According to the first case, on 1st January 2012, a contract was signed between the Owner and the Charterers for time span of twelve months or 15 days more or less in the Charterers’ option. The agreement was according to the Companies Act, 1956 according to which a treaty between any two parties will be signed only when both the parties will agree to the terms and conditions and the two of them have the mutual understanding of the regulations applied in the contract.
Here, the Owners chartered their vessel or ship named as the Ocean King to the Charterers. It was decided that the delivery and redelivery has to be done at a safe port in Antwerp-Hamburg range. According to both the parties the clause 10 has come to the conclusion that the hire has to be done at US$17,500 per day by the Charterers. In this agreement it was provided in clause 11(a) that the payment has to be done to the Owners’ bankers in London known as the Mercantile & Commercial Bank. Also, it has been given in the case that in lines 162 and 163 of clause 11(b) the word ‘three’ had been inserted it means that in case if there is any negligence on part of both the parties then the amount of damage is reduced for the bearer of the risk which signifies that the threat will be reduced.
Also, it has been given that in the Arbitration Clause, clause45, part (a) has been deleted. According to this, in case of nay conflict it will be resolved outside the court in presence of the parties and involvement of a third party, known as arbitrator, which will determine the case and take the judgment. Now if 45 part (a) is removed so (b) is applicable which suggest that the decision on any conflict will be taken by the court. Finally, the vessel was delivered for the Charterers’ service on 29 January 2012 at 21.30 hours GMT. As decided, the Charterers always gave the information to the bank to make the payment. And so on 27 April, Friday, it again instructed the bank in Singapore to to remit the funds to the Owners’ bank for the amount of value that day. But, unfortunately the financial institution sent the due amount to a third party by error. So due to this mistake of the authorities no fund was transferred to Owner’s account and the seventh installment became due on 28th April.
Since no finance was received in the Owners’ bank by close of business at 17.00hrs that Friday a noticed was immediately sent by them to the Charterers at 18.30hrs BST that day which gave the details that hire was not received by them on time. The notice also mentioned the intention of the Owners that it will withdraw the vessel if it does not get the due amount by 1700hrs on Wednesday 2 May giving them a time of two days. All this created confusion because the Charterers bank insisted that it made the correct payment on time but it was after two days that they realized that the funds were transferred to the wrong party by the bank.
Meanwhile, now on Wednesday 2 May, at 17.30hrs BST, the Owners sent a further message to the Charterers which mentioned that in spite of the warning that it has sent it did not receive the funds so it will be removing the vessel from the opposite party as soon as she has finished discharging her present cargo which was to be expected on Friday 4 May at 18.00 hours local time Rotterdam. As per the note the Owners duly departed the vessel and re fixed her elsewhere which implies that it went into an agreement with another party saying that the earlier contract has become void. The Charterers now insisted that the withdrawal of the vessel was done in a wrong way and also it claimed substantial damages. It was so because the market rates of the goods in the ship has risen significantly between the date of the charter and the date of withdrawal.
Suggestions to the Owners
The advice to the Owners has been given to the European Union Competition Law. In this case, clause 11(a) has been included according to which if both the agreeing parties will show negligence to the project then amount of the claim can be reduced by the bearer of the damage. Here, this is a positive point for the Owners because he is the one who has to pay the amount to the Charterers. So the owners can take benefit of this act and can pay less funds to the other party. In this way it will be acting in favor of the consumer welfare and will not face any contradicts. Articles 101 and 102 of European Union are being applied here in this case according to which all its rules are in the interest of consumers and businesses along with easing the competitive burden of firms doing business in Europe.
It is a suggestion to the Owners that it should take all decisions regarding the case in favor of the consumer, that is, the Charterers so that it will not be charged of violating the European Union Competition Law which has now become more strict and focuses on the safety of the purchaser. But along with this, it can go against the Charterers in the case where it does not go in opposition to the EU laws[ EU Competition Law - Article 101 and Article 102. 2010.
In the case it is also given that clause 45(a) is deleted so the judgment will be taken by third party called as the arbitrator outside the court but since this portion has not been included so now the decision on the conflict will be taken in the court and the justice will again be in the favor of the consumer and not the competition. It will not protect the rivalry but the other party. The Owners is here advised that it should respect the outcome decided by the judiciary and move according to it.It is advisable to the Owners that it can accept the fact that it has to give a time gap of ten days to the Charterers before signing the agreement of ship with the third party but has sanctioned only two days to it.
So, the second party or the consumers did not have the time to act on the notice provided to it.It is given in the case that it is also following the clause 11(b) which says that if damage is cause due to one party and that too in its custody or by some of his actions then only one of them will be liable to the harm and the other party can claim for it so here also the Charterers can argue over the injured part but it is to the relief of the Owners that they can get relief from the amount to be paid because here negligence on part of both the parties is considered EU Competition Law.
Now, in the present scenario, the European Union Competition Law is taking more and more strict actions so that it can safeguard the consumers. According to article 101 (81) the following will be prohibited which will be incompatible with the internal market. It says that all agreements between undertakings, decisions by those associations and all the concerted activities which may affect the prevention or restriction of competition will directly or indirectly fix the selling or purchase prices. In this article 101, some conditions have to be established. First is a practice of an agreement between two or more undertakings or a decision by an association. Second is that there should be fulfillment of an object or effect the prevention of any competition and favor the consumer’s interests.It also states that an appreciable effect of competition or effect on trade along with the customer’s wellbeing. Keeping this in view, the Owners are suggested that it should abide by the regulations written in the article 101.
The concept of ‘undertakings’ here means that it will include individuals, corporations or limited partnerships. Also it will take into effect the charities and cooperatives. It will also consist of government departments and agencies. It is also declared that any agreement between companies within the similar industry or corporate group will not be entitled to the rules of competition law because they will be treated as a part of the same business entity[ The doctrine of frustration in English law. 2013.
For this article, the objective or effect of any conformity of a project will have to aim at removing the competition and focus only and only on the welfare of both the parties giving preference to the overall benefits. The lists of non exhaustive agreements which are to be anti opposition are given in article 101 (1) which include limited or controlled production, purchase or selling price will be fixed directly or indirectly. Also, markets and technical investment will also be restricted. Here it is suggested to the Owners that this act also contain that if the object of the union is against competition then it can claim for exemption on the payment of funds to the Charterers on their damaged goods. It is also an advice to them that if they can prove in the court that the concurrence between the two parties was to favor competition but that effect is too in an appreciable manner then it will not face any problem.
The Owners can also demand for a release under article 101(3). The criteria for this are that it can prove in the court that the aim of the agreement between the two was to contribute to improve production or distribution and also promote technical progress. It shall also ensure that the business was to promote technical or economic progress which will allow the consumers a fair share of the benefits that are going to be resulted.
Now the article 102 says that it will prohibit any abusive business conduct by any undertaking where it holds a dominant position within the EU which signifies that the one who holds a significant position in the market and enjoys power. Here market may be defined geographically and to identify the competitive constraints in a systematic way. Once it is known it is important to know that whether the position of the undertaking is a strong one or not. Under article 102 it has to be determined about the party if it is able to carry on effective competition by behaving independently of its rivals and the customers. This article also presents lists of examples of abusive act such as if the strong body imposes unfair purchase or selling price and any unfair trade policies then this will not be accepted. Along with this, applying dissimilar conditions with other business parties and making the contract to be concluded by applying acceptance of obligations will also be regarded against the regulations.
The Owners should not have started the contract immediately with another party without giving enough time to the Charterers. By doing so it was going against the laws of EU. Article 102 has been more frequently applied to the behavior that is aimed at elimination of existing competitors and support consumer wellbeing so in that case the Owners will have to act accordingly because if they will not do so then they will be at a fault in the eyes of law which will eventually harm their business and image.
It is discussed earlier that the European Law is mainly focusing on the benefits of the victim party so in regards to this it has made certain changes in the law which will further remunerate the injured group. The Council of the European Union adopted a new policy which has been named as the Regulation (EC) No. The main aim of this new board was to provide a foundation or aid to the party who has been claimed. It has been suggested by the regulation that an exemption can be provided on the property that is being damaged and so the claimed party can pay less for the cost or repair that has been incurred. The new rules lie in article 81 and 82 of the European Union Treaty. The ruling was directly based on supporting the relevance which has been mentioned in article 81(3) of the treaty. It has been declared that all the guidelines are mentioned in article 81 and 83 of the treaty. It is necessary to provide an exception for the repaired charges.
The Owners are not countable to pay for the complete repair of loss which was being incurred by the Charterers. According to this law and article 83, the Owner can get release from the payment of funds on the damaged goods after an inspection is done by a committee which will be set up by the judiciary. It is then the duty of this committee to decide on the amount of charges to be paid by the first party. So it is advisable to the Owners to present those points where it is right and go for a mutual understanding in front of the court.
There are certain changes that have been made in this case. It has been given that no message was sent to the Charterers on Friday 27 April. Earlier on his day a notice was being sent saying the hire did not reach to the Owners and they are intended to withdraw a vessel. But this time such a thing did not happened. Instead, a note was sent on Monday 30 April in which it was signified that under clause 11(a), hire has to be paid until Thursday 4 April and not later than that. As no amount was received by the party so it checked this with the bank about the funds. On knowing that no amount was transferred so it sent a notice to the Charterers on Friday 5 May at 12.00hrs BST which said that as the outstanding amount has not been received so the vessel has been withdrawn immediately from the Charterers’ service and also claimed for the costs of discharging the cargo form the vessel.
But it also has been given that twenty minutes later after the dispatch of the notice the Owners received a call from the Mercantile & Commercial Bank apologizing that the bank has received the hire amount at around 2am that Friday morning but it failed to to recognize the remittance immediately. It happened because this transaction was not referred by the Charterers that it has transferred the amount. So the banker informed the Owners about the mistake and also the amount transferred.
But, despite this also, the Owners proceeded to withdraw vessel from the charter. Not only this, it also refused to return the hire that the other party has paid. It said that it has kept the amount as a security for the costs that it has incurred in completing the discharge of the cargo, that is labor charges, and also for the detention of the ship while this operation was performed when it was used for free of cost for seven days. Now, again the Charterers have maintained that the withdrawal was done wrongfully and ahs claimed for substantial damages.
- In providing the advice to the Owners it is important to note that where it is going right in the case. First of all it has to go according to the European Union Commission Law which is always in favor of the consumer and here it is the Charters. But hen too, there are areas where it is legal and it can prove that in the court.
- It was given that clause 45(a) was deleted so here the applicable will be clause 45(b) according to which the matter of conflict will be resolved by the court itself and no other third or outside party will be involved. It can present in the case that it has given a time span of a complete seven days before giving any kind of notice to the charter.
- Before giving any notice to the second party about the nonpayment of the funds the Owners cross checked with the bank and when it was conferred that no amount was transferred the only it send the notice.
- After checking also it did not send the notice on 4 May itself but did it on the next day, that is, 5th. Here also the Owners are right in their action.
- The Charterers were wrong in the deed that it did not paid the hire amount on 4th but on 5th morning though it received the notice a day earlier.
- Also, it has been given in the case that the bank has informed that it was not referred when the amount was transmitted to the Owners’ account so there was the delay. The advice to the Owners is that it can put the point in the court that it was the mistake of the Charterers that it should inform prior to the bank about it.
- The notice given to the Charterers was legal because it has done this in order to defend itself.
- First of all, after knowing of the fact that the bank has received its due hire then also it continued with the withdrawal of the cargo from the vessel. Such a deed should not have happened.
These will include the deeds in which the Owners should take steps so that the case can be in its favor.It is advisable to the Owners that it should abide by the Law of Doctrine of Frustration Act according to which whatever it has done was to defend itself when was being exploited. It also says that a contract can be discharged on the ground of frustration when anything occur after the bond has been formed which can render it physically or commercially impossible to fulfill the agreement or transform the obligation to perform into a radically different one which can be completed at that moment. It consists of main five propositions which are the essence of the doctrine[ Vogelaar, F.O.W., 2000.
The Competition Laws of the EU Member States and Switzerland, Vol 1. Kluwer.First is that frustration will mitigate the insistence of common law on performance of absolute obligations or promises[ Wiesbrock, A., 2013. E.ON/GDF: Revisiting the Standard of Judicial Review for Fines in Competition Cases. Journal of European Competition Law and Practice. Second is that the doctrine is operated to end the contract and discharge the involved parties from performing any liability under it. Thirdly, it includes that a frustration brings a contract to an end without any force but automatically. Fourthly, the doctrine should not be due to the act or party going to rely on it in such a way that there must be some outside event or any uncertain change in the situation. Fifthly, any frustrating event shall take place without fault of any party which means that it cannot be provoked by the company itself.
After knowing of the fact that the bank has received its due hire then also it continued with the withdrawal of the cargo from the vessel. Such a deed should not have happened. Furthermore, it has said that it will retain the amount which it has received from the Charterers because it has incurred the cost of labor of that it has hired in discharging the cargo and also for the use of vessel for seven days free of cost. Except taking hire and withdrawing the cargo it has done everything in favor of the Charterers so that they are not harmed. These might be the two actions where the Owners are getting drifted from the articles 101 and 102 included in the European Union Commission Law and against it but by following the Frustration Act it will be able to save itself in the court and will also be acting in compliance with EU. The main motive of this commission is that the interests of the victim party shall not be harmed in any manner so by doing so the Owners’ point is also safeguarded and it will be not illegal in the eyes of law Scholz, U. and Purps. The Application of EU Competition Law in The energy sector. Journal of European Competition Law and Practice.
The Owners are also suggested that it can claim on the Charterers that it they have not followed the Right to Information Act. According to this, it is the right of both the parties in agreement to have all the information related to the entire proceedings ongoing in the business. But here, the Charterers did not provided the reference to the bank that it has transferred the amount of hire in the account of Owners in Mercantile & Commercial Bank and completed the transaction[ Rousseva, E. and Marquis, M., 2013. Hell Freezes Over: A Climate Change for Assessing Exclusionary Conduct under Article 102 TFEU. Journal of European Competition Law and Practice.
Since the Charterers did not do so it is not abiding by the Right to Information Act and eventually the Owners can get any sort of relaxation it wants. Apart from this, the Charterers did not inform about the transaction it did to the Owners also. When the funds did not reach the account of Owners and when it was about to withdraw the cargo then it gave prior information to the Charterers about its action so that it can take necessary steps. Here, according to the Right to Information Act, Owners are not wrong and are doing everything in compliance with the law[ Obersteiner. International Antitrust Litigation: How to Manage Multijurisdictional Leniency Applications. Journal of European Competition Law and Practice.
It has been given in the case that here both 11 clause (a) and (b) are followed. According to the former one, if the two parties are showing negligence and material is damaged because of both so in that case the amount of funds which is claimed for the harm then it will be decided by the court. Also, the party can get relaxation in paying the required sum. So, by following this, the Owners can also get some kind of relief in the money which it has to pay to the Charterers for the goods destroyed. In this manner, it will be following the article 101 and 102 of European Union Commission Law.
Now the 11 clause (b) says that if any harm is caused to the goods of one party when they were in the custody of the other party in agreement then the latter one will be liable for injury caused. In this case also, it can be said that the material of the Charterers is destroyed because of the action of the Owners since they were in its supervision and it employed its own labor to withdraw the cargo. So in this case the Owners have to prove this in court that it is following the 11 clause (a) and harm of goods was not only because of his mistake but also due to the carelessness of the Charterers. If this will happen then the first party will be saved from paying the entire funds of the goods destroyed[ Lopez, M.M. 2013. On the judgement recently issued by the General Court in TF1 e.a. v Commission. Journal of European Competition Law and Practice.
Since it is seen that in this case both the parties are being at a loss and both has done some kind of mistakes on their part. Now that it is the requirement that they have to act according to the European Union Commission Law, articles 101 and 102, which is now paying more and more attention towards the well being of the consumers or the victim party and not on the competition or rivals. One of the main aims of the EU is to provide a single or common market within Europe so that people, goods, services and capital are allowed to move freely among the member states.Excessive prices within EU Competition Law. European Competition Journal.It can achieve this goal by ensuring that consumers are treated fairly and all resources are allocated efficiently. So in this situation it is being suggested to the Owners that it should go for the mutual cooperation with the Charterers so that it will be relieved from the entire claim of the opposite party and will be innocent in the eyes of the legal committee. For this, it has prohibited certain business practices that are in the Competition Law. It is so because the Owners is not entirely wrong in the business dealings so it can win over the argument that where ever it is the mistake of the Charterers it will not be responsible for that loss or damage. It is for its own benefit they are being recommended to go for a joint collaboration so that the interests of both are not kept at a stake and the two will be at benefit[ Nazzini, R., 2011. The Foundations of European Union Competition Law: The Objective and Principles of Article 102.
It is also being proposed to the Owners that since the case is almost in its favor so it should not do anything that will harm the objective of article 101 and 102 of EU which can eventually harm the Owners itself[ Buccirossi, P. and Carpagnano. Is it Time for the European Union to Legislate in the Field of Collective Redress in Antitrust.
It has been given that in the first case it was suggested to the Owners that it should claim for the enactment of clause 11 (a) so that it has to pay only for a less amount of funds for the part of goods damaged and also follow the regulations of the Treaty on the Functioning of the European Union .In case second, it is being advised that it should stand by the Doctrine of Frustration Act because it has enacted to defend itself against Charterers. It is also recommended that since Owners also did some of the mistakes so it shall go for a mutual cooperation with the other party and agree to those terms which can satisfy both Kingston.Greening EU Competition Law and Policy. Cambridge University Press.