Citgo Asphalt Refining v. Frescati Shipping Co.

Whether under federal maritime law a safe berth clause in a voyage charter contract is a guarantee of a ship’s safety, as the Third Circuit below and the Second Circuit have held, or a duty of due diligence, as the Fifth Circuit has held.

Respondent chartered a ship to a company that later sub-chartered the ship to Petitioner. Petitioner attempted safe berth in the Delaware River, in a federally maintained “parking lot,” and hit and abandoned anchor. Respondent filed a “Petition for Exoneration from or Limitation of Liability” of the ensuing oil spill. 46 U.S.C. app. § 183 (2005). Petitioner filed a claim for the loss of its cargo and Respondent counterclaimed, attempting to attain clean-up costs and $56 million in additional damages. Respondent argued that the “safe berth” clause in the ship charter contract, imposed strict liability on Petitioner to attain safe berth for its vessel. The district court found for Petitioner. The Third Circuit reversed, following the Second Circuit’s standard in imposing strict liability on the charterer and remanded with the question of whether the clause was actually breached. The district court found for Respondent and the Third Circuit affirmed the decision. The Fifth circuit has held that “safe berth” clauses impose a duty of due diligence on a charterer, rather than a warranty of strict liability. Petitioner argues that the Third Circuit’s decision has widened the circuit split and uniformity should be brought to what it is an “important area of federal common law.” Furthermore, Petitioner argues that the Third Circuit is wrong in its contractual interpretation, which “undermines the doctrine of privity.”