Charterers’ Obligation

A charterparty is, under English law, a contract. The parties to the contract take on obligations and are given rights by mutual agreement and for a price. One of these obligations on the part of the charterer under a time charterparty will be that the ship is sent to safe ports. However, for the obligation to arise it should be expressly set out in the charterparty (possible implied rights, that is, unwritten). Most printed time charterparty forms contain an express safe port provision. For example: Vessel to be employed … between good and safe ports or places where she can safely lie always afloat as the charterers may direct Baltime Form [Vessel … to be employed] … between safe port and/or ports … as the charterers or their agents shall direct New York Produce Exchange Form 1946 which was amended in the 1993 revision to: Vessel shall be employed … between good and safe ports and safe places … as the charterer shall direct ….The wording is clear and direct. As with any English law contract the parties are essentially free to agree what they want and, as a result, there have been variations of the safe port wording. In particular some tanker time charterparties have been amended to reduce the burden on the charterers to an obligation of exercising due diligence in nominating safe ports. (This is generally because the oil majors are the charterers and have the commercial muscle to be able to reduce their potential liabilities) One example is in the Shelltime form which is as follows: “Charterers shall exercise due diligence to ensure that the vessel is only employed between and at safe ports … and shall be under no liability in respect thereof except for loss or damage caused by their failure to exercise due diligence ….” This clause was considered by the English Commercial Court in a case called (The Chemical Venture 1993). A brief note of the case is as follows: During the Iran/Iraq war the tanker Chemical Venture was ordered to a port in a third country to load cargo. Just before that order Iran had started attacking ships at the potential load port despite the fact that she was in a neutral or non-combatant country. After first refusing to go there the crew then agreed to do so, on the payment of bonuses. In fact, the ship was hit by a missile and damaged. At least three other vessels had been attacked in the same way in the previous eleven days. The charterers defended a claim by the owners that the port was unsafe. Because the charterparty was on the Shelltime form they said that they only had to exercise due diligence which they had done by ordering the ship to the port at a time when attacks were sporadic. The judge found that the port was unsafe and that because the charterers knew the facts they had not exercised due diligence when they gave the orders. However, because the owners had allowed the ship to go to the port after agreeing crew bonuses the judge also held that they had agreed the port despite the unsafety. As a result they could not recover their losses. The test of what constitutes due diligence in these circumstances seems to be one by which diligent enquiries must be made and a reasonable conclusion reached