2.6 Alternatives to port safety warranty
Among these alternatives, the doctrine of Indemnity stands out. When there is no express clause related to port safety, this provides a separate basis for a shipowner to seek indemnification for the consequences stemming from their compliance with the charterer's orders. This doctrine is only relevant when the owner complied with the charterers’ orders and there is no express clause governing port safety in the charterparty.(1) Solvang, Trond (2013), The English doctrine of indemnity for compliance with time charterers´orders - does it exist under Norwegian law? MarIus. ISSN 0332-7868. p. 11–28. At 18 The application of the doctrine of Indemnity can be illustrated through an example, as seen in The Evaggelos Th case.(2)The Evaggelos Th [1971] In this case, there was no express clause related to the port safety obligation and the jugde was prepared to imply a safe port warranty. However, the outbreak of hostilities was deemed to be sudden and not foreseeable at the time of the order. As a result, the port was not prospectively unsafe, and the charterers were not considered in breach. Thus, the judge intended to apply the doctrine of indemnity but came to the conclusion that the proximate cause of the vessel's damage was a gunfire and not the charterer's order. The damage suffered by the vessel could not be borne by the charterers as it was therefore not the consequences of their order. To effectively invoke the doctrine of Indemnity, several specific conditions need to be fulfilled. The risks should not be of a kind that is traditionally placed on the shipowner, such as perils of the sea and hazards related to navigation. It is essential to note that if there is express wording related to port safety obligations in the charterparty, the doctrine of Indemnity will be excluded for such consequences. In such cases, the express clause will take precedence over the doctrine of Indemnity.(3) Trond (2013) There must be an unbroken chain of causation between the charterer's order and the occurrence of the loss. Furthermore, the foreseeability of the event is a key factor in determining whether the doctrine of indemnity applies. If a specific event is considered a too foreseeable consequence of a charterer's order, the shipowner may be deemed to have assumed the risk. On the other hand, if the event is too unforeseeable, it may break the chain of causation, and the doctrine may not apply in such a situation. In summary, the doctrine of indemnity is a legal principle that provides a shipowner with a basis for indemnification when they have incurred losses due to complying with charterer's orders, except in cases stated above. In our view, the doctrine of indemnity could be readily applicable in the context of the ongoing war between Russia and Ukraine, though its application would, of course, depend on the specific wording in the charterparty and the prevailing context at the time of an attack. For instance, if missile attacks suddenly become frequent in the region and the shipowner still proceeds to the area, they would likely be deemed to have accepted the risks. This interpretation hinges on the understanding that knowingly entering a high-risk zone, especially one experiencing escalating conflict, could be seen as an assumption of risk on the shipowner's part.
Another option available for a shipowner to be protected in this conflict is to consider adding war risks clauses. BIMCO, the Baltic and International Maritime Council, advises the inclusion of war risks clauses in maritime contracts. The latest versions, such as CONWARTIME 2013 for time charters and VOYWAR 2013 for voyage charters, are noteworthy. They define war risks in a broad manner, importantly noting that an official declaration of war by the state concerned is not necessary for the risks to be deemed in alignment with the definition of war risks. If there is no war clause in the charterparty, terminating a charterparty or voyage can be challenging. If a war clause is included in a charterparty, the only requirement for its activation is that the area is considered dangerous with a potentially high risk; a detailed assessment of the likelihood of the war risk to occur is not necessary.(4) Cf. below 3.3.1 This was established, regardless of whether the conflict has escalated since the charterparty was signed in The Paiwan Wisdomcase.(5) Taokas Navigation SA v Komrowski Bulk Shipping KG (GMBH & Co), The Paiwan Wisdom (2012) Since then, an amendment to CONWARTIME’s sub-clause (b) states that the clause applies regardless of whether the war risk existed at the time of entering into the charterparty or occurred thereafter. Charterers are responsible for any losses or expenses resulting from their orders. Additionally, a new sub-clause (i) specifies that charterers bear any claims from third parties under a Bill of Lading or other documents evidencing a contract of carriage.
Furthermore, BIMCO also recommends the incorporation of trade zones exclusions and war cancellation clauses. These latters allow both parties to cancel the agreement if a conflict arises between specific countries named in the contract.
Additionally, as explained above,(6) See below 2.2.2.2 the ship having to wait does not necessarly make a port unsafe. It might also be interesting to look at the Force Majeur clause and as we refered to earlier, the frustration doctrine when the port safety warranty is not operating. This becomes relevant in situations like vessels blocked in the Danube. The situation of vessels, highlighted in a Lloyd's article, presents unique challenges. Ships queued in the bosphorus, unable to secure passage authorisation, could lead to reevaluations of port safety warranties. The article indicates that these warranties might not apply for vessels arrived before the termination of the Black Grain Agreements (port not deemed prospectively unsafe), potentially allowing for the invocation of the doctrine of frustration due to these altered circumstances.(7) Marie Kelly, Black sea Grain initiative- will it restart and what are the implications for mariners, Maritime risk International, published on September 20, 2023, Llyods Intelligence, Liz Booth Ed. 2000-2023( i-law.com)
Finally, sanctions clauses are designed to protect parties from fulfilling contractual obligations adversely affected by sanctions. It helps them mitigate risks associated with sanctions. Unlike anti-sanctions clauses that require parties to fulfill their contractual obligations even if sanctions are implemented, a sanctions clause often treats the imposition of sanctions as a force majeure event. It potentially excuses a party from performing their contractual duties under certain conditions.(8)For more details, see Tserakhau, K., and Struzkho, A. (2021, February 21). (anti)sanctions clause: How to minimize sanction risks – contracts and commercial law – Belarus,in https://www.mondaq.com/contracts-and-commercial-law/1033796/antisanctions-clause-how-to-minimize- sanction-risks
Shipowners willing to trade in the Black Sea region are advised make an assessment and consider the above in their charterparty.
In the next section, we will delve into the consequences and implications of ordering the vessel to an unsafe port.