A critical analysis of the nature and effect of the safe port clause in time charters
12-10-2016

Usually, under the majority of the charterparties, the shipowner undertakes the risks while the ship is at sea and his assumption of risks is expressed in the warranty that the vessel will be “staunch, strong and well equipped for the intended voyage and manned by a competent crew and skillful master of sound judgment and discretion” , i.e. seaworthy. On the other hand, the charterer usually undertakes the risks while the vessel is at loading/discharging destinations and his undertaking takes the form of the so-called safe port/berth warranty, according to which the vessel will be required to trade only between safe ports.

 The purpose of the obligation to nominate a safe port was perfectly illustrated in the words of Roskill LJ in Unitramp v Garnac Grain Co Inc (The Hermine)  where he stated: “The concept whether a particular port or berth is safe is or at least should be simple, for the main purpose of such a warranty of safety in a charterparty is to ensure that a charterer, who has an otherwise unfettered right to nominate a port or berth, does not do so in such a way as to imperil the shipowners’ ship, or, it may be, the lives of the shipowners’ servants, by putting that ship or those lives in danger and thereby impose upon the shipowner the risk of financial loss. This limitation is of crucial importance to the shipowner because, by the terms of the contract of affreightment, whether it be a charterparty for time or voyage, the shipowner has contracted with the charterer that his servants, that is master, officers and crew, will comply with the charterer’s orders, so long as those orders are within the terms of the charterparty.” These words become more important particularly in the context of a time charterparty, which by nature is a contract for “the right to exploit the earning capacity of the vessel.”  In other words “the owner undertakes for the period of the charter to make his vessel available to serve the commercial purposes of the charterer”    in return for payment of hire. No transfer of the possession of the ship or of any other proprietary rights takes place between the shipowner and the time charterer.  What the time charterers actually acquire is the right to direct the use to which the owners put the vessel.  

This right is materialised through the employment clause, which functions within the limitations imposed by the contract. One such limitation is the doctrine of safe ports, a logical corollary to the charterers unrestrained right to order the vessel to any port/berth.  

The aim of this essay is to offer a critical analysis of the nature and effect of the safe port clause in time charters. Cases regarding voyage charterparties will be analysed as well, in order to offer a better view of how the safe port clause functions in the particular context. To the same effect, references to the American Law will also provide us with a critical overview of the issue at stake. The classic definition of the safe port by Sellers LJ in The Eastern City  will be the starting point of this analysis, especially in defining the scope of the safety.  And although from the clear legal definition one might think that there is no obvious reason for such a matter as safety to require lengthy legal analysis, it will be shown that the difficulty and at the same time the challenge of this issue is that safety is to a great extent a question of fact.  In an attempt to combine the competing interests of the charterer and the shipowner in this field, the development of the law has tried to reach an equilibrium between legal certainty and predictability on the one hand and commercial practicality and flexibility on the other. This is expressed in the contractual allocation of risk and especially in the nature of the charterer’s obligation. Despite the fact that English courts still adopt the strict liability nature of the safe port undertaking, a tendency to gradually adopt a due diligence approach is revealed through the consideration of factors such as, abnormal occurrences, the parties’ experience, knowledge about the port by the time the contract was concluded, and particularly the importance given to the construction of the charterparty and the parties’ intentions as evidenced in it. This last-mentioned factor will lead to the conclusion that the charterparty is the keystone for the settlement of the safety disputes and consequently, that the best way to achieve certainty would be to expressly provide for the incidence of the risk, in cases that the loss/damage or delay is attributed to external (physical or political) factors.

Read the whole dissertation here.

 

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