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18-565 CITGO ASPHALT REFINING CO. V. FRESCATI SHIPPING CO., LTD. DECISION BELOW: 886 F.3d 291 CERT. GRANTED 4/22/2019 QUESTION PRESENTED: Whether under federal maritime law a safe berth clause in a voyage charter contract is a guarantee of a ship's safety, as the Third Circuit below and the Second Circuit have held, or a duty of due diligence, as the Fifth Circuit has held. LOWER COURT CASE NUMBER: 16-3470, 16-3552, 16-3867, 16-3868
The U.S. Supreme Court case CITGO Asphalt Refining Co. v. Frescati Shipping Co., Ltd., 2019, revolved around a dispute over who should bear the cost of an oil spill cleanup that occurred in 2004 when a tanker leased by Frescati Shipping Company struck an abandoned anchor while approaching a refinery owned by CARCO (a subsidiary of CITGO). The Safe Port Warranty clause in the charter contract between Frescati and CARCO was at the heart of this litigation. The Third Circuit court held that CARCO was responsible for ensuring safe berth for vessels under its charter agreement with Frescati, thus making it liable to pay $143 million towards clean-up costs incurred by both Frescati and United States as co-plaintiff. However, on appeal to the Supreme Court, justices unanimously upheld this decision stating that under maritime law's "safe-berth" clause in voyage-charter contracts like those between shipping companies and refineries - which guarantees ship owners a safe place to dock their vessels - is an absolute warranty of safety unless explicitly stated otherwise within contractual terms; therefore placing financial responsibility onto CITGO.
In the dissenting opinion for CITGO Asphalt Refining Co. v. Frescati Shipping Co., Ltd., Justice Gorsuch, joined by Justice Alito, argued that the majority misinterpreted both contract law and maritime custom to reach its conclusion. The dissenters believed that under normal principles of contract interpretation, ambiguous terms should be construed against the drafter - in this case CARCO (CITGO's predecessor). However, they felt that there was no ambiguity about who would bear responsibility for "safe berth" clauses; it was clearly meant to be on ship owners rather than charterers like CARCO. They also disagreed with the majority's reliance on maritime customs as a basis for their decision since such customs were not explicitly mentioned in the agreement between parties involved in this case.