Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc. [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE AIKENS,Mr Justice Aikens |
| Judgment Date | 01 August 2008 |
| Neutral Citation | [2008] EWHC 1875 (Comm) |
| Date | 01 August 2008 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2007/1605 |
[2008] EWHC 1875 (Comm)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
The Honourable Mr Justice Aikens
Case No: 2007/1605
Mr David Bailey QC (instructed by Jackson Parton, Solicitors, London) for the Claimant
Mr Stewart Buckingham (instructed by Clyde & Co, Solicitors, London) for the Defendant
Hearing dates: 18 th July 2008
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is an appeal pursuant to section 69 of the Arbitration Act 1996, with the leave of Burton J, on a point of law raised by a Final Declaratory Award concerning the vessel “REBORN”. The vessel was chartered by the Claimants as owners (“the Owners”) to the Defendants as charterers (“the Charterers”) under a Gencon form of voyage charterparty dated 10 January 2003, (“the charterparty”), for the carriage of a cargo of cement from Chekka, Lebanon, to Algiers. In the arbitrationthe Owners claimed compensation for damage allegedly suffered by the vessel's hull as a result of contact with an underwater projection at the loading berth at Chekka.
The three distinguished maritime arbitrators, Mr Bruce Harris, Mr Mark Hamsher and Mr Michael Baker – Harber, were asked to make declaratory awards on four preliminary issues. This appeal concerns only the first of these issues, which relates to whether the Charterers were obliged, under the terms of the charterparty, to nominate a safe berth at the load port.
The relevant terms of the charterparty are set out in Box 10 and clause 1 of the standard terms of the 1994 revised form of Gencon charter, asamended by the parties. Also relevant is a typed additional clause 20. These clauses provide:
(1) In Box 10: “Loading port or place (Cl.1) 1 BERTH CHEKKA – 27 FT SW PERMISSIBLE DRAFT
(2) Clause 1: The said Vessel shall … proceed to the loading port(s) or place(s) stated in Box 10 or so near thereto as she may safely get and lie always afloat …and being so loaded the Vessel shall proceed to the discharging port(s) or place(s) stated in Box 11 … or so near thereto as she may safely get and lie always afloat, and there deliver the cargo.”
(3) Clause 20: “Owners guarantee and warrant that upon arrival of the vessel to and/or prior its departure from, loading or discharging ports (either in ballast condition prior to loading or laden prior discharging) the vessel including, inter alia the vessel's draft, shall fully comply with all restrictions whatsoever of the said ports (as applicable at relevant time) including their anchorages, berths and approaches and that they have satisfied themselves to their full satisfaction with and about the ports specifications and restrictions prior to entering into this Charter Party.”
It will be noted that there is no express warranty by the Owners that either the port of Chekka or the loading berth there will be “safe”. 1
The arbitrators formulated the first of the four preliminary issues for decision in the following terms:
“Was there to be implied in the charterparty a term that there was an absolute duty upon the Charterers to nominate a safe berth [at Chekka]?”
The arbitrators' answer to this question was: “No”. In their Reasons, the arbitrators assumed (as they were invited to do) that there were several berths at Chekka to which the vessel could have been directed to load by the Charterers. The arbitrators made no findings of fact either about the process of nomination of the loading berth at Chekka by the Charterers or the events leading up to the alleged damage to the vessel. On the appeal I therefore have to deal with the issue on the same basis of fact —or lack of it.
The Owners' argument before the arbitrators was that because the Charterers had a choice of berths at the port to which they could send the vessel, this choice carried with it a warranty that the berth nominated by the Charterers within the named load port of Chekka would be safe. The arbitrators stated their conclusions on this issue concisely. They said:
“Owners' approach had its attractions but it seemed to us to meet an insurmountable difficulty: their acceptance of the “port”. A port is a place which a vessel must be able to safely reach and depart but it is also a place where a vessel must berth and load or discharge its cargo. The berths in the port are just as much a part of it as is, for example, the approach channel or the tugs or the pilotage service. All of them are constituent elements of the “port “which the Owners have agreed to accept. Given that the Owners had agreed to shoulder the risk of the named port we could see no basis for implying a term that the berths within it should fall into a different category. The fact that a particular berth had a unique hidden danger did not alter our view: the issue is all about the allocation of risk rather than consideration of the physical characteristics of each and every potential berth”.
On this appeal I would formulate the issue as follows: 2 if a specific load port is named in a voyage charterparty and there are several possible berths within that port to which a vessel could be directed to load by the charterers and there is no express warranty in the charterparty of the “safety” of either the port or the berth to which the vessel is to be directed by the charterers, is the charterparty subject to an implied term that the charterers must nominate a “safe” berth at that load port?
In their award the arbitrators correctly noted that there is no direct authority on this particular issue. The question of when precisely a “safe port” or “safe berth” warranty should be implied in a voyage charterparty has been the subject of debate in the text – books and amongst shipping lawyers for many years. The present question is therefore of interest and perhaps importance to the shipping industry. I was assisted at the hearing of the appeal by very helpful written and oral submissions from Mr David Bailey QC on behalf of the Owners and Mr Stewart Buckingham on behalf of the Charterers. In view of the fact that this is a point on which there is no direct authority and its possible general interest to the industry, I decided to reserve judgment.
A. The general legal background
Traditionally, voyage charterparties have been divided into “port” or “berth” charters. The difference is usually significant for the purposes of deciding when a
vessel is an “arrived ship” for the purposes of calculating laytime and demurrage. 3 In the present case, counsel agree that the charterparty is a “berth charter”. The significance of that for the present case concerns the right of the Charterer to nominate a berth to which the vessel must go to load or discharge cargo.In the present case, no specific berth is identified in the charterparty to which the vessel is to go to load the cargo of cement at Chekka. It was common ground that when a berth charterparty does not originally identify a specific berth to which the vessel is to proceed, whether to load or discharge, 4 the charterer has an implied right and obligation to nominate a specific berth and give orders to the master accordingly. The master is, generally, obliged to obey that order. 5 When the charterer nominates a specific berth, that berth or place has to be treated as if it had originally been written into the charterparty. This nomination is an election, as opposed to a selection. In other words, the charterer cannot change the nomination of the berth chosen without the agreement of the shipowners. 6 In my view this is of significance in the present case.
The other background legal principles to note concern the nature of the “safe port” or “safe berth” warranty in voyage charterparties and the rationale for the warranty. When there is an express “warranty of safety” in a voyage charterparty, whether it be of a port or a berth, the nature of the warranty by the charterer is that the port or berth will be “prospectively safe” at the time that the nomination is made. 7 Broadly speaking, a port or berth is “prospectively safe” if, during the relevant period of time when she should be doing so, the vessel can reach, remain at and depart from the port/berth without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship. Where a charterer has given a warranty of the safety of the berth or port in a voyage charter, it is not entitled to nominate a berth or port that is not safe in the sense described above. If the charterer does so, the owner would not be obliged to obey an order to proceed to an unsafe berth or port. 8
The rationale for a warranty of safety in a voyage charterparty was given in a famous passage of a dissenting judgment of Sir Owen Dixon CJ in the case of Reardon Smith Line Ltd v Australian Wheat Board (the “Houston City”), 9 which was subsequently approved generally on an appeal to the Privy Council in that case 10 and by the Court of Appeal in Compania Naviera Maropan SA v Bowaters Lloyd Pulp and Paper Mills Ltd (the “Stork”) 11.
In the “Houston City” case the voyage charter provided that the vessel would proceed as ordered by the charterers to “…one or two safe ports in Western Australia, or so near thereto as she may safely get…”. The vessel had proceeded to Geraldtown, as ordered by the charterers, berthed and then sustained damage during gales to her starboard quarter by ranging at the berth, because she could not be hauled off the berth through lack of a hauling off buoy. In analysing the reason for a warranty...
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