SCOTUS Provides Clarity to Charterers in Oil Spill Case and All Parties Subject to OPA Should Take Note
On March 30, 2020, the U.S. Supreme Court issued a decision that will directly affect those in the maritime charter industry, and may ripple out to anyone performing a cleanup or defending a claim under the Oil Pollution Act (OPA). The case began with a 1,900-mile voyage by the M/T Athos I, which was a 748-foot single-hulled oil tanker, from Venezuela to Paulsboro, New Jersey in November 2004. Only 900 feet from the ship’s intended destination, it struck a nine ton anchor that was abandoned in the Delaware River. The anchor pierced the hull of the vessel and caused over 250,000 gallons of crude oil to spill into the river, which resulted in a $133 million cleanup. Frescati Shipping Company, the owner of the ship, together with the United States, paid for the cleanup as required under OPA, and then sought its cleanup costs from the charterer, CITGO Asphalt Refining Company (“CARCO”). The question before the High Court was “whether the safe-berth clause is a warranty of safety, imposing liability for an unsafe berth regardless of CARCO’s diligence in selecting the berth.” Frescati and the U.S. argued that CARCO breached the charter-contract’s “safe-berth” clause, which obligated CARCO to designate a safe-berth where the ship would be able to come and go “always safely afloat.” CARCO,...