Port becomes unsafe following its nomination: know your rights

Under English law, upon nomination of a loading or discharge port same is treated as if it was written in the contract ab initio (from the beginning). However, what happens if the port has become unsafe at a stage after its nomination and the Charterers have nevertheless warrantied its safety? Are the Charterers entitled to ask the vessel to proceed to another port irrespective of their prior nomination? Fair questions those.

Under a Time Charter, the position is more or less clear: in the circumstances, the Charterers come under a secondary obligation to re-nominate another port which is safe at the time of that re-nomination (The Evia No 2 – [1982] 1 Lloyd’s Rep 334). Problem solved.

Under a Voyage Charter, however the position is less clear although there is support in the view that the Charterers will not have the option to renominate the discharge port. In Lord Roskill’s words in The Evia (No. 2):

“But in considering whether there is any residual or remaining obligation after nomination it is necessary to have in mind one fundamental distinction between a time charterer and a voyage charterer. In the former case, the time charterer is in complete control of the employment of the ship. It is in his power by appropriate orders timeously given to change the ship’s employment so as to prevent her proceeding to or remaining at a port initially safe which has since it was nominated become unsafe. But a voyage charterer may not have the same power. If there is a single loading or discharging port named in the voyage charterparty then, unless the charterparty specifically otherwise provides, a voyage charterer may not be able to order that ship elsewhere.

 [1983] 1 A.C 736, at p. 736.

It appears that, in the absence of a particular clause dealing specifically with this matter (always look at the Charter!), the parties are free to negotiate a solution. Nothing precludes Owners to ask for extra freight before agreeing to another discharge or loading port. Under a Time Charter, the Owner would be compensated anyway as hire would continue running. If no such fresh agreement is achieved, the position would most likely fall under the doctrine of frustration.

Advertisements