Safe port – vessel traded outside Institute Warranty Limits in return for charterers’ contribution to extra premiums – safe port warranty remaining intact
The vessel was let on a modified NYPE form. [relevant clauses 25 and 32]
The vessel was ordered to three Canadian ports during winter which fell outside the Institute Warranty Limits.
The vessel’s shell plating and propeller were damaged by ice.
The owners’ claimed damages for the cost of repairs and the delay to the vessel.
The two arbitrators appointed by the parties, Mr Donald Davies and Mr Cedric Barclay, found that the damage to the shell plating was caused by an extraneous factor, namely, excessive speed.
They held that the damage to the propeller arose from the charterers’ breach of the express safe port warranty.
Despite their agreement on the facts, the arbitrators were unable to agree on whether the terms of the charterparty absolved the charterers and this issue was referred to an umpire, Captain Warwick, who decided in the owners’ favour.
The decision of the umpire was in the form of a special case subject to the opinion of the Commercial Court.
In the arbitration, the charterers’ contended that by agreeing to the vessel being traded to ports outside the Limits, the owners waived reliance on the safe port warranty in respect of these ports.
In the Commercial Court, this argument was refined to suggest that the warranty was excluded in respect of dangers stemming from the reason for the port falling outside of the Limits e.g ice. The simple answer to this argument was that such an interpretation was not supported by the wording of the clause in question.
A second argument advanced by the charterers was that by naming a range of ports, the owners were to be regarded as having consented to the risk of unsafety.
The third main argument raised by the charterers was that by requiring the charterers to pay an extra insurance premium, the parties intended this as the quid pro quo for the relaxation of the safe port warranty. Mustill J pointed out that the requirement of extra premiums was to allow the ship to be traded to ports outside the Institute Warranty Limits. Without the payment of such premium, the ship would be trading uninsured which the owner could refuse. In other words, the quid pro quo obtained by the charterers was the facility to trade the vessel over an extended area. It was therefore not unfair to require the charterers to pay the premium and still be obliged to ensure that the vessel was traded to safe ports only.
A similar point regarding extra insurance premiums occurred in the Evaggelos where there was an express stipulation that payment of the premium did not absolve the charterers from the safe port warranty.
This case was decided on the wording of the charterparty. The naming of a range of ports is not equivalent to agreeing on a specific port. Mustill J incorrectly referred to the Houston City as being an example of an agreed port.
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