Safe Port. Unnamed port or ports. Qualification to implication that the port or place had to be safe …

But where the charterer cannot specify the place of loading or discharge at the time of the charter the shipowner must agree to submit his ship to the charterer’s orders.
Australian Wheat Board v Reardon Smith Line Ltd [1954] HCA 27, per Dixon CJ.

Some undertaking as to port’s safety

Second part of celebrated statement of Dixon CJ in Australian Wheat Board v Reardon Smith Line Ltd [1954] HCA 27 (above) is understood as possibly meaning that where the charterer cannot specify the place at the time of the charter a warranty would be implied that the nominated port or ports was or were safe. Due to lack of direct authority this question is yet to be decided. Their Lordships supported this reasoning and held that the words of the clause pronounce an undertaking by the charterers to nominate a safe port:

The charterer is given a choice, within limits prescribed, as to where he will have his cargo available for loading. It seems natural that he should give at any rate some undertaking as to its safety, and that the owners should be entitled to rely on the place nominated being safe. If he breaks this undertaking and nominates an unsafe port and the ship is damaged through going there he will be liable for the damage, subject of course to possible questions of remoteness, or novus actus interveniens.

In support of such implication textbooks usually cite an obiter dictum of Donaldson J in Vardinoyannis v The Egyptian General Petroleum Corporation (The Evaggelos Th) [1971] 2 Lloyd’s Rep 200:

For my part, if I were faced with a simple charter which provided that the vessel was only to go to such port or place within a specified range as might be nominated by the charterer and there load a cargo, I should have no hesitation in implying a qualification that the port or place had to be safe. I should make this implication because common sense and business efficacy require it in cases in which the shipowner surrenders to the charterer the right to choose where his ship shall go, and because I think that this is in accordance with the weight of authority.

However, Thomas J. in The Aegean Sea [1998] 2 Lloyd’s Rep 39 warned against automatic implication of safe port warranty in such cases. He said:

Although there is much to be said for this view, I do not think that one can conclude in general that a term as to safety will always be implied into voyage charter-parties where there is an unspecified range of ports. The issue as to whether a term should be implied as to safety and the extent of the obligation may turn on the specific terms of the charter.

Speaking about implied warranty in bill of lading contract Thomas J. said that it would be necessary to imply a term that the port nominated be one at which it was possible for the vessel to discharge the cargo she had loaded. The learned judge also pointed out that any implication of safe port warranty in case of bill of lading contract will impose very onerous liability on those who became subjected to the liabilities under the bill of lading. He said:

The position of the charterer is very different as he is in direct contractual relationship with the shipowner and will often insure his liabilities under a charterer’s liability policy. In the case of a bill of lading that liability as to safety will be passed to the lawful holder who takes or demands delivery at the end of the chain; it would not necessarily be certain that in the case of this bill of lading that would be Repsol and it would be unlikely that they would ever contemplate insurance against such liabilities as the holders of a bill of lading, assuming such insurance was available. In my view if it had been intended that the onerous obligations as to safety were imposed under the bill of lading, the bill of lading would have made this express.

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