2.2 Safe port warranty definition
In our exploration of the safe port warranty, we will first delve into the classique definition of port safety (2.2.1), before entering into details related to political safety considerations (2.2.2), and the relevance of a port's safety for a particular ship (2.2.3).
2.2.1 Meaning of safety
The charterers’ obligation is to order the ship to a safe port. It is well established that the definition of safety is found in the leading case known under the name The Eastern City.(1) Leeds Shipping Co. Ltd. V. Société française Bunge, The Eastern City [1958] 2 Llyod’s Rep. 127, at 131 The facts of the case are not especially relevant to our study, as it concerned a physical danger and not a war risk, unlike the scope of our study. However, we will see later in this study that this general definition also applies to our case. It was provided by Sellers L.J. in the following formulation:
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. (2) Ibid.
The main features of a safe port can therefore be more crudely translated as follows.
First, safety is to be assessed for a specific period and a for specific ship.
Second, the ship must able to “safely” reach it, use it and return from it.
Third, if the ship is being exposed to a danger due to some abnormal occurrence: i.e., a danger that is not characteristic of the port or a danger that could be avoided by good navigation and seamanship, the port will be deemed safe.
This definition of safety is unanimously agreed upon and will apply in the same way to time charterparties as it does to voyage charterparties(3) Terence Coghlin et al., Time Charters, 7th edn, [2014] (Informa), Para 10 seq. and Julian Cooke et al., Voyage Charters, 4th ed., [2014], para 5.30 et seq. . Roskill, L.J, in The Hermine case [1979], asserted that it was redundant to refere to a plethora of cases, as the law regarding port/berth safety had been distinctly set out in The Eastern City.(4) Unitramp v Garnac Grain Co Inc, The Hermine [1979] 1 Lloyd’s Rep 212 (CA), at 214 to 215; see details about case below para 2.2.2.2, this study. Furthermore, a number of significant cases concerning safe port warranty have clarified that the definition given in The Eastern City has become the starting point for assessing whether a breach of the Charter can be observed or not. We refer, for instance, to The Evia case (1982) as well as the more recent case, The Ocean Victory (2017).(5) Kodros Shipping Corporation v Empresa Cubana de Fletes The Evia 2 [1982] 2 Lloyd’s Rep. 307, at p. 310 concerning a ship trapped in Al Basrah due to the break out of the Iran/Irak war; Gard Marine & Energy Ltd v China National Chartering Co Ltd The Ocean Victory [2017] 1 Lloyd's Rep. 521 - London Arbitration 14/23, addressing the issue of inadequate space at sea for safely maneuvering a capesize ship under specific weather conditions. Additionally, in The Saga Cob [1992], another significant case involving a guerrilla attack in the Red Sea near the harbor entrance, Lord Justice Parker added that the definition stated by Lord Justice Sellers in The Eastern city has “been well-settled for at least a quarter of a century.”(6) K/S Penta Shipping A/S V. Ethiopian Shipping Lines Corporation, The Saga Cob [1992] 2 Lloyd’s Rep. 545 at 547
Today, it can be asserted without any doubt that the definition highlighted above remains the classic definition of "safe port."(7) See in that sens, Coghlin et al. (2014), para 10.3 Additionally, this definition implies that the safety of the berth is also included within the scope of an express safe port obligation.(8) Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc., The Reborn [2009] 2 Lloyd’s Rep. 639 CA (Civ Div) at [33]
2.2.2 Political safety
Most of the cases addressing unsafe ports focus primarily on a port's marine attributes that can result in physical damage to, or loss of, the vessel. This might include unmarked areas in the waterway, malfunctioning navigational aids, or inclement weather,(9) Coghlin et al. (2014), at 10.17; Charles GCH Baker and Paul David, The politically unsafe port [1986] LMCLQ 112 swell and ice or not having sufficient tugs(10) For some examples of dangers due to a physical characteristic of the port, see Tage Berlund v Montoro Shipping Corp Ltd., The Dagmar, [1968] 2 Lloyd’s Rep. 563 (QB); Palm Shipping Inc v Kuwait Petroleum Corp, The Sea Queen, [1988] 1 Lloyd’s Rep. 500 for example. Our study focuses specifically on port safety within the context of the Ukraine/Russia conflict. The risks associated with this conflict pertain to the ongoing war and the dangers faced by vessels operating in the regions of the Black Sea and the Sea of Azov. The physical dangers of a port will not be examined in the scope of this study. However, there is a consensus that the definition of “safe port” encompasses risks broader than just the physical condition of the port or damage to the vessel.(11) Coghlin et al. (2014), at 10.17
2.2.2.1 Meaning of political safety
It is unanimously agreed that a safe port clause encompasses both physical and "political" unsafety.(12)The Saga Cob [1992] at 548 In an insightful article, Baker and David, attempt to compile a non-exhaustive list of political risks that can affect a port an “include outright warfare, blockade, civil unrest, politically inspired retaliation against vessels of a specific flag such as embargo and terrorism.” However, it is worth to note that this article was penned in 1986, and other risks may be added to the list. For instance, the risk of a pandemic comes to mind when thinking of the COVID-19 pandemic in 2020.(13) Bennett and Girvin et al., Carver on Charterparties,1st ed., [2017], Sweet & Maxwell, at 4-037 Moreover, the two authors, have also mentioned the situation of an “outbreak of plague in the area of the port”, which could likewise fit the definition of a political risk affecting a port.(14) Baker and David [1986]
Nevertheless, the conflict that is the focus of our study is clearly a war conflict. It is a consistent jurisprudence that an existing state of war falls within the definition of political safety.(15) Coghlin et al. (2014), para 10.17; Ciampa v. British India S.N. [1915] 2 K.B 774, cited in Cooke et al. (2014), para 5.66; Ogden v. Graham (1861) 1 B. & S. 773. (QB); Duncan v Koster, The Teutonia (1872) L.R. 4 P.C 171; The Evaggelos Th [1971] 2 Llyod’s Rep 200; The Lucille [1984] 1 Llyod’s Rep. 244; The Evia 2 [1982]; The Saga Cob [1992], Pearl Carriers v. Japan Line, The chemical Venture [1993] 1 Llyod’s Rep. 508; The Greek Fighter [2006] 1 Llyod’s Rep. Plus 99 Additionally, the safety of the port should extend not just to the vessel itself but also to its cargo(16) For an example, Hall v. Paul (1914) 19 Com. Cas. 384, The Alhambra (1881) 6 P.D. 68 and to its crew. If there are potential health or security hazards, then the port might be deemed unsafe.(17) Rhidian Thomas, The Safe Port Promise of Charterers from the Perspective of the English Common Law, [2006], Singapore Academy of Law Journal 597, at 608 Thus, as a starting point, we can affirm without a doubt that the question of political safety arises when a vessel is set to trade with Russia or Ukraine.
In the current context, vessels are harassed, delayed and arrested in the black sea.(18)Richard Meade, Shipping faces intimidation, harassment and credible threat of attack in Black Sea, 27 july 2023. Retrieved November 18, 2023, https://lloydslist.com/LL1146051/Shipping-faces-intimidation-harassment-and-credible-threat-of-attack-in-Black-Sea This holds specially for those flying the Ukrainian flag and some crew have been arrested and generally concerned for their safety. Is it the responsibility of the Charterers to bear the consequences of the resulting delays? In other words, do delays caused by political reasons render the port unsafe?
2.2.2.2 Can conflict-related delay make a port unsafe?
As per today (November 19, 2023), Russia aims to disturb the sea supplies to Ukraine. Security experts have informed Lloyd’s List that there exists a substantial threat to vessels entering the Black Sea, with expected scenarios including harassment, detentions, seizures, and other forms of interference.(19) Ibid. In 2023, disputes often arose from the detainment or release of small ships at Danube ports like Izmail and Reni. Moreover, a spike in collisions at Danube ports has led to significant maritime traffic congestion.(20) Nytsevich (2023) These situations might have caused some serious delays.(21) Paul Todd, Laytime, demurrage and implied safety obligations [2012] 8 Journal of Business Law 668-682
The main question is then to determine who bears the liability for such delays resulting from arrests, seizures, and detentions. If such a delay arises, does it render the port unsafe?
To study this question, it is first important to highlight the difference in risk allocation for delay between time charters and voyage charters.
Risk allocation for delay in Time Charters and Voyage Charters
In a time charter, the ship is chartered for a specified period. The charterers must pay hire during the whole period, regardless of delays. The latter have a great freedom in deciding the ports the ship will go to. In other words, the charterers bear the risk of delay. If the ship is delayed, the charterer still has to pay the daily hire. This means that the safety warranty does not really add anything in terms of risk distribution.(22) Ibid.
In a voyage charter, the shipowner agrees to transport a specified cargo from one port to another for an agreed freight rate, within a specified time. If the vessel is delayed, the charterer may be entitled to claim a compensation from the shipowner for the delay. It will depend on when the delay occurred as the "demurrage" system(23) See. below under para 3.1 might interfere with a claim based on the breach of an independent term. If there is a breach of the safe port obligation, and the charterer have ordered the ship to an unsafe port, and, this results in a delay or other loss, the shipowner may claim damages from the charterer for the losses incurred.
In essence, the risk of delay in a time charterparty is fundamentally different than in a voyage charter, and the safety obligation does not alter the charterer's existing responsibility related to delays. However, when a delay arises due to political risks, a number of questions have arisen.
What is the extent of delay that renders a port unsafe? Does the delay need to have a specific duration to deem the port unsafe, or does it simply need to be a foreseeable delay?
Insights from The Hermine Case
In Ogden v. Graham [1861],(24) Ogden V Graham (1861) the defendants chartered a vessel to sail from England to a safe port in Chile. The charterer designated Carrisal Bajo as the discharge port and instructed the vessel to proceed there. However, because of a rebellion, the Chilian government had already closed the port at the time of nomination. The Queen’s Bench Division asserted that if a vessel risks to be detained or cannot enter a port without being confiscated, the owners may claim damages in respect of the delay suffered by the detention. The Queen’s Bench Division found that such a port is not safe.(25) Ibid. Nevertheless, it remains uncertain where the boundaries of this principle should be defined.(26) Cooke et al. (2014), para 5.66
In the 1908, the case of Knutsford v. Tillmanns will bring some precisions concerning the extent of the delay that render a port unsafe. The judge used a logic that weighs the duration of delay against the contract period and considered that for a danger to render a port unsafe, it must cause an "inordinate delay."(27) Knutsford v. Tillmanns [1908] A. C. 406 (H.L.), cited in Coghlin et al. (2014), at 10.14 The meaning of what constitutes an "inordinate delay" has been clarified in subsequent case "The Hermine."(28)The Hermine [1979] In this case, the delay began before the laytime was triggered(29) For a deeper analyse, see Paul Todd, [2012]. The main issue revolved around the definition of a "safe port" in the context of vessels suffering a delay, when accessing or egressing from a port. The facts were as follows. The vessel "Hermine" was chartered to load a cargo at the port of Destrehan, located on the Mississippi River, some 140 miles from the open sea. After the cargo had been loaded, the vessel faced a delay in her voyage due to siltation in the Mississippi River. This delay, which lasted several weeks, prevented the ship from reaching the open sea. The owners argued that the port of Destrehan was "unsafe", as the vessel was unable to proceed to sea after loading its cargo. The warranty of safety, an express term in the charterparty, was considered not just for the port itself, but also for the access to and egress from it.
The Court of Appeal's decision provided clarity on the concept of "safety" in the context of vessels suffering a delay when accessing or egressing from a port. The court held that a port is not deemed unsafe merely because a vessel is delayed in leaving it, even if the delay is of several weeks. To address the main issue here, the Court of Appeal made a ruling in The Hermine case, clarifying that for a delay to render a port unsafe, it must be significant enough to frustrate the charterparty. A "commercially unreasonable" delay is also not sufficient.
Frustration in English law is rather a complex notion that will not be the subject of our study. Additionally, Todd explains that it is not clear whether the frustrating delay test(30) Ibid. is the one that should be adopted to allow the shipowner to terminate the charterparty. However, put simply, the courts will assess the duration of the contract and a delay will be deemed "frustrating" when it is so extensive that it substantially undermines what the parties expected to receive from the contract.
Ultimately, one thing is clear; based on The Hermine ruling, minor delays have to be excluded, and only exceptional delays would render the port unsafe. Although it was determined that the delay was not due to an abnormal occurrence, Geoffrey Lane L.J. stated, "if the hazard is merely temporary, it will neither constitute a lack of safety nor render the port unsafe."(31)The Hermine [1979] at 220; Paul Todd [2012] This last point will be developed at the end of this section after considering other aspects of the extent of the delay rendering a port unsafe.
Prospective delay
One of the conditions for establishing unsafety, involves assessing the port's safety at the time of its nomination; it is the concept of “propective safety”.(32) See below, under section 2.5.1 Todd points out that following The Hermine case, The Evia 2 set a precedent that the determination of safety should be conducted prospectively at the point of nomination.(33) Paul Todd [2012] He uses The count case to illustrate the implications of an unsafe port where the only consequence is delay. In this case, the delay occurred after discharge, outside of laytime.(34) See below, under section 3.1 regarding liability of the charterers depending on when unsafety of the port arises. The port was considered unsafe due to the delay caused by another vessel that grounded as a result of the port's permanent physical characteristics. The shipowner was able to successfully claim damages for the losses incurred due to this delay. Contrary to The Hermine, the port was deemed unsafe, which allowed for a claim for damages resulting from the breach of the safety obligation. However, in The Evia, the decision did not differentiate between temporary and frustrating delays. Thus, it must be believed that if a port is unsafe and the sole consequence is delay, the shipowner could potentially claim for the entirety of the loss caused by the delay. As to whether the delay must be frustrating or not to deem the port unsafe, Todd concluded that, the finding in The Hermine [only serious delay could be taken into acoount] aligns with The Eastern City decision, as the obstruction encountred should not be a temporary one.(35) Paul Todd, [2012] The concept of a temporary obstacle, in our view, differs from the duration of the delay but rather depends on the probability of the risk associated with the delay. This concept will be further examined later in our study.(36) See below, section 2.5 In our opinion, the question, is more related to the gravity of the risk required.(37) See below, at the end of this section.
On the other hand, regarding delays triggered by another vessel, Todd notes that the judge added a condition that the danger must exist not just for the ship that caused the delay, but also for the vessel that suffered from it. He argues that this distinction seems superficial and suggests a more meaningful approach would be to consider the extent of the delay, similar to that in The Hermine case. According to him, the court would be better to assess “if there is a prospective risk of a serious delay (the test in The Hermine being of course frustrating delay), and such a delay occurs, that amounts to a breach, but less serious delays do not, on their own, trigger breach of a safety obligation.” Teare J. confirmed in the The Vine case that the application of the safe port warranty also extends to delays triggered in relation to another vessel.(38)The Vine [2011] 1 Lloyd’s Rep. 301 at 85
From our standpoint, this concept becomes even more plausible when the risk is politically driven, as it encompasses a broader maritime region and impacts a greater number of vessels. For example, we can consider the risk of mine explosions or the potential of being hit by a missile. In the context of the Ukrainian/Russian conflict, let us envision a scenario where, upon departing from a port, a mine detonates near another vessel, causing the delayed ship to wait for clearance of the area before it can continue its voyage. Although the physical damage is suffured by another vessel, the delay incurred is directly caused by the political risks associated with the region. Therefore, considering delays triggered by another vessel as part of the safe port warranty appears logical. Based on The Evia, the risk of delay must exist prospectively. Based on The Hermine, the delay should also be frustrating in nature, meaning that it must be prospectively frustrating. To classify a frustrating delay as “prospective,” it must have been reasonably foreseeable at the time the ship was nominated(39) See below 2.5.1. Realistically, the detonation of a mine affecting another vessel, depending on the duration and nature of the charterparties, is unlikely to lead to a frustrating delay, in our view. In such case, it will not qualify for a prospectively frustrating delay. However, the pertinent question remains: is the appropriate test indeed one of a frustrating delay? As noted earlier, any delay caused is directly linked to the political risks associated with the region. The real question, therefore, is whether the definition of a safe port, as established in caselaw, requires a delay of significant severity. Indeed, the vessel, crew, or cargo must be exposed to a “danger,” as established in The Eastern City [1958]. Therefore, we believe that the test should be whether a delay is so significant that it poses a danger to the crew, cargo, or vessel itself. In conclusion, for a delay to be compensated due to a breach of port safety, it must be of a certain severity relative to the contract period, as established in Knutsford v. Tillmann [1908], and also in relation to the nature of the cargo being transported.
Finally, to determine if there is a risk of delay that could prospectively render a port unsafe, it is crucial to consider the duration of the delay. Additionally, it is essential for this risk to be linked to the characteristics of the port and specifically applicable to the vessel experiencing the delay.(40) Ibid. For instance, if a shipowner dispatches a vessel to the Black Sea without any connection to Ukraine -be it through crew, flag, or trading intentions with Ukrainian ports- the risk of delay triggered by an arrest of the vessel by the Russian forces may seem remote and unforeseeable. Conversely, the risk of a mine detonation affecting a vessel and subsequently causing a delay to another vessel dispatched to the Black Sea may be considered prospectively plausible.
On the other hand, delays can also result from EU sanctions against Russia. Additionally, these sanctions may lead to additional consequences. Does the risk of exposure to sanctions render the port unsafe?
2.2.2.3 Can a port be unsafe because of sanctions risks?
Sanctions commonly involve trade limitations on specified goods and services and restrictions on interactions with certain Russian individuals and corporations. Key financial institutions in Russia have also been targeted, and the country's access to the SWIFT international payment system has been significantly curtailed, disrupting Russia's financial transaction capabilities.(41) On this topic, Biltoo, Hu, (2023) Further restrictions have been introduced to undermine the Russian economy, specifically targeting the energy sector and goods that could bolster military and technological development. The EU banned the purchase, import, or transfer of Russian seaborne crude oil and specific petroleum products. Starting on December 5, 2022, the EU also implemented a price cap on oil transported by sea from Russia to third countries, aiming to limit the profits that Russia can earn from its oil exports(42) Council Regulation (EU) 2022/1904 of 6 October 2022 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine (2022) OJ L 259 I/3.. Indeed, sanctions can prohibit certain vessels, those with Russian flags or those that changed their registration after February 24, 2022, potentially preventing these ships from reaching their destination. In more severe cases, the vessel may be confiscated under Council Regulation 269/2014(43) Council Regulation (EU) No 269/2014 of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (2014) OJ L 78., facing the risk of detention or asset freezing. These risks may make a port unsafe for certain vessels or cargo operations. However, the determination of whether a port is unsafe due to sanctions will depend on the terms agreed in the charterparty.
The fundamental principle is that the port must be safe for the vessel to use it, load or discharge her cargo.(44) Reardon Smith Line Ltd. V. Australian Wheat Board, The Houston city [1954] A.C, 2 Lloyd’s Rep 148; Cooke et al. (2014), para 5.80 It is also presented that if a vessel’s call at a port could result in it being blacklisted, detained, or impounded at a subsequent port, then that port should be categorised as unsafe. Eventhough, uncertainty remains regarding the limits of this principle, it is suggested that the mere threat to the vessel owner's proprietary interest may be sufficient to deem the port unsafe.(45) In that sens, Cooke et al. (2014), para 5.66 In our context, the primary focus of sanctions is on Russian entities or unlawful cargoes destined for Russia or loaded from Russia. Logically, we assume that if the vessel is clearly owned or partially owned by a Russian entity, the charterers will avoid sending it to an EU port. However, it might be that the charterers wishes to circumvent the sanctions in some cases. The may hide the real nature of a cargo, or proceed with ship-to-ship operations, loading for example, Russian crude oil, and then call at an EU port afterward.(46) See COUNCIL REGULATION (EU) 2022/1904, note 54, at Art. 14 ; The EU has implemented further restrictions on vessels suspected of circumventing the prohibitions and engaging in ship-to-ship transfers of Russian crude oil, the vessels suspected of engaging in such operations are denied access to EU ports; see the EU’s 11th package of sanctions against Russia- Official Journal of the European Union (2023) OJ L 159I.
The Greek Fighter [2006] case can serve as an illustration, where it was held that charterers have an absolute warranty to load or discharge lawfull goods at the nominated ports.(47)The Greek Fighter [2006], per Colman, J., at [283]; Coghlin et al. (2014), para 9.1 In this case, the coastguard enforced UN sanctions against Iraq and detained the vessel due to a suspected unlawful cargo loaded on board. The detention was caused by a justified suspicion that the cargo being transferred was of Iraqi origin. Indeed, the cargo had come from a vessel suspected of carrying contraband. Therefore, this amounted to a breach by the charterers of the clause prescribing to only load lawful merchandise. However, if the vessel detention was arbitrary and could not be anticipated, the proviso would not apply.(48) Coghlin et al. (2014), at 37.110 Additionally, the judge found an express safe port warranty in the Charterparty. He held that the risk of unjustified confiscation faced by a vessel could amount to an unsafe port. This was compounded by the absence of an effective political and legal system to prevent such actions or provide remedies for unlawful seizure. Nonetheless, the fact of the case did not allow for a breach of safe port obligation as the port was not prospectively unsafe at the time of nomination.(49) Ibid.A contrario, it appears that if a vessel encounters an unjustified detention or seizure in the Black Sea, this could constitute an unsafe port situation. We can think of the intimidations and detentions currently carried out by Russian authorities on vessels flying the Ukrainian flag or with Ukrainian crews, or simply heading towards Ukraine.
Similar to the situation with The Greek Fighter, in a scenario where charterers load crude oil from Russia or prohibited cutting-edge technology products, for example, they would be responsible for the repercussions arising from sanctions due to the breach of the warranty to load a lawful cargo (even if not explicitly stated in the agreement). However, would this render the port unsafe? It seems likely, in the case where the vessel is predictably at risk of being detained and perhaps even blacklisted.
2.2.3 Safe for a particular ship
In The Eastern City, the safety of the specific port is to be assessed for a specific ship at a specific time,(50)The Eastern City [1958] at 131 the particularity of the ship is usually relevant for physical damages, each port possesses distinct attributes related to the physical condition of its structures (water depth for example). For that reason, a particular port may be entirely safe for one ship and presents a dangerous risk to another,(51) Cooke et al. (2014), at 10.20 depending of the size of the vessel, if it is laden or in ballast for example(52) For more details, see Cooke et al. (2014),. at 5.71. In the context our study, unless to consider some war ships more equipped against war risks(53) See below 2.5.4 Dangers avoidable by good navigation and seamanship, this condition is not particularly relevant our research. Nonetheless, between February 2022 and April 2023, approximately 30 ships sustained severe damage as a result of the war, and one-third of these ships was registered under the Ukrainian flag.(54) Nytsevich (2023) It is also reported that ships with Ukrainian crews are more susceptible to attacks or arrests.(55) Meade [2023] Thus, to some extent, these characteristics may come into play when assessing the risk of a ship venturing into the Black Sea, although they are not purely physical attributes per se.