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The question before the court was whether the safe
port clause in the charterparty was a promise by the
charterer that the port would be safe for the ship, or
merely an undertaking to “exercise due diligence” or
reasonable care to ensure that it would be safe.
The United States Supreme Court was asked to
consider clause 9 of the widely used ASBATANKVOY
form charterparty, which provides: “the vessel shall
load and discharge at any safe place or wharf…which
shall be designated and procured by the Charterer,
provided the Vessel can proceed thereto, lie at, and
depart therefrom always safely afloat, any lighterage
being at the expense, risk and peril of the
Charterer…”
The court held that the plain language of the clause
established a warranty of safety, upholding the
decision reached by the 3rd Circuit Court of Appeal.
The clause imposed on the charterer a duty to select a
safe berth and, given the unqualified language of the
clause, that duty was absolute. There was no
requirement for the clause to state the term
“warranty”, as long as the clause included a statement
of material fact regarding the condition of the berth
selected by the charterer [12].
2 THE CASE OF ATHOS I
2.1 The Facts
The voyage charterer of the fully laden tanker ATHOS
I was also the owner of the refining complex in
Paulsboro, New Jersey, which the vessel was
approaching when its (single skin) hull was torn open
by an anchor that had been lost/abandoned by some
unknown vessel. The anchor was lying on the bottom
of a federally-maintained anchorage ground through
which the ship had to transit on its way to the berth
from the federally-maintained ship channel. The
anchor, which had not been previously discovered or
removed by the U.S. Army Corps of Engineers, had
evidently laid on the bottom with its flukes down for
at least three years, during which time many ships
had passed over it without incident. But, at some time
prior to the ATHOS’ arrival, the anchor was somehow
flipped over so that its flukes could be in position to
rake the ATHOS I’s hull and tear open a number of its
cargo tanks. ATHOS I’s cargo was Venezuelan heavy
crude oil, which the charterer/wharfinger was
importing to use in making asphalt. Because the
anchorage was maintained by the federal government,
the charterer/wharfinger had never expected that the
anchorage would have obstructions within it so,
although passage through the anchorage en route the
berth commonly involved passage through the
anchorage, the charterer/wharfinger never took steps
on its own to conduct sonar surveys. An estimated
263,000 gallons of Venezuelan crude oil was released
into the Delaware River when ATHOS I was
punctured, giving rise to enormous (U.S. $180
million+) cleanup and business interruption expenses
[7].
The vessel was operated under the separate charter
parties. Namely, the first was a time charter between
the ship’s owner and a charterer which agreed to
exercise “due diligence” to ensure that the vessel was
only sent to “safe places.” The time charterer then
subchartered the vessel under a voyage charter to the
operator of the Paulsboro refinery on the
ASBATANKVOY form, which contained a “safe
berth” or “safe berth” warranty that was not expressly
limited to the exercise of due diligence. Based upon
the privity of contracts, the vessel owner was not
under a contractual relationship with the subcharter.
The owner of the ship remained its operator and was
therefore the responsible party for the consequences
of the oil spill under the Oil Pollution Act of 1990 [10].
The origin of the anchor being unknown, the
shipowner sued the charterer/wharfinger for breaches
of both the contractual “warranty of safe berth”
(Charterer “shall select . . .always safely afloat”) found
in the ASBATANKVOY charter party and of the
maritime law duty of care to properly maintain its
berth and the approach(es) thereto. The United States
was a party to the suit both for recovery of funds from
the national Oil Spill Liability Trust Fund, which had
made partial reimbursement payments to the innocent
ATHOS I and her underwriters, and as the subject of a
counterclaim for having failed to properly maintain
the anchorage [8].
2.2 Third Circuit Decision
The case was originally tried for 41 days to the bench
in the U.S. District Court for the Eastern District of
Pennsylvania (Hon. John P. Fullam presiding), which
found that the charterer/wharfinger was not liable for
harm caused by the casualty on any theory. But the
Third Circuit reversed in a precedential opinion (In re
Petition of Frescati, 718 F 3rd 200 (3rd Cir. 2013). The
Third Circuit held that the ship owner was a third-
party beneficiary of the voyage charter warranty
because that warranty was certainly intended for the
benefit of the vessel. That contractual warranty had
been breached as a matter of law irrespective of the
amount of diligence exercised by the
wharfinger/charterer under the circumstances because
the approachway to the berth was in fact obstructed
and the contractual warranty did not have a due
diligence limitation. (“[The] safe berth warranty is an
express assurance of safety.” The ship’s captain was
not in a better position to ascertain the safety of the
berth than the charterer because the charterer was
itself on scene and “had selected its own berth.”) It
further held that the contractual warranty obligations
were not avoidable, as had been argued by the
charterer/wharfinger, as a result of the ship’s captain
having impliedly accepted the berth as safe when it
had been nominated [7].
It further held that the contractual warranty
obligations were not avoidable, as had been argued by
the charterer/wharfinger, as a result of the ship’s
captain having impliedly accepted the berth as safe
when it had been nominated.
In its opinion, the Third Circuit declined to follow
the Fifth Circuit’s decision in Orduna S.A. v. Zen-Noh
Grain Corp., 913 F. 2d 1149 (5th Cir. 1990), which had
adopted a due diligence limitation for the reasons
suggested by notable admiralty law scholars Gilmore
and Black, but instead followed the reasoning of a line
of cases decided by the Second Circuit going as far
back as 1935, citing Venore Transportation Co. v.