Safe Port. Implied safe port warranty. The court has no power to improve upon the instrument

…the nomination of Aalborg as the port of discharge, when it was perfectly well known that the ship could not proceed there because of the restriction on the carriage of nitrates from the UK to Denmark, was in truth and in fact no exercise of the option at all. It was merely a nugatory nomination and which could not possibly be acted upon.
Olivebank A/S v Dansk Svovlsyre Fabrik (The Springbank) [1919] 2 KB 162, per Bankes LJ at p.166

Nothing is to happen

Modern approach to the question of implication formulated by Lord Hoffman in Attorney General of Belize v Belize Telecom Limited [2009] UKPC 11, stresses the need for the court to be satisfied that the proposed implication spells out what the contract would reasonably be understood to mean. And the most usual inference when the instrument does not expressly provide for what is to happen when some event occurs is that nothing is to happen. The main difficulty with implication of safe warranty comes from the considerations that the omission of an express warranty may well have been deliberate or such an implied term is not necessary for the business efficacy of the charter or because such an implied term would at best lie uneasily beside the express terms of the charter.

The analysis suggests that liberty to nominate from a number of unnamed ports gives to the charterer desired flexibility to conduct his business, but on the other hand it would probably call for the greater the necessity to imply a warranty and vice versa; the more specific information given in the charter to the owner about the intended port or place, the more reasonable it is to conclude that he has satisfied himself as to its safety, or that he is prepared to take the risk that it is unsafe.

Recently, question of implied safe port/berth warranty in charterparty contracts was examined in depth in decision of the Court of Appeal in Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc [2009] EWCA Civ 531. Owners chartered their vessel, The Reborn, on amended Gencon form, with the word "safely" struck out from Clause 1:

The said Vessel shall …proceed to the loading port(s) or place(s) stated in Box 10 or so near thereto as she may safely get and lie always afloat … and being so loaded the Vessel shall proceed to the discharging port(s) or place(s) stated in Box 11 … or so near thereto as she may safely get and lie always afloat, and there deliver the cargo.

On the other hand the owners guaranteed in Clause 20 that:

…that upon arrival of the vessel to and/or prior its departure from, loading or discharging ports (either in ballast condition prior to loading or laden prior discharging) the vessel including, inter alia the vessel’s draft, shall fully comply with all restrictions whatsoever of the said ports (as applicable at relevant time) including their anchorages, berths and approaches and that they have satisfied themselves to their full satisfaction with and about the ports specifications and restrictions prior to entering into this Charter Party.

Port of Chekka, located in the Lebanon, had been agreed as the load port, and it was for the charterers to nominate the berth at which the vessel was to be loaded. During loading at Chekka vessel’s hull was penetrated by a hidden underwater projection at the loading berth. The owners claimed damages from the charterers and argued that the charterparty contained an implied warranty by the charterers that the loading berth they nominated would be safe. They said that because no berth was named in the charterparty and there was more than one berth at Chekka, therefore in such circumstances it was for the charterers to nominate the loading berth. If followed, they alleged, that a safe berth warranty is necessarily to be implied.

The Court of Appeal assessed the question of necessary implication on the basis of decision of the Privy Council in Attorney General of Belize v Belize Telecom Limited [2009] UKPC 11 and was reluctant to imply warranty of safety on the basis that appearance of express terms as to safety of ports, berths or places, in charters of all kinds emphasises that the basic risk to the integrity of his vessel is upon its owner. When the owner likes to shift this risk to the charterer he has to do it by way of express warranty, otherwise the default position is that the owners must bear their own loss.

Thus it was held that the proposed implied term was not necessary to make the contract work because combined effect of the deletion of the word "safely" in Clause 1 together with the owners’ warranty in Clause 20 indicated that the owners has agreed to the port and to taking the risk of its restrictions and limitations, as well as those of its anchorages, berths and approaches.

Furthermore, Rix LJ at para 55 stressed that to order the vessel to a port or berth known to be unsafe will constitute an order to an impossible port or berth and will be a breach of contract, since it would prevent the owners earning their freight. His lordship articulated his conclusion in the following words:

If a charterer has warranted the safety of a berth, then of course an owner can consider at the time of nomination whether he is willing to accept the nomination or refuse it on the ground of lack of safety. However, if the charterer has not warranted the safety of a berth, but it is obvious that it is unsafe or (perhaps) the owner has good reason to doubt its safety, he may possibly be entitled on the ground of other provisions or considerations of the contract between the parties to refuse to proceed. In either case, of course, the owner takes the risk of being able to establish a legitimate basis for his refusal. Thus it might be that what entitles the owner to refuse to proceed is that an order to go to an unsafe berth is an illegitimate order not because of any implied warranty of safety but because of an obligation not to nominate an impossible port (or berth) which, if persisted in, might amount to a repudiation, or at least to a frustration of the contract. A similar problem might arise if a valid nomination of a port or berth (even if warranted safe) becomes unsafe as a result of some abnormal occurrence after nomination (a problem left open in The Evia (No 2) at 749, 764/5). In such a case it is an open question whether a voyage charter is frustrated, or whether the charterer must renominate, or whether the problem is to be resolved by other terms of the contract.

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