Safe berth warranty to be considered by US Supreme Court

Safe berth warranty to be considered by US Supreme Court

Overview

BIMCO, Intertanko and Intercargo have filed an Amicus Curiae brief in a case currently before the US Supreme Court. The case raises key issues for the shipping industry, since the verdict will establish who is responsible for the safety of a visiting ship to a berth.
The case concerns the fully laden single-hull crude carrier ATHOS I which, in 2004, struck a submerged, partially buried anchor ripping a hole in its bottom and causing 263,000 gallons of crude oil to spill into the Delaware River. At the time of the incident, ATHOS I was on voyage charter based on ASBA’s Tanker Voyage Charter Party, ASBATANKVOY.

In 2013, the US Court of Appeals for the Third Circuit decided that the ship and its owner were implied beneficiaries of the safe berth warranty in a contract between a charterer and a terminal owner. The named port exception did not apply to hazards that are unknown to the parties. The case was then remanded to the District Court to determine if CITGO, which was both the charterers and the owners of the terminal, had in fact breached the warranty.

Judgement was handed down in 2016, concluding that CITGO breached the safe berth warranty and its duty to maintain a safe approach, as they had failed to periodically scan the approach to search for any hazards to navigation. The owner was held to be entitled to all damages caused by the incident. A further appeal followed in which the District Court’s finding on breach of contract was upheld, while the negligence claim against CITGO was overturned.

The US Supreme Court decided to review the case on 22 April 2019.

“The issues to be considered by the Supreme Court are essential as they concern interpretation of the safe berth warranty and, more generally, the balance of duties and responsibilities for a visiting ship and the terminal,” said Søren Larsen, Deputy Secretary General of BIMCO, adding:

“The safe berth clause is commonly understood to be an absolute warranty. It would have serious consequences for the industry if, instead, it were to be considered a due diligence obligation – not only for widely used standard forms and their interpretation - but also for the underlying insurance arrangements. This is why we have joined the case as amici.”

The case before the US Supreme Court is between CITGO Asphalt Refining Company, CITGO Petroleum Corporation and CITGO East Coast Oil Corporation (Petitioners); and Frescati Shipping Company Ltd. (Owners), Tsakos Shipping and Trading SA (Managers), and the United States (collectively the Respondents).

An Amicus Curiae is literally a ‘friend of the court’ who is not a party to the lawsuit but may present arguments and advice to the court. This often concerns the effect a decision may have on a broader audience, in this case, members of the three shipping associations.

The verdict is expected in the first half of 2020.
Christian Hoppe
in Copenhagen, DK

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