War Risk, Safe Ports & Voywar 1993 Termination | LMAA Award

Analysis and Findings: Voywar 1993 Termination

I. Escalation of Risk: The Tribunal’s Core Finding

In the Award, the Tribunal found unequivocally that there was a material escalation in risk between 17 July and 24 July 2023.

In particular, several factors supported this conclusion:

• Prior to 17 July 2023, neither Reni nor Izmail had been targeted by Russian missiles since the onset of hostilities in February 2022
• The ports’ geographical location (on the Danube River, near NATO member Romania) had created a reasonable expectation of relative safety
• Russia’s withdrawal from the Black Sea Grain Initiative represented a shift under which the grain trade moved from being tolerated and protected under the Initiative to being specifically targeted by Russian forces.
• The 23 July 2023 attack on Reni shattered the “illusion” that these ports were too close to NATO territory to be targeted

Critically, cross-examination evidence influenced the Tribunal, including an acknowledgment from a Charterers’ witness that Reni and Izmail had been regarded as comparatively safe because of their proximity to the Romanian border and NATO territory, and that an attack so close to NATO had not been anticipated.

The Tribunal also noted that an official from the Reni and Izmail harbour authority, another Charterers’ witness, stated under cross-examination that the commencement of bombing on 23 July 2023 increased the risk compared to 17 July 2023, and that once Reni was attacked, attacks on Izmail were expected.

Although the Black Sea Grain Initiative did not formally cover Reni and Izmail, the Tribunal considered that it provided indirect protection by signalling Russia’s general tolerance of the grain trade. Its collapse triggered a qualitative change in the risk profile of Ukrainian grain ports.

II. Assumption of Risk: The Contractual Allocation Framework

The Charterers argued that by entering into a charterparty for a voyage to Ukrainian ports during an ongoing war, the Owners had assumed the inherent risks and could not later rely on those same risks to escape their contractual obligations.

The Tribunal considered the established authorities on pre-assumed war risks:

• The Mary Lou [1981] 2 Lloyd’s Rep. 272 (Mustill J): Safe port warranties operate as limits on a charterer’s entitlement to insist on named ports
• The Product Star (No. 2) [1993] 1 Lloyd’s Rep. 397 (Leggatt LJ): Owners may refuse performance if the danger has become “different, either in nature or extent” from the risk undertaken at the time of contracting
• The Polar [2024] 1 Lloyd’s Rep. 85 (Hamblen LJ): Owners accepting risk at the date of the charter are accepting that “in the circumstances prevailing at the date of the charter the risks of proceeding there were not such as would render their discretion exercisable”

The Tribunal also observed an important nuance regarding the allocation of war risk insurance costs. In cases such as The Paiwan Wisdom [2012] 2 Lloyd’s Rep. and The Helen Miller [1980] 2 Lloyd’s Rep. 95, charterparty provisions requiring charterers to bear additional war risk premiums have been interpreted as the “price” charterers pay for insisting on orders that owners would not otherwise accept.

However, the Owners bore the cost of Extra War Risk Insurance (EWRI). The Tribunal found this factor less instructive on the facts, reasoning that in a single-voyage charter to a known war zone, the cost of war risk insurance was likely “baked into” the agreed freight rate.

The Charterers also contended that the crew’s reluctance to proceed to the Ukrainian ports meant the Vessel was unseaworthy. The Tribunal rejected this point, noting it was raised only in the Charterers’ closing submissions (and was unpleaded).

On that basis, the Tribunal concluded that the Owners assumed only the level of risk as it existed on 17 July 2023; the escalation culminating in direct attacks on the nominated load ports fell outside the scope of any assumed risk.

III. Exercise of Discretion: The Voywar 1993 Clause

Clause 27 of the charterparty incorporated the Voywar 1993 standard clause, which provides owners with a broad discretion to refuse performance if, “in the reasonable judgment” of the Master and/or Owners, the voyage “may expose, or is likely to expose” the vessel, cargo, or crew to war risks.

The Charterers challenged the Owners’ exercising of this discretion on multiple grounds:

(a) The Standard for Unreasonableness

The Tribunal applied a well-established test from The Product Star (No. 2):

The discretion must be exercised “honestly, and in good faith” and must not be “arbitrary, capricious or unreasonable.”

Importantly, the threshold for unreasonableness is high. It is insufficient for a charterer to show that many (or even most) reasonable shipowners would have reached a different conclusion. The question is whether there was “material on which a reasonable shipowner could have reached that conclusion”: The Product Star (No. 2) at 407.

On the evidence, it was satisfied that Russia’s withdrawal from the Black Sea Grain Initiative and the direct targeting of Reni and Izmail on 23–24 July 2023 provided ample material for a reasonable shipowner to conclude that the ports were too dangerous.

(b) The “Normal Characteristic” Test

The Tribunal also considered the “safe port” dimension of the analysis, applying the test from The Saga Cob [1991] 2 Lloyd’s Rep. 398:

• The relevant inquiry is whether the likelihood of a particular risk occurring is such as to amount to a “normal characteristic of that port.”

The Tribunal found that direct targeting by Russian missiles was not a “normal characteristic” of Reni or Izmail prior to 24 July 2023. The ports had operated without incident since the onset of hostilities, and the commencement of attacks represented a fundamental change in their risk profile.

(c) Adequacy of Enquiries

The Charterers argued that the Owners acted unreasonably by failing to consult the Harbour Master at Reni and Izmail before cancelling. The Tribunal rejected this argument, applying Triton Lark [2012] 1 Lloyd’s Rep. 151:

• If a shipowner fails to make all necessary enquiries, the resulting judgment is unlikely to be considered unreasonable “if it was in fact an objectively reasonable judgment” and would have been shown to be so had all necessary inquiries been made.

The Tribunal found that the Owners did consult with their local agents in Sulina, Reni, and Izmail. Moreover, the official from the harbour authority stated in cross-examination that he had no particular insight into when or whether the ports may be targeted, so any advice he might have provided would have been speculative.

(d) The 48-Hour Notice Requirement

The Charterers contended that under Voywar 1993, the Owners were required to provide 48 hours’ notice to allow the Charterers to nominate an alternative safe port.

Therefore, the Tribunal carefully construed Clause 27(b), which provides:

“…if this Charter Party provides that loading or discharging is to take place within a range of ports…the Owners shall first require the Charterers to nominate any other safe port which lies within the range…”

The Tribunal found that the charterparty did not provide for a “range” of load ports. It specified two named ports, Reni or Izmail, in Charterers’ option (i.e., the Charterers could elect which of the two would apply). Two specific alternatives do not constitute a “range” within the meaning of the clause. Accordingly, the 48-hour notice requirement did not apply.

Accordingly, the Tribunal held that the Owners validly exercised their Voywar 1993 discretion and that the 48-hour re-nomination mechanism was not engaged because two named alternative load ports did not constitute a “range of ports” on these facts; the 24 July 2023 cancellation notice therefore amounted to “due fulfilment of the Charter Party” under Clause 27(f).