Stx Pan Ocean Co Ltd v Ugland Bulk Transport A.S. (Livanita)

A charterparty may name a loading or discharging port and also contain a safe port warranty. There is no inherent inconsistency between those terms. The named port is not thereby exempted from the warranty, unless the contractual and factual context makes the terms inconsistent. The presence of ice does not, by itself, establish that a port is unsafe. The relevant question is whether the conditions made the port unsafe for the vessel in the circumstances found. On an appeal under section 69 of the Arbitration Act 1996, the court cannot determine a question which the tribunal was not asked to decide.

The charterers of the Livanita appealed under section 69(3) of the Arbitration Act 1996 against an arbitral award holding them liable for breach of an express safe port warranty. The charterparty named St Petersburg as a port on a winter voyage and separately contained safe port provisions, including provisions concerning ice breakers.

The tribunal found that St Petersburg was unsafe because of ice blocks created by ice breakers and awarded the owners US $73,136.67 plus interest. The appeal concerned whether the named port was covered by the safe port warranty and whether liability could arise where winter ice was reasonably predictable or known when the charterparty was made.

1. Appeal dismissed. The tribunal was entitled to find the charterers liable for breach of the express safe port warranty.

2. There is no general principle of construction that a safe port warranty does not apply to a port expressly named in the charterparty. A named port and a safe port warranty can operate together. Effect must be given to all contractual terms which are not inconsistent. The contextual possibility identified in The Mary Lou did not arise on these facts.

3. The charterparty expressly contemplated the use of ice breakers. That did not remove the safe port warranty or reduce it to a mere trading exclusion. The court agreed with the reasoning in AIC Limited v Marine Pilot Limited, where the charterers likewise failed to establish that wording referring to a specified safe load port displaced the warranty. The reasoning in The Greek Fighter and The Doric Pride supported the same construction.

4. The mere presence of ice did not itself establish unsafety. The tribunal’s finding was that the port was unsafe because of the ice blocks created by the ice breaker. The charterers’ case that the port remained safe because ice breakers kept it open also made it difficult for them to advance a contrary construction on appeal.

5. The proposed additional ground concerning what the owners knew or should have known was not properly before the tribunal. Section 69(3) permitted leave only where the question was one which the tribunal had been asked to determine. The court therefore considered that the judge granting leave had no jurisdiction to grant leave on a new ground, although the merits were addressed with counsel’s agreement.

The appeal failed on all grounds. The court declined to remit the matter to the tribunal.

• Arbitration: The tribunal found the charterers in breach of the express safe port warranty and awarded the owners US $73,136.67 plus interest.
• High Court (Commercial Court): On an appeal under section 69(3) of the Arbitration Act 1996, the appeal was dismissed.