CITGO Asphalt Refining Co. v. Frescati Shipping Co., 589 U.S. 348

Background

M/T Athos I, owned by Frescati and operated by Star Tankers, was subchartered to CARCO and struck an abandoned anchor in the Delaware River, spilling 264,000 gallons of crude oil.
Under the Oil Pollution Act (OPA) Frescati, as vessel owner, paid cleanup costs (limited statutorily) and the Oil Spill Liability Trust Fund reimbursed additional amounts; Frescati and the United States then sued CARCO to recover those costs.
The dispute turned on a standard-form safe‑berth / safe‑port clause in the CARCO–Star subcharter (ASBATANKVOY language) requiring the charterer to designate a place or wharf "safe" such that the vessel can "proceed thereto, lie at, and depart therefrom always safely afloat."
Frescati and the U.S. argued the clause is an unqualified warranty of safety (liability regardless of diligence); CARCO argued it imposed only a due‑diligence obligation (no strict contractual liability absent negligence).
The Third Circuit held Frescati an implied third‑party beneficiary and treated the clause as an express warranty of safety; the Supreme Court granted certiorari to resolve whether the clause imposed a warranty or only a due‑diligence duty.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the safe‑berth clause creates an absolute warranty of safety or only a due‑diligence obligation	Safe‑berth is an unqualified warranty; charterer strictly liable for designating an unsafe berth	Clause imposes only a duty to exercise due diligence in selecting a safe berth; no strict contractual liability	Clause unambiguously creates a warranty of safety — charterer liable regardless of diligence
Whether absence of the word "warranty" defeats a warranty finding	Label is immaterial; material contractual statements are warranties regardless of label	Failure to use express warranty language shows parties did not intend a warranty	Label not required; a material assurance in the charter party can be a warranty
Whether the general exceptions clause ("perils of the sea") or pollution‑insurance clause relieves charterer of liability	Exceptions/insurance do not negate an express contractual provision imposing liability for selecting an unsafe berth	Exceptions or required insurance show parties did not intend charterer liability for such risks	Exceptions clause inapplicable where contract "otherwise . . . expressly provides" liability; insurance clause covers broader risks and does not negate warranty
Whether the master’s right to refuse entry / lighterage allocation creates conflict or limits charterer liability	Master’s right to refuse and lighterage allocation do not erase charterer’s warranty when vessel actually enters unsafe berth	Master’s textual rights indicate no separate charterer warranty; reading as a warranty creates conflicting obligations	No conflict: charterer must select a safe berth; master’s duty/right to load or refuse refers to whether master will enter that chosen berth and does not negate charterer’s warranty

Key Cases Cited

Davison v. Von Lingen, 113 U.S. 40 (1885) (statements of material fact in a charter party can constitute warranties)
Mencke v. Cargo of Java Sugar, 187 U.S. 248 (1902) (master may refuse unsafe berth; charterer liable for resultant lighterage expenses)
Atkins v. Disintegrating Co., 85 U.S. 272 (1874) (discussed in opinion; District Court earlier found master waived safe‑berth protection)
Paragon Oil Co. v. Republic Tankers, 310 F.2d 169 (2d Cir. 1962) (Second Circuit treats unqualified safe‑berth language as an express warranty of safety)
Orduna S.A. v. Zen‑Noh Grain Corp., 913 F.2d 1149 (5th Cir. 1990) (Fifth Circuit held a similar clause imposed a due‑diligence obligation)
Norfolk Southern R. Co. v. James N. Kirby, Pty Ltd., 543 U.S. 14 (2004) (maritime contracts construed by their terms; parties’ intent controls)
Stolt‑Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (industry custom and usage may inform parties’ intent)