## Facts

- An oil tanker, M/T Athos I, owned by Frescati Shipping Co., Ltd. and managed by Tsakos Shipping & Trading, S.A., was subchartered by Citgo Asphalt Refining Co. and related entities (CARCO) to deliver crude oil to CARCO’s Paulsboro, New Jersey terminal on the Delaware River.
- While approaching the terminal, the vessel struck a submerged, abandoned anchor located within its path roughly 900 feet from the intended berth.
- The impact ruptured the hull and spilled about 263,000 gallons of crude oil, triggering extensive cleanup under the Oil Pollution Act of 1990 (OPA).
- Frescati and its insurers paid substantial cleanup costs; the United States reimbursed Frescati from the Oil Spill Liability Trust Fund and sought recovery as statutory subrogee.
- Frescati and the United States pursued CARCO for (i) breach of a voyage charter “safe berth/safe port” clause, (ii) negligence, and (iii) negligent misrepresentation regarding safety of the berth and approaches.
- The district court ruled that Frescati was not a third-party beneficiary of the CARCO–Star Tankers charter and, alternatively, that the safe-berth clause imposed only a due-diligence obligation that CARCO did not breach; it also rejected tort liability.

## Issues

1. Whether Frescati and the Athos I were implied beneficiaries entitled to enforce CARCO’s safe-berth clause in the voyage charter.
2. Whether the safe-berth clause created an express warranty of safety or only a duty of due diligence in selecting a safe berth.
3. Whether a “named port” limitation can relieve the charterer of responsibility for unknown and not reasonably foreseeable hazards.
4. Whether CARCO could face negligence liability for hazards affecting the vessel’s transit to the terminal, including areas beyond the immediate berth.

## Decision

- The court held Frescati and the Athos I were implied beneficiaries of CARCO’s safe-berth undertaking and could sue for breach.
- The court held the safe-berth clause operated as an express warranty—an assurance of safety—not merely a due-diligence obligation.
- The court held any named-port limitation does not apply to hazards that are unknown and not reasonably foreseeable.
- The court did not finally determine breach of the warranty, citing missing factual findings (including vessel draft and under-keel clearance), vacated the adverse rulings to the extent inconsistent with its legal holdings, and remanded for findings under Rule 52(a)(1) and further proceedings.
- The court indicated CARCO could be liable in negligence for hazards affecting the approaches to its terminal, subject to factual determinations on remand.

## Legal Principles

- In maritime voyage charters, a standard safe-berth clause is construed as an express contractual warranty that the designated berth will be safe for the vessel, absent a contractually recognized exception.
- A vessel and its owner may qualify as implied beneficiaries of a safe-berth warranty in a charter party executed through intermediaries when the warranty’s benefit is directed to the calling vessel.
- A named-port limitation does not excuse the charterer from an express safe-berth warranty for latent hazards that were unknown and not reasonably foreseeable.
- When a bench trial judgment lacks required findings and legal conclusions under Federal Rule of Civil Procedure 52(a)(1), the proper remedy is remand for adequate findings and application of the correct legal standards.
- A terminal operator/charterer may owe a maritime duty of reasonable care regarding hazards in the approaches vessels must traverse to reach the terminal, depending on proof of breach and causation.

## Conclusion

The Third Circuit treated the safe-berth clause as an enforceable express warranty running to the vessel and its owner as implied beneficiaries, rejected a due-diligence-only construction and a broad named-port limitation for latent hazards, and remanded for factual findings and further adjudication of contractual breach and negligence liability.


In re Frescati Shipping Co. Ltd., 718 F.3d 184 (3d Cir. 2013)