The recent award Gard Marine & Energy Ltd v China National Chartering Co Ltd ("Ocean Victory”) deserve to be taken in consideration as it highlights the liability that a charterer takes during a marine voyage.
The vessel Ocean Victory, a Capesize bulk carrier, was demise-‐chartered by its registered owners, Ocean Victory Maritime Inc., to Ocean Line Holdings Ltd for a period of 10 years on an amended Barecon 89 form which provided that the vessel was to be employed «only between good and safe ports».
On 24 October 2006, the Ocean Victory, part-‐ laden with an iron ore cargo, while attempting to leave the port of Kashima in a severe gale, encountered force 9 winds and heavy swell, was set down on the end of a breakwater and then driven aground, before breaking up.
Claimant underwriters Gard Marine & Energy Ltd, as assignee of the rights of Ocean Victory Maritime Inc. and Ocean Line Holdings Ltd., lodged a claim for damages against the time-‐ charterer China National Chartering alleging that:
- Kashima had been a prospectively unsafe port for a Capesize bulk carrier and
- there was no system in place to guard against every conceivable hazard.
Charterers argued that:
- Kashima could not be described as an unsafe port simply because of the reasons set out above;
- it was only necessary to ascertain whether there had been a reasonable level of safety. Moreover, charterers pointed out that no vessel had ever before been trapped by a combination of wind and swell in the way that happened to Ocean Victory.
The Court found that Kashima had been unsafe for the vessel and held that the storm that affected the port of Kashima was not an abnormal event.
In particular, the Court held that the danger faced by the Ocean Victory related to the particular characteristics of the port of Kashima, which was regularly exposed to long waves and gale force winds. On the facts, there was a real -‐ as opposed to fanciful -‐ risk that both might occur at the same time. In those circumstances «… ordinary seamanship and navigation could not ensure a safe exit from Kashima… good luck (would be) also required».
There was a real risk that the vessel might be advised to leave the port due to a convergence of bad weather events and, in those circumstances, there was no system for ensuring that such advice was given only when it was safe to leave port.
Having established the foregoing, the Court needed to assess whether the accident might have been caused by the absence of systems to properly guarantee the safety of the port of Kashima.
In such respect, the English Court decided that:
- the effective cause for the accident was the instruction given by charterers’ representative, a local experienced mariner, that the vessel should leave the port. The fact that it had been given without considering whether it was safe for the vessel to leave the port only confirmed the absence of a suitable safety system;
- there was no negligence in navigation by the master. The Court stated that even if the master’s had been found negligent, the lack of safety systems in the port would still have remained the real cause of the accident.
The Ocean Victory case confirms English Courts’ position, according to which a port is considered safe if, at the relevant time, a vessel can leave it without being exposed to dangers that, in no event, could be avoided by good navigation and seamanship.
Besides, this case underlines that charterers cannot necessarily rely on the master’s alleged negligence to relieve themselves of liability. As a matter of fact, even if the master had been considered negligent, such circumstance would not have been sufficient, in itself, to break the chain of causation between the unsafety of the port and the damage suffered.
As a result of the claim, charterers incurred a liability of USD 137.7 million; considering the extent of the decision, from now on all charterers should take into due account the serious compensatory consequences originating from their breach of ‘safe port’ warranty.