MarIus

2.3.1 Expressed

Port safety warranty is typically explicitly addressed in the charterparty to counterbalance the charterer's right to nominate ports. In Thor Falkanger's work, clause 3 from Intertankvoy 76 is cited as an example of redundancy in charterparties:

Charters shall exercise due diligence to ascertain that any places to which they order the vessel are safe for the vessel and that it will lie there always afloat. Charterer shall, however, not be deemed to warrant the safety of any place and shall be under no liability in respect thereof except for loss or damage caused by their failure to exercise due diligence as aforesaid. (1) Thor Falkanger, Lasse Brautaset, and Hans Jacob Bull. Scandinavian Maritime Law - The Norwegian Perspective. 4th ed. Universitetsforlaget, 2017 at 464

When the port is not nominated by the charterer, but instead, it has been previously specified in the charterparty, the court will still give effect to an express safe warranty clause. This warranty may as well be extended to berths within the port by implication^{(2) See Baughen, Simon, Shipping Law, 8th Edition 2023, Routledge, at 221}. The express warranty might not apply if another provision has already addressed the occurrence of an unsafe port. This is often the case with war risk clauses that comprehensively outline the allocation of risks.^{(3) The Evia 2 [1982]}

It is common to impose on charterers the obligation to exercise due diligence in the nomination of a port or berth and to allow them to free themselves from this responsibility when the damages incurred are not related to their failure to exercise "reasonable care". A detailed discussion will be explained below regarding the nature of the obligation undertaking by the charterers under a safe port warranty.^{(4) See below 2.4}

2.3.2 Implied

In the context of implied terms, Todd references Lord Diplock's perspective in The Johanna, highlighting the intricate nature of modern charterparties. Lord Diplock observes that these agreements, despite their complexity, do not explicitly outline the allocation of responsibilities between charterers and shipowners for the successful execution of the venture. Instead, they implicitly rely on established commercial practices, which have gained legal recognition through court decisions.^{(5) E.L. Oldendorff & Co GMBH v Tradax Export SA, The Johanna Oldendorff [1974] A.C. 479 HL, The Johanna Oldendorff [1974] A.C. 479 at 554, cited in Paul Todd, [2012]}

Courts traditionally imply terms when it “goes without saying” or when it is “necessary to give business efficacy of the contract”.^{(6) We will not enter into details but instead, for a detailed explanation regarding frustration doctrine, see Poole’s Textbook on Contract Law, 15th Ed. 2021, at 12.3} Todd has observed that while courts may occasionally imply a warranty of safe port in charterparties, such agreements are typically crafted by experts, and therefore the implication of such a warranty is only legitimate in exceptional circumstances.^{(7) Paul Todd, [2012]}

The issue of port safety linked to contracts of affreightment is dealt with differently depending on the agreement signed between owners and charterers. One of the particularities of a voyage charter is that the owners undertake to carry a cargo from a specific loading port/berth to another designated discharging port/berth. Time charters and some voyage charters will give the right to the charterer to nominate a port from a wide range of ports agreed upon in the agreement.^{(8) For a detailed presentation of these contracts, Thor Falkanger, [2017], at 462 et seq. for voyage charters; 500 et seq. for time charters.} Hence, a charterer may select a port/berth that exposes the shipowner to a risk unforeseen at the time the agreement and that he had not consented to assume. The right given to the charterer to nominate a port of loading is therefore balanced by the fact that the charterer will assume the risk associated with damage in connection with its call at a specific port. After all, the charterer who nominates the port is expected to have conducted some investigations and assessed the risk before making a decision on the chosen location. If the charterer fails in this duty, it is generally accepted that they assume the risk^{(9) Thor Falkanger, 2017, at 463} unless it could have been avoided through the use of good navigation/seaman practices^{(10) Ibid.}. In England, the charterer is presumed responsible for the safety of the port they themselves have nominated unless there is a contrary clause.^{(11) Ibid.}

An interesting decision is the case of Vardinoyannis v The Egyptian General Petroleum Corporation, known as The Evaggelos Th^{(12)The Evaggelos Th. (1971)} . The fact occurred in the context of the Arab-Israeli conflict. In this case, a ship was chartered to trade in a war zone, no express safe port warranty was included in the agreement, and this obligation was considered implied. The vessel was headed to Suez during a ceasefire in the conflict. However, after her arrival, hostilities resumed, resulting in significant damage to the vessel, ultimately leading to a constructive total loss. The court implied a condition that the nominated discharge port should remain safe throughout the vessel's stay. Furthermore, a port is considered unsafe if the ship faces risks when departing from it. Therefore, the charterers will still be liable if the vessel faces risks when departing from the port.^{(13) Gray (2023)}

However, courts are generally hesitant to imply terms in voyage charterparties^{(14) Ibid.}. One reason may be that a voyage charterer usually has fewer options to nominate a port compared to those available in a time charter. It may also be that, what was warranted in the charter was the safety of the berth, but not of the port. In such a case, it was determined that where all the berths are affected by the same unsafety, the charterers will not be in breach. In The AJP Priti^{(15) Atkins International HA v Islamic Republic of Iran Shipping Lines, The AJP Priti, (1987) 2 Lloyd's Rep 37} , there was no automatic implication of a port safety warranty. It was argued that if the parties did not specify the warranty specially for the port in the charter, it might have been a deliberate omission^{(16) Ibid.}. Thus, the risk should lie where it falls.^{(17) Attorney General of Belize v Belize Telecom Ltd, Belize [2009] 1 W.L.R. 1988 PC, at [17] (Lord Hoffmann)} In fact, the parties had expressly included a clause for safety of the berth but not for the port. Additionally, the state of war was known at the time of contract formation, and all the berths named in the charterparty were subject to hostilities. It was held that, in situations where either every berth or the entire port is anticipated to be unsafe, the owners should not have accepted to call at this place. However, in The Greek Fighter case, J. Colman, in an obiter dictum, rejected the notion that, by analogy, owners could not claim compensation for political unsafety in breach of an express safe port commitment if the unsafety was a common condition across all ports in a country.^{(18)The Greek Fighter [2006] at [320]- [323]} The decision is justified by the fact that in The Greek Fighter, only one location was named, and the unsafety of the other ports was therefore not relevant.

In the context of the Ukrainian/Russian conflict, much will depend on when the charterparty entered into the agreement and the terms agreed on. Bearing the aforementioned points in mind, today, the state of war is established, and it will be difficult for a shipowner to argue that a port safety warranty is implied in the conclusion of a voyage charterparty. This is especially true if the charterparty only mentions specific safe berths to load or discharge at in the Black Sea. If the whole port is deemed unsafe, which is likely to be knowing the current situation, the owners will not be able to imply a port safety obligation relying on an express safe berth warranty. Nonetheless, if the charter includes an express safe port warranty, the owners might be able to rely upon it.

In a time charterparty, with the state of war being clear and current, it can be argued that the owners could have refused this trade and excluded Russia/Ukraine from the areas to be served, or, at the very least, allocated the responsibility for any potential consequences on the charterers. The whole Black Sea is affected by dangers such as mines or danger to bit hit by a missile. However, if we consider the precedent set in The Evaggelos Th, which also involved a vessel trading in a war zone under a time charter party, the obligation of safety will be implied. In such a scenario, the charterers would be liable if the losses incurred are a result of compliance with the charterers' orders.

Adittionally, courts will not imply a safe port/berth warranty when it is not compatible with the contract's construction. For example, consider the case of Reborn, where the parties had struck the world “safety” from the Gencon Voyage Party upon which their agreement was based, and no express safety obligation was present. The judges then decided that the risk should lie where it falls.^{(19)The Reborn [2009] at [18], quoting Sir Thomas Bingham M.R. in Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] E.M.L.R. 472 CA (Civ Div), cited in Paul Todd, [2012] at 681}

To conclude, it appears that case law suggests the court's reluctance to employ such implications in voyage charterparties. It should also be noted that it was established that the words “Always lie afloat” refers to the safety of the vessel when in port. However, in the case of The Evaggelos, it was established that the words "Always lie afloat" are exclusively concerned with the marine characteristics of a port, indicating it refers to maritime dangers but excludes war risks. Consequently, a charterparty that includes a clause with this wording would not safeguard against war risks for a vessel trading in the Black Sea.^{(20)The Evaggelos Th [1971]}