Leeds Shipping Co Ltd v. Societe Francaise Bunge (The “EASTERN CITY”) – COURT OF APPEAL (Hodson, Romer, and Sellers LJJ) – 30 July 1958

EDITOR’S NOTE: This 1958 case set the industry standard for determining a safe berth and is referenced in two new recaps:  London Arbitration 2/23 and SMA No. 4457 “PRESINGE.”  The full account can be found in Lloyd’s List Law Reports, 1958, Volume 2, pages 127-146.

Summary of Facts

Leeds Shipping and Societe Francaise  were parties to a voyage charterparty which provided “That the [EASTERN CITY] shall proceed to one or two safe ports in Morocco…” with Clause 13 stating “Indemnity for non-performance of this charter-party, proved damages, not exceeding estimated amount of freight.”

The appeal was to challenge a previous decision in favor of Owners, which claimed Charterers ordered the vessel to an unsafe port, Mogador, where she ran aground and sustained damage. Charterers denied that Mogador was an unsafe port and asserted by accepting the voyage, Owners had consented to the vessel going there. Charterers further alleged that the negligence of· the Master caused the vessel’s grounding.

The EASTERN CITY arrived Mogador, Morocco, on Dec. 26, 1949.  Two days later, on December 28, weather conditions rapidly deteriorated, and by that evening, the Master suspected the anchor was dragging.  The Master decided to leave port, but soon after the anchor was aweigh, a squall forced the Vessel aground.  With no tugs in Mogador, the Vessel had to wait for tugs to arrive from other ports before the ship could be refloated and taken for repairs.

Owners claimed breach of charterparty and alleged the grounding was because the port was unsafe at that time of year for a vessel the size of the EASTERN CITY.  Charterers countered that the port was safe and the grounding was due to the Master’s negligent navigation.  

Key Issues

The key issues, as defined by the Courts, were:

  1. Was Mogador a safe port for the EASTERN CITY when she arrived there?
  2. If Mogador was at that time an unsafe port, were the Owners prevented from claiming a loss from breach of contract since they willingly entered and agreed to such contract? 
  3. Was the EASTERN CITY’s stranding due to the port’s unsafety or the Master’s negligence?
  4. Did Clause 13 limit the amount of damages the Owners could recover for the alleged breach of contract? 

The Appeal

The Lord Justices of the Court of Appeal upheld the lower court ruling in favor of Leeds Shipping as owners, against Societe Francaise, as charterers.  The new evidence Charterers submitted to the Court did not provide new ground for a successful appeal.  

The Court of Appeal reaffirmed the grounding was due to the unsafety of Mogodar as a port because of insufficient holding ground in the anchorage area, the lack of shelter from severe weather, and the unpredictability of the onset of high winds, which could cause an anchor to drag.  In addition, the close proximity to rocks and shallows increased the risk of grounding and/or damage to the vessel.

The Master was deemed to have shown good judgment and acted reasonably in the interest of the Owners’ contractual obligations; Thus, the grounding was not due to any negligence by the Master.  

Since the damages resulted from a breach of charterparty by the Charterers, Clause 13 did not apply, for Owners did not have a “non-performance” of their obligations, but rather a “misperformance,” and hence there was no limit to the Charterers’ liability for damages.

Lord Justice Sellers summarized the Court’s safe berth ruling as:

If it were said that 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 the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and sea­manship, it would probably meet all circumstances as a broad statement of the law.

This standard is still used today to determine a safe berth.