In a case which is of considerable interest to owners and charterers on an issue where there is no direct authority, owners appealed the previous decision of the Commercial Court reported in Safe Berth - Implied Warranty?
to the Court of Appeal. The unanimous decision of Clarke MR, Rix LJ and Carnwath LJ dismissed owner’s appeal.
The issue under appeal was the one formulated by Mr Justice Aitkens when giving leave to owners under s.69 Arbitration Act to appeal to the Commercial Court as follows:
“If a specific load port is named in a voyage charterparty and there are several possible berths within that port to which a vessel could be directed to load by the Charterers and there is no express warranty in the charterparty for the “safety” of either the port or the berth to which the vessel is to be directed by the Charterers, is the charterparty subject to an implied term that the Charterers must nominate a “safe” berth at the load port?”
Leading judgment was given by Clarke MR, who considered the circumstance in which the court might imply a term in a contract in the light of the terms of the contract and the normal rules of the implication of contractual terms.
The owners had chartered the vessel to the charterers on an amended Gencon 1994 voyage charterparty for the carriage of a cargo of cement from Chekka, Lebanon to Algiers. Whilst at the loading berth, the vessel came into contact with a hidden underwater projection and the vessel’s hull was damaged. As result, it was said, both ship and cargo suffered damages. Owners claimed against charterers on the ground that charterers were obliged to nominate a safe berth at the loadport despite there being no express warranty as to safety.
The charter terms provided, inter alia, as follows:
Box 10: “Loadport port or place (Cl.1) 1 Berth Chekka – 27 FT SW permissible draft”
Clause 1: The said vessel shall…proceed to the loading port(s) or place(s) stated in Box 10 or so near thereto as she may safely get and lie always afloat….
Clause 20: Owners guarantee and warrant that upon arrival of the vessel to and/or prior its departure from, loading or discharging ports….the vessel, including inter alia, the vessel’s draft, shall fully comply with all restrictions whatsoever of the said ports...including their anchorages, berths and approaches and that they have satisfied themselves to their full satisfaction with an about the ports specifications and restrictions prior to entering into this Charter Party”
Owners argued that where there were a number of possible loading berths and these were not named in the charter, it was necessary to imply a term to the effect that, while owners accepted the risks common the port itself and to all berths within the port, they did not accept the risks associated with unique dangers affecting the berth which charterers nominated as opposed to all berths.
Charterers continued to maintain that such an implied terms would be inconsistent with clause 20 and where the parties chose not to make specific provision about the safety of the loading berth nominated by charterers, it was inappropriate to apply such a term.
Given the absence of direct authority on this point, Clark MR first considered the circumstances in which implied terms might be implied into a contract. In doing so, the starting point was the decision of Lord Hoffman in A.G. Belize v Belize telecom Ltd [2009] UKPC 11, wherein the court held that the implication of terms is the natural part of the wider process of construing the contract, and the principle set out in Inventors Compensation Scheme v West Bromwich Society [1998] 1 WLR 896, that a contract means what a reasonable person, in the light of all the factual background available to the parties, would understand it to mean. Those cases directed Clarke MR to the conclusion that an implied term is to be reasonable and necessary (in making a contract work) without contradicting any express terms. He noted:
“For my part, I would not apply the reasoning directly from a time charterparty to a voyage charterparty, especially where, as here, the danger at the berth was (it appears) unascertainable by either the owners or the charterers and the question is simply which party has to bear the risk or, put another way, how the risk should be apportioned. As I see it, all will depend upon the circumstances and, in particular whether, having regard to the terms of the particular charterparty, it is necessary to imply the warranty”.
In reaching their decision the court found that owners had agreed to load at the named port of Chekka knowing the vessel had to go to one of the berths capable of accommodating the vessels draft, as per clause 1. Further by way of clause 20, owners had guaranteed and warranted they would satisfy themselves as to restrictions and specifications of the port. The combination of the warranty in clause 20 and the fact that the word “safely” had been deleted from 1 meant that owners had agreed that the vessel would proceed to the nominated berth at Chekka, or so near as she could get and lie afloat and load cargo but that obligation was not contingent upon the vessel’s safety. Therefore as charterers had not warranted that the berth would be safe, any implied warranty that the berth was safe would not include a warranty with regard to the passage to and from the port and would be limited to risks not affecting the port as a whole, or other berths in it. Such an implied warranty would have been inconsistent with clauses 1 and 20 and was not necessary to make the contract work.
Owners’ appeal was, therefore, dismissed and the arbitration award and High Court Decision in charterers’ favour upheld.
The judgment is of considerable importance and it provides useful guidance on whether a “safe berth” warranty is to be implied in circumstances where a specific load port is named in a berth (voyage) charterparty. This is, though, always a question of construing the charterparty as whole and so as to make sense. In the case of The "Reborn" the express terms of this charter were somewhat unusual and the decision will therefore not be applicable to every charterparty under which the issue arises.
Mediterranean Salvage & Towage Limited v Seamar Trading & Commerce Inc “The REBORN” [2009] EWHC Civ 531
Article by Domenico Ferrara and Duncan Howard
