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SEALIFT BULKERS, INC. v. REPUBLIC OF ARMENIA

March 30, 2000

SEALIFT BULKERS, INC., PLAINTIFF,
V.
REPUBLIC OF ARMENIA, DEFENDANT.



The opinion of the court was delivered by: Paul L. Friedman, District Judge.

MEMORANDUM OPINION

This matter arises from a charter agreement between plaintiff, Sealift Bulkers, Inc., and defendant, the Republic of Armenia, to transport wheat to Armenia during a time of famine. Plaintiff brought this lawsuit to recover the money it spent to warehouse the wheat on another ship when it was delayed in port by civil unrest in the Republic of Georgia. Plaintiff claims that defendant is responsible for reimbursing it under the charter because the expenses were "special charges" — expenses incurred "for the safety and preservation of the cargo." Because the Court finds that the transfer of the wheat to another ship did nothing to further the "safety and preservation of the cargo," it concludes that defendant has no obligation under the agreement between the parties to reimburse plaintiffs expenses and will grant summary judgment in favor of defendant.*fn1

I. BACKGROUND

Pursuant to its obligations under the Donation Agreement, the Republic of Armenia entered into a separate Charter Party Agreement (the "charter" or the "agreement") with its chosen carrier, Sealift Bulkers, Inc. on the basis of "full berth terms." Two portions of this agreement are particularly relevant. First, paragraph 10 of the agreement states:

The cargo is to be discharged at Vessel's time, risk, and expense with no demurrage, no despatch, and no detention. Contractor to deliver cargo in rail cars through Bill(s) of Lading to final destination (Airum, Armenia) at Owner's time, risk and expense. The Government of Armenia, as the Receiver of this cargo, will take delivery in rail cars at this point of entry and will transport the rail cars at their expense to destinations within Armenia.

Government of Armenia Charter Party Agreement, Pl.'s Motion for Summ. J., Exh. 4 ¶ 10. "Vessel" is defined in the agreement as the Inger, plaintiffs ship that transported the cargo. Id. at Preamble. "Owner" is defined at Sealift Bulkers, Inc. Id.

Second, paragraph 29 of the agreement states:

In the event of accident, danger, damage or disaster before or after the commencement of the voyage resulting from any cause whatsoever, whether due to negligence or not, for which, or for the consequences of which, the carrier is not responsible by statute, contract or otherwise, the goods, shippers, Receivers or owners of the goods shall contribute with the carrier in General Average to the payment of any sacrifices, losses or expenses of a General Average nature that may be made or incurred and shall pay salvage and special charges incurred with respect to the goods.

Id. i 29.*fn2

During the summer of 1993, Sealift loaded the wheat onto the Inger, which carried the wheat from the United States to the port of Poti, Georgia. The Inger arrived in Poti on August 31, 1993. Finding that civil unrest had erupted in the Republic of Georgia and that the rail service between Poti and Armenia had been interrupted, the Inger was not able to locate railcars on which to offload the wheat. Sealift therefore requested an alternative point of discharge. Armenia refused the request, insisting that the Inger deliver the wheat to Airum, Armenia via the ports of Poti or Batumi as the charter instructed.

The Inger next contacted the port of Batumi. Georgia, which, while also congested, was active. The Inger attempted to "jump the line" at Batumi by offering to pay other vessels to exchange places in the queue for docking, but no other vessels accepted the offer. Eventually, Sealift chartered a second vessel at Poti, the Catherine L., onto which it completely unloaded the wheat by September 20, 1993.*fn3 The Inger then returned to the United States to perform unrelated work. The rail lines from Armenia to Georgia reopened and the wheat was discharged from the Catherine L. onto rail cars between September 26, 1993 and October 23, 1993. While some of the wheat was diverted and never reached Armenia, the remainder eventually made it to its destination.

Sealift now has filed suit to recover its expenses associated with chartering the Catherine L. Sealift claims that these expenses were "special charges" that Armenia is required to pay under paragraph 29 of the charter. In particular, Sealift requests to be reimbursed $370,501.03 for chartering the Catherine L. and $63,000 for ...


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