obligations on the part of the shipowner and the charterer, which are considered in this chapter. Before going on to the common law implied undertakings, a brief description of the different types of charterparties is provided.

Types of charterparties

Charterparties are classified into three (basic) types: voyage charterparties, time charterparties and demise charterparties. A brief description of these types is subsequently provided; however, only the voyage charterparty is examined in this chapter. The others are outside the scope of this book, since they are concerned with the hire, employment or lease of the vessel.

Voyage charterparty

Under a voyage charterparty, the shipowner agrees to charter the vessel to the charterer for one or more specified voyages. The vessel remains under the control of the shipowner, who is responsible for equipping and manning the vessel. The crew and master are employees of the shipowner, who is responsible for their wages. The shipowner in a voyage charterparty undertakes to transport the goods to the port(s) specified in the charterparty. The charterer undertakes to provide the specified cargo and pay for the services either as a lump sum for the voyage or in terms of the amount and type of cargo carried.

A number of standard forms are in use. The most well-known standard form for use with general cargo is GENCON charterparty, approved by BIMCO. The form, despite revisions (in 1922 and 1976), was not comprehensive with the result that parties using GENCON regularly inserted additional clauses.8 BIMCO, therefore, produced an amended version of GENCON, known as GENCON 1994.9 The 1994 version has introduced new clauses, such as cl 19, on law and arbitration, and has modified a number of clauses to reflect modern practice – for instance, cl 8 on lien10 and cl 10 on bills of lading. There are also other standard forms for use with specific cargo – for example, NORGRAIN 89 (North American grain charterparty issued by the Association of Shipbrokers and Agents (USA) Inc) for use in the carriage of grain, OREVOY (the Baltic and International Maritime Conference standard ore charterparty) for use in the carriage of ore and FERTICON (Chamber of Shipping fertilisers charter) for use in the carriage of fertilisers.11

Time charterparty

Under a time charterparty, the charterer hires the vessel for a specified period of time. As in a voyage charter, the shipowner retains control of the ship and the employees on board the ship. However, the charterer is responsible for its deployment, the number of voyages it undertakes and the destination of the voyages. The shipowner in a time charterparty does not undertake to transport the goods to a specified port(s) as in a voyage charterparty. There are also a number of standard time charter forms – the most well known of these are BALTIME (Baltic and International Maritime Conference uniform time charter) and the NYPE (New York Produce Exchange time charter).12 Because of the nature of time charterparties, their terms concentrate on employment of vessel, speed of vessel, maintenance of vessel, hire period, return of vessel, payment of hire, and so on.

Since the emphasis of time charterparties relates to the vessel, they are beyond the scope of this book and, therefore, not examined in this chapter.13

Demise charterparty

Also known as a bareboat charterparty, in a demise charterparty, the shipowner passes possession and control of ship to the charterer. The shipowner is no longer responsible for equipping the ship or employing the crew as in a voyage or time charterparty. For the duration of the charter, the charterer is responsible for manning, equipping and insuring it. Mackinnon LJ, in Sea and Land Securities v Dickinson and Co,14 formulated the difference as thus:

. . . the distinction between the demise and other forms of charter contract is as clear as the difference between the agreement a man makes when he hires a boat in which to row himself and the contract he makes with a boatman to take him for a row [at pp 69–70].

Once again, because of its nature, a demise charterparty is beyond the scope of this book.

Common law implied obligations in a voyage charterparty

As stated earlier, common law implies a number of undertakings on the part of the shipowner and the charterer. On the part of the shipowner, common law implies that he will:

(a)provide a seaworthy ship;

(b)proceed with due dispatch;

(c)carry the cargo to the agreed destination without deviation; and

(d)use due care and skill in navigating the vessel and carrying the goods.

These obligations on the part of the shipowner are also implied in a bill of lading governed by common law. The scope of these undertakings and the effect of the breach of these terms are considered in Chapter 7.

For the charterer’s part, common law implies that he will:

(a)nominate a safe port and

(b)not ship dangerous goods without disclosure.

Nomination of a safe port

‘Safe port’ was defined in Leeds Shipping v Société Française Bunge (The Eastern City)15 in the following manner:

. . . a port will not be safe unless, in the relevant period of time, the particular ship can reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship [at p 131].

13See Wilson, Carriage of Goods by Sea, 7th edition, 2010, Pearson Education Longman for an excellent account of time charterparties.

14[1942] 2 KB 65.

15[1958] 2 Lloyd’s Rep 127.

It is difficult to construct a priori an exhaustive list of situations likely to fall within the definition provided in The Eastern City. The matter is one of fact and has to be decided in the light of factors, such as the vessel’s manoeuvrability and availability of weather reports. Most obvious incidents likely to render a port unsafe are meteorological events that cannot be avoided through good navigation. For instance, unpredictable weather and absence of weather reports may render a port unsafe. The Dagmar16 illustrates this well. The defendants in this case ordered the vessel to Cape Chat where there was a sudden swell and the moorings of the ship came apart, as a result of which she went aground. The master had asked for weather reports, but reports were not provided. In these circumstances, the court held that there was no negligence on the master’s part, and the port was unsafe.

Disturbances of a political nature may also render a port unsafe. In Ogden v Graham,17 under the voyage charterparty, the vessel was to go to a safe port in Chile, with leave to call at Valparaiso. At Valparaiso, she was ordered to Carrisal Boju. The port was closed by government order, and the vessel was likely to be confiscated on entry.The ship waited for the port to open and discharged the goods. Shipowners claimed damages for the delay. The issue was whether political safety came within the safe port obligation. Blackburn J had no hesitation in finding that it did. According to him:

In the absence of all authority bearing on this matter, I am of the opinion that under the terms of the charterparty like the present the charterer is bound to name a place which at the time he names it is one into which the ship can get; and that although the ship can physically get into it as far as navigation and what may be called the natural incidents are concerned, yet if that would be at the certain risk of confiscation then the place is not a ‘safe port’ [at p 29].

Obstacles of a temporary nature, however, will not render a port unsafe. In the event of a temporary obstacle, the master will be expected to wait for a reasonable time until it is removed or has abated.18 Only where the delay is such as to frustrate the object of the contract will there be a breach of the safe port undertaking. In Grace v General Steam Navigation Co Ltd (The Sussex Oak),19 it was held that an icebound port did not render the port unsafe unless it was icebound for a period that would frustrate the object of the charterparty.

The shipowner is not under an obligation to ensure that the port nominated is safe. On arrival, in the face of obvious danger, if the master enters the port, the safe port undertaking in the charter will not benefit the shipowner since the negligence would have broken the chain of causation.20 The master can refuse to enter the port nominated if he thinks it is dangerous to enter it. Whether the voyage charter allows the charterer to nominate another port, in the absence of an express term,21 is open to doubt. The GENCON 1994 charterparty, in cl 1, provides that ‘the vessel is to proceed to the discharging port(s) . . . or so near thereto as she may safetly get and lie always afloat, and there deliver the cargo’, which imparts the right to the shipowner to discharge the goods at another port. The distance of the alternative port from port of discharge that will be tolerated will depend on the availability of alternative safe ports in the immediate vicinity of the discharging port.

16[1968] 2 Lloyd’s Rep 563. For a recent example, see The Marinicki [2003] 2 Lloyd’s Rep 655.

17(1861) 31 LJQB 26.

18See Independent Petroleum Group v Seacarriers [2006] EWHC 3173 where the port of Beira held to be unsafe because of failure of port authorities to monitor a navigation channel prone to shifting sands. Damages for detention awarded. For more recent cases on the safe port obligation, see The Livanita [2007] EWHC 1317 (Comm); The Archinidis [2008] EWCA Civ 175.

19[1950] 2 KB 383.

20See The Kanchenjunga [1990] 1 Lloyd’s Rep 391; Compania Naviera Maropan SA v Bowaters Lloyd Pulp and Paper Mills Ltd (The Stork) [1955] 2 QB 68.

21Where a right to decline a nomination is given, the master is expected to act honestly and in good faith. See Abu Dhabi National Timber Co v Products Star Shipping Ltd (The Product Star) (No 2) [1993] 1 Lloyd’s Rep 397.

which, by reason of a port, which was prospectively safe when the order to go to it was given, subsequently became unsafe . . . imposes a further and secondary obligation.

In this connection, two possible situations require to be considered. The first situation is where, after the time charterer has performed his primary obligation by ordering the ship to go to a port which, at the time of such order, was prospectively safe for her, and while she is still proceeding towards such port in compliance with such order, new circumstances arise which render the port unsafe. The second situation is where, after the time charterer has performed his primary obligation by ordering the ship to go to a port which was, at the time of such order, prospectively safe for her, and she has proceeded to and entered such port in compliance with such order, new circumstances arise which render the port unsafe.

In the fi rst situation . . . the time charterer . . . [is] to order her to go to another port which, at the time when such fresh order is given, is prospectively safe for her. This is because . . . the charterer . . . [is] to do all that he can effectively do to protect the ship from the new danger in the port which has arisen since his original order for her to go to it was given.

In the second situation . . . [if] it is not possible for the ship so to leave, then no further and secondary obligation is imposed . . . [If] it is possible for the ship to avoid the new danger in the port which has arisen by leaving, then a further and secondary obligation is imposed . . . to order the ship to leave the port forthwith, whether she has completed loading or discharging or not . . . to order her to go to another port which, at the time when such fresh order is given, is prospectively safe for her [at pp 319–20].

On the facts of the case, the court held that there was no breach of the safe port obligation. Basrah was a prospectively safe port at the time of nomination, and the vessel was trapped in Basrah because of an abnormal occurrence.

In a case decided in 1983,25 the vessel was unable to enter Basrah until 20 September. Likelihood of war was imminent, but the charterer did not order the ship to leave, which she could have done. The court found that the charterer was in breach of the safe port obligation.

The secondary obligation, however, raises a number of questions. Does the further obligation require the charterer to be vigilant at all times continuously – that is, to check there are no abnormal or unusual occurrences, or likelihood of abnormal or unusual occurrences in the nominated port or on the way to the nominated port? What standard of care must the charterer exercise? Is it one of due diligence or is it absolute? Is the secondary obligation personal to the charterer? In other words, is he liable for the negligence on the part of expert third parties from whom he has taken advice?

The standard for establishing whether a ‘political risk’ renders a port unsafe seems to be that of the reasonable shipowner or master as indicated by K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob).26 In other words, if a reasonable shipowner or master would decline to send or sail his vessel in the face of a political risk, the port would be unsafe (at p 551).27

The meaning of safe port expounded in The Evia (No 2) applies equally to voyage charterparties, as was pointed out by Lord Roskill. However, unlike in a time charter, the voyage charterer has no control over employment of the ship. The voyage charter may provide for a range of ports, but, once nominated, there is no right to renominate, unless there is a clause to that effect. This is also

25The Lucille [1983] 1 Lloyd’s Rep 387.

26[1992] 2 Lloyd’s Rep 545. This case considered the safety of the port of Massawa in the light of guerrilla activities of rebel Eritrean forces in and around the coastal waters. Note that this was in the context of a time charterparty. See also Dow-Europe v Novokia Inc [1998] 1 Lloyd’s Rep 306.

27See also Pearl Carriers Inc v Japan Line Ltd (The Chemical Venture) [1993] 1 Lloyd’s Rep 508, at p 520; The Kanchenjunga [1990] 1 Lloyd’s Rep 391, at pp 397–400.

the case in a charterparty naming a specific port. No guidance is provided on how the secondary obligation will be construed in these cases. Their Lordships preferred silence in The Evia (No 2). In the words of Lord Roskill:

. . . What is a voyage charterer to do . . .? My Lords, this problem seems never to have been judicially considered in any detail: indeed . . . in The Houston City [1956] AC 266, the Privy Council expressly denied to consider it.

. . . I fi nd it much more difficult to say what are the comparable obligations under a voyage charterparty at any rate where there is no express right to renominate. The well-known decision in Duncan v Köster (The Teutonia) (1872) LRPC 171 – a case decided long before the doctrine of frustration assumed its present form – has always presented difficulties and voyage charterparties today almost invariably contain war and strike clauses which give the shipowner and their masters the right sometimes to require another nomination and sometimes an unfettered right to proceed elsewhere. I think, therefore, in a case where only a time charterparty is involved, that it would be unwise . . . to give further consideration to the problems of which might arise in the case of voyage charterparty . . . I would leave these problems for later consideration if and when they arise [at pp 318–20].

One possible solution is to construe the secondary obligation as giving rise to an implied obligation to renominate in a voyage charterparty. This could be justified on the grounds that to hold a voyage charterer liable in the absence of an express renomination clause would make the charterer the insurer for an emerging imminent danger, the effects of which could be avoided by taking evasive action. This implied obligation to renominate should, however, be used sparingly – that is, only where the voyage charterparty does not have an express renomination clause and where the circumstances indicate imminent danger. Interestingly, some of the voyage charterparties do have a renomination clause. For instance, cl 2 of TANKERVOY 87 (Tanker voyage charterparty 1987) provides for nominations and renominations as follows:

Charters shall nominate loading and discharging ports or places and shall have the option of ordering the vessel to a safe port or place en route . . .

If after loading or discharging ports or places are nominated, charterers desire to vary them, owners agree to issue such revised instructions as are necessary to give effect to charterer’s revised orders . . .

In the event of breach of the safe port obligation, the charterer becomes liable for damages incurred by the shipowner – both for physical loss (e.g., damage to the fabric of the ship) and for economic loss (e.g., hire). This right to damages is not affected where a shipowner does not refuse nomination of an unsafe port. However, the shipowner will not be successful with his claim for damages where the charterer is able to show that the acceptance on the part of the shipowner of the nomination amounted to a waiver28 or where the behaviour on the part of the shipowner is of a character (i.e., unreasonable) that breaks the chain of causation. As Morris LJ indicated in Compania Naviera Maropan SA v Bowaters Lloyd Pulp and Paper Mills Ltd (The Stork):29

The owners must not throw their ship away. If, having the opportunity to refrain from obeying the order, and having the knowledge that the ship had been wrongly directed to run into

28See Pearl Carriers Inc v Japan Line Ltd (The Chemical Venture) [1993] 1 Lloyd’s Rep 508.

29[1955] 2 QB 68.