Safe Ports, Safe Berths

8/13/2019 Safe Ports, Safe Berths

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Safe ports, safe berths

Professor Martin Davies

Director, Tulane Maritime Law Center, New Orleans

IntertankoTanker Chartering SeminarAthens, 11 May 2011


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Standard charterers promise

Trading limits in a time charter: charterer tosend the ship only to safe ports

NYPE 93, cl. 5 line 71: between safe ports andsafe places

Destination in a voyage charter, particularly ifstated as a range

One safe berth, one safe port, East Coast UnitedStates

Asbatankvoy, cl. 9: The vessel shall load anddischarge at any safe placewhich shall bedesignated and procured by the Charterer

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Definition of safety

Leeds Shipping Co v Socit Franaise Bunge

(The Eastern City) [1958] 2 Lloyds Rep127 at 131 per Sellers LJ:

[A] port will not be safe unless, in the

relevant period of time, the particular ship canreach 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 navigation and seamanship.

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A relative term

Safe for this ship carrying this cargo

Port or berth can be safe for some ships but not

others Axel Brostrom & Son v Louis Dreyfus & Co (1932) 44

Ll.L.Rep. 136 at per Roche J: The conclusion at which the learned umpire arrived was

that the Port of Londonderry in Northern Ireland was nota safe port within the meaning of the charter-party for theparticular ship which was the subject of the charter-party.Let not the finding of the umpire be misunderstood. It

was not a finding that the Port of Londonderry was not anentirely safe port for 99 out of 100 or an even largerproportion of the ships which may seek to resort thereto,but merely that it was not a safe part for the ship inquestion the Sagoland, which was a ship of large

dimensions

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In English law, an absolute warranty

Any unsafety is a breach giving rise to damages,regardless of fault

Unless the charterparty creates a due diligenceobligation E.g. Shelltime 4, cl. 4(c): Charterers shall use due

diligence to ensure that the vessel is only employedbetween and at safe places (which expression whenused in this charter shall include ports, berths,wharves, docks, anchorages, submarine lines, alongsidevessels or lighters and other locations including

locations at sea See also Shellvoy 5 and 6, Pt II, cl. 4: Charterers shall

exercise due diligence to order the vessel only toports and berths which are safe for the vessel

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A trap for charterers using

Shelltime 4 (or Shellvoy 5 or 6) Ullises Shipping Corp. v. Fal Shipping Co. Ltd

(The Greek Fighter) [2006] 1 Lloyds Rep. Plus

99 Shelltime 4 form; fixture fax stated: TRADING

AREA: TRADING ALWAYS AFLOAT WITHIN

IWL VIA SAFE PORTS/ANCHORAGESARABIAN GULF/CHINA RANGE EXCLUDINGIRAQ AS LONG AS SANCTIONS IN FORCE,

INCLUDING RED SEA ALWAYS EXCLUDINGAUSTRALIA AND NEW ZEALAND.

Held: an absolute warranty of safety, not a

due diligence obligation6


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A trap for charterers using

Shelltime 4 (or Shellvoy 5 or 6) Colman J (para [315]): The qualified safe

port obligation in Clause 4, second

paragraph, being to the extent of the duediligence qualification, inconsistent with theexpress warranty in the fixture fax, mustyield to it. The attributes of safety identifiedin clause 4 are thus subsumed in the expresssafe port warranty.

So dont refer to safe ports/anchorages inyour recap when using Shelltime 4

Same is probably true of Shellvoy 5 and 6

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American law

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

Venore Transp. Co. v. Oswego Shipping Corp., 498 F.2d 469 (2d Cir.

1974)(warranty) Orduna, S.A. v. Zen-Noh Grain 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, New York arbitrators take a warranty

approach, too

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

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

T. Klaveness Shipping A/S/Duferco Intl Steel Trading, SMA No. 3686,

2001 AMC 1954 (N.Y. Arb. 2001)(majority)(explicitly rejectingOrduna re a CP for delivery in New Orleans

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Named port?

What if the charter both names the port and imposesa safe port obligation? (A voyage CP question)

Is it a promise that the named port is safe? Or does the shipowners agreement to go to the

named port constitute prior acceptance of any risksthat may arise in that port?

Two English cases have recently held (for shipowner)that safe port is a promise that the named port issafe AIC Ltd v. Marine Pilot Ltd (The Archimidis) [2008] 1 Lloyds

Rep. 597 (one safe port Ventspils)

STX Pan Ocean Ltd v. Ugland Bulk Transport, A.S., (TheLivanita) [2008] 1 Lloyds Rep. 86 (St Petersburg named;general clause trading to bebetween safe ports)

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Named port

New York arbitrators generally take the opposite view

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

In general, the purpose of a charter party safe port warranty is to

afford a ship owner some protection where a charter has thecontractual right to order the vessel to load or discharge atports/berths within a broad geographic area or range containingports/berths that may or may not be safe or appropriate for the subjectvessel. However, when the parties agree to name specific load and/or

discharge ports/berths, the considerations, and consequently the ruleschange dramatically. The rationale for the safe port/berth warranty issimply no longer pertinent.

Klaveness Shipping A/S/Duferco Intl Steel Trading, SMA No. 3686, 2001AMC 1954, 1961 (N.Y. Arb. 2001)

In a named-port charter, on the other hand, the issue is differentbecause the owner makes its own decision on the safety of the portwhen it agrees to that port.

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

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Prospective safety

Test is prospective safety at the time

the charterer gives the order Kodros Shipping Corp of Monrovia v Empresa

Cubana de Fletes The Evia (No 2) [1983] 1 AC

736 (TCPs)Motor Oil Hellas (Corinth) Refineries SA v

Shipping Corp of India (The Kanchenjunga)

[1990] 1 Lloyds Rep 391 (VCPs)

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The Evia (No 2)

In mid-March 1980, charterer ordered shipto carry cement from Cuba to Basrah

Long wait for berth in Shatt-al-Arab

Arrived 1 July 1980; berthed 20 August 1980

Slow discharge 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

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The Evia (No 2)

Lord Roskill (at 763): [S]ince Basrah was

prospectively safe at the time ofnomination, and since the unsafety arose

after her arrival and was due to an

unexpected and abnormal event, therewas at the former time no breach of cl. 2

by the respondents.

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The Kanchenjunga

Voyage charter, of a VLCC to load at 1/2 safe ports ArabianGulf excluding Iran and Iraq but including Kharg, Lavan andSirri Islands

Charterer ordered loading of cargo of crude oil at KhargIsland

Order given on 20 November 1980

Vessel arrived and gave NOR on 23 November 1980

Waiting for berth

Kharg Island bombed by Iraqis on 1 December 1980

Master sailed away 25 miles

Owners asked for substitute order Charterers repeated order for Kharg Island

Owners instructed master to go to Kharg Island

Master refused

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The Kanchenjunga

Owners said charterers had repudiated contractby not nominating substitute for Kharg Island

Charterers said owners had repudiated by notloading at Kharg Island

Held: (1) Kharg Island was prospectively unsafe(adopting Evia (No 2) test)

(2) Owners were therefore entitled to reject thenomination

(3) By arriving and giving NOR, the ship hadwaived the right to reject the nomination

(4) By refusing to load, owners had breached thecharter (but were protected by an exclusion

clause)

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Claiming damages

Owners waive the right to reject the nomination butnot 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, theowners were entitled to reject it. Even so, by theirnomination of Kharg Island the charterers impliedlypromised that that port was prospectively safe for thevessel to get to, stay at, so far as necessary, and in duecourse, leaveAccordingly if the owners, notwithstandingtheir right to reject the nomination, complied with it and

their ship suffered loss or damage in consequence, theywould be entitled to recover damages from the charterersfor breach of contract, though the ordinary principles ofremoteness of damage and causation would apply to any

such claim.

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Political unsafety

Guerrilla/terrorist activity can make a portunsafe for purposes of safe port warranty

K/S Penta Shipping A/S v Ethiopian Shipping LinesCorp (The Saga Cob) [1992] 2 Lloyds Rep 545(CA)

Must be sufficiently likely to constitute normalcharacteristic of the port

Only prospectively unsafe if the political risk is

sufficient that a reasonable shipowner or masterwould decline to send or sail the vessel there


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Getting in and out

Independent Petroleum Group Ltd v. Seacarriers Count Pte Ltd(The Count), [2008] 1 Lloyds Rep. 72

1, 2 or 3 safe ports East Africa Mombasa/Beira range

Charterers nominated Beira as discharge port

Vessel delayed entering Beira because of a grounding in thechannel but proceeded to berth

Vessel unable to leave after discharge because another shiphad grounded in the channel

Eventually left safely no physical problems for ship itself

Held: by London arbitrators, affirmed by QBD, Beira was an

unsafe port Prospectively unsafe when nominated because of condition

of channel

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Berth not port

Atkins International H.A. v. Islamic Republic ofIran Shipping Lines (The A P J Priti) [1987] 2

Lloyds Rep. 37 Voyage charter from Dammam for discharge

at 1/2 safe berths Bandar Abbas, 1/2 safe

berths Bandar Bushire, 1/2 safe berthsBandar Khomeini in charterers option

Vessel struck by a missile while proceeding

in convoy between Bandar Bushire andBandar Khomeini

Owners said Bandar Khomeini an unsafe

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Berth not port The A P J Priti

No express safe port warranty

No safe port warranty to be implied fromsafe berth warranty

Only a promise that the nominated berth

would be safe, not the port as a whole (or

the approach voyage)

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Port not berth?

Opposite situation to The A P J Priti

impossible If charterer promises that the port is safe,

that promise must include a promise that

the berth is safe

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Practice tips

If you are an owner, include reference tosafety or you will be taken to haveaccepted the risks posed by the port orberth

If you are a charterer, dont includereference to safety in your recap if usingShelltime 4 (or other due diligence form)

If you are an owner and you accept anorder to go to an unsafe port/berth,reserve your right to claim damages

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Safe Ports, Safe Berths

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