DMC/SandT/45/01
Fondren Corporation-Panama v. Lagoven, S.A. (the "Olympic Sponsor")
New York Society of Maritime Arbitrators: Agreed Arbitration Award: Richard H. Brown, Jack Berg and Louis P. Sheinbaum as arbitrators: November 2001
TANKER CHARTERPARTY ON ASBA II FORM: LOADING AT LA SALINA, VENEZUELA: ACCESS THROUGH DREDGED CHANNELS: DRAFT LIMITATIONS IMPOSED: VESSEL GROUNDED IN EXIT CHANNEL: UNSAFE PORT: WHETHER SAFETY OF PORT WARRANTED BY CHARTERERS: CHARTERERS NOT LIABLE UNLESS THEY AT FAULT OR NEGLIGENT: DEPTH OF WATER IN CHANNEL: NEGLIGENT NAVIGATION

The charterparty contained in Part I a typescript provision that the ship would load at ‘one or two safe ports Venezuela’. However, the printed clause 9 of Part II, provided that the charterers would not be deemed to warrant the safety of any port to which the vessel might be ordered, nor would they be responsible for any damage resulting from the condition of any such port ‘not caused by charterers’ fault or neglect, or which could have been avoided by the exercise of reasonable care on the part of the Master’. .

The Olympic Sponsor arrived at La Salina on March 8 1997. She loaded 72,000 tonnes of crude oil and sailed for the open sea on March 10, with a compulsory pilot on board. The ship encountered navigational difficulties between buoys 26 and 24 in the exit channel, making only three knots over the ground despite the engines working on full ahead manoeuvring speed. By the time the vessel reached buoy 22, she had lost steerageway and was set to the west side of the channel. She went aground shortly afterwards. The no.4 starboard double-bottom tank was holed but no pollution occurred. Sufficient cargo was then lightered to re-float the ship, which then re-loaded the cargo and continued her voyage to Rotterdam without incident. Repairs to the damaged hull were carried out in dry-dock at Dubai in April 1999. Subject to issues of liability, the amount of damages had been agreed between the parties. The day following the casualty to the Olympic Sponsor, the Harbour Master reduced the exit draft to 36 feet at high tide.

The Issues
The owners maintained that the reason for the grounding of the ship was the inadequate depth of water in the exit channel for the draft of the vessel. This rendered the port of La Salina unsafe and amounted to a breach of warranty by the charterers. The owners relied in this respect on the safe port stipulation in Part I of the charter, which they maintained overrode the exception in clause 9, since the charter expressly provided that in the event of a conflict between the provisions of Part I and Part II, the provisions of Part I would prevail. If this argument failed, the owners alleged that the charterers were nevertheless at fault for the grounding, since they either knew or should have known that the exit channel was unsafe for a ship such as the Olympic Sponsor, laden to a freshwater draft of 38 feet.

The charterers maintained that the cause of the grounding was not any inadequacy in the depth of water in the exit channel but rather errors in navigation on the part of the Master and pilot, by not properly taking into account the wind, sea, current and tidal conditions present at the time.

As regards the interpretation of the charterparty, charterers argued that there was no conflict between Parts I and II of the charter. Clause 9 in Part II simply set out the standard to determine whether liability attached to the charterers for any failure on their part to supply a safe port. The charterers further denied that they were in any way at fault in having the vessel sail from La Salina through the exit channel with a fresh water draft of 38 feet and maintained, in the wording of clause 9, that the grounding ‘could have been avoided by the exercise of reasonable care on the part of the Master’.

Award
In an unanimous award, the arbitrators found, after a careful examination of the vessel’s course and speed in the exit channel, that the grounding was caused by errors in her navigation and not by any inadequacy in the depth of water in the channel. The course steered between beacon 33 and buoy 26 had taken her outside the channel after passing too close to the west side of the channel, causing her to lose speed as the hull came into contact with the sloping bank, and ultimately lose steerageway. The panel concluded that in going aground in the vicinity of buoy 22, the vessel had most likely proceeded through the trench or path in the bottom outside the channel, made by the "Nissos Amorgos", a ship that had grounded some ten days earlier, causing a major oil-spill.

Although the finding of negligent navigation made it, strictly speaking, unnecessary for the panel to address the remaining points, they adopted the charterers’ arguments on the issue of charterparty interpretation. They found no conflict between the safe port provisions in Part I and the provisions of clause 9 in Part II. The two provisions could be reasonably read together and therefore should be.

The panel did not find the charterers in any way at fault for allowing the vessel to sail with the permitted fresh water draft of 38 feet. Owners had failed to carry the burden of showing that the exercise of due care required the charterers to give instructions to load to a lesser draft.

Consequently, owners’ claims failed. They were also ordered to pay 75% of the charterers’ attorney’s fees and costs, together with interest, and a similar proportion of the arbitrators’ fees.