SwissMarine Pte Asia v. Mosaic Fertilizer (MN “PRESINGE”) – SMA No. 4457, 10 March 2023

Summary of Facts

SwissMarine PTE Asia and Mosaic Fertilizer LLC had a contract of affreightment dated 20 December 2018 for the carriage of phosphate rock from Peru to the US Gulf for discharge at New Orleans Triport and/or Tampa, including Port Manatee.  

On July 16, 2021, SwissMarine nominated the PRESINGE to carry 60,000 mt of phosphate rock under the governing COA.  Mosaic accepted the vessel the same day.  The cargo was slated to discharge per Charterers’ option at either Triport New Orleans or Tampa.  Eleven days later, Mosaic named Tampa Port Manatee as the discharge port.

On August 9, PRESINGE arrived at the load port in Peru and departed on August 13, with an estimated ETA to the Port Manatee pilot station of August 24 at 1700 LT.  Five days later, on August 18, Mosaic decided to divert the Vessel to New Orleans due to concerns about the LOA at the designated berth, Port Manatee – Berth 6.

The Vessel arrived at the Southwest Pass and tendered NOR on August 22 at 0947.  By 1706 she had crossed the Lower Mississippi River, anchoring at Dockside Anchorage LMR 70.  

Weather and stevedore delays kept the Vessel at anchorage until August 27, when she began the inward shift to New Orleans.  Shortly after that, at 0800 the same day, the US Coast Guard – New Orleans issued a Captain of the Port Order limiting vessel operations on the Mississippi in anticipation of the severe weather due to the arrival of Hurricane Ida to the region.  

Hurricane Ida made landfall on August 29, and by September 3, Mosaic gave written notice to SwissMarine of force majeure.  The Vessel could not berth at the intended discharge location until September 26 and completed operations on October 5. Owners alleged demurrage was due and that Charterers were in breach of COA for failing to provide a safe berth.  Charterers countered that no demurrage was due because of the force majeure event, and Owners were in breach of COA for failing to nominate a safe vessel.

Safe Berth

Charterers alleged Owners were in breach of the COA when a vessel was nominated that could not safely berth at the Charterers’ designated port and designated berth. Clause 4.3 of the COA stated, “Owners acknowledge that the named port(s) and berth(s) in this contract are safe and suitable for Owner’s nominated vessels.” Port Manatee Berth 6 was known to SwissMarine as Mosaic’s contract discharge berth for all other vessels SwissMarine had nominated and used over the three-year COA (except for PRESINGE) discharged at Berth 6.

Mosaic claimed that SwissMarine was in material breach of the COA when it nominated PRESINGE for this voyage, for it was unfit, unsuitable, and unsafe for discharging at Charterers’ chosen contractual discharge port, PM – Berth 6.  This left Mosaic no choice but to divert the Vessel mid-voyage to the second port agreed to in the COA, New Orleans.

At the time of this decision, Mosaic alleged it was unaware of the threat of Hurricane Ida, which made landfall in New Orleans shortly after PRESINGE arrived for discharge. The hurricane caused significant damage to both the port and the infrastructure necessary for the cargo’s discharge.  Mosaic duly notified SwissMarine of the force majeure event, which SwissMarine acknowledged it received.  

Mosaic also asserted that SwissMarine nominated PRESINGE based on the assumption that discharge would occur in New Orleans.  When Tampa was designated instead, Mosaic alleged that SwissMarine did not want to incur shifting costs for this port and directed the Master to deem Berth 6 unsafe for the Vessel.  In addition, Mosaic claimed that had SwissMarine abided by the charterparty, discharging in Tampa would have been possible, and any delays caused by Hurricane Ida and the resulting damage claim would have been avoided.

SwissMarine stated that since Mosaic did not contest the change of discharge port from Port Manatee to New Orleans in writing, as required by COA clause 12.1 ( c ), there could be no claim that the change was in breach of the COA.  In addition, SwissMarine stated that Mosaic accepted the Vessel as per COA requirements and that the PRESINGE dimensions were within COA specifications and were disclosed to Mosaic.

SwissMarine also countered that the COA did not name Berth 6 as the discharge berth and that discharging in Tampa was not limited to Port Manatee Berth 6. SwissMarine cited multiple other safe berths at Port Manatee where the PRESINGE could have safely discharged. 

Decision – Safe Berth

The panel relied on three sources in its determination of a safe berth:

• CITGO Asphalt Refining Co. v. Frescati Shipping Co. Ltd., 140 S Ct. 1081 (2020), in which the U.S. Supreme Court held that the nomination of a safe berth is both a duty and a warranty and not merely an exercise of due diligence.
• Leeds Shipping v. Société Francaise Bunge “EASTERN CITY” [1958] Court of Appeal which presented a widely accepted definition of a safe port as: [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.
• The test of a safe port from Scrutton’s “On Charter Parties and Bills of Lading,” which stated: Whether a port is a safe port is in each case a question of fact and degree and must be determined with reference to the particular ship concerned, assuming that she is properly manned and equipped and navigated and handled without negligence and in accordance with good seamanship.

The Panel also examined Section 4.2 of the COA, which provided for discharge at New Orleans Triport and/or Tampa (including Port Manatee), at Charterer’s option. The New Orleans berth is described as 1 safe anchorage or 1 safe berth Mississippi River Mile Marker 157 to Mile Marker 167…Charterer’s ‘Uncle Sam’ facility, Convent, Louisiana… In contrast, the Tampa berth is described as 1 safe berth Tampa (which to include Port Manatee…).

While it was confirmed that seven other SwissMarine vessels successfully discharged cargo at Port Manatee Berth 6, they all had LOA of less than 750 feet and were geared vessels.  PRESINGE had an LOA of 751.9 feet and no gears.  And while the Kinder Morgan–Mosaic Master Service Agreement (MSA) did not have a specified LOA, it required all vessels to be geared.  Thus, Mosaic breached the MSA with Kinder Morgan when it nominated the gearless PRESINGE to discharge at Berth 6.  

Furthermore, the PRESINGE nomination by SwissMarine was accepted by Mosaic without reservation of rights, which constituted a warranty that the port selected in Port Manatee was safe for the PRESINGE to berth. Since Section 2 of the Kinder Morgan MSA allowed for an alternative berth to Berth 6, the argument that Berth 6 was the sole berth at Port Manatee was rejected.  

It appeared that the safe berthing of PRESINGE at Berth 6 was not recognized as a problem until the Port raised concerns about the vessel’s workability and safety.  When the Master confirmed the PRESINGE could not be safely moored at Berth 6, neither party protested the decision to divert to New Orleans due to vessel safety.

Using the standards of the EASTERN CITY and the Scrutton test, the Panel determined that the Master used good seamanship when determining that PRESINGE could not always be safely moored at Berth 6.

The Panel also concluded that Mosaic, having discharged at Berth 6 five times earlier in the COA, should have anticipated the issues with PRESINGE and should have rejected the vessel nomination in advance.  

With no evidence that Mosaic worked proactively with Kinder Morgan to find an alternative berth, the Panel concluded Mosaic was in breach of the COA through its failure to nominate and warrant a safe berth in Tampa, thus invalidating Mosaic’s claim against Swisse Marine for the damages associated with the New Orleans discharge.

Demurrage and Force Majeure

Since Mosaic failed to designate a safe berth for the PRESINGE at Port Manatee, SwissMarine contended Mosaic must bear the extra expenses of this decision, with all demurrage to be counted and laytime starting when NOR was tendered at the Southwest Pass on August 22, 0947.

Mosaic claimed the laytime and demurrage calculations of over $1M were inflated, for the discharging laytime was not exhausted, and no demurrage was due.  Furthermore, Mosaic had made a good faith effort to commercially settle the demurrage claim, although it was not legally nor contractually obligated to do so.

Mosaic also asserted that SwissMarine tendered an invalid NOR, thus negating the demurrage claim, and that the devastation of Hurricane Ida was a vis major event, further exempting Charterer from Owner’s claim. [Editor’s note: A vis major event is an extraordinary natural occurrence that causes damage or disruption and that is neither caused by nor preventable by humans—even when exercising the utmost skill, care, diligence, or prudence.] Even if demurrage were due, Mosaic claimed actual costs for demurrage were $535,822.74.

SwissMarine countered that Hurricane Ida, as a force majeure event, did not exempt Mosaic from paying demurrage for the additional time required.  Clauses 13.2 and 13.3 specifically addressed a force majeure event that could last more than eight days, stating that “any lost time shall count beyond eight days.”

Additionally, section (c) of Clause 13.3 stated, “No later than 20 calendar days after the arrival of the vessel at the discharge port (if the force majeure event should continue so long) Charterers shall identify an alternative discharge port…” which Charterer failed to do.

Decision – Demurrage

Using Clause 11.1 (f) of the COA, the Panel determined that when PRESINGE tendered NOR at Dockside Anchorage, she was considered an arrived ship, at the Charterer’s disposal, with time to count immediately.  PRESINGE was as close to the discharging berth as she could proceed; thus, laytime commenced on August 22, 2021, at 1706.

After the shift to Grandview Anchorage, and with the threat of Hurricane Ida looming, Mosaic declared force majeure under Clause 13 of the COA, which SwisseMarine accepted.  Clause 11.6 (c) then outlined the delay to be calculated as follows:

“In the event that the performing vessel is prevented from moving to its … discharge berth due to weather, laytime (or time on demurrage if on demurrage) will continue to run during the time so lost unless a vessel occupying the relevant … discharge berth is actually prevented from working due to the weather (even if it is … discharging goods other than the Cargo), in which case the time so lost will not to count as laytime, but will count as time on demurrage if the performing vessel is already on demurrage.”

Since the FJM GLORY occupied the berth, the Panel concluded that time lost due to weather would be calculated based on the hours FMJ GLORY was “actually prevented” from working due to weather.  The hours due to weather only affecting PRESINGE would be counted in full.

Thus, laytime commenced on August 22 at 1706, at the retendering of the NOR at Dockside Anchorage.  Time continued running until the agreed laytime of 4 days 00 hours 44 minutes expired on August 26 at 1950, except for the 2-hour rain/weather delay on August 24, which halted operations on the FJM GLORY.

Decision – Force Majeure

In evaluating the force majeure conditions, the Panel noted paragraph 13.2 of the COA, which read:

As a condition to trigger this clause, the party declaring Force Majeure must make a written notice to the other party stating the start date and describing with reasonable specificity the Force Majeure event, promptly after becoming aware of it.”

The Panel concluded Mosaic gave SwissMarine sufficient notice via email on August 27 at 1432 that the “start” of force majeure conditions would be later that day.  However, the Vessel was on demurrage as of 1950 August 26, well before this email was sent.

Relying on the well-established principle that “Once on demurrage, always on demurrage,” the Panel concluded that demurrage accrued from August 26, 1950 through the completion of discharging operations on October 5 at 0004, 38 days, 19 hours, and 44 minutes.

The Panel ruled that Mosaic was liable for the $1.32M (38.88 days) of demurrage at Grammercy and directed them to pay $1,626,589.93 net in demurrage, freight, bunkers, and fees associated with the claim.