Good and Safe

THERE are various elements which come into play in the decision-making process of arbitrators, such as the charter party language, trade terms and, of course, the law. These elements are dealt with by individuals who have been appointed as arbitrators due to their industry knowledge, business and/or educational background, intellect and arbitration records. To illustrate the point, take, for example, an arbitration dealing with a safe port issue such as Trade Sol Shipping Ltd v Sea-Land Industries Bermuda Ltd. The underlying time charter, based on the charterers’ form, provided for, “. . . trading with lawful harmless merchandise via good and safe berth(s)/port(s) always afloat . . . .”

The crucial point in this arbitration was the good and safe port provision and how commercial arbitrators interpret it. Chartering Terms & Definitions shows separate entries for GSB – good, safe berth; GSP – good, safe port; SB – safe berth; SP – safe port. It’s not hard to see how commercial people can attach different meanings to the terms.

The panel majority ruled on the “good and safe port” issue as follows:

“The “good and safe” wording of the Seatime charter party, which is identical to the Baltime charter party phraseology, appears to imply that the word “good” somehow extends the charterer’s safe port obligation beyond the generally accepted norm. The owner has seized upon this construction and argues that the charterer not only warranted that the vessel would be employed between safe ports but that it would operate between good ports as well.

The meaning of “good” in the context of the safe port warranty has, apparently, never been interpreted in maritime court cases or arbitrations in the US. It has, however, been discussed in a number of important English court decisions.

In ‘Time Charters’, the authors state that:

“In general the criteria applicable in the case of voyage charters are applicable also to time charters. Thus, the Privy Council in Reardon Smith v Australian Wheat Board (The Houston City) said, ‘Where a time charter contains . . . an undertaking by the charterer that the vessel is to be employed between good and safe ports, the liability of the charter is at any rate in all ordinary circumstances the same as where under a voyage charter party the charterer undertakes to nominate a ‘safe port’.”

Lord Denning addressed the very same issue in the Evia in connection with a Baltime “good and safe port” dispute, stating in relevant part:

“Many cases have been considered on those and similar words. Sometimes in voyage charter parties. Sometimes in time charter parties. Sometimes in one formula. Sometimes in another. But in most cases nothing turns on the kind of charter party – nor on the precise formula used. Sufficient that the charterer has to nominate a ‘safe port’ or to employ her at or between ‘safe port or ports.’”

Lord Roskill similarly addressed this question in the Evia appeal stating:

“My Lords, I propose to consider first the question which arises on clause 2. It will be convenient to quote again those few words in that clause which are relevant –

‘The vessel to be employed . . . between good and safe ports . . .’

“Learned counsel were unable to offer any suggestion what in this context the word ‘good’ added to the word ‘safe.’ Your lordships are, I think, all of a like mind. So I will consider only the either words ‘the vessel to be employed . . . between . . . safe ports . . .’ The argument for the appellants is simple. The relevant restriction during her employment is to safe ports . . .”

This panel posed a similar question to the owner’s counsel during oral argument. His view of the additional obligations imposed by the “good” wording was unpersuasive.

A panel majority, Mr. Arnold dissenting, concludes that the inclusion of “good” to the “safe” port wording of the Seatime charter adds nothing to the charterer’s obligation to trade the vessel between safe ports. This is in accord with established English precedent on the subject. Even if some additional obligation may be imputed by adding “good” to the safe port warranty, as Mr. Arnold suggests, the obligation would still require, and be subject to, the vessel’s duty to avoid danger by the exercise of good navigation and seamanship, as discussed herein. Therefore, we need only consider whether the Port of Marsaxlokk was safe for the Chesapeake Bay based upon the generally accepted legal and commercial definitions. The standard that is universally applied and accepted as such by counsel is:

“A port will not be safe unless in the relevant period of time, the particular ship can reach it, use it, and return from it without, in absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship.

Because of my disagreement with the various cited decisions and the conclusions reached by the panel majority, I wrote the following dissent:

. . . At the outset, I should like to state that I do not disagree with the classic definition of a safe port . . . However, the Eastern City and other cases that followed are, in my opinion, distinguishable from the dispute before this panel because of the language of the safe port warranty.

It appears that the only printed charter party forms which include the phrase “between good and safe ports” are the Baltime (Clause 2 of Part II) and the Liner-Time (Clause 3 of Part II). The more commonly used time charter parties, including the New York Produce Exchange form, refer to “safe port/safe berth” warranties only, without any reference to the word “good.”

In this particular case, the parties negotiated a time charter on the basis of Sea-Land’s form, the Seatime, with certain amendments. The standard printed text of Clause 2a provides for “. . . calling at such safe ports or places . . . “which the parties amended to “. . . trading with lawful harmless merchandise via good and safe berth(s)/port(s) . . .” Owners have argued that the addition of the word “good” to the safe berth/port warranty placed an additional burden upon charterers. The panel majority, under reliance on English decisions, reached the conclusion that the owners’ argument was without merit, a position with which I cannot agree.

The panel majority makes reference to the Evia, which was fixed on the Baltime form. This case started as a London arbitration and was decided in a split decision. The Commercial Court then reviewed the award and the matter thereafter came before the Court of Appeal where again it was decided by a majority. The case then came before the House of Lords. The reference to a statement by Lord Denning in the Evia is taken from the Court of Appeal decision, which, in my opinion, does nothing to clarify the issues raised in the Chesapeake Bay arbitration. My fellow arbitrators quote from the House of Lords citing Lord Roskill’s pronouncement. His statement, in my view, is not based upon any profound analysis or scholarly reasoning, but on a rather laconic dismissal because counsel was not able to offer any suggestions as to the meaning of “good” in conjunction with the safe port provision.

Considering the prior history of the case as well as my own conclusions, I do not accept the House of Lords’ treatment of the case, particularly the perfunctory dismissal of the “good and safe” issue.

With respect to the majority’s reference and reliance on the time charters and the Houston City, it should be noted that the citation refers “to ‘good and safe ports.” However, the Houston City is irrelevant, as that charter party did not contain those words. The vessel had been fixed for “safe ports.” The reference is dictum, only quoting from Lensen Shipping v Anglo-Soviet Shipping, in which the vessel Terneuzen had been fixed on the Baltime form.

As to the citations from time charters, it must be noted that these are the views and commentaries of the English co-authors of the book analysing English law. The comments on American law do not address the “good and safe port” issue for the very reason that there are no reported decisions on this point in American jurisprudence.

While it may be useful for New York to look to English decisions and vice versa, when there is no body of existing law [in one’s own jurisdiction], one certainly should not follow such decisions simply because they are there and particularly not if they are distinguishable.

The conclusion by the panel majority, as well as the House of Lords decisions, are, in my view, not on point because the parties to this arbitration specifically negotiated the “good and safe” provision and, as such, it requires consideration. Furthermore, the decisions are at odds with the primary rules of interpretation of contracts, which provide that words are to be understood in their plain and normal meaning. It has also been stated that individual clauses and particular words are to be construed in relation to the main purpose to be effectuated. Where the intention clearly appears from the words used, there is no need to go further, for in such cases, the words must govern. Likewise, the Rules in Aid Interpretation state inter alia. “. . . a writing is interpreted as a whole, and all writings that are part of the same transaction are interpreted together.”

Clearly, the word “good” has a meaning and the parties intended it to have one when they added it. Since no evidence was presented as to the making of the charter party, this amendment should be given the appropriate weight. If one were to conclude that “good” is a modifier for berth or port, then the conclusion must be that it is a “good port” as well as a “safe port.” In the alternative, the Random House Dictionary lists, in its definition and application of the word “good,” the phrase “good and ______,” (e.g., “good and cold”) in which “good” becomes a modifier to the following adjective; the presence of the word “good” in conjunction with a following adjective has the effect of “very,” “completely,” “exceedingly.” Thus, using this application to the “good and safe port,” leads to the result that the port is very safe, completely safe or exceedingly safe.

Since I conclude that the addition of the word “good” augments the the charterers’ responsibilities with respect to the non-delegable duty to provide a safe port, I find that this case is clearly distinguishable from the line of decisions cited by the charterers and relied upon by the majority.”

If the concepts as described are recognised and accepted principles of contract interpretations, how then was it possible that Lord Roskill rejected the notion that ‘good’ meant anything in the context of ‘good and safe’ simply because counsel was not able to offer any suggestion to the meaning of it in the English proceedings? Should Lord Roskill not have been capable and willing to draw his own conclusions? Farnsworth concluded that usage of words is not limited to contract language, but applies to the language generally. There is the maxim of expressio unius est exclusio alterius (the expression of one thing is the exclusion of another), which proves by analogy for this particular case that since no exclusive language was applied, the parties purposely described the port as good and safe.

Although perhaps a bit irreverent in the context of this publication, what would the expression ‘good and safe sex’ mean to someone unconcerned with the views of the Law Lords? If one would use the House of Lords’ interpretation to this less-than-erudite phrase, it would mean that the sex was safe without giving recognition to the quality of it. I hope that the next time I am in a Chinese restaurant and order hot and sour soup, the waiter will not bring any old hot soup or any old sour soup, but will serve suan la tang.