Voyage Charters. Charterer’s obligation to nominate port Last updated 29-Jun-2015

Subject, however, to an implied obligation not to nominate an utterly impossible port, the principle is well established that where a charterparty provides a choice of named places for loading or discharge, the charterer is free to exercise his option as he chooses, and in doing so is in no way bound to consult the convenience of the shipowners.
Per Willmer LJ in Reardon Smith Line Ltd. v Ministry of Agriculture, Fisheries and Food [1961] 3 W.L.R. 110

Charterer is impliedly obliged not to nominate an impossible port

The charterer should nominate port of loading and discharging and this nomination is in no way limited by any consideration of the shipowner’s convenience or expense which would be incurred in complying with this nomination. Port nomination is, however, subject to safe port/berth warranty.

Under common law ( read more about common law duties of charterers and owners) the charterer is impliedly obliged not to nominate an utterly impossible port, because that would be practically no exercise of the option at all, but otherwise he is free to nominate as he chooses. Definition of an impossible port was made by Willmer L.J. in Reardon Smith Line Ltd. v Ministry of Agriculture, Fisheries and Food [1961] 3 W.L.R. 110 at p 155:

… assuming in favour of the shipowners that the charterers were under an implied obligation not to nominate an impossible port, I am of opinion that a port only becomes an impossible port for this purpose when loading thereat will subject the ship to such delay as will frustrate the commercial object of the adventure, so that the voyage when performed will be something different from that contracted for.

Generally nomination is to be made by the charterer or his agent, but voyage charter may expressly provide by whom and how nomination to be made. Sometimes, when "…or so near thereto as she may safely get" clause comes into operation, the shipowner will have a liberty to load or discharge at other port than nominated, in which case, if the owner exercise this option, he may be deemed to warrant safety of berth or port which he chooses.

In accordance with the decision in Reardon Smith v Ministry of Agriculture (The Vancouver Strikes Cases) [1963] AC 691 (where the charterer nominated a port with a strike already in progress) the charterers would have been entitled to require the vessel to wait for cargo to be loaded unless delay becomes so unreasonable as to frustrate the contract.

The law also implies that nomination of load port or ports shall be made within reasonable time, but early enough to avoid any delays which the vessel can suffer from the absence of such nomination. As to nomination of discharge port, some charters as, for example, the Gencon form, specifies that it must be made "on signing bills of lading". Usually, when no separate nomination received by the time of signing of bills of lading, then issue of bills of lading specifying discharging port is deemed to amount to such nomination.

Irrevocability of nomination was underlined in The Jasmine B [1992] 1 Lloyd’s Rep. 39 by Diamond J at p.42 that:

In the absence of any special provision in a charter-party, the effect of the nomination of a loading or discharging port by the charterer is that the charter-party must thereafter be treated as if the nominated port had originally been written into the charter-party and that the charterer has neither the right nor the obligation to change that nomination.

However, Sellers LJ in Reardon Smith Line Ltd. v Ministry of Agriculture, Fisheries and Food [1961] 3 W.L.R. 110 at p.135 agreeing with Devlin J that the charterer has neither the right nor the obligation to make a second nomination when a proper nomination has been made, was of opinion that if a stipulated port had been destroyed by earthquake or another similar extraordinary supervening event, so that it could no longer be said to be a port and could not be used as such in any foreseeable and practical period, then the Charterers’ obligation to nominate an existing port under the charterparty would appear to remain (see also Implied obligation not to order the vessel to any unsafe place). On the other side Willmer LJ categorically denied existence of any such right and obligation:

It appears to me that the weight of authority is overwhelmingly against the existence of any right, and a fortiori of any obligation, on the part of a charterer to nominate a fresh port, if for any reason the port first nominated becomes impossible. No doubt this can be done by agreement between the parties

Obviously, a question whether the common adventure has been frustrated will inevitably appear in cases when load or discharge port is physically or legally impossible to reach after a valid nomination has been made and especially so when such alternative nomination will fundamentally change commercial adventure. This matter becomes even more complicated when the vessel has already loaded cargo her on board and therefore the shipowner "cannot simply put an end to his contract; he must do something with the cargo".

What happens when the loading berth has been destroyed by excluded peril? And whether nomination of berth is a condition to invocation of force-majeure provisions in Clause 28 of the "Sugar Charter Party 1999" ? This matter was examined in ED & F Man Sugar Ltd v Unicargo Transportgesellschaft GmbH [2012] EWHC 2879 (Comm). The clause sais:

In the event that whilst at or off the loading place… the loading… of the vessel is prevented or delayed by any of the following occurrences: strikes, riots, civil commotions, lock outs of men, accidents and/or breakdowns on railways, stoppages on railway and/or river and/or canal by ice or frost mechanical breakdowns at mechanical loading plants, government interferences, vessel being inoperative or rendered inoperative due to the terms and conditions of appointment of the Officers and crew time so lost shall not count as laytime.

Eder J found that there is no any reason in principle nor in the wording of the charterparty which, as a matter of law, requires the charterers to nominate a berth as a precondition to the operation of force-majeure clause. Naming a berth, said the judge, merely makes alternative arrangements for loading at another berth legally impossible without a variation of the charter.

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