THE SAFE PORT PROMISE OF CHARTERERS FROM THE PERSPECTIVE OF THE ENGLISH COMMON LAW

Citation(2006) 18 SAcLJ 597
Published date01 December 2006
Date01 December 2006

The safe port promise of charterers is a vital aspect of charterparty contracts but it is one which is not always accurately understood within the shipping industry. Notwithstanding that its basic concern is with safety, the basis of the promise is commercial expediency, not public policy and, therefore, the nature and breadth of the promise is ultimately governed by the intention of the parties. Nonetheless, there is sufficient consistency and uniformity in the law to make it possible to present a clear image of the substantive promise, which emerges as a much more limited and qualified undertaking than popular imaginings. The promise operates in the same manner as contractual promises generally, but it also, more widely, impinges on the validity of port nominations and voyage orders, a fact which contributes to the surprising complexity of the law and the survival of several unresolved outstanding issues.

I. Introduction

1 It is a general but not universal rule of commercial contracting practice and the English common law that ports and places of loading and discharge to which a chartered ship is despatched to under the terms of a voyage or time charterparty, or any hybrid of the two, shall be safe.1 It is customary to refer to this branch of the law as the charterer’s safe port warranty, though this is a historic and potentially misleading form of words. In this context the word “warranty” means nothing more than promise; it does not indicate the classification of the promise for the purpose of determining the remedies of the owner in the event of breach,

nor does it suggest a term in the nature of a marine insurance warranty.2 The broad purpose underlying the extraction of the promise is to avoid danger to the chartered ship.3 It is inevitably a limitation on the manner in which the charterer can use the chartered ship, and when so viewed the safe port promise exists alongside cargo, trading and geographical limitations customarily found in charterparties.

2 It would be another misconception to interpret the promise as making the charterer an insurer of port risks. As it will be seen, the promise is much more limited than this. Nor does it imply that the chartered ship will come to actual harm if she visits an unsafe port; more precisely it implies that the ship will be exposed to the risk of harm arising from some danger, which may or may not materialise into actual harm.4 Ultimately the concept of a safe port is a question of contract and not law, for it turns on the proper construction of the precise words, express and implied, agreed by owners and charterers in their contracts.5 Nonetheless, a substantial degree of uniformity has been achieved by the adoption of the standard charterparty forms currently available and also widely used in practice.

3 The concept of a safe port is a question of mixed law and fact,6 but the precise question whether or not any particular port is safe is, predominantly, a question of fact.7 The subjective opinions of owners, charterers and masters are neither individually nor collectively conclusive. A port is unsafe only if it can be established to be unsafe on the facts and circumstances of each individual case. Consequently, it is particularly appropriate to refer safe port disputes to arbitration by experienced maritime arbitrators, and in the context of English law, because of the high factual element present, only in exceptional circumstances will leave to appeal from the award be given.8

4 Although quite clearly an important aspect of charterparty contracts,9 with particular relevance to time charterparties,10 the safe port promise does not occupy any elevated and protected position in terms of public policy. Nor is the promise universal. Where it exists, whether express or implied, it is founded not on considerations of public policy but commercial expediency. It follows that by adopting appropriate contractual words, subject to any constraint imposed by the governing law, the liability of the charterer for breach of the safe port promise may be excluded or limited.11

5 The safe port promise is most directly associated with the trading of chartered ships at and between ports of loading and discharge. But potentially the promise has a wider remit. It may be associated with many other performance obligations arising under charterparties, such as delivery and re-delivery of the chartered ship, or bunkering during the course of the charterparty. The promise is also of direct concern to the contractual relation between owner and charterer, but when an allegation of unsafe port is made third parties may become implicated in the dispute, for example, port authorities and other port users.12

II. Source of the promise

6 In contemporary practice the safe port promise is frequently made expressly in charterparties. To take some examples from dry cargo time charterparties, cl 2 of the Baltic and International Maritime Council Uniform Time-Charter, Code Name: “Baltime 1939” (“Baltime 1939”) provides:

The vessel to be employed … only between good and safe ports or places.

7 In the 2001 revision the wording is changed to “only between safe ports and places”.

8 In the New York Produce Exchange Form 1946 (“NYPE 1946”), line 27, it is stipulated that the vessel is to be employed “between safe port and/or ports”. In cl 5 of the 1993 edition the language is changed to “between safe ports and places”.

9 In the BIMCO General Time Charter Party issued in September 1999 (“GENTIME”), cl 2(a), it is stipulated that the vessel shall be employed “between safe ports or safe places where she can safely enter, lie always afloat, and depart”.

10 Express safe port undertakings are less frequently encountered in dry cargo voyage charterparties, but they are far from being unknown.13

11 In the absence of an express promise, the promise may exist by implication, based usually on considerations of business efficacy.14 An implied promise of safety will usually be recognised with regard to ports nominated under the terms of a voyage charterparty, or ports designated in pursuance to voyage orders given by a time charterer.15 In these instances the implied promise is necessary for the owner has no advance knowledge of the precise port(s) the vessel will be ordered to proceed to and use. An implied promise does not normally exist in connection with a port(s) specified (in the sense of being named) in the charterparty. In this circumstance it is for the owner, before entering into the charterparty, to determine that the port(s) specified is safe for the vessel to use.16 In relation to specified ports, the safe port promise exists only when it is expressly made; in other words, when there is an express promise in the charterparty to that effect. It follows that the implied promise, at least potentially, has a wide role to play in connection with time charterparties, and also in connection with voyage charterparties where, as is often the case, the port(s) of loading and/or discharge are to be nominated by the charterer from a geographical range of ports. But, it would appear, that

no implication is made where the nomination is from a range of specified (named) ports.17

12 The prevalence and significance of the implied promise will, of course, bear a direct relation to contracting practice at any point in time; the wider the adoption of express terms the less it will be necessary to rely on implied terms. And where the parties have made an express promise, an inconsistent implied promise will not be recognised. In contemporary practice there tends to be no difference of substance between express and implied safe port promises.

III. Ambit of the promise

13 In enunciating and analysing this branch of the law it is customary to allude to the safe “port” promise of charterers, but in commercial practice the promise may extend more widely to include places within or outside a port where the chartered ship is or may be obliged to load or discharge. There is a clear distinction between a port, which may be an extensive area defined by law or custom, and a place within a port where ships load and discharge cargoes, such as a dock, wharf, quay, anchorage, terminal, offshore facility, submarine pipeline, etc. From the owner’s point of view it is desirable that the promise of safety extend beyond the port in its generality to include the precise place(s), whether within or outside a port, where the vessel will be required to proceed to and use, and this is often expressly stipulated for in the charterparty terms.18

14 The precise reach and ambit of the promise will depend on the drafting and proper construction of the charterparty words. It seems that when the promise is made with regard to a “port” alone, it will be construed as alluding both to the port and to the loading and unloading places within the port used by the chartered ship.19 This result is achieved either as a question of construction or by implying a term to complement the express term, though the former approach appears the more supportable. Where the express promise is expansive, for example, extending beyond the port to include “wharves” and “other places”, the promise follows to a corresponding extent. In this circumstance questions may arise as to the proper meaning of words such as “wharf” and “other

places” and as to the precise nature of the obligation.20 On the other hand, an express promise of safety made solely in relation to a “wharf” or “other place” situated within a named port is confined to the “wharf” or “other place” and does not, more generally, extend to the port.21 This rule is consistent with the refusal by the law to imply a safe port promise in relation to a specified port.

15 The ambit of the promise will in all instances turn on the proper construction of the relevant words of the particular charterparty; or, on the formulation of the implied promise.

IV. Nature of the contractual...

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