180. Mediolanum Shipping Co v Japan Lines Ltd (The “Mediolanum”) [1982] 1 Lloyd’s Rep 47; [1984] 1 Lloyd’s Rep 136

Safe port – vessel grounding in unchartered area of safe port – charterers not liable

The facts

The vessel was chartered on the NYPE form and expressly required to trade between safe ports. During the course of the charter the vessel sailed to Ghent from Los Angeles fully laden with petroleum coke.

Having passed through the Panama Canal, the vessel was ordered by the charterers to take on bunkers at Las Minas.

The charterers’ agents ordered the vessel to a safe bunkering location in the port. The refinery supplying the bunkers diverted the vessel to an alternative location within the port. In proceeding to such location, the vessel took ground and was damaged on an unchartered reef.

A dispute arose in respect of liability for the damage and the consequent loss of hire.

Findings

The three Baltic Exchange arbitrators, Mr Cedric Barclay, Dr Ralph E Kingsley and Mr Michael D Baskerille found in favour of the owners in an interim award started in the form of a special case.

The award was initially remitted to the arbitrators for further findings and elucidation. Two of the arbitrators filed a second interim award in which they refused to alter their original award. This was followed by a further application for remission after which certain words were added to the award by consent of the parties.

Robert Goff J in the Commercial Court upheld the arbitrators’ award in an ex tempore judgment.

The Court of Appeal (Lawton, Dillon and Kerr LJJ – judgement by Kerr LJ) answered the special case in the negative and upheld an appeal against the judgement of Robert Goff J.

Kerr LJ pointed out that the original position for bunkering which had been designated by the charterers’ agents was safe and that even in a safe port such as Las Minas, there would be areas which would be unsafe for vessels of certain drafts and sizes [the safe port warranty requires safety for the particular vessel and therefore this argument is unsound].

Even on the assumption that the refinery which gave the order which led to the vessel’s damage, was considered to be the agent of the charterers, no negligence on the refinery’s part had been established for which the charterers could be vicariously liable.

Both bases upon which the charterers could have been liable i.e. breach of the safe port warranty and agency were thus ruled out.

Commentary

The judgment of Robert Goff J confirming as it does the award of three experienced arbitrators is to be preferred. Shifting position to bunker was a normal occurrence which was made dangerous by the unchartered reef, a feature of the port in question.

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