Task #3 – Answer to the Notice of Arbitration, Statement of Defence and Counterclaim

In the matter of an Arbitration under the Rules of Arbitration of the Northern International Court of
Arbitration

between

TRUE NORTH MARITIME OPERATIONS LTD

Claimant and Respondent to the Counterclaim

and

NEPTUNE FREIGHT COMPANY INC

Respondent and Counterclaimant

ANSWER TO THE NOTICE OF ARBITRATION, STATEMENT OF

DEFENCE AND COUNTERCLAIM

Levin and Ahmed Law Offices

441 Legal Corner, St Quinoa ZQ33LL, Southland

12 January 2021
1 Introduction

1. True North Marine Operations Ltd (the “Claimant”, “Respondent to the Counterclaim”
or “True North”) submitted its Notice of Arbitration and Statement of Claim in
accordance with the Arbitration Rules of the Northern International Court of Arbitration
against Neptune Freight Company Inc (the “Respondent”, “Counterclaimant” or
“Neptune”) on 6 November 2020.

2. The Respondent hereby submits its Answer to the Notice of Arbitration and Statement of
Claim, pursuant to the Arbitration Rules of the Northern International Court of Arbitration,
together with its Counterclaim.

3. This arbitration arises out of contract for the manufacturing and delivery of a marine
container feeder vessel. As will be exhibited below, the Claimant failed to live up to its
part, performing neither in accordance with the agreed timelines nor the agreed quality.

2 The Parties to the arbitration

2.1 Respondent

4. The Respondent, Neptune Freight Company Inc, is a company registered in Southland,

active in the marine transportation industry.

5. The Respondent is a long-established company. It maintains a fleet of ships, ferries and

container feeder vessels and operates in the Great Green River region, along the Pleiadean
Ocean coastline and overseas.

6. The Respondent’s contact details are:

Neptune Freight Company Inc

Attn: Jeremy De Klerk
702 Chateau Noir Avenue
Petit Paradis ZQ19RT
Southland
Tel: + 22 11 233 76 76
Fax: + 22 11 233 76 77
Email: [email protected]

7. The Respondent is legally represented in this arbitration by:

Saffiya Ahmed, Partner

Levin and Ahmed Law Offices
441 Legal Corner
St Quinoa ZQ33LL
Southland
Tel: + 22 44 677 18 18
Fax: + 22 44 677 18 19
Email: [email protected]

8. All communications and notices to Respondent with regard to this arbitration should be
directed to Ms. Saffiya Ahmed, counsel for the Respondent.

2.2 Claimant

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9. The Claimant, True North Maritime Operations Limited, is a company registered in
Northistan. dealing with the manufacture and supply of sea-faring vessels. Its contact
details, together with information on its legal representation. are included in its Notice of
Arbitration and Statement of Claim.

10. In this Answer, the Claimant and the Respondent shall be referred to together as “Parties”.

3 Factual background

11. In or around late 2016, the Respondent was introduced to the Claimant through mutual
contacts and the two engaged into discussions for the construction of a container feeder
vessel. The Respondent was keen on having such a vessel constructed within a strict
timeframe, in view of a charter party contract with a third party, Oceania Shipping
Company Limited. The Respondent addressed this issue and the timelines with the
Claimant.

12. Further to discussions and with the Claimant’s assurances that, if the Claimant would
receive a significant deposit, it would be able to deliver within the timeframe required by
Respondent, the two Parties entered into contract no. 25CQZ115-02(a) on 20 January 2017
(the “Contract”).

13. Under the Contract, the Claimant agreed to manufacture and deliver to the Respondent a
container feeder vessel of capacity 1500TEU on 18 January 2019 for a purchase price of
S$ 900,000,000.

14. After the payment of a significant advance (20% of the total purchase price), delays started
to occur on the Claimant’s side. The Respondent’s queries about the delays were met with
continuous reassurances from the Claimant.

15. Notwithstanding those reassurances, the vessel was finally delivered with a significant
delay, and launched on 3 June 2019. This delay led to the cancellation of the charter party
contract with the third party mentioned above.

4 The claims put forward by the Claimant

16. As to the Claimant’s claims that invoices as per the Contract were paid either partly or not
at all, the Respondent notes that in respect of the first three invoices the Claimant was paid
in full.

17. It is admitted that invoice 4 was held back for payment. This is because it was tied to the
approval of the final design of the vessel. The Ministry of Marine Resources and
Transportation, Southland raised some technical issues on the design, which the
Respondent passed over to the Claimant for clarification. The response received from the
Claimant was delayed by a month and when received was found to be wholly inadequate.
The Respondent asserts that not only did this response delay matters by a month, but this
also created an undesirable rift between the Respondent and the Ministry. The Respondent
withheld the payment as that contractual milestone was not achieved satisfactorily.

18. Also, as will be elaborated below, the Claimant’s performance under the Contract was not
up to standard. In light of this, and in order to avoid a situation where the Claimant would

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 be overpaid, Invoices 5 and 6 and were not paid, especially in a situation where the
Claimant underperformed.

19. Moreover and contrary to the Claimant’s arguments, the Respondent has not made any
defamatory remarks against the Claimant, and any remarks were purely of a factual nature.

5 Lack of Admissibility of the Claimant’s Claims

20. According to Clause 35, the Claimant was obliged to submit the dispute to mediation
before initiating these arbitration proceedings. The Claimant did not do so. Instead, it
decided to immediately proceed with arbitration.

21. The Respondent argues that this is not in accordance with the dispute resolution procedure
agreed between the Parties, and therefore, the Claimant’s claims are inadmissible.

6 Counterclaim

22. True North had agreed, pursuant to the Contract, to deliver the vessel to Neptune on 18
January 2019 or earlier.

23. Notwithstanding the above and the agreed delivery date under the Contract, the vessel was
launched on 3 June 2019.1 Further to the conclusion of the Contract, the Claimant has
acted in an inadequate (and unexpectedly slow) manner, which led to accumulated delay.

24. To the extent True North alleges that the delays in the construction of the vessel were due
to shortage in supply of required materials, the Respondent notes that True North had
received a large deposit for the construction of the vessel and was, therefore, in a position
to reserve all the necessary materials in advance and well before shortage in the supply
appeared.

25. Therefore, the Respondent requests the Tribunal to order True North to pay liquidated
damages for the above-mentioned delay in the receipt of the vessel. This amounts to
S$3,000,000. p/d (according to Clause 26 of the Contract) for 136 days, amounting to S$
408,000,000.

26. In addition, the capacity of the vessel, as delivered, was determined to be 10% less than
agreed between the Parties. In addition, the refrigeration section of the vessel was not
operating as per the appropriate standard. For the delivery of an under-capacity vessel, the
Respondent claims the amount of S$ 90,000,000. as quantum-merit damages.

27. Last, the delay in the delivery, led, as a consequence, to the cancellation of a charter party
contract concluded between Neptune and Oceania Shipping Company Limited, of which
True North was aware. As a result, Neptune incurred loss and damages, which the
Respondent respectfully wishes to recover from True North.

7 Procedural Matters

7.1 The arbitration agreement

1
See Respondent Document No. R-3.

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 28. Claimant relies on the arbitration agreement found in Clause 35 of the Contract, which
provides:

1. In the event of any dispute arising between the Parties in connection with this
agreement or the performance, validity or enforceability of it, senior managers of
the parties will, within 10 business days of a written notice from either Party to the
other (Dispute Notice), meet in good faith and attempt to resolve the dispute
without recourse to legal proceedings.

2. If the dispute is not resolved as a result of such meeting or if no such meeting

takes place within 20 business days of delivery of the Dispute Notice, the parties
agree to enter into mediation in good faith to settle the dispute in accordance the
CIArb Mediation Rules. Unless agreed between the parties within 30 days of
service of the Dispute Notice, the mediator shall be nominated by the President of
the Chartered Institute of Arbitrators. To initiate the mediation, a party must serve
notice in writing (ADR Notice) to the other party to the Dispute, referring the
dispute to mediation. Unless otherwise agreed between the parties, the mediation
will start not later than 14 days after the date of the ADR Notice. No party may
commence arbitration proceedings until 21 days after service of the ADR notice,
provided that the right to issue proceedings is not prejudiced by a delay.

3. If the Parties fail to reach agreement, such dispute must be settled by arbitration
in accordance with the Northern International Court of Arbitration Rules. The
number of arbitrators shall be three. Each Party shall nominate an arbitrator for
confirmation. The third arbitrator, who will act as president of the arbitral tribunal,
shall be appointed by the Chartered Institute of Arbitrators, after consultation with
the Parties. The language of arbitration shall be English and the seat of arbitration
shall be Athens, Greece.

7.2 The seat and language of the arbitration

29. Clause 35(3) of the Contract stipulates that: “The language of arbitration shall be English
and the seat of arbitration shall be Athens, Greece.” Accordingly, Respondent confirms its
agreement that Athens, Greece will be the seat of this arbitration. According to Clause 35
of the Contract, this arbitration will be conducted in the English language.

7.3 The applicable law

30. Clause 36 of the Contract provides that “This agreement and any dispute or claim
(including non-contractual disputes or claims) arising out of or in connection with it or its
subject matter or formation shall be governed by and construed in accordance with English
law.”.

7.4 The appointment of arbitrators

7.4.1 The arbitrator appointed by the Respondent

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31. Without prejudice to its jurisdictional defence referred to above, the Respondent hereby
nominates Prof. David Foster Eugenides for confirmation as arbitrator, in accordance with
Article 35(3) of the Contract. His contact details are:

Prof. David Foster Eugenides

25a Goldfinch Hill,
Beatty City 1022 SW, Kurtland
Tel: +343 54 11 671 22
Email: [email protected]
32. To the best of the Respondent’s knowledge, Dr. Eugenides is impartial and independent of
the Parties.

8 Prayer for Relief

33. In view of the foregoing, the Respondent respectfully requests the Tribunal to render an
award and:

(i) declare that the Claimant’s claims are inadmissible, due to the Claimant’s
failure to submit their claims to mediation, as required by the applicable arbitration
agreement, prior to initiating arbitration proceedings;

(ii) declare that Neptune did not breach its obligations under the Contract;

(iii) declare that Neptune’s remarks to the press were purely of a factual nature
and did not constitute defamation;

(iv) as a consequence, dismiss all of the Claimant’s claims against the

Respondent;

(v) declare that True North performed its obligations under the Contract in a
non-timely manner, delivering the vessel 136 days after the delivery date under the
Contract;

(vi) order True North, in accordance with Clause 26 of the Contract, to pay
liquidated damages at the rate of S$3,000,000. p/d due to non-timely performance
of the Contract and delay of 136 days, amounting to S$ 408,000,000;

(vii) declare that True North did not perform its obligations under the Contract
in accordance with the agreed qualities of the vessel under the Contract;

(viii) order True North to pay damages in this regard amounting to S$

90,000,000;

(ix) order True North to compensate Neptune for its losses and damages caused
by True North’s non-timely manner performance of its obligations under the
Contract with regard to the cancelled charter-party contract with Oceania Shipping
Company Limited, amounting to S$ 65,000,0000;

(x) order True North to pay compound interest at the appropriate commercial
interest rate, with quarterly rests, on the sums awarded to Neptune;

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 (xi) order True North to compensate Neptune for its costs, including but not
limited to, the fees of lawyers and any experts assisting them, translators, expenses
of witnesses and compensation for the time that witnesses and management spend
working on the defence of these proceedings, in addition to the costs of this
arbitration (e.g. any sums paid to the Northern International Court of Arbitration,
arbitrators’ fees and the costs related to any hearings); and

(xii) order such other relief as the Tribunal deems fit.

34. The Respondent reserves its right to amend, supplement, revise or otherwise modify its
Answer and pleadings and to submit documents, data, information, evidence as well as
legal, technical and other expert reports to its support.

35. This Answer is submitted in the name of the Respondent, in 5 original copies, in
accordance with the Arbitration Rules of the Northern International Court of Arbitration .

Respectfully submitted on behalf of Neptune Freight Company Inc by

Ms. Saffiya Ahmed

Partner
Levin and Ahmed Law Offices
St Quinoa, 12 January 2021

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