On March 30, 2020, the Supreme Court of the United States issued its ruling in the case CITGO Asphalt Refining Co. v. Frescati Shipping Co., Ltd. The case came on a writ of certiorari to the United States Court of Appeals for the 3rd Circuit.
The case: An abandoned anchor in the Delaware River pierced the hull of the Athos I, an oil tanker, causing an estimated 264,000 gallons of crude oil to spill into the river. The cost of cleanup was $143 million. Frescati, the shipowner, paid for the cleanup effort and was later reimbursed for $88 million by the U.S. federal government. Frescati and the U.S. sued CITGO, the intended oil recipient, for a portion of the costs.
The issue: Whether under federal maritime law a safe berth clause in a voyage charter contract is a guarantee of a ship’s safety, as the 3rd Circuit below and the 2nd Circuit have held, or a duty of due diligence, as the Fifth Circuit has held.
The outcome: In a 7-2 decision, SCOTUS affirmed the 3rd Circuit’s decision, holding that a safe berth clause in a voyage charter contract is a guarantee of a ship’s safety. Justice Sonia Sotomayor delivered the majority opinion of the court. Justice Clarence Thomas filed a dissenting opinion, joined by Justice Samuel Alito.
In the opinion, Sotomayor wrote, “The charterer’s assurance of a safe berth is the entire root of the safe-berth clause, and crucially, it is not subject to qualifications or conditions.”