Safe Port. Express warranty. Case law overview

The identification of a named port or anchorage, thereby limiting the Charterers’ choice as to the location of performance is not inconsistent with a warranty that it is safe, any more than the sale of goods by description would be inconsistent with an express term as to quality.
Ullises Shipping Corporation v Fal Shipping Co Ltd (The Greek Fighter)[2006] EWHC 172 (Comm), per Colman J at para 313.

The Helen Miller

In several instances express safe warranty was an object of dispute between the charterers and the owners, for instance in St Vincent Shipping Co Ltd v Bock, Godeffroy & Co (The Helen Miller) [1980] 2 Lloyd’s Rep 95 the time charterers agreed by cl.25 that the vessel shall not be required to enter any ice-bound port, furthermore in accordance with cl. 32, they also agreed to employ the vessel in lawful trades between safe ports within the Institute Warranty Limits (the IWL). Additionally, they had an option for breaching IWL by paying extra insurance. During the winter of 1976 the charterers ordered the vessel to several ports within the St. Lawrence system which lay outside the IWL at that season. They also paid for the extra insurance, as required by clause 32 of the Charterparty. As a result of complying with the Charterers’ orders the vessel suffered damage to her shell plating and propeller as a result of contact with ice. Temporary and permanent repairs were made, which resulted in expenditure and delay, in respect of which the owners made claims against the charterers.

The charterers argued in their defence that where the charter-party expressly stipulates the place at which the vessel shall load or discharge the shipowner is regarded as having consented to the risk that the place will prove to be unsafe. Therefore, by analogy between a named port or range and an area (the IWL), the owners by giving the right to trade the vessel outside the limits impliedly agreed to take the risk that if the right was exercised the port would prove to be unsafe.

Mustill J rejected the Charterers’ arguments saying that there is no authority to suggest that where the charter contains an express warranty it is in any way restricted by the naming of the port or range. It was also held that the judgment of Sir Owen Dixon, C.J. cannot be read as expressing a contrary view, since the learned Chief Justice went on to hold that the charterers were liable under the charter, albeit it named the port. The payment of premium, in its turn, had a purpose independent of shifting the risk, but only to enable the owner to perform voyages which he could not otherwise have undertaken.

The Greek Fighter

In Ullises Shipping Corporation v Fal Shipping Co Ltd (The Greek Fighter) [2006] EWHC 172 (Comm), [2006] 1 Lloyd’s Rep Plus 99, where timechartered vessel was arrested in UAE for contraband of Iraqi oil, the owners claimed, that on assumption that actions of UAE coastguard were illegal under UAE law, the charterers were in breach of the safe port warranty. Relevant provision in charterparty said:

TRADING AREA: TRADING ALWAYS AFLOAT WITHIN IWL VIA SAFE PORTS/ANCHORAGES ARABIAN GULF/CHINA RANGE EXCLUDING IRAQ AS LONG AS SANCTIONS IN FORCE, INCLUDING RED SEA ALWAYS EXCLUDING AUSTRALIA AND NEW ZEALAND

It was lately amended with the wording that "vessel only to perform storage operations in the Khorfakkan area", so the owners argued it had the effect of the charterers assuming an obligation for the safety of the port of Khorfakkan or at least the anchorage off it. They submitted that Khorfakkan was unsafe because of the risk of irremediable confiscation of the vessel due to the endemic dishonesty of the UAE authorities, in particular the Coastguard, and the lack of any effective means of obtaining justice in cases where a vessel had been unjustifiably detained and confiscated. The charterers contended that the true effect of safe port warranty was to pre-select the place of performance by mutual agreement thereby displacing the safe port warranty.

At para 312 Colman J agreed with approach taken by the court in The Helen Miller to give effect to all the terms of the charter which are not inconsistent, and said at para 313-314:

The identification of a named port or anchorage, thereby limiting the Charterers’ choice as to the location of performance is not inconsistent with a warranty that it is safe, any more than the sale of goods by description would be inconsistent with an express term as to quality.

…As a matter of construction there is, in my judgment, no basis for the implicit abandonment by Owners of such a warranty simply because, instead of being employed between unspecified ports, the vessel was to be employed at one specific port. In this connection, the vessel could, for all owners knew, have been ordered by [charterers] to any anchorage off Khorfakkan, at which port there is on the evidence a spacious anchorage area. There would thus appear to be no reason why Owners should be taken to have relinquished the safe port warranty in relation to each and every anchorage to which [charterers] might direct her, as well as to the port generally.

The Archimidis

The next case to consider is AIC v Marine Pilot Ltd (The Archimidis) [2008] EWCA Civ 175 where the charterparty provided that the vessel was to "[l]oad one safe port Ventspils. Discharge 1/2 safe ports United Kingdom Continent Bordeaux/Hamburg range." While it was not in dispute that the words "discharge 1/2 safe ports …" import a warranty on the part of the charterers that the port or ports of discharge are or will be safe, the charterers nevertheless argued, citing Dixon CJ , that where a charterparty provides that the vessel shall load at a single named safe port, that means that the parties agree that the named port is safe, rather than the charterers warrant the safety of the port. Sir Anthony Clarke MR, giving the only reasoned judgment, pointed out that construing the first part of provision in question as having any different meaning from its second part would be odd and unnatural. He also stated that description of Ventspils as safe port in the expression "1 safe port Ventspils" must obviously bear some meaning, i.e. that the charterers warranted safety of this port.

Addition of word "safe" cannot be ignored, because it is a vital characteristic of the port or place and of a crucial importance to both parties to the contract. Lord Blackburn in Dahl v Nelson unequivocally stated in his analysis that the only effect of insertion of word "safely" is to stress on status of the vessel when she reaches her destination:

Had the words in the charterparty been "as near thereto as she may get," it would have been open to a charterer to contend that the ship must get as far as it was possible, however dangerous it might be. I do not think it could have been successfully so contended, but those who originally framed this clause prevented the possibility of such a contention by inserting the "safely." In the absence of authority, and construing the words in their ordinary sense, I think that is the only effect of the introduction of the word "safely." I think if the ship cannot get at all, it cannot get safely. And there is no authority putting any other construction upon the words.

The Athos I

In recent decision of U.S. Court of Appeals for the Third Circuit The Athos I [2013] US11-2576 concerning damage to the single hull tanker which occurred while she was approaching her berth on the Delaware River when she struck an abandoned ship anchor laying at the bottom, stabbing the ship’s hull and causing a spill of approximately 263,000 gallons of crude oil. The vessel was time-chartered (Shelltime4) to the pool and sub-chartered on ASBATANKVOY form which expressly provides that “[t]he vessel shall load and discharge at any safe place or wharf”. The judge held that the owner, were beneficiaries of voyage charter’s contractual safe berth warranty.

The judge considered operation of safety warranty language which triggers two separate protections: a contractual excuse for a master who elects not to venture into an unsafe port, and protection against damages to a ship incurred in an unsafe port to which the warranty applies. The warranty is qualified by negligent seamanship which will nullify the safe port warranty.

The charterers contended that they absolved from liability by the nature of named port exception but judge rejected this argument saying that there is no suggestion that exception does not apply to the case at hands since there was no suggestion that anyone - much less the master of the Athos I - had any inkling as to the anchor’s existence in the River.

Where there is an express warranty of safety of the port but not the berth but the charterers are left to nominate the berth, the Court of Appeal in Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc [2009] EWCA Civ 531 agreed with the authors of Voyage Charters who say at paragraph 5.42 that, if the port to be nominated must be safe, it follows that the berth must impliedly be safe. Such proposition flows from Sellers LJ’s description of a safe port in Leeds Shipping Co Ltd v Société Française Bunge (The Eastern City) [1958] 2 Lloyd’s Rep 127 given at page 133.

In cases when there is no safe port warranty but the charterers expressly warrant safety of berth, such warranty is qualified by two assumptions:

Since, on the construction I prefer, the charterers had not promised that the port they declared would be safe, I do not accept that the vessel’s passage to and from a nominated berth should be treated as including any part of the voyage to or from the port. It would only include movement within the port to and from a nominated berth.
…The second qualification is equally important. The Charterers’ promise should, in my view, be understood as limited to a promise that the berth or berths nominated would be prospectively safe from risks not affecting the port as a whole or all the berths in it. To hold otherwise is to erode what I think is intended to be a meaningful distinction between berths and ports.
Per Bingham, LJ in Atkins International HA v Islamic Republic of Iran Shipping Lines (The APJ Priti) (CA) [1987] 2 Lloyd’s Rep 37 at p.42.

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