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Any port in a storm?

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Robert Shearer of Thomas Cooper

Any port in a storm? A re-examination of the law concerning safe ports in The Ocean Victory
By Robert Shearer

The Supreme Court has recently handed down judgment in the long running matter of The Ocean Victory1, which provides a useful summary of the position with regards to claims for breach of safe port warranties.

The “OCEAN VICTORY” was a bulk carrier demise-chartered by her registered owner, to Ocean Line Holdings Ltd. The vessel was then time-chartered to Sinochart, who in turn sub-chartered the vessel to Daiichi. On 19 October 2006 the vessel arrived off Kashima, Japan, to discharge a cargo of iron ore. However, shortly thereafter the weather began to deteriorate and the berth was affected by “long waves”. Subsequently, the vessel, still partially loaded, left the port because mooring lines and tugs were insufficient to keep her at the berth. On departure, the vessel encountered gale force winds and heavy seas. As a result of the weather conditions she ran aground and eventually broke apart resulting in approximately US$170 million worth of losses.

Proceedings were issued against charterers for breach of the safe port warranty. At first instance, it was held that the port was unsafe, because the vulnerability of the port to “long waves” and the danger of storms at the entrance were said to be “characteristics” of Kashima.

However, on a subsequent appeal the Court of Appeal disagreed. The Court of Appeal found that the critical question to consider was whether the “simultaneous coincidence” of these two features was an abnormal occurrence or a normal characteristic of the port. After consideration, the Court of Appeal judged that the relevant combination of characteristics was not characteristic of the port; it was instead said to be an abnormal occurrence, due to the fact that while they were not infrequent individually they were a rare event together. Thus there was not a breach of the safe port warranty.

The Supreme Court unanimously upheld the Court of Appeal’s decision; and reaffirmed the definition of a safe port from The Eastern City2.  Lord Clarke also went on to clarify the definition of an abnormal occurrence as something “out of the ordinary course and unexpected. It is something which the notional charterer or owner would not have in mind”.

This judgment will hopefully add a further element of clarity to this area of law, however, unsafe port claims remain incredibly fact sensitive and will thus always require thorough consideration and legal advice.

If you require further information regarding the contents of this article, please contact Robert Shearer whose details appear below.

[1] Gard Marine & Energy Ltd -v- China National Chartering Co Ltd and Daiichi Chuo Kisen Kaisha (“OCEAN VICTORY”), [2013] EWHC 2199 (Comm), [2015] EWCA Civ 16, [2017] UKSC 35

[2] Leeds Shipping Co v Societe Francaise Bunge SA (The Eastern City) [1958] 2 Lloyd’s Rep. 127

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