Issue 37


In the case of AIC Ltd. v. Marine Pilot (“The Archimidis”) [2008] the Court of Appeal clarified the meaning “one safe port”, a phrase which is commonly included in both charter parties and sales contracts. The judges were in no doubt that these words, included in the charter party as “load one safe port Ventspils”, constituted a warranty given by the charterers that the berth was safe. It made no difference whether or not the port had been named in the charter party. This clarified the legal position because it had been widely thought that if the charter party actually named the port, the guarantee of a safety no longer applied because the ship owner had specifically contracted to take his vessel to that port. The Court of Appeal, agreeing with the judge at first instance, confirmed that this view was incorrect and that the two arbitrations quoted in support of the charterers’ argument, LMLN 18/86 and LMLN 11/97, were wrong.

This decision highlights the need for charterers and traders to be very careful when agreeing charter party amendments and sales contracts. The inclusion of the words “safe port” will be construed as a guarantee that the port is safe. Asbatankvoy is the only commonly used tanker charter party that includes a safe port/berth warranty. Clause 9 states “Safe berthing - shifting. The vessel shall load and discharge at any safe place or wharf or alongside vessels or lighters reachable on her arrival, which shall be designated and procured by the Charterer, provided the Vessel can proceed thereto, lie at, and depart therefrom always safely afloat, …The Charterer shall have the right of shifting the Vessel at ports of loading and/or discharge from one safe berth to another…”. The double obligation to provide not just a safe berth but one that is also “reachable on arrival” should be more than sufficient to deter charterers from using Asbatankvoy. In the oil company charter forms, the charterers agree to “exercise due diligence” (e.g. ExxonMobil Voy 2005 cl.16(b) and BPVoy4 cl.5.1) but do not warrant the safety of any port/berth.


In the same case of AIC Ltd. v. Marine Pilot (“The Archimidis”) [2008] the Court of Appeal overruled the High Court judge on the question of the charterers’ liability to pay deadfreight. In fact, the question of the safe berth warranty had been a secondary argument put forward by the ship owners in support of their claim for payment for deadfreight. The charter party special provisions stipulated a “minimum 90,000 metric tonnes… No deadfreight to be for Charterer’s account provided minimum quantity supplied”. Both owners and charterers were aware of the draft restrictions at Ventspils, the load port, which had been imposed because the approach channel had silted up as a result of recent bad weather. The owners advised that 67,000 mt was likely to be the maximum cargo that could be loaded to ensure that the vessel could sail from the port in safety. Despite this, the charterers had tendered 93,410 mt of cargo for loading.

The judge in the High Court, somewhat surprisingly perhaps, had overruled the arbitration tribunal and agreed with the charterers’ argument that by formally tendering a cargo of more than 90,000 mt, they had discharged their contractual obligation and therefore no deadfreight was payable. However, the Court of Appeal unanimously confirmed that the arbitrators had been correct. The charterers had only provided sufficient cargo to allow the vessel to sail out of the port. They had failed to supply the contractual minimum quantity of 90,000 mt and were liable to pay deadfreight on the difference between this and the 67,058 mt actually loaded. Because the owners were able to recover their deadfreight, the argument as to whether or not Ventspils was an unsafe port became superfluous. However, one might conclude that “unsafe” would require an element of risk to the vessel and cargo. Since the approach channel was properly charted and the maximum draft was known by the owners, it seems there was no possibility of risk because the vessel was never going to load more than a safe quantity of cargo. This situation was very different from the case of “The Count” referred to in News Update No. 34 where vessels had run aground because the approaches to the port had not been surveyed frequently enough to record that the sand bars had moved.


London arbitration 2/08 734 LMLN 2 is a good illustration of the way the courts and arbitrators will deal with disputes when there are conflicting clauses in a charter party. In this case, there was a contradiction between clause 12 of the Asbatankvoy charter party form and an additional clause. Clause 12 states “…The vessel shall be free of charges for the use of any wharf, dock place or mooring facility arranged by the Charterer for the purpose of loading or discharging cargo…”. However, an additional clause said “Port charges, quay dues and similar dues on ship are for Owners’ account, but all dues and duties on cargo shall be for Charterers’/Shippers’ account”. The argument was over who should pay for “pier dues” which the arbitrators concluded were the same as quay dues. Having decided that there was clearly a conflict between the two clauses that could not be reconciled, the arbitration tribunal followed the standard rules of construction. These dictate (a) that agreed amendments and additional clauses will take precedence over the printed charter party form and (b) that a provision which appears later in a contract will overrule a conflicting clause that appears earlier. On the basis of both these rules, the pier dues were held to be for the ship owners’ account.


Click here to see our full post archive


View our full topic list

Organised by category and sub-category

Topic List