa, (2012). 3
Yvonne Baatz, Maritime Law, Informa Law, 3rdedn. (Year) 12,13
ARTICLES
Fuller And Perdue Article, “The Reliance Interest In Contract Damages”, Pg.66, 46 Yale Law
Journal (1936) 52-96 20
John Weale, ‘The NYPE Off-Hire Clause And Third Party Intervention: Can An Efficient Vessel
Be Placed Off-Hire?’ Braden Vandeventer, ‘Analysis Of Basic Provisions Of Voyage And Time
Charter Parties’, P. 806, Vol. 49 Tulane Law Review (1974-19750. 14
MEMORANDUM FOR CLAIMANT Page vii

Thomas G. Guedj, ‘The Theory Of Lois De Police, A Fundamental Trend in Continental Private
International Law- A Comparative Analysis with Modern American Theories’, 39(4) Am. J.
Comp. L. 661, 665-66 (1991) 6
MEMORANDUM FOR CLAIMANT Page viii

STATEMENT OF JURISDICTION
This present dispute has been referred to the arbitral tribunal in pursuance to the arbitration
agreement entered into by the parties and under Cl. 45 of NYPE Standard Time Charter Party
amended 1993 which is the charter party signed by the parties in the present matter.
MEMORANDUM FOR CLAIMANT Page ix

STATEMENT OF FACTS
THE PARTIES
Laffayette Company Limited (hereinafter the Owners/Claimants) are the Owners of the vessel
M.V.EMJOS (hereinafter the Vessel). ACC Radani Pvt. Ltd. (Hereinafter the
Defendants/Charterers) are the Charterers in this present case.
CHARTER PARTY
The Claimants and Defendants entered into the contractual relationship on an amended
‘NYPE93’ format Charter-party inclusive of rider clauses for hiring of the Vessel on 12th
September 2012 for a period of 36 months. This Charter-Party was terminated by the Owners on
24th January 2014.
BREAKDOWN OF CRANE
On the morning of 1st March 2013, the Vessel’s cranes had a malfunction due to certain technical
problems that were rectified by the local crane experts who confirmed that the cranes were good
to be used. In the same afternoon, during the cargo operations, the Jib of crane no. 3 broke and
fell on hatch no.4 making hold no. 3 and 4 inaccessible for loading, reducing the cargo capacity
to 20,000 MT.
DEFAULT IN PAYMENT
The default in payment was made by the Charterers in the month of March and a fraction of the
amount of full hire to be paid in advance was withheld by the Charterers. The Charterers
continued delaying the payment of advance hire for the subsequent months.
STRUCTURAL DAMAGE TO THE VESSEL
On 24th November 2013, the Independent Expert appointed by the Owners stated that due to the
continual carriage of corrosive cargo materials, the holds of the Vessel have suffered structural
defects which would affect the navigability and commercial utility of the vessel and
recommended immediate sandblasting. The sandblasting was carried out at Shanghai at a cost of
US$ 1.13 million for which the vessel had to be grounded for a period of 17 days.
WITHDRAWAL OF VESSEL FROM SERVICE
The charterers withheld the hire payment and as a reaction to it, the owners withdrew the vessel
from the Charterparty on 12th January 2014 and then subsequently instructed the master to abide
by the Charterers instructions on 17th January 2014 after news of anticipated slowdown in the
South Asian naval logistics market. On 23rd January 2014, the Charterers accepted the
MEMORANDUM FOR CLAIMANT Page x

withdrawal of vessel from services and asserted their claims for remittances. The owners
accepted charterer’s action of abstaining from providing further directions to the Master of the
Vessel and their explicit disinterest in performing the Charterparty as a repudiatory breach and
terminated the Charterparty on 24th January 2014.
ARBITRATORS
The owners on 23rd December 2015 invoked the arbitration in terms of the Fixture Note and
appointed Capt. Joel Fernandez as their arbitrator and the respondents appointed Mr. Julian Dave
as their arbitrator on 6th January 2016. The arbitrators for the respective parties agreed to appoint
Mr. Henry Albridge as the presiding arbitrator on 14th January 2016.
MEMORANDUM FOR CLAIMANT Page xi

ISSUES RAISED
1. Jurisdictional Issue –
i) Whether the arbitral tribunal has the jurisdiction to hear the present dispute.
ii) Whether the invocation of arbitration between two Indian parties at a foreign seat is
unlawful for being contrary to public policy of India.
2. Whether the respondents are liable for repudiatory breach of charter-party?
3. Whether charterers are entitled to make deductions in the hire amount?
4. Whether charterers are liable for the structural damage caused to the holds of the Vessel?
5. Whether charterers are liable to pay the owners the withheld hire amount along with
interest?
MEMORANDUM FOR CLAIMANT Page xii

SUMMARY OF ARGUMENTS
A. THE TRIBUNAL HAS JURISDICTION OVER THE MATTERS CONCERNING
THE PRESENT DISPUTE
Claimants submit that this tribunal has been validly constituted and has contentious jurisdiction
over this dispute as the Charter-party provides that, the disputes arising out or in connection with
the charter party shall be settled by way of arbitration. The arbitration clause in the NYPE 1993
Standard Time Charterpart agreement to which both owners and charterers are parties, specifies
London as the seat of the Arbitration. The contractual obligations being governed by Indian
substantive law, the choice of the Arbitration Act, 1996 to govern the arbitration agreement and
London as the seat of Arbitration does not abrogate the public policy of India. Hence, it can be
safely concluded that tribunal has jurisdiction to hear the disputes arising out of this charter
party.
B. RESPONDENTS ARE LIABLE FOR REPUDIATORY BREACH OF CHARTER

PARTY
If the facts of the present case are to be analyzed then there has been a continuing default on the
part of the Charterers when they first deducted in the payment of the ‘hire amount’ on 15th March
2013. The ship owners’ board meeting on 18th November 2013 also brings light to the fact that
the charterers have continuously delayed making hire payment for the past few months. Since
12th December, the Charterers have also denied to clearing their dues regarding the cost of
sandblasting and also the hire for the duration during which the ship was undergoing
sandblasting. Therefore, the act of non-payment of hire and other dues and by the ‘Charterers’
would amount to a breach of the charter party as it was a condition precedent as well as a
contractual obligation on behalf of the ‘Charterers’ which was essential for the continuation of
the charter party.
C. CHARTERERS ARE NOT ENTITLED TO MAKE ANY DEDUCTIONS FROM THE

HIRE AMOUNT
The breakdown of the crane was caused not by the fault of the owners but because of the latent
defect over which the owners had no control. The right to deduct the hire is limited to the cases
where the ship-owner has wrongly deprived the Charterers of the use of the vessel. The claim for
Equitable set-off would be available only when the Charterers are deprived of the use of the ship
MEMORANDUM FOR CLAIMANT Page xiii

by the fault of the owners. So as here the owners were not even remotely involved in the
unfortunate event of the crane breakdown. Hence, the charterers should not be allowed to exempt
themselves from the absolute obligation of payment of the hire amount.
D. CHARTERERS ARE LIABLE FOR STRUCTURAL DAMAGES CAUSED TO THE

HOLDS OF THE VESSEL
The Vessel was delivered seaworthy and cargo-worthy in its best condition as it was a
prerequisite for delivery of the vessel in compliance with the C.P. Therefore, the question of lack
of due diligence on the part of Owners does not arise. The Charterers took possession after all
due formalities and inspection. Any default on the part of Charterers doesn’t create a liability on
the part of the Owners. The cost of sandblasting should be borne by the Charterers as they failed
to maintain the condition of the Vessel holds as was provided to them. They are to be held
responsible for the structural damages and the cost of sandblasting so incurred.
E. THE CHARTERERS ARE LIABLE TO PAY THE OWNERS THE WITHHELD

HIRE AMOUNT ALONG WITH INTEREST
As per the assessment made with bona fide intentions and reasonably, the charterers are liable to
pay the hire amount withheld by them in the month of March, along with damages for the
remainder of the agreed period of hire after termination of charter-party, the costs of sandblasting
to rectify structural damages and the interests therein, amounting to 467000 USD and 1.13
Million USD along with simple or Compound Interests as the tribunal deems fit.
MEMORANDUM FOR CLAIMANT Page xiv

ARGUMENTS ADVANCED
JURISDICTION
[A] THE TRIBUNAL HAS DOMINION OVER THE MERITS OF THE DISPUTE
1. The Charter Party provides for an arbitration panel with jurisdiction over ‘any dispute
arising out of or in connection with the Charter Party’.1 Arbitration clauses are interpreted
broadly, and with the presumption that, the parties agreeing to the arbitration clause,
intended the dispute to be heard before an arbitration tribunal2.
[A.1] THE ARBITRATION TRIBUNAL HAS JURISDICTION TO HEAR THE DISPUTE

2. The Owners argue that this tribunal has the contentious jurisdiction to hear the merits of this
dispute because:
a) The Owners and the Charterers are parties to the NYPE 93 Charterparty.
b) The Owners has commenced these arbitration proceedings in accordance with the
English Arbitration Act 1996.3
c) This tribunal has the power to rule on its own jurisdiction.
d) The Charter-party clearly specifies London as the seat.4
[A.1.1] The Owners and the Charterers are parties to the NYPE 93
3. The Charterers and the Owners entered into a legally binding relationship by way of Charter
Party.5 For the purpose of both the New York Convention and the UNCITRAL Model law, it
is sufficient that, there should be defined legal relationship between the parties, whether
contractual or not. The underlying contract in the instant case, relating to the hiring of the
vessel for rent, to which the parties entered into, provides for a contractual relationship
between the parties. Such contractual relationships between the parties form the basis of the
arbitral proceedings. Thus, subject to any provisions of the relevant applicable law, the terms
1
Cl. 45(b), NYPE 93 4, Standard Time Charter Party, (December, 2003).
2
Comandate Marine Corp v. Pan Australia Shipping Pty Ltd (2006) 157 FCR 45, at 89-90; Fiona Trust & Holding
Corporation v Privalov [2007] Bus L R 1719, at 1725-1726
3
§ 2(1) English Arbitration Act 1996.
4
Refer Moot Proposition, Arbitration Clause in the Fixture Note on Page no. 2
5
Refer Moot Proposition, Fixture Note Page 1 and Email Dated – 15th October 2012
MEMORANDUM ON BEHALF OF CLAIMANTS Page 1

of the arbitral jurisdiction and powers in any particular case depend on a proper construction
of the Arbitration Agreement.
4. Relying upon the aforementioned submissions, it can be validly concluded that, all form
requirements of an arbitration agreement as specified under Art. II of New York
Convention, 19586 and Article 21 of the UNCITRAL7 rules provides that- ‘the arbitral
tribunal shall have the power to determine the existence or the validity of the contract of
which an arbitration clause forms a part. For the purposes of Article 21, an arbitration clause
which forms part of a contract and which provides for arbitration under these Rules shall be
treated as an agreement independent of the other terms of the contract.
5. It is submitted that both the Charterers and the Owners entered into a valid contract having a
valid arbitration clause.8 It is further submitted that the disputing parties are parties to the
NYPE 93 Standard Time Charter Party9agreement.
[A.1.2] The Owners has commenced these arbitration proceedings in

accordance with the English Arbitration Act 1996
6. S. 14(4) provides that, ‘Where the arbitrator or arbitrators are to be appointed by the
parties, arbitral proceedings are commenced in respect of a matter when one party serves
on the other party or parties notice in writing requiring him or them to appoint an arbitrator
or to agree to the appointment of an arbitrator in respect of that matter’.10
7. Further, a notice must be in writing in order for it to be valid.11 A valid notice must contain
an indication of the claim, the remedies sought and a reference to the arbitration
agreement.12 If no request is made in the notice, a notice carries with it an implied request in
relation to the appointment of an arbitrator.13
6
New York on the Recognition and Enforcement of the Foreign Arbitral Awards,1958, 330 UNTS 38
7
Art. 21(2), United Nations Commission on International Trade Law, UN Doc. A/RES/31/98; 15 ILM 701
(1976).
8
Cl. 45 (b), NYPE 93, Standard Time Charter Party, (September, 1993).
9
Refer Moot Proposition Addendum 1
10
§.14(4), English ARBITRATION ACT, 1996.
11
The Nea Agrex S.A. v. Baltic Shipping Co. Ltd., (Agios Lazaros Case), [1976] 2 Lloyd’s Rep 47, at 51; Vosnoc
Ltd v. Transglobal Projects Ltd, [1997] 1 WLR 101; Seabridge Shipping AB v AC Orsleff’s EFTS A/S [2000]
CLC 656.
12
Art 6, UNCITRAL Arbitration Rules, UN Doc. A/RES/31/98; 15 ILM 701, (1976).
13
The Frotanorte [1995] 2 Lloyd’s Rep 254, at. 261; The AgiosLazaros, [1976] 2 Lloyd’s Rep 47.

8. It is humbly submitted that the ‘Email correspondence dated 23rd December 2013 sent by the
Owners to Charterers making a definite reference to the Fixture Note containing the
arbitration clause, contained all the requisites of a valid notice.14.
9. The Owners, therefore, argue that they initiated these proceedings in accordance with the
provisions given under the English Arbitration Act 1996.
[A.1.3] The Tribunal has the power to decide its own Jurisdiction
10. It is an established principle of arbitration that an arbitral tribunal has an inherent power to
rule on its own jurisdiction151617. The jurisdiction of the arbitral tribunal is premised on the
existence of a valid agreement to arbitrate between the parties18. A tribunal may also rule on
its own jurisdiction under the provisions of the Arbitration Act.19
11. The principle of competence is a general principle of commercial arbitration according to
which a tribunal is empowered to make a determination as to its own jurisdiction to deal
with the substantive claims in dispute. The arbitral tribunal shall have the power to rule on
objections that, it has no jurisdiction.20
12. The arbitrator shall be entitled to proceed with the arbitration to rule on his own
jurisdiction.21 The arbitral tribunal may rule on its own jurisdiction, including any objections
with respect to the existence or validity of the arbitration agreement. 22 If one of the party
contests, before the arbitrator, the latter’s jurisdiction whether in principal or scope, it is for
the arbitrator to decide on the validity or scope of his mission.23
13. The jurisdiction clause in the Charter-Party which came into existence with effect from 12th
September, 2012, by way of Fixture Note24 must be construed against the Charterers such
that the Tribunal is given with the jurisdiction to determine matters “arising out of
14
Refer Moot Proposition , Page 35.
15
Christopher Brown Ltd. v. Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschftsbetriebe Regisrierte
GmbH (1954) 1 QB 8
16
Gary B. Born, International Commercial Arbitration, Vol. 1,p. 853, Kluwer Law International (5 th ed., 2009);
17
Nigel Blackaby (ed.), Redfern And Hunter On International Arbitration, p.347, (5th ed., 2009).
18
Robert Markin, Arbitration Law, p. 5.1, Informa, (2012).
19
§. 30(1), Arbitration Act, 1996.
20
Art. 21(1), United Nations Commission on International Trade Law Rules, UN Doc. A/RES/31/98; 15 ILM 701
(1976).
21
Art. V (3), European Convention On International Commercial Arbitration Of 1961.
22
Art. 16 UNCITRAL Model Law On International Commercial Arbitration 1985.
23
Art. 1466, France Code Of Civil Procedure, (1981).
24
Refer Moot Proposition, Page 1

14. or in connection” to this Fixture Note, and by extension, the Tribunal must have jurisdiction
to determine the merits of claims prefaced on it. The arbitral tribunal shall itself decide on its
jurisdiction.25
15. It is therefore humbly submitted that this Tribunal has the power to rule on its own
jurisdiction.
[A.1.4] The Charter Party evinces the parties’ true intention to have London as
the seat of their arbitration
16. The seat of the arbitration” means the juridical seat of the arbitration designated—
a. By the parties to the arbitration agreement, or
b. By any arbitral or other institution or person vested by the parties with powers in that
regard
c. By the arbitral tribunal if so authorized by the parties, or which, in the absence of any
such designation, has been determined having regard to the parties’ agreement26 and all
the relevant circumstances.27
17. A written agreement requiring that “any dispute arising from this charter-party shall be
settled by arbitration in London” constituted a valid arbitration agreement28. The arbitration
clause contained in NYPE 93 stating that, ‘All disputes arising out of this charter shall be
Arbitrated at London’ presents a similar intention to arbitrate in London and goes further in
providing the forum and rules of arbitration29. It is further submitted that S. 2(1)30 sets out
the basic rule governing the application of Part. I of the Arbitration Act 1996. It applies
where the seat of the arbitration is in England.
18. By virtue of this clause31, the Owners and the Charterers, in an extensive reading of its
terms, have consented to matters arising out of or in connection with the C.P being resolved
25
Article 186, Federal Code On Private International Law, 1987.
26
ABB Lummus Global Ltd. v. Keppel Fels Ltd. (1992) 2 Lloyd’s Rep. 24; Dubai Islamic Bank PJSC
v. Paymentech Merchant Services Inc. (2001) 1 Lloyd’s Rep. 65, at 74; Arab National Bank v. El Abdali (2005)1
Lloyd’s Rep. 541; Braes of Doune Wind Farm (Scotland) Ltd. v. Alfred McAlpine Business Services Ltd.(2008)
1 Lloyd’s Rep. 608; Pertodulos (2002) L.M.C.L.Q. 66; Tonkstar Ltd. v. American Home Assurance Co(2006)
EWHC 1234 (Comm.).
27
§. 3, Arbitration Act, 1996
28
Tritonia Shipping Inc. v. South Nelson Forest Products Corp, (1996) 1 Lloyd’s Rep 114.
29
Cl. 45(b), NYPE 93, Standard Time Charter Party (September, 1993).
30
§.2(1), Arbitration Act, 1996.
31
Cl. 45(b), NYPE 93, Standard Time Charter Party, (September, 1993).

by the arbitral procedure.32 In this present case, the parties had consented to the amended
NYPE 93 Charter Party and there had been no objection raised by the Charterers with
respect to the seat of the arbitration tribunal.
19. It is submitted that there existed a valid agreement to arbitrate as the arbitration clause was
validly embedded in the NYPE 93 C.P which specified London as the seat of arbitration.33
34
20. This also can be inferred from the Arbitration clause in the Fixture Note wherein the
Owners clearly mentioned that both the Owners and the Charterers agreed for London to be
the seat of Arbitration and they consented to the arbitral awards which shall be given by
them. Now, as it was already agreed in past, then, the Charterers should be restrained from
challenging the seat as London.
[A.2] THE INVOCATION OF ARBITRATION AT A FOREIGN SEAT BETWEEN TWO INDIAN
PARTIES IS NOT CONTRARY TO THE PUBLIC POLICY OF INDIA
21. The Article V (2) (b) of the New York Convention on Enforcement of International
Agreements and International Arbitral Awards, 195835 states that, “Recognition and
enforcement of an arbitral award may also be refused if the competent authority in the
country where recognition and enforcement are sought finds that:…….(b) the recognition
and enforcement of the award would be contrary to the public policy of that country.”
22. A general definition of public policy has been attempted by the Belgian Cour de Cessation
as, “… which concerns the essential interests of the state or the public at large, or a statute
which determines, in private law, the fundamental legal requirements on which the
economic or moral order of the society is based”36 According to Gaillard and Savage, “Not
every breach of a mandatory rule of host country could justify refusing recognition or
enforcement of a foreign award. Such refusal is only justified where the award contravenes
principles which are considered in the host country as reflecting its fundamental convictions,
or as having an absolute, universal value.” 37 It is sufficient to note [for the purposes of New
York Convention] that public policy must be interpreted restrictively and does not
32
Pacific Carriers Ltd. v. BNP Paribas (2004) 218 CLR 451
33
Cl. 45(b), NYPE 93, Standard Time Charter Party, (September, 1993).
34
Refer Moot Proposition, Page 2
35
New York on the Recognition and Enforcement of the Foreign Arbitral Awards,1958, 330 UNTS 38
36
Belgian Cour De Cassation, Cass. Belgium, 15 March 1968, 1968(I) Pas. 884.
37
E. Gaillard and J.Savage (eds.), Fouchard Gaillard Goldman on International Commercial Arbitration 996,
Kluwer (1999)

encompass all the mandatory provisions of the state where the exequatur is requested. 38 The
overriding general principle to keep in mind is whether ‘the goals sought to be achieved by
the laws are so important that the legal order could not tolerate the application of any foreign
law which could frustrate these goals’.39
23. The Arbitration and Conciliation Act40 is divided into two parts; the first part deals with
arbitration proceedings conducted in India and their enforcement and the second part deals
with foreign arbitration proceedings and its enforcement. Section 34(2) (b) (ii) of the Act
provides a ground of challenge to an arbitral award on being in conflict with the public
policy of India. However, public policy has not been defined in the Act and has been left
open to interpretation by the courts. The Arbitration and Conciliation (Amendment)
Act,2015 has restricted the challenges to an award on the ground of public policy to the
following only-
a) making of an award was induced/ affected by fraud or corruption or was in violation of
Section 75 or Section 81 of the Act
b) where an award is in conflict with the fundamental policy of Indian Law; or
c) Where an award is in conflict with the most basic notions of morality or justice.
24. Similar amendments have also been introduced in Sections 48 and 57 making the test of
conflict with the public policy a uniform one for domestic and foreign awards. Amendment
to Section 2 (2) extending the applicability of Section 9, Section 27 and Section (37) (1) (a)
& (3) contained in Part 1 of the A&C Act to international commercial arbitrations. Section 9
deals with the interim relief granted by the courts and Section 27 deals with court assistance
to a tribunal for taking evidence. The Amendment by clarifying what provisions in Part 1 of
the Arbitration & Conciliation Act, apply to international commercial arbitrations, in effect,
makes it clear that other provisions of Part 1 of the act are not applicable to international
commercial arbitration, thereby codifying the Supreme Court decision in Balco v Kaiser
Aluminium41. The five-judge Constitution bench in Balco v Kaiser Aluminium, settled the
law on the applicability of the provisions of Part I of the Act to the arbitrations held outside
38
Jean-Francois Poudret; Sebastian Besson, Droit Compare De L’arbitrage International, 907, (2002).
39
Thomas G. Guedj, ‘The theory of Lois de Police, a Fundamental Trend In Continental Private International Law-
A Comparative Analysis with Modern American Theories’, 39(4) Am. J. Comp. L. 661, 665-66 (1991)
40
The Arbitration and Conciliation Act,1996
41
Bharat Aluminium Co. v. Kaiser Aluminium Technical Services , Inc. (2012) 9 SCC 552.

India by making Part I inapplicable to the foreign arbitrations. The relevant findings of the
Supreme Court in BALCO are:
1. The legislature has given recognition to the territorial principle and therefore, it has
enacted that Part I of the Act applies to arbitrations having their place/seat in India.42
2. The absence of the word "only" from Section 2(2) of the Act does not change the content
of the section as limiting the application of Part I of the Act to arbitrations where the
place/seat is in India. It would not be applicable to the arbitrations held outside India.43
3. Interpretation of Section 2(1) (e) makes it axiomatic that two courts have jurisdiction to
adjudicate a dispute, i.e., the court within whose jurisdiction the cause of action is located
and the courts where the arbitration takes place.44
4. Indian Courts do not have the power to grant interim relief when the seat of arbitration is
outside India.45
5. Foreign arbitral awards would only be subject to the jurisdiction of the Indian courts
when the same are sought to be enforced in India in accordance with the provisions
contained in Part II of the Act.46
The court further clarified that agreeing to make the Indian Laws as the governing laws of
arbitration, will not make Part I applicable to the case. Even if the substantive law of the
arbitration is Indian Law but the seat of arbitration is outside India, the jurisdiction of Indian
courts will still be barred.47
25. Since the expression "public policy" covers the field not covered by the words "and the law
of India", contravention of law alone will not attract the bar of public policy and something
more than a contravention of law is required."48
26. Section 23 of Indian Contract Act49 states that “the consideration and object of an agreement
are lawful, unless: ……….the court regards it as immoral or opposed to public policy” and
Section 28 makes any agreement that restrains legal proceedings, void. The Public policy
reservation based on the objection that two Indian parties cannot be allowed to derogate
42
Ibid at ¶ 63
43
Ibid at ¶ 75
44
Ibid at ¶ 96
45
Ibid at ¶161
46
Ibid at ¶ 198
47
Bharat Aluminium Co. v. Kaiser Aluminium Technical Services , Inc. (2012) 9 SCC 552,
48
Renusagar vs. General Electric Co.(1984) 4 SCC 679
49
Indian Contract Act,1872

from the substantive Indian law is diluted by the applicability of the “Principle of party
autonomy” recognized by both the UNCITRAL rules and the Alternate dispute resolution
regime in India and the liberty that has been accorded to the parties for choosing the
convenient procedural and curial laws applicable to the proceeding, along with forum or
juridical seat of arbitration.
[A.2.1] The principle of party autonomy provides the parties with a discretion
to prefer the most convenient and efficient forum to adjudicate their
disputes
27. Arbitration as an alternate dispute resolution is premised on the principle of party autonomy
and the mere location of the arbitrators in a foreign jurisdiction(London) cannot by itself be
enough to nullify the arbitration agreement that the parties have entered into on their own
volition and the arbitral award arising out of such foreign seated arbitration between Indian
parties would be enforceable and not opposed to public policy read with sections 23 and 28
of the Indian Contract Act, 1872.50 Where the parties had agreed to resolve their disputes
through arbitration, the courts were to give effect to the intention of the parties and interfere
only when the agreement was null or void or inoperative51. Thus, the application of the
principle of party autonomy can be reasonably extended to two Indian parties designating a
foreign seat of arbitration and a foreign law for the resolution of disputes through arbitration
as the freedom of parties to determine the choice of law and seat of arbitration must be
recognized.52
[A.2.2] The parties are at the liberty to choose the jurisdiction whose laws
would govern the terms of the arbitration agreement
28. The seat of arbitration is analogous to exclusive jurisdiction clause.53 In an arbitration
agreement usually there are three types of laws applicable namely; i) the law governing the
substantive contract, ii) the law governing arbitration agreement, iii) the curial law
governing the arbitration proceeding.54 The interpretation accorded by the Supreme Court of
India to scope of Section 28 of the Indian Contract Act,1872 clearly explained that its
50
M/s. Atlas Exports Industries v. M/s. Kotak and Company, (1999) 7 SCC 61
51
Enercon (India) Private Limited v. Enercon GMBH 2014 (5) SCC 1 and Chatterjee Petroleum v. Haldia Petro
Chemicals 2013 ARBLR 456 (SC)
52
Sasan Power Limited v. North American Coal Corporation India Pvt. Ltd. FA 15-2015
53
Reliance Limited v. Union of India and another. (2014) 5 SCC 1
54
Sumitono Heavy Industries Ltd. v. ONGC Ltd. and Ors., (1998) 1 SCC 305

applicability is restricted to the substantive law of contract and has nothing to do with
choosing a foreign seat(curial law) or a foreign law governing the arbitration agreement 55
thus part 1 of the Arbitration and Conciliation Act, 1996 will be excluded by necessary
implication if juridical seat is outside India or where law other than Indian law governs the
arbitration agreement56 and this would not violate the Public policy of India or would render
57
the contract void under Section 23 of the Indian Contract Act,1872. The Supreme Court
of India has observed that if the parties have expressly agreed upon a foreign seat of
arbitration and to abide by the curial law of arbitration proceeding of that seat then the law
of the foreign jurisdiction in which the seat is located would prevail and the Indian courts
would not have jurisdiction to entertain appeals under Section 37 of the Arbitration and
Conciliation Act, 1996.58
29. Hence, it is humbly submitted, that according to the two-fold test of implied exclusion59, viz,
(i) foreign seat and, (ii) arbitration agreement governed by foreign law, the express intention
of the parties to have the terms of the agreement governed by the English law and arbitration
proceedings to be held at London in accordance with the Arbitration Act, 1996 clearly
excludes the application of Part 1 of the Arbitration and Conciliation Act,1996 and also the
applicability of Indian procedural and curial laws in exercise of the liberty vested on them
by the principle of party autonomy.
30. It is humbly submitted that the NYPE 93, Charter Party governing both the parties provides
that, the relationship between the parties shall be determined in accordance with the laws of
England60. All disputes arising out of this Charter shall be referred to Arbitration in London
in accordance with the Arbitration Act 199661. Thus, their consent to the arbitration clause is
evident and the invocation of arbitration is not in violation of the public policy of India.
Hence, the arbitration clause has been validly incorporated.
55
Bharat Aluminium Co. v. Kaiser Aluminium Technical Services , Inc. (2012) 9 SCC 552
56
Reliance Industries Limited v. Union of India, (2014) 5 SCC 1
57
Videocon Industries Ltd. v. Union of India and another. (2011) 6 SCC 161
58
Yograj Infrastructure Ltd. v. Ssangyong Engineering and Construction Company Ltd. (2012) 12 SCC 359
59
Reliance Limited v. Union of India and another. (2015) 10 SCC 213
60
Cl. 45(b), NYPE 93, Standard Time Charter Party, (September 1993).
61
Cl. 45(b), NYPE 93, Standard Time Charter Party, (September 1993).

[B] RESPONDENTS ARE LIABLE FOR REPUDIATORY BREACH OF CHARTER

PARTY
31. A breach of contract62 can be defined as a situation where,
a. The promisor/promisee fails to perform a contractual obligation within the stipulated
time period
b. There is an anticipatory breach of the contract
32. A breach of contract can be established by the proof that the promisor/promisee failed to
perform a contractual obligation within the time period stipulated for the performance of the
obligation.63
33. A fundamental breach of a contract, sometimes known as a repudiatory breach, is a breach
so fundamental that it permits the distressed party to terminate performance of the contract,
in addition to entitling that party to sue for damages.
34. Lord Reid in Suisse Atlantique Societed'Armement Maritime S.A. v. N.V. Rotterdamsche
Kolen Centrale64 defined fundamental breach as a:
‘well-known type of breach which entitles the innocent party to treat it as repudiatory and to
rescind the contract’.
[B.1] The actions of the Owners fall under the ambit of Repudiatory Breach of
Charter Party
35. Repudiatory breach is any breach which the promisee is entitled to treat as a repudiation of
obligation at common law that gives rise to terminate the performance of the contract.
Repudiatory breach comprises a breach of condition and fundamental breach. Claimants
submit that the Charter Party has an express “Deductions Clause” which lays down the
criteria as to when deductions can be made, however, the Defendants’ act of direct deduction
as well as a delay in payment of hire which is continuous in nature amounts to a
fundamental breach of the Charter Party.
36. If the Charterparty provides for an absolute obligation of seaworthiness, the effect will be to
reduce the obligation to one to exercise due diligence. 65 The Charterers’ most basic
62
J.W. Carter, Carter’s Breach Of Contract, p. 3,(2011, 1st ed.), Lexis Nexis Butterworths, Australia
63
Brinkibon Ltd. V. Stahag Stahlund Stahlwarenhandelsgessellschaft mbH, [1983] 2 AC 34; Gill &
DuffusLandauer Ltd v. London Export Corp. GmbH, [1982] 2 Lloyd’s Rep 627
64
Suisse Atlantique Societed'Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale [1966] 1 Lloyd's
Rep. 529
65
Yvonne Baatz, Maritime Law 126 (3rd Ed. 2014).

obligation under a time charter is to ensure full and regular payment of the hire amount. The
obligation to pay on the due date is an absolute obligation and the reasons provided in case
of any default are immaterial.66 In the present matter, it is submitted that the payment of the
hire amount was a contractual obligation on the part of the Charterers which was a condition
precedent to the contract. Thereby, a default on the part of the Charterers to ensure the
proper payment of the hire amount constituted to a breach of the contractual obligation on
behalf of the Charterers.
37. The condition precedent in general parlance refers to the contractual terms and promises that
are required to be fulfilled on the part of one party before the contractual obligations can be
imposed upon the other contracting party. In the present matter, the payment of the hire67 is a
condition precedent that is by all means is required to be fulfilled if at all any obligations are
to be imposed upon the Owners.
38. If the facts of the present case are to be analyzed that there has been a continuing default on
the part of the Charterers when they first deducted in the payment of the ‘hire amount’ on
15th March 2013. The ship Owners’ board meeting on 18th November 2013 also brings light
to the fact that the Charterers have continuously delayed making hire payment for the past
few months. Since 12th December, the Charterers have also denied clearing their dues
regarding the cost of sandblasting and also the hire for the duration during which the ship
was undergoing sandblasting. Therefore, the act of non-payment of hire and other dues and
by the Charterers’ would amount to a breach of the charter party as it was a condition
precedent as well as a contractual obligation on behalf of the Charterers’ which was essential
for the continuation of the charter party.
[C] CHARTERERS ARE NOT ENTITLED TO MAKE ANY DEDUCTIONS FROM THE
HIRE AMOUNT
39. The Charterers can make deductions from the hire in two situations: where there is an
express right to do so or where there is an equitable right of set-off. If there is no such right,
the Charterers must pursue its claim against the Owners and, if it is not paid, bring court or
arbitration proceedings. The breakdown of the crane was caused not by the fault of the
Owners but because of the latent defect over which the Owners had no control. The right to
66
A/S Tankexpress v. Campagnie Financiere Belgedes Petroles, [1949] AC 76.
67
Clause 11(a), NYPE 93 Standard Time Charter party.

deduct the hire is limited to the cases where the ship-Owners has wrongly deprived the
Charterers of the use of the vessel. The claim for Equitable set-off would be available only
when the Charterers are deprived of the use of the ship by the fault of the Owners. In the
present case, the Owners were not even remotely involved in the unfortunate event of the
crane breakdown. Hence, the Charterers should not be allowed to exempt themselves from
the absolute obligation of payment of the hire amount.
40. The hire amount was arbitrarily deducted by the Charterers. The Charterers were not entitled
to make any adjustment on the hire amount the off-hire clause could not be possibly
attracted.
[C.1] THE DEDUCTION MADE BY THE CHARTERERS DOES NOT FALL UNDER ANY
PERMISSIBLE PRINCIPLE
41. The Deduction Clause in the C.P entails the following provision-
a) Deduction Clause (77) –Charterers will not deduct from hire payment for any estimated
expense under this charter party unless otherwise agreed by the Owners. Owners agree
to deduct from hire payment from all Owners’ disbursement subject to supporting
vouchers. Charterers are at liberty to deduct estimated value of bunkers on redelivery
from last or penultimate hire payments.
It is usual for the Charterers to have an express right to deduct a number of different claims
from the hire including advances for the ship’s disbursements made by the Charterers on
behalf of the Owners, off-hire periods (but not anticipated off-hire periods) fuel used while
the ship is off-hire, the cost of diesel oil consumed for domestic consumption, speed and
performance claims and the cost of bunkers on board on redelivery from the last hire
payment.68 Deductions are often permitted by the express agreement.
b) Deduction By Way Of Equitable Set-Off

Where the Owner of the ship is in breach of time charter and the effect of such breach is
to wrongly deprive the Charterers of the use of the ship or to prejudice the Charterers in
the use of it, the time Charterers is entitled to deduct the claim for such breach from hire.
42. The right would only exist where:-
68
Yvonne Baatz, Maritime Law, p. 163 (3rd ed. 2014).

i) The claim in respect of which the Charterers sought to deduct arose out of the same
transaction or was closely connected with it; and
ii) Where it directly impeached the Owner's demand for hire. This would generally only
be the case where the Owner's conduct had wrongfully deprived the Charterers of the
use of the vessel or in some way prejudiced his use of it.69
43. If there is no express provision in the charter party permitting the Charterers to make a
deduction from hire for a particular sum, English law recognizes limited circumstances in
which the time Charterers is entitled to deduct from hire by way of equitable set-off.
[C.2] THE CHARTERERS ARE NOT ENTITLED TO DEDUCT THE HIRE
AMOUNT UNDER THE OFF-HIRE CLAUSE
44. Off-Hire Clause (17) -In the event of loss of time from deficiency and/or default and/or
strike of officers or crew, or deficiency of stores, fire, breakdown of, or damages to hull,
machinery or equipment, grounding, detention by the arrest of the Vessel, (unless such
arrest is caused by events for which the Charterers, their servants, agents or subcontractors
are responsible), or detention by average accidents to the Vessel or cargo unless resulting
from inherent vice, quality or defect of the cargo, dry-docking for the purpose of
examination or painting bottom, or by any other similar cause preventing the full working of
the Vessel, the payment of hire and overtime, if any, shall cease for the time thereby lost.
Should the Vessel deviate or put back during a voyage, contrary to the orders or directions
of the Charterers, for any reason other than accident to the cargo or where permitted in
lines 257 to 258 hereunder, the hire is to be suspended from the time of her deviating or
putting back until she is again in the same or equidistant position from the destination and
the voyage resumed therefrom. All bunkers used by the Vessel while off hire shall be for the
Owners' account. In the event of the Vessel being driven into port or to anchorage through
the stress of weather, trading to shallow harbors or to rivers or ports with bars, any
detention of the Vessel and/or expenses resulting from such detention shall be for the
Charterers' account. If upon the voyage the speed is reduced by a defect in, or breakdown
of, any part of her hull, machinery or equipment, the time so lost, and the cost of any extra
bunkers consumed in consequence thereof, and all extra proven expenses may be deducted
from the hire.
69
Nanfri case[1978] 2 Lloyd's Rep. 132

45. Standard forms of time charter provide that hire will cease to be payable on the occurrence
of certain events which prevent the full working of the ship either for the time lost to the
Charterers as a result of such event or during the period that the event continues. Some
charter parties provide for a list of specified events which will trigger the off-hire clause.
Events which may be specified in the off-hire clause may include breakdown of the ship’s
engines, the ship running aground, “detention by average accidents to ship or cargo” (an
accident which causes damage), “default and/or deficiency of men” or capture and seizure or
“any other cause”. The list may culminate in the wording “or any other cause preventing the
full working of the vessel”. The words “preventing the full working of the vessel” apply to
all the causes and it should first be determined whether the cause does prevent the full
working of the vessel.
[C.2.1] The Burden of Proof Lies upon the Charterers
46. The Charterers has an obligation to continuously pay hire and bears the risk of delay unless
it can prove that the off hire is operational in that particular situation70. Therefore, the burden
of proof squarely falls on the Charterers. The cardinal rule is that the Charterers will pay hire
for the use of the ship unless they can bring themselves clearly within the exceptions.
[C.2.2] Off-Hire Clause is Exemptive in Nature
47. The nature of an off-hire clause is that of an exemption. The Charterers exempts himself
from paying hire and is usually then construed narrowly against him as it is for his benefit.
The general rule is that if there is doubt as to the construction of any term in a contract, it
should be construed strictly against the party in whose favor it was made.71 If there is a
doubt as to what the words mean, then those words must be read in favor of the Owners
because the Charterers is attempting to cut down the Owner's right to hire
48. The off-hire clause will not depend on the fault of the ship Owners. If the ship Owners is
actually at fault it may also be in breach of charter-party and the Charterers may have
remedies such as the right to terminate the Charterparty or claim damages in addition to, or
in substitution for, the ship being off-hire. If the off hire event is caused by a breach of
70
Hyundai Merchant Marine Co Ltd v. Furness Withy (Australia) Pty (The Doric Pride), [2006] 2 Lloyd’s Rep 175
at p. 179.
71
John Weale, ‘The Nype Off-Hire Clause And Third Party Intervention: Can An Efficient Vessel Be Placed Off-
Hire?’ in Braden Vandeventer, ‘Analysis Of Basic Provisions Of Voyage And Time Charter Parties’, P. 806,
Vol. 49 Tulane Law Review (1974-1975).

charter-party by the Charterers, the ship may still be off hire but the Owners will be able to
recover damages for the breach including any off-hire.
49. The Charterers is obliged to pay hire continuously unless it can show that the wording of the
off-hire clause applies to the event which has occurred. Where the clause is a “net loss of
time clause” the burden of proof is on the Charterers to show not only that the off hire event
occurred but also that time has been lost as a result.
50. To invoke an off-hire clause two things need be proved:
a) Failure of the full working of the ship.
b) Loss of time to the Charterers.
a) Failure of Full working:

51. The next point to note is that, for hire to cease, there must have been something preventing
the full working of the vessel. Unless this is so, there is no need to consider if this had a
relevant cause. The question was there some failure in the full working of the vessel requires
a practical rather than theoretical inquiry. It is necessary to look at the next operation
required of the vessel. Preventing the full working of the vessel does not mean that the
vessel must be wholly prevented from operating for there to be off hire but rather the may
make the vessel wholly off-hire. This appears to make no sense inasmuch as the Owners has
no interest in working the vessel partially if the hire is not being earned at all and even has a
vested interest in not working at all until the vessel is fully efficient full hire can once more
be earned. The apparent toughness of this clause is qualified however by the fact that the
clause only permits hire to be deducted only to the extent that a loss of time has really been
suffered.
b) Loss of Time to the Charterers:
52. The occurrence of an off-hire event is not in itself enough to put the ship off-hire, there must
also be a loss of time. There are two ways of looking at a loss of time: from the Owners’
perspective – for how much time has the vessel been prevented from working; or from the
Charterers’: by how much time has its adventure been delayed.
53. New York Produce Exchange charters’ off-hire clauses are all interpreted as a net loss of
time clauses. This means that it is not enough (as it would be under a period off-hire clause)
simply to identify the length of time the vessel was not fully working by reason of one of the

required causes. Instead, in addition to this, Charterers must establish the loss of time they
have truly suffered – the real delay to their adventure72.
54. Off-hire clauses are not triggered simply because there is an inefficiency or breakdown. For
the clause to be triggered, there needs to be an actual delay, i.e. a real ‘loss of time’, and this
is the first question to be answered when considering a Charterer's claim for off-hire. When
deciding whether there is a delay, the question that one should ask is whether the ship has
been prevented from performing the next operation that the Charterer's orders necessitate. A
ship is not prevented from performing merely because it cannot perform the next operation
that the Charterers would wish, or was expecting, it to undertake. Put another way, the
question is not what a Charterers hoped or expected its order(s) would be, but what service it
actually required.73
55. Since off-hire clauses operate as exceptions which cut down the Owner's right to hire, it is
for the Charterers to show that those circumstances have arisen. For the same reason, if the
meaning of a clause is uncertain, it has been said that the words must be read in favour of the
Owners.74
56. Since no time has been lost or no delay has occurred as is evident from the facts and the
communication between the Charterers, Owners and the Master of the Ship, it can be justly
said that the off-hire clause did not come into effect leaving the Charterers to pursue only the
Hire Deduction clause. The off-hire clause together with other clauses sprinkled in charter
parties specify the circumstances which cause the ship to be off-hire and payment of hire to
be reduced.
57. In this present case, the claim by the Charterers for making a deduction in the hire and
further delays in hire payment was because of the alleged loss of freight to the Charterers
which was not caused by any negligence or fault on the part of the Owners. It was a Latent
defect which was beyond the comprehension of the Owners. Giving heed to the established
precedents, it would mean that the Charterers are not entitled to make any adjustment of hire
if the Owners are not at any fault and have practiced due diligence.
72
The Pythia [1982] 2 Lloyd’s Rep 160 at 168
73
The “Berge Sund”, [1993] 2 Lloyds Rep 453.
74
Royal Greek Govt v Minister of Transport,( The Ann Stathatos)(1948) 82 LlL Rep 196 at 199

58. It is further submitted that, except where otherwise specifically permitted under the
provisions of the c/p, the Charterers shall have no right to make arbitrary deductions from
hire which shall remain payable punctually and regularly as stipulated therein.
59. Hence, it can be understood that, in order to make a deduction from a hire payable, there has
to be an express incorporation for the same which shall provide the Charterers the right to do
so. Express deductions of hire are considered to be exhaustive. Unless a claim fell within
them, the hire has to be paid continuously. In the present case, the claim does not fall within
the Deduction clause.
60. Hence, it can be said that the Charterers in no circumstances had any right to provide for an
adjustment in the hire amount which they did and the act was unsustainable to the core.
[D] CHARTERERS ARE LIABLE FOR STRUCTURAL DAMAGES CAUSED TO THE
HOLDS OF THE VESSEL
61. Owners are to be responsible for loss of or damage to the goods or for delay in delivery of
the goods only in case the loss, damage or delay has been caused by the improper or
negligent stowage of the goods (unless stowage performed by shippers/Charterers or their
stevedores or servants) or by personal want of due diligence on the part of the Owners or
their Manager to make the vessel in all respects seaworthy and to secure that she is properly
manned, equipped and supplied or by the personal act or default of the Owners or their
Manager. 75
62. And the Owners are responsible for no loss or damage or delay from any other cause
whatsoever, even from the neglect or default of the Captain or crew or some other person
employed by the Owners on board or ashore for whose acts they would, but for this clause,
be responsible, or from unseaworthiness of the vessel on loading or commencement of the
voyage or at any time whatsoever.76 Damage caused by contact with or leakage, smell or
evaporation from other goods or by the inflammable or explosive nature or insufficient
package of other goods not to be considered as caused by improper or negligent stowage,
even if in fact so caused.77
75
Julian Coke, Voyage Charters, p.228, Informa Law (2014)
76
Ibid
77
Ibid

63. Time Charterers usually provide that the charterer shall redeliver the vessel in the same good
78
order and condition (fair wear and tear excepted) as when delivered to him. If on
redelivery the vessel has by the Charterer’s breach of contract been damaged, his liability is
for damages (i.e. the cost of repair and loss of profit during repair).79
64. Most of the Charterparties stipulate that the Charterers will be liable to pay damages if, as a
result of a breach of any of his obligations under the charter, he redelivers the ship in a
worse condition than when delivered, ordinary wear and tear excepted.80 Therefore, often it
will be necessary to decide what degree of physical change will constitute "ordinary wear
and tear" and what will constitute "damage" for which the Charterers will be liable.81
65. The rule in this respect is that where the vessel is engaged in a trade where the risk of
physical damage to the ship is high, the room for the physical damage being referred to as
ordinary wear and tear increases.82
[D.1] THE SHIP WAS SEAWORTHY WHEN DELIVERED
66. A Time Charter not by way of demise includes an undertaking of seaworthiness at the
beginning of the time83, but, there is by Scots Law no such warranty at the beginning of each
voyage under the Charter.84
67. The Owners Responsibility Clause (Owners to provide)85 consists of three paragraphs. The
first is, on the face of it, an acceptance of liability for loss of or damage to goods or delay in
delivery incurred by any of the three specified causes already mentioned,86 the second
paragraph excludes liability for all such loss from any other cause, and the third cuts down
the ambit of the first paragraph by introducing a narrow definition of “improper or negligent
stowage”, for which the Owners may be liable under the first paragraph. The effect of the
first and third paragraphs may, therefore, be considered together.
68. In the instant case, the vessel was delivered seaworthy and cargo-worthy in its best condition
as it was a prerequisite for delivery of the vessel in compliance with the C.P. therefore, the
78
Bernard Eder, Scrutton on Charterparties and Bills of Lading, p.446, Sweet And Maxwell, (23rd Ed. 2015)
79
Ibid at p. 446
80
Chellew Navigation Co. v. Appelquist , (1933) 38 Com. Cas. 218
81 Canadian Pacific Railway v. Board of Trade (1925)22 Lloyd's Rep.1.
82
Id.
83
Giertsen v. Turnbull 1908 S.C 1101
84
Ibid at 1103
85
Clause 6, Addendum at p. 4
86
Ibid

question of lack of due diligence on the part of Owners does not arise. The Charterers took
possession after all due formalities and inspection. Any default on the part of Charterers
doesn’t create a liability on the part of the Owners.
[D.2] THE DAMAGE IS CAUSED DUE TO CHARTERERS FAULT AND NEGLIGENCE
69. The ship owner may be entitled, either by implication of law or by express agreement, to be
indemnified by the time-charterer against loss falling upon him in consequence of latter’s
acts or of complying with the latter’s requests or orders.87
70. The Charterers are responsible for redelivering the Vessel in the same good order and
condition (fair wear and tear excepted) as when delivered to him.88 If on redelivery, the
Vessel has by the Charterer’s breach of contract been damaged, his liability is for damages.89
71. It is always necessary to determine whether or not the losses claimed were caused by
complying with the Charterer’s order, which must be an effective cause of losses (although
it need not be the sole cause of loss).90
72. Clause 47 of the C.P specifically mentions Hold Cleanliness clause which provides that it is
the primary responsibility of the Charterers to clean and maintain the holds in the same state
of condition as was on delivery of the vessel. Any delay or damage shall be the
responsibility of the Charterers and they would be liable to pay costs for such delay or
damage.91
73. Charterers can carry 4 dirty cargoes out of salt/sulphur/scrap/bulk cement as per C.P, but, for
not more than 2 consecutive voyages and not before the last cargo. 92 The Salt and/or Sulphur
cargo directives under the Cargo Exclusion Clause specify that before loading sulphur/salt,
vessels’ holds to be coated with hold block/limewash by the Charterers. It is prudent to
accord that no such coating was undertaken by the Charterers as had it been done, the vessel
wouldn’t have suffered such structural damages.
74. Also, the Cargo Exclusion Clause in the Addendum93 provides that the Charterers may carry
corrosive substances, but subject to their sole liability. In the case of any damage,
87
Telfair Shipping Corp. v,.Intersea Carriers SA (The Caroline P), [1984] 2 Lloyd’s Rep. 466
88
89
Black Sea and Danube Shipping and Co. v. Goeland Transport and Trading Co.(1942) 74 L1.L.R 192 at 195
90
ENE Kos Ltd. v. Petroleo Brasileiro SA (The Kos), [2012]2 Llyod’s Rep. 292
91
Cl.47, p.2,Rider Clauses, NYPE Standard Time Charterparty,1993
92
Cl.49, p. 2,Rider Clauses, NYPE Standard Time Charterpaty,1993
93
Ibid

Charterers’ shall be liable. Charterers would also undertake to provide a cargo survey report
prior to loading stating the structural formation of Sulphur.
75. In the present case, an Independent Expert opined that there are structural defects in the
holds of the vessel owing to cargo-voyages of Iron ore, Nickel ore, Cement Clinker and
Sulphur. The Expert strictly advised for sandblasting as these damages would further impact
the navigability and commercial usability of the vessel.94
76. Therefore, it is humbly submitted that the cost of sandblasting should be borne by the
Charterers as they failed to maintain the condition of the Vessel holds as was provided to
them. They are to be held responsible for the structural damages and the cost of sandblasting
so incurred.
[E] THE CHARTERERS ARE LIABLE TO PAY THE OWNERS THE WITHHELD
HIRE AMOUNT ALONG WITH INTEREST
77. The usual aim of damages for breach of contract is to put the claimant into as a good
position as it would have been in if the contract had been performed.95 This is commonly
referred to by academic commentators as the protection of claimant’s expectation interest 96
or performance interest. It is often said to be based on “Compensatory Principle”.97
Charterers had wrongfully withheld the hire amount. In addition to that, wrongful
termination of the Charter Party led to the loss in excess of 4,70,000/- USD98 to the Owners.
The cost of sandblasting i.e. 1.13 million USD should further be borne by the Charterers as
the damage so caused is due to negligence on the part of the Charterers.
[E.1] THE CHARTERERS ARE LIABLE TO PAY THE MONEY WITHHELD BY THEM FOR
THE MONTH OF MARCH
78. Where two parties have made a contract which one of them has broken, the damages which
the other party ought to receive in respect of such breach of contract should be such as may
fairly and reasonably be considered as arising naturally.99 It is further submitted that, as if
any claim of withholding the amount with respect to the off-hire clause is maintainable, then
94
Refer P. 15, Moot Proposition
95
Zim ISS v. European Container [2013] EWHC 3581
96
Fuller; Perdue, “The Reliance Interest in Contract Damages”, pp. 52-96 at 66, 46 Yale Law Journal (1936)
97
Flame SA v. Glory Wealth Shipping Pte Ltd. (The Glory Wealth) [2013] EWHC 3153 (Comm.)
98
Hire during repair = 17*$10000 = $ 170000, hire from 12th Dec to 12 Jan = 30* $10000= $300000,
Total = $470000.
99
Hadley v. Baxendale, (1854) 9 Ex. 341 at 354-355.

the same should be entertained through a legitimate recourse to dispute resolution as agreed
by both the parties. Hence, instead of randomly deducting the amount, the same should be
contemplated by the tribunal and the Charterers should be asked to pay the same.
79. In the instant case, the Charterers withheld the amount in the month of March. The dispute if
any, on the part of Charterers arose, then, the same should have been redressed through
arbitration. The Charterers are not authorized to deduct any amount without notifying the
same to the Owners. The act of Charterers is arbitrary and whimsical. So if the Charterers
actually wanted to terminate the C/P, they should have re-delivered the vessel which they
did not. Now, it can be argued that the Owners themselves refused to accept the re-delivery.
80. The emails might resemble that the owners had no intention of taking the delivery back but
that is not true as those were merely business conversations and negotiation which reflected
owners’ will to continue the C/P. If the Charterers were actually adamant about terminating
the legally binding relationship, they instead of keeping the vessel at their disposal should
have re-delivered it back as it was their responsibility and like payment of hire, it is an
absolute obligation.
81. The arbitral tribunal may, therefore, award simple or compound interest at such rates as it
considers viable to meet the ends of justice.100 Thereby, it is humbly submitted that the
Charterers are liable to pay the money withheld and the interest therein as per the prevailing
market price.
[E.2] THE CHARTERERS HAVE BREACHED OBLIGATION BY NOT PROVIDING ANY
INSTRUCTIONS TO THE VESSEL

82. By not providing instructions to the Vessel to sail to West Coast India, the Charterers have
caused damages to owners. It is a settled view that where a shipowner withdraws a vessel for
non-payment of hire, the ship owner can claim damages for the remainder of the agreed
period of hire based upon the Charterer’s repudiation of the charter if the Charterer’s
conduct is such as to amount to repudiation.101.
83. In the present case, the Charterers abstained from providing instructions to The Master of
the Vessel Despite continual requests by the Owners. The Charterers were explicitly
informed about the rights which they held over the vessel and were given specific
100
§. 49, Arbitration Act, 1996 (UK).
101

information about the vessel still being at their disposal by making them aware of the fact
that, the vessel was waiting for them at the anchorage for their instruction.102 This means
that the Charterers were well-aware about the vessel waiting at the harbor. The arbitrary
actions of Charterers’ have caused a loss of 4, 70,000 USD103to the Owner of the Vessel.
Therefore, the Charterers are liable to pay damages for the same.
[E.3] THE CHARTERERS ARE LIABLE TO PAY THE COSTS OF SANDBLASTING
84. The ship owner may be entitled, either by implication of law or by express agreement, to be
indemnified by the time-charterers against loss falling upon him in consequence of latter’s
act, or of complying with the latter’s requests or orders.104
85. The negligence on the part of the Charterers by not loading cargo as specified to in the C.P,
the Vessel suffered structural damages which had to be addressed urgently by undertaking
the sandblasting process. Structural damages do not form a part of ordinary wear and tear.
86. Thereby, the cost of sandblasting i.e.1.13 million USD should be paid by the Charterers to
make good the damages so incurred. It is therefore humbly submitted that the charterers are
liable to pay 1.13 million USD to the owners.
102
Refer Moot Proposition, pp. 30 & 31
103
Hire during repair = 17*$10000 = $ 170000, hire from 12 th Dec to 12 Jan = 30* $10000= $300000,
Total = $470000.
104
Telfare Shipping Corp v. Intersea Carriers SA (The Caroline P), [1984] 2 Llyod’s Rep. 466

PRAYER FOR RELIEF

In light of the above submissions, the Claimant/Owners requests this Arbitral Tribunal to:
DECLARE that, this Tribunal has jurisdiction to hear the dispute.
ADJUDGE that, the Respondent/Charterers are liable:
a) For Repudiatory breach of Charterparty.
b) For structural damage caused to holds of vessels.
c) And were not entitled to make deductions in hire amount.
d) For payment of withheld hire amount along with interest.
ADJUDGE that, the Claimants/Owners:
e) Didn’t commit a repudiatory breach of the Charter by withdrawing the vessel.
And therefore, AWARD the Claimants/Owners:-
g) For the default in the payment of USD 1.13 million by the Charterers and the USD 4,70,000
which was withheld by the Charterers.
Any interest or compound Interest pursuant to Section 49 of Arbitration Act, 1996 (UK)

Nluo Imam Claimant Memorandum

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3RD NATIONAL LAW UNIVERSITY ODISHA INTERNATIONAL MARITIME ARBITRATION MOOT

3RD NATIONAL LAW UNIVERSITY ODISHA INTERNATIONAL MARITIME

LAFAYETTE AND COMPANY LIMITED

ACC RADANI Pvt. Ltd.

MEMORANDUM ON BEHALF OF CLAIMANT

ON BEHALF OF: AGAINST:

LAFAYATTE AND COMPANY LIMITED ACC RADANI Pvt. Ltd.

MEMORANDUM FOR CLAIMANT Page

MEMORANDUM FOR CLAIMANT Page i

[E.2] THE CHARTERERS HAVE BREACHED OBLIGATION BY NOT PROVIDING ANY

MEMORANDUM FOR CLAIMANT Page ii

MEMORANDUM FOR CLAIMANT Page iii

TREATIES/CONVENTIONS PAGE NO.

Chatterjee Petroleum v. Haldia Petro Chemicals, 2013 ARBLR 456 (SC) 8

Enercon (India) Private Limited v. Enercon GMBH 2014 (5) SCC 1

Reliance Limited v. Union of India and another. (2014) 5 SCC 1 8,9

Reliance Limited v. Union of India and another. (2015) 10 SCC 213 9

Renusagar vs. General Electric Co., (1984) 4 SCC 679 7

MEMORANDUM FOR CLAIMANT Page iv

Videocon Industries Ltd. v. Union of India (2011) 6 SCC 161 9

Arab National Bank v. El Abdali (2005) 1 Lloyd’s Rep.608 4

Brinkibon Ltd. V. Stahag Stahl und Stahlwarenhandelsgessellschaft mbh, [1983] 2 AC 34 10

Canadian Pacific Railway v. Board of Trade (1925)22 Lloyd's Rep.1. 17

Chellew Navigation Co. v. Appelquist, (1933) 38 Com. Cas. 218 17

Christopher Brown Ltd. v. Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe

Fiona Trust and Holding Corporation v Privalov [2007] Bus L R 1719 1

MEMORANDUM FOR CLAIMANT Page v

Giertsen v. Turnbull 1908 S.C 1101 18

Hadley v. Baxendale, (1854) 9 Ex. 341, pg. 354-355 20

Nanfri case [1978] 2 Lloyd's Rep. 132 12

Pacific Carriers Ltd. v. BNP Paribas (2004) 218 CLR 451 4

Petrodulos (2002) L.M.C.L.O. 66 4

Seabridge Shipping AB v. AC Orsleff’s EFTS A/S [2000] CLC 656 2

The “Berge Sund” [1993] 2 Lloyds Rep 453. 16

The Agios Lazaros, [1976] 2 Lloyd’s Rep 47 2

The Frotanorte [1995] 2 Lloyd’s Rep 254 2

The Pythia [1982] 2 Lloyd’s Rep 160 15

MEMORANDUM FOR CLAIMANT Page vi

Vosnoc Ltd v. Transglobal Projects Ltd, [1997] 1 WLR 101 2

Zim ISS v. European Container [2013] EWHC 3581 20

E. Gaillard; J. Savage (Eds.), Fouchard Gaillard Goldman on International Commercial

Julian coke, Voyage Charters, 4th ed., Informa Law (2014) 17

Robert Markin, Arbitration Law, Informa, (2012). 3

Yvonne Baatz, Maritime Law, Informa Law, 3rdedn. (Year) 12,13

MEMORANDUM FOR CLAIMANT Page vii

MEMORANDUM FOR CLAIMANT Page viii

MEMORANDUM FOR CLAIMANT Page ix

MEMORANDUM FOR CLAIMANT Page x

MEMORANDUM FOR CLAIMANT Page xi

MEMORANDUM FOR CLAIMANT Page xii

B. RESPONDENTS ARE LIABLE FOR REPUDIATORY BREACH OF CHARTER

C. CHARTERERS ARE NOT ENTITLED TO MAKE ANY DEDUCTIONS FROM THE

MEMORANDUM FOR CLAIMANT Page xiii

D. CHARTERERS ARE LIABLE FOR STRUCTURAL DAMAGES CAUSED TO THE

E. THE CHARTERERS ARE LIABLE TO PAY THE OWNERS THE WITHHELD

MEMORANDUM FOR CLAIMANT Page xiv

[A.1] THE ARBITRATION TRIBUNAL HAS JURISDICTION TO HEAR THE DISPUTE

MEMORANDUM ON BEHALF OF CLAIMANTS Page 1

[A.1.2] The Owners has commenced these arbitration proceedings in

MEMORANDUM ON BEHALF OF CLAIMANTS Page 2

MEMORANDUM ON BEHALF OF CLAIMANTS Page 3

MEMORANDUM ON BEHALF OF CLAIMANTS Page 4