Kodros Shipping Corporation v Empresa Cubana de Fletes (No. 2) (Evia)

I agree with the speech to be delivered by my noble and learned friend, Lord Roskill, and with the detailed reasons that he will give for dismissing this appeal.

For my part, I would regard the nature of the contractual promise by the charterer that a chartered vessel shall be employed between safe ports ("the safe port clause") as having been well-settled for a quarter of a century at the very least. It was correctly and concisely stated by Sellers L.J. in The Eastern City[1958] 2 Lloyd's Rep. 127 in a classic passage which, in its reference to "abnormal occurrence", reflects a previous statement in the judgment of Morris L.J. (as he then was) in The Stork[1955] 1 Lloyd's Rep. 349. Sellers L.J. said:

"A port will not be safe unless, in the relevant period of time, the particular ship can reach it, use it, and return from it without, in the absence of some abnormal occurrence, being exposed to damage which cannot be avoided by good navigation and seamanship."

It is with the prospective safety of the port at the time when the vessel will be there for the loading or unloading operation that the contractual promise is concerned and the contractual promise itself is given at the time when the charterer gives the order to the master or other agent of the shipowner to proceed to the loading or unloading port.

What are the respective rights and duties of charterer and shipowner under a voyage charter if the port becomes prospectively unsafe by reason of some abnormal occurrence actually occurring (whether or not to the knowledge of either of them) during the period of the loading or unloading voyage is not a matter that arises in the instant appeal and I think it would be unwise for your Lordships to express any view about it. In the case of the time charter, however, under which the charterer has power to substitute for his original order to the master to proceed to a particular port and there undertake the loading or unloading operation, a fresh order to proceed elsewhere, so long as such fresh order is given at a time when it is possible for the vessel to comply with it, the contractual promise is a continuing one and if an occurrence which at the time of the original order could properly be regarded as abnormal has actually occurred and has rendered the port prospectively unsafe, the charterer could not rely upon the exception of "abnormal occurrence" in Lord Justice Sellers' statement of the effect of the safe port clause.

So great is the variety of ports to which chartered vessels are ordered to go, it is not surprising that disputes should arise as to whether damage sustained by a particular vessel in a particular port on a particular occasion was caused by an "abnormal occurrence" rather than resulting from some normal characteristic of the particular port at the particular time of year. In cases of this kind, judges, particularly at first instance with their minds directed solely to the particular facts of the case they are deciding, may, not infrequently, in expressing the reasons for their decision, state a proposition of law on which they rely as relevant to the particular case in general terms which omit qualifications to that proposition that would be relevant to other cases, but are not relevant to the case under decision.

The heresy that, in the last decade or so, has been embraced by judges in the commercial court in the course of several judgments at first instance, culminating in that of Mustill J. in the Mary Lou[1981] 2 Lloyd's Rep 272, 277, would have the effect of eliminating the exception based upon abnormal occurrence in Lord Justice Sellers's statement of the effect of the safe port clause. These judgments, which are analysed by Lord Roskill in his speech, afford in my view a classic example of the danger of assembling together isolated statements contained in judgments at first instance, each dealing with the facts of a particular case, and using such statements to build up some novel principle of law, inconsistent with an existing principle which carries with it the authority and approval of an appellate court.

It may be because so high a proportion of those judgments of the commercial court which turn upon the application of well-known principles of law to particular and peculiar facts are reported in a specialised series of reports that this mis-use of judgments given at first instance is particularly rife in commercial cases.

On the other aspects of the case dealt with in the speech of my noble and learned friend, there is nothing that I could wish to add.

I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Roskill. I agree with it and for the reasons which he gives I would dismiss the appeal.

I have had the benefit of reading in draft the speech of my noble and learned friend Lord Roskill. I agree with it, and for the reasons which he gives I, too, would dismiss the appeal. I agree also with the supplementary observations contained in the speech of my noble and learned friend Lord Diplock.

In preparing this speech I have had the great advantage of the help of my noble and learned friend. Lord Brandon of Oakbrook, and the speech now represents the opinions both of my noble and learned friend and of myself.

My Lords, as a result of the outbreak of hostilities between Iran and Iraq in September 1980, a large number of ships were trapped in the Shatt-al-Arab waterway. The appellants had the misfortune to be the owners of such a ship, the Evia, registered in Liberia. The respondents were the time charterers of the Evia under a time charter-party for a period of eighteen months, two months more or less at the respondents' option, concluded in Greece and dated 12th November 1979. This time charter-party was in the Baltime 1939 form as amended in 1950, that form being as is usual substantially amended and with a large number of typed clauses attached.

My Lords, disputes between the appellants thereupon arose as to their respective rights and obligations, as indeed they have done between many other shipowners and charterers who have found themselves in a similar predicament. The time charter-party contained a London arbitration clause (Clause 23). Pursuant to that clause the disputes were in due course referred to two arbitrators who appointed Mr. Basil Eckersley as umpire. Upon the disagreement of the arbitrators, it fell to Mr. Eckersley to decide the disputes, which he duly did on the 20th March 1981, attaching to his formal interim award some thirty-five pages containing sixty-five paragraphs of reasons expressed with admirable clarity.

My Lords, it will be convenient at this point to mention one curious fact about this case. The principal and most important question argued before your Lordships' House, namely, the effect of the "safe port" clause in the charter-party, arose only incidentally before Mr. Eckersley. There were no pleadings. The appellants' claim was for two sums of money only, first, time-charter hire from the 5th October 1981 onwards. The previous payment covered the period up to and including the 4th October 1981. And, secondly, reimbursement of certain war risk premiums allegedly incurred by the appellants after the 28th June 1980. The respondents challenged these two claims. In answer to the first, they contended that the charter-party was frustrated on the 22nd September 1980, adding a counter-claim on that basis for overpaid hire, and in answer to the second made a general denial of liability. The second issue revolved mainly round questions of quantum and is in no way relevant to this appeal. But the appellants challenged the defence of frustration. They contended that if the charter-party had been frustrated at any relevant date, that defence was not open to the respondents, since the assumed frustrating events had been brought about by the respondents' own breach of the charter-party by ordering the ship to an unsafe port, namely, Basrah. Thus before the umpire the issue principally argued before your Lordships' House was only raised in answer to the defence of frustration.

My Lords, while the issue of frustration is of course of great importance to these parties, and no doubt to others similarly placed, the question whether the respondents were in breach of the charter-party by ordering the Evia to an unsafe port raises questions of wide general importance, and it was for that reason that your Lordships' House thought it right to give leave to appeal so that that question might be fully argued and determined, especially in the light of a number of recent decisions of judges of first instance sitting in the Commercial Court on this issue, the correctness of which had been challenged. The obligation of a charterer whether for time or for voyage in relation to the safety of the port or place to which the ship may be ordered during her chartered service seems never before to have been considered by your Lordships' House. The principles governing frustration of contract, however, have very recently been considered twice in your Lordships' House, first in National Carriers Ltd. v. Panalpina (Northern) Ltd.[1981] A.C. 675, and secondly, in Pioneer Shipping Ltd. v. B.T.P. Tioxide Ltd.�The Nema[1981] 3 W.L.R. 292. The latter decision had not been announced at the time of Mr. Eckersley's award. Further, though the argument on the appeal against that award before Goff J., for which that learned judge had previously given leave, also took place before the date of that decision, judgment...