The Court of Appeal in AIC Limited v. Marine Pilot Limited, The Archimidis (7 March 2008) has held that the words "safe port" in a voyage charter will always be treated as a warranty by charterers that the port in question is safe, even if owners and charterers agree in advance a single loading or discharge port. This issue had not previously come before the Court of Appeal and it has long been unclear if there could be a warranty of port safety where there is an agreed single port.
The voyage charter stipulated "load one safe port Ventspils". The charterers, AIC, argued that it was illogical to speak of a warranty of port safety when the owners knew at the time of the charter where the vessel would be sent. They contended that there could only be a warranty of port safety where a charterer had a choice where to direct a vessel to load or discharge.
The Court of Appeal held that the phrase "load one safe port Ventspils" did contain a warranty by the charterers that Ventspils was a safe port. The principal reason given by the Court was that the word "safe" had to be given a meaning and would not have been required at all if, as the charterers argued, both parties had agreed in advance that Ventspils was a safe port.
This decision underlines the risk of inserting in charterparties and other contracts words and phrases that have become detached from their original purpose. It also shows that the courts will, where possible, give meaning to phrases used in commercial contracts, even when they are used out of context and where the consequences may be surprising.
The implications of the decision may not only apply to charterparties. Sale contracts routinely include the words "safe port" where only one delivery port is named. Traders selling on FOB terms or buying CFR/CIF may find that they are unknowingly warranting the safety of named delivery ports and so potentially indemnifying their counterparties against liabilities to shipowners.
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