Safe Ports, Safe Berths

 

Safe ports, safe berths

Professor Martin Davies Directo Direc torr, Tul ulane ane Ma Marit ritime ime Law Ce Cent nter er,, New Or Orlea leans ns Intertanko Tank anker er Chartering Char tering Seminar Athens, 11 May 2011

 

Standard charterer’s promise 

Trading limits in a time charter: charterer to send the93,ship to “between safe ports NYPE cl. 5only line 71: safe ports and ◦

safe places” 

Destination in a voyage charter, particularly if stated as a range ◦

◦

“One safe berth, one safe port, East Coast United States” Asbatankvoy, cl. 9: “The vessel shall load and discharge at any safe place…which shall be designated and procured by the Charterer…” 2

 

Definition of safety 

Leeds Shipping Co v Société Française Bunge (The Eastern City) [1958] 2 Lloyd’s Rep 127 at 131 per Sellers LJ: ◦

“[A] portperiod will not safethe unless, in theship can relevant of be time, particular reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigati navigation on and seamanship. seamanship.””

3

 

relative term ASafe for this ship carrying this cargo 





Port or berth can be safe safe for some ships but not others  Axel  Ax el Brostr Brostrom om & Son v Louis Dreyfus & Co (1932) 44 Ll.L.Rep Ll.L.Re p. 136 at per R Roche oche JJ:: ◦

“The conclusion at which the t he learned umpire arrived that the Port of Londonderry in Northern Ireland waswas not a safe port within the meaning of the charter-party charter-party for the particular ship which was the subject of the charter-party. Let findingthat of the misunderstood. It an was not not the a finding the umpire Port of be Londonderry was not entirely safe port for 99 out of 100 or an ev even en larger proportion of the ships which may seek to resort thereto, but merely that it was not a safe part for the ship in question the Sagoland, which was a ship of large dimensions…” 4

 

In English law, an absolute warranty 



Any unsafety Any unsafety is a breach breach giving giving rise to damages, damages, regardless regar dless of fault Unless the charterpa charterparty rty create createss a due due dilig diligenc ence e obligation ◦

◦

E.g. Shelltime 4, cl. 4(c): “Charterers shall use due diligence to ensure that the vessel is only employ employed ed between and at safe places (which expression when used in this charter shall include ports, berths, wharves, docks, anchorages, submarine lines, alongside vessels or lighters and other locations including locations at sea” See also Shellvoy 5 and 6, Pt II, cl. 4: “Char “Charterers terers shall exercise exer cise due diligence to order the vessel only to ports and berths which are safe for the vessel…” 5

 

ers using A trap for charter charterers Shelltime 4 (o (or Sh Shellvoy 5 or or 6) 6) 

Ullisess Shipping Ullise Shipping Corp. Corp. v. Fal Shipp Shipping ing Co. Ltd (The 99 Greek Fighter) [2006] 1 Lloyd’s Rep. Plus ◦

Shelltime 4 form; fixtur fixture e fax stated: “TRADING AREA:: TR AREA TRAD ADIN ING G AL ALW WAYS AF AFLOA LOAT TW WIT ITHI HIN N IWL VIA SAFE POR PORTS/ANCHORAGES TS/ANCHORAGES ARABIAN GULF/CHINA RANGE EXCLUDING IRA IRAQ Q AS LONG ASSEA SANCTIONS IN FORCE, INCLUDING RED ALWAYS EXCLUDING AUSTRALIA AUSTRAL IA AND NEW ZEAL ZEALAND AND..”



Held:diligence an absolu absolute te warranty warranty of safety, safety, not a due obligation 6

 

A trap for charter charterers ers using Shelltime 4 (o (or Sh Shellvoy 5 or or 6) 6) 

Colman J (para [315]): “The qualified qualified safe

por port t obligation Claus 4, second paragraph, beingintoClause the eextent of the due diligence qualification, qualification, inconsistent with the



express warranty in the fixture fax, must yield to it. The attributes of safety identified in clause 4 are thus subsumed in the express safe port por t warrant warrantyy.” So don’t ref refer er to “safe ports/anchorages” por ts/anchorages” in your recap ecap when when usi using ng SShel hellti ltime me 4 ◦

Same is is pr probabl obablyy true o off Shel Shellv lvo oy 5 and 6 7

 

American law 

In the U.S., there is a circuit split ◦

◦

Venore Transp. Co. v. Oswego Shipping Corp., Corp., 498 F.2d 469 (2d Cir. 1974)(warranty) Orduna, S.A. v. Zen-Noh Grain Corp., Corp., 913 F.2d 1149 (5th Cir. 1990)(due diligence obligation only) 



In re Petition of Frescati Shipping Co. Ltd, as owner of the M/T Athos 1 (E.D. Pa. 2011)

In practice, practice, New York arbitrators arbitrators take a warranty approach, too ◦

E.g., M/V E.g.,  M/V Atlantic Bulker , SMA No. 3938 (N.Y. Arb. 2006)

◦

E.g., M/V Bahama Spirit E.g., M/V Spiri t, SMA No. 3849 (N.Y. Arb. 2004)

◦

T. Klaven Klaveness ess Shipping Shippin g A/S/Duferco A/S/Duferc o Int’l Steel Trading , SMA No. 3686, 2001 AMC 1954 1954 (N.Y. (N.Y. Arb. 2001)(majo 2001)(majority) rity)(expl (explicitly icitly rejectin rejectingg Orduna re a CP for delivery in New Orleans 8

 

Named port? What if the charter both names the port and imposes 

a “safe port” por t” obligation? (A voyage CP question)  



Is it a promise that the named port por t is safe? Or does the the shipo shipowner’ wner’ss agr agreement eement to go to th the e named port constitute prior acceptance of any risks that may may arise in that port? Two Englis English h cas cases es h haave recently held (for sh shipowner) ipowner) that “safe por port” t” is a promise that the named por portt is safe ◦

◦

 AIC Ltd v. Marine Pilot Ltd (The Archimidis) [2008] 1 Lloyd’ Lloyd’ss Rep. 597 (“one safe por portt Ventspi entspils”) ls”) STX Pan Ocean Ltd v. Ugland Bulk Transport, ranspor t, A.S A.S.,., (The Livanita)clause [2008]“trading 1 Lloyd’s 86 (St Petersburg general toRep. be…between safe ports”) pornamed; ts”) 9

 

por ort t Named p New York arbitrators generally take the opposite view 



E.g. M/V E.g.  M/V Bahama Spirit Spirit,, SMA No. 3849 (N.Y. Arb. 2004): ◦

“In general, purpose aotection charter cha rter party par ty safe port warranty afford a shipthe owner someofprotection pr where a charter has the is to contractual right to order the vessel to load or discharge at ports/berths ports/ber ths within a broad geographic area or range containing ports/berths ports/ber ths that may or may not be safe or appropriate for the subject vessel. However, when the agree toand name specific loadthe and/or discharge por ts/berths, ports/berths, the parties considerations, consequently rules change dramatically. dramatically. The rationale for the safe port/berth por t/berth warranty is simply no longer pertinent.”



Klaveness Klaven ess Shippi Shipping ng A/S A/S/Du /Dufe ferco rco Int Int’l’l Steel Steel Trading  ading , SMA No. 3686, 2001 AMC 1954, 1961 (N.Y. Arb. 2001) ◦



“In a named-port charter, on the other hand, the issue is different because the owner makes its own decision on the safety of the port when it agrees to that port.”

Also, In re Petition of Frescati Frescati Shipping Co. Ltd, as owner of the M/T  Athos 1 (E.D. Pa. 2011)

10

 

Pr Prospecti ospectivve safety 

Test is “prospec “prospective tive safet safety” y” at the time

the charterer gives the order ◦

◦

Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes The Evia (No 2) [1983 [1983]] 1 AC 736 (TCPs)  Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 (VCPs)

11

 

The Evia (No 2) 

In mid-March 1980, charterer ordered ship



to carry cement from Cuba to Basrah Long wait for berth in Shatt-al-Arab ◦



Slow discharge ◦

  

Arrived 1 July 1980; ber berthed thed 20 August 1980 Discharge completed 22 September1980

On that day, Iraq invaded Iran Evia trapped in Shatt-al-Arab for six months Held : charterer not in breach of safe port warranty 12

 

The Evia (No 2) 

Lord Roskill Roskill (at 763): “[S]ince Basrah was prospectively safe at the time of nomination, nominatio n, and sin since ce the the unsa unsafety fety aarrose after her arrival and was due to an unexpected and abnormal event, there was at the former time no breach of cl. 2 by the respondents.”

13

 

The Kanchenjunga Voyage ch chart arter er,, of a VLCC to load at “1/2 safe por ports ts Arabian Arabia n 

Gulf excluding Iran and Iraq but including Kharg, La Lavan van and 

Sir Si rri Is Isla land nds” s” Charterer ordered loading of cargo of crude oil at Kharg ordered Island ◦

       

Order given on 20 November 1980

Vessel arrived and gave NOR on 23 November 1980 Waiting for berth Kharg Island bombed by Iraqis Iraqis o on n 1 Dec December ember 1980 Master sailed away 25 miles Owners asked for substitute order Charterers Charter ers repeate repeated d order order fo forr Kharg Island Ownerss instr Owner instructed ucted master to ggo o to K Kharg harg Island Master refused 14

 

The Kanchenjunga Owners said charterers charterers had repudiated repudiated contract 











by not not nomina nominatin tingg substit substitute ute for for Kharg Kharg Island Island Charterers said owners had repudiated by not load lo adin ingg at Kha Kharg rg Isla Island nd Held : (1) Kharg Island was pr prospect ospectiv ively ely unsafe unsafe (adopting Evia (No 2) test) (2) Owners were were therefore entitled to reject the nomination (3) By arriving and giving NOR, the ship had waived the right to reject the nomination (4) By refusing to load, owners had breached the charter (but were were protected by an exclusion clause) 15

 

Claiming damages Owners waive the right to reject the nomination but 

not the right to claim damages 

Lord Goff (at 397): ◦

“[T]he nomination was a tender of performance which did not conform to the terms of the contract; as such, the owners were entitl entitled ed tto o reject it. Even so, by thei theirr nomination nomina tion of K Kharg harg Island the charterer chartererss impliedly impliedly promised that that port was prospectively prospectively safe for the vessel to get to, stay at, so far as necessary, and in due course, leave…Accordingly if the owners, notwithstanding their right to reject the nomination, complied with it and their ship suffered loss or damage in consequence, they would be entitled to recover recover damages from the char charterers terers for breach of contract, though the ordinary principles of remoteness such claim.” of damage and causation would apply to any 16

 

Political unsafety 



Guerrilla/terrorist Guerrilla/terr orist activity can mak make e a port

unsafe forShipping purposes port warranty K/S Penta A/Sofv safe Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545 (CA) ◦

◦

Must be sufficiently likely to constitute “normal characteristic of the port”

Only prospectively prospectively unsafe if the political risk is sufficient that a reasonable shipowner or master would decline to send or sail the vessel there

17  

in and out Getting Independent Indepe ndent Pe Petr troleum oleum Group Group Ltd Ltd vv.. Seac Seacarriers arriers Count Pte Ltd 

(The Count), Count), [2008] 1 Lloyd’s Rep. 72 ◦

 



 



“1, 2 or 3 safe por ports ts East Africa Mombasa/Beira Mombasa /Beira range”

Charterers nominated Beira as discharge port Vessel delayed entering Beira because of a grounding in the channel but proceeded to berth Vessel unable to leave after discharge because another ship had grounded in the channel Eventual Ev entually ly left saf safely ely – no physica physicall problems problems for for ship itself  Held: byport London arbitrators, arbitrators, affirmed affirmed by QBD Q BD,, Beira was an an unsafe Prospectively Pro spectively unsafe when nominated because of condition of channel

18  

Berth not port 



 Atkins International H.A. v. Islamic Republic of Iran Ir an Shipping Lines (The A P J Priti) Pr iti) [1987] 2 Lloyd’s Rep. 37 Voyage charter charter fr from om Damm Dammam am for discharge discharge at “1/2 safe ber berths ths Bandar Abbas , 1/2 bert berths hs Bandar Bushire, 1/2Abbas, safe ber berths thssafe Bandar Khomeini in charterers’ option”



Vessel byeen a missile proceeding in conv convstruck oy betw between Banda Bandarrwhile Bushi Bushir re and Bandar Khomeini 

Owners said Bandar Khomeini an unsafe port

19  

Berth not port – The A P J Priti  

No express express safe port warranty



No safe port warranty to be implied from safe berth warranty



Only a promise that the nominated berth would be safe, not the port as a whole (or the appr approach oach vo voyage) yage)

20  

Port not berth? 

Opposite situation to The A P J Priti Pr iti



impossible If charterer promises that the port is safe, that promise must include a promise that the berth is safe

21  

Practice tips 





If you are an owner, include reference to safety or you will b be e taken to ha have ve accepted the risks posed by the port port or berth If you are a charterer, don’t include reference to safety in your recap if using Shelltime Shellt ime 4 (or o othe therr due dili diligen gence ce form form)) If you are an owner and you accept an order to go to an unsafe port/berth, reserve your right to claim damages