177. D/S A/S Idaho v Colossus Maritime S.A. (The “Concordia Fjord”) [1984] 1 Lloyd’s Rep 385

Safe port – payment of extra war risks premium not absolving charterers from liability in ordering vessel to unsafe port

The facts

The vessel was time chartered on the NYPE form and ordered to Beirut.

Subsequent to the order, and at a time when it was still possible for the charterers to divert the vessel, war broke out in Beirut. The charterers allowed the vessel to continue to the port where it was severely damaged by a napalm rocket.

Basing their argument on the second ratio in the Evia 2, the charterers contended that their obligation to pay an extra war risks premium as part of the hire, freed them from their liability in ordering the vessel to an unsafe port.

Findings

MacCrindle QC as the sole arbitrator gave an interim award in which he rejected the charterers’ argument. The charterers appealed against this decision.

Bingham J in the Commercial Court analysed the relevant provisions in the Baltime charter involved in the Evia 2 and concluded that the provision in the current NYPE charter did not have the effect of absolving the charterers.

Bingham J endorsed the reasons of the arbitrators that the extra war risks premium was part of hire, whether this was hidden in a globular amount or specifically earmarked. Insurance was a matter between the owners and their insurers and did not involve the charterers or give them any special rights under the charter.

Commentary

Bingham J refused leave to appeal but certified the matter as one of general interest. He remarked that an arbitrator of unparalleled experience had expressed misgivings over the correctness of the second ratio in the Evia 2. Despite significant differences in the wording of the two respective clauses, the argument which Lord Roskill and Lord Denning MR relied on was one which ignored the extraneous nature of insurance and the fundamental principle of subrogation, fusing the identity of the insured and the insurers.

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