SCENARIO 1

Aussie Shipping is an Australian carrier company specialising in transporting goods between the Australian ports of Melbourne, Sydney and Brisbane and Jakarta (Tanjung Priok port), Indonesia. The company owns two general cargo ships, which can carry up to 100 20" containers (20 foot long) on deck and has multiple thermally controlled cargo holds below deck for bulk goods, in which the ships carry mainly fresh and frozen foods.

Aussie Shipping recently accepted two shipments for carriage from Melbourne to Tanjung Priok on board one of its ships, The Flying Kangaroo. Namely,

• 1 x 40" (40 foot long) container of academic text books, packed inside the container in 4000 cartons. This consignment was shipped by an academic bookseller in Melbourne, and the Bill of Lading issued by Aussie Shipping names the University of Indonesia as the consignee. This container was stowed on the deck of the Flying Kangaroo.

• 2000kg of frozen beef, packed onto 5 pallets. This consignment was shipped on behalf of Jakarta Food Supplies (JFS), an Indonesian company that supplies local supermarkets in Jakarta and has purchased the beef from an Australian wholesaler. The Bill of Lading issued by Aussie Shipping names JFS as the consignee. This cargo is loaded and stowed in one of the ship's thermally controlled cargo holds.

Both consignments were loaded on board as scheduled and the Flying Kangaroo departed Melbourne and arrived at Tanjung Priok on time. However, during the voyage, the Flying Kangaroo encountered storms and unusually rough seas two days from its destination, at which point the container of books fell overboard and had to be retrieved. It transpires that the deck equipment for securing containers on the ship has not been customised to accommodate the newer, larger 40" containers. When the container is opened at the Port of Tanjung Priok, all of the books are found to be damaged by sea water which entered the container while it was in the water.

There is also a problem with the shipment of beef. A day into the voyage, the crew member responsible for checking and maintaining the cargo holds became ill and was confined to his cabin for the rest of the voyage. No other crew member was assigned to that task. Unfortunately, lightning during the storm disrupted the electricity supply to the cargo hold containing the beef. Without refrigeration, the beef thawed. Over the two days the temperatures in the hold soared and by the time the shipment arrived it had spoiled.

1. Discuss whether Aussie Shipping has breached its carrier obligations, and whether it may rely on any defences, in respect of potential claims by the University of Indonesia and JFS. (10 marks)

1. Consider this extract from the Bill of Lading issued for the shipment of books:

Marks and nos	Quantity and description of goods	Gross weight, kg.	Measurements
RMT492	1 Container STC 100,000 printed books Particulars declared by shipper FREIGHT PREPAID		67.7m3

Regardless of your answer to question B above, assume that Aussie Shipping has accepted liability for the damaged books, but that it is disputing the amount of compensation it is required to pay the University of Indonesia. The case is proceeding in the Australian courts, discuss how the maximum amount of compensation Aussie Shipping will have to pay will be calculated taking into account the conflicting case law on this question . [8 marks]

SCENARIO TWO

Water Lily House (WLH) is a business in Thailand that supplies SE Asia and Australia with high quality and rare water lilies. WLH has organised for a shipment of three rare species of water lilies: precisely 120 plants, forty of each. The plants are being sold on F terms to Exotic Blooms (EB) in Brisbane, Qld, which specialises in the supply of speciality plants to collectors. The price for each plant is $250 (FCA Nong Khai Airport) and EB has agreed to make payment via a Letter of Credit, which is subject to the UCP600 rules.

EB organised transport with Malaysia Air Freight and WLH delivered the plants, which WLH had carefully packed in accordance with MAF's guidelines and instructions, to a MAF agent at Nong Khai International Airport. The MAF agent issued EB with an Air Waybill for the 120 plants, which specified that the shipment would be transported on flight MAF01 to arrive in Brisbane, via a short stop at Bangkok Airport.

At Nong Khai Airport, MAF employees consolidated the plants into air freight containers for loading. However, it was a very busy day at the airport. There were consignments of many exotic flowers and plants from all over the north of Thailand, departing Nong Khai and destined for transhipment at Bangkok to Singapore, Jakarta and Ho Chi Minh City. During the busy consolidation process, 40 of the plants destined for Exotic Blooms in Brisbane, were mistakenly placed into a freight container labelled for unloading at Bangkok for transhipment. This container was unloaded at Bangkok and the plants were lost, likely misdelivered.

The remaining 80 plants did arrive at Brisbane Airport as scheduled. However, they all appear to have suffered damage as a consequence of the journey. When EB unpacked the goods, it discovered that nearly all of the plants were uprooted or had broken stems and bruised leaves and buds. The plants are very delicate and EB anticipates that all the damaged plants will die. Certainly, EB cannot supply these plants to its customers. The flight record, lodged by the pilots, notes that the aircraft experienced "severe turbulence". Severe turbulence refers to large, abrupt changes in attitude and altitude with large variations in airspeed and brief periods where effective control of the aircraft is impossible. During severe turbulence loose objects may move around the cabin and damage to aircraft structures may occur.

EB took delivery of the shipment eight days ago and wishes to obtain compensation for the lost and damaged plants from MAF under the contract of carriage. EB is especially anxious about obtaining compensation because the employee who organized the carriage contract forgot to organize insurance. The day after EB took delivery of the shipment, EB's manager attempted to speak to the business customer representative of MAF to notify MAF that there were problems with the shipment. However, the line was busy and the manager left a voicemail message.

Thailand and Australia are party to both the Montreal Convention 1999 and the Montreal Protocol 1975 to the Warsaw Convention, as amended in 1955.

1. Discuss whether the carrier is likely to be liable to AA under the provisions of the relevant Convention and how the limits of compensation will apply to limit any liability of the carrier [10 marks]

SCENARIO THREE

WLH has encountered problems in obtaining payment under the letter of credit arrangement set up by EB. EB applied for a letter of credit with the Bank of Australia, which issued the credit in favour of WLH and arranged for the Bank of Nong Khai (BNK) to be the advising bank. The letter of credit stated that it was subject to the UCP600 Rules. The letter of credit instructions stipulated that payment would be made against the usual documents - shipping documents, commercial invoice - as well as a certificate of inspection from the Thai Water Lily Epidemiology Agency, which certifies that the plants are free of water-lily diseases. On 15 October, WLH made a presentation. On 24 October WLH received an message from the Bank of Australia informing WLH that the presentation had been refused.

While not detailed in the refusal, a source at the Bank of Nong Khai tells WLH that there were two issues. Firstly, the commercial invoice described the goods as:

'40 x Rwandan water lily, 40 x crinum thaianum (Thai onion plant) and 40 x nympha ealotus'

Whereas the letter of credit instructions described the goods as:

'40 x nymphaea thernarum (pygmy Rwandan water lily), 40 x crinum thaianum and 40 x nymphaea lotus (white lotus)'.

Secondly, that the documents presented did not include the inspection certificate. WLH has an inspection certificate, it just forgot to include it in the presentation.

1. Discuss whether WLH is entitled to payment. Your response should include consideration of whether there is a complying presentation and any other matter you deem relevant [15 marks]

SCENARIO FOUR

Australian Electrical Supplies (AES) has regularly purchased products from Electronic Products (a manufacturer of electronic goods in Japan) over the last three or so years. However, one recent order has given rise to a dispute over improperly branded goods, late delivery of goods and associated warehouse costs and lost profits to AES amounting to $20,000. Attempts by AES to negotiate a solution were unsuccessful and AES has initiated arbitration proceedings in Japan under UNICTRAL Model Law provisions as agreed in the contract of sale with EP.

1. During the course of the arbitration AES discovers that one of the arbitrators - appointed because of his specialist knowledge of the electronics industry - has previously provided consultancy services to EP on 3 different occasions, most recently 5 years ago. Discuss what action AES can take and what the likely outcome of this action will be. [5 marks]
2. Assume that the arbitrator refuses to step down and further that the arbitrator finds in favour of EP. EP then initiate proceedings in Australia to enforce the award under the International Arbitration Act. Can AES challenge the award? If so, on what grounds? Discuss these questions and evaluate the strength of AES' case. [5 marks]