Unsafe port claims - A guide developed in collaboration with The Swedish Club

If a ship suffers damage, delay or exceptional expense at a port to which it was ordered by charterers, owners may have a claim against charterers for breach of the unsafe port warranty. This guide examines the legal principles governing unsafe port claims, issues arising in such claims and the defences that may be available.

How do safety warranties arise?

Some standard form charter parties, such as NYPE and Asbatankvoy, contain an express warranty that charterers will only order the vessel to safe ports or places. (NB The Gencon form does not include an express safety warranty.) In practice, parties will frequently include an express safety warranty in the charter recap, whether or not there is also an express warranty in the charter form. This can be done, for example, by simply specifying “trading between safe ports” or even “via SP(S)”. Generally, where there is no express warranty and the port or place is identified in the charter party (or where there is a small range of ports from which charterers may nominate), no safety warranty will be implied. Charterers will not be liable for the consequences of the port being unsafe. Where there is no express warranty and the port(s) to be visited is/are not named in the charter party, a warranty may be implied, where, for example, there is a wide range of ports to which the vessel may be ordered.

What is an unsafe port?

No discussion of unsafe ports would be complete without quoting the classic definition set out by Sellers LJ in The Eastern City:1

“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 danger which cannot be avoided by good navigation and seamanship.”

This definition can be broken down into composite parts, as emphasised above.

a. What is the relevant time?

Charterers’ primary obligation crystallises at the time they give the order nominating the port, at which point it must be prospectively safe for the ship. In other words, the port must be safe at the time in the future when the ship is expected to reach, use and leave it.

An unsafe nomination is a breach of the charter party. If the Master or owners know the port is unsafe, they are entitled to and should refuse to obey charterers’ order and insist on a valid nomination. Owners have a reasonable time after receiving the order in which to decide whether to refuse it.2 If an owner accepts an order knowing the port to be unsafe, they may be held to have waived the right to claim damages for any resulting loss.

Persistent invalid nomination by charterers may constitute a repudiatory breach of the charter party.

Where the nominated port ceases to be safe after charterers’ nomination

In unnamed port time charter parties, if the port subsequently becomes unsafe before the vessel arrives at the port, charterers will come under a new, secondary obligation to cancel the original order and issue fresh instructions to enable the chartered vessel to avoid the unsafety, unless it is already too late to comply with the fresh instructions. This secondary obligation will be triggered only if charterers know that the nominated port has become unsafe, in which case they will be required to do all that they can effectively do to protect the ship from the new danger.

It is unlikely that a voyage charterer would be able to renominate in equivalent circumstances.

b. Characteristics of the particular ship

Safety is assessed by reference to the chartered vessel. The port must be safe for the particular ship, taking into account circumstances such as whether it is laden (or not) at the relevant time, its draught, trim, air draught, and so on.

c. Reach, use and leave

The warranty requires that the particular vessel must be able to reach, use and depart from the relevant port or place in safety. This will include means of access to and from the port (subject to there being no alternative route which may be adopted safely) as well as the vessel’s stay at usual anchorages.

Unsafety of the approaches / upriver ports

Even a hazard far from the port could put charterers in breach of the safety warranty, for example, if there is a danger on the approach and no alternative safe route for the vessel to reach and depart an upriver port. In The Mary Lou,3 the vessel’s grounding at the Southwest Pass of Mississippi, almost 100 miles away from the nominated port of New Orleans, was held to be a breach of the safe port warranty. However, it is also more likely that the farther away the obstacle, the less likely it will be that there is no alternative route which will enable the ship to reach the port safely.

Anchorages, berths, wharfs

If there is an express warranty of the safety of a port and charterers are to nominate the berth, charterers impliedly warrant the safety of the dock, berth or wharf. On the other hand, if there is an express safe berth warranty but no safe port warranty, the warranty is restricted to movements within the port and will not extend to the approach to the port.

d. Abnormal occurrences

Charterers will not be liable if the damage or loss results from an “abnormal occurrence”. This is best illustrated by the Supreme Court decision in The Ocean Victory.4 The claim arose from the total loss of a capesize bulk carrier at the port of Kashima, Japan in 2006. The vessel was discharging at a quay vulnerable to long waves, which made it difficult to remain safely alongside. However, the port was also prone to severe northerly winds, making it difficult to navigate the narrow entrance channel. These conditions normally operated independently of one another, but at the time of the vessel’s visit, both occurred simultaneously. The vessel tried to leave port due to the adverse effect of long waves but was unable to navigate the entrance channel due to the severe northerly winds and grounded on a breakwater, becoming a total loss.

The Supreme Court held that “abnormal occurrence” should be given its ordinary meaning, namely something which is rare and unexpected, out of the ordinary, and which a charterer would not have in mind. The question will be whether the particular event was sufficiently likely to have become an attribute of the port. In The Ocean Victory, the court held that the combination of the two conditions was an abnormal occurrence, so the charterers were not in breach of the safety warranty.

Where the set-up of a port is satisfactory, exposure to unavoidable danger will be an abnormal occurrence, and charterers will consequently not be in breach if damage results.

e. Exposure to danger

The risks that may render a port “unsafe” cannot be exhaustively listed as they depend on the particular port and ship at the time of the visit. Lord Denning MR summarised the position in The Evia (No. 2):5

“… every port in its natural state has hazards for the ships going there. … In order to be a “safe port”, there must be reasonable precautions taken to overcome these hazards, or to give sufficient warning of them to enable them to be avoided.”

The focus will be on the port’s set-up in order to deal with potential hazards.

Physical unsafety

A port must be physically safe in its location, size, layout and natural and artificial characteristics. Approach channels and navigable areas of the port and anchorage must be sufficiently deep and wide, and be well-marked and accurately charted. Similarly, any obstacles, such as shallow spots, rocks, mudbanks, wrecks, reefs, etc. must be properly identified and charted.

Hazards that temporarily delay the ship (e.g., tidal sandbars or ice) will not make the port unsafe if they are known or obvious. However, temporary hazards that the Master is unaware of may be sufficient to establish unsafety. The question will be whether the port system adequately addresses the hazard; a temporary breakdown in the port system may put charterers in breach.

By way of example from case law, the port set-up must have effective weather forecasting, adequate procedures for advertising underwater hazards, and systems for ensuring the vessel may efficiently vacate the berth if required.

Delays

Delays will only render a port unsafe if they are of sufficient duration to amount to “inordinate delay”, so as to frustrate the object of the charter. However, cases of “pure delay” (where the only manifestation of unsafety is the fact of the delay) should be distinguished from cases where the delay is a consequence of a shortcoming or failure in the port’s set-up causing unsafety. In the latter case, charterers may be liable for the consequences of delay to the chartered vessel as a result of the inadequate set-up, including delay of any duration outside the proper operation of the charter party.

Political unsafety

A danger created by a political situation or an existing state of war may render a port unsafe. This may be the case where there is a risk of confiscation of the vessel by the authorities. The question will be whether the risk is sufficient for a “reasonable” owner or Master to decline to send or sail his vessel there.

f. Good navigation and seamanship

A common primary line of defence when owners bring an unsafe port claim is that there has been negligence on the part of the Master or crew, or that the vessel was unseaworthy, which caused or contributed to the loss.

There are two elements that may break the chain of causation:

1. If the danger could have been avoided by the exercise of good seamanship, or if it arose from the vessel’s unseaworthiness, the port/berth will, by definition, not be unsafe.

2. Even if the port was unsafe, if something for which owners are responsible (such as negligence on the part of the Master, or the vessel’s unseaworthiness) was at least an effective cause of the incident, then charterers may have a defence of circuity of action and may be able to avoid liability.

The threshold for the Master’s negligence is high. Authorities suggest that the negligent act of the Master or the crew, or the unseaworthiness of the vessel, must be such as to break the chain of causation, becoming the real and effective cause of the casualty rather than the alleged or actual unsafety. A recent reported arbitration decision (London Arbitration 2/23) concerning a laden bulk carrier grounding at Chaozhou, China suggests there may be a lower bar for this defence and that charterers need only show that the negligence or unseaworthiness was an effective cause of the loss.

Where charterers can prove a break in causation, there will be no liability on charterers even if the port is unsafe. A failure by the Master or crew to exercise reasonable skill in leaving an unsafe port may therefore constitute a break in the chain of causation.

In practice, provided the Master acts reasonably in the circumstances, it is unlikely that his actions will be held to have been an effective cause of the damage. Where the Master has been put in a difficult position by the conditions or circumstances at the port to which charterers have ordered the vessel, the Master will be given considerable leeway if the vessel finds itself in a situation where a quick decision is needed when confronted with a hazard. If the Master acts reasonably, even if mistakenly, when placed on “the horns of a dilemma”, then it is unlikely that his actions will be found to be the effective cause of the loss.

The evidential burden on a charterer to prove negligence is a high one. Further, even an act of clear negligence may not serve to break the chain of causation if the port is otherwise unsafe and if that unsafety influenced the succeeding negligence. Even clearly negligent action may fail to break the chain of causation, such as where the Master negligently allowed the anchor to drag.

Inadequate set-up

There are several reported decisions in which the English Courts have analysed the safety of a port or berth, and in particular the systems in place to ensure visiting vessels can safely reach, use and depart from the port.

A good example is the case of The Marinicki,6 where the vessel suffered serious bottom damage prior to its arrival at the discharge berth in Jakarta, which breached two ballast tanks. The Admiralty Court found that the owners had discharged the burden of proving that the damage was caused by an underwater obstruction within the dredged channel. However, as it was not known when the object came to rest in the channel, the owners were unable to prove that the port was unsafe at the time the charterers gave the order to proceed to Jakarta. It was therefore necessary to consider whether the port was rendered unsafe because of deficiencies in the set-up.

Having found that some of the port authority personnel must have been aware that there was or might be an obstacle in the channel, the court found Jakarta was unsafe due to systemic inadequacies in the port’s safety regime, specifically relating to the dredged approach channel, which were causative of the damage to The Marinicki. Those deficiencies included:

No system for alerting mariners of the danger

• No buoy marking the presence of the obstruction, meaning ships transiting the channel were unable to identify and avoid the hazard

• No Notice to Mariners warning of any obstruction in the channel; the port did not disseminate essential navigational warnings routinely expected

• No pilot warning of any obstruction in the dredged channel (despite the charterers accepting the pilots would likely have known of any such obstruction)

Absence of post-incident investigation or remedial action

• The port administrator was not made aware of the complaint by The Marinicki until five days after it was first made to port staff, and even then, having established that there was no note of complaint on the pilotage certificate, decided that no further action was required.

• No investigation by the port authorities into how the incident occurred

• No effort to determine whether an underwater obstruction existed

• No action to mark or remove it

• This failure to react underscored a deeper problem, namely that the port lacked even a basic safety management system for its navigational channels.

In conclusion, the port was found unsafe because there was no system in place to check and monitor the safety of the channel to the port, and to warn traffic using the channel of any such danger as might exist.

What evidence should charterers obtain when confronted with an unsafe port claim?

Collecting evidence can be difficult in practice. Once a claim is advanced by owners, charterers can find that the relevant port authority is unwilling to cooperate with them in defending the litigation, even when it is explained that it is charterers who are trying to defend the reputation of the port. This can be particularly problematic where owners’ allegations involve systemic failures, such as a failure to monitor and/or maintain depths or navigational aids, or a failure to have in place an adequate system of suitably trained and experienced pilots. If charterers have failed to secure contemporaneous evidence on these issues and are provided with no assistance from the port authority, they may be put in some difficulty in resisting owners’ claim.

For this reason, in the event of an incident involving damage to the ship or additional cost to avoid damage, if charterers anticipate that a claim may materialise, there is no substitute for a prompt and thorough investigation. Such a claim may not arise until months or even years later, at which point the best opportunity to secure evidence may have been lost.

This could include:

• Correspondence exchanged between owners, charterers (including their respective brokers), before, during and after the fixture – particularly important will be the instructions and information provided by charterers to the vessel regarding the port and any navigational information

• The relevant chart(s) used, and, if appropriate, other charts available, and other navigational aids, such as guides to port entry, and so on

• Ship’s documents, such as the pre-arrival checklist, deck log, standing orders, passage plan, engine log

• VDR data or, if that is not available, AIS data, may be helpful

• Evidence of the weather conditions at the time of the incident

• The Master’s and Pilot’s experience/qualifications and certificates

• Photos and videos of any damage to the ship

• Details of the port’s characteristics, including:

  a. Buoyage

  b. Pilot training, competency and experience

  c. Accuracy and frequency of port’s hydrographic surveys and dredging operations

  d. Publication of information to port users, including notices to mariners

  e. Availability of tugs and other service vessels (e.g., icebreakers)

Retaining experts is also an important part of handling these matters. Local correspondents and surveyors can assist with the initial fact-finding exercise, including arranging prompt attendance on board the ship, while charterers should ensure early disclosure of evidence from owners.

Even if that is not possible, someone with technical or nautical experience will help to understand the issues and provide guidance on what kind of evidence should be sought, and whether there might be a defence to an unsafe port allegation.

Statements should also be taken from the relevant factual witnesses, while memories are still fresh, and before individuals become less inclined to assist.

Final remarks

All ports present varying risks to vessels. The question is whether there is an adequate system in place for mitigating those risks. Most disputes therefore focus on the port setup, and charterers will often need to produce evidence to demonstrate that systems were in place to enable a ship to avoid the danger.

Safe port disputes can be complex and much can turn on the facts, so it is important to collect and preserve as much information and evidence as possible at an early stage.

This note is intended for general guidance only and should not be considered as legal advice. For specific advice, please contact Nico Saunders, Nick Wilson, or your usual contact at MFB