Gard Marine & Energy Ltd v China National Chartering Co Ltd & Ors

A safe port warranty promises safety, not merely reasonable safety. A port is unsafe where the vessel is prospectively exposed, during arrival, use or departure, to a danger which cannot be avoided by good navigation and seamanship. The existence of reasonable precautions or the possibility that a master may have to leave the port does not itself answer the question. Where a port’s characteristics create a real risk that a vessel must leave in conditions requiring more than ordinary navigation and seamanship, the warranty may be breached. The charterer remains liable where the unsafe port causes the casualty, unless negligent navigation is the effective intervening cause. Local advice to depart does not necessarily make the master’s decision negligent or break causation.

The claimant, hull underwriters suing as assignees, claimed approximately US$137.6 million arising from the loss of the Capesize bulk carrier OCEAN VICTORY after she left Kashima, Japan, during severe weather and was driven onto the breakwater. The vessel had been ordered to Kashima under successive charterparties containing safe port warranties. The claimant alleged that Kashima was prospectively unsafe because long waves could require a vessel to leave the berth when northerly gale conditions made safe departure impossible by ordinary navigation and seamanship.

The charterers disputed the safety of the port, causation, the master’s navigation, and the recoverability of the vessel’s insured value and loss of hire. The central issues were whether Kashima was prospectively unsafe, whether that unsafety caused the casualty, whether the demise charterer was liable despite the insurance arrangements, and what losses were recoverable.

1. Claim succeeded. The casualty was caused by the unsafety of Kashima, in breach of the safe port warranty. The claimant was entitled to the sums claimed from Sinochart, and Sinochart was entitled to recover the corresponding sums from Daiichi.
2. The authoritative safe port test was that stated by Sellers LJ in The Eastern City [1958] 2 Lloyd’s Rep 127: the particular ship must be able to reach, use and leave the port without exposure to danger which cannot be avoided by good navigation and seamanship. The phrase “reasonable safety” did not introduce a separate standard. The inquiry was into the prospective exposure of the vessel, not whether the port authority had acted reasonably.
3. Kashima had a real risk that long waves would require a Capesize vessel to leave the Raw Materials Quay, while northerly gale conditions in the Kashima Fairway made safe navigation difficult and required more than ordinary navigation and seamanship. The danger arose from characteristics of the port and was not an abnormal occurrence. The absence of a system ensuring that vessels left only in safe conditions reinforced the conclusion, although proof of a particular alternative system was unnecessary.
4. The advice of Captain Yamauchi, a local experienced mariner, that the vessel should leave was the effective cause of the departure. The intervening misunderstandings, postponement, agent’s arrangements, pilot’s error and the master’s decision to depart did not break the chain of causation. The master was not negligent in following the local advice in the circumstances. Even assuming negligent navigation in maintaining hard helm, the unsafety of the port would have remained the real and effective cause.
5. The demise charterer was liable for breach of the safe port warranty despite paying for hull insurance and being a co-assured. Clause 12 was not an exhaustive code displacing the warranty, and contained no express ouster of recovery or subrogation. The claimant could recover the vessel’s value without double recovery, because any recovery by insurers would operate through subrogation.
6. Loss of hire up to the date on which the vessel broke apart was recoverable. The claim was not barred by limitation because the demise charterer’s liability formed part of the loss claimed by the assignee against the head charterers.